PR Newswire | Oct 28, 2020 06:31AM EDT

10/28 05:30 CDT

Wyndham Destinations Reports Third Quarter 2020 Results ORLANDO, Fla., Oct. 28, 2020

ORLANDO, Fla., Oct. 28, 2020 /PRNewswire/ -- Wyndham Destinations, Inc. (NYSE:WYND), the world's largest vacation ownership and exchange company, today reported third quarter 2020 financial results for the three months ended September 30, 2020. Highlights include:

* Net income from continuing operations of $40 million and diluted earnings per share of $0.47 on net revenue of $614 million * Adjusted EBITDA of $139 million and adjusted diluted earnings per share of $0.83 (1) * Net cash provided by operating activities of $224 million and adjusted free cash flow of $120 million for the first nine months of 2020 * Leverage ratio for covenant purposes of 4.1x at the end of September, well within covenant restriction of 6.5x * Cash and cash equivalents of $1.3 billion at the end of September; $1.5 billion of liquidity available in cash and cash equivalents and revolving credit facility * Company expects to recommend a fourth quarter dividend of $0.30 per share for approval by the Board of Directors

"We were very encouraged with our third quarter results. Our ability to recover quickly during this re-opening phase demonstrates the resiliency of our business," commented Michael D. Brown, president and CEO of Wyndham Destinations. "Early indications show buyer behavior remains unchanged, in fact VPG is 30% higher year-over-year at Wyndham Vacation Clubs. Our two business segments, Wyndham Vacation Clubs and Panorama, saw strong demand in net bookings improving throughout the quarter."

"Our focus on leisure travel, and our geographically diverse resort and sales and marketing footprint, gives us confidence for the fourth quarter and heading into 2021. We believe we are well-positioned to lead the broader travel industry in recovery," said Brown. "Our resilient business model means that we expect to be adjusted free cash flow positive for the full-year."

(1) This press release includes adjusted EBITDA, adjusted diluted EPS fromcontinuing operations, adjusted free cash flow from continuing operations,gross VOI sales and adjusted net income/(loss) from continuing operations,which are metrics that are not calculated in accordance with Generally AcceptedAccounting Principles in the U.S. ("GAAP"). See "Presentation of FinancialInformation" and the tables for the definitions and reconciliations of thesenon-GAAP measures in accordance with GAAP.

Business Segment Results

The results of operations during the third quarter of 2020 include impacts related to the COVID-19 global pandemic, which have been significantly negative to the travel industry, the Company, its customers and employees. Refer to Table 8 for a breakout of COVID-19 related impacts.

Wyndham Vacation Clubs

$ in millions 2020 2019 % change

Revenue $477 $858 (44) %

Adjusted EBITDA $96 $203 (53) %

Wyndham Vacation Clubs revenue declined 44% to $477 million in the third quarter. Gross vacation ownership interest (VOI) sales decreased 61% to $256 million with tours 70% lower year-over-year. Volume Per Guest (VPG) increased 30% to $3,039. Third quarter adjusted EBITDA was $96 million compared to $203 million in the prior year.

The provision for loan loss as a percentage of gross VOI sales, net of fee-for-service sales, was 18.8% for third quarter of 2020, an improvement from 20.3% during the third quarter of 2019.

Panorama

$ in millions 2020 2019 % change

Revenue $138 $250 (45) %

Adjusted EBITDA $60 $83 (28) %

Panorama revenue decreased 45% to $138 million in the third quarter. Adjusted EBITDA decreased 28% to $60 million. Excluding the sale of North American vacation rentals and the acquisition of Alliance Reservations Network (ARN), revenue decreased 24% and adjusted EBITDA decreased 16%. Cancellations continue to run at elevated levels and cross-border transactions are down significantly, particularly in international regions. This decrease was offset in part by sequential improvement in exchange bookings yielding September gross bookings which exceeded the prior year by 1%.

Balance Sheet and Liquidity

Net Debt-As of September 30, 2020, the Company's leverage ratio for covenant purposes was 4.1x, well within covenant restriction of 6.5x. The Company had $4.2 billion of corporate debt outstanding as of September 30, 2020, which excluded $2.5 billion of non-recourse debt related to its securitized notes receivable. Additionally, the Company had cash and cash equivalents of $1.3 billion. The Company's next long-term debt maturity is $250 million of secured notes due March 2021. Refer to Table 9 for definitions of net debt and leverage ratio.

The Company amended its $1.0 billion revolving credit facility in July. The Credit Amendment raised the first lien leverage-based financial covenant by varying levels for each applicable fiscal quarter during the relief period providing the Company with significant financial flexibility.

In July, the Company also completed the private placement issuance of $650 million senior secured notes due 2026 with an interest rate of 6.625%.

At the end of the third quarter, the Company had $1.5 billion of liquidity available in cash and cash equivalents and revolving credit facility.

Timeshare Receivables Financing-During the quarter, Wyndham Destinations closed on a $575 million securitization with a weighted average coupon of 2.81% and 90% advance rate.

Cash Flow-For the nine months ended September 30, 2020, net cash provided by operating activities from continuing operations was $224 million, compared to $321 million in the prior year period. Adjusted free cash flow from continuing operations was $120 million for the nine months ended September 30, 2020, compared to $466 million in the same period of 2019.

Share Repurchases- The Company has suspended share repurchase activity.

Dividend-The Company paid $26 million ($0.30 per share) in cash dividends on September 30, 2020 to shareholders of record as of September 15, 2020.

The Company expects to recommend a fourth quarter dividend of $0.30 per share for approval by the Company's Board of Directors in November.

Conference Call Information

Wyndham Destinations will hold a conference call with investors to discuss the Company's results and forward-looking information today at 8:30 a.m. ET. Participants may listen to a simultaneous webcast of the conference call, which may be accessed through the Company's website at investor.wyndhamdestinations.com, or by dialing 877-876-9176, passcode WYND, 10 minutes before the scheduled start time. For those unable to listen to the live broadcast, an archive of the webcast will be available on the Company's website for 90 days beginning at 12:00 p.m. ET today. Additionally, a telephone replay will be available for four days beginning at 12:00 p.m. ET today at 800-283-8183.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures such as adjusted EBITDA, adjusted diluted EPS from continuing operations, adjusted free cash flow from continuing operations, gross VOI sales and adjusted net income/(loss) from continuing operations, which include or exclude certain items. The Company utilizes non-GAAP measures on a regular basis to assess performance of its reportable segments and allocate resources. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors when considered with GAAP measures as an additional tool for further understanding and assessing the Company's ongoing operating performance by adjusting for items which in our view do not necessarily reflect ongoing performance. Management also internally uses these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. Exclusion of items in the Company's non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures for the reported periods appear in the financial tables section of the press release. See definitions on Table 9 for an explanation of our non-GAAP measures.

About Wyndham Destinations

Wyndham Destinations (NYSE:WYND), the world's largest vacation club and exchange company, is on a mission to put the world on vacation. The company offers more than four million members and owner families the opportunity to own, exchange or rent their vacation experience while enjoying quality, flexibility and great value from a trusted brand. The company's Wyndham Vacation Clubs offer 230 resorts that provide a contemporary take on the timeshare model through brands Club Wyndham(r) WorldMark(r) by Wyndham, and Margaritaville Vacation Club(r) by Wyndham. With a global presence in 110 countries, the company's membership travel business -- Panorama -- includes today's leading vacation exchange, leisure travel, and technology brands including RCI, the world's leader in vacation exchange that provides access to 4,200+ affiliated resorts around the world; and Extra Holidays, offering condo vacations at hotel prices. Year after year, our worldwide team of associates delivers exceptional vacation experiences to families around the globe as they make memories to last a lifetime. At Wyndham Destinations, our world is your destination.

Forward-Looking Statements

This press release includes "forward-looking statements" as that term is defined by the Securities and Exchange Commission ("SEC"). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as "may," "will," "expects," "should," "believes," "plans," "anticipates," "estimates," "predicts," "potential," "continue," "future," "intends," "projects" or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Wyndham Destinations, Inc. ("Wyndham Destinations") to differ materially from those discussed in, or implied by, the forward-looking statements. The forward-looking statements contained in this press release include statements related to Wyndham Destinations' current views and expectations with respect to its future performance and operations, and other anticipated future events and expectations that are not historical facts. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that might cause such a difference include, but are not limited to, uncertainty with respect to the scope and duration of the novel coronavirus global pandemic (COVID-19) and any resurgences and the pace of recovery; the timing of the development and distribution of an effective vaccine or treatment for COVID-19; the potential impact of the COVID-19 pandemic and governmental, business and individuals' actions in response to the pandemic and our related contingency plans and cost and investment reductions on our business, vacation ownership interest (VOI) sales and tour flow, consumer demand and liquidity, our ability to comply with financial and restrictive covenants under our indebtedness and our ability to access capital on reasonable terms, at a reasonable cost or at all, our and Wyndham Hotels' ability to maintain credit ratings, general economic conditions and unemployment rates, the performance of the financial and credit markets, the competition in and the economic environment for the timeshare industry; risks associated with employees working remotely or operating with a reduced workforce; the impact of war, terrorist activity, political strife, severe weather events and other natural disasters, and pandemics (including COVID-19) or threats of pandemics; operating risks associated with the Wyndham Vacation Clubs and Panorama segments; uncertainties related to our ability to realize the anticipated benefits of the spin-off of the hotel business ("spin-off") Wyndham Hotels & Resorts, Inc. ("Wyndham Hotels") or the divestiture of our North American and European vacation rentals businesses, or the acquisition of Alliance Reservations Network ("ARN"); unanticipated developments related to the impact of the spin-off, the divestiture of our North American and European vacation rentals businesses, the acquisition of ARN and related transactions, including any potential impact on our relationships with our customers, suppliers, employees and others with whom we have relationships, and possible disruption to our operations; our ability to execute on our strategy, the timing and amount of future dividends and share repurchases, if any, and those other factors disclosed as risks under "Risk Factors" in documents we have filed with the SEC, including in Part I, Item 1A of our Annual Report on Form 10-K for the fiscal year ended December 31, 2019, filed with the SEC on February 26, 2020 and Part II, Item 1A of our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2020, to be filed with the SEC on October 28, 2020. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management's opinion only as of the date on which they were made. Except as required by law, we undertake no obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

Wyndham Destinations Table of Contents

Table Number

* Condensed Consolidated Statements of Income/(Loss) (Unaudited) * Summary Data Sheet * Operating Statistics * Revenue by Reportable Segment * Non-GAAP Measure: Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) from Continuing Operations to Adjusted EBITDA * Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales * Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow from Continuing Operations * COVID-19 Impacts * DefinitionsWyndham Destinations

Condensed Consolidated Statements of Income/(Loss) (Unaudited)

(in millions, except per share amounts)

Three Months Ended Nine Months Ended

September 30, September 30,

2020 2019 2020 2019

Net revenues

Service and membership fees $ 291 $ 426 $ 845 $ 1,241

Consumer financing 115 132 360 385

Net VOI sales 196 528 273 1,384

Other 12 19 37 52

Net revenues 614 1,105 1,515 3,062

Expenses

Operating 263 450 861 1,269

Consumer financing interest 26 26 76 78

Cost/(recovery) of vacation ownership interests 22 60 (26) 141

General and administrative 101 129 295 379

Marketing 84 188 247 505

COVID-19 related costs 14 - 81 -

Asset impairments 6 - 50 -

Restructuring 2 - 27 4

Separation and related costs - 7 - 44

Depreciation and amortization 32 31 94 90

Total expenses 550 891 1,705 2,510

Operating income/(loss) 64 214 (190) 552

Other (income), net (5) (6) (11) (18)

Interest expense 52 40 138 122

Interest (income) (2) (1) (5) (6)

Income/(loss) before income taxes 19 181 (312) 454

(Benefit)/provision for income taxes (21) 46 (54) 120

Net income/(loss) from continuing operations 40 135 (258) 334

Gain on disposal of discontinued businesses, net - - - 5of income taxes

Net income/(loss) attributable to WYND $ 40 $ 135 $ (258) $ 339shareholders

Basic earnings/(loss) per share

Continuing operations $ 0.47 $ 1.48 $ (3.00) $ 3.59

Discontinued operations - - - 0.05

$ 0.47 $ 1.48 $ (3.00) $ 3.64

Diluted earnings/(loss) per share

Continuing operations $ 0.47 $ 1.47 $ (3.00) $ 3.58

Discontinued operations - - - 0.06

$ 0.47 $ 1.47 $ (3.00) $ 3.64

Weighted average shares outstanding

Basic 85.9 91.7 86.1 93.0

Diluted 86.1 92.0 86.1 93.3

Wyndham Destinations

Summary Data Sheet

(in millions, except per share amounts, unless otherwise indicated)

Three Months Ended September 30, Nine Months Ended September 30,

2020 2019 Change 2020 2019 Change

Consolidated Results

Net income/(loss) attributable to WYND $ 40 $ 135 (70) % $ (258) $ 339 (176) %shareholders

Diluted earnings/(loss) per share $ 0.47 $ 1.47 (68) % $ (3.00) $ 3.64 (182) %

Net income/(loss) from continuing operations $ 40 $ 135 (70) % $ (258) $ 334 (177) %

Diluted earnings/(loss) per share from $ 0.47 $ 1.47 (68) % $ (3.00) $ 3.58 (184) %continuing operations

Adjusted Earnings/(Loss) from Continuing Operations

Adjusted EBITDA $ 139 $ 267 (48) % $ 111 $ 726 (85) %

Adjusted net income/(loss) $ 71 $ 144 (51) % $ (108) $ 378 (129) %

Adjusted diluted earnings/(loss) per share $ 0.83 $ 1.57 (47) % $ (1.26) $ 4.05 (131) %

Segment Results

Net Revenues

Wyndham Vacation Clubs $ 477 $ 858 (44) % $ 1,125 $ 2,351 (52) %

Panorama 138 250 (45) % 393 716 (45) %

Corporate and other (1) (3) (3) (5)

Total $ 614 $ 1,105 (44) % $ 1,515 $ 3,062 (51) %

Adjusted EBITDA

Wyndham Vacation Clubs $ 96 $ 203 (53) % $ 6 $ 534 (99) %

Panorama 60 83 (28) % 142 234 (39) %

Segment Adjusted EBITDA 156 286 148 768

Corporate and other (17) (19) (37) (42)

Total Adjusted EBITDA $ 139 $ 267 (48) % $ 111 $ 726 (85) %

Adjusted EBITDA Margin 22.6 % 24.2 % 7.3 % 23.7 %

Key Operating Statistics

Vacation Clubs

Gross VOI sales $ 256 $ 663 (61) % $ 687 $ 1,773 (61) %

Tours (in thousands) 80 269 (70) % 248 710 (65) %

VPG (in dollars) $ 3,039 $ 2,332 30 % $ 2,331 $ 2,384 (2) %

New owner sales mix 27.6 % 38.2 % 28.1 % 37.8 %

Panorama

Average number of members (in thousands) 3,680 3,895 (6) % 3,781 3,888 (3) %

Exchange revenue per member (in dollars) $ 131.95 $ 162.47 (19) % $ 124.16 $ 170.93 (27) %

Note: Amounts may not calculate due to rounding. See Table 9 for definitions.For a full reconciliation of non-GAAP financial measures to the most directlycomparable GAAP financial measures, refer to Table 5 and Table 6. See"Presentation of Financial Information" and the tables for the definitions andreconciliations of these non-GAAP measures in accordance with GAAP.

Wyndham Destinations

Operating Statistics

The following operating statistics are the drivers of the Company's revenuesand therefore provide an enhanced understanding of the Company's businesses:

Year Q1 Q2 Q3 Q4 Full Year

Vacation Clubs ^(a)

Gross VOI Sales (in millions) ^(b) 2020 $ 413 $ 18 $ 256 $ - $ -

2019 $ 484 $ 626 $ 663 $ 582 $ 2,355

2018 $ 465 $ 602 $ 640 $ 564 $ 2,271

Tours (in thousands) 2020 162 6 80 - -

2019 192 249 269 234 945

2018 190 241 259 214 904

VPG 2020 $ 2,128 NM $ 3,039 $ - $ -

2019 $ 2,405 $ 2,425 $ 2,332 $ 2,373 $ 2,381

2018 $ 2,303 $ 2,411 $ 2,350 $ 2,499 $ 2,392

Provision for Loan Losses 2020 $ (315) $ (30) $ (45) $ - $ -

(in millions) ^(c) 2019 $ (109) $ (129) $ (135) $ (106) $ (479)

2018 $ (92) $ (126) $ (132) $ (106) $ (456)

2020 NM NM 18.8 % - % - %Provision for Loan Loss as aPercentage of Gross VOI Sales, net 2019 22.5 % 21.2 % 20.3 % 18.6 % 20.6 %of Fee-for-Service sales 2018 20.4 % 21.4 % 20.8 % 19.3 % 20.5 %

Allowance for Loan Losses 2020 $ 930 $ 846 $ 788 $ - $ -

(in millions) 2019 $ 721 $ 735 $ 767 $ 747 $ 747

2018 $ 684 $ 705 $ 743 $ 734 $ 734

2020 $ 3,722 $ 3,461 $ 3,309 $ - $ -Gross Vacation Ownership 2019 $ 3,741 $ 3,783 $ 3,885 $ 3,867 $ 3,867Contract Receivables (in millions) 2018 $ 3,560 $ 3,609 $ 3,732 $ 3,771 $ 3,771

2020 25.0 % 24.4 % 23.8 % - % - %Allowance for Loan Loss as aPercentage of Gross Vacation 2019 19.3 % 19.4 % 19.7 % 19.3 % 19.3 %Ownership Contract Receivables 2018 19.2 % 19.5 % 19.9 % 19.5 % 19.5 %

Panorama ^(a)

2020 3,864 3,799 3,680 - -Average Number of Members 2019 3,875 3,893 3,895 3,884 3,887(in thousands) 2018 3,852 3,844 3,857 3,833 3,847

Exchange Revenue Per Member 2020 $ 137.23 $ 103.31 $ 131.95 $ - $ -

2019 $ 185.40 $ 165.00 $ 162.47 $ 153.36 $ 166.54

2018 $ 194.70 $ 173.05 $ 163.84 $ 152.51 $ 171.04

Exchange Transactions 2020 260 71 214 - -

Closed User Group Transactions 2020 93 40 80 - -

Total Panorama Transactions 2020 353 111 294 - -(in thousands)

Note: Full year amounts and percentages may not compute due to rounding.

NM Not Meaningful.

(a) Includes the impact of acquisitions from the acquisition dates forward.

(b) Includes Gross VOI sales under the Company's fee-for-service sales. (See Table 6 for a reconciliation of Net VOI sales to Gross VOI sales).

Represents provision for estimated losses on vacation ownership contract(c) receivables, which is recorded as contra revenue to vacation ownership interest sales on the Condensed Consolidated Statements of Income/ (Loss).

Wyndham Destinations

Revenue by Reportable Segment

(in millions)

2020

Q1 Q2 Q3 Q4 Full Year

Vacation Clubs

Net VOI Sales $ 90 $ (13) $ 196 $ - $ -

Property Management Fees and Reimbursable Revenues 176 123 149 - -

Consumer Financing 127 119 114 - -

Other Revenues 16 10 18 - -

Total Vacation Clubs 409 239 477 - -

Panorama

Exchange Revenues 133 98 122 - -

Other Revenues 17 7 16 - -

Total Panorama 150 105 138 - -

Total Reportable Segments $ 559 $ 344 $ 615 $ - $ -

2019

Q1 Q2 Q3 Q4 Full Year

Vacation Clubs

Net VOI Sales $ 375 $ 481 $ 528 $ 464 $ 1,848

Property Management Fees and Reimbursable Revenues 170 170 178 183 702

Consumer Financing 125 128 132 130 515

Other Revenues 13 31 20 24 86

Total Vacation Clubs 683 810 858 801 3,151

Panorama

Exchange Revenues 180 161 158 149 647

Other Revenues 56 69 92 32 251

Total Panorama 236 230 250 181 898

Total Reportable Segments $ 919 $ 1,040 $ 1,108 $ 982 $ 4,049

2018

Q1 Q2 Q3 Q4 Full Year

Vacation Clubs

Net VOI Sales $ 358 $ 462 $ 503 $ 446 $ 1,769

Property Management Fees and Reimbursable Revenues 164 162 172 168 665

Consumer Financing 118 120 126 128 491

Other Revenues 21 26 19 23 91

Total Vacation Clubs 661 770 820 765 3,016

Panorama

Exchange Revenues 188 166 158 146 658

Other Revenues 58 72 85 45 260

Total Panorama 246 238 243 191 918

Total Reportable Segments $ 907 $ 1,008 $ 1,063 $ 956 $ 3,934

Note: Full year amounts may not add across due to rounding.

Wyndham Destinations

Non-GAAP Measure: Reconciliation of Net Income/(Loss) to

Adjusted Net Income/(Loss) from Continuing Operations to Adjusted EBITDA

(in millions, except diluted per share amounts)

Three Months Ended September 30, Nine Months Ended September 30,

2020 EPS 2019 EPS 2020 EPS 2019 EPS

Net income/(loss) attributable to WYND $ 40 $ 0.47 $ 135 $ 1.47 $ (258) $ (3.00) $ 339 $ 3.64shareholders

Gain on disposal of discontinued businesses, - - - 5net of income taxes

Net income/(loss) from continuing operations $ 40 $ 0.47 $ 135 $ 1.47 $ (258) $ (3.00) $ 334 $ 3.58

Restructuring costs 2 - 27 4

Impairments 6 - 54 -

COVID-19 related costs 13 - 51 -

Exchange inventory write-off 10 - 48 -

Amortization of acquired intangibles ^(a) 2 2 7 6

Legacy items 1 - 2 1

Separation and related costs - 7 - 44

Acquisition and divestiture costs - 4 - 4

Taxes ^(b) (3) (4) (39) (15)

Adjusted net income/(loss) from continuing $ 71 $ 0.83 $ 144 $ 1.57 $ (108) $ (1.26) $ 378 $ 4.05operations

Income taxes/(benefit) on adjusted net (18) 50 (15) 135income/(loss)

Stock-based compensation expense ^(c) 6 5 14 13

Depreciation 30 29 87 84

Interest expense 52 40 138 122

Interest income (2) (1) (5) (6)

Adjusted EBITDA $ 139 $ 267 $ 111 $ 726

Diluted Shares Outstanding 86.1 92.0 86.1 93.3

Amounts may not calculate due to rounding. The table above reconciles certainnon-GAAP financial measures to their closest GAAP measure. The presentation ofthese adjustments is intended to permit the comparison of particularadjustments as they appear in the income statement in order to assistinvestors' understanding of the overall impact of such adjustments. In additionto GAAP financial measures, the Company provides adjusted net income/(loss)from continuing operations, adjusted EBITDA and adjusted diluted EPS fromcontinuing operations to assist our investors in evaluating our ongoingoperating performance for the current reporting period and, where provided,over different reporting periods, by adjusting for certain items which in ourview do not necessarily reflect ongoing performance. We also internally usethese measures to assess our operating performance, both absolutely and incomparison to other companies, and in evaluating or making selectedcompensation decisions. These supplemental disclosures are in addition to GAAPreported measures. Non-GAAP measures should not be considered a substitute for,nor superior to, financial results and measures determined or calculated inaccordance with GAAP. See "Presentation of Financial Information" and thetables for the definitions and reconciliations of these non-GAAP measures.

(a) Amortization of acquisition-related assets is excluded from adjusted net income/(loss) from continuing operations and adjusted EBITDA.

In the three and nine months ended September 30, 2020 the amounts represent the tax effect of the adjustments totaling $9 million and $45 million, respectively, partially offset by $6 million of non-cash tax expense(b) associated with COVID-19 related increases to valuation allowances. In the three and nine months ended September 30, 2019, amounts represent the tax effect of the adjustments totaling $4 million and $15 million, respectively.

(c) All stock-based compensation is excluded from adjusted EBITDA.

Wyndham Destinations

Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales

(in millions)

The Company believes gross VOI sales provide an enhanced understanding of theperformance of its vacation clubs business because it directly measures thesales volume of this business during a given reporting period.

The following table provides a reconciliation of Net VOI sales (see Table 4) toGross VOI sales (see Table 3):

Year

2020 Q1 Q2 Q3 Q4 Full Year

Net VOI sales $ 90 $ (13) $ 196 $ - $ -

Loan loss provision 315 30 45 - -

Gross VOI sales, net of Fee-for-Service sales 405 17 241 - -

Fee-for-Service sales 8 1 15 - -

Gross VOI sales $ 413 $ 18 $ 256 $ - $ -

2019

Net VOI sales $ 375 $ 481 $ 528 $ 464 $ 1,848

Loan loss provision 109 129 135 106 479

Gross VOI sales, net of Fee-for-Service sales 484 610 663 570 2,327

Fee-for-Service sales - 16 - 12 28

Gross VOI sales $ 484 $ 626 $ 663 $ 582 $ 2,355

2018

Net VOI sales $ 358 $ 462 $ 503 $ 446 $ 1,769

Loan loss provision 92 126 132 106 456

Gross VOI sales, net of Fee-for-Service sales 450 588 635 552 2,225

Fee-for-Service sales 15 14 5 12 46

Gross VOI sales $ 465 $ 602 $ 640 $ 564 $ 2,271

Note: Amounts may not add due to rounding.

Wyndham Destinations

Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activitiesfrom Continuing Operations to Adjusted Free Cash Flow from ContinuingOperations

(in millions)

Nine Months Ended September 30,

2020 2019

Net cash provided by operating activities from continuing $ 224 $ 321operations

Property and equipment additions (56) (75)

Sum of proceeds and principal payments of non-recourse (94) 139vacation ownership debt

Free cash flow from continuing operations $ 74 $ 385

Separation and other adjustments ^(a) 14 81

COVID-19 related adjustments 32 -

Adjusted free cash flow from continuing operations $ 120 $ 466

(a) Includes cash paid for separation-related activities and transaction costs for acquisitions and divestitures.

Wyndham Destinations

COVID-19 Impacts

(in millions)

The tables below present the COVID-19 related impacts to our results ofoperations for the three and nine months ended September 30, 2020, and therelated classification on the Condensed Consolidated Statements of Income/(Loss)

Wyndham Corporate Non-GAAP IncomeThree Months Ended Vacation Panorama & Other Consolidated Adjustments Statement Clubs Classification

Employee compensation related and other $ 11 $ 1 $ 2 $ 14 $ 13 COVID-19 related costs

Asset impairment 6 - - 6 6 Asset impairments

Exchange inventory write-off - 10 - 10 10 Operating expenses

Lease related 1 - - 1 1 Restructuring

Total COVID-19 $ 18 $ 11 $ 2 $ 31 $ 30

Wyndham Corporate Non-GAAP IncomeNine Months Ended Vacation Panorama & Other Consolidated Adjustments Statement Clubs Classification

Allowance for loan losses:

VacationProvision $ 225 $ - $ - $ 225 $ - ownership interest sales

Cost/ (recovery) ofRecoveries (55) - - (55) - vacation ownership interests

Employee compensation related and other $ 62 $ 6 $ 13 $ 81 $ 51 COVID-19 related costs

AssetAsset impairment 20 34 - 54 54 impairments/ Operating expenses

Exchange inventory write-off - 48 - 48 48 Operating expenses

Lease related 2 22 - 24 24 Restructuring

Total COVID-19 $ 254 $ 110 $ 13 $ 377 $ 177

Definitions

Adjusted EBITDA: A non-GAAP measure, defined by the Company as net income/(loss) before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Consolidated Statements of Income. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, transaction costs and impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent. We believe that when considered with GAAP measures, Adjusted EBITDA is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. Adjusted EBITDA should not be considered in isolation or as a substitute for net income/(loss) or other income statement data prepared in accordance with GAAP and our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

Adjusted net income/(loss) from continuing operations: A non-GAAP measure, defined by the Company as net income/(loss) from continuing operations adjusted to exclude separation and restructuring costs, amortization of acquisition-related assets, debt modification costs, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent and the tax effect of such adjustments.

Adjusted diluted earnings/(loss) per share: A non-GAAP measure, defined by the Company as Adjusted net income/(loss) from continuing operations divided by the diluted weighted average number of common shares.

Gross Vacation Ownership Interest Sales: A non-GAAP measure, represents sales of vacation ownership interests (VOIs), including sales under the fee-for-service program before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.

Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.

Volume Per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel.

Average Number of Members: Represents paid members in our vacation exchange programs who are current on their annual membership dues or within the allowed grace period.

Exchange Revenue Per Member: Represents total revenues generated from fees associated with memberships, exchange transactions, and other servicing for the period divided by the average number of vacation exchange members during the period.

Panorama transactions: Represents Exchange System and Closed User Group bookings, net of cancellations.

Free Cash Flow from Continuing Operations (FCF): A non-GAAP measure, defined by the Company as net cash provided by operating activities from continuing operations less property and equipment additions (capital expenditures) plus the sum of proceeds and principal payments of non-recourse vacation ownership debt. The Company believes FCF to be a useful operating performance measure to evaluate the ability of its operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, its ability to grow its business through acquisitions and equity investments, as well as its ability to return cash to shareholders through dividends and share repurchases. A limitation of using FCF versus the GAAP measures of net cash provided by operating activities as a means for evaluating Wyndham Destinations is that FCF does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

Adjusted Free Cash Flow from Continuing Operations: A non-GAAP measure, defined by the Company as net cash provided by operating activities from continuing operations less property and equipment additions (capital expenditures) plus the sum of proceeds and principal payments of non-recourse vacation ownership debt, while also adding back transaction costs for acquisitions and divestitures, separation adjustments associated with the spin-off of Wyndham Hotels & Resorts, and certain adjustments related to COVID-19.

Net Debt: Net debt equals total debt outstanding, less non-recourse vacation ownership debt and cash and cash equivalents.

Leverage Ratio: The Company calculates leverage ratio as net debt divided by adjusted EBITDA, as defined in the credit agreement.

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SOURCE Wyndham Destinations