Wyndham Hotels & Resorts(US:WH)2021-04-29 15:45Financial Performance - Total net revenues for the three months ended March 31, 2021, decreased by $107 million, or 26%, compared to the prior-year period, primarily due to lower travel demand from COVID-19 [122]. - Adjusted EBITDA for the three months ended March 31, 2021, was $97 million, a decrease of 11% compared to $109 million in the prior-year period [126]. - Net revenues decreased by $34 million, or 14%, compared to Q1 2020, primarily due to a global RevPAR decline [128]. - Adjusted EBITDA decreased by $5 million, or 5%, compared to Q1 2020, mainly driven by the revenue decline, partially offset by cost reductions [128]. - Hotel Franchising net revenues for the three months ended March 31, 2021, were $209 million, down 14% from $243 million in 2020 [126]. - Hotel Management net revenues decreased by 44% to $94 million for the three months ended March 31, 2021, compared to $167 million in 2020 [126]. Room and Revenue Metrics - Global RevPAR for the three months ended March 31, 2021, decreased 10% to $24.90 compared to the prior year, with a 31% decline from the comparable 2019 period [121]. - The total number of rooms as of March 31, 2021, decreased by 4% to 797,200, reflecting the strategic termination plan that removed approximately 26,700 rooms in 2020 [120]. - Total rooms decreased to 48,500 in Q1 2021 from 59,300 in Q1 2020, representing an 18% decline [129]. - Global RevPAR decreased to $38.17 in Q1 2021 from $50.00 in Q1 2020, a decline of 24% [129]. Tax and Financial Position - The effective tax rate increased to 31.4% from 29.0% during the three months ended March 31, 2021, primarily due to changes in state tax rates [124]. - Total assets remained consistent at $4.64 billion as of March 31, 2021, compared to December 31, 2020 [132]. - Total liabilities decreased by $32 million to $3.65 billion as of March 31, 2021, primarily due to a decrease in accrued expenses [132]. - As of March 31, 2021, the company had $750 million in liquidity and was in compliance with financial covenants [136]. Cash Flow and Dividends - Cash provided by operating activities increased by $47 million to $64 million in Q1 2021 compared to Q1 2020 [141]. - Capital expenditures for Q1 2021 were $5 million, with an anticipated total of approximately $40 million for the year [145]. - The quarterly cash dividend was increased to $0.16 per share in Q1 2021, reflecting a 100% increase compared to the previous dividend [149]. Market and Operational Insights - Approximately 70% of bookings are generated from leisure customers, while 30% come from business travel, indicating a strong reliance on leisure demand [117]. - Nearly 90% of hotels within the U.S. system are located along highways and in suburban and small metro areas, positioning the company well for recovery [117]. - Over 99% of domestic and approximately 98% of the global portfolio remain open, indicating resilience amid the pandemic [116]. - The hotel industry is seasonal, with higher revenues typically in Q2 and Q3, but COVID-19 has disrupted this pattern, leading to higher revenues in Q3 and Q4 of 2020 [154]. Legal and Risk Management - As of March 31, 2021, potential exposure from legal proceedings could reach approximately $6 million beyond recorded accruals, but the company does not expect a material liability from these litigations [156]. - The total outstanding balance of variable-rate borrowings, net of swaps, was $460 million as of March 31, 2021, with a hypothetical 10% change in interest rates resulting in approximately a $5 million increase or decrease in annual interest expense [160]. - The company has foreign currency exposure to several currencies, including the Canadian Dollar and Euro, with a notional amount of outstanding foreign exchange hedging instruments at $92 million as of March 31, 2021 [163]. - A hypothetical 10% change in foreign currency exchange rates would result in approximately a $7 million increase or decrease in the fair value of outstanding forward foreign currency exchange contracts [163]. - The company uses interest rate swaps and foreign currency forwards to manage risks related to debt and foreign currency exchange rates [158]. - The company assesses market risk through sensitivity analyses, which are limited by the necessity to conduct the analysis based on a single point in time [165].