1 - Wyndham Worldwide

Report
Forward Looking Statements
Certain statements in this presentation constitute “forward-looking statements” within the meaning of Section
21E of the Securities Exchange Act of 1934, as amended. Any statements that refer to expectations or other
characterizations of future events, circumstances or results are forward-looking statements. Such forwardlooking statements include projections. Such projections were not prepared in accordance with public guidelines
of the American Institute of Certified Public Accountants regarding projections and forecasts, nor have such
projections been audited, examined or otherwise reviewed by independent auditors of Wyndham Worldwide
Corporation (“WYN”).
Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may
cause the actual results, performance or achievements of Wyndham Worldwide to be materially different from
any future results, performance or achievements expressed or implied by such forward-looking statements.
You are cautioned not to place undue reliance on these forward-looking statements. Important assumptions and
other important factors that could cause actual results to differ materially from those in the forward looking
statements are specified in Wyndham Worldwide’s most recent Form 10-K under “Risk Factors” filed with the
Securities and Exchange Commission. Except for ongoing obligations of Wyndham Worldwide to disclose
material information under the federal securities laws, Wyndham Worldwide does not undertake any obligation to
release any revisions to any forward-looking statements, to report events or to report the occurrence of
unanticipated events.
The information in this presentation should be read in conjunction with the consolidated financial statements and
accompanying notes, “Management's Discussion and Analysis of Financial Condition and Results of Operations”
in Wyndham Worldwide's 2012 Form 10-K and Form 10-Q for the quarterly period ending September 30, 2013
filed with the Securities and Exchange Commission on February 15, 2013 and October 23, 2013 respectively.
2
THE W YNDHAM W ORLDWIDE STORY
Powerful Cash Flow Drives Dependable Growth
* 2011-2015
Business
Execution
Sustainable
annual
free cash flow
Successful!
Target
$750M
EPS growth*
17-21%
CAGR
3
Agenda
Three solid platforms
Strong execution
Delivers dependable growth
4
W YNDHAM W ORLDW IDE TODAY
Leading Positions in Leisure Industry
Business
Segment
Market Position
Worldwide
% of 2012
Adjusted EBITDA
Major
Brands Include
Hotel Group
#1
Hotel franchisor
by hotels
Exchange & Rentals
23%
#1
Timeshare
exchange and rental
company
29%
Vacation Ownership
#1
Timeshare
developer
48%
5
W YNDHAM W ORLDW IDE TODAY
Majority of Income from Fee-for-Service Businesses
Revenues
Advantages:
 Strong cash flow
~ 40%
~ 60%
 Low capital intensity
Other
Fee-for-Service
Businesses
 Recurring revenues
 Stable earnings
•
•
•
•
•
Hotel Franchising Fees
Vacation Exchange Fees
Vacation Rentals Fees
Property Management Fees
WAAM 1.0
6
W YNDHAM W ORLDW IDE TODAY
Uniquely Positioned in the Industry
High
(15%)
WYN
Other lodging
companies
Cash Flow
Yield
• High free cash flow
• Diversified revenue
streams
Low
(0%)
Low
Diversified Revenues
High
product lines & demographics
7
Three Strong Platforms for Growth
Hotel
Group
Exchange &
Rentals
Vacation
Ownership
8
HOTEL GROUP
Building On Leading Global Position
Strengths
•
$290M - $305M(1)
World’s largest hotel franchisor
–
•
Adjusted EBITDA
over 638,300 rooms and 7,440 hotels
Leader of the economy & midscale segment
$271M
$214M
$190M
$178M
Strategic Priorities
•
Grow system size
–
–
•
Strengthen value proposition
–
–
•
add new rooms
retain every desired property
upgrade and improve technology
generate more bookings through our own channels
Drive organizational excellence
–
–
2009 2010 2011 2012 2013E
consolidate central reservation systems
call center efficiency
(1) Based on guidance as of July 24, 2013
9
EXCHANGE AND RENTALS
Extending the Lead
Rentals Strengths
Exchange Strengths
Adjusted EBITDA
• Leading vacation rental
facilitator
• Leading timeshare
exchange network
• Access to approx.106,000
rental properties
• Approximately 3.7 million
$308M
members
$293M
• Approx.1.4 million
transactions completed
during 2012
• Over 4,000 vacation
ownership resorts in
approximately 100
countries
$355M - $370M(2)
$348M $340M(1)
Strategic Priorities
• Expand into new geographic markets
– grow organically and through targeted M&A
• Leverage web technology investments
– enhance online experience & reduce costs
2009
2010
2011
2012
2013E
• Drive revenue and customer retention
– develop compelling products and services
(1) Adjusted EBITDA decrease primarily due to currency ($17M) (2) Based on guidance as of July 24, 2013
10
VACATION OWNERSHIP
A Transformed Business
Strengths
•
World’s largest vacation ownership business
– 190 resorts and approx. 915,000 owners
•
Leading innovator
•
Property management and consumer finance
have fee-for-service components
Adjusted EBITDA
$595M - $620M(1)
$514M
$423M
$552M
$440M
Strategic Priorities
•
Drive further cash flow improvements
– develop “Just-in-Time” and asset-lite
inventory models (WAAM)
•
Drive greater sales and marketing efficiencies
•
Deliver better service to owners to enable greater
owner satisfaction
(1) Based on guidance as of July 24, 2013
2009 2010 2011 2012 2013E
11
VACATION OWNERSHIP
A Closer Look
Recurring upgrade sales
• 50% of existing owners
Flexible points based product
• Allows remote market sales
Recurring income
• Property management fees = $63M EBITDA(1)
Recurring interest income
• Financing receivables
Accounting transparency
• Clean business model
(1) For full year 2012
12
Agenda
Three solid platforms
Strong execution
Delivers dependable growth
13
Strong Record of Execution – Key Initiatives
1
Vacation Ownership transformed
2
Leverage web to improve margins
of Vacation Exchange
3
Grow Vacation Rentals business
4
Strengthen Hotel Group
value proposition
5
Strong balance sheet and
financial position
Delivered
strong cash flow
and
2012 EPS growth
of 34%
14
Vacation Ownership Transformed
Major Actions
Major Benefits
Right-sized the business
Margin increased from
16% to 24%
Tightened consumer
lending practices
Average FICO scores(1)
increased to 725
Developed WAAM concept
(1) Weighted Average FICO of Portfolio (at origination)
Inventory spend reduced
from nearly $700M to approx.
$125M
15
VACATION OWNERSHIP – A CLOSER LOOK
Fee-for-Service Vacation Ownership Model Gaining Traction
Wyndham Asset Affiliation
Model (WAAM)
Affiliate with developers
of unsold properties
Traditional Vacation
Ownership Model
Invest in development of
resort properties
Advantages

Reduces capital intensity

Increases recurring
management fees

Improves returns
16
Leverage Web to Improve Margins of Vacation Exchange
Key Actions
•
Enhanced search
•
Improved Exchange value
transparency
•
Improved resort
photography and videos
•
Better websites for
club affiliates
Web Penetration(1)
46%
13%
2008
2012
~250 bps of segment margin improvement
(1) As of December 31, 2012
17
Grow Vacation Rentals Business
U.S. Market
• $24B of annual revenue in the U.S.
large
highly fragmented
– $14B rent-by-owner market
– $10B professionally managed market
• 5,000 professional managers have
an average of ~110 units in the U.S.
• Just 10% of US adults have stayed
Market is under-penetrated
under-penetrated
in a rental over the past 10 years
18
Strengthen Hotel Group Value Proposition
Build value proposition through Apollo
Revamp Websites
• Drive direct channel
bookings
• Improve conversion increases of 10% to 60%
Enhance Content
Improve Rate Integrity
• Overhaul information
and images of 7,000
properties
• Better manage rates and
inventory
• Improve search engine
results
• Enhance property
management system
synergies
19
Strong Balance Sheet and Financial Position
Annual sustainable free cash flow target $750 million
Well stacked capital deck – no near-term maturities
Investment grade ratings from three major rating agencies
Cost-efficient commercial paper program
20
Agenda
Three solid platforms
Strong execution
Delivers dependable growth
21
Segment Long-term Growth Dynamics
Hotel Group
• Continued RevPAR recovery
• Apollo
• International expansion
High-single digit
growth
Exchange & Rentals
Vacation Ownership
• Migration to web for
Exchange business
• WAAM / Just in Time
• U.S. penetration in rentals
• Credit Pre-screening Program
• Voyager benefits
Mid-single digit
growth
Mid-single digit
growth
Organic EBITDA growth of 6-8%
22
Our Cash Flow will Enhance Strong, Sustainable Growth
17-21%*
Share Repurchase
and M&A
6-8%
EBITDA of
Base Business
* 2010-2015
Company EPS
Growth
23
Disciplined Capital Deployment
 Drive Shareholder Value
Disciplined Capital
Deployment of ~$1B Annually
Free Cash Flow: $750M target
Maintain existing leverage: $100M EBITDA = $300M of debt
Dividends
Share Repurchase
Targeted M&A Investment
Currently ~$162M annually
~32% of adj. net income(1)
$623M in 2012
Focus on fee-for-service
businesses and tuck-in
acquisitions
(1) Based on guidance as February 6, 2013
24
Clear Evidence Our Business Model is Working
Adjusted EBITDA
Adjusted EPS
$3.78 - $3.80(2)
$1,140M - $1,165M
$3.23
$1,054M
$976M
+12%
$2.49
+8%
+10%
+30%
$860M
+13%
$2.00
+25%
2010
2011
(1) Based on guidance as of October 23, 2013
2012
2013E
(1)
2010
(2) Includes share repurchases through September 30, 2013
2011
2012
(1)
2013E
25
WYN Valuation Framework
Price/Earnings
Peer
Average
22.3
17.4
WYN
2013 Enterprise Value / EBITDA
Peer
Average
12.4x
9.8x
WYN
Free Cash Flow Yield
Peer
Average
WYN
5.2%
8.7%
26
IN SUMMARY
Powerful Cash Flow Drives Dependable Growth
Execution
Solid
Platforms
Growth
Strong record of
execution
Building on three
solid platforms
Delivering dependable
growth
• Transformed Vacation
Ownership business model
• Extending lead of all
platforms
• Using free cash flow for
targeted growth
• ~$750M annual sustainable
free cash flow target
• Continuing to optimize
operations
• Targeting 17-21% EPS
growth
27
Investor contact:
Margo C. Happer
Senior Vice President, Investor Relations
Wyndham Worldwide Corporation
(973) 753-6472
[email protected]

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