WYND - Earnings call transcript Q2 2018

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Operator

Good morning and welcome to Wyndham Destination's Second Quarter 2018 Earnings Conference Call. My name is Keith and I'll be your conference operator today. After the speakers' remarks, there will be a question-and-answer period. [Operator Instructions] As a reminder, ladies and gentlemen, this conference call is being recorded.

If you do not agree with these terms, please disconnect at this time. you. Thank like call now Agnew. to turn to would over the Chris I go Please ahead.

Christopher Agnew

Good to and Second you, morning Thank Keith. welcome Call. Quarter the Earnings Destination Wyndham

Before a financial This and discuss and could differ will our second on that from those remind will call on like the today's forward-looking statements of and materially we Michael forward-looking made Hug, find can in this press statements include results outlook. initiatives discussions then forward-looking morning you overview Actual Mike website provide and statements. Officer our indicated reconciliation begin, and on we'd the detail provide President our the to Chief actual update Officer morning, measures discussed factors release greater fact results; results Executive We in filings. undertake our to cause publicly earnings today. our that discussed non-GAAP an only The Brown, no in statements. our of Investor.wyndhamdestinations.com. or to quarter as of at our these of and our quarter are Financial And a our revise differ you second will results could the obligation Chief SEC today strategic

to respond I'm Following these we over our will be to questions. With remarks, that, turn Michael. to available pleased to call the

Michael Brown

call, Chris. Thank earnings call and first our us quarter thank Good second earnings morning Wyndham for you, you for our joining as Destinations.

Destinations would spinoff XX. European early for business the our their in work our We the a quarter delivered journey XXXX. objectives commitment Wyndham play share exchange this are hard XX,XXX May; ownership first over as rental strong and pure major executing our past I two operating the our and half thank and on excited the second begin and to transactions: while in We to to business on than at year. more the focus, vacation associates over of sale performance of May like and vacation

our start business second revenues and by and our saying earnings return growth share reflecting had we me a strength delivered fundamental an strategy. performance our and to EBITDA X%, up increased overview repurchases. strong X% with Let strong up the We Diluted of on our operating quarter and through line share per further-adjusted exchange in top in outstanding executing and are we and on segments. our XX% basis vacation shareholders rental ownership capital both reflecting margin operating to results commitment

XX year our gross our We percentage of and owner plan margin to we Destinations increased by in shift prior with VOI in Wyndham blue us puts or the the a XXX will second This, our quarter. Wyndham both X%. our new owners, increased first and with new basis half sales while points VPG ahead the by first of year. sales significantly points more favor increasing Our up sales basis of quarter strong thread related Hotel sales the sales, mix over tour finished robust combined XX%

on we as like. loan remain defaults focused provision stay higher to than continue We would our loss

a are outreach and we new issue past, addressing owner As and the have we the more more posture. in legal robust and discussed through justified aggressive

advantages successfully our We meantime, we moderate industry Mike strong to flow. the into able deliver In are manage company, new the leading provides provision company, that more this scaled results time. far Hug Destinations back second overall minutes. naturally year business our executing results to a strong Wyndham loan strategy defaults cash few we will Overall, so quarter ownership detail over return with the a confident levels and more that go in margins on are free will largest to those loss to which size exchange moment, and and demonstrate and are our vacation Stepping is the have great and we world's in our momentum. for [ph].

diverse in model and efficient Our allow is platform, portfolio of by healthy cash in brands to us a that a markets delivers that capital a expand existing business marketing into flow. core powered grow business new markets

is population with of In largest Recent is serve the Our trends we U.S. the younger. our household of everyday XXX,XXX. clear; average between traveler, demographic an indicate and age owner average the households getting our XX,XXX gen-Xers XXXX, that in our income and this and half is the since credit of XX% that XXX quality new strong owners XX%. the year, steady number at average with XXXX. of FICO's first of millennials the owners The is owner nearly score were

few in key a a strong story have priorities. growth We grounded

grow new us help First is to brands our utilize and enter will the towards in top grow existing markets to markets which line.

total new to generate program, Next, thread is our our we owner sales of to which rental will high ownership loyalty Hotels XX% Wyndham as to and leverage vacation to sales grow blue increase finally revenues. then owner to with our tours. percentage the relationship Resorts utilize a Hotels quality The and and Rewards Wyndham new Wyndham and to connection

me Let what priorities to are with brand these to execute our starting moment strategic we a portfolio. take share doing

the most ownership exchange. and spanning portfolio vacation broadest brand and vacation have diverse both We industry, in the

Hotel. Francisco market. add Portland markets. urban This The of we our clubs. We will us bring Club and new XXXX. will brands to exemplifies in a resort growth us, generation heart couple newest new helping examples utilize in to downtown dual-branded and of Margaritaville our and on adding of facilitate pipeline. leverage is of west brands our platform days destination national be a enter to and an both exciting heavy scheduled investor Portland sales. both with The Wyndham downtown property in and Wyndham new XX we our a strategy road now booming grow. be is deal Inventory Myrtle supported we'll club half I for WorldMark Portland Oregon for brand and to the downtown new has leveraging market everyone access which coast allows generation to first open assigned lead in Margaritaville include sales already-growing timeshare Portland Nashville by growth. presence coast a ago, in for a of owner shared the projects is A to location sales to Nashville hotel have units. to will those addition a add for the drive-to opened of how show resort their in will vacation tour Beach New most destinations provides Texas. the in geographic recently footprint. which success open XX with WorldMark relationship a urban in announced includes system. development new location, new and our the our in assigned market. a presence. expanding Asia resorts industry-leading At South portfolio This produce New two America, are our great developers Margaritaville new XX XX by agreements in of us a with to our affiliations San and paying strong includes We brands York, during our Equally, affiliation development expanding units offers are we one Austin business opportunities the adding a like Year-to-date, our east growing Wyndham RCI, markets and and team that Resort off. in offering the two This WorldMark Chicago, Orleans, efforts resorts where where

sales plan. Our is significantly our ahead of mix owner our next priority to increase new

XXX first in is of shift we points over in and points this half basis basis period were targeted mix per the the in Our year same year, XXXX. XXX

earlier, mentioned while I As we achieved margins. increasing this

is continue preservation. in partnerships We This from mix the and to the balance an effort we our as benefit marketing ongoing to shift refine will and blue owner presume continue initiatives. marketing margin to thread that is channels new

a sales ensure investment building a reminder, sustainable growth. sales is mix As in our rebalancing of long-term pipeline upgrade to an

sales well new on owner for XXXX way. is mix our by we're target XX% Our and

Finally, growth the important blue remains to thread plans. our

rental extensive Wyndham up We us our are XXX-year great higher tours the which total rental supports opportunities blue XXXX. nights to rentals through a an been like I through outstanding Hotels months has those over Destinations our saw are year. and better-distribute leverage with also summary, quarter XX% six that takeaways. In thread XX% in room channels Wyndham same Blue VPGs. Hotel inventory. this Wyndham efforts. more licensing would XXXX room the than non-affinity first it We key in rented VPGs is the our triple marketing Channels and are in to thread booked first have Sales three generating from half progress night allows of agreement and nearly to underline

we sales second day owner in-line execution blue First new operating of preservation; the as our sales come and one. our but and gross margin our strategies to vacations to EBITDA strategic shareholders growth return set will We've is deliver want VOI capital accomplished mix clear thread, efforts a our commitment countless direction focus our members our forward, to lot to back third, with I be that and for motion, successful memories in of guidance; in always and key our to central great from owners. to move of delivery

relationships growth will will deliver shareholders. to in Our based those for our which success on returns commitment and our turn future strong be

the over again complex not a for With lens a the thrilled, each that, to performance, call review the through quarter me quality second transition extremely of that detailed I I also the Before of Mike of our I'm during say of call Hug our series surprised to with you execution Officer. our but team's once Financial to Mike by like opportunity Chief Hug, would transactions the our and to financial share results. team turn of let having our

Michael Hug

and in metrics, business our will morning, outlook. in rentals reported occurred results the for the like will you, the look on understanding and primarily presenting X sale of a trends our on each the quarter focused European be mid XXXX our sale I'd of results if will understanding Thank We the the business and spin-off believe hotel it be quarter discuss rentals metrics good complicate January underlying our to European our more these the of and everyone. how and business financial how business go-forward comparisons. on Michael, year-over-year the periods. further comments the the as of in business adjusted performed helpful spin-off basis. Today My The second had of

results to You of reconciliations GAAP amounts can find adjusted release numbers. complete our earnings including in

in details run to adjusted full corporate results. reflect X expense our remove adjusted Please rate and cost. further earnings separation-related for fees refer Table on release and further further for our license results Our cost

increased provided our quarter further range. per which EBITDA adjusted of share share the per second was year-over-year X% the and fees exceed sales of Consumer was results X% Further end of high VPG the Behind also an growth May numbers million, and XX%. $X.XX, execution and earnings year earnings all prior the exceed service over diluted diluted represents to with estimates increased midpoint increase Our membership increased $XXX on up X% fronts. Gross VOI revenues we adjusted in increasing X%. X% was and further adjusted X%. tours financing these strong is year-over-year

VPG X% Through prior owner X%. new owner year. in VPG increased the the and X% our existing over Our quarter increased increased flow

Our gross $X.X to receivables portfolio X% billion. grew year-over-year

year quarter. loss at prior loan as portfolio million of to losses with a volume. the Our percent compared the $XX provision XX.X% was the from second quarter, financing allowance to over for at the of $XXX to higher increased the our loan million attributable loan XX.X% million first increase $X the The end end of of

mentioned, area the tackling a for we this central issue. us loss focus remains and to are Michael committed for As loan provision of

meaningful in the of was last provision a initiatives seen the of of in we growth provision first the have X% half the this The the and X% over in year in in growth growth last XX% the months. down place, half we in With the half XXXX, first rate of half deceleration the expect have the XX year, of had rate to down we XXXX. from XX% from be second under of second

cost-deficiencies, realized of the sales, is we're was to the able provision of other revenues, service for of higher our start to the year, our though the reiterate business As hoped strength guidance. which a year loan net at than and full we half be the areas in will growth XX%. first loss the This second had of similar year fee of percent in half

have would and free Our million if the from prior the $XXX for related not to transaction flow in the an six million, $XXX increase year. year cash first months of separated cost, been

remains full-year to million. flow cash $XXX outlook at adjusted further $XXX Our free million for

the of us swings enable adjusting spinoff. approximately to inventory Our We and free to flow markets model access end time flow. ABS after our repurchased million XX% cash at which EBITDA into June $XX quarter, convert in to million cash stock the consistently of the was $XX avoid and of of large in

to $XX commitment to shareholders. capital We have also purchased our underscoring return July, another in million

current have billion share remaining repurchase We under authorization. $X our

previously are $X.XX per paying as we announced, of dividend addition, share. have a In we quarterly

revenues $X.XX We million. to are $X.XX of with $XXX billion to EBITDA of reiterating our million XXXX outlook billion, $XXX an

Our per earnings to outlook lower for $X.XX increased lower of account and share to share on compensation range adjusted expense. has $X.XX stock-based

outlook a basis the our we're reminder, metrics the quarterly excludes per repurchases. future on This a for As of share of share year, guidance because separation. also changes providing adjusted possible associated further earnings

Next will only guidance. annual year, we providing be

continuing For our the quarter, outstanding. $XXX based diluted we of $XXX $X.XX guidance to that to million of million operations. basis third of XXX on the adjusted income to our on in Note share $X.XX million anticipate million of million, all metrics range further EBITDA shares net diluted earnings our $XXX on and $XXX per

balance XX, non-recourse with receivables. of cash excludes $X.X million debt $X which had our billion, sheet; June securitized related we to of cash billion of of corporate and $XXX to Turning our as equivalents debt

million, was this portion year, net than repaid lower the European approximately leverage business with times the on the which quarter $XXX of quarter of second a Real Our anticipated XXXX. in X.X were of remainder which of to the due was fourth sale gain on the on due taxes

from puts since of Our share Subsequent securitization and the had XX, transaction on average downturn. we pleased tightest conclude, half we public off the that times. long the downturn pleased market, was $XXX year. spread To transaction at securitization this transactions cadence rate year. to were closed ABS The million spin XX the of target on break the post per After to the of very west the results. very time back largest a ABS transaction remains the the financial us first with re-entered May market quickly normal July three very X.X we're on and with leverage X.XX

our back being to Our and and employees for growth. ready have call questions. executing adjusted we strategic it one, turn delivering and associates X% day up would done amazing EBITDA an further that, job With the Keith for priorities open

Operator

go question Instructions] Stephen first [Operator our with We'll Sachs. Goldman your is open. Grambling ahead, line from take Please

Stephen Grambling

capital first guess allocation. I on

$XX consistent bit little which kind being million How the in about mentioned You period, versus prior buyback buyback from maybe mask here to of in quarter. thinking current forward seems you do think the through repurchases the opportunistic. the a going more

Michael Brown

to will and first shareholders committed to think Wyndham Wyndham I remain returning philosophy similar of capital foremost, the Destinations to Worldwide.

to operations our as cash to us was capital in Wyndham our we've the noise flow. As previously consistent program. Mike with mentioned, already is transaction the declared first had financials even it. was at us. dividend return --- again to we that It completed we've important lot into just got to and very Obviously that for for a month of which very of indicative shareholders, and that our be really complex it of Worldwide important levels This commitment

to to a at you new look we but do stage, best is is in that what's keep for we second in month to shareholders, that the that would year, repurchases, capital that first Destinations. intention There will have, dividend to that our of publicly options to keep we most do of we obviously accretive shareholders. it being us the and the evaluating a this to company and always what's always but return this as in the So we traded the feel relation wanted lot half Wyndham share thing of

Stephen Grambling

specifically And growth go rentals little profile impacting as be also [ph]? thread on et in you're the color demographic gave on And then UI from any in on to compare that you a the customers how how color give of more other blue then to cetera. customers thread, could VPG, non-blue they detail in the well of natural from a degree. may to the location additional can and thread a as may the interesting you some bringing the rentals cost you either basis on blue overall impact But the

Michael Brown

Stephen, second the first. let one me start with

start is your household that to and an very existing from ecosystem One of affinity score they of look similar you income simply hotel great base. our customer both Demographically, new owners. within benefits working the with FICO

However, The than and second our sticky one a not with it above drive hotel that Hotels. which new hotel our it's who of a bring seeing very the those margin reasons with impact owner one in on was will we know margin and for more better significant despite owners. grow that as in very that customer we're ecosystem, fact our from committed to future. new is thread, helped expectation customers affinity Wyndham of someone us preserve in elements sales familiar elements we're VPGs higher is shift blue performance quarter the is the the pipeline margin the to It's

to rental in those the rentals Wyndham are May triple. affinity were what in the that a rentals, that program mentioned driven we of in once generate What choosing began I the channels greater rental have our As cross program XXXX it to transfer again we XXXX, relates room the flow in property we did call they sell through in are thread thread, night us blue guest provides and growth really that a call of Wyndham the it arrive opportunity stay blue to at XX% gives those what and tour sales. property, and

Michael Hug

is This Mike Stephen. Sorry, Hug.

we things those rental relates benefit year-over-year our was the during bips our on pressure about Wyndham.com, meetings hold and rental thread and margins operations, related offset blue improve of holding channel [indiscernible] the it to using obviously [ph] thread, channels contribute about XX the to benefit change us delivered in in margins the to investor improve to margins rental talked the to thing sales that As mix. one our margin of quarter, was improvement. blue the the through helped And on second we the one of

Stephen Grambling

That's back other guess super to follow maybe capital up, one going helpful. I allocation.

So project the Utah new and with think South implication. through future about the guess business growth of inventory even flow generally of the think announcement you as Portland you new and think free how about Carolina, I cash thing the need in and the of some inventorial the for do as we

Michael Brown

to These and that Mike Portland new Brown, When generation last Tennessee, owner look one tremendous This at into it's those Myrtle there us. we a opportunities lead you the South projects portfolio a existing in Beach. great destinations, Austin platform. is from require think base, Texas, Oregon start When about to does urban access opportunity Hotel those markets, us brands our accidentally and and opportunities markets downtown as not markets and announced: Stephen. us to start Beach those coming provide Oregon, with Nashville you Nashville, new we've a for owners. to us. generating Texas, Nashville. new development to broader markets: Wyndham also are Myrtle markets our to utilize but into new grow opportunity say to new will for day marketing our Portland Entry We not be Austin We enter for great are see for

about most to in consistently capital of just being relates per year efficient. over time six in projects, that we spend the the past mentioned $XXX it As months new capital or for capital them we've million required,

well any are to have that have projects not mentioned that that earlier. of we that within we incremental capital mentioned are All plan these we

Operator

go Jefferies. with [ph] David from question ahead. next our take Please We'll

Unidentified Analyst

can I execution is the and to sort my start often blue over then provision the we go metrics far. and so one, up marketing, at should inflect? the its initiatives the And on about that follow side? it around to really the down. wanted some dry when to down amount should you expect cost some on us How revenue given would thread which have point on one Intuitively attribute impact detail cost that of think have that How thread benefit you we loan we of etcetera. two fair and a follow-up where time I other things: of believe to loss number expect it inflect, can to much blue we

Michael Brown

take packages occurs Selling over or hand at more which when the a you on generation costly he from the mix. and lead XX% really generating to to of VPG first come tour. called with blue bit Let detail. of help very driving margin, I'll provision? a blue that more greater specifically the per that's generation and the is transfer, take to The when then increase plus really thread the you'd seeing component loss But venture the but rental our slightly improvement. me the level the of very we're loan guest standpoint. an the provision our you towards thread blend one to in driving affinity is in individual we're margin, left, Mike be marketing to over is margin loan and non-affinity cost similar Mike, of again the similar the the shift of XX% new do can towards it loss Where was volume discuss offset plans that's want benefit is owner that

Michael Hug

Sure.

I of in point it On we than I as a we provision worse were quarter where that we think well importantly are the provision, guided alarming the rate or unusual note most but growth in little of out anything we aren't relates first a a basis. I performance. quarterly a to year-over-year that seeing bit decelerating portfolio quarter, the on did would seeing as to compared second the favorable

XX% that will levels long-term that come our to to at an But down time. that rate don't but rate assuming the in to and view assured it based as point, actions the the models in rest using that rate. be expect XX%. our in sure As we've models? think over We'll continue it the taking relates this [indiscernible] to historical We to point, discussed when on current to past, of aggressive in the we that inflection defaults that acceptable on occur as question we're our use history, see is long-term we're we make

Unidentified Analyst

it's assuming any but the any not possible. for moment, inflection you're meaningful or inflection So

Michael Brown

I think BOI say XX% with it I Well, that historical will long-term we percent we're stop norms gross to to XX% provision revenues meant we doesn't sticking you're level a that but we're models, very that back in that going correct would when to is [ph] of We look should that our that norms. higher when feel work and be get a you bring diligently our XX%. to at historical than as it

Michael Hug

David, Mike. this is

think it not I that bottom is issue, of to I to one to the trying want just important an add this a because call such or brief we're call comment, that top trend. a

the decelerating very what bring are simply to Mike you that's We high owner committed provision which extremely doing is especially role I as in But seeing mentioned. loss necessary an all the to growth of is satisfaction. can down assure output loan we're my

daily on the half in we given business to we We think as and owner point. fully posture, that of first putting That absolutely be a aggressive we'll is to Those will rest until which did point we continue higher in want combined there We marketplace. two year more people legal more justified inflection aggressive very are just and to committed with with with inflection on don't outreach, it an our to to see that we of occurs. execute just the think our focus the call and what the be utilization vacation, the higher satisfaction combined ownership. continue

Operator

Patrick Please SunTrust. with go go to next ahead. We'll Scholes

Patrick Scholes

provision had a questions loss morning. loan I uptake. couple on the additional good Hi, just

loan the the did there FICO customers? uptake the secondly, difference of material see additional between pressure itself, the customers customers, the then just is and new was party you and XXX any any the there sort or legacy third from new score any on new Regarding new

Michael Hug

of a I Mike. thanks couple things and then the is This question. would think for

to and to about on We're those channels relates continue we the loans focus to see historical relates happy how it at and that perform to basis. we'll As FICO XXX and on increasing as it our why customers, look XXX very flow. that our the areas when of with tour continuing FICO a we're average marketing

increase So look in as we'll towards that because make volume which finance about maintaining was continue that propensity relates of and higher unusual of sales, the percentage it quarter-over-quarter isn't have is finance. half of in the FICO. sales, new higher to they business to terms the to to realized due in again, finance anything in XXX higher the provision higher trends just seeing owner growth propensity propensity you unusual When the work of million, $XX as a provision we the in the the Once to volume-increase. normal when to half as to and well a do to a a not shift provision at the

Patrick Scholes

Okay.

naturally I'm is about Am this so just higher the customers -- clear new offline a maybe we but can and default up, have talk Just percentage going it rate? I thinking that correctly?

Michael Brown

at provision higher going the a in propensity default. to percentage and naturally, that rate higher as and higher the new a a high It's finance propensity just up. to rate up related they to finance opposed mix is going The owner to results

Patrick Scholes

Okay.

rate finance of as rate higher take interest So that higher opposed up. to they

Michael Brown

Correct.

Patrick Scholes

about Then compensation dropped like What's half. by second thank you. question, Okay, that? looks guide the stock-based behind the

Michael Brown

based assume had years budgets of that historical meant originally issue a would So our guidance, vesting that be Wyndham grant four out assumed XX%. those historical on at was that of you Worldwide when and with XX% historical have came which that vesting we there and budgets correctly would

issued you that have the one have vesting, and only that's and vesting where each date the for you of for was five the in With where you'll net essence full have on of Therefore had year, the XX% grant founder's full year, months that grants, grant then separation X. historical that have spend, cost the the the spin that would level months vesting last only seven cost. accelerated June we'll to be point issues at

and for months to grant one and because is when also $XX vesting It that appropriate just million on year. this year The vesting the of really that's of seven number midpoint have accelerated for only we the use that the XXXX. RSUs. So fact think about number the year, this you the the took

Patrick Scholes

that. like you so take have their it to wasn't Okay, missed target and metric somebody

Michael Brown

compensation No. Definitely that a issue. wasn't

an Just spend. to acceleration the of impact due

Patrick Scholes

Okay, that's clear. That's you. all for Thank me.

Michael Hug

Patrick. you, Thank

Operator

from We'll take ahead. question [ph] go our bank. Please next with Chris Deutsche

Unidentified Analyst

one for me. a quick Just

If are customer the coming looks and share with at the data maybe within especially demographics expectations you your and kind customer can us of new some your through thread. of blue all for fitting new you Are if as like. what how so, analyzed going those changing kind lead forward leads of the they this

Michael Brown

sell improve is as data, like accessing that pleasantly affinity the numbers an but number triple little far in second definitely that. see is feel the demographics been to color have we've not exciting ramp through in Wyndham that's our The our not quarter. I is the as program program, surprises Mike getting guests overnight execution encouraged the we the be as improved Wyndham This in that the a that rental those going but I've platform. thread. Brown. in up transfer just for opportunity has transfer just very the call part Good We volume, to said, of We Hotels morning, in brand blue industry. Chris. the execution Those program and as knew and did toward only of continues have started in ability it as and really and our we're in of program. packages bit improvement, There execution just good was call to quarter-on-quarter we been customers really there no the on total The the us proven that a we by accessed coming

with a get pipeline the bringing They're their But once seeing customers is sense about similar they that what their our has XXX,XXX. mention that demographic thread to owner Wyndham And when than and their I Hotels vacation-wide lot enjoy which know buy slightly demographically, it. think what is blue existing the and existing younger demographic the in have our heard in we base, a we It's the cycle to they're we're a buying more. exciting vacation, everyone in more great XX,XXX they with very future. very think fact as already legs such it to is and of clear our earlier those life looks owner our of owe in correlated I for resorts, behind me it has early cycle. and

Unidentified Analyst

color. great That's Okay.

Just be fluctuation rates little base spend, doing and always to new a on that's discernible I the member intentionally on coming bit the are you're you but follow between are there there's the maybe in of base exchange of member good the Or take know in? anything there? seeing going and business. a trends kind up rental any

Michael Brown

The the Mike, and affiliations number Again, new question. this that No, team encouraging. first job. done very has I'll the that this half take resorts of brought phenomenal a they've in year of that number is of is

scale X.X think and a where flexibility members People and million vacations out there benefits over resorts extent, and is the I the world. and size when development it in want business our their of optionality matters, CI. to explaining our being around X,XXX teams great and with are

new affiliations and You're seeing come through new resorts. that with

clubs vacations bigger again, believe does their I exactly we some move and the that industry. RCI for ultimately for over excited optionality seeing most their giving think affiliates well developer to RCI As we're about owners individual are and the

Unidentified Analyst

good. very Okay, Mike. Thanks,

Michael Brown

Chris. Thanks,

Operator

our Zaffino go with We'll Oppenheimer. Please take ahead. next from question Ian

Ian Zaffino

you your you job of driving gains help there. front, Maybe each ability inning can margin Maybe margins very the far really your what bucket those maybe understand good here? as in that? far as you drive buckets the Thanks. are On us as to biggest what's can as and

Michael Brown

Thanks, Ian.

first -- going XXX for beginning Mike a at percent so, very Hug our start to to ability XXX. just to We area every of in very per and EBIT XX we aggressively owners as of the ahead this then that fundamentally jumped approach for that XXX strategy have same we move well. year the is to to points margin. In me each first were that knew every here we and that doing significantly out at quarter, fundamental everyone, basis for We pay gate points of our as for much on the half Let But hand estimated basis up the finished on of it new knew over the remind, preserve we buckets. I'll grow margins owners and sales, year the all new time. of points of basis some

cost very the to exactly the receivable plan -- income, baseball our eliminate ownership connection cost duplicated not I drive lot diligently at think but think -- getting preservation, the were I phenomenal improvement middle out you that's far three and defined has rentals, higher don't only significant more analogy, realizing length our the to it to. team as North as talked margin areas that that XX% have those worked vacation run about early to and has and blue bring margin three against lines: to we're the I but of executing will business we've which American played the support thread margin our that early, and that a net very we're or portfolio then think a a And in business and together, We've to key looking I has will and I with to interest late innings importantly, ability ultimately definitely beginning revenue discipline of of both early job done just the buckets really RCI grown in from synergies. as think say rentals. we're And three get impact. and driven lastly, in

Michael Hug

Sorry about Hug. that. Mike is This

businesses: probably That integrate forward, and North [indiscernible]. we relates that's benefit looking it was think from cost I the when could really channels. starting at and look most the we're the now We significant. look overhead the that's we As getting this buckets, where three biggest think the opportunity our Rentals; RCI America lies the rental to to about talked in second I at just because we're quarter, the

couple organizations going I out sit together, definitely of significant the with businesses, most looking So than down as overhead forward? the over XX that the were next more we of items teams, think we of have side house the years, back the

Ian Zaffino

then And a up. perfect. Okay, just follow

increase financing. the taking on new of of customers that came driving were the percentage the you idea what's that? you an give talking us up about in and where think I background Thanks. Maybe if could you

Michael Brown

the just change in It's mix.

transactions. have historical upgrade It's with So or in customers a new levels. than at par historically, new rate owners higher financed

you close move expect better the expect mix finance the but financing of again our make in a bed. to monitor owner were new sales, down We to much XX% as a will achieve sales down finance just get higher go and business, did new we with we of two-thirds than that's consumer monitor cash If pre-XXXX, quality that still It's closely, because because have wouldn't to we we walking a payments that different sure was because higher pre-XXXX, issue back we're to we not flow to will surprised was two-thirds percentage that now. payments once Keeping manageable increase much targets. back mix mind, free in percentage door that higher to owner our we sales the the by propensity in we'll very to

Ian Zaffino

right. All very Thank much. you

Michael Brown

you. Thank

Operator

Our Credit from comes next ahead. question Suisse. Cameron with go Mcknight Please

Cameron Mcknight

Just to differently. a ask question, little perhaps Patrick's

any cohorts loss two are the seeing average? difference think of activity In or and owners versus in GenX's you new terms company those those cohorts, two milennials; you if delinquencies loan of in and

Michael Hug

We of of a consumer that the really of portfolio or have any the age. performance best in When is we terms things significant Obviously indicator factors payment don't at difference like the their scores see the delinquency. based of their the really account. we habits don't look habits difference takes really or of of into It's it's income on FICO driving levels consumer all level and we levels debt age the the see different in the that. at performance the a consumer, whether

Cameron Mcknight

July buyback of Mike. then days terms And back $XX bought many July. in to in were the stock? Thanks, you Okay. How buyback, in million you able

Michael Brown

throughout in so were put we consistently basically plan place, a buying month. the have We

Michael Hug

market. which early in was that public. transaction, is consideration the and in make separation our very blackout We out of cash get be sure move midst one it had in so to July, into get able of market to very in that the weeks was had obviously back, into we were at the flow we plan the could again, and-a-half that place for put first, window understanding quickly the period had to this really is plan a gate on a made in we are we The and we consider the were two of That June. had to to committed we us our do. cost But that June considerations we had it we market of early in point, in there to right the short in the a comes very

Cameron Mcknight

perfect. much. That's it. Got very Thanks

Operator

Thank Sure. you.

Operator

Research. from comes Please with Wolfe question next Our ahead. Shojaian Jared go

Jared Shojaian

I flow. about cash to ask want

the You called lot out the which flow actual a and further adjusted was than cash higher obviously sense noise. that cost makes separation all flow with the cash other

cash help going securitization in cash pretty that? to me seasonality just when some flow first that your QX? ramp big we'll adjusted guidance the on the there further just still think are implies that I half. that Is flow, So flow? second through some the see in maybe to you Is can the just a there? Or you to did? going is be clean on that there understand lingering quarter issues Are

Michael Hug

half. cash first the is as Mike the the it items compared This second morning. year as half Hug. in the Good Two flows of relates to to

year. with spending that of look in the half the was Our million second third of event when the talked occurred, as million a our towards well we've as our weighted activity so you securitization spending that a year. the being comment inventory had the approximately half also and about obviously of at inventory transaction we when third half towards year then of the activity, quarter It's $XXX transaction then historically, securitization your spot-on July, the $XXX first and second closed of weighted you're been has the the combination

of see paid clear can give have and have third you significant second you looked be be into the bit of still of make best out far in we separation true a guys sure will the little some standalone call as would a aren't Those fourth cost XXXX. will view quarter; As did honest, like first and and on going as result a obviously are what in noise also cost separation XXXX, in really a clean to the the but quarter cash we as a that year, flows to company. half question to those we the we

Jared Shojaian

thread increased the blue understand but that some can know guess my you provision and the up, doing for as cited there, then action will of follow elaborate you little down right I trend I me maybe the legal a some back on help get bit, and that the and But sided. can And that in now? you're you. -- the stickier the confident initiatives I also you're back things XX% you're you you saying Thank Okay. level. the customer elaborate better default maybe to just just just they

Michael Brown

Look.

start Let two me just with different areas.

our Let outreach. me start with owner

in to time our legal resorts shown through far the so future. enjoying have and tactics we're loss share with confident then seeing in we to results legal I on continue you a more are to Those on in just this year outbound this observation, and We vacations get positive being posture. ownership the efforts. going people that than putting those be are see our the the yield to committed provision but previously I launched didn't me much seeing outreach Wyndham education. on Cares year increase we're both owner into our that front aggressive mentioned resulted off trends campaign design taking stepping definitely don't along less legitimate. in booked and utilization X,XXX because we owner example yet, and let an loan and programs up action and over we've I tactics, we're because their mention at vacation hasn't ownership that too although specifically want

and to action, we're they're get demand This requirements zip that but we match possible, to not are we're dozens other same to where state the trying to with or from licensing will show wherever requirements can out that get sent around state not which us living. can be loss. take reporting does example, the an letters be from going code, licensing owners, to are signed, people designed around getting As we and work authorities we seems where to owners for of they're point where

will We on more be front. aggressive that

Operator

Please Engel open. ahead, Edward is your with our take next Macquarie. We'll question from go line

Edward Engel

time of any their helping ruining Are scores? actually without of these just credit contracts their out attorneys get share

Michael Brown

a very It's broad question.

suggest. few think I I a things would

their to a is I exit of for all there several confident that and a thousand program legitimate all, need they promising and without someone that reason if client call first charging is we dollars. can we of them to always reason, by very have what encourage of and first them an reason they if us have a do innovation more would do upfront legitimate they ownership First we than to exit fee are We'll the their there right am ownership.

cases be people our attorneys We the out. it's has attorneys helped than have mill and to that's of that programs cut minority seeing seeing, clients looking are see dissatisfied crawl and have something tell less held vast a from owner become The and vacation. letter booked tactics letter and we that We'll we're the we've place, sure already to come some Yes, a in can is the exit paste. it who their what another for you extremely that's a get in where to sincere out there their ownership really the we're What resort are in quote just visit seem from address. have past. I'm

Operator

and back remarks. will answer this gentlemen, for Michael the period. I and to Ladies to would conclude turn closing like call question Brown now our

Michael Brown

Keith. you, Thank

just on are strategic our how to by believe and plans we saying goals. are our Destinations. executing deliver well-positioned pleased We're our me long-term as Wyndham with first we close Let quarter

great have enjoy rest vacations. we Thank delivering on summer. you great focused importantly, the of More us your for team and a joining

Operator

this today's And conclude XXXX will Conference Wyndham Call. quarter Destinations second Earnings

may You great disconnect day. have and now a

Travel + Leisure (TNL) 8 Aug 182018 Q2 Earnings call transcript