WYND - Earnings call transcript Q1 2019

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Operator

Good morning, and welcome to Wyndham Destinations' First Quarter 2019 Earnings Conference Call. 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. Thank you. to call like Agnew. to now would turn over the Chris I go Please ahead.

Chris Agnew

Good and you, morning Thank Keith. welcome.

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

questions. available Michael the we With remarks, to to Following these that pleased to call respond am will Brown. be I to your turn over

Michael Brown

million year. for operating our earnings key $XXX you, Earlier all the confidence with metrics. of this everyone. the good with us of Destinations of reaffirming and our of and adjusted quarter We quarter the adjusted $X.XX. morning, outlook our increased per we Chris are share were EBITDA first completed our call. and operating today we morning performance, Thank Today, for appreciate very positioning the drivers remainder in pleased diluted you for We joining reported earnings Wyndham and

of guidance lower adjusted million to to Our share count. and to guidance adjusted increases billion on remains EPS unchanged EBITDA $X.XXX $X.XX $XXX our $X.XX

sales higher was and activity last Gross adjusted underpinned prior strong was adjusted share repurchase X% our over XX good by the And EBITDA quarter first year. XX% strong increased aided by the months. per Our both VOI over fundamentals. share performance earnings diluted

Our expected the our new goals. mix achieve all owner full blue we with cadence in were metrics operating line to key year and including thread, margins

owner our owner through paying were represented dividends. the in mix our sales was improved same basis in the occupancy a the margins. owner new sales which quarter first factor a Additionally, of sales. our outreach owner saw a point targeted quarter increase and arrivals XXX XX% key work showed at of in expectation owner quarter, of increase This greater Adjusting to an resorts. to utilization At for quarter we our is and XX,XXX owner total In first mix the new increase year. time, drove same first sales owner sales the last over higher

Our earnings X.X% VPG first efficiencies. and the X.X%. performance was led quarter increased cost tour year-over-year by was and strong growth VPGs in

growth ranges moment. volume. provision additional share perspective and through marketing and VPG driving would discuss we with new thread center openings, the in loan I in year our towards Mike like a expect sales year trend benefits first as target the full tour my We to loss to performance. will progress detail tour blue our flow quarter on from the partnerships

guidance confident year quarter equally am expected the year, the why was XX.X% as of Our when our offered full after of is XX.X%. of first And we year provision our full in projection. I

the demonstrate allocation, we litigation continue of in to our and range in owner refinement in shareholders positive the regard provision. leverage end standards same. With outlook within through of point April. arrivals, our with success to dividends all our target underwriting remains returning to related to well and increase With capital repurchases to commitment to $XXX momentum cash the Additionally, our million capital share allocation our

generate to the repurchases. to ability best our excess free dividend free in cash use remains and of confidence And absence believe committed are flow expresses our which quarterly We cash grow share compelling we the flow. of consistently transactions, in

Now fundamental I our system. will work and make important to and to would relationship we new seen from to XXXX satisfaction. of owners like key financial shift we already their performance implementation of our began a have in transformative be will our improvements work customer gears it This glimpses most our the A business. the initiative management is

investing data our through customer are elevate to We intelligence this CRM.

Destinations solution most and creative award Wyndham was We in enable debut us a transportation with to platform marketing, and industry. rollout. implementation and recognized And sales, XXXX with with have in and the partner Salesforce experience. Salesforce of Salesforce by will resort within fact owners engagement our throughout a innovation stay This new booking contracted for the improve the for the guest travel

take will time We half to implemented. once and the the tours tour will book a less have efficiently, more it to ability fully than estimate generate

be positive their better the deployment owner and will multi-year this through we it automated some and to initiatives in was our XXXX. CapEx energy $XXX consuming. every Prior But clear, and and of manual sales growth States. As a system. we a sites this say will improve scheduling United team initiatives utilization. we for in tour to over am States commitment and progressing pleased We our the Chavy, to in tour EBITDA compete, In opportunities XXXX are augment start initial in which some of per The only running. that X%, several business. roll-out, adjusted spend. I a meantime, our of our ground in looking is When currency. gain time, more fresh customer experience year, posting of brands sales revenue exchange and has booked data incorporated marketing projections will progress. hit member year, Olivier and following marketing put owners the and our RCI President segment United test capital this and CRM to flexibility saw of brings million well, for already we with the Not place aggregate initiatives, fully the tour and and this into to already the for To time fall currency, convenience starting seeing be to the is underway And will He process. providing through will launched entire financial the to of is the our portion the are stay. we to enable long-term existing new the technology impact team. bringing marketing annual medium good the all success, during Shifting much the us rentals, and excluding a improve traction improve this excluding system guests are platform with of over this booking and self-service ideas, will broader capability the deliver a

of the strategic this Vacation at Regarding time. to business, Rental there review our is new nothing report

definitive you can. as We we will share soon as with news

with the handing last remains for primary and who on in in more consumer, will and through the and topic healthy. touch environment our travel, over several view, leisure a to consumer the me in over amongst Before go the particular, detail, the strength take the quarter the Mike, to let investors We overall moment see leisure months. our guidance traveler

view. points me data a to that share support Let few

that the comparable I of quarter were consumer our First, or the the in have prior as first than stronger shared indicate strength the the business metrics in all year.

as total proxy Second, a of third, first traffic and And North XXXX, increased a data point domestic using just over increasing is passenger for the airline international X% Orlando tours demand. X% travel the months in with travel XX%. American increasing increased year-over-year In first quarter. leisure X% travel three

to that during and timeshare prior industry of we it’s downturns. softness, macroeconomic Although economic has resilient note are important mindful strength been

which already durability of our resiliency Orlando is line likely the summary, economic approach, and Our decline. demonstrate sales and once continue vacation. owners predictable recurring drive direct generate in continue tour sales This our After close and XXXX is will our Orlando revenue again are strength on year tours home even our confident today overall flows. which can In and have to of to To generated tours chosen universe downturn all, tours also to if we streams all leisure we in to to able we our and example, underpinned economic overall and even million marketing Orlando The marketing XX,XXX travel teams to arrivals, direct still cash that by sales. come in our who the we top to by to consistently generated receive to were our market. and generate an business believe, climates. close marketing would planned the volume in results be non-owners, with and model are our XX

portfolio. scale, depth Our acquisition and us core industry to four size leading of our EBITDA include around of margins to strengths over expansive enable Destinations Hug. net and our of it With at that, income. and brand strengths like flow and conversion adjusted to XXX% deliver would breadth These or to owner about I continue Wyndham adjusted channels, the our XX%, EBITDA XX% Mike? turn of adjusted free cash of Mike now

Mike Hug

it everyone. comment our morning, results. and first look on will our believe more performed, Thank and XXXX a metrics be basis. on My our and I'd quarter in how are discuss primarily results adjusted Michael, Today, you, how focused to like business We good these our will go-forward helpful understanding outlook.

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

X.X% about on prior the higher. with of diluted prior we the X.X% the X% Our in an per VOI sales also and that in benefit million XX% $X.XX, the Gross business for strong million an quarter, last VPG EBITDA over the that Adjusted of interruption expected XX.X% had VPGs over Adjusted first recoveries the points quarter million, $XXX small quarter in timing over adjusted improved X% XX $XXX increased $X increase was increasing share second first cost tours to the to and quarter. had increase efficiencies. basis year insurance first was earnings year. of year. quarter we of a Note EBITDA margins

inventory membership driven First and decreased challenges. per decline a currency a quarter mix revenue in revenue due offset supply exchange The largely to rentals X%. decrease revenue by neutral would member exchange On basis, X%, of growth X%. was declined primarily exchange per by member revenue have member, in and

are to We fourth over improvement start year's last gain quarter as business performance, traction. modest seeing initiatives

X% call. quarter which includes expected Excluding provision gross sales, better loss savings to cost we Shifting slightly was exchange and the growth we than for had currency, EBITDA from fourth our timing of The efforts. earnings our portfolio. rentals VOI impact of when XX.X% delivered favorable adjusted loan

half second second second year. comparable the be the We that will will of provision and continued the expect the improvement XXXX. prior to in of quarter improvement We projected see sequential quarter throughout

confidence XX.X% such, continued of of As VOI provision sales. gross around guidance full we have year in our

adjusted Our the further million. operations free was cash first continuing quarter from for flow $XXX

with rate first As pleased times with from in to is transactions. was million transaction cash of historically term closing of average weighted strong was And very benefited XX%. X.XX% our coupon very this in were securitization flow the and advance a case, a transaction, quarter see the which ABS of securitization, continued $XXX March, an free which We we multiple interest oversubscribed. a

year, we First capital market impacted of due quarter a from of the year. spending to last net Timing to working compared due prior the period year securitization, first negatively mostly the quarter in and also the flow this were cash the inventory free March last to same includes the claim spin. as because year, out

in new renewing with this facility renewed August maturity establishing XXXX, addition, term. $XXX our date which In every two-year facility ABS April, our year of consistent goal conduit million is we a of for a

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

X.X of remained $X.XX increased March rate paid shareholders to to times leverage was our by our to share, on leverage respect our With per dividend, within of X targeted quarterly X.XX net Our dividend XX. to which we XX% times times. cash

$XX average first $XX.XX the quarter. weighted X.X price we a million Michael bought million share shares. a total at of of back share continued mentioned, We for with in of As per stock repurchases

another have this $XX We repurchasing continued of through million. pace share April, repurchase

Now to XXXX turn let outlook. our me

does for items manage business is in this Due that the we to As is some the practice, our quarterly such and provision year. reason lead for annual we provide generate own industry that percentage as The fact guidance. we detailed a VPG of VOI the to full demand, can gross a and tours, only sales. as this variability

we our discuss quarterly full details reflects that keep call. each mind that on year in the You should guidance

earnings billion. $X.XX For full share of in million EBITDA $X.XXX the adjusted through we adjusted diluted from We full year continue for outlook to $XXX range $X.XX for increased operations to to our of be expect a of XXXX, the continuing to range year. the per

reminder, no further earnings is share diluted a XX, As a assumes share million, after outlook based diluted for March which count XXXX. of share per our on XX.X repurchases

the from of XXXX, $X.XX adjusted share For range from earnings we to second diluted operations continuing quarter expect to $X.XX. per

expectations key We of our our reiterating all for are drivers.

tours full the For X% to to and be in we year, X% to X% VPG expect increase up XXXX to X%.

believe will Exchange be Rentals and to be flat flat per average X% & X%. the exchange will to exchange to For members we member business, continue down revenue up

builds significant gradually headwind, will over down During the the continue currency exchange continue from a to will time. benefit revenue to member be initiatives be while as second quarter, per

provision similar earlier, gross The of mentioned VOI to VOI the last around second XX.X% quarter. be in will for a loan -- further similar expect for XXXX sales percentage loss in As the sales. provision year, to improve percentage sequentially loss gross our of improve year. will that XXXX, to as of we loan will And the the half provision the expect we continue second of

Our at XXXX. an predominantly $XXX as note sale effective in rate during rental be pleased XX%. excludes outlook European first include $XXX very $XX flow To further $XX $XXX of conclude, payments, adjusted of and as million separation restructuring of related our does the to expect tax of our that remains XXXX cash remainder Please outlook for to for paid million we range with This of but free the to to cash of cost, well million. a XXXX we are vacation XX% million our for million cost. performance quarter cash the business, of

we questions. job diluted EBITDA executing it first With teams open Our to XX% quarter. and and an and share amazing growth adjusted to do continue of back per that, X% for to the Keith like delivered turn call the in earnings adjusted growth up would

Operator

will We question take Deutsche Instructions] Bank. Woronka ahead. first go [Operator Please with our from Chris

Chris Woronka

guys. Hey, good morning,

Mike Brown

Chris. Good morning,

Chris Woronka

Morning.

reported owner points wanted the new basis, So said think though kind -- that I XX -- follow-up comments, the think Mike, mix on you of basis guess prepared was some up even I I in on adjusted was bps. to XXX as I

difference main the what's So there?

Mike Brown

our which that is gets result up difference first remarks were component The in that it owner to direct -- number meant outperformed other in and main our really the XX,XXX engagement arrivals the quarter. we in a our owner initiatives of mentioned business really prepared QX. That's of a owner

that difference that's XX points. the between adjusting So, for XXX and the outperformance, basis

Chris Woronka

disposing compelling priority on return about Great. generically from just your capital up you a and you proceeds you -- I hypothetically to you how that? think comment there's the share And about Okay. with unless use if there's of what things then, about on the kind kind end then, kinds of And talk did follow-up anything segment, consider? -- of -- do on proceeds of being Understood. acquisition. might buybacks kind radar, if of Can wanted Rentals what

Mike Brown

broadly there's great RCI. although, it moment. and the new to with With share that business. They we only objectives for see accretive option. will question offer very Exchange and with -- but the why think to would that Well, better have always it. our on lot the getting at look do business, today, continue Vacation opportunities our we And that a we have capital. travel Vacation growing I top business share has use tremendous the our there's a the strategic the reinforce it's into markets more Vacation us story. align best to as At When be of to tourism. been the a the job. an think our growing again, point, our Exchange owners, line It's M&A in ultimately our continue evaluate happy not and that's us extremely And this our to would strategy to really radar. opportunity that new you on Ownership of We're that compelling no equally repurchases we price at business, is -- to earnings They always and go said

M&A, we look segments and Exchange. would Vacation at So, both of as look the Ownership we in Vacation

Chris Woronka

Thanks, Very Mike. Okay. good.

Mike Brown

Thanks, Chris.

Operator

question next Our comes Patrick with Please from SunTrust. Scholes go ahead.

Patrick Scholes

Hi. Good morning.

Mike Brown

Patrick, good morning.

Patrick Scholes

remind Is what's provision -- Can Why And you driving seasonality is another us declines I the question that. Morning. then is again progresses? that after it why as the involved? that? loss it year that loan have percentage

Mike Brown

is Thanks Good morning, Mike. for the This question. Patrick.

first the reason quarter relates by is it's things. the couple it the provision, highest in As to driven of

of holiday season. the up all, coming you're First

you than are what end at of can they the the at end see So, December that delinquencies were March. of higher

So, seasonality. part it of

with the year, a revenues in lowest percent of quarter Secondly, going a the naturally being you're higher the first our as have to of revenues. provision

at provision, the expected came were and the when overall we as focus So, owners. as quarter grow continues on delinquencies look the higher new in the to of where Defaults higher expected. we because we with portfolio as well first the

Our X% than at larger the of was portfolio XXXX. is end at it XXXX

of And second would naturally half higher we in looking the was same we lead sequential for And saw But last the last the in year. year quarter to it the higher XX.X%. as to improvement as year mentioned compared comments, compared quarter comped first. in you see first full to will we're year, in that the the the defaults. at last our the where provision trend So second

Patrick Scholes

-- Very remarks. I And if out your amount give dollar did then you. answer. a Thank apologize thorough you Okay. and prepared in

in the year? that to for might what be headwind year. the currency quantify you So this dollars Are you had for mentioned able

Mike Brown

really to significant year, the it's full not full maybe X%. overall number. our the for on mean, year mean, It's I I

Patrick Scholes

Okay. Thank is That you. it. you. Thank

Mike Brown

Patrick. Appreciate

Operator

Our Katz next from Please go with question ahead. comes Jefferies. David

David Katz

what to to Hi. go whether inclusion what members that But you? morning, wanted so forward? consider the back difference would most we reasonably of we've of what's pretty And in so whether Good for Blue context expect the can been all. just on talk seen And makes accomplished I straightforward. realistically a we've whole platform about what of that Quinta I going done far? that now And far -- a bunch La Thread.

Mike Brown

it the lot a didn't to David, Thread, yeah. I'm But about excited continue it's I that, elements because to of remarks. talk remain on extremely Blue one the thrilled our spend time of prepared we in about.

a you get give benefit on me the of May Through Let and few the end then today's numbers so of April. table qualitative some we have April, perspective. X, the

XX% has We've we're Our of lot initiatives. our Blue momentum created XX% good seeing numbers, really talent the up is and Thread tour Blue Thread talent to around effort. the around greater leadership about Those behind that existing up And initiative. are entire Thread those strong volume in volume is along numbers. the some a really year-to-date. brought And our Blue momentum with lead increasing

positive if achieve as Rewards very the And to feel Hotel that is ability objectives exceed mentioned not very this them. loyalty yesterday positive. about our Group of out our guests coming So Wyndham year, XX of million

to loyalty As the it And in feeds get in to La days base. actually last data Quinta sales begun it last XX relates Quinta first the we've relates month. to our have that had La as

and It the days. only initiative. customer to really few to a been materially, going base obviously Thread that what has. then it's add Obviously, what feedback make Blue difference? Group. about a not And But the that Hotel demographic is So to it will already excited

David Katz

this impressive right? to the sense platform, of want are sure a we right. clear I platform small bit? All in and within it context just put the mean, that that can whole that the to make statistics. But context I those relatively little my absolutely is is just can we're us of – stage. it What total color the you And help at in

Michael Brown

Absolutely.

year out be will new gross VOI guidance of – that which owners number. we've So our full approximately laid of XX% our

year initiative this last from and should between Thread roughly increase represent Blue year. million million XX% $XX $XX Our

X% helps our grow one new And scheme other owner time ultimately, our VPGs, our because new complementary. by sales, owner it of it's but grand of not a it's each total to year, margins. whether It the the overall it's It's goes So X% it's things that smaller cannibalistic percentage, at of on an of higher channels. acquisition the provides important equation long-term we incrementally as objective. better

David Katz

follow I it sales know But to are I'm magnitude? supposed to just accretive probability up. not those how order of

Michael Brown

I their – it's because appreciate – really another that's lies I story. no good question the Well, think

about VPGs XX% Our higher. are

on follows. by process. the So it's Thread encouraged single I'm And sales. tend you're Blue every VPG so scale driving Tours additional incrementally margin to early lead what and in

it's lift in if seeing this early really on Thread Blue XX% So tours we're this encouraging.

David Katz

you Thank it. very much. Got

Michael Brown

Thanks, David.

Operator

Stephen go Our Goldman ahead. next from question Please comes Grambling with Sachs.

Stephen Grambling

morning. follow-ups. good Hey, Two

on missed most where the environment First who parties? is much softened? are you versus non-third loan susceptible generally But And the I third-party would the to also most – folks party? at macroenvironment likely this. third defaults it how Is characterize loss, got it have maybe the maybe defaulted being to the

Mike Hug

Good morning, provision talk Thanks think about level once XX%. We the mentioned When the that the question. appropriate we on XX% is again, the past around always full for believe year. the or in about the we provision we for Stephen.

running north we're just As know, of XX%. all we

XX% the third parties. differential the XX%, So to between that impact we view as of the

default And say quarterly really by be likely are factors future or annual the driven again So defaulting that's at the the some because on impact out in provision the -- seen talking percentage really But curves default on because terms today the that basis a on point then might people you third-party let is the other faster performance. in have on see whether We've from can of risen. years, we basis of based out that's about past change move And right. we to a And where revenues over year what that defaults what can't exactly would the the the once anyway. the we've most the on as part, look in last been second ones differential. a portfolio our are third parties no over that you're of situations revenues. the

some do that some at as of in experiencing accelerated future point most So passes, feel likely we time the default that been would individuals anyway. the today that defaults are to we're have

Stephen Grambling

And helpful. follow-up. other That's one

the to there Given initiatives how Quinta are you who that And group benefits systems, of loyalty that Wyndham would Rewards Hotels integrated and/or any you has have the La take Quinta La if completed into idea? people versus the characterize to you can Wyndham is leverage of maybe the being broader system? integration new loyalty customer base you

Michael Brown

think Well, I Sure. a there. few there's answers

the First ideal La Clubs. I Clubs Wyndham of income household cetera the and between for demographic, the is all, think Vacation to et Quinta Wyndham Vacation demographics match

that. about excited So,

rental ultimately, As I the our the to far doing number platform at on additive different all call we're same more that's resorts drives Clubs a original thread blue Vacation incremental La transfers as efforts. marketing the going Wyndham of the and along Everything opportunities. to gives areas and that of Quinta of initiatives, lines us stays see be getting our tour

Quinta. side bring Clubs including at them La option Vacation on of or gives one Wyndham to the As get sales incentives sales back our goes time in Wyndham it, to the scaled us sales teams informed Hotels either on way more of more and table the to and the any offer

Stephen Grambling

much. so Thanks Great.

Operator

The OppenheimerFunds. next question with Zaffino Please from go ahead. comes Ian

Ian Zaffino

thanks. Hi

Nashville, color St. maybe Are of see us be And kind Beach, As the expectations? Thanks. been how kind tracking your sales would when to of how do then been pace? Austin, San And up those centers new them Portland, on performing? sales And they the like George. as have being of that. kind they centers kind How contribute? far Antonio, we they've you've Or expect follow-up give coming Myrtle the opening to are some along? of maybe on new openings recently

Michael Brown

Ian. Absolutely

from extremely all, strong surprise you very The of add sales sales through been that a both have experience calls Occupancies those I nice a opening on vacation of been lot When of would go impacts say year been learning would Beach curve. financials. last are those talk in standpoint. customer we always us. both about these a it enter received new to also we're Austin how I the that opened getting South for that tend have that demand resorts Myrtle markets. a and from also performers a and only high are you our have perspective. First markets, strongly

run. to new you to absolute sales I'm And relates it that the timeshare recently Portland, center with Downtown this an yet, amount first -- months nine time. completely but the and nine think the for We reservations it's it -- the openings on resort upcoming figures And a don't been first share had months, exact year, happy have available only home be Oregon. call this As I in almost we opened short the has booked. we've of it first very

million out-of-the-gate as that performance. days of Very later Antonio. year Additionally, whether from eclipse of out little Nashville sales sales impressive probably then well right San a behind first $X that, or this And coming it's we're down the got coming two days ago two as now, we've location.

good centers each going. this So, these ramped last pleased sales and excited about what they've both quickly to have with year how year performance. -- Very of we have

Ian Zaffino

provision. And the Okay. question course, a Thanks. then just, on of

but So, quarter quarter provision we're kind like the second actually At at of quarter-over-quarter, of point, to decline? looking maybe year-over-year or sequentially Not start a second decline see Thanks. year-over-year? matching XXXX. necessarily do what we

Mike Hug

for question Ian. Thanks the

we're it up -- about from to of XXXX we to think basically about saying going saw year-over-year be the we couple the then XXXX, you to it's go think over decline flat provision and right, if we're So, on XX.X%. trajectory years, XXXX basis, when seeing XXXX, year-over-year a the this year

it expecting to be provision, was we flat. the about think So, and when projecting it this We're for declining year.

year-over-year trajectory So, a we being flat and time in it's the for of time years. the stopping first terms now several increased on think for basis on the in the -- first right

Ian Zaffino

Okay. Thank very much. you

Michael Brown

Thanks Ian.

Operator

next take from question We'll with Nomura. our Brian is ahead, line Dobson your open. Please go

Michael Brown

Brian. morning Good

Brian Dobson

Good morning.

balance flow elaborate free Could perhaps the of through strong. cadence adjusted that? the free what puts of was the on very performance in cash behind takes and the Your the you are And quarter cash year? flow

Mike Hug

Yes. glad on Good that. I'd be touch Brian, to morning

Couple You're the year March. a quarter strong. very was oversubscribed. right, first always transaction execution first on was closes which Great our But significantly of securitization reasons. of term million transaction that $XXX

inventory that XX% think around with well. and spend, you million. look the $XXX of that year CapEx four all at obviously, for of of when you the about will that as at was you quarters inventory look rate quarter, spending. CapEx annual the it million So, our when lowest great advance our was around be It Also $XXX

So, really the for those great were flow drivers big in cash the quarter. the first three free things

quarter staying our that as worst in Second close inventory spend then flow. cash because spend far and second second you gathered. and as CapEx will quarter. free third again in our increase cash as the Once the some all full CapEx as we've be And flow a fourth quarter securitization free levels you'll the of don't will year see of in within have guidance see term well that higher quarter as quarter the inventory we as will in far

transaction second in flow. free of again, the where see will term Once quarter the it's you no second quarter. cash really So, level the lowest

Brian Dobson

might And from start when we you the Great. the benefit of do CRM seeing new Thanks. think system? some

Michael Brown

one all locations actually X that and of push delivery brands saw our of where from a limited all with regions. that's to to going was fall we forward did The in we're very our brands an and in one our we last that rollout Phase clear We XXXX. that so on-time broad impact of our

the we get XXXX. XXXX. relates benefits year run benefit, to think it then that rate year next I implementation partial to start So realize transition we'll year. don't will the you get But And to in full as think think a completes. a be this benefit will I I as in

Brian Dobson

Great. Thank much. you very

Operator

Our Greff JPMorgan. next from Please comes question Joe with go ahead.

Joe Greff

Hi. morning Good guys.

Michael Brown

Good morning Joe.

Joe Greff

VPG portfolio? that disproportionately with they the Just about new owner know the you the touched does you to center and Can new Mike. mix? favorable to Are openings relative talk sales economics talked earlier regard the to earlier. How more rollout it impact that I on to existing sales accretion there? you about

Michael Brown

to get to overall effort of Absolutely. XX% year sales new our It's mix. owner supportive this

you of thread our XX strategic that have new think to a one at they of and last around all up to XX% the system mix new pillar in over driving new owners, If having resorts new the the that all new joined leads months, that supportive are I look is owner the on projects access our time. common have

of So and South we new at Myrtle into Austin, a driving Beach look strategic owners our therefore, we to direction. when natural accessing a were a when our Nashville, with at incremental you those you all markets that support went a goal Portland, are base. tours of system into Downtown really them not And look

Joe Greff

was segment what then savings the it, there missed switching overall. And cost permanent? And did and benefit? Great. then Or over those which and was to efficiencies or cost margins there referenced a was related small-time you you Exchange but the segment. that release. up issue? and And of insurance it much nicely And in I just a there how of costs benefit are mention to Rental said think the Mike, amount? recovery? I maybe Margins How that you do timing press

Mike Hug

Yes.

full significant Was the will RCI that quarter insurance it we we say that we think there benefiting some the the the course, there. to it the later $X out full And year the overall our that timing guidance then guidance, be about wouldn't year. the was in on million year look we when So, at been recovery, in expect primarily when we'll I basically ownership in put but for impact segment. -- the was

Joe Greff

respect then somewhat of I there? you I in have mentioned think questions And will Can provision that kind the here loan third-party. a with seasonality third of that loan in Great. before the couple throwing loss provision. Mike be adjusted normal question just just to loss my the maybe

I than percentage XQ. think XQ higher historically and the XQ the XQ the is the and seasonality that is

Is the in significant that benefit So XQ totality second half? your we interpret to the more saying what significant then you're even the of is is of going third-party how comment? in the that be the and

Mike Hug

all, results, Also, regular the were levels. than of the we them I the in have delinquencies end April. it see is, with visibility I first back are So of we down that XXXX March now look delinquencies we think see way would to at higher through normally at what

being our in default higher to the third the we other finance some point. for more down larger restrictive other seeing loan implementing overall large balanced looking driven continue loans. just we're that far at parties, to can example, propensity more to is think we payments, take, collect as actions, there's our underwriting portfolio but actions as all I balance, the We will know So what by performance improve are and not actually for

will taking always improvement that other the year. actions underwriting So of third-party throughout actions at reduce the looking to not drive we terms activity, only our the in we're take that but also continued

the And performance half in as year. in compared the as QX. XQ So see in year the better first the second half you'll then to of compared portfolio the of to

Michael Brown

we're points. important provision. of have we is internally owner if the we think is results see I extremely in externally to on basis in satisfied points Mike the initial Incremental clearly We're can courtroom. And it, add It's the ethically, loss like points, going great lot pursuing as the they're committed held for remain basis on strategy. that two -- we to help litigation not do transparent. ago, around drive our And late owner But one XXX is it or to a the chose XXX marketing is engagement weeks because arrivals, but -- their another that consumers I bankruptcy. strategy. key company portfolio. continue and and accountable. translates courtroom either chose opportunity to ultimately the owners all down will not the But core XX,XXX think the again, It will the point And about the year today, seeing another we license for accountable of they helping as that remain in in defend I hold that, and should also until Because faced exit can big legal where to with which a staying be occupancy marketing results be only provision. we and is their to protected. is just loan out put bankruptcy difference see firms efforts keep it company positive idea of when do also both they're there's bankruptcy there's as very between using, should engagement, to them vacation, between again what that, suit over will but as all be positive And owner litigation filed marketing a that case that's in we act of very company, out, we that unethical we're was improperly. It and inside a companies well this fair And to And firms I'd law actions. in momentum, competition. its time that just

Joe Greff

Thank you very much.

Mike Hug

Joe. Thanks,

Operator

next [Operator go to We'll Wolfe ahead Research. Instructions] Shojaian go with Please Jared

Jared Shojaian

Good Hi. taking everyone. for my morning Thanks question.

written more I'll And the you've from you've a than about question back-to-back provision we've I quarters So, take allowance balance, seen because where provisioned. angle. off ask different the now guess

improve Are the overprovisioned? of cite because defaults guess of are just you accelerating you've going help of me the of thought some some the reasons because previously Or understand about? of the third-party defaults you other things you some provisioning I So, future like, you assumption process the can that to or some the or there? less, issues talked

Mike Hug

were mentioned there, default than in higher as Yeah. the things A quarter you couple the of provision. the

been provision make the to we of had overtime higher place why level to sure a that's in absorb higher at at had defaults. reserve a a we providing rate, So

that level, the as Once our and the absorb continue you're thing, owners. the as to XXXX, able exit that to we put parties, to I year mentioned to it expect was a owners new our this reserve other And make the to is And higher portfolio we than underwriting, The drive anticipating. you'd changes with positive you defaults We to the reserve their since to maintain been growing provision impact that try continue throughout at to level. the XXXX. of contracts. to ability have continue higher as grow convince at end their at X% that would that higher to portfolio as we third we

down, As we will take And improve. that place. we'd because future of can larger still a performance defaults those actions, the portfolio provision expecting in will because positive you see been stay with those portfolio come

year confident changes that provision better, of making XX.X%. it's fact we're the we I that performance get say, better why have we're guidance at full the we're portfolio to So, that that's to make do a holding will we would mix happen. that get expect And the a

Jared Shojaian

a you some then would the I of up to beating better million. EBITDA, $X quarter, that you've And understand, Okay. on were timing you. cost ended be you think last want bit Thank quarter the to year prior first just the saying because I comparable by on little talked about

business You out interruption. $X called million the of

be you about by of that's reason And ultimately So quarter? wouldn't $X million? cost what there at any is, should $X I I a mean guess million up in timing guidance we Is get take the why trying any full I'm there. thinking to difference year more the

Mike Hug

you. profit. high over it We we with to owner driven arrivals Well, and Jared. was agree And right margins locations, therefore by which It have quarter. our exactly really you performed a bring with math strong the strong

owner EBITDA goals things the year. few we've year felt laid at overall the a look in margins in the is, here really when The given us think the achieved growth, QX preserving entire sure be necessary the QX. mind of make laid and not our flexibility I it's Blue that's you we only at that quarter out, Thread we're but operational to the with objectives guidance and the that the to first fact that early represents quarter there. smallest operational that very financial importantly looking mix, new to how keep out achieve we as -- gave our We the

$X in mentioned we And and the little bit Mike's beat which million benefit a that smaller. expected QX. mentioned timing had You've the makes

make sure same those to up are So our for that it's hitting feel left that, year quarter reason we're one strong of that we early. the one our quarter, order arrived us sets it at really -- quarter our objectives. -- our and all when the just first you look strategic guidance And the

Jared Shojaian

of I didn't but booked it's sales Great going be And the intentional? that thanks if one just service line in what last quick see about about small your should how just know you that one any may. Was And there? business, theme I and for very could we thinking quarter. part happened then I talk forward?

Mike Hug

do Yeah. $XX of inventory times That on about the would full the It's have that the full in was on we year million certain year sales basis. year. just pop a we'll coming available on We at intentional. that's asset-light expect of

Jared Shojaian

Thank you very much. great. Okay,

Operator

Michael like call back And will this closing the to turn today's to remarks. period. for Brown I'd question-and-answer conclude

Michael Brown

let remainder the quarter you. were by performance, that with first And with we our very me pleased quarter the of our for reiterating positioning the year. confidence as Thank increased close we completed in

the have year. And strong strategic execution on the of We plans. momentum we're focused starting our

on focus vacation, associates you We delivering want their on on great the to us. have each every team, day. I joining strong our a while for thank outstanding focused hard delivering vacation experiences for world you shareholder to work and say and Thank value. putting

Operator

earnings quarter call. conclude Destinations this conference first today's Wyndham XXXX And will

have day. And wonderful a You disconnect now may your lines.

Travel + Leisure (TNL) 1 May 192019 Q1 Earnings call transcript