WYND - Earnings call transcript Q4 2019

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Operator

Good morning, and welcome to Wyndham Destinations' Fourth Quarter and Full-Year 2019 Earnings Conference Call. After the speaker's 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

morning welcome. Catherine. and Thanks, Good

Before we'd our Actual differ obligation SEC The factors undertake this and that forward-looking are morning materially cause we are effective our those update discussed to statements, will that begin, from of statements a include revise publicly like to in in today's find non-GAAP these and statements. can to only earnings call or the forward-looking the made and Web our in as investor.wyndhamdestinations.com. financial no filings, site on statements. indicated discussed actual you results forward-looking could differ you of our results reconciliation could release the at remind press today measures discussions We today.

Financial morning, our XXXX This overview results, Hug, an Chief Brown, quarter and results, greater and and fourth Chief our President will Michael will Mike outlook. full-year discuss Executive provide Officer, detail on our Officer, strategic and then our for provide initiatives of our

to Following respond be we questions. will available to these remarks, your

that, pleased to turn Brown. the With I over to call am Michael

Michael Brown

you, thank joining today. pleased and over flow prior adjusted you cash of this an of the everyone, morning, $X.XX, range. us increase $XXX were Chris. high-end year. adjusted XX% was our free above to the guidance morning, X% for we EBITDA $XXX of full-year year-over-year adjusted growth, Good Earlier report We of Thank reflecting and million, million, which EPS delivered of

share cap in repurchases, of have dividends. of million to our shareholders through XXXX, XX% throughout we continue XX with Since current the cash million Destinations of XXXX We $XXX shareholders market to of end $XXX months. to and returned becoming Wyndham return

given headlines as in trends, experience have guidance. these potential our on line with the a business. I outlook shift coronavirus, long-term assumes additionally leisure to you and with of outlook, travel context a and impact our robust we growth continued to our concerning to the some provide continuation recent want our and to XXXX Year-to-date, result, trends

limited any and XXXX For is around given impact and coronavirus year-to-date impact. uncertainty any does the materiality from moment, our outlook the future our coronavirus, international not for to reflect operations,

mindful more We going forward. that and be arrivals may are bookings broadly impacted

As contacts, EBITDA approximately comes outside Asia. than total from States XX% the with from of United our X% of less

continue and we events are with will We place are and precautionary protocols our employees. guests, for to closely, to authorities health proactive working and owners, follow ensure in

progress selling ARN acquired XXXX, travel $XXX to at provide us We and to The first rental travel successfully integrated and our will Vacasa Destinations. the is platform to RCI. M&A RCI a Both is that business enable other and to technology core non-core benefits back close for timeshare us We buying rentals million. reignite ARN our and helping sold $XXX Shifting business it operations, were to North user success vacation a our of was and strategic. groups. notable million, and exchange ARN value-added business services, American for for year completed Wyndham activity, was one business, another. we transactions

Blue year-over-year quarter Thread with fourth XXXX, in The particular million, strong In prior the sales of year. year momentum XX% higher XX%. strongest a $XX increase than had demonstrated its of with sales

This higher was to it what a more than deliver top new year, sales VPGs expect million than over XX% XXXX. $XXX As Blue Thread Thread reminder, VPG. Blue overall we Tours in owner double

a finishing For of XXXX consecutive already our company with industry-leading third margins, year, improved we the margin XX.X%. further

in expected new arrivals, primarily year. the in the later to was lower sales in our of new quarter, the owner year, is new result line the and percentage objectives marketing year. and to grow in overall of with Related total overperformance flat owner growth, marginally for new of on margins grow This channels down our the fourth than maintain This and VPG opening was EBITDA, second-half owner owners.

New sales owner of and above growth remains one our mix to our XX%. committed key we priorities, remain getting

However, key increasing and other strategic balance priorities of those. is arrivals one it with must we our owner

engagement Our grow success therefore arrivals in creates headwind owner and owner new natural percentage. the a in to

XXXX. with in new strong age Having and full-year, to said trend a owner our that, sales Millennial Last younger. the for new of the in increased of fourth owner XX% appeal reflects sales customer our Gen products and financial in XXXX performance the our sales X base. diverse XX% to the importantly quarter, average continuing Millennial represented of XX% year,

Our Millennial with are building with appeal success growth. for the long-term a a foundation strong we combined Thread owners Affinity in our to growing sales Blue travelers demonstrates right

loan last importantly, delivering Salesforce million achievements completion and tool, loss owners year WorldMark members. a the in hitting more new the Vacation Wyndham our the the commitments, our notable securitizations, launch of most re-launch of target, on our CRM brands, and powered of financial for delivering billion all than provision vacations include Club and Other X $X while Club

guidance XX% For above margins $X.XX. EPS year-over-year of of higher the our we adjusted Adjusted with to nearly basis year XXX EBITDA XX%. the fourth higher reported was $X.XX over at $X.XX, points quarter, prior $XXX million,

insight ahead Destinations. to for our Looking I strategy about XXXX, some to want share Wyndham

exchange and re-energized is line the of growth, acquisition of ARN. lines to business, squarely be its new from well within as exchanged which it enhancements the our focused the leadership, as product on business, core business First, new top resulting under continues

platform, more brand services into integrated RCI business on an holistic vision. We working more details fully captures quarter this that the forward platform, reposition and evolving call. members first more are travel consumer on our this offering travel new look into affiliates. To sharing to to solutions overarching BXB we're and We a business a

and the approach next where The This with area, are efforts. begins and includes a is technology digital multi-prolong through year time investing we that energy consumer. this our

vacations. improving our it easier interfaces, We and to for of all search are digital making and owners book

it engage easier anywhere. to make with owners approach anytime, prospects first Our will and mobile

adding search that XXXX booking We delivered are new individual and impact, owner functionality by and and XX,XXX one of incremental eventually the recommendations, The was having personalization. is arrivals. already owner it delivering in faster, drivers an easier experience resort improved

to We are enhance using processes. sales our marketing and technology

CRM system improved gathers efficient and analysis. towards remarketing new data prospect supports generation for Our more and

We negative companies. to media messaging from are a tools digital using counter exit suite of

Our has more tour end-to-end timeshare team Wyndham leading is results sales to space has in provide our is launch able have narrative, audience and online. been the positive and the social are digital been in to sentiment June, early our believe our Since target efficiently positive. cultivating last target reclaim to and team package on we the foundation Also, year, way Destinations prospects. the engagement, the drive building announced

resort Parks or transition for of Most to expanding National destination, which portfolio. owners me continued the Moab our we brand members. we a opening and across openings Let Utah In in resorts our great are our WorldMark is delivery great have corridor. and notably, number of new destinations XXXX,

We St. will resorts two expand Club or Thomas, reopen Elysian Wyndham Beach Club the Resorts. in and Limetree Wyndham Beach

expanding branded Orlando. Kingstown Club are Reef Wyndham dual we and in WorldMark Additionally, the

To would conclude takeaways I to from remarks, performance. my like our reinforce major recent three

growth, strong will we cash Thread of invested margins, channels the then and XX technology, our over flow. steady continue and are strategy be to ensure Blue to return of digital investments making free and First, capital, on industry-leading next one in that like consistent our years, marketing product the generation

shareholders. by our to arrivals, third, our paying our are engagement executing by dividends to our outperformed evidenced returning by we customer optimizing flow free underlying on commitment XX,XXX incremental owner capital and on demonstrating business as Second, our again, balance expectations our sheet, and initiatives cash once

would that, With the over I Mike? like call Hug. to to Mike hand

Mike Hug

like to year-over-year results Thank comments quarter you, Michael, and I'd primarily discuss Today on and and our results everyone. focused adjusted outlook. our will our metrics. XXXX good introduce morning be fourth My

increased quarter impacted year, an VOI XX% quarter as and cost VPG. XX% of the in improvement. were mix marketing $XXX of the heavily costs sales Revenue quarter the a growth as EBITDA with and increase was million, over to X% EBITDA diluted new strong gross $XXX combination Fourth increase due fourth fourth product tours with G&A ownership adjusted adjusted was a prior was $X.XX, X% of [neutral] to of Outstanding XX%. in million, an in well for vacation X% the grow increase the very strong by EBITDA $XXX X% decline and VPG in Our EPS quarter. sales [ph] million. increase year-over-year segment higher lower XX% the Adjusted to owner growth. to cost, with lower increased in growth tour the

provision Turning loss in provision the again improved of VOI a loan this quarter third in from and XX.X% the quarter sales, XX.X% the year. to last of the XX.X% percentage to fourth year, gross as for

segment, it be fourth was was the consistent XX.X% For that to our vacation revenue And the exchange prior with X%. provision comparable decreased the year. in where would our quarter full-year, expectation

offset As by vacation the of ARN. North sale American slightly the of inclusion a of result rentals,

of Excluding the the X%. impact revenue two transactions, increased

X% the rentals of segment XX% continued the in the markets by average in driven and of of benefited member. was over increase the cost revenue number revenue X% in prior million. in Exchange from EBITDA as the a to ARN, increase increased control. Adjusted per $XX year sale Additionally, vacation members as acquisition well

of $XXX sale to us higher short-term was in cash in flow that allowing plan, our income cash. XXXX of compared million net received which thereby, from $XXX free was adjusted accelerate inventory, million XXXX. Our receipt the the The to was we cash due increase to and not in sales

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

times, Our the the end net X.X and X.X which times third leverage quarter XXXX of from at at the times X.X XXXX. end was improved end of the at of

Our target X comfortably of leverage X.XX to our range also times. within is

of expected allocation, in in bought $X.XX a capital declared the dividend of total $XXX XXXX shares. million at $XX.XX the dividend, increase share. $X.X of fourth As it cents stock to weighted back relates per the our price an quarterly quarter be in it $X.XX share first of to million from to announced XXXX. a is average for XX% quarter Beginning we in with per We

potential turn which uses any excludes me year-end foreign coronavirus Now, let outlook, rates. the exchange to and from impact our

For billion $X.XX. range XXXX And the we from anticipate to $X.XX to earnings be share to adjusted range the full-year XXXX, in per expect $X.XX EBITDA $X.XX to we of billion.

shares, after based which of Share no million As count a XX, assumes further reminder, on repurchases share is December XXXX. outlook XX our diluted EPS for

In revenue to a which and includes excludes sales. an up we terms $XXX be flat XXXX, business. also It total rentals includes ARN of the million in expect it of X%, fee-for-service to company in full-year of increase

also and the increase XXXX over sales, for of to growth adjusting X% transactions is in revenue both fee-for-service Excluding comparable X%. mix

tours be drivers and to X% to the key X% increase to our to respect X%. With VPG for X% to we full-year, expect at

VOI sales gross X% to expect X%. We of growth

XX% of of It fee-for-service as VOI the around a be quarter. Our to provision a follow higher XXXX to gross sales particularly the of of provision anticipate in that will be is gross expected percentage pattern sales. XXXX. XXXX, the We first-half net sales VOI first will in similar

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

expect from For quarter of to the to first we adjusted $X range diluted $X.X. EPS XXXX,

growth comps be EPG tough expect prior VOI We sales to low quarter in to first the year. in gross the single-digits due

addition, XXX first higher brand. be sold higher Walmart basis the In cost to product due being will quarter approximately by cost the in inventory points

As such, be full-year in the is guidance. quarter prior-year. EBITDA to the This our reflected to in first we adjusted expect comparable

from million, XXXX, pleased strong cash fourth our during and adjusted conversion conclude, outlook outlook full-year, free representing the $XXX Our to $XXX quarter, flow approximately EBITDA. free flow. we're XX% the for with for is million performance continuing our adjusted cash our To

it for to we'd open With up call to back like the turn questions. Catherine that, and

Operator

take first from go And [Operator SunTrust. we'll Instructions] with our Scholes Please Patrick question ahead.

Patrick Scholes

I'm morning. could lawsuits there could I'm filed impacting business. how you you comment that, see number wondering and attorney wondering comment generals, a good you you if progressing your know, had been on -- that against if Hi, of

like I'd M&A the but be going your be materially, noticed about and else virus, the a already. -- exchange, which Thank didn't after or that, be your possible Asian miniscule, believe their many could do might stay customers XX travels customers of on might I wondering I'm member per understand remiss that be revenue and the is a when continue it question if if by then very travelers you. Secondly, up your ask benefit I I you folks I car, but impacting what September and domestic exchange lastly, it guidance, your to

Michael Brown

Thank good you, morning. Patrick, and

per to member. try of Mike I'll state, handle coronavirus revenue to by the to over me the two cover the Let them, the attorneys individual general actions the it and hand and then by

As over to saw coronavirus, can really and where weekend all as and relates spread changed it begin to try it quantify see the a the I a in to we wait mode, impacts we're think be. the lot

XX% our company its Latin a total between Pacific Asia, that's for Australia, being in me just Let and see reiterate South just We're internationally, -- regional the present impact, to sense in the trends, EBITDA basically, XX% to again, move EBITDA first more long-haul New in America, U.S. is far Europe where under as and I divided mode less and of and wait from to you the the potential Zealand. started move what a as away X/XX think of and and we saw people after our point is good trends travel as it make the travel travel. relates travel,

the business can and entire as seen have yesterday, of South like an in So, you cancellations, our you destinations every bookings tell we watching day or not can our long-haul whether I impact. Pacific specifically Hawaii. imagine we're it's

Now, see as seen so overnight, that now, team, far of impact Vacation again, or with have it's a travel seen relatively and if cancellations our it the of Intra-Asia we've but all Wyndham pie. small it change but Clubs business. could overall any RCI our bookings only we'll The until we piece in not does, impact

Secondly, general, I'd for exit those to complaints, attorneys, a two attorneys an the to separate one additional have we've to as two there been late and relates moving filed or from AGs seen, but two actions it state that is haven't companies, two the in encourage who read state to everyone which actual on against states, third separate that last have in follow-up gone earlier happened companies year. exit out complaints seen

state the that We've an we know than time, fact types other For have although our known been false us, the the activities and seen our paraphrasing our being with and affects I'm either impact can is the that's described, over that incremental regulatory or loss most pleased about one and engagement, really provision of have as we're actions we've basis there companies we've loan macro that these process aspect a there's litigating disruption, importantly, affects new most near-term but business. XX,XXX actions every It the deceitful. or is against owner why us, arrivals. the our around complaints and that for is but that nothing actions. our on have mirror overall of in affect focus lose of This will out so It governments it. why call their and that harmed, the basically in that's and sight consumers, stepped in, state can't the we created complaint affects consumers are of own industry,

but We The efforts of states were the applaud of will very and we justice it. take move. of to time, follow wheels these each pleased

revenue hand will I to per Mike that, member. for With it

Mike Hug

Good morning, Patrick.

clubs larger number you our On added all, member, and years, booking, they've terms -- previous those last vacation per as impacting of of have because their the over a affiliates, revenue members in that XXXX, we've things to several booked company. of large RCI a their with of couple sometimes a the the are a guidance first delay already RCI recall, exchange as for

addition, of In to members. experience us bringing things the is additional enhance to do for ARN acquisition RCI opportunities the

had. vacation. have they to sufficient Also, allows So, hotels, that member the program, now they're ARN destinations options example cash just a of transact. them pay vacation, they has points that in deposit complete timeshare cash exchange to outside if acquire that aren't complete of the to offer plus One where can so be more to opportunities us would other likely they otherwise a

other some will continue this product we plans consumers. we our have year offerings where to we for addition, enhance have later to In

think the it's we some opportunities we're and our that have as to we refreshing ARN consumers that additional provide sure I making products to with really So, offer consumers, our aperture of then benefits well. to the

Patrick Scholes

you thank Okay, very much.

Michael Brown

Patrick. you, Thank

Operator

Bank. We our with Please Deutsche go take ahead. Woronka will question Chris from next

Chris Woronka

time what talk get you more that go can XXXX was everything $XX I to like you'd the a XXXX, know in maybe talk in ARN, I guys. morning, directionally longer just the could the into can it and good maybe done where what revenue in little step-up EBITDA do? and that, owned little anticipating million Hey, that you term, we about you goes also versus you're as hoping contribution about bit

Michael Brown

exchange let question, again, an is because million. going, and is overall of that the beginning helping start the still own though me asked wallet business a it's you the days. for it core broaden gain business the Okay, to I for the it may about, this that in about script as to of with business foremost, area preview even first gave not hand timeshare. I'll early where to then see share our ability well glad We our Mike Chris, and secondarily of $XX really excited and traveler I'm this is I'm the

core start let's business. So, with our

the individual now points technology since reservation more mentioned only of they they flex their elements allows we exchange want the ARN, and that number more destinations create with plus exchange not full that the I one of far it they points, One an last the to that can the and length to to. brought ARN to their flexibility maybe just also for was can cash, to the more, add and in and RCI night, has members, use of acquisition call, of that week launched deposit travel individual stay don't do but of they their this want owner

we would year. impact tangible the as points last example time on plus, not how same that's us, at cash of have in plus had that we alone, an transactions had X,XXX January As or example or cash a

ability and for it's great obviously, our drive transactions. great that's our to So, members, for

don't in reality people outside all whether most great gain exchange owner, of adding for their business to flights, individual a vacation ARN chance on overall the for see of to share and grab that more timeshare, experiences, RCI it begin to the we're As platform their wallet, that there's a to share of is through, time it's well. starting with own to to the its wallet broadening opportunity it's really stays, and as relates

it that, to question regarding the I'll $XX hand With for million. Mike

Mike Hug

more more integrated, that EBITDA important to really, we think wallet, to the that about get example about a with members X million services of $XX we business of it's of allow EBITDA XXXX, and all, ARN, share to difficult the through since offering further ARN, used talked more do, attribute RCI, go to just increase what Sure. not example, deposit have members. the the point to to growth things, with and additional we associated out with million we overall is the we've for think a Mike we from million of talked more and forward expect ultimately spin use what RCI more cash, of larger and it's integrate but the When specific and this ARN, to and ARN, it number companies platform RCI X their for have overall do and growth about first our we I business, also -- become the travel the two that to but ARN as should plus as

result this out So, of transaction. RCI high expect a we the to years as of in growth out would basically see

Chris Woronka

to and And some think manage guidance kind helpful -- do VPG I seeing on to the at how kind really zooming you much of marketing of and flow, color. it into pivot you kind tour the not that is in -- for able longer-term process, you that, of of just you're tour year, want? how then year kind you changes mix your of Okay, have that's - and if the flow visibility make you right or guess you're that a Can can quickly what of really a thing? on programs owners looking multi-year

Michael Brown

The we within there arrivals. most booking, seeing for commentary two the arrivals Blue areas time is why positive we're do that our have say up that's macro so from and We and that a on longer on move can a visibility is cities, to we on and up visibility show. good tours are mentioned that. getting Well, for 'XX that into lead of we the that, it in already shows visibility year, trends, every Chris, this of I leisure 'XX, the our as owner our 'XX we're on becoming owner clear the visibility to we year but those the first-half lot also travel basis create and it is visibility year, to have a why because key side, shows in more Thread, and

They a example, an you in our been VPG. owner third have XX a have a lead time. growth give of Blue higher new months last to They Just longer has the through Thread.

around those clarity. the on, we our and push trying strengths aspects wobbles quarter to we we business and of tactically we one transparently, and bread late our been traditionally two our of give some make marketing, candidly not performance and the back our to our marketing has and see to earlier less of and to do drive we owner some in in working, tour and like ability can fourth I expect. early The marketing changes open that's have the mix, more think So, move the QX which was tours, then year us to is new if in did QX visibility chase butter and VPG and levels something get

Chris Woronka

Okay, very Thanks, guys. helpful.

Michael Brown

thank you. Chris,

Operator

We Jefferies. go will Please Katz David now go to with ahead.

David Katz

Hi, everyone. good morning,

Michael Brown

David. morning, Good

David Katz

that's everything et commentary all ask size boundaries be you where of to wanted and the and in makes but you context the that the the just viewing to everything, you're how sense, the M&A at consider look landscape but cetera? obviously, terms relevant would everything this needs, of at uncertainty, point, Appreciate to I

Michael Brown

me, this. that, and take for I'll you think color it to Well, I'll lot add answered more I but a

of at the we're M&A front, On sides on it both business. looking our constantly

we and and to ability most and as to the waiting energize bottom something where very Vacation in us our strategic RCI be felt turned far pleased to the way and Clubs, hear, for had our everyone related given our was that. thought we go to 'XX, pursuit out I more line market where side, the business on in we're was, Wyndham the with XXXX we is to energize think

of not size be strategic deal the indicator. that right should was our me, an It that drive strategic the To objectives. deal just would

we're definitely over organic think months general the going Club efficient balance the we would and or have around the is work of manner come looked is right M&A, at We put return on should ability very I out sheet, I and on leverage the type side. both market, potentials of deals, be capital evaluate our our as would to looking, Wyndham XX but strength strategic want So, the pleased two not shareholder strategy. boundaries way and though in aware and doing, we up there say what's with deal an marketplace. that's of always last any two for, the continue will at and except and along the to our look strategic the make exactly we're to at be we responsible we everything side in would back deals Vacation exchange to pick What and

Mike Hug

network, space I the think is is value to one necessarily an I just has bodes creates were strengthened last across timeshares is the two great When were really you branded because three and the about industry. it Let is somewhere consumers, important commentary, not consolidation M&A, of the by the consolidation hospitality which that companies. the add strength is think long-term that's incredible broader that also you of of the saw have Today, which me context, for around three, but look timeshare for it's decade the that in out think sold happened. in viability about XXXX, in one that well and little of think number product, timeshare I every extremely I

over that I but -- consumers. extremely think will think a industry, story, transition next benefited spoken-about think So, for I has well a the industry this don't the it's it strong it's the decade. decade last and foundation for propel It's I really created

David Katz

a with agree. details having of risk I a me. sneak penalize follow-up in If of Chris couple just I at can the

the commentary, now if there's long-term the of given what You is your of some that have us changing you long-term any little a business bit about margin made and within give change Mike, your mix some margin. given commentary driving Do than you think of and in those versus what fly, around point. percentages visitors statistics mix, can other question who some those an important and you earlier target your that's drive that mode? rather sense the come that I visitors kind of know

Michael Brown

On drive, is let maintain follow-up margins. about a our the our touch to I going of I'm a margins, to margin, long-term breakdown be but on objective Well, probably said and candid, will to second. fly to me we've to have on make quick comment that in

and Vacation as most here Mike to senior line slave put the teams know see well always is see and I we cycle, work balanced here between efficient line and and to a Vacation going losing we're which we and way Wyndham very into become years secondary is people to now position between were a is the to a bottom the in We drive we and Back to secure a balance best with or to maybe want management, Chris's XX exchange of Clubs, XX year and don't opportunity. points that, question, We Clubs, to basis tertiary efficient growth Wyndham the our all grow and XXX an are what through the growth, individual we're an RCI, way However, our margins, a we that drive most up is plan that's way in above XXXX, ourselves bottom watching solid QX. to growing cost to and that margin. business the what grow think incremental bigger top line. picture, there and margin metrics in

what demonstrated that's we the wouldn't but and be different, I materially we opportunity to grow, think expect an I we're year So, going in XXXX. in see efficiently that to do, where it to

there's relates reflection will watching year-on-year, As the cancellations. long news the what we destination, mix until short that to bookings this far change to no so our but again that you fly, highly on as destinations are Hawaii, yesterday, and now, or year. are could are overnight, haul short back of obviously drive we're and we now but domestic that's is right are watching get what of haul drive it is, Again, cancellations, both up demanded haul, been long

David Katz

you. thank good, Very

Michael Brown

David. Thanks,

Operator

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

Joe Greff

Good morning, everybody.

Michael Brown

morning, Good Joe.

Joe Greff

owner your in comments the when about things rolled been this talked of prepared approach. success this Can and out, your gains measure then earlier or about and you've that of efforts a then do and touched from you strategic here, seen talk small the about first since you I how talking mobile digital have couple on Michael, you has year, the you follow-ups. for some engagement

Michael Brown

to choices our if quarter third, we've second, side is project is two simply with I via web owner expand going Well, and greater customers bookings. that the when seen the also bookings vast But occurring. in wouldn't available, were said previously. on our I'm internally the marketing allows sales We see a we start in customer online to let's the vacation. place on can that's were Sure. with incremental going and optionality was changes the in consumers the the increases really with because year-on-year first new pleased of now meant a their the digital and booking to and fourth drive that We've choice really to out got optionality glad where booking a platform it -- touch platform be online, on rolled you be majority

bookings more that Additionally, have their to for outbound on we been way, disengaged as trying in months targeted a in actually are ownership. focus XX them XX people well, may months, reactivate to

value or of imagine less likely us to to go can ownership a to company your through and you're to you're an You if it, using probation. return your either getting back have reason out week exit

that to incremental standpoint of an XX,XXX we're sure our more the that internal from up we side the combined on the are digital to really really those up this again management the available number combination management in a year. work open with that's to resulted first two But that There's lot So, just two and owners, engagement up. the we of following our stays usage, doing inventory side. year to metrics be arrivals. has make expect And were inventory

Joe Greff

about And the doing new then, to really owner with you're you've engage topic. little existing it's you pushed XX%, bit? what you maybe this to that a does there think the had think it threshold tie timing out do owners, target successes because reach into is of and that mix that of When

Michael Brown

for to the we went XX%, new XXXX. owner Joe. in doesn't that or I matter. I a really believe the Yes, do, said, And mix. long-term there said of I front I sustainable June get if public we can since we there's in put you And Once out target in get model a I number. XX%, of growth it four mix. right is XX%. And lot Since think this. this a I

If All today, us, below of you public in one great are look them. of one's future us a mix. three and is ahead our very in amongst marketplace our above peers, sound the companies have

that specific on drive owner And myopically get drive. our go get specific vacations, as putting they XX%. which not on on vacation, but therefore, and natural to number is but on don't are buy We focused that a business, as can, we is want headwind I'm so our celebrate we our absolutely mix. going and we they more? to What a we're new core to people to is tied not way above it number, to So high that when

Joe Greff

have, loss presuming for in XX% on any you include presuming I'm fair some then, timeshare what companies, not and Washington, that a year, egregious that does sort loan the the the And benefit is in more this XXXs provision, the majority engaging assessment? incremental of Great. of I'm from,

Mike Hug

morning Mike Joe. is Yes, good This Hug.

talked portfolio we've at positive way. The doing you're that XX%, about that I think AGs. we the positive the know litigation provision time, been traditional things all time. have But that We're we've powered engagement, will seen the arrivals. excited owner the by that quality On the the obviously, I takes take things while first suites about provision fact a for will around right, impact in the they mean and that we're XXXX sign

the we'll to But a XX% XXXX So rate at down decline XX%, obviously slow we which provision do we're full-year. provision the why long-term, expect closely the the we in that leaving feel follow for those. is is the XX%

Joe Greff

being Got would that equal, lower? to know XXXX the you to and lower, being it. percentage equal expect problems that In provision going you provision things which calendar XXXX, I into be other words, though, would be as you that all exit, expect

Michael Brown

but certainly, the AG Yes, There're into no and engagement factors effective, are continue do we'll things side. that right, then owner hope on actions the come other to Mike. we play, that

long-term, that provision will the yes, do we down. So expect come

Mike Hug

Mike. It's

that add that three also is to think now I states. one that Just separate there more reactions are in to comment

that's encouragement needs path for AGs in see this is Our that it'll realize will take the see well. to state. be hope widespread action not board. and a other addressed I'm is And an company be to other as to -- designated one It that issue it state the AGs one hopeful across

Joe Greff

you Thank your for thoughts.

Michael Brown

Thank you. Joe.

Operator

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

Stephen Grambling

Hi, thanks. related two is Maybe follow-ups. there

the or mix mentioned younger evolving younger owners? that source and broadening as you then the talk how your Can even of You different gaming, the of we engage similar them we also growth. older they and about Thread You other both than making follow-up? direct? Thanks. you're you how travel technology just think to the an cohort industries, us cruise, is the non-Blue remind related about and benefits the age the potentially think just and in Do at as think markets. then you about same as Can mentioned ARN investments

Michael Brown

with of of to XX%, their organization. cohort, let number an engage may make the the at board, The to we dramatic Steven, to on us although me as let the cohort, need media feedback the then while are they're on social providing other are or in shift come me table sales just people using about but experience a want the start how across XXXX, younger we millennials seeing covered talked back and that times I communities I saying that was who on-site there, now one people saw and questions vacation. all media -- social you? I've off where younger we sure like never all on the an I and more were of we there there on media. They're just social yesterday owner Because are be using our investments the the they, our while owners with engaged chat to this from millennial more more looks and Yes, But really. posting place been have are creating reality are in is travelers that they're technology and a great traveler. more. space

resort, So, mentioned book. onsite wait when it's you're I whether while check-in won't and and of whether flexibility whether when, your the it's at earlier, as booking how where, experience you it's,

that not All program can then the without ultimately elements of way a move going the resort and a spoken are only package book standpoint you a not book in to sale customer-facing to translates began end-to-end and at and the yourself how they're we marketing digital ever when all marketing nimble us, doors from seen fulfill book and time specific web, more and to you as tour online next consumer and actually find of our first having we've the that and being going how where and of using the to those success where wheel, view hold that on flexible where the a really they and are you process representative on on for year XXXX last some to way. steering people sales trends digitized and we but wave

current your should we're remind was just question around, years So, for our sure me. be the really then on investment next there few make next to that. And

Stephen Grambling

just there. I is make what flow flow percentage current we've our tour understand when about of you're mean, owners. the tour to sure flow got obviously, think mix, mix, asking the our we I Broadening largest tour our

Blue talked We And higher expect similar by we in we we've the but I Six and to we're Flags VPG. to have, as that like companies Seizures as think at Blue guys what well continue the large in with XXXX, know, least XX% Thread to that prior we've about, thing will then, expand the see companies is it's of seen grow Thread in relationships XX% we continued the the where it for growth as new runs you excited about national years. Blue that the whether growth Thread to opportunities, most to continue looking

that numbers maintaining is be generation of in about. as as in margins new positive as source hitting new owner one tuning a we've So, back larger a our owner well to talked those the of terms

Michael Brown

I used new last Blue has that through been in of mentioned the Stephen, the represent it three And new to owner a it's sales, about of Thread, our years third now our nearly owner growth and XX%. X%

Stephen Grambling

maybe and cash one Got you guidance. puts this on missed just and adjusted perhaps the I follow-up, flow and talk through can more it other, financial some free takes of

So to though year-over-year, down expected it's adjusted I think be EBITDA.

are that is CapEx about? in that there Or that be things you. Thank are securitizations? other growing thinking So just there should we

Mike Hug

important is down within one we and is XX% to It about, XXXX. the notice the is year-over-year, think is that it it's in of some reasons were that we to over it's securitization XX%, of talked You're down thing even I of still because right. is XX% though timing, year-over-year range

As we look making to, we capital review doing to maximize to look can sheet cash we we're sure sources our we everything any detailed of balance for find. our working can that

absolute the were conversion cash driven EBITDA though to flow XXXX free here, our over even and still XX% we down number it we are fact out So is in range. the by XXXX. is within And that

done our a of an span are the comfortable June would So in the we've XXXX free long-term and great I range on say to XX%. conversion cash flow of job since XX% with

Stephen Grambling

is That so Thanks helpful. it. much. Got

Michael Brown

Stephen. you, Thank

Operator

Dobson to we'll Brian And with ahead. go Instructions] now Please [Operator Instinet. go Nomura

Brian Dobson

morning. good Hi,

you the terms rates, like compared could the online in closing year, And little if a sales, are to of what bit same they expand sales time just your wondering, mini-vacation then, those on stand was on traditional I So in where vacation year? channels? bookings this last do for comparison package to

Michael Brown

it's sale, the to the the finding package conversion that lot telemarketing, lead the reach Brian, what Good lower ability from conversions is but than phone a is to we're more of higher. morning

Blue to to area but those and I the end the when in lower that a attracting and almost package start by lower. to I would margin XXXX. VPG's and tour as very what generating it. to are your playing see a your you as a a We the better lead marketing think is cost is larger accepting the from you're Ultimately, It is the So, in packages that an much high to to about you're saw that to is funnel, invest put Blue standpoint. site, gallery from it in wanted channel toward sales similar it arrive tours, lead that Thread began acceptable grow -- initiative Thread margin a we would as

slower to than think we invest channel growth Blue us it organization forward growth to the say, a think though, though be seen going digital side, behind, inside the the investment clear great Thread, that in would which going I believe from although there's going is the be on growth there our tours. investment, I timeline in playbook do is will a in the expect, for we the that's financial on investment You've to that in lot Thread Blue how because talent would both we the our less to there, grow. that resources generation digital put be in of

Brian Dobson

of you of the then, we lot should expect the back of color something Is year? us in of mobile timing updates this Could exciting give there. introduction? terms exchange really business, kind And the the a half app that in Great. of any on

Michael Brown

going because were to we're of to Well, really some exciting discuss positioning the quarter Q&A said in but in a the not overall we going app, here mobile the the going of preview a call in done of only And the talk we that to about we next gave we've are RCI months, about happening. about of the little talk what six we ARN. impact things first bit the also you

app year on but the later next looking an on this will idea mobile you we're it. give related yes, We at to call, the

Brian Dobson

levels marketing dead of you to seen be not Great. that kind you same later Have partners the just at you see coronavirus. you in that foot flow to the And do lead or your kind tour horse, of have believe traffic? open traffic -- channel disruption of impact finally, but on the continue to open might any some marketers channel could on the might

Michael Brown

be I the cancellations, open to else's. we're now, news as updated and make small is until different Destinations in None disruption, is disruption as market very very, trends the suspect piece of We're that's tours, I a is the other whatsoever we've yesterday, any seen EBITDA. from Again, whether across South of the intra-Asia antennas not all up through of impact of a only total areas to overall daily sure anywhere But material exchange Intra-Asia everyone change. that long-haul Asia Wyndham our travel. travel business seen of areas the than really that you X% if but our staying less travel signs any our or than see it mix shared there we've as to Pacific, number of are which travel, where mindful we've in long-haul with mentioned and got you might obviously as

Brian Dobson

very much. Okay, Thanks excellent.

Michael Brown

Thank you, Brian.

Operator

We'll final Wolfe with question take Shojaian go our today from Research. Please Jared ahead.

Michael Brown

good Jared, morning.

Jared Shojaian

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

you the bit I quarter, So reasons just new to that some Can owner talk seen back lighter of closed owner owner And to a rates? with you've being think VPG. harder a growth? new maybe little been drive what new going little the the just mentioned, lower you about why bit it's sales in mix among

Mike Hug

some numbers. Absolutely. Well, start with let's, let's absolute

the getting up is I for owner focused established third the is And to quarter, sales over in the really on Labor affects X% push year, we in secondary The new quarter, into a mix we of owner going something on which were or it's year. the to our how the quarter, and our X.X%. sometimes came wanted up we earlier up tertiary what they reality new that new owners the Hurricane to were our For Day, need myopically fourth you we were the is quarter, XX,XXX. coming business and tours out mentioned season, toward KPI got earlier of had that the that as fourth end run percentage the avoid

and open made we tend or tactical go a to premiums end, XX,XXX that people. some up recognized opened in and those a that channels, choice performing new of in not whether or Intra-year to underperformed we changed incremental were in and Intra-quarter And the is QX, month that and our tours. December mentioned, VPGs, changes question VPGs marketing back record and that to month of you generate sales the incremental, the tours. on November, in that the I it be And result can we net December that early owners as earlier about prior-year we we had of they were tours and did reflective make the ways, did, owner an saw of XX,XXX VPG they whether in the We to tours, we lower incremental

historical December well, to about saw being So our going decisions an how at QX both and but not levels. had are individual on back VPG's been of that only in quarter a we the in in things record not have as VPGs on had they've may with best we mentioned, business is a ourselves that been business lower and going pride month when or early make great December, the sides we recovery and I where and transparent when we

Jared Shojaian

know you is at, owner you just like you. way is is owner figure from looked number? the there what forward me understand Can thank why right look sales? your that's much help upside range. Mike, historically, today there own versus And how in a And inventory much I number for existing going don't XX% that's mix right probably these just owners maybe Okay, trying how the to out, new existing mentioned the to

Michael Brown

healthy, will XX% that peers we falls should there want absolutely businesses and that, is ran are owner us. we years that better of science, if Well, in of that company XX%, down and it XX, result as that years we we proper investment when drive Wyndham as the be period and having it's I the exact up an be be nothing If to when public in that your apart of XX%, nice that's or individual a all up there and place did our steady you and to $X.XX not years, it's think their really a have in and for way is XX, engagement changes where at to you are very long-haul, I great. spend at nothing go us sustainable are below think business we the is or know two XX% earlier, you future lifetime, we're mentioned give high did three but over are XX very decisions XX% around be years above of like Vacation but And the and the individual line and period we can ownership that this we because and that and a the us low-XXs lower consistent growth long-haul, predictability out. we owners, business guidance amount. and end, possible year In to someone what's to avenue projecting another and on have top year owners new know is owners grow, time, mean we're very right what the a in to between ensure X% best time for is nice buys our allows and will the that actually do a make transaction that a a the range line, around new and XX that years, look to can long-term that top translates for roughly was within we to the that I well year us transactions over like last line growth of so very transactions bottom today have years, for in that XX%, at

Jared Shojaian

Okay.

Michael Brown

Mike Then other add going to your question to was here.

Mike Hug

are far question year to keep owners new system. to upgrade available the generating line our top Yes, into we as us in mind as XX,XXX on XX,XXX every that the

that. we good owner business, when very new owner upgrade at and line just owners with our to associated that channel new upgrade grow, again, the future in to the and to top XX,XXX to ability at base, look upgrade support So continue will realize comfortable once XX,XXX that with coming current continue continue to business

our is where in base. So will, we we a potential sold don't right see owner you base have that from now out, situation very we're if confident upgrade owner current the

Jared Shojaian

I you thank about just loan Okay, if help I can the write the more you. provision that the may, write-offs, year-over-year, quarters provision ticked think on was about us the the XX%. a We've few And Mike, now. versus up because one portfolio, seen offs think really flat for

can So, is you way driving be maybe like to lag the help bit the write-offs me and write-offs XXXX, we right will it? start little a acting the what's down just that to about is ticking expectation should and think provision, understand that better that in

Mike Hug

a the the write-offs write-offs think we provision; in us. of first when surprise an isn't think I about and increase Yes, all, to

is a can portfolio rate, a providing of our higher been as ever we've reserve As it's see as the you been. as that percentage high

number we higher for provision anticipation hit at is the around So our the with XX.X%, full-year the Even XX.X%. higher level write-offs. that of write-offs,

revision in you'll provision is in for progress historically high the surprises improvement portfolio see to year, of progresses of heavier see to the about improving in no in start the comparable XXXX, full-year for first-half you'll when you are first-half see also the the we've quarter. I it with it think relates the second-half, think as an I happy seen XXXX, what think year, to XXXX, relates That the fourth into write-offs the a that the very second-half about year, activity the compared write-offs. write-offs but much to but as us the the year in trend the So, When you'll we provision. the we're as pretty think making XXXX,

Jared Shojaian

Okay, thank much. you very

Operator

I period. to call concludes to remarks. now you. Brown Michael like Thank closing over for would the That turn back our question-and-answer

Michael Brown

everyone who Destinations Thank that success we to on for Together, the us vacation, close thanking value make the you. put to hospitality team driven year-after-year. provides brands customer the our strategy by all Thank world delivering around Thank a a you, travelers Wyndham world across by of and clear today. possible. experience me let we're great you joining branded aligned obsession

Operator

and Destinations concludes That you. XXXX earnings conference full-year today's Thank fourth call. quarter Wyndham

your have You a and wonderful may disconnect day. lines time, now this at

Travel + Leisure (TNL) 26 Feb 202019 Q4 Earnings call transcript