Wyndham Hotels & Resorts(WH) - 2025 Q1 - Quarterly Report

Financial Performance - Total net revenues for the three months ended March 31, 2025, increased by $11 million, or 4%, compared to the prior-year period, reaching$ 316 million [109]. - Adjusted EBITDA for the Hotel Franchising segment increased by $3 million, or 2%, compared to the prior-year period, totaling$ 161 million [113]. - Operating income for the three months ended March 31, 2025, increased by $62 million, or 124%, compared to the prior-year period, reaching$ 112 million [109]. - Net income for the three months ended March 31, 2025, increased by $45 million, or 281%, compared to the prior-year period, totaling$ 61 million [111]. - Total expenses decreased by $51 million, or 20%, compared to the prior-year period, primarily due to lower other expenses [109]. Room and Revenue Growth - The total number of rooms grew by 4% year-over-year, with U.S. rooms increasing by 1% and international rooms by 7% [106]. - Global RevPAR for the three months ended March 31, 2025, increased by 2% year-over-year, driven by a 2% increase in the U.S. and a 3% increase internationally [108]. - The average royalty rate for U.S. franchised properties increased by 19 basis points to 4.8%, while the global average royalty rate rose by 16 basis points to 4.0% [106]. Development and Investments - As of March 31, 2025, the global development pipeline included approximately 2,140 hotels and 254,000 rooms, marking a 5% year-over-year increase [114]. - The company invested$ 7 million in capital expenditures during Q1 2025, primarily for information technology [128]. - Approximately $28 million was deployed in development advance notes during the quarter, with an expected total investment of$ 110 million for 2025 [129]. Cash Flow and Shareholder Returns - Net cash provided by operating activities decreased by $17 million year-over-year, totaling$ 59 million for Q1 2025 [125]. - The company repurchased approximately 0.8 million shares at an average price of $95.23, costing$ 76 million in Q1 2025 [133]. - Cash dividends declared in Q1 2025 amounted to $0.41 per share, totaling$ 32 million [134]. Debt and Liabilities - Total assets increased by $26 million from December 31, 2024, to March 31, 2025, primarily due to an increase in development advance notes and loan receivables [117]. - Total liabilities rose by$ 97 million during the same period, mainly due to a $65 million increase in outstanding debt [117]. - As of March 31, 2025, the first-lien leverage ratio was 2.9 times, in compliance with financial covenants [135]. - As of March 31, 2025, the total outstanding balance of variable-rate borrowings, net of swaps, was$ 620 million [143]. Interest and Tax Rates - Interest expense for the three months ended March 31, 2025, increased by $5 million, or 18%, compared to the prior-year period, primarily due to a higher average interest rate [109]. - The effective tax rate decreased to 22.8% for the three months ended March 31, 2025, from 27.3% in the prior-year period, due to higher tax benefits associated with stock-based compensation [110]. Market Risks - A hypothetical 10% change in the effective weighted average interest rate on variable-rate borrowings would result in a$ 3 million increase or decrease in annual long-term debt interest expense [143]. - A hypothetical 10% change in foreign currency exchange rates would result in approximately a $10 million increase or decrease to the fair value of outstanding forward foreign currency exchange contracts [147]. - The company anticipates that foreign currency exchange rate risk will remain a market risk exposure for the foreseeable future [145]. - Total market risk is influenced by market volatility and liquidity, with limitations inherent in the sensitivity analyses presented [149].