Hotel franchising company Wyndham (NYSE:WH) missed analysts' expectations in Q1 CY2024, with revenue down 2.6% year on year to $305 million. It made a non-GAAP profit of $0.78 per share, down from its profit of $0.86 per share in the same quarter last year.
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Wyndham (WH) Q1 CY2024 Highlights:
- Revenue: $305 million vs analyst estimates of $308.3 million (1.1% miss)
- EPS (non-GAAP): $0.78 vs analyst estimates of $0.74 (4.9% beat)
- Full year guidance for rooms growth, RevPAR growth, and adjusted EBITDA maintained from previous
- EPS (non-GAAP) guidance for the full year: $4.24 at the midpoint (in line with expectations, raised from previous midpoint of $4.17)
- Gross Margin (GAAP): 57%, down from 60.4% in the same quarter last year
- Free Cash Flow of $67 million, down 41.2% from the previous quarter
- Market Capitalization: $5.79 billion
Established in 1981, Wyndham (NYSE:WH) is a global hotel franchising company with over 9,000 hotels across nearly 95 countries on six continents.
Hotels, Resorts and Cruise LinesHotels, resorts, and cruise line companies often sell experiences rather than tangible products, and in the last decade-plus, consumers have slowly shifted from buying "things" (wasteful) to buying "experiences" (memorable). In addition, the internet has introduced new ways of approaching leisure and lodging such as booking homes and longer-term accommodations. Traditional hotel, resorts, and cruise line companies must innovate to stay relevant in a market rife with innovation.
Sales GrowthA company's long-term performance can indicate its business quality. Any business can enjoy short-lived success, but best-in-class ones sustain growth over many years. Wyndham's revenue declined over the last five years, dropping 7.3% annually. Within consumer discretionary, a long-term historical view may miss a company riding a successful new property or emerging trend. That's why we also follow short-term performance. Wyndham's 2-year annualized revenue declines of 7.7% align with its five-year revenue declines, suggesting its demand is consistently shrinking.
We can dig even further into the company's revenue dynamics by analyzing its revenue per available room, which clocked in at $36.28 this quarter and is a key metric accounting for average daily rates and occupancy levels. Over the last two years, Wyndham's revenue per room averaged 6.1% year-on-year growth. Because this number is higher than its revenue growth, we can see its room bookings outperformed its sales from other areas like restaurants, bars, and amenities.
This quarter, Wyndham missed Wall Street's estimates and reported a rather uninspiring 2.6% year-on-year revenue decline, generating $305 million of revenue. Looking ahead, Wall Street expects sales to grow 5.3% over the next 12 months, an acceleration from this quarter.
Cash Is KingIf you've followed StockStory for a while, you know we emphasize free cash flow. Why, you ask? We believe that in the end, cash is king, and you can't use accounting profits to pay the bills.
Over the last two years, Wyndham has shown terrific cash profitability, enabling it to reinvest, return capital to investors, and stay ahead of the competition while maintaining a robust cash balance. The company's free cash flow margin has been among the best in the consumer discretionary sector, averaging 22.7%.
Wyndham's free cash flow came in at $67 million in Q1, equivalent to a 22% margin and down 20.2% year on year.
Key Takeaways from Wyndham's Q1 Results It was encouraging to see Wyndham slightly top analysts' adjusted EBITDA and EPS expectations this quarter. On the other hand, its revenue fell short of Wall Street's estimates. Guidance didn't provide any surprises, as the company maintained its full year outlook for rooms growth, RevPAR growth, and adjusted EBITDA. EPS guidance was raised but came in in line with analyst estimates. Overall, this was a mixed quarter for Wyndham. The stock is flat after reporting and currently trades at $71.96 per share.