Travel + Leisure Co. (NYSE:TNL), the world’s leading membership
and leisure travel company, today reported second quarter 2023
financial results for the three months ended June 30, 2023.
Highlights and outlook include:
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- Net income of $94 million, $1.18 diluted earnings per share
from continuing operations, on net revenue of $949 million
- Adjusted EBITDA of $236 million and adjusted diluted
earnings per share of $1.33 (1)
- Reaffirms full year adjusted EBITDA guidance of $925 million
to $945 million and expects third quarter adjusted EBITDA from $245
million to $260 million
- Repurchased $202 million of common stock in the first half
of 2023, including $100 million in the second quarter
- Management will recommend a third quarter dividend of $0.45
per share for approval by the Board of Directors
- Executed $300 million term securitization on July 20,
2023
“The company’s second quarter results met our expectations,
while sales volume per guest was at the high end of our guidance,”
said Michael D. Brown, president and CEO of Travel + Leisure Co.
“In the second quarter, we returned $135 million to shareholders,
continuing our strategy of delivering strong capital returns to
shareholders. We have consistently bought back shares this year,
reducing our total share count by 7 percent since the beginning of
2023."
(1) This press release includes Adjusted
EBITDA, Adjusted diluted EPS, Adjusted free cash flow, Gross VOI
sales and Adjusted net income, which are measures that are not
calculated in accordance with Generally Accepted Accounting
Principles in the U.S. (“GAAP”). See "Presentation of Financial
Information" and the tables for the definitions and reconciliations
of these non-GAAP measures. Forward-looking non-GAAP measures are
presented in this press release only on a non-GAAP basis because
not all of the information necessary for a quantitative
reconciliation is available without unreasonable effort..
Business Segment Results
Vacation Ownership
$ in millions
Q2 2023
Q2 2022
% change
Revenue
$768
$735
4%
Adjusted EBITDA
$187
$187
—%
Vacation Ownership revenue increased 4% to $768 million in the
second quarter of 2023 compared to the same period in the prior
year. Net vacation ownership (VOI) sales were $401 million in the
second quarter compared to $400 million in the prior year period,
and Gross VOI sales were $557 million compared to $527 million in
the prior year. Gross VOI sales were driven by tours of 170,000
during the quarter compared to 148,000 in the same period last
year, partially offset by a 10% decrease in VPG. Net VOI sales were
impacted by the normalization of the provision, and the impact of
excluding fee-for-service sales.
Second quarter adjusted EBITDA was flat compared to the prior
year period at $187 million, with the revenue growth offset by an
increase in marketing costs in support of increased tour flow and
new owner mix as well as higher consumer finance interest
expense.
Travel and Membership
$ in millions
Q2 2023
Q2 2022
% change
Revenue
$179
$188
(5)%
Adjusted EBITDA
$62
$64
(3)%
Travel and Membership revenue decreased 5% to $179 million in
the second quarter of 2023 compared to the same period in the prior
year. This was driven by an 8% decrease in transactions offset by
revenue per transaction growth of 1%. The transaction decline was
driven by lower RCI member propensity and a decrease in Travel Club
transactions.
Second quarter Adjusted EBITDA was $62 million compared to $64
million in the prior year due to lower transaction revenue,
partially offset by lower cost of sales and lower marketing
costs.
Balance Sheet and
Liquidity
Net Debt — As of June 30, 2023, the Company's leverage
ratio for covenant purposes was 3.7x. The Company had $3.7 billion
of corporate debt outstanding as of June 30, 2023, which excluded
$1.9 billion of non-recourse debt related to its securitized notes
receivables portfolio. Additionally, the Company had cash and cash
equivalents of $214 million. At the end of the second quarter, the
Company had $818 million of liquidity in cash and cash equivalents
and revolving credit facility availability.
Timeshare Receivables Financing — Subsequent to the end
of the second quarter, the Company closed on a $300 million term
securitization transaction with a weighted average coupon of 6.7%
and a 91.7% advance rate.
Cash Flow — For the six months ended June 30, 2023, net
cash provided by operating activities was $110 million compared to
$230 million in the prior year period. Adjusted free cash flow was
$11 million for the six months ended June 30, 2023 compared to $121
million in the same period of 2022 due to higher year-over-year
originations in our loan portfolio, as well as other working
capital items and increased interest payments on our corporate
debt.
Share Repurchases — During the second quarter of 2023,
the Company repurchased 2.6 million shares of common stock for $100
million at a weighted average price of $38.54 per share. As of June
30, 2023, the Company had $275 million remaining in its share
repurchase authorization.
Dividend — The Company paid $35 million ($0.45 per share)
in cash dividends on June 30, 2023 to shareholders of record as of
June 15, 2023. Management will recommend a third quarter dividend
of $0.45 per share for approval by the Company’s Board of Directors
in August 2023.
Other Items
Taxes — Tax regulation changes enacted at the state level
resulted in a discrete impact on the tax provision rate which
lowered Adjusted EPS by approximately $0.03 for the quarter.
However, we do not expect the changes to have a significant impact
on the full year tax rate.
Outlook
The Company is providing guidance regarding expectations for the
2023 full year:
- Adjusted EBITDA of $925 million to $945 million
- Gross VOI sales of $2.1 billion to $2.2 billion
- VPG of approximately $3,050 to $3,150
The Company is providing guidance regarding expectations for the
third quarter 2023:
- Adjusted EBITDA of $245 million to $260 million
- Gross VOI sales of $580 million to $600 million
- VPG of approximately $3,000 to $3,100
- Travel and Membership Adjusted EBITDA of $60 million to $65
million
- Adjusted EPS of approximately $1.43 to $1.55 assuming no
additional share repurchases
Following are sensitivities to third quarter Adjusted EBITDA
guidance. The impact of a 100 bps change in our key Vacation
Ownership drivers would be expected to be as follows:
- Tours: approximately $1.5 million change in Adjusted
EBITDA
- VPG: approximately $2.5 million change in Adjusted EBITDA
Sensitivities to Adjusted EBITDA are based on average system
wide trends. Operating circumstances, including but not limited to
brand mix, product mix, geographical concentration or market
segment variability, may cause the impact to differ materially.
This guidance is presented only on a non-GAAP basis because not
all of the information necessary for a quantitative reconciliation
of forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measure is available without unreasonable
effort, primarily due to uncertainties relating to the occurrence
or amount of these adjustments that may arise in the future. Where
one or more of the currently unavailable items is applicable, some
items could be material, individually or in the aggregate, to GAAP
reported results.
Conference Call
Information
Travel + Leisure Co. will hold a conference call with investors
to discuss the Company’s results and outlook today at 8:30 a.m. ET.
Participants may listen to a simultaneous webcast of the conference
call, which may be accessed through the Company's website at
travelandleisureco.com/investors, or by dialing 877-733-4794 ten
minutes before the scheduled start time. For those unable to listen
to the live broadcast, an archive of the webcast will be available
on the Company's website for 90 days beginning at 12:00 p.m. ET
today. Additionally, a telephone replay will be available for seven
days beginning at 12:00 p.m. ET today at 877-660-6853.
Presentation of Financial
Information
Financial information discussed in this press release includes
non-GAAP measures such as Adjusted EBITDA, Adjusted diluted EPS,
Adjusted free cash flow, gross VOI sales and Adjusted net income,
which include or exclude certain items, as well as non-GAAP
guidance. The Company utilizes non-GAAP measures, defined in Table
5, on a regular basis to assess performance of its reportable
segments and allocate resources. These non-GAAP measures differ
from reported GAAP results and are intended to illustrate what
management believes are relevant period-over-period comparisons and
are helpful to investors when considered with GAAP measures as an
additional tool for further understanding and assessing the
Company’s ongoing operating performance by adjusting for items
which in our view do not necessarily reflect ongoing performance.
Management also internally uses these measures to assess our
operating performance, both absolutely and in comparison to other
companies, and in evaluating or making selected compensation
decisions. Exclusion of items in the Company’s non-GAAP
presentation should not be considered an inference that these items
are unusual, infrequent or non-recurring. Full reconciliations of
non-GAAP financial measures to the most directly comparable GAAP
financial measures for the reported periods appear in the financial
tables section of the press release.
The Company may use its website as a means of disclosing
information concerning its operations, results and prospects,
including information which may constitute material nonpublic
information, and for complying with its disclosure obligations
under SEC Regulation FD. Disclosure of such information will be
included on the Company’s website in the Investor Relations section
at travelandleisureco.com/investors. Accordingly, investors should
monitor that Investor Relations section of the Company website, in
addition to accessing its press releases, its submissions and
filings with the SEC, and its publicly noticed conference calls and
webcasts.
About Travel + Leisure
Co.
As the world’s leading membership and leisure travel company,
Travel + Leisure Co. (NYSE:TNL) transformed the way families
vacation with the introduction of the most dynamic points-based
vacation ownership program at Club Wyndham, and the first vacation
exchange network, RCI. The company delivers more than six million
vacations each year at 245+ timeshare resorts worldwide, through
tailored travel and membership products, and via Travel + Leisure
GO - the signature subscription travel club inspired by the pages
of Travel + Leisure magazine. With hospitality and responsible
tourism at the heart of all we do, our 19,500+ dedicated associates
bring out the best in people and places around the globe. We put
the world on vacation. Learn more at travelandleisureco.com.
Forward-Looking
Statements
This press release includes “forward-looking statements” as that
term is defined by the Securities and Exchange Commission (“SEC”).
Forward-looking statements are any statements other than statements
of historical fact, including statements regarding our
expectations, beliefs, hopes, intentions or strategies regarding
the future. In some cases, forward-looking statements can be
identified by the use of words such as “may,” “will,” “expects,”
“should,” “believes,” “plans,” “anticipates,” “estimates,”
“predicts,” “potential,” “continue,” “future,” or other words of
similar meaning. Forward-looking statements are subject to risks
and uncertainties that could cause actual results of Travel +
Leisure Co. and its subsidiaries (“Travel + Leisure Co.” or “we”)
to differ materially from those discussed in, or implied by, the
forward-looking statements. Factors that might cause such a
difference include, but are not limited to, risks associated with:
the acquisition of the Travel + Leisure brand and the future
prospects and plans for Travel + Leisure Co., including our ability
to execute our strategies to grow our cornerstone timeshare and
exchange businesses and expand into the broader leisure travel
industry through new business extensions; our ability to compete in
the highly competitive timeshare and leisure travel industries;
uncertainties related to acquisitions, dispositions and other
strategic transactions; the health of the travel industry and
declines or disruptions caused by adverse economic conditions
(including inflation, higher interest rates, and recessionary
pressures), terrorism or acts of gun violence, political strife,
war (including hostilities in Ukraine), pandemics, and severe
weather events and other natural disasters; adverse changes in
consumer travel and vacation patterns, consumer preferences and
demand for our products; increased or unanticipated operating costs
and other inherent business risks; our ability to comply with
financial and restrictive covenants under our indebtedness; our
ability to access capital and insurance markets on reasonable
terms, at a reasonable cost or at all; maintaining the integrity of
internal or customer data and protecting our systems from
cyber-attacks; uncertainty with respect to potential resurgences of
the novel coronavirus global pandemic (“COVID-19”) and its impacts;
the timing and amount of future dividends and share repurchases, if
any; and those other factors disclosed as risks under “Risk
Factors” in documents we have filed with the SEC, including in Part
I, Item 1A of our Annual Report on Form 10-K for the fiscal year
ended December 31, 2022, filed with the SEC on February 22, 2023.
We caution readers that any such statements are based on currently
available operational, financial and competitive information, and
they should not place undue reliance on these forward-looking
statements, which reflect management’s opinion only as of the date
on which they were made. Except as required by law, we undertake no
obligation to review or update these forward-looking statements to
reflect events or circumstances as they occur.
Travel + Leisure Co. Table of Contents
Table Number
- Condensed Consolidated Statements of Income (Unaudited)
- Summary Data Sheet
- Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net
Income to Adjusted EBITDA
- Non-GAAP Measure: Reconciliation of Net Cash Provided by
Operating Activities to Adjusted Free Cash Flow
- Definitions
Table 1
Travel + Leisure Co.
Condensed Consolidated Statements
of Income (Unaudited)
(in millions, except per share
amounts)
Three Months Ended
Six Months Ended
June 30,
June 30,
2023
2022
2023
2022
Net revenues
Service and membership fees
$
424
$
410
$
844
$
812
Net VOI sales
401
400
739
697
Consumer financing
103
99
206
198
Other
21
13
40
24
Net revenues
949
922
1,829
1,731
Expenses
Operating
427
404
847
785
Cost of vacation ownership interests
33
46
64
86
Consumer financing interest
27
17
52
34
Marketing
127
119
238
213
General and administrative
114
121
239
241
Depreciation and amortization
28
31
55
61
Restructuring
11
1
11
8
COVID-19 related costs
—
—
—
2
Asset recoveries, net
(1
)
(2
)
(1
)
(1
)
Total expenses
766
737
1,505
1,429
Loss on sale of business
—
—
2
—
Operating income
183
185
322
302
Interest expense
61
47
119
94
Other (income)/expense, net
—
7
(1
)
4
Interest (income)
(3
)
(1
)
(6
)
(2
)
Income before income taxes
125
132
210
206
Provision for income taxes
36
32
58
55
Net income from continuing
operations
89
100
152
151
Gain on disposal of discontinued business,
net of income taxes
5
—
5
—
Net income attributable to TNL
shareholders
$
94
$
100
$
157
$
151
Basic earnings per share
Continuing operations
$
1.18
$
1.17
$
1.99
$
1.76
Discontinued operations
0.07
—
0.07
—
$
1.25
$
1.17
$
2.06
$
1.76
Diluted earnings per share
Continuing operations
$
1.18
$
1.16
$
1.98
$
1.75
Discontinued operations
0.07
—
0.07
—
$
1.25
$
1.16
$
2.05
$
1.75
Weighted average shares
outstanding
Basic
75.2
85.0
76.3
85.5
Diluted
75.5
85.7
76.8
86.4
Table 2
Travel + Leisure Co.
Summary Data Sheet
(in millions, except per share
amounts, unless otherwise indicated)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
Change
2023
2022
Change
Consolidated
Results
Net income attributable to TNL
shareholders
$
94
$
100
(6
)%
$
157
$
151
4
%
Diluted earnings per share
$
1.25
$
1.16
8
%
$
2.05
$
1.75
17
%
Net income from continuing operations
$
89
$
100
(11
)%
$
152
$
151
1
%
Diluted earnings per share from continuing
operations
$
1.18
$
1.16
2
%
$
1.98
$
1.75
13
%
Net income margin
9.9
%
10.8
%
8.6
%
8.7
%
Adjusted Earnings
Adjusted EBITDA
$
236
$
230
3
%
$
420
$
399
5
%
Adjusted net income
$
100
$
109
(8
)%
$
170
$
169
1
%
Adjusted diluted earnings per share
$
1.33
$
1.27
5
%
$
2.21
$
1.95
13
%
Segment
Results
Net Revenues
Vacation Ownership
$
768
$
735
4
%
$
1,453
$
1,344
8
%
Travel and Membership
179
188
(5
)%
379
389
(3
)%
Corporate and other
2
(1
)
(3
)
(2
)
Total
$
949
$
922
3
%
$
1,829
$
1,731
6
%
Adjusted EBITDA
Vacation Ownership
$
187
$
187
—
%
$
319
$
291
10
%
Travel and Membership
62
64
(3
)%
133
146
(9
)%
Segment Adjusted EBITDA
249
251
452
437
Corporate and other
(13
)
(21
)
(32
)
(38
)
Total Adjusted EBITDA
$
236
$
230
3
%
$
420
$
399
5
%
Adjusted EBITDA margin
24.9
%
24.9
%
23.0
%
23.1
%
Note: Amounts may not calculate due to
rounding. See "Presentation of Financial Information" and Table 5
for Non-GAAP definitions. For a full reconciliation of non-GAAP
financial measures to the most directly comparable GAAP financial
measures, refer to Table 3.
Table 2
(continued)
Travel + Leisure Co.
Summary Data Sheet
(in millions, unless otherwise
indicated)
Three Months Ended June
30,
Six Months Ended June
30,
2023
2022
Change
2023
2022
Change
Vacation
Ownership
Net VOI sales
$
401
$
400
—
%
$
739
$
697
6
%
Loan loss provision
86
76
13
%
157
125
26
%
Gross VOI sales, net of Fee-for-Service
sales
487
476
2
%
896
821
9
%
Fee-for-Service sales
70
51
35
%
115
85
35
%
Gross VOI sales
$
557
$
527
6
%
$
1,011
$
906
12
%
Tours (in thousands)
170
148
15
%
305
256
19
%
VPG (in dollars)
$
3,150
$
3,489
(10
)%
$
3,179
$
3,441
(8
)%
Tour generated VOI sales
$
537
$
516
4
%
$
970
$
882
10
%
Telesales and other
20
11
82
%
41
24
71
%
Gross VOI sales
$
557
$
527
6
%
$
1,011
$
906
12
%
Net VOI sales
$
401
$
400
—
%
$
739
$
697
6
%
Property management revenue
205
189
8
%
404
374
8
%
Consumer financing
103
99
4
%
206
198
4
%
Other (a)
59
47
26
%
104
75
39
%
Total Vacation Ownership
revenue
$
768
$
735
4
%
$
1,453
$
1,344
8
%
Travel and
Membership (b)
Avg. number of exchange members (in
thousands)
3,502
3,517
—
%
3,507
3,543
(1
)%
Transactions (in thousands)
236
253
(7
)%
536
564
(5
)%
Revenue per transaction (in dollars)
$
359
$
343
5
%
$
352
$
334
5
%
Exchange transaction revenue
$
85
$
86
(2
)%
$
189
$
188
—
%
Transactions (in thousands)
180
197
(9
)%
356
371
(4
)%
Revenue per transaction (in dollars)
$
229
$
247
(8
)%
$
238
$
253
(6
)%
Travel Club transaction revenue
$
41
$
49
(15
)%
$
85
$
94
(10
)%
Transactions (in thousands)
416
450
(8
)%
891
935
(5
)%
Revenue per transaction (in dollars)
$
303
$
301
1
%
$
307
$
302
2
%
Travel and Membership transaction
revenue
$
126
$
135
(7
)%
$
273
$
282
(3
)%
Transaction revenue
$
126
$
135
(7
)%
$
273
$
282
(3
)%
Subscription revenue
46
45
2
%
91
90
1
%
Other (c)
7
8
(13
)%
15
17
(12
)%
Total Travel and Membership
revenue
$
179
$
188
(5
)%
$
379
$
389
(3
)%
Note: Amounts may not compute due to
rounding.
(a)
Includes Fee-for-Service
commission revenues and other ancillary revenues.
(b)
In the third quarter of 2022, the
Travel and Membership segment determined that the presentation of
transactions for Travel Club would be more reflective of how
members use the club if it included add-on vacation travel
bookings, such as car rentals. These changes are reflected in all
periods presented.
(c)
Primarily related to cancellation
fees, commissions, and other ancillary revenue.
Table 3
Travel + Leisure Co.
Non-GAAP Measure: Reconciliation
of Net Income to
Adjusted Net Income to Adjusted
EBITDA
(in millions, except diluted per
share amounts)
Three Months Ended June
30,
2023
EPS
Margin %
2022
EPS
Margin %
Net income attributable to TNL
shareholders
$
94
$
1.25
9.9
%
$
100
$
1.16
10.8
%
Gain on disposal of discontinued business,
net of income taxes
(5
)
—
Net income from continuing
operations
$
89
$
1.18
9.4
%
$
100
$
1.16
10.8
%
Restructuring
11
1
Amortization of acquired intangibles
(a)
3
3
Legacy items
2
1
Loss on equity investment
—
8
Asset recoveries, net (b)
—
(1
)
Taxes (c)
(5
)
(3
)
Adjusted net income
$
100
$
1.33
10.5
%
$
109
$
1.27
11.8
%
Income taxes on adjusted net income
41
35
Interest expense
61
47
Depreciation
25
28
Stock-based compensation expense (d)
12
12
Interest income
(3
)
(1
)
Adjusted EBITDA
$
236
24.9
%
$
230
24.9
%
Diluted Shares Outstanding
75.5
85.7
Six Months Ended June
30,
2023
EPS
Margin %
2022
EPS
Margin %
Net income attributable to TNL
shareholders
$
157
$
2.05
8.6
%
$
151
$
1.75
8.7
%
Gain on disposal of discontinued business,
net of income taxes
(5
)
—
Net income from continuing
operations
$
152
$
1.98
8.3
%
$
151
$
1.75
8.7
%
Restructuring (e)
11
8
Legacy items
7
2
Amortization of acquired intangibles
(a)
5
5
Loss on sale of business (f)
2
—
Loss on equity investment
—
8
COVID-19 related costs
—
2
Asset recoveries, net (b)
—
(1
)
Taxes (c)
(7
)
(6
)
Adjusted net income from continuing
operations
$
170
$
2.21
9.3
%
$
169
$
1.95
9.8
%
Income taxes on adjusted net income
65
61
Interest expense
119
94
Depreciation
50
56
Stock-based compensation expense (d)
22
21
Interest income
(6
)
(2
)
Adjusted EBITDA
$
420
23.0
%
$
399
23.1
%
Diluted Shares Outstanding
76.8
86.4
Table 3
(continued)
Amounts may not calculate due to
rounding. The tables above reconcile certain non-GAAP financial
measures to their closest GAAP measure. The presentation of these
adjustments is intended to permit the comparison of particular
adjustments as they appear in the income statement in order to
assist investors' understanding of the overall impact of such
adjustments. In addition to GAAP financial measures, the Company
provides Adjusted net income, Adjusted EBITDA, Adjusted EBITDA
margin, and Adjusted diluted EPS to assist our investors in
evaluating our ongoing operating performance for the current
reporting period and, where provided, over different reporting
periods, by adjusting for certain items which in our view do not
necessarily reflect ongoing performance. We also internally use
these measures to assess our operating performance, both absolutely
and in comparison to other companies, and in evaluating or making
selected compensation decisions. These supplemental disclosures are
in addition to GAAP reported measures. Non-GAAP measures should not
be considered a substitute for, nor superior to, financial results
and measures determined or calculated in accordance with GAAP. Our
presentation of adjusted measures may not be comparable to
similarly-titled measures used by other companies. See
"Presentation of Financial Information" and table 5 for the
definitions of these non-GAAP measures.
(a)
Amortization of
acquisition-related intangible assets is excluded from Adjusted net
income and Adjusted EBITDA.
(b)
Includes $1 million of inventory
impairments for the three and six months ended June 30, 2023 and
2022, included in Cost of vacation ownership interests on the
Condensed Consolidated Statements of Income.
(c)
Represents the tax effects on the
adjustments. We determine the tax effects of the non-GAAP
adjustments based on the nature of the underlying adjustment and
the relevant tax jurisdictions. The tax effect of the non-GAAP
adjustments was calculated based on an evaluation of the statutory
tax treatment and the applicable statutory tax rate in the relevant
jurisdictions.
(d)
All stock-based compensation is
excluded from Adjusted EBITDA.
(e)
Includes $3 million of
stock-based compensation expenses for the six months ended June 30,
2022 associated with the 2022 restructuring.
(f)
Represents the loss on sale of
the Love Home Swap business.
Table 4
Travel + Leisure Co.
Non-GAAP Measure: Reconciliation
of Net Cash Provided by Operating Activities to Adjusted Free Cash
Flow
(in millions)
Six Months Ended June
30,
2023
2022
Net cash provided by operating
activities
$
110
$
230
Property and equipment additions
(28
)
(24
)
Sum of proceeds and principal payments of
non-recourse vacation ownership debt
(71
)
(87
)
Free cash flow
$
11
$
119
COVID-19 related adjustments (a)
—
2
Adjusted free cash flow (b)
$
11
$
121
(a)
Includes cash paid for COVID-19
expenses factored into the calculation of Adjusted EBITDA.
(b)
The Company had $33 million of
net cash used in investing activities and $386 million of net cash
used in financing activities for the six months ended June 30, 2023
and had $29 million of net cash used in investing activities and
$315 million of net cash used in financing activities for the six
months ended June 30, 2022.
Table 5
Definitions
Adjusted Diluted
Earnings per Share: A non-GAAP measure, defined by the
Company as Adjusted net income divided by the diluted weighted
average number of common shares. Adjusted Diluted Earnings per
Share is useful to assist our investors in evaluating our ongoing
operating performance for the current reporting period and, where
provided, over different reporting periods.
Adjusted
EBITDA: A non-GAAP measure, defined by the Company as net
income from continuing operations before depreciation and
amortization, interest expense (excluding consumer financing
interest), early extinguishment of debt, interest income (excluding
consumer financing revenues) and income taxes, each of which is
presented on the Condensed Consolidated Statements of Income.
Adjusted EBITDA also excludes stock-based compensation costs,
separation and restructuring costs, legacy items, transaction costs
for acquisitions and divestitures, asset impairments/recoveries,
gains and losses on sale/disposition of business, and items that
meet the conditions of unusual and/or infrequent. Legacy items
include the resolution of and adjustments to certain contingent
assets and liabilities related to acquisitions of continuing
businesses and dispositions, including the separation of Wyndham
Hotels & Resorts, Inc. and Cendant, and the sale of the
vacation rentals businesses. We believe that when considered with
GAAP measures, Adjusted EBITDA is useful to assist our investors in
evaluating our ongoing operating performance for the current
reporting period and, where provided, over different reporting
periods. We also internally use these measures to assess our
operating performance, both absolutely and in comparison to other
companies, and in evaluating or making selected compensation
decisions. Adjusted EBITDA should not be considered in isolation or
as a substitute for net income/(loss) or other income statement
data prepared in accordance with GAAP and our presentation of
Adjusted EBITDA may not be comparable to similarly-titled measures
used by other companies.
Adjusted EBITDA
Margin: A non-GAAP measure, represents Adjusted EBITDA as a
percentage of revenue. Adjusted EBITDA Margin is useful to assist
our investors in evaluating our ongoing operating performance for
the current reporting period and, where provided, over different
reporting periods.
Adjusted Free Cash
Flow: A non-GAAP measure, defined by the Company as net cash
provided by operating activities from continuing operations less
property and equipment additions (capital expenditures) plus the
sum of proceeds and principal payments of non-recourse vacation
ownership debt, while also adding back cash paid for transaction
costs for acquisitions and divestitures, separation adjustments
associated with the spin-off of Wyndham Hotels, and certain
adjustments related to COVID-19. TNL believes FCF to be a useful
operating performance measure to evaluate the ability of its
operations to generate cash for uses other than capital
expenditures and, after debt service and other obligations, its
ability to grow its business through acquisitions and equity
investments, as well as its ability to return cash to shareholders
through dividends and share repurchases. A limitation of using
Adjusted free cash flow versus the GAAP measure of net cash
provided by operating activities as a means for evaluating TNL is
that Adjusted free cash flow does not represent the total cash
movement for the period as detailed in the consolidated statement
of cash flows.
Adjusted Free Cash
Flow Conversion: Adjusted free cash flow as a percentage of
Adjusted EBITDA. Forward-looking outlook regarding Adjusted Free
Cash Flow Conversion is provided only on a non-GAAP basis because
not all of the information necessary for a quantitative
reconciliation is available without unreasonable effort. We use
this non-GAAP performance measure to assist in evaluating our
operating performance and the quality of our earnings as
represented by adjusted EBITDA, and to evaluate the performance of
our current and prospective operating and strategic initiatives in
generating cash flows from our earnings performance. This measure
also assists investors in evaluating our operating performance,
management of our assets, and ability to generate cash flows from
our earnings, as well as facilitating period-to-period
comparisons.
Adjusted Net
Income: A non-GAAP measure, defined by the Company as net
income from continuing operations adjusted to exclude separation
and restructuring costs, legacy items, transaction costs for
acquisitions and divestitures, amortization of acquisition-related
assets, debt modification costs, impairments, gains and losses on
sale/disposition of business, and items that meet the conditions of
unusual and/or infrequent and the tax effect of such adjustments.
Legacy items include the resolution of and adjustments to certain
contingent assets and liabilities related to acquisitions of
continuing businesses and dispositions, including the separation of
Wyndham Hotels and Cendant, and the sale of the vacation rentals
businesses. Adjusted Net Income is useful to assist our investors
in evaluating our ongoing operating performance for the current
reporting period and, where provided, over different reporting
periods.
Average Number of
Exchange Members: Represents paid members in our vacation
exchange programs who are considered to be in good standing.
Free Cash Flow
(FCF): A non-GAAP measure, defined by TNL as net cash
provided by operating activities from continuing operations less
property and equipment additions (capital expenditures) plus the
sum of proceeds and principal payments of non-recourse vacation
ownership debt. TNL believes FCF to be a useful operating
performance measure to evaluate the ability of its operations to
generate cash for uses other than capital expenditures and, after
debt service and other obligations, its ability to grow its
business through acquisitions and equity investments, as well as
its ability to return cash to shareholders through dividends and
share repurchases. A limitation of using FCF versus the GAAP
measure of net cash provided by operating activities as a means for
evaluating TNL is that FCF does not represent the total cash
movement for the period as detailed in the consolidated statement
of cash flows.
Gross Vacation
Ownership Interest Sales: A non-GAAP measure, represents
sales of vacation ownership interests (VOIs), including sales under
the fee-for-service program before the effect of loan loss
provisions. We believe that Gross VOI sales provide an enhanced
understanding of the performance of our vacation ownership business
because it directly measures the sales volume of this business
during a given reporting period.
Leverage
Ratio: The Company calculates leverage ratio as net debt
divided by Adjusted EBITDA as defined in the credit agreement.
Net Debt: Net
debt equals total debt outstanding, less non-recourse vacation
ownership debt and cash and cash equivalents.
Tours:
Represents the number of tours taken by guests in our efforts to
sell VOIs.
Travel and
Membership Revenue per Transaction: Represents transaction
revenue divided by transactions, provided in two categories;
Exchange, which is primarily RCI, and Travel Club.
Travel and
Membership Transactions: Represents the number of exchanges
and travel club bookings recognized as revenue during the period,
net of cancellations. This measure is provided in two categories;
Exchange, which is primarily RCI, and Travel Club.
Volume Per Guest
(VPG): Represents Gross VOI sales (excluding telesales and
virtual sales) divided by the number of tours. The Company has
excluded non-tour sales in the calculation of VPG because non-tour
sales are generated by a different marketing channel. We believe
that VPG provides an enhanced understanding of the performance of
our Vacation Ownership business because it directly measures the
efficiency of its tour selling efforts during a given reporting
period.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726752473/en/
Investors: Christopher Agnew Investor Relations (407)
626-4050 Christopher.Agnew@travelandleisure.com
Media: Steven Goldsmith Media Relations (407) 626-5882
Steven.Goldsmith@travelandleisure.com
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