Travel + Leisure Co. Reports Third Quarter 2022 Results

Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported third quarter 2022 financial results for the three months ended September 30, 2022. Highlights and outlook include:

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Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported third quarter 2022 financial results for the three months ended September 30, 2022.

Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported third quarter 2022 financial results for the three months ended September 30, 2022.

  • Net income of $116 million, $1.38 diluted earnings per share, on net revenue of $937 million
  • Adjusted EBITDA of $234 million and adjusted diluted earnings per share of $1.28 (1)
  • Net cash provided by operating activities of $267 million and adjusted free cash flow of $195 million for the nine months ended September 30, 2022
  • Expects full year adjusted EBITDA from $855 million to $865 million
  • Repurchased $115 million of common stock in the third quarter and $243 million for the nine months ended September 30, 2022
  • Management will recommend a fourth quarter dividend of $0.40 per share for approval by the Board of Directors
  • Executed $250 million term securitization on October 20, 2022

“Our third quarter results and outlook for the remainder of the year clearly demonstrate the strength of leisure travel and the strong desire for new and existing timeshare owners to buy, use, and upgrade their membership,” said Michael D. Brown, president and CEO of Travel + Leisure Co.

“Our Vacation Ownership segment is performing as well as it ever has, driven by VPG 45% higher than 2019. The strength in VPG reflects the value our consumer sees in the timeshare product, with strong relative value to hotel and alternative accommodations.”

(1) This press release includes adjusted EBITDA, adjusted diluted EPS, adjusted free cash flow, gross VOI sales and adjusted net income, which are metrics 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 to the most directly comparable 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

Q3 2022

Q3 2021

% change

Revenue

$754

$665

13 %

Adjusted EBITDA

$188

$181

4 %

 

Vacation Ownership revenue increased 13% to $754 million in the third quarter of 2022 compared to the same period in the prior year. Gross vacation ownership interest (VOI) sales were $555 million compared to $440 million in the prior year and tours were 158,000 during the quarter compared to 129,000 in the same period last year. VPG increased 5% to $3,393.

Third quarter adjusted EBITDA was $188 million compared to $181 million in the prior year period. The increase was driven by higher Gross VOI sales due to the ongoing recovery of operations from COVID-19, partially offset by an adjustment in the prior year to the COVID-19 related allowance for loan losses. The third quarter 2021 COVID-19 related allowance adjustment resulted in a $21 million increase to revenue and a $13 million net positive impact to Adjusted EBITDA.

Travel and Membership

$ in millions

Q3 2022

Q3 2021

% change

Revenue

$183

$175

5 %

Adjusted EBITDA

$65

$64

2 %

 

Travel and Membership revenue increased 5% to $183 million in the third quarter of 2022 compared to the same period in the prior year, primarily due to transaction growth.

Third quarter Adjusted EBITDA was $65 million compared to $64 million in the prior year due to the revenue increase partially offset by higher staffing and marketing costs to support new travel club launches.

Balance Sheet and Liquidity

Net Debt — As of September 30, 2022, the Company had net debt of $3.2 billion comprised of $3.4 billion of corporate debt and $169 million of cash and cash equivalents. Corporate debt excludes $1.9 billion of non-recourse debt related to the securitized notes receivables portfolio. The Company's leverage ratio for covenant purposes was 3.7x. At the end of the third quarter, the Company had $1.2 billion of liquidity in cash and cash equivalents and revolving credit facility availability.

Timeshare Receivables Financing — On July 21, 2022, the Company closed on a $275 million term securitization transaction with a weighted average coupon of 5.7% and a 90.5% advance rate. Subsequent to the end of the quarter, on October 20, 2022, the Company closed on an additional $250 million term securitization transaction with a weighted average coupon of 6.9% and a 87.5% advance rate.

Cash Flow For the nine months ended September 30, 2022, net cash provided by operating activities was $267 million, compared to $435 million in the prior year period. Adjusted free cash flow was $195 million for the nine months ended September 30, 2022 compared to $128 million in the same period of 2021.

Share Repurchases During the third quarter of 2022, the Company repurchased 2.8 million shares of common stock for $115 million at a weighted average price of $41.76 per share. As of September 30, 2022, the Company had $585 million of remaining availability under its share repurchase program.

Dividend The Company paid $33 million ($0.40 per share) in cash dividends on September 30, 2022 to shareholders of record as of September 15, 2022. Management will recommend a fourth quarter dividend of $0.40 per share for approval by the Company’s Board of Directors in November 2022.

Outlook

The Company is providing guidance regarding expectations for the 2022 full year:

  • Adjusted EBITDA of $855 million to $865 million
  • Gross VOI sales of $1.95 billion to $2.0 billion
  • VPG of approximately $3,400

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, such 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. EDT. 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. EDT today. Additionally, a telephone replay will be available for seven days beginning at 12:00 p.m. EDT 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/(loss), which include or exclude certain items, as well as non-GAAP guidance. The Company utilizes non-GAAP measures, defined in Table 6, 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 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. See definitions on Table 6 for an explanation of our non-GAAP measures.

About Travel + Leisure Co.

Travel + Leisure Co. (NYSE:TNL) is the world’s leading membership and leisure travel company, with nearly 20 travel brands across its resort, travel club, and lifestyle portfolio. The company provides outstanding vacation experiences and travel inspiration to millions of owners, members, and subscribers every year through its products and services: Wyndham Destinations, the largest vacation ownership company with more than 245 vacation club resort locations across the globe; Panorama, the world’s foremost membership travel business that includes the largest vacation exchange company and subscription travel brands; and Travel + Leisure Group, featuring top travel content and travel services including the brand’s eponymous travel club. At Travel + Leisure Co., our global team of associates brings hospitality to millions each year, turning vacation inspiration into exceptional travel experiences. 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,” “intends,” and 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, inflation and potential recessionary impacts, unemployment rates, consumer sentiment, 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; rising interest rates and our ability to access capital 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 the scope, impact and duration of the novel coronavirus global pandemic (“COVID-19”), including resurgences, the pace of recovery, distribution and adoption of vaccines and treatments, and actions in response to the evolving pandemic by governments, businesses and individuals; 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, 2021, filed with the SEC on February 23, 2022. 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

  1. Condensed Consolidated Statements of Income (Unaudited)
  2. Summary Data Sheet
  3. Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA
  4. Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
  5. COVID-19 Related Impacts
  6. Definitions
 
 
 

Table 1

Travel + Leisure Co.

Condensed Consolidated Statements of Income (Unaudited)

(in millions, except per share amounts)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net revenues

 

 

 

 

 

 

 

Service and membership fees

$

410

 

 

$

378

 

 

$

1,222

 

 

$

1,114

 

Net VOI sales

 

403

 

 

 

344

 

 

 

1,099

 

 

 

810

 

Consumer financing

 

104

 

 

 

103

 

 

 

302

 

 

 

304

 

Other

 

20

 

 

 

14

 

 

 

45

 

 

 

36

 

Net revenues

 

937

 

 

 

839

 

 

 

2,668

 

 

 

2,264

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Operating

 

417

 

 

 

352

 

 

 

1,202

 

 

 

992

 

Cost of vacation ownership interests

 

39

 

 

 

43

 

 

 

125

 

 

 

105

 

Consumer financing interest

 

20

 

 

 

19

 

 

 

55

 

 

 

63

 

Marketing

 

125

 

 

 

101

 

 

 

337

 

 

 

261

 

General and administrative

 

117

 

 

 

106

 

 

 

358

 

 

 

325

 

Depreciation and amortization

 

30

 

 

 

31

 

 

 

91

 

 

 

93

 

Restructuring

 

 

 

 

 

 

 

8

 

 

 

(1

)

COVID-19 related costs

 

 

 

 

1

 

 

 

2

 

 

 

3

 

Asset recoveries, net

 

 

 

 

 

 

 

(1

)

 

 

 

Total expenses

 

748

 

 

 

653

 

 

 

2,177

 

 

 

1,841

 

 

 

 

 

 

 

 

 

Operating income

 

189

 

 

 

186

 

 

 

491

 

 

 

423

 

Interest expense

 

48

 

 

 

47

 

 

 

143

 

 

 

147

 

Interest (income)

 

(2

)

 

 

(1

)

 

 

(3

)

 

 

(1

)

Other (income), net

 

(19

)

 

 

 

 

 

(16

)

 

 

(2

)

Income before income taxes

 

162

 

 

 

140

 

 

 

367

 

 

 

279

 

Provision for income taxes

 

46

 

 

 

39

 

 

 

101

 

 

 

76

 

Net income from continuing operations

 

116

 

 

 

101

 

 

 

266

 

 

 

203

 

Loss on disposal of discontinued business, net of income taxes

 

 

 

 

 

 

 

 

 

 

(2

)

Net income attributable to TNL shareholders

$

116

 

 

$

101

 

 

$

266

 

 

$

201

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

Continuing operations

$

1.39

 

 

$

1.16

 

 

$

3.15

 

 

$

2.35

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

(0.02

)

 

$

1.39

 

 

$

1.16

 

 

$

3.15

 

 

$

2.33

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

Continuing operations

$

1.38

 

 

$

1.15

 

 

$

3.12

 

 

$

2.33

 

Discontinued operations

 

 

 

 

 

 

 

 

 

 

(0.03

)

 

$

1.38

 

 

$

1.15

 

 

$

3.12

 

 

$

2.30

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

 

83.0

 

 

 

86.6

 

 

 

84.6

 

 

 

86.5

 

Diluted

 

83.6

 

 

 

87.4

 

 

 

85.5

 

 

 

87.3

 

 
 
 
 

Table 2

Travel + Leisure Co.

Summary Data Sheet

(in millions, except per share amounts, unless otherwise indicated)

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

 

2022

 

 

 

2021

 

 

Change

 

 

2022

 

 

 

2021

 

 

Change

Consolidated Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to TNL shareholders

$

116

 

 

$

101

 

 

15

%

 

$

266

 

 

$

201

 

 

32

%

Diluted earnings per share

$

1.38

 

 

$

1.15

 

 

20

%

 

$

3.12

 

 

$

2.30

 

 

36

%

Net income from continuing operations

$

116

 

 

$

101

 

 

15

%

 

$

266

 

 

$

203

 

 

31

%

Diluted earnings per share from continuing operations

$

1.38

 

 

$

1.15

 

 

20

%

 

$

3.12

 

 

$

2.33

 

 

34

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income margin

 

12.4

%

 

 

12.0

%

 

 

 

 

10.0

%

 

 

8.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

234

 

 

$

228

 

 

3

%

 

$

634

 

 

$

550

 

 

15

%

Adjusted net income

$

107

 

 

$

104

 

 

3

%

 

$

275

 

 

$

214

 

 

29

%

Adjusted diluted earnings per share

$

1.28

 

 

$

1.19

 

 

8

%

 

$

3.22

 

 

$

2.46

 

 

31

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

$

754

 

 

$

665

 

 

13

%

 

$

2,098

 

 

$

1,722

 

 

22

%

Travel and Membership

 

183

 

 

 

175

 

 

5

%

 

 

572

 

 

 

544

 

 

5

%

Corporate and other

 

 

 

 

(1

)

 

 

 

 

(2

)

 

 

(2

)

 

 

Total

$

937

 

 

$

839

 

 

12

%

 

$

2,668

 

 

$

2,264

 

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

$

188

 

 

$

181

 

 

4

%

 

$

480

 

 

$

386

 

 

24

%

Travel and Membership

 

65

 

 

 

64

 

 

2

%

 

 

211

 

 

 

209

 

 

1

%

Segment Adjusted EBITDA

 

253

 

 

 

245

 

 

 

 

 

691

 

 

 

595

 

 

 

Corporate and other

 

(19

)

 

 

(17

)

 

 

 

 

(57

)

 

 

(45

)

 

 

Total Adjusted EBITDA

$

234

 

 

$

228

 

 

3

%

 

$

634

 

 

$

550

 

 

15

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

 

25.0

%

 

 

27.2

%

 

 

 

 

23.8

%

 

 

24.3

%

 

 

 

Note: Amounts may not calculate due to rounding. See "Presentation of Financial Information" and Table 6 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 September 30,

 

Nine Months Ended September 30,

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Vacation Ownership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net VOI sales

$

403

 

$

344

 

17

%

 

$

1,099

 

$

810

 

36

%

Loan loss provision

 

91

 

 

49

 

86

%

 

 

216

 

 

120

 

80

%

Gross VOI sales, net of Fee-for-Service sales

 

494

 

 

393

 

26

%

 

 

1,315

 

 

930

 

41

%

Fee-for-Service sales

 

61

 

 

47

 

30

%

 

 

146

 

 

129

 

13

%

Gross VOI sales

$

555

 

$

440

 

26

%

 

$

1,461

 

$

1,059

 

38

%

 

 

 

 

 

 

 

 

 

 

 

 

Tours (in thousands)

 

158

 

 

129

 

22

%

 

 

415

 

 

323

 

28

%

VPG (in dollars)

$

3,393

 

$

3,233

 

5

%

 

$

3,423

 

$

3,112

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

Tour generated VOI sales

$

537

 

$

418

 

28

%

 

$

1,419

 

$

1,004

 

41

%

Telesales and other

 

18

 

 

22

 

(18

) %

 

 

42

 

 

55

 

(24

) %

Gross VOI sales

$

555

 

$

440

 

26

%

 

$

1,461

 

$

1,059

 

38

%

 

 

 

 

 

 

 

 

 

 

 

 

Net VOI sales

$

403

 

$

344

 

17

%

 

$

1,099

 

$

810

 

36

%

Property management revenue

 

191

 

 

176

 

9

%

 

 

565

 

 

503

 

12

%

Consumer financing

 

104

 

 

103

 

1

%

 

 

302

 

 

304

 

(1

) %

Other (a)

 

56

 

 

42

 

33

%

 

 

132

 

 

105

 

26

%

Total Vacation Ownership revenue

$

754

 

$

665

 

13

%

 

$

2,098

 

$

1,722

 

22

%

 

 

 

 

 

 

 

 

 

 

 

 

Travel and Membership (b)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Avg. number of exchange members (in thousands)

 

3,501

 

 

3,895

 

(10

) %

 

 

3,529

 

 

3,684

 

(4

) %

 

 

 

 

 

 

 

 

 

 

 

 

Transactions (in thousands)

 

250

 

 

231

 

8

%

 

 

813

 

 

836

 

(3

) %

Revenue per transaction (in dollars)

$

334

 

$

344

 

(3

) %

 

$

334

 

$

321

 

4

%

Exchange transaction revenue

$

84

 

$

79

 

6

%

 

$

272

 

$

268

 

1

%

 

 

 

 

 

 

 

 

 

 

 

 

Transactions (in thousands)

 

189

 

 

172

 

10

%

 

 

560

 

 

476

 

18

%

Revenue per transaction (in dollars)

$

239

 

$

248

 

(4

) %

 

$

248

 

$

256

 

(3

) %

Travel Club transaction revenue

$

45

 

$

43

 

5

%

 

$

139

 

$

122

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

Transactions (in thousands)

 

439

 

 

403

 

9

%

 

 

1,373

 

 

1,312

 

5

%

Revenue per transaction (in dollars)

$

293

 

$

303

 

(3

) %

 

$

299

 

$

297

 

1

%

Travel and Membership transaction revenue

$

129

 

$

122

 

6

%

 

$

411

 

$

390

 

5

%

 

 

 

 

 

 

 

 

 

 

 

 

Transaction revenue

$

129

 

$

122

 

6

%

 

$

411

 

$

390

 

5

%

Subscription revenue

 

47

 

 

43

 

9

%

 

 

137

 

 

127

 

8

%

Other (c)

 

7

 

 

10

 

(30

) %

 

 

24

 

 

27

 

(11

) %

Total Travel and Membership revenue

$

183

 

$

175

 

5

%

 

$

572

 

$

544

 

5

%

Note:

Amounts may not compute due to rounding.

 

Due to changes in organizational structure in the second quarter of 2022, the management of Extra Holidays was transitioned to the Vacation Ownership segment. As such, the Company reclassified the results of Extra Holidays, which was previously reported within the Travel and Membership segment, into the Vacation Ownership segment. Prior period segment information has been updated to reflect this change.

 

(a)

Includes fee-for-service commission revenues and other ancillary revenues. 

(b)

In 2022, the Travel and Membership segment determined that certain rental transactions for travelers that were not RCI members are more closely aligned with Travel Club transactions (previously “Non-exchange”). It was also 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 September 30,

 

 

2022

 

 

EPS

 

Margin %

 

 

2021

 

 

EPS

 

Margin %

Net income attributable to TNL shareholders

$

116

 

 

$

1.38

 

12.4

%

 

$

101

 

 

$

1.15

 

12.0

%

Amortization of acquired intangibles (a)

 

2

 

 

 

 

 

 

 

2

 

 

 

 

 

COVID-19 related costs

 

 

 

 

 

 

 

 

1

 

 

 

 

 

Legacy items

 

(1

)

 

 

 

 

 

 

2

 

 

 

 

 

Gain on equity investment

 

(3

)

 

 

 

 

 

 

 

 

 

 

 

Fair value change in contingent consideration

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

Taxes (b)

 

3

 

 

 

 

 

 

 

(1

)

 

 

 

 

Adjusted net income

$

107

 

 

$

1.28

 

11.4

%

 

$

104

 

 

$

1.19

 

12.4

%

Income taxes on adjusted net income

 

43

 

 

 

 

 

 

 

41

 

 

 

 

 

Interest expense

 

48

 

 

 

 

 

 

 

47

 

 

 

 

 

Depreciation

 

28

 

 

 

 

 

 

 

29

 

 

 

 

 

Stock-based compensation expense (c)

 

10

 

 

 

 

 

 

 

8

 

 

 

 

 

Interest income

 

(2

)

 

 

 

 

 

 

(1

)

 

 

 

 

Adjusted EBITDA

$

234

 

 

 

 

25.0

%

 

$

228

 

 

 

 

27.2

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding

 

83.6

 

 

 

 

 

 

 

87.4

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

 

2022

 

 

EPS

 

Margin %

 

 

2021

 

 

EPS

 

Margin %

Net income attributable to TNL shareholders

$

266

 

 

$

3.12

 

10.0

%

 

$

201

 

 

$

2.30

 

8.9

%

Loss on disposal of discontinued business, net of income taxes

 

 

 

 

 

 

 

 

2

 

 

 

 

 

Net income from continuing operations

$

266

 

 

$

3.12

 

10.0

%

 

$

203

 

 

$

2.33

 

9.0

%

Restructuring (d)

 

8

 

 

 

 

 

 

 

(1

)

 

 

 

 

Amortization of acquired intangibles (a)

 

7

 

 

 

 

 

 

 

7

 

 

 

 

 

Loss on equity investment

 

5

 

 

 

 

 

 

 

 

 

 

 

 

COVID-19 related costs

 

2

 

 

 

 

 

 

 

3

 

 

 

 

 

Legacy items

 

1

 

 

 

 

 

 

 

6

 

 

 

 

 

Asset recoveries, net (e)

 

(1

)

 

 

 

 

 

 

 

 

 

 

 

Fair value change in contingent consideration

 

(10

)

 

 

 

 

 

 

 

 

 

 

 

Taxes (b)

 

(3

)

 

 

 

 

 

 

(4

)

 

 

 

 

Adjusted net income

$

275

 

 

$

3.22

 

10.3

%

 

$

214

 

 

$

2.46

 

9.5

%

Income taxes on adjusted net income

 

104

 

 

 

 

 

 

 

80

 

 

 

 

 

Interest expense

 

143

 

 

 

 

 

 

 

147

 

 

 

 

 

Depreciation

 

84

 

 

 

 

 

 

 

86

 

 

 

 

 

Stock-based compensation expense (c)

 

31

 

 

 

 

 

 

 

24

 

 

 

 

 

Interest income

 

(3

)

 

 

 

 

 

 

(1

)

 

 

 

 

Adjusted EBITDA

$

634

 

 

 

 

23.8

%

 

$

550

 

 

 

 

24.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding

 

85.5

 

 

 

 

 

 

 

87.3

 

 

 

 

 

 

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 6 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)

Represents the tax effects on the adjustments.

(c)

All stock-based compensation is excluded from adjusted EBITDA.

(d)

Includes $3 million of stock-based compensation expenses for the nine months ended September 30, 2022 associated with the 2022 restructuring. 

(e)

Includes $1 million of inventory impairments for the nine months ended September 30, 2022, included in Cost of vacation ownership interests on the Condensed Consolidated Statements of Income. 

 
 
 
 

Table 4

Travel + Leisure Co.

Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow

(in millions) 

 

 

 

Nine Months Ended September 30,

 

 

 

2022

 

 

 

2021

 

 

 

 

 

 

Net cash provided by operating activities

 

$

267

 

 

$

435

 

Property and equipment additions

 

 

(36

)

 

 

(40

)

Sum of proceeds and principal payments of non-recourse vacation ownership debt

 

 

(38

)

 

 

(272

)

Free cash flow

 

$

193

 

 

$

123

 

COVID-19 related adjustments (a)

 

 

2

 

 

 

5

 

Adjusted free cash flow (b)

 

$

195

 

 

$

128

 

(a)

Includes cash paid for COVID-19 expenses factored into the calculation of Adjusted EBITDA.

(b)

The Company had $34 million of net cash used in investing activities and $414 million of net cash used in financing activities for the nine months ended September 30, 2022, and $77 million of net cash used in investing activities and $1.2 billion of net cash used in financing activities for the nine months ended September 30, 2021.

 
 
 
 

Table 5 

Travel + Leisure Co.

COVID-19 Related Impacts

(in millions)

 

The table below presents the COVID-19 related impacts on our results of operations for the nine months ended September 30, 2022, and the related classification on the Condensed Consolidated Statements of Income. There were no COVID-19 related impacts recognized during the three months ended September 30, 2022.

Nine Months Ended

 

Vacation

Ownership

 

Travel and

Membership

 

Corporate

& Other

 

Consolidated

 

Non-GAAP

Adjustments

 

Income Statement

Classification

September 30, 2022

 

 

 

 

 

 

Employee compensation related and other

 

$

 

$

 

$

2

 

$

2

 

$

2

 

COVID-19 related costs

Total COVID-19

 

$

 

$

 

$

2

 

$

2

 

$

2

 

 

 
 

The tables below present the COVID-19 related impacts on our results of operations for the three and nine months ended September 30, 2021, and the related classification on the Condensed Consolidated Statements of Income:

Three Months Ended

 

Vacation

Ownership

 

Travel and

Membership

 

Corporate

& Other

 

Consolidated

 

Non-GAAP

Adjustments

 

Income Statement

Classification

September 30, 2021

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Provision

 

$

(21

)

 

$

 

$

 

$

(21

)

 

$

 

Vacation ownership interest sales

Recoveries

 

 

8

 

 

 

 

 

 

 

8

 

 

 

 

Cost of vacation ownership interests

Employee compensation related and other

 

 

1

 

 

 

 

 

 

 

1

 

 

 

1

 

COVID-19 related costs

Total COVID-19

 

$

(12

)

 

$

 

$

 

$

(12

)

 

$

1

 

 

 

Nine Months Ended

 

Vacation

Ownership

 

Travel and

Membership

 

Corporate

& Other

 

Consolidated

 

Non-GAAP

Adjustments

 

Income Statement

Classification

September 30, 2021

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Provision

 

$

(47

)

 

$

 

$

 

$

(47

)

 

$

 

 

Vacation ownership interest sales

Recoveries

 

 

17

 

 

 

 

 

 

 

17

 

 

 

 

 

Cost of vacation ownership interests

Employee compensation related and other

 

 

2

 

 

 

 

 

1

 

 

3

 

 

 

3

 

 

COVID-19 related costs

Lease related

 

 

(1

)

 

 

 

 

 

 

(1

)

 

 

(1

)

 

Restructuring

Total COVID-19

 

$

(29

)

 

$

 

$

1

 

$

(28

)

 

$

2

 

 

 













Table 6

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, impairments, 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 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.

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 tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade 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.

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