Travel + Leisure Co. Reports Second Quarter 2021 Results and Provides Third Quarter and Full Year 2021 Outlook

Gisela Steep

Vacation ownership sales growth accelerated as leisure travel returns;Strong cash flow and EPS demonstrate resilience and strength of the business ORLANDO, Fla., July 28, 2021–(BUSINESS WIRE)–Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported second quarter 2021 financial results for the three months ended […]

Vacation ownership sales growth accelerated as leisure travel returns;
Strong cash flow and EPS demonstrate resilience and strength of the business

ORLANDO, Fla., July 28, 2021–(BUSINESS WIRE)–Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported second quarter 2021 financial results for the three months ended June 30, 2021. Highlights and outlook include:

  • Expects full year adjusted EBITDA from $720 million to $735 million, adjusted diluted EPS of $3.20 to $3.30, and third quarter adjusted EBITDA from $200 million to $210 million

“The strong rebound in leisure travel in North America drove continued growth in the second quarter, demonstrated by the sustained improvement in our key metrics,” said Michael D. Brown, president and CEO of Travel + Leisure Co. “Both reporting segments exceeded our expectations, further proving the resilience and strength of our business model.”

“Leisure travel is back in a significant way. All indicators of consumer behavior show that consumers are fulfilling their desire to travel, and we are benefiting from that recovery. We are particularly pleased with the strong recovery in adjusted EBITDA margins which reflects the actions we have taken over the last 18 months to improve the quality of our business,” Brown commented.

(1) This press release includes adjusted EBITDA, adjusted diluted EPS, adjusted free cash flow, gross VOI sales and adjusted net income/(loss), 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.

Business Segment Results

The results of operations during the second quarter of 2021 and 2020 include impacts related to the COVID-19 global pandemic, which have been significantly negative to the travel industry, the Company, its customers and employees. Refer to Table 8 for a breakout of COVID-19 related impacts.

Vacation Ownership

$ in millions

Q2 2021

Q2 2020

% change

Revenue

$599

$238

152

%

Adjusted EBITDA

$133

($12

)

1,208

%

Vacation Ownership revenue increased 152% to $599 million in the second quarter of 2021 compared to the same period in the prior year. Gross vacation ownership interest (VOI) sales were $383 million compared to $18 million in the prior year and tours were 117,000 during the quarter compared to 6,000 in the same period last year. Volume Per Guest (VPG) was $3,151 due to strong close rates and higher quality tours.

Second quarter adjusted EBITDA was $133 million compared to a loss of $12 million in the prior year period. The increase was driven by higher Gross VOI sales due to the ongoing recovery of our operations from COVID-19 and cost savings initiated in the prior year, partially offset by lower net interest income as a result of a smaller contract receivable portfolio.

Second quarter 2021 results include an adjustment to the COVID-19 related allowance for loan losses, resulting in a $26 million increase to revenue and a $10 million increase to cost of vacation ownership interests, resulting in a net positive impact to Adjusted EBITDA of $16 million.

Travel and Membership

$ in millions

Q2 2021

Q2 2020

% change

Revenue

$204

$106

92

%

Adjusted EBITDA

$75

$35

114

%

Travel and Membership revenue increased 92% to $204 million in the second quarter driven by an increase in net transactions. Second quarter net transactions of 524,000 increased 353%, four and a half times higher than the same period last year.

Adjusted EBITDA increased 114% to $75 million due to the ongoing recovery of operations from the impact of COVID-19 as well as cost savings initiatives implemented in 2020 partially offset by lower subscription revenues due to decreased new owner sales in the timeshare industry.

Balance Sheet and Liquidity

Net Debt — As of June 30, 2021, the Company’s leverage ratio for covenant purposes was 4.7x, well within the 7.5x amended covenant under the Company’s credit agreement. The Company had $3.4 billion of corporate debt outstanding as of June 30, 2021, which excluded $2.0 billion of non-recourse debt related to its securitized notes receivables portfolio. Additionally, the Company had cash and cash equivalents of $328 million. At the end of the second quarter, the Company had $1.3 billion of liquidity in cash and cash equivalents and revolving credit facility availability.

Cash Flow — For the six months ended June 30, 2021, net cash provided by operating activities was $290 million, compared to $130 million in the prior year period. Adjusted free cash flow was $56 million for the six months ended June 30, 2021, compared to $88 million in the same period of 2020 due to timing of securitization activity.

Dividend — The Company paid $26 million ($0.30 per share) in cash dividends on June 30, 2021 to shareholders of record as of June 15, 2021. Management will recommend a third quarter dividend of $0.30 per share for approval by the Company’s Board of Directors in August 2021.

Outlook

The Company is providing guidance regarding expectations for the 2021 full year:

  • Adjusted EBITDA of $720 million to $735 million

  • Adjusted diluted EPS of $3.20 to $3.30

  • Gross VOI sales of $1.4 billion to $1.5 billion

  • Tours of 440,000 to 450,000

  • VPG of approximately $3,000

The Company is providing guidance regarding expectations for the third quarter of 2021:

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.

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 investor.travelandleisureco.com, or by dialing 866-342-8591, passcode TNL, 10 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 four days beginning at 12:00 p.m. ET today at 800-753-5575.

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 these non-GAAP measures, defined in Table 9, 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. See definitions on Table 9 for an explanation of our non-GAAP measures.

About Travel + Leisure Co.

Travel + Leisure Co. 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, industry-leading travel technology, and subscription travel brands; and Travel + Leisure Group, featuring top online and print travel content, online booking platforms and travel clubs, and branded consumer products. At Travel + Leisure Co., our global team of associates brings hospitality to millions, 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” 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” 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, uncertainty with respect to our ability to realize the benefits of the Travel + Leisure acquisition; the scope and duration of the novel coronavirus global pandemic (“COVID-19”), any resurgences and the paceof recovery; the timing of the widespread distribution of an effective vaccine or treatment for COVID-19; the potential impact of governmental, business and individuals’ actions in response to the COVID-19 pandemic and our related contingency plans, including reductions in investment in our business, vacation ownership interest sales and tour flow, and consumer demand and liquidity; our ability to comply with financial and restrictive covenants under our indebtedness and our ability to access capital on reasonable terms, at a reasonable cost or at all; our ability and the ability of Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) to maintain credit ratings; general economic conditions and unemployment rates, the performance of the financial and credit markets, the competition in and the economic environment for the leisure travel industry; risks associated with employees working remotely or operating with a reduced workforce; the impact of war, terrorist activity, political strife, severe weather events and other natural disasters, and pandemics (including COVID-19) or threats of pandemics; operating risks associated with the Vacation Ownership and Travel and Membership segments; uncertainties related to strategic transactions, including the spin-off of our hotels business, Wyndham Hotels, and any potential impact on our relationships with our customers, suppliers, employees and others with whom we have relationships, and possible disruption to our operations; our ability to execute on our strategy; 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, 2020, filed with the SEC on February 24, 2021. 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
Table of Contents

Table Number

  1. Condensed Consolidated Statements of Income/(Loss) (Unaudited)

  2. Summary Data Sheet

  3. Operating Statistics

  4. Revenue by Reportable Segment

  5. Non-GAAP Measure: Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) to Adjusted EBITDA

  6. Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales

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

  8. COVID-19 Impacts

  9. Definitions

Table 1

Travel + Leisure

Condensed Consolidated Statements of Income/(Loss) (Unaudited)

(in millions, except per share amounts)

Three Months Ended

Six Months Ended

June 30,

June 30,

2021

2020

2021

2020

Net revenues

Service and membership fees

$

388

$

227

$

736

$

554

Net VOI sales

294

(13

)

466

77

Consumer financing

102

119

201

246

Other

13

10

22

24

Net revenues

797

343

1,425

901

Expenses

Operating

349

200

639

598

Cost/(recovery) of vacation ownership interests

41

(17

)

62

(48

)

Consumer financing interest

20

25

44

50

General and administrative

112

85

218

195

Marketing

92

32

161

163

Depreciation and amortization

31

31

63

62

COVID-19 related costs

1

45

2

67

Asset impairments

33

44

Restructuring

23

(1

)

25

Total expenses

646

457

1,188

1,156

Operating income/(loss)

151

(114

)

237

(255

)

Other (income), net

(5

)

(1

)

(7

)

Interest expense

47

46

100

87

Interest (income)

(1

)

(2

)

(1

)

(4

)

Income/(loss) before income taxes

105

(153

)

139

(331

)

Provision/(benefit) for income taxes

31

11

37

(33

)

Net income/(loss) from continuing operations

74

(164

)

102

(298

)

Loss on disposal of discontinued business, net of income taxes

(2

)

(2

)

Net income/(loss) attributable to TNL shareholders

$

72

$

(164

)

$

100

$

(298

)

Basic earnings/(loss) per share

Continuing operations

$

0.85

$

(1.92

)

$

1.18

$

(3.46

)

Discontinued operations

(0.02

)

(0.02

)

$

0.83

$

(1.92

)

$

1.16

$

(3.46

)

Diluted earnings/(loss) per share

Continuing operations

$

0.84

$

(1.92

)

$

1.17

$

(3.46

)

Discontinued operations

(0.02

)

(0.02

)

$

0.82

$

(1.92

)

$

1.15

$

(3.46

)

Weighted average shares outstanding

Basic

86.5

85.4

86.4

86.1

Diluted

87.4

85.4

87.1

86.1

Table 2

Travel + Leisure

Summary Data Sheet

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

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

Change

2021

2020

Change

Consolidated Results

Net income/(loss) attributable to TNL shareholders

$

72

$

(164

)

144

%

$

100

$

(298

)

134

%

Diluted earnings/(loss) per share

$

0.82

$

(1.92

)

143

%

$

1.15

$

(3.46

)

133

%

Net income/(loss) from continuing operations

$

74

$

(164

)

145

%

$

102

$

(298

)

134

%

Diluted earnings/(loss) per share from continuing operations

$

0.84

$

(1.92

)

144

%

$

1.17

$

(3.46

)

134

%

Net income/(loss) margin

9.0

%

(47.8

)%

7.0

%

(33.1

)%

Adjusted Earnings/(Loss)

Adjusted EBITDA

$

193

$

16

1,106

%

$

322

$

(28

)

1,250

%

Adjusted net income/(loss)

$

77

$

(95

)

181

%

$

110

$

(179

)

161

%

Adjusted diluted earnings/(loss) per share

$

0.88

$

(1.11

)

179

%

$

1.27

$

(2.08

)

161

%

Segment Results

Net Revenues

Vacation Ownership

$

599

$

238

152

%

$

1,048

$

641

63

%

Travel and Membership

204

106

92

%

387

265

46

%

Corporate and other

(6

)

(1

)

(10

)

(5

)

Total

$

797

$

343

132

%

$

1,425

$

901

58

%

Adjusted EBITDA

Vacation Ownership

$

133

$

(12

)

1,208

%

$

200

$

(87

)

330

%

Travel and Membership

75

35

114

%

150

79

90

%

Segment Adjusted EBITDA

208

23

350

(8

)

Corporate and other

(15

)

(7

)

(28

)

(20

)

Total Adjusted EBITDA

$

193

$

16

1,106

%

$

322

$

(28

)

1,250

%

Adjusted EBITDA margin

24.2

%

4.7

%

22.6

%

(3.1

)%

Key Operating Statistics

Vacation Ownership

Gross VOI sales

$

383

$

18

2,028

%

$

619

$

431

44

%

Tours (in thousands…

117

6

1,850

%

193

168

15

%

VPG (in dollars)

$

3,151

NM

%

$

3,031

NM

%

New owner sales, volume mix

29.5

%

NM

28.4

%

NM

New owner sales, transaction mix

29.9

%

NM

28.5

%

NM

Travel and Membership

Transactions (in thousands)

524

116

353

%

1,038

517

101

%

Revenue per transaction (in dollars)

$

291

$

384

(24

)%

$

275

$

271

1

%

Average number of members (in thousands)

3,582

3,799

(6

)%

3,579

3,832

(7

)%

NM is defined as Not Meaningful.

Note: Amounts may not calculate due to rounding. See Table 9 for definitions. For a full reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, refer to Table 5 and Table 6. See “Presentation of Financial Information” and the tables for the definitions and reconciliations of these non-GAAP measures in accordance with GAAP.

In connection with the Travel + Leisure brand acquisition we updated the names and composition of our reportable segments to better align with how they are managed. We created the Travel + Leisure Group which falls under the Travel and Membership segment along with the Panorama business line. With the formation of Travel + Leisure Group, we decided that the operations of our Extra Holidays business, which focuses on direct to consumer bookings, better aligns with the operations of this new business line and therefore transitioned the management of our Extra Holidays business to the Travel and Membership segment. As such, we reclassified the results of our Extra Holidays business, which were previously reported within the Vacation Ownership segment, into the Travel and Membership segment.

Table 3

Travel + Leisure

Operating Statistics: Vacation Ownership

The following operating statistics are the significant drivers of the Company’s revenues and therefore provide an enhanced understanding of the Company’s businesses:

Year

Q1

Q2

Q3

Q4

Full Year

Gross VOI Sales (in millions) (a)

2021

$

236

$

383

$

$

$

2020

$

413

$

18

$

256

$

281

$

967

2019

$

484

$

626

$

663

$

582

$

2,355

Tours (in thousands)

2021

76

117

2020

162

6

80

85

333

2019

192

249

269

234

945

VPG

2021

$

2,847

$

3,151

$

$

$

2020

$

2,128

NM

$

3,039

$

2,938

$

2,486

2019

$

2,405

$

2,425

$

2,332

$

2,373

$

2,381

Provision for Loan Losses

(in millions) (b)

2021

$

(38

)

$

(33

)

$

$

$

2020

$

(315

)

$

(30

)

$

(45

)

$

(25

)

$

(415

)

2019

$

(109

)

$

(129

)

$

(135

)

$

(106

)

$

(479

)

Provision for Loan Loss as a Percentage of Gross VOI Sales, net of Fee-for-Service sales

2021

18.1

%

10.1% (c)

%

%

%

2020

NM

NM

18.8

%

9.5% (d)

NM

2019

22.5

%

21.2

%

20.3

%

18.6

%

20.6

%

Allowance for Loan Losses

(in millions)

2021

$

622

$

573

$

$

$

2020

$

930

$

846

$

788

$

693

$

693

2019

$

721

$

735

$

767

$

747

$

747

Gross Vacation Ownership

Contract Receivables (in millions)

2021

$

2,975

$

2,892

$

$

$

2020

$

3,722

$

3,461

$

3,309

$

3,175

$

3,175

2019

$

3,741

$

3,783

$

3,885

$

3,867

$

3,867

Allowance for Loan Loss as a Percentage of Gross Vacation Ownership Contract Receivables

2021

20.9

%

19.8

%

%

%

%

2020

25.0

%

24.4

%

23.8

%

21.8

%

21.8

%

2019

19.3

%

19.4

%

19.7

%

19.3

%

19.3

%

Note:

Full year amounts and percentages may not compute due to rounding.

NM

Defined as not meaningful.

(a)

Includes Gross VOI sales under the Company’s fee-for-service sales. (See Table 6 for a reconciliation of Net VOI sales to Gross VOI sales).

(b)

Represents provision for estimated losses on vacation ownership contract receivables, which is recorded as contra revenue to vacation ownership interest sales on the Condensed Consolidated Statements of Income/(Loss).

(c)

The percentage was 18.0%, excluding the release of $26 million of the COVID-19 related provision during the period.

(d)

The percentage was 17.3%, excluding the release of $20 million of the COVID-19 related provision during the period.

Table 3
(continued)

Travel + Leisure

Operating Statistics: Travel and Membership

The following operating statistics are the significant drivers of the Company’s revenues and therefore provide an enhanced understanding of the Company’s businesses: (a)

Year

Q1

Q2

Q3

Q4

Full Year

Transactions (in thousands)

Exchange

2021

354

314

Non-Exchange

2021

159

210

Total Transactions

2021

513

524

Exchange

2020

260

72

214

217

762

Non-Exchange

2020

141

44

142

131

458

Total Transactions

2020

401

116

356

348

1,220

Exchange

2019

444

377

367

304

1,493

Non-Exchange

2019

52

63

138

153

405

Total Transactions

2019

496

440

505

457

1,898

Revenue per transaction (in dollars)

Exchange

2021

$

292

$

331

$

$

$

Non-Exchange

2021

$

182

$

231

$

$

$

Total Revenue per transaction

2021

$

258

$

291

$

$

$

Exchange

2020

$

279

$

540

$

300

$

330

$

324

Non-Exchange

2020

$

164

$

133

$

157

$

128

$

148

Total Revenue per transaction

2020

$

239

$

384

$

243

$

254

$

258

Exchange

2019

$

275

$

276

$

276

$

307

$

282

Non-Exchange

2019

$

216

$

185

$

172

$

165

$

177

Total Revenue per transaction

2019

$

269

$

263

$

247

$

259

$

259

Average Number of Members

(in thousands)

2021

3,576

3,582

2020

3,864

3,799

3,680

3,652

3,749

2019

3,875

3,893

3,895

3,884

3,887

Note:

Full year amounts may not compute due to rounding.

(a)

Includes the impact of acquisitions from the acquisition dates forward.

Table 4

Travel + Leisure

Revenue by Reportable Segment

(in millions)

2021

Q1

Q2

Q3

Q4

Full Year

Vacation Ownership

Net VOI Sales

$

172

$

294

$

$

$

Property Management Fees and Reimbursable Revenues

157

161

Consumer Financing

98

102

Other Revenues

22

42

Total Vacation Ownership

449

599

Travel and Membership

Transaction Revenues

132

153

Subscription Revenues

41

43

Other Revenues

10

8

Total Travel and Membership

183

204

Total Reportable Segments

$

632

$

803

$

$

$

2020

Q1

Q2

Q3

Q4

Full Year

Vacation Ownership

Net VOI Sales

$

90

$

(13

)

$

196

$

231

$

505

Property Management Fees and Reimbursable Revenues

170

122

146

145

583

Consumer Financing

127

119

115

107

467

Other Revenues

16

10

18

26

70

Total Vacation Ownership

403

238

475

509

1,625

Travel and Membership

Transaction Revenues

96

44

86

88

315

Subscription Revenues

44

33

43

40

160

Other Revenues

19

29

16

13

77

Total Travel and Membership

159

106

145

141

552

Total Reportable Segments

$

562

$

344

$

620

$

650

$

2,177

2019

Q1

Q2

Q3

Q4

Full Year

Vacation Ownership

Net VOI Sales

$

375

$

481

$

528

$

464

$

1,848

Property Management Fees and Reimbursable Revenues

163

162

170

176

672

Consumer Financing

125

128

132

130

515

Other Revenues

12

31

20

24

87

Total Vacation Ownership

675

802

850

794

3,122

Travel and Membership

Transaction Revenues

133

116

125

118

492

Subscription Revenues

55

54

54

53

216

Vacation Rental Revenue

38

48

60

7

153

Other Revenues

22

24

24

14

83

Total Travel and Membership

248

242

263

192

944

Total Reportable Segments

$

923

$

1,044

$

1,113

$

986

$

4,066

Note:

Full year amounts may not add across due to rounding.

Table 5

Travel + Leisure

Non-GAAP Measure: Reconciliation of Net Income/(Loss) to

Adjusted Net Income/(Loss) to Adjusted EBITDA

(in millions, except diluted per share amounts)

Three Months Ended June 30,

2021

EPS

Margin %

2020

EPS

Margin %

Net income/(loss) attributable to TNL shareholders

$

72

$

0.82

9.0

%

$

(164

)

$

(1.92

)

(47.8

)%

Loss on disposal of discontinued business, net of income taxes

(2

)

Net income/(loss) from continuing operations

$

74

$

0.84

9.3

%

$

(164

)

$

(1.92

)

(47.8

)%

Legacy items

1

1

Amortization of acquired intangibles (a)

2

2

COVID-19 related costs (b)

1

26

Exchange inventory write-off

Impairments (c)

38

Restructuring costs

23

Taxes (d)

(1

)

(21

)

Adjusted net income/(loss)

$

77

$

0.88

9.7

%

$

(95

)

$

(1.11

)

(27.7

)%

Income taxes/(benefit) on adjusted net income/(loss)

32

32

Interest expense

47

46

Depreciation

29

29

Stock-based compensation expense (e)

9

6

Interest income

(1

)

(2

)

Adjusted EBITDA

$

193

24.2

%

$

16

4.7

%

Diluted Shares Outstanding

87.4

85.4

Six Months Ended June 30,

2021

EPS

Margin %

2020

EPS

Margin %

Net income/(loss) attributable to TNL shareholders

$

100

$

1.15

7.0

%

$

(298

)

$

(3.46

)

(33.1

)%

Loss on disposal of discontinued business, net of income taxes

(2

)

Net income/(loss) from continuing operations

$

102

$

1.17

7.2

%

$

(298

)

$

(3.46

)

(33.1

)%

Legacy items

4

2

Amortization of acquired intangibles (a)

5

5

COVID-19 related costs (b)

2

38

Exchange inventory write-off

38

Impairments (c)

48

Restructuring costs

(1

)

25

Taxes (d)

(2

)

(37

)

Adjusted net income/(loss)

$

110

$

1.27

7.7

%

$

(179

)

$

(2.08

)

(19.9

)%

Income taxes/(benefit) on adjusted net income/(loss)

39

4

Interest expense

100

87

Depreciation

58

57

Stock-based compensation expense (e)

16

7

Interest income

(1

)

(4

)

Adjusted EBITDA

$

322

22.6

%

$

(28

)

(3.1

)%

Diluted Shares Outstanding

87.1

86.1

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/(loss), adjusted EBITDA, 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 9 for the definitions of these non-GAAP measures.

(a)

Amortization of acquisition-related intangible assets is excluded from adjusted net income/(loss) and adjusted EBITDA.

(b)

Reflects severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by employee retention credits received in connection with the U.S. CARES Act, ARPA and similar international programs for wages paid to certain employees despite having operations suspended. This amount does not include costs associated with idle pay.

(c)

Includes $5 million of bad debt expense related to a note receivable for the three and six months ended June 30, 2020, included in Operating expenses on the Condensed Consolidated Statements of Income/(Loss).

(d)

Amounts represents the tax effect of the adjustments.

(e)

All stock-based compensation is excluded from adjusted EBITDA.

Table 6

Travel + Leisure

Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales

(in millions)

The Company believes gross VOI sales provide an enhanced understanding of the performance of its vacation clubs business because it directly measures the sales volume of this business during a given reporting period.

The following table provides a reconciliation of Net VOI sales (see Table 4) to Gross VOI sales (see Table 3):

Year

2021

Q1

Q2

Q3

Q4

Full Year

Net VOI sales

$

172

$

294

$

$

$

Loan loss provision

38

33

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

210

327

Fee-for-Service sales

26

56

Gross VOI sales

$

236

$

383

$

$

$

2020

Net VOI sales

$

90

$

(13

)

$

196

$

231

$

505

Loan loss provision

315

30

45

25

415

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

405

17

241

256

920

Fee-for-Service sales

8

1

15

25

47

Gross VOI sales

$

413

$

18

$

256

$

281

$

967

2019

Net VOI sales

$

375

$

481

$

528

$

464

$

1,848

Loan loss provision

109

129

135

106

479

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

484

610

663

570

2,327

Fee-for-Service sales

16

12

28

Gross VOI sales

$

484

$

626

$

663

$

582

$

2,355

Note: Amounts may not add due to rounding.

Table 7

Travel + Leisure

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

(in millions)

Six Months Ended June 30,

2021

2020

Net cash provided by operating activities

$

290

$

130

Property and equipment additions

(25

)

(39

)

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

(213

)

(33

)

Free cash flow

$

52

$

58

Separation and other adjustments (a)

13

COVID-19 related adjustments (b)

4

17

Adjusted free cash flow (c)

$

56

$

88

(a)

Includes cash paid for separation-related activities and transaction costs for acquisitions and divestitures.

(b)

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

(c)

The Company had $62 million of net cash used in investing activities and $1.1 billion of net cash used in financing activities for the six months ended June 30, 2021, and $36 million of net cash used in investing activities and $598 million of net cash provided by financing activities for the six months ended June 30, 2020.

Table 8

Travel + Leisure

COVID-19 Impacts

(in millions)

The tables below present the COVID-19 related impacts to our results of operations for the three and six months ended June 30, 2021, and the related classification on the Condensed Consolidated Statements of Income/(Loss):

Three Months Ended

Vacation Ownership

Travel and Membership

Corporate & Other

Consolidated

Non-GAAP Adjustments

Income Statement
Classification

June 30, 2021

Allowance for loan losses:

Provision

$

(26

)

$

$

$

(26

)

$

Vacation ownership interest sales

Recoveries

10

10

Cost/(recovery) of vacation ownership interests

Employee compensation related and other

1

1

1

COVID-19 related costs

Total COVID-19

$

(15

)

$

$

$

(15

)

$

1

Six Months Ended

Vacation Ownership

Travel and Membership

Corporate & Other

Consolidated

Non-GAAP Adjustments

Income Statement
Classification

June 30, 2021

Allowance for loan losses:

Provision

$

(26

)

$

$

$

(26

)

$

Vacation ownership interest sales

Recoveries

10

10

Cost/(recovery) of vacation ownership interests

Employee compensation related and other

1

1

2

2

COVID-19 related costs

Lease related

(1

)

(1

)

(1

)

Restructuring

Total COVID-19

$

(16

)

$

$

1

$

(15

)

$

1

The tables below present the COVID-19 related impacts to our results of operations for the three and six months ended June 30, 2020, and the related classification on the Condensed Consolidated Statements of Income/(Loss):

Three Months Ended

Vacation Ownership

Travel and Membership

Corporate & Other

Consolidated

Non-GAAP Adjustments

Income Statement
Classification

June 30, 2020

Employee compensation related and other

$

32

$

5

$

8

$

45

$

26

COVID-19 related costs

Asset impairment

8

30

38

38

Asset impairments / Operating expenses

Lease related

1

22

23

23

Restructuring

Total COVID-19

$

41

$

57

$

8

$

106

$

87

Six Months Ended

Vacation Ownership

Travel and Membership

Corporate & Other

Consolidated

Non-GAAP Adjustments

Income Statement
Classification

June 30, 2020

Allowance for loan losses:

Provision

$

225

$

$

$

225

$

Vacation ownership interest sales

Recoveries

(55

)

(55

)

Cost/(recovery) of vacation ownership interests

Employee compensation related and other

51

5

11

67

38

COVID-19 related costs

Asset impairment

14

34

48

48

Asset impairments / Operating expenses

Exchange inventory write-off

38

38

38

Operating expenses

Lease related

1

22

23

23

Restructuring

Total COVID-19

$

236

$

99

$

11

$

346

$

147

Table 9

Definitions

Adjusted Diluted Earnings/(Loss) per Share: A non-GAAP measure, defined by the Company as Adjusted net income/(loss) from continuing operations divided by the diluted weighted average number of common shares.

Adjusted EBITDA: A non-GAAP measure, defined by the Company as net income/(loss) 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 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 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. 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 Net Income/(Loss): A non-GAAP measure, defined by the Company as net income/(loss) 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 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.

Average Number of Members: Represents paid members in our vacation exchange programs who are current on their annual membership dues or within the allowed grace period.

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.

New owner sales, volume mix: Represents VOI sales (tour generated plus telephonic) to first time buyers as a percentage of total VOI sales.

New owner sales, transactions mix: Represents the number of first time buyer transactions as a percentage of the total number of VOIs sold during the period.

Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.

Travel and Membership Revenue per Transaction: Represents transactional revenue divided by transactions, provided in two categories; Exchange, which is primarily RCI, and non-Exchange.

Travel and Membership Transactions: Represents the number of vacation bookings recognized as revenue during the period, net of cancellations, provided in two categories; Exchange, which is primarily RCI, and non-Exchange.

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210728005272/en/

Contacts

Investors:
Christopher Agnew
Senior Vice President, FP&A and Investor Relations
(407) 626-4050
[email protected]

Media:
Steven Goldsmith
Corporate Communications
(407) 626-5882
[email protected]

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