Vacation ownership sales growth accelerated as
leisure travel returns; Strong cash flow and EPS demonstrate
resilience and strength of the business
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:
- Net income from continuing operations of $74 million ($0.84
diluted earnings per share) on net revenue of $797 million
- Adjusted EBITDA of $193 million and adjusted diluted
earnings per share of $0.88 (1)
- Net cash provided by operating activities of $290 million
and adjusted free cash flow of $56 million for the first six months
of 2021
- 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
- Management will recommend a third quarter dividend of $0.30
per share for approval by the Board of Directors
"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:
- Adjusted EBITDA of $200 million to $210 million
- Gross VOI sales of $450 million to $470 million
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
- Condensed Consolidated Statements of Income/(Loss)
(Unaudited)
- Summary Data Sheet
- Operating Statistics
- Revenue by Reportable Segment
- Non-GAAP Measure: Reconciliation of Net Income/(Loss) to
Adjusted Net Income/(Loss) to Adjusted EBITDA
- Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI
Sales
- Non-GAAP Measure: Reconciliation of Net Cash Provided by
Operating Activities to Adjusted Free Cash Flow
- COVID-19 Impacts
- 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/
Investors: Christopher Agnew Senior Vice President,
FP&A and Investor Relations (407) 626-4050
Christopher.Agnew@wyn.com
Media: Steven Goldsmith Corporate Communications (407)
626-5882 Steven.Goldsmith@wyn.com
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