June 15, 2024

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Travel + Leisure Co. Reports Fourth Quarter and Full-Year 2022 Results and Provides 2023 Outlook

Travel + Leisure Co. Reports Fourth Quarter and Full-Year 2022 Results and Provides 2023 Outlook

ORLANDO, Fla., February 22, 2023–(BUSINESS WIRE)–Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported fourth quarter and full-year 2022 financial results for the period ended December 31, 2022.

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20230222005302/en/

Travel + Leisure Co., the world’s leading membership and leisure travel company, today reported 2022 full year financial results, with net income of $357 million, $4.24 diluted earnings per share, on net revenue of $3.6 billion. (Graphic: Business Wire)

Fourth quarter 2022 highlights:

  • Net income of $90 million (diluted EPS of $1.12) on net revenue of $899 million

  • Adjusted EBITDA of $225 million and Adjusted diluted EPS of $1.30 (1)

  • Repurchased $108 million of common stock during the fourth quarter

Full-year 2022 highlights:

  • Net income of $357 million (diluted EPS of $4.24) on net revenue of $3.6 billion

  • Adjusted EBITDA of $859 million and Adjusted diluted EPS of $4.52

  • Net cash provided by operating activities of $442 million and Adjusted free cash flow of $439 million

  • Repurchased $351 million of common stock during the full-year

Outlook:

  • Full Year 2023 Adjusted EBITDA expected to range from $920 million to $940 million and first quarter 2023 Adjusted EBITDA expected to range from $170 million to $180 million

  • The Company will recommend increasing first quarter 2023 dividend to $0.45 per share for approval by the Board of Directors

“Our fourth quarter and full year results demonstrate our ability to capitalize on the strong leisure travel market and deliver great vacations for our owners and members while maximizing return of capital to our shareholders,” said Michael D. Brown, president and CEO of Travel + Leisure Co. “We finished the year with the highest annual sales volume per guest in our company’s history, and returned $486 million of capital to shareholders.”

“December’s strong finish has carried into January and February, and our owner reservations on the books are pacing ahead of 2022, underscoring that consumers see the value of our product and are continuing to prioritize vacations.”

(1) This press release includes Adjusted EBITDA, Adjusted diluted EPS, Adjusted free cash flow, Gross VOI sales and Adjusted net income, which are measures that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”). See “Presentation of Financial Information” and the tables for the definitions and reconciliations of these non-GAAP measures. Forward-looking non-GAAP measures are presented in this press release only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation is available without unreasonable effort.

Business Segment Results

The results of operations during the fourth quarter and full-year of 2022 and 2021 include impacts related to the COVID-19 global pandemic. Refer to Table 5 for a breakout of COVID-19 related impacts.

Vacation Ownership

$ in millions

Q4 2022

Q4 2021

% change

FY 2022

FY 2021

% change

Revenue

$737

$700

5

%

$2,835

$2,423

17

%

Adjusted EBITDA

$186

$184

1

%

$665

$569

17

%

Vacation Ownership revenue increased 5% to $737 million in the fourth quarter of 2022 compared to the same period in the prior year. In the fourth quarter, Gross VOI sales were $521 million compared to $432 million in the prior year period and tours were 147,000 in the fourth quarter compared to 129,000 in the same period last year. Volume Per Guest (VPG) increased 7% to $3,434 due to strong close rates and higher quality tours.

Fourth quarter Adjusted EBITDA was $186 million compared to $184 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, partially offset by an adjustment in the prior year to the COVID-19 related allowance for loan losses, which resulted in a $44 million increase to revenue and a $28 million net positive impact to Adjusted EBITDA.

Travel and Membership

$ in millions

Q4 2022

Q4 2021

% change

FY 2022

FY 2021

% change

Revenue

$163

$170

(4

)%

$735

$714

3

%

Adjusted EBITDA

$57

$62

(8

)%

$268

$271

(1

)%

Travel and Membership revenue decreased 4% to $163 million in the fourth quarter of 2022 compared to the same period in the prior year, primarily due to a decrease in Exchange subscription revenue related to a lower average member count and a stronger U.S. dollar.

Fourth quarter Adjusted EBITDA was $57 million compared to $62 million in the prior year due to the revenue decrease, partially offset by cost savings.

Balance Sheet and Liquidity

Net Debt — As of December 31, 2022, the Company’s leverage ratio for covenant purposes was 3.5x. The Company had $3.7 billion of corporate debt outstanding as of December 31, 2022, 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 $550 million. At the end of the fourth quarter, the Company had $1.6 billion of liquidity in cash and cash equivalents and revolving credit facility availability.

The Company amended the credit agreement governing its $1 billion revolving credit facility and term loan B on December 14, 2022. This amendment provides for an incremental term loan B of $300 million, which will mature on December 14, 2029. We expect to use the net proceeds of the incremental term loan B and revolving credit facility capacity to repay our outstanding $400 million dollar secured notes that mature in March, 2023.

Timeshare Receivables Financing — The Company closed on a $250 million term securitization on October 20, 2022 with a weighted average coupon of 6.91% and an 87.5% advance rate.

Cash Flow — For the full-year 2022, net cash provided by operating activities was $442 million compared to $568 million in the prior year. Adjusted free cash flow was $439 million in 2022 compared to $223 million in the prior year.

Share Repurchases — During the fourth quarter of 2022, the Company repurchased 2.9 million shares of common stock for $108 million at a weighted average price of $37.41 per share. For the full-year 2022, the Company repurchased 8.2 million shares of common stock for $351 million at a weighted average price of $42.97 per share. As of December 31, 2022, the Company had $477 million remaining in its share repurchase authorization.

Dividend — The Company paid $31 million ($0.40 per share) in cash dividends on December 30, 2022 to shareholders of record as of December 15, 2022. For the full-year 2022, Travel + Leisure Co. paid an aggregate $135 million in dividends to shareholders. Management will recommend a first quarter dividend of $0.45 per share for approval by the Company’s Board of Directors in March 2023.

Outlook

The Company is providing guidance regarding expectations for the 2023 full year:

The Company is providing guidance regarding expectations for the first quarter 2023:

This guidance is presented only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future. Where one or more of the currently unavailable items is applicable, some items could be material, individually or in the aggregate, to GAAP reported results.

Conference Call Information

Travel + Leisure Co. will hold a conference call with investors to discuss the Company’s results and outlook today at 8:30 a.m. ET. Participants may listen to a simultaneous webcast of the conference call, which may be accessed through the Company’s website at travelandleisureco.com/investors, or by dialing 877-733-4794 ten minutes before the scheduled start time. For those unable to listen to the live broadcast, an archive of the webcast will be available on the Company’s website for 90 days beginning at 12:00 p.m. ET today. Additionally, a telephone replay will be available for seven days beginning at 12:00 p.m. ET today at 877-660-6853.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures such as Adjusted EBITDA, Adjusted diluted EPS, Adjusted free cash flow, gross VOI sales and Adjusted net income, which include or exclude certain items, as well as non-GAAP guidance. The Company utilizes non-GAAP measures, defined in Table 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 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 6 for an explanation of our non-GAAP measures.

About Travel + Leisure Co.

As the world’s leading membership and leisure travel company, Travel + Leisure Co. (NYSE:TNL) transformed the way families vacation with the introduction of the most dynamic points-based vacation ownership program at Club Wyndham, and the first vacation exchange network, RCI. The company delivers more than six million vacations each year at 245+ timeshare resorts worldwide, through tailored travel and membership products, and via Travel + Leisure GO – the signature subscription travel club inspired by the pages of Travel + Leisure magazine. With hospitality and responsible tourism at the heart of all we do, our 18,000+ dedicated associates bring out the best in people and places around the globe. We put the world on vacation. Learn more at travelandleisureco.com.

Forward-Looking Statements

This press release includes “forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” “future” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Travel + Leisure Co. and its subsidiaries (“Travel + Leisure Co.” or “we”) to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the acquisition of the Travel + Leisure brand and the future prospects and plans for Travel + Leisure Co., including our ability to execute our strategies to grow our cornerstone timeshare and exchange businesses and expand into the broader leisure travel industry through new business extensions; our ability to compete in the highly competitive timeshare and leisure travel industries; uncertainties related to acquisitions, dispositions and other strategic transactions; the health of the travel industry and declines or disruptions caused by adverse economic conditions (including inflation, higher interest rates, and recessionary pressures), terrorism or acts of gun violence, political strife, war (including hostilities in Ukraine), pandemics, and severe weather events and other natural disasters; adverse changes in consumer travel and vacation patterns, consumer preferences and demand for our products; increased or unanticipated operating costs and other inherent business risks; our ability to comply with financial and restrictive covenants under our indebtedness; our ability to access capital and insurance markets on reasonable terms, at a reasonable cost or at all; maintaining the integrity of internal or customer data and protecting our systems from cyber-attacks; uncertainty with respect to potential resurgences of the novel coronavirus global pandemic (“COVID-19”) and its impacts; the timing and amount of future dividends and share repurchases, if any; and those other factors disclosed as risks under “Risk Factors” in documents we have filed with the SEC, including in Part I, Item 1A of our Annual Report on Form 10-K most recently filed with the SEC. 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.

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.

Consolidated Statements of Income (Unaudited)

(in millions, except per share amounts)

 

Three Months
Ended December 31,

 

Twelve Months
Ended December 31,

 

2022

 

2021

 

2022

 

2021

Net revenues

 

 

 

 

 

 

 

Service and membership fees

$

389

 

 

$

388

 

 

$

1,611

 

 

$

1,502

 

Net VOI sales

 

384

 

 

 

366

 

 

 

1,484

 

 

 

1,176

 

Consumer financing

 

105

 

 

 

100

 

 

 

406

 

 

 

404

 

Other

 

21

 

 

 

16

 

 

 

66

 

 

 

52

 

Net revenues

 

899

 

 

 

870

 

 

 

3,567

 

 

 

3,134

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Operating

 

401

 

 

 

367

 

 

 

1,603

 

 

 

1,359

 

Cost of vacation ownership interests

 

32

 

 

 

52

 

 

 

157

 

 

 

157

 

Consumer financing interest

 

24

 

 

 

18

 

 

 

79

 

 

 

81

 

General and administrative

 

120

 

 

 

110

 

 

 

479

 

 

 

434

 

Marketing

 

114

 

 

 

102

 

 

 

451

 

 

 

363

 

Depreciation and amortization

 

28

 

 

 

31

 

 

 

119

 

 

 

124

 

Restructuring

 

7

 

 

 

 

 

 

14

 

 

 

(1

)

Asset impairments/(recoveries), net

 

12

 

 

 

(5

)

 

 

10

 

 

 

(5

)

COVID-19 related costs

 

 

 

 

 

 

 

2

 

 

 

4

 

Total expenses

 

738

 

 

 

675

 

 

 

2,914

 

 

 

2,516

 

 

 

 

 

 

 

 

 

Operating income

 

161

 

 

 

195

 

 

 

653

 

 

 

618

 

Interest expense

 

51

 

 

 

50

 

 

 

195

 

 

 

198

 

Interest (income)

 

(3

)

 

 

(1

)

 

 

(6

)

 

 

(3

)

Other (income), net

 

(6

)

 

 

(4

)

 

 

(22

)

 

 

(6

)

Income before income taxes

 

119

 

 

 

150

 

 

 

486

 

 

 

429

 

Provision for income taxes

 

29

 

 

 

40

 

 

 

130

 

 

 

116

 

Net income from continuing operations

 

90

 

 

 

110

 

 

 

356

 

 

 

313

 

(Loss)/gain on disposal of discontinued business, net of income taxes

 

 

 

 

(3

)

 

 

1

 

 

 

(5

)

Net income attributable to TNL shareholders

$

90

 

 

$

107

 

 

$

357

 

 

$

308

 

 

 

 

 

 

 

 

 

Basic earnings per share

 

 

 

 

 

 

 

Continuing operations

$

1.13

 

 

$

1.27

 

 

$

4.27

 

 

$

3.62

 

Discontinued operations

 

 

 

 

(0.04

)

 

 

0.01

 

 

 

(0.06

)

 

$

1.13

 

 

$

1.23

 

 

$

4.28

 

 

$

3.56

 

 

 

 

 

 

 

 

 

Diluted earnings per share

 

 

 

 

 

 

 

Continuing operations

$

1.12

 

 

$

1.26

 

 

$

4.23

 

 

$

3.58

 

Discontinued operations

 

 

 

 

(0.04

)

 

 

0.01

 

 

 

(0.06

)

 

$

1.12

 

 

$

1.22

 

 

$

4.24

 

 

$

3.52

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

 

79.8

 

 

 

86.5

 

 

 

83.4

 

 

 

86.5

 

Diluted

 

80.5

 

 

 

87.4

 

 

 

84.2

 

 

 

87.3

 

Table 2

Travel + Leisure Co.

Summary Data Sheet

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

 

Three Months Ended December 31,

 

Twelve Months Ended December 31,

 

 

2022

 

 

 

2021

 

 

Change

 

 

2022

 

 

 

2021

 

 

Change

Consolidated Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to TNL shareholders

$

90

 

 

$

107

 

 

(16

)%

 

$

357

 

 

$

308

 

 

16

%

Diluted earnings per share

$

1.12

 

 

$

1.22

 

 

(8

)%

 

$

4.24

 

 

$

3.52

 

 

20

%

Net income from continuing operations

$

90

 

 

$

110

 

 

(18

)%

 

$

356

 

 

$

313

 

 

14

%

Diluted earnings per share from continuing operations

$

1.12

 

 

$

1.26

 

 

(11

)%

 

$

4.23

 

 

$

3.58

 

 

18

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income margin

 

10.0

%

 

 

12.3

%

 

 

 

 

10.0

%

 

 

9.8

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

225

 

 

$

228

 

 

(1

)%

 

$

859

 

 

$

778

 

 

10

%

Adjusted net income

$

105

 

 

$

104

 

 

1

%

 

$

380

 

 

$

319

 

 

19

%

Adjusted diluted earnings per share

$

1.30

 

 

$

1.19

 

 

9

%

 

$

4.52

 

 

$

3.65

 

 

24

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

$

737

 

 

$

700

 

 

5

%

 

$

2,835

 

 

$

2,423

 

 

17

%

Travel and Membership

 

163

 

 

 

170

 

 

(4

)%

 

 

735

 

 

 

714

 

 

3

%

Corporate and other

 

(1

)

 

 

 

 

 

 

 

(3

)

 

 

(3

)

 

 

Total

$

899

 

 

$

870

 

 

3

%

 

$

3,567

 

 

$

3,134

 

 

14

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

$

186

 

 

$

184

 

 

1

%

 

$

665

 

 

$

569

 

 

17

%

Travel and Membership

 

57

 

 

 

62

 

 

(8

)%

 

 

268

 

 

 

271

 

 

(1

)%

Segment Adjusted EBITDA

 

243

 

 

 

246

 

 

 

 

 

933

 

 

 

840

 

 

 

Corporate and other

 

(18

)

 

 

(18

)

 

 

 

 

(74

)

 

 

(62

)

 

 

Total Adjusted EBITDA

$

225

 

 

$

228

 

 

(1

)%

 

$

859

 

 

$

778

 

 

10

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin

 

25.0

%

 

 

26.2

%

 

 

 

 

24.1

%

 

 

24.8

%

 

 

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 December 31,

 

Twelve Months Ended December 31,

 

2022

 

2021

 

Change

 

2022

 

2021

 

Change

Vacation Ownership

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net VOI Sales

$

384

 

 

$

366

 

 

5

%

 

$

1,484

 

 

$

1,176

 

 

26

%

Loan loss provision

 

86

 

 

 

9

 

 

856

%

 

 

302

 

 

 

129

 

 

134

%

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

 

470

 

 

 

375

 

 

25

%

 

 

1,786

 

 

 

1,305

 

 

37

%

Fee-for-Service sales

 

51

 

 

 

57

 

 

(11

)%

 

 

196

 

 

 

186

 

 

5

%

Gross VOI sales

$

521

 

 

$

432

 

 

21

%

 

$

1,982

 

 

$

1,491

 

 

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tours (in thousands)

 

147

 

 

 

129

 

 

14

%

 

 

561

 

 

 

451

 

 

24

%

VPG (in dollars)

 

3,434

 

 

 

3,222

 

 

7

%

 

 

3,426

 

 

 

3,143

 

 

9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Tour generated VOI sales

 

503

 

 

 

415

 

 

21

%

 

 

1,923

 

 

 

1,419

 

 

36

%

Telesales and other

 

18

 

 

 

17

 

 

6

%

 

 

59

 

 

 

72

 

 

(18

)%

Gross VOI sales

 

521

 

 

 

432

 

 

21

%

 

 

1,982

 

 

 

1,491

 

 

33

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net VOI sales

 

384

 

 

 

366

 

 

5

%

 

 

1,484

 

 

 

1,176

 

 

26

%

Property management revenue

 

198

 

 

 

187