Travel + Leisure Co. Reports Third Quarter 2021 Results and Increases Full Year 2021 Adjusted EBITDA Guidance

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

  • Net income from continuing operations of $101 million ($1.15 diluted earnings per share) on net revenue of $839 million
  • Adjusted EBITDA of $228 million and adjusted diluted earnings per share of $1.19 (1)
  • Net cash provided by operating activities of $435 million and adjusted free cash flow of $128 million for the first nine months of 2021
  • Increased full year adjusted EBITDA guidance to a range of $740 million to $750 million and increased full year adjusted diluted EPS guidance to a range of $3.35 to $3.43
  • Management will recommend increasing the fourth quarter dividend to $0.35 per share for approval by the Board of Directors
  • On October 22, 2021, renewed $1 billion revolving credit facility and exited the amendment to the credit agreement
  • Executed $350 million term securitization on October 26, 2021

“Our cornerstone brands continued to demonstrate their strength in the third quarter as our businesses delivered adjusted EBITDA at or above our expectations,” said Michael D. Brown, president and CEO of Travel + Leisure Co. “Robust sales volume per guest, combined with a continued focus on cost control, allowed us to deliver on the bottom line with strong margins."

“As we said last month, the desire for leisure travel has never been stronger. Bookings at our vacation ownership resorts for the remainder of the year are ahead of 2019 levels, clearly demonstrating that people are planning to get back on vacation, which will benefit all of our businesses as we close out the year.”

(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. 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 third quarter of 2021 and 2020 include impacts related to the COVID-19 global pandemic. Refer to Table 8 for a breakout of COVID-19 related impacts.

Vacation Ownership

 

$ in millions

Q3 2021

Q3 2020

% change

Revenue

$660

 

$475

 

39

%

Adjusted EBITDA

$177

 

$93

 

90

%

Vacation Ownership revenue increased 39% to $660 million in the third quarter of 2021 compared to the same period in the prior year. Gross vacation ownership interest (VOI) sales were $440 million compared to $256 million in the prior year and tours were 129,000 during the quarter compared to 80,000 in the same period last year. Volume Per Guest (VPG) was $3,233 due to strong close rates and higher quality tours.

Third quarter adjusted EBITDA was $177 million compared to $93 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 lower average contract receivable portfolio.

Third quarter 2021 results include an adjustment to the COVID-19 related allowance for loan losses, resulting in a $21 million increase to revenue and an $8 million increase to cost of vacation ownership interests, and yielding a net positive impact to Adjusted EBITDA of $13 million.

Travel and Membership

 

$ in millions

Q3 2021

Q3 2020

% change

Revenue

$185

 

$145

 

28

%

Adjusted EBITDA

$68

 

$62

 

10

%

Travel and Membership revenue increased 28% to $185 million in the third quarter driven by a 32% increase in transactions. This reflects the third consecutive quarter of year over year transaction improvement as we continue to see the business recover from COVID-19.

Third quarter Adjusted EBITDA increased 10% to $68 million, driven by revenue improvement partially offset by higher operational support costs.

Balance Sheet and Liquidity

Net Debt — As of September 30, 2021, the Company's leverage ratio for covenant purposes was 4.2x. The Company had $3.4 billion of corporate debt outstanding as of September 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 $346 million. At the end of the third quarter, the Company had $1.3 billion of liquidity in cash and cash equivalents and revolving credit facility availability.

Subsequent to the end of the quarter, the Company renewed its $1 billion revolving credit facility and extended the term through October 2026. In addition, this renewal terminated the relief period and restrictions regarding share repurchases, dividends and acquisitions under the first amendment.

Timeshare Receivables Financing Subsequent to the end of the quarter, the Company closed on a $350 million term securitization transaction with a weighted average coupon of 1.82% and 98% advance rate.

Cash Flow For the nine months ended September 30, 2021, net cash provided by operating activities was $435 million, compared to $224 million in the prior year period. Adjusted free cash flow was $128 million for the nine months ended September 30, 2021 compared to $120 million in the same period of 2020.

Dividend The Company paid $26 million ($0.30 per share) in cash dividends on September 30, 2021 to shareholders of record as of September 15, 2021. Management will recommend a fourth quarter dividend of $0.35 per share for approval by the Company’s Board of Directors in November 2021.

Outlook

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

  • Adjusted EBITDA of $740 million to $750 million from $725 million to $735 million
  • Adjusted diluted EPS of $3.35 to $3.43 from $3.24 to $3.30
  • Gross VOI sales of $1.45 billion to $1.5 billion from $1.4 billion to $1.5 billion
  • Tours of 440,000 to 450,000
  • VPG of approximately $3,000

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 800-695-1564.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures such as adjusted EBITDA, adjusted EBITDA margin, 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 historical 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 travel content, travel services including the brand’s eponymous travel club, and branded consumer products. At Travel + Leisure Co., our global team of associates brings hospitality to millions each year, turning vacation inspiration into exceptional travel experiences. We put the world on vacation. Learn more at travelandleisureco.com.

Forward-Looking Statements

This press release includes “forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” “future” 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, uncertainty with respect to our ability to realize the benefits of the Travel + Leisure brand acquisition; the scope and duration of the novel coronavirus global pandemic (“COVID-19”), any resurgences and the pace of recovery; the timing of the widespread distribution and use 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 Co.
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 Co.

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

(in millions, except per share amounts)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

2021

 

2020

 

2021

 

2020

Net revenues

 

 

 

 

 

 

 

Service and membership fees

$

378

 

 

$

291

 

 

$

1,114

 

 

$

845

 

Net VOI sales

344

 

 

196

 

 

810

 

 

273

 

Consumer financing

103

 

 

115

 

 

304

 

 

360

 

Other

14

 

 

12

 

 

36

 

 

37

 

Net revenues

839

 

 

614

 

 

2,264

 

 

1,515

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Operating

352

 

 

263

 

 

992

 

 

861

 

Cost/(recovery) of vacation ownership interests

43

 

 

22

 

 

105

 

 

(26

)

Consumer financing interest

19

 

 

26

 

 

63

 

 

76

 

General and administrative

106

 

 

101

 

 

325

 

 

295

 

Marketing

101

 

 

84

 

 

261

 

 

247

 

Depreciation and amortization

31

 

 

32

 

 

93

 

 

94

 

COVID-19 related costs

1

 

 

14

 

 

3

 

 

81

 

Asset impairments

 

 

6

 

 

 

 

50

 

Restructuring

 

 

2

 

 

(1

)

 

27

 

Total expenses

653

 

 

550

 

 

1,841

 

 

1,705

 

 

 

 

 

 

 

 

 

Operating income/(loss)

186

 

 

64

 

 

423

 

 

(190

)

Other (income), net

 

 

(5

)

 

(2

)

 

(11

)

Interest expense

47

 

 

52

 

 

147

 

 

138

 

Interest (income)

(1

)

 

(2

)

 

(1

)

 

(5

)

Income/(loss) before income taxes

140

 

 

19

 

 

279

 

 

(312

)

Provision/(benefit) for income taxes

39

 

 

(21

)

 

76

 

 

(54

)

Net income/(loss) from continuing operations

101

 

 

40

 

 

203

 

 

(258

)

Loss on disposal of discontinued business, net of income taxes

 

 

 

 

(2

)

 

 

Net income/(loss) attributable to TNL shareholders

$

101

 

 

$

40

 

 

$

201

 

 

$

(258

)

 

 

 

 

 

 

 

 

Basic earnings/(loss) per share

 

 

 

 

 

 

 

Continuing operations

$

1.16

 

 

$

0.47

 

 

$

2.35

 

 

$

(3.00

)

Discontinued operations

 

 

 

 

(0.02

)

 

 

 

$

1.16

 

 

$

0.47

 

 

$

2.33

 

 

$

(3.00

)

 

 

 

 

 

 

 

 

Diluted earnings/(loss) per share

 

 

 

 

 

 

 

Continuing operations

$

1.15

 

 

$

0.47

 

 

$

2.33

 

 

$

(3.00

)

Discontinued operations

 

 

 

 

(0.03

)

 

 

 

$

1.15

 

 

$

0.47

 

 

$

2.30

 

 

$

(3.00

)

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Basic

86.6

 

 

85.9

 

 

86.5

 

 

86.1

 

Diluted

87.4

 

 

86.1

 

 

87.3

 

 

86.1

 

Table 2

 

Travel + Leisure Co.

Summary Data Sheet

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

 

 

Three Months Ended September 30,

 

Nine Months Ended September 30,

 

2021

 

2020

 

Change

 

2021

 

2020

 

Change

Consolidated Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) attributable to TNL shareholders

$

101

 

 

$

40

 

 

153

%

 

$

201

 

 

$

(258

)

 

178

%

Diluted earnings/(loss) per share

$

1.15

 

 

$

0.47

 

 

145

%

 

$

2.30

 

 

$

(3.00

)

 

177

%

Net income/(loss) from continuing operations

$

101

 

 

$

40

 

 

153

%

 

$

203

 

 

$

(258

)

 

179

%

Diluted earnings/(loss) per share from continuing operations

$

1.15

 

 

$

0.47

 

 

145

%

 

$

2.33

 

 

$

(3.00

)

 

178

%

 

 

 

 

 

 

 

 

 

 

 

 

Net income/(loss) margin

12.0

%

 

6.5

%

 

 

 

8.9

%

 

(17.0

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted Earnings/(Loss)

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

228

 

 

$

139

 

 

64

%

 

$

550

 

 

$

111

 

 

395

%

Adjusted net income/(loss)

$

104

 

 

$

71

 

 

46

%

 

$

214

 

 

$

(108

)

 

298

%

Adjusted diluted earnings/(loss) per share

$

1.19

 

 

$

0.83

 

 

43

%

 

$

2.46

 

 

$

(1.26

)

 

295

%

 

 

 

 

 

 

 

 

 

 

 

 

Segment Results

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Revenues

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

$

660

 

 

$

475

 

 

39

%

 

$

1,708

 

 

$

1,116

 

 

53

%

Travel and Membership

185

 

 

145

 

 

28

%

 

573

 

 

411

 

 

39

%

Corporate and other

(6

)

 

(6

)

 

 

 

(17

)

 

(12

)

 

 

Total

$

839

 

 

$

614

 

 

37

%

 

$

2,264

 

 

$

1,515

 

 

49

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

$

177

 

 

$

93

 

 

90

%

 

$

377

 

 

$

6

 

 

NM

 

Travel and Membership

68

 

 

62

 

 

10

%

 

218

 

 

142

 

 

54

%

Segment Adjusted EBITDA

245

 

 

155

 

 

 

 

595

 

 

148

 

 

 

Corporate and other

(17

)

 

(16

)

 

 

 

(45

)

 

(37

)

 

 

Total Adjusted EBITDA

$

228

 

 

$

139

 

 

64

%

 

$

550

 

 

$

111

 

 

395

%

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA margin

27.2

%

 

22.6

%

 

 

 

24.3

%

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Key Operating Statistics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Vacation Ownership

 

 

 

 

 

 

 

 

 

 

 

Gross VOI sales

$

440

 

 

$

256

 

 

72

%

 

$

1,059

 

 

$

687

 

 

54

%

Tours (in thousands)

129

 

 

80

 

 

61

%

 

323

 

 

248

 

 

30

%

VPG (in dollars)

$

3,233

 

 

$

3,039

 

 

6

%

 

$

3,112

 

 

$

2,331

 

 

34

%

New owner sales, volume mix

30.1

%

 

27.6

%

 

 

 

29.1

%

 

28.1

%

 

 

New owner sales, transaction mix

29.9

%

 

23.8

%

 

 

 

29.1

%

 

30.5

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel and Membership

 

 

 

 

 

 

 

 

 

 

 

Transactions (in thousands)

470

 

 

356

 

 

32

%

 

1,508

 

 

873

 

 

73

%

Revenue per transaction (in dollars)

$

282

 

 

$

243

 

 

16

%

 

$

277

 

 

$

260

 

 

7

%

Avg. number of exchange members (in thousands)

3,895

 

 

3,680

 

 

6

%

 

3,684

 

 

3,781

 

 

(3

)%

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 Co.

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

 

 

$

440

 

 

$

 

 

$

 

 

2020

 

$

413

 

 

$

18

 

 

$

256

 

 

$

281

 

 

$

967

 

 

2019

 

$

484

 

 

$

626

 

 

$

663

 

 

$

582

 

 

$

2,355

 

 

 

 

 

 

 

 

 

 

 

 

 

Tours (in thousands)

2021

 

76

 

 

117

 

 

129

 

 

 

 

 

 

2020

 

162

 

 

6

 

 

80

 

 

85

 

 

333

 

 

2019

 

192

 

 

249

 

 

269

 

 

234

 

 

945

 

 

 

 

 

 

 

 

 

 

 

 

 

VPG

2021

 

$

2,847

 

 

$

3,151

 

 

$

3,233

 

 

$

 

 

$

 

 

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

)

 

$

(49

)

 

$

 

 

$

 

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)

 

12.4

%(d)

 

%

 

%

2020

 

NM

 

 

NM

 

 

18.8

%

 

9.5

%(e)

 

NM

 

2019

 

22.5

%

 

21.2

%

 

20.3

%

 

18.6

%

 

20.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Allowance for Loan Losses

(in millions)

2021

 

$

622

 

 

$

573

 

 

$

565

 

 

$

 

 

$

 

2020

 

$

930

 

 

$

846

 

 

$

788

 

 

$

693

 

 

$

693

 

 

2019

 

$

721

 

 

$

735

 

 

$

767

 

 

$

747

 

 

$

747

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Vacation Ownership

Contract Receivables (in millions)

2021

 

$

2,975

 

 

$

2,892

 

 

$

2,857

 

 

$

 

 

$

 

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

%

 

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 17.8%, excluding the release of $21 million of the COVID-19 related provision during the period.

(e)

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 Co.

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

 

 

256

 

 

 

 

 

Non-Exchange

2021

 

159

 

 

210

 

 

214

 

 

 

 

 

Total Transactions

2021

 

513

 

 

524

 

 

470

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

$

339

 

 

$

 

 

$

 

Non-Exchange

2021

 

$

182

 

 

$

231

 

 

$

214

 

 

$

 

 

$

 

Total Revenue per transaction

2021

 

$

258

 

 

$

291

 

 

$

282

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

Avg. Number of Exchange Members

(in thousands)

2021

 

3,576

 

 

3,582

 

 

3,895

 

 

 

 

 

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 Co.

Revenue by Reportable Segment

(in millions)

 

 

 

2021

 

 

Q1

 

Q2

 

Q3

 

Q4

 

Full Year

Vacation Ownership

 

 

 

 

 

 

 

 

 

 

Net VOI Sales

 

$

172

 

 

$

294

 

 

$

344

 

 

$

 

 

$

 

Property Management Fees and Reimbursable Revenues

 

157

 

 

161

 

 

171

 

 

 

 

 

Consumer Financing

 

98

 

 

102

 

 

103

 

 

 

 

 

Other Revenues

 

22

 

 

42

 

 

42

 

 

 

 

 

Total Vacation Ownership

 

449

 

 

599

 

 

660

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Travel and Membership

 

 

 

 

 

 

 

 

 

 

Transaction Revenues

 

132

 

 

153

 

 

133

 

 

 

 

 

Subscription Revenues

 

41

 

 

43

 

 

43

 

 

 

 

 

Other Revenues

 

10

 

 

8

 

 

9

 

 

 

 

 

Total Travel and Membership

 

183

 

 

204

 

 

185

 

 

 

 

 

Total Reportable Segments

 

$

632

 

 

$

803

 

 

$

845

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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 Co.

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 September 30,

 

2021

 

EPS

 

Margin %

 

2020

 

EPS

 

Margin %

Net income attributable to TNL shareholders

$

101

 

 

$

1.15

 

 

12.0

%

 

$

40

 

 

$

0.47

 

 

6.5

%

Legacy items

2

 

 

 

 

 

 

1

 

 

 

 

 

Amortization of acquired intangibles (a)

2

 

 

 

 

 

 

2

 

 

 

 

 

COVID-19 related costs (b)

1

 

 

 

 

 

 

13

 

 

 

 

 

Exchange inventory write-off

 

 

 

 

 

 

10

 

 

 

 

 

Impairments (c)

 

 

 

 

 

 

6

 

 

 

 

 

Restructuring costs

 

 

 

 

 

 

2

 

 

 

 

 

Taxes (d)

(1

)

 

 

 

 

 

(3

)

 

 

 

 

Adjusted net income from continuing operations

$

104

 

 

$

1.19

 

 

12.4

%

 

$

71

 

 

$

0.83

 

 

11.6

%

Income taxes/(benefit) on adjusted net income

41

 

 

 

 

 

 

(18

)

 

 

 

 

Interest expense

47

 

 

 

 

 

 

52

 

 

 

 

 

Depreciation

29

 

 

 

 

 

 

30

 

 

 

 

 

Stock-based compensation expense (e)

8

 

 

 

 

 

 

6

 

 

 

 

 

Interest income

(1

)

 

 

 

 

 

(2

)

 

 

 

 

Adjusted EBITDA

$

228

 

 

 

 

27.2

%

 

$

139

 

 

 

 

22.6

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding

87.4

 

 

 

 

 

 

86.1

 

 

 

 

 

 

Nine Months Ended September 30,

 

2021

 

EPS

 

Margin %

 

2020

 

EPS

 

Margin %

Net income/(loss) attributable to TNL shareholders

$

201

 

 

$

2.30

 

 

8.9

%

 

$

(258

)

 

$

(3.00

)

 

(17.0

)%

Loss on disposal of discontinued business, net of income taxes

(2

)

 

 

 

 

 

 

 

 

 

 

Net income/(loss) from continuing operations

$

203

 

 

$

2.33

 

 

9.0

%

 

$

(258

)

 

$

(3.00

)

 

(17.0

)%

Amortization of acquired intangibles (a)

7

 

 

 

 

 

 

7

 

 

 

 

 

Legacy items

6

 

 

 

 

 

 

2

 

 

 

 

 

COVID-19 related costs (b)

3

 

 

 

 

 

 

51

 

 

 

 

 

Exchange inventory write-off

 

 

 

 

 

 

48

 

 

 

 

 

Impairments (c)

 

 

 

 

 

 

54

 

 

 

 

 

Restructuring costs

(1

)

 

 

 

 

 

27

 

 

 

 

 

Taxes (d)

(4

)

 

 

 

 

 

(39

)

 

 

 

 

Adjusted net income/(loss) from continuing operations

$

214

 

 

$

2.46

 

 

9.5

%

 

$

(108

)

 

$

(1.26

)

 

(7.1

)%

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

80

 

 

 

 

 

 

(15

)

 

 

 

 

Interest expense

147

 

 

 

 

 

 

138

 

 

 

 

 

Depreciation

86

 

 

 

 

 

 

87

 

 

 

 

 

Stock-based compensation expense (e)

24

 

 

 

 

 

 

14

 

 

 

 

 

Interest income

(1

)

 

 

 

 

 

(5

)

 

 

 

 

Adjusted EBITDA

$

550

 

 

 

 

24.3

%

 

$

111

 

 

 

 

7.3

%

 

 

 

 

 

 

 

 

 

 

 

 

Diluted Shares Outstanding

87.3

 

 

 

 

 

 

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, adjusted EBITDA margin, and adjusted diluted EPS to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. Non-GAAP measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP. Our presentation of adjusted measures may not be comparable to similarly-titled measures used by other companies. See "Presentation of Financial Information" and table 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 nine months ended September 30, 2020, included in Operating expenses on the Condensed Consolidated Statements of Income/(Loss).

(d)

The amounts represent the tax effects on the adjustments. In addition, during the three and nine months ended September 30, 2020, the amounts are partially offset by $6 million of non-cash tax expense associated with COVID-19 related increases to valuation allowances.

(e)

All stock-based compensation is excluded from adjusted EBITDA.

 Table 6

 

Travel + Leisure Co.

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 ownership 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

 

 

$

344

 

 

$

 

 

$

 

Loan loss provision

 

38

 

 

33

 

 

49

 

 

 

 

 

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

 

210

 

 

327

 

 

393

 

 

 

 

 

Fee-for-Service sales

 

26

 

 

56

 

 

47

 

 

 

 

 

Gross VOI sales

 

$

236

 

 

$

383

 

 

$

440

 

 

$

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

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 Co.

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

(in millions)

 

 

 

Nine Months Ended September 30,

 

 

2021

 

2020

 

 

 

 

 

Net cash provided by operating activities

 

$

435

 

 

$

224

 

Property and equipment additions

 

(40

)

 

(56

)

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

 

(272

)

 

(94

)

Free cash flow

 

$

123

 

 

$

74

 

Separation and other adjustments (a)

 

 

 

14

 

COVID-19 related adjustments (b)

 

5

 

 

32

 

Adjusted free cash flow (c)

 

$

128

 

 

$

120

 

(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 $77 million of net cash used in investing activities and $1.2 billion of net cash used in financing activities for the nine months ended September 30, 2021, and $98 million of net cash used in investing activities and $775 million of net cash provided by financing activities for the nine months ended September 30, 2020.

 Table 8

 

Travel + Leisure Co.

COVID-19 Impacts

(in millions)

 

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

 

Three Months Ended

 

Vacation Ownership

 

Travel and Membership

 

Corporate & Other

 

Consolidated

 

Non-GAAP Adjustments

 

Income Statement Classification

September 30, 2021

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Provision

 

$

(21

)

 

$

 

 

$

 

 

$

(21

)

 

$

 

 

Vacation ownership interest sales

Recoveries

 

8

 

 

 

 

 

 

8

 

 

 

 

Cost/(recovery) of vacation ownership interests

Employee compensation related and other

 

1

 

 

 

 

 

 

1

 

 

1

 

 

COVID-19 related costs

Total COVID-19

 

$

(12

)

 

$

 

 

$

 

 

$

(12

)

 

$

1

 

 

 

Nine Months Ended

 

Vacation Ownership

 

Travel and Membership

 

Corporate & Other

 

Consolidated

 

Non-GAAP Adjustments

 

Income Statement Classification

September 30, 2021

 

 

 

 

 

 

Allowance for loan losses:

 

 

 

 

 

 

 

 

 

 

 

 

Provision

 

$

(47

)

 

$

 

 

$

 

 

$

(47

)

 

$

 

 

Vacation ownership interest sales

Recoveries

 

17

 

 

 

 

 

 

17

 

 

 

 

Cost/(recovery) of vacation ownership interests

Employee compensation related and other

 

2

 

 

 

 

1

 

 

3

 

 

3

 

 

COVID-19 related costs

Lease related

 

(1

)

 

 

 

 

 

(1

)

 

(1

)

 

Restructuring

Total COVID-19

 

$

(29

)

 

$

 

 

$

1

 

 

$

(28

)

 

$

2

 

 

 

The tables below present the COVID-19 related impacts to our results of operations for the three and nine months ended September 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

September 30, 2020

 

 

 

 

 

 

Employee compensation related and other

 

$

11

 

 

$

1

 

 

$

2

 

 

$

14

 

 

$

13

 

 

COVID-19 related costs

Exchange inventory write-off

 

 

 

10

 

 

 

 

10

 

 

10

 

 

Operating expenses

Asset impairment

 

6

 

 

 

 

 

 

6

 

 

6

 

 

Asset impairments

Lease related

 

1

 

 

 

 

 

 

1

 

 

1

 

 

Restructuring

Total COVID-19

 

$

18

 

 

$

11

 

 

$

2

 

 

$

31

 

 

$

30

 

 

 

Nine Months Ended

 

Vacation Ownership

 

Travel and Membership

 

Corporate & Other

 

Consolidated

 

Non-GAAP Adjustments

 

Income Statement Classification

September 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

 

62

 

 

6

 

 

13

 

 

81

 

 

51

 

 

COVID-19 related costs

Asset impairment

 

20

 

 

34

 

 

 

 

54

 

 

54

 

 

Asset impairments / Operating expenses

Exchange inventory write-off

 

 

 

48

 

 

 

 

48

 

 

48

 

 

Operating expenses

Lease related

 

2

 

 

22

 

 

 

 

24

 

 

24

 

 

Restructuring

Total COVID-19

 

$

254

 

 

$

110

 

 

$

13

 

 

$

377

 

 

$

177

 

 

 

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 Exchange 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.

Investors:
Christopher Agnew
Senior Vice President, FP&A and Investor Relations
(407) 626-4050
Christopher.Agnew@travelandleisure.com

Media:
Steven Goldsmith
Corporate Communications
(407) 626-5882
Steven.Goldsmith@travelandleisure.com

Source: Travel + Leisure Co.