EX-99.1
Published on February 24, 2021
Exhibit 99.1
Travel + Leisure Co. Reports Fourth Quarter and Full-Year 2020 Results
ORLANDO, Fla. (Feb. 24, 2021) — Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported fourth quarter and full-year 2020 financial results for the period ended December 31, 2020. The Company is reporting its first financial results since changing its name from Wyndham Destinations, Inc., on February 17, 2021.
Fourth quarter 2020 highlights:
•Net income from continuing operations of $4 million (diluted EPS of $0.05) on net revenue of $645 million
•Adjusted EBITDA of $148 million and adjusted diluted EPS of $0.32 (1)
Full-year 2020 highlights:
•Net loss from continuing operations of $253 million (loss per share of $2.95) on net revenue of $2.2 billion
•Adjusted EBITDA of $259 million and adjusted loss per share of $0.94
•Net cash provided by operating activities from continuing operations of $374 million and adjusted free cash flow of $35 million
Outlook:
•First quarter 2021 adjusted EBITDA is projected to range from $95 million to $110 million
Dividend:
•The Company will recommend a first quarter 2021 dividend of $0.30 per share for approval by the Board of Directors
"At the end of an extraordinary year, I’m proud to report our team delivered a robust fourth quarter, with sequential improvement in vacation ownership interest (VOI) sales and adjusted EBITDA. Our resilient business model allowed us to weather an extremely difficult year in the travel industry. The early actions we took to transform our business and reduce costs enabled us to deliver positive adjusted free cash flow for the full year, as well as adjusted EBITDA margins of over 20% in the second half," said Michael D. Brown, president and CEO of Travel + Leisure Co.
"The strength of our business has allowed us to execute several strategic growth initiatives despite the macro headwinds. We successfully launched Panorama in 2020 and we acquired the Travel + Leisure brand and travel club businesses in January of this year. Both initiatives position the Company for future success, allowing us to expand more broadly into the larger leisure travel market."
(1) This press release includes adjusted EBITDA, adjusted diluted EPS from continuing operations, adjusted free cash flow from continuing operations, gross VOI sales and adjusted net income/
(loss) from continuing operations, 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 in accordance with GAAP.
Business Segment Results
The results of operations during the fourth quarter of 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 (formerly Wyndham Vacation Clubs)
| $ in millions | Q4 2020 | Q4 2019 | % change | FY 2020 | FY 2019 | % change | ||||||||||||||
| Revenue | $512 | $801 | (36)% | $1,637 | $3,151 | (48)% | ||||||||||||||
| Adjusted EBITDA | $115 | $222 | (48)% | $121 | $756 | (84)% | ||||||||||||||
| Margin | 22 | % | 28 | % | 7 | % | 24 | % | ||||||||||||
Vacation Ownership revenue decreased 36% to $512 million in the fourth quarter. Gross VOI sales decreased 52% to $281 million with tours 64% lower year-over-year. Volume Per Guest (VPG) increased 24% to $2,938. Fourth quarter adjusted EBITDA was $115 million, compared to $222 million in the prior year.
Travel and Membership (formerly Panorama)
| $ in millions | Q4 2020 | Q4 2019 | % change | FY 2020 | FY 2019 | % change | ||||||||||||||
| Revenue | $135 | $181 | (25)% | $528 | $898 | (41)% | ||||||||||||||
| Adjusted EBITDA | $49 | $55 | (11)% | $191 | $289 | (34)% | ||||||||||||||
| Margin | 36 | % | 30 | % | 36 | % | 32 | % | ||||||||||||
Travel and Membership revenue decreased 25% to $135 million and adjusted EBITDA decreased 11% to $49 million in the fourth quarter. The 600 basis point increase in adjusted EBITDA margin to 36% in the fourth quarter was primarily driven by cost saving initiatives. Cancellations in the fourth quarter were elevated relative to 2019, due to travel restrictions, and Exchange gross bookings were down just 3% for the quarter compared to the prior year.
Balance Sheet and Liquidity
Net Debt — As of December 31, 2020, the Company's leverage ratio for covenant purposes was 5.4x, well within the 7.5x amended covenant. The Company had $4.2 billion of corporate debt outstanding as of December 31, 2020, which excluded $2.2 billion of non-recourse debt related to its securitized notes receivable. Additionally, the Company had cash and cash equivalents of $1.2 billion. The Company's next long-term debt maturity is $250 million of secured notes due March 2021. At the end of the fourth quarter, the Company had $1.6 billion of liquidity in cash and cash equivalents and revolving credit facility capacity.
Timeshare Receivables Financing — The Company renewed its $800 million conduit facility on October 27, 2020 and extended the maturity date to October 31, 2022.
Cash Flow — For the full-year 2020, net cash provided by operating activities from continuing operations was $374 million compared to $453 million in the prior year. Adjusted free cash flow from continuing operations was $35 million in 2020 compared to $617 million in the prior year.
2
Share Repurchases — The Company suspended share repurchase activity in the first quarter of 2020. For the full-year 2020, the Company repurchased 3.1 million shares of common stock for $125 million at a weighted average price of $40.79 per share.
Dividend — The Company paid $26 million ($0.30 per share) in cash dividends on December 30, 2020 to shareholders of record as of December 15, 2020. For the full-year 2020, Travel + Leisure Co. paid an aggregate $138 million in dividends to shareholders.
Other
Travel + Leisure Brand Acquisition — On January 5, 2021, Wyndham Destinations acquired the Travel + Leisure brand from Meredith Corporation. On February 17, 2021, Wyndham Destinations, Inc. changed its name to Travel + Leisure Co. and began trading under the ticker symbol NYSE:TNL. The $100 million acquisition was funded with cash on hand of $35 million paid at closing, with trailing payments to be completed by June 2024. The acquisition is expected to be neutral to earnings in the first year and accretive in the second year.
Outlook
For the first quarter of 2021, the Company expects adjusted EBITDA to range from $95 million to $110 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.
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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 877-876-9173, 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 800-695-0974.
Presentation of Financial Information
Financial information discussed in this press release includes non-GAAP measures such as adjusted EBITDA, adjusted diluted EPS from continuing operations, adjusted free cash flow from continuing operations, gross VOI sales and adjusted net income from continuing operations, which include or exclude certain items, as well as non-GAAP guidance. The Company utilizes 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 a portfolio of nearly 20 resort, travel club, and lifestyle travel brands. 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.
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Forward-Looking Statements
This press release includes “forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,”“will,”“expects,”“should,”“believes,”“plans,”“anticipates,” “estimates,” “predicts,” “potential,” “continue,” “future,” "intends," "projects" or other words of similar meaning. Forward looking statements are subject to risks and uncertainties that could cause actual results of Travel + Leisure Co. (the “Company” or “TNL”) to differ materially from those discussed in, or implied by, the forward-looking statements. The forward-looking statements contained in this press release include statements related to TNL's current views and expectations with respect to its future performance and operations, and other anticipated future events and expectations that are not historical facts. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Factors that might cause such a difference include, but are not limited to, risks associated with the acquisition of the Travel + Leisure brand and all related assets from Meredith Corporation, including unanticipated costs and/or delays, unfavorable reaction by customers, partners, employees, or suppliers, future revenues being lower than expected, failure or inability to implement growth or expansion strategies in a timely manner or at all, local and global political and economic conditions; uncertainty with respect to the scope and duration of the novel coronavirus global pandemic (COVID-19) and any resurgences and the pace of recovery; the timing of the development and distribution of an effective vaccine or treatment for COVID-19; the potential impact of the COVID-19 pandemic and governmental, business and individuals’ actions in response to the pandemic and our related contingency plans and cost and investment reductions on our business, vacation ownership interest (VOI) sales and tour flow, 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 and Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) ability 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 timeshare 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 our ability to realize the anticipated benefits of the spin-off of the hotel business (“spin-off”) Wyndham Hotels or the divestiture of our North American and European vacation rentals businesses, or the acquisition of Alliance Reservations Network (“ARN”); unanticipated developments related to the impact of the spin-off, the divestiture of our North American and European vacation rentals businesses, the acquisition of ARN and related transactions, including 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 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.
Contacts
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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Travel + Leisure
Table of Contents
Table Number
1.Consolidated Statements of Income/(Loss) (Unaudited)
3.Operating Statistics
4.Revenue by Reportable Segment
5.Non-GAAP Measure: Reconciliation of 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 from Continuing Operations to Adjusted Free Cash Flow from Continuing Operations
8.COVID-19 Related Impacts
9.Definitions
6
Table 1
Travel + Leisure
Consolidated Statements of Income/(Loss) (Unaudited)
(in millions, except per share amounts)
| Three Months Ended December 31, |
Twelve Months Ended December 31, |
||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net revenues | |||||||||||||||||||||||
| Service and membership fees | $ | 293 | $ | 366 | $ | 1,139 | $ | 1,606 | |||||||||||||||
| Net VOI sales | 231 | 464 | 505 | 1,848 | |||||||||||||||||||
| Consumer financing | 107 | 130 | 467 | 515 | |||||||||||||||||||
| Other | 14 | 21 | 49 | 74 | |||||||||||||||||||
| Net revenues | 645 | 981 | 2,160 | 4,043 | |||||||||||||||||||
| Expenses | |||||||||||||||||||||||
| Operating | 269 | 380 | 1,130 | 1,648 | |||||||||||||||||||
| Cost of vacation ownership interests | 29 | 45 | 2 | 186 | |||||||||||||||||||
| Consumer financing interest | 26 | 27 | 101 | 106 | |||||||||||||||||||
| General and administrative | 102 | 111 | 398 | 491 | |||||||||||||||||||
| Marketing | 82 | 162 | 329 | 666 | |||||||||||||||||||
| Depreciation and amortization | 32 | 32 | 126 | 121 | |||||||||||||||||||
| COVID-19 related costs | 6 | — | 88 | — | |||||||||||||||||||
| Asset impairments | 2 | 27 | 52 | 27 | |||||||||||||||||||
| Restructuring | 12 | 5 | 39 | 9 | |||||||||||||||||||
| Separation and related costs | — | 1 | — | 45 | |||||||||||||||||||
| Total expenses | 560 | 790 | 2,265 | 3,299 | |||||||||||||||||||
| Gain on sale of business | — | (68) | — | (68) | |||||||||||||||||||
| Operating income/(loss) | 85 | 259 | (105) | 812 | |||||||||||||||||||
| Other (income), net | (3) | (4) | (14) | (23) | |||||||||||||||||||
| Interest expense | 54 | 39 | 192 | 162 | |||||||||||||||||||
| Interest (income) | (1) | (2) | (7) | (7) | |||||||||||||||||||
| Income/(loss) before income taxes | 35 | 226 | (276) | 680 | |||||||||||||||||||
| Provision for/(benefit from) income taxes | 31 | 71 | (23) | 191 | |||||||||||||||||||
| Net income/(loss) from continuing operations | 4 | 155 | (253) | 489 | |||||||||||||||||||
| (Loss)/gain on disposal of discontinued business, net of income taxes | (2) | 12 | (2) | 18 | |||||||||||||||||||
| Net income/(loss) attributable to TNL shareholders | $ | 2 | $ | 167 | $ | (255) | $ | 507 | |||||||||||||||
| Basic earnings/(loss) per share | |||||||||||||||||||||||
| Continuing operations | $ | 0.05 | $ | 1.73 | $ | (2.95) | $ | 5.31 | |||||||||||||||
| Discontinued operations | (0.02) | 0.14 | (0.02) | 0.19 | |||||||||||||||||||
| $ | 0.03 | $ | 1.87 | $ | (2.97) | $ | 5.50 | ||||||||||||||||
| Diluted earnings/(loss) per share | |||||||||||||||||||||||
| Continuing operations | $ | 0.05 | $ | 1.73 | $ | (2.95) | $ | 5.29 | |||||||||||||||
| Discontinued operations | (0.02) | 0.14 | (0.02) | 0.19 | |||||||||||||||||||
| $ | 0.03 | $ | 1.87 | $ | (2.97) | $ | 5.48 | ||||||||||||||||
| Weighted average shares outstanding | |||||||||||||||||||||||
| Basic | 86.1 | 89.5 | 86.1 | 92.1 | |||||||||||||||||||
| Diluted | 86.6 | 89.8 | 86.1 | 92.4 | |||||||||||||||||||
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Table 2
Travel + Leisure
Summary Data Sheet
(in millions, except per share amounts, unless otherwise indicated)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||
| 2020 | 2019 | Change | 2020 | 2019 | Change | ||||||||||||||||||||||||||||||
| Consolidated Results | |||||||||||||||||||||||||||||||||||
| Net income/(loss) attributable to TNL shareholders | $ | 2 | $ | 167 | (99) | % | $ | (255) | $ | 507 | (150) | % | |||||||||||||||||||||||
| Diluted earnings/(loss) per share | $ | 0.03 | $ | 1.87 | (98) | % | $ | (2.97) | $ | 5.48 | (154) | % | |||||||||||||||||||||||
| Net income/(loss) from continuing operations | $ | 4 | $ | 155 | (97) | % | $ | (253) | $ | 489 | (152) | % | |||||||||||||||||||||||
| Diluted earnings/(loss) per share from continuing operations | $ | 0.05 | $ | 1.73 | (97) | % | $ | (2.95) | $ | 5.29 | (156) | % | |||||||||||||||||||||||
| Adjusted Earnings/ (Loss) from Continuing Operations | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 148 | $ | 265 | (44) | % | $ | 259 | $ | 991 | (74) | % | |||||||||||||||||||||||
| Adjusted net income/(loss) | $ | 28 | $ | 142 | (80) | % | $ | (80) | $ | 520 | (115) | % | |||||||||||||||||||||||
| Adjusted diluted earnings/(loss) per share | $ | 0.32 | $ | 1.58 | (80) | % | $ | (0.94) | $ | 5.62 | (117) | % | |||||||||||||||||||||||
| Segment Results | |||||||||||||||||||||||||||||||||||
| Net Revenues | |||||||||||||||||||||||||||||||||||
| Vacation Ownership | $ | 512 | $ | 801 | (36) | % | $ | 1,637 | $ | 3,151 | (48) | % | |||||||||||||||||||||||
| Travel and Membership | 135 | 181 | (25) | % | 528 | 898 | (41) | % | |||||||||||||||||||||||||||
| Corporate and other | (2) | (1) | (5) | (6) | |||||||||||||||||||||||||||||||
| Total | $ | 645 | $ | 981 | (34) | % | $ | 2,160 | $ | 4,043 | (47) | % | |||||||||||||||||||||||
| Adjusted EBITDA | |||||||||||||||||||||||||||||||||||
| Vacation Ownership | $ | 115 | $ | 222 | (48) | % | $ | 121 | $ | 756 | (84) | % | |||||||||||||||||||||||
| Travel and Membership | 49 | 55 | (11) | % | 191 | 289 | (34) | % | |||||||||||||||||||||||||||
| Segment Adjusted EBITDA | 164 | 277 | 312 | 1,045 | |||||||||||||||||||||||||||||||
| Corporate and other | (16) | (12) | (53) | (54) | |||||||||||||||||||||||||||||||
| Total Adjusted EBITDA | $ | 148 | $ | 265 | (44) | % | $ | 259 | $ | 991 | (74) | % | |||||||||||||||||||||||
| Adjusted EBITDA Margin | 22.9 | % | 27.0 | % | 12.0 | % | 24.5 | % | |||||||||||||||||||||||||||
| Key Operating Statistics | |||||||||||||||||||||||||||||||||||
| Vacation Ownership | |||||||||||||||||||||||||||||||||||
| Gross VOI sales | $ | 281 | $ | 582 | (52) | % | $ | 967 | $ | 2,355 | (59) | % | |||||||||||||||||||||||
| Tours (in thousands) | 85 | 234 | (64) | % | 333 | 945 | (65) | % | |||||||||||||||||||||||||||
| VPG (in dollars) | $ | 2,938 | $ | 2,373 | 24 | % | $ | 2,486 | $ | 2,381 | 4 | % | |||||||||||||||||||||||
| New owner sales mix | 25.3 | % | 33.7 | % | 27.3 | % | 36.8 | % | |||||||||||||||||||||||||||
| Travel and Membership | |||||||||||||||||||||||||||||||||||
Average number of members (in thousands)
|
3,652 | 3,884 | (6) | % | 3,749 | 3,887 | (4) | % | |||||||||||||||||||||||||||
Exchange revenue per member (in dollars)
|
$ | 134 | $ | 153 | (13) | % | $ | 126 | $ | 167 | (24) | % | |||||||||||||||||||||||
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.
8
Table 3
Travel + Leisure
Operating Statistics: Vacation Ownership
The following operating statistics are the 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 | ||||||||||||||||||||||||||||||
Gross VOI Sales (in millions) (b)
|
2020 | $ | 413 | $ | 18 | $ | 256 | $ | 281 | $ | 967 | ||||||||||||||||||||||||
| 2019 | $ | 484 | $ | 626 | $ | 663 | $ | 582 | $ | 2,355 | |||||||||||||||||||||||||
| 2018 | $ | 465 | $ | 602 | $ | 640 | $ | 564 | $ | 2,271 | |||||||||||||||||||||||||
Tours (in thousands)
|
2020 | 162 | 6 | 80 | 85 | 333 | |||||||||||||||||||||||||||||
| 2019 | 192 | 249 | 269 | 234 | 945 | ||||||||||||||||||||||||||||||
| 2018 | 190 | 241 | 259 | 214 | 904 | ||||||||||||||||||||||||||||||
| VPG | 2020 | $ | 2,128 | NM | $ | 3,039 | $ | 2,938 | $ | 2,486 | |||||||||||||||||||||||||
| 2019 | $ | 2,405 | $ | 2,425 | $ | 2,332 | $ | 2,373 | $ | 2,381 | |||||||||||||||||||||||||
| 2018 | $ | 2,303 | $ | 2,411 | $ | 2,350 | $ | 2,499 | $ | 2,392 | |||||||||||||||||||||||||
|
Provision for Loan Losses
(in millions) (c)
|
2020 | $ | (315) | $ | (30) | $ | (45) | $ | (25) | $ | (415) | ||||||||||||||||||||||||
| 2019 | $ | (109) | $ | (129) | $ | (135) | $ | (106) | $ | (479) | |||||||||||||||||||||||||
| 2018 | $ | (92) | $ | (126) | $ | (132) | $ | (106) | $ | (456) | |||||||||||||||||||||||||
| Provision for Loan Loss as a Percentage of Gross VOI Sales, net of Fee-for-Service sales |
2020 | NM | NM | 18.8 | % | 9.5 | % | (d) |
NM | ||||||||||||||||||||||||||
| 2019 | 22.5 | % | 21.2 | % | 20.3 | % | 18.6 | % | 20.6 | % | |||||||||||||||||||||||||
| 2018 | 20.4 | % | 21.4 | % | 20.8 | % | 19.3 | % | 20.5 | % | |||||||||||||||||||||||||
|
Allowance for Loan Losses
(in millions)
|
2020 | $ | 930 | $ | 846 | $ | 788 | $ | 693 | $ | 693 | ||||||||||||||||||||||||
| 2019 | $ | 721 | $ | 735 | $ | 767 | $ | 747 | $ | 747 | |||||||||||||||||||||||||
| 2018 | $ | 684 | $ | 705 | $ | 743 | $ | 734 | $ | 734 | |||||||||||||||||||||||||
|
Gross Vacation Ownership
Contract Receivables (in millions)
|
2020 | $ | 3,722 | $ | 3,461 | $ | 3,309 | $ | 3,175 | $ | 3,175 | ||||||||||||||||||||||||
| 2019 | $ | 3,741 | $ | 3,783 | $ | 3,885 | $ | 3,867 | $ | 3,867 | |||||||||||||||||||||||||
| 2018 | $ | 3,560 | $ | 3,609 | $ | 3,732 | $ | 3,771 | $ | 3,771 | |||||||||||||||||||||||||
| Allowance for Loan Loss as a Percentage of Gross Vacation Ownership Contract Receivables |
2020 | 25.0 | % | 24.4 | % | 23.8 | % | 21.8 | % | 21.8 | % | ||||||||||||||||||||||||
| 2019 | 19.3 | % | 19.4 | % | 19.7 | % | 19.3 | % | 19.3 | % | |||||||||||||||||||||||||
| 2018 | 19.2 | % | 19.5 | % | 19.9 | % | 19.5 | % | 19.5 | % | |||||||||||||||||||||||||
Note: Full year amounts and percentages may not compute due to rounding.
NM Not Meaningful
(a) Includes the impact of acquisitions from the acquisition dates forward.
(b) 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).
(c) Represents provision for estimated losses on vacation ownership contract receivables, which is recorded as contra revenue to vacation ownership interest sales on the Consolidated Statements of Income/(Loss).
(d) The percentage was 17.3%, excluding the release of $20 million of the COVID-19 reserve.
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Table 3
Travel + Leisure
Operating Statistics: Travel and Membership
The following operating statistics are the 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 | ||||||||||||||||||||||||||||||
|
Average Number of Members
(in thousands)
|
2020 | 3,864 | 3,799 | 3,680 | 3,652 | 3,749 | |||||||||||||||||||||||||||||
| 2019 | 3,875 | 3,893 | 3,895 | 3,884 | 3,887 | ||||||||||||||||||||||||||||||
| 2018 | 3,852 | 3,844 | 3,857 | 3,833 | 3,847 | ||||||||||||||||||||||||||||||
| Exchange Revenue Per Member | 2020 | $ | 137 | $ | 103 | $ | 132 | $ | 134 | $ | 126 | ||||||||||||||||||||||||
| 2019 | $ | 185 | $ | 165 | $ | 162 | $ | 153 | $ | 167 | |||||||||||||||||||||||||
| 2018 | $ | 195 | $ | 173 | $ | 164 | $ | 153 | $ | 171 | |||||||||||||||||||||||||
| Exchange Transactions | 2020 | 260 | 71 | 214 | 217 | 762 | |||||||||||||||||||||||||||||
| Non-Exchange Transactions | 2020 | 93 | 40 | 80 | 64 | 278 | |||||||||||||||||||||||||||||
|
Total Travel and Membership Transactions
(in thousands) (b)
|
2020 | 353 | 111 | 294 | 281 | 1,040 | |||||||||||||||||||||||||||||
| Exchange Transactions | 2019 | 444 | 377 | 368 | 304 | 1,493 | |||||||||||||||||||||||||||||
| Non-Exchange Transactions | 2019 | — | — | 70 | 93 | 163 | |||||||||||||||||||||||||||||
|
Total Travel and Membership Transactions
(in thousands) (b)
|
2019 | 444 | 377 | 438 | 397 | 1,656 | |||||||||||||||||||||||||||||
Note: Full year amounts and percentages may not compute due to rounding.
(a) Includes the impact of acquisitions from the acquisition dates forward.
(b) Given recent acquisitions, we will be reporting transactions as a key operating metric for our Travel and Membership
segment beginning in 2021. The company is providing 2020 and 2019 data in advance of this change.
segment beginning in 2021. The company is providing 2020 and 2019 data in advance of this change.
10
Table 4
Travel + Leisure
Revenue by Reportable Segment
(in millions)
| 2020 | ||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||||||||||||||||||||
| Vacation Ownership | ||||||||||||||||||||||||||||||||
| Net VOI Sales | $ | 90 | $ | (13) | $ | 196 | $ | 231 | $ | 505 | ||||||||||||||||||||||
| Property Management Fees and Reimbursable Revenues | 176 | 123 | 149 | 148 | 595 | |||||||||||||||||||||||||||
| Consumer Financing | 127 | 119 | 114 | 107 | 467 | |||||||||||||||||||||||||||
| Other Revenues | 16 | 10 | 18 | 26 | 70 | |||||||||||||||||||||||||||
| Total Vacation Ownership | 409 | 239 | 477 | 512 | 1,637 | |||||||||||||||||||||||||||
| Travel and Membership | ||||||||||||||||||||||||||||||||
| Exchange Revenues | 133 | 98 | 122 | 122 | 474 | |||||||||||||||||||||||||||
| Other Revenues | 17 | 7 | 16 | 13 | 54 | |||||||||||||||||||||||||||
| Total Travel and Membership | 150 | 105 | 138 | 135 | 528 | |||||||||||||||||||||||||||
| Total Reportable Segments | $ | 559 | $ | 344 | $ | 615 | $ | 647 | $ | 2,165 | ||||||||||||||||||||||
| 2019 | ||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||||||||||||||||||||
| Vacation Ownership | ||||||||||||||||||||||||||||||||
| Net VOI Sales | $ | 375 | $ | 481 | $ | 528 | $ | 464 | $ | 1,848 | ||||||||||||||||||||||
| Property Management Fees and Reimbursable Revenues | 170 | 170 | 178 | 183 | 702 | |||||||||||||||||||||||||||
| Consumer Financing | 125 | 128 | 132 | 130 | 515 | |||||||||||||||||||||||||||
| Other Revenues | 13 | 31 | 20 | 24 | 86 | |||||||||||||||||||||||||||
| Total Vacation Ownership | 683 | 810 | 858 | 801 | 3,151 | |||||||||||||||||||||||||||
| Travel and Membership | ||||||||||||||||||||||||||||||||
| Exchange Revenues | 180 | 161 | 158 | 149 | 647 | |||||||||||||||||||||||||||
| Other Revenues | 56 | 69 | 92 | 32 | 251 | |||||||||||||||||||||||||||
| Total Travel and Membership | 236 | 230 | 250 | 181 | 898 | |||||||||||||||||||||||||||
| Total Reportable Segments | $ | 919 | $ | 1,040 | $ | 1,108 | $ | 982 | $ | 4,049 | ||||||||||||||||||||||
| 2018 | ||||||||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||||||||||||||||||||
| Vacation Ownership | ||||||||||||||||||||||||||||||||
| Net VOI Sales | $ | 358 | $ | 462 | $ | 503 | $ | 446 | $ | 1,769 | ||||||||||||||||||||||
| Property Management Fees and Reimbursable Revenues | 164 | 162 | 172 | 168 | 665 | |||||||||||||||||||||||||||
| Consumer Financing | 118 | 120 | 126 | 128 | 491 | |||||||||||||||||||||||||||
| Other Revenues | 21 | 26 | 19 | 23 | 91 | |||||||||||||||||||||||||||
| Total Vacation Ownership | 661 | 770 | 820 | 765 | 3,016 | |||||||||||||||||||||||||||
| Travel and Membership | ||||||||||||||||||||||||||||||||
| Exchange Revenues | 188 | 166 | 158 | 146 | 658 | |||||||||||||||||||||||||||
| Other Revenues | 58 | 72 | 85 | 45 | 260 | |||||||||||||||||||||||||||
| Total Travel and Membership | 246 | 238 | 243 | 191 | 918 | |||||||||||||||||||||||||||
| Total Reportable Segments | $ | 907 | $ | 1,008 | $ | 1,063 | $ | 956 | $ | 3,934 | ||||||||||||||||||||||
Note: Full year amounts may not add across due to rounding.
11
Table 5
Travel + Leisure
Non-GAAP Measure: Reconciliation of Net Income/(Loss) to
Adjusted Net Income/(Loss) from Continuing Operations to Adjusted EBITDA
(in millions, except diluted per share amounts)
| Three Months Ended December 31, | Twelve Months Ended December 31, | ||||||||||||||||||||||||||||||||||||||||||||||
| 2020 | EPS | 2019 | EPS | 2020 | EPS | 2019 | EPS | ||||||||||||||||||||||||||||||||||||||||
| Net income/(loss) attributable to TNL shareholders | $ | 2 | $ | 0.03 | $ | 167 | $ | 1.87 | $ | (255) | $ | (2.97) | $ | 507 | $ | 5.48 | |||||||||||||||||||||||||||||||
| (Loss)/gain on disposal of discontinued business, net of income taxes | (2) | 12 | (2) | 18 | |||||||||||||||||||||||||||||||||||||||||||
| Net income/(loss) from continuing operations | $ | 4 | $ | 0.05 | $ | 155 | $ | 1.73 | $ | (253) | $ | (2.95) | $ | 489 | $ | 5.29 | |||||||||||||||||||||||||||||||
| Impairments | 2 | 27 | 57 | 27 | |||||||||||||||||||||||||||||||||||||||||||
| COVID-19 related costs | 6 | — | 56 | — | |||||||||||||||||||||||||||||||||||||||||||
| Exchange inventory write-off | — | — | 48 | — | |||||||||||||||||||||||||||||||||||||||||||
| Restructuring costs | 12 | 5 | 39 | 9 | |||||||||||||||||||||||||||||||||||||||||||
Amortization of acquired intangibles (a)
|
2 | 3 | 9 | 9 | |||||||||||||||||||||||||||||||||||||||||||
| Legacy items | 2 | — | 4 | 1 | |||||||||||||||||||||||||||||||||||||||||||
| Separation and related costs | — | 1 | — | 45 | |||||||||||||||||||||||||||||||||||||||||||
| Acquisition and divestiture costs | — | (2) | — | 1 | |||||||||||||||||||||||||||||||||||||||||||
| Gain on sale of business | — | (68) | — | (68) | |||||||||||||||||||||||||||||||||||||||||||
Taxes (b)
|
— | 21 | (40) | 6 | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted net income/(loss) from continuing operations | $ | 28 | $ | 0.32 | $ | 142 | $ | 1.58 | $ | (80) | $ | (0.94) | $ | 520 | $ | 5.62 | |||||||||||||||||||||||||||||||
| Interest expense | 54 | 39 | 192 | 162 | |||||||||||||||||||||||||||||||||||||||||||
| Depreciation | 30 | 29 | 117 | 112 | |||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense (c)
|
6 | 6 | 20 | 20 | |||||||||||||||||||||||||||||||||||||||||||
| Interest income | (1) | (2) | (7) | (7) | |||||||||||||||||||||||||||||||||||||||||||
| Income taxes/(benefits) on adjusted net income/(loss) | 31 | 50 | 17 | 185 | |||||||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 148 | $ | 265 | $ | 259 | $ | 991 | |||||||||||||||||||||||||||||||||||||||
| Diluted Shares Outstanding | 86.6 | 89.8 | 86.1 | 92.4 | |||||||||||||||||||||||||||||||||||||||||||
Amounts may not calculate due to rounding. The table above reconciles 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) from continuing operations, adjusted EBITDA and adjusted diluted EPS from continuing operations 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 the tables for the definitions and reconciliations of these non-GAAP measures.
(a) Amortization of acquisition-related intangible assets is excluded from adjusted net income/(loss) from continuing operations and adjusted EBITDA.
(b) In the three months ended December 31, 2020, the amount represent the tax effect of the adjustments totaling $8 million, offset by $3 million of non-cash tax expense associated with COVID-19 related increases to valuation allowances and $5 million of additional tax related to the Company's former rentals businesses. In the three months ended December 31, 2019, the amount represents $13 million of tax expense related to the separation of the hotel business and $8 million of net tax effects of the adjustments. In the twelve months ended December 31, 2020, the amounts represent the tax effect of the adjustments totaling $54 million, partially offset by $9 million of non-cash tax
12
Table 5
(continued)
expense associated with COVID-19 related increases to valuation allowances and $5 million of additional tax related to the Company's former rentals businesses. In the twelve months ended December 31, 2019, the amount represents $13 million of tax expense related to the separation of the hotel business partially offset by $7 million of net tax effects of the adjustments.
(c) All stock-based compensation is excluded from adjusted EBITDA.
13
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 | |||||||||||||||||||||||||||||||||||
| 2020 | Q1 | Q2 | Q3 | Q4 | Full Year | ||||||||||||||||||||||||||||||
| 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 | |||||||||||||||||||||||||
| 2018 | |||||||||||||||||||||||||||||||||||
| Net VOI sales | $ | 358 | $ | 462 | $ | 503 | $ | 446 | $ | 1,769 | |||||||||||||||||||||||||
| Loan loss provision | 92 | 126 | 132 | 106 | 456 | ||||||||||||||||||||||||||||||
| Gross VOI sales, net of Fee-for-Service sales | 450 | 588 | 635 | 552 | 2,225 | ||||||||||||||||||||||||||||||
| Fee-for-Service sales | 15 | 14 | 5 | 12 | 46 | ||||||||||||||||||||||||||||||
| Gross VOI sales | $ | 465 | $ | 602 | $ | 640 | $ | 564 | $ | 2,271 | |||||||||||||||||||||||||
Note: Amounts may not add due to rounding.
14
Table 7
Travel + Leisure
Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow from Continuing Operations
(in millions)
| Twelve Months Ended December 31, |
||||||||||||||
| 2020 | 2019 | |||||||||||||
| Net cash provided by operating activities from continuing operations | $ | 374 | $ | 453 | ||||||||||
| Property and equipment additions | (69) | (108) | ||||||||||||
| Sum of proceeds and principal payments of non-recourse vacation ownership debt | (333) | 185 | ||||||||||||
| Free cash flow from continuing operations | $ | (28) | $ | 530 | ||||||||||
Separation and other adjustments (a)
|
16 | 87 | ||||||||||||
COVID-19 related adjustments (b)
|
47 | — | ||||||||||||
| Adjusted free cash flow from continuing operations | $ | 35 | $ | 617 | ||||||||||
(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.
15
Table 8
Travel + Leisure
COVID-19 Related Impacts
(in millions)
The tables below present the COVID-19 related impacts to our results of operations for three and twelve months ended December 31, 2020, and the related classification on the Consolidated Statements of (Loss)/Income:
| Three Months Ended | Vacation Ownership | Travel and Membership | Corporate & Other |
Consolidated | Non-GAAP Adjustments |
Income Statement Classification |
||||||||||||||||||||||||||||||||
| Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||
| Provision | (20) | — | — | (20) | — | Vacation ownership interest sales | ||||||||||||||||||||||||||||||||
| Recoveries | 7 | — | — | 7 | — | Cost of vacation ownership interests | ||||||||||||||||||||||||||||||||
| Employee compensation related and other | 3 | 2 | 2 | 7 | 6 | COVID-19 related costs | ||||||||||||||||||||||||||||||||
| Asset impairments | 1 | — | 1 | 2 | 2 | Asset impairments | ||||||||||||||||||||||||||||||||
| Lease-related | 12 | — | — | 12 | 12 | Restructuring | ||||||||||||||||||||||||||||||||
| Total COVID-19 | $ | 3 | $ | 2 | $ | 3 | $ | 8 | $ | 20 | ||||||||||||||||||||||||||||
| Twelve Months Ended | Vacation Ownership | Travel and Membership | Corporate & Other |
Consolidated | Non-GAAP Adjustments |
Income Statement Classification |
||||||||||||||||||||||||||||||||
| Allowance for loan losses: | ||||||||||||||||||||||||||||||||||||||
| Provision | 205 | — | — | 205 | — | Vacation ownership interest sales | ||||||||||||||||||||||||||||||||
| Recoveries | (48) | — | — | (48) | — | Cost of vacation ownership interests | ||||||||||||||||||||||||||||||||
| Employee compensation related and other | 65 | 9 | 14 | 88 | 56 | COVID-19 related costs | ||||||||||||||||||||||||||||||||
| Asset impairments | 21 | 34 | 1 | 56 | 56 | Asset impairments / Operating expenses | ||||||||||||||||||||||||||||||||
| Exchange inventory write-off | — | 48 | — | 48 | 48 | Operating expenses | ||||||||||||||||||||||||||||||||
| Lease-related | 14 | 22 | — | 36 | 36 | Restructuring | ||||||||||||||||||||||||||||||||
| Total COVID-19 | $ | 257 | $ | 113 | $ | 15 | $ | 385 | $ | 196 | ||||||||||||||||||||||||||||
16
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 Consolidated Statements of Income. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, transaction costs and impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent. 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 Free Cash Flow from Continuing Operations: 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 transaction costs for acquisitions and divestitures, separation adjustments associated with the spin-off of Wyndham Hotels, and certain adjustments related to COVID-19.
Adjusted net income/(loss) from continuing operations: A non-GAAP measure, defined by the Company as net income/(loss) from continuing operations adjusted to exclude separation and restructuring costs, 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.
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.
Exchange Revenue Per Member: Represents total revenues generated from fees associated with memberships, exchange transactions, and other servicing for the period divided by the average number of vacation exchange members during the period.
Free Cash Flow from Continuing Operations (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 measures of net cash provided by operating activities as a means for evaluating TNL is that FCF does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.
Gross Vacation Ownership Interest Sales: A non-GAAP measure, represents sales of vacation ownership interests (VOIs), including sales under the fee-for-service program before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.
Leverage Ratio: The Company calculates leverage ratio as net debt divided by Adjusted EBITDA as defined in the credit agreement.
Net Debt: Net debt equals total debt outstanding, less non-recourse vacation ownership debt and cash and cash equivalents.
Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.
Travel and Membership Transactions: Represents the number of vacation transactions booked during the period, net of cancellations.
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.
17