Travel + Leisure Co. Reports Fourth Quarter and Full-Year 2021 Results

Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported fourth quarter and full-year 2021 financial results for the period ended December 31, 2021.

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Travel + Leisure Co. (NYSE:TNL) reports 4Q and FY 2021 results

Fourth quarter 2021 highlights:

• Net income from continuing operations of $110 million (diluted EPS of $1.26) on net revenue of $870 million

• Adjusted EBITDA of $228 million and adjusted diluted EPS of $1.19 ⁽¹⁾

• Resumed stock repurchase program and increased dividend

Full-year 2021 highlights:

• Net income from continuing operations of $313 million (diluted EPS of $3.58) on net revenue of $3.1 billion

• Adjusted EBITDA of $778 million and adjusted diluted EPS of $3.65

• Net cash provided by operating activities of $568 million and adjusted free cash flow of $223 million

Outlook:

• First quarter 2022 adjusted EBITDA is expected to range from $160 million to $170 million

• The Company will recommend a first quarter 2022 dividend of $0.40 per share for approval by the Board of Directors

“The continued recovery in leisure travel and business improvements made at the start of the pandemic helped us deliver full-year adjusted EBITDA and adjusted diluted EPS above our guidance range,” said Michael D. Brown, president and CEO of Travel + Leisure Co. “Based on our strong results in 2021 and optimism for the year ahead, we increased the dividend and resumed stock repurchases in the fourth quarter.”

“We anticipate that leisure travel will continue to lead the broader travel industry, which will support the 2025 growth plan announced at our Investor Day in September 2021.”

^{(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. Forward-looking non-GAAP measures are presented in this press release only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation is available without unreasonable effort.}

Business Segment Results

The results of operations during the fourth quarter and full-year of 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

Vacation Ownership revenue increased 37% to $695 million in the fourth quarter of 2021 compared to the same period in the prior year. Gross vacation ownership interest (VOI) sales were $432 million in the fourth quarter compared to $281 million in the prior year period and tours were 129,000 in the fourth quarter compared to 85,000 in the prior year period. Volume Per Guest (VPG) increased 10% to $3,222 due to strong close rates and higher quality tours in the fourth quarter compared to the prior year period.

Fourth quarter adjusted EBITDA was $182 million compared to $115 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 improvement in the provision for loan losses.

Fourth quarter 2021 results include an adjustment to the COVID-19 related allowance for loan losses, resulting in a $44 million increase to revenue and a $16 million increase to cost of vacation ownership interests, and yielding a $28 million net positive impact to Adjusted EBITDA. Fourth quarter 2020 results also include an adjustment to the COVID-19 related allowance, resulting in a $20 million increase to revenue and a $7 million increase to cost of vacation ownership interests, yielding a $13 million net positive impact to Adjusted EBITDA.

Travel and Membership

Travel and Membership revenue increased 27% to $179 million in the fourth quarter driven by a 30% increase in transactions and 6% increase in revenue per transaction. Transactions grew year over year in every quarter of 2021 as we continue to recover from COVID-19 impacted levels.

Fourth quarter Adjusted EBITDA increased 28% to $64 million driven by higher revenue, partially offset by increased operational costs supporting the revenue increase.

Balance Sheet and Liquidity

Net Debt — As of December 31, 2021, the Company's leverage ratio for covenant purposes was 3.99x. The Company had $3.4 billion of corporate debt outstanding as of December 31, 2021, which excluded $1.9 billion of non-recourse debt related to its securitized notes receivables portfolio. Additionally, the Company had cash and cash equivalents of $369 million. At the end of the fourth quarter, the Company had $1.4 billion of liquidity in cash and cash equivalents and revolving credit facility availability.

The Company renewed its $1 billion revolving credit facility on October 22, 2021 and extended the term through October 2026. This renewal terminated the relief period and restrictions regarding share repurchases, dividends and acquisitions under the first amendment.

During the quarter, the Company issued $650 million senior secured notes due 2029 with an interest rate of 4.5% and paid off $650 million senior secured notes due March 2022. The Company's next long-term debt maturity is $400 million of secured notes due March 2023.

Timeshare Receivables Financing — The Company closed on a $350 million term securitization on October 26, 2021 with a weighted average coupon of 1.82% and a 98% advance rate.

Cash Flow — For the full-year 2021, net cash provided by operating activities was $568 million compared to $374 million in the prior year. Adjusted free cash flow was $223 million in 2021 compared to $35 million in the prior year.

Share Repurchases — The Company resumed share repurchase activity in the fourth quarter of 2021 and repurchased 0.5 million shares of common stock for $26 million at a weighted average price of $52.94 per share during the quarter.

Dividend — The Company paid $30 million ($0.35 per share) in cash dividends on December 30, 2021 to shareholders of record as of December 15, 2021. For the full-year 2021, Travel + Leisure Co. paid an aggregate $109 million in dividends to shareholders.

Outlook

For the first quarter of 2022, the Company expects adjusted EBITDA to range from $160 million to $170 million.

This guidance is presented only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future.

Conference Call Information

Travel + Leisure Co. will hold a conference call with investors to discuss the Company’s results and outlook today at 8:30 a.m. ET. Participants may listen to a simultaneous webcast of the conference call, which may be accessed through the Company's website at investor.travelandleisureco.com, or by dialing 866-831-8713, passcode TNL, 10 minutes before the scheduled start time. For those unable to listen to the live broadcast, an archive of the webcast will be available on the Company's website for 90 days beginning at 12:00 p.m. ET today. Additionally, a telephone replay will be available for four days beginning at 12:00 p.m. ET today at 800-753-0348.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures such as adjusted EBITDA, adjusted diluted EPS, adjusted free cash flow, gross VOI sales and adjusted net income/(loss), which include or exclude certain items, as well as non-GAAP guidance. The Company utilizes 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. (NYSE:TNL) 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 and subscription travel brands; and Travel + Leisure Group, featuring top travel content and travel services including the brand’s eponymous travel club. 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, risks associated with: the acquisition of the Travel + Leisure brand and the future prospects and plans for Travel + Leisure Co., including our ability to execute our strategies to grow our cornerstone timeshare and exchange businesses and expand into the broader leisure travel industry through new business extensions; our ability to compete in the highly competitive timeshare and leisure travel industries; uncertainties related to acquisitions, dispositions and other strategic transactions; the health of the travel industry and declines or disruptions caused by adverse economic conditions and unemployment rates, terrorism or acts of gun violence, political strife, war, pandemics, and severe weather events and other natural disasters; adverse changes in consumer travel and vacation patterns, consumer preferences and demand for our products; increased or unanticipated operating costs and other inherent business risks; our ability to comply with financial and restrictive covenants under our indebtedness and our ability to access capital markets on reasonable terms, at a reasonable cost or at all; maintaining the integrity of internal or customer data and protecting our systems from cyber-attacks; uncertainty with respect to the scope, impact and duration of the novel coronavirus global pandemic (“COVID-19”), including resurgences, the pace of recovery, distribution and adoption of vaccines and treatments, and actions in response to the evolving pandemic by governments, businesses and individuals; the timing and amount of future dividends and share repurchases, if any; and those other factors disclosed as risks under “Risk Factors” in documents we have filed with the SEC, including in Part I, Item 1A of our Annual Report on Form 10-K most recently filed with the SEC. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, we undertake no obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

Travel + Leisure Co.

Table of Contents

Table Number

1. Consolidated Statements of Income/(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 Related Impacts
9. Definitions