Travel Leisure Co. · NYSE:TNL
Travel Leisure — Investor Presentation (December 2021)
50 slides from Travel Leisure's investor presentation, December 2021
Slide 1: Investor Presentation
Zz O P ae Oz ip Wl Dy SW 2 Zo. November/December 2021
Slide 2: Forward Looking Statements Disclaimer
Forward Looking Statements Disclaimer This presentation 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 expectat
Slide 3: 3Q21 Highlights
3Q21 HIGHLIGHTS Net Revenue Gross VOI Sales 1 Adj. EBITDA 1 $839M $440M $228M Adj. EBITDA Margin 1 YTD Adj. FCF 1 27.2% $128M 1. Non-GAAP measure. See appendix for definition and GAAP reconciliation. 3
Slide 4: Recent Updates
RECENT UPDATES + HOSTED 2021 INVESTOR DAY: FOUR- YEAR PLAN TO ACCELERATE GROWTH + APPOINTED LUCINDA MARTINEZ, SENIOR NETFLIX EXECUTIVE, TO BOARD + LAUNCHED BRANDED B2C TRAVEL SUBSCRIPTION CLUB + RENEWED REVOLVING CREDIT FACILITY, ELIMINATING RELIEF PERIOD RESTRICTIONS REGARDING SHARE REPURCHASES AND
Slide 5: Key Themes
KEY THEMES + + + + STRATEGIC STRONG BUSINESS ACCELERATING OVERVIEW FOUNDATION EXTENSIONS GROWTH KEY THEMES 5
Slide 6: Key Takeaways
KEY TAKEAWAYS STRONG BUSINESS ACCELERATING + = FOUNDATION EXTENSIONS GROWTH STRATEGIC OVERVIEW 6
Slide 7: Accelerate Growth and Maximize Free Cash Flow
ACCELERATE GROWTH AND MAXIMIZE FREE CASH FLOW ACCELERATED ADJ. EBITDA 1 GROWTH RATE EBITDA 11-14% 2 GROWTH 58-63% 3 MAXIMIZE FCF ADJ. FCF 1 Conversion STRATEGIC OVERVIEW 7
Slide 8: Strategic M&A Extends Capabilities
STRATEGIC M&A EXTENDS CAPABILITIES 50+ YEARS IN MEMBERSHIP & LEISURE TRAVEL STRATEGIC OVERVIEW 8
Slide 9: Travel + Leisure Acquisition Outcomes
TRAVEL + LEISURE ACQUISITION OUTCOMES + REBRAND THE COMPANY + PARTNER WITH LEISURE BRANDS WITHOUT BRAND CONFLICT + LAUNCH BRANDED B2C TRAVEL SUBSCRIPTION CLUB + BROADEN BEYOND TIMESHARE TO GROW OUR ADDRESSABLE MARKET STRATEGIC OVERVIEW 9
Slide 10: Broaden the Enterprise
BROADEN THE ENTERPRISE COMING FROM GOING TO FOCUS BUSINESS MODEL ADDRESSABLE MARKET STRATEGIC OVERVIEW 10
Slide 11: New Lines Will Capitalize on the 'Primeification' Megatrend
NEW LINES WILL CAPITALIZE ON THE ‘PRIMEIFICATION’ MEGATREND RISE OF SUBSCRIPTION U.S. HOUSEHOLD PENETRATION MODELS RATES (2021) +400% 58% 51% 38% ~6x 4% 3% 1% 79% STRATEGIC OVERVIEW 11
Slide 12: Creating a Private Vacation Marketplace
CREATING A PRIVATE VACATION MARKETPLACE Private Vacation Marketplace HIGH CUSTOMER COMMITMENT LOW MODEL Timeshare Booking Platforms Subscription Clubs Booking Platforms TRAVEL + LEISURE BRANDS MARKET BRANDS STRATEGIC OVERVIEW 12
Slide 13: Travel + Leisure Private Vacation Marketplace
TRAVEL + LEISURE PRIVATE VACATION MARKETPLACE Foster Engagement Travel Suppliers Captive Communities Fulfilled Inventory with Price Integrity STRATEGIC OVERVIEW 13
Slide 14: Timeshare = More Relevant Than Ever
TIMESHARE = MORE RELEVANT THAN EVER SPACE TRUSTED VALUE BRANDS STRONG FOUNDATION 14
Slide 15: Strategic Intent of Vacation Ownership
STRATEGIC INTENT OF VACATION OWNERSHIP Grow Vacation Ownership + Commitment to the Wyndham brand + Broaden demographic through additional brands + Optimize margins Strong and Resilient Business Model + Resilient through last two downturns + Capital efficient + Industry leading margins, returns and A
Slide 16: Industry Transformation
INDUSTRY TRANSFORMATION HISTORICAL TODAY STRONG FOUNDATION 16
Slide 17: Wyndham Destinations Positioned for Success
WYNDHAM DESTINATIONS POSITIONED FOR SUCCESS SCALE FLEXIBILITY REVENUE PIPELINE 247 1 POINTS-BASED SYSTEM OWNER UPGRADES RESORTS DIVERSITY OF BLUE THREAD DESTINATIONS 867K 1 OWNERS JUST-IN-TIME SALES TO INVENTORY MILLENNIAL/GENX RESILIENT BUSINESS MODEL STRONG FOUNDATION 17
Slide 18: 245+ Global Locations
245+ G L O B A L L O C A T I O N S 220+ In North America STRONG FOUNDATION 18
Slide 19: Key Statistics Show Stability in Our Owner/Member Base
KEY STATISTICS SHOW STABILITY IN OUR OWNER/MEMBER BASE 867K ~80% 98% 69% OWNERS1 OF OWNERS ANNUAL SALES TO HAVE NO RETENTION MILLENNIAL/ LOANS OF OWNERS2 GENX3 OUTSTANDING1 STRONG FOUNDATION 19
Slide 20: Building Upon Our Strong Foundation
BUILDING UPON OUR STRONG FOUNDATION LARGE UPGRADE PIPELINE BLUE THREAD OPPORTUNITY OPTIMIZING OPEN-MARKET CHANNELS STRONG FOUNDATION 20
Slide 21: Embedded Revenue Potential of Existing Owner Base
EMBEDDED REVENUE POTENTIAL OF EXISTING OWNER BASE $19.3B TOTAL CLUB & RESORT $2.3B MANAGEMENT $4.5B FINANCING GROSS $12.5B VOI SALES1 STRONG FOUNDATION 21
Slide 22: Optimizing Open Market Channels
OPTIMIZING OPEN MARKET CHANNELS PRE-PANDEMIC REOPENING BENEFITS + High volume + Targeted marketing + Higher VPG + Scale to leverage costs + CRM and data analytics + Stronger Portfolio + 600+ FICOs + Advanced underwriting/ + Higher margins scoring STRONG FOUNDATION 22
Slide 23: Leading Exchange Company and Travel Solutions
LEADING TRAVEL SOLUTIONS EXCHANGE COMPANY FOR THIRD PARTIES FULFILLMENT PLATFORM STRONG FOUNDATION 23
Slide 24: RCI Business
RCI BUSINESS RCI AFFILIATES RCI MEMBERS RCI SERVICES BUILD & SELL OWN TIMESHARE STANDARD & TIMESHARE AT AN RCI PREMIUM MEMBERSHIP AFFILIATED RESORT EXCHANGE PROMOTE RCI AT POS RENEWS VIA CLUB RENTAL ENROLL NEW OWNERS WITH RCI RENEWS DIRECTLY WITH RCI TRAVEL RCI AFFILIATES: STRONG FOUNDATION 24
Slide 25: World's Largest Exchange Company for 45+ Years
WORLD’S LARGEST EXCHANGE COMPANY FOR 45+ YEARS 3.5 million MEMBERS1 ~110 COUNTRIES 4,200 RESORTS STRONG FOUNDATION 25
Slide 26: Focus on Travel to Grow
FOCUS ON TRAVEL TO GROW DELIVER ON PROVIDE A ONE- EXCHANGE STOP-SHOP GROWTH + = PROMISE TRAVEL SERVICE HIGH MARGIN + CAPITAL-LIGHT + HIGH ADJ. FCF STRONG FOUNDATION 26
Slide 27: Increase Exchange Propensity
INCREASE EXCHANGE PROPENSITY + + + + STRONG FOUNDATION 27
Slide 28: Leverage Expertise to Expand Beyond Timeshare
LEVERAGE EXPERTISE TO EXPAND BEYOND TIMESHARE + = GROWTH BUSINESS EXTENSIONS 28
Slide 29: Panorama Key Takeaways
PANORAMA KEY TAKEAWAYS GROW EXPAND B2B INCREMENTAL MEMBERSHIP PARTNERSHIPS SUBSCRIPTION BEYOND THE ACROSS MULTIPLE AND TIMESHARE SECTORS TRANSACTION INDUSTRY REVENUE BUSINESS EXTENSIONS 29
Slide 30: Panorama Travel Solutions
PANORAMA TRAVEL SOLUTIONS PRODUCT OFFERING PARTNER VALUE PROPOSITION + B2B Travel Club Solution + Benefit from Scale and Core + Closed User Group Travel Club Competencies of RCI + White Label Under Partner Brand + Customized Solutions + Comprehensive Travel Platform at + Dedicated Website and Digita
Slide 31: Panorama Travel Solutions Algorithm Example
PANORAMA TRAVEL SOLUTIONS ALGORITHM EXAMPLE NATIONAL ASSOCIATION OF REALTORS REALTORS: 1.4M DRIVING ENGAGEMENT 120K $350 AVERAGE TRANSACTIONS TRANSACTION STANDARD MEMBERSHIP STANDARD MEMBERSHIP CONVERSION 4% PREMIUM MEMBERSHIP 1% $99 SUBSCRIPTION FEE BUSINESS EXTENSIONS 31
Slide 32: Value Proposition to All Participants
VALUE PROPOSITION TO ALL PARTICIPANTS CLOSED TRAVEL SUPPLIERS USER GROUP • • • • PANORAMA TRAVEL SOLUTIONS TRAVEL CONSUMERS • • • • BUSINESS EXTENSIONS 32
Slide 33: Travel + Leisure Club
TRAVEL + LEISURE CLUB LEVERAGING THE SUBSCRIPTION BUILDS ON CORE WORLD’S MOST MEGATREND – WE OPERATIONAL INFLUENTIAL TRAVEL HAVE CONTENT STRENGTHS BRAND IN A LARGE AND VALUE ADDRESSABLE MARKET BUSINESS EXTENSIONS 33
Slide 34: Media Halo: Magazine, Website, Social, Podcast
MEDIA HALO: MAGAZINE, WEBSITE, SOCIAL, PODCAST Licensing BUSINESS EXTENSIONS 34
Slide 35: Travel + Leisure Club Has a Simple Business Model
TRAVEL + LEISURE CLUB HAS A SIMPLE BUSINESS MODEL THAT PLAYS TO OUR CORE STRENGTHS CORE STRENGTHS ACQUISITION CHANNELS • + • + • ONGOING MEMBERSHIP + REVENUE STREAMS • + • BUSINESS EXTENSIONS 35
Slide 36: 4 Year Compound Annual Growth Outlook
4 YEAR COMPOUND ANNUAL GROWTH OUTLOOK 1 VACATION OWNERSHIP 9-10% 9-11% TRAVEL AND MEMBERSHIP 27-30% 13-17% TRAVEL + LEISURE 15-17% 11-14% Travel and Membership Travel + Leisure ~40% 17-22% CAGR in 2025 Before share repurchases ACCELERATING GROWTH 36
Slide 37: Vacation Ownership Growth Outlook
VACATION OWNERSHIP GROWTH OUTLOOK 2025 PROJECTION REVENUE CAGR 2021-2025 9% 10% TOUR CAGR 2021-2025 18% 20% GROSS VOI SALES $2.5B $2.6B ADJ. EBITDA1 $740M $780M ACCELERATING GROWTH 37
Slide 38: Travel and Membership Growth Outlook
TRAVEL AND MEMBERSHIP GROWTH OUTLOOK 2025 PROJECTION REVENUE CAGR 2021-2025 27% 30% RCI $250M $265M 41-44% PANORAMA TRAVEL SOLUTIONS $120M $170M 23-26% TRAVEL + LEISURE GROUP $80M $95M 8-9% T&M ADJUSTED EBITDA $450M $530M 21-23% ACCELERATING GROWTH 38
Slide 39: 2025 Adjusted EBITDA Targets
2025 ADJUSTED EBITDA TARGETS VACATION OWNERSHIP $740M $780M TRAVEL AND MEMBERSHIP $450M $530M CORP AND OTHER ($65M) ($60M) TRAVEL + LEISURE $1,125M $1,250M ACCELERATING GROWTH 39
Slide 40: Adjusted EBITDA to Adjusted Free Cash Flow Conversion %
ADJUSTED EBITDA TO ADJUSTED FREE CASH FLOW CONVERSION % 2022 to 2025 Projection 100% (2%) – 2% 2% – 6% (20%) – (17%) 58% – 63% (16%) – (13%) (13%) – (9%) Adj. EBITDA Cash interest Cash taxes Net consumer Net inventory Capex and Adj. FCF finance spending working conversion capital 2018 to 2019 Actual
Slide 41: Committed to Returning Cash to Shareholders 2022-2025
COMMITTED TO RETURNING CASH TO SHAREHOLDERS 2022-2025 CASH AVAILABLE $2. 4 -2. 6 B FOR ENHANCING SHAREHOLDER VALUE $0 . 6 -0.7B DIVIDENDS CUMULATIVE ADJ. FCF + $2. 9 -3. 3B $0 . 5 -0. 7B NET DEBT/OTHER $2. 3-2. 6 B BUSINESS INVESTMENTS SHARE REPURCHASES M&A ACCELERATING GROWTH 41
Slide 42: A New Algorithm for Sustained Growth
A NEW ALGORITHM FOR SUSTAINED GROWTH STRONG BUSINESS FREE CASH THE FOUNDATION EXTENSIONS FLOW OUTLOOK Building on a strong Accelerating top-line Driving strong Adj. Accelerating adj. foundation; resilient growth by FCF generation of EBITDA growth business with leveraging core $2.4B+ over next and cu
Slide 43: Listed NYSE
LISTED NYSE
Slide 44: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION TNL Consolidated Reconciliation of Net Income to Adjusted EBITDA ($ in millions) 2019 2018 (1) 2018 + 2019 2019 2018 (1) 2018 + 2019 Net income attributable to T+L shareholders 507 672 1,179 Vacation Ownership 736 704 1,440 Income from ops of disc bus, net of income
Slide 45: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow from Continuing Operations ($ in millions) 2019 2018 2018 + 2019 Net cash provided by operating activities from continuing operations 453 292 745 Proper
Slide 46: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION 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 busi
Slide 47: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION 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 % Net income attributable to TNL shareholders $ 101 $ 1.15 12.0% L
Slide 48: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (in millions) Nine Months Ended September 30, 2021 Net cash provided by operating activities $ 435 Property and equipment additions (40) Sum of proceeds and prin
Slide 49: Definitions
DEFINITIONS 1. Adjusted 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. 2. Adjusted EBITDA: A non-GAAP measure, defined by the Company as net income/(loss)
Slide 50: Definitions and Sources
DEFINITIONS AND SOURCES 12. Travel and Membership Revenue per Transaction: Represents transactional revenue divided by transactions, provided in two categories; Exchange, which is primarily RCI, and non-Exchange. 13. Travel and Membership Transactions: Represents the number of vacation bookings reco
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