Travel Leisure Co. · NYSE:TNL
Travel Leisure — Investor Presentation (November 2022)
34 slides from Travel Leisure's investor presentation, November 2022
Slide 1: Investor Presentation November 2022
+ INVESTOR PRESENTATION November 2022 M O AB , U TAH
Slide 2: Forward Looking Statements Disclaimer
Forward Looking Statements Disclaimer presentation does not constitute a recommendation regarding the securities of Travel + Leisure. This This presentation includes “forward-looking statements” as that term is defined by the Securities and presentation or any related oral presentation does not cons
Slide 3: Our Mission: We Put the World on Vacation
WE P U T T H E WO R L D O N VACATION OUR MISSION
Slide 4: Strong and Resilient Cash Flow Across the Economic Cycle
Strong and Resilient Cash Flow Across the Economic Cycle + = Strong Business Accelerating Foundation Extensions Growth Vacation Ownership Travel Clubs Accelerate earnings growth and Exchange & free cash flow generation 4
Slide 5: In the Leisure Travel and Membership Business for 50+ Years
In the Leisure Travel and Membership Business for 50+ Years NYSE listed TNL Annualized dividend of Yield of $3.0B1 market cap $1.60 4.2%1 2022 adj. EBITDA2 outlook Resorts Owners $855–$865M +2453 833K3 2022 Adj. EBITDA-to-FCF2 conversion RCI Members Affiliated Resorts ~50% +3.7M3 +4,2003 (1) As of 1
Slide 6: Leading Membership & Leisure Travel Company
Leading Membership & Leisure Travel Company YTD Through September 30, 2022 Vacation Ownership Travel & Membership Revenue Mix2 Revenue Mix2 $2,098M 79% $572M 21% Adj. EBITDA1 Mix2 Adj. EBITDA1 Mix2 $480M 69% $211M 31% Owners Tours VPG Members Transactions Rev/transaction 833K3 415K $3,423 3.7M3 1,37
Slide 7: 2025 Financial Goals
2025 Financial Goals Travel + Leisure Adj. EPS2 Low High 16-20% CAGR 2025 Adj. EBITDA1 $1.13B $1.25B Before share repurchases Adj. FCF Conversion1 58% 63% Cumulative Adj. FCF1 Cash available $2.4B $2.6B for enhancing 2022-2025 shareholder value3 $2.9–3.3B Target Leverage (1) Adjusted EBITDA, adjuste
Slide 8: Investment Thesis
I n v e s t me n t T h e s i s Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient bu
Slide 9: ~80% of Revenue in 2021 Predictable and/or Recurring
Predictable and/or Recurring Revenue ($ in millions) $3,134 Primarily New Vacation Owner Sales Other 22% and Travel Club transactions $690 Exchange membership revenue (3.7M members) Subscription Revenue $176 6% Exchange Transactions 11% Booking revenue from exchange members $346 Consumer Financing $
Slide 10: Embedded Revenue Potential of Large Existing Owner Base
Embedded Revenue Potential of Large Existing Owner Base $4.5B $12.5B Gross VOI Sales1 Financing $19.3B Owner upgrade potential Interest revenue on Total of current members over next ten years existing portfolio and potential upgrade loans Upgrades are more a $2.3B over next ten years function of lif
Slide 11: Adj. EBITDA Margin Performance Across the Economic Cycle
Adj. EBITDA Margin Performance Across the Economic Cycle Resilient Business with Strong Margins Vacation Ownership Segment Adjusted EBITDA Margin 25% 24% 25% 25% 25% 25% 24% 24% 24% 22% 22% 23% 17% 16% 16% 7% The Great Recession COVID-19 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20
Slide 12: Investment Thesis
I n v e s t me n t T h e s i s Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient bu
Slide 13: Compelling Consumer Value Proposition
Compelling Consumer Value Proposition Scale Flexibility Value + + +2451 Points-based System Majority of Sales are Owner Upgrades Resorts Diversity of Destinations Inflation: Lock in Price of Future Vacations 833K1 Additional Space/Amenities Owners 65%2 of Sales to Millennial/GenX Consumer Value Prop
Slide 14: 95%+ of U.S. Population Live within 300 Miles of one of our Resorts
+95% of U.S. Population Live within 300 Miles of one of our Resorts +245 Locations Globally +220 Locations in North America As of 12/31/21. 14
Slide 15: Key Statistics Underline the Value Proposition
K E Y S TAT I S T I C S U N D E R L I N E T H E VA L U E PROPOSITION Owners 833K1 Owners with No Loans Outstanding ~80%1 Annual Retention of Owners 98%2 Record High YTD VPGs in Today’s Inflationary Environment $3,4233 (1) As of 12/31/21. (2) Annual retention of owners without loans over last 10 year
Slide 16: Travel Club Value Proposition
Travel Club Value Proposition Travel Suppliers Closed User Group ﹢Price integrity (via paywall) ﹢Member loyalty ﹢Fulfilled inventory ﹢Customized/one-stop platform TRAVEL CLUBS TNL Travel Solutions Travel Consumers ﹢Recurring revenue and bookings ﹢Attractive inventory ﹢Attractive inventory at value ﹢
Slide 17: Investment Thesis
I n v e s t me n t T h e s i s Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient bu
Slide 18: Strong FCF Supports Growth and Return of Capital to Shareholders
Strong FCF Supports Growth and Return of Capital to Shareholders Strong and Long Track Record Minimal Strong Track Consistent of Execution in the Inventory Record of Conversion of FCF ABS Market Commitments Returning Capital from EBITDA to Shareholders Just-in-Time Historically average Five years of
Slide 19: Adjusted EBITDA to Adjusted Free Cash Flow Conversion %
Adjusted EBITDA to Adjusted Free Cash Flow Conversion % 2025 Outlook 100% (20%) – (17%) (2%) – 2% 2% – 6% 58% – 63% (16%) – (13%) (13%) – (9%) Capex and Adj. EBITDA1 Cash interest Cash taxes Net consumer Net inventory working capital Adj. FCF1 finance spending conversion 2018 to 2019 Actual 100% 11%
Slide 20: Committed to Returning Cash to Shareholders
Committed to Returning Cash to Shareholders 2022-2025 Outlook $0.6–0.7B $2.4–2.6B Potential Dividends Cumulative Adj. FCF1 $2.9–3.3B + Cash Available for Enhancing Shareholder Value $2.3–2.6B $0.5–0.7B Potential Business Investments Share Repurchases Net Debt/Other M&A (1) Adjusted Free Cash Flow is
Slide 21: Corporate Debt Maturities
Corporate Debt Maturities As of September 30, 2022 ($ in millions) $650 $650 Term Loan B Secured Notes $290 91% of $400 $400 $350 Corporate $300 Debt is Fixed with a weighted average $350 effective interest rate of 5.4% 2023 2024 2025 2026 2027 2028 2029 2030 Note: Excludes Term Loan B amortization
Slide 22: Investment Thesis
I n v e s t me n t T h e s i s Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient bu
Slide 23: A New Algorithm for Sustained Growth
A NEW ALGORITHM FOR SUSTAINED GROWTH Strong Foundation Building on a strong foundation; resilient business with strong adj. EBITDA margins1 Business Extensions Accelerating top-line growth by leveraging core competencies with acquired strategic capabilities Free Cash Flow Projection Driving strong A
Slide 24: 3Q 2022 Results
3Q 2022 Results THR E E M O N T H S E N D E D 0 9 / 3 0 / 2 2 HIGHLIGHTS 3Q 2022 VPGs increased 45% over 3Q 2019 Repurchased $115M of common stock in the 3rd quarter and $243M in the first nine months of 2022 Net Revenue Gross VOI Sales1 Adj. EBITDA 1 $937M $555M $234M Closed on a $250 million term
Slide 25: Travel + Leisure, NYSE Listed TNL
TRAVEL+ LEISURE TNL LISTED NYSE
Slide 26: Appendix
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Slide 27: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION TNL Consolidated Reconciliation of Net Income to Adjusted EBITDA ($ in millions) 2019 2018 (1) 2018 + 2019 Net income attributable to T+L shareholders $ 507 $ 672 $ 1,179 Income from ops of disc bus, net of income taxes - 50 50 Gain on disposal of disc bus, net of i
Slide 28: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow ($ in millions) 2019 2018 2018 + 2019 Net cash provided by operating activities from continuing operations $ 453 $ 292 $ 745 Property and equipment addi
Slide 29: 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 bu
Slide 30: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA ($ in millions) Three Months Ended September 30, 2022 Net income attributable to TNL shareholders $ 116 Amortization of acquired intangibles (1) 2 Legacy items (1) Gain on equit
Slide 31: 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, 2022 Net cash provided by operating activities $ 267 Property and equipment additions (36) Sum of proceeds and pr
Slide 32: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Vacation Ownership Net Income to Adj. EBITDA Reconciliation ($ in millions) YTD Q3 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vacation Ownership net income/(loss) $ 276 $ 309 $ (69) $ 404 $ 340 $ 174 $ 316 $ 316 $ 295 $ 248
Slide 33: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Travel and Membership Net Income to Adj. EBITDA Reconciliation (in millions) Nine Months Ended September 30, 2022 Travel and Membership net income $ 118 Loss/(gain) on disposal of discontinued business, net of (1) income taxes Provision for income taxes 55 Depreciat
Slide 34: Definitions
DEFINITIONS 1. Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted net income divided by the Adjusted Net Income is useful to assist our investors in evaluating our ongoing operating performance for the current reporting diluted weighted average number of comm
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