Travel Leisure Co. · NYSE:TNL
Travel Leisure — Investor Presentation (February 2023)
35 slides from Travel Leisure's investor presentation, February 2023
Slide 1: Investor Presentation February 2023
+ INVESTOR PRESENTATION February 2023 MA R G A R I T A V I LL E V A C A T I O N C L UB B Y W YND HA M C L UB W YND HA M - A T L A NT A
Slide 2: Forward Looking Statements Disclaimer
Forward Looking Statements Disclaimer solicitation of any offer to subscribe for, purchase or otherwise acquire any securities of Travel + This presentation includes “forward-looking statements” as that term is defined by the Securities and Leisure, nor shall it form the basis of, or be relied upon
Slide 3: We Put the World on Vacation: Our Mission
WE PUT THE WORLD ON 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 Accelerate Foundation Extensions Growth Vacation Ownership Travel Clubs Expected to accelerate earnings and Exchange growth & free cash flow generation 4
Slide 5: 4Q and FY 2022 Results
4Q and FY 2022 Results T HRE E MONT HS E NDE D 1 2 / 3 1 / 2 0 2 2 F UL L YE AR HIGHL IG HT S Record VPG, 44% over full year 2019 Adjusted diluted earnings per share growth of 24% Net Revenue Gross VOI Sales Adj. EBITDA VPG Repurchased 8.2M shares of common stock for $899M $521M $225M $3,434 $351M r
Slide 6: Full Year 2022 vs. 2021
Full Year 2022 vs. 2021 VPG +9% New Owner tours +33% Travel Club transactions +14% Tours +24% New Owner sales +42% New Travel Clubs transactions +37% Net VOI sales +26% Blue Thread sales +65% Gross VOI sales +33% NEW YORK, NEW YORK 6 0094-2023. 2/23
Slide 7: In the leisure travel and membership business for 50+ years
In the leisure travel and membership business for 50+ years NYSE listed TNL1 Annual dividend2 Dividend Yield2 $3.3B market cap $1.60 4.4% Full Year 2022 Adj. EBITDA3 Resorts2 Owners2 $859M 245+ 816K Full Year 2022 Adj. EBITDA-to-FCF Avg. number Affiliated Resorts2 conversion3 of exchange members2 51
Slide 8: Leading Membership & Leisure Travel Company
Leading Membership & Leisure Travel Company Full Year 2022 Vacation Ownership Travel and Membership Revenue Mix2 Revenue Mix2 $2,835M 79% $735M 21% Adj. EBITDA1 Mix2 Adj. EBITDA1 Mix2 $665M 71% $268M 29% Owners3 Tours VPG Avg. number of Transactions4 Rev/transaction4 exchange members3 816K 561K $3,4
Slide 9: 2025 Financial Goals
2025 Financial Goals Travel + Leisure Adj. EPS1 Low High 17-22% 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 value2 $2.9–3.3B Target Leverage 2.25x-3.0x (1) Adjusted EBIT
Slide 10: Investment Thesis
Investment Thesis Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient business model
Slide 11: Predictable and/or Recurring Revenue
Predictable and/or Recurring Revenue ($ in millions) $3,567 Primarily New Vacation Owner Sales Other 23% and Travel Club transactions $827 Travel and Membership subscription revenue Subscription Revenue $184 5% Exchange Transactions 10% Booking revenue from exchange members $348 Consumer Financing $
Slide 12: 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 13: Resilient Business Across Economic Cycles
Resilient Business Across Economic Cycles Strong Margins Vacation Ownership Segment Adjusted EBITDA Margin 25% 24% 25% 25% 25% 25% 24% 24% 24% 22% 22% 23% 23% 17% 16% 16% 7% The Great Recession COVID-19 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 High Credit
Slide 14: Investment Thesis
Investment Thesis 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 business model
Slide 15: Compelling Consumer Value Proposition
Compelling Consumer Value Proposition Scale Flexibility Value + + 245+ Points-based System Majority of Sales are Owner Upgrades Resorts1 Diversity of Destinations Inflation: Lock in Price of Future Vacations 816K Additional Space/Amenities 65% of New Owner Sales to Owners1 Millennial/GenX2 Consumer
Slide 16: 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+ Resorts Globally 220+ Resorts in North America As of 12/31/2022. 16
Slide 17: Key Statistics Underline the Consumer Value Proposition
KEY STATISTICS UNDERLINE THE CONSUMER VALUE PROPOSITION Owners1 816K Owners with No Loans Outstanding1 ~80% Annual Retention of Owners2 98% Record High VPGs3 $3,426 (1) As of 12/31/2022. (2) Annual retention of owners without loans over last 10 years as of 12/31/2022. (3) Full Year 2022. .. 17
Slide 18: 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 T+L Travel Solutions Travel Consumers ﹢Recurring revenue and bookings ﹢Attractive inventory ﹢Attractive inventory at value ﹢
Slide 19: Investment Thesis
Investment Thesis 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 business model
Slide 20: Strong FCF Supports Growth and Return of Capital to Shareholders
Strong FCF Supports Growth and Return of Capital to Shareholders Strong and Consistent Long Track Record Minimal Strong Track Record Conversion of Adj. FCF of Execution in the Inventory of Returning Capital from Adj. EBITDA ABS Market Commitments to Shareholders Just-in-Time Historically average Fou
Slide 21: Adjusted EBITDA to Adjusted Free Cash Flow Conversion %
Adjusted EBITDA to Adjusted Free Cash Flow Conversion % 2022 to 2025 Outlook 100% (20%) – (17%) (2%) – 2% 2% – 6% 58% – 63% (16%) – (13%) (13%) – (9%) Adj. EBITDA1 Cash interest Cash taxes Net consumer Net inventory Capex and Adj. FCF1 finance spending working capital conversion 2018 to 2019 Actual
Slide 22: Committed to Returning Cash to Shareholders 2022-2025 Outlook
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 $0.5–0.7B Potential Business Investments Share Repurchases Net Debt/Other M&A (1) Adjusted Free Cash Flow is
Slide 23: Corporate Debt Maturities
Corporate Debt Maturities1 As of December 31, 2022 ($ in millions) Term Loan B Secured Notes $300 $650 82% of Corporate $287 $400 Debt is Fixed $350 $300 with a weighted average $650 effective interest rate of 5.7% $350 2024 2025 2026 2027 2028 2029 2030 (1) Excludes Term Loan B amortization payment
Slide 24: Investment Thesis
Investment Thesis Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient business model
Slide 25: A New Algorithm for Sustained Growth
A NEW ALGORITHM FOR SUSTAINED GROWTH Strong Foundation Building on a strong foundation; resilient business with strong Adj. EBITDA margins1 Business Extensions Expect to accelerate top-line growth by leveraging core competencies with acquired strategic capabilities Free Cash Flow Projection Expect t
Slide 26: TNL Listed NYSE
TNL LISTED NYSE Forbes Ba] WORLD'S BEST EMPLOYERS
Slide 27: Appendix
APPENDIX TRAVEL+ LEISURE
Slide 28: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION TNL Consolidated Reconciliation of Net Income to Adjusted EBITDA ($ in millions) 2019 2018 (1) 2018 + 2019 Net income attributable to T+L shareholders $ 507 $ 672 $ 1,179 Loss from ops of disc bus, net of income taxes - 50 50 Gain on disposal of disc bus, net of inc
Slide 29: 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 30: 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 31: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA ($ in millions) Reconciliation of Net income Three Months Ended Twelve Months Ended to Adjusted EBITDA December 31, 2022 December 31, 2022 Net income attributable to Travel + Le
Slide 32: 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) Twelve Months Ended December 31, 2022 Net cash provided by operating activities $ 442 Property and equipment additions (52) Sum of proceeds and p
Slide 33: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Vacation Ownership Net Income to Adj. EBITDA Reconciliation ($ in millions) 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vacation Ownership net income/(loss) attributable to TNL shareholders $ 373 $ 309 $ (69) $ 404 $ 340 $ 17
Slide 34: Appendix: Non-GAAP Reconciliation
APPENDIX: NON-GAAP RECONCILIATION Travel and Membership Net Income to Adj. EBITDA Reconciliation (in millions) 2022 Travel and Membership net income attributable to TNL shareholders $ 147 Gain on disposal of discontinued business, net of income taxes (1) Provision for income taxes 65 Depreciation an
Slide 35: Definitions
DEFINITIONS Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted Net Income divided by and dispositions, including the separation of Wyndham Hotels and Cendant, and the sale of the vacation rentals businesses. the diluted weighted average number of common share
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