Travel Leisure Co. · NYSE:TNL
Travel Leisure — Investor Presentation (June 2022)
40 slides from Travel Leisure's investor presentation, June 2022
Slide 1: Investor Presentation May/June 2022
+ INVESTOR PRESENTATION May/June 2022
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: 1Q 2022 Results
1 Q 2 02 2 R es ults THREE MONTHS ENDED 03/31/22 HIGHLIGHTS + Increased available share repurchase authorization by $500 million(2) Net Revenue Gross VOI Sales(1) Adj. EBITDA(1) + Paid quarterly dividend of $0.40 per share $809M $379M $170M +29% YOY growth +61% YOY growth +32% YOY growth + Highest q
Slide 4: Building on a Strong Foundation: Strategic Overview
B U I L D I N G O N A S T R O N G F O U N DAT I O N STRONG BUSINESS A C C E L E R AT I N G + = F O U N D AT I O N EXTENSIONS GROWT H Building upon Adding new value streams Accelerate earnings growth core competencies & free cash flow generation STRATEGIC OVERVIEW 4
Slide 5: Accelerate Growth and Maximize Free Cash Flow
AC C E L E R AT E G R O W T H A N D M A X I M I Z E F R E E C A S H F LO W 4 -Y E A R TA R G E T ACCELERATED ADJ. EBITDA 1 EBITDA GROWTH RATE 11-14% 2 GROWTH MAXIMIZE 58-63%3 FCF ADJ. FCF 1 Conversion 1. Adjusted EBITDA and Adjusted free cash flow are forward looking non-GAAP measures, the reconcili
Slide 6: Broaden the Enterprise
B R OA D E N T H E E N T E R P R I S E COMING FROM G O I N G TO FOCUS Timeshare-centric Leisure Travel BUSINESS MODEL Mono-branded Multi-branded ADDRESSABLE Narrow/Focused Broad/Targeted MARKET STRATEGIC OVERVIEW 6
Slide 7: Strategic Intent of Vacation Ownership
S T R AT E G I C I N T E N T O F VAC AT I O N O W N E R S H I P 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 leadi
Slide 8: Industry Transformation
I N D U S T R Y T R A N S F O R M AT I O N H I S TO R I CA L T O D AY Fragmented, regional developers Branded hospitality developers Fixed week/fixed unit Flexibility Real estate focused/capital intensive Capital efficient STRONG FOUNDATION 8
Slide 9: Resilient Business Model
W Y N D H A M D E S T I N AT I O N S P O S I T I O N E D F O R S U C C E S S SCALE FLEXIBILITY REVENUE PIPELINE 245+ POINTS-BASED OWNER UP GRADES 1 SYS T E M RESORTS DIVERSITY OF B LU E T H R E A D D E S T I N AT I O N S 833K 1 OWNERS J U S T- I N -T I M E S A L E S TO I N V E N TO RY M I L L E N N
Slide 10: 245+ Global Locations
245+ G LO B A L LO CAT I O N S 220+ In North America As of 12/31/21 STRONG FOUNDATION 10
Slide 11: Key Statistics Show Stability in Owner/Member Base
K E Y S TAT I S T I C S S H O W S TA B I L I T Y I N O U R OW N E R / M E M B E R B A S E 833K ~80% 98% 65% OWNERS1 OF OWNERS ANNUAL S A L E S TO H AV E N O RETENTION MILLENNIAL/ LOA N S OF OWNERS2 GENX3 O U T S TA N D I N G 1 1. As of 12/31/21 2. Annual retention of owners without loans over last 1
Slide 12: Building Upon Our Strong Foundation
B U I L D I N G U P O N O U R S T R O N G F O U N DAT I O N LARGE UPGRADE PIPELINE ~2.6x Initial Purchase B LU E T H R E A D O P P O R T U N I T Y 92M+ Loyalty Members1 OPTIMIZING OPEN-MARKET CHANNELS New Owner VPGs increase ~46% in 20212 1. Number of loyalty members as of 12/31/21 2. For the year 2
Slide 13: Embedded Revenue Potential of Existing Owner Base
E M B E D D E D R E V E N U E P OT E N T I A L O F E X I S T I N G OW N E R B A S E $19.3B TOTAL CLUB & RESORT Total Club & Resort $2.3B MANAGEMENT Management Fees over next ten years Interest revenue on existing $4.5B FINANCING portfolio and potential upgrade loans over next ten years GROSS Owner u
Slide 14: RCI Business
RCI BUSINESS R C I A F F I L I AT E S RCI MEMBERS RCI SERVICES BUILD & SELL OWN TIMESHARE S TA N D A R D & TIMESHARE AT A N R C I PREMIUM MEMBERSHIP A F F I L I AT E D R E S O R T E XC H A N G E P R O M O T E R C I AT P O S RENEWS VIA CLUB R E N TA L ENROLL NEW OWNERS WITH RCI R E N E W S D I R E C
Slide 15: World's Largest Exchange Company for 45+ Years
W O R L D ’ S L A R G E S T E XC H A N G E C O M PA N Y F O R 4 5 + Y E A R S 3.7M MEMBERS 1,700 Resorts 1,000 Resorts North America Europe / Middle East 200 Resorts Asia Pacific ~110 COUNTRIES 100 Resorts Africa 1,100 Resorts Caribbean, South America 100 Resorts 4,200 & Mexico Australia RESORTS As
Slide 16: Focus on Travel to Grow
F O C U S O N T R AV E L TO G R O W DELIVER ON P R OV I D E A O N E - E XC H A N G E S TO P- S H O P GROWTH + = PROMISE T R AV E L S E R V I C E Add more inventory Add more travel products Greater share of wallet options for exchange and services Higher exchange propensity Increased member retention
Slide 17: Increase Exchange Propensity
I N C R E A S E E XC H A N G E P R O P E N S I T Y + More flexibility + Use trading power to buy down cost of hotels + Added 600k+ hotels and resorts to exchange portfolio + Additional exchange options STRONG FOUNDATION 17
Slide 18: B2B Travel Clubs
B 2 B T R AV E L C L U B S GROW E X PA N D B 2 B I N C R E M E N TA L MEMBERSHIP PA R T N E R S H I P S SUBSCRIPTION B E YO N D T H E A C R O S S M U LT I P L E AND TIMESHARE S E C TO R S T R A N S AC T I O N INDUSTRY REVENUE BUSINESS EXTENSIONS 18
Slide 19: Panorama Travel Solutions
PA N O R A M A T R AV E L S O L U T I O N S PRODUCT OFFERING PA R T N E R VA L U E P R O P O S I T I O N + B2B Travel Club Solution + Benefit from Scale and Core Competencies of RCI + Closed User Group Travel Club + Customized Solutions + White Label Under Partner Brand + Dedicated Website and Digit
Slide 20: Value Proposition to All Participants
VA L U E P R O P O S I T I O N TO A L L PA R T I C I PA N T S CLOSED TRAVEL SUPPLIERS USER GROUP • Price integrity (via paywall) • Member loyalty • Fulfilled inventory • Customized/one-stop platform PANORAMA TRAVEL SOLUTIONS TRAVEL CONSUMERS • Recurring revenue & bookings • Attractive inventory • At
Slide 21: Travel + Leisure Club
T R AV E L + L E I S U R E C L U B L E V E R AG I N G T H E SUBSCRIPTION BUILDS ON CORE WORLD’S MOST M E G AT R E N D – W E O P E R AT I O N A L I N F L U E N T I A L T R AV E L H AV E C O N T E N T S T R E N GT H S BRAND IN A LARGE A N D VA L U E ADDRESSABLE MARKET BUSINESS EXTENSIONS 21
Slide 22: Travel + Leisure Club Has a Simple Business Model
T R AV E L + L E I S U R E C L U B H A S A S I M P L E B U S I N E S S M O D E L T H AT P L AYS TO O U R C O R E S T R E N GT H S CORE STRENGTHS ACQUISITION CHANNELS • Upsell from Travel + Leisure GO + Upselling • Travel + Leisure Direct (e.g., print ads) + Database marketing • Core database ONGOING
Slide 23: 4 Year Compound Annual Growth Outlook
4 Y E A R C O M P O U N D A N N U A L G R O W T H O U T LO O K 1 Adjusted Revenue EBITDA2 VA C AT I O N O W N E R S H I P 9 -1 0 % 9 -1 1 % T R AV E L A N D M E M B E R S H I P 2 7- 3 0 % 1 3 -1 7 % T R AV E L + L E I S U R E 1 5 -1 7 % 1 1 -1 4% Tr ave l a n d M e m b e r s h i p Tr ave l + L e i s
Slide 24: Vacation Ownership Growth Outlook
VAC AT I O N O W N E R S H I P G R O W T H O U T LO O K 1 2025 PROJECTION Low High R E V E N U E CAG R 2 0 2 1 -2 0 2 5 9% 10% TO U R CAG R 2 0 2 1 -2 0 2 5 18% 20% G R O S S VO I S A L E S 2 $2.5B $ 2 .6 B A D J. E B I T DA 2 $ 74 0 M $780M 1. Growth assumptions are based on 2021 guidance. 2. Gross
Slide 25: Travel and Membership Growth Outlook
T R AV E L A N D M E M B E R S H I P G R O W T H O U T LO O K 1 2025 PROJECTION Adj. EBITDA Low High Margins 2 R E V E N U E CAG R 2 0 2 1 -2 0 2 5 27% 30% Adjusted EBITDA RCI $250M $265M 41 - 4 4% PA N O R A M A T R AV E L S O L U T I O N S $120M $ 1 70 M 2 3 -2 6 % T R AV E L + L E I S U R E G R O
Slide 26: 2025 Adjusted EBITDA Targets
2 0 2 5 A D J U S T E D E B I T DA 1 TA R G E T S Low High VA C AT I O N O W N E R S H I P $ 74 0 M $780M T R AV E L A N D M E M B E R S H I P $450M $530M C O R P A N D OT H E R ($65M) ($60M) T R AV E L + L E I S U R E $ 1 ,1 2 5 M $1,250M 1. Adjusted EBITDA is a forward-looking non-GAAP measure, th
Slide 27: Adjusted EBITDA to Adjusted Free Cash Flow Conversion %
A D J U S T E D E B I T DA TO A D J U S T E D F R E E CA S H F LOW C O N V E R S I O N % 2022 to 2025 Outlook 100% (2%) – 2% 2% – 6% (20%) – (17%) 58% – 63% (16%) – (13%) (13%) – (9%) Adj. EBITDA1 Cash interest Cash taxes Net consumer Net inventory Capex and Adj. FCF1 finance spending working conver
Slide 28: Committed to Returning Cash to Shareholders
C O M M I T T E D TO R E T U R N I N G C A S H TO S H A R E H O L D E R S 2 0 2 2 - 2 0 2 5 O U T LO O K C A S H AVA I L A B L E $2 . 4 -2 .6 B FOR ENHANCING S H A R E H O L D E R VA L U E $0.6 -0.7B P OT E N T I A L D I V I D E N D S C U M U L AT I V E A D J . F C F 1 + $2 . 9 -3. 3B $0. 5 -0.7B N
Slide 29: Corporate Debt Maturity
C O R P O R AT E D E B T M AT U R I T Y As of March 31, 2022 ($ in millions) $640 $650 $650 Term Loan B ~91 % of corporate Secured Notes debt is fixed as of March 31, 2022 $290 $400 $400 $350 $300 $350 2023 2024 2025 2026 2027 2028 2029 2030 Note: Excludes Term Loan B amortization payments of $3M pe
Slide 30: Predictable and/or Recurring Revenue
P R E D I C TA B L E A N D/ O R R E C U R R I N G R E V E N U E ($ in millions) $3,134 Primarily New Vacation Owner Sales Other and Travel Club transactions $690 22% Exchange membership revenue Subscription Revenue 6% (3.7M members) $176 Booking revenue from Exchange Transactions 11% exchange member
Slide 31: Resilient Business with Strong Margins; Strong Credit Quality
Resilient Business with Strong Margins 25% 25% 25% 25% 25% 24% 24% 24% 24% 23% 22% 22% 17% 16% 16% 7% The Great Recession COVID-19 2006 2007 2008 2009 201 0 201 1 201 2 201 3 201 4 201 5 201 6 201 7 201 8 201 9 2020 2021 Vacation Ownership Segment Adjusted EBITDA Margin Strong Credit Quality 740 735
Slide 32: A New Algorithm for Sustained Growth
A N E W A LG O R I T H M F O R S U S TA I N E D G R O W T H STRONG BUSINESS FREE CASH THE F O U N D AT I O N EXTENSIONS F LOW O U T LO O K PROJECTION Building on a strong Accelerating top-line Accelerating adj. foundation; resilient growth by Driving strong Adj. EBITDA growth business with leveragin
Slide 33: Listed NYSE
LISTED NYSE
Slide 34: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N TNL Consolidated Reconciliation of Net Income to Adjusted EBITDA ($ 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 Inc
Slide 35: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N 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
Slide 36: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N 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
Slide 37: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA ($ in millions) Three Months Ended March 31, 2022 Net income attributable to TNL shareholders $ 51 Restructuring (1) 7 COVID-19 related costs (2) 2 (3
Slide 38: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow ($ in millions) Three Months Ended March 31, 2022 Net cash provided by operating activities $ 141 Property and equipment additions (10
Slide 39: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N Vacation Ownership Net Income to Adj. EBITDA Reconciliation (1) ($ in millions) 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vacation Ownership net income/(loss) $ 298 $ (69) $ 404 $ 340 $ 174 $ 316 $ 316
Slide 40: Definitions
DEFINITIONS 1. Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted net 7. Free Cash Flow (FCF): A non-GAAP measure, defined by TNL as net cash provided by operating income divided by the diluted weighted average number of common shares. activities from continu