Travel Leisure Co. · NYSE:TNL
Travel Leisure — Q3 2022 Earnings Presentation
34 slides from Travel Leisure's earnings presentation, Oct 27, 2022
Slide 1: Q3 2022 Earnings Call
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Slide 2: Forward-Looking Statements
Forward-Looking Statements The information presented herein may contain forward-looking statements within the meaning of the federal securities laws. Such forward- looking statements include all statements other than statements of historical fact, including forecasts of trends, market conditions, an
Slide 3: Agenda
Agenda 1. CEO Remarks 2. Financial Results 3. Business Updates 4. Summary and Q&A 3
Slide 4: CEO Remarks
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Slide 5: Home-only Revenue Trend Stabilized
Home-only Revenue Trend Stabilized 3-year Look Back Revenue Trend YoY ▪ 53% growth vs. 2019 ▪ Transitioned to 100% home-only assortment by end of Q2 ▪ Outpaced TAM expansion1 ▪ Sequential stabilization during Q3 Home-only Home-only Revenue ($M) Revenue (YoY %) Largest Q3’s in history 0% $700 -5% $60
Slide 6: Corporate Update: making dream homes come true
Corporate Update our refreshed vision making dream homes come true ▪ Review of organizational structure ▪ Launched national brand campaign 6
Slide 7: National Brand Campaign Overview
National Brand Campaign Overview Commercial National Brand Ambassadors Media Platforms ▪ Social Media ▪ Influencer Partnerships ▪ Streaming Video/Audio c’mon get comfy… ▪ Traditional TV Left to Right: Taniya Nayak ∙ Farah Merhi ∙ Tarek El Moussa ∙ Luke Caldwell ∙ Vanessa Deleon ∙ Lizzy Mathis About
Slide 8: Financial Results
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Slide 9: Q3 2022 Financial Results
Q3 2022 Financial Results Revenue Gross Margin G&A and Tech % of Revenue $460.3 Million 23.3% 10.5% -33% vs. Q3’21 +62 bps vs. Q3’21 +292 bps vs. Q3’21 Diluted EPS Adjusted EBITDA Margin1 ($0.81) Ending Cash Adjusted Diluted EPS2 3.2% $427.5 Million -202 bps vs. Q3’21 $0.13 -3% / -$15.1M vs. Q2’22 -
Slide 10: Revenue
Revenue Revenue ($M) Q3 Dynamics $800 $795 ▪ Revenue of $460.3M – -33% / -$229M vs. Q3’21 $718 $700 $689 $670 $660 ▪ Revenue influenced by: $613 $600 – Macro / consumer sentiment $536 – Non-home category exit $528 $500 $460 $400 $300 $200 $100 $0 Q3 ’20 Q4 ’20 Q1 ’21 Q2 ’21 Q3 ’21 Q4 ’21 Q1 ’22 Q2 ’
Slide 11: Gross Margin
Gross Margin Gross Margin Gross Margin ($M) (%) Q3 Dynamics $225 25% ▪ Gross margin of 23.3% 23.5% 23.3% 23.4% 23.3% 22.5% 22.7% 22.7% 22.9% – +62 bps vs. Q3’21 22.0% $200 $175 20% ▪ Gross margin influenced by: $175 $169 – Operational efficiencies $154 $157 – Offset by higher discounting $151 $150 $
Slide 12: G&A and Tech Expense
G&A and Tech Expense G&A and Tech Expense G&A and Tech Exp. ($M) as % of Revenue Q3 Dynamics $80 18% ▪ G&A and Tech Expense of $48M – -8% vs. Q3’21 $70 16% ▪ G&A and tech expense % of $59 14% revenue of 10.5% $60 $54 $54 – +292 bps vs. Q3’21 $53 $53 $52 $52 $52 12% $50 $48 10% 10.5% $40 10.1% 9.8% 8
Slide 13: Adjusted EBITDA
Adjusted EBITDA Adjusted EBITDA Adjusted EBITDA Margin ($M) (%) Q3 Dynamics $60 12% ▪ Adj. EBITDA of $15M – -$21M vs. Q3’21 $50 10% ▪ Adj. EBITDA margin of 3.2% $46 $44 – -202 bps vs. Q3’21 $40 8% $36 $34 $30 $30 6% $27 6.4% 5.6% 5.1% 5.2% $21 $21 $20 4% 4.5% 4.5% $15 4.0% 3.9% 3.2% $10 2% $0 0% Q3
Slide 14: Active Customers and Order Frequency
Active Customers and Order Frequency Active Customers (LTM) Orders per Active Customer (LTM) (M) Q3 Dynamics 12 2.0 ▪ Active customers of 5.8M 1.63 1.64 1.66 1.69 1.68 1.67 1.67 1.65 1.62 – -33% / -2.9M vs. Q3’21 – Macro / consumer sentiment 9.9 1.5 – Non-home category exit 10 9.2 9.2 8.7 8.2 8.1 1.
Slide 15: Orders and Average Order Value
Orders and Average Order Value Orders Delivered (LTM) Average Order Value (M) Q3 Dynamics $247 25 $243 $250 ▪ Orders delivered (LTM) of 9.4M – -36% / -5.2M vs. Q3’21 $221 $213 $214 $206 20 $200 ▪ Average order value of $243 $183 – +13% vs. Q3’21 $173 $168 – Sales mix within home categories 16.5 15.1
Slide 16: Home-only Active Customers and Revenue
Home-only Active Customers and Revenue Q3 LTM Active Customers Change Q3 Revenue Change ▪ Reported -33.1% YoY ▪ Reported -33.2% YoY ▪ Excluding non-home only1 customers -29.1% YoY ▪ Excluding non-home only1 customers -29.7% YoY 0% 0% Actual/ Reported Actual/ Reported -5% -5% -5.3% -10% -8.8% -10% -8
Slide 17: Q3 2022 Balance Sheet & Cash Flow Highlights
Q3 2022 Balance Sheet & Cash Flow Highlights Cash Long-term Debt Net Cash Position1 $428 Million $35 Million $392 Million -3% / -$15M vs. Q2’22 -2% / -$1M vs. Q2’22 -3% / -$14M vs. Q2’22 No significant debt maturity until March 2030 Significant uses of cash in YTD 2022 Share Repurchases tZERO Series
Slide 18: Business Updates
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Slide 19: Top Brand in a Growing $419B Market
1 Top 4 Brand in a Growing $419B Market Top U.S. Home Furnishings Online Brands2 Furniture & Home Furnishings U.S. Online Penetration3 (ranked by online revenue) 40% 1. Amazon 34% 34% 2. Wayfair 33% 3. Walmart 30% 4. 5. Target 24% 20% 21% 6. Pottery Barn 19% 7. IKEA 16% 14% 8. Bed Bath & Beyond 10%
Slide 20: Unique Market Positioning
Unique Market Positioning Home Goods Expertise Pottery Barn Restoration Making Dream Homes IKEA Wayfair West Elm Hardware Come True Bed Bath & Smart Value = Quality & Style for less Beyond Overstock Customers Smart Value Seekers Value Inspiration Savvy Shoppers Target Amazon Reluctant Refreshers Wal
Slide 21: Brand Pillars: Product Findability
Brand Pillars: Product Findability Broadened assortment of on-trend, quality products to meet evolving consumer demand Strategic positioning of branded giftable products to capture holiday market share 21
Slide 22: Brand Pillars: Smart Value
Brand Pillars: Smart Value Pricing competency remained stable in an elevated promotional environment Value proposition increasingly resonating with high income customers Labor Day holiday largest sales day of 2022 22
Slide 23: Brand Pillars: Easy Delivery & Support
Brand Pillars: Easy Delivery & Support + Innovation within our asset-light model to deliver best returns experience in the industry Diversification of third-party LTL delivery carriers supporting faster deliveries Improvement in customer care productivity 23
Slide 24: Growth Drivers
Growth Drivers Increase brand association with “home” Improve Increase home product assortment findability Optimize marketing Grow Canada 2022 Focus channels Improve Improve customer category retention management Increase mobile app adoption 24
Slide 25: Targeted Financial Operating Model
Targeted Financial Operating Model ▪ Annual revenue outpacing industry ▪ Gross profit margin in the 22% range ▪ Operating expenses growing at a slower rate than revenue, driving operating leverage ▪ Adjusted EBITDA margins in the mid-single digits making dream homes ▪ Free cash flow positive come tr
Slide 26: Medici Ventures Fund Update
Medici Ventures Fund Update 26
Slide 27: Medici Ventures Fund Update
Medici Ventures Fund Update 27
Slide 28: Summary and Q&A
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Slide 29: Q3 2022 Review and Looking Ahead
Q3 2022 Review and Looking Ahead ▪ Strengthen brand association with ‘home’ Q3 2022 Execute on Brand Pillars ▪ Improve customer engagement Review ▪ Leverage unique fulfillment model ▪ Home revenue stabilized ▪ Grow US market share Business for ▪ Remained profitable the Long Term ▪ Deliver profitabil
Slide 30: Questions?
To ask questions: ▪ Access registration link on IR website ▪ Email: ir@overstock.com Questions? 30
Slide 31: Slide 31
Slide 32: Appendix
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Slide 33: Adjusted EBITDA Reconciliation
Adjusted EBITDA Reconciliation Three months ended Sep-2020 Dec-2020 Mar-2021 Jun-2021 Sep-2021 Dec-2021 Mar-2022 Jun-2022 Sep-2022 Income (loss) from continuing operations $ 37,904 $ 23,150 $ 26,018 $ 82,405 $ 30,426 $ 32,942 $ 10,123 $ 7,147 $ (36,995) Depreciation and amortization 5,310 5,488 5,14
Slide 34: Adjusted Diluted EPS Reconciliation
Adjusted Diluted EPS Reconciliation Three months ended September 30, 2022 Less: equity method income Adjusted 1 in thousands, except per share data Diluted EPS (loss) Diluted EPS Numerator: Net income (loss) from continuing operations attributable to common stockholders $ (36,995) (42,861) 5,866 Den