Travel Leisure Co. · NYSE:TNL
Travel Leisure — Investor Presentation (September 2022)
35 slides from Travel Leisure's investor presentation, Sep 15, 2022
Slide 1: Investor Presentation Fall 2022
+ INVESTOR PRESENTATION Fall 2022
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 PUT THE WO R L D O N VACAT I O N 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 $3.5B1 market cap $1.60 3.8%1 2022 adj. EBITDA2 outlook Resorts Owners $860–$880M +2453 833K3 Steady state Adj. EBITDA-to-FCF2 conversion RCI Members Affiliated Resorts 55%–60% +3.7M3 +4,2003
Slide 6: Leading Membership & Leisure Travel Company
L e a d i n g M e m b e r s h i p & L e i s u r e Tr av e l C o m p a n y First Half 2022 Vacation Ownership Travel & Membership Revenue Mix2 Revenue Mix2 $1,344M 78% $389M 22% Adj. EBITDA1 Mix2 Adj. EBITDA1 Mix2 $291M 67% $146M 33% Owners Tours VPG Members Transactions Rev/transaction 833K3 256K $3
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 $2.9–3.3B Target Leverage (1) Adjusted EBITDA, adjuste
Slide 8: Investment Thesis
I nve s t m e n t T h e s i s Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and travel clubs Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient business
Slide 9: Investment Thesis
I nve s t m e n t T h e s i s Proven Resilient Compelling Consumer Business Model Value Proposition Recurring and predictable revenue streams Benefits of vacation ownership and discounted travel Strong FCF Supports Growth & Return of Capital to Shareholders Leisure Travel Focus Capital efficient bus
Slide 10: Predictable and/or Recurring Revenue: ~80% of Revenue in 2021
Predictable and/or Recurring Revenue ($ 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 11: 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 Upgrades are more a of current members over existing portfolio and next ten years potential upgrade loans $2.3B over next ten years function of lif
Slide 12: 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% The Great 7% Recession COVID-19 2006 2007 2008 2009 201 0 201 1 201 2 201 3 201 4 201 5 201 6
Slide 13: Investment Thesis
I nve s t m e 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 bus
Slide 14: 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 15: 95% of U.S. Population Live within 300 Miles 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. 15
Slide 16: 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 VPGs in Today’s Inflationary Environment $3,4893 (1) As of 12/31/21. (2) Annual retention of owners without loans over last 10 years as
Slide 17: 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 18: Investment Thesis
I nve s t m e 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 bus
Slide 19: 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 Minimum 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 20: 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%) Capex and Adj. EBITDA1 Cash interest Cash taxes Net consumer Net inventory working capital Adj. FCF1 finance spending conversion 2018 to 2019 Actual
Slide 21: 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 $0.5–0.7B Potential Business Investments Share Repurchases Net Debt/Other M&A (1) Adjusted Free Cash Flow is
Slide 22: Corporate Debt Maturities
Corporate Debt Maturities As of June 30, 2022 ($ in millions) $650 $650 Term Loan B Secured Notes $290 91% of $400 $400 Corporate $350 $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 payme
Slide 23: Investment Thesis
I nve s t m e 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 bus
Slide 24: A New Algorithm for Sustained Growth
A N E W A LG O R I T H M FO R S U S TA I N E D G R O W T H 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 Proje
Slide 25: 2Q 2022 Results
2Q 2022 Results Three Months Ended 06/30/22 Highlights ﹢ Highest quarterly VPG in the company’s history ﹢ Repurchased $83 million of common stock in the 2nd quarter and $128M in the first half of 2022 Yield of Net Revenue $922M Gross VOI Sales1 $527M Adj. EBITDA1 $230M 3.75% 1 ﹢ Paid quarterly divid
Slide 26: Travel + Leisure, NYSE Listed TNL
TRAVEL+ LEISURE TNL LISTED NYSE
Slide 27: Appendix
APPENDIX TRAVEL+t+ LEISURE
Slide 28: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N TNL Consolidated Reconciliation of Net Income to Adjusted EBITDA ($ in millions) 2019 2018 (1) 2018 + 2019 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 dis
Slide 29: 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 30: 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 31: 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 June 30, 2022 Net income attributable to TNL shareholders $ 100 Unrealized loss on equity investments 8 Amortizatio
Slide 32: 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) Six Months Ended June 30, 2022 Net cash provided by operating activities $ 230 Property and equipment additions (24) S
Slide 33: 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 ($ in millions) 1H 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006 Vacation Ownership net income/(loss) $ 163 $ 309 $ (69) $ 404 $ 340 $ 174 $
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 Travel and Membership Net Income to Adj. EBITDA Reconciliation (in millions) Six Months Ended June 30, 2022 Travel and Membership net income $ 69 Provision for income taxes 37 Depreciation and amortization 15 Interest expense 9 Unrealized
Slide 35: Definitions
DEFINITIONS 1. Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted net income divided by 7. Average Number of Exchange Members: Represents paid members in our vacation exchange programs who are considered the diluted weighted average number of common shares. A
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