Travel Leisure Co. · NYSE:TNL
Travel Leisure — Investor Presentation (September 2023)
38 slides from Travel Leisure's investor presentation, September 2023
Slide 1: Investor Presentation August/September 2023
+ INVESTOR COVER PRESENTATION August/September 2023 M A R G A R I TAV I L L E VAC AT I O N C L U B B Y W Y N D H A M - R I O M A R
Slide 2: Presentation of Financial Information; Forward-Looking Statements
Presentation of Financial Information Forward-Looking Statements Financial information discussed in this presentation includes non-GAAP measures such as This presentation includes “forward-looking statements” as that term is defined by the Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EP
Slide 3: We Put the World on Vacation: Our Mission
WE PUT THE WORLD O N VA C AT I O N Our mission 3
Slide 4: Resilient Business. Strong FCF and Capital Returns.
The Travel + Leisure Co. Story Resilient Business. Strong FCF and Capital Returns. Proven Resilient Favorable Timeshare Reality Strong Margins Robust Capital Business Model Market Dynamics vs. Perception and FCF Returns 4
Slide 5: Proven Resilient Business Model
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S M A R G A R I TAV I L L E VAC AT I O N C L U B B Y W Y N D H A M AT L A N TA Proven Resilient Business Model 5
Slide 6: Leading Membership & Leisure Travel Company
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Leading Membership & Leisure Travel Company At a Glance Key Financials 2022 Revenue mix (2) Net Revenue $3.6bn Gross VOI S
Slide 7: 2Q 2023 Results
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S 2Q 2023 Results T H R E E M O N T H S E N D E D 6 / 3 0/ 2 0 2 3 Net Revenue Gross VOI Sales (1) Adj. EBITDA (1) Adj. Dilu
Slide 8: Resilient Business with Strong Adjusted EBITDA Margins
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Resilient Business with Strong Adjusted EBITDA Margins Vacation Ownership Segment Adjusted EBITDA Margin (1) VO Adjusted E
Slide 9: Strong Credit Quality
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Strong Credit Quality Average FICO Score on New Originations Average Interest Rate FICO 800 18.0% 17.0% 735 736 736 725 72
Slide 10: Predictable and/or Recurring Revenue
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Predictable and/or Recurring Revenue ($ in millions) $3,567 Primarily New Vacation Owner Sales and Other 23% Travel Club t
Slide 11: Embedded Revenue Potential of Existing Owner Base
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Embedded Revenue Potential of Existing Owner Base Ten year cumulative revenue potential, not discounted $4.5B Financing $1
Slide 12: Favorable Market Dynamics
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S C LU B W Y N D H A M C L E A R WAT E R Favorable Market Dynamics 12
Slide 13: Strong Value Proposition
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Strong Value Proposition Favorable Attractive Inflation Scale/Product secular trends product form beneficiary Flexibility
Slide 14: 95% of U.S. Population within 300 Miles of our Resorts
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S +95% of U.S. Population Live within 300 Miles of one of our Resorts 245+ Resorts Globally 220+ Resorts in North America As
Slide 15: Timeshare Reality vs. Perception
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S W O R L D M A R K A S S O C I AT E M OA B Timeshare Reality vs. Perception 15
Slide 16: Industry Transformation
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Industry Transformation H I STO R I CA L T O D AY Fragmented, regional developers Branded hospitality developers Fixed wee
Slide 17: Owners Love Their Timeshare
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S OW N E R S LOV E THEIR TIMESHARE Owners1 816K Owners with No Loans Outstanding1 ~80% Annual Retention of Owners2 98% Owner
Slide 18: Younger Generations Are Buying
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S YO U N G E R G E N E R AT I O N S ARE BUYING Gen-X 1 24% of new owner sales Millennial and Gen-Z 1 40% of new owner sales
Slide 19: Capital Efficient
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S C A P I TA L EFFICIENT Just-in-time inventory Owners fund FF&E reserves Inventory recycling — Certified exit programs M A
Slide 20: Strong Margins and FCF
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S M A R G A R I TAV I L L E VAC AT I O N C LU B B Y W Y N D H A M S T. T H O M A S Strong Margins and FCF 20
Slide 21: High Adjusted EBITDA Margins and Strong FCF
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S High Adjusted EBITDA Margins and Strong FCF High Adjusted Strong and Consistent Track Record Minimal EBITDA Margins(1) Con
Slide 22: Favorable Inventory Position
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Favorable Inventory Position + Four years of North America Inventory Spend inventory on-hand Months On Hand US Only + Recy
Slide 23: 2025 Financial Goals
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S 2025 Financial Goals Travel + Leisure Adj. EPS1 Low High 17-22% CAGR before share 2025 Adj. EBITDA1 $1.13B $1.25B repurcha
Slide 24: Adjusted EBITDA to Adjusted Free Cash Flow Conversion %
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Adjusted EBITDA to Adjusted Free Cash Flow Conversion % 2022 to 2025 Goals 100% (2%) – 2% 2% – 6% (20%) – (17%) 58% – 63%
Slide 25: Robust Capital Returns
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S C LU B W Y N D H A M K A E O K A I Robust Capital Returns 25
Slide 26: Committed to Returning Cash to Shareholders
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Committed to Returning Cash to Shareholders 2022-2025 Goals $0.6–0.7B $2.4–2.6B Potential Dividends Cumulative Adj. FCF1 $
Slide 27: Annual Dividend Growth
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Annual Dividend Growth +20% $2.00 $1.80 $1.80 (1) $1.60 $1.60 $1.50 $1.25 Paid cash dividends $1.00 throughout the pandemi
Slide 28: Cumulative Capital Returned to Shareholders Since Spin
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Cumulative Capital Returned to Shareholders Since Spin Diluted Weighted Average Repurchases Shares Outstanding Dividends $
Slide 29: Corporate Debt Maturities
P R OV E N R E S I L I E N T FAV O R A B L E TIMESHARE REALITY STRONG MARGINS ROBUST BUSINESS MODEL M A R K E T DY N A M I C S VS. PER CEPTION AND FCF C A P I TA L R E T U R N S Corporate Debt Maturities1 As of June 30, 2023 ($ in millions) Revolving Credit Facility 73% of Term Loan B $395 $299 Corp
Slide 30: TRAVEL+
TRAVEL+ LEISURE = I TNL LISTED NYSE BEST COMPANIES TOP TO WORK FOR PLACES
Slide 31: Appendix
x Q Z Ww ao a <{ TRAVEL+ LEISURE
Slide 32: Appendix: Non-GAAP Reconciliation
A P P E N D I X : N O N - G A A P R E C O N C I L I AT I O N TNL Consolidated Reconciliation of Net Income to Adjusted EBITDA ($ 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 dispo
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 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 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 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 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 Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA ($ in millions except per share data) Reconciliation of Net income Three Months Ended Twelve Months Ended to Adjusted EBITDA June 30, December 31, 202
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 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
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 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 Vacation Ownership net income/(loss) $ 373 $ 309 $ (69) $ 404 $ 340 $ 174 $ 316 $ 3
Slide 38: Definitions
DEFINITIONS Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted net income divided Adjusted Net Income: A non-GAAP measure, defined by the Company as net income from continuing operations by the diluted weighted average number of common shares. Adjusted Dilute
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