Travel + Leisure(TNL) - 2023 Q4 - Annual Report

Financial Performance - Net revenues for 2023 reached $3,750 million, a 5.1$3,567 million in 2022[322]. - Operating income increased to $720 million in 2023, up from$653 million in 2022, representing a 10.3% growth[322]. - Net income attributable to Travel + Leisure Co. shareholders was $396 million in 2023, compared to$357 million in 2022, reflecting an increase of 10.9%[324]. - Basic earnings per share for continuing operations rose to $5.24 in 2023, up from$4.27 in 2022, marking a 22.8% increase[322]. - The cumulative total return for Travel + Leisure Co. from December 31, 2018, to December 31, 2023, was $131.98, compared to$181.15 for the S&P Midcap 400 Index[198]. Assets and Liabilities - Total assets decreased slightly to $6,738 million in 2023 from$6,757 million in 2022[326]. - The company’s total liabilities remained stable at $7,655 million in 2023, slightly down from$7,661 million in 2022[326]. - The company’s total deficit as of December 31, 2023, was $917 million, compared to$904 million in 2022, showing a slight increase of 1.4%[332]. - The allowance for doubtful accounts decreased to $143 million in 2023 from$168 million in 2022, representing a reduction of approximately 14.9%[349]. - The total balance of restricted cash for securitizations increased to $96 million in 2023 from$83 million in 2022, indicating a growth of 15.7%[346]. Cash Flow and Capital Expenditures - Cash and cash equivalents at the end of 2023 were $282 million, down from$550 million at the end of 2022[326]. - The company repurchased common stock worth $307 million in 2023, a decrease from$352 million in 2022, reflecting a reduction of approximately 12.8%[332]. - The company issued dividends of $1.80 per share in 2023, up from$1.60 per share in 2022, marking a 12.5% increase[332]. - The company had accrued expenses and other liabilities of $807 million as of December 31, 2023, compared to$876 million in 2022[437]. Debt and Financing - As of December 31, 2023, the total outstanding balance of variable rate borrowings was $1.231 billion, comprising$364 million in non-recourse debt and $867 million in corporate debt[303]. - The company’s total debt, including finance leases, was$3,575 million as of December 31, 2023, down from $3,669 million in 2022[438]. - The Company closed a placement of term notes with an initial principal amount of$250 million, secured by VOCRs, bearing interest at a weighted average coupon rate of 6.33%[443]. - The Company had $394 million in other assets as of December 31, 2023, up from$324 million in 2022[436]. - The combined weighted average interest rate on the Company's total non-recourse vacation ownership debt was 5.9% in 2023[451]. Revenue Segments - The Vacation Ownership segment generated $3,041 million in total revenues for 2023, up from$2,835 million in 2022, reflecting a growth of 7.3%[392]. - The Travel and Membership segment reported total revenues of $711 million for 2023, a decrease from$735 million in 2022, indicating a decline of 3.3%[392]. - Management fee revenue increased to $432 million in 2023 from$413 million in 2022, while reimbursable revenues rose to $382 million from$350 million in the same period[379]. - Total property management fees and reimbursable revenues reached $814 million in 2023, up from$763 million in 2022 and $691 million in 2021[379]. Market Risks - The company assesses market risks based on changes in interest and foreign currency exchange rates using a sensitivity analysis[302]. - The company anticipates that SOFR and asset-backed commercial paper rates will remain its primary market risk exposures[305]. - A hypothetical 10$2 million increase or decrease in annual consumer financing interest expense and a $5 million increase or decrease in annual debt interest expense[302]. - The fair value of outstanding foreign exchange hedging instruments was$61 million as of December 31, 2023, with a potential $5 million change in fair value from a 10$13 million, which includes $6 million in cash and contingent consideration valued at$7 million, potentially rising to $24 million based on financial metrics[398]. - The company acquired the Travel + Leisure brand for a total of$100 million, with $35 million paid at closing and additional payments of$20 million in 2021, 2022, and $15 million in 2023, with a remaining$10 million due in June 2024[400]. - As of December 31, 2023, the company's total goodwill increased to $962 million, up from$955 million in 2022, with $935 million attributed to the Travel and Membership segment[409]. - The Company completed its annual goodwill impairment test as of October 1, 2023, and determined that no impairment exists[364]. Taxation - The effective income tax rate for the company in 2023 was 19.4$1,067 million as of December 31, 2023, compared to $1,040 million in 2022[412]. - The ending balance of unrecognized tax benefits decreased to$22 million in 2023 from $25 million in 2022, with potential penalties and interest liabilities of$3 million and $10 million respectively as of December 31, 2023[414][418]. Vacation Ownership Contracts - Vacation ownership contract receivables (VOCRs) increased to$3.101 billion in 2023 from $2.911 billion in 2022, with net VOCR originations of$1.43 billion in 2023, up from $1.14 billion in 2022[419][421]. - The allowance for loan losses on VOCRs rose to$574 million in 2023 from $541 million in 2022, reflecting a provision for loan losses of$348 million during 2023[422]. - The total vacation ownership receivables, net of securitized liabilities and allowance for loan losses, reached $579 million in 2023, up from$517 million in 2022, indicating a growth of approximately 12%[468]. - The fair value of vacation ownership contract receivables, net, was estimated at $2,527 million as of December 31, 2023, down from$2,829 million in 2022[477].