Travel + Leisure(TNL) - 2025 Q2 - Quarterly Results

Executive Summary / Highlights Travel + Leisure Co. achieved strong Q2 2025 results with healthy year-over-year growth in VOI sales, driven by increased tour flow and Volume per Guest (VPG) exceeding guidance - Travel + Leisure Co. delivered a strong Q2 2025, marked by healthy year-over-year growth in VOI sales, driven by increased tour flow and volume per guest (VPG) The company's VPG performance exceeded the high end of its guidance range[2] - The company's multi-brand strategy gained momentum with the announcement of three new projects: a Margaritaville Vacation Club resort in Orlando, a new Sports Illustrated Resorts location in Nashville, and the launch of the Asia-based Accor Vacation Club in Indonesia[3] Q2 2025 Financial and Operational Highlights | Metric | Value | | :-------------------------------- | :---------- | | Net income | $108 million | | Diluted earnings per share | $1.62 | | Net revenue | $1.02 billion | | Adjusted EBITDA | $250 million | | Adjusted diluted earnings per share | $1.65 | | Vacation Ownership revenue | $853 million (6% increase YoY) | | Volume per guest (VPG) | $3,251 (7% increase YoY) | | Tours | 3% increase | | Returned to shareholders | $107 million (dividends: $37 million, share repurchases: $70 million) | Business Segment Results This section details the performance of the Vacation Ownership and Travel and Membership segments, highlighting revenue and Adjusted EBITDA changes Vacation Ownership The Vacation Ownership segment reported a 6% increase in revenue and Adjusted EBITDA for Q2 2025, primarily driven by an 8% increase in Gross VOI sales, which benefited from a 7% rise in Volume per Guest (VPG) and a 3% increase in tours Q2 2025 Vacation Ownership Performance | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | | :---------------- | :----------- | :----------- | :------- | | Revenue | $853 million | $807 million | 6% | | Adjusted EBITDA | $218 million | $206 million | 6% | - Net vacation ownership interest (VOI) sales increased 7% year over year despite a higher provision rate Gross VOI sales increased 8%, driven by a 7% increase in VPG and a 3% increase in tours[5] Travel and Membership The Travel and Membership segment saw a 6% decrease in revenue and an 11% decrease in Adjusted EBITDA in Q2 2025, attributed to lower exchange transactions and a higher mix of lower-margin travel club transactions Q2 2025 Travel and Membership Performance | Metric | Q2 2025 ($M) | Q2 2024 ($M) | % Change | | :---------------- | :----------- | :----------- | :------- | | Revenue | $166 million | $177 million | (6)% | | Adjusted EBITDA | $55 million | $62 million | (11)% | - Revenue decrease was driven by a 7% decrease in transaction revenue due to lower exchange transactions, impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity[7] - Adjusted EBITDA decrease was driven by a higher mix of travel club transactions, which generate lower margins, partially offset by cost savings resulting from strategic restructuring at the end of 2024[8] Financial Position and Liquidity This section covers the company's debt and financing activities, cash flow performance, and shareholder return initiatives Debt and Financing The company refinanced its $1.0 billion revolving credit facility, extended its $600 million timeshare receivables conduit facility, and closed a $300 million term securitization transaction - Refinanced $1.0 billion revolving credit facility, extending maturity from October 2026 to June 2030 and reducing pricing spreads by 25 basis points[9] - As of June 30, 2025, the Company's leverage ratio for covenant purposes was 3.4x, with $3.6 billion of corporate debt outstanding (excluding $2.0 billion of non-recourse debt)[9] - Renewed its $600 million USD timeshare receivables conduit facility, extending the commitment period to August 2027 Subsequent to quarter-end, closed a $300 million term securitization transaction with a weighted average coupon of 5.10% and a 98% advance rate[10] Cash Flow For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $353 million from $221 million in the prior year, leading to an increase in Adjusted free cash flow to $123 million Cash Flow (Six Months Ended June 30) | Metric | 2025 ($M) | 2024 ($M) | | :----------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $353 million | $221 million | | Adjusted free cash flow | $123 million | $112 million | - The increase in Adjusted free cash flow was due to a decrease in cash utilization for working capital items, partially offset by higher net payments on non-recourse debt[11] Shareholder Returns In Q2 2025, the company repurchased 1.5 million shares for $70 million and paid $37 million in cash dividends, with management planning to recommend a Q3 dividend of $0.56 per share - During Q2 2025, the Company repurchased 1.5 million shares of common stock for $70 million at a weighted average price of $46.75 per share As of June 30, 2025, $303 million remained in its share repurchase authorization[12] - The Company paid $37 million ($0.56 per share) in cash dividends on June 30, 2025 Management will recommend a third quarter dividend of $0.56 per share[13] Outlook This section provides the company's financial guidance for the third quarter and full-year 2025, including key metrics like Adjusted EBITDA, Gross VOI sales, and VPG Third Quarter 2025 Guidance For the third quarter of 2025, the company expects Adjusted EBITDA between $250 million and $260 million, with Gross VOI sales projected to be $650 million to $680 million, and VPG between $3,200 and $3,250 Q3 2025 Guidance | Metric | Range | | :---------------- | :-------------------- | | Adjusted EBITDA | $250 million to $260 million | | Gross VOI sales | $650 million to $680 million | | VPG | $3,200 to $3,250 | Full-Year 2025 Guidance The company reaffirmed its full-year Adjusted EBITDA guidance of $955 million to $985 million and Gross VOI sales guidance of $2.4 billion to $2.5 billion, while raising the full-year VPG outlook to $3,200 to $3,250 Full-Year 2025 Guidance | Metric | Range | Prior Outlook | | :---------------- | :-------------------- | :-------------------- | | Adjusted EBITDA | $955 million to $985 million | Reaffirmed | | Gross VOI sales | $2.4 billion to $2.5 billion | Reaffirmed | | VPG | $3,200 to $3,250 | $3,050 to $3,150 (Raised) | Company Information This section provides essential company details, including conference call information, financial reporting practices, a company overview, forward-looking statement disclaimers, and contact information Conference Call Information Travel + Leisure Co. held a conference call on July 23, 2025, at 8:00 a.m. ET to discuss results and outlook, with webcast access available on its investor relations website and an archive for 90 days - A conference call was held on July 23, 2025, at 8:00 a.m. ET Participants could listen via webcast at travelandleisureco.com/investors or by dialing 877-733-4794[16] - An archive of the webcast will be available on the Company's website for 90 days beginning at 12:00 p.m. ET on the day of the call[16] Presentation of Financial Information This section clarifies that the press release includes non-GAAP measures such as Adjusted EBITDA and Adjusted diluted EPS, which are used by management to assess performance and allocate resources, and are provided to investors as an additional tool for understanding ongoing operating performance - The press release includes non-GAAP measures like Adjusted EBITDA, Adjusted diluted EPS, Adjusted free cash flow, gross VOI sales, and Adjusted net income[17] - These non-GAAP measures are used by the Company to assess performance of its reportable segments, allocate resources, and provide investors with relevant period-over-period comparisons, adjusting for items not necessarily reflecting ongoing performance[17] - Full reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the financial tables section of the press release[17] About Travel + Leisure Co. Travel + Leisure Co. is a leading leisure travel company providing over six million vacations annually, operating a portfolio of vacation ownership, travel club, and lifestyle travel brands globally with nearly 19,000 associates - Travel + Leisure Co. (NYSE:TNL) is a leading leisure travel company, providing more than six million vacations to travelers around the world every year[19] - The company operates a portfolio of vacation ownership, travel club, and lifestyle travel brands, supported by nearly 19,000 dedicated associates globally[19] Forward-Looking Statements This section serves as a cautionary note, defining forward-looking statements and outlining various risks and uncertainties that could cause actual results to differ materially from projections, advising readers not to place undue reliance on these statements - Forward-looking statements are any statements other than historical fact, identifiable by words such as 'expects,' 'believes,' 'plans,' 'outlook,' and 'guidance'[20] - These statements are subject to risks and uncertainties, including those related to competition, economic conditions (inflation, interest rates, recession), travel disruptions (terrorism, war, pandemics, natural disasters), changes in consumer patterns, operating costs, debt covenants, capital access, and data security[20] - Readers are cautioned not to place undue reliance on these statements, which reflect management's opinion only as of the date made, and the company undertakes no obligation to update them[20] Contacts Provides contact information for investor relations and media inquiries - Investors can contact Investor Relations at IR@travelandleisure.com[21] - Media inquiries can be directed to Public Relations at Media@travelandleisure.com[21] Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements, including statements of income, balance sheets, and cash flows for the reported periods Condensed Consolidated Statements of Income For Q2 2025, net revenues increased to $1,018 million from $985 million in Q2 2024, driven by higher Net VOI sales, with net income from continuing operations rising to $108 million, resulting in diluted EPS from continuing operations of $1.62 Q2 2025 Condensed Consolidated Statements of Income Highlights | Metric | Q2 2025 ($M) | Q2 2024 ($M) | | :----------------------------------- | :----------- | :----------- | | Net Revenues | $1,018 million | $985 million | | Net VOI sales | $474 million | $441 million | | Service and membership fees | $407 million | $413 million | | Operating income | $206 million | $189 million | | Income before income taxes | $152 million | $133 million | | Net income from continuing operations | $108 million | $97 million | | Diluted EPS from continuing operations | $1.62 | $1.36 | Six Months Ended June 30, 2025 Condensed Consolidated Statements of Income Highlights | Metric | 6M 2025 ($M) | 6M 2024 ($M) | | :----------------------------------- | :----------- | :----------- | | Net Revenues | $1,951 million | $1,900 million | | Net income from continuing operations | $181 million | $163 million | | Diluted EPS from continuing operations | $2.68 | $2.28 | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $6,809 million from $6,735 million at December 31, 2024, primarily driven by increases in cash and cash equivalents, trade receivables, and inventory, while total liabilities also increased slightly to $7,662 million Condensed Consolidated Balance Sheets Highlights (as of June 30, 2025 vs. December 31, 2024) | Metric | June 30, 2025 ($M) | Dec 31, 2024 ($M) | | :-------------------------------- | :----------------- | :----------------- | | Total assets | $6,809 million | $6,735 million | | Cash and cash equivalents | $212 million | $167 million | | Vacation ownership contract receivables, net | $2,568 million | $2,619 million | | Inventory | $1,252 million | $1,227 million | | Total liabilities | $7,662 million | $7,615 million | | Debt | $3,628 million | $3,468 million | | Non-recourse vacation ownership debt | $1,959 million | $2,123 million | | Total stockholders' (deficit) | $(852) million | $(881) million | Condensed Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities significantly increased to $353 million from $221 million in the prior year, with net cash used in investing activities decreasing, while net cash used in financing activities remained relatively stable Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Activity | 2025 ($M) | 2024 ($M) | | :----------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $353 million | $221 million | | Net cash used in investing activities | $(48) million | $(81) million | | Net cash used in financing activities | $(255) million | $(261) million | | Net change in cash, cash equivalents and restricted cash | $58 million | $(126) million | | Cash and cash equivalents, end of period | $212 million | $166 million | Supplemental Financial Data This section provides additional financial data, including a consolidated and segment results summary and a detailed data sheet with key segment metrics Consolidated and Segment Results Summary Consolidated net revenues increased 3% to $1,018 million in Q2 2025, with Adjusted EBITDA up 2% to $250 million, driven by 6% growth in Vacation Ownership revenue, while Travel and Membership revenue decreased 6% Q2 2025 Consolidated and Adjusted Earnings | Metric | Q2 2025 | Q2 2024 | Change | | :-------------------------------- | :------ | :------ | :----- | | Net income attributable to TNL shareholders | $108 million | $129 million | (16)% | | Diluted earnings per share | $1.62 | $1.81 | (10)% | | Net income from continuing operations | $108 million | $97 million | 11% | | Diluted EPS from continuing operations | $1.62 | $1.36 | 19% | | Adjusted EBITDA | $250 million | $244 million | 2% | | Adjusted net income | $110 million | $108 million | 2% | | Adjusted diluted earnings per share | $1.65 | $1.52 | 9% | Q2 2025 Segment Net Revenues and Adjusted EBITDA | Segment | Q2 2025 Net Revenues ($M) | Q2 2024 Net Revenues ($M) | Net Revenue % Change | Q2 2025 Adjusted EBITDA ($M) | Q2 2024 Adjusted EBITDA ($M) | Adjusted EBITDA % Change | | :------------------ | :------------------------ | :------------------------ | :------------------- | :--------------------------- | :--------------------------- | :----------------------- | | Vacation Ownership | $853 million | $807 million | 6% | $218 million | $206 million | 6% | | Travel and Membership | $166 million | $177 million | (6)% | $55 million | $62 million | (11)% | | Total | $1,018 million | $985 million | 3% | $250 million | $244 million | 2% | Summary Data Sheet (Detailed Segment Metrics) The detailed data sheet shows strong performance in Vacation Ownership with Gross VOI sales up 8% and VPG up 7% in Q2 2025, while Travel and Membership experienced an 11% decrease in exchange transactions, leading to a 7% decline in total transaction revenue Q2 2025 Vacation Ownership Key Metrics | Metric | Q2 2025 | Q2 2024 | % Change | | :----------------------------------- | :-------- | :-------- | :------- | | Net VOI sales | $474 million | $441 million | 7% | | Loan loss provision | $128 million | $113 million | 13% | | Gross VOI sales | $654 million | $607 million | 8% | | Tours (in thousands) | 197 | 192 | 3% | | VPG (in dollars) | $3,251 | $3,051 | 7% | Q2 2025 Travel and Membership Key Metrics | Metric | Q2 2025 | Q2 2024 | % Change | | :----------------------------------- | :-------- | :-------- | :------- | | Avg. number of exchange members (in thousands) | 3,329 | 3,450 | (4)% | | Exchange Transactions (in thousands) | 197 | 220 | (11)% | | Travel Club Transactions (in thousands) | 191 | 179 | 7% | | Travel and Membership transaction revenue | $117 million | $126 million | (7)% | | Subscription revenue | $43 million | $44 million | (2)% | Non-GAAP Reconciliations and Definitions This section provides reconciliations of non-GAAP financial measures to their most directly comparable GAAP measures and defines key non-GAAP and operational metrics Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA The reconciliation shows that for Q2 2025, Adjusted Net Income was $110 million (Adjusted diluted EPS $1.65) and Adjusted EBITDA was $250 million, after adjusting for items like amortization of acquired intangibles, asset impairments, and stock-based compensation Q2 2025 Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA | Metric | Q2 2025 ($M) | Q2 2024 ($M) | | :----------------------------------- | :----------- | :----------- | | Net income attributable to TNL shareholders | $108 million | $129 million | | Net income from continuing operations | $108 million | $97 million | | Adjusted net income | $110 million | $108 million | | Adjusted diluted earnings per share | $1.65 | $1.52 | | Adjusted EBITDA | $250 million | $244 million | - Key adjustments to reconcile GAAP net income to Adjusted EBITDA include amortization of acquired intangibles, asset impairments, legacy items, and stock-based compensation expense[34][35] Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow For the six months ended June 30, 2025, Adjusted Free Cash Flow was $123 million, calculated by adjusting net cash provided by operating activities for property and equipment additions and the sum of proceeds and principal payments of non-recourse vacation ownership debt Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (Six Months Ended June 30) | Metric | 2025 ($M) | 2024 ($M) | | :---------------------------------------------------- | :-------- | :-------- | | Net cash provided by operating activities | $353 million | $221 million | | Property and equipment additions | $(58) million | $(38) million | | Sum of proceeds and principal payments of non-recourse vacation ownership debt | $(172) million | $(71) million | | Adjusted free cash flow | $123 million | $112 million | Definitions of Non-GAAP Measures and Key Metrics This section provides comprehensive definitions for various non-GAAP financial measures such as Adjusted Diluted EPS, Adjusted EBITDA, Adjusted Free Cash Flow, and Gross VOI Sales, along with key operational metrics like VPG and Tours, explaining their utility in evaluating company performance - Adjusted Diluted Earnings per Share is a non-GAAP measure defined as Adjusted net income divided by the diluted weighted average number of common shares, useful for evaluating ongoing operating performance[37] - Adjusted EBITDA is a non-GAAP measure defined as net income from continuing operations before depreciation and amortization, interest expense, interest income, income taxes, and other specific non-cash or non-recurring items, used to assess segment performance and allocate resources[38] - Adjusted Free Cash Flow is a non-GAAP measure defined as net cash provided by operating activities from continuing operations less property and equipment additions plus the sum of proceeds and principal payments of non-recourse vacation ownership debt, used to evaluate cash generation for growth and shareholder returns[40] - Gross Vacation Ownership Interest Sales (Gross VOI sales) is a non-GAAP measure representing sales of VOIs before the effect of loan loss provisions, providing an enhanced understanding of the sales volume of the vacation ownership business[45] - Volume Per Guest (VPG) represents Gross VOI sales (excluding telesales and virtual sales) divided by the number of tours, directly measuring the efficiency of tour selling efforts[49]