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

GLOSSARY OF TERMS The glossary defines key terms and acronyms used throughout the report - The glossary defines key terms and acronyms used in the report, such as Adjusted EBITDA, AOCL (Accumulated Other Comprehensive Loss), EPS (Earnings Per Share), VIE (Variable Interest Entity), VOCR (Vacation Ownership Contract Receivable), and VOI (Vacation Ownership Interest)[9][10] PART I — FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated financial statements for the periods ended June 30, 2025, and 2024 Report of Independent Registered Public Accounting Firm - Deloitte & Touche LLP reviewed the accompanying condensed consolidated interim financial information for the three-month and six-month periods ended June 30, 2025 and 2024[12] - Based on their reviews, they are not aware of any material modifications that should be made for the interim financial information to conform with GAAP[12] - They previously issued an unqualified opinion on the Company's consolidated financial statements as of December 31, 2024, and confirmed the accompanying condensed consolidated balance sheet as of December 31, 2024, is fairly stated[13] Condensed Consolidated Statements of Income Condensed Consolidated Statements of Income (Unaudited, In millions, except per share amounts) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $1,018 | $985 | $1,951 | $1,900 | | Total expenses | $812 | $796 | $1,589 | $1,561 | | Operating income | $206 | $189 | $362 | $339 | | Income before income taxes | $152 | $133 | $253 | $225 | | Provision for income taxes | $44 | $36 | $72 | $62 | | Net income from continuing operations | $108 | $97 | $181 | $163 | | Gain on disposal of discontinued business, net of income taxes | $— | $32 | $— | $32 | | Net income attributable to Travel + Leisure Co. shareholders | $108 | $129 | $181 | $195 | | Basic earnings per share (Continuing operations) | $1.63 | $1.36 | $2.71 | $2.29 | | Basic earnings per share (Total) | $1.63 | $1.82 | $2.71 | $2.74 | | Diluted earnings per share (Continuing operations) | $1.62 | $1.36 | $2.68 | $2.28 | | Diluted earnings per share (Total) | $1.62 | $1.81 | $2.68 | $2.73 | Condensed Consolidated Statements of Comprehensive Income Condensed Consolidated Statements of Comprehensive Income (Unaudited, In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Travel + Leisure Co. shareholders | $108 | $129 | $181 | $195 | | Foreign currency translation adjustments, net of tax | $34 | $3 | $46 | $(12) | | Other comprehensive income/(loss), net of tax | $34 | $3 | $46 | $(12) | | Comprehensive income attributable to Travel + Leisure Co. shareholders | $142 | $132 | $227 | $183 | Condensed Consolidated Balance Sheets Condensed Consolidated Balance Sheets (Unaudited, In millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $212 | $167 | | Restricted cash | $175 | $162 | | Vacation ownership contract receivables, net | $2,568 | $2,619 | | Inventory | $1,252 | $1,227 | | Total assets | $6,809 | $6,735 | | Liabilities and (deficit) | | | | Non-recourse vacation ownership debt | $1,959 | $2,123 | | Debt | $3,628 | $3,468 | | Total liabilities | $7,662 | $7,615 | | Total stockholders' (deficit) | $(852) | $(881) | | Total (deficit) | $(853) | $(880) | | Total liabilities and (deficit) | $6,809 | $6,735 | Condensed Consolidated Statements of Cash Flows Condensed Consolidated Statements of Cash Flows (Unaudited, In millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net income | $181 | $195 | | Net cash provided by operating activities | $353 | $221 | | Net cash used in investing activities | $(48) | $(81) | | Net cash used in financing activities | $(255) | $(261) | | Effect of changes in exchange rates on cash, cash equivalents and restricted cash | $8 | $(5) | | Net change in cash, cash equivalents and restricted cash | $58 | $(126) | | Cash, cash equivalents and restricted cash, end of period | $387 | $332 | | Cash and cash equivalents | $212 | $166 | Condensed Consolidated Statements of Deficit Changes in Total Deficit (Unaudited, In millions) | Metric | Balance as of Dec 31, 2024 | Six Months Ended June 30, 2025 Changes | Balance as of June 30, 2025 | | :--- | :--- | :--- | :--- | | Total Deficit | $(880) | +$27 | $(853) | | Net income | | +$181 | | | Other comprehensive income | | +$46 | | | Repurchase of common stock | | $(140) | | | Dividends | | $(78) | | | Additional paid-in capital changes | | +$20 | | Notes to Condensed Consolidated Financial Statements Note 1 - Background and Basis of Presentation - Travel + Leisure Co. is a global provider of hospitality services and travel products, operating in two reportable segments: Vacation Ownership and Travel and Membership[31] - The Vacation Ownership segment develops, markets, and sells vacation ownership interests (VOIs), provides consumer financing, and property management services[32] - The Travel and Membership segment includes vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals[33] Note 2 - New Accounting Pronouncements - Recently Issued Accounting Pronouncements include guidance on Disclosure Improvements (Oct 2023), Improvements to Income Tax Disclosures (Dec 2023, effective after Dec 15, 2024), Disaggregation of Disclosures About Income Statement Expenses (Nov 2024, effective after Dec 15, 2026), and Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity (May 2025, effective after Dec 15, 2026)[37][38][39][40][41] - Recently Adopted Accounting Pronouncements include Business Combinations—Joint Venture Formations (Aug 2023, effective Jan 1, 2025, no significant impact) and Segment Reporting (Nov 2023, effective after Dec 15, 2023, only affected disclosures)[42][43] Note 3 - Revenue Recognition - Revenue from Vacation Ownership Interest (VOI) sales is recognized upon transfer of control, execution of financing, expiration of the statutory rescission period, and deemed collectibility[44] Property Management Fees and Reimbursable Revenues (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Management fee revenues | $114 | $113 | $228 | $227 | | Reimbursable revenues | $103 | $97 | $212 | $194 | | Property management fees and reimbursable revenues | $217 | $210 | $440 | $421 | - Travel and Membership segment revenues are primarily from membership dues (recognized straight-line over membership period) and fees for facilitating timeshare interval trading (recognized upon confirmed transactions)[51] Contract Liabilities (In millions) | Contract Liability | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Deferred subscription revenue | $155 | $151 | | Deferred VOI trial package revenue | $141 | $142 | | Deferred VOI incentive revenue | $85 | $86 | | Deferred exchange-related revenue | $61 | $58 | | Deferred co-branded credit card programs revenue | $38 | $21 | | Deferred other revenue | $4 | $1 | | Total | $484 | $459 | Disaggregation of Net Revenues by Segment (In millions) | Segment/Revenue Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Vacation Ownership | | | | | | Vacation ownership interest sales | $474 | $441 | $858 | $810 | | Property management fees and reimbursable revenues | $217 | $210 | $440 | $421 | | Consumer financing | $112 | $111 | $224 | $221 | | Total Vacation Ownership | $853 | $807 | $1,609 | $1,533 | | Travel and Membership | | | | | | Transaction revenues | $117 | $126 | $246 | $266 | | Subscription revenues | $43 | $44 | $86 | $90 | | Total Travel and Membership | $166 | $177 | $345 | $370 | | Net revenues | $1,018 | $985 | $1,951 | $1,900 | Note 4 - Earnings Per Share Basic and Diluted Earnings Per Share (In millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net income from continuing operations attributable to Travel + Leisure Co. Shareholders | $108 | $97 | $181 | $163 | | Basic earnings per share (Continuing operations) | $1.63 | $1.36 | $2.71 | $2.29 | | Basic earnings per share (Total) | $1.63 | $1.82 | $2.71 | $2.74 | | Diluted earnings per share (Continuing operations) | $1.62 | $1.36 | $2.68 | $2.28 | | Diluted earnings per share (Total) | $1.62 | $1.81 | $2.68 | $2.73 | | Basic weighted average shares outstanding | 66.1 | 70.8 | 66.6 | 71.2 | | Diluted weighted average shares outstanding | 66.5 | 71.0 | 67.3 | 71.5 | - The Board authorized a share repurchase program totaling $7.0 billion, with $303 million remaining availability as of June 30, 2025[65] - During the six months ended June 30, 2025, the Company repurchased 2.8 million shares at a cost of $140 million[65] Note 5 - Acquisitions - During Q1 2025, the Company completed a business acquisition for $3 million, recognizing $2 million in definite-lived intangible assets and $1 million in Property and equipment within the Vacation Ownership segment[67] - On March 1, 2024, the Company acquired Accor Vacation Club for $50 million ($44 million net of cash acquired), expanding its international portfolio in the Asia Pacific region[68] - The Accor Vacation Club acquisition included $23 million of definite-lived intangible assets, $9 million of Inventory, $8 million of Trade receivables, $6 million of Goodwill, and $6 million of Property and equipment[69] Note 6 - Discontinued Operations - During the three and six months ended June 30, 2024, the Company recognized a $32 million Gain on disposal of discontinued business, net of income taxes[70] - This gain resulted from the expiration of certain guarantees made in connection with the 2018 sale of its European vacation rentals business[70] Note 7 - Vacation Ownership Contract Receivables Vacation Ownership Contract Receivables, Net (In millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securitized VOCRs | $2,105 | $2,293 | | Non-securitized VOCRs | $1,067 | $940 | | VOCRs, gross | $3,172 | $3,233 | | Less: allowance for loan losses | $604 | $614 | | VOCRs, net | $2,568 | $2,619 | - Securitized VOCRs generated interest income of $166 million for the six months ended June 30, 2025, up from $159 million in the prior year[71] Allowance for Loan Losses on VOCRs (In millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Beginning balance | $614 | $574 | | Provision for loan losses, net | $219 | $191 | | Contract receivables write-offs, net | $(229) | $(191) | | Ending balance | $604 | $574 | - The weighted average interest rate on outstanding VOCRs was 14.7% as of both June 30, 2025, and December 31, 2024[72] Note 8 - Inventory Inventory Composition (In millions) | Inventory Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Completed VOI inventory | $996 | $970 | | Estimated VOI recoveries | $213 | $214 | | Land held for VOI development | $29 | $29 | | VOI construction in process | $12 | $10 | | Vacation exchange credits and other | $2 | $4 | | Total inventory | $1,252 | $1,227 | - The Company had net transfers of VOI inventory from property and equipment of $8 million during the six months ended June 30, 2025[79] - Inventory obligations related to third-party developers totaled $5 million as of June 30, 2025[81] Note 9 - Property and Equipment Property and Equipment, Net (In millions) | Asset Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Capitalized software | $828 | $794 | | Building and leasehold improvements | $630 | $625 | | Furniture, fixtures and equipment | $144 | $144 | | Finance leases | $52 | $50 | | Land | $28 | $28 | | Construction in progress | $33 | $21 | | Total property and equipment | $1,715 | $1,662 | | Less: accumulated depreciation and amortization | $1,123 | $1,071 | | Property and equipment, net | $592 | $591 | Note 10 - Debt Company Indebtedness (In millions) | Debt Type | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Non-recourse vacation ownership debt | $1,959 | $2,123 | | Debt (Corporate) | $3,628 | $3,468 | | Total Indebtedness | $5,587 | $5,591 | - On March 19, 2025, the Company closed a $350 million placement of term notes (Sierra Timeshare 2025-1) secured by VOCRs, bearing a weighted average coupon rate of 5.20%[84] - On April 17, 2025, the $600 million USD bank conduit facility was renewed, extending the commitment period to August 2027 and amending the advance rate[85] - On June 25, 2025, the $1.0 billion revolving credit facility was refinanced and extended to June 2030, reducing pricing spreads by 25 basis points, eliminating the credit spread adjustment, reducing the Term SOFR floor to 0.00%, and lowering the minimum interest coverage ratio to 2.00 to 1.00[86][88] - As of June 30, 2025, the Company was in compliance with financial covenants, with an interest coverage ratio of 4.57 to 1.0 and a first lien leverage ratio of 3.44 to 1.0[91] Interest Expense (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Corporate Interest expense | $57 | $63 | $115 | $127 | | Non-recourse vacation ownership debt interest expense | $34 | $33 | $68 | $66 | Note 11 - Variable Interest Entities - The Company consolidates bankruptcy-remote Special Purpose Entities (SPEs) used for securitizing Vacation Ownership Contract Receivables (VOCRs)[98] Assets and Liabilities of Vacation Ownership SPEs (In millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Securitized contract receivables, gross | $2,105 | $2,293 | | Total SPE assets | $2,213 | $2,412 | | Non-recourse term notes | $1,576 | $1,746 | | Non-recourse conduit facilities | $383 | $377 | | Total SPE liabilities | $1,961 | $2,126 | | SPE assets in excess of SPE liabilities | $252 | $286 | - The receivables held by these SPEs are not available to creditors of the Company, and the non-recourse debt is not a liability of the Company[98] Note 12 - Fair Value - The Company classifies financial assets and liabilities into a fair value hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[101][102] - Derivative instruments, consisting of foreign exchange forward contracts, are measured at estimated fair value (all Level 2)[104][105] Carrying Amounts and Estimated Fair Values of Financial Instruments (In millions) | Financial Instrument | June 30, 2025 Carrying Amount | June 30, 2025 Estimated Fair Value | December 31, 2024 Carrying Amount | December 31, 2024 Estimated Fair Value | | :--- | :--- | :--- | :--- | :--- | | Vacation ownership contract receivables, net (Level 3) | $2,568 | $2,867 | $2,619 | $2,900 | | Debt (Level 2) | $5,587 | $5,570 | $5,591 | $5,537 | Note 13 - Derivative Instruments and Hedging Activities - The Company uses freestanding foreign currency forward contracts to manage exposure to foreign currency exchange rate fluctuations, particularly for the Euro, British pound sterling, Australian and Canadian dollars, and Mexican peso[111][112] - Interest rate risk is managed through financial derivatives, including interest rate swaps (fair value hedges) and interest rate caps (undesignated hedges), to adjust the mix of fixed to floating rate debt[113] - As of June 30, 2025 and 2024, there were no interest rate derivatives designated as fair value or cash flow hedges, and no losses on derivatives recognized in Accumulated Other Comprehensive Loss (AOCL)[113][114] Note 14 - Income Taxes Effective Tax Rates | Period | Effective Tax Rate | | :--- | :--- | | Three Months Ended June 30, 2025 | 28.9% | | Three Months Ended June 30, 2024 | 27.4% | | Six Months Ended June 30, 2025 | 28.5% | | Six Months Ended June 30, 2024 | 27.9% | - The effective tax rate for Q2 2025 was primarily impacted by an increase in unrecognized tax benefits. For H1 2025, it was impacted by Pillar Two taxes and increased unrecognized tax benefits, offset by decreased state taxes[116] - Income tax payments, net of refunds, were $57 million for the six months ended June 30, 2025, compared to $47 million in the prior year[117] Note 15 - Leases Lease Costs (In millions) | Lease Cost Type | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Operating lease cost | $5 | $5 | $10 | $10 | | Short-term lease cost | $3 | $4 | $7 | $7 | | Total finance lease cost | $3 | $3 | $6 | $6 | Lease-Related Assets and Liabilities (In millions) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Operating lease right-of-use assets | $52 | $47 | | Operating lease liabilities | $82 | $79 | | Finance lease assets | $18 | $21 | | Finance lease liabilities | $17 | $21 | | Weighted average remaining lease term (Operating) | 5.4 years | 4.9 years | | Weighted average remaining lease term (Finance) | 2.4 years | 2.6 years | - A new 15-year lease agreement for the corporate headquarters, with estimated average annual payments of $7 million, will commence in Q3 2025[121] Note 16 - Commitments and Contingencies - The Company is involved in various claims, legal and regulatory proceedings, and governmental inquiries, none of which are expected to have a material effect on results of operations or financial condition[122] - Accruals for legal contingencies were $3 million as of June 30, 2025, with a potential exposure ranging up to $23 million in excess of recorded accruals[124] - The Company enters into standard guarantees and indemnities in the ordinary course of business, for which the maximum potential amount of future payments is not estimable[127] Note 17 - Accumulated Other Comprehensive Loss Components of Accumulated Other Comprehensive Loss (Net of Tax, In millions) | Metric | December 31, 2024 | Other Comprehensive Income/(Loss) H1 2025 | June 30, 2025 | | :--- | :--- | :--- | :--- | | Foreign Currency Translation Adjustments | $(113) | $46 | $(67) | | Defined Benefit Pension Plans | $1 | $— | $1 | | Total Accumulated Other Comprehensive Loss | $(112) | $46 | $(66) | - The net Accumulated Other Comprehensive Loss improved from $(112) million at December 31, 2024, to $(66) million at June 30, 2025, primarily due to $46 million in foreign currency translation adjustments[129] Note 18 - Stock-Based Compensation - During the six months ended June 30, 2025, the Company granted $38 million in RSUs and $10 million in PSUs to key employees and senior officers[133] - As of June 30, 2025, aggregate unrecognized compensation expense for RSUs was $66 million (expected over 2.8 years) and for PSUs was $15 million (probable, over 2.3 years), with a maximum potential of $41 million for non-probable PSUs[135] Stock-Based Compensation Expense (In millions) | Period | Stock-Based Compensation Expense | | :--- | :--- | | Three Months Ended June 30, 2025 | $12 | | Three Months Ended June 30, 2024 | $11 | | Six Months Ended June 30, 2025 | $26 | | Six Months Ended June 30, 2024 | $20 | - The Employee Stock Purchase Plan issued 0.1 million shares during the six months ended June 30, 2025 and 2024, recognizing $1 million of compensation expense for each period[140] Note 19 - Segment Information - The Company operates in two reportable segments: Vacation Ownership and Travel and Membership, with Adjusted EBITDA used as the primary profitability measure by the Chief Operating Decision Maker (CODM)[141][142][143][144] Adjusted EBITDA by Segment (In millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Vacation Ownership | $218 | $206 | $378 | $340 | | Travel and Membership | $55 | $62 | $123 | $137 | | Total reportable segments | $273 | $268 | $501 | $477 | | Corporate and other | $(23) | $(24) | $(49) | $(42) | | Total Company Adjusted EBITDA | $250 | $244 | $452 | $435 | Capital Expenditures by Segment (In millions) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Vacation Ownership | $28 | $25 | | Travel and Membership | $8 | $10 | | Total reportable segments | $36 | $35 | | Corporate and other | $22 | $3 | | Total Company | $58 | $38 | Segment Assets (In millions) | Segment | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Vacation Ownership | $5,141 | $5,112 | | Travel and Membership | $1,343 | $1,325 | | Total reportable segments | $6,484 | $6,437 | | Corporate and other | $325 | $298 | | Total Company | $6,809 | $6,735 | Note 20 - Restructuring - The 2024 restructuring plan incurred $15 million in charges, primarily personnel-related from a reduction of approximately 300 employees, focused on enhancing organizational efficiency[158] - As of June 30, 2025, the remaining liability for the 2024 restructuring plan was $2 million, expected to be paid by the end of 2026[158][160] - A remaining $13 million liability from prior restructuring plans, related to leased facilities, is expected to be paid by the end of 2029[159][160] Note 21 - Transactions with Former Parent and Former Subsidiaries - The Company is responsible for 25% of certain contingent liabilities related to its former parent, ABG, and paid $24 million for a legacy tax matter in May 2025, reimbursed $8 million by Wyndham Hotels[163][164] - In connection with the Spin-off, Travel + Leisure Co. assumed two-thirds and Wyndham Hotels assumed one-third of certain contingent corporate liabilities incurred prior to the Spin-off[168] - A $32 million Gain on disposal of discontinued business, net of income taxes, was recognized in Q2 2024 due to the expiration of indemnifications related to the sale of the European vacation rentals business[171] - As of June 30, 2025, the estimated fair value of guarantees and indemnifications for which Travel + Leisure Co. is responsible related to the European vacation rentals business totaled $48 million[173] Note 22 - Related Party Transactions - The Company incurred less than $1 million of expenses during the six months ended June 30, 2025 and 2024, for subletting an aircraft from its former CEO and current Chairman of the Board for business travel[175] Note 23 - Subsequent Event - On July 22, 2025, the Company closed on a placement of $300 million in term notes (Sierra Timeshare 2025-2 Receivables Funding LLC), secured by VOCRs and bearing a weighted average coupon rate of 5.10%[176] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations Forward-Looking Statements - The report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially[178] - Key risks include adverse economic conditions (inflation, interest rates, recession), travel disruptions (war, pandemics, natural disasters), changes in consumer patterns, operating costs, debt covenants, and cyber-attacks[178] - The Company undertakes no obligation to update these statements unless required by law[178] Business and Overview - The Company operates in two segments: Vacation Ownership (VOIs, consumer financing, property management) and Travel and Membership (vacation exchange, travel technology, memberships, rentals)[181] - The Vacation Ownership business saw continued demand for leisure travel, resulting in higher Gross VOI sales and Adjusted EBITDA growth in H1 2025, with increased tours and Volume Per Guest (VPGs)[179] - The Travel and Membership business experienced lower revenues in H1 2025 due to industry consolidation, lower member counts, and an increasing mix of exchange members with club affiliations, despite an overall improvement in exchange revenue per transaction[180] - The Company is experiencing pressure on its loan portfolio due to elevated delinquencies but has benefited from improved interest rates on variable rate corporate borrowings and successful securitization closings[182][183] Pillar Two and Recent Legislation - The OECD's Pillar Two global minimum tax rules increased the Company's effective tax rate, but the overall impact to financial statements was not material as of June 30, 2025[186] - The recently signed 'One Big Beautiful Bill Act' extends tax provisions and restores full expensing for R&D and capital investments; the Company is currently assessing its potential impact[187] Results of Operations Consolidated Results (In millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Net revenues | $1,018 | $985 | $1,951 | $1,900 | | Expenses | $812 | $796 | $1,589 | $1,561 | | Operating income | $206 | $189 | $362 | $339 | | Net income from continuing operations | $108 | $97 | $181 | $163 | | Net income attributable to Travel + Leisure Co. shareholders | $108 | $129 | $181 | $195 | Operating Statistics (Q2 2025 vs Q2 2024) | Metric | Q2 2025 | Q2 2024 | % Change | | :--- | :--- | :--- | :--- | | Vacation Ownership Gross VOI sales (in millions) | $654 | $607 | 7.8% | | Vacation Ownership Tours (in 000s) | 197 | 192 | 2.7% | | Vacation Ownership Volume per guest | $3,251 | $3,051 | 6.5% | | Travel and Membership Total transactions (in 000s) | 388 | 399 | (2.7%) | | Travel and Membership Total revenue per transaction | $300 | $315 | (4.6%) | | Travel and Membership Average number of exchange members (in 000s) | 3,329 | 3,450 | (3.5%) | - Q2 2025 Net revenues increased $33 million YoY, primarily driven by a $47 million increase in Vacation Ownership offset by an $11 million decrease in Travel and Membership[194][197] - H1 2025 Net revenues increased $51 million YoY, primarily due to an $80 million increase in Vacation Ownership offset by a $23 million decrease in Travel and Membership[207][209] RESTRUCTURING PLANS - The 2024 restructuring plan, focused on organizational efficiency and rationalizing operations, incurred $15 million in charges, including personnel-related costs from approximately 300 employee reductions[221] - During the six months ended June 30, 2025, $6 million in cash payments reduced the 2024 restructuring liability to $2 million, expected to be paid by the end of 2026[221] - For prior restructuring plans, $2 million in cash payments were made in H1 2025, leaving a remaining liability of $13 million, primarily related to leased facilities, expected by the end of 2029[222] FINANCIAL CONDITION Financial Condition Summary (In millions) | Metric | June 30, 2025 | December 31, 2024 | Change | | :--- | :--- | :--- | :--- | | Total assets | $6,809 | $6,735 | +$74 | | Total liabilities | $7,662 | $7,615 | +$47 | | Total (deficit) | $(853) | $(880) | +$27 | - Total assets increased by $74 million, driven by increases in Cash and cash equivalents (+$45M), Prepaid expenses (+$30M), Inventory (+$25M), and Trade receivables (+$20M), partially offset by a $51 million decrease in Vacation ownership contract receivables, net[223][226] - Total liabilities increased by $47 million, primarily due to increases in Debt (+$160M), Deferred income (+$26M), and Deferred income taxes (+$23M), partially offset by a $164 million decrease in Non-recourse vacation ownership debt[226] - Total deficit decreased by $27 million, primarily due to Net income (+$181M), favorable currency translation adjustments (+$46M), and increased additional paid-in capital (+$20M), partially offset by share repurchases (-$140M) and dividends (-$78M)[227] LIQUIDITY AND CAPITAL RESOURCES - The Company believes it has sufficient liquidity from net cash from operations, cash and cash equivalents, revolving credit facility, bank conduit facilities, and debt markets to meet short-term and long-term cash needs[228] - As of June 30, 2025, the $1.0 billion revolving credit facility had $596 million of available capacity, and non-recourse conduit facilities had a combined capacity of $747 million ($364 million available)[230][235] - The Company closed $350 million in securitization financings in H1 2025 and an additional $300 million subsequent to quarter-end, demonstrating continued access to debt markets[236] - Capital deployment focuses on business growth, optimizing cash flow and Adjusted EBITDA, with anticipated full-year spending of $150-$180 million for vacation ownership development and $125-$135 million for capital expenditures in 2025[249][250][251] - The share repurchase program had $303 million remaining availability as of June 30, 2025, after repurchasing $140 million in H1 2025[255] - Dividends paid were $78 million in H1 2025 ($0.56 per share per quarter), with a long-term plan to grow dividends at least at the rate of earnings growth[257] CASH FLOW Changes in Cash, Cash Equivalents, and Restricted Cash (In millions) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | Change | | :--- | :--- | :--- | :--- | | Operating activities | $353 | $221 | +$132 | | Investing activities | $(48) | $(81) | +$33 | | Financing activities | $(255) | $(261) | +$6 | | Effects of changes in exchange rates on cash and cash equivalents | $8 | $(5) | +$13 | | Net change in cash, cash equivalents and restricted cash | $58 | $(126) | +$184 | - Net cash provided by operating activities increased by $132 million, primarily due to a $75 million decrease in cash utilized for working capital and a $71 million increase in non-cash addbacks[246] - Net cash used in investing activities decreased by $33 million, mainly due to the $44 million acquisition of Accor Vacation Club in 2024 and $15 million from investment sales in 2025, partially offset by a $20 million increase in capital expenditures[247] - Net cash used in financing activities decreased by $6 million, driven by a $159 million increase in net proceeds from corporate debt, partially offset by a $101 million increase in net payments on non-recourse debt and a $46 million increase in share repurchases[248] SEASONALITY - The Company experiences seasonal fluctuations, with revenues from VOI sales generally higher in the third quarter due to increased leisure travel[258] - Revenues from vacation exchange fees are typically highest in the first quarter, when members usually book their annual vacations[258] COMMITMENTS AND CONTINGENCIES - The Company refers to Note 16 and Note 21 of the Condensed Consolidated Financial Statements for details on claims, legal actions, guarantees, and indemnifications[260] CRITICAL ACCOUNTING ESTIMATES - There have been no material changes to the critical accounting estimates since the filing of the Annual Report on Form 10-K for the year ended December 31, 2024[262] Item 3. Quantitative and Qualitative Disclosures About Market Risks This section assesses the company's exposure to market risks, primarily from changes in interest and foreign currency exchange rates - A hypothetical 10% change in interest rates would result in a $2 million change in annual consumer financing interest expense and a $5 million change in annual debt interest expense for the six months ended June 30, 2025[264] - A hypothetical 10% change in foreign currency exchange rates would result in a $6 million change to the fair value of outstanding forward foreign currency exchange contracts, generally offset by the underlying exposure[264] - A 100 basis point change in underlying interest rates on variable rate borrowings would result in a $4 million change in annual consumer financing interest expense and a $12 million change in annual debt interest expense[265] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2025 - The principal executive and principal financial officers concluded that disclosure controls and procedures were designed and functioning effectively as of June 30, 2025[266] - There have been no material changes in internal control over financial reporting during the period covered by the report[266] PART II — OTHER INFORMATION Item 1. Legal Proceedings This section refers to disclosures in Note 16 and Note 21 regarding claims and lawsuits arising in the ordinary course of business - The Company is involved in various claims and lawsuits arising in the ordinary course of business, none of which are expected to have a material adverse effect on its results of operations or financial condition[267] - Further details are provided in Note 16 (Commitments and Contingencies) and Note 21 (Transactions with Former Parent and Former Subsidiaries) of the financial statements[267] Item 1A. Risk Factors This section states there have been no material changes to the risk factors previously disclosed in the company's Annual Report - As of June 30, 2025, there have been no material changes to the risk factors set forth in Part I, Item 1A of the Annual Report on Form 10-K for the fiscal year ended December 31, 2024[268] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section summarizes the company's common stock repurchase activity for the quarter ended June 30, 2025 Common Stock Repurchases (Quarter Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plan | Approximate Dollar Value of Shares that May Yet Be Purchased Under Plan | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 531,121 | $42.32 | 531,121 | $350,625,404 | | May 2025 | 496,366 | $48.63 | 496,366 | $326,485,754 | | June 2025 | 469,985 | $49.76 | 469,985 | $303,099,697 | | Total | 1,497,472 | $46.75 | 1,497,472 | $303,099,697 | - The Share Repurchase Program, authorized on August 20, 2007, has a total authorization of $7.0 billion, with $303 million remaining availability as of June 30, 2025[271] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - None[272] Item 4. Mine Safety Disclosures This section indicates that the disclosure requirements for mine safety are not applicable to the company - Not applicable[273] Item 5. Other Information This section states that there is no other information to report under this item - None[274] Item 6. Exhibits This section lists all exhibits filed as part of the Form 10-Q - Key exhibits include the Third Amended and Restated Certificate of Incorporation, Fourth Amended and Restated Bylaws, Thirteenth Amendment to the Amended and Restated Indenture and Servicing Agreement, and the Seventh Amendment to the Credit Agreement[275] - Certifications from the President and Chief Executive Officer and Chief Financial Officer pursuant to Rule 13a-14(a) and 18 U.S.C. Section 1350 are also filed[275]