Travel + Leisure(TNL) - 2025 Q3 - Quarterly Results

Executive Summary and Highlights Travel + Leisure Co. delivered strong Q3 2025 results, surpassing guidance, maintaining high VPG, and advancing strategic brand partnerships Third Quarter 2025 Performance Highlights The company reported strong Q3 2025 financial results, exceeding Adjusted EBITDA guidance and maintaining high VPG, while making strategic brand progress Q3 2025 Key Financial Highlights: | Metric | Value | | :--------------------------------- | :---------- | | Net income | $111 million | | Diluted earnings per share | $1.67 | | Net revenue | $1.04 billion | | Adjusted EBITDA | $266 million | | Adjusted diluted earnings per share | $1.80 | | Vacation Ownership revenue | $876 million | | Volume per guest (VPG) | $3,304 | | Shareholder returns | $106 million | - Vacation Ownership revenue increased 6% year-over-year, and VPG increased 10% year-over-year[4] - The company returned $106 million to shareholders through $36 million in dividends and $70 million in share repurchases[4] CEO Commentary and Strategic Progress CEO Michael D. Brown highlighted an exceptional quarter, exceeding guidance and consistent VPG, alongside strategic multi-brand advancements - CEO Michael D. Brown stated that Travel + Leisure Co. delivered an "exceptional quarter," exceeding Adjusted EBITDA guidance and achieving its 18th consecutive quarter with VPG above $3,000[2] - Strategic progress includes the launch of the Eddie Bauer Adventure Club and a new Sports Illustrated Resort in Chicago, expanding reach and strengthening the brand portfolio[3] Business Segment Results This section details the financial performance of the Vacation Ownership and Travel and Membership segments, highlighting revenue and Adjusted EBITDA contributions Vacation Ownership The Vacation Ownership segment demonstrated strong performance in Q3 2025, with significant increases in revenue and Adjusted EBITDA, driven by higher net VOI sales, VPG, and tours Vacation Ownership Segment Performance (Q3 2025 vs. Q3 2024): | Metric | Q3 2025 | Q3 2024 | % Change | | :---------------- | :------ | :------ | :------- | | Revenue | $876 million | $825 million | 6% | | Adjusted EBITDA | $231 million | $202 million | 14% | - Net vacation ownership interest (VOI) sales increased 9% year-over-year, and Gross VOI sales increased 13%, primarily due to a 10% increase in VPG and a 2% increase in tours[5] - Adjusted EBITDA growth was attributed to revenue growth and lower cost of VOIs sold[6] Travel and Membership The Travel and Membership segment experienced modest revenue growth but a decline in Adjusted EBITDA in Q3 2025, primarily due to a shift towards lower-margin travel club transactions Travel and Membership Segment Performance (Q3 2025 vs. Q3 2024): | Metric | Q3 2025 | Q3 2024 | % Change | | :---------------- | :------ | :------ | :------- | | Revenue | $169 million | $168 million | 1% | | Adjusted EBITDA | $58 million | $62 million | (6)% | - Revenue increase was driven by a $3 million increase in transaction revenue due to a 12% increase in transactions, partially offset by an 8% decrease in revenue per transaction[7] - The decrease in Adjusted EBITDA was primarily due to a higher mix of travel club transactions, which generate lower margins[8] Balance Sheet and Liquidity This section reviews the company's financial position, including net debt, financing activities, cash flow performance, and shareholder return initiatives Net Debt and Financing Activities As of September 30, 2025, the company maintained a leverage ratio of 3.3x and actively managed its debt portfolio through refinancing and securitization transactions to optimize interest rates and liquidity - The Company's leverage ratio for covenant purposes was 3.3x as of September 30, 2025, with $3.6 billion of corporate debt outstanding[9] - During Q3 2025, the company issued $500 million secured notes at 6.125% to redeem $350 million 6.60% secured notes due October 2025 and for other corporate purposes[10] - The company closed two $300 million term securitization transactions for timeshare receivables, with weighted average coupons of 5.10% and 4.78% respectively, and 98% advance rates[11] Cash Flow For the nine months ended September 30, 2025, net cash provided by operating activities and Adjusted free cash flow significantly increased compared to the prior year, driven by improved working capital management Cash Flow (Nine Months Ended Sep 30, 2025 vs. 2024): | Metric | 2025 | 2024 | | :-------------------------------- | :----- | :----- | | Net cash provided by operating activities | $516 million | $366 million | | Adjusted free cash flow | $326 million | $266 million | - The increase in Adjusted free cash flow was primarily due to a decrease in cash utilization for working capital items, partially offset by higher net payments on non-recourse debt[12] Shareholder Returns Travel + Leisure Co. continued its commitment to shareholder returns in Q3 2025 through significant share repurchases and consistent dividend payments - During Q3 2025, the company repurchased 1.2 million shares of common stock for $70 million at a weighted average price of $59.90 per share[13] - As of September 30, 2025, $253 million remained in the share repurchase authorization[13] - The company paid $36 million ($0.56 per share) in cash dividends in Q3 2025 and management will recommend a fourth quarter dividend of $0.56 per share[14] Outlook This section provides the company's updated full-year 2025 guidance, reflecting management's expectations for future financial performance and key operational metrics Full Year 2025 Guidance Update Travel + Leisure Co. updated its full-year 2025 guidance, increasing the mid-point for Adjusted EBITDA and raising the lower end of the range for Gross VOI sales and VPG, reflecting positive performance expectations Full Year 2025 Guidance Update: | Metric | New Outlook | Prior Outlook | | :---------------- | :---------------------- | :---------------------- | | Adjusted EBITDA | $965 million to $985 million | $955 million to $985 million | | Gross VOI sales | $2.45 billion to $2.50 billion | $2.4 billion to $2.5 billion | | VPG | $3,250 to $3,275 | $3,200 to $3,250 | - The guidance is presented on a non-GAAP basis due to uncertainties in reconciling forward-looking non-GAAP measures to GAAP without unreasonable effort[15] Company Information and Disclosures This section provides essential company information, including conference call details, non-GAAP measure explanations, company overview, forward-looking statements, and contact information Conference Call Information Details for the investor conference call to discuss Q3 2025 results and outlook are provided, including access methods and webcast archive availability - A conference call for investors was scheduled for October 22, 2025, at 8:00 a.m. ET, accessible via webcast at travelandleisureco.com/investors or by dialing 877-733-4794[17] - An archive of the webcast will be available on the company's website for 90 days[17] Presentation of Financial Information (Non-GAAP Measures) The company utilizes non-GAAP financial measures to assess performance and provide investors with additional tools for understanding ongoing operating performance, with full reconciliations provided in the financial tables - Non-GAAP measures like Adjusted EBITDA and Adjusted diluted EPS are used to assess performance, allocate resources, and provide relevant period-over-period comparisons[18] - These measures are intended to supplement GAAP results by adjusting for items that do not necessarily reflect ongoing performance[18] - Full reconciliations of non-GAAP financial measures to the most directly comparable GAAP measures are included in the financial tables section of the press release[18] About Travel + Leisure Co. Travel + Leisure Co. is a leading leisure travel company, providing millions of vacations globally through a diverse portfolio of vacation ownership, travel club, and lifestyle travel brands - Travel + Leisure Co. (NYSE:TNL) is a leading leisure travel company, providing over six million vacations annually[20] - The company operates a portfolio of vacation ownership, travel club, and lifestyle travel brands[20] - With nearly 19,000 associates, its mission is to 'put the world on vacation'[20] Forward-Looking Statements This section contains standard disclaimers regarding forward-looking statements, highlighting that actual results may differ materially due to various risks and uncertainties outlined in SEC filings - The press release includes forward-looking statements, which are not historical facts and are subject to risks and uncertainties[21] - Factors that might cause actual results to differ materially include competition, economic conditions, travel restrictions, operating costs, and ability to access capital markets, among others[21] - Readers are cautioned not to place undue reliance on these statements, which reflect management's opinion only as of the date made[21] Contacts Contact information for investor relations and media inquiries is provided - Investor inquiries can be directed to IR@travelandleisure.com[22] - Media inquiries can be directed to Media@travelandleisure.com[22] Condensed Consolidated Financial Statements (Unaudited) This section presents the unaudited condensed consolidated statements of income, balance sheets, and cash flows for the specified periods Statements of Income The unaudited condensed consolidated statements of income show the company's revenues, expenses, and net income for the three and nine months ended September 30, 2025, and 2024 Condensed Consolidated Statements of Income (Unaudited) (Three Months Ended Sep 30): | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net Revenues | $1,044 million | $993 million | | Total Expenses | $830 million | $804 million | | Operating Income | $214 million | $189 million | | Income Before Income Taxes | $158 million | $130 million | | Net Income Attributable to Shareholders | $111 million | $97 million | | Diluted Earnings Per Share | $1.67 | $1.39 | Condensed Consolidated Statements of Income (Unaudited) (Nine Months Ended Sep 30): | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net Revenues | $2,996 million | $2,893 million | | Total Expenses | $2,420 million | $2,366 million | | Operating Income | $576 million | $527 million | | Income Before Income Taxes | $410 million | $356 million | | Net Income Attributable to Shareholders | $291 million | $292 million | | Diluted Earnings Per Share | $4.35 | $4.11 | Balance Sheets The unaudited condensed consolidated balance sheets provide a snapshot of the company's assets, liabilities, and stockholders' equity as of September 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheets (Unaudited) (as of Sep 30, 2025 vs. Dec 31, 2024): | Metric | Sep 30, 2025 | Dec 31, 2024 | | :--------------------------------- | :----------- | :----------- | | Total Assets | $6,892 million | $6,735 million | | Total Liabilities | $7,713 million | $7,615 million | | Total Stockholders' (Deficit) | $(821) million | $(881) million | | Cash and cash equivalents | $240 million | $167 million | | Vacation ownership contract receivables, net | $2,592 million | $2,619 million | | Debt | $3,554 million | $3,468 million | Statements of Cash Flows The unaudited condensed consolidated statements of cash flows detail the cash generated from or used in operating, investing, and financing activities for the nine months ended September 30, 2025, and 2024 Condensed Consolidated Statements of Cash Flows (Unaudited) (Nine Months Ended Sep 30): | Metric | 2025 | 2024 | | :----------------------------------- | :----- | :----- | | Net cash provided by operating activities | $516 million | $366 million | | Net cash used in investing activities | $(78) million | $(101) million | | Net cash used in financing activities | $(360) million | $(374) million | | Net change in cash, cash equivalents and restricted cash | $85 million | $(109) million | | Cash and cash equivalents (end of period) | $240 million | $194 million | - Operating activities provided significantly more cash in 2025 ($516 million) compared to 2024 ($366 million)[28] Summary Data Sheet This section provides a consolidated overview of key financial and operational metrics, broken down by segment and detailed for Vacation Ownership and Travel and Membership Consolidated Results The consolidated results highlight key financial metrics for Travel + Leisure Co., showing year-over-year growth in net income, diluted EPS, and Adjusted EBITDA for both the three and nine-month periods Consolidated Results (Q3 2025 vs. Q3 2024): | Metric | 2025 | 2024 | Change | | :--------------------------------- | :----- | :----- | :----- | | Net income attributable to TNL shareholders | $111 million | $97 million | 14% | | Diluted earnings per share | $1.67 | $1.39 | 20% | | Adjusted EBITDA | $266 million | $242 million | 10% | | Adjusted diluted earnings per share | $1.80 | $1.57 | 15% | Consolidated Results (Nine Months Ended Sep 30, 2025 vs. 2024): | Metric | 2025 | 2024 | Change | | :--------------------------------- | :----- | :----- | :----- | | Net income attributable to TNL shareholders | $291 million | $292 million | —% | | Diluted earnings per share | $4.35 | $4.11 | 6% | | Adjusted EBITDA | $718 million | $677 million | 6% | | Adjusted diluted earnings per share | $4.55 | $4.04 | 13% | Segment Results This section provides a breakdown of net revenues and Adjusted EBITDA by segment, illustrating the performance contributions of Vacation Ownership and Travel and Membership Segment Net Revenues (Q3 2025 vs. Q3 2024): | Segment | 2025 | 2024 | Change | | :------------------ | :----- | :----- | :----- | | Vacation Ownership | $876 million | $825 million | 6% | | Travel and Membership | $169 million | $168 million | 1% | | Total | $1,044 million | $993 million | 5% | Segment Adjusted EBITDA (Q3 2025 vs. Q3 2024): | Segment | 2025 | 2024 | Change | | :------------------ | :----- | :----- | :----- | | Vacation Ownership | $231 million | $202 million | 14% | | Travel and Membership | $58 million | $62 million | (6)% | | Total Adjusted EBITDA | $266 million | $242 million | 10% | - Vacation Ownership Adjusted EBITDA margin increased from 24.5% to 26.4% year-over-year in Q3[30] Vacation Ownership Detailed Metrics Detailed operational metrics for the Vacation Ownership segment show strong growth in sales, tours, and VPG for both the three and nine-month periods Vacation Ownership Key Metrics (Q3 2025 vs. Q3 2024): | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net VOI sales | $494 million | $455 million | 9% | | Gross VOI sales | $682 million | $606 million | 13% | | Tours (in thousands) | 200 | 195 | 2% | | VPG (in dollars) | $3,304 | $3,012 | 10% | Vacation Ownership Key Metrics (Nine Months Ended Sep 30, 2025 vs. 2024): | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Net VOI sales | $1,352 million | $1,265 million | 7% | | Gross VOI sales | $1,848 million | $1,702 million | 9% | | Tours (in thousands) | 550 | 542 | 2% | | VPG (in dollars) | $3,259 | $3,033 | 7% | - Fee-for-Service sales saw a significant increase of 62% in Q3 2025 to $42 million[33] Travel and Membership Detailed Metrics Operational metrics for the Travel and Membership segment show a decrease in exchange members but an increase in overall transactions, with a slight decline in revenue per transaction Travel and Membership Key Metrics (Q3 2025 vs. Q3 2024): | Metric | 2025 | 2024 | Change | | :-------------------------------- | :----- | :----- | :----- | | Avg. number of exchange members (in thousands) | 3,322 | 3,386 | (2)% | | Transactions (in thousands) | 422 | 378 | 12% | | Revenue per transaction (in dollars) | $281 | $306 | (8)% | | Transaction revenue | $119 million | $116 million | 3% | - Exchange transaction revenue decreased by 4% in Q3 2025, while Travel Club transaction revenue increased by 15%[33] - Subscription revenue decreased by 2% in Q3 2025[33] Non-GAAP Reconciliations This section provides detailed reconciliations of GAAP financial measures to their corresponding non-GAAP counterparts, including Adjusted EBITDA and Adjusted Free Cash Flow Net Income to Adjusted Net Income to Adjusted EBITDA This section provides detailed reconciliations of GAAP net income to Adjusted Net Income and Adjusted EBITDA, outlining specific adjustments made for non-recurring or non-operational items for both quarterly and year-to-date periods Reconciliation of Net Income to Adjusted EBITDA (Q3 2025 vs. Q3 2024): | Metric | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net income attributable to TNL shareholders | $111 million | $97 million | | Adjusted net income | $119 million | $110 million | | Adjusted EBITDA | $266 million | $242 million | Reconciliation of Net Income to Adjusted EBITDA (Nine Months Ended Sep 30, 2025 vs. 2024): | Metric | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net income attributable to TNL shareholders | $291 million | $292 million | | Adjusted net income | $304 million | $287 million | | Adjusted EBITDA | $718 million | $677 million | - Key adjustments include asset impairments, amortization of acquired intangibles, debt modification costs, restructuring, and stock-based compensation expense[36][37] Net Cash Provided by Operating Activities to Adjusted Free Cash Flow This reconciliation details the adjustments from GAAP net cash provided by operating activities to Adjusted Free Cash Flow for the nine months ended September 30, 2025, and 2024 Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (Nine Months Ended Sep 30): | Metric | 2025 | 2024 | | :--------------------------------- | :----- | :----- | | Net cash provided by operating activities | $516 million | $366 million | | Property and equipment additions | $(85) million | $(58) million | | Sum of proceeds and principal payments of non-recourse vacation ownership debt | $(106) million | $(43) million | | Free cash flow | $325 million | $265 million | | Adjusted free cash flow | $326 million | $266 million | - Adjusted free cash flow increased by $60 million year-over-year for the nine-month period[39] Definitions of Non-GAAP Measures This section provides comprehensive definitions and explanations for the various non-GAAP financial measures used by the company to evaluate performance Key Non-GAAP Financial Measures This section provides comprehensive definitions for the various non-GAAP financial measures used by Travel + Leisure Co., explaining their calculation and purpose in evaluating the company's ongoing operating performance - Adjusted Diluted Earnings per Share: Defined as Adjusted net income divided by the diluted weighted average number of common shares, used to evaluate ongoing operating performance[40] - Adjusted EBITDA: Defined as net income from continuing operations before depreciation, amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues), and income taxes, with further adjustments for stock-based compensation, restructuring, legacy items, transaction costs, asset impairments, and unusual/infrequent items[41] - Adjusted Free Cash Flow: Defined as net cash provided by operating activities from continuing operations less property and equipment additions, plus proceeds and principal payments of non-recourse vacation ownership debt, with additional adjustments for transaction costs and separation adjustments[43] - Gross Vacation Ownership Interest Sales: Represents sales of vacation ownership interests (VOIs), including sales under the fee-for-service program before the effect of loan loss provisions, providing an understanding of the sales volume of this business[49][50] - 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[52]