Travel + Leisure(US:TNL)2023-04-26 16:17Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of $184 million, an 8% increase over the prior year, and adjusted earnings per share (EPS) of $0.89, a 29% improvement over Q1 2022 [4][10] - The company repurchased 3% of its shares outstanding in the first quarter, reflecting confidence in 2023 free cash flow [4][10] Business Line Data and Key Metrics Changes - The Vacation Ownership segment reported revenue of $685 million and adjusted EBITDA of $131 million, increases of 12% and 25% respectively over the first quarter of 2022 [11] - The Travel and Membership segment generated revenue of $200 million, flat compared to the prior year, with adjusted EBITDA decreasing to $71 million from $82 million due to higher costs [11] Market Data and Key Metrics Changes - Forward bookings for owners are pacing above 2019 levels, indicating strong demand in major destination markets such as Orlando, Las Vegas, and Hawaii [5][7] - Length of stay remains 6% above 2019 levels, reflecting ongoing consumer demand [5] Company Strategy and Development Direction - The company is focused on maintaining a resilient business model with $19 billion of embedded revenue potential over the next 10 years from the existing owner base [8] - The company raised its adjusted EBITDA guidance for the full year to a range of $925 million to $945 million, while reiterating expectations for gross VOI sales between $2.1 billion and $2.2 billion [9][10] Management's Comments on Operating Environment and Future Outlook - Management noted that the trends observed in April returned to pre-March levels, indicating that the dip in performance was temporary [16][28] - The company remains optimistic about summer leisure travel, with expectations for continued growth in new owner business [27][28] Other Important Information - The company reported a use of cash of $8 million in adjusted free cash flow for the quarter, compared to a source of cash of $146 million in the same period of 2022 [12] - The company expects to maintain a free cash flow conversion rate of 55% to 60% in 2023 [13] Q&A Session Summary Question: Can you discuss the monthly cadence within the quarter and what you are seeing in April regarding close rates and VPG? - Management observed that metrics were strong in January and February, with a temporary dip in March due to market volatility, but trends returned to normal in April [16] Question: What are the expectations for Travel and Membership growth in the second half of the year? - Management expects growth in the second half, driven by new owners entering the timeshare space [17] Question: Are there differences in performance by geographic region? - Management noted some impact on West Coast operations in late March, but performance metrics returned to normal in April [22] Question: What is the strategy for the exchange business moving forward? - Management acknowledged the long-term headwinds in the exchange space but emphasized maintaining market share and revenue per transaction [24] Question: How is summer leisure travel shaping up year-over-year? - Management is optimistic about summer travel, with strong forward bookings and a positive outlook based on April trends [27][28] Question: Can you provide insight into consumer financing trends? - Management indicated that the propensity to finance is strategic, with improvements in portfolio quality leading to higher prepayment rates [48] Question: What is the refinancing strategy given upcoming maturities? - Management expressed confidence in their ability to refinance upcoming debt, with a strong capital structure in place [50][51]