Travel + Leisure Co. Reports Third Quarter 2021 Results and Increases Full Year 2021 Adjusted EBITDA Guidance

Rhea-AI Summary

Travel + Leisure Co. (NYSE:TNL) reported strong third quarter 2021 results, achieving a net income of $101 million, or $1.15 per diluted share, on revenues of $839 million. The company's adjusted EBITDA was $228 million, with adjusted diluted EPS of $1.19. Cash flow metrics were robust, with $435 million from operations and adjusted free cash flow of $128 million for the first nine months. The company raised its full-year adjusted EBITDA guidance to $740-$750 million and diluted EPS guidance to $3.35-$3.43. A fourth-quarter dividend of $0.35 per share is recommended, following a $1 billion credit facility renewal and a $350 million securitization.

Positive

• Net income of $101 million for Q3 2021, reflecting strong performance.
• Raised full-year adjusted EBITDA guidance to $740-$750 million.
• Increased full-year adjusted diluted EPS guidance to $3.35-$3.43.
• Recommended a Q4 dividend increase to $0.35 per share.
• Achieved net cash from operating activities of $435 million.

Negative

• None.

ORLANDO, Fla.--(BUSINESS WIRE)-- Travel + Leisure Co. (NYSE:TNL), the world’s leading membership and leisure travel company, today reported third quarter 2021 financial results for the three months ended September 30, 2021. Highlights and outlook include:

• Net income from continuing operations of $101 million ($1.15 diluted earnings per share) on net revenue of $839 million

• Adjusted EBITDA of $228 million and adjusted diluted earnings per share of $1.19 ⁽¹⁾

• Net cash provided by operating activities of $435 million and adjusted free cash flow of $128 million for the first nine months of 2021

• Increased full year adjusted EBITDA guidance to a range of $740 million to $750 million and increased full year adjusted diluted EPS guidance to a range of $3.35 to $3.43

• Management will recommend increasing the fourth quarter dividend to $0.35 per share for approval by the Board of Directors

• On October 22, 2021, renewed $1 billion revolving credit facility and exited the amendment to the credit agreement

• Executed $350 million term securitization on October 26, 2021

“Our cornerstone brands continued to demonstrate their strength in the third quarter as our businesses delivered adjusted EBITDA at or above our expectations,” said Michael D. Brown, president and CEO of Travel + Leisure Co. “Robust sales volume per guest, combined with a continued focus on cost control, allowed us to deliver on the bottom line with strong margins."

“As we said last month, the desire for leisure travel has never been stronger. Bookings at our vacation ownership resorts for the remainder of the year are ahead of 2019 levels, clearly demonstrating that people are planning to get back on vacation, which will benefit all of our businesses as we close out the year.”

(1) This press release includes adjusted EBITDA, adjusted diluted EPS, adjusted free cash flow, gross VOI sales and adjusted net income/(loss), which are metrics that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. (“GAAP”). See "Presentation of Financial Information" and the tables for the definitions and reconciliations of these non-GAAP measures to the most directly comparable GAAP measures. Forward-looking non-GAAP measures are presented in this press release only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation is available without unreasonable effort.

Business Segment Results

The results of operations during the third quarter of 2021 and 2020 include impacts related to the COVID-19 global pandemic. Refer to Table 8 for a breakout of COVID-19 related impacts.

Vacation Ownership
$ in millions	Q3 2021		Q3 2020		% change
Revenue	$660		$475		39	%
Adjusted EBITDA	$177		$93		90	%

Vacation Ownership revenue increased 39% to $660 million in the third quarter of 2021 compared to the same period in the prior year. Gross vacation ownership interest (VOI) sales were $440 million compared to $256 million in the prior year and tours were 129,000 during the quarter compared to 80,000 in the same period last year. Volume Per Guest (VPG) was $3,233 due to strong close rates and higher quality tours.

Third quarter adjusted EBITDA was $177 million compared to $93 million in the prior year period. The increase was driven by higher Gross VOI sales due to the ongoing recovery of our operations from COVID-19 and cost savings initiated in the prior year, partially offset by lower net interest income as a result of a lower average contract receivable portfolio.

Third quarter 2021 results include an adjustment to the COVID-19 related allowance for loan losses, resulting in a $21 million increase to revenue and an $8 million increase to cost of vacation ownership interests, and yielding a net positive impact to Adjusted EBITDA of $13 million.

Travel and Membership
$ in millions	Q3 2021		Q3 2020		% change
Revenue	$185		$145		28	%
Adjusted EBITDA	$68		$62		10	%

Travel and Membership revenue increased 28% to $185 million in the third quarter driven by a 32% increase in transactions. This reflects the third consecutive quarter of year over year transaction improvement as we continue to see the business recover from COVID-19.

Third quarter Adjusted EBITDA increased 10% to $68 million, driven by revenue improvement partially offset by higher operational support costs.

Balance Sheet and Liquidity

Net Debt — As of September 30, 2021, the Company's leverage ratio for covenant purposes was 4.2x. The Company had $3.4 billion of corporate debt outstanding as of September 30, 2021, which excluded $2.0 billion of non-recourse debt related to its securitized notes receivables portfolio. Additionally, the Company had cash and cash equivalents of $346 million. At the end of the third quarter, the Company had $1.3 billion of liquidity in cash and cash equivalents and revolving credit facility availability.

Subsequent to the end of the quarter, the Company renewed its $1 billion revolving credit facility and extended the term through October 2026. In addition, this renewal terminated the relief period and restrictions regarding share repurchases, dividends and acquisitions under the first amendment.

Timeshare Receivables Financing — Subsequent to the end of the quarter, the Company closed on a $350 million term securitization transaction with a weighted average coupon of 1.82% and 98% advance rate.

Cash Flow — For the nine months ended September 30, 2021, net cash provided by operating activities was $435 million, compared to $224 million in the prior year period. Adjusted free cash flow was $128 million for the nine months ended September 30, 2021 compared to $120 million in the same period of 2020.

Dividend — The Company paid $26 million ($0.30 per share) in cash dividends on September 30, 2021 to shareholders of record as of September 15, 2021. Management will recommend a fourth quarter dividend of $0.35 per share for approval by the Company’s Board of Directors in November 2021.

Outlook

The Company is updating its guidance regarding expectations for the 2021 full year:

• Adjusted EBITDA of $740 million to $750 million from $725 million to $735 million
• Adjusted diluted EPS of $3.35 to $3.43 from $3.24 to $3.30
• Gross VOI sales of $1.45 billion to $1.5 billion from $1.4 billion to $1.5 billion
• Tours of 440,000 to 450,000
• VPG of approximately $3,000

This guidance is presented only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future.

Conference Call Information

Travel + Leisure Co. will hold a conference call with investors to discuss the Company’s results and outlook today at 8:30 a.m. ET. Participants may listen to a simultaneous webcast of the conference call, which may be accessed through the Company's website at investor.travelandleisureco.com, or by dialing 866-342-8591, passcode TNL, 10 minutes before the scheduled start time. For those unable to listen to the live broadcast, an archive of the webcast will be available on the Company's website for 90 days beginning at 12:00 p.m. ET today. Additionally, a telephone replay will be available for four days beginning at 12:00 p.m. ET today at 800-695-1564.

Presentation of Financial Information

Financial information discussed in this press release includes non-GAAP measures such as adjusted EBITDA, adjusted EBITDA margin, adjusted diluted EPS, adjusted free cash flow, gross VOI sales, and adjusted net income/(loss), which include or exclude certain items, as well as non-GAAP guidance. The Company utilizes these non-GAAP measures, defined in Table 9, on a regular basis to assess performance of its reportable segments and allocate resources. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors when considered with GAAP measures as an additional tool for further understanding and assessing the Company’s ongoing operating performance by adjusting for items which in our view do not necessarily reflect ongoing performance. Management also internally uses these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. Exclusion of items in the Company’s non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. Full reconciliations of historical non-GAAP financial measures to the most directly comparable GAAP financial measures for the reported periods appear in the financial tables section of the press release. See definitions on Table 9 for an explanation of our non-GAAP measures.

About Travel + Leisure Co.

Travel + Leisure Co. is the world’s leading membership and leisure travel company, with nearly 20 travel brands across its resort, travel club, and lifestyle portfolio. The company provides outstanding vacation experiences and travel inspiration to millions of owners, members, and subscribers every year through its products and services: Wyndham Destinations, the largest vacation ownership company with more than 245 vacation club resort locations across the globe; Panorama, the world’s foremost membership travel business that includes the largest vacation exchange company, industry-leading travel technology, and subscription travel brands; and Travel + Leisure Group, featuring top travel content, travel services including the brand’s eponymous travel club, and branded consumer products. At Travel + Leisure Co., our global team of associates brings hospitality to millions each year, turning vacation inspiration into exceptional travel experiences. We put the world on vacation. Learn more at travelandleisureco.com.

Forward-Looking Statements

This press release includes “forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may,” “will,” “expects,” “should,” “believes,” “plans,” “anticipates,” “estimates,” “predicts,” “potential,” “continue,” “future” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Travel + Leisure Co. and its subsidiaries (“Travel + Leisure Co.” or “we”) to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, uncertainty with respect to our ability to realize the benefits of the Travel + Leisure brand acquisition; the scope and duration of the novel coronavirus global pandemic (“COVID-19”), any resurgences and the pace of recovery; the timing of the widespread distribution and use of an effective vaccine or treatment for COVID-19; the potential impact of governmental, business and individuals’ actions in response to the COVID-19 pandemic and our related contingency plans, including reductions in investment in our business, vacation ownership interest sales and tour flow, and consumer demand and liquidity; our ability to comply with financial and restrictive covenants under our indebtedness and our ability to access capital on reasonable terms, at a reasonable cost or at all; our ability and the ability of Wyndham Hotels & Resorts, Inc. (“Wyndham Hotels”) to maintain credit ratings; general economic conditions and unemployment rates, the performance of the financial and credit markets; the competition in and the economic environment for the leisure travel industry; risks associated with employees working remotely or operating with a reduced workforce; the impact of war, terrorist activity, political strife, severe weather events and other natural disasters, and pandemics (including COVID-19) or threats of pandemics; operating risks associated with the Vacation Ownership and Travel and Membership segments; uncertainties related to strategic transactions, including the spin-off of our hotels business, Wyndham Hotels, and any potential impact on our relationships with our customers, suppliers, employees and others with whom we have relationships, and possible disruption to our operations; our ability to execute on our strategy; the timing and amount of future dividends and share repurchases, if any, and those other factors disclosed as risks under “Risk Factors” in documents we have filed with the SEC, including in Part I, Item 1A. of our Annual Report on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC on February 24, 2021. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, we undertake no obligation to review or update these forward-looking statements to reflect events or circumstances as they occur.

Travel + Leisure Co.
Table of Contents

Table Number

1. Condensed Consolidated Statements of Income/(Loss) (Unaudited)
2. Summary Data Sheet
3. Operating Statistics
4. Revenue by Reportable Segment
5. Non-GAAP Measure: Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) to Adjusted EBITDA
6. Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales
7. Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow
8. COVID-19 Impacts
9. Definitions

    

									Table 1
Travel + Leisure Co. Condensed Consolidated Statements of Income/(Loss) (Unaudited) (in millions, except per share amounts)
	Three Months Ended								Nine Months Ended
	September 30,								September 30,
	2021				2020				2021				2020
Net revenues
Service and membership fees	$	378			$	291			$	1,114			$	845
Net VOI sales	344				196				810				273
Consumer financing	103				115				304				360
Other	14				12				36				37
Net revenues	839				614				2,264				1,515
Expenses
Operating	352				263				992				861
Cost/(recovery) of vacation ownership interests	43				22				105				(26		)
Consumer financing interest	19				26				63				76
General and administrative	106				101				325				295
Marketing	101				84				261				247
Depreciation and amortization	31				32				93				94
COVID-19 related costs	1				14				3				81
Asset impairments	—				6				—				50
Restructuring	—				2				(1		)		27
Total expenses	653				550				1,841				1,705
Operating income/(loss)	186				64				423				(190		)
Other (income), net	—				(5		)		(2		)		(11		)
Interest expense	47				52				147				138
Interest (income)	(1		)		(2		)		(1		)		(5		)
Income/(loss) before income taxes	140				19				279				(312		)
Provision/(benefit) for income taxes	39				(21		)		76				(54		)
Net income/(loss) from continuing operations	101				40				203				(258		)
Loss on disposal of discontinued business, net of income taxes	—				—				(2		)		—
Net income/(loss) attributable to TNL shareholders	$	101			$	40			$	201			$	(258	)
Basic earnings/(loss) per share
Continuing operations	$	1.16			$	0.47			$	2.35			$	(3.00	)
Discontinued operations	—				—				(0.02		)		—
	$	1.16			$	0.47			$	2.33			$	(3.00	)
Diluted earnings/(loss) per share
Continuing operations	$	1.15			$	0.47			$	2.33			$	(3.00	)
Discontinued operations	—				—				(0.03		)		—
	$	1.15			$	0.47			$	2.30			$	(3.00	)
Weighted average shares outstanding
Basic	86.6				85.9				86.5				86.1
Diluted	87.4				86.1				87.3				86.1

												Table 2
Travel + Leisure Co. Summary Data Sheet (in millions, except per share amounts, unless otherwise indicated)
	Three Months Ended September 30,											Nine Months Ended September 30,
	2021				2020				Change			2021				2020				Change
Consolidated Results
Net income/(loss) attributable to TNL shareholders	$	101			$	40			153	%		$	201			$	(258	)		178	%
Diluted earnings/(loss) per share	$	1.15			$	0.47			145	%		$	2.30			$	(3.00	)		177	%
Net income/(loss) from continuing operations	$	101			$	40			153	%		$	203			$	(258	)		179	%
Diluted earnings/(loss) per share from continuing operations	$	1.15			$	0.47			145	%		$	2.33			$	(3.00	)		178	%
Net income/(loss) margin	12.0		%		6.5		%					8.9		%		(17.0		)%
Adjusted Earnings/(Loss)
Adjusted EBITDA	$	228			$	139			64	%		$	550			$	111			395	%
Adjusted net income/(loss)	$	104			$	71			46	%		$	214			$	(108	)		298	%
Adjusted diluted earnings/(loss) per share	$	1.19			$	0.83			43	%		$	2.46			$	(1.26	)		295	%
Segment Results
Net Revenues
Vacation Ownership	$	660			$	475			39	%		$	1,708			$	1,116			53	%
Travel and Membership	185				145				28	%		573				411				39	%
Corporate and other	(6		)		(6		)					(17		)		(12		)
Total	$	839			$	614			37	%		$	2,264			$	1,515			49	%
Adjusted EBITDA
Vacation Ownership	$	177			$	93			90	%		$	377			$	6			NM
Travel and Membership	68				62				10	%		218				142				54	%
Segment Adjusted EBITDA	245				155							595				148
Corporate and other	(17		)		(16		)					(45		)		(37		)
Total Adjusted EBITDA	$	228			$	139			64	%		$	550			$	111			395	%
Adjusted EBITDA margin	27.2		%		22.6		%					24.3		%		7.3		%
Key Operating Statistics
Vacation Ownership
Gross VOI sales	$	440			$	256			72	%		$	1,059			$	687			54	%
Tours (in thousands)	129				80				61	%		323				248				30	%
VPG (in dollars)	$	3,233			$	3,039			6	%		$	3,112			$	2,331			34	%
New owner sales, volume mix	30.1		%		27.6		%					29.1		%		28.1		%
New owner sales, transaction mix	29.9		%		23.8		%					29.1		%		30.5		%
Travel and Membership
Transactions (in thousands)	470				356				32	%		1,508				873				73	%
Revenue per transaction (in dollars)	$	282			$	243			16	%		$	277			$	260			7	%
Avg. number of exchange members (in thousands)	3,895				3,680				6	%		3,684				3,781				(3	)%

NM is defined as Not Meaningful.

Note: Amounts may not calculate due to rounding. See Table 9 for definitions. For a full reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, refer to Table 5 and Table 6. See "Presentation of Financial Information" and the tables for the definitions and reconciliations of these non-GAAP measures in accordance with GAAP.

In connection with the Travel + Leisure brand acquisition we updated the names and composition of our reportable segments to better align with how they are managed. We created the Travel + Leisure Group which falls under the Travel and Membership segment along with the Panorama business line. With the formation of Travel + Leisure Group, we decided that the operations of our Extra Holidays business, which focuses on direct to consumer bookings, better aligns with the operations of this new business line and therefore transitioned the management of our Extra Holidays business to the Travel and Membership segment. As such, we reclassified the results of our Extra Holidays business, which were previously reported within the Vacation Ownership segment, into the Travel and Membership segment.

Table 3
Travel + Leisure Co. Operating Statistics: Vacation Ownership
The following operating statistics are the significant drivers of the Company's revenues and therefore provide an enhanced understanding of the Company's businesses:
	Year		Q1				Q2				Q3				Q4				Full Year
Gross VOI Sales (in millions) (a)	2021		$	236			$	383			$	440			$	—			$	—
	2020		$	413			$	18			$	256			$	281			$	967
	2019		$	484			$	626			$	663			$	582			$	2,355
Tours (in thousands)	2021		76				117				129				—				—
	2020		162				6				80				85				333
	2019		192				249				269				234				945
VPG	2021		$	2,847			$	3,151			$	3,233			$	—			$	—
	2020		$	2,128			NM				$	3,039			$	2,938			$	2,486
	2019		$	2,405			$	2,425			$	2,332			$	2,373			$	2,381
Provision for Loan Losses (in millions) (b)	2021		$	(38	)		$	(33	)		$	(49	)		$	—			$	—
	2020		$	(315	)		$	(30	)		$	(45	)		$	(25	)		$	(415	)
	2019		$	(109	)		$	(129	)		$	(135	)		$	(106	)		$	(479	)
Provision for Loan Loss as a Percentage of Gross VOI Sales, net of Fee-for-Service sales	2021		18.1		%		10.1		%(c)		12.4		%(d)		—		%		—		%
	2020		NM				NM				18.8		%		9.5		%(e)		NM
	2019		22.5		%		21.2		%		20.3		%		18.6		%		20.6		%
Allowance for Loan Losses (in millions)	2021		$	622			$	573			$	565			$	—			$	—
	2020		$	930			$	846			$	788			$	693			$	693
	2019		$	721			$	735			$	767			$	747			$	747
Gross Vacation Ownership Contract Receivables (in millions)	2021		$	2,975			$	2,892			$	2,857			$	—			$	—
	2020		$	3,722			$	3,461			$	3,309			$	3,175			$	3,175
	2019		$	3,741			$	3,783			$	3,885			$	3,867			$	3,867
Allowance for Loan Loss as a Percentage of Gross Vacation Ownership Contract Receivables	2021		20.9		%		19.8		%		19.8		%		—		%		—		%
	2020		25.0		%		24.4		%		23.8		%		21.8		%		21.8		%
	2019		19.3		%		19.4		%		19.7		%		19.3		%		19.3		%

Note: Full year amounts and percentages may not compute due to rounding.
NM Defined as not meaningful.
(a)	Includes Gross VOI sales under the Company's fee-for-service sales. (See Table 6 for a reconciliation of Net VOI sales to Gross VOI sales).
(b)	Represents provision for estimated losses on vacation ownership contract receivables, which is recorded as contra revenue to vacation ownership interest sales on the Condensed Consolidated Statements of Income/(Loss).
(c)	The percentage was 18.0%, excluding the release of $26 million of the COVID-19 related provision during the period.
(d)	The percentage was 17.8%, excluding the release of $21 million of the COVID-19 related provision during the period.
(e)	The percentage was 17.3%, excluding the release of $20 million of the COVID-19 related provision during the period.

Table 3
(continued)
Travel + Leisure Co. Operating Statistics: Travel and Membership
The following operating statistics are the significant drivers of the Company's revenues and therefore provide an enhanced understanding of the Company's businesses: (a)
	Year		Q1				Q2				Q3				Q4				Full Year
Transactions (in thousands)
Exchange	2021		354				314				256				—				—
Non-Exchange	2021		159				210				214				—				—
Total Transactions	2021		513				524				470				—				—
Exchange	2020		260				72				214				217				762
Non-Exchange	2020		141				44				142				131				458
Total Transactions	2020		401				116				356				348				1,220
Exchange	2019		444				377				367				304				1,493
Non-Exchange	2019		52				63				138				153				405
Total Transactions	2019		496				440				505				457				1,898
Revenue per transaction (in dollars)
Exchange	2021		$	292			$	331			$	339			$	—			$	—
Non-Exchange	2021		$	182			$	231			$	214			$	—			$	—
Total Revenue per transaction	2021		$	258			$	291			$	282			$	—			$	—
Exchange	2020		$	279			$	540			$	300			$	330			$	324
Non-Exchange	2020		$	164			$	133			$	157			$	128			$	148
Total Revenue per transaction	2020		$	239			$	384			$	243			$	254			$	258
Exchange	2019		$	275			$	276			$	276			$	307			$	282
Non-Exchange	2019		$	216			$	185			$	172			$	165			$	177
Total Revenue per transaction	2019		$	269			$	263			$	247			$	259			$	259
Avg. Number of Exchange Members (in thousands)	2021		3,576				3,582				3,895				—				—
	2020		3,864				3,799				3,680				3,652				3,749
	2019		3,875				3,893				3,895				3,884				3,887

Note: Full year amounts may not compute due to rounding.
(a)	Includes the impact of acquisitions from the acquisition dates forward.

		Table 4
Travel + Leisure Co. Revenue by Reportable Segment (in millions)
		2021
		Q1				Q2				Q3				Q4				Full Year
Vacation Ownership
Net VOI Sales		$	172			$	294			$	344			$	—			$	—
Property Management Fees and Reimbursable Revenues		157				161				171				—				—
Consumer Financing		98				102				103				—				—
Other Revenues		22				42				42				—				—
Total Vacation Ownership		449				599				660				—				—
Travel and Membership
Transaction Revenues		132				153				133				—				—
Subscription Revenues		41				43				43				—				—
Other Revenues		10				8				9				—				—
Total Travel and Membership		183				204				185				—				—
Total Reportable Segments		$	632			$	803			$	845			$	—			$	—
		2020
		Q1				Q2				Q3				Q4				Full Year
Vacation Ownership
Net VOI Sales		$	90			$	(13	)		$	196			$	231			$	505
Property Management Fees and Reimbursable Revenues		170				122				146				145				583
Consumer Financing		127				119				115				107				467
Other Revenues		16				10				18				26				70
Total Vacation Ownership		403				238				475				509				1,625
Travel and Membership
Transaction Revenues		96				44				86				88				315
Subscription Revenues		44				33				43				40				160
Other Revenues		19				29				16				13				77
Total Travel and Membership		159				106				145				141				552
Total Reportable Segments		$	562			$	344			$	620			$	650			$	2,177
		2019
		Q1				Q2				Q3				Q4				Full Year
Vacation Ownership
Net VOI Sales		$	375			$	481			$	528			$	464			$	1,848
Property Management Fees and Reimbursable Revenues		163				162				170				176				672
Consumer Financing		125				128				132				130				515
Other Revenues		12				31				20				24				87
Total Vacation Ownership		675				802				850				794				3,122
Travel and Membership
Transaction Revenues		133				116				125				118				492
Subscription Revenues		55				54				54				53				216
Vacation Rental Revenue		38				48				60				7				153
Other Revenues		22				24				24				14				83
Total Travel and Membership		248				242				263				192				944
Total Reportable Segments		$	923			$	1,044			$	1,113			$	986			$	4,066
Note: Full year amounts may not add across due to rounding.

	Table 5
Travel + Leisure Co. Non-GAAP Measure: Reconciliation of Net Income/(Loss) to Adjusted Net Income/(Loss) to Adjusted EBITDA (in millions, except diluted per share amounts)
	Three Months Ended September 30,
	2021				EPS				Margin %			2020				EPS				Margin %
Net income attributable to TNL shareholders	$	101			$	1.15			12.0	%		$	40			$	0.47			6.5	%
Legacy items	2											1
Amortization of acquired intangibles (a)	2											2
COVID-19 related costs (b)	1											13
Exchange inventory write-off	—											10
Impairments (c)	—											6
Restructuring costs	—											2
Taxes (d)	(1		)									(3		)
Adjusted net income from continuing operations	$	104			$	1.19			12.4	%		$	71			$	0.83			11.6	%
Income taxes/(benefit) on adjusted net income	41											(18		)
Interest expense	47											52
Depreciation	29											30
Stock-based compensation expense (e)	8											6
Interest income	(1		)									(2		)
Adjusted EBITDA	$	228							27.2	%		$	139							22.6	%
Diluted Shares Outstanding	87.4											86.1

	Nine Months Ended September 30,
	2021				EPS				Margin %			2020				EPS				Margin %
Net income/(loss) attributable to TNL shareholders	$	201			$	2.30			8.9	%		$	(258	)		$	(3.00	)		(17.0	)%
Loss on disposal of discontinued business, net of income taxes	(2		)									—
Net income/(loss) from continuing operations	$	203			$	2.33			9.0	%		$	(258	)		$	(3.00	)		(17.0	)%
Amortization of acquired intangibles (a)	7											7
Legacy items	6											2
COVID-19 related costs (b)	3											51
Exchange inventory write-off	—											48
Impairments (c)	—											54
Restructuring costs	(1		)									27
Taxes (d)	(4		)									(39		)
Adjusted net income/(loss) from continuing operations	$	214			$	2.46			9.5	%		$	(108	)		$	(1.26	)		(7.1	)%
Income taxes/(benefit) on adjusted net income/(loss)	80											(15		)
Interest expense	147											138
Depreciation	86											87
Stock-based compensation expense (e)	24											14
Interest income	(1		)									(5		)
Adjusted EBITDA	$	550							24.3	%		$	111							7.3	%
Diluted Shares Outstanding	87.3											86.1

Amounts may not calculate due to rounding. The tables above reconcile certain non-GAAP financial measures to their closest GAAP measure. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors' understanding of the overall impact of such adjustments. In addition to GAAP financial measures, the Company provides adjusted net income/(loss), adjusted EBITDA, adjusted EBITDA margin, and adjusted diluted EPS to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. Non-GAAP measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP. Our presentation of adjusted measures may not be comparable to similarly-titled measures used by other companies. See "Presentation of Financial Information" and table 9 for the definitions of these non-GAAP measures.
(a)	Amortization of acquisition-related intangible assets is excluded from adjusted net income/(loss) and adjusted EBITDA.
(b)	Reflects severance and other employee costs associated with layoffs due to the COVID-19 workforce reduction offset in part by employee retention credits received in connection with the U.S. CARES Act, ARPA and similar international programs for wages paid to certain employees despite having operations suspended. This amount does not include costs associated with idle pay.
(c)	Includes $5 million of bad debt expense related to a note receivable for the nine months ended September 30, 2020, included in Operating expenses on the Condensed Consolidated Statements of Income/(Loss).
(d)	The amounts represent the tax effects on the adjustments. In addition, during the three and nine months ended September 30, 2020, the amounts are partially offset by $6 million of non-cash tax expense associated with COVID-19 related increases to valuation allowances.
(e)	All stock-based compensation is excluded from adjusted EBITDA.

Table 6
Travel + Leisure Co. Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales (in millions)
The Company believes gross VOI sales provide an enhanced understanding of the performance of its vacation ownership business because it directly measures the sales volume of this business during a given reporting period.
The following table provides a reconciliation of Net VOI sales (see Table 4) to Gross VOI sales (see Table 3):
Year
2021		Q1				Q2				Q3				Q4				Full Year
Net VOI sales		$	172			$	294			$	344			$	—			$	—
Loan loss provision		38				33				49				—				—
Gross VOI sales, net of Fee-for-Service sales		210				327				393				—				—
Fee-for-Service sales		26				56				47				—				—
Gross VOI sales		$	236			$	383			$	440			$	—			$	—
2020
Net VOI sales		$	90			$	(13	)		$	196			$	231			$	505
Loan loss provision		315				30				45				25				415
Gross VOI sales, net of Fee-for-Service sales		405				17				241				256				920
Fee-for-Service sales		8				1				15				25				47
Gross VOI sales		$	413			$	18			$	256			$	281			$	967
2019
Net VOI sales		$	375			$	481			$	528			$	464			$	1,848
Loan loss provision		109				129				135				106				479
Gross VOI sales, net of Fee-for-Service sales		484				610				663				570				2,327
Fee-for-Service sales		—				16				—				12				28
Gross VOI sales		$	484			$	626			$	663			$	582			$	2,355
Note: Amounts may not add due to rounding.

Table 7
Travel + Leisure Co. Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (in millions)
		Nine Months Ended September 30,
		2021				2020
Net cash provided by operating activities		$	435			$	224
Property and equipment additions		(40		)		(56		)
Sum of proceeds and principal payments of non-recourse vacation ownership debt		(272		)		(94		)
Free cash flow		$	123			$	74
Separation and other adjustments (a)		—				14
COVID-19 related adjustments (b)		5				32
Adjusted free cash flow (c)		$	128			$	120

(a)	Includes cash paid for separation-related activities and transaction costs for acquisitions and divestitures.
(b)	Includes cash paid for COVID-19 expenses factored into the calculation of Adjusted EBITDA.
(c)	The Company had $77 million of net cash used in investing activities and $1.2 billion of net cash used in financing activities for the nine months ended September 30, 2021, and $98 million of net cash used in investing activities and $775 million of net cash provided by financing activities for the nine months ended September 30, 2020.

Table 8
Travel + Leisure Co. COVID-19 Impacts (in millions)
The tables below present the COVID-19 related impacts to our results of operations for the three and nine months ended September 30, 2021, and the related classification on the Condensed Consolidated Statements of Income/(Loss):
Three Months Ended		Vacation Ownership				Travel and Membership				Corporate & Other				Consolidated				Non-GAAP Adjustments				Income Statement Classification
September 30, 2021
Allowance for loan losses:
Provision		$	(21	)		$	—			$	—			$	(21	)		$	—			Vacation ownership interest sales
Recoveries		8				—				—				8				—				Cost/(recovery) of vacation ownership interests
Employee compensation related and other		1				—				—				1				1				COVID-19 related costs
Total COVID-19		$	(12	)		$	—			$	—			$	(12	)		$	1

Nine Months Ended		Vacation Ownership				Travel and Membership				Corporate & Other				Consolidated				Non-GAAP Adjustments				Income Statement Classification
September 30, 2021
Allowance for loan losses:
Provision		$	(47	)		$	—			$	—			$	(47	)		$	—			Vacation ownership interest sales
Recoveries		17				—				—				17				—				Cost/(recovery) of vacation ownership interests
Employee compensation related and other		2				—				1				3				3				COVID-19 related costs
Lease related		(1		)		—				—				(1		)		(1		)		Restructuring
Total COVID-19		$	(29	)		$	—			$	1			$	(28	)		$	2

The tables below present the COVID-19 related impacts to our results of operations for the three and nine months ended September 30, 2020, and the related classification on the Condensed Consolidated Statements of Income/(Loss):
Three Months Ended		Vacation Ownership				Travel and Membership				Corporate & Other				Consolidated				Non-GAAP Adjustments				Income Statement Classification
September 30, 2020
Employee compensation related and other		$	11			$	1			$	2			$	14			$	13			COVID-19 related costs
Exchange inventory write-off		—				10				—				10				10				Operating expenses
Asset impairment		6				—				—				6				6				Asset impairments
Lease related		1				—				—				1				1				Restructuring
Total COVID-19		$	18			$	11			$	2			$	31			$	30

Nine Months Ended		Vacation Ownership				Travel and Membership				Corporate & Other				Consolidated				Non-GAAP Adjustments				Income Statement Classification
September 30, 2020
Allowance for loan losses:
Provision		$	225			$	—			$	—			$	225			$	—			Vacation ownership interest sales
Recoveries		(55		)		—				—				(55		)		—				Cost/(recovery) of vacation ownership interests
Employee compensation related and other		62				6				13				81				51				COVID-19 related costs
Asset impairment		20				34				—				54				54				Asset impairments / Operating expenses
Exchange inventory write-off		—				48				—				48				48				Operating expenses
Lease related		2				22				—				24				24				Restructuring
Total COVID-19		$	254			$	110			$	13			$	377			$	177

Definitions

Adjusted Diluted Earnings/(Loss) per Share: A non-GAAP measure, defined by the Company as Adjusted net income/(loss) from continuing operations divided by the diluted weighted average number of common shares.

Adjusted EBITDA: A non-GAAP measure, defined by the Company as net income/(loss) from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Condensed Consolidated Statements of Income. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent. Legacy items include the resolution of and adjustments to certain contingent liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels and Cendant, and the sale of the vacation rentals businesses. We believe that when considered with GAAP measures, Adjusted EBITDA is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. Adjusted EBITDA should not be considered in isolation or as a substitute for net income/(loss) or other income statement data prepared in accordance with GAAP and our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

Adjusted EBITDA Margin: A non-GAAP measure, represents Adjusted EBITDA as a percentage of revenue.

Adjusted Free Cash Flow: A non-GAAP measure, defined by the Company as net cash provided by operating activities from continuing operations less property and equipment additions (capital expenditures) plus the sum of proceeds and principal payments of non-recourse vacation ownership debt, while also adding back cash paid for transaction costs for acquisitions and divestitures, separation adjustments associated with the spin-off of Wyndham Hotels, and certain adjustments related to COVID-19. A limitation of using Adjusted free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating TNL is that Adjusted free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

Adjusted Net Income/(Loss): A non-GAAP measure, defined by the Company as net income/(loss) from continuing operations adjusted to exclude separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, amortization of acquisition-related assets, debt modification costs, impairments, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent and the tax effect of such adjustments. Legacy items include the resolution of and adjustments to certain contingent liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels and Cendant, and the sale of the vacation rentals businesses.

Average Number of Exchange Members: Represents paid members in our vacation exchange programs who are current on their annual membership dues or within the allowed grace period.

Free Cash Flow (FCF): A non-GAAP measure, defined by TNL as net cash provided by operating activities from continuing operations less property and equipment additions (capital expenditures) plus the sum of proceeds and principal payments of non-recourse vacation ownership debt. TNL believes FCF to be a useful operating performance measure to evaluate the ability of its operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, its ability to grow its business through acquisitions and equity investments, as well as its ability to return cash to shareholders through dividends and share repurchases. A limitation of using FCF versus the GAAP measure of net cash provided by operating activities as a means for evaluating TNL is that FCF does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows.

Gross Vacation Ownership Interest Sales: A non-GAAP measure, represents sales of vacation ownership interests (VOIs), including sales under the fee-for-service program before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period.

Leverage Ratio: The Company calculates leverage ratio as net debt divided by Adjusted EBITDA as defined in the credit agreement.

Net Debt: Net debt equals total debt outstanding, less non-recourse vacation ownership debt and cash and cash equivalents.

New owner sales, volume mix: Represents VOI sales (tour generated plus telephonic) to first time buyers as a percentage of total VOI sales.

New owner sales, transactions mix: Represents the number of first time buyer transactions as a percentage of the total number of VOIs sold during the period.

Tours: Represents the number of tours taken by guests in our efforts to sell VOIs.

Travel and Membership Revenue per Transaction: Represents transactional revenue divided by transactions, provided in two categories; Exchange, which is primarily RCI, and non-Exchange.

Travel and Membership Transactions: Represents the number of vacation bookings recognized as revenue during the period, net of cancellations, provided in two categories; Exchange, which is primarily RCI, and non-Exchange.

Volume Per Guest (VPG): Represents Gross VOI sales (excluding tele-sales upgrades, which are non-tour upgrade sales) divided by the number of tours. The Company has excluded non-tour upgrade sales in the calculation of VPG because non-tour upgrade sales are generated by a different marketing channel.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211027005279/en/

Investors:

Christopher Agnew

Senior Vice President, FP&A and Investor Relations

(407) 626-4050

Christopher.Agnew@travelandleisure.com

Media:

Steven Goldsmith

Corporate Communications

(407) 626-5882

Steven.Goldsmith@travelandleisure.com

Source: Travel + Leisure Co.

FAQ

What were the financial results for Travel + Leisure Co. in Q3 2021?

Travel + Leisure Co. reported a net income of $101 million and revenues of $839 million for Q3 2021.

What is the adjusted EBITDA for Travel + Leisure Co. in Q3 2021?

The adjusted EBITDA for Q3 2021 is reported at $228 million.

What is the adjusted diluted EPS guidance for Travel + Leisure Co. for the full year?

The adjusted diluted EPS guidance for the full year is increased to a range of $3.35 to $3.43.

What dividend increase is recommended by Travel + Leisure Co. for Q4 2021?

The company recommends increasing the Q4 dividend to $0.35 per share.

What cash flow metrics did Travel + Leisure Co. achieve in 2021?

The company achieved net cash provided by operating activities of $435 million and adjusted free cash flow of $128 million.