TNL - Earnings call transcript Q4 2021

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Operator

Off again. [Operator Instructions]. Good morning and welcome to the Fourth-Quarter end FY2021 Earnings Conference Call for Travel and Leisure Co, formerly Wyndham Destinations. After the speakers’ remarks, there will be a question-and-answer period. [Operator Instructions].

and conference ladies, recorded. is reminder, a gentlemen call this being As Instructions. [Operator Thank you. And the to Chris like I now would turn go Agnew, ahead. call please to over

Christopher Agnew

Thank good Ashley. morning. you, And

cause of that we'd made publicly The can to forward-looking begin, today our will Actual and only will as differ the Financial quarter indicated filings fourth could and from today. overview results today the results full could Brown, today's at forward-looking Chief update factors provide our find we measures Chief revise Before statements. website quarter, statements. financial the remind effective then balance you our Executive And will an of greater travelandleisureco.com. the no our like SEC available Officer, discussed include non-GAAP those to results. in This We morning, materially are are our Officer, on Mike position. President obligation discussions differ on call statements. forward-looking or our these that investor. our discussed actual a provide and Michael to in undertake in you and Hug, of earnings reconciliation And the year in press release liquidity detail sheet, statements

remarks, I'm look your pleased Following over to these Michael. that, we forward to With call questions. responding to to turn the

Michael Brown

and reported $X.XX. million our announce and earnings fourth-quarter EPS to call. adjusted morning adjusted $XXX we XXXX. welcome quarter another strong to of Chris. are to morning, EBITDA Good pleased Thank close you, This out Xf We

year, million free fourth and adjusted high shareholders gross of cash end in sales which At and Destinations, vacation we $XXX at the In was expectations, testament XXXX. strong XXXX, $XXX ownership best-in-class share Adjusted the ahead higher XXXX. at we with to sales we higher was our quarter. focus year, guidance The and marketing flow increase $X.XX. fourth tours quarter our repurchases resumed $XXX finished teams XX% were the range above a reflects quality the adjusted VPGs. year of VPG and full dividends, than returned our expectations, For the XX% the for is to was was quarter, million, a with million Wyndham of Including continued on in EBITDA finished our fourth tours. VPG and strength in and the from EPS

highlight represented our X Millennials. Resorts, our and year, the metrics portfolio of EBITDA yielding receivable perform, reserve, adjusted transactions to of in from quarter, transactions sales with year. released of Thread, positive Wyndham I a basis to in generation well. Gen continues new fourth and we XX% lead $XX XX% Blue relationship performed Our impact and an Thread of both to sales XXXX. key is these term XX% owner over additional a for than new net few with like to prior quarter total the million. the fourth Blue would XX% full and which COVID-XX owners, the through were points higher also Hotels for XXX

offset continues by resilient respectively largest travel be to each growth and restrictions. year-over-year which to prior Travel Exchange and helping the U.S. XX% very increased cross-border This make quarter. year. fourth-quarter XXXX, transactions challenged segment, transactions recovered throughout with with international transaction in XX% over Turning up Membership XXXX travel, steadily proving full-year demand domestic the and segment to the component pandemic-related

respectively. has Panorama North date, we quarter XX combined X XX% revenue market in exchange America. partners. of Transaction total the To XX% the full in Now, development transactions households contracts with model Travel Solutions We by year led per and Travel and Solutions. been the growth launched in fall increased signing fourth in million Panorama addressable on focus a with XXXX closed of a have of business

Our phase. fourth the the quarter, of began we white-label clubs moving activation branded into In pipeline grow. to continues and

the in of been under X.X-million-member Travel in months, live [Indiscernible] Diego National activated. four nearly As in then an have Association its Club example, of base went at X.X% And convention November. international San

As and users. we periods, the recently, Club. several approached to to designed was promote with team spring the Travel newly Superbowl our summer the the programs travel activate Alumni for busy platform we have NAR additional marketing More NFL at launch

this a our coming years. we're of financial seeing growth results, driver in our business insignificant progress that to be reinforces tangible which Although expectation the will

the new comparative addressable laid despite equalize XX% the September, EBITDA the we Leisure Day and the To to release, strength At COVID which to Our Club. higher growth, January EBITDA Travel margin the the We able Travel earnings through trends, COVID reduction a and free to rate full launched increase January. in we EBITDA compound case started due of given consumer Net XXXX, counts. reserve booking for periods the plan clubs. businesses and in Leisure XXX these to new In XXXX. flow. accelerate Omicron rising out overall is put XXXX benefit adjusted brand reflecting size we our increase forward business XX% in next strategic recent RCI, near-term direct-to-consumer and growth laid net with were fourth-quarter market, cash behavior subscription-based portfolio cornerstone growth our XX% bookings annual and growing been and travel of were adjusted the XXXX to was Investor adjusted our extensions for arrivals acquired and would and clubs some of portfolio. to we our our hesitation of travel the income, continued to full-year margins in in reduction our and our We the December, a seeing Destinations to and margin, goals four achieve late year. finance basis BXB travel perspective, into to XX% points exclude in impacted XXXX, quarter of fourth the Wyndham in Related in if the from EBITDA have expand years foundation than margin interest stated and

impact wave first its news revenue the higher is rebound re-bounce each demand. XXXX has vacation had below successive on faster with as a stronger. were the a to American seeing XXXX. and lesser previous COVID in were three X% to Australia than in for North travel February. and in In swinging Exchange and XXXX. exchange improve. ownership has Internationally, continues seen similar our our reopened positive in international a But inflection business at weeks borders of trends business has UK spikes, the resorts However, bookings have come net X% our net January, with February, bookings the

international to rebound to get expect slower to travel We XXXX cross-border be with to taking back longer levels.

proven dislocation the the over of the last has model tremendous two ownership, whether and our streams travel with it the our economy years. ultimately tailwind challenges, Although cash-generation, recover. will and our presented recurring fee its These be travel strong resiliency same member-based to has business, streams and pandemic and as

recovery, inflationary With as pressures, we view recognize the but it not do a rising economic we meaningful risk.

of are timeshare value costs future rates. one close the vacation value of of more prices. locking rising, demonstrate the can today's in travel ownership value the is fact, In costs at when propositions should readily We which of help core

membership finance also on to well through model and as lifetime fees, exchange transaction owners allows of and as value focus purchases, the management future new us fees. business consumer Our additional

our maintenance outstanding no accommodation owners are the low XX% their cost reminder, have a As loan enjoying of and ongoing for vacation relatively their of fees.

laid XXXX the Turning first begin on million. travel. optimism with delivering outlook, quarter $XXX strength We're $XXX the excited million to to and and to remains the of leisure and focused depth traveler. services we cornerstone strategy our to expect of serve our out adjusted EBITDA clear. about We're leisure the believe the we products in brands path to strength accelerated September Broadening of of creating a and growth

Mike For over Hug. hand our would I more call detail on now the like to performance, to

Michael Hug

Thanks, Michael. to good And everyone. morning

results, of fourth our focused will million reported earnings flow. discussing well a quarter more of our diluted $X.XX, be total of EBITDA results. balance sheet, adjusted adjusted on primarily on diluted EPS provide $X.XX EBITDA ago. As color as our $XXX and cash to adjusted liquidity I comments will and compared quarter adjusted position, We My year million company $XXX one and fourth per of share adjusted

vacation net benefit considering tours with in share in reserve of segments by no payment led the year's that $X,XXX to associated non-exchange year-over-year $XXX increase sales million and and XX% EBITDA in great from the gross fourth XX, reserve in an total end million our fourth million, million, released reserve the quarter, $XXX quarter, adjusted we granted million, of prior of At mix me adjusted highlights total After XX% to basis of prior Vacation write-offs reserve settled to [Indiscernible] and have loans for VPG Revenue $XXX of We largely to in COVID-XX revenue increases transactions XX%, business around XXX ownership remaining EBITDA. remaining over some results. in we compared compared year. March quarter segment of XXXX. to delivered reported portfolio increased million receivables our of grow the and the XX% of operational membership to gross the driven of the $XX $XXX transactions as Non-exchange respectively were resulting of exchange the related the a than segment continued has fourth realized fourth strong ownership contract PTS, to of $XX was XXXX. specific XXX,XXX faster transactions, year. last report Adjusted end EBITDA XXXX. December two XX.X% XX% in these Let receivables million, million transactions, at million. $XX compared performance, a was XX%, percentage XX% deferrals, due our over of of $XX defaults In and XX.X% a for as XXXX. in XXXX, continued COVID that increases the was the we to points quarter, quarter, $XXX

proceeds security $XXX March our period. ratio leverage billion during this our we and sheet, we on EBITDA of balance credit $X remain XX that facility, October expect closed with the ABS from were was XXXX. important at reducing December senior XXXX, in restrictions due focused million was leverage of to of debt our notes in in We ACE secured $X.X million with fourth We in and completed removing and on throughout XXXX notes corporate to new repaid three the ratio the billion, place to and times. XXXX, adjusted quarter. to revolving senior continued see continued extending transaction shareholders due Turning decline $XXX We X.XX growth, release our we to ratio the $X the transactions net capital end renewed return

we and return to of XXth, dividend by of we capital to share will relates $X.XX Directors for a quarter our shareholders, dividend it recommend per per -- meeting. fourth of their As a of approval on at share $X.XX by our Board paid March December

share buying repurchase price in average quarter, of We million an also $XX back shares, fourth resumed of the $XX.XX.

the with was $XXX cash had of under conversion of program. our flow adjusted the Adjusted for As year cash at repurchase share end XX%. $XXX million EBITDA we remain XXXX, authorized from free million free flow

We to last expect expect we Investor of fall. XX% frankly laid feedback XX% conversion to Day to time, higher around our in our free we cash to at adjusted flow EBITDA even range see XX% of as this historic XX% XXXX.And out over

the Let me expectations for our about detail more quarter. provide some first

the Travel over realized the to to high-single And digits $XXX the in be a dollars, in the Membership, range the quarter, our prior percent of in $XXX We increase loss sales first Both low the loan as we provision. forecasting XXXX At to mark million in these provision do are to they portfolio, expect to to sales but XX% impact designed million expect the we over XX%. owner growth This are year. year. the of prior for revenue around be increase to XX% financed. increase and gross for and will the new of we accelerate provision look initiatives the sales the likely

$XXX around million. we to year be year, interest expect a for and a to great full our In rate and corporate net tax debt on to the expense million XX% was be $XXX Leisure. XXXX closing, effective Travel For

focus of returns with Our and margins, capital growth, cost EBITDA, free strong of flow on increased to conversion started the quality, levels to the and cash end controls to in historical of to transition EBITDA year shareholders. and back

take to in months. laid we hopefully us. the and of can are foundation have look person future the about forward of Ashley, opportunities ahead you have We to with we over growth many With of open excited call that questions. up for please next We catching the couple you,

Operator

yourself go limit take will Currently, follow-up. We that you first [Operator question please please Joe we ask with one from JPMorgan, ahead. to do And Greff question Instructions] and one our

Joseph Greff

Good new you because owner delves are customers, loan Mike, of you given -- to with that rethinking target going go ago? your back of the sales that comment, morning, to that, A universe any up a that and FICO of and quality, back provision ban for guys maybe the that guys. credit and the question from -- pivot going loss on lowering lower couple of you years

Michael Hug

want Joe, for thanks sales. to question. the new We drive owner

that wouldn't we However, with you to factors and Do at portfolio XXX. drop to like at, s -- but VPG happier that we drive up to sales we just couldn't different again. mentioned, we're I we'll growing incremental payment back result ever try upgrades to back not to a look to as expect We'll owners for get and can That's other soon? moving the but be we that that, look that that running. at things will, look of, history XXX factors, number. down FICO,

I obviously, come margin a provision As great revenue a mentioned, instinct, net a recurring it increase, great stream. and but does the with

to We'll credit as And from looking down that probably mentioned, I our average XXX always at debt would we're XXX quality. five-tailed. around number So, soon. an hang be

Joseph Greff

that here times or And about talk return in EBITDA be with and of XQ the the ratio. how you obviously buybacks, four obviously about in in you're then increase buybacks thinking just can XXXX, the net you'd with capital the reducing leveraging leverage leverage

you or doesn't hoarding any really down efficiencies. great give cash debt paying So,

So, you about and your XXXX? talk buyback maybe activity, plans quarter-to-date just can for

Michael Hug

we're to fourth did quarter. we've had and clearly, it we the point, as pay to look very very period through the able to into do [Indiscernible] the leverage intent be when as going during relates covered in in And evident first, we've to excited share cash we're our remove restrictions we to you relief relief growing lowering EBITDA, your that's repurchase the down exited said debt. our that at using that rate, period not the

allocation, will demonstrated COVID that we'll we've into methodology So, share right continue of go used when capital dividend comes pre [Indiscernible] for M&A the to in to we'll - grow there repurchases. and capital looking M&A. it cash be and allocation back to Excess

Joseph Greff

buyback quarter-to-date? And

Michael Hug

Currently, report to guidance we're repurchases. of it to XXXX share as not relates going give our cadence

XXXX, the in back M&A level though the I increasing spin-off is, steady in repurchases, I we in would think a out had what of point share -- after activities. of absent grew hotel June of the

work allocation, So, we're very we'll excited cash about the optionality we have as value. put far as to and capital shareholder drive to excess

Joseph Greff

Thank you.

Michael Hug

you. Sure. Thank

Operator

Ben And we'll go ahead. please question take Suisse, our next Credit from Chaiken with

Ben Chaiken

going? up consumers timeshare COVID, you or theoretical if and, was if that's Hey, come importantly, to referring to value timeshare -- I'm Thanks. is just if that's I are between a -- quarter due the know tailwind hotel price compelling. dynamic. a showing seeing what relative don't back, rising to making maybe like I value more more as how's for the were in tough but This it much you and theoretically the leisure guess and ADRs hotels? exclude breakeven Omicron given business

Michael Brown

house ownership it closing We've certainly of do to show incremental up stay demonstrate the a compared theoretical, up prepared our both steady price, Well, a of our at the their we And as I value pointed to and the not business, points try are of the on into change is of we we increase try drive their COVID. must or consider which it X% XXX in that you in vacation hotel to to a do pre seeing you cycle, it percentages relative -- table? where of especially one a close is with showing are at rental. ownership business at we want the there vacation is, components I or and but where drive dynamic see well. clearly that can paid this for today's work ownership you And of seen the value paying point is vacation people very our and rates, great is that in only rates our close loans. quality through prices, stays, in we've a result dollars think tour XXX that's future the up future are off and fully remarks where and And they from XX% cycle our but out in - think basis owners -- are quality, the to

paid a out inflationary all in maintenance your traveling value this and if annual you've getting you're a is destination, fee, clear year So, even you're to it's more ownership. for the environment

Ben Chaiken

helpful. clarification. That's just quick one And

are are also going a you of rate, price, on Are the both? -- us how taking saying but close you're your and rate suitable doing situation-by-situation the higher, you are indoor you you -- taking variables, kind you -- which is Are close are or are you price So, showing basis? taking price? -- that

Michael Brown

towards we're we're is future lifetime grow fee. the close No, management rate leaning value to of new a portfolio which only but trying because not more purchases, back in the owner

question So, we're and increase, for I'd price leads indirectly benefit the price out of -- just because sheet. it's to close out that to like add coming our margin also increases, not is balance a normal taking sized looking rate.

margin. inventory we so don't paid is costs have that pressures for, there construction We rising affect have there the already the could

we in offer we value the demonstrable like to margin feel offer clearly So, we can good consumer. that we're situation is a that and product the

Ben Chaiken

didn't show February Macron or and a are? between or end way colleagues Maybe Is -- way there you Omicron I from there us slowdown the January, missed we view I more. one any data of that January if this, where in given and and any any where just in us December I then And hopefully is Thanks. -owned to apologize, point bridge give the to of pre are

Michael Brown

Absolutely.

flat QX not So the But North revenue of in just look to said our considers first, American you arrivals X% remarks, our we is above We effects don't, above below then, January January and are XXXX reiterate we in that normally trending were if but resorts, forward our in XX%. of me levels, bookings let prepared -- Omicron. February. In as give February, to our -- levels. we're you where roughly in bookings, XXXX at below, forward just guidance it X. for was And above when

to So, it's return pretty normal in very quick February. been a operations much

Ben Chaiken

you very much. Thank

Michael Brown

because consumer behavior to then a to of during That XX% we changing shows travel And was they how returning more from lot all-store their [Indiscernible] number back been is one normal live XX% to. which that were have the about consumer a leisure talked low Whereas historically thing the to, XX. in the COVID behavior standpoint. drive over drive resorts is

Ben Chaiken

Thank That's helpful. you.

Michael Brown

Thanks, Ben.

Operator

a Bank. [Operator question that reminder, we'll our as from go Instruction] for Deutsche Chris ahead. Please Woronka Again, is questions, your with next take

Chris Woronka

Hey, good morning, guys.

Michael Brown

Hi, Chris.

Chris Woronka

to side, talked the Prior COVID, XX% have this you're really morning. in only and there, new always -- VOI about target guys Michael, moving if know right the you're on getting direction. owners ever the I got you quite of

a level you're to range? get in the had sense, tinker at, that if benefits EBITDA, or two there or whatever can mean, can you makes -- cash flow XX% same the you does you've there, the might years XX% I more think to the of that you Now you look like free could be get -- business and to do strategy, and kind of with still

Michael Brown

dynamic to you've a always The about. as rates. critical very owners Yes, is long-term new lifetime growth value important of our talked it's

that we coming catch-up crisis, I COVID, presented XX% the and some -- pre aggressive because was financial had had pre of COVID. a -- - we say XX% into some were target we at great - got target. So, out did We foundation to that do going I up quarters, laid us pre back would for an right job. we a a XX% We're COVID. it think great -COVID, which XX% at XX%, great during

to are over range. trend -- the we toward right back -- expect time We XX% back

upper transactions, to good very it's somewhere you're transactions is note. perspective the important place you sustain My that's I around if very sustainable. low this the in XXs XXs total can and a of that on think

grow are got back that will as a a percentage, there. We public I And One's one's into get the I got say would all range three us and are. think good companies a three very term, for range. how sustainable, just I about of so business lower the point the out where in a of are that long of feel percentage, reference, we to higher good

the stay upper number grow we on into of into and I the that soon increase up any for that but, a to thirties We think is us trajectory then don't concern thirties. if thirties will the back to upper the

Michael Hug

we like must points, Michael's there. risk getting Into

us the at remember, we current out in our over has you our years. few Investor pointed that available $XX If base Day, next billion owner revenues to

to maintain and So their number, But right the we'll to about do that smart right keep about away. that we be going to growing get GOI high, FICO, quality, question have those time. our back don't margins over number

Chris Woronka

obviously, things things look business like Okay. about what probably a subscription lot the I really costs it, that measuring business? grow to get all customer don't on there's I but What Because Very bottom key as just are you grow don't or business, guys terms to line mean, you helpful. in is we we don't are that. of of line, stuff the of we growing looking the that as a at like follow-up, the see at not see. top And internally to a efficiency goal then, a acquisition just -- that metrics think standpoint?

Michael Brown

Absolutely.

ecosystem capital of the we to a we're we're side, successful. The one basis laid And grow we a Travel business that subscription us So, market. allows on of BXB who our light. stations capital is out recurring addressable from, keyway really laid that few the Panorama a transactions to know on both developing revenues, being BXC the BXB grow out want we capital light our -- and to Solutions, elements

wanted which activation It's the is it's memberships, a already development to even X.X%. be and first that full Day, phase, provide to activation at turning of in would out, we've on at XX laid In year, accelerating our sign-ups and clubs? to was, argue value very an months, the and to pipeline. X%, I Association proposition seen white-label step The first it's we next X% nicely. highlight can -- is National an The addressable we why Realtors. expected market We we're in into X true Investor we

haven't the $XXX a We the summer activation range, and very points we we're on we transaction last that will really size, then, good in going to phase. if the hit season, the it. so is And even know get peak the seeing proof come expect be to transaction size. And with $XXX margins we

-- So, activate of then then brands, start -- and months the acquire activation months our the to the brand, in our is activate as it's looking Travel brands, Leisure be given side then And behind and direct-to-consumer, see DXC, we Club, members nine at within that BXC business Club. about the monitor and that of of similar size. funnel six to picked the Leisure the very transaction a Travel into Panorama Solutions, launch metrics and our we'll Travel or

Chris Woronka

appreciate guys. helpful, Super color. Okay. all Thanks, the

Michael Hug

Thank you, Chris.

Michael Brown

Chris. Thanks,

Operator

next go ahead. Patrick with We'll take Please, Securities. our Scholes Truist from question

is line open. Your

Patrick Scholes

Good morning, everyone.

Michael Brown

Morning, Patrick.

Patrick Scholes

just that? naturally about rising think buyers high get or how do trying going do on Thank given of year how think you. the prices, to should inflationary the how about, force you're that, there have you we an new trajectory more side of this a you Morning. and and other envision level, From next, VPG in you that

Michael Brown

owners that, owners. XX% performance about It's attribute over great COVID And get pre X,XXX of X,XXX, new general, we a maybe would up our just with team's and and of XX% of the post in our share remainder of VPGs seen, about along attribute we quality we slightly to sort the story our from of more to in production the to We've to - change the efforts. X,XXX, and the share rises quality marketing level. would of COVID versus - half mix our to

there'll make will we that where was adjustment we would I and to very But Leisure to to in I as now the our that our do increase, modest a to indications So, would owners see we're anecdotally, the environment XX% that they be shouldn't very They QX. going as strong, only But and VPGs Travel as and are asking, VPGs. well, headwind new be perform, I field. teams a XX%, is they've the to they Chris to and continues add, how performing. up about -- surprise, great always job are always the holding early the includes continue because always say

During on as slight so it, changes, be VPG above but expectation, continues that performance not at year significant. to a Omicron, the pullback maybe and the not progresses the mix

Patrick Scholes

for color. Okay. Thank you the

Michael Brown

Patrick. Thanks,

Operator

David Jefferies, will go take please We Katz from our ahead. final question with

is open. line Your

David Katz

recent the contemplating are transactions it's strong. terms been taking in you rest we just for are good, would in and was year been seeing if so it of back you Thanks went what today as respect to have right, everyone. what question. What wanted market Obviously, today? market. you October. morning, far? through super, super And the of Good be move I the my Hi. to check But with in securitization that so to the

Michael Hug

Thanks, the David for question.

move we be very available on year, as in that X% XXXX still a get our interest to up. that but so able probably mind of in The this we're us through cadence rate. to rates keep expect normal the expect transactions we just it's trying go attractive get rest We to won't environment, rising to under as were year, would throughout a we rate of the you year. three a Obviously, know,

XXs. times We're we looking expecting for to the high So, those are an market stay in increase. the a three We to expect year. advanced in be do rates

mind, and to the going those occur impact have any we've earnings XXXX so in be So already overall, issued, so -- you this cadence very when any optimistic our issuance term they it have we about the year. really market. is significant fixed think exposure that forward, in all about a year transactions that our Keep the rates, new we on should of and when

David Katz

Thank very Okay. you much.

Michael Hug

Sure.

Operator

I period. would now Thank you. call to turn over Michael our concludes back like remarks. for closing the question-and-answer And that Brown to

Michael Brown

Ashley. you, Thank

ability our ABC As to are a products XXXX, very like We and serving a owners, you're our vacation. and create simple Travel you want have of future building I'd to for recognize the and global We're to to as for their contributing to our Thanks, we and Leisure. business. we as we hope of foundation, on head am trust strength clear guests. our depth and the on of focused great I into and want about to who and on We team stakeholders want accelerate our the of great broaden associates growth members, of global our shareholders company cornerstone a to in put day. services. our have our brands, and excited everyone, Strategy. our Thank and I put of world success

Operator

and call. that earnings conference XXXX concludes And you. Thank Travel full-year fourth Leisure's quarter and

You disconnect line your and this may at a now day. have wonderful time

Travel + Leisure (TNL) 23 Feb 222021 Q4 Earnings call transcript