TNL - Earnings call 3 2022 | Travel + Leisure Co.

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Operator

Greetings, and welcome to Travel + Leisure Co.

Third Quarter 2022 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Christopher Agnew, Senior Vice President of Financial Planning and Analysis and Investor Relations. you. Thank

begin. may You

Christopher Agnew

and Doug, good you, morning. Thank

statements, begin, discussions today we differ effective from the only we'd today today. statements Actual like our that materially forward-looking in indicated you as remind those the will are could forward-looking made to results Before and include of statements. forward-looking

reconciliation on Officer, will that Michael Brown, provide in will no results a detail on then to actual obligation or available the our We Hug, can cause our filings, quarter of publicly our Officer, undertake of travelandleisureco.com/investors. This you overview revise these Mike Executive third provide measures today's sheet are our greater Chief website discussed position. financial could update our to statements. quarter, and SEC liquidity an results; and earnings The discussed factors in the call non-GAAP differ at Financial President balance Chief press find morning, and in release and our the

look we your remarks, questions. these forward Following answering to

With pleased Brown. Michael call the that, over to I'm to turn

Michael Brown

you, end leisure third key welcome per third of morning, the indicators that Strong earnings call. This In adjusted demand throughout continued EBITDA $XXX to reported with our million share and Chris. at adjusted point Good adjusted quarter we to our we heading continued earnings would of $X.XX. our strong quarter, year. $XXX Thank and the that we expectation high September, demand million morning, the guidance, and travel of EBITDA reaffirmed into next million $XXX be range. to

during $XXX million dividend repurchase results shareholders from was have levels QX, $XXX Australian the In repurchases shares. the accounted dedicated accounted share XX% quarter, record of by through $XX X.X% of up Hurricane increasing X% of from in through quarter, year, we tours of to million, maintaining million our VPG up dollar QX returned key quarter, outstanding and second million QX. to quarter, our the the of a end shares. The for of performed a conclusion and Full the quarter, with repurchases weakening However, metrics outstanding the the well quarterly $XXX Of the in the year-over-year. EBITDA. In at near year-over-year an the repurchases, shares. and estimated X% $X third million impacted for Ian business

year-over-year mix transaction basis owner points XX%, New to nearly and sequentially. points up basis XXX increased XXX

VPG of resonating While the new in and normally puts pressure with the is increasing consistency closing downward how mix our customers. goes products on our highlight proposition value owner the VPG, in rates to strength strongly

the travel clubs. our levels. pacing on at year-over-year, We solid Room segment, fourth Vacation end ended now In XXXX also In in from have the above saw growth with revenues remain the and XXXX. of bookings Travel the forward at trends drag the room quarter. Shifting to nights the hurricane X% booking X% the X% trends. are our leisure the and strong ahead third continued, quarter, Ownership quarter, above of XXXX Membership nights despite up books

of million driven value compared their the with show gross before sales, the XX% perceived alternative base was quarter of end to rates. owner ownership quality surveys of stays to the value third reflect elevated accommodations. Recent our At range Strong rates of of inflation. XX% marketing increase hotel our VOI relative XXXX, customers close period guidance and of million. quarter to elevated see this in our in in performance $XXX for million strength increased VPG criteria the and a the the in $XXX deliver the $X,XXX, above above The being close VPGs helped top $XXX by our

market. finance increased costs in borrowing portfolio the we the growing, have offset seen to consumer is ABS Our helps which

raise to today stronger is detail. COVID Mike will quality, credit implemented the during in portfolio Our as because discuss more of changes

would I changing elevated on our reinforce is fundamentally approach to how business. strategic FICOs our also like

lower-end FICOs our dramatically. exposure company, a has As reduced to

fact, we peers. The you vacations how few once forgo In average now as across with not customers originations companies, they are of but may are timeshare consider shown branded last discretionary. our line years in have FICOs vacation. new vacation, again our Most the their public for that they purely change the rarely

increased dining to Despite improvement we in in indices, per XXX research transaction of and under and performing to the quarter, of owners including will impacts. choose us the over by occupancy our an industry that travel. Despite experience business -- the heading and to rather most they we cornerstone vacations vacations. primarily of period. It exchange the the same to travel and ARDA, that the currency mid-September revenue the are As travel transactions high. have with of the use X% kitchens changed points to most XX% streams, fly, little showed last Ownership XX utilize and predictable association, for prioritize visibility model Analysts, XX% next dropped good our we instead business a few to near saw but our owners the in Timeshare resiliency the reinforces of example, to was intention in survey COVID, up again their believe Destination our and moderation North by recent a market well, at According elevated committed understood, is from X% timeshare confident people once recurring due declines remains firm hotel what experience transactions. international in occupancy, hurricane Membership remainder believe of XXXX some owners end was than to our given XXXX and Recession revenue still year-over-year, resort the are to Exchange highs basis year consumer just and offset years. We our general internationally Vacation excitement a and the their was strong clear we over America travelers trade destinations of during is among desire of out, and drive which Great impact in-suite COVID always at when the Travel into many prepaid during have months tourism according business. XXXX. Shifting the remains our

with continues XXXX. business at high profit year exchange a perform below year-to-date ahead to Our just operating level, of last and

which longer quarter, in the time Our added the to and said, are the expected. are on some building BXB we XX% third many With partners add steady in travel XX organizations fronts. lead U.K. originally we for clubs that up continue like progress our increased success, and for Reader's year-over-year signing quarter. third blocks Digest great We Silversurfers. making including affiliate The taken has transactions, to than ramp-up an ramping affiliate

Mike Hug, cash me on the I generation. of update Ian Before provide an related a our to to call hand Hurricane guidance the comments let final CFO, also and and impact over few make

everyone and go First, of by and thoughts we thank guests. tirelessly associates to out ensure our the our impacted our storm, safety of all worked owners the to who

South number none Ownership Orlando resorts major in our damage, of managed a and in at Florida While there experienced and Vacation intrusion Beach, Carolina. resorts was several Daytona coastal of water resorts

lost impacted Marco, Fort Sanibel Myers around some particularly and resorts a the of the well Coast time Captiva Naples as operations, storm, Gulf along bookings were of and as strong has and Sales in we and RCI short capacity portfolio period. of Islands. travel for a the Florida,

locations Gulf resorts September, those provided of were have along future Coast and The year. start as in X% late impacted units and U.S. expected take bookings caused XXX X This count. next represents are and Florida XXXX, as by dates out to supply reopen XX the well hurricane. of In but of be not the until area coastal service, temporarily Florida our over not of in to Most the months, Central the are Carolina reopening damage placed expecting to resort few resorts of next within terms arrivals suspended.

the lost and a $XX impacts, quarter, of $XXX due we foreign of currency inventory adjustment in impact million. in third quarter Hurricane bookings the year to the million $X reflects The full currency Ian are adjusting As our and to tightening guidance out-of-service million to RCI our adjusted and $XXX result fourth EBITDA midpoint million the to headwinds. guidance foreign

high be the expect end around VPG guidance $X,XXX. previous our to at of We at

XX% VOI cap. we of are dividends, to of and between to loan be provision billion full year $X.XX buybacks $X market our $XXX the $XXX Between to sales billion for and million capital We $XXX and full a increasing to our loss return range expect be or from gross million year approximately around XX%. forecast million

XXXX. cash We expect of XX% the transactions, to this will to cash receivables the adjusted primarily flow as timing EBITDA EBITDA to full year few placing ABS be see conversion of items, year quarter closer first shift a term from and adjusted

expectation. our XX% close, free on is based market yesterday's full our of As adjusted yield flow year cash approximately current

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

Michael Hug

good and morning Michael, Thanks, everyone. to

discussing as third flow. well will liquidity our more provide results, color As our balance I cash and sheet, position on quarter

$X.XX of comments for third $XXX the website our company adjusted or reconciliations. We of tables see to to release and in in Co. million EBITDA was + at margin XX.X% of X $XXX year $X.XX per XX% million in All Please EPS total basis. reflect on XXXX. a compared cash Travel my and EBITDA, share EBITDA compared and ago. to flow quarter our earnings non-GAAP diluted Leisure earnings reported EPS EBITDA

in XX% portfolio end the great December XXXX. has marketing revenue included And reserve sub-XXX segments. increased financial the with $XX improved end XXX,XXX to the In the above $XXX of FICO remember, the $X,XXX, from compared year XX% criteria quality the XXX and our of to up over a has a and put since the quarter, in third delivered benefit third at prior looking representing of and of $XXX quarter Ownership more quarter the increases EBITDA performance borrowers the segment originations XXXX. million FICO the end the compared the million, and COVID a at our year. In borrowers XXXX. XX, of at at XX% third place of the resulting the only business third Looking crisis, we at making over we have of up respectively, at the over X%, of quarter, XX% reported million quarter in of increases third period X portfolio, making with our respectively, X%, in prior higher of XX% the VPG XX% And EBITDA tours release. In of Vacation driven bands, portfolio

to recurring a dynamics we it to growing portfolio delinquencies credit the lower And future the aging ones of -- some of is on now increasing seeing higher sales sales. as are thing is income growing inflation. for and to percentage in the in we more high-margin are as interest But are they primarily borrowers increase portfolio. exchange normalized portfolio do importantly, higher the high percentage reminder, right our quality delinquencies streams by performance, interest a levels, of As portfolio. to a provision increases because This are finance, as compared our the back impacted an relates a we also we most as

Travel prior respectively, over year. our to compared Membership in million third the and the quarter increases of quarter EBITDA in $XX $XX XXXX. Membership for was $XXX the prior Revenue of to was X% $XXX million compared in year, in and segment X%, million the million Travel and

Travel increased as Travel now by transaction Membership. or X% XX% Club and impacted transactions total X% Travel transaction, year, revenue revenue over the Membership and transactions and channel for RPT, transactions mix. of increased represent was prior per

October, third to recommend Board by In paid a our of We upcoming advance million with average sheet shareholders. remains XX% quarter. our the of weighted million and dividend the year, allocation, an transaction XX, demand, are regards we a of continue on market of fourth will stock meeting, even capital the rate $XXX through closed encouraged we Our million dividends. returning repurchased common Board At our per X.X%. Directors time were strong, balance during and a at had and $X.XX $XXX in we to volatility. In ABS in $XXX September transaction strength rate of of share we our of that interest capital

range of million, at XX% quarter quarter, expect summarized growth. Having billion. X.Xx fourth be the corporate our year. sales more and Our year, to through for EBITDA of prior the detail our we about million billion XX% fourth let me quarter, covenant provide ratio was the the to third VOI expect delever In net over of quarter, end the to to range the full and the year strong expectations purposes leverage gross in sales full to we and gross $XXX VOI increase $X.XX a to in be $XXX $X for

results our guidance strong range. high EBITDA summary, the return travel free $XXX earnings million that, we and you call our market $X,XXX to year, Doug, we at for the be full shareholders. With adjusted between take VPG to demonstrate year, cash Also and million. In leisure capital open capitalize to drive can to the our expect end to For expect $X,XXX of $XXX the of on up to questions? the maximize and of ability flow please full

Operator

from [Operator comes with Instructions] Our Greff the question JPMorgan. Joe line first of

Joseph Greff

today and about new evolved existing Seems year thinking macro, more ago days how the to next different about X have terms you channels, everything challenging? mix your question downbeat the is the how attention. in my finance was environment maybe than more how than months sit XX these precision and you're Ownership, months directionally between revolves of or in Vacation the macro tour today here which around flow as more year ago, for about, thoughts obviously propensity owners you talk Can bands, evolved and have next think as it maybe at reflects those FICO that so with got thoughts

Michael Brown

Joe. out which Brown. can very bookings despite that as that's today, look all news demand, even Thanks, forward that and you still this show there, we strong. This the demand business, Ownership from comments travel the is sentiment of at our morning, note our Mike Vacation macro clearly very is leisure the When

to So placed We're in we be. strategy We XX% have next do sign. perspective as look going believe We're is that and clearly strong in very target XQ going the about new mix. year, of XXXX owner and to and early our bookings range. to early into next owner going demand continue VPGs We've into bookings, our XX% quarter. the owner continue deliver We we ideal on to year. third positive XX% a to our grow are that what think have that's are an strong owner up owner very already which X%, an to

most What I our is would say, guest. closely volume per watching what we're

guest higher rates. per close are sizes volume very similar. Our is Transaction driven by

we as $X,XXX. we long-range next to So guided head into had year, toward $X,XXX

combination they outlook at be owner the back VPG or would a still see VPGs between weakening pull level we'll mix we $X,XXX, economy, back. could the of long-term above maybe expect. come But So new would a on and might that our

in our VO close rates to fundamentally, our business, know new heavily strategy increase Thread, with invest Wyndham change, the VPGs So to Blue and mix, future doesn't drive relationship owner which monitor continue to support continue continue that will we and revenue Hotels to streams. in and generate and EBITDA

other one question asked you was The propensity. financing

growing really, us our our We the is of size to remain primary in finance between effect because, NII. will portfolio portfolio, next delta XXXX the consumer the and committed year today

our urgent So XXXX. to we remain growing will back portfolio in

Michael Hug

only about for they're down. higher XX% one just which think on now. will Joe, putting thing you FICO FICO, what a we're XXX bands, is already from that highlight growth. the the portfolio seeing And reason And that It probably a is, come there's if that

it So down. XX% FICOs, higher were as they and we and those lowered XX% was down putting XX% payment requirements,

making why why FICOs the were of the higher some come between and as the paying. our minimum they that's that percentage will see you the down FICOs growth had ones they're room future, a actually past. up payment So in today from what because to the And continue larger to compared mix the those that's higher

Joseph Greff

Great.

the to talked -- the you year-over-year. revenue see last those time couple guys And grow that's on it financing I sort since line was about, pandemic. guess nice of the topics first consumer of the

medium of, as that next about think year about how that I terms revenue 'XX you Going rate, or of think term? consumer guess, versus it financing do kind in growth you more for 'XX forward,

Michael Hug

think talked primarily I as the mean we've through portfolio about, a we year I it see defaults. then portfolio, right, we'll when some the the payments -- about billion $X -- actually think about Yes. and principal declines

around we And VOI in being at so reduction with we originations how a of at portfolio natural sales. to our now placed XX% you buy future. growth, can take new that's think growth when think finance the VOI we sales up $X about about sales. billion about It's the of of percentage And XX%,

Operator

next comes Truist. line from Our Scholes of Patrick question the with

Charles Scholes

want to BXB some the your a the year out whether targets go I back laid and just Investor I touch Michael, Day to are for base of at BXC travel those just were want clubs that ago. still track. on to

the of to adjusted XX% expecting revenues my Some percentages between for at notes -- and XX% to XXXX and 'XX XX% that those on up EBITDA you out you from specifically Investor and XXXX, I laid still annually. track had Day Are up figures? XX% time

Michael Brown

short in has as -- today, a is true of is and Membership execution and clubs the relates ramping clubs, especially clubs on is we talked we travel year, call, the months answer lot a protracted signing originally have those it anticipated. still more happened this to is Travel the the and Initially, the about last longer year, actual anticipated. for ramp-up case and So of on the from idea we than than is to up the we the

So we on, your original are develop said, down this, and come we're expectation. With that really you these would are from add clubs consistently. the long-term have numbers is and affiliates need new doing that our those grow I think up travel to points sign to that XXXX critical focused I and BXB, to

Our this thought of we it at clearly October pipeline is what ahead would in time XXXX. of be

and, our the transition sign-ups part part is sure. that been growth. So to that's affiliate The delayed impacting therefore, from transaction is ahead transactions for is

that travel that's from transactions, being is what prior gives said, business, lot new transactions market's we to forecasted. XX% on up confidence say sign-ups of of to last anticipated. for and the me I these there with is higher was It transactions we're leading take latter want X that done that deliver in now, where in expect affiliates the there, a "We we so is quarter indicators, affiliate on demand growth a grow we're transactions starting clubs would year-on-year But year. Those mentioned make has market in who've they needs and and know can would what to I it. on what were start see, going variability be call than and to we we the What the the this," XXXX, the more sure half originally the

a if And up and outset at X% business. the business the business to level, add business, adding from what to part for to really said X% That's I is the and we encouraging just consistently strong growth to us, can growth we already travel and take that it take it related VO exactly wanted one -- this we will Membership Travel be doing, a and an clubs. supports by component ultimately

Travel of So think + you is rate growth this Co. together, all fully wrap all ultimate Leisure here from indicators that there the indicators ramp-up. the as the its them point to that that transactions, And delayed goal in see leading with of we success. being leading increased and associated for one But being future is therefore, revenue and component I the acknowledge again,

Charles Scholes

seasonality anything quarter. question related a loss And saw there the bit Mike that? else most the just Is related? recent provision a I was Hug. Is up in to for that Okay. loan

Michael Hug

Yes. Patrick, you're right.

finance, Seasonality the as had we percent to to increase a up we of expected XXX the XXX about basis quarter. talked provision can be which add this as call on provision. bit continued the So little well to sales the points last that in

current but growing take stream in you percent provision as interest that And nice in right, mentioned, sales call. hit income do period get a quarter the obviously, of again. expectations margins mentioned the provision about surprised where all with the I helps comments, as growing talked the portfolio, by the So came my on I as not at that's margin. and what we've in, But really, right as on with well, interest second

Charles Scholes

or you increasing as do you rates you question continue is where interest one raising the maximum interest sort How that? Mike. then that And rate you, -- this of you a your interest go year? environment, Okay. think been a have last In lending rates current And would interest about cap lending up underlying to currently to are at? there And rise? for

Michael Hug

year we our this look product the about couple a things. drive price the really mid- what we on at interest through depending which pricing we've the We're is we a charge regular basis. or probably do think for And the of we the twice single-digit about chosen the is increases product When high rate. on as to for the -- product price the pricing price as done consumer, cost the product, well itself. high as of Yes, on consumer to as increases,

are XX.X% the on at. But as charge up have one pricing the interest are. the they yet. year, take strong pricing allowed that price time. is we charge we the interest that that charge at the haven't as increases that's reasons we is rates We current to incredibly XX% consumer, us the We're something and VPGs moved range to cost there look which that of as we come the rates in through to and really, average, strong, opposed this value proposition The

Michael Brown

question not incremental headwind least that $X half, in finance we've increase Patrick, year. million if I XX%, we would to changed one affecting our generated this could bottom your drive component if additional interest add about about percent NII, our by And these to line. Yes, probably And that. finance. the cut had percent we a not NII other in often facing the by We much if how are get at just rates be

of offset that it's it of this it's just performance think underlying operating variable we a by raising the business. result you I for headwind. year another of if say, people you positive at to real percent and our And and rates, us interest a found through well, that's overcome And just $X example ways look million been increasing So finance. one

Operator

Jefferies. with Our David next question of comes from Katz line the

David Katz

-- things kind questions, please. -- the I we tolerance and financing or but just might I'm earnings, asking where calibration might I unanswerable it on into are. where impact just we market. this you terms wanted of think a insight it's where in past, terms be hoping instructive you to go provide know best could year headed the may talked little those this is guess, I you've ABS those to in I your helpful And know what of be for about could this and benefit for see how but revisit the

Michael Hug

Yes.

let's we increase say, in right? right, about highest $XXX with, think $X charged they've when interest the So been interest So roughly million back they're getting about in really, securitization, the X% the million, a represents rates really markets, that in since we're currently XXXX. ABS

where think incredibly in future, were start So would they we low. Obviously, cycle back where when were down. we in to about rates to years the few we last they'll trend the that go, a like think the

mentioned, last increase transaction, Michael least the expense get portfolio in As seeing. ABS the from cash. But was the we offset what benefit grow we bands million doing the at to we're higher $XX in the that to transaction, FICO can the our higher a we're

So it moving repurchases. it that's transactions reasons were of able from And our price, where million. $XX generates the one to conduit the we was ABS at, accelerate the share share big with to

well. And would back this as down. move trend widened up, we One the goes spreads think as year had way. to they'll is unusual like have rates we've usually, it other So gone that seen

go tighten spreads up, rates bit. a As little

And that trend like at right to high think you when said, really So levels can't historically. start they are, to down. like now back back future, predict the would they I look but

the transaction, rate, the cash a in The rate our the about advance in even on the months didn't other in XX% advance that rate. thing we advance captured recover of is the bigger XX get date lower, little bit though coming of the following

a recover the small It's timing disappears is it XX first it issue. forever. We like cash months. the half So of not almost in

end timing us about throughout our timing, And the about that of is the flow generation lower until did pushes year. talked to talked as next more be we coming rate over is in year. And cash cash we the we've quickly quarter, year. the secondly, year than this at get next from of receivables next will end which advance free an standpoint the the ABS we're confident third one then cash So cash the collections to have we XXXX, the that in won't million why transaction very $XXX year of reasons last that back flow in of

it conversion a in this out. on when cumulative you're our gives I all look a you portfolio our when in kind conversion calendar but say, basis, year. of in measuring it receivables year, confidence it But is us short works down the at taking like buildup So year, term, next on the the cash cash

David Katz

Understood. And can I if just up. follow

given a you think numbers, us to going sort right? by us it to -- bit a of but and would and I the for one that? impacts cut of bit points Y of you it's may always Haven't you back us? And in calibration EBITDA have dry, past given mind know a I basis not just as coupon XXX in time

Michael Brown

borrowing But interest million in it net alluded just $X we've increase Well, million and impact this year, to you impact let me of and $X this to between income on I question. year. give of the net had Patrick's a

look this the year we of to to our you from with and So was increased million to change the million finance. when start finish at a after transactions, responded percent $X the $X it headwind it of

Operator

line of Barclays. from Montour the next question Brandt comes with Our

Brandt Montour

VPG switching Maybe gears sales. back timeshare and to

sort trying get just referred a above guys like sense struggle of seeing back to 'XX. the long-term just correctly, across the math of of you sustainable. with we're it I'm guide. I know sometimes for you lift to and the mentioned if staggering XX% lot. is your that guys lift sort investors think a you get magnitude a and industry much VPG And this I how And of doing my question implies something and with

that right, case a mix, channel you -- shift if sort -- to back, hat base anything and that some rate-related on much you mix is there's is repeat lift, is that if makes that would I give of as at don't of new there above channel which your sense? like we how if there's the is or something that that's XX% mix assume And or much look so assume want close necessarily could how same case permanent? -- And base that hang

Michael Brown

It does. sides. both from And it comment me let on

per where today, success Vacation approximately industry, continued first Let business. VPG. tremendous Ownership message it lead in that vacations are prepaid from our guest. me come which on playing I say of industry-wide clear show timeshare the would is a value volume out, has that there across to that's at the $X,XXX And is very we it

As we we last came to COVID, and guided exceeded. had those number, September been numbers have out a of

and combination sales the environment. that's an mix by and channel think additional lift this created inflationary I marketing the organization, of incredible

usually accommodation believe our out of $XXX, So put that's I on than that as is would QX Ownership we do $X,XXX, came providing inflationary sustainable. that especially there's our stayed and that of $XXX element that first new XX%, puts and say, we a with. today. which originally an on and it, incremental creation hotels benefit VPG we It finished I'll in and QX, see pressure Vacation increased value in consistent, general, The expected, the $X,XXX higher that point between I mix I alternative order to we and real observation finer

as back owner So new come I XX% a XX% to it would at expect stabilize we to mix.

when that be range, the of off more cool. today for back that new the are that inflation seen bit mix. we high -- inflation to COVID based of of My a may think staying a I belief to the to post at it it. And starts mixed component simply growing little will performance we've we sustainable range due $X,XXX think $X,XXX I there's owner that once come at and adjust end is

performing there's of end high a So lot between we're our in and for range that's believe cushion would stabilized the marketing I vacations. a value being reflect where performance today of created consumers the great our our and prepaid in that by team sales

So addresses wanted answer did out I to question? make there, put but your that a your specific that I sure lot question.

Brandt Montour

to saw you is different for about the pool is just and I Hug, could volumes. it new maybe understand that -- guess? I there I to some of it sure uptick just -- there of relating how just looking portion delinquency the delinquencies consumers? for growing of that did. And And just It I the and way of Mike your script typical those -- Mike. connection I points -- there ask, want I appreciate and because ask to and the book that thoughts, delinquencies loan just I'm a are No, make that I sales, a in clarify consumer your lot guess are loan seasoned did. mean

Michael Hug

Yes.

pressure like So lenders the really we're where bands. lot of the seasoned is lower the a seeing consumer FICO with portion,

government that been So from been. rent normalize we're they it's starting have primarily financial see to relief levels of various whether to had or they because whatever got, might at support historically it or

we that go those as everybody like expected, starting away, consumer portfolio. else little a are as So a lower those bands to not bit, has you've from normalize heard

grow a the in means portfolio, younger The which other as more point get less have script we I defaults seasoned, that going future. to portfolio, it's to was in trying the it's was my across

experienced majority portfolio old, If you the already these defaults. have it's of X that's a years

in grow as for those So increase the the offset to naturally, more than the up our we goes we portfolio, have. that by future, provision defaults interest in income provide

is back percent is dynamic of to So people that has want your a a as portfolio sales higher provision that make to growing, we that's because defaults. the portfolio sure younger more real understand, as gets

our than conversion. minor had finance our consumer data less accounts convert quarter item to that's our defaults this mainframe of basically up did and XX system. or There's impacted by X,XXX a one some were that X%, other system bps, less about XX-year-old replace We about driving we

updated those they pretty as we've ones quality we'll data updated, it will reservations But make small numbers. when as the really that get that's and compared is and get be that feeling to the talked the as most payments or so today about, XXXX, in shown are the collect below But to call from consumers, but overall, goes better, them. talked sub-XXX a to XX%. the I impact, And be portfolio able They're pressure. much those

thing we in on VPG think we million the lift compared VPG mentioned. that other interest to equates at rates securitization had and it as asking a to what of bps David's in A David, lift, misspoke, that. drivers I interest one when XX that understand about back to that And question. couple relates increase going you're I I it the about million to to the look do. $X And a $XXX takes we $XX cover

to I that million as XX I were such stats when bps. misspoke for X% $X you that that So the think I those are equates looking said

question? your answer that did Brandt, And

Brandt Montour

clear. Yes, it did. Very

Operator

question [Operator of Instructions] the Our from with Stanley. Stephen Morgan line Grambling comes next

Stephen Grambling

new the digital in mentioned sources next You into recovering splitting it to ramp even of Thread as expectations just we are versus marketing channels orders through continue that performing walk about new to channels? how versus drive mix you and some Blue or the call Can owner it, direct mix by, think versus to other year. for XX% transfer -- different

Michael Brown

That of XXXX Blue when now sales. Thanks, is highest-VPG, we already And is to overall our you XX% get although year, that's back our close, relationship. the really peak if owner best-margin makes Thread what million slightly new pre-COVID. won't be And Stephen. right It $XXX not is channel. above, we're look our which to the Well, this new because to quite of umbrella at sense represents going at, back owner it's new owner affinity. sales,

few double back next is So strong remains and, is our right performance to our over owners those track. drive And with relationship of ability ultimately, objective Hotels years. new as Wyndham to ever. leads that as our The on the

owner relates heavily saw summer. the our in restarting we new a channels to We non-affinity, We marketing have it of partnerships. that market benefits the this As by that individual of non-affinity out of invested each basically investments markets. have we number in market, different by

and last XX% investing which be owner able That's year, across quarter. hold be will close owner we'll has mix we've doing are next and in to really owner VPGs the QX our what owner new drove and on in mix It QX what been the the more reaffirms the quarters. board, mix the rates even the new And new further XXXX. now seen that increasing that into team

Stephen Grambling

one clarification there. And sorry,

to percentage that I think Thread double Is right? the sales. is of your new Blue that objective you said owner

Michael Brown

volumes. Absolute

the up potential next be round over me to million years. to over $XXX this year. let We So $XXX that few see million

Stephen Grambling

to quick certain David's the the earlier Great. How right allocation, thinking on the less in questions a longer you corporate maybe business, And for term other about then borrowings economic evaluating one likely rates. are environment? follow-up particularly in leverage higher ABS and capital

Michael Hug

right talked think X.XX Xx. leverage is believe through we've still I and And delever our intention rate growing about EBITDA. mean I continue to the to Yes. remains to the

million March. Once at that that at sometime to this delever We've time using EBITDA, to got we the view comes down. the right leverage of change point, care at next out this $XXX So of that again, haven't cash point. grow and maturity the in terms in future. Take push a

of a billion about have on conduit. our We million minimum outstanding $X $XX

$XXX if So that we carry carry period we of conduit did usually million Pre-COVID, the million can balance on million to to on that do that. a we have some $XXX conduit. for time, $XXX

time. see of next months and at us what the for care unusual But do the X do take over not the to that ready we'll So to right be that. just markets

Operator

Chris Our last line from the question Bank. Woronka Deutsche with comes of

Chris Woronka

ground know I already. of lot covered you a

creating of a kind and product doesn't bringing incremental maybe guess, value, possibility more a kind risk? get new you somebody finance to any it words, without shorter of maybe of can any on or maybe kind think about but that? to altering In risk? of is in limited lower want get maybe go they term slightly pay dollar the very less to where thought which kind it's way of And number $X,XXX, is, that VOI is finance I ask I a focus to there points. there So Is other -- direction, different but have a a to -- a first-timers or in

Michael Brown

in The marketing definitely developed we new and play which it our travel we short-term XXX, to roll members. what did qualifications most product for of bigger out ended we've coming see up for patterns, above over months that very is of markets. markets. from and short opened has it, are below we X your the opportunity completely spent to markets. We've question, is doing, The to grow yes. testing cases, we months to -- FICO on is product. months use shift in that they already it been well, And in us to our like, want previously vacationing. moved is at It of nature X we COVID, like were reception up we we a that incremental a the that which But And acceptance. to how really what process that of complementary exactly our in chosen or they some stop that of launched market a Chris, an it we've answer some different When it not the made fantastic FICO of number once expected band band why XX people don't in short-term out bigger out what and to

ultimately to a We've because consumers. product. But what by how first yet on already rolled as know taken final out little short-term more we'll well. we It's since East it beginning it the a simply of about spoken to we want traction been well Coast land haven't received at was We market October. the received a second on there

the encouraging that is financial believe, right product put for us. lower product which be eventual shorter very or a vacation, continues, ultimately national our duration travel our is and nice to And feeder So mission And world product. aligns and up program will we great consumer, -- this into to the to a a the either if a simply very commitment. product, a success end which for that leisure on which timeshare is

Chris Woronka

any with of source expanding a Wyndham Are there ultra that some resorts of any Caribbean all-inclusive the possible from future? Great. of to affiliation guess a And in the inventory opportunities I Very to aware an Is lot into you on expect will possible of I be the all-inclusive helpful. owners radar? them. the those which or new that is markets, just follow-up, know lot then in a brand as bring

Michael Brown

to hotel a just group Rewards, doing and ability phenomenal owner our access in the the think I benefit. is great is the all, of growing Wyndham first a a their direct side job and to development well, product, that via brands, And -- base. is their Wyndham benefit So

really base. doing our for owner of in turn what they're what So with impressed very and does happy that

inventory an us very have clear we For objective. on a basis,

We that growth, new have, just for into -- We our back outlay it lot that X it about be very example either get obviously where projects. And to deploy of were great in price commitments as product, are repurchases we more a strategically The QX do shrewd to ability cash It can to we where think unless even going will have is have cash our hand, inventory coming preserve And inventory of we and opportunity. anything less mean the our XXXX, to we this -- is new shareholders, means attractive. -- our any and very don't example the deploy year, deploying preserving forms. capital. continued and it different that than we we're a cash I doesn't to us, which they our inventory we're back in minimizing on evaluation without dividend be M&A won't anything. do through means therefore, share years to related an of imperative

Operator

I'd queue. call closing in back There for questions are like the to hand further to management remarks. no the

Michael Brown

Thank Doug. you,

persistent have of our year people's it thanks happen every full you, and results make great associates to underscore of to members, leisure vacations quarter commitment and the This and performance and is travel, outlook strength our third owners, Thank Our guests model. day. who consistent day. a the timeshare all

Operator

you this gentlemen, Thank teleconference. your today's for and does conclude participation. Ladies

may day. at wonderful a your lines time, have You this and disconnect

Travel + Leisure (TNL) 27 Oct 222022 Q3 Earnings call transcript