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

ORLANDO, Fla., October 27, 2021–(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:

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

“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.”

Business Segment Results

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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 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 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