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Travel+Leisure Co (TNL) Q1 2024 Earnings Call Transcript Highlights: Strategic Growth and ...

GuruFocus Research
·3-min read

  • Revenue Growth: 4% increase

  • Adjusted EBITDA: $191 million

  • Adjusted Earnings Per Share: $0.97

  • Tours Increase: 15% year-over-year

  • New Owner Tours: Up 28%

  • Q1 VPG (Volume Per Guest): $3,035

  • Owner Room Nights: 7% increase for the remainder of the year

  • Vacation Ownership Revenue: $725 million, up 6%

  • Adjusted EBITDA for Vacation Ownership: $135 million, up 3%

  • Travel and Membership Revenue: $193 million, down 4%

  • Adjusted EBITDA for Travel and Membership: Growth of 6%

  • Operating Cash Flow: $47 million

  • Adjusted Free Cash Flow: $22 million

  • Dividend: Increased to $0.50 per share

  • Share Repurchases: 624,000 shares at an average price of $40.7

Release Date: April 24, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Q & A Highlights

Q: Michael, Mike, it seems like volume per guest is tracking better even as you improve your new owner mix. Can you talk about what's driving that more favorable relationship between VPG and new owner mix? A: Michael D. Brown, CEO - President & Director, Travel+Leisure Co.: The 28% new owner tour growth year-on-year sets us up well for Q1 and beyond. We opened over 30 new marketing locations in 2023, getting the full year positive impact this year. Additionally, we invested heavily into the marketing package pipeline, which is now beginning to show results. The execution by the team has been excellent, contributing significantly to these outcomes.

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Q: Regarding consumer financing in Vacation Ownership, have your expectations changed given the potential shifts in interest rate cuts by the Fed? A: Michael A. Hug, CFO, Travel+Leisure Co.: We've executed well with our March ABS transaction. Interest rates have risen slightly since then, but it's not expected to significantly impact this year's EBITDA. We anticipate that interest rate headwinds will eventually become tailwinds, although this may not occur as soon as previously expected. Our consumer finance portfolio is performing well, with a provision for the quarter at 17.4% and a focus on maintaining high credit quality.

Q: Can you discuss the criteria for share repurchases and how acquisitions or other investments may have influenced this quarter's repurchase levels? A: Michael A. Hug, CFO, Travel+Leisure Co.: The $46 million spent on the Accor acquisition impacted our Q1 share repurchases. Our capital allocation strategy prioritizes growing dividends and the business, followed by strategic M&A and then share repurchases. We spent $25 million on share repurchases in Q1 and plan to request an additional $500 million in share repurchase authorization at our upcoming Board meeting.

Q: How is the new owner growth sustainable, especially with the impressive tour flow and mix seen this quarter? A: Michael D. Brown, CEO - President & Director, Travel+Leisure Co.: The growth is sustainable due to our focus on incremental arrivals and room nights for owners, fruitful partnerships like with Wyndham Hotels, and methodical regional expansion of new marketing locations. Additionally, our focus on package sales is creating a new avenue for sustained growth.

Q: Could you provide an update on the progress and strategy for the B2B and B2C portions of your business? A: Michael D. Brown, CEO - President & Director, Travel+Leisure Co.: We've aligned costs more closely with revenue expectations and are focusing on deepening relationships with existing B2B partners rather than expanding the number of partners. This approach is intended to enhance conversion rates and transaction growth without diluting efforts across too many new B2B customers.

Q: Can you give more details on the Allegiant partnership and how it fits into your strategy? A: Michael D. Brown, CEO - President & Director, Travel+Leisure Co.: The partnership with Allegiant, which has 15 million loyalty members and 125 destinations, will involve cross-promotional marketing focusing on air and stay packages. This collaboration is expected to enhance our package pipeline and marketing efforts, aligning well with our growth strategy.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.