Travel+Leisure Timeshare Market Dynamics and Financial Overview
DEFINITIONS
Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted net income divided
by the diluted weighted average number of common shares. Adjusted Diluted Earnings per Share is useful to assist our
investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over
different reporting periods.
Adjusted EBITDA: A non-GAAP measure, defined by the Company as net income 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, asset impairments/recoveries, 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 assets and liabilities related to acquisitions of continuing
businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. 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
EBITDA Margin is useful to assist our investors in evaluating our ongoing operating performance for the current reporting
period and, where provided, over different reporting periods.
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. 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 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 Free Cash Flow Conversion: Adjusted free cash flow as a percentage of Adjusted EBITDA. Forward-looking
outlook regarding Adjusted Free Cash Flow Conversion is provided only on a non-GAAP basis because not all of the
information necessary for a quantitative reconciliation is available without unreasonable effort. We use this non-GAAP
performance measure to assist in evaluating our operating performance and the quality of our earnings as represented
by adjusted EBITDA, and to evaluate the performance of our current and prospective operating and strategic initiatives
in generating cash flows from our earnings performance. This measure also assists investors in evaluating our operating
performance, management of our assets, and ability to generate cash flows from our earnings, as well as facilitating period-
to-period comparisons.
Adjusted Net Income: A non-GAAP measure, defined by the Company as net income 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 assets and 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. Adjusted Net Income is useful to assist our investors in evaluating our ongoing operating
performance for the current reporting period and, where provided, over different reporting periods.
Average Number of Exchange Members: Represents paid members in our vacation exchange programs who are
considered to be in good standing.
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.
Tours: Represents the number of tours taken by guests in our efforts to sell VOIS.
Travel and Membership Revenue per Transaction: Represents transaction revenue divided by transactions, provided
in two categories; Exchange, which is primarily RCI, and Travel Club.
Travel and Membership Transactions: Represents the number of exchanges and travel club bookings recognized as
revenue during the period, net of cancellations. This measure is provided in two categories; Exchange, which is primarily
RCI, and Travel Club.
Volume Per Guest (VPG): Represents Gross VOI sales (excluding telesales and virtual sales) divided by the number of
tours. The Company has excluded non-tour sales in the calculation of VPG because non-tour sales are generated by a
different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our Vacation
Ownership business because it directly measures the efficiency of its tour selling efforts during a given reporting period.
TRAVEL+
LEISURE
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