Travel + Leisure(TNL) - 2023 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - The company reported a fourth quarter adjusted EBITDA of $240 million, a 7% increase year-over-year, and a full year adjusted EBITDA of$ 908 million, reflecting a 6% year-over-year growth [36][52] - Adjusted diluted earnings per share for the fourth quarter was $1.98, which includes a$ 0.37 income tax benefit, leading to a 52% increase [36][52] - Full year adjusted EPS grew by 26% over the prior year, with a cumulative capital return to shareholders since spin exceeding $2.1 billion [38][50] Business Line Data and Key Metrics Changes - Vacation Ownership segment reported a revenue increase of 5% to$ 776 million in the fourth quarter, with adjusted EBITDA rising 12% to $208 million [53] - Gross VOI sales for the full year increased 8% to$ 2.15 billion, with a VPG of $3,128 [40] - Travel and Membership segment revenue was$ 158 million in the fourth quarter, down from $163 million the previous year, with adjusted EBITDA of$ 52 million compared to $57 million [54] Market Data and Key Metrics Changes - Tours increased by 17% year-over-year in the fourth quarter and 18% for the full year, indicating strong consumer demand [41] - New owner transaction mix improved by 330 basis points in the fourth quarter and 240 basis points for the full year [41] - Forward bookings for 2024 owner nights are ahead of 2023 levels, reflecting robust consumer demand [48] Company Strategy and Development Direction - The company aims for growth through a multi-brand strategy, recently acquiring the rights to the Sports Illustrated Vacation Ownership business and the Accor Vacation Club brand [44][46] - The focus remains on enhancing marketing standards and ensuring profitable partnerships to drive new owner growth [6][7] - The company expects to leverage its strong relationships with partners like Wyndham Hotels to enhance marketing capabilities and drive growth [71] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving low single-digit EBITDA growth in the Travel and Membership segment for 2024, despite challenges [43] - The company anticipates a return to high single-digit growth rates in the long term as interest rates subside and operational efficiencies improve [15][63] - Management highlighted the importance of maintaining credit quality and managing provisions effectively, with expectations for provisions to remain in the 18% to 19% range [81] Other Important Information - The company returned approximately 15% of its market capitalization to shareholders through dividends and share repurchases [38][50] - Adjusted free cash flow for the year was$ 379 million, resulting in a 42% adjusted EBITDA to free cash flow conversion [57] - The company plans to recommend a dividend increase to $0.50 per share for the first quarter of 2024, reflecting confidence in future performance [51] Q&A Session Summary Question: Can you discuss the growth expectations for tours? - Management expects tour growth to exceed 10% for the year, building on the previous year's 18% growth [5][6] Question: How is the cost structure for the B2B and B2C business? - The company believes the cost structure is right-sized and is focused on maintaining EBITDA levels with minimal top-line growth [8][9] Question: What are the expectations for the Travel and Membership segment? - Management anticipates low single-digit EBITDA growth for this segment in 2024, with a focus on improving margins [75] Question: How is the company managing its capital allocation strategy? - The company remains committed to dividends and strategic M&A opportunities, with a focus on long-term growth [90][91] Question: What is the outlook for the Accor acquisition? - The Accor acquisition is expected to provide incremental growth, with plans for future expansion and synergies [65][66]