Travel + Leisure Co.

Good morning and welcome to the third quarter 2021 earnings conference call for Travel and Leisure Co., formerly Wyndham Destinations. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press the stars and the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key on your telephone keypad. As a reminder, ladies and gentlemen, this conference call is being recorded. If you do not agree with these terms, please disconnect at this time. Thank you, and I would now like to turn the call over to Chris Agnew. Please go ahead.

Thank you, Ashley. Good morning. Before we begin, we'd like to remind you that our discussions today will include forward-looking statements. Actual results could differ materially from those indicated in the forward-looking statements, and the forward-looking statements made today are effective only as of today. We undertake no obligation to publicly update or revise these statements. The factors that could cause actual results to differ are discussed in our SEC filings, and you can find a reconciliation of the non-GAAP financial measures discussed in today's call in the earnings press release available on our website at investor.travelandleisureco.com. This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of our third quarter results, and Mike Hugg, our Chief Financial Officer, will then provide greater detail on the quarter, our balance sheet, and liquidity position. Following these remarks, we will then be available to respond to your questions. With that, I'm pleased to turn the call over to Michael Brown.

Thank you, Chris. Good morning and welcome everyone to our third quarter earnings call. This morning, we are pleased to announce another solid quarter as our cornerstone brands continue to demonstrate their strength. We reported adjusted EBITDA of $228 million in the third quarter and adjusted EPS of $1.19. This has been an eventful last 90 days. On September the 10th, we held a Travel and Leisure Investor Day where we laid out our strategic and economic direction to deliver accelerated growth over the next four years. That same week, we launched our first B2C travel subscription club called the Travel and Leisure Club, delivering a unique membership travel experience based on the inspiration from the Travel and Leisure magazine. In the midst of these strategic events, We continue to execute within our two cornerstone brands of Wyndham Destinations and RCI. We are very pleased with the operational performance of our vacation ownership business in the third quarter. VPG was $3,233, including very strong performance from sales to new owners, which contributed to the highest overall quarterly VPG in our history. Our portfolio continues to perform well, and the cost reductions we made in 2020 are now being fully realized. Those factors contributed to the strong adjusted EBITDA margin of 27%. At Wyndham Destinations, North American gross vacation ownership sales were within the range of our expectations despite multiple headwinds in the quarter. When we provided our guidance at the end of the second quarter, we did not anticipate the severity of the Delta variant surge, nor did we anticipate the impact Hurricane Ida would have on our operations in Texas and Louisiana, along with the wildfires that impacted several of our California resorts. Despite these headwinds, we were still within our VOI sales guidance range for North America. Only international vacation ownership sales which are less than 5% of total sales were outside of their range due to the significant ongoing travel restrictions in the South Pacific. The travel and membership segment exceeded our expectations with strong revenue per transaction for both the exchange and non-exchange businesses. Exchange revenue per transaction increased 13% year-over-year and non-exchange increased 36%. Travel and membership adjusted EBITDA was $68 million in the quarter. For the company as a whole, the adjusted EBITDA margin of 27% was 300 basis points above the third quarter of 2019. We were able to achieve this margin despite a $30 million net interest income headwind due to a reduction in our consumer finance portfolio. To put in perspective the strength of our third quarter margin, If we equalize the 2021 portfolio size to 2019 and exclude the $13 million EBITDA impact from the COVID reserve release, adjusted EBITDA margin would have been approximately 28.6%, 448 basis points higher than the third quarter of 2019. In the final two weeks of the third quarter, we saw clear indications that the impacts of the Delta variant were abating. specifically related to net vacation ownership bookings. In August and most of September, near-term booking trends were consistently behind our 2019 pace. In the last two weeks of September and through October, the booking trend moved back above 2019. Looking into the remainder of the year, net bookings are 5% ahead of 2019. RCI saw similar positive trends at the end of September. Close-end exchange booking trends finished the month of September ahead of 2019 after starting the month below. This trend has continued into October. We are also seeing some positive booking trends emerge in RCI's international regions as COVID travel restrictions are starting to ease. We are encouraged about the recovery of international travel, but recognize overall performance will trail the U.S. Beyond our business, I'd like to address a few macro topics that are becoming increasingly important for companies and share some thoughts on how these topics do or do not impact our business. On the topic of inflation, we should be a net beneficiary. One of the core value propositions of timeshare is locking in future vacation costs at today's prices. It is easier for us to demonstrate the value of ownership when travel costs are rising. Rising inflation will likely mean higher interest rates. Approximately 85% of our debt is fixed, and rising rates will have a muted impact on our net interest expense. For every 50 basis points of increase in rates, our corporate interest expense would increase $1.5 million on an annualized basis. And on the consumer finance side, for every 50 basis points of increase in rates, our ABS interest expense would increase $3 million. On supply chains, we have not seen any material impact to our operations related to supply chain disruption. We have more than sufficient inventory for our sales needs for years to come, and the two new projects being delivered next year, Atlanta and Moab, are scheduled for on-time and on-budget deliveries. Turning to the labor market, like all service related industries, recruiting has become more challenging lately. Despite the labor market, we do not see this as a factor that will alter our road to recovery. We have taken a number of actions to compete effectively for talent, but in general, we staff up for busy travel seasons every year and are accustomed to managing high volume recruiting for these periods, which helps us to be effective in the current environment. Our resort operations teams continue to deliver great vacations, and our marketing and sales teams are working harder than ever to acquire new owners or increase the ownership of existing customers. As you can hear from my commentary, I'm proud of our team's efforts in the third quarter to overcome the unexpected headwinds, yet deliver such strong results. And there is a clear strengthening of sentiment forming among travelers as we see the Delta variant cases decline. As a result of our strong third quarter and confidence in our business, we are increasing our full year adjusted EBITDA guidance to $740 to $750 million, more than a full pull through of our third quarter beat after we adjusted for continued travel restrictions in the South Pacific impacting the fourth quarter. With our cornerstone brands delivering on all sides of the business, I want to transition to our business extensions for an update from our most recent investor day. Panorama Travel Solutions has great momentum as the team has closed 12 transactions year-to-date. In the third quarter, we signed MasterCard in Southeast Europe and the NFL Alumni Association. We are also excited about expansion in Latin America, where our leading affiliate, Grupo Posadas, has signed three new partners, including Hertz Mexico. As we begin to activate these new affiliates, we will start to see transaction flow in the first quarter next year. Travel and Leisure Club is also making good progress since its launch in September. In the weeks since launch, we've gained traction as new members have enrolled in the subscription club as we've started our marketing efforts within the travel and leisure affinity channels. Our business development team continues to expand acquisition channels through digital marketing activation and affiliate partnerships. On the content side, by the end of the year, we expect to have around 40 curated itineraries available for purchase. These itineraries are proving to be one of the most viewed features on our website and a top driver of organic search traffic. We continue to deliver on the strategy we laid out last month and believe our path to accelerated growth through 2025 remains clear. For more details on our performance, I would now like to hand the call over to Mike Hugg for our financial results.