Travel + Leisure Co.

Good morning and welcome to the second quarter 2022 earnings conference call for Travel and Leisure Co. 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 star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the pound key. 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. I would now like to turn the call over to Chris Agnew. Please go ahead.

Thanks, Emma. 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 FCC 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 second quarter results, and Mike Hugg, our Chief Financial Officer, will then provide greater detail on the quarter, our balance sheet, and liquidity positions. Following these remarks, we'll look forward to responding to your questions. And with that, I'm pleased to turn the call over to Michael Brown.

Thank you, Chris. Good morning, and welcome to our second quarter earnings call. This morning, we are pleased to report strong results, highlighted by adjusted EBITDA of $230 million and adjusted EPS of $1.27. Thanks. Our top and bottom line results reflect the strength of our business model and continued strength in leisure travel demand despite macroeconomic headlines. The record volume per guest we delivered in the second quarter underscores the value our owners see in their timeshare ownership and the increasing value they receive during an inflationary environment. Our adjusted EBITDA margin was 24.9%. an improvement of 70 basis points over the second quarter of last year, and 40 basis points over the same quarter of 2019. We recognize that beyond our 2Q results, second half leisure travel demand and travel sentiment is top of mind for everyone. We see continued robust vacation ownership demand through the end of the year. Our booking pace is at 2019 levels, And due to an increase in average length of stay, room nights for the second half are 8% above 2019. I would also note we already have nearly 90% of 2019 second half room nights on the books for this year. I will share a number of data points that reflect the latest consumer travel behavior. The regions with the most demand for the rest of the year are the South, Southwest, and Hawaii. while the West Coast and International are modestly lagging. There has been an increase in drive-to arrivals from 73% in March to 79% in June. RCI booking windows have decreased by five days from 118 days earlier in the year to 113 days in the second quarter. Lastly, our portfolio remains strong and is growing again. These are a few of the data points we monitor to understand the latest consumer sentiment. As you can see, there is no significant changes in trends. As such, we believe that continued strength and performance is founded in our consumers' appreciation of their realized value. As a reminder, 80% of our owners have no loan outstanding and are traveling for the price of their maintenance fee. Our diverse portfolio of resorts gives our owners maximum flexibility with 95% of the U.S. population within 300 miles driving distance to one of our resorts. Transitioning to second quarter results, we were pleased with the continued performance of the business, and that strength is reflected in our forward guidance. For the second consecutive quarter, we achieved record volume per guest, At $3,489, we saw strong sequential and year-over-year growth in both new owner and owner VPGs. Second quarter VPG was 44% higher than 2019 and 11% higher than 2021. This VPG performance occurred while we also grew our new owner transaction mix by 200 basis points to 32%. Early signs in July show that VPG strength in each customer acquisition channel is continuing. Given that July and August are historically higher new owner sales months, we expect a modest pullback in Q3 VPG due to mix of new owner sales. In the second quarter, over 65% of new owner sales were to Gen Xers and Millennials, which underscores that the value of vacation ownership is resonating with younger generations and gives us confidence in our future upgrade pipeline. A key segment of our new owner growth is affinity sales, most notably the blue thread. Blue thread VPGs run approximately 20% higher than non-affinity new owner VPGs and now represent 16% of our new owner sales, which is nearly double the percentage of 2019. In addition to driving new owner sales, we are focused on increasing the percentage of sales finance. We have been successful on that front. In the second quarter, the percent of sales finance increased to approximately 65% from 55% in the prior year. We expect this to grow our high margin net interest income stream more quickly and offset higher borrowing costs. I will point out we are doing this while raising our average FICO score on new originations to 734 in the second quarter. The value proposition of vacation ownership continues to resonate and is the reason why close rates continue to track about 300 basis points above 2019 levels. We see inflation as a net positive for our business model as rising hotel and vacation home rental rates create an even more compelling value proposition for our customers. Turning now to the travel and membership segment, revenue declined 3% in the second quarter and finished up 5% for the first half of the year. In the second quarter, subscription revenue increased 5% and transaction revenue declined 6%. Overall, we are pleased with the performance of our exchange business. Through six months, member engagement continues to improve, and revenue per member is 2% higher than the first six months of last year. As we highlighted on our first quarter call, exchange had a difficult comp in the second quarter due to a COVID-related shift in demand into the second quarter in the prior year. Turning to our travel clubs, our travel club affiliation pipeline continues to steam ahead. We had nine new clubs in Q2 and are expecting even more this quarter. Many of the clubs we announced late in 2021 and in Q1 of this year have come online for membership and transactions in Q2, and several more will come online in Q3. We expect transactions to ramp toward the end of the current quarter through the end of the year. One of the benefits that resonates with clients is our ability to customize the travel platform to their affiliate needs. The customization takes between four and six months, and our goal is to get that to our original plan of under three months. Our transaction size is meeting our expectation at an average of $400, and some of the earliest clubs are already within the 1% to 3% activation range we are targeting. We have more work to do to get all clubs in that range, but the early proof points show a promising future. The platform is robust, and the value proposition is strong. Now, our single biggest focus is to drive transactions to those new clubs that have just come online or will do so in the upcoming months. We intend to do so by engaging more heavily to market each of the clubs to their members. Turning to our outlook, we expect third quarter adjusted EBITDA of $230 to $240 million, and we are raising full-year adjusted EBITDA guidance to between $860 to $880 million. We're committed to disciplined capital deployment, and while we are constantly looking for opportunities to invest cash flow to grow our business, as Mike will describe, we have also been returning a healthy portion of our excess capital to shareholders. Between buybacks and dividends, we expect to return 350 to 400 million to shareholders this year, or approximately 10% of our market cap at the midpoint. We are cognizant of uncertainty ahead for the macroeconomy, but we believe that the combination of the strategic improvements we have implemented and the resiliency of our cornerstone businesses position us well to meet the challenges that may emerge. and we are confident in our outlook for the remainder of the year. For more detail on our performance, I would now like to hand the call over to Mike Hugg. Mike?