Travel + Leisure Co.

Greetings and welcome to Travel and Leisure Company's third quarter 2022 conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Christopher Agnew, Senior Vice President of Financial Planning and Analysis and Investor Relations. Thank you. You may begin.

Thank you, Doug, and 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 poll in the earnings press release available on our website at travelandleisureco.com forward slash investors. 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 look forward to answering your questions. With that, I'm pleased to turn the call over to Michael Brown.

Thank you, Chris. Good morning, and welcome to our third quarter earnings call. This morning, we reported adjusted EBITDA of $234 million and adjusted earnings per share of $1.28. Strong leisure demand continued throughout the third quarter, and our key indicators point to continued strong travel demand heading into next year. In September, we reaffirmed our $230 million to $240 million adjusted EBITDA guidance with the expectation that we would be at the high end of that range. However, at the conclusion of the quarter, Hurricane Ian and a weakening Australian dollar impacted our Q3 results by an estimated $4 million of EBITDA. In the quarter, we returned $148 million to shareholders through a quarterly dividend and the repurchase of shares. Of the $148 million, $115 million was dedicated to share repurchases, up from $83 million in Q2. In the third quarter, repurchases accounted for 3.2% of outstanding shares. Full year through the end of Q3, repurchases have accounted for 6% of outstanding shares. The key metrics in our business performed well during the quarter with tours increasing 22% year-over-year and VPG maintaining the near record levels from the second quarter of 5% year-over-year. New owner transaction mix increased to 33%, up nearly 300 basis points year-over-year and 100 basis points sequentially. While increasing new owner mix normally puts downward pressure on VPG, the strength in VPG goes to highlight the consistency in closing rates and how strongly the value proposition of our products is resonating with our customers. We also saw solid growth in our travel and membership segment, with revenues up 5% year over year, despite the drag from the hurricane at the end of the quarter. Shifting to booking trends, in the third quarter, room nights ended 8% ahead of 2019 at our vacation ownership clubs. In the fourth quarter, the strong leisure travel trends have continued, and forward bookings remain above 2019 levels. Room nights on the books are now pacing 9% above 2019. Strong VPGs in the quarter helped deliver $555 million of gross VOI sales above the top end of our guidance range of $530 to $550 million. At $3,393, VPG for the third quarter was 45% above 2019, with the performance being driven by increased close rates. The strength in close rates reflect the elevated quality of our marketing criteria and the value our customers see relative to hotel stays and alternative accommodations. Recent surveys of our owner base show a 13% increase in the perceived value in their ownership compared to before this period of elevated inflation. Our consumer finance portfolio is growing, which helps to offset the increased borrowing costs we have seen in the ABS market. Our portfolio is stronger today because of the changes implemented during COVID to raise credit quality, as Mike will discuss in more detail. I would also like to reinforce how our strategic approach on elevated FICOs is fundamentally changing our business. As a company, our exposure to lower-end FICOs has reduced dramatically. In fact, as you consider average FICOs for new originations across the public timeshare companies, we are now in line with our branded peers. The last few years have shown once again that vacations are not purely discretionary. Most of our customers may change how they vacation, but they rarely forego their vacation. As an example, during COVID, we saw many of our owners choose to drive to destinations rather than fly, and they utilized their en suite kitchens instead of dining out, which reinforces once again what we always understood. People prioritize vacations and have a strong desire to travel. Despite some recent moderation in general consumer indices, intention to travel remains high. According to a mid-September survey by tourism market research firm Destinations Analysts, excitement to travel in the next 12 months remains elevated and near the highs of the last few years. We believe our owners are among the most committed travelers and experience And our experience during the Great Recession and COVID showed us that most of our owners will use their prepaid vacations. Timeshare resort occupancy, according to ARDA, the Timeshare Industry Trade Association, was little changed from 2007 at just under 80% in 2009 when hotel occupancy dropped over 800 basis points over the same period. It is clear that our cornerstone vacation ownership business is performing well, and given the resiliency of our business model with predictable and recurring revenue streams, we believe we have good visibility for the remainder of the year and are confident heading into 2023. Shifting to our travel and membership business, despite the impact of the hurricane at the end of the quarter, exchange transactions still increased 8% year over year, including a 13% improvement in international transactions. Exchange revenue per transaction was up 3% in North America, but was offset by declines internationally, primarily due to currency impacts. Our exchange business continues to perform at a high level with year-to-date operating profit ahead of last year and just below 2019. Our travel clubs continue to add to building blocks for success, and we are making steady progress on many fronts. We added 38 affiliate partners in the third quarter, including some great organizations like Reader's Digest UK and Silver Surfers. The lead time for signing an affiliate to ramp up has taken longer than originally expected. With that said, we are ramping up our B2B transactions, which increased 27% year-over-year in the third quarter. Before I hand the call over to our CFO, Mike Hugg, let me provide an update on the impact of Hurricane Ian and also make a few final comments related to guidance and cash generation. First, our thoughts go out to everyone impacted by the storm, and we thank all of our associates who work tirelessly to ensure the safety of our owners and guests. While none of our managed vacation ownership resorts experienced major damage, there was water intrusion at several resorts in Orlando and Daytona Beach, Florida, and a number of resorts in coastal South Carolina. Sales operations, bookings, and travel were impacted around the time of the storm and we lost some capacity for a short period. RCI has a strong portfolio of resorts along the Gulf Coast of Florida, particularly in Fort Myers and Naples, as well as Marcos, Sanibel, and Captiva Islands. In late September, 114 resorts along the Gulf Coast of Florida and Central Florida, as well as Coastal Carolina, were impacted by the hurricane. The damage caused units to be placed out of service and future bookings in those locations temporarily suspended. This area represents 6% of our U.S. supply in terms of resort count. Most have provided reopening dates within the next few months, but over 40 resorts are not expecting to take arrivals until the start of 2023, and seven are not expected to reopen next year. As a result of hurricane and foreign currency impacts, We are adjusting and tightening our full-year adjusted EBITDA guidance to $855 million to $865 million. The $10 million adjustment to the midpoint of our guidance reflects the $4 million impact in the third quarter, lost RCI bookings due to out-of-service inventory in the fourth quarter, and foreign currency headwinds. We expect VPG to be at the high end of our previous guidance at around $3,400, We expect gross VOI sales to be between $1.95 billion and $2 billion, and loan laws provision for the full year to be around 17%. Between buybacks and dividends, we are increasing our full-year capital return forecast from a range of $350 to $400 million to approximately $475 million, or 14% of our market cap. We expect full-year adjusted EBITDA cash conversion from adjusted EBITDA to be closer to 50% this year as a few timing items, primarily the placing of receivables in term ABS transactions, will see cash flow shift to the first quarter of 2023. As of yesterday's market close, our current adjusted free cash flow yield is approximately 13% based on our full-year expectation. For more detail on our performance, I would now like to hand the call over to Mike Huck.