Travel + Leisure Co.

Greetings and welcome to the Traveler Leader Q1 2025 Earnings Call. At this time, all participants are in listen-only mode. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into question queue at any time by pressing star one on your telephone keypad. In the interest of time, we ask that you please ask one question, one follow-up, then return to the queue. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Mike Hugg, Chief Financial Officer. Please go ahead, Mike.

Thank you, Kevin. Good morning to everyone. Before we begin, we would 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 in our earnings press release accompanying this earnings call. 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 TravelandLeisureCo.com slash investors. This morning, Michael Brown, our President and Chief Executive Officer, will provide an overview of our first quarter results and outlook. and then I will provide greater detail on the quarter, our balance sheet, and outlook for the rest of the year. Following our prepared remarks, we will open up the call for questions. With that, I'm pleased to turn the call over to Michael Brown.

Good morning, and thank you for joining our first quarter earnings call. I look forward to expanding on the strong first quarter results you saw in our press release earlier today, as well as handing the call over to Mike Hugg for a review of our financial performance. This will be Mike's last earnings call, and I would like to thank Mike for his 26 years with our company and his last seven as the first and only Travel and Leisure CFO. During his leadership, Mike has seen us grow revenues from $500 million to $4 billion, has brought the company public, navigated us through the great financial crisis and COVID, and has been integral in ensuring we execute against our operational plans and our capital return strategy with incredible consistency. Thank you, Mike. In quarter one, we delivered $202 million of adjusted EBITDA at the high end of our guidance range. Our vacation ownership business once again fueled our success, driven by VPGs well above $3,000. Consolidated adjusted EBITDA margins grew from 21% in the prior year to 22%. We also continued to return capital to shareholders through dividends and share repurchases. Our dividend increased 12% to $0.56 per share, and share repurchases were $70 million, or 1.3 million shares in Q1. Before I address the question we're asked most often, which is how is the consumer, let me first take a moment to revisit who our 800,000 plus owners actually are. On average, they're 59 years old with a household income in excess of $110,000 and a tenure of about 17 years. 80% have fully paid off their ownership And our newest buyers, 65% of whom are Gen X, Millennials, and Gen Z, reflect the appeal of our product across generations. In short, our consumer KPIs perform very well in Q1. Consistent with the broad commentary in the marketplace, we recognize there is incrementally more uncertainty in the macro outlook, and the consumer sentiment has fallen progressively in 2025. Our perspective is that we will continue to monitor the available data. However, we have not seen meaningful changes in our company-specific KPIs. Our owners showed continued demand for vacation ownership in the first quarter. This was most clearly reflected in our best daily measure, volume per guest, or VPG. Our VPG was $3,212, up from 2024 and notably above $3,000. We also measure consumer demand through our owner's desire to visit our properties, as shown in resort bookings. We saw an acceleration of resort bookings as the quarter progressed. Mike will speak to a third important KPI, performance of the portfolio, during his overview. Our performance in Q1 is a great reminder of the characteristics of the timeshare business. that are often overlooked, starting with the reality that our owners continue to prioritize their travel and generally do not view vacations as discretionary. Travel patterns do tend to shift with economic conditions, and in that regard, we monitor drive-to versus fly-to arrival percentages, as well as booking windows. There's been no change in the percent of owners driving to our resorts, and we have only seen a modest reduction in our booking window. Compared to the same time last year, the booking window has decreased from 130 to 116 days. We see strong build for the upcoming months, and our second quarter reservations on the books are in line with expectations. When you combine VPGs, forward bookings, and travel trends, we currently see our consumer as quite resilient. We also observed that our investments in technology are beginning to yield higher owner satisfaction. The Club Wyndham app has now been downloaded by nearly 100,000 owners or approximately 20% of our Club Wyndham owner base. This is up from 40,000 downloads when we last reported. The app is driving a search to book conversion rate of 71%, representing a 22% increase compared to the booking conversion on the owner website. As I mentioned in our last call, we will deploy a similar app to our 200,000 plus Walmart owners later this year. Additionally, our resort operations team have deployed texting capabilities, increasing onsite satisfaction scores to new highs in Q1. All of this is to say, demand was solid in Q1 and our satisfaction rates are increasing. Moving to travel and membership, Industry consolidation continues to drive the migration from external to internal exchanges, putting continued pressure on the segment. Exchange transactions were down in the quarter. However, the business had its strongest exchange year-over-year transaction performance toward the end of the quarter. Our Travel Club business showed transaction growth of 3% in the quarter, with an expectation of acceleration in Q2. highlighting an opportunity to support the Traveler Membership segment. Q1 is typically the strongest transaction quarter, therefore transaction trends and margin will remain our focus in Q2. Our VO strength more than offset weakness in this segment, and we expect a similar dynamic throughout 2025, albeit with different orders of magnitude. Lastly, let me touch on our brand strategy. Starting with our partnership with Wyndham Hotels, Blue Thread performance in Q1 contributed 7% of new owner tours, with the VPG more than 20% higher than other new owner channels. Our relationship with Accor in Asia Pacific has been performing for a year with good success. Sports Illustrated remains on pace to start sales in 2025, and we have dedicated significant resources to reinvigorate our sales and expansion efforts for Margaritaville. we announced a new Margaritaville Resort in Orlando that will open in 2027, placing a vacation ownership resort next to the successful 265-room Margaritaville Hotel and 900 Margaritaville Cottages on the doorsteps of Disney. We have nearly completed an organizational realignment to marry strategy, economic objectives, and people around our brands. Although it is a subtle change, it is one that ensures we are laser-focused on the successful execution of these brands. As we look to Q2, on the back of the strength from Q1, we are projecting $250 million of adjusted EBITDA with a range of $5 million on either side and are reiterating our full-year adjusted EBITDA outlook. Mike will provide more details on this outlook. And with that, let me hand the call over to Mike.