TNL | Travel   Leisure Co. | earnings call 2026-07-22
Verbatim transcript (source: faster-whisper-small.en)

Tour flows, tour flow in the second quarter decelerated just a little bit. And I think that we were looking for, you guys had talked to something in the mid-single digit range for the year. So just sort of x acquisitions. Is that lower than your internal expectations? Did you expect just sort of a bigger second half, or things evolved in a different way for the P&L as the way you're looking toward the back half? They've evolved a little bit different, not much, but ultimately, as we started at the beginning of the year, we knew that our Resort Optimization Initiative was going to impact our tour flow this year. What we're excited about and what we saw in Q2 is that our new owner tours accelerated, and we saw good growth to really begin to support getting back into the 30s on new owner transactions. And then the impact started to come through on owner tour flow in Q2 as a result of our strategic resort closures. That's how we expected the year to play out, and we're seeing that come through. What has been the positive surprise to that is that the VPG has allowed us to outpace the tour decline on the owner side through the resort closures, resulting in us being able to hit our historical VOI growth rate. So yeah, like with all of this, all of our KPIs, things bounce up and down within a range. Tours are the same, VPGs are the same, one slightly down, one slightly up, and net effect is VOI sales being above where we originally anticipated at 6%. Okay, Mike, thank you for that, that's helpful. And then maybe for Eric, I just wanna widen the lens out on the loan loss revision and talk more sort of longer term. If we kinda go back last year, I think, I don't wanna put words in your mouth, but the expectation or sort of the upshot for this year was loan loss could get down into the high teens. And then now, or sort of earlier this year, the 2026 expectations sort of came in, sort of evolved to slightly down year over year, which would imply still above that 20% mark. Now we have a deal, the deal's gonna sort of push the whole thing up a little bit, which is totally understandable. And then there was the first quarter wrinkle that's now, looks like it's completely reversed and improved. I guess just, so what, I guess, outside of the deal, what would make 26 not sort of back to that prior path toward high teens? What would make you wanna kind of give it another year to sort of hope you could get there? Yeah, so thanks for the question, Brian. So first, let's start with, you're right, the second quarter has completely reversed itself off of what we saw in the first quarter from an early stage delinquency perspective. We guided 2026 to be slightly below 2025's loan loss provision level. And in prior calls, I think that we have talked about the loan loss provision settling in over the longer term in the upper teens. I think that that thesis continues to hold. I think that we've got some early positive indicators associated with what we've seen from the portfolio here in the second quarter. But I think that as we get further and deeper into 2026 and start to think harder about what the 27 number could look like, we'll be back to you on that. Okay, fair enough, thanks for the color. Thanks, Brian. Thank you, our next question is a follow-up coming from Patrick Skoles of Truist. Please go ahead. All right, thank you. Regarding the acquisitions, it looks like, and my question is regarding how they may be incorporated into RCI. It looks like the fixed weeks that spin occur are already a part of RCI, but if I'm correct here, floating weeks are part of interval international. Would you see down the road whenever that, in fact, if that's correct, that interval international contract rolls off, and I'm reminded here of what happened with the shell acquisition many years ago, that you would recontract with RCI for the floating weeks, assuming I've got my facts correct here, thank you. Yeah, that would definitely be the logical outcome. Some can be immediate depending on the owner base, and I'm not referring to spin occur, and then some will occur over time. But there's a good portion of that 100,000 that are not currently affiliated, which creates an opportunity for us over the next 24 months, maybe 36, I don't know exactly the timing on it. Okay, so sometime in the next two to three years, lately? Yes. Thank you, I'm all set. Thanks, Patrick. Thank you. At this time, I would like to turn the floor back over to Mr. Brown for any additional or closing comments. Thanks, everyone, again, for joining us today, and especially I'd like to, like Eric, I'd like to welcome the teams of Yesand and Spinnaker to the Travel and Leisure team. 2026 is shaping up to be another great year for Travel and Leisure. Through the first half of the year, we delivered compounding growth across the P&L, 4% revenue growth, 9% EBITDA growth, and 21% earnings per share growth. This momentum alongside our two recently announced acquisition gives us the confidence to raise the midpoint of our full year EBITDA guidance by more than $30 million. Importantly, we achieved all of this while maintaining our shareholder-friendly capital allocation strategy and balance sheet flexibility. These results are a direct result of our growth strategy and discipline capital deployment, and we are well positioned to create meaningful long-term value for shareholders. Eric and I look forward to seeing you at upcoming conferences, and thank you for your continued interest in Travel and Leisure. Ladies and gentlemen, this concludes today's event. You may disconnect your lines or log off the webcast at this time and enjoy the rest of your day.