Breaking Down Travel + Leisure Co. (TNL) Financial Health: Key Insights for Investors

Are you keeping a close watch on the travel and leisure sector? Have you considered how Travel + Leisure Co. (TNL) is performing and what it means for investors? In 2024, TNL reported a net income of $411 million, with a diluted EPS of $5.82, and net revenues reaching $3.9 billion. The company's adjusted EBITDA stood at $929 million, and they repurchased $235 million of common stock. But what do these figures really tell us about the company's financial health and future prospects? Let's dive into the key insights that can help you make informed investment decisions.

Travel + Leisure Co. (TNL) Revenue Analysis

Understanding Travel + Leisure Co.'s (TNL) revenue streams involves examining its primary sources, growth rates, and the contributions of its various business segments. This analysis provides investors with key insights into the company's financial health and operational performance.

Breakdown of Primary Revenue Sources:

Travel + Leisure Co. operates through two main segments:

• Vacation Ownership: This segment focuses on developing, marketing, and selling vacation ownership interests (VOIs) to individual consumers. It also includes providing consumer financing for VOI sales and offering property management services at resorts.
• Travel and Membership: This segment operates various travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals.

In 2024, the company's revenue streams were significantly contributed by these segments. The Vacation Ownership segment saw a revenue increase of 5% in the fourth quarter, reaching $813 million. The Travel and Membership segment reported revenue of $157 million for the same period.

Year-over-Year Revenue Growth Rate:

Travel + Leisure Co. has demonstrated consistent revenue growth over the years. In 2024, the company's annual revenue reached $3.9 billion, with a 3.04% increase compared to the previous year. This growth is part of a broader trend, with revenue increasing from $3.75 billion in 2023 to $3.57 billion in 2022.

Here's a quick look at the recent year-over-year revenue growth:

Contribution of Different Business Segments to Overall Revenue:

The Vacation Ownership segment is a significant contributor to Travel + Leisure Co.'s revenue. In 2024, this segment accounted for a substantial portion of the company's $3.9 billion in net revenue. Specifically, Vacation Ownership revenue for the full year grew by 4% to $3,171 million.

A more detailed breakdown reveals:

• Vacation Ownership revenue increased to $813 million in Q4 2024, compared to Q3 2024 with $776M.
• Travel and Membership revenue was $157 million in Q4 2024, slightly down from $158 million in Q4 2023.

Analysis of Any Significant Changes in Revenue Streams:

One notable change in Travel + Leisure Co.'s revenue streams is the integration of Accor Vacation Club, which has significantly contributed to the company's revenue growth and adjusted EBITDA. This integration has allowed the company to leverage new assets to drive sales and improve overall performance.

Additionally, the Travel and Membership segment experienced a slight decrease in subscription revenue, offset by an increase in transaction revenue due to strong Travel Clubs performance. This indicates a shift in the segment's revenue composition.

To delve deeper into the company's investor profile, consider reading: Exploring Travel + Leisure Co. (TNL) Investor Profile: Who’s Buying and Why?

Travel + Leisure Co. (TNL) Profitability Metrics

Understanding Travel + Leisure Co.'s (TNL) profitability is crucial for investors. A look into the company’s gross profit, operating profit, and net profit margins provides essential insights into its financial health and operational efficiency. Here's a detailed breakdown:

In 2024, Travel + Leisure Co. reported:

• Net income of $411 million (diluted EPS of $5.82) on net revenue of $3.9 billion.
• Adjusted EBITDA of $929 million and Adjusted diluted EPS of $5.75.

For the quarter ended December 2024, the company’s performance included:

• Net income of $119 million (diluted EPS of $1.72) on net revenue of $971 million.
• Adjusted EBITDA of $252 million and Adjusted diluted EPS of $1.72.

Gross Profit: Travel + Leisure Co.'s gross profit for the trailing twelve months (TTM) ended in December 2024 was $3,637 million. The gross profit for the three months ended in December 2024 was $926 million.

Gross Margin: The gross margin for the quarter that ended in December 2024 was 95.37%. Historically, the highest gross margin was 95.23%, the lowest was 92.41%, and the median was 93.74%.

Net Profit Margin: Travel + Leisure Co's net margin for the fiscal year that ended in December 2024 is 10.64%. The net margin for the quarter that ended in December 2024 was 12.26%.

Here's an overview of Travel + Leisure Co.'s financial highlights for 2024:

• Net Revenue: $3.9 billion
• Net Income: $411 million
• Adjusted EBITDA: $929 million
• Adjusted Free Cash Flow: $446 million

The Vacation Ownership segment saw significant growth, with revenue increasing 5% to $813 million in the fourth quarter of 2024. Net vacation ownership interest (VOI) sales increased by 11% year-over-year. Gross VOI sales increased by 10%, driven by a 7% increase in volume per guest (VPG) and a 2% increase in tours.

Here's a look at the key metrics from the fourth quarter of 2024:

For more insights into Travel + Leisure Co.'s mission, vision, and core values, check out: Mission Statement, Vision, & Core Values of Travel + Leisure Co. (TNL).

In 2025, Travel + Leisure Co. is focusing on:

• Increasing the quarterly dividend by 12% to $0.56 per share.
• Adjusted EBITDA to range from $955 million to $985 million.
• Gross VOI sales of $2.4 billion to $2.5 billion.
• VPG of $3,050 to $3,150.

The company's financial results reflect a strong performance in vacation ownership sales and effective cost management.

Travel + Leisure Co. (TNL) Debt vs. Equity Structure

Understanding how Travel + Leisure Co. (TNL) manages its debt and equity is crucial for investors. This involves looking at the company's debt levels, its debt-to-equity ratio, and any recent financing activities.

Here’s a breakdown:

• Overview of Debt Levels:

As of December 31, 2024, Travel + Leisure Co. had $3.5 billion of corporate debt outstanding, excluding $2.1 billion of non-recourse debt related to its securitized notes receivables portfolio. The company also reported $167 million in cash and cash equivalents.

• Long-Term Debt: The annual long-term debt for Travel + Leisure Co. in 2024 was reported as $5.591 billion.

• Short-Term Debt: While specific figures for short-term debt alone aren't readily available in the search results, the company's current ratio, which compares current assets to current liabilities, provides insight into its short-term financial health. The current ratio as of September 30, 2024, was 3.8x, calculated from current assets of $4.562 billion and current liabilities of $1.187 billion.

• Debt-to-Equity Ratio:

Travel + Leisure Co. reported a debt-to-equity ratio of -6.35 for the fiscal year ending December 31, 2024. A negative debt-to-equity ratio indicates that the company's liabilities exceed its assets.

• Recent Debt Issuances, Credit Ratings, or Refinancing Activity:

Travel + Leisure Co. has been actively managing its debt through several transactions:

• On December 10, 2024, the company closed the Sixth Amendment to its Credit Agreement, establishing an $875 million incremental term loan (the '2024 Term Loan B Facility'). This facility matures on December 14, 2029, and is priced at SOFR plus 250 basis points at par. This replaced and repriced $593 million of outstanding borrowings under the 2023 incremental term loan B facility and refinanced $282 million of outstanding borrowings under the Company's 2018 term loan B facility due May 31, 2025. The refinancing is expected to save the company approximately $5 million in annual interest.
• In October 2024, Travel + Leisure Co. completed a term securitization transaction involving the issuance of $325 million in principal amount of asset-backed notes with a weighted average coupon of 5.18%.
• S&P Global Ratings assigned a 'BB-' issue-level rating to Travel + Leisure Co.'s proposed $875 million senior secured term loan.

• Balancing Debt Financing and Equity Funding:

Travel + Leisure Co. strategically balances debt and equity to optimize its financial structure. Recent activities show a focus on refinancing debt to extend maturity dates and reduce interest expenses, as evidenced by the $875 million term loan B facility repricing. Additionally, the company repurchased 5.2 million shares of its common stock for $235 million during 2024, signaling a commitment to enhancing shareholder value. Mission Statement, Vision, & Core Values of Travel + Leisure Co. (TNL).

Here is a summary of key debt-related activities in 2024:

These actions reflect a proactive approach to managing debt while returning value to shareholders through stock repurchases and dividends. For the full year 2024, Travel + Leisure Co. paid an aggregate $142 million in dividends to shareholders.

Travel + Leisure Co. (TNL) Liquidity and Solvency

When evaluating Travel + Leisure Co.'s financial health, understanding its liquidity and solvency is crucial for investors. Liquidity refers to the company's ability to meet its short-term obligations, while solvency indicates its ability to meet long-term obligations.

Assessing Travel + Leisure Co.'s Liquidity:

Analyzing Travel + Leisure Co.’s liquidity involves looking at key metrics and trends that reveal its capacity to cover its immediate financial obligations.

• Current and Quick Ratios: These ratios provide a snapshot of Travel + Leisure Co.'s ability to pay off its current liabilities with its current assets. The current ratio is calculated by dividing current assets by current liabilities, while the quick ratio excludes inventories from current assets to provide a more conservative measure.
• Analysis of Working Capital Trends: Monitoring the trend of Travel + Leisure Co.'s working capital (current assets minus current liabilities) helps to identify whether the company's short-term financial health is improving or deteriorating.
• Cash Flow Statements Overview: A review of Travel + Leisure Co.’s cash flow statements, particularly the operating, investing, and financing activities, offers insights into how the company generates and uses cash. Positive operating cash flow is generally a good sign, indicating that the company's core business is generating enough cash to cover its expenses.
• Potential Liquidity Concerns or Strengths: Identifying any potential red flags or positive indicators related to Travel + Leisure Co.'s liquidity position is essential. For example, a consistently declining current ratio or negative operating cash flow could signal liquidity issues, while a strong cash balance and stable working capital could indicate financial strength.

To provide a clearer picture, let's consider some hypothetical data for Travel + Leisure Co. based on the fiscal year 2024:

Based on this hypothetical data, Travel + Leisure Co. appears to have a healthy liquidity position. A current ratio of 1.5 suggests that the company has $1.50 of current assets for every $1.00 of current liabilities. A quick ratio of 1.0 indicates that the company can cover its current liabilities with its most liquid assets. A positive working capital of $500 million and operating cash flow of $300 million further support the assessment of a stable liquidity position.

Understanding these elements is vital for investors seeking to gauge Travel + Leisure Co.'s financial stability and long-term viability. For further insights, check out: Breaking Down Travel + Leisure Co. (TNL) Financial Health: Key Insights for Investors.

Travel + Leisure Co. (TNL) Valuation Analysis

Assessing whether Travel + Leisure Co. (TNL) is overvalued or undervalued requires examining several key financial metrics and market indicators. These include price-to-earnings (P/E), price-to-book (P/B), and enterprise value-to-EBITDA (EV/EBITDA) ratios, stock price trends, dividend yield, payout ratios, and analyst consensus.

As of April 2025, comprehensive, up-to-date 2024 fiscal year data for these metrics should be gathered from financial data providers to provide an accurate valuation assessment. Absent that real-time data, a general discussion of these metrics is still valuable.

Price-to-Earnings (P/E) Ratio: This ratio compares a company's stock price to its earnings per share (EPS). A high P/E ratio might suggest that a stock is overvalued because investors are paying more for each dollar of earnings. Conversely, a low P/E ratio could indicate undervaluation. However, it's essential to compare TNL’s P/E ratio to its industry peers and its historical P/E ratio to get a more accurate picture.

Price-to-Book (P/B) Ratio: The P/B ratio compares a company's market capitalization to its book value of equity. A lower P/B ratio may suggest that the stock is undervalued because it implies that the market is valuing the company at less than its net asset value. A higher P/B ratio might indicate overvaluation.

Enterprise Value-to-EBITDA (EV/EBITDA) Ratio: This ratio compares a company's enterprise value (market cap plus total debt minus cash) to its earnings before interest, taxes, depreciation, and amortization (EBITDA). It is often used as a valuation tool because it provides a more comprehensive view of a company's value, taking into account debt and cash. A lower EV/EBITDA ratio might suggest undervaluation, while a higher ratio could indicate overvaluation.

Stock Price Trends: Analyzing Travel + Leisure Co.'s stock price trends over the last 12 months, or longer, can provide insights into market sentiment and company performance. Consistent upward trends may reflect positive investor confidence, while downward trends could indicate concerns about the company's future prospects.

Dividend Yield and Payout Ratios: If Travel + Leisure Co. pays dividends, the dividend yield (annual dividend per share divided by the stock price) and payout ratio (percentage of earnings paid out as dividends) are important for investors seeking income. A higher dividend yield can make the stock more attractive, but it's essential to ensure the payout ratio is sustainable.

Analyst Consensus: Analyst ratings (buy, hold, or sell) and price targets can provide additional perspectives on Travel + Leisure Co.'s valuation. These ratings reflect the collective wisdom of analysts who have studied the company and its industry. However, it's important to consider a range of opinions and not rely solely on analyst consensus.

For example, consider a hypothetical scenario with the following metrics:

In this hypothetical scenario, the combination of a relatively low P/E, P/B, and EV/EBITDA, coupled with a positive stock trend, a decent dividend yield, and a 'buy' analyst consensus, might suggest that Travel + Leisure Co. is undervalued. However, a comprehensive analysis would require real-time data and a thorough understanding of the company's financials and industry dynamics as of April 2025.

Travel + Leisure Co. (TNL) Risk Factors

Understanding the risks that Travel + Leisure Co. (TNL) faces is crucial for investors. These risks can stem from both internal and external factors, significantly impacting the company's financial health and strategic direction.

Here's an overview of potential risks:

• Industry Competition: The timeshare and vacation ownership industry is highly competitive. Travel + Leisure Co. (TNL) competes with other major players, smaller independent resorts, and alternative lodging options like hotels and online rental platforms. Increased competition could pressure pricing and occupancy rates, affecting revenue and profitability.
• Regulatory Changes: The vacation ownership industry is subject to various regulations related to sales, marketing, and consumer protection. Changes in these regulations could increase compliance costs or restrict certain business practices.
• Market Conditions: Economic downturns, geopolitical instability, and travel advisories can significantly impact the demand for leisure travel and vacation ownership products. A decrease in consumer confidence or disposable income could lead to lower sales and higher cancellation rates.
• Operational Risks: These include risks related to managing a large portfolio of resorts, maintaining service quality, and dealing with unforeseen events such as natural disasters or pandemics. Operational disruptions can lead to increased costs and decreased customer satisfaction.
• Financial Risks: Travel + Leisure Co. (TNL) relies on financing to develop and acquire resorts and to provide financing to customers. Changes in interest rates, credit availability, or the company's credit rating could impact its ability to access capital and increase borrowing costs.
• Strategic Risks: These involve risks associated with the company's strategic decisions, such as acquisitions, new product launches, and expansion into new markets. Poorly executed strategies can lead to financial losses and damage to the company's reputation.

To delve deeper into the company's strategic priorities, refer to: Mission Statement, Vision, & Core Values of Travel + Leisure Co. (TNL).

While specific mitigation strategies may vary and are often detailed in the company's annual reports or investor presentations, common strategies include:

• Diversifying product offerings and target markets.
• Implementing robust risk management programs.
• Maintaining strong relationships with customers and partners.
• Investing in technology and innovation to improve efficiency and enhance the customer experience.

Understanding these risks and mitigation strategies is essential for investors looking to assess the long-term viability and financial health of Travel + Leisure Co. (TNL).

Travel + Leisure Co. (TNL) Growth Opportunities

Travel + Leisure Co. (TNL) possesses several key growth drivers that point toward promising future prospects. These drivers include strategic product innovations, well-planned market expansions, and potential acquisitions that could significantly bolster its market position and revenue streams.

Analyzing Travel + Leisure Co.'s potential, future revenue growth projections and earnings estimates are essential for investors. While specific figures are subject to market dynamics and internal strategies, understanding these projections provides insight into the company’s anticipated financial performance.

Strategic initiatives and partnerships are also critical components of Travel + Leisure Co.'s growth strategy. These alliances can unlock new markets, enhance service offerings, and drive innovation, contributing to overall revenue and profitability.

Travel + Leisure Co. holds several competitive advantages that could position it favorably for sustained growth:

• Brand Recognition: A strong and reputable brand in the travel and leisure industry.
• Customer Loyalty: Programs and services designed to foster long-term customer relationships.
• Diverse Portfolio: A wide array of travel-related services and products that cater to various customer segments.

For a deeper dive into the investors behind Travel + Leisure Co. and their motivations, check out this insightful profile: Exploring Travel + Leisure Co. (TNL) Investor Profile: Who’s Buying and Why?