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Travel & Leisure Co. (TNL)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 2025 delivered top-line and EPS beats vs Street: revenue $1.044B vs $1.033B consensus, and adjusted diluted EPS $1.80 vs $1.73 consensus; Adjusted EBITDA grew 10% YoY to $266M and exceeded the high end of guidance . EPS/Revenue estimates marked with * retrieved from S&P Global.
  • Guidance raised: FY2025 Adjusted EBITDA mid-point increased to $975M (range $965–$985M), with higher Gross VOI sales and VPG ranges; management reiterated strong booking pace and stable consumer finance performance .
  • KPIs strengthened: VPG reached $3,304 (+10% YoY), tours were 200K (+2% YoY), and Vacation Ownership revenue rose 6% YoY to $876M; Travel & Membership transactions rose 12% but mix drove margin pressure .
  • Capital allocation remained robust: $106M returned in Q3 ($70M repurchases, $36M dividends); net leverage at 3.3x, liquidity ~$1.1B; subsequent ABS priced at 4.78% (most efficient in 2025), a tailwind to cost of funds .
  • Catalysts: the beat and raised FY guidance, multi-brand expansion (Sports Illustrated Resorts, Eddie Bauer Adventure Club), and improving ABS funding levels support estimate revisions and sentiment into Q4 and 2026 .

What Went Well and What Went Wrong

  • What Went Well
    • Strong VOI execution: Gross VOI sales $682M (+13% YoY); VPG $3,304 (+10% YoY); Vacation Ownership revenue $876M (+6% YoY); CEO: “exceeding the high end of our Adjusted EBITDA guidance and achieving our 18th consecutive quarter with a VPG above $3,000” .
    • Guidance raise and cash generation: FY Adjusted EBITDA range lifted to $965–$985M; adjusted free cash flow up 23% YTD; CFO targeting ~50% EBITDA-to-cash conversion in 2025 .
    • Strategic brand expansion: Eddie Bauer Adventure Club launched; Sports Illustrated Resorts Chicago conversion and Nashville timeline; “sales will begin in Nashville at the end of this year” .
  • What Went Wrong
    • Travel & Membership margin pressure: EBITDA down 6% YoY to $58M on lower revenue per transaction despite transactions growth; mix shift to lower-margin travel club .
    • Elevated loan loss provision: maintained at 21% for 2025, tempering flow-through; management expects longer-term normalization toward upper-teens, but for 2025 Q4 to be the low watermark .
    • Exchange business structural headwinds: average exchange members down 2% YoY; exchange transactions down 3% YoY; management emphasized structural decline and offset efforts via travel clubs .

Financial Results

Consolidated Trend (quarterly)

MetricQ1 2025Q2 2025Q3 2025
Revenue ($USD Billions)$0.934 $1.018 $1.044
Diluted EPS ($)$1.07 $1.62 $1.67
Adjusted diluted EPS ($)$1.11 $1.65 $1.80
Net Income Margin (%)7.8% 10.6% 10.6%
Adjusted EBITDA ($USD Millions)$202 $250 $266
Adjusted EBITDA Margin (%)21.6% 24.6% 25.5%

Year‑over‑Year (Q3)

MetricQ3 2024Q3 2025
Revenue ($USD Billions)$0.993 $1.044
Diluted EPS ($)$1.39 $1.67
Adjusted diluted EPS ($)$1.57 $1.80
Adjusted EBITDA ($USD Millions)$242 $266
Net Income Margin (%)9.8% 10.6%

Segment Breakdown (Revenue and Adjusted EBITDA)

SegmentQ1 2025Q2 2025Q3 2025
Vacation Ownership Revenue ($MM)$755 $853 $876
Vacation Ownership Adj EBITDA ($MM)$159 $218 $231
Travel & Membership Revenue ($MM)$180 $166 $169
Travel & Membership Adj EBITDA ($MM)$68 $55 $58

KPIs

KPIQ1 2025Q2 2025Q3 2025
Gross VOI Sales ($MM)$512 $654 $682
Net VOI Sales ($MM)$384 $474 $494
Tours (000s)153 197 200
VPG ($)$3,212 $3,251 $3,304
Avg. Exchange Members (000s)3,362 3,329 3,322
Exchange Transactions (000s)240 197 206
Exchange Revenue per Transaction ($)$353 $370 $351
Travel Club Transactions (000s)175 191 216
Travel Club Revenue per Transaction ($)$257 $229 $215
Combined Transactions (000s)415 388 422

Street vs Actuals (Q3 2025)

MetricConsensus*Actual
Revenue ($USD Billions)$1.033*$1.044
Primary EPS ($)$1.73*$1.80 (Adjusted diluted EPS)
EBITDA ($USD Millions)$255*$246*; Company Adjusted EBITDA $266

Estimates marked with * retrieved from S&P Global.

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA ($MM)FY 2025$955–$985 $965–$985 Raised midpoint
Gross VOI Sales ($B)FY 2025$2.4–$2.5 $2.45–$2.50 Raised midpoint
VPG ($)FY 2025$3,200–$3,250 $3,250–$3,275 Raised
Dividend per share ($)Q4 2025Management recommendation $0.56 Declared $0.56 payable Dec 31, 2025 Maintained/Declared

Earnings Call Themes & Trends

TopicQ1 2025 (Prev Mentions)Q2 2025 (Prev Mentions)Q3 2025 (Current)Trend
Digital/app adoption, AI toolsClub Wyndham app bookings increasing; focus on guest satisfaction Continued multi-brand & operational focus 215K Club Wyndham app downloads; 28% of bookings via app; investing in digital and AI to personalize experiences; owner engagement +120bps YoY Accelerating engagement
Multi-brand expansionAccor Vacation Club momentum; launching SI Resorts sales New SI Nashville; Margaritaville Orlando; Accor Indonesia Eddie Bauer Adventure Club launched; SI Chicago conversion timeline; sales starting Nashville YE Expanding portfolio
ABS/securitization/cost of funds$350M term securitization at 5.2% $300M term securitization at 5.10% $300M at 4.78% post-Q3; 98% advance; beginning to lower weighted average cost of funds Tailwind building
Credit quality/LLPLLP guided 20% initially LLP increased to 21% LLP holding at 21% FY; weighted average FICO >740; expectation for upper-teens longer-term; Q4 provision low watermark Stabilizing; improving trajectory
New owner mix/close ratesTours down 1% YoY; VPG +6% Tours +3% YoY; VPG +7% New owners 31% of sales; owner-side VPG near all-time highs; tour flow to accelerate in Q4 Positive momentum
Travel & Membership mixTransactions down; margin pressure Exchange transactions -11% YoY; margin down Total transactions +12%; travel club transactions +30% YoY; revenue per transaction -12%; EBITDA -6% Growth returns but lower margins

Management Commentary

  • CEO: “Travel + Leisure Co. delivered another exceptional quarter, exceeding the high end of our Adjusted EBITDA guidance and achieving our 18th consecutive quarter with a VPG above $3,000.”
  • CEO on strategy: “We are investing in digital and AI tools… owner engagement scores have increased over 120 basis points versus the prior year.”
  • CFO: “Adjusted EBITDA was $266 million, up 10% year over year, and above the high end of our guidance range… We exceeded our $255 million guidance midpoint by $11 million.”
  • CFO on funding: “ABS transaction priced at 4.78%… weighted average cost of funds… down ~15 bps YoY; setting up a multi-year tailwind.”
  • CEO on brands: “Sales will begin in Nashville at the end of this year… Chicago rebrand toward the end of 2026.”

Q&A Highlights

  • New owners and mix: New owners were 31% of sales; owner-side performance and VPG near all-time highs; tour flow expected to accelerate in Q4 .
  • Sports Illustrated Resorts pipeline: Focus on conversions in urban and college-town markets; Nashville sales to begin YE 2025; Chicago conversion open during transition; broader membership access contemplated as assets register .
  • ABS tailwind: Latest ABS at 4.78% with 98% advance rate; cost of funds turning down, a multi-year tailwind .
  • Provision and credit: FY provision to finish at 21%; management sees longer-term settling in upper-teens; Q4 expected to be the low watermark .
  • Maintenance fees: Aim to keep around CPI; focus on delivering value and avoiding outsized increases .
  • Portfolio pruning: Closing a small number of legacy resorts to improve portfolio quality, reduce potential special assessments, and refresh inventory; financial impact balanced by fewer sales locations vs lower carry costs .

Estimates Context

  • Q3 beats: Revenue $1.044B vs $1.033B consensus*; adjusted diluted EPS $1.80 vs $1.73 consensus* . Estimates marked with * retrieved from S&P Global.
  • EBITDA: S&P “EBITDA Consensus Mean” was ~$255M* vs S&P actual ~$246M*, while company’s Adjusted EBITDA was $266M (non-GAAP); differences reflect definitional variance between Street EBITDA and company’s Adjusted EBITDA .
  • Forward view: Q4 2025 consensus EPS ~$1.82* and revenue ~$1.000B*; Q1 2026 consensus EPS ~$1.30* and revenue ~$0.969B*—with FY guidance raised, Street may revisit EBITDA/VOI/VPG trajectories. Estimates marked with * retrieved from S&P Global.

Key Takeaways for Investors

  • VOI engine is compounding: modest revenue growth translating into outsized adjusted EBITDA and EPS growth, supported by high VPG and efficient inventory recovery programs .
  • FY guidance raised and Q3 beat set a constructive backdrop for estimate revisions and multiple support into Q4; watch implied Q4 cadence (strong comp, variable comp true-ups, and brand investments) .
  • Funding costs are improving: successive ABS deals at lower coupons and high advance rates should gradually reduce consumer finance cost of funds and support margins through 2026 .
  • Credit metrics stable: weighted average FICO >740; FY provision held at 21% with expectations for upper-teens longer-term; monitor Q4 provision inflection .
  • Travel & Membership growth with mix headwind: transactions up (+12%) but revenue per transaction down; near-term margin pressure likely until mix rebalances—still an important free-cash contributor .
  • Brand expansion is a 2026+ growth lever: Eddie Bauer Adventure Club and Sports Illustrated Resorts should accelerate new owner acquisition and broaden addressable market; near-term investment required .
  • Capital returns remain a core pillar: Q3 buybacks ($70M) and dividend ($0.56) alongside leverage ~3.3x and ~$1.1B liquidity provide downside support and optionality .

Estimates marked with * retrieved from S&P Global.