Travel + Leisure Co. (NYSE:TNL) Q1 2023 Earnings Call Transcript

Brandt Montour: That’s great color. Thanks for that. And then just a follow-up, your VOI EBITDA margins in the 1Q were impressive, right, up a couple of hundred basis points year-over-year despite VPG being down year-over-year and loan loss provisions being high as well. So I guess the question is, is there timing — was there a timing benefit to margins in the first quarter and sort of how should we think about the margin cadence throughout the rest of the year and maybe for the full year as well?

Mike Hug: Yeah. I will touch on that. There were a couple of things that happened in the quarter. First of all, our cost of sales was very favorable in the first quarter compared to historical trends, it was what we expected, but that’s driven and we saw that in the fourth quarter. But that’s really driven by the fact that we relieve inventory not to get independent accounting on a first-in first-out basis and the inventory we are selling through in the first quarter was some of our less expensive inventory. So we got that benefit. Also, the provision came in at 17.4% and we are retaining our guidance at 18% to 19% for the full year as we get into the busier part of the year and drive higher originations. So those were really the two significant items in the quarter that helped to drive margins up on the Vacation Ownership business.

When we think about the full year, we would expect margins to be in line with where they were last year and historically been kind of in that mid- to low-20s.

Brandt Montour: Perfect. Great. Thanks, everyone.

Mike Hug: Sure. Thank you.

Operator: Thank you. We reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further closing comments.

Michael Brown: Thank you, Kevin. Our full year outlook underscores the persistent strength of leisure travel, people’s commitment to vacations and the consistent performance of our timeshare model. We will be on the road in May and June at multiple investor conferences and look forward to seeing many of you in person. Finally, I would like to thank our associates, which are the driving force at Travel + Leisure and help us to receive recognition as a month the most trusted companies in America by Newsweek. Thank you to everyone and have a great day.

Operator: Thank you. That does conclude today’s teleconference and webcast. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.