Q2 2024 Travel + Leisure Co Earnings Call

Hello and welcome to the Travel and Leisure second quarter 2024 earnings conference call and webcast. If anyone should require operator assistance please press star zero on your telephone keypad.

Operator: for Earnings Conference Calling Webcast. If anyone could require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. We ask that you please ask one question and one follow-up. You may be placed into the question queue at any time by pressing star 1 on your telephone keypad.

A question and answer session will follow the formal presentation.

Operator: We ask you, please ask one question and one follow-up. You may be placed into question queued anytime by pressing star one on your telephone keypad. As a reminder, this conference is being recorded.

We ask you to please ask one question and one follow-up. You may be placed into question queue at any time by pressing star 1 on your telephone keypad. As a reminder, this conference is being recorded. It's now my pleasure to turn the call over to Jill Greer, Vice President, Investor Relations. Please go ahead, Jill.

Operator: As a reminder, this conference is being recorded. It is now my pleasure to turn the call over to Jill Greer, Vice President, Investor Relations. Please go ahead, Jill.

Jill Greer: It's now my pleasure to turn the call over to Jill Greer, by President Investor Relations. Please go ahead, Jill.

Joseph Richard Greff: Thanks, Kevin. Good morning to everyone, and thanks for dialing in. Joining us this morning are Michael Brown, our President and Chief Executive Officer, and Mike Hug, our Chief Financial Officer. Michael will provide an overview of our financial results and our longer-term growth strategy, and Mike will then provide greater detail on the quarter, our balance sheet, and our outlets for the rest of the year. Following our prepared remarks, we'll open the call-in for questions.

Michael Brown: Thanks, Kevin. Good morning to everyone, and thanks for dialing in. Joining us this morning are Michael Brown, our president and chief executive officer, and Michael Hug, our chief financial officer.

Joseph Richard Greff: Thanks, Kevin. Good morning to everyone, and thanks for dialing in. Joining us this morning are Michael Brown, our President and Chief Executive Officer, and Mike Hug, our Chief Financial Officer.

Michael Brown: Michael will provide an overview of our financial results in our longer term growth strategy, and Michael then provides greater detail on the quarters, our balance sheet, and outlets for the rest of the year. Following our prepared remarks, we will open the call up for questions.

Speaker Change: Michael will provide an overview of our financial results and our longer-term growth strategy, and Mike will then provide greater detail on the quarter, our balance sheet, and outlets for the rest of the year.

Michael Brown: Before we begin, we'd 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 may today are effective only as of today. We undertake no obligation to publicly update or revise these statements, and the factors that could cause actual results to differ are discussed in our SEC filings and in our earnings press release.

Joseph Richard Greff: Before we begin, we'd like to remind you that our discussions today will include forward-looking statements. The 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, and the factors that could cause actual results to differ are discussed in our SEC filings and in our earnings press release. You can find a reconciliation of non-GAAP financial measures discussed in today's call in the earnings release, available on our Investor Relations website. Finally, all comparisons today are to the same period of the prior year unless specifically stated. With that, I'm pleased to turn the call over to Michael Brown.

Speaker Change: Following our prepared remarks, we'll open the call up for questions. Before we begin, we'd 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.

Speaker Change: We undertake no obligation to publicly update or revise these statements, and the factors that could cause actual results to differ are discussed in our SEC filings and in our earnings press release. You can find a reconciliation of non-GAAP financial measures discussed in today's call and the earnings release available on our Investor Relations website.

Michael Brown: You can find a reconciliation of non-GAAP financial measures discussed in today's call, the earnings release available on our Investor Relations website. Finally, all comparisons today are to the same period of the prior year, unless specifically stated.

Speaker Change: Finally, all comparisons today are to the same period of the prior year, unless specifically stated. With that, I'm pleased to turn the call over to Michael Brown.

Michael Brown: With that, I'm pleased to turn the call over to Michael Brown. Good morning, and thank you to everyone for joining us today. This morning we released our second quarter results, which showed top line growth, healthy margins, and strong free cash flow. Revenue's grew 4% to $985 million, with adjusted EBITDA of $244 million at the high end of our guidance range. We have a resilience and value-driven business model, are executing well against our key priorities for the year, and demand for our product remains solid, all of which factored into our decision to increase our full year EBITDA diets.

Michael D. Brown: Good morning, and thank you to everyone for joining us today. This morning, we released our second quarter results, which showed top-line growth, healthy margins, and strong free cash flow. Revenues grew 4% to $985 million, with adjusted EBITDA of $244 million at the high end of our guidance range. We have a resilient and value-driven business model, are executing well against our key priorities for the year, and demand for our product remains solid, all of which factored into our decision to increase our full-year EBITDA guidance. We see good momentum in our vacation ownership business. Tours were up 13%, with new owner tours up 22%. Our Blue Thread partnership with Wyndham Hotels is an important source of lead generation.

Michael D. Brown: Good morning, and thank you to everyone for joining us today.

Michael D. Brown: This morning we released our second quarter results.

Michael D. Brown: which showed top-line growth, healthy margins, and strong free cash flow. Revenues grew 4% to $985 million, with adjusted EBITDA of $244 million at the high end of our guidance range.

Michael D. Brown: We have a resilient and value-driven business model, are executing well against our key priorities for the year, and demand for our product remains solid, all of which factored into our decision to increase our full-year EBITDA guidance.

Michael Brown: We see good momentum in our vacation ownership business. Tours were up 13% with new owner tours up 22%. Our Blue Thread Partnership with Wyndham Hotels is an important source of lead generation. In the quarter, Blue Thread produced about 10% of our new owner tours, which came with a volume per guest or VPG more than 20% higher than other new owner channels. In addition, our investments in new marketing locations and channels are yielding good results. With over 100,000 active packages, this pipeline is up over 140% this year, providing an incremental and fast growing source of new owner tours.

Michael D. Brown: We see good momentum in our vacation ownership business.

Michael D. Brown: Tours were up 13%, with new owner tours up 22%.

Michael D. Brown: Our Blue Thread partnership with Wyndham Hotels is an important source of lead generation. In the quarter, Blue Thread produced about 10% of our new owner tours, which came with a volume per guest, or VPG, more than 20% higher than other new owner channels.

Michael D. Brown: In the quarter, Blue Thread produced about 10% of our new owner tours, which came with a volume per guest, or VPG, more than 20% higher than other new owner channels. In addition, our investments in new marketing locations and channels are yielding good results. With over 100,000 active packages, this pipeline is up over 140% this year, providing an incremental and fast-growing source of new owner tours. New owner sales are an important source of future revenue. As we've seen over time, new owners buy an incremental 2.6 times their initial purchase.

Michael D. Brown: In addition, our investments in new marketing locations and channels are yielding good results. With over 100,000 active packages, this pipeline is up over 140% this year, providing an incremental and fast-growing source of new owner tours.

Michael Brown: New owner sales are an important source of future revenue. As we've seen over time, that new owners buy an incremental 2.6 times their initial purchase. This is because owner's level product. On our most recent customer surveys, nine out of ten guests staying at our resorts reported a great experience with high marks for flexibility, value, and consistent experience. The credit to our field operations team. To our point-based product and the breadth of our resort network, we offer tremendous flexibility for our owners to customize each and every vacation they take with us. In addition, our resorts come with spacious living areas, fully equipped kitchens, and a range of amenities, giving owners a means to optimize their vacation spend on what matters most to them.

Michael D. Brown: New owner sales are an important source of future revenue, as we've seen over time that new owners buy an incremental 2.6 times their initial purchase.

Michael D. Brown: This is because owners love our product. In our most recent customer surveys, nine out of 10 guests staying at our resorts reported a great experience with high marks for flexibility, value, and consistent experience, credit to our field operations team. Through our points-based product and the breadth of our resort network, we offer tremendous flexibility for our owners to customize each and every vacation they take with us. From a weekend getaway to music in Austin to four days in Moab to visit Arches National Park to a week on the beach in beautiful Fiji, our product offers tremendous value by allowing owners to buy future vacations with today's dollars. In addition, our resorts come with spacious living areas, fully equipped kitchens, and a range of amenities, giving owners a means to optimize their vacation spend on what matters most to them.

Michael D. Brown: This is because owners love our product. On our most recent customer surveys, 9 out of 10 guests staying at our resorts reported a great experience, with high marks for flexibility, value, and consistent experience.

Michael D. Brown: A credit to our field operations teams.

Michael D. Brown: Through our points-based product and the breadth of our resort network, we offer tremendous flexibility for our owners to customize each and every vacation they take with us.

Michael D. Brown: From a weekend getaway for music in Austin, to four days of Moab to visit the Arches National Park, to a week on the beach in beautiful Fiji, our product offers tremendous value by allowing owners to buy future vacations with today's dollars.

Michael D. Brown: In addition, our resorts come with spacious living areas, fully equipped kitchens, and a range of amenities, giving owners a means to optimize their vacation spend on what matters most to them.

Michael Brown: We are also seeing a length of stay increase in this work-from-anywhere environment as owners are seeing the added utility of our resorts with more space to work and play. The premium that owners place on consistency, value, and flexibility is evident in our VPG of $3,051, which is especially strong considering our 37% new owner mix. The VPG was above the high end of our expectations, and we expect strong VPG performance to continue. As a result, we have increased our VPG guidance for the year by $50 at the midpoint. From our perspective, all indications are pointing to a strong second half, with owner nights up 6% for the remainder of the year, and we continue to expect double-digit tour growth for the full year.

Michael D. Brown: We are also seeing length of stay increase in this work from anywhere environment as owners are seeing the added utility of our resorts with more space to work and play. The premium that owners place on consistency, value, and flexibility is evident in our BPG of $3,051, which is especially strong considering our 37% new owner mix. VPG was above the high end of our expectations, and we expect strong VPG performance to continue. As a result, we have increased our VPG guidance for the year by $50 at the midpoint.

Michael D. Brown: We are also seeing length-of-stay increase in this work-from-anywhere environment, as owners are seeing the added utility of our resorts, with more space to work and play.

Michael D. Brown: The premium that owners place on consistency, value, and flexibility is evident in our BPG of $3,051, which is especially strong considering our 37% new owner mix.

Michael D. Brown: The VPG was above the high end of our expectations, and we expect strong VPG performance to continue.

Michael D. Brown: As a result, we have increased our BPG guidance for the year by $50 at the midpoint.

Michael D. Brown: From our perspective, all indications are pointing to a strong second half, with owner nights up 6% for the remainder of the year, and we continue to expect double-digit tour growth for the full year. The momentum with tour growth and BPG is a sign that our product appeals in a value-focused market, and our team is executing well on our growth initiative. Similar to a number of other companies, we are seeing some pressure on our loan portfolio.

Michael D. Brown: From our perspective, all indications are pointing to a strong second half, with owner nights up 6% for the remainder of the year, and we continue to expect double-digit tour growth for the full year.

Michael Brown: The momentum with tour growth and VPG are signs that our product appeals in a value focused market and our team is executing well on our growth initiatives. Similar to a number of other companies, we are seeing some pressures with our loan portfolio. Mike will give more details on our projection of elevated delinquencies for the remainder of the year. The fact that we are increasing our full year guidance shows the durability and resiliency of our business model. That business model provides a solid foundation for long-term growth. Our multi-brand strategy is unique in the industry and is the path to driving consistent growth going forward in our vacation ownership business.

Michael D. Brown: The momentum with Tour Growth and VPG are signs that our product appeals in a value-focused market and our team is executing well on our growth initiatives.

Michael D. Brown: Similar to a number of other companies, we are seeing some pressures with our loan portfolio.

Michael D. Brown: Mike will give more details on our projection of elevated delinquencies for the remainder of the year. The fact that we are increasing our full-year guidance shows the durability and resiliency of our business model. That business model provides a solid foundation for long-term growth. Our multi-brand strategy is unique in the industry and is the path to driving consistent growth going forward in our vacation ownership business. The Accor and Sports Illustrated brands will augment the VOI sales platforms of Club Wyndham, Worldmark, Margaritaville, and Shell.

Michael D. Brown: Mike will give more details on our projection of elevated delinquencies for the remainder of the year.

Michael D. Brown: The fact that we are increasing our full-year guidance shows the durability and resiliency

Michael A. Hug: of our business model. That business model provides a solid foundation for long-term growth.

Michael A. Hug: Our multi-brand strategy is unique in the industry and is the path to driving consistent growth going forward in our vacation ownership business.

Michael Brown: The Accord and Sports Illustrated brands will augment the VOI sales platforms of Club Windom, World Mark, Margaritaville, and Shell. With a broad geographic footprint and a variety of ownership options, we intend to expand our share by meeting the vacation travel needs and a broader range of consumers. We are making good progress with the Accord Vacation Club integration. Accord has delivered more than a million dollars in adjusted EBITDA year to date, and we are well-entrenched at our full year goal. The Accord growth has been a creative to an international business that is already performing well. While it is still a relatively small part of our results, the growth and performance in international has been strong.

Michael A. Hug: The Accor and Sports Illustrated brands will augment the VOI sales platforms of Club Wyndham, Worldmark, Margaritaville, and Shell.

Michael D. Brown: With a broad geographic footprint and a variety of ownership options, we intend to expand our share by meeting the vacation travel needs of a broader range of consumers. We're making good progress with the Accord Vacation Club integration. Accord has delivered more than a million dollars in adjusted EBITDA year to date, and we are well on track to hit our full year goal. Accord's growth has been accretive to an international business that is already performing well.

Michael A. Hug: With a broad geographic footprint and a variety of ownership options, we intend to expand our share by meeting the vacation travel needs of a broader range of consumers.

Michael A. Hug: We are making good progress with the Accord Vacation Club integration. Accord has delivered more than a million dollars in adjusted EBITDA year-to-date, and we are well on track to hit our full-year goal.

Michael A. Hug: The Accord growth has been accretive to an international business that is already performing well.

Michael D. Brown: While it is still a relatively small part of our results, the growth in performance in International has been strong. Through the second quarter, Adjusted Even is up 33%, with Tour Flow up over 50%, and DPG up in the low single digits. With regard to Sports Illustrated Resorts, we are continuing to move toward the launch of our first project in Tuscaloosa. We are currently working to finalize the design and to obtain the necessary zoning and entitlements to break ground early next year, which will allow us to launch sales.

Michael A. Hug: While it is still a relatively small part of our results, the growth in performance in International has been strong. Through the second quarter, Adjusted EBIT is up 33%, with Torflow up over 50%, and BPG up in the low single digits.

Michael Brown: Through the second quarter, adjusted EBITDA is up 33%, with tour flow up over 50% and DPG up in the low single digit. With regard to Sports Illustrating Resorts, we are continuing to move toward the launch of our first project in Tuscaloosa. We are currently working to finalize the design and to obtain the necessary zoning and entitlements to break ground early next year, which will allow us to launch sales. The Illustrator Resorts means for our growth in 2026 and beyond. Turning to our Travel and Membership business, this segment produces solid margins and cash flows. Our focus in this area has been on driving higher margin transactions, primarily with our existing vacation club customers.

Michael A. Hug: With regard to Sports Illustrated Resorts, we are continuing to move toward the launch of our first project in Tuscaloosa.

Michael A. Hug: We are currently working to finalize the design and to obtain the necessary zoning and entitlements to break ground early next year, which will allow us to launch sales.

Michael D. Brown: And while our primary focus is on Tuscaloosa, we're also actively working to identify additional options for future locations. We're in the early stages, but excited about what Sports Illustrated Resorts means for our growth in 2026 and beyond. Turning to our Travel & Membership business, this segment produces solid margins in cash flows. Our focus in this area has been on driving higher-margin transactions, primarily with our existing Vacation Club customers. Our progress here is evidenced by the 4% increase in revenue per transaction that we saw in the quarter, which, combined with cost discipline, produces higher returns.

Michael A. Hug: And while our primary focus is on Tuscaloosa, we're also actively working to identify additional options for future locations.

Michael A. Hug: We're in the early stages, but excited for what Sports Illustrated Resorts means for our growth in 2026 and beyond.

Speaker Change: Turning to our Travel and Membership business, this segment produces solid margins in cash flows.

Speaker Change: Our focus in this area has been on driving higher margin transactions, primarily with our existing Vacation Club customers.

Michael Brown: Our progress here is evidence in the 4% increase in revenue for transaction that we saw in the quarter, which combined with cost discipline produces higher returns.

Speaker Change: Our progress here is evidence in the 4% increase in revenue per transaction that we saw in the quarter, which combined with cost discipline, produces higher returns.

Michael Brown: To wrap up, I want to extend my thanks to the entire Travel Leisure team for their focus on providing a great experience for our owners.

Michael D. Brown: To wrap up, I want to extend my thanks to the entire Travel & Leisure team for their focus on providing a great experience for our owners. Their dedication and determination sets us apart and positions us well for long-term success. Now, I'll turn the call over to Mike to walk through the quarter in more detail.

Speaker Change: To wrap up, I want to extend my thanks to the entire Travel & Leisure team for their focus on providing a great experience for our owners.

Michael Hug: Their dedication and determination sets us apart and positions us well for long-term success. And now I'll turn the call over to Mike to walk through the quarter in more detail. Mike, thanks, Michael. Overall, we had a solid second quarter with all results at midpoint of guidance or higher. Revenues were a 4% with adjusted EBITDA of 3% to $244 million. Our 24.8% adjusted EBITDA margins shows our ability to maintain margins in the mid-20s while growing revenue. We had an adjusted net income of $108 million for $1.02 cents per share. Our adjusted EPS growth of 14% was driven by both net earnings growth and benefits of our sharey purposes.

Speaker Change: Their dedication and determination sets us apart and positions us well for long term success. And now I'll turn the call over to Mike to walk through the quarter in more detail.

Michael A. Hug: Thank you. Thank you. Thanks, Michael.

Michael A. Hug: Overall, we had a solid second quarter with all results at the midpoint of guidance or higher. Revenues were up 4%, with adjusted EBITDA of 3% to $244 million. Our 24.8% adjusted EBITDA margin shows our ability to maintain margins in the mid-20s while growing revenue. We had an adjusted net income of $108 million, for $1.52 per share.

Michael A. Hug: Thanks, Michael.

Michael A. Hug: Overall, we had a solid second quarter with all results at midpoint of guidance or higher.

Michael A. Hug: Revenues were up 4%, with adjusted EBITDA up 3%, to $244 million.

Michael A. Hug: Our 24.8% adjusted EBITDA margin shows our ability to maintain margins in the mid-20s while growing revenue.

Michael A. Hug: We had an adjusted net income of $108 million for $1.52 per share.

Michael A. Hug: Our adjusted EPS growth of 14% was driven by both net earnings growth and benefits of our share repurchase. And as a reminder, we had $8 million of year-over-year headwinds this quarter from higher interest rates and variable compensation, with regard to segment results. For the vacation ownership business, revenues increased 5%, with Roseville live sales of $607 million at the high end of the guidance rank and a significant driver of the 10% increase in this segment's suggested EBITDA.

Michael A. Hug: Our adjusted EPS growth of 14% was driven by both net earnings growth and benefits of our share repurchases.

Michael Hug: And as a reminder, we had $8 million of year-over-year headwinds this quarter from higher interest rates and variable compensation. With regard to segment results, for the vacation ownership business, revenues increased 5% with grossly a lot of sales of $607 million at the high end of the guidance range, and a significant driver of the 10% increase in this segment suggested EBITDA. As Michael mentioned, we're especially pleased with the true growth, new owner mix, and BPG that we're seeing, which we believe sets us up well for continued growth. We did see an increase in our low-mossed provision in the second quarter, primarily due to the low-inquency levels associated with the regional fight goes below 700, which are down to 24% of our portfolio as of June 30th.

Michael A. Hug: And as a reminder, we had $8 million of year-over-year headwinds this quarter from higher interest rates and variable compensation.

Michael A. Hug: With regard to segment results, for the vacation ownership business, revenues increased 5% with gross VOI sales of $607 million at the high end of the guidance range, and a significant driver of the 10% increase in this segment suggested EBITDA.

Michael A. Hug: As Michael mentioned, we're especially pleased with the true growth, new owner mix, and BPG that we're seeing, which we believe sets us up well for continued growth. We did see an increase in our loan loss provision in the second quarter, primarily due to delinquency levels associated with original FICOs below $700.00, which were down to 24% of our portfolio as of June 30th.

Michael A. Hug: As Michael mentioned, we're especially pleased with the true growth, new owner mix, and VPG that we're seeing, which we believe sets us up well for continued growth.

Speaker Change: We did see an increase in our loan loss provision in the second quarter, primarily due to delinquency levels associated with the regional FICOs below 700, which are down to 24% of our portfolio as of June 30th.

Michael Hug: On the travel membership side, we maintain flat adjusted EBITDA on slightly client revenue. A higher revenue per transaction in both exchange and clubs is off, saying the client transactions and driving higher margins. For the third quarter, we are forecasting adjusted EBITDA overall to be $235 to $245 million and $55 to $69 for the travel and membership segment. This includes the higher provision in addition to $16 million in headwinds year-over-year for variable compensation and interest impact. We expect the variable compensation and interest impact will peak in the third quarter and dimension of fourth quarter. For the full year, we're in peace and are just at the event of guidance range to 915-935 million dollars.

Michael A. Hug: On the travel membership side, we maintain flat adjusted EBITDA on a slight decline in revenue as higher revenue per transaction in both exchange and clubs is offsetting the decline in transactions and driving higher margins. For the third quarter, we are forecasting adjusted EBITDA overall to be $235 to $245 million and $55 to $60 million for the travel and membership segment. This includes the higher provision in addition to $16 million in headwinds year over year for variable compensation and interest impact. We expect the variable compensation and interest impact to peak in the third quarter and diminish in the fourth quarter.

Speaker Change: On the travel membership side, we maintain flat adjusted EBITDA on slight decline in revenue as higher revenue per transaction in both exchange and clubs is offsetting the decline in transactions and driving higher margins.

Michael A. Hug: For the third quarter, we are forecasting adjusted EBITDA overall to be $235 to $245 million and $55 to $60 million for the travel and membership segment.

Michael A. Hug: This includes the higher provision in addition to $16 million in headwinds year-over-year for variable compensation and interest impact.

Michael A. Hug: We expect the variable compensation and interest impact will peak in the third quarter and diminish in the fourth quarter.

Michael A. Hug: For the full year, we're increasing our adjusted EBITDA guidance range to $915 to $935 million dollars, reflecting both the momentum we're building in the business and the incremental provision rate. Turning to the balance sheet and cash flow, earlier this week, we closed our second ABS transaction of the year, securing $375 million at a rate of 5.6% and a 96% advance rate. The interest rate and advance rate are both improvements over our marked securitization. We ended the quarter with 3.5 times leverage. With our normal seasonality, we expect our leverage rate to slightly increase in the third quarter and decline to below 3.5 times by year end.

Michael A. Hug: For the full year, we're increasing our adjusted EBITDA guidance range to $915 to $935 million, reflecting both the momentum we're building in the business and the incremental provision rate.

Michael Hug: We're reflecting both the momentum we're building in the business and the incremental provision rate. Turning to the balance sheet and cash flow, earlier this week we closed our second ABS transaction of the year, securing 375 million dollars at a rate of 5.6% and 96% advantage rate. The interest rate and advantage rate are both improvements over our mark's curization. We ended the quarter with 3.5 times leverage. With our normal seasonality, we expect our leverage rate to slightly increase in the third quarter and climb to below 3.5 times a year in. We generated 90 million dollars of adjusted cash flow in the quarter and continue to expect our adjusted to even up to free cash flow conversion for the full year to be in the neighborhood of 50%.

Michael A. Hug: Turning to the balance sheet and cash flow, earlier this week we closed our second ABS transaction of the year, securing $375 million at a rate of 5.6% and a 96% advance rate. The interest rate and advance rate are both improvements over our March securitization.

Michael A. Hug: We ended the quarter with 3.5 times leverage. With our normal seasonality, we expect our leverage rate to slightly increase in the third quarter and decline to below 3.5 times a year end.

Michael A. Hug: We generated $90 million of adjusted free cash flow in the quarter and continue to expect our adjusted EBITDA to free cash flow conversion for the full year to be in the neighborhood of 50%. Additionally, under our shareholder-focused approach to capital allocation, we returned $105 million to our shareholders through dividends and share buybacks during the quarter. As I mentioned on our last call, our Board of Directors approved an additional $500 million in share repurchase authorization at their May meeting.

Michael A. Hug: We generated $90 million of adjusted pre-cash flow in the quarter and continue to expect our adjusted EBITDA to pre-cash flow conversion for the full year to be in the neighborhood of 50%.

Michael Hug: Under our shareholder purpose approach to capital allocation, we returned $105 dollars to our shareholders through dividends and share buy-backs during the quarter. As I mentioned in our last call, our Board of Directors approved an additional $500 million in share repurchase authorization at their main meeting. After our $7.7 million dollars in repurchases in the second quarter, we have $578 million remaining under our authorization.

Michael A. Hug: Under our shareholder-focused approach to capital allocation, we returned $105 million to our shareholders through dividends and share buybacks during the quarter.

Michael A. Hug: As I mentioned on our last call, our Board of Directors approved an additional $500 million in share repurchase authorization at their May meeting.

Michael A. Hug: After our $770,000,000 in repurchases in the second quarter, we have $578,000,000 remaining under our authorization. I'll close by echoing Michael's comments and thanking the entire Travel and Leisure team for a great first half of the year. There's no better team in the industry at delivering great results for shareholders and owners. With that, Kevin, can you please open up the call for questions?

Michael A. Hug: After our $7,070,000 in repurchases in the second quarter, we have $578,000,000 remaining under our authorization.

Michael Hug: I'll close by echoing mock-up comments and thanking the entire family's routine for the great first half of the year. There's no better team in the industry, and it'll have been great results for shareholders and owners.

Michael A. Hug: I'll close by echoing Michael's comments and thanking the entire Travel & Leisure team for a great first half of the year.

Michael D. Brown: There is no better team in the industry at delivering great results for shareholders and owners.

Operator: Would that, Kevin, do you please open up the call for questions? Certainly, would I be conducting a question-and-answer session? As a reminder, please ask one question and one follow-up to return to the queue.

Operator: Certainly, we will now be conducting a question and answer session. As a reminder, please ask one question and one follow-up question, then return to the queue. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. One moment, please, while we poll for questions. Our first question today is coming from Chris Woronka from Deutsche Bank. Your line is now live.

Michael D. Brown: With that, Kevin, can you please open up the call for questions?

Kevin: Certainly. I'll be conducting a question and answer session.

Kevin: As a reminder, please ask one question and one follow-up, then return to the queue.

Operator: If you'd like to be placing the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to move your question from the queue. One moment please, while we pull for questions.

Speaker Change: If you'd like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate that your line is in the question queue. You may press star 2 if you'd like to move your question from the queue. One moment please while we poll for questions.

Chris Moronka: Our first question today is to meet from Chris Moronka from Deutsche Banker line. Hey, good morning, guys, and appreciate the details. So I guess maybe we could start with that discussion of the provision, right? And you know, appreciate what you mentioned about the lower kind of the older off-intentional or flight course. So the question on that is, is that something that, you know, is we look forward and take into account your guidance? That's something that moves a little higher than your original. I think you were clapping 19% last quarter. And you know, are there offsets elsewhere in the business or do you expect that to kind of normalize in the range we saw in Q2?

Speaker Change: Our first question today is coming from Chris Woronka from Deutsche Bank. Your line is now live.

Chris Jon Woronka: Hey, good morning, guys, and I appreciate the details. So I guess maybe we can start with that discussion of the provision, right? And, you know, appreciate what you mentioned about the lower, the older vintage, lower FICO scores. So the question on that is, is that something that, as we look forward and take into account your guidance, is that something that moves a little higher than the original? I think you were talking 19% last quarter, and are there offsets elsewhere in the business, or do you expect that to kind of normalize in the range we saw in Q2?

Chris Jon Woronka: Hey, good morning, guys, and I appreciate the details.

Chris Jon Woronka: So I guess maybe we could start with that discussion of the provision, right, and you know, appreciate what you mentioned about the lower

Speaker Change: Heavy older, vintage, lower FICO scores. So the the question on that is

Speaker Change: Is that something that, you know, as we look forward and take into account your guidance, is that something that moves a little higher than the original, I think you were talking 19% last quarter? And, you know, are there offsets elsewhere in the business or do you expect that to kind of normalize in the range we saw in Q2?

Michael A. Hug: Good morning, Chris, and thanks for the question. This is Mike Hug.

Michael Hug: Good morning, Chris. And thanks for the question. This is my code. As we're relates to the provision for the full year, we do expect it to be about 100 bits higher than our original expectation. As you noted, there are other things in the business that are off-chain at, which allows us to take up a guidance. Basically, the other performance we had in the first half of the year compared to our guidance in the first half is what we've pushed through. So yes, when you look at VPG, when you look at the other things, the higher margin transactions on the cloud management side of the business.

Michael A. Hug: As it relates to the provision, for the full year, we do expect it to be about 100 bps higher than our original expectation. However, as you noted, there are other things in the business that are offsetting that, which allows us to take up our guidance. Basically, the higher performance we had in the first half of the year compared to our guidance in the first half is what we pushed through. So yes, when you look at VPG, when you look at the other things, the higher-margin transactions on the travel management side of the business, in the quarter, we still generated 25% of a margin despite that higher provision.

Speaker Change: Good morning, Chris, and thanks for the question. This is Mike Hug.

Speaker Change: As it relates to the provision, for the full year, we do expect it to be about 100 bps higher than our original expectation. As you noted, there are other things in the business that are off-saying that, which allow us to take our prejudice. Basically, the upper performance we had in the first half of the year compared to...

Speaker Change: Our guidance in the first half is what we've pushed through. So, yes, when you look at BPG, when you look at the other things, the higher margin transactions on the travel management side of the business,

Michael Hug: In the quarter, we still generate a 20% margin despite that higher provision. So the provision is moving up a little bit, but the other parts of the business continued to form very well. And as it relates to that sub 700 original FICO, it's down 235 bits from where it was a year ago. So, as we've moved the standards for marking up to that 640 FICO, we continued to see that average FICO for new regulations coming at 740. So very pleased with that change we made. Our field and compression low FICO bands, but I think we've been able to manage it well when you look at the overall business.

Michael A. Hug: So the provision is moving up a little bit, but the other parts of the business continue to perform very well. And as it relates to that sub-700 original FICO, it's down 235 bps from where it was a year ago. So as we've moved the standards for marking up to that 640 FICO, we continue to see that average FICO for new originations coming in at 740. So, very pleased with that change we made. We are feeling some pressure in the lower FICO bands, but I think we've been able to manage it well when you look at the overall business.

Speaker Change: In the quarter, we still generated 25% margin, despite that higher provision. So, the provision is moving up a little bit, but the other parts of the business continue to perform very well.

Speaker Change: And as it relates to that sub-700 original FICO, it's down 235 bps from where it was a year ago. So, as we've moved the standards for marking up to that 640 FICO...

Speaker Change: We continue to see that average FICO for new originations coming in at $7.40, so very pleased with that change we made. Are feeling some pressure in the lower FICO bands, but I think we've been able to manage it well when you look at the overall business.

Chris Jon Woronka: Okay, thanks, Mike. And then a follow up, maybe for Michael.

Chris Moronka: Okay, thanks, Mike. And then follow up maybe for Michael.

Speaker Change: Okay. Thanks, Mike. And then a follow-up, maybe for Michael.

Michael Brown: You know, Michael, it's been about probably cycling three years now since you really kind of got the post-COVID business plan taken shape. And I wanted to kind of ask about your marketing channels, and you made a lot of changes there. And the question is kind of, are you, you know, satisfied with where with with the, you know, with what the, I guess, channel mix looks like right now. And then how are some of them were recently added or deleted partners, you know, how are they contributing to your, your outlook for the rest of the year and beyond.

Michael D. Brown: You know, Michael, it's been about three years now since you really kind of got the post-COVID business plan taking shape, and I wanted to kind of ask about your marketing channels. You made a lot of changes there. And the question is, kind of, are you satisfied with what the, I guess, channel mix looks like right now? And how are some of the more recently added or deleted partners, you know, how are they contributing to your outlook for the rest of the year and beyond? Thanks.

Speaker Change: You know, Michael, it's been about probably cycling three years now since you really kind of got the post-COVID business plan taking shape.

Speaker Change: And I wanted to kind of ask...

Speaker Change: about your marketing channels and you made a lot of changes there. And the question is, kind of, are you, you know, satisfied with where, with what the, you know, what the, I guess, channel mix looks like right now? And how are some of the more recently added or deleted partners?

Speaker Change: How are they contributing to your outlook for the rest of the year and beyond? Thanks.

Michael Brown: Thanks.

Michael D. Brown: Well, I think the tour story, especially for the first half of this year, is clearly one of the highlights of the underlying business performance, the strong underlying business performance. And I credit a lot of that to our channel mix and our marketing team, more specifically. I've spoken over the years about a diversified, three-pronged marketing approach: owners, a partnership with Wyndham Hotels via the Blue Thread, and our non-affinity marketing approach in the field, which I felt was the strongest and the most unique in the space.

Michael Brown: Well, I think the tour story, especially for the first half of this year, is clearly one of the highlights of the underlying business performance, the strong underlying business performance. And I credit a lot of that to our channel mix and our, and our marketing teams more specifically. I've spoken over the years about a diversified three prompt marketing approach owners, a partnership with when them hotels via the blue thread and our non affinity marketing approach in the field, which I thought was the strongest and in the most unique in the space. As we've grown in the post-COVID environment, our regional teams have continued to add a number of marketing relationships, not a silver bullet, but a lot of little wins, a lot of successful partnerships that have really grown on those three marketing channels in each of our markets.

Speaker Change: Well, I think the...

Speaker Change: The tour story, especially for the first half of this year, is...

Speaker Change: Clearly one of the highlights of the

Speaker Change: under the underlying business performance, the strong underlying business performance. And I credit a lot of that to our channel mix and our marketing teams. More specifically,

Speaker Change: I've spoken over the years about a diversified, three-pronged marketing approach. Owners...

Speaker Change: Our partnership with Wyndham Hotels via the Blue Thread and our non-affinity marketing approach in the field, which I felt was the strongest and the most unique in the space.

Chris Jon Woronka: As we've grown in a post-COVID environment, our regional teams have continued to add a number of marketing relationships, not a silver bullet, but a lot of little wins, a lot of successful partnerships that have really grown on those three marketing channels in each of our markets. We've added a fourth channel to our marketing channels, which is the package pipeline. We spoke about that in 2023 and started to invest in and commit to that being a fourth leg of our marketing channels.

Speaker Change: As we've grown in a post-COVID environment, our regional teams have continued to add.

Speaker Change: A number of marketing relationships, not a silver bullet, but a lot of little wins, a lot of successful partnerships that have really grown on those three marketing channels in each of our markets.

Michael Brown: We've added a fourth channel to our marketing channels, which is the package pipeline. We spoke about that in 2023 and started to invest and commit to that being a fourth leg to our marketing channels. And as we mentioned here, those packages are up 140%. And like the blue thread was in 2018, 2019, where we committed to it, and we saw a lot of potential, I would position that package work that we're doing, which is seeding the pipeline of future tours to be in a similar state. And we were blue thread back in 2018, 2019 adds a great growth opportunity for our business.

Speaker Change: We've added a fourth channel to our marketing channels, which is...

Speaker Change: the package pipeline. We spoke about that in 2023 and started to invest and commit to

Speaker Change: That being a fourth leg to our marketing channels, and as we mentioned here, those packages are up 140%.

Speaker Change: and Like the Blue Thread was.

Speaker Change: In 2018-2019, where we committed to it and we saw a lot of potential, I would position that package work that we're doing, which is...

Chris Jon Woronka: And as we mentioned here, those packages are up 140%. And like the blue thread was in 2018-2019, where we committed to it and we saw a lot of potential, I would position that package work that we're doing, which is feeding the pipeline of future tours, to be in a similar state as we were in blue thread back in 2018-2019 as a great growth opportunity for our business.

Speaker Change: feeding the pipeline of future tours to be in a similar state that we were in blue thread back in 2018-2019 as a great growth opportunity for our business.

Chris Moronka: Okay, very helpful.

Operator: Okay, very helpful. Thanks, guys.

Chris Moronka: Thanks, guys.

Operator: Thank you, Chris. Thank you.

Speaker Change: Okay, very helpful. Thanks, guys. Thank you, Chris.

Patrick Scholes: Thank you. The next question today is coming from Patrick Scholes from Truist Securities. Your line is now live.

Patrick Sholes: Next question today is coming from Patrick Sholes from Truis Securities Align. Is that live? Great.

Speaker Change: Thank you. Next question today is coming from Patrick Scholes from Truist Security. Your line is now live.

Michael D. Brown: All right, great. Good morning, everyone. Morning, Michael, you've been one of the more, should we say positive or bullish, of the three Communication Ownership Companies.

Michael Brown: Good morning, everyone. Good morning. Michael, you've been one of the more, should we say positive or bullish, of the three case ownership companies. I'd like to hear your latest thoughts on sort of the state of the consumer or at least your consumer. And you know, now we sort of throw in the mix a little bit to the little bit of weakness on, I guess, the middle or lower end here. And just like to hear your latest thoughts on the latest landscape. Thank you. My last public comments were mid-quarter, where we remain positive on the consumer and the direction of our business related to the leisure travel environment.

Patrick Scholz: Great. Good morning, everyone.

Speaker Change: Morning, Patrick. Morning.

Speaker Change: Michael, you've been one of the more, should we say positive or bullish of the three.

Speaker Change: Location Ownership Companies

Speaker Change: I'd like to hear your latest thoughts on sort of the state of the consumer, or at least your consumer, and now we sort of throw in the mix a little bit, a little bit of weakness.

Speaker Change: I'd like to hear your latest thoughts on the lay of the landscape.

Michael D. Brown: My last public comments were mid-quarter, where we remain positive about the consumer and the direction of our business related to the leisure travel environment. I would say, fundamentally, I have no change to those statements mid-quarter, that we see a second half of the year in a consumer that remains and the fact that we drove 37% new owner mix in Q2 and the first half of this year, which is 400 basis points above what it was in 2023.

Speaker Change: My last public comments were mid-quarter, where we remained positive on the consumer and the direction of our business related to the...

Michael Brown: I would say fundamentally I have no change to those statements mid-quarter that we see a second half of the year and a consumer that remains demanding leisure vacations. And I point to the element that I consistently point to, which is look at our forward bookings, which we are seeing year-on-year increases to our owner room nights, which translates to positivity on our rivals, which is great for a marketing program. That's our perspective look at consumer demand. We look at our day-to-day; we see a lot of consumers every single day, and we hear what they have to say through volume per guest.

Speaker Change: I would say, fundamentally, I have no change to those statements mid-quarter that we see a second half of the year in a consumer that remains, you know, a consumer that's a little bit more

Speaker Change: Demanding great leisure vacations, and I point to the element that I consistently point to, which is look at our forward bookings, which we're seeing year-on-year increases to our owner room nights.

Speaker Change: which translates to Positivity on Owner Arrivals, which is great for a marketing program. That's our prospective look at consumer demand.

Speaker Change: We look at our day-to-day, we see a lot of consumers every single day, and we hear what they have to say through volume per guest.

Michael Brown: And the fact that we drove 37% new owner mix in Q2 and the first half this year, which is 400 basis points above what it was in 2023, to dramatic shift and for our BPG to be less than $100 or write it $100 less than it was last year shows that the sales performance, the consumer desire for ownership, remains very strong. Are the two biggest points forward bookings and BPG and the delinquencies we spoke about. Yes, it's worse than it was three months ago or six months ago, but you look across the macro environment. I think that's a commentary you're not uniquely hearing in our business, but you're hearing across the entire macro environment.

Speaker Change: and the fact that we drove 37%

Speaker Change: new owner mix in Q2 and the first half of this year, which is 400 basis points above what it was in 2023. It's a dramatic shift and for our VPG to be

Michael D. Brown: It's a dramatic shift and for our VPG to be you know less than a hundred dollars or right at a hundred dollars less than it was last year shows that uh the sales performance the consumer desire for ownership remains very strong are the two biggest points for bookings and VPG and um the delinquencies we spoke about yes it's it's uh worse than it was three months ago or six months ago but I but you look across the macro environment I think that's a commentary you're not uniquely hearing in our business but you're hearing across the entire macro environment um to me that's a positive it puts us in a more positive state maybe than even my mid-quarter comments that We could deliver the high end of our guidance, raise our four-year resort, uh, uh, guidance and absorb, as Mike said, about a hundred basis points higher provision. Speaks even more to the underlying strength of our business. So that would be my updated commentary on the consumer and where we see it.

Speaker Change: You know less than $100 or right at $100 less than it was last year shows that

Speaker Change: The sales performance, the consumer desire for ownership remains very strong are the two biggest points.

Speaker Change: Forward Bookings, and PPG. And the delinquencies we spoke about, yes, it's worse than it was three months ago or six months ago.

Speaker Change: But I, but you look across the macro environment, I think that's a commentary you're not uniquely hearing in our business, but you're hearing across the entire macro environment. To me, that's a positive. It puts us in a more positive state, maybe than even my mid-quarter comments that

Michael Brown: To me, that's a positive; it puts us in a more positive state, maybe than even my mid-quarter comments that we could deliver the high end of our guidance, raise our four year resort guidance, and absorb. As Mike said, about a hundred basis points higher provision, speak even more to the underlying strength of our business. So that would be my updated commentary on the consumer and where we see it for the remainder of the year.

Michael A. Hug: We could deliver the high-end of our guidance, raise our four-year guidance, and absorb, as Mike said, about 100 basis points higher provision.

Speaker Change: speak even more to the underlying strength of our business. So that would be my updated commentary on the consumer and where we see it for the remainder of the year. Okay. Thank you. And then, Mike, a question for you related to the most recent securitization.

Patrick Scholes: Okay, thank you. And then, Mike, I have a question for you related to the most recent securitization and, you know, the comments about some weakness in, you know, some of the lower-end customers. One thing I thought was interesting about the securitization, you know, we saw the D coupon rate. Maybe you can help me just get a little more color on why the D, the coupon rate on the D went down, which implies sort of your lower end consumer, that went down, whereas, you know, your A coupon actually went up a little bit. How do I understand that in light of, you know, talking about the loan loss provision? Am I Thank you.

Patrick Sholes: Thank you.

Michael Hug: And then, Mike, your question for you related to the most recent securitization and, you know, the comments about some weakness on. You know, some of the lower-end customers, one thing I thought was interesting on the securitization, you know, we saw the deep coupon rate. Maybe you can tell me just get a little more color, you know, why the deep, the coupon rate on the D went down, which implies sort of your lower end consumer. That went down, whereas you know, your any coupon actually went up a little bit. How do I understand that in light of, you know, talking about the lowest provision.

Michael A. Hug: and, you know, the comments about some weakness on...

Speaker Change: Some of the lower-end customers. One thing I thought was interesting on the securitization, we saw...

Speaker Change: The D coupon rate, maybe you can help me just get a little more color, you know, why the D, the coupon rate on the D went down, which implies sort of your lower end consumer.

Speaker Change: That went down, whereas your A coupon actually went up a little bit. How do I understand that in light of, you know, talking about the loan loss provision? Am I thinking about that the right way? Thank you.

Michael Hug: And I think in about that.

Michael Hug: Thank you. Well, I think overall, when you look at the execution on the transaction, as I mentioned, my comments, right, better performance. And while we got in the market, we were very happy with it. Our advantage rate, move up to 96; the interest rate, move it down to 5.6 from 5.7. So, it's a great execution. As far as the individual rates based on, you know, each of the trenches, a lot is going to be driven by the demand for that crunch. So, when we go to the market, we'll go out with target rates and put the rate out there.

Michael A. Hug: Well, I think overall, when you look at the execution on that transaction, as I mentioned in my comments, right, better performance than what we got in March, which we were very happy with. But our advance rate moving up to 96, and the interest rate moving down to 5.6 from 5.7, so great execution.

Speaker Change: Yeah, well, I think overall, when you look at the execution on that transaction, as I mentioned in my comments, right, better performance and

Speaker Change: What we've got in March, which we were very happy with, but our advance rate moving up to 96, the interest rate.

Speaker Change: Moving down to 5.6 from 5.7. So so great execution. As far as the individual rates based on, you know, each of the tranches, a lot is going to be driven by the demand for that tranche. So when we go to market, we'll go out with

Michael A. Hug: As far as the individual rates based on, you know, each of the tranches, a lot of that's going to be driven by the demand for that tranche. So when we go to market, we'll go out with target rates and put the rate out there. And then, you know, if one tranche is oversubscribed by a higher level than another tranche, we have the ability to tighten pricing. So I think it's just, you know, you look at the rate that the purchaser of the notes is going to get on each one, you look at demand out there, and then when you're out there marking a transaction, it gives you the flexibility to be able to tighten rates in certain tranches based on the level of oversubscription.

Michael Hug: And then, you know, if one crunch is oversubscribed by a higher level than another crunch, we have the ability to time pricing. So, I think it's just, you know, you look at the rates that the purchaser, the notes is going to get on each one. You look at the demand out there. And then, when you're out there, mark in the transaction; it gives you the flexibility to be able to, you know, tighten rates and certain charges at the, based on the level of oversubscription.

Speaker Change: Target rates and put the rate out there and then you know if one tranche is

Speaker Change: oversubscribed by a higher level than other trunks, we have the ability to tighten pricing. So I think it's just, you know, you look at the rate that the purchaser of the notes is going to get on each one, you look at demand out there and

Speaker Change: Then when you're out there marking a transaction, it gives you the flexibility to be able to, you know, tighten rates in certain tranches based on the level of over-subscription.

Michael Hug: Thank you.

Patrick Scholes: Okay, thank you. I'll get back in the queue for some more questions. Thank you.

Patrick Sholes: Okay, thank you.

Operator: I'll get back in the queue for some more questions. Thank you. Sure. Thank you. As a reminder, that star one to be placed in the question queue.

Speaker Change: Okay, thank you. I'll get back in the queue for some more questions. Thank you.

Operator: Thank you. As a reminder, that's star number one to be placed in the question queue. Our next question today is coming from David Katz from Jeffrey's. Your line is now live.

Speaker Change: Sure, thank you.

Speaker Change: Thank you. As a reminder, that's star one to be placed in the question queue. Our next question today is coming from David Katz from Jeffrey's. Your line is now live.

David Katz: Our next question today is coming from David Katz from Jeffries; your line is now live. Hi, good morning. I want to dispense with the provision discussion and just make sure I'm clear. I think the prior guidance was somewhere around 2019, and now we should be thinking more about 20. And that's a question. Is that correct? And I think in your commentary, Mike, you talked about those sub-700s being about 24% of the portfolio. Does that lead us to conclude that the arc of its impact is something that sort of ramps down as we get into next year?

David Brian Katz: Hi, good morning. I want to dispense with the provision discussion and just make sure I'm clear. I think the prior guidance was somewhere around 19, and now we should be thinking more about 20, you know, and that's the question: is that correct? And I think in your commentary, Mike, you talked about those sub 700s being about 24% of the portfolio. Does that lead us to conclude that, you know, the arc of its impact is, you know, something that sort of ramps down as we get into next year? Is that a fair way to think about it?

David Brian Katz: Hi, good morning. I want to dispense with...

David Brian Katz: The provision discussion and just make sure I'm clear I think the you know prior guidance was somewhere around 19 and now we should be thinking more about 20

Speaker Change: And that's a question, is that correct? And I think in your commentary, Mike, you talked about those sub-700s being about 24% of the portfolio. Does that lead us to conclude that, you know, the arc of its impact...

Speaker Change: is, you know, something that sort of ramps down as we get into next year. Is that a fair way to think about it?

Michael Hug: Is that a fair way to think about it?

Michael Hug: Well, a couple of things. First of all, you're right as far as that 100 bips kind of resulting in the provision 70 and around 20%. It will be a little bit higher in the third quarter, a little bit lower in the fourth quarter, which is not an unusual trend when you go to the year based on new owner mix and things like that. As it relates to 2025, obviously, I would say what impacts the portfolio more than anything? Is it really the economy right, and how the consumers feel and the income they have in their pockets?

Michael A. Hug: Well, a couple things. First of all, you're right, as far as that 100 bps kind of resulting in the provision, definitely at around 20%. It will be a little bit higher in the third quarter, a little bit lower in the fourth quarter, which is not an unusual trend when you go through the year based on new owner mix and things like that. As it relates to, you know, 2025, obviously, I would say what impacts the portfolio more than anything is really the economy, right, and how consumers feel and the income they have in their pockets.

Michael A. Hug: Well, a couple things. First of all, you're right as far as that 100 bps kind of resulting in the provision, settling in at around 20%. It will be a little bit higher in the third quarter, a little bit lower in the fourth quarter, which is not an unusual trend when you go through the year based on new owner mix and things like that.

Michael A. Hug: You know, as it relates to, you know, 2025, um, obviously...

Michael A. Hug: I would say what impacts the portfolio more than anything is really the economy, right, and how the consumers feel.

Michael Hug: So when we think about next year and what the provision looks like, I think it's really going to depend on what happens over the next several months as it relates to consumer in the economy. But, you know, our continued focus on, you know, those new originations coming at 740, in my opinion, should do anything but continue to make the portfolio better. As the lower five goes roll off and get replaced by a new origination monthly and after in 740. So, you know, we'll see what happens. But I think overall, what we're talking about as far as the higher level of the link with Jesus is about 1%, so about 30 million on a 3 billion dollar portfolio.

Michael A. Hug: So when we think about next year and what the provision looks like, I think it's really going to depend on what happens over the next several months as it relates to the consumer and the economy. But, you know, our continued focus on those new originations coming at 740, in my opinion, shouldn't do anything but continue to make the portfolio better as the lower FICOs roll off and get replaced by new originations, once again, after 740. So, you know, we'll see what happens.

Speaker Change: Unknown Executive, Michael Brown, Christopher Agnew

Speaker Change: You know, our continued focus on, you know, those new originations coming at 740, in my opinion, shouldn't do anything but continue to make the portfolio better.

Speaker Change: As the lower FICOs roll off and get replaced by a new origination, once again averaging 740. So, you know, we'll see what happens, but I think...

David Brian Katz: But I think, overall, what we're talking about, as far as the higher level of delinquencies is about 1%. So, about $30 million on a $3 billion portfolio. So while it gets measured in terms of the provision as a percent of revenues, you know, when you think about it like that, it's not a massive deterioration in the portfolio or anything like that. It's a slight 1% increase. And obviously, we'll do what we can to manage it. And I think, as I mentioned in my earlier response, I think we are managing it well when you look at our ability to take up the guidance while still absorbing that 100% increase in the provision.

Speaker Change: Overall, what we're talking about as far as the higher level of delinquencies is about 1%, so about $30 million on a $3 billion portfolio. So while it gets measured in terms of the provision as percent of revenues,

Michael Hug: So, while it gets measured in terms of the provision as percent revenues, you know, when you think about it like that, it's not a massive deterioration of portfolio or anything like that. It's a slight 1% increase, and obviously we'll do what we can to manage it. And I think, as I mentioned in my earlier response, I think we are managing well when you look at our ability to take up the guidance while still absorbing that 100% increase in the provision.

Speaker Change: You know, when you think about it like that, it's not a massive deterioration in the portfolio or anything like that. It's a slight 1% increase and

Speaker Change: Obviously we'll do what we can to manage it and I think, as I mentioned in my earlier response, I think we are managing it well when you look at our ability to take up the guidance while still absorbing that hundred-fifth increase in the provision.

Michael D. Brown: Absolutely true. I just wanted to follow up quickly and just talk about some of the more, you know, growthy elements, right? And, you know, Accor is, and the size of that opportunity is something we probably could benefit from a little, you know, depth of commentary on. How do you sort of see or imagine Accor turning into a growth engine over time?

David Katz: Absolutely true. I just wanted to follow up quickly and just talk about some of the more, you know, growth elements, right. And, you know, Accor is, and the size of that opportunity is something we probably could benefit from a little, you know, depth of commentary on.

Speaker Change: Absolutely true. I just wanted to follow up quickly and just talk about some of the more, you know, growthy elements, right? And, you know, Accor is, and the size of that opportunity is something we probably could benefit from.

Michael Brown: How, you know, how do you sort of see or envision Accor, you know, turning into a growth engine over time? Well, keep in mind that you first have to look at the nature of the hospitalized companies and whether geographically based, and our opportunity, as we see in the near term, is in that Asia-Pacific region, which represents less than 10% of our total evena. The way we're looking at our growth is to first transition the business over the next 12 months, restart a business that had been dormant, and then look to expand it in the Asia-Pacific region.

Speaker Change: A little, you know, depth of commentary on how, you know, how do you sort of see or envision Accor, you know, turning into a growth engine over time?

Michael D. Brown: Well, keep in mind that you first have to look at the nature of... the hospitality companies and whether they are geographically based, and our opportunity, as we see in the near term, is in the Asia Pacific region, which represents less than 10% of our total EBITDA. The way we're looking at our growth is to first transition the business over the next 12 months, restart a business that had been dormant, and then look to expand it in the Asia-Pacific region, capitalizing on their international presence and opportunity more than anything.

Speaker Change: Well, keep in mind that you first have to look at the nature of the

Speaker Change: the hospitality companies and where they're geographically based and our opportunity as we see in the near term is in that Asia-Pacific region which represents less than 10% of our total EBITDA.

Speaker Change: The way we're looking at our growth is to first transition the business over the next 12 months, restart a business that had been dormant, and then look to expand it in the Asia-Pacific region. And

Michael Brown: And... Capitalize on those international presence and opportunity, more than anything.

Speaker Change: Capitalize on their international presence and opportunity.

Michael D. Brown: So I think it follows, ultimately, the arc of how the rest of the branded has gone, but you do have to recognize that geographically, their business is primarily international, whereas the brands that are in this space today are primarily North America, and North America is really the best timeshare market, the most regulated, and where the branded companies have been able to really establish their presence and growth. So, I said, I guess I said it more simply, of course, we look at the international opportunity, which is a smaller opportunity than what you're going to get in North America with branded hospitality. I got it. Okay, thanks.

Michael Brown: So I think it follows ultimately the arc of how the rest of the branded has gone, but you do have to recognize that geographically their businesses primarily in a national where as the brands that are in this space today are primarily North America. North America is really the best time-share market, the most regulated in where the branded companies have been able to really establish their presence and growth. So I guess said more simply, a cool, we look at international opportunity, which is a smaller opportunity than what you're going to get North America with the branded hospitality companies.

Speaker Change: More than anything so I I think it follows ultimately the arc of

Operator: Okay, thank you.

Speaker Change: of how the rest of the branded has gone. But you do have to recognize that geographically, their business is primarily international, whereas

Speaker Change: The brands that are in this space today are primarily North America. North America is really the best timeshare market, the most regulated and where.

Speaker Change: The Branded Companies have been able to really establish their presence and growth.

Speaker Change: I said I guess said more simply a core we look at international opportunity which is a smaller opportunity than what you're going to get in North America with the branded hospitality companies.

David Katz: Okay, thank you. Sure, thank you, David.

Speaker Change: Okay, thank you.

Brandt Antoine Montour: Thank you. The next question today is coming from Brandt Montour from Barclays. Your line is now live.

Brandt Montour: Make a next question today. It's coming from Brandt Montour from Barclays, Realynes, now live. Hey, good morning, everybody. Thanks for taking my question. So on the long loss of business, I was hoping that you could maybe just level set longer term, right versus 2019. The provision at 20 college, it is back to the 19 levels. But, you know, now versus then, you have a higher quality mix, presumably from the, you know, those higher quality loans you were making over the last five years. So that's different; that should argue for lower provision. Also, I think, 2019, you had maybe some residual third-party stuff going on from that era.

David Brian Katz: Sure, thank you, David.

Speaker Change: Thank you. Next question today is coming from Brandt Montour from Barclays, your line is now live.

Brandt Antoine Montour: Hey, good morning, everybody. Thanks for taking my question. So, on the loan loss provisions, I was hoping that you could maybe just level them longer term, right, versus 2019. Unknown Executive, Charles Scholes, Dany Asad, Chris Woronka, Benjamin Chaiken, Isaac Sellhausen. Is that much worse, or what's the other bridge?

Brandt Antoine Montour: Hey, good morning everybody. Thanks for taking my question.

Brandt Antoine Montour: So on the loan loss provision, I was hoping that you could maybe just level set longer term right versus 2019

Speaker Change: The provision, NET-20, call it, is back to the 19 levels.

Speaker Change: But, you know, now versus then, you have a higher quality,

Speaker Change: mix, presumably from the

Speaker Change: from the decidedly, the shift you made toward those higher quality loans you were making over the last five years.

Speaker Change: That's different, that should argue for a lower provision.

Speaker Change: Also, I think, 19, you had maybe some residual third-party stuff going on from that era. I'm not sure about that. Maybe you could clarify, but just why are we, yeah, I guess, what are, you know, you're at that same place, but how do you account for the fact, is it just that lower band is

Michael Hug: I'm not sure about that; maybe you could clarify.

Michael Hug: But, but just why are we, yeah, I guess, what are, you know, you're at that same place, but how do you count for the fact, is it just that lower band is, is that much worse, or what's the other bridge? Yeah, so the lower band is definitely one that that's seen the, the most pressure. Keep in mind, too, we, I think, is in April of 2022. We basically start asking for lower down payments at table, because we wanted to properly start growing quicker. And so, if you finance more naturally, you're going to have a higher provision; that's probably 150 bits as well.

Michael A. Hug: Yeah, so the lower band is definitely one that's seen the most pressure. Keep in mind, too; we, I think it was in April of 22, we basically started asking for lower down payments at the table because we wanted the portfolio to start growing quicker. And so if you finance more naturally, you're going to have a higher provision. That's probably 100 to 150 bits as well.

Speaker Change: Is that much worse, or what's the other bridge?

Speaker Change: Yeah, so the lower band is definitely one that's seen the most pressure. Keep in mind, too, we, I think it was in April of 22...

Speaker Change: We basically start asking for lower down payments at table because we want the portfolio to start growing quicker And so if you finance more naturally, you're going to have a higher provision. That's probably 100 to 150 bits as well. So

Michael A. Hug: So I think when you look at the provision of percent of revenues, there's a lot of different things that can impact it besides just the performance of the portfolio. And I think that's probably one of the big dynamics is lower down payments today because we do want to, you know, get that portfolio growing at a quicker rate. The other thing I would point out, and you guys have heard me talk about before, is unlike a lot of other asset classes, we've got a great asset supporting this loan, right?

Michael Hug: So, I think when you look at the provision of revenue, there's a lot of different things that can impact the size, just the performance of the portfolio. And I think that's probably one of the big dynamics: lower down payments today, because we do want to, you know, get that portfolio growing at a quicker way.

Speaker Change: I think when you look at the provision of percent of revenues, there's a lot of different things that can impact it besides just the performance of the portfolio, and I think that's probably one of the big dynamics is.

Michael Hug: The other thing I would point out, and you guys heard me talk about before, is I'm like a lot of other asset classes. We've got a great asset supporting this loan, right? It's basically the resort that we manage every day. We get the HOE maintenance fees, which include reserves, and our goal is for every five to six years for every unit to be repurposed. So, even though I'd love to have no defaults in no provision, in those cases where someone, their ability to pay ceases, and then they do defaults, we go in and we take an asset back, that's in great shape, because we're there managing it every day.

Michael A. Hug: It's basically the resorts that we manage every day. We get the HOA maintenance fees, which include reserves. And our goal is for every five to six years for every unit to be refurbished. So even though I would love to have no defaults and no provision, in those cases where someone's ability to pay ceases and they do default, we go in, and we take an asset back that's in great shape because we're there managing it every day, and we sell it for more today than we did three years ago because of the price increases we put in place.

Michael Hug: And we're going to sell some more to the aid, and we did three years ago because the pricing increased with the employees. So, you know, it is elevated, slightly compared to our expectations, but also I think we've still have, you know, margins in the 20 plus percent, and run a very healthy business, you know, with provisions at 20 percent. So, for me, as I mentioned, it's $30,000 on a three-billion-dollar portfolio. We manage your overall business, and if I go back and get a great asset back, it works out pretty well just in terms of the cash flow, and to be honest, let's see if the person's in the future, because I'm just taking a great asset back and we're selling.

Michael A. Hug: So, you know, it is elevated slightly compared to our expectations. But also, I think we've demonstrated over time that we can still have, you know, margins in the 20-plus percent and run a very healthy business, you know, with provisions at 20%. So for me, as I mentioned, it's $30 million on a $3 billion portfolio. We manage the overall business. And if I go back and get a great asset back, it works out pretty well just in terms of the cash flow and, to be honest, fewer inventory purchases in the future because I'm just taking a great asset back and reselling it.

Brandt Antoine Montour: That's a helpful explanation. Thanks for that, Mike.

Brandt Montour: That's a helpful explanation.

Brandt Montour: Thanks for that, Mike.

Brandt Montour: And the second question I have on the same topic is, do some struggling a little bit with the timeline, because I think you guys sounded a little, you thought it pretty consistent into the quarter on the provision, and so it sounds like it really sort of, you know, it eroded there toward the end of the quarter, and I'm just curious if there was something that happened on the macro front or, you know, related to that, why you think it, why it sort of deteriorated toward the end, and if you could talk about sort of the exit rate, that might be helpful for us.

Michael A. Hug: And the second question I have on the same topic is, just I'm struggling a little bit with the timeline, because I think you guys sounded pretty consistent into the quarter on the provision. And so it sounds like it really sort of, you know, eroded there toward the end of the quarter. And I'm just curious if there was something that happened on the macro front or, you know, related to that, why you think it, why it sort of deteriorated toward, you know, toward the end. And if you could talk about sort of the exit rate, that might be helpful for us. Yeah, I think what we're seeing is

Michael A. Hug: Yeah, I think what we're seeing is that historically, you know, we start the year at a rate, and that delinquency rate moves down in Q1 and then again, usually in Q2. And in both cases, we did see the delinquency go down in Q1 compared to year end and again in Q2, just not as much as we have historically seen, obviously, which results in the higher provision that we need. So, I think when you look sequentially throughout the quarter, the rate didn't move down as much as we expected.

Michael Hug: Yeah, I think what we're seeing is historically, you know, we start the year at, at a rate in that, doing what she rate moves down in Q1, and then again, usually in Q2, and in both cases, we did see the, the, the doing see go down in Q1, compared to your end and again in Q2, just not as much as, as we have historically seen, obviously, which results in the, the higher provision that we need. So I think when you let's sequentially throughout the quarter, the rate didn't move down as much as we expected, and I think you just, once again, as I mean, there gets, gets back to the lower income consumers is feeling, I think, a little more pressure than, you know, those are the higher end.

Speaker Change: Right net delinquency rate moves down in Q1, and then again, usually in Q2 and in both cases, we did see the delinquency go down in Q1 compared to a year and then again in Q2, just just not as much as we have historically seen obviously, which resulted in the higher provision that we need so I think when you look sequentially throughout the quarter.

Michael A. Hug: And I think you just once again, as I mentioned earlier, it gets back to lower income consumers feeling, I think, a little more pressure than, you know, those of the higher end. And that's, in essence, what we're seeing when we see the higher level of delinquencies, primarily in the sub-700 FICO, so it was a slight deterioration throughout the quarter, and obviously, the way the provision works is once you see that deterioration, you have to provide for the expected level of future defaults, and that's in essence what our calculation does.

Speaker Change:

Speaker Change: The rate didn't move down as much as we expected and I think you just once again it gets back to the lower income consumers is feeling I think a little more pressure than you know those are there are the higher end.

Michael Hug: That's, that's what we're seeing when we see the, the higher level doing, but these primarily being in the, the sub 700, five goes.

So that's what we're seeing when we see the the.

Speaker Change: The higher level delinquencies, primarily being in the sub 700 FICO. So it was a slight deterioration throughout the quarter and obviously the way. The provision works is once you see that deterioration you have to provide for the unexpected level of future defaults and that's in essence, Florida calculation does.

Michael Hug: So it was a, a slide deterioration throughout the quarter, and obviously the way the provision works is, once you see that deterioration, you have to provide for the, and expected level of future defaults, and, and that's in essence, where our calculation does.

Speaker Change: Perfect. Thanks, so much.

Michael Hug: Perfect, thanks so much.

Dany Asad: Sure, thank you. Thank you. Next question is coming from Danny Asad from Bank of America; your wine is now live. Thank you, and good morning, guys.

Speaker Change: Sure. Thank you.

Speaker Change: Thank you next question is coming from Danny Assad from Bank of America. Your line is now live.

Operator: Thank you. The next question is coming from Dany Asad from Bank of America. Your line is now live.

Dany Asad: Thank you and good morning, guys. Mike, I'll take the flip side of that. So when you add your newer, the incremental, you know, higher quality owners, let's call them the ones that are, you know, the 740 originations that are coming in, what kind of loan loss provisions are we marking up for those?

Dany Asad: Thank you and good morning, guys Michael.

Dany Asad: Mike, I'll take the flip side of that. So when you add your newer, the incremental, you know, higher quality owners, let's call them the ones that are, you know, the 740 originations that are coming in. What kind of low mass provisions are we marking up for those owners? Yes. It's a great question. Unfortunately, I don't have an easy answer. The reason for that is good to back to the down payment. If you have somebody that walks in and, you know, they, they make a $25,000 transaction, make the $10,000 down, your provision on that's going to be a lot lower than someone that, you know, only puts $5,000 down.

Speaker Change: Mike I'll take the flip side of that so when you add your new where the incremental you know.

Higher quality owners, let's call them the ones that are you know.

Speaker Change: 740.

Dany Asad: Originations that are coming in what kind of loan loss provisions army marching up for those owners.

Michael A. Hug: Yes, it's a great question. Unfortunately, I don't have an easy answer, and the reason for that is it gets back to the down payment. If you have somebody that walks in and, you know, they make a $25,000 transaction and they put $10,000 down, your provision on that is going to be a lot lower than someone that, you know, only puts $5,000 down. So I think when you look at the provision we were running, and that we were projecting kind of in that below-19 range, I think that's what we expected our new originations to come in.

Yes, it's a great question. Unfortunately, I don't have a easy answer and the reason for that just gets back to the down payment. If you. If you have somebody that walks in and you know they they make it 25000 dollar transaction in May put $10000 down your provision on that's going to be a lot lower than someone that you know only puts $5000 down. So I think when you look at the.

Michael Hug: So I think when you look at the provision, we were running, you know, in that we were rejecting kind of in that below 19 range. I think that's what we expected for our new originations coming in on average. Once again, each particular loan is different as far as, you know, whether it's enough grade or whether it's a new purchase, whether they put 5% down or 10% down. So I think on average, we were expecting to be kind of under 19%. It's moved up a little bit, and so, you know, once, you know, longer term, I would expect that, you know, you know, when we keep down payments at where they're at today, you know, that provision would move that down at some point in the future to clear below 19.

Dany Asad: Provision we were running you know and that we were projecting kind of in that below 19 range I think that's what we expected for our new originations come in on average once again, each particular loan is different as far as whether it's an upgrade or whether it's a new purchase whether they put 5% down our 10% down. So I think on average we were expecting to be kind of under 19.

Michael A. Hug: On average, once again, each particular loan is different as far as, you know, whether it's an upgrade or whether it's a new purchase, whether they put 5% down or 10% down. So I think, on average, we were expecting to be kind of under 19%. It's moved up a little bit. And so, you know, once you know, longer term, I would expect that, assuming we keep down payments at where they're at today, that provision would move back down at some point in the future to below 19.

Dany Asad: Percent, it's moved up a little bit and so you know what.

Dany Asad: You know longer term I would expect that assuming we keep downpayments at where they're at today, you know that provision would move back down at some point in the future to below 19.

Speaker Change: Got it and then.

Michael A. Hug: Got it. And then you gave really good color on kind of the moving pieces of the guide, but if you could just help us a little bit more with that, So we understand that, you know, you flowed through the beat in Q2. And since now we're assuming higher loan loss preparedness for Q3 and Q4, can you maybe help us bucket, like, in Q3 and Q4, what's running better to offset that? Is it, you know, in terms of, like, tours, pricing, you know, travel, and membership? Where is that coming from? Danny, good morning.

Michael Hug: Got it, and then you get really good color on kind of like the moving pieces of the guy, but if you could just help us a little bit more with that. So we understand that, you know, you flow through the B and Q2, and since now we're assuming higher loan loss prevents for Q3 and Q4, can you maybe help us buck it, like, in Q3 and Q4, what's running better to offset that? Is it, you know, in terms of, like, is it towards pricing, you know, travel membership, where is that coming from?

Speaker Change: You gave really good color on kind of like the moving pieces in the guide, but if you could just help us a little bit more with that so we understand that you know you flowed through the beat in Q2 and since now we are assuming higher loan loss provisions for Q3 and Q4.

Can you maybe help us bucket like in Q3, and Q4, what's running better to offset that.

Speaker Change: Is it in terms of like in the tours pricing you know travel a membership or where is that coming from.

Michael D. Brown: Really, it's on our core timeshare business. We moved up our VPG guidance by $50. And at the beginning of the year, we said our tour flow growth would be around 10%. And we're a lot more confident that it's at least going to be 10%, if not more. So when you look at fundamentally where we think the increased provision gets offset, oddly enough, it's straight back to the consumer because the consumer loves the product and is using it and is combined with a really good team out there is delivering results on the tours and the BPG and the combination of those two not only help us overcome the increased provision, but just as a reminder to everyone is we're also overcoming this year approximately $30 million headwind on interest income as well as the variable comp.

Michael Brown: Dany, good morning, it's Michael. It really is on our core time share business. We moved up our VPG guidance by $50, and at the beginning of the year we said our twerk flow growth would be around 10%. We're a lot more confident that it's at least going to be 10%, if not more. So when you look at fundamentally where we think the increased provision gets all set, oddly enough it's straight back to the consumer because the consumer loves the product and is using it and is combined with a really good team out there is delivering results on the tours and the VPG and the combination of those two.

Michael D. Brown: Dany, good morning. It's Michael.

Speaker Change: Dan and good morning, its Michael.

Really its on our core timeshare business, we moved up our V. P G guidance by $50.

Speaker Change: And at the beginning of the year, we said our tour flow growth would be around 10% in and we're a lot more confident that it's at least going to be 10% if not more so when you look at fundamentally where we think the increased provision it gets offset.

Speaker Change: Oddly enough, it's straight back to the consumer because the consumer loves the product and is using it and is combined with a really good team out there is delivering results on the tours and the CPG and the combination of those two not only help us overcome.

Michael Brown: Not only help us overcome the increased provision, but just as a reminder to everyone, is we're also overcoming this year approximately 30 million headwind on interest income as well as the variable comp. So I think the performance that we're laying out with the increased guidance highlights our core business continues to show, as we said over the last five years, there's a resilient business that will perform well when the economy's booming and in an inflationary environment where there's value-driven purchases. So core businesses overcoming the issues that are coming up in a slightly higher provision.

Speaker Change: The increased provision, but just as a reminder to everyone. As we're also overcoming this year of approximately $30 million headwind on interest.

Speaker Change: Income as well as the variable comp so I think the.

Michael D. Brown: So I think the performance that we're laying out with the increased guidance highlights our core business, which continues to show, as we've said, over the last five years, there's a resilient business that will perform well when the economy's booming and in an inflationary environment where there's value-driven purchases. So core businesses are overcoming the issues that are coming up in a slightly higher provision.

Speaker Change: The performance that we're laying out with the increased guidance highlights our core business continues to show as we've said over the last five years. This is a resilient business that debt.

Operator: Thank you. The next question is coming from Ian Zaffino from Oppenheimer. Your line is now live.

Speaker Change: That will perform well when the economies booming and are in an inflationary environment, where there's value driven purchases. So our core businesses overcoming the.

Speaker Change: The issues that are coming up in a slightly higher provision.

Speaker Change: Alright, Thank you very much.

Speaker Change: Thank you.

Dany Asad: Thank you.

Ian Zaffino: Next question is coming from Ian's; if you know from Oppenheimer, your line is now live. Hi, great. But thank you. I think I was able to give us the new owner or the tour mix versus new owners that's existing or maybe just the existing owner or three. I need to give us the new owner tour course. Thanks.

Speaker Change: Your next question is coming from Ian Zaffino from Oppenheimer. Your line is now live.

Ian Alton Zaffino: I agree, but thank you. Would you guys be able to give us the new owner tour mix, or the tour mix versus new owner versus existing, or maybe just the existing owner tour growth rate? I need to give us something to work with. Thanks.

Ian Alton Zaffino: Hi, great. Thank you.

Ian Alton Zaffino: Would you guys be able to give us the new owner tour mix Orient towards makes versus new owners versus existing or maybe just the existing owner tour growth rate I know you gave us a new owner.

Speaker Change: Two are closely thanks.

Michael D. Brown: So, Ian, let me give you some stats, and you can tell me if this is answering the question. Our new owner tour mix is roughly 50% of our total tour mix, and our new owner sales mix is 37%. The reason the differential was obviously BPG, that with the lower BPGs on new owners, you're going to get a lower mix than you do tours. And so, overall, our new owner tour mix is about 50% of our total tours, both for the first half and for the full year.

Speaker Change: So.

Michael Brown: So let me give you some stats, and you can tell me this is answering the question. Our new owner tour mix is roughly 50 percent of our total tour mix, and our new owner sales mix is 37 percent. The reason the differential was obviously BPG that with the lower BPGs on new owners you're going to get a lower mix than you do tours and to overall our new owner tour mix is about 50 percent of our total tours both for the first full year.

Speaker Change: And then just.

Speaker Change: Let me give you some stats and you can tell me. If this is answering the question or our new owner tour mix is roughly 50% of our total toward mix and our new owner.

Speaker Change: Sales mix is 37%. The reason the differential was obviously V. P. G M that with the lower V. P cheese on new owners, you're going to get a lower mix that usually tours and so overall, our new owner tour mix is about 50% of our total tours both for the first half of it.

Speaker Change: All year.

Speaker Change: Yeah.

Michael Hug: Okay, thank you. And then on TNM EBITDA. I guess we were kind of thinking maybe over the game of the year flat, but I guess we're looking at down year over year into third quarter. You know, are there cost ounces or anything else you didn't do on that side to maybe keep EBITDA flat or you know there's nothing really left to do on that side.

Ian Alton Zaffino: Okay, thank you. And then on TNM EBITDA, I guess we were kind of thinking maybe at the beginning of the year that it would be flat, but I guess we're looking at down year over year into the third quarter. You know, are there cost savings? Is there anything else you can do on that side to maybe keep EBITDA flat or, you know, There's nothing really left to do on that. Well, let's start that, whether it's the VO...

Speaker Change: Okay. Thank you and then on PNM EBITDA I guess, we're kind of thinking maybe.

Speaker Change: It was at the beginning of the year flat, but I guess, what we're looking at down year over year into third quarter.

Speaker Change: You know are there cost ounces or anything else you can do on that side to maybe keep EBITDA flat or you.

Speaker Change: You know that.

Speaker Change: There's nothing like let's get on that side. Thanks.

Michael Hug: Thanks. Well, let's start that whether it's the VO business or the travel membership business, we're always looking to improve our results. When you look at the second quarter, we were at the midpoint of our guidance range, and we were just off of it in Q1. So, with our efforts, especially on the travel clubs, we're looking to grow our transactions the second half of this year, and we feel quite confident in our ability to do that. On the exchange business, although propensity still continues to be ahead when we're encouraged by the increase in the RPT. So like the VO business, there's multiple variables on the top line as well as on the bottom line to cost, and we'll look at all of them to get back to a flat.

Michael D. Brown: Well, let me start by saying that, whether it's the VO business or the travel and membership business, we're always looking to improve our results. When you look at the second quarter, we were at the midpoint of our guidance range, and we were just off of it in Q1. So with our... efforts, especially on the travel clubs, we're looking to grow our transaction volume in the second half of this year, and we feel quite confident in our ability to do that. On the exchange business, although propensity still continues to be a headwind, we're encouraged by the increase in the RPT.

Let's start that.

Speaker Change: Whether it's the <unk> business or the travel the membership business, we're always looking to improve our results. When you look at the second quarter, we were at the midpoint of our guidance range.

Speaker Change: And we were just off of it in Q1, so with our.

Speaker Change: Efforts, especially on the travel clubs.

Speaker Change: We're looking to grow our transaction in the second half of this year and we feel quite confident in our ability to do that.

Speaker Change: On the exchange business, although propensity still continues to be a headwind. We're encouraged by the increase in the RPT. So like the V O business, there's multiple variables.

Michael D. Brown: So like the VO business, there are multiple variables on the top line, as well as on the bottom line through cost. And we'll look at all of them to get back to flat, if not modest, growth for 2024. Keeping in mind that flat to 2% in 2024 is the difference between zero and five million of EBITDA growth. So, you know, every percentage point, you know, two and a half million. And our effort this year is to get back to that level, if not achieve, you know, some modest growth this year.

Speaker Change: On the top line as well as on the bottom bottom line through cost and we'll look at all of them to get back to flat if not modest growth for 2024.

Michael Hug: It's not modest growth for 2024. Keeping in mind that flat to 2% in 2024 is the difference between zero and five million of EBITDA growth, so every percentage point's two and a half million. And our effort this year is to get back to that flat, if not get some modest growth this year.

Speaker Change: Keeping in mind that.

Speaker Change: Flat to 2% in 2024 is the difference between zero and $5 million of EBITDA growth. So.

Speaker Change: Every percentage points.

Speaker Change: Two and a half million dollars and our effort. This year is to get back to that flat if not get some modest growth this year.

Michael Hug: Okay, thank you very much. Thank you.

Speaker Change: Okay. Thank you very much.

Speaker Change: Okay.

Speaker Change: Thank you next question today is coming from Patrick Scholes from <unk> Securities. Your line is now live.

Operator: Thank you. The next question today is coming from Patrick Scholes from Truist Securities. Your line is now live.

Patrick Scholes: Next question today is coming from Patrick Scholes from Truist Securities.

Patrick Scholes: Your line is now live. Okay, thank you.

Patrick Scholes: Okay, thank you. A number of follow-up questions here. Mike, you know, we saw a competitor last year.

Patrick Scholes: Okay. Thank you a number of follow up questions here.

Patrick Scholes: A number of follow-up questions here. Mike, you know, we saw a competitor last year take a charge related to Loma's provision. You know, given the uptick that you've seen the last year. Just a couple months here. You know, in your opinion, do you think these trends create an elevated risk that you might have to take a special charge?

Speaker Change: Yeah.

Speaker Change: Mike we saw a competitor last.

Speaker Change: Last year.

Speaker Change: Take a take a charge.

Patrick Scholes: Take a charge. Related to the loan loss provision, you know, given the uptick that you've seen in the last couple months here, you know, in your opinion, do you think these trends create an elevated risk that you might have to take a special charge? I'd like you to talk about that, thank you.

Speaker Change: Related to the loan loss provision.

Speaker Change: Given the uptick that you've.

Speaker Change: You've seen the last couple of months here.

Speaker Change: Your opinion do you think.

Speaker Change: These trends create an elevated risk that you might have to take a special charge.

Speaker Change: Well you know I'd like you to talk about that.

Michael Hug: You want to talk about that? Yeah, no, thanks for the question, Patrick. And there's, there's not even belief on our part that we're going to have a special charge come through as relates to the elevator level of delinquencies. Normally, when we have a special charge come through, it's due to a specific event. For example, COVID in March of 2020. So basically, the way we're seeing the portfolio on the provision is what reflected in our guidance and what expect the large one-time charge at some highly unusual event. Okay.

Michael A. Hug: Yeah, no, thanks for the question, Patrick, and there's a nodding belief on our part that we're going to have a special charge come through as relates to the elevated level of delinquencies. Normally, when we have a special charge come through, it's due to a specific event, for example, COVID in March of 2020. So basically, the way we're seeing the portfolio and the provision is what's reflected in our guidance and would expect a large one-time charge absent some highly unusual event.

Speaker Change: Yeah no. Thanks for the question Patrick and there's there's not a belief on our part that we're gonna have a special charges come through as it relates to the elevated level of.

Speaker Change: Delinquencies normally when we have a special charges come through it's due to a specific event for example, COVID-19 in March of 2020 so.

Speaker Change: Basically the way, we're seeing the portfolio and the provision is what's reflected in our guidance and wouldn't expect a large one time charge absent some highly unusual event.

Speaker Change: Okay, Okay good to hear.

Patrick Scholes: Okay, okay, good to hear. Next question. Um, you know, this year, and I think also last year, roughly a $30 million headwind due to the, Securitizations, you know, given where your last two securitizations price and the details within, you know, would you say, you know, next year, sort of these trends, inter-freight trends continue, you might actually see a small tailwind or would it be sort of tracking neutral at this point as opposed to a headwind the last two years?

Patrick Scholes: Good to hear.

Michael Hug: Next question. You know, this year and I think also last year roughly a 30 million headwind due to the. Yeah, but, you know, the spreads on the, the securitizations, you know, given where your last two securitizations price and the details within, you know, would you say, you know, next year. If sort of these trends, the interfree trends continue, you might actually see a small tailwind, or would it be sort of tracking neutral at this point as opposed to a headwind the last two years? Yeah, I think what we would expect next year is maybe the first half of the year, just a very, very slight headwind flattening out kind of as we get towards into the year and then become a tailwind in 2026 based on current interest rate projections.

Speaker Change: Next question.

Speaker Change: This year and I think also last year, roughly a 30 million headwind due to the.

Speaker Change: But the tightening of the spreads on the.

Speaker Change: Securitization.

Speaker Change: Given where your last two securitization.

Speaker Change: Price.

Speaker Change: And.

Speaker Change: The details within you know would you say you.

Speaker Change: You know next year sort of these tret interest rates trends continue you might actually see a small tailwind or would it be sort of tracking neutral at this point as opposed to a headwind, though the last two years.

Michael A. Hug: Yeah, I think what we would expect next year is maybe in the first half of the year, just a very, very slight headwind, flattening out kind of as we get towards the end of the year and then becoming a tailwind in 2026 based on current interest rate projections. So I would say for the full year next year, not a significant impact, maybe a few million dollars. And then once again, assuming rates continue to move like the Curbs and Forecast with NK becoming a tailwind at 26.

Speaker Change: Yes, I think what we would expect next year as maybe in the first half of the year, just a very very slight head.

Speaker Change: Headwind flattening out kind of as we get towards the end of the year and then become a tailwind in 2026 based on current interest rate projections. So I would say for the full year next year not a significant impact maybe maybe a few million dollars headwind and then once again assuming rates continue to move like the.

Michael Hug: So I would say for the full year next year, not significant impact, maybe a few million dollars headwind, and then once again, assuming rates continue to move like the curves and forecast would indicate, becoming a tailwind in 26.

Speaker Change: Curbs and forecast would indicate becoming a tailwind in 'twenty six.

Michael Hug: Okay.

Patrick Scholes: Okay, let's just talk quickly about BPGs and your guidance. You did better on BPG, you took the guidance up. Is that, talk a little bit, give me a little more color on that. Is that better close rates, or is it just a higher sales price combination of the above? And what customer were you seeing better success with? Was it the new buyer or the existing buyer? Thank you.

Speaker Change: Okay.

Patrick Scholes: Let's just talk quickly about BPGs and your guidance. You did better on BPG. You took the guidance up. Is that is talk a little bit giving a little more color on that? Is that better close rates, or is it just a higher sales price combination of the above and, you know, what customer were you seeing better success with? Was it the new buyer or the existing buyer?

Just talk quickly about V P g's in your guidance.

Speaker Change #100: Yeah, you did better on V. P. G. You took the guidance up is that is talk a little bit give me a little more color on that is that better close rates or is it just a higher sales price combination.

Speaker Change: Bob.

Speaker Change #101: What customer where you're seeing better success with wasn't that Dubai or are the existing buyer. Thank you.

Michael Brown: Thank you. Well, just again, to put some data points out there for the first half of the year, 37% new want to make. and we've been able to maintain, which is 400 basis points higher than it was last year for the first half. So, with that, you would expect a much stronger decline in the VPG, and the fact that it's still at 3050 is a great data point for the strength of our consumer. Primarily, that's holding up on close rates. We've seen continued strength in our owner, VPG's; we've seen continued strength in our blue thread, VPG's; and we've been able to hold the line on non-affinity, VPG's, which is very important because when you talk about plus 20% growth on new owner tours.

Speaker Change #103: Ah well.

Michael D. Brown: Well, just again to put some data points out there, for the first half of the year, 37% new owner max, and we've been able to maintain that, which is 400 basis points higher than it was last year for the first half. So with that, you would expect a much stronger decline in the BPG, and the fact that it's still at 3050 is a great data point for the strength of our consumer. Primarily that's holding up on close rates.

Speaker Change #102: Again to put some data points out there for the first half of the year, 37% new owner mix.

Speaker Change #102: And we've been able to maintain which which is 400 basis points higher than it was last year for the first half so with that you would expect.

Speaker Change #102: Much stronger decline in the V. P G and the fact that it's still at 30 50 is.

Speaker Change #102: Great.

Speaker Change #102: A point for the strength of our consumer.

Speaker Change #102: Primarily that's holding up on close rates.

Speaker Change #102: We've seen continued.

Michael D. Brown: We've seen continued strength in our owner BPGs, and we've seen continued strength in our blue thread. We've been able to hold the line on non-affinity VPGs, which is very important because when you talk about plus 20% growth on new owner tours, you expect degradation in your BPG. So, you know, holding the line on new owner, non affinity BPG. While getting strength out of your owner and blue thread is a very positive sign. Almost all of that's close, right? You get some on price, but really, it comes down to our ability to continue to perform, our team's ability to continue to perform at closed rates.

Speaker Change #102: Strength at our owner VP Jeez, we've seen continued strength in our blue thread.

Patrick Scholes: Okay, great. And then I have just my last two questions for you, Michael.

Speaker Change #102: <unk> and we've been able to hold the line on non affiliate T. V. P. G, which is very important because when you talk about plus 20% growth on new owner tours.

Michael Brown: You expect degradation in your VPG, so holding the line on new owner, non-affinity, VPG's, while getting strength out of your owner and blue thread is a very positive sign. Almost all of that's close rate; you get some on price, but really it comes down to our ability to continue to perform. Our team's ability to continue to perform on close rates.

Speaker Change #104: You expect.

Speaker Change #104: Degradation in your V P G. So.

Speaker Change #104: Holding the line on new owner non affinity P. P cheese, while straight and getting strength out of your older at Blue thread is a very positive sign almost all of that is close rate you get some on price but.

Speaker Change #105: Really it comes down to our ability to continue to perform our team's ability to continue to.

Speaker Change #105: Before I close rates.

Speaker Change #105: Okay.

Michael D. Brown: You talked about last quarter being able to announce some additional Sports Illustrated locations by, I think, the second half of this year. Is that still on track? And then, lastly, could you give us some color on what you're seeing as far as demand trends in Hawaii? And that's it for me. Thank you.

Michael Brown: Great, and then just had last two questions for you, Michael. You talked about I think last quarter being able to announce some additional Sports Illustrated locations by, I think, in the second half of this year, is that still on track that you expect to announce some additional locations. And then lastly, if you could give us some color on what you're seeing as far as demand trends in Hawaii, and that's it for me.

Speaker Change #106: Great and then just my last two.

Michael D. Brown: Two questions for you Michael you.

Michael D. Brown: You talked about I think last quarter being able to announce some additional sports illustrated illustrated our locations by.

Second half of this year or is that still on track that you expect to announce.

Michael D. Brown: Some additional locations and then lastly.

Speaker Change #107: If you could give us some color on what you're seeing as far as.

Speaker Change #108: Demand trends in Hawaii, and that's it for me. Thank you.

Michael Brown: Thank you. Yes, is the answer to the first question. And the second one is, we haven't seen from our standpoint any anomalies in Hawaii demand, keeping in mind, the most of our presence is on the Big Island, a little bit on the Law who in Hawaii. We have a very small resort in Maui, which is closer to Key. Hey, so I don't think we're the best parameter of Hawaii traffic, but I would say we're seeing nothing unusual from what we have for the total market. We are up year-on-year on our room nights, but again, we're on all the islands and Maui, which is what I'm presuming is your underlying question.

Michael D. Brown: Yes is the answer to the first question, and the second one is, we haven't seen, from our standpoint, any... anomalies in Hawaii demand. Keeping in mind, most of our presence is on the Big Island, a little bit on Oahu and Kauai. We have a very small resort in Maui, which is closer to Kihei, so I don't think we're the best barometer of Hawaii traffic, but I would say we're seeing nothing unusual from what we have.

Speaker Change #109: Ah, Yes is the answer to the first question and the second one is we haven't seen from our standpoint any.

Speaker Change #110: Anomalies in our Hawaii demand.

Speaker Change #110: Keeping in mind or are the most of our presence is on the Big Island, a little bit on Oahu and Hawaii.

Speaker Change #110: We have a very small resort it now.

Speaker Change #111: Which is.

Speaker Change #111: Closer to key Hey, So I don't think we're the best barometer of Hawaii traffic, but I would say, we're seeing nothing unusual from what we have.

Speaker Change #111: Hum.

Michael D. Brown: For the total market, we are up year on year on owner room nights, but again, we're on all the islands and Maui, which is what I'm presuming is your underlying question. We're not a good barometer of that market.

Speaker Change #111: For the total market.

Speaker Change #111: Are up year on year on all the room nights, but again.

Speaker Change #111: Sort of.

Speaker Change #111: On all of the islands, and Maui, which is what I'm presuming issue. Your underlying question, we were not a good barometer of that market.

Michael Brown: We're not a good parameter of that market.

Patrick Scholes: Okay, well, thank you for taking all my questions. I'm all set.

Patrick Scholes: Okay.

Speaker Change #112: Okay well.

Operator: Well, thank you for taking all my questions.

Speaker Change #113: Thank you for taking all my questions I'm all set.

Operator: I'm all set.

Operator: Thanks Patrick; we appreciate it.

Operator: Thank you, Patrick. We appreciate it. Thank you.

Patrick: Patrick we appreciate it.

Michael D. Brown: Thank you. We've reached the end of our question and answer session. I'd like to turn the floor back over to you for any further closing comments.

Speaker Change #115: Thank you we reached end of our question and answer session I would like to turn the floor back over for any further or closing comments.

Operator: We reached the end of our question and answer session.

Michael Brown: I'd like to turn the floor back over for any further closing comments. Thank you. And thanks again to everyone for dialing in today. Our performance year-to-date shows our ability to deliver top-line growth, healthy margins, and strong free cash generations. The increase to our full-year guidance demonstrates that we have a resilient and value-driven business model, are executing well against our key priorities for the year, and consumer demand for our product remains strong. Most importantly, we have the best team in the industry, which is focused on delivering top-tier results for our owners and our shareholders.

Speaker Change #116: Thank you and thanks again to everyone for dialing in today, our performance year to date shows our ability to deliver top line growth healthy margins and strong free cash generations. The increase to our full year guidance demonstrates that we have a resilient and value driven business model are executing well against our key.

Michael D. Brown: Thank you. And thanks again to everyone for dialing in today. Our performance year to date shows our ability to deliver top line growth, healthy margins, and strong free cash generation. The increase to our full year guidance demonstrates that we have a resilient and value-driven business model, are executing well against our key priorities for the year, and consumer demand for our product remains strong. Most importantly, we have the best team in the industry, which is focused on delivering top-tier results for our owners and our shareholders.

Speaker Change #116: <unk> for the year and consumer demand for our product remains strong.

Speaker Change #116: Most importantly, we have the best team in the industry, which is focused on delivering top tier results for our owners and our shareholders.

Michael Brown: We definitely look forward to speaking to you again on our October call.

Michael D. Brown: We definitely look forward to speaking to you again on our October call. And before we hang up, I'd also like to briefly just recognize one of our team members who celebrated 25 years with the company in the last quarter and thank our Chief Financial Officer, Mike Hug, for all his great work and service over the last 25 years. With that, thank you everyone, and see you on the next call.

Speaker Change #117: We definitely look forward to speaking to you again on our October call and before we hang up I would also like to briefly just recognize one of our team members, who celebrated 25 years with the company in the last quarter and thank our Chief Financial Officer, Mike hub for all of his great work and service over the last 25 years.

Michael Brown: Before we hang up, I'd also like to briefly just recognize one of our team members who celebrated 25 years with the company in the last quarter and thank our two financial officer, Mike Hug, for all his great work and service over the last 25 years.

Speaker Change #117: With that thank you everyone and see you on the next call.

Operator: With that, thank you everyone, and see you on the next call.

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.

Operator: Thank you.

Speaker Change #118: 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.

Operator: That does conclude today's telecom for some webcasts, and we just connect our line at this time and have a wonderful day. We thank you for your participation.