ORLANDO, Fla. – Travel + Leisure Co. (NYSE:TNL), a global provider of leisure travel and experiences, has announced the completion of a term securitization transaction. The deal involved the issuance of $325 million in principal amount of asset-backed notes. The notes carry an overall weighted average coupon of 5.18%, and the advance rate for this transaction was reported at 98.00%.
Mike Hug, Chief Financial Officer of Travel + Leisure Co., expressed satisfaction with the transaction, noting it as the company’s third term securitization of 2024. Hug highlighted that the advance rate and overall coupon rates have shown improvement, marking the best levels achieved by the company in over two years. He attributed this success to the company’s consistent ability to access capital markets, despite varying economic conditions, reflecting market confidence in the business’s resilience.
The securitization structure included $148 million of Class A Notes at a coupon of 4.83%, $71 million of Class B Notes at 4.98%, $75 million of Class C Notes at 5.32%, and $31 million of Class D Notes at 6.93%. Sierra Timeshare 2024-2 Receivables Funding LLC, an indirect subsidiary of Travel + Leisure Co., was responsible for issuing these notes.
The transaction was conducted under Rule 144A and Regulation S, allowing the placement of securities not registered under the Securities Act of 1933 or any state securities law. The announcement serves as a matter of record post-sale of the securities.
Travel + Leisure Co. serves more than six million vacationers annually and operates a diverse portfolio of vacation resorts, travel clubs, and lifestyle travel brands. With a workforce of over 19,000 associates worldwide, the company is committed to fulfilling its mission of putting the world on vacation while focusing on hospitality and responsible tourism.
This financial move by Travel + Leisure Co. is based on a press release statement and is intended to inform investors and the public of the company’s recent business activities.
In other recent news, Travel + Leisure Co. experienced a 4% rise in Q2 revenue, reaching $985 million, and an increase in adjusted EBITDA to $244 million, primarily due to its vacation ownership business and strategic partnerships. The company updated its full-year adjusted EBITDA guidance to fall between $915 million and $935 million. However, Barclays downgraded Travel + Leisure’s stock from Equalweight to Underweight and adjusted the price target to $40 from the previous $46, indicating a potential decrease in the company’s stock value to align with historical trends.
Goldman Sachs initiated coverage on Travel + Leisure with a Neutral rating and a 12-month price target of $44.00, highlighting the company’s core vacation ownership business and recent strategic acquisitions as potential growth catalysts. In contrast, Truist Securities maintained a Buy rating but reduced the price target to $60 from $65 based on updated earnings projections and a lower multiple used in their analysis.
Travel + Leisure Co. also declared a regular cash dividend of $0.50 per share, set to be paid to shareholders on record as of September 13, 2024. These are among the recent developments for Travel + Leisure Co. Despite a slight increase in loan loss provisions and a decline in transactions in the Travel and Membership segment, analysts expect a slight headwind in the first half of next year, followed by a tailwind in 2026.
InvestingPro Insights
Travel + Leisure Co.’s recent securitization transaction aligns well with its strong financial position, as highlighted by several InvestingPro metrics and tips. The company’s ability to secure favorable terms in the capital markets is reflected in its solid financial performance.
According to InvestingPro data, Travel + Leisure Co. boasts a market capitalization of $3.29 billion and has demonstrated impressive profitability with a P/E ratio of 7.77. This low earnings multiple, as pointed out by an InvestingPro Tip, suggests that the stock may be undervalued relative to its earnings potential.
The company’s revenue for the last twelve months stands at $3.82 billion, with a healthy revenue growth of 4.26% over the same period. This growth trajectory supports the company’s ability to generate cash flow for initiatives like the recent securitization.
An InvestingPro Tip indicates that Travel + Leisure Co. has maintained dividend payments for 18 consecutive years, showcasing its commitment to shareholder returns. This is further evidenced by the current dividend yield of 4.23%, which may be attractive to income-focused investors.
The company’s financial stability is underscored by another InvestingPro Tip, which notes that its liquid assets exceed short-term obligations. This strong liquidity position likely contributed to the favorable terms achieved in the recent securitization deal.
For investors seeking more comprehensive analysis, InvestingPro offers additional tips and insights. Currently, there are 8 more InvestingPro Tips available for Travel + Leisure Co., providing a deeper understanding of the company’s financial health and market position.
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