Slides
Page 1
+ INVESTOR PRESENTATION March 2026 CANNON BEACH, OR WE PUT THE WORLD ON V ACA TION
Page 2
Presentation of Financial Information Financial information discussed in this presentation includes non-GAAP measures such as Adjusted EBITDA, Adjusted EBITDA margin, Adjusted diluted EPS, Adjusted free cash flow, Adjusted free cash flow conversion, gross VOI sales and Adjusted net income, which include or exclude certain items, as well as non-GAAP guidance. The Company utilizes non-GAAP measures on a regular basis to assess performance of its reportable segments and allocate resources. These non-GAAP measures differ from reported GAAP results and are intended to illustrate what management believes are relevant period-over-period comparisons and are helpful to investors when considered with GAAP measures as an additional tool for further understanding and assessing the Company’s ongoing operating performance by adjusting for items which in our view do not necessarily reflect ongoing performance. Management also internally uses these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. Exclusion of items in the Company’s non-GAAP presentation should not be considered an inference that these items are unusual, infrequent or non-recurring. See the appendix to this presentation for definitions of these Non- GAAP measures, and full reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures where applicable. The Company may use its website as a means of disclosing information concerning its operations, results and prospects, including information which may constitute material nonpublic information, and for complying with its disclosure obligations under SEC Regulation FD. Disclosure of such information will be included on the Company’s website in the Investor Relations section at travelandleisureco.com/investors. Accordingly, investors should monitor that Investor Relations section of the Company website, in addition to accessing its press releases, its submissions and filings with the SEC, and its publicly noticed conference calls and webcasts. About Travel + Leisure Co. Travel + Leisure Co. (NYSE: TNL) is a leading leisure travel company, providing more than six million vacations to travelers around the world every year. The Company operates a diverse portfolio of vacation ownership, travel club, and lifestyle travel brands designed to meet the needs of the modern leisure traveler, whether they’re traversing the globe or enjoying destinations closer to home. This includes experiential brands such as Sports Illustrated Resorts, Eddie Bauer Adventure Club, Margaritaville Vacation Club, and Accor Vacation Club, as well as cornerstone brands Club Wyndham, WorldMark, and RCI. With hospitality and responsible tourism at its heart, the Company’s more than 19,000 dedicated associates worldwide help fulfill its mission to put the world on vacation. Learn more at travelandleisureco.com. Forward-Looking Statements This presentation includes “forward-looking statements” as that term is defined by the Securities and Exchange Commission (“SEC”). Forward-looking statements are any statements other than statements of historical fact, including statements regarding our expectations, beliefs, hopes, intentions or strategies regarding the future. In some cases, forward-looking statements can be identified by the use of words such as “may, ” “will, ” “expects, ” “should, ” “believes, ” “plans, ” “anticipates, ” “estimates, ” “predicts, ” “potential, ” “projects, ” “continue, ” “outlook, ” “guidance, ” “commitments, ” “future” or other words of similar meaning. Forward-looking statements are subject to risks and uncertainties that could cause actual results of Travel + Leisure Co. and its subsidiaries (“Travel + Leisure Co. ” or “we”) to differ materially from those discussed in, or implied by, the forward-looking statements. Factors that might cause such a difference include, but are not limited to, risks associated with: the acquisition of the Travel + Leisure brand and the future prospects and plans for Travel + Leisure Co., including our ability to execute our strategies to grow our cornerstone timeshare and exchange businesses and expand into the broader leisure travel industry through travel clubs; our ability to compete in the highly competitive timeshare and leisure travel industries; uncertainties related to acquisitions, dispositions and other strategic transactions; the health of the travel industry and declines or disruptions caused by adverse economic conditions (including inflation, recent tariff actions and other trade restrictions, higher interest rates, and recessionary pressures), terrorism or acts of violence, political strife, war (including hostilities in Ukraine and the Middle East), pandemics, and severe weather events and other natural disasters; adverse changes in consumer travel and vacation patterns, consumer preferences and demand for our products; increased or unanticipated operating costs and other inherent business risks; our ability to comply with financial and restrictive covenants under our indebtedness; our ability to access capital and insurance markets on reasonable terms, at a reasonable cost or at all; maintaining the integrity of internal or customer data and protecting our systems from cyber-attacks; the timing and amount of future dividends and share repurchases, if any; and those other factors disclosed as risks under “Risk Factors” in documents we have filed with the SEC, including in Part I, Item 1A of our Annual Report on Form 10-K most recently filed with the SEC. We caution readers that any such statements are based on currently available operational, financial and competitive information, and they should not place undue reliance on these forward-looking statements, which reflect management’s opinion only as of the date on which they were made. Except as required by law, we undertake no obligation to review or update these forward- looking statements to reflect events or circumstances as they occur. 2
Page 3
Company Overview CLUB WYNDHAM EMERALD GRANDE AT DESTIN DESTIN, FL ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK 3
Page 4
We are focused on delivering outstanding vacation experiences for our owners and members, while building lasting value for our shareholders. ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW (1) As of December 31, 2025 (2) Non-GAAP measures: see appendix for definition and reconciliation QUARTERL Y RESUL TS AND OUTLOOK SHAREHOLDER-FRIENDL Y APPROACH TO CAPITAL ALLOCATION RESILIENT , PROVEN BUSINESS MODEL WITH STRONG FINANCIAL PERFORMANCE $2.9B+ Returned to Shareholders Since 2018 Spin 37% Reduction to Shares Outstanding Since Spin 37% Increase in Quarterly Dividend per Share Since Spin T ravel + Leisure Co. is a differentiated multi-brand leisure platform with a proven financial track record BUSINESS FUNDAMENTALS INVESTMENT HIGHLIGHTS (1)V ALUE DRIVERS RETURNS 4% Revenue Growth (3 -Y R CAG R) 5% Adj. EBITDA Growth(2) (3 -Y R CAG R) 12% Adj. Diluted EPS(2) (3 -Y R CAG R) GROWTH 25% Adj. EBITDA Margin(2) 26% ROIC(2) 52% Adj. FCF Conversion(2) EFFICIENCY 4
Page 5
280+ Resorts Worldwide 3,600 Affiliated RCI Resorts 26% Ad j . E B I TA Margin(2) 34% Ad j . E B I TA Margin(2) 797K Timeshare Owners ~1.6M Vacations Booked (1) As of December 31, 2025 (2) Non-GAAP measures: see appendix for definition and reconciliation (3) Represents the average number of paid members in our vacation exchange programs who are considered to be in good standing, during a given reporting period ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK 2025 FINANCIALS 4.0B Net Revenue $516M Adj. FCF(2) $990M Adj. EBITDA(2) $6.34 Adj. Diluted EPS(2) 25% Adj. EBITDA Margin(2) $449M Capital Returned We operate an integrated two-segment model V ACA TION OWNERSHIP (1) TRA VEL & MEMBERSHIP (1) HIGH MARGIN, RECURRING REVENUE ENGINE ASSET LIGHT , CASH GENERATIVE PLATFORM + = Four interconnected businesses Sales of Vacation Ownership Interest Resort Development Resort Management Consumer Financing T wo distinct travel platforms Exchange services for timeshare intervals Travel club membership Healthy EBITDA margins and cash flow Long-term stable owner base Generates significant recurring and predictable revenue 3.3 million exchange members(3) Opportunities to further monetize through add-on services and offerings Proven margin stability Through a variety of economic conditions 5
Page 6
With favorable trends in the business that contribute to resilient financial performance ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK Global leisure travel market is forecasted to grow 7% CAGR (2024 - 2032)(1) Companies associated with major hospitality brands account for ~92% of industry sales(2) “Best of both” experience combining vacation-home space with hotel like consistency Owners lock in long-term vacation value with flexibility and certainty Points-based system allows owners to curate unique vacation experiences Owners can split, borrow, or bank points across destinations and time A TTRACTIVE, CONSOLIDA TING INDUSTRY SECULAR GROWTH IN TRA VEL CONSOLIDATING INDUSTRY COMPELLING V ALUE PROPOSITION CONSUMER BENEFITS FLEXIBLE OWNERSHIP STRUCTURE HIGH-QUALITY OWNER BASE ~50 Ye a r s Average age of new owners(3) ~65% Of sales are to Gen X, Millennials, and younger(3) ~$120k Average household income(3) ~80% Of owners have fully paid off(3) ~70% Of sales are to existing owners(3) 746 Weighted average FICO on new originations(3) 2.6x Owner spend vs. initial purchase 97% Annual owner retention rate(4) (1) Source: Expert Market Research.com (2) Source: ARDA 2025 H1 Pulse Survey (3) As of December 31, 2025 (4) Ten year average as of December 31, 2025 of owners who fully paid off their purchases or are current on their loan 6
Page 7
We have curated a portfolio of brands capable of reaching a wide range of consumers ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK 2018 Wyndham Worldwide Completes Spin-off Wyndham Hotels & Resorts; Becomes Wyndham Destinations (NYSE: WYND) 2021 Wyndham Destinations acquires Travel + Leisure brand, accelerating the company’s multi-brand strategy (NYSE: TNL) 2023 Introduced Sports Illustrated Resorts, a new sports-themed vacation club 2024 Acquired Accor Vacation Club, with nearly 30,000 club members and 24 resorts 2025 Launched Eddie Bauer Adventure Club FOUNDATIONAL BRANDS 7
Page 8
Consumer Financing $3.3B portfolio with weighted average interest rate of 15% $5.3B Consumer Financing Interest revenue on existing and potential upgrade loans Exchange T ransactions Subscription Revenue VOI Upgrade Owners consistently buy 2.6X their initial purchase $12.2B Gross VOI Sales (2) Owner upgrade potential of current members Other New owner sales New Owner Sales Create Solid Foundation for Future Revenue Growth MORE THAN 75% OF REVENUES ARE PREDICTABLE AND/OR RECURRING (1) STRONG PIPELINE OF POTENTIAL FUTURE REVENUE (1) 10 Y ear Revenue Potential (Not Discounted) $3.3B Club + Resort Management Fees > 75% of T otal$20.8B (1) As of December 31, 2025. (2) Gross VOI Sales, a forward looking non-GAAP measure, the reconciliation of which is not available without unreasonable effort. See appendix for definition. ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW Property Management Resort management fees Cost plus pass through QUARTERL Y RESUL TS AND OUTLOOK 8
Page 9
2007 2008 2009 2010-2019 2020 2021 2022 2023 2024 2025 1,993 1,987 1,315 1,935 (2) 967 1,491 1,982 2,149 2,293 2,486 24% 2023 24% 2024 2025 Resilient Business with Strong Adjusted EBITDA Margins Vacation Ownership Segment Adjusted EBITDA Margin (1) 2007 2008 2009 0% 5% 10% 15% 20% 25% 30% 16% 2021 23% 2022 23% 26% 2010-2019 24% (2) 2020 7% COVID-19 GROSS VOI SALES (1) (1) Non-GAAP measure: see appendix for definition and reconciliation. (2) Average from 2010-2019. ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW 22% 16% The Great Recession QUARTERL Y RESUL TS AND OUTLOOK 9
Page 10
Consumer Financing Drives Substantial Earnings Stream 2007 2008 2009 2010-2019 (3) 2020 2021 2022 2023 2024 2025 248 295 296 360 366 323 327 315 314 320 NET INTEREST INCOME (1) Weighted Average Interest Rate on North American loans outstanding. Calculations consider all non-rescinded, regular loan originations recognized 3 months post addenda, which are considered in the static pool default curve. (2) Weighted average FICO Score on new originations. (3) Average from 2010 - 2019. FICO(2)Weighted Average Interest Rate(1) 2007 2008 2009 2010-2019(3) 2020 2021 2024 202520232022 10.0% 11.0% 12.0% 13.0% 14.0% 15.0% 16.0% 18.0% 17.0% 500 600 700 800 683 12.3% 691 12.9% 725 13.6% 726 13.8% 736 14.7%14.8% 736 14.7% 735 744 15.2% 746 14.9% 739 15.0% ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK 10
Page 11
Disciplined Approach to Underwriting has Improved Relative Position of Loan Portfolio Weighted Avg. FICO (at origination) % of loans < 640 FICO Portfolio Equity Weighted Avg. Coupon Loan Loss Provision 12/31/2019 14.3% 722 52.7% 14.6% 12/31/2025 10.3% 739 55.4% 15.0% INCREASED FICO MINIMUM TO 640 IMPLEMENTED MINIMUM FICO UNDERWRITING ST ANDARD (1) Portfolio Characteristics as of 12/31/2025. Qualified Non-defaulted North American Portfolio, including Shell originations starting 07/01/13. LOAN COUNT (1) ~130,000 AVG. BALANCE (1) $23,901 RECEIVABLES (1) $3.12B AUTO PA Y ENROLLMENT (1) 88% 12/31/2008 31.4% 680 39.1% 12.7% 22.6% 20.6% 20.7% ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK 11
Page 12
Our T ravel and Membership Business is T ransforming ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW QUARTERL Y RESUL TS AND OUTLOOK EXCHANGE TRA VEL CLUBS TRA VEL AND MEMBERSHIP • Pressure on volumes as industry has consolidated and points-based products expand • Resized footprint and more targeted approach will drive higher quality service and better efficiency • Refining offerings to broaden appeal to closed-user groups • Driving mix toward higher margin transactions • High Margin, Low Capital Intensity • High Adjusted Free Cash Flow + = 12
Page 13
QUARTERL Y RESUL TS AND OUTLOOK ADDITIONAL FINANCIAL INFORMATION NON- GAAPS COMPANY OVERVIEW INVESTING IN THE BUSINESS CAPITAL RETURNS TO SHAREHOLDERS BALANCE SHEET Disciplined and Balanced Capital Allocation Framework Opportunistic M&A Organic growth Dividends Share repurchases Leverage reduction through EBITDA growth Manageable maturities WORLDMARK MOAB MOAB, UT ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW MARGARITA VILLE V ACATION CLUB ST . THOMAS, VI QUARTERL Y RESUL TS AND OUTLOOK CLUB WYNDHAM AUSTIN, TX 13
Page 14
$235 $300 $26 $125 Shareholder-Focused Capital Allocation (1) Average annual dividend growth. (2) Average since 2022. CAPIT AL ALLOCA TION • Paid a dividend every quarter as an independent company, including during COVID • Repurchase an average of ~9% of shares each year(2) DIVIDEND GROWTH IN LINE WITH BUSINESS SUBST ANTIAL SHARE REPURCHASES ($ IN MILLIONS) 20202019 20192021 2022 20222023 20232024 2025 2024 2025 $340 $352 $1.80 $1.60 $1.25 $1.60 $2.00 $2.24 $1.80 2020 2021 2023 $41M for Sports Illustrated Resorts 2024 $44M for Accor Vacation Club CAPIT AL INVESTMENTS ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW $307 QUARTERL Y RESUL TS AND OUTLOOK COVID-19 +16%(1) COVID-19 14
Page 15
ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW Cumulative Capital Returned to Shareholders Since Spin (in millions) Over $2.9B of capital returned to shareholders post spin(1) $808 $562 $246 2019 $687 $1,071 $384 2020 $628 $1,064 $1,692 2022 $493 $1,206 $713 2021 $764 $1,371 $2 ,13 5 2023 Repurchases Diluted Weighted Average Shares OutstandingDividends 2018 $302 $221 $81 $500 $0 $1,000 $1,500 $2,000 $2,500 $3,000 99.2 92.4 86.1 87.3 84.2 75.0 $906 $1,606 $2,512 2024 70.7 $1,055 $1,906 $2,961 2025 66.9 QUARTERL Y RESUL TS AND OUTLOOK (1) Information provided as of December 31, 2025. 15
Page 16
Solid Balance Sheet with Manageable Debt Maturities S&P BB- Moody’s Ba3 Fitch BB+ Term Loan B Revolving Credit Facility Secured Notes (1) As of 12/31/2025 $2.6B of corporate debt was fixed. (2) As of December 31, 2025. A security rating is not a recommendation to buy, sell or hold securities and is subject to revision or withdrawal by the assigning rating organization. Reference to any such credit rating is intended for the limited purpose of discussing or referring to aspects of our liquidity and of our costs of funds. Any reference to a credit rating is not intended to be any guarantee or assurance of, nor should there be any undue reliance upon, any credit rating or change in credit rating, nor is any such reference intended as any inference concerning future performance, future liquidity, or any future credit rating. (3) Represents principal balances at December 31, 2025 and excludes remaining Term Loan B amortization payments of $9M per year in 2026 – 2029. Corporate debt excludes our securitization transactions indebtedness and securitization conduit facilities. At 12/31/2025, the revolving credit facility of $1.0B had $893M of capacity, net of $44M outstanding letters of credit. CORPORATE DEBT MATURITIES (3) As of December 31, 2025 ($ in millions) 3.1x leverage ratio at 12/31/25 CORPORATE DEBT RATINGS (2) STATS 74% of corporate debt is fixed (1) 5.66% Weighted Avg. Interest Rate on Corporate Debt (1) QUARTERL Y RESUL TS AND OUTLOOK ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS COMPANY OVERVIEW $650 $650 $350 $500 $854 $63 $400 2026 2027 2028 2029 2030 2031 2032 2033 16
Page 17
Quarterly Results and Outlook COMPANY OVERVIEW ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS QUARTERL Y RESUL TS AND OUTLOOK CLUB WYNDHAM MIDTOWN 45 NEW YORK, NY 17
Page 18
FULL YEAR HIGHLIGHTS (1) Non-GAAP measure: see appendix for definition and reconciliation. COMPANY OVERVIEW ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS 4Q and FY 2025 Results WORLDMARK SANTA FE SANTA FE, NM VPG of $3,284, above the high end of our guidance range Adj. Free Cash Flow of $516M(1) Advanced our multi-brand strategy with Sports Illustrated Resorts Club sales, the introduction of Eddie Bauer Adventure Club, and the expansion of Accor Vacation Club into Indonesia Returned $449M to shareholders through dividends and share repurchases Recognized by Fortune as one of the World’s Most Admired Companies for the fourth consecutive year QUARTERL Y RESUL TS AND OUTLOOK THREE MONTHS ENDED 12/31/2025 TWEL VE MONTHS ENDED 12/31/2025 Gross VOI Sales(1) $638M +8% YOY growth Gross VOI Sales(1) $2.5B +8% YOY growth Adj. EBITDA(1) $272M +8% YOY growth Adj. EBITDA(1) $990M +7% YOY growth Net Revenue $1.0B +6% YOY growth Net Revenue $4.0B +4% YOY growth Adj. Diluted Earnings Per Share(1) $1.83 +6% YOY growth Adj. Diluted Earnings Per Share(1) $6.34 +10% YOY growth 1818
Page 19
300 235 34 (1) Non-GAAP measure: see appendix for definition and reconciliation. (2) Corporate debt as of December 31, 2025. Utilizing a Proven Capital Allocation Framework • $449M returned to shareholders in 2025 • Repurchased 8% of shares outstanding 2025 SHAREHOLDER RETURNS Q4‘24 Q1‘25 Q3‘25 Q4‘25Q2‘25 3.4x • $516M Adj. FCF(1) produced in 2025 • 52% Adj. EBITDA to Adj. FCF conversion(1) in 2025 STRONG CASH GENERATION SOLID BALANCE SHEET • Strong access to capital markets • Weighted average interest rate of 5.66%(2) • Leverage improved 26 bps over prior year (2) Dividends Repurchases LEVERAGE RATIOCASH RETURNED TO SHAREHOLDERSADJUSTED FREE CASH FLOW (1) 2024 142 377 2025 149 449 446 2024 2025 516 COMPANY OVERVIEW ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS QUARTERL Y RESUL TS AND OUTLOOK 3.3x 3.3x 3.3x 3.1x +16% +19% 19
Page 20
COMPANY OVERVIEW ADDITIONAL FINANCIAL INFORMATION NON-GAAP RECONCILIATIONS QUARTERL Y RESUL TS AND OUTLOOK Expectations for 2026 VPG Adj. EBITDA (1) $1,030M–$1,055M $2.5B–$2.6B $3,175–$3,275 Q1‘26E 2026E $210M–$220M $520M–$540M $3,200–$3,250 PROVIDING FIRST QUARTER GUIDANCE 2026 TARGETS (1) Adjusted EBITDA and Gross VOI Sales are forward looking non-GAAP measures, the reconciliation of which is not available without unreasonable effort. See appendix for definitions. Outlook is as of February 18, 2026. Nothing herein is intended to update such outlook or guidance after such date or to reflect any facts, circumstances or other factors occurring since the date of such outlook or guidance. WORLDMARK ISLA MUJERES QUINTANA ROO, MEXICO Gross VOI Sales (1) MARGARITA VILLE V ACATION CLUB RIO MAR, PR 20
Page 21
Additional Financial Information ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS WORLDMARK ISLA MUJERES ISLA MUJERES, MEXICO 2121
Page 22
Model Sensitivities Three major drivers to performance in the Vacation Ownership segment Loan Loss Provision Volume Per Guest (VPG) T our Growth Number of tours taken by guests in our efforts to sell vacation ownership interests Portion of financed Gross VOI sales(1) reserved at point of sale to account for potential future loan losses Gross VOI sales (excluding telesales and virtual) divided by number of tours, a measure of efficiency of our tour selling efforts 100 BPS CHANGE = ~$4 MILLION ADJ. EBITDA ON AN ANNUAL BASIS $50 VPG CHANGE = ~$15 MILLION ADJ. EBITDA ON AN ANNUAL BASIS 50 BPS CHANGE = ~$9 MILLION ADJ. EBITDA ON AN ANNUAL BASIS (1) Net of Fee-for-Service sales. Note: Sensitivities provided as of December 31, 2025. Sensitivities are based on our general expectations. Sensitivities to Adjusted EBITDA include system-wide trends. Operating circumstances, including but not limited to brand mix, product mix, geographical concentrations, and market segment variations, among other factors, may cause impacts to differ materially. ADDITIONAL FINANCIAL INFORMATION COMPANY OVERVIEW NON-GAAP RECONCILIATIONS QUARTERL Y RESUL TS AND OUTLOOK 22
Page 23
(1) Non-GAAP measure: see appendix for definition and GAAP reconciliation. Adjusted EBITDA to Adjusted Free Cash Flow Conversion % 2018 to 2019 Actual 100% Adj. EBITDA (1) (3%) Net inventory spending (18%) Capex and working capital 61% Adj. FCF (1) conversion (16%) Cash Interest (13%) Cash T axes 11% Net consumer finance 2025 Actuals 100% Adj. EBITDA (1) (7%) Net inventory spending (6%) Capex and working capital 52% Adj. FCF (1) conversion Cash Interest (9%) Cash T axes (3%) Net consumer finance (23%) ADDITIONAL FINANCIAL INFORMATION COMPANY OVERVIEW NON-GAAP RECONCILIATIONS QUARTERL Y RESUL TS AND OUTLOOK 23
Page 24
QUARTERL Y RESUL TS AND OUTLOOK ADDITIONAL FINANCIAL INFORMATION NON- GAAPS COMPANY OVERVIEW 24 24
Page 25
APPENDIX: NON-GAAP RECONCILIATIONS 25
Page 26
APPENDIX: NON-GAAP RECONCILIA TION Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA ($ in millions except per share data) Note: Amounts may not calculate due to rounding. (1) Includes $216 million of inventory write-downs and impairments during the year ended December 31, 2025 and $1 million of inventory write- downs during each of the years ended December 31, 2023 and 2022, included within Cost of vacation ownership interests on the Consolidated Statements of Income. (2) Includes $2 million and $3 million of stock-based compensation expenses associated with the 2023 and 2022 restructuring plans for the twelve months ended December 31, 2023 and 2022. (3) Represents adjustments for other items that meet the conditions of unusual and/or infrequent. (4) Amortization of acquisition-related intangible assets is excluded from Adjusted net income and Adjusted EBITDA. (5) Debt modifications are excluded from Adjusted net income, while included for Adjusted EBITDA. (6) Represents the tax effects on the adjustments. We determine the tax effects of the non-GAAP adjustments based on the nature of the underlying adjustment and the relevant tax jurisdictions. The tax effect of the non-GAAP adjustments was calculated based on an evaluation of the statutory tax treatment and the applicable statutory tax rate in the relevant jurisdictions. (7) All stock-based compensation is excluded from Adjusted EBITDA. 2025 EPS Margin % 2024 EPS Margin % 2023 EPS Margin % 2022 EPS Margin % Net income attributable to TNL shareholders $ 230 $ 3.44 6% $ 411 $ 5.82 11% $ 396 $ 5.28 11% $ 357 $ 4.24 10% Gain on disposal of discontinued business, net of income taxes - (33) (5) (1) Income from continuing operations $ 230 $ 3.44 6% $ 378 $ 5.35 10% $ 391 $ 5.21 10% $ 356 $ 4.23 10% Inventory write-downs and asset impairments, net (1) 226 3 1 11 Restructuring (2) 19 16 26 14 Amortization of acquired intangibles (3) 10 10 10 9 Other (4) 3 - - Debt modification (5) 1 2 1 - Acquisition and divestiture related 1 2 - Legacy Items - 11 8 1 Intergration costs - 1 - Loss on sale of business - - 2 - Loss on sale of equity investment - - - 5 COVID-19 related costs - - - 2 Fair value change in contingent consideration - (7) - (10) T axes (6) (66) (10) (12) (8) Adjusted net income $ 424 $ 6.34 11% $ 406 $ 5.75 11% $ 427 $ 5.70 11% $ 380 $ 4.52 11% Income taxes on adjusted net income 173 145 106 138 Interest expense 232 249 251 195 Depreciation 114 105 102 110 Stock-based compensation expense (7) 57 40 36 42 Debt modification (5) (1) (2) (1) - Interest income (9) (14) (13) (6) Adjusted EBITDA $ 990 25% $ 929 24% $ 908 24% $ 859 24% Diluted Shares Outstanding 66.9 70.7 75.0 84.2 Net income CAGR -14% Adj. EBITDA CAGR 5% EPS CAGR -7% Adj. Diluted EPS CAGR 12% ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS 26
Page 27
APPENDIX: NON-GAAP RECONCILIA TION Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA ($ in millions except per share data) Note: Amounts may not calculate due to rounding. (1) Includes $210 million of inventory write-downs and impairments during the ended December 31, 2025, included within Cost of vacation ownership interests on the Consolidated Statements of Income. (2) Represents adjustments for other items that meet the conditions of unusual and/or infrequent. (3) Amortization of acquisition-related intangible assets is excluded from Adjusted net income and Adjusted EBITDA. (4) Debt modifications are excluded from Adjusted net income, while included for Adjusted EBITDA. (5) Represents the tax effects on the adjustments. We determine the tax effects of the non-GAAP adjustments based on the nature of the underlying adjustment and the relevant tax jurisdictions. The tax effect of the non-GAAP adjustments was calculated based on an evaluation of the statutory tax treatment and the applicable statutory tax rate in the relevant jurisdictions. (6) All stock-based compensation is excluded from Adjusted EBITDA. QTD Q4 2025 EPS Margin % QTD Q4 2024 EPS Margin % Net (loss)/income attributable to TNL shareholders $ (61) $ (0.95) -6% $ 119 $ 1.72 12% Gain on disposal of discontinued business, net of income taxes - (1) (Loss)/income from continuing operations $ (61) $ (0.95) -6% $ 118 $ 1.70 12% Inventory write-downs and asset impairments, net (1) 219 1 Restructuring 19 2 Other (2) 1 - Amortization of acquired intangibles (3) 3 3 Acquisition and divestiture related 1 - Debt modification (4) - 2 Intergration costs - 1 Legacy Items - (1) Fair value change in contingent consideration - (7) T axes (5) 61 - Adjusted net income $ 120 $ 1.83 12% $ 119 $ 1.72 12% Income taxes on adjusted net income 49 40 Interest expense 57 59 Depreciation 29 27 Stock-based compensation expense (6) 19 12 Debt modification (4) - (2) Interest income (2) (2) Adjusted EBITDA $ 272 27% $ 252 26% Diluted Shares Outstanding 65.6 69.2 ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS 27
Page 28
APPENDIX: NON-GAAP RECONCILIA TION ($ in millions) T ravel + Leisure Co. Net Income to Adjusted EBITDA Reconciliation Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow 2019 2018 (18) 2018 + 2019 Net income attributable to T+L shareholders $ 507 $ 672 $ 1,179 Loss from ops of disc bus, net of income taxes - 50 50 Gain on disposal of disc bus, net of income taxes (18) (456) (474) Provision for income taxes 191 130 321 Depreciation and amortization 121 138 259 Interest expense 162 170 332 Interest (income) (7) (5) (12) Gain on sale of business (68) - (68) Separation and related costs (2) 45 223 268 Asset impairments 27 (4) 23 Stock-based compensation 20 23 43 Restructuring 9 16 25 Legacy items 1 1 2 Acquisition/divestiture related 1 - 1 Value-added tax refund - (16) (16) Further adjustments (3) - 15 15 T+L Adjusted EBITDA $ 991 $ 957 $ 1,948 T otal Revenue $ 4,043 $ 3,931 Net income margin 13% 17% Adj. EBITDA margin 25% 24% 2019 2018 (18) 2018 + 2019 Net cash provided by operating activities from continuing operations $ 453 $ 292 $ 745 Property and equipment additions (108) (99) (207) Sum of proceeds and principal payments of non-recourse vacation ownership debt 185 264 449 Free cash flow 530 457 987 Separation and other adjustments (4) 87 123 210 Adjusted free cash flow $ 617 $ 580 $ 1,197 Net cash used in investing activities from continuing operations (44) (99) (143) Net cash used in financing activities from continuing operations (289) (1,786) (2,075) Net income 507 672 1,179 Adjusted EBITDA 991 957 1,948 Net income cash flow conversion 89% 43% 63% Adjusted free cash flow conversion 62% 61% 61% (1) 2018 Adjusted EBITDA is further adjusted. (2) Includes $4 million and $105 million of stock-based compensation expenses for the years ended 2019 and 2018. (3) Includes incremental license fees paid to Wyndham Hotels & Resorts and other changes being affected in conjunction with the spin-off. (4) Includes cash paid for separation-related activities and transaction costs for acquisitions and divestitures as well as certain adjustments to 2018 for comparative purpose for incremental license fees paid to Wyndham Hotels and other corporate costs being affected in order to reflect the company’s position as if the spin-off had occurred for all periods presented. ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS 28
Page 29
29 APPENDIX: NON-GAAP RECONCILIA TION Reconciliation of Net Cash Provided by Operating Activities from Continuing Operations to Adjusted Free Cash Flow ($ in millions) ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS 2025 2024 Net cash provided by operating activities from continuing operations $ 640 $ 464 Property and equipment additions (117) (81) Sum of proceeds and principal payments of non-recourse vacation ownership debt (8) 62 Free cash flow 515 445 T ransaction costs for acquisitions 1 1 Adjusted free cash flow $ 516 $ 446 Net cash used in investing activities from continuing operations (107) (125) Net cash used in financing activities from continuing operations (443) (458) Net income 230 411 Adjusted EBITDA 990 929 Net income cash flow conversion 278% 113% Adjusted free cash flow conversion 52% 48% 29
Page 30
APPENDIX: NON-GAAP RECONCILIA TION Non-GAAP Measure: Reconciliation of Net VOI Sales to Gross VOI Sales ($ in millions) The Company believes gross VOI sales provide an enhanced understanding of the performance of its vacation ownership business because it directly measures the sales volume of this business during a given reporting period. Q4 2025 QTD Q4 2024 QTD 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 Net VOI Sales $ 495 $ 456 $ 1,847 $ 1,721 $ 1,582 $ 1,484 $ 1,176 $ 505 $ 1,848 $ 1,769 $ 1,684 $ 1,601 $ 1,604 $ 1,485 $ 1,379 $ 1,323 $ 1,150 $ 1,072 $ 1,053 $ 1,463 $ 1,666 Net effect of percentage- of-completion accounting - - - - - - - - - - - (13) 12 1 - - - (187) 74 22 Loan loss provision 119 117 484 432 348 302 129 415 479 456 420 342 248 260 349 409 339 341 449 450 305 Gross VOI sales, net of Fee-for-Service sales $ 614 $ 573 $ 2,331 $ 2,153 $ 1,930 $ 1,786 $ 1,305 $ 920 $ 2,327 $ 2,225 $ 2,104 $ 1,943 $ 1,838 $ 1,757 $ 1,729 $ 1,732 $ 1,489 $ 1,413 $ 1,315 $ 1,987 $ 1,993 Fee-for-Service sales 24 18 155 140 219 196 186 47 28 46 34 64 126 132 160 49 106 51 - - - Gross VOI sales $ 638 $ 591 $ 2,486 $ 2,293 $ 2,149 $ 1,982 $ 1,491 $ 967 $ 2,355 $ 2,271 $ 2,138 $ 2,007 $ 1,965 $ 1,889 $ 1,889 $ 1,781 $ 1,595 $ 1,464 $ 1,315 $ 1,987 $ 1,993 Note: Amounts may not calculate due to rounding. 2007-2025 Gross VOI sales does not reflect the adoption of ASC 606 revenue recognition accounting standard. ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS 2010-2019 Average $ 1,935 30
Page 31
APPENDIX: NON-GAAP RECONCILIA TION Vacation Ownership Net Income to EBITDA Reconciliation ($ in millions) 2025 2024 2023 2022 2021 2020 2019 2018 2017 2016 2015 2014 2013 2012 2011 2010 2009 2008 2007 VO net income/(loss) $ 324 $ 443 $ 429 $ 373 $ 309 $ (69) $ 404 $ 340 $ 174 $ 316 $ 316 $ 295 $ 248 $ 227 $ 195 $ 156 $ 117 $ (1,281) $ 150 NI attributable to NCI - - - - - - - - - 1 - 1 1 - - - - - - Provision for income taxes 139 176 160 149 128 (17) 150 119 110 194 196 185 144 137 122 96 72 50 95 Depreciation and amortization 78 71 70 78 82 86 81 73 63 53 47 47 47 38 38 46 54 58 48 Interest expense 68 58 47 38 34 43 78 117 142 131 130 133 180 147 160 142 144 100 85 Interest (income) (3) (3) (2) - - - - (1) - (1) (2) (1) (1) - - - - (1) - Inventory write-downs and impairments (1) 224 1 - 8 1 22 27 (4) 205 - - - - - - - 9 1,374 - Stock-based compensation 20 1 4 15 16 13 8 7 9 13 16 - - - - - - - - - Restructuring Costs 5 2 10 3 (1) 14 5 11 - 8 1 - - 2 (1) - 37 66 - Other (2) 4 - - - - - - - - - - - - - - - - - Acquisition related 1 1 - - - - - - - - - - 2 1 - - - - - Integration costs - 1 - - - - - - - - - - - - - - - - - COVID-19 related - - - - 3 34 - - - - - - - - - - - - - Separation & related costs - - - - - - 4 67 1 - - - - - - - - - 9 2016 Grant Modifer - - - - - - - - 1 - - - - - - - - - - Executive Costs - - - - - - - - - 6 - - - - - - - - - Further adjustments - - - - - - - (10) (25) (21) - - - - - - - - - VO Adjusted EBITDA $ 860 $ 764 $ 729 $ 665 $ 569 $ 121 $ 756 $ 721 $ 684 $ 703 $ 688 $ 660 $ 621 $ 552 $ 514 $ 440 $ 433 $ 366 $ 387 T otal Revenue $ 3,361 $ 3,171 $ 3,041 $ 2,835 $ 2,423 $ 1,637 $ 3,151 $ 2,979 $ 2,881 $ 2,774 $ 2,772 $ 2,638 $ 2,515 $ 2,269 $ 2,077 $ 1,979 $ 1,945 $ 2,278 $ 2,425 Net Income Margin 10% 14% 14% 13% 13% (4)% 13% 11% 6% 11% 11% 11% 10% 10% 9% 8% 6% (56)% 6% Adj. EBITDA Margin 26% 24% 24% 23% 23% 7% 24% 24% 24% 25% 25% 25% 25% 24% 25% 22% 22% 16% 16% 2010 - 2019 VO Adj. EBITDA $ 6,339 T otal Revenue $ 26,035 Avg Adj. EBITDA Margin 24.3 % Note: 2007-2015 Adjusted EBITDA is per Wyndham Worldwide’s definition and does not reflect the adoption of ASC 606 revenue recognition accounting standard. 2016-2018 Adjusted EBITDA is further adjusted. (1) Includes $216 million of inventory write-downs and impairments during the year ended December 31, 2025 and $1 million of inventory write-downs during each of the years ended December 31, 2023 and 2022, included within Cost of vacation ownership interests on the Consolidated Statements of Income. (2) Represents adjustments for other items that meet the conditions of unusual and/or infrequent. (3) Includes incremental license fees paid to Wyndham Hotels & Resorts and other changes being affected in conjunction with the spin-off. ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS 31
Page 32
2025 T&M net income $ 139 Provision for income taxes 48 Depreciation and amortization 28 Interest expense 10 Interest (income) (4) Restructuring Costs 7 Impairments 2 Stock-based compensation 1 Acquisition related 1 Other (1) (4) T&M Adjusted EBITDA $ 228 T otal Revenue $ 662 Net Income Margin 21% Adj. EBITDA Margin 34% APPENDIX: NON-GAAP RECONCILIA TION T ravel and Membership Net Income to Adjusted EBITDA Reconciliation ($ in millions) ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS (1) Represents adjustments for other items that meet the conditions of unusual and/or infrequent. 32
Page 33
2025 Average Corporate Debt $ 3,471 Less: Average Cash and Cash Equivalents (210) Average Net Debt 3,261 Plus: Average T otal Stockholder’s (deficit) and Noncontrolling interest (931) Average Invested Capital (1) $ 2,330 Net Income $ 230 Net Income ROIC 10% Adjusted EBITDA $ 990 Depreciation and amortization 124 Adjusted EBIT 866 T axes (2) (251) Adjusted Net Operating Profit After T axes (NOPAT) $ 615 Adjusted ROIC 26% APPENDIX: NON-GAAP RECONCILIA TION Reconciliation of Adjusted ROIC ($ in millions) ADDITIONAL FINANCIAL INFORMATION QUARTERL Y RESUL TS AND OUTLOOK COMPANY OVERVIEW NON-GAAP RECONCILIATIONS (1) Averages included in this computation represent 2-year averages. (2) Represents taxes on Adjusted EBIT. 33
Page 34
34 DEFINITIONS Adjusted Diluted Earnings per Share: A non-GAAP measure, defined by the Company as Adjusted net income divided by the diluted weighted average number of common shares. Adjusted Diluted Earnings per Share is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods. Adjusted EBIT: A non-GAAP measure, defined by the Company as net income from continuing operations before interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Consolidated Statements of Income. Adjusted EBIT also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, asset impairments/recoveries and inventory write-downs associated with the Company’s resort optimization initiative, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent. Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. and Avis Budget Group, Inc. (ABG), and the sale of the vacation rentals businesses. Integration costs represent certain non-recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business. We believe that when considered with GAAP measures, Adjusted EBIT is useful to assist our investors because it reflects the Company’s operating performance before the impact of financing decisions and income taxes, while including depreciation and amortization to reflect the capital -intensive nature of our business. Adjusted EBIT also provides a consistent basis for evaluating period-to-period operating performance. Adjusted EBIT should not be considered in isolation or as a substitute for net income/(loss) or other income statement data prepared in accordance with GAAP and our presentation of Adjusted EBIT may not be comparable to similarly-titled measures used by other companies. Adjusted EBITDA: A non-GAAP measure, defined by the Company as net income from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes, each of which is presented on the Consolidated Statements of Income. Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, asset impairments/recoveries and inventory write-downs associated with the Company’s resort optimization initiative, gains and losses on sale/ disposition of business, and items that meet the conditions of unusual and/or infrequent. Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc. and Avis Budget Group, Inc. (ABG), and the sale of the vacation rentals businesses. Integration costs represent certain non- recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business. We believe that when considered with GAAP measures, Adjusted EBITDA is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods. We also internally use this measure to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. Adjusted EBITDA should not be considered in isolation or as a substitute for net income/(loss) or other income statement data prepared in accordance with GAAP and our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies. Adjusted EBITDA Margin: A non-GAAP measure, represents Adjusted EBITDA as a percentage of revenue. Adjusted EBITDA Margin is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods. Adjusted Free Cash Flow: A non-GAAP measure, defined by the Company as net cash provided by operating activities from continuing operations less property and equipment additions (capital expenditures) plus the sum of proceeds and principal payments of non-recourse vacation ownership debt, while also adding back cash paid for transaction costs for acquisitions and divestitures, separation adjustments associated with the spin-off of Wyndham Hotels, and certain adjustments related to COVID-19. TNL believes adjusted FCF to be a useful operating performance measure to evaluate the ability of its operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, its ability to grow its business through acquisitions and equity investments, as well as its ability to return cash to shareholders through dividends and share repurchases. A limitation of using Adjusted free cash flow versus the GAAP measure of net cash provided by operating activities as a means for evaluating TNL is that Adjusted free cash flow does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows. Adjusted Free Cash Flow Conversion: A non-GAAP measure, defined by the Company as Adjusted free cash flow as a percentage of Adjusted EBITDA. We use this non-GAAP performance measure to assist in evaluating our operating performance and the quality of our earnings as represented by adjusted EBITDA, and to evaluate the performance of our current and prospective operating and strategic initiatives in generating cash flows from our earnings performance. This measure also assists investors in evaluating our operating performance, management of our assets, and ability to generate cash flows from our earnings, as well as facilitating period-to-period comparisons. Adjusted Net Income: A non-GAAP measure, defined by the Company as net income from continuing operations adjusted to exclude separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, amortization of acquisition-related assets, debt modification costs, asset impairments/recoveries and inventory write-downs associated with the Company’s resort optimization initiative, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent and the tax effect of such adjustments. Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels and ABG, and the sale of the vacation rentals businesses. We believe Adjusted Net Income is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods. Adjusted Net Operating Profit After Taxes (NOPAT): A non-GAAP measure, defined by the Company as Adjusted EBIT less associated taxes. We believe Adjusted NOPAT is useful to investors because it represents the Company’s after-tax operating performance independent of financing decisions and provides a consistent basis for evaluating the profitability of the Company’s core operations. Adjusted Pre-Tax Income: A non-GAAP measure, defined by the Company as net income from continuing operations adjusted to exclude separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, amortization of acquisition-related assets, debt modification costs, asset impairments/recoveries and inventory write-downs associated with the Company’s resort optimization initiative, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent and taxes. Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels and ABG, and the sale of the vacation rentals businesses. Adjusted Pre-Tax Income is useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, without the impacts of fluctuations in tax rates. Adjusted Return on Invested Capital (ROIC): A non-GAAP measure, defined by the Company as Adjusted NOPAT divided by average invested capital. We believe Adjusted ROIC is useful to our investors because it measures the efficiency with which we generate profits from our capital investments. Average invested capital: Average invested capital is a two-year average of net debt, stockholders’ equity/(deficit) and noncontrolling interest for the applicable period. Average Number of Exchange Members: Represents the average number of paid members in our vacation exchange programs who are considered to be in good standing, during a given reporting period. Free Cash Flow (FCF): A non-GAAP measure, defined by TNL as net cash provided by operating activities from continuing operations less property and equipment additions (capital expenditures) plus the sum of proceeds and principal payments of non-recourse vacation ownership debt. TNL believes FCF to be a useful operating performance measure to evaluate the ability of its operations to generate cash for uses other than capital expenditures and, after debt service and other obligations, its ability to grow its business through acquisitions and equity investments, as well as its ability to return cash to shareholders through dividends and share repurchases. A limitation of using FCF versus the GAAP measure of net cash provided by operating activities as a means for evaluating TNL is that FCF does not represent the total cash movement for the period as detailed in the consolidated statement of cash flows. Gross Vacation Ownership Interest Sales: A non-GAAP measure, represents sales of vacation ownership interests (VOIs), including sales under the Fee-for-Service program before the effect of loan loss provisions. We believe that Gross VOI sales provide an enhanced understanding of the performance of our vacation ownership business because it directly measures the sales volume of this business during a given reporting period. Leverage Ratio: The Company calculates leverage ratio as net debt divided by Adjusted EBITDA as defined in the credit agreement. Net Debt: Net debt equals total debt outstanding, less non-recourse vacation ownership debt and cash and cash equivalents. Net Income Return on Invested Capital (ROIC): Defined by the Company as net income divided by average invested capital. Tours: Represents the number of tours taken by guests in our efforts to sell VOIs. Travel and Membership Revenue per Transaction: Represents transaction revenue divided by transactions, provided in two categories; Exchange, which is primarily RCI, and Travel Club. Travel and Membership Transactions: Represents the number of exchanges and travel bookings recognized as revenue during the period, net of cancellations. This measure is provided in two categories; Exchange, which is primarily RCI, and Travel Club. Volume Per Guest (VPG): Represents Gross VOI sales (excluding telesales and virtual sales) divided by the number of tours. The Company has excluded non-tour sales in the calculation of VPG because non-tour sales are generated by a different marketing channel. We believe that VPG provides an enhanced understanding of the performance of our Vacation Ownership business because it directly measures the efficiency of its tour selling efforts during a given reporting period. 34