TNL beats and raises guidance, buys resorts, funds cheaply; SEC fine is the counterweight
Q2 beat and higher full-year EBITDA guidance TNL reported second-quarter revenue of $1.06 billion and EBITDA up 9%, and lifted full-year EBITDA guidance to $1.065-$1.085 billion. Earnings per share rose 21%. Higher expected profit is the main reason the stock should be worth more.
The raised guidance and earnings beat are the biggest new force behind TNL's value.
Buying 23 resorts adds earnings and owners TNL agreed to buy 23 resorts from Yes& Vacations and Spinnaker Resorts, adding over 100,000 owners and about $50 million a year in EBITDA. Management says the deals add to earnings right away, so profit per share should rise.
This acquisition is a new, concrete addition to TNL's earnings base.
Cheap $300 million funding and new resort pipeline TNL raised $300 million by packaging its timeshare loans into bonds at a 5.52% average rate, showing lenders still fund its business cheaply. It also started building a $150 million Sports Illustrated resort in Tuscaloosa, adding future vacation-ownership units.
Cheap capital and new resort supply support future sales and growth.
SEC fine over misleading loan-loss disclosures TNL agreed to pay $975,000 to settle SEC claims it hid loan rescissions that made its loan-loss numbers look better than they were. The fine is small, but it raises questions about disclosure and could invite more scrutiny.
This is the main new negative and the real counterweight to the good news.