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Business Wire
20 hours ago
- Business
- Business Wire
Merck & Co., Inc., Rahway, N.J., USA Announces Second-Quarter 2025 Financial Results
RAHWAY, N.J.--(BUSINESS WIRE)--Merck & Co., Inc., Rahway, N.J., USA (NYSE: MRK), known as MSD outside the United States and Canada, today announced financial results for the second quarter of 2025. "Earlier this month, we were pleased to announce our pending acquisition of Verona Pharma, which augments our portfolio and pipeline and is another example of acting decisively when science and value align,' said Robert M. Davis, chairman and chief executive officer. 'Today, we announced a multiyear optimization initiative that will redirect investment and resources from more mature areas of our business to our burgeoning array of new growth drivers, further enable the transformation of our portfolio, and drive our next chapter of productive, innovation-driven growth. With these actions, I am confident that we are well positioned to generate near- and long-term value for our shareholders and, most importantly, deliver for our patients.' Financial Summary For the second quarter of 2025, Generally Accepted Accounting Principles (GAAP) earnings per share (EPS) assuming dilution was $1.76 and non-GAAP EPS was $2.13. GAAP and non-GAAP EPS in the second quarter of 2025 include a charge of $0.07 per share for an upfront payment to Jiangsu Hengrui Pharmaceuticals Co., Ltd. (Hengrui Pharma) upon closing of a license agreement. Non-GAAP EPS excludes acquisition- and divestiture-related costs, costs related to restructuring programs, and income and losses from investments in equity securities. Non-GAAP EPS in the second quarter of 2025 also excludes tax benefits primarily resulting from favorable audit adjustments. Non-GAAP EPS in the second quarter of 2024 also excludes a tax benefit due to a reduction in reserves for unrecognized income tax benefits, resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year. Year-to-date results can be found in the attached tables. Second-Quarter Sales Performance The following table reflects sales of the Company's top products and significant performance drivers. Second-Quarter Expense, EPS and Related Information The table below presents selected expense information. GAAP Expense, EPS and Related Information Gross margin was 77.5% for the second quarter of 2025 compared with 76.8% for the second quarter of 2024. The increase was primarily due to the favorable impact of product mix, partially offset by higher restructuring costs and inventory write-offs. Selling, general and administrative (SG&A) expenses were $2.6 billion in the second quarter of 2025, a decrease of 3% compared with the second quarter of 2024. The decrease was primarily due to lower administrative, restructuring and promotional costs. Research and development (R&D) expenses were $4.0 billion in the second quarter of 2025, an increase of 16% compared with the second quarter of 2024. The increase was primarily due to a $200 million charge for an upfront payment made in the second quarter of 2025 for a license agreement with Hengrui Pharma, increased clinical development spending, higher compensation and benefit costs, and higher restructuring costs. Other (income) expense, net, was $7 million of income in the second quarter of 2025 compared with $42 million of expense in the second quarter of 2024. The effective tax rate of 11.4% for the second quarter of 2025 includes a 2.9 percentage point favorable impact due to tax benefits primarily resulting from favorable audit adjustments. GAAP EPS was $1.76 for the second quarter of 2025 compared with $2.14 for the second quarter of 2024. The decrease reflects increased operating expenses driven by higher restructuring costs and research and development spending, a charge related to the closing of a license agreement with Hengrui Pharma, unfavorable tax impacts, and the unfavorable impact of foreign exchange. Non-GAAP Expense, EPS and Related Information Non-GAAP gross margin was 82.2% for the second quarter of 2025 compared with 80.9% for the second quarter of 2024. The increase was primarily due to the favorable impact of product mix, partially offset by higher inventory write-offs. Non-GAAP SG&A expenses were $2.6 billion in the second quarter of 2025, a decrease of 2% compared with the second quarter of 2024. The decrease was primarily due to lower administrative and promotional costs. Non-GAAP R&D expenses were $4.0 billion in the second quarter of 2025, an increase of 15% compared with the second quarter of 2024. The increase was primarily due to a $200 million charge for an upfront payment made in the second quarter of 2025 for a license agreement with Hengrui Pharma, increased clinical development spending, and higher compensation and benefit costs. Non-GAAP other (income) expense, net, was $54 million of expense in the second quarter of 2025 compared with $108 million of expense in the second quarter of 2024. The non-GAAP effective tax rate was 15.0% for the second quarter of 2025. Non-GAAP EPS was $2.13 for the second quarter of 2025 compared with $2.28 for the second quarter of 2024. The decrease reflects increased operating expenses driven by higher research and development spending, a charge related to the closing of a license agreement with Hengrui Pharma, and the unfavorable impact of foreign exchange. A reconciliation of GAAP to non-GAAP net income and EPS is provided in the table that follows. Planned Acquisition of Verona Pharma On July 9, 2025, the Company furthered its science-led business development strategy by announcing an agreement under which the Company, through a subsidiary, will acquire Verona Pharma plc (Verona Pharma) for $107 per American Depository Share, each of which represents eight Verona Pharma ordinary shares, for a total transaction value of approximately $10 billion. Through the acquisition, the Company will add Ohtuvayre, a first-in-class selective dual inhibitor of phosphodiesterase 3 and 4 (PDE3 and PDE4), to its growing cardio-pulmonary pipeline and portfolio. The U.S. Food and Drug Administration (FDA) approved Ohtuvayre in June 2024 for the maintenance treatment of chronic obstructive pulmonary disease (COPD) in adult patients. It is the first novel inhaled mechanism for the treatment of COPD in more than 20 years. The transaction is anticipated to close in the fourth quarter of 2025. Pipeline and Portfolio Highlights In the second quarter, the Company continued to advance its broad and diverse pipeline with multiple regulatory and clinical milestones. In oncology, the FDA approved KEYTRUDA as part of a therapy regimen for the treatment of certain adult patients with resectable locally advanced head and neck squamous cell carcinoma (HNSCC), based on results from the Phase 3 KEYNOTE-689 trial. This approval is the first perioperative anti-PD-1 treatment regimen for adults with resectable locally advanced HNSCC whose tumors express PD-L1 (CPS ≥1). In addition, the Ministry of Health, Labor and Welfare (MHLW) in Japan approved WELIREG as monotherapy for the treatment of adults with von Hippel-Lindau (VHL) disease-associated tumors, and for adults with unresectable or metastatic RCC that has progressed after chemotherapy. At the 2025 American Society of Clinical Oncology Annual Meeting, the Company announced new research across more than 25 types of cancer in multiple treatment settings. Data were presented for several candidates, including MK-1084, an investigational oral selective KRAS G12C inhibitor, and from the Company's pipeline of antibody-drug conjugates (ADCs). The Company also presented data from Phase 3 trials evaluating new combination regimens with KEYTRUDA, and longer-term data for studies of KEYTRUDA and WELIREG, with the KEYTRUDA studies including people with earlier stages of cancer. The Company announced results from the Phase 3 KEYNOTE-B96 trial (also known as ENGOT-ov65) evaluating KEYTRUDA plus chemotherapy, which met its primary endpoint of progression-free survival (PFS) for the treatment of patients with platinum-resistant recurrent ovarian cancer whose tumors express PD-L1 and in all comers, as well as a secondary endpoint of overall survival (OS) in patients whose tumors express PD-L1. In addition, a pre-specified interim analysis of the Phase 3 KEYNOTE-937 study found that compared to placebo, KEYTRUDA did not show a statistically significant improvement in the primary endpoint of recurrence-free survival for certain patients with hepatocellular carcinoma. Also, a pre-specified interim analysis of the Phase 3 LEAP-014 trial found that KEYTRUDA plus Lenvima, in combination with platinum-based chemotherapy, did not show a statistically significant improvement in its primary endpoint of OS compared to KEYTRUDA plus chemotherapy for the first-line treatment of patients with metastatic esophageal squamous cell carcinoma (ESCC). In vaccines and infectious diseases, the Company received FDA approval of ENFLONSIA for the prevention of respiratory syncytial virus (RSV) lower respiratory tract disease in newborns and infants who are born during or entering their first RSV season. ENFLONSIA is the first and only RSV preventive option administered to infants using the same dose regardless of weight. The CDC's Advisory Committee on Immunization Practices (ACIP) also recommended ENFLONSIA for the prevention of RSV in infants younger than 8 months of age born during or entering their first RSV season. In addition, the Company announced initiation of the MOBILIZE-1 Phase 3 trial evaluating V181, an investigational single-dose quadrivalent vaccine for the prevention of dengue disease. In addition, the FDA accepted a New Drug Application (NDA) for doravirine/islatravir, an investigational, once-daily, oral, two-drug regimen for the treatment of adults with virologically suppressed HIV-1 based on the Phase 3 MK-8591A-051 and MK-8591A-052 trials. The FDA set a Prescription Drug User Fee Act (PDUFA) date of April 28, 2026. The Company also announced the initiation of the EXPrESSIVE Phase 3 trials for MK-8527, its investigational once-monthly oral candidate for HIV pre-exposure prophylaxis (PrEP). In cardiovascular disease, the Company announced positive topline results from Phase 3 CORALreef HeFH and CORALreef AddOn, the first two of three Phase 3 clinical trials evaluating the safety and efficacy of enlicitide decanoate, an investigational, oral proprotein convertase subtilisin/kexin type 9 (PCSK9) inhibitor being evaluated for the treatment of adults with hyperlipidemia already on lipid-lowering therapies, including at least a statin. In both trials, enlicitide demonstrated statistically significant and clinically meaningful reductions in low-density lipoprotein cholesterol. If approved, it would be the first marketed oral PCSK9 inhibitor. In addition, the FDA granted priority review for a new supplemental Biologics License Application for WINREVAIR seeking approval to update the U.S. product label based on compelling results from the Phase 3 ZENITH trial. The FDA has set a PDUFA date of Oct. 25, 2025. The Company also provided an update on the Phase 3 HYPERION study evaluating WINREVAIR in recently diagnosed adults with pulmonary arterial hypertension (PAH). In the study, WINREVAIR added on top of background therapy within 12 months after initial diagnosis of PAH demonstrated a statistically significant and clinically meaningful reduction in the risk of clinical worsening events when compared to placebo. Further, the MHLW in Japan approved sotatercept for the treatment of adults with PAH under the trademark AIRWIN. It is the first activin signaling inhibitor therapy for PAH approved in Japan. In the Animal Health business, the FDA approved BRAVECTO QUANTUM, an injectable formulation of BRAVECTO for dogs for the treatment and persistent killing of fleas and ticks. In addition, the European Commission (EC) approved NUMELVI tablets for dogs, a once-daily, second-generation Janus kinase (JAK) inhibitor, indicated for the treatment of pruritus associated with allergic dermatitis including atopic dermatitis and treatment of clinical manifestations of atopic dermatitis. Notable recent news releases on the Company's pipeline and portfolio are provided in the table that follows. Visit the News Releases section of the Company's website to read the releases*. New Multiyear Optimization Initiative, Which Includes a Restructuring Program The Company launched a new multiyear optimization initiative to enable the transformation of its portfolio by generating an expected $3.0 billion in annual cost savings from productivity actions, which will be fully reinvested to support new product launches and its pipeline across multiple therapeutic areas. In July 2025, as part of this initiative, the Company approved a new restructuring program, in which it expects to eliminate certain administrative, sales and R&D positions. The Company will, however, continue to hire employees into new roles across strategic growth areas of the business. In addition, the Company will reduce its global real estate footprint and continue to optimize its manufacturing network, aligning the geography of its global manufacturing to its customers and reflecting changes in the Company's business. The Company anticipates cumulative pretax costs related to the program to be approximately $3.0 billion. For the second quarter of 2025, the Company recorded charges in its GAAP results of $649 million related to this restructuring program. The Company expects the actions under the restructuring program to result in annual cost savings of approximately $1.7 billion, which will be substantially realized by the end of 2027. This restructuring program is part of the multiyear optimization initiative expected to achieve $3.0 billion in annual cost savings by the end of 2027. Manufacturing and R&D Investment The Company continued to make long-term investments in its U.S. manufacturing and R&D capabilities. This includes the start of construction for a $1.0 billion, 470,000-square-foot state-of-the-art biologics center of excellence in Wilmington, Delaware, which will serve as a launch and commercial production facility and the primary U.S. manufacturing site for KEYTRUDA. In addition, the Company announced an $895 million expansion of its Animal Health manufacturing facility in De Soto, Kansas; the 200,000-square-foot facility will increase capacity for Animal Health vaccines and biologic products. Full-Year 2025 Financial Outlook The following table summarizes the Company's full-year financial outlook. The Company has not provided a reconciliation of forward-looking non-GAAP gross margin, non-GAAP operating expenses, non-GAAP other (income) expense, net, non-GAAP effective tax rate and non-GAAP EPS to the most directly comparable GAAP measures, given it cannot predict with reasonable certainty the amounts necessary for such a reconciliation, including intangible asset impairment charges, legal settlements, and income and losses from investments in equity securities either owned directly or through ownership interests in investment funds, without unreasonable effort. These items are inherently difficult to forecast and could have a significant impact on the Company's future GAAP results. The Company now expects full-year 2025 sales to be between $64.3 billion and $65.3 billion, including a revised negative impact of foreign exchange of approximately 0.5% at mid-July 2025 exchange rates. The Company now expects its full-year non-GAAP effective income tax rate to be between 15.0% and 16.0%. The Company now expects its full-year non-GAAP EPS to be between $8.87 and $8.97, including a revised negative impact of foreign exchange of approximately $0.15 per share. This revised non-GAAP EPS range continues to reflect the impacts of a one-time charge of $200 million (recorded in the second quarter of 2025) for an upfront payment made in connection with the closing of a license agreement with Hengrui Pharma and the one-time charge of $300 million (to be recorded in the third quarter of 2025) related to a payment to LaNova for the completion of the technology transfer for MK-2010, which will impact EPS by approximately $0.16 in the aggregate. In 2024, non-GAAP EPS of $7.65 was negatively impacted by a net charge of $1.28 per share related to certain asset acquisitions, licensing agreements and collaborations. The financial outlook does not include the anticipated impact of the announced acquisition of Verona Pharma. Consistent with past practice, the financial outlook does not assume additional significant potential business development transactions. The $200 million of costs previously included in the Company's financial outlook related to the impact of tariffs is unchanged pending the outcome of additional potential government actions. Earnings Conference Call Investors, journalists and the general public may access a live audio webcast of the call on Tuesday, July 29, at 9 a.m. ET via this weblink. A replay of the webcast, along with the sales and earnings news release, supplemental financial disclosures and slides highlighting the results, will be available on the Company's website. All participants may join the call by dialing (800) 369-3351 (U.S. and Canada Toll-Free) or (517) 308-9448 and using the access code 9818590. About Our Company At Merck & Co., Inc., Rahway, N.J., USA, known as MSD outside of the United States and Canada, we are unified around our purpose: We use the power of leading-edge science to save and improve lives around the world. For more than 130 years, we have brought hope to humanity through the development of important medicines and vaccines. We aspire to be the premier research-intensive biopharmaceutical company in the world – and today, we are at the forefront of research to deliver innovative health solutions that advance the prevention and treatment of diseases in people and animals. We foster a diverse and inclusive global workforce and operate responsibly every day to enable a safe, sustainable and healthy future for all people and communities. Forward-Looking Statement of Merck & Co., Inc., Rahway, N.J., USA This news release of Merck & Co., Inc., Rahway, N.J., USA (the 'Company') includes 'forward-looking statements' within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. These statements are based upon the current beliefs and expectations of the Company's management and are subject to significant risks and uncertainties. There can be no guarantees with respect to pipeline candidates that the candidates will receive the necessary regulatory approvals or that they will prove to be commercially successful. If underlying assumptions prove inaccurate or risks or uncertainties materialize, actual results may differ materially from those set forth in the forward-looking statements. Risks and uncertainties include but are not limited to, general industry conditions and competition; general economic factors, including interest rate and currency exchange rate fluctuations; the impact of pharmaceutical industry regulation and health care legislation in the United States and internationally; global trends toward health care cost containment; technological advances, new products and patents attained by competitors; challenges inherent in new product development, including obtaining regulatory approval; the Company's ability to accurately predict future market conditions; manufacturing difficulties or delays; financial instability of international economies and sovereign risk; dependence on the effectiveness of the Company's patents and other protections for innovative products; and the exposure to litigation, including patent litigation, and/or regulatory actions. The Company undertakes no obligation to publicly update any forward-looking statement, whether as a result of new information, future events or otherwise. Additional factors that could cause results to differ materially from those described in the forward-looking statements can be found in the Company's Annual Report on Form 10-K for the year ended December 31, 2024 and the Company's other filings with the Securities and Exchange Commission (SEC) available at the SEC's Internet site ( Appendix Generic product names are provided below. Animal Health BRAVECTO (fluralaner) BRAVECTO QUANTUM (fluralaner for extended-release injectable suspension) NUMELVI (atinvicitinib) ________________________________ 1 All trademarks are property of their respective owners. 2 Net income attributable to the Company. 3 The Company is providing certain 2025 and 2024 non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing this information enhances investors' understanding of the Company's results because management uses non-GAAP results to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the Company along with other metrics. In addition, annual employee compensation, including senior management's compensation, is derived in part using a non-GAAP pretax income metric. This information should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. For a description of the non-GAAP adjustments, see Table 2a attached to this release. 4 Reflects expenses related to business combinations, including the amortization of intangible assets, intangible asset impairment charges, and expense or income related to changes in the estimated fair value measurement of liabilities for contingent consideration. Also includes integration, transaction and certain other costs associated with acquisitions and divestitures, as well as amortization of intangible assets related to collaborations and licensing arrangements. 5 Includes the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments for both periods presented. Amount in the second quarter of 2025 also includes a $146 million benefit primarily resulting from favorable audit adjustments. Amount in the second quarter of 2024 also includes a $259 million benefit due to a reduction in reserves for unrecognized income tax benefits resulting from the expiration of the statute of limitations for assessments related to the 2019 federal tax return year. Expand MERCK & CO., INC., RAHWAY, N.J., USA THREE AND SIX MONTHS ENDED JUNE 30, 2025 GAAP TO NON-GAAP RECONCILIATION (AMOUNTS IN MILLIONS, EXCEPT PER SHARE FIGURES) (UNAUDITED) Table 2a GAAP Acquisition- and Divestiture-Related Costs (1) Restructuring Costs (2) (Income) Loss from Investments in Equity Securities Certain Other Items Adjustment Subtotal Non-GAAP Second Quarter Cost of sales $ 3,557 576 165 741 $ 2,816 Selling, general and administrative 2,649 15 1 16 2,633 Research and development 4,048 3 53 56 3,992 Restructuring costs 560 560 560 – Other (income) expense, net (7 ) (61 ) (61 ) 54 Income Before Taxes 4,999 (594 ) (779 ) 61 (1,312 ) 6,311 Income Tax Provision (Benefit) 571 (102 ) (3) (139 ) (3) 14 (3) (146 ) (4) (373 ) 944 Net Income 4,428 (492 ) (640 ) 47 146 (939 ) 5,367 Net Income Attributable to Merck & Co., Inc., Rahway, N.J., USA 4,427 (492 ) (640 ) 47 146 (939 ) 5,366 Earnings per Common Share Assuming Dilution $ 1.76 (0.20 ) (0.25 ) 0.02 0.06 (0.37 ) $ 2.13 Tax Rate 11.4 % 15.0 % June YTD Cost of sales $ 6,976 1,196 201 1,397 $ 5,579 Selling, general and administrative 5,202 38 1 39 5,163 Research and development 7,669 10 53 63 7,606 Restructuring costs 629 629 629 – Other (income) expense, net (43 ) (3 ) (168 ) (171 ) 128 Income Before Taxes 10,902 (1,241 ) (884 ) 168 (1,957 ) 12,859 Income Tax Provision (Benefit) 1,388 (219 ) (3) (157 ) (3) 36 (3) (146 ) (4) (486 ) 1,874 Net Income 9,514 (1,022 ) (727 ) 132 146 (1,471 ) 10,985 Net Income Attributable to Merck & Co., Inc., Rahway, N.J., USA 9,506 (1,022 ) (727 ) 132 146 (1,471 ) 10,977 Earnings per Common Share Assuming Dilution $ 3.77 (0.40 ) (0.29 ) 0.05 0.06 (0.58 ) $ 4.35 Tax Rate 12.7 % 14.6 % Only the line items that are affected by non-GAAP adjustments are shown. The Company is providing certain non-GAAP information that excludes certain items because of the nature of these items and the impact they have on the analysis of underlying business performance and trends. Management believes that providing non-GAAP information enhances investors' understanding of the Company's results because management uses non-GAAP measures to assess performance. Management uses non-GAAP measures internally for planning and forecasting purposes and to measure the performance of the Company along with other metrics. In addition, annual employee compensation, including senior management's compensation, is derived in part using a non-GAAP pretax income metric. The non-GAAP information presented should be considered in addition to, but not as a substitute for or superior to, information prepared in accordance with GAAP. (1) Amounts included in cost of sales reflect expenses for the amortization of intangible assets and intangible asset impairment charges, partially offset by a decrease in the estimated fair value measurement of liabilities for contingent consideration. Amounts included in selling, general and administrative expenses reflect integration, transaction and certain other costs related to acquisitions and divestitures. Amounts included in research and development expenses reflect the amortization of intangible assets. (2) Amounts primarily include employee separation costs, accelerated depreciation and asset impairments associated with facilities to be closed or divested related to activities under the Company's formal restructuring programs. (3) Represents the estimated tax impacts on the reconciling items based on applying the statutory rate of the originating territory of the non-GAAP adjustments. (4) Represents tax benefits primarily resulting from favorable audit adjustments. Expand FRANCHISE / KEY PRODUCT SALES (AMOUNTS IN MILLIONS) Table 3 2025 2024 2Q June YTD 1Q 2Q June YTD 1Q 2Q June YTD 3Q 4Q Full Year Nom % Ex-Exch % Nom % Ex-Exch % TOTAL SALES (1) $15,529 $15,806 $31,335 $15,775 $16,112 $31,887 $16,657 $15,624 $64,168 -2 -2 -2 0 PHARMACEUTICAL 13,638 14,050 27,688 14,006 14,408 28,415 14,943 14,042 57,400 -2 -3 -3 -2 Oncology Keytruda 7,205 7,956 15,161 6,947 7,270 14,217 7,429 7,836 29,482 9 9 7 8 Alliance Revenue – Lynparza (2) 312 370 682 292 317 609 337 365 1,311 17 15 12 12 Alliance Revenue – Lenvima (2) 258 265 523 255 249 504 251 255 1,010 6 5 4 4 Welireg 137 162 300 85 126 211 139 160 509 29 29 42 43 Alliance Revenue – Reblozyl (3) 119 107 226 71 90 161 100 110 371 19 19 40 40 Vaccines (4) Gardasil/Gardasil 9 1,327 1,126 2,453 2,249 2,478 4,727 2,306 1,550 8,583 -55 -55 -48 -48 ProQuad/M-M-R II/Varivax 539 609 1,148 570 617 1,187 703 594 2,485 -1 -2 -3 -3 Vaxneuvance 230 229 459 219 189 408 239 161 808 21 20 13 13 RotaTeq 228 121 349 216 163 379 193 139 711 -26 -26 -8 -7 Capvaxive 107 129 236 47 50 97 - - - - Pneumovax 23 41 38 79 61 59 120 68 74 263 -36 -37 -35 -33 Hospital Acute Care Bridion 441 461 902 440 455 895 420 449 1,764 1 1 1 1 Prevymis 208 228 436 174 188 362 208 215 785 21 20 20 21 Dificid 83 96 179 73 92 165 96 79 340 5 5 8 9 Zerbaxa 70 74 145 56 62 118 64 70 252 21 21 23 24 Cardiovascular Winrevair 280 336 615 70 70 149 200 419 * * * * Alliance Revenue - Adempas/Verquvo (5) 106 123 229 98 106 203 102 109 415 16 16 12 12 Adempas (6) 68 80 147 70 72 142 72 73 287 10 6 4 4 Virology Lagevrio 102 83 185 350 110 460 383 121 964 -25 -27 -60 -59 Isentress/Isentress HD 90 86 176 111 89 200 102 92 394 -3 -4 -12 -11 Delstrigo 67 83 150 56 60 116 65 69 249 40 35 30 30 Pifeltro 45 41 86 42 39 81 42 40 163 5 4 6 6 Neuroscience Belsomra 50 40 90 46 53 99 78 45 222 -24 -26 -9 -8 Immunology Simponi 184 172 356 189 543 -100 -100 -100 -100 Remicade 39 35 74 41 114 -100 -100 -100 -100 Diabetes (7) Januvia 549 372 921 419 405 824 278 232 1,334 -8 -8 12 13 Janumet 247 251 498 251 224 475 204 255 935 12 14 5 8 Other Pharmaceutical (8) 729 584 1,313 632 618 1,252 638 699 2,590 -6 -7 5 6 ANIMAL HEALTH 1,588 1,646 3,234 1,511 1,482 2,993 1,487 1,397 5,877 11 11 8 11 Livestock 924 961 1,885 850 837 1,686 886 889 3,462 15 16 12 16 Companion Animal 664 685 1,349 661 645 1,307 601 508 2,415 6 6 3 4 Other Revenues (9) 303 110 413 258 222 479 227 185 891 -50 -3 -14 7 *200% or greater Sum of quarterly amounts may not equal year-to-date amounts due to rounding. (1) Only select products are shown. (2) Alliance Revenue represents the Company's share of profits, which are product sales net of cost of sales and commercialization costs. (3) Alliance Revenue represents royalties. (4) Total Vaccines sales were $2,607 million and $2,370 million in the first and second quarter of 2025, respectively, and $3,424 million and $3,656 million in the first and second quarter of 2024, respectively. (5) Alliance Revenue represents the Company's share of profits from sales in Bayer's marketing territories, which are product sales net of cost of sales and commercialization costs. (6) Net product sales in the Company's marketing territories. (7) Total Diabetes sales were $876 million and $704 million in the first and second quarter of 2025, respectively, and $745 million and $715 million in the first and second quarter of 2024. (8) Includes Pharmaceutical products not individually shown above. (9) Other Revenues are comprised primarily of revenues from third-party manufacturing arrangements and miscellaneous corporate revenues, including revenue-hedging activities. Other Revenues related to the receipt of upfront and milestone payments for out-licensed products were $95 million and $5 million in the first and second quarter of 2025, respectively, and $61 million and $15 million in the first and second quarter of 2024, respectively. Expand
Business Wire
7 days ago
- Business
- Business Wire
Travel + Leisure Co. Reports Second Quarter 2025 Results
ORLANDO, Fla.--(BUSINESS WIRE)--Travel + Leisure Co. (NYSE:TNL), a leading leisure travel company, today reported second quarter 2025 financial results for the three months ended June 30, 2025. Highlights and outlook include: Net income of $108 million, $1.62 diluted earnings per share, on net revenue of $1.02 billion Adjusted EBITDA of $250 million and Adjusted diluted earnings per share of $1.65 (1) Vacation Ownership revenue of $853 million, a 6 percent increase year-over-year Volume per guest (VPG) of $3,251, a 7 percent increase year-over-year, on a 3 percent increase in tours Expects third quarter Adjusted EBITDA of $250 million to $260 million and reaffirms full-year Adjusted EBITDA guidance of $955 million to $985 million Returned $107 million to shareholders through $37 million of dividends and $70 million of share repurchases 'Thanks to the exceptional work of the entire Travel + Leisure Co. team, we delivered another strong quarter. We saw healthy year-over-year growth in VOI sales, with gains in both tour flow and volume per guest. Our VPG performance remains strong as we ended the quarter above the high end of our guidance range,' said Michael D. Brown, President and CEO of Travel + Leisure Co. 'Our multi-brand strategy continued to gain momentum in the first half of the year. We announced three exciting new projects: a Margaritaville Vacation Club resort in Orlando, a new Sports Illustrated Resorts location in Nashville, and the launch of our new Asia based Accor Vacation Club in Indonesia. These developments underscore the strength of our brand partnerships and our ability to grow and diversify our vacation ownership portfolio.' (1) This press release includes Adjusted EBITDA, Adjusted diluted EPS, Adjusted free cash flow, Gross VOI sales and Adjusted net income, which are measures that are not calculated in accordance with Generally Accepted Accounting Principles in the U.S. ('GAAP'). See "Presentation of Financial Information" and the tables for the definitions and reconciliations of these non-GAAP measures. Forward-looking non-GAAP measures are presented in this press release only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation is available without unreasonable effort. Expand Business Segment Results Vacation Ownership $ in millions Q2 2025 Q2 2024 % change Revenue $853 $807 6 % Adjusted EBITDA $218 $206 6 % Expand Vacation Ownership revenue increased 6% to $853 million in the second quarter of 2025 compared to the same period in the prior year. Net vacation ownership interest (VOI) sales increased 7% year over year despite a higher provision rate. Gross VOI sales increased 8% driven by a 7% increase in VPG and a 3% increase in tours. Second quarter adjusted EBITDA was $218 million compared to $206 million in the prior year period driven by the revenue growth. Travel and Membership $ in millions Q2 2025 Q2 2024 % change Revenue $166 $177 (6) % Adjusted EBITDA $55 $62 (11) % Expand Travel and Membership revenue decreased 6% to $166 million in the second quarter of 2025 compared to the same period in the prior year. This was driven by a 7% decrease in transaction revenue due to lower exchange transactions. Transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity. Second quarter Adjusted EBITDA decreased 11% to $55 million compared to the same prior year period. This decrease was driven by a higher mix of travel club transactions, which generate lower margins, partially offset by cost savings resulting from the strategic restructuring at the end of 2024. Balance Sheet and Liquidity Net Debt — On June 25, 2025, the Company refinanced its $1.0 billion revolving credit facility extending maturity from October 2026 to June 2030, and among other things, reducing pricing spreads on borrowings and letters of credit at all pricing levels by 25 basis points. As of June 30, 2025, the Company's leverage ratio for covenant purposes was 3.4x. The Company had $3.6 billion of corporate debt outstanding as of June 30, 2025, which excluded $2.0 billion of non-recourse debt related to its securitized notes receivables portfolio. Timeshare Receivables Financing — During the second quarter of 2025, the Company renewed its $600 million USD timeshare receivables conduit facility, extending the end of the commitment period from September 2025 to August 2027 and making certain other amendments, including to the advance rate. Subsequent to the end of the quarter, the Company closed on a $300 million term securitization transaction with a weighted average coupon of 5.10% and a 98% advance rate. Cash Flow — For the six months ended June 30, 2025, net cash provided by operating activities was $353 million compared to $221 million in the prior year period. Adjusted free cash flow was $123 million for the six months ended June 30, 2025 compared to $112 million in the same period of 2024 due to a decrease in cash utilization for working capital items, partially offset by higher net payments on non-recourse debt. Share Repurchases — During the second quarter of 2025, the Company repurchased 1.5 million shares of common stock for $70 million at a weighted average price of $46.75 per share. As of June 30, 2025, the Company had $303 million remaining in its share repurchase authorization. Dividend — The Company paid $37 million ($0.56 per share) in cash dividends on June 30, 2025 to shareholders of record as of June 13, 2025. Management will recommend a third quarter dividend of $0.56 per share for approval by the Company's Board of Directors in August 2025. Outlook The Company is providing guidance for the third quarter 2025: Adjusted EBITDA of $250 million to $260 million Gross VOI sales of $650 million to $680 million VPG of $3,200 to $3,250 The Company is providing guidance for the 2025 full year: Adjusted EBITDA of $955 million to $985 million Gross VOI sales of $2.4 billion to $2.5 billion VPG of $3,200 to $3,250 (vs. prior outlook of $3,050 to $3,150) This guidance is presented only on a non-GAAP basis because not all of the information necessary for a quantitative reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure is available without unreasonable effort, primarily due to uncertainties relating to the occurrence or amount of these adjustments that may arise in the future. Where one or more of the currently unavailable items is applicable, some items could be material, individually or in the aggregate, to GAAP reported results. Conference Call Information Travel + Leisure Co. will hold a conference call with investors to discuss the Company's results and outlook today at 8:00 a.m. ET. Participants may listen to a simultaneous webcast of the conference call, which may be accessed through the Company's website at or by dialing 877-733-4794 ten minutes before the scheduled start time. For those unable to listen to the live broadcast, an archive of the webcast will be available on the Company's website for 90 days beginning at 12:00 p.m. ET today. Presentation of Financial Information Financial information discussed in this press release includes non-GAAP measures such as Adjusted EBITDA, Adjusted diluted EPS, Adjusted free cash flow, 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, defined in Table 7, 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. Full reconciliations of non-GAAP financial measures to the most directly comparable GAAP financial measures for the reported periods appear in the financial tables section of the press release. 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 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 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 staying a little closer to home. With hospitality and responsible tourism at its heart, the company's nearly 19,000 dedicated associates around the globe help the company achieve its mission to put the world on vacation. Learn more at Forward-Looking Statements This press release 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,' "intends," 'estimates,' 'predicts,' 'potential,' "projects," 'continue,' 'future,' "outlook," "guidance," "commitments," 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 our 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 and other trade restrictions, higher interest rates, and recessionary pressures), travel restrictions, terrorism or acts of gun 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 for the fiscal year ended December 31, 2024, filed with the SEC on February 19, 2025. 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. Table 1 Travel + Leisure Co. Condensed Consolidated Statements of Income (Unaudited) (in millions, except per share amounts) Three Months Ended Six Months Ended June 30, June 30, 2025 2024 2025 2024 Net Revenues Net VOI sales $ 474 $ 441 $ 858 $ 810 Service and membership fees 407 413 823 832 Consumer financing 112 111 224 221 Other 25 20 46 37 Net revenues 1,018 985 1,951 1,900 Expenses Operating 457 442 902 880 Marketing 152 144 276 265 General and administrative 116 128 236 239 Consumer financing interest 34 33 68 66 Depreciation and amortization 31 28 61 56 Cost of vacation ownership interests 21 21 45 55 Asset impairments, net 1 — 1 — Total expenses 812 796 1,589 1,561 Operating income 206 189 362 339 Interest expense 57 63 115 127 Other (income), net (1 ) (4 ) (2 ) (5 ) Interest (income) (2 ) (3 ) (4 ) (8 ) Income before income taxes 152 133 253 225 Provision for income taxes 44 36 72 62 Net income from continuing operations 108 97 181 163 Gain on disposal of discontinued business, net of income taxes — 32 — 32 Net income attributable to Travel + Leisure Co. shareholders $ 108 $ 129 $ 181 $ 195 Basic earnings per share Continuing operations $ 1.63 $ 1.36 $ 2.71 $ 2.29 Discontinued operations — 0.46 — 0.45 $ 1.63 $ 1.82 $ 2.71 $ 2.74 Diluted earnings per share Continuing operations $ 1.62 $ 1.36 $ 2.68 $ 2.28 Discontinued operations — 0.45 — 0.45 $ 1.62 $ 1.81 $ 2.68 $ 2.73 Weighted average shares outstanding Basic 66.1 70.8 66.6 71.2 Diluted 66.5 71.0 67.3 71.5 Expand Table 2 Travel + Leisure Co. Condensed Consolidated Balance Sheets (Unaudited) (in millions, except share data) June 30, 2025 December 31, 2024 Assets Cash and cash equivalents $ 212 $ 167 Restricted cash 175 162 Trade receivables, net 175 155 Vacation ownership contract receivables, net 2,568 2,619 Inventory 1,252 1,227 Prepaid expenses 244 214 Property and equipment, net 592 591 Goodwill 972 966 Other intangibles, net 208 209 Other assets 411 425 Total assets $ 6,809 $ 6,735 Liabilities and (deficit) Accounts payable $ 69 $ 67 Accrued expenses and other liabilities 778 778 Deferred income 483 457 Non-recourse vacation ownership debt 1,959 2,123 Debt 3,628 3,468 Deferred income taxes 745 722 Total liabilities 7,662 7,615 Stockholders' (deficit): Preferred stock, $0.01 par value, authorized 6,000,000 shares, none issued and outstanding — — Common stock, $0.01 par value, 600,000,000 shares authorized, 225,320,707 issued as of 2025 and 224,599,556 as of 2024 3 2 Treasury stock, at cost – 160,313,284 shares as of 2025 and 157,476,502 shares as of 2024 (7,574 ) (7,433 ) Additional paid-in capital 4,348 4,328 Retained earnings 2,437 2,334 Accumulated other comprehensive loss (66 ) (112 ) Total stockholders' (deficit) (852 ) (881 ) Noncontrolling interest (1 ) 1 Total (deficit) (853 ) (880 ) Total liabilities and (deficit) $ 6,809 $ 6,735 Expand Table 3 Travel + Leisure Co. Condensed Consolidated Statements of Cash Flows (Unaudited) (in millions) Six Months Ended June 30, 2025 2024 Operating activities Net income $ 181 $ 195 Gain on disposal of discontinued business, net of income taxes — (32 ) Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 219 191 Depreciation and amortization 61 56 Stock-based compensation 26 20 Deferred income taxes 23 24 Non-cash interest 12 12 Non-cash lease expense 7 6 Asset impairments 1 — Other, net (2 ) (1 ) Net change in assets and liabilities, excluding the impact of acquisitions and dispositions: Trade receivables (14 ) 13 Vacation ownership contract receivables (161 ) (235 ) Inventory (16 ) (2 ) Prepaid expenses (27 ) (24 ) Other assets 18 4 Accounts payable, accrued expenses, and other liabilities 5 (14 ) Deferred income 20 8 Net cash provided by operating activities 353 221 Investing activities Property and equipment additions (58 ) (38 ) Proceeds from the sale of investments 15 — Purchase of investments (4 ) — Acquisitions, net of cash acquired (1 ) (44 ) Proceeds from sale of assets — 1 Net cash used in investing activities (48 ) (81 ) Financing activities Proceeds from non-recourse vacation ownership debt 644 657 Principal payments on non-recourse vacation ownership debt (816 ) (728 ) Proceeds from debt 1,253 949 Principal payments on debt (1,095 ) (650 ) Repayment of notes and term loans (4 ) (304 ) Repurchase of common stock (140 ) (94 ) Dividends paid to shareholders (78 ) (73 ) Net share settlement of incentive equity awards (13 ) (9 ) Debt issuance/modification costs (12 ) (7 ) Payment of deferred acquisition consideration — (9 ) Proceeds from issuance of common stock 7 7 Other, net (1 ) — Net cash used in financing activities (255 ) (261 ) Effect of changes in exchange rates on cash, cash equivalents and restricted cash 8 (5 ) Net change in cash, cash equivalents and restricted cash 58 (126 ) Cash, cash equivalents and restricted cash, beginning of period 329 458 Cash, cash equivalents and restricted cash, end of period 387 332 Less: Restricted cash 175 166 Cash and cash equivalents $ 212 $ 166 Expand Table 4 Travel + Leisure Co. Summary Data Sheet (in millions, except per share amounts, unless otherwise indicated) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 Change 2025 2024 Change Consolidated Results Net income attributable to TNL shareholders $ 108 $ 129 (16 )% $ 181 $ 195 (7 )% Diluted earnings per share $ 1.62 $ 1.81 (10 )% $ 2.68 $ 2.73 (2 )% Net income from continuing operations $ 108 $ 97 11 % $ 181 $ 163 11 % Diluted earnings per share from continuing operations $ 1.62 $ 1.36 19 % $ 2.68 $ 2.28 18 % Net income margin 10.6 % 13.1 % 9.3 % 10.3 % Adjusted Earnings Adjusted EBITDA $ 250 $ 244 2 % $ 452 $ 435 4 % Adjusted net income $ 110 $ 108 2 % $ 185 $ 177 5 % Adjusted diluted earnings per share $ 1.65 $ 1.52 9 % $ 2.75 $ 2.48 11 % Segment Results Net Revenues Vacation Ownership $ 853 $ 807 6 % $ 1,609 $ 1,533 5 % Travel and Membership 166 177 (6 )% 345 370 (7 )% Corporate and other (1 ) 1 (3 ) (3 ) Total $ 1,018 $ 985 3 % $ 1,951 $ 1,900 3 % Adjusted EBITDA Vacation Ownership $ 218 $ 206 6 % $ 378 $ 340 11 % Travel and Membership 55 62 (11 )% 123 137 (10 )% Segment Adjusted EBITDA 273 268 501 477 Corporate and other (23 ) (24 ) (49 ) (42 ) Total Adjusted EBITDA $ 250 $ 244 2 % $ 452 $ 435 4 % Adjusted EBITDA margin 24.6 % 24.8 % 23.2 % 22.9 % Expand Note: Amounts may not calculate due to rounding. See "Presentation of Financial Information" and Table 7 for Non-GAAP definitions. For a full reconciliation of non-GAAP financial measures to the most directly comparable GAAP financial measures, refer to Table 5. Expand Table 4 (continued) Travel + Leisure Co. Summary Data Sheet (in millions, unless otherwise indicated) Three Months Ended June 30, Six Months Ended June 30, 2025 2024 Change 2025 2024 Change Vacation Ownership Net VOI sales $ 474 $ 441 7 % $ 858 $ 810 6 % Loan loss provision 128 113 13 % 219 191 15 % Gross VOI sales, net of Fee-for-Service sales 602 554 9 % 1,077 1,001 8 % Fee-for-Service sales 52 53 (2 )% 89 95 (7 )% Gross VOI sales $ 654 $ 607 8 % $ 1,166 $ 1,096 6 % Tours (in thousands) 197 192 3 % 350 347 1 % VPG (in dollars) $ 3,251 $ 3,051 7 % $ 3,234 $ 3,044 6 % Tour generated VOI sales $ 641 $ 586 9 % $ 1,133 $ 1,055 7 % Telesales and other 13 21 (36 )% 33 41 (21 )% Gross VOI sales $ 654 $ 607 8 % $ 1,166 $ 1,096 6 % Net VOI sales $ 474 $ 441 7 % $ 858 $ 810 6 % Property management revenue 217 210 3 % 440 421 5 % Consumer financing 112 111 1 % 224 221 1 % Other (a) 50 45 11 % 87 81 7 % Total Vacation Ownership revenue $ 853 $ 807 6 % $ 1,609 $ 1,533 5 % Travel and Membership Avg. number of exchange members (in thousands) 3,329 3,450 (4 )% 3,346 3,472 (4 )% Transactions (in thousands) 197 220 (11 )% 437 495 (12 )% Revenue per transaction (in dollars) $ 370 $ 366 1 % $ 361 $ 357 1 % Exchange transaction revenue $ 73 $ 81 (10 )% $ 157 $ 177 (11 )% Transactions (in thousands) 191 179 7 % 367 349 5 % Revenue per transaction (in dollars) $ 229 $ 251 (9 )% $ 242 $ 254 (5 )% Travel Club transaction revenue $ 44 $ 45 (2 )% $ 89 $ 89 — % Transactions (in thousands) 388 399 (3 )% 804 844 (5 )% Revenue per transaction (in dollars) $ 300 $ 315 (5 )% $ 306 $ 315 (3 )% Travel and Membership transaction revenue $ 117 $ 126 (7 )% $ 246 $ 266 (8 )% Transaction revenue $ 117 $ 126 (7 )% $ 246 $ 266 (8 )% Subscription revenue 43 44 (2 )% 86 90 (4 )% Other (b) 6 7 (14 )% 13 14 (7 )% Total Travel and Membership revenue $ 166 $ 177 (6 )% $ 345 $ 370 (7 )% Expand Note: Amounts may not compute due to rounding. (a) Includes Fee-for-Service commission revenues and other ancillary revenues. (b) Primarily related to cancellation fees, commissions, and other ancillary revenue. Expand Table 5 Travel + Leisure Co. Non-GAAP Measure: Reconciliation of Net Income to Adjusted Net Income to Adjusted EBITDA (in millions, except diluted per share amounts) Three Months Ended June 30, 2025 EPS Margin % 2024 EPS Margin % Net income attributable to TNL shareholders $ 108 $ 1.62 10.6% $ 129 $ 1.81 13.1% Gain on disposal of discontinued business, net of income taxes — (32) Net income from continuing operations $ 108 $ 1.62 10.6% $ 97 $ 1.36 9.8% Amortization of acquired intangibles (a) 3 2 Asset impairments, net 1 — Legacy items (1) 12 Taxes (b) (1) (4) Adjusted net income $ 110 $ 1.65 10.8% $ 108 $ 1.52 11.0% Income taxes on adjusted net income 45 40 Interest expense 57 63 Depreciation 28 26 Stock-based compensation expense (c) 12 11 Interest income (2) (3) Adjusted EBITDA $ 250 24.6% $ 244 24.8% Diluted Shares Outstanding 66.5 71.0 Six Months Ended June 30, 2025 EPS Margin % 2024 EPS Margin % Net income attributable to TNL shareholders $ 181 $ 2.68 9.3% $ 195 $ 2.73 10.3% Gain on disposal of discontinued business, net of income taxes — (32) Net income from continuing operations $ 181 $ 2.68 9.3% $ 163 $ 2.28 8.6% Amortization of acquired intangibles (a) 5 5 Asset impairments, net 1 — Legacy items — 13 Acquisition-related deal costs — 2 Taxes (b) (2) (6) Adjusted net income $ 185 $ 2.75 9.5% $ 177 $ 2.48 9.3% Income taxes on adjusted net income 74 68 Interest expense 115 127 Depreciation 56 51 Stock-based compensation expense (c) 26 20 Interest income (4) (8) Adjusted EBITDA $ 452 23.2% $ 435 22.9% Diluted Shares Outstanding 67.3 71.5 Expand Amounts may not calculate due to rounding. The tables above reconcile certain non-GAAP financial measures to their closest GAAP measure. The presentation of these adjustments is intended to permit the comparison of particular adjustments as they appear in the income statement in order to assist investors' understanding of the overall impact of such adjustments. In addition to GAAP financial measures, the Company provides Adjusted net income, Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted diluted EPS to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods, by adjusting for certain items which in our view do not necessarily reflect ongoing performance. We also internally use these measures to assess our operating performance, both absolutely and in comparison to other companies, and in evaluating or making selected compensation decisions. These supplemental disclosures are in addition to GAAP reported measures. Non-GAAP measures should not be considered a substitute for, nor superior to, financial results and measures determined or calculated in accordance with GAAP. Our presentation of adjusted measures may not be comparable to similarly-titled measures used by other companies. See "Presentation of Financial Information" and Table 7 for the definitions of these non-GAAP measures. (a) Amortization of acquisition-related intangible assets is excluded from Adjusted net income and Adjusted EBITDA. (b) 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. (c) All stock-based compensation is excluded from Adjusted EBITDA. Expand Table 6 Travel + Leisure Co. Non-GAAP Measure: Reconciliation of Net Cash Provided by Operating Activities to Adjusted Free Cash Flow (in millions) Six Months Ended June 30, 2025 2024 Net cash provided by operating activities $ 353 $ 221 Property and equipment additions (58 ) (38 ) Sum of proceeds and principal payments of non-recourse vacation ownership debt (172 ) (71 ) Free cash flow / Adjusted free cash flow (a) $ 123 $ 112 Expand (a) The Company had $48 million and $81 million of net cash used in investing activities during the six months ended June 30, 2025 and 2024. The Company had $255 million and $261 million of net cash used in financing activities for the six months ended June 30, 2025 and 2024. Expand Table 7 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 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 Condensed 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, 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 these measures 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, impairments, 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. 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. 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. 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.
Yahoo
10-07-2025
- Business
- Yahoo
The Big Beautiful Bill may have just quietly boosted Big Tech earnings
Part of Trump's tax bill could give Big Tech a boost to earnings. The bill allows upfront expensing of R&D costs, enhancing cash flow for software firms. Microsoft, Oracle, and Salesforce are some of the biggest beneficiaries, Morgan Stanley said. President Donald Trump's new tax bill hands businesses major tax perks, but it's especially generous to Big Tech — and it could deliver an earnings boost that's not yet been priced in by the market. Specifically, the One Big Beautiful Bill Act's research and development (R&D) expensing guidelines will create a "cash flow tailwind" for software companies, Morgan Stanley said this week. Previously, the 2017 Tax Cuts and Jobs Act required companies to spread out domestic R&D costs over the course of five years starting in 2022. But now, the new tax bill allows companies to expense those R&D costs upfront, restoring a more favorable tax treatment that lowers companies' taxable income. And to make the deal even sweeter, the new tax bill allows for retroactive deductions of previously deferred R&D costs, allowing companies to claim tax savings from previous years all at once. There's an additional accounting wrinkle: According to Generally Accepted Accounting Principles (GAAP), the rulebook that companies follow when reporting earnings to Wall Street, R&D expense must be expensed immediately even if the costs are being paid over the period of five years, as was the case under the previous legislation. This discrepancy means companies actually paid more in taxes up front than their GAAP incomes would suggest, creating a deferred tax asset that allowed companies to take a tax deduction in later years. Now, with the One Big Beautiful Bill, companies can take advantage of those deferred tax assets earlier and deduct R&D costs immediately going forward. "The option to expense over two years, or to remain on the five-year amortization schedule, is more attractive for companies where full accelerated expensing in the first year would put them in a net loss position for tax purposes," Keith Weiss, technology equity analyst at Morgan Stanley, wrote on Tuesday. Software companies in particular stand to be big beneficiaries of the provision in the bill, as they spend heavily on R&D to develop new products. Microsoft has spent an average of $27 billion a year on R&D over the last three years. Others, like Oracle, Salesforce, and Adobe, have spent between $3.5 to $8 billion annually. They also have significant deferred tax assets that they can leverage to boost their free cash flow next year. According to Morgan Stanley, Microsoft could see a 4% boost to its free cash flow margin. Oracle and Salesforce are projected to benefit by around 6%. The biggest software winner on an incremental basis is Okta, which Morgan Stanley expects to receive a margin boost of nearly 12%. Read the original article on Business Insider Sign in to access your portfolio
Business Wire
09-07-2025
- Business
- Business Wire
Humana Inc. to Release Second Quarter 2025
LOUISVILLE, Ky.--(BUSINESS WIRE)--Humana will release its 2Q25 financial results, as well as prepared management remarks (in PDF format), at 6:00 a.m. Eastern time on July 30, 2025. The company will host a live question-and-answer session at 8:00 a.m. Eastern time that morning to discuss its financial results for the quarter and earnings guidance for 2025. A webcast of the 2Q25 earnings call may be accessed via Humana's Investor Relations page at If you anticipate asking a question during the question-and-answer session, please register in advance using this link, Upon registration, telephone participants will receive a confirmation email detailing how to join the conference call, including the dial-in number and a unique registrant ID. The company suggests participants listening via the web or the conference call sign in or dial in at least 15 minutes in advance of the call. For those unable to participate in the live event, the virtual presentation archive will be available in the Historical Webcasts and Presentations section of the Investor Relations page at approximately two hours following the live webcast. The company's 2Q25 earnings news release is expected to include financial measures that are not in accordance with Generally Accepted Accounting Principles (GAAP). A reconciliation of non-GAAP financial measures to financial results under GAAP, as well as management's reasons for including non-GAAP financial measures, will be included in the company's 2Q25 earnings news release, a copy of which will be available on the Investor Relations page of on July 30, 2025. About Humana Humana Inc. is committed to putting health first – for our teammates, our customers, and our company. Through our Humana insurance services, and our CenterWell health care services, we make it easier for the millions of people we serve to achieve their best health – delivering the care and service they need, when they need it. These efforts are leading to a better quality of life for people with Medicare, Medicaid, families, individuals, military service personnel, and communities at large. Learn more about what we offer at and at
Business Insider
09-07-2025
- Business
- Business Insider
The Big Beautiful Bill just quietly boosted Big Tech earnings
President Donald Trump's new tax bill hands businesses major tax perks, but it's especially generous to Big Tech — and it could deliver an earnings boost that's not yet been priced in by the market. Specifically, the One Big Beautiful Bill Act's research and development (R&D) expensing guidelines will create a "cash flow tailwind" for software companies, Morgan Stanley said this week. Previously, the 2017 Tax Cuts and Jobs Act required companies to spread out domestic R&D costs over the course of five years starting in 2022. But now, the new tax bill allows companies to expense those R&D costs upfront, restoring a more favorable tax treatment that lowers companies' taxable income. And to make the deal even sweeter, the new tax bill allows for retroactive deductions of previously deferred R&D costs, allowing companies to claim tax savings from previous years all at once. There's an additional accounting wrinkle: According to Generally Accepted Accounting Principles (GAAP), the rulebook that companies follow when reporting earnings to Wall Street, R&D expense must be expensed immediately even if the costs are being paid over the period of five years, as was the case under the previous legislation. This discrepancy means companies actually paid more in taxes up front than their GAAP incomes would suggest, creating a deferred tax asset that allowed companies to take a tax deduction in later years. Now, with the One Big Beautiful Bill, companies can take advantage of those deferred tax assets earlier and deduct R&D costs immediately going forward. "The option to expense over two years, or to remain on the five-year amortization schedule, is more attractive for companies where full accelerated expensing in the first year would put them in a net loss position for tax purposes," Keith Weiss, technology equity analyst at Morgan Stanley, wrote on Tuesday. Software companies in particular stand to be big beneficiaries of the provision in the bill, as they spend heavily on R&D to develop new products. Microsoft has spent an average of $27 billion a year on R&D over the last three years. Others, like Oracle, Salesforce, and Adobe, have spent between $3.5 to $8 billion annually. They also have significant deferred tax assets that they can leverage to boost their free cash flow next year. According to Morgan Stanley, Microsoft could see a 4% boost to its free cash flow margin. Oracle and Salesforce are projected to benefit by around 6%. The biggest software winner on an incremental basis is Okta, which Morgan Stanley expects to receive a margin boost of nearly 12%.
