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Marriott Vacations Worldwide (“MVW”) Reports First Quarter 2023 Financial Results

Marriott Vacations Worldwide Corporation (NYSE: VAC) (the “Company”) reported first quarter 2023 financial results.

First Quarter 2023 Highlights

  • Consolidated Vacation Ownership contract sales were $434 million, a 10% increase compared to the first quarter of 2022, and VPG was $4,358.
  • Net income attributable to common shareholders was $87 million compared to $58 million in the prior year, and fully diluted earnings per share increased 67% to $2.06.
  • Adjusted net income attributable to common shareholders was $109 million compared to $81 million in the prior year, and adjusted fully diluted earnings per share increased 49% to $2.54.
  • Adjusted EBITDA increased 8% compared to the prior year to $203 million.
  • The Company returned $134 million to shareholders, repurchasing 522,000 shares of its common stock for $80 million and paying two quarterly dividends totaling $54 million.

“We started the year on a strong note, growing contract sales by 10% in the first quarter and Adjusted EBITDA by 8%, illustrating the resilience of our leisure focused business model,” said John Geller, president and chief executive officer. “Consumers continue to prioritize travel, which we’re seeing in our occupancies, Abound by Marriott Vacations is generating excitement among our existing owners and first time buyers, and we are making investments in our business to support our long term growth.”

Vacation Ownership

Revenues excluding cost reimbursements increased 16% in the first quarter of 2023 compared to the prior year, reflecting growth in all lines of businesses.

Segment financial results attributable to common shareholders were $205 million in the first quarter of 2023 compared to $173 million in the prior year and Segment margin was 28%. Segment Adjusted EBITDA was $229 million compared to $199 million in the prior year, and Adjusted EBITDA margin remained strong at more than 31%.

Exchange & Third-Party Management

Revenues excluding cost reimbursements decreased 12% in the first quarter of 2023 compared to the prior year and decreased 2% excluding the sale of VRI Americas in April of 2022, primarily due to lower Getaways. Interval International active members decreased 2% compared to the prior year to 1.6 million but were in-line with the fourth quarter of 2022, and Average revenue per member decreased 5% year-over-year.

Segment financial results attributable to common shareholders were $28 million in the first quarter of 2023, Segment margin was 42% and Segment Adjusted EBITDA was $37 million. Excluding the VRI Americas business, Segment Adjusted EBITDA decreased $4 million compared to the prior year primarily due to lower Getaway and membership revenue and Adjusted EBITDA margin was 56%.

Corporate and Other

General and administrative costs increased $7 million in the first quarter of 2023 compared to the prior year primarily as a result of our Vacation Next program and new product development initiatives, partially offset by lower bonus expense.

Balance Sheet and Liquidity

The Company ended the quarter with approximately $1.0 billion in liquidity, including $306 million of cash and cash equivalents, $120 million of gross notes receivable that were eligible for securitization, and $549 million of available capacity under its revolving corporate credit facility.

At the end of the first quarter of 2023, the Company had $3.1 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.

On April 13, 2023, the Company completed its first timeshare receivable securitization of 2023, issuing $380 million of notes. The transaction was structured with a gross advance rate of 98% and a weighted average interest rate of 5.52%, including $11 million of Class D Notes retained by the Company.

Full Year 2023 Outlook

The Company is providing its full year 2023 outlook as reflected in the chart below. The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2023 expected GAAP results for the Company.

In the table below “*” denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

(in millions, except per share amounts)

2023 Guidance

Contract sales

$1,930

to

$2,000

Net income attributable to common shareholders

$410

to

$445

Earnings per share - diluted

$9.70

to

$10.49

Net cash, cash equivalents and restricted cash provided by operating activities

$382

to

$397

Adjusted EBITDA*

$950

to

$1,000

Adjusted earnings per share - diluted*

$11.05

to

$11.85

Adjusted free cash flow*

$600

to

$670

Non-GAAP Financial Information

Non-GAAP financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. In addition to the foregoing non-GAAP financial measures, we present certain key metrics as performance measures which are further described in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission.

First Quarter 2023 Financial Results Conference Call

The Company will hold a conference call on May 4, 2023 at 8:30 a.m. ET to discuss these financial results and provide an update on business conditions. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the Company's website at ir.mvwc.com. An audio replay of the conference call will be available for 30 days on the Company’s website.

About Marriott Vacations Worldwide Corporation

Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products, and services. The Company has over 120 vacation ownership resorts and approximately 700,000 owner families in a diverse portfolio that includes some of the most iconic vacation ownership brands. The Company also operates an exchange network and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries and territories, and provides management services to other resorts and lodging properties. As a leader and innovator in the vacation industry, the Company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International, Inc. and an affiliate of Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements

This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including statements about expectations for future growth and projections for full year 2023. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the effects of the COVID-19 pandemic or future health crises, including their short and longer-term impacts on consumer confidence and demand for travel, and the pace of recovery following a future health crisis; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price and wage inflation; global supply chain disruptions; volatility in the international and national economy and credit markets; impact of the current or a future banking crisis; the ongoing war between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the impact of rising interest rates; political or social strife; difficulties associated with implementing new or maintaining existing technology; changes in privacy laws and other matters referred to under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, and which may be updated in our future periodic filings with the U.S. Securities and Exchange Commission. All forward-looking statements in this press release are made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.

Financial Schedules Follow

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FINANCIAL SCHEDULES

QUARTER 1, 2023

 

TABLE OF CONTENTS

 

Summary Financial Information and Adjusted EBITDA Summary

A-1

Interim Consolidated Statements of Income

A-2

Revenues and Profit by Segment

A-3

Consolidated Contract Sales to Adjusted Development Profit

A-5

Adjusted Net Income Attributable to Common Shareholders and Adjusted Earnings Per Share - Diluted

A-6

Adjusted EBITDA

A-7

Segment Adjusted EBITDA - Vacation Ownership and Exchange & Third-Party Management

A-8

Interim Consolidated Balance Sheets

A-9

Interim Consolidated Statements of Cash Flows

A-10

2023 Outlook

 

Adjusted Net Income Attributable to Common Shareholders, Adjusted Earnings Per Share - Diluted and Adjusted EBITDA

A-12

Adjusted Free Cash Flow

A-13

Quarterly Operating Metrics

A-14

Non-GAAP Financial Measures

A-15

A-1

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions, except VPG, tours, total active members, average revenue per member and per share amounts)

(Unaudited)

 

SUMMARY FINANCIAL INFORMATION

 

 

Three Months Ended

 

Change %

 

March 31, 2023

 

March 31, 2022

 

Key Measures

 

 

 

 

 

Total consolidated contract sales

$

434

 

$

394

 

10%

VPG

$

4,358

 

$

4,706

 

(7%)

Tours

 

92,890

 

 

78,505

 

18%

Total active members (000's)(1)

 

1,568

 

 

1,606

 

(2%)

Average revenue per member(1)

$

42.07

 

$

44.33

 

(5%)

 

 

 

 

 

 

GAAP Measures

 

 

 

 

 

Revenues

$

1,169

 

$

1,052

 

11%

Income before income taxes and noncontrolling interests

$

128

 

$

90

 

43%

Net income attributable to common shareholders

$

87

 

$

58

 

50%

Earnings per share - diluted

$

2.06

 

$

1.23

 

67%

 

 

 

 

 

 

Non-GAAP Measures*

 

 

 

 

 

Adjusted EBITDA

$

203

 

$

188

 

8%

Adjusted pretax income

$

130

 

$

120

 

8%

Adjusted net income attributable to common shareholders

$

109

 

$

81

 

35%

Adjusted earnings per share - diluted

$

2.54

 

$

1.70

 

49%

 

 

 

 

 

 

(1) Includes members at the end of each period for the Interval International exchange network only.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

ADJUSTED EBITDA SUMMARY

 

 

Three Months Ended

 

Change %

 

March 31, 2023

 

March 31, 2022

 

Adjusted EBITDA*

$

203

 

$

188

 

8%

Vacation Ownership Segment*

$

229

 

$

199

 

15%

Exchange & Third-Party Management Segment*

$

37

 

$

43

 

(13%)

 

 

 

 

 

 

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-2

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

REVENUES

 

 

 

Sale of vacation ownership products

$

375

 

 

$

310

 

Management and exchange

 

200

 

 

 

222

 

Rental

 

151

 

 

 

133

 

Financing

 

78

 

 

 

71

 

Cost reimbursements

 

365

 

 

 

316

 

TOTAL REVENUES

 

1,169

 

 

 

1,052

 

EXPENSES

 

 

 

Cost of vacation ownership products

 

58

 

 

 

60

 

Marketing and sales

 

210

 

 

 

182

 

Management and exchange

 

107

 

 

 

127

 

Rental

 

113

 

 

 

81

 

Financing

 

26

 

 

 

21

 

General and administrative

 

68

 

 

 

61

 

Depreciation and amortization

 

32

 

 

 

33

 

Litigation charges

 

3

 

 

 

3

 

Royalty fee

 

29

 

 

 

27

 

Impairment

 

4

 

 

 

 

Cost reimbursements

 

365

 

 

 

316

 

TOTAL EXPENSES

 

1,015

 

 

 

911

 

Gains and other income, net

 

21

 

 

 

4

 

Interest expense, net

 

(34

)

 

 

(27

)

Transaction and integration costs

 

(13

)

 

 

(28

)

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

128

 

 

 

90

 

Provision for income taxes

 

(41

)

 

 

(32

)

NET INCOME

 

87

 

 

 

58

 

Net income attributable to noncontrolling interests

 

 

 

 

 

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

87

 

 

$

58

 

 

 

 

 

EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

 

 

Basic

$

2.32

 

 

$

1.36

 

Diluted

$

2.06

 

 

$

1.23

 

A-3

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the three months ended March 31, 2023

(In millions)

(Unaudited)

 

 

Reportable Segment

 

Corporate and Other

 

Total

 

Vacation Ownership

 

Exchange & Third-Party Management

 

 

REVENUES

 

 

 

 

 

 

 

Sales of vacation ownership products

$

375

 

 

$

 

 

$

 

 

$

375

 

Management and exchange(1)

 

 

 

 

 

 

 

Ancillary revenues

 

61

 

 

 

1

 

 

 

 

 

 

62

 

Management fee revenues

 

45

 

 

 

8

 

 

 

(1

)

 

 

52

 

Exchange and other services revenues

 

29

 

 

 

47

 

 

 

10

 

 

 

86

 

Management and exchange

 

135

 

 

 

56

 

 

 

9

 

 

 

200

 

Rental

 

141

 

 

 

10

 

 

 

 

 

 

151

 

Financing

 

78

 

 

 

 

 

 

 

 

 

78

 

Cost reimbursements(1)

 

368

 

 

 

5

 

 

 

(8

)

 

 

365

 

TOTAL REVENUES

$

1,097

 

 

$

71

 

 

$

1

 

 

$

1,169

 

 

 

 

 

 

 

 

 

PROFIT

 

 

 

 

 

 

 

Development

$

107

 

 

$

 

 

$

 

 

$

107

 

Management and exchange(1)

 

71

 

 

 

26

 

 

 

(4

)

 

 

93

 

Rental(1)

 

25

 

 

 

10

 

 

 

3

 

 

 

38

 

Financing

 

52

 

 

 

 

 

 

 

 

 

52

 

TOTAL PROFIT

 

255

 

 

 

36

 

 

 

(1

)

 

 

290

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

(68

)

 

 

(68

)

Depreciation and amortization

 

(23

)

 

 

(8

)

 

 

(1

)

 

 

(32

)

Litigation charges

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Royalty fee

 

(29

)

 

 

 

 

 

 

 

 

(29

)

Impairment

 

(4

)

 

 

 

 

 

 

 

 

(4

)

Gains and other income, net

 

9

 

 

 

 

 

 

12

 

 

 

21

 

Interest expense, net

 

 

 

 

 

 

 

(34

)

 

 

(34

)

Transaction and integration costs

 

 

 

 

 

 

 

(13

)

 

 

(13

)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

205

 

 

 

28

 

 

 

(105

)

 

 

128

 

Provision for income taxes

 

 

 

 

 

 

 

(41

)

 

 

(41

)

NET INCOME (LOSS)

 

205

 

 

 

28

 

 

 

(146

)

 

 

87

 

Net income attributable to noncontrolling interests(1)

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

205

 

 

$

28

 

 

$

(146

)

 

$

87

 

SEGMENT MARGIN(2)

28%

 

42%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues.

A-4

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the three months ended March 31, 2022

(In millions)

(Unaudited)

 

 

Reportable Segment

 

Corporate and Other

 

Total

 

Vacation Ownership

 

Exchange & Third-Party Management

 

 

REVENUES

 

 

 

 

 

 

 

Sales of vacation ownership products

$

310

 

 

$

 

 

$

 

 

$

310

 

Management and exchange(1)

 

 

 

 

 

 

 

Ancillary revenues

 

54

 

 

 

1

 

 

 

 

 

 

55

 

Management fee revenues

 

42

 

 

 

10

 

 

 

(3

)

 

 

49

 

Exchange and other services revenues

 

30

 

 

 

53

 

 

 

35

 

 

 

118

 

Management and exchange

 

126

 

 

 

64

 

 

 

32

 

 

 

222

 

Rental

 

122

 

 

 

11

 

 

 

 

 

 

133

 

Financing

 

71

 

 

 

 

 

 

 

 

 

71

 

Cost reimbursements(1)

 

327

 

 

 

9

 

 

 

(20

)

 

 

316

 

TOTAL REVENUES

$

956

 

 

$

84

 

 

$

12

 

 

$

1,052

 

 

 

 

 

 

 

 

 

PROFIT

 

 

 

 

 

 

 

Development

$

68

 

 

$

 

 

$

 

 

$

68

 

Management and exchange(1)

 

72

 

 

 

31

 

 

 

(8

)

 

 

95

 

Rental(1)

 

32

 

 

 

11

 

 

 

9

 

 

 

52

 

Financing

 

50

 

 

 

 

 

 

 

 

 

50

 

TOTAL PROFIT

 

222

 

 

 

42

 

 

 

1

 

 

 

265

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

(61

)

 

 

(61

)

Depreciation and amortization

 

(22

)

 

 

(9

)

 

 

(2

)

 

 

(33

)

Litigation charges

 

(3

)

 

 

 

 

 

 

 

 

(3

)

Royalty fee

 

(27

)

 

 

 

 

 

 

 

 

(27

)

Gains and other income, net

 

3

 

 

 

 

 

 

1

 

 

 

4

 

Interest expense, net

 

 

 

 

 

 

 

(27

)

 

 

(27

)

Transaction and integration costs

 

 

 

 

 

 

 

(28

)

 

 

(28

)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

173

 

 

 

33

 

 

 

(116

)

 

 

90

 

Provision for income taxes

 

 

 

 

 

 

 

(32

)

 

 

(32

)

NET INCOME (LOSS)

 

173

 

 

 

33

 

 

 

(148

)

 

 

58

 

Net income attributable to noncontrolling interests(1)

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

173

 

 

$

33

 

 

$

(148

)

 

$

58

 

SEGMENT MARGIN(2)

27%

 

45%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues.

A-5

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2023

March 31, 2022

Consolidated contract sales

$

434

 

 

$

394

 

Less resales contract sales

 

(11

)

 

 

(9

)

Consolidated contract sales, net of resales

 

423

 

 

 

385

 

Plus:

 

 

 

Settlement revenue

 

8

 

 

 

7

 

Resales revenue

 

6

 

 

 

4

 

Revenue recognition adjustments:

 

 

 

Reportability

 

 

 

 

(33

)

Sales reserve

 

(38

)

 

 

(29

)

Other(1)

 

(24

)

 

 

(24

)

Sale of vacation ownership products

 

375

 

 

 

310

 

Less:

 

 

 

Cost of vacation ownership products

 

(58

)

 

 

(60

)

Marketing and sales

 

(210

)

 

 

(182

)

Development profit

 

107

 

 

 

68

 

Revenue recognition reportability adjustment

 

 

 

 

24

 

Purchase accounting adjustments

 

2

 

 

 

4

 

Adjusted development profit*

$

109

 

 

$

96

 

Development profit margin

28.5%

 

21.8%

Adjusted development profit margin*

29.2%

 

28.3%

 

 

 

 

(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-6

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND

ADJUSTED EARNINGS PER SHARE - DILUTED

(In millions, except per share amounts)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

Net income attributable to common shareholders

$

87

 

 

$

58

 

Provision for income taxes

 

41

 

 

 

32

 

Income before income taxes attributable to common shareholders

 

128

 

 

 

90

 

Certain items:

 

 

 

ILG integration

 

9

 

 

 

25

 

Welk acquisition and integration

 

4

 

 

 

3

 

Transaction and integration costs

 

13

 

 

 

28

 

Early redemption of senior secured notes

 

10

 

 

 

 

Foreign currency translation

 

(2

)

 

 

(1

)

Insurance proceeds

 

(2

)

 

 

(3

)

Change in indemnification asset

 

(23

)

 

 

 

Other

 

(4

)

 

 

 

Gains and other income, net

 

(21

)

 

 

(4

)

Purchase accounting adjustments

 

2

 

 

 

3

 

Litigation charges

 

3

 

 

 

3

 

Impairment

 

4

 

 

 

 

Other

 

1

 

 

 

 

Adjusted pretax income*

 

130

 

 

 

120

 

Provision for income taxes

 

(21

)

 

 

(39

)

Adjusted net income attributable to common shareholders*

$

109

 

 

$

81

 

 

 

 

 

Diluted shares

 

44.4

 

 

 

47.9

 

Adjusted earnings per share - Diluted*

$

2.54

 

 

$

1.70

 

 

 

 

 

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-7

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ADJUSTED EBITDA

(In millions)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

87

 

 

$

58

 

Interest expense, net

 

34

 

 

 

27

 

Provision for income taxes

 

41

 

 

 

32

 

Depreciation and amortization

 

32

 

 

 

33

 

Share-based compensation

 

7

 

 

 

8

 

Certain items:

 

 

 

ILG integration

 

9

 

 

 

25

 

Welk acquisition and integration

 

4

 

 

 

3

 

Transaction and integration costs

 

13

 

 

 

28

 

Early redemption of senior secured notes

 

10

 

 

 

 

Foreign currency translation

 

(2

)

 

 

(1

)

Insurance proceeds

 

(2

)

 

 

(3

)

Change in indemnification asset

 

(23

)

 

 

 

Other

 

(4

)

 

 

 

Gains and other income, net

 

(21

)

 

 

(4

)

Purchase accounting adjustments

 

2

 

 

 

3

 

Litigation charges

 

3

 

 

 

3

 

Impairment

 

4

 

 

 

 

Other

 

1

 

 

 

 

ADJUSTED EBITDA*

$

203

 

 

$

188

 

ADJUSTED EBITDA MARGIN*

25%

 

25%

 

 

 

 

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-8

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

(Unaudited)

 

VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

205

 

 

$

173

 

Depreciation and amortization

 

23

 

 

 

22

 

Share-based compensation

 

1

 

 

 

1

 

Certain items:

 

 

 

Insurance proceeds

 

(2

)

 

 

(3

)

Change in indemnification asset

 

(3

)

 

 

 

Other

 

(4

)

 

 

 

Gains and other income, net

 

(9

)

 

 

(3

)

Purchase accounting adjustments

 

2

 

 

 

3

 

Litigation charges

 

3

 

 

 

3

 

Impairment

 

4

 

 

 

 

SEGMENT ADJUSTED EBITDA*

$

229

 

 

$

199

 

SEGMENT ADJUSTED EBITDA MARGIN*

31%

 

32%

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

28

 

 

$

33

 

Depreciation and amortization

 

8

 

 

 

9

 

Share-based compensation

 

1

 

 

 

1

 

SEGMENT ADJUSTED EBITDA*

$

37

 

 

$

43

 

SEGMENT ADJUSTED EBITDA MARGIN*

56%

 

57%

 

 

 

 

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-9

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

 

 

Unaudited

 

 

 

March 31, 2023

 

December 31, 2022

ASSETS

 

 

 

Cash and cash equivalents

$

306

 

 

$

524

 

Restricted cash (including $85 and $85 from VIEs, respectively)

 

268

 

 

 

330

 

Accounts receivable, net (including $13 and $13 from VIEs, respectively)

 

289

 

 

 

292

 

Vacation ownership notes receivable, net (including $1,793 and $1,792 from VIEs, respectively)

 

2,220

 

 

 

2,198

 

Inventory

 

672

 

 

 

660

 

Property and equipment, net

 

1,215

 

 

 

1,139

 

Goodwill

 

3,117

 

 

 

3,117

 

Intangibles, net

 

898

 

 

 

911

 

Other (including $80 and $76 from VIEs, respectively)

 

617

 

 

 

468

 

TOTAL ASSETS

$

9,602

 

 

$

9,639

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Accounts payable

$

222

 

 

$

356

 

Advance deposits

 

178

 

 

 

158

 

Accrued liabilities (including $3 and $5 from VIEs, respectively)

 

334

 

 

 

369

 

Deferred revenue

 

448

 

 

 

344

 

Payroll and benefits liability

 

206

 

 

 

251

 

Deferred compensation liability

 

147

 

 

 

139

 

Securitized debt, net (including $1,957 and $1,982 from VIEs, respectively)

 

1,936

 

 

 

1,938

 

Debt, net

 

3,129

 

 

 

3,088

 

Other

 

183

 

 

 

167

 

Deferred taxes

 

339

 

 

 

331

 

TOTAL LIABILITIES

 

7,122

 

 

 

7,141

 

 

 

 

 

Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding

 

 

 

 

 

Common stock — $0.01 par value; 100,000,000 shares authorized; 75,805,974 and 75,744,524 shares issued, respectively

 

1

 

 

 

1

 

Treasury stock — at cost; 38,731,521 and 38,263,442 shares, respectively

 

(2,132

)

 

 

(2,054

)

Additional paid-in capital

 

3,937

 

 

 

3,941

 

Accumulated other comprehensive income

 

18

 

 

 

15

 

Retained earnings

 

654

 

 

 

593

 

TOTAL MVW SHAREHOLDERS' EQUITY

 

2,478

 

 

 

2,496

 

Noncontrolling interests

 

2

 

 

 

2

 

TOTAL EQUITY

 

2,480

 

 

 

2,498

 

TOTAL LIABILITIES AND EQUITY

$

9,602

 

 

$

9,639

 

 

 

 

 

The abbreviation VIEs above means Variable Interest Entities.

A-10

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

OPERATING ACTIVITIES

 

 

 

Net income

$

87

 

 

$

58

 

Adjustments to reconcile net income to net cash, cash equivalents and restricted cash (used in) provided by operating activities:

 

 

 

Depreciation and amortization of intangibles

 

32

 

 

 

33

 

Amortization of debt discount and issuance costs

 

7

 

 

 

5

 

Vacation ownership notes receivable reserve

 

38

 

 

 

29

 

Share-based compensation

 

7

 

 

 

8

 

Impairment charges

 

3

 

 

 

 

Deferred income taxes

 

6

 

 

 

18

 

Net change in assets and liabilities:

 

 

 

Accounts and contracts receivable

 

(6

)

 

 

45

 

Vacation ownership notes receivable originations

 

(225

)

 

 

(205

)

Vacation ownership notes receivable collections

 

161

 

 

 

188

 

Inventory

 

16

 

 

 

28

 

Other assets

 

(146

)

 

 

(134

)

Accounts payable, advance deposits and accrued liabilities

 

(101

)

 

 

12

 

Deferred revenue

 

101

 

 

 

54

 

Payroll and benefit liabilities

 

(45

)

 

 

13

 

Deferred compensation liability

 

4

 

 

 

(7

)

Other liabilities

 

16

 

 

 

(3

)

Purchase of vacation ownership units for future transfer to inventory

 

 

 

 

(12

)

Other, net

 

(5

)

 

 

(1

)

Net cash, cash equivalents and restricted cash (used in) provided by operating activities

 

(50

)

 

 

129

 

INVESTING ACTIVITIES

 

 

 

Capital expenditures for property and equipment (excluding inventory)

 

(37

)

 

 

(9

)

Purchase of company owned life insurance

 

 

 

 

(4

)

Other, net

 

 

 

 

3

 

Net cash, cash equivalents and restricted cash used in investing activities

 

(37

)

 

 

(10

)

Continued

A-11

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In millions)

(Unaudited)

 

 

Three Months Ended

 

March 31, 2023

 

March 31, 2022

FINANCING ACTIVITIES

 

 

 

Borrowings from securitization transactions

 

171

 

 

 

102

 

Repayment of debt related to securitization transactions

 

(174

)

 

 

(178

)

Proceeds from debt

 

405

 

 

 

30

 

Repayments of debt

 

(461

)

 

 

(30

)

Finance lease incentive

 

10

 

 

 

 

Finance lease payment

 

(2

)

 

 

(2

)

Payment of debt issuance costs

 

 

 

 

(4

)

Repurchase of common stock

 

(80

)

 

 

(119

)

Payment of dividends

 

(54

)

 

 

(49

)

Payment of withholding taxes on vesting of restricted stock units

 

(9

)

 

 

(22

)

Net cash, cash equivalents and restricted cash used in financing activities

 

(194

)

 

 

(272

)

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

 

1

 

 

 

 

Change in cash, cash equivalents and restricted cash

 

(280

)

 

 

(153

)

Cash, cash equivalents and restricted cash, beginning of period

 

854

 

 

 

803

 

Cash, cash equivalents and restricted cash, end of period

$

574

 

 

$

650

 

A-12

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions, except per share amounts)

 

2023 ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK

 

 

Fiscal Year 2023

(Low)

 

Fiscal Year 2023

(High)

Net income attributable to common shareholders

$

410

 

 

$

445

 

Provision for income taxes

 

175

 

 

 

190

 

Income before income taxes attributable to common shareholders

 

585

 

 

 

635

 

Certain items(1)

 

58

 

 

 

58

 

Adjusted pretax income*

 

643

 

 

 

693

 

Provision for income taxes

 

(173

)

 

 

(188

)

Adjusted net income attributable to common shareholders*

$

470

 

 

$

505

 

Earnings per share - Diluted(2)

$

9.70

 

 

$

10.49

 

Adjusted earnings per share - Diluted(2)*

$

11.05

 

 

$

11.85

 

Diluted shares(2)

 

44.2

 

 

 

44.2

 

2023 ADJUSTED EBITDA OUTLOOK

 

 

Fiscal Year 2023

(Low)

 

Fiscal Year 2023

(High)

Net income attributable to common shareholders

$

410

 

$

445

Interest expense

 

140

 

 

140

Provision for income taxes

 

175

 

 

190

Depreciation and amortization

 

130

 

 

130

Share-based compensation

 

37

 

 

37

Certain items(1)

 

58

 

 

58

Adjusted EBITDA*

$

950

 

$

1,000

(1) Certain items adjustment includes $50 million of anticipated transaction and integration costs, $20 million of anticipated purchase accounting adjustments, $5 million of anticipated litigation charges, $4 million of impairments, partially offset by $21 million of gains and other income, net.

(2) We expect 6.5 million shares to be included in diluted shares related to our convertible notes and an add back of $18 million for interest expense to the numerator of the diluted earnings per share calculation.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-13

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

2023 ADJUSTED FREE CASH FLOW OUTLOOK

(In millions)

 

 

 

Fiscal Year 2023

(Low)

 

Fiscal Year 2023

(High)

Net cash, cash equivalents and restricted cash provided by operating activities

 

$

382

 

 

$

397

 

Capital expenditures for property and equipment (excluding inventory)

 

 

(90

)

 

 

(100

)

Borrowings from securitizations, net of repayments

 

 

130

 

 

 

195

 

Securitized debt issuance costs

 

 

(12

)

 

 

(12

)

Free cash flow*

 

 

410

 

 

 

480

 

Adjustments:

 

 

 

 

Net change in borrowings available from the securitization of eligible vacation ownership notes receivable(1)

 

 

120

 

 

 

120

 

Certain items(2)

 

 

85

 

 

 

85

 

Change in restricted cash

 

 

(15

)

 

 

(15

)

Adjusted free cash flow*

 

$

600

 

 

$

670

 

(1) Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable between the 2022 and 2023 year ends.

(2) Certain items adjustment consists primarily of the after-tax impact of anticipated transaction and integration costs.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-14

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

QUARTERLY OPERATING METRICS

(Contract sales in millions)

 

 

Year

 

Quarter Ended

 

Full Year

 

 

March 31

 

June 30

 

September 30

 

December 31

 

Vacation Ownership

 

 

 

 

 

 

 

 

 

 

 

Consolidated contract sales

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

$

434

 

 

 

 

 

 

 

 

 

2022

 

$

394

 

$

506

 

$

483

 

$

454

 

$

1,837

 

2021

 

$

226

 

$

362

 

$

380

 

$

406

 

$

1,374

 

 

 

 

 

 

 

 

 

 

 

 

VPG

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

$

4,358

 

 

 

 

 

 

 

 

 

2022

 

$

4,706

 

$

4,613

 

$

4,353

 

$

4,088

 

$

4,421

 

2021

 

$

4,644

 

$

4,304

 

$

4,300

 

$

4,305

 

$

4,356

 

 

 

 

 

 

 

 

 

 

 

 

Tours

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

 

92,890

 

 

 

 

 

 

 

 

 

2022

 

 

78,505

 

 

102,857

 

 

104,000

 

 

105,231

 

 

390,593

 

2021

 

 

45,871

 

 

79,900

 

 

84,098

 

 

89,495

 

 

299,364

 

 

 

 

 

 

 

 

 

 

 

 

Exchange & Third-Party Management

 

 

 

 

 

 

 

 

 

 

Total active members (000's)(1)

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

 

1,568

 

 

 

 

 

 

 

 

 

2022

 

 

1,606

 

 

1,596

 

 

1,591

 

 

1,566

 

 

1,566

 

2021

 

 

1,479

 

 

1,321

 

 

1,313

 

 

1,296

 

 

1,296

 

 

 

 

 

 

 

 

 

 

 

 

Average revenue per member(1)

 

 

 

 

 

 

 

 

 

 

 

 

2023

 

$

42.07

 

 

 

 

 

 

 

 

 

2022

 

$

44.33

 

$

38.79

 

$

38.91

 

$

35.60

 

$

157.97

 

2021

 

$

47.13

 

$

46.36

 

$

42.95

 

$

42.93

 

$

179.48

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes members at the end of each period for the Interval International exchange network only.

A-15

MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES

In our press release and schedules, and on the related conference call, we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules included herein reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by an asterisk (“*”) on the preceding pages). Although we evaluate and present these non-GAAP financial measures for the reasons described below, please be aware that these non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for revenues, net income or loss attributable to common shareholders, earnings or loss per share or any other comparable operating measure prescribed by GAAP. In addition, other companies in our industry may calculate these non-GAAP financial measures differently than we do or may not calculate them at all, limiting their usefulness as comparative measures.

Certain Items Excluded from Non-GAAP Financial Measures

We evaluate non-GAAP financial measures, including those identified by an asterisk (“*”) on the preceding pages, that exclude certain items as further described in the financial schedules included herein, and believe these measures provide useful information to investors because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of these items. These non-GAAP financial measures also facilitate the comparison of results from our on-going core operations before these items with results from other companies.

Adjusted Development Profit and Adjusted Development Profit Margin

We evaluate Adjusted development profit (Adjusted sale of vacation ownership products, net of expenses) and Adjusted development profit margin as indicators of operating performance. Adjusted development profit margin is calculated by dividing Adjusted development profit by revenues from the Sale of vacation ownership products. Adjusted development profit and Adjusted development profit margin adjust Sale of vacation ownership products revenues for the impact of revenue reportability, include corresponding adjustments to Cost of vacation ownership products associated with the change in revenues from the Sale of vacation ownership products, and may include adjustments for certain items as necessary. We evaluate Adjusted development profit and Adjusted development profit margin and believe they provide useful information to investors because they allow for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development profit and Development profit margin.

Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA

EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to shareholders. We also use Adjusted EBITDA, as do analysts, lenders, investors and others, because this measure excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others, of results from our on-going core operations before the impact of these items with results from other companies.

Adjusted EBITDA Margin and Segment Adjusted EBITDA Margin

We evaluate Adjusted EBITDA margin and Segment Adjusted EBITDA margin as indicators of operating performance. Adjusted EBITDA margin represents Adjusted EBITDA divided by the Company’s total revenues less cost reimbursement revenues. Segment Adjusted EBITDA margin represents Segment Adjusted EBITDA divided by the applicable segment’s total revenues less cost reimbursement revenues. We evaluate Adjusted EBITDA margin and Segment Adjusted EBITDA margin and believe it provides useful information to investors because it allows for period-over-period comparisons of our on-going core operations.

Free Cash Flow and Adjusted Free Cash Flow

We evaluate Free Cash Flow and Adjusted Free Cash Flow as liquidity measures that provide useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment and the borrowing and repayment activity related to our term securitizations, which cash can be used for, among other purposes, strategic opportunities, including acquisitions and strengthening the balance sheet. Adjusted Free Cash Flow, which reflects additional adjustments to Free Cash Flow for the impact of transaction and integration charges, impact of borrowings available from the securitization of eligible vacation ownership notes receivable, and changes in restricted cash, allows for period-over-period comparisons of the cash generated by our business before the impact of these items. Analysis of Free Cash Flow and Adjusted Free Cash Flow also facilitates management’s comparison of our results with our competitors’ results.

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