Marriott Vacations Worldwide Corporation (NYSE: VAC) (“MVW” or
the “Company”) reported third quarter 2023 financial results.
Third Quarter 2023
Highlights
- Consolidated Vacation Ownership contract sales were $438
million and volume per guest (“VPG”) increased $87 sequentially
from the second quarter, or 2%, to $4,055. The Company estimates
the Maui wildfires negatively impacted contract sales by $28
million and VPG by approximately $66, or 2%, in the quarter.
- Net income attributable to common shareholders was $42 million
compared to $109 million in the prior year, and fully diluted
earnings per share was $1.09.
- The Company recorded a $59 million charge to its loan loss
provision in the third quarter resulting in a $36 million negative
impact to Net income attributable to common shareholders and a $49
million negative impact to Adjusted EBITDA.
- Adjusted net income attributable to common shareholders was $48
million and adjusted fully diluted earnings per share was
$1.20.
- Adjusted EBITDA was $150 million. The Company estimates the
Maui wildfires negatively impacted Adjusted EBITDA by $24 million
in the quarter and the increased loan loss provision impacted
Adjusted EBITDA by $49 million.
- The Company repurchased 793,300 shares of its common stock for
$86 million during the quarter and declared a $0.72 per share
quarterly dividend, which was paid in October.
- The Company updated its full year outlook.
“We had a difficult quarter between the devastating wildfires in
Maui and default rates on our loan portfolio remaining above our
recent experience. However, our loan delinquencies are stabilizing
and with Maui reopen for tourism we have started to see our resort
occupancies recover,” said John Geller, president and chief
executive officer. “We've also been working hard educating
consumers about the benefits of Abound by Marriott Vacations and
our salespeople are getting more comfortable selling the new
product, which was evident in our results this quarter, with VPG
growing sequentially from the prior quarter.”
Third Quarter 2023 Results
On August 8, 2023, a wildfire devastated the area of West Maui.
While the Company operates four vacation ownership resorts and
sales centers in the area, it did not sustain any physical damage
to these resorts and sales centers. However, the Company estimates
the Maui wildfires negatively impacted its third quarter contract
sales by approximately $28 million, its third quarter Net income
attributable to common shareholders by $18 million and its Adjusted
EBITDA by $24 million.
In the third quarter of 2022, the Company aligned its contract
terms for the sale of its Marriott-, Westin-, and Sheraton-branded
vacation ownership products, resulting in the acceleration of
revenue from the sale of Marriott-branded vacation ownership
interests. In addition, the Company aligned its reserve methodology
for vacation ownership notes receivable for these brands, resulting
in a decrease in the reserve for the acquired notes offset by an
increase in the reserve for the originated notes. Together, these
changes were referred to as the “Alignment.”
The tables below illustrate the comparison of the reported
results from the third quarter of 2023, as well as adjusted results
that reflect the estimated impact of the Maui fires, to the results
from the third quarter of 2022, including the impact of the
Alignment on the Company’s reported results for that time period.
In the tables below “*” denotes non-GAAP financial measures. Please
see “Non-GAAP Financial Measures” for additional information about
our reasons for providing these alternative financial measures and
limitations on their use.
Consolidated
Three Months Ended
September 30, 2023
September 30, 2022
($ in millions)
As Reported
Estimated Impact of Maui
Fires
As Adjusted*
As Reported
Impact of Alignment
As Adjusted*
Net income attributable to common
shareholders
$
42
$
18
$
60
$
109
$
(33
)
$
76
Adjusted net income attributable to common
shareholders*
$
48
$
18
$
66
$
131
$
(33
)
$
98
Adjusted EBITDA*
$
150
$
24
$
174
$
284
$
(44
)
$
240
Vacation Ownership
Three Months Ended
September 30, 2023
September 30, 2022
($ in millions)
As Reported
Estimated Impact of Maui
Fires
As Adjusted*
As Reported
Impact of Alignment
As Adjusted*
Sale of vacation ownership products
$
319
$
19
$
338
$
444
$
(27
)
$
417
Development profit
$
67
$
13
$
80
$
161
$
(25
)
$
136
Management and exchange profit
$
74
$
3
$
77
$
72
$
—
$
72
Rental profit
$
6
$
5
$
11
$
24
$
—
$
24
Financing profit
$
51
$
—
$
51
$
69
$
(19
)
$
50
Other
$
(1
)
$
1
$
—
$
(1
)
$
—
$
(1
)
Segment financial results attributable to
common shareholders
$
149
$
22
$
171
$
270
$
(33
)
$
237
Segment margin
22.3%
24.5%
33.5%
30.6%
Segment Adjusted EBITDA*
$
173
$
22
$
195
$
299
$
(44
)
$
255
Segment Adjusted EBITDA margin*
25.8%
27.9%
37.1%
32.7%
Three Months Ended
September 30, 2023
September 30, 2022
(Contract sales $ in millions)
As Reported
Estimated Impact of Maui
Fires
As Adjusted*
As Reported
Impact of Alignment
As Adjusted*
Consolidated contract sales
$
438
$
28
$
466
$
483
$
—
$
483
VPG
$
4,055
$
66
$
4,121
$
4,353
$
—
$
4,353
Tours
100,609
5,101
105,710
104,000
—
104,000
Revenues excluding cost reimbursements decreased 17% in the
third quarter of 2023 compared to the prior year. The decline was
driven by a 9% year-over-year reduction in consolidated contract
sales resulting from 7% lower VPG and a 3% decline in tours, and a
$59 million increase in its loan loss provision. Adjusted for the
estimated $28 million impact of the Maui wildfires, consolidated
contract sales would have declined 4% year-over-year, tours would
have increased 2% and VPG would have declined 5%.
Segment financial results attributable to common shareholders
declined $121 million to $149 million in the third quarter of 2023.
Adjusting for the estimated impact from the Maui wildfires and the
prior year Alignment benefit:
- Segment Adjusted EBITDA declined $60 million year-over-year
primarily due to lower development and rental profit and a $49
million net loan loss impact in the current year.
- Development profit declined $56 million year-over-year
primarily due to a $49 million net loan loss impact in the current
year and 4% lower contract sales.
- Rental profit declined $13 million year-over-year primarily due
to lower ADR and higher inventory costs.
- Management and exchange profit increased $5 million
year-over-year due to higher revenue from management fees and club
dues.
Exchange & Third-Party Management
Three Months Ended
September 30, 2023
September 30, 2022
($ in millions)
As Reported
Estimated Impact of Maui
Fires
As Adjusted*
As Reported
Impact of Alignment
As Adjusted*
Management and exchange profit
$
19
$
1
$
20
$
27
$
—
$
27
Segment financial results attributable to
common shareholders
$
23
$
1
$
24
$
29
$
—
$
29
Segment margin
37.4%
38.1%
44.4%
44.4%
Segment Adjusted EBITDA*
$
30
$
1
$
31
$
39
$
—
$
39
Segment Adjusted EBITDA margin*
49.8%
50.3%
57.6%
57.6%
Revenues excluding cost reimbursements decreased 7% in the third
quarter of 2023 compared to the prior year driven primarily by
lower exchange and Getaway volumes. Interval International active
members decreased 1% compared to the prior year to 1.6 million and
Average revenue per member increased 1% year-over-year.
Segment financial results attributable to common shareholders
were $23 million in the third quarter of 2023 and Segment margin
was 37%. Adjusted for the estimated $1 million negative impact from
the Maui wildfires, Segment Adjusted EBITDA decreased to $31
million and Segment Adjusted EBITDA Margin was 50%.
Corporate and Other General and administrative costs
decreased $5 million in the third quarter of 2023 compared to the
prior year primarily as a result of lower variable compensation
costs.
Balance Sheet and Liquidity The Company ended the quarter
with $1.0 billion in liquidity, including $265 million of cash and
cash equivalents, $70 million of gross notes receivable that were
eligible for securitization, and $659 million of available capacity
under its revolving corporate credit facility.
At the end of the third quarter of 2023, the Company had $3.0
billion of corporate debt and $2.0 billion of non-recourse debt
related to its securitized notes receivable.
Full Year 2023 Outlook While the Company's resorts in
West Maui have reopened, it expects the wildfires to negatively
impact its fourth quarter contract sales by approximately $32 to
$37 million, its Net income attributable to common shareholders by
approximately $19 to $22 million and its Adjusted EBITDA by
approximately $26 to $31 million.
The Company updated its full year 2023 guidance 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
Full Year Estimated Impact of
Maui Wildfires
Contract sales
$1,750
to
$1,770
$60
to
$65
Net income attributable to common
shareholders
$268
to
$278
$37
to
$40
Earnings per share - diluted
$6.59
to
$6.82
$0.85
to
$0.94
Net cash, cash equivalents and restricted
cash provided by operating activities
$271
to
$307
$50
to
$55
Adjusted EBITDA*
$745
to
$765
$50
to
$55
Adjusted earnings per share - diluted*
$7.44
to
$7.78
$0.85
to
$0.94
Adjusted free cash flow*
$430
to
$460
$50
to
$55
Note: 2023 guidance includes the estimated impact of the Maui
wildfires on the Company’s results.
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.
Third Quarter 2023 Financial Results Conference Call The
Company will hold a conference call on November 2, 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 contract sales, results of operations, cash flows,
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 a future health crisis,
including its short and longer-term impacts on consumer confidence
and demand for travel, and the pace of recovery following a 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; the impact
of the current or a future banking crisis; wars involving Russia,
Ukraine, Israel and Gaza 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; the effects of steps
that we or our affiliates have taken and may continue to take to
reduce operating costs; impacts from natural or man-made disasters
and wildfires, including the Maui wildfires; 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 3, 2023
TABLE OF CONTENTS
Summary Financial Information
A-1
Adjusted EBITDA by Segment
A-2
Interim Consolidated Statements of
Income
A-3
to
A-4
Revenues and Profit by Segment
A-5
to
A-8
Consolidated Contract Sales to Adjusted
Development Profit
A-9
to
A-10
Adjusted Net Income Attributable to Common
Shareholders and Adjusted Earnings Per Share - Diluted
A-11
Adjusted EBITDA
A-12
Segment Adjusted EBITDA
A-13
Vacation Ownership
Exchange & Third-Party Management
Interim Consolidated Balance Sheets
A-14
Interim Consolidated Statements of Cash
Flows
A-15
to
A-16
2023 Outlook
Adjusted Net Income Attributable to Common
Shareholders, Adjusted Earnings Per Share - Diluted and Adjusted
EBITDA
A-17
Adjusted Free Cash Flow
A-18
Quarterly Operating Metrics
A-19
Non-GAAP Financial Measures
A-20
to
A-21
A-1
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
(In millions, except VPG, tours,
total active Interval International members, average revenue per
member, and per share amounts)
(Unaudited)
SUMMARY FINANCIAL
INFORMATION
Three Months Ended
Change %
Nine Months Ended
Change %
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Key Measures
Total consolidated contract sales
$
438
$
483
(9%)
$
1,325
$
1,383
(4%)
VPG
$
4,055
$
4,353
(7%)
$
4,118
$
4,544
(9%)
Tours
100,609
104,000
(3%)
300,245
285,362
5%
Total active Interval International
members (000's)(1)
1,571
1,591
(1%)
1,571
1,591
(1%)
Average revenue per Interval International
member
$
39.15
$
38.91
1%
$
120.48
$
122.30
(1%)
GAAP Measures
Revenues
$
1,186
$
1,252
(5%)
$
3,533
$
3,468
2%
Income before income taxes and
noncontrolling interests
$
66
$
169
(61%)
$
334
$
437
(24%)
Net income attributable to common
shareholders
$
42
$
109
(61%)
$
219
$
303
28%
Diluted shares
43.3
43.4
—%
43.8
45.9
(5%)
Earnings per share - diluted
$
1.09
$
2.53
(57%)
$
5.33
$
6.68
(20%)
Non-GAAP Measures*
Adjusted EBITDA
$
150
$
284
(47%)
$
575
$
727
(21%)
Adjusted pretax income
$
75
$
207
(64%)
$
345
$
508
(32%)
Adjusted net income attributable to common
shareholders
$
48
$
131
(64%)
$
247
$
343
(28%)
Adjusted earnings per share - diluted
$
1.20
$
3.02
(60%)
$
5.95
$
7.53
(21%)
(1) Includes members at the end of each
period.
* 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
ADJUSTED EBITDA BY
SEGMENT
(In millions)
(Unaudited)
Three Months Ended
September 30, 2022
September 30, 2023
As Reported
Impact of
Alignment
As Adjusted*
Vacation Ownership
$
173
$
299
$
(44
)
$
255
Exchange & Third-Party Management
30
39
—
39
Segment Adjusted EBITDA*
203
338
(44
)
294
General and administrative
(57
)
(62
)
—
(62
)
Other
4
8
—
8
Adjusted EBITDA*
$
150
$
284
$
(44
)
$
240
Nine Months Ended
September 30, 2022
September 30, 2023
As Reported
Impact of
Alignment
As
Adjusted*
Vacation Ownership
$
647
$
772
$
(44
)
$
728
Exchange & Third-Party Management
99
117
—
117
Segment Adjusted EBITDA*
746
889
(44
)
845
General and administrative
(189
)
(187
)
—
(187
)
Other
18
25
—
25
Adjusted EBITDA*
$
575
$
727
$
(44
)
$
683
* 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-3
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED
STATEMENTS OF INCOME
(In millions, except per share
amounts)
(Unaudited)
Three Months Ended
September 30, 2023
September 30, 2022
As Reported
Impact of Alignment
As Adjusted*
REVENUES
Sale of vacation ownership products
$
319
$
444
$
(27
)
$
417
Management and exchange
205
198
—
198
Rental
138
165
—
165
Financing
81
74
—
74
Cost reimbursements
443
371
—
371
TOTAL REVENUES
1,186
1,252
(27
)
1,225
EXPENSES
Cost of vacation ownership products
50
76
(2
)
74
Marketing and sales
202
207
—
207
Management and exchange
115
101
—
101
Rental
119
126
—
126
Financing
30
5
19
24
General and administrative
57
62
—
62
Depreciation and amortization
33
33
—
33
Litigation charges
2
2
—
2
Royalty fee
30
28
—
28
Impairment
—
1
—
1
Cost reimbursements
443
371
—
371
TOTAL EXPENSES
1,081
1,012
17
1,029
Gains (losses) and other income (expense),
net
3
(2
)
—
(2
)
Interest expense, net
(36
)
(34
)
—
(34
)
Transaction and integration costs
(5
)
(34
)
—
(34
)
Other
(1
)
(1
)
—
(1
)
INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS
66
169
(44
)
125
Provision for income taxes
(24
)
(59
)
11
(48
)
NET INCOME (LOSS)
42
110
(33
)
77
Net income attributable to noncontrolling
interests
—
(1
)
—
(1
)
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
42
$
109
$
(33
)
$
76
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE
TO COMMON SHAREHOLDERS
Basic shares
36.4
39.5
39.5
Basic
$
1.16
$
2.76
$
(0.80
)
$
1.96
Diluted shares
43.3
43.4
43.4
Diluted
$
1.09
$
2.53
$
(0.74
)
$
1.79
* 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-4
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
INTERIM CONSOLIDATED
STATEMENTS OF INCOME
(In millions, except per share
amounts)
(Unaudited)
Nine Months Ended
September 30, 2023
September 30, 2022
As Reported
Impact of Alignment
As Adjusted*
REVENUES
Sale of vacation ownership products
$
1,085
$
1,179
$
(27
)
$
1,152
Management and exchange
611
623
—
623
Rental
435
438
—
438
Financing
239
217
—
217
Cost reimbursements
1,163
1,011
—
1,011
TOTAL REVENUES
3,533
3,468
(27
)
3,441
EXPENSES
Cost of vacation ownership products
174
216
(2
)
214
Marketing and sales
618
603
—
603
Management and exchange
332
330
—
330
Rental
344
294
—
294
Financing
81
49
19
68
General and administrative
189
187
—
187
Depreciation and amortization
99
98
—
98
Litigation charges
7
7
—
7
Royalty fee
88
84
—
84
Impairment
4
1
—
1
Cost reimbursements
1,163
1,011
—
1,011
TOTAL EXPENSES
3,099
2,880
17
2,897
Gains and other income, net
34
39
—
39
Interest expense, net
(106
)
(91
)
—
(91
)
Transaction and integration costs
(28
)
(99
)
—
(99
)
INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS
334
437
(44
)
393
Provision for income taxes
(115
)
(134
)
11
(123
)
NET INCOME (LOSS)
219
303
(33
)
270
Net income attributable to noncontrolling
interests
—
—
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
219
$
303
$
(33
)
$
270
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE
TO COMMON SHAREHOLDERS
Basic shares
36.9
41.1
41.1
Basic
$
5.96
$
7.39
$
(0.78
)
$
6.61
Diluted shares
43.8
45.9
45.9
Diluted
$
5.33
$
6.68
$
(0.69
)
$
5.99
* 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-5
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
REVENUES AND PROFIT BY
SEGMENT
for the three months ended
September 30, 2023
(In millions)
(Unaudited)
Reportable Segment
Corporate and Other
Total
Vacation Ownership
Exchange & Third-Party
Management
REVENUES
Sales of vacation ownership products
$
319
$
—
$
—
$
319
Management and exchange(1)
Ancillary revenues
62
1
—
63
Management fee revenues
44
5
—
49
Exchange and other services revenues
37
44
12
93
Management and exchange
143
50
12
205
Rental
128
10
—
138
Financing
81
—
—
81
Cost reimbursements(1)
455
4
(16
)
443
TOTAL REVENUES
$
1,126
$
64
$
(4
)
$
1,186
PROFIT
Development
$
67
$
—
$
—
$
67
Management and exchange(1)
74
19
(3
)
90
Rental(1)
6
10
3
19
Financing
51
—
—
51
TOTAL PROFIT
198
29
—
227
OTHER
General and administrative
—
—
(57
)
(57
)
Depreciation and amortization
(23
)
(7
)
(3
)
(33
)
Litigation charges
(2
)
—
—
(2
)
Royalty fee
(30
)
—
—
(30
)
Gains (losses) and other income (expense),
net
7
1
(5
)
3
Interest expense, net
—
—
(36
)
(36
)
Transaction and integration costs
—
—
(5
)
(5
)
Other
(1
)
—
—
(1
)
INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS
149
23
(106
)
66
Provision for income taxes
—
—
(24
)
(24
)
NET INCOME (LOSS)
149
23
(130
)
42
Net income attributable to noncontrolling
interests(1)
—
—
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
149
$
23
$
(130
)
$
42
SEGMENT MARGIN(2)
22%
37%
(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-6
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
REVENUES AND PROFIT BY
SEGMENT
for the three months ended
September 30, 2022
(In millions)
(Unaudited)
Reportable Segment
Corporate and
Other
Total
Vacation Ownership
Exchange & Third-Party
Management
As Reported
As Adjusted*
As Reported
Impact of Alignment
As Adjusted*
REVENUES
Sales of vacation ownership products
$
444
$
(27
)
$
417
$
—
$
—
$
444
$
417
Management and exchange(1)
Ancillary revenues
63
—
63
1
—
64
64
Management fee revenues
41
—
41
7
(1
)
47
47
Exchange and other services revenues
32
—
32
47
8
87
87
Management and exchange
136
—
136
55
7
198
198
Rental
154
—
154
11
—
165
165
Financing
74
—
74
—
—
74
74
Cost reimbursements(1)
374
—
374
5
(8
)
371
371
TOTAL REVENUES
$
1,182
$
(27
)
$
1,155
$
71
$
(1
)
$
1,252
$
1,225
PROFIT
Development
$
161
$
(25
)
$
136
$
—
$
—
$
161
$
136
Management and exchange(1)
72
—
72
27
(2
)
97
97
Rental(1)
24
—
24
11
4
39
39
Financing
69
(19
)
50
—
—
69
50
TOTAL PROFIT
326
(44
)
282
38
2
366
322
OTHER
General and administrative
—
—
—
—
(62
)
(62
)
(62
)
Depreciation and amortization
(23
)
—
(23
)
(8
)
(2
)
(33
)
(33
)
Litigation charges
(2
)
—
(2
)
—
—
(2
)
(2
)
Royalty fee
(28
)
—
(28
)
—
—
(28
)
(28
)
Impairment
(1
)
—
(1
)
—
—
(1
)
(1
)
Gains (losses) and other income (expense),
net
1
—
1
(1
)
(2
)
(2
)
(2
)
Interest expense, net
—
—
—
—
(34
)
(34
)
(34
)
Transaction and integration costs
(2
)
—
(2
)
—
(32
)
(34
)
(34
)
Other
(1
)
—
(1
)
—
—
(1
)
(1
)
INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS
270
(44
)
226
29
(130
)
169
125
Provision for income taxes
—
11
11
—
(59
)
(59
)
(48
)
NET INCOME (LOSS)
270
(33
)
237
29
(189
)
110
77
Net income attributable to noncontrolling
interests(1)
—
—
—
—
(1
)
(1
)
(1
)
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
270
$
(33
)
$
237
$
29
$
(190
)
$
109
$
76
SEGMENT MARGIN(2)
34%
31%
44%
(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.
* 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
REVENUES AND PROFIT BY
SEGMENT
for the nine months ended
September 30, 2023
(In millions)
(Unaudited)
Reportable Segment
Corporate and Other
Total
Vacation Ownership
Exchange & Third-Party
Management
REVENUES
Sales of vacation ownership products
$
1,085
$
—
$
—
$
1,085
Management and exchange(1)
Ancillary revenues
193
3
—
196
Management fee revenues
134
18
(2
)
150
Exchange and other services revenues
98
136
31
265
Management and exchange
425
157
29
611
Rental
404
31
—
435
Financing
239
—
—
239
Cost reimbursements(1)
1,182
12
(31
)
1,163
TOTAL REVENUES
$
3,335
$
200
$
(2
)
$
3,533
PROFIT
Development
$
293
$
—
$
—
$
293
Management and exchange(1)
223
66
(10
)
279
Rental(1)
50
31
10
91
Financing
158
—
—
158
TOTAL PROFIT
724
97
—
821
OTHER
General and administrative
—
—
(189
)
(189
)
Depreciation and amortization
(69
)
(23
)
(7
)
(99
)
Litigation charges
(8
)
—
1
(7
)
Royalty fee
(88
)
—
—
(88
)
Impairment
(4
)
—
—
(4
)
Gains and other income, net
23
1
10
34
Interest expense, net
—
—
(106
)
(106
)
Transaction and integration costs
—
—
(28
)
(28
)
INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS
578
75
(319
)
334
Provision for income taxes
—
—
(115
)
(115
)
NET INCOME (LOSS)
578
75
(434
)
219
Net income attributable to noncontrolling
interests(1)
—
—
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
578
$
75
$
(434
)
$
219
SEGMENT MARGIN(2)
27%
40%
(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-8
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
REVENUES AND PROFIT BY
SEGMENT
for the nine months ended
September 30, 2022
(In millions)
(Unaudited)
Reportable Segment
Corporate and
Other
Total
Vacation Ownership
Exchange & Third-Party
Management
As Reported
As Adjusted*
As Reported
Impact of Alignment
As Adjusted*
REVENUES
Sales of vacation ownership products
$
1,179
$
(27
)
$
1,152
$
—
$
—
$
1,179
$
1,152
Management and exchange(1)
Ancillary revenues
183
—
183
3
—
186
186
Management fee revenues
124
—
124
28
(5
)
147
147
Exchange and other services revenues
95
—
95
146
49
290
290
Management and exchange
402
—
402
177
44
623
623
Rental
405
—
405
33
—
438
438
Financing
217
—
217
—
—
217
217
Cost reimbursements(1)
1,026
—
1,026
19
(34
)
1,011
1,011
TOTAL REVENUES
$
3,229
$
(27
)
$
3,202
$
229
$
10
$
3,468
$
3,441
PROFIT
Development
$
360
$
(25
)
$
335
$
—
$
—
$
360
$
335
Management and exchange(1)
224
—
224
84
(15
)
293
293
Rental(1)
94
—
94
33
17
144
144
Financing
168
(19
)
149
—
—
168
149
TOTAL PROFIT
846
(44
)
802
117
2
965
921
OTHER
General and administrative
—
—
—
—
(187
)
(187
)
(187
)
Depreciation and amortization
(67
)
—
(67
)
(24
)
(7
)
(98
)
(98
)
Litigation charges
(7
)
—
(7
)
—
—
(7
)
(7
)
Royalty fee
(84
)
—
(84
)
—
—
(84
)
(84
)
Impairment
(1
)
—
(1
)
—
—
(1
)
(1
)
Gains (losses) and other income (expense),
net
36
—
36
15
(12
)
39
39
Interest expense, net
—
—
—
—
(91
)
(91
)
(91
)
Transaction and integration costs
(3
)
—
(3
)
—
(96
)
(99
)
(99
)
INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS
720
(44
)
676
108
(391
)
437
393
Provision for income taxes
—
11
11
—
(134
)
(134
)
(123
)
NET INCOME (LOSS)
720
(33
)
687
108
(525
)
303
270
Net income attributable to noncontrolling
interests(1)
—
—
—
—
—
—
—
NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS
$
720
$
(33
)
$
687
$
108
$
(525
)
$
303
$
270
SEGMENT MARGIN(2)
33%
32%
52%
(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.
* 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
CONSOLIDATED CONTRACT SALES TO
ADJUSTED DEVELOPMENT PROFIT
(In millions)
(Unaudited)
Three Months Ended
September
30, 2023
September 30, 2022
As Reported
Impact of Alignment
As Adjusted*
Consolidated contract sales
$
438
$
483
$
—
$
483
Less resales contract sales
(11
)
(10
)
—
(10
)
Consolidated contract sales, net of
resales
427
473
—
473
Plus:
Settlement revenue
12
10
—
10
Resales revenue
6
5
—
5
Revenue recognition adjustments:
Reportability
—
54
(46
)
8
Sales reserve
(102
)
(64
)
19
(45
)
Other(1)
(24
)
(34
)
—
(34
)
Sale of vacation ownership products
319
444
(27
)
417
Less:
Cost of vacation ownership products
(50
)
(76
)
2
(74
)
Marketing and sales
(202
)
(207
)
—
(207
)
Development Profit
67
161
(25
)
136
Revenue recognition reportability
adjustment
—
(43
)
39
(4
)
Purchase accounting adjustments
2
5
—
5
Other
—
(5
)
—
(5
)
Adjusted development profit*
$
69
$
118
$
14
$
132
Development profit margin
20.7%
36.1%
32.6%
Adjusted development profit margin*
21.5%
29.9%
32.0%
(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-10
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
CONSOLIDATED CONTRACT SALES TO
ADJUSTED DEVELOPMENT PROFIT
(In millions)
(Unaudited)
Nine Months Ended
September
30, 2023
September 30, 2022
As Reported
Impact of Alignment
As Adjusted*
Consolidated contract sales
$
1,325
$
1,383
$
—
$
1,383
Less resales contract sales
(32
)
(30
)
—
(30
)
Consolidated contract sales, net of
resales
1,293
1,353
—
1,353
Plus:
Settlement revenue
29
26
—
26
Resales revenue
18
13
—
13
Revenue recognition adjustments:
Reportability
5
7
(46
)
(39
)
Sales reserve
(185
)
(130
)
19
(111
)
Other(1)
(75
)
(90
)
—
(90
)
Sale of vacation ownership products
1,085
1,179
(27
)
1,152
Less:
Cost of vacation ownership products
(174
)
(216
)
2
(214
)
Marketing and sales
(618
)
(603
)
—
(603
)
Development Profit
293
360
(25
)
335
Revenue recognition reportability
adjustment
(3
)
(8
)
39
31
Purchase accounting adjustments
6
14
—
14
Other
—
(5
)
—
(5
)
Adjusted development profit*
$
296
$
361
$
14
$
375
Development profit margin
27.0%
30.5%
29.1%
Adjusted development profit margin*
27.4%
30.8%
31.6%
(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-11
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
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
Net income attributable to common
shareholders
$
42
$
109
$
219
$
303
Provision for income taxes
24
59
115
134
Income before income taxes attributable to
common shareholders
66
168
334
437
Certain items:
ILG integration
—
22
$
15
$
80
Welk acquisition and integration
5
5
13
10
Other transformation initiatives
—
6
—
6
Other transaction costs
—
1
—
3
Transaction and integration costs
5
34
28
99
Early redemption of senior secured
notes
—
—
10
—
Gain on disposition of hotel, land and
other
(1
)
—
(8
)
(33
)
Gain on disposition of VRI Americas
—
(1
)
—
(17
)
Foreign currency translation
5
3
1
10
Insurance proceeds
(1
)
—
(3
)
(5
)
Change in indemnification asset
(6
)
(1
)
(30
)
2
Other
—
1
(4
)
4
(Gains) losses and other (income) expense,
net
(3
)
2
(34
)
(39
)
Purchase accounting adjustments
3
5
6
13
Litigation charges
2
2
7
7
Impairment
—
1
4
1
Expiration/forfeiture of deposits on
pre-acquisition preview packages
—
(6
)
—
(6
)
Early termination of VRI management
contract
—
—
—
(2
)
Change in estimate relating to
pre-acquisition contingencies
—
(2
)
—
(5
)
Other
2
3
—
3
Adjusted pretax income*
75
207
345
508
Provision for income taxes
(27
)
(76
)
(98
)
(165
)
Adjusted net income attributable to common
shareholders*
$
48
$
131
$
247
$
343
Diluted shares
43.3
43.4
43.8
45.9
Adjusted earnings per share - Diluted*
$
1.20
$
3.02
$
5.95
$
7.53
Excluding the Impact of
Alignment:
Adjusted net income attributable to common
shareholders*
$
48
$
98
$
247
$
310
Adjusted earnings per share - Diluted*
$
1.20
$
2.28
$
5.95
$
6.83
* 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-12
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
ADJUSTED EBITDA
(In millions)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
NET INCOME ATTRIBUTABLE TO COMMON
SHAREHOLDERS
$
42
$
109
$
219
$
303
Interest expense, net
36
34
106
91
Provision for income taxes
24
59
115
134
Depreciation and amortization
33
33
99
98
Share-based compensation
6
10
25
30
Certain items:
ILG integration
—
22
15
80
Welk acquisition and integration
5
5
13
10
Other transformation initiatives
—
6
—
6
Other transaction costs
—
1
—
3
Transaction and integration costs
5
34
28
99
Early redemption of senior secured
notes
—
—
10
—
Gain on disposition of hotel, land and
other
(1
)
—
(8
)
(33
)
Gain on disposition of VRI Americas
—
(1
)
—
(17
)
Foreign currency translation
5
3
1
10
Insurance proceeds
(1
)
—
(3
)
(5
)
Change in indemnification asset
(6
)
(1
)
(30
)
2
Other
—
1
(4
)
4
(Gains) losses and other (income) expense,
net
(3
)
2
(34
)
(39
)
Purchase accounting adjustments
3
5
6
13
Litigation charges
2
2
7
7
Impairment
—
1
4
1
Expiration/forfeiture of deposits on
pre-acquisition preview packages
—
(6
)
—
(6
)
Early termination of VRI management
contract
—
—
—
(2
)
Change in estimate relating to
pre-acquisition contingencies
—
(2
)
—
(5
)
Other
2
3
—
3
ADJUSTED EBITDA*
$
150
$
284
$
575
$
727
ADJUSTED EBITDA MARGIN*
20%
32%
24%
30%
Excluding the Impact of
Alignment
ADJUSTED EBITDA*
$
150
$
240
$
575
$
683
ADJUSTED EBITDA MARGIN*
20%
28%
24%
28%
* 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
(In millions)
(Unaudited)
VACATION OWNERSHIP SEGMENT
ADJUSTED EBITDA
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE
TO COMMON SHAREHOLDERS
$
149
$
270
$
578
$
720
Depreciation and amortization
23
23
69
67
Share-based compensation
2
2
6
5
Certain items:
Transaction and integration costs
—
2
—
3
Gain on disposition of hotel, land and
other
—
—
(7
)
(33
)
Foreign currency translation
—
(1
)
—
—
Insurance proceeds
(1
)
—
(3
)
(3
)
Change in indemnification asset
(6
)
—
(9
)
—
Other
—
—
(4
)
—
Gains and other income, net
(7
)
(1
)
(23
)
(36
)
Purchase accounting adjustments
3
5
6
13
Litigation charges
2
2
8
7
Impairment
—
1
4
1
Expiration/forfeiture of deposits on
pre-acquisition preview packages
—
(6
)
—
(6
)
Change in estimate relating to
pre-acquisition contingencies
—
(2
)
—
(5
)
Other
1
3
(1
)
3
SEGMENT ADJUSTED EBITDA*
$
173
$
299
$
647
$
772
SEGMENT ADJUSTED EBITDA MARGIN*
26%
37%
30%
35%
Excluding the Impact of
Alignment
SEGMENT ADJUSTED EBITDA*
$
173
$
255
$
647
$
728
SEGMENT ADJUSTED EBITDA MARGIN*
26%
33%
30%
34%
EXCHANGE & THIRD-PARTY
MANAGEMENT SEGMENT ADJUSTED EBITDA
Three Months Ended
Nine Months Ended
September 30, 2023
September 30, 2022
September 30, 2023
September 30, 2022
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE
TO COMMON SHAREHOLDERS
$
23
$
29
$
75
$
108
Depreciation and amortization
7
8
23
24
Share-based compensation
—
1
1
2
Certain items:
Gain on disposition of hotel, land and other
(1
)
—
(1
)
—
Gain on disposition of VRI Americas
—
(1
)
—
(17
)
Early termination of VRI management
contract
—
—
—
(2
)
Foreign currency translation
—
2
—
2
Other
1
—
1
—
SEGMENT ADJUSTED EBITDA*
$
30
$
39
$
99
$
117
SEGMENT ADJUSTED EBITDA MARGIN*
50%
58%
53%
55%
* 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
INTERIM CONSOLIDATED BALANCE
SHEETS
(In millions, except share and
per share data)
Unaudited
September 30, 2023
December 31, 2022
ASSETS
Cash and cash equivalents
$
265
$
524
Restricted cash (including $84 and $85
from VIEs, respectively)
238
330
Accounts receivable, net (including $14
and $13 from VIEs, respectively)
298
292
Vacation ownership notes receivable, net
(including $1,885 and $1,792 from VIEs, respectively)
2,291
2,198
Inventory
642
660
Property and equipment, net
1,250
1,139
Goodwill
3,117
3,117
Intangibles, net
868
911
Other (including $88 and $76 from VIEs,
respectively)
484
468
TOTAL ASSETS
$
9,453
$
9,639
LIABILITIES AND EQUITY
Accounts payable
$
238
$
356
Advance deposits
169
158
Accrued liabilities (including $3 and $5
from VIEs, respectively)
359
369
Deferred revenue
371
344
Payroll and benefits liability
193
251
Deferred compensation liability
156
139
Securitized debt, net (including $2,048
and $1,982 from VIEs, respectively)
2,026
1,938
Debt, net
3,031
3,088
Other
165
167
Deferred taxes
335
331
TOTAL LIABILITIES
7,043
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; 75,807,873 and 75,744,524 shares
issued, respectively
1
1
Treasury stock — at cost; 40,122,822 and
38,263,442 shares, respectively
(2,298
)
(2,054
)
Additional paid-in capital
3,953
3,941
Accumulated other comprehensive income
18
15
Retained earnings
734
593
TOTAL MVW SHAREHOLDERS' EQUITY
2,408
2,496
Noncontrolling interests
2
2
TOTAL EQUITY
2,410
2,498
TOTAL LIABILITIES AND EQUITY
$
9,453
$
9,639
The abbreviation VIEs above means Variable
Interest Entities.
A-15
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
Nine Months Ended
September 30, 2023
September 30, 2022
OPERATING ACTIVITIES
Net income
$
219
$
303
Adjustments to reconcile net income to net
cash, cash equivalents and restricted cash provided by operating
activities:
Depreciation and amortization of
intangibles
99
98
Amortization of debt discount and issuance
costs
17
20
Vacation ownership notes receivable
reserve
182
130
Share-based compensation
25
30
Impairment charges
2
1
Gains and other income, net
(8
)
(48
)
Deferred income taxes
2
64
Net change in assets and liabilities:
Accounts and contracts receivable
(16
)
6
Vacation ownership notes receivable
originations
(749
)
(728
)
Vacation ownership notes receivable
collections
461
469
Inventory
80
74
Other assets
(10
)
(21
)
Accounts payable, advance deposits and
accrued liabilities
(103
)
(28
)
Deferred revenue
24
(5
)
Payroll and benefit liabilities
(58
)
52
Deferred compensation liability
12
8
Other liabilities
(2
)
7
Deconsolidation of certain Consolidated
Property Owners' Associations
—
(48
)
Purchase of property for future transfer
to inventory
(27
)
(12
)
Other, net
(1
)
8
Net cash, cash equivalents and restricted
cash provided by operating activities
149
380
INVESTING ACTIVITIES
Proceeds from disposition of subsidiaries,
net of cash and restricted cash transferred
—
94
Capital expenditures for property and
equipment (excluding inventory)
(92
)
(36
)
Issuance of note receivable to VIE
—
(47
)
Proceeds from collection of note
receivable from VIE
—
47
Purchase of company owned life
insurance
(8
)
(14
)
Other dispositions, net
15
5
Net cash, cash equivalents and restricted
cash (used in) provided by investing activities
(85
)
49
Continued
A-16
MARRIOTT VACATIONS WORLDWIDE
CORPORATION
INTERIM CONSOLIDATED
STATEMENTS OF CASH FLOWS (CONTINUED)
(In millions)
(Unaudited)
Nine Months Ended
September 30, 2023
September 30, 2022
FINANCING ACTIVITIES
Borrowings from securitization
transactions
916
609
Repayment of debt related to
securitization transactions
(828
)
(655
)
Proceeds from debt
790
505
Repayments of debt
(956
)
(505
)
Finance lease incentive
10
—
Finance lease payment
(2
)
(3
)
Payment of debt issuance costs
(6
)
(10
)
Repurchase of common stock
(248
)
(528
)
Payment of dividends
(80
)
(75
)
Payment of withholding taxes on vesting of
restricted stock units
(10
)
(23
)
Net cash, cash equivalents and restricted
cash used in financing activities
(414
)
(685
)
Effect of changes in exchange rates on
cash, cash equivalents and restricted cash
(1
)
(4
)
Change in cash, cash equivalents and
restricted cash
(351
)
(260
)
Cash, cash equivalents and restricted
cash, beginning of period
854
803
Cash, cash equivalents and restricted
cash, end of period
$
503
$
543
A-17
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
$
268
$
278
Provision for income taxes
141
146
Income before income taxes attributable to
common shareholders
409
424
Certain items(1)
23
28
Adjusted pretax income*
432
452
Provision for income taxes
(127
)
(132
)
Adjusted net income attributable to common
shareholders*
$
305
$
320
Earnings per share - Diluted(2)
$
6.59
$
6.82
Adjusted earnings per share -
Diluted(2)*
$
7.44
$
7.78
Diluted shares(2)
43.5
43.5
2023 ADJUSTED EBITDA
OUTLOOK
Fiscal Year 2023 (Low)
Fiscal Year 2023
(High)
Net income attributable to common
shareholders
$
268
$
278
Interest expense
145
145
Provision for income taxes
141
146
Depreciation and amortization
135
135
Share-based compensation
33
33
Certain items(1)
23
28
Adjusted EBITDA*
$
745
$
765
(1) Certain items adjustment includes $40
million of anticipated transaction and integration costs, $10
million of anticipated litigation charges, $9 million of
anticipated purchase accounting adjustments, and $4 million of
impairments, partially offset by $34 million of gains and other
income, net, and $1 million of other adjustments.
(2) We expect 6.5 million shares to be
included in diluted shares, reflecting the assumed conversion of
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-18
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
$
271
$
307
Capital expenditures for property and
equipment (excluding inventory)
(110
)
(125
)
Borrowings from securitizations, net of
repayments
(30
)
(25
)
Securitized debt issuance costs
(12
)
(12
)
Free cash flow*
119
145
Adjustments:
Net change in borrowings available from the securitization of
eligible vacation ownership notes receivable(1)
230
230
Certain items(2)
81
85
Change in restricted cash
—
—
Adjusted free cash flow*
$
430
$
460
(1) Represents the anticipated 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-19
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
$
453
$
438
2022
$
394
$
506
$
483
$
454
$
1,837
2021
$
226
$
362
$
380
$
406
$
1,374
VPG
2023
$
4,358
$
3,968
$
4,055
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
106,746
100,609
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 Interval International
members (000's)(1)
2023
1,568
1,566
1,571
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 Interval International
member
2023
$
42.07
$
39.30
$
39.15
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.
A-20
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
A-21
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.
Results As Adjusted for the
Estimated Impact of the Maui Fires
In our press release and
schedules we provide As Adjusted results for the three- and
nine-months ended September 30, 2023 for comparison purposes. The
As Adjusted results reflect the estimated impact of the Maui fires
on the Company’s reported results on a GAAP basis, as well as to
the Company’s non-GAAP financial measures. We provide this As
Adjusted information because we believe that it facilitates the
comparison of results from our on-going core operations before the
estimated impact of the Maui fires. We believe that the As Adjusted
results provide useful information to assist with
period-over-period comparisons of our on-going operations excluding
any estimated impact from the Maui fires.
Results As Adjusted for the
Impact of the Alignment
In our press release and
schedules we provide As Adjusted results for the three- and
nine-months ended September 30, 2022 for comparison purposes. The
As Adjusted results exclude any impacts to the Company’s reported
results on a GAAP basis, as well as to the Company’s non-GAAP
financial measures, due to the Alignment. We provide this As
Adjusted information because we believe that it facilitates the
comparison of results from our on-going core operations before the
impact of the Alignment. We believe that the As Adjusted results
provide useful information to assist with period-over-period
comparisons of our on-going operations excluding any impact from
the Alignment.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231101621753/en/
Neal Goldner Investor Relations 407-206-6149
neal.goldner@mvwc.com Cameron Klaus Global Communications
407-513-6066 cameron.klaus@mvwc.com
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