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Marriott Vacations Worldwide ("MVW") Reports Second Quarter 2022 Financial Results

·13 min read

ORLANDO, Fla., Aug. 8, 2022 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) (the "Company") reported second quarter 2022 financial results.

Marriott Vacations Worldwide Corporation. (PRNewsFoto/Marriott Vacations Worldwide)
Marriott Vacations Worldwide Corporation. (PRNewsFoto/Marriott Vacations Worldwide)

Second Quarter 2022 Highlights:

  • Consolidated Vacation Ownership contract sales were $506 million, a 40% increase compared to the second quarter of 2021, and VPG increased 7% to $4,613.

  • Net income attributable to common shareholders was $136 million, or $2.97 fully diluted earnings per share.

  • Adjusted net income attributable to common shareholders was $131 million, or $2.87 adjusted fully diluted earnings per share.

  • Adjusted EBITDA was $255 million, a 55% increase compared to the second quarter of 2021, as the Company continues to see a strong recovery in the business.

  • The Company returned $219 million to shareholders, repurchasing more than 1.4 million shares of its common stock for $193 million at an average price per share of $136 and paying a quarterly dividend of $26 million.

  • Consistent with its strategy to dispose of non-strategic assets, during the second quarter, the Company closed on the sale of its VRI Americas business and its hotel in Puerto Vallarta, Mexico for total cash proceeds in excess of $100 million.

"We had a very strong second quarter, generating $506 million in contract sales, up 40% from the prior year, with contract sales and Adjusted EBITDA up 31% from the second quarter of 2019," said Stephen P. Weisz, chief executive officer. "We introduced Abound by Marriott VacationsTM during the quarter, an exclusive new program providing more options and access for Owners. With the strong recovery of our operations, as well as cash proceeds from dispositions, we accelerated our return of cash to shareholders, surpassing $500 million this year through the end of July."

Second Quarter 2022 Results

Vacation Ownership

Revenues excluding cost reimbursements increased 28% in the second quarter of 2022 compared to the prior year, reflecting growth in all of the Company's lines of business.

Segment financial results attributable to common shareholders were $277 million in the second quarter of 2022 and Segment margin was 36%. Segment adjusted EBITDA increased 51% to $274 million, with Segment adjusted EBITDA margin of 36%, over 500 basis points higher than the second quarter of 2021.

Exchange & Third-Party Management

Revenues excluding cost reimbursements decreased 4% in the second quarter of 2022 compared to the prior year. Interval International active members increased 21% to 1.6 million and Average revenue per member decreased 16% compared to the prior year.

Segment financial results attributable to common shareholders were $46 million in the second quarter of 2022 and Segment margin was 66%. Segment adjusted EBITDA decreased $2 million to $35 million compared to the prior year primarily due to the sale of VRI Americas, with Segment adjusted EBITDA margin of 52%, in line with the second quarter of 2021.

Corporate and Other

General and administrative costs decreased $2 million in the second quarter of 2022 compared to the prior year primarily as a result of lower bonus expense.

Balance Sheet and Liquidity

The Company ended the quarter with approximately $1.2 billion in liquidity, including $324 million of cash and cash equivalents, $106 million of gross notes receivable that were eligible for securitization, and $749 million of available capacity under its revolving corporate credit facility.

At the end of the second quarter of 2022, the Company had $2.7 billion of net corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

The Company completed its first timeshare receivable securitization of 2022 in the second quarter, issuing $375 million of notes backed by a pool of $383 million of vacation ownership notes receivable from all of the Company's timeshare brands. The overall weighted average interest rate of the notes was 4.59% and the transaction had a gross advance rate of 98%.

Abound by Marriott Vacations

During the quarter, the Company introduced Abound by Marriott Vacations, a new Owner benefit and exchange program providing access to over 90 vacation club resorts, including Marriott Vacation Club®, Sheraton® Vacation Club and Westin® Vacation Club, as well as access to more than 8,000 Marriott Bonvoy® hotels, 2,000 vacation homes, and 2,000 unique experiences like cruises, guided and culinary tours, premiere events, outdoor adventures and more with a continued ability to exchange through Interval International, a premier exchange partner.

Full Year 2022 Outlook (in millions, except per share amounts)

The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2022 expected GAAP results for the Company.

The Company is providing guidance as reflected in the chart below for the full year 2022.

Income before income taxes attributable to common shareholders

$511

to

$551


Net income attributable to common shareholders

$365

to

$395


Earnings per share - diluted

$8.15

to

$8.81


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

$470


$500







Contract sales

$1,775

to

$1,875


Adjusted EBITDA

$880

to

$930


Adjusted pretax net income

$600

to

$650


Adjusted net income attributable to common shareholders

$425

to

$465


Adjusted earnings per share - diluted

$9.47

to

$10.35


Adjusted free cash flow

$650

to

$730


Revenue Recognition

In connection with the launch of Abound by Marriott Vacations and the unification of the Company's Marriott-, Westin-, and Sheraton-branded vacation ownership products, the Company intends to align its revenue recognition on the sale of vacation ownership interests across all of its brands in the third quarter. This will result in the acceleration of revenue and a one-time benefit to Adjusted EBITDA but will have no impact on cash flow. The Company is unable to estimate the impact at this time and its guidance excludes this one-time benefit, which will be provided in connection with the release of its third quarter 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.

Second Quarter 2022 Financial Results Conference Call

The Company will hold a conference call on August 9, 2022 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 exchange networks and membership programs comprised of nearly 3,200 affiliated resorts in over 90 countries and territories, as well as 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 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 2022. 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 continuing effects of the COVID-19 pandemic, including quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic, including its short and longer-term impact on consumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines against variants of the COVID-19 virus become widely available; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price inflation; global supply chain disruptions; volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic and the ongoing conflict 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 effects of steps we have taken and may continue to take to reduce operating costs and/or enhance health and cleanliness protocols at our resorts due to the COVID-19 pandemic; political or social strife, 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 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 2, 2022






TABLE OF CONTENTS






Summary Financial Information and Adjusted EBITDA by Segment

A-1



Consolidated Statements of Income

A-2



Revenues and Profit by Segment

A-3



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

A-7



Adjusted EBITDA

A-8



Consolidated Contract Sales to Adjusted Development Profit

A-9



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

A-10



Consolidated Balance Sheets

A-11



Consolidated Statements of Cash Flows

A-12



2022 Outlook




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




and Adjusted EBITDA

A-14



Adjusted Free Cash Flow

A-15



Quarterly Operating Metrics

A-16



Non-GAAP Financial Measures

A-17



 

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
%


Six Months Ended


Change
%



June 30,
2022


June 30,
2021



June 30,
2022


June 30,
2021


Key Measures













Total consolidated contract sales


$        506


$        362


40 %


$        900


$        588


53 %

VPG


$     4,613


$     4,304


7 %


$     4,653


$     4,428


5 %

Tours


102,857


79,900


29 %


181,362


125,771


44 %

Total active members (000's)(1)


1,596


1,321


21 %


1,596


1,321


21 %

Average revenue per member(1)


$     38.79


$     46.36


(16 %)


$     83.32


$     93.77


(11 %)














GAAP Measures













Revenues


$     1,164


$        979


19 %


$     2,216


$     1,738


28 %

Income (loss) before income taxes and noncontrolling interests


$        178


$          35


NM


$        268


$           (1)


NM

Net income (loss) attributable to common shareholders


$        136


$            6


NM


$        194


$         (22)


NM

Earnings (loss) per share - diluted


$       2.97


$       0.15


NM


$       4.18


$      (0.52)


NM














Non-GAAP Measures **













Adjusted EBITDA


$        255


$        164


55 %


$        443


$        233


90 %

Adjusted pretax income


$        181


$          70


154 %


$        301


$          47


NM

Adjusted net income attributable to common shareholders


$        131


$          37


252 %


$        212


$          17


NM

Adjusted earnings per share - diluted


$       2.87


$       0.85


238 %


$       4.55


$       0.40


NM


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

 

ADJUSTED EBITDA BY SEGMENT
















Three Months Ended


Change

%


Six Months Ended


Change
%



June 30,
2022


June 30,
2021



June 30,
2022


June 30,
2021


Vacation Ownership


$        274


$        182


51 %


$        473


$        250


89 %

Exchange & Third-Party Management


35


37


(5 %)


78


78


— %

Segment adjusted EBITDA**


309


219


41 %


551


328


68 %

General and administrative


(54)


(55)


1 %


(108)


(95)


(14 %)

Adjusted EBITDA**


$        255


$        164


55 %


$        443


$        233


90 %














** 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.

NM - Not meaningful

 

A-2


MARRIOTT VACATIONS WORLDWIDE CORPORATION


CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)




Three Months Ended


Six Months Ended



June 30, 2022


June 30, 2021


June 30, 2022


June 30, 2021

REVENUES









Sale of vacation ownership products


$               425


$               296


$               735


$               459

Management and exchange


203


220


425


413

Rental


140


121


273


210

Financing


72


68


143


127

Cost reimbursements


324


274


640


529

TOTAL REVENUES


1,164


979


2,216


1,738

EXPENSES









Cost of vacation ownership products


80


67


140


107

Marketing and sales


214


164


396


273

Management and exchange


102


126


229


243

Rental


87


81


168


163

Financing


23


21


44


42

General and administrative


64


66


125


112

Depreciation and amortization


32


36


65


77

Litigation charges


2


3


5


6

Royalty fee


29


27


56


52

Impairment



5



5

Cost reimbursements


324


274


640


529

TOTAL EXPENSES


957


870


1,868


1,609

Gains (losses) and other income (expense), net


37


(2)


41


4

Interest expense


(30)


(44)


(57)


(87)

Transaction and integration costs


(37)


(29)


(65)


(48)

Other


1


1


1


1

INCOME (LOSS) BEFORE INCOME TAXES AND









NONCONTROLLING INTERESTS


178


35


268


(1)

Provision for income taxes


(43)


(27)


(75)


(16)

NET INCOME (LOSS)


135


8


193


(17)

Net loss (income) attributable to noncontrolling interests


1


(2)


1


(5)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON



SHAREHOLDERS


$               136


$                   6


$               194


$               (22)










EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO









COMMON SHAREHOLDERS









Basic


$              3.30


$              0.15


$              4.64


$            (0.52)

Diluted


$              2.97


$              0.15


$              4.18


$            (0.52)










NOTE: Earnings (loss) per share - Basic and Earnings (loss) per share - Diluted are calculated using whole dollars.

 

A-3


MARRIOTT VACATIONS WORLDWIDE CORPORATION


REVENUES AND PROFIT BY SEGMENT

for the three months ended June 30, 2022

(In millions)

(Unaudited)




Reportable Segment


Corporate and
Other


Total



Vacation
Ownership


Exchange &
Third-Party
Management



REVENUES









Sales of vacation ownership products


$                425


$                  —


$                  —


$               425

Management and exchange(1)









Ancillary revenues


66


1



67

Management fee revenues


41


11


(1)


51

Exchange and other services revenues


33


46


6


85

Management and exchange


140


58


5


203

Rental


129


11



140

Financing


72




72

Cost reimbursements(1)


325


5


(6)


324

TOTAL REVENUES


$             1,091


$                  74


$                  (1)


$            1,164










PROFIT









Development


$                131


$                  —


$                  —


$               131

Management and exchange(1)


80


26


(5)


101

Rental(1)


38


11


4


53

Financing


49




49

TOTAL PROFIT


298


37


(1)


334










OTHER









General and administrative


...