Marriott Vacations Worldwide ("MVW") Reports Second Quarter 2023 Financial Results

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ORLANDO, Fla., August 02, 2023--(BUSINESS WIRE)--Marriott Vacations Worldwide Corporation (NYSE: VAC) (the "Company") reported second quarter 2023 financial results.

Second Quarter 2023 Highlights

  • Consolidated Vacation Ownership contract sales were $453 million, a 10% decrease compared to the second quarter of 2022, and VPG was $3,968.

  • Net income attributable to common shareholders was $90 million compared to $136 million in the prior year, and fully diluted earnings per share decreased 27% to $2.17.

  • Adjusted net income attributable to common shareholders was $90 million compared to $131 million in the prior year, and adjusted fully diluted earnings per share decreased 24% to $2.19.

  • Adjusted EBITDA decreased 13% compared to the prior year to $222 million.

  • The Company repurchased 621,000 shares of its common stock for $82 million during the quarter and paid a quarterly dividend of $26 million. The Board of Directors also increased the Company’s share repurchase authorization during the quarter to $600 million.

  • The Company updated its full year outlook.

"Occupancy was nearly 90% in the second quarter reflecting the continued high demand for vacation experiences from our Owners, members and guests. However, with the tough comparison from last year, as well as the continued transition to the Abound by Marriott Vacations program and the integration of our Hyatt and legacy-Welk businesses, contract sales declined 10% in the quarter, though we still expect to grow contract sales for the full year and generate significant cash flow from operations," said John Geller, president and chief executive officer. "While the changes to our programs impacted our near-term results, I am confident these are the right strategic changes that will position us for long-term growth."

Vacation Ownership
Revenues excluding cost reimbursements decreased 2% in the second quarter of 2023 compared to the prior year. The decline was driven by a 10% year-over-year reduction in consolidated contract sales resulting from 14% lower VPG, partially offset by 4% higher tours. While the Company expected VPGs to decline due to the tough comparison to the prior year, we saw larger declines at the legacy-Vistana sites due to the continued transition associated with the launch of Abound by Marriott Vacations. In addition, VPG was impacted by the continued alignment of the Hyatt and Legacy-Welk business models and sales processes.

Segment financial results attributable to common shareholders were $224 million in the second quarter of 2023 compared to $277 million in the prior year and Segment margin was 30%. Development profit declined $12 million year-over-year primarily due to lower contract sales and higher sales reserve while Development profit margin was 31%. Rental profit was down $19 million primarily due to lower rental occupancy and higher unsold inventory costs. As a result, Segment Adjusted EBITDA was $245 million compared to $274 million in the prior year while Segment Adjusted EBITDA margin remained strong at more than 32%.

Exchange & Third-Party Management
Revenues excluding cost reimbursements decreased 11% in the second quarter of 2023 compared to the prior year and decreased 4% excluding the sale of VRI Americas in April of 2022. Interval International active members decreased 2% compared to the prior year to 1.6 million but were in-line with first quarter of 2023, and Average revenue per member increased 1% year-over-year.

Segment financial results attributable to common shareholders were $24 million in the second quarter of 2023, Segment margin was 40% and Segment Adjusted EBITDA was $32 million. Excluding the VRI Americas business, Segment Adjusted EBITDA declined $3 million compared to the prior year due to lower management fees at Aqua-Aston and Adjusted EBITDA margin was 52%.

Corporate and Other
General and administrative costs were largely unchanged in the second quarter of 2023 compared to the prior year primarily as a result of new product development initiatives and higher wage and benefit costs offset by lower variable compensation.

Balance Sheet and Liquidity
The Company ended the quarter with approximately $1.0 billion in liquidity, including $242 million of cash and cash equivalents, $59 million of gross notes receivable that were eligible for securitization, and $684 million of available capacity under its revolving corporate credit facility.

At the end of the second 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
The Company is updating 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

$1,840

to

$1,900

Net income attributable to common shareholders

$355

to

$375

Earnings per share - diluted

$8.51

to

$8.96

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

$360

to

$395

Adjusted EBITDA*

$880

to

$910

Adjusted earnings per share - diluted*

$9.76

to

$10.22

Adjusted free cash flow*

$540

to

$600

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 2023 Financial Results Conference Call
The Company will hold a conference call on August 3, 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, 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; 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 2, 2023

TABLE OF CONTENTS

Summary Financial Information

A-1

Interim Consolidated Statements of Income

A-2

Revenues and Profit by Segment

A-3

Consolidated Contract Sales to Adjusted Development Profit

A-7

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

A-8

Adjusted EBITDA

A-9

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

A-10

Interim Consolidated Balance Sheets

A-11

Interim Consolidated Statements of Cash Flows

A-12

2023 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, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Key Measures

Total consolidated contract sales

$

453

$

506

(10%)

$

887

$

900

(1%)

VPG

$

3,968

$

4,613

(14%)

$

4,150

$

4,653

(11%)

Tours

106,746

102,857

4%

199,636

181,362

10%

Total active Interval International members (000's)(1)

1,566

1,596

(2%)

1,566

1,596

(2%)

Average revenue per Interval International member

$

39.30

$

38.79

1%

$

81.35

$

83.32

(2%)

GAAP Measures

Revenues

$

1,178

$

1,164

1%

$

2,347

$

2,216

6%

Income before income taxes and noncontrolling interests

$

140

$

178

(22%)

$

268

$

268

—%

Net income attributable to common shareholders

$

90

$

136

(34%)

$

177

$

194

9%

Diluted shares

43.8

46.5

(6%)

44.1

47.2

(7%)

Earnings per share - diluted

$

2.17

$

2.97

(27%)

$

4.23

$

4.18

1%

Non-GAAP Measures*

Adjusted EBITDA

$

222

$

255

(13%)

$

425

$

443

(4%)

Adjusted pretax income

$

140

$

181

(22%)

$

270

$

301

(10%)

Adjusted net income attributable to common shareholders

$

90

$

131

(31%)

$

199

$

212

(6%)

Adjusted earnings per share - diluted

$

2.19

$

2.87

(24%)

$

4.73

$

4.55

4%

Segment Adjusted EBITDA*

Vacation Ownership Segment

$

245

$

274

(11%)

$

474

$

473

NM

Exchange & Third-Party Management Segment

$

32

$

35

(10%)

$

69

$

78

(12%)

(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.

NM = Not meaningful

A-2

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

REVENUES

Sale of vacation ownership products

$

391

$

425

$

766

$

735

Management and exchange

206

203

406

425

Rental

146

140

297

273

Financing

80

72

158

143

Cost reimbursements

355

324

720

640

TOTAL REVENUES

1,178

1,164

2,347

2,216

EXPENSES

Cost of vacation ownership products

66

80

124

140

Marketing and sales

206

214

416

396

Management and exchange

110

102

217

229

Rental

112

87

225

168

Financing

25

23

51

44

General and administrative

64

64

132

125

Depreciation and amortization

34

32

66

65

Litigation charges

2

2

5

5

Royalty fee

29

29

58

56

Impairment

—

—

4

—

Cost reimbursements

355

324

720

640

TOTAL EXPENSES

1,003

957

2,018

1,868

Gains and other income, net

10

37

31

41

Interest expense, net

(36

)

(30

)

(70

)

(57

)

Transaction and integration costs

(10

)

(37

)

(23

)

(65

)

Other

1

1

1

1

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

140

178

268

268

Provision for income taxes

(50

)

(43

)

(91

)

(75

)

NET INCOME

90

135

177

193

Net loss attributable to noncontrolling interests

—

1

—

1

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

90

$

136

$

177

$

194

EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic shares

36.9

41.3

37.1

41.9

Basic

$

2.46

$

3.30

$

4.78

$

4.64

Diluted shares

43.8

46.5

44.1

47.2

Diluted

$

2.17

$

2.97

$

4.23

$

4.18

A-3

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the three months ended June 30, 2023

(In millions)

(Unaudited)

Reportable Segment

Vacation

Ownership

Exchange &

Third-Party

Management

Corporate

and Other

Total

REVENUES

Sales of vacation ownership products

$

391

$

—

$

—

$

391

Management and exchange(1)

Ancillary revenues

70

1

—

71

Management fee revenues

45

5

(1

)

49

Exchange and other services revenues

32

45

9

86

Management and exchange

147

51

8

206

Rental

135

11

—

146

Financing

80

—

—

80

Cost reimbursements(1)

359

3

(7

)

355

TOTAL REVENUES

$

1,112

$

65

$

1

$

1,178

PROFIT

Development

$

119

$

—

$

—

$

119

Management and exchange(1)

78

21

(3

)

96

Rental(1)

19

11

4

34

Financing

55

—

—

55

TOTAL PROFIT

271

32

1

304

OTHER

General and administrative

—

—

(64

)

(64

)

Depreciation and amortization

(23

)

(8

)

(3

)

(34

)

Litigation charges

(3

)

—

1

(2

)

Royalty fee

(29

)

—

—

(29

)

Gains and other income, net

7

—

3

10

Interest expense, net

—

—

(36

)

(36

)

Transaction and integration costs

—

—

(10

)

(10

)

Other

1

—

—

1

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

224

24

(108

)

140

Provision for income taxes

—

—

(50

)

(50

)

NET INCOME (LOSS)

224

24

(158

)

90

Net income attributable to noncontrolling interests(1)

—

—

—

—

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

224

$

24

$

(158

)

$

90

SEGMENT MARGIN(2)

30%

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-4

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the three months ended June 30, 2022

(In millions)

(Unaudited)

Reportable Segment

Vacation

Ownership

Exchange &

Third-Party

Management

Corporate

and Other

Total

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

—

—

(64

)

(64

)

Depreciation and amortization

(22

)

(7

)

(3

)

(32

)

Litigation charges

(2

)

—

—

(2

)

Royalty fee

(29

)

—

—

(29

)

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

32

16

(11

)

37

Interest expense, net

—

—

(30

)

(30

)

Transaction and integration costs

(1

)

—

(36

)

(37

)

Other

1

—

—

1

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

277

46

(145

)

178

Provision for income taxes

—

—

(43

)

(43

)

NET INCOME (LOSS)

277

46

(188

)

135

Net loss attributable to noncontrolling interests(1)

—

—

1

1

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

277

$

46

$

(187

)

$

136

SEGMENT MARGIN(2)

36%

66%

(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

REVENUES AND PROFIT BY SEGMENT

for the six months ended June 30, 2023

(In millions)

(Unaudited)

Reportable Segment

Vacation

Ownership

Exchange &

Third-Party

Management

Corporate

and Other

Total

REVENUES

Sales of vacation ownership products

$

766

$

—

$

—

$

766

Management and exchange(1)

Ancillary revenues

131

2

—

133

Management fee revenues

90

13

(2

)

101

Exchange and other services revenues

61

92

19

172

Management and exchange

282

107

17

406

Rental

276

21

—

297

Financing

158

—

—

158

Cost reimbursements(1)

727

8

(15

)

720

TOTAL REVENUES

$

2,209

$

136

$

2

$

2,347

PROFIT

Development

$

226

$

—

$

—

$

226

Management and exchange(1)

149

47

(7

)

189

Rental(1)

44

21

7

72

Financing

107

—

—

107

TOTAL PROFIT

526

68

—

594

OTHER

General and administrative

—

—

(132

)

(132

)

Depreciation and amortization

(46

)

(16

)

(4

)

(66

)

Litigation charges

(6

)

—

1

(5

)

Royalty fee

(58

)

—

—

(58

)

Impairment

(4

)

—

—

(4

)

Gains and other income, net

16

—

15

31

Interest expense, net

—

—

(70

)

(70

)

Transaction and integration costs

—

—

(23

)

(23

)

Other

1

—

—

1

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

429

52

(213

)

268

Provision for income taxes

—

—

(91

)

(91

)

NET INCOME (LOSS)

429

52

(304

)

177

Net income attributable to noncontrolling interests(1)

—

—

—

—

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

429

$

52

$

(304

)

$

177

SEGMENT MARGIN(2)

29%

41%

(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 six months ended June 30, 2022

(In millions)

(Unaudited)

Reportable Segment

Vacation

Ownership

Exchange &

Third-Party

Management

Corporate

and Other

Total

REVENUES

Sales of vacation ownership products

$

735

$

—

$

—

$

735

Management and exchange(1)

Ancillary revenues

120

2

—

122

Management fee revenues

83

21

(4

)

100

Exchange and other services revenues

63

99

41

203

Management and exchange

266

122

37

425

Rental

251

22

—

273

Financing

143

—

—

143

Cost reimbursements(1)

652

14

(26

)

640

TOTAL REVENUES

$

2,047

$

158

$

11

$

2,216

PROFIT

Development

$

199

$

—

$

—

$

199

Management and exchange(1)

152

57

(13

)

196

Rental(1)

70

22

13

105

Financing

99

—

—

99

TOTAL PROFIT

520

79

—

599

OTHER

General and administrative

—

—

(125

)

(125

)

Depreciation and amortization

(44

)

(16

)

(5

)

(65

)

Litigation charges

(5

)

—

—

(5

)

Royalty fee

(56

)

—

—

(56

)

Losses and other expense, net

35

16

(10

)

41

Interest expense, net

—

—

(57

)

(57

)

Transaction and integration costs

(1

)

—

(64

)

(65

)

Other

1

—

—

1

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

450

79

(261

)

268

Provision for income taxes

—

—

(75

)

(75

)

NET INCOME (LOSS)

450

79

(336

)

193

Net loss attributable to noncontrolling interests(1)

—

—

1

1

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

450

$

79

$

(335

)

$

194

SEGMENT MARGIN(2)

32%

55%

(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-7

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Consolidated contract sales

$

453

$

506

$

887

$

900

Less resales contract sales

(10

)

(11

)

(21

)

(20

)

Consolidated contract sales, net of resales

443

495

866

880

Plus:

Settlement revenue

9

9

17

16

Resales revenue

6

4

12

8

Revenue recognition adjustments:

Reportability

5

(14

)

5

(47

)

Sales reserve

(45

)

(37

)

(83

)

(66

)

Other(1)

(27

)

(32

)

(51

)

(56

)

Sale of vacation ownership products

391

425

766

735

Less:

Cost of vacation ownership products

(66

)

(80

)

(124

)

(140

)

Marketing and sales

(206

)

(214

)

(416

)

(396

)

Development profit

119

131

226

199

Revenue recognition reportability adjustment

(3

)

11

(3

)

35

Purchase accounting adjustments

2

5

4

9

Adjusted development profit*

$

118

$

147

$

227

$

243

Development profit margin

30.8%

31.0%

29.6%

27.1%

Adjusted development profit margin*

30.4%

33.6%

29.8%

31.3%

(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-8

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

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

Net income attributable to common shareholders

$

90

$

136

$

177

$

194

Provision for income taxes

50

43

91

75

Income before income taxes attributable to common shareholders

140

179

268

269

Certain items:

ILG integration

6

33

$

15

$

58

Welk acquisition and integration

4

2

8

5

Other transaction costs

—

2

—

2

Transaction and integration costs

10

37

23

65

Early redemption of senior secured notes

—

—

10

—

Gain on disposition of hotel/land

(7

)

(33

)

(7

)

(33

)

Gain on disposition of VRI Americas

—

(16

)

—

(16

)

Foreign currency translation

(2

)

8

(4

)

7

Insurance proceeds

—

(2

)

(2

)

(5

)

Change in indemnification asset

(1

)

3

(24

)

3

Other

—

3

(4

)

3

Gains and other income, net

(10

)

(37

)

(31

)

(41

)

Purchase accounting adjustments

1

5

3

8

Litigation charges

2

2

5

5

Impairment

—

—

4

—

Early termination of VRI management contract

—

(2

)

—

(2

)

Change in estimate relating to pre-acquisition contingencies

—

(3

)

—

(3

)

Other

(3

)

—

(2

)

—

Adjusted pretax income*

140

181

270

301

Provision for income taxes

(50

)

(50

)

(71

)

(89

)

Adjusted net income attributable to common shareholders*

$

90

$

131

$

199

$

212

Diluted shares

43.8

46.5

44.1

47.2

Adjusted earnings per share - Diluted*

$

2.19

$

2.87

$

4.73

$

4.55

* 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-9

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ADJUSTED EBITDA

(In millions)

(Unaudited)

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

90

$

136

$

177

$

194

Interest expense, net

36

30

70

57

Provision for income taxes

50

43

91

75

Depreciation and amortization

34

32

66

65

Share-based compensation

12

12

19

20

Certain items:

ILG integration

6

33

15

58

Welk acquisition and integration

4

2

8

5

Other transaction costs

—

2

—

2

Transaction and integration costs

10

37

23

65

Early redemption of senior secured notes

—

—

10

—

Gain on disposition of hotel/land

(7

)

(33

)

(7

)

(33

)

Gain on disposition of VRI Americas

—

(16

)

—

(16

)

Foreign currency translation

(2

)

8

(4

)

7

Insurance proceeds

—

(2

)

(2

)

(5

)

Change in indemnification asset

(1

)

3

(24

)

3

Other

—

3

(4

)

3

Gains and other income, net

(10

)

(37

)

(31

)

(41

)

Purchase accounting adjustments

1

5

3

8

Litigation charges

2

2

5

5

Impairment

—

—

4

—

Early termination of VRI management contract

—

(2

)

—

(2

)

Change in estimate relating to pre-acquisition contingencies

—

(3

)

—

(3

)

Other

(3

)

—

(2

)

—

ADJUSTED EBITDA*

$

222

$

255

$

425

$

443

ADJUSTED EBITDA MARGIN*

27%

30%

26%

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-10

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

(Unaudited)

VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

224

$

277

$

429

$

450

Depreciation and amortization

23

22

46

44

Share-based compensation

3

2

4

3

Certain items:

Transaction and integration costs

—

1

—

1

Gain on disposition of hotel/land

(7

)

(33

)

(7

)

(33

)

Foreign currency translation

—

1

—

1

Insurance proceeds

—

—

(2

)

(3

)

Change in indemnification asset

—

—

(3

)

—

Other

—

—

(4

)

—

Gains and other income, net

(7

)

(32

)

(16

)

(35

)

Purchase accounting adjustments

1

5

3

8

Litigation charges

3

2

6

5

Impairment

—

—

4

—

Change in estimate relating to pre-acquisition contingencies

—

(3

)

—

(3

)

Other

(2

)

—

(2

)

—

SEGMENT ADJUSTED EBITDA*

$

245

$

274

$

474

$

473

SEGMENT ADJUSTED EBITDA MARGIN*

32%

36%

32%

34%

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

Three Months Ended

Six Months Ended

June 30, 2023

June 30, 2022

June 30, 2023

June 30, 2022

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

24

$

46

$

52

$

79

Depreciation and amortization

8

7

16

16

Share-based compensation

—

—

1

1

Certain items:

Gain on disposition of VRI Americas

—

(16

)

—

(16

)

Early termination of VRI management contract

—

(2

)

—

(2

)

SEGMENT ADJUSTED EBITDA*

$

32

$

35

$

69

$

78

SEGMENT ADJUSTED EBITDA MARGIN*

52%

52%

54%

54%

* 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

INTERIM CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

Unaudited

June 30, 2023

December 31, 2022

ASSETS

Cash and cash equivalents

$

242

$

524

Restricted cash (including $78 and $85 from VIEs, respectively)

238

330

Accounts receivable, net (including $14 and $13 from VIEs, respectively)

313

292

Vacation ownership notes receivable, net (including $1,863 and $1,792 from VIEs, respectively)

2,272

2,198

Inventory

660

660

Property and equipment, net

1,221

1,139

Goodwill

3,117

3,117

Intangibles, net

884

911

Other (including $87 and $76 from VIEs, respectively)

535

468

TOTAL ASSETS

$

9,482

$

9,639

LIABILITIES AND EQUITY

Accounts payable

$

209

$

356

Advance deposits

175

158

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

322

369

Deferred revenue

417

344

Payroll and benefits liability

174

251

Deferred compensation liability

154

139

Securitized debt, net (including $2,052 and $1,982 from VIEs, respectively)

2,028

1,938

Debt, net

3,001

3,088

Other

180

167

Deferred taxes

344

331

TOTAL LIABILITIES

7,004

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; 75,806,578 and 75,744,524 shares issued, respectively

1

1

Treasury stock — at cost; 39,337,085 and 38,263,442 shares, respectively

(2,213

)

(2,054

)

Additional paid-in capital

3,947

3,941

Accumulated other comprehensive income

23

15

Retained earnings

718

593

TOTAL MVW SHAREHOLDERS' EQUITY

2,476

2,496

Noncontrolling interests

2

2

TOTAL EQUITY

2,478

2,498

TOTAL LIABILITIES AND EQUITY

$

9,482

$

9,639

The abbreviation VIEs above means Variable Interest Entities.

A-12

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Six Months Ended

June 30, 2023

June 30, 2022

OPERATING ACTIVITIES

Net income

$

177

$

193

Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities:

Depreciation and amortization of intangibles

66

65

Amortization of debt discount and issuance costs

12

10

Vacation ownership notes receivable reserve

79

66

Share-based compensation

19

20

Impairment charges

2

—

Gains and other income, net

(7

)

(47

)

Deferred income taxes

10

29

Net change in assets and liabilities:

Accounts and contracts receivable

(31

)

59

Vacation ownership notes receivable originations

(470

)

(483

)

Vacation ownership notes receivable collections

308

365

Inventory

46

25

Other assets

(61

)

(63

)

Accounts payable, advance deposits and accrued liabilities

(129

)

8

Deferred revenue

69

19

Payroll and benefit liabilities

(78

)

7

Deferred compensation liability

7

4

Other liabilities

12

—

Deconsolidation of certain Consolidated Property Owners' Associations

—

(48

)

Purchase of vacation ownership units for future transfer to inventory

—

(12

)

Other, net

(4

)

1

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

27

218

INVESTING ACTIVITIES

Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred

—

93

Capital expenditures for property and equipment (excluding inventory)

(63

)

(23

)

Issuance of note receivable to VIE

—

(47

)

Purchase of company owned life insurance

(4

)

(11

)

Other dispositions, net

14

3

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

(53

)

15

Continued

A-13

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In millions)

(Unaudited)

Six Months Ended

June 30, 2023

June 30, 2022

FINANCING ACTIVITIES

Borrowings from securitization transactions

743

477

Repayment of debt related to securitization transactions

(651

)

(485

)

Proceeds from debt

515

125

Repayments of debt

(706

)

(125

)

Finance lease incentive

10

—

Finance lease payment

(2

)

(2

)

Payment of debt issuance costs

(6

)

(9

)

Repurchase of common stock

(162

)

(312

)

Payment of dividends

(80

)

(75

)

Payment of withholding taxes on vesting of restricted stock units

(10

)

(22

)

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

(349

)

(428

)

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

1

(2

)

Change in cash, cash equivalents and restricted cash

(374

)

(197

)

Cash, cash equivalents and restricted cash, beginning of period

854

803

Cash, cash equivalents and restricted cash, end of period

$

480

$

606

A-14

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

$

355

$

375

Provision for income taxes

163

173

Income before income taxes attributable to common shareholders

518

548

Certain items(1)

45

45

Adjusted pretax income*

563

593

Provision for income taxes

(153

)

(163

)

Adjusted net income attributable to common shareholders*

$

410

$

430

Earnings per share - Diluted(2)

$

8.51

$

8.96

Adjusted earnings per share - Diluted(2)*

$

9.76

$

10.22

Diluted shares(2)

43.9

43.9

2023 ADJUSTED EBITDA OUTLOOK

Fiscal Year 2023

(Low)

Fiscal Year 2023

(High)

Net income attributable to common shareholders

$

355

$

375

Interest expense

145

145

Provision for income taxes

163

173

Depreciation and amortization

135

135

Share-based compensation

37

37

Certain items(1)

45

45

Adjusted EBITDA*

$

880

$

910

(1) Certain items adjustment includes $50 million of anticipated transaction and integration costs, $14 million of anticipated purchase accounting adjustments, $10 million of anticipated litigation charges, and $4 million of impairments, partially offset by $31 million of gains and other income, net, and $2 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-15

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

$

360

$

395

Capital expenditures for property and equipment (excluding inventory)

(110

)

(125

)

Borrowings from securitizations, net of repayments

90

130

Securitized debt issuance costs

(12

)

(12

)

Free cash flow*

328

388

Adjustments:

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

120

120

Certain items(2)

92

92

Adjusted free cash flow*

$

540

$

600

(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-16

MARRIOTT VACATIONS WORLDWIDE CORPORATION

QUARTERLY OPERATING METRICS

(Contract sales in millions)

Year

Quarter Ended

March 31

June 30

September 30

December 31

Full Year

Vacation Ownership

Consolidated contract sales

2023

$

434

$

453

2022

$

394

$

506

$

483

$

454

$

1,837

2021

$

226

$

362

$

380

$

406

$

1,374

VPG

2023

$

4,358

$

3,968

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

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

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

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-17

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.

View source version on businesswire.com: https://www.businesswire.com/news/home/20230731093164/en/

Contacts

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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