U.S. Markets closed

Marriott Vacations Worldwide Reports Third Quarter Financial Results

ORLANDO, Fla., Nov. 2, 2017 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (VAC) today reported third quarter financial results and updated its guidance for the full year 2017.

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

Due to the change in the company's financial reporting calendar beginning in 2017, the third quarter of 2017 included the period from July 1, 2017 through September 30, 2017 (92 days) compared to the 2016 third quarter, which included the period from June 18, 2016 through September 9, 2016 (84 days). Prior year results have not been restated for the change in the company's reporting calendar.

During the third quarter of 2017, over 20 of the company's properties in its North America segment were negatively impacted by one or both of Hurricane Irma and Hurricane Maria (the "Hurricanes"). As a result of the mandatory evacuations, shutdowns and cancellations of reservations and scheduled tours resulting from the Hurricanes, the company's sales operations at several of its locations, primarily those located on St. Thomas (USVI) and on Marco Island and Singer Island in Florida, were adversely impacted along with rental and ancillary operations.

Third Quarter 2017 Highlights:

  • Net income was $40.8 million, or $1.47 fully diluted earnings per share ("EPS"), compared to net income of $26.8 million, or $0.97 fully diluted EPS, in the third quarter of 2016.
  • Adjusted net income was $39.0 million, compared to adjusted net income of $26.6 million in the third quarter of 2016, an increase of 47 percent. Adjusted fully diluted EPS was $1.41, compared to adjusted fully diluted EPS of $0.96 in the third quarter of 2016, an increase of 47 percent.
  • Adjusted EBITDA totaled $74.0 million, an increase of $23.3 million, or 46 percent, year-over-year.
  • Total company vacation ownership contract sales were $198.5 million, an increase of $28.6 million, or 17 percent, compared to the prior year period. North America vacation ownership contract sales were $179.2 million, an increase of $28.3 million, or 19 percent, compared to the prior year period.
  • North America VPG totaled $3,482, a 3 percent increase from the third quarter of 2016. North America tours increased 18 percent year-over-year.
  • During the third quarter of 2017, the company repurchased 695,885 shares of its common stock for $79 million.

"I am very pleased with our continued contract sales and adjusted EBITDA growth in the third quarter of 2017.  While obviously impacted by the hurricanes in the Caribbean and southeastern U.S., our business continues to grow from the ramp-up of our new locations, as well as from marketing programs that continue to grow our tour flow," said Stephen P. Weisz, president and chief executive officer. "Excluding the adverse impacts from the hurricanes, our expectations for contract sales, adjusted EBITDA, and adjusted free cash flow remain on target for the full year.  On a more personal level, I could not be more proud of how our entire company came through the many challenges we faced in the quarter.  Our associates survived historic storms and unexplainable tragedies by displaying their unending flexibility, tenacity, and perseverance to help each other, their communities, and our guests."

Non-GAAP financial measures, such as adjusted net income, adjusted EBITDA, adjusted fully diluted earnings per share, adjusted free cash flow, and adjusted development margin are reconciled and adjustments are shown and described in further detail on pages A-1 through A-14 of the Financial Schedules that follow.

Third Quarter 2017 Results

As a result of the change in the company's financial reporting calendar, financial results for the third quarter 2017 include the impact of eight additional days of operations.

Company Results

Third quarter 2017 company net income was $40.8 million, a $14.0 million increase from the third quarter of 2016. Excluding the impact of the provision for income taxes, these results were driven by $20.0 million of higher development margin, $6.5 million of higher gains and other income, $4.0 million of higher financing revenues net of expenses and consumer financing interest expense, $1.8 million of higher resort management and other services revenues net of expenses, and $0.2 million of lower acquisition costs, partially offset by $4.5 million of higher general and administrative costs, $2.7 million of lower rental revenues net of expenses, $2.0 million of higher litigation settlement costs, $0.6 million of higher royalty fees, and $0.4 million of higher interest expense.

Total company vacation ownership contract sales were $198.5 million, $28.6 million, or 17 percent, higher than the third quarter of 2016. These results were driven by $28.3 million of higher contract sales in the company's North America segment and $1.4 million of higher contract sales in the company's Asia Pacific segment, partially offset by $1.0 million of lower contract sales in the company's Europe segment. Excluding the estimated impact of the change in the company's financial reporting calendar, total company vacation ownership contract sales would have increased 6 percent, compared to the prior year period. In addition, the company estimates that the Hurricanes negatively impacted contract sales by approximately $12 million in the third quarter. Excluding that impact, as well as the impact of the change in the financial reporting calendar, contract sales would have grown by approximately 13 percent over the prior year period.

Development margin was $37.2 million, a $20.0 million increase from the third quarter of 2016. Development margin percentage was 20.6 percent compared to 13.1 percent in the prior year quarter. The increase in development margin reflected $13.1 million related to favorable revenue reportability year-over-year, $5.5 million from higher contract sales volumes net of expenses, $4.5 million from lower product costs, and $3.4 million from lower sales reserve activity, partially offset by $6.5 million of higher marketing and sales costs including costs to ramp-up the company's newest sales distributions. Adjusted development margin percentage, which excludes the impact of revenue reportability and other charges, was 21.3 percent in the third quarter of 2017 compared to 19.7 percent in the third quarter of 2016. The company estimates that the Hurricanes negatively impacted adjusted development margin by 0.5 percentage points in the third quarter of 2017.

Rental revenues totaled $81.2 million, a $7.4 million increase from the third quarter of 2016. Rental revenues net of expenses were $10.1 million, a $2.7 million decrease from the third quarter of 2016. The company estimates that the Hurricanes impacted rental revenues net of expenses by roughly $1.5 million in the third quarter of 2017.

Resort management and other services revenues totaled $76.9 million, a $6.7 million increase from the third quarter of 2016. Resort management and other services revenues, net of expenses, totaled $32.2 million, a $1.8 million, or 6 percent, increase from the third quarter of 2016.

Financing revenues totaled $34.7 million, a $5.6 million increase from the third quarter of 2016. Financing revenues, net of expenses and consumer financing interest expense, were $23.1 million, a $4.0 million, or 21 percent, increase from the third quarter of 2016.

Gains and other income totaled $7.0 million in the third quarter of 2017 including $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew, partially offset by a charge of $1.7 million associated with the estimated property damage insurance deductibles and impairment of property and equipment at several of our resorts that were impacted by the 2017 Hurricanes.

Net income was $40.8 million, compared to net income of $26.8 million in the third quarter of 2016, an increase of $14.0 million, or 52 percent. Adjusted net income was $39.0 million, compared to adjusted net income of $26.6 million in the third quarter of 2016, an increase of 47 percent. Adjusted EBITDA was $74.0 million, a $23.3 million, or 46 percent, increase from $50.6 million in the third quarter of 2016. The company estimates that the Hurricanes negatively impacted adjusted net income and adjusted EBITDA by approximately $1.1 million and $3.3 million, respectively, in the third quarter. Excluding that impact, adjusted net income and adjusted EBITDA would have totaled approximately $40.1 million and $77.3 million, respectively, in the third quarter of 2017.

Segment Results

North America

North America vacation ownership contract sales were $179.2 million, an increase of $28.3 million, or 19 percent, from the prior year period, reflecting higher sales from existing sales centers driven by the success of our new marketing programs, as well as the continued ramp-up of the company's newest sales distributions. VPG increased 3 percent to $3,482 in the third quarter of 2017 from the third quarter of 2016. Total tours in the third quarter of 2017 increased 18 percent, reflecting a 23 percent increase in first time buyer tours and a 15 percent increase in owner tours. Excluding the estimated impact of the change in the company's financial reporting calendar, vacation ownership contract sales and tours would have increased 8 percent and 7 percent, respectively, compared to the prior year period. In addition, the company estimates that the Hurricanes negatively impacted contract sales by approximately $12 million and tour growth by roughly 6.5 percentage points in the third quarter. Excluding that impact, as well as the impact of the change in the financial reporting calendar, contract sales and tours would have grown by approximately 15 percent and 13 percent, respectively, over the prior year period.

Third quarter 2017 North America segment financial results were $103.9 million, an increase of $21.6 million from the third quarter of 2016. The increase was driven primarily by $20.4 million of higher development margin, $5.4 million of higher financing revenues, $1.7 million of higher resort management and other services revenues net of expenses, $0.9 million of lower royalty fees, and $0.1 million of lower acquisition costs, partially offset by $3.0 million of lower rental revenues net of expenses, $2.0 million of higher litigation settlement costs and $1.7 million of lower gains and other income.

Development margin was $38.7 million, a $20.4 million increase from the third quarter of 2016. Development margin percentage was 23.7 percent compared to 15.8 percent in the prior year quarter. The increase in development margin reflected $11.8 million related to favorable revenue reportability year-over-year, $5.9 million from higher contract sales volumes net of expenses, $4.4 million from lower product costs, $2.8 million from lower sales reserve activity, and $0.5 million from favorable product cost true-up activity year-over-year, partially offset by $5.1 million of higher marketing and sales costs including costs to ramp-up the company's newest sales distributions. Adjusted development margin percentage, which excludes the impact of revenue reportability and other charges, was 24.4 percent in the third quarter of 2017, compared to 22.0 percent in the third quarter of 2016. The company estimates that the Hurricanes negatively impacted adjusted development margin by 0.3 percentage points in the third quarter of 2017.

Asia Pacific

Total vacation ownership contract sales in the segment were $12.6 million, an increase of $1.4 million, or 13 percent, from the third quarter of 2016, due primarily to the opening of the newest sales distribution in Surfers Paradise, Australia in the second quarter of 2016. Segment financial results were a loss of $0.5 million, a $1.7 million decrease from the third quarter of 2016. Excluding the estimated impact of the change in the company's financial reporting calendar, vacation ownership contract sales would have decreased 1 percent compared to the prior year period.

Europe

Third quarter 2017 contract sales were $6.7 million, a decrease of $1.0 million, or 13 percent, from the third quarter of 2016. Segment financial results were $6.8 million, an increase of $2.2 million, or 49 percent, from the third quarter of 2016. Excluding the estimated impact of the change in the company's financial reporting calendar, vacation ownership contract sales would have decreased 17 percent compared to the prior year period.

Share Repurchase Program and Dividends

During the third quarter of 2017, the company repurchased 695,885 shares of its common stock for $79 million, bringing the total amount returned to shareholders, including nearly $29 million of dividends, to nearly $112 million for the first three quarters of 2017.

Balance Sheet and Liquidity

On September 30, 2017, cash and cash equivalents totaled $440.1 million. Since the beginning of the year, real estate inventory balances increased $22.3 million to $730.5 million, including $390.4 million of finished goods, $2.0 million of work-in-progress, and $338.1 million of land and infrastructure. The company had $1.2 billion in debt outstanding at the end of the third quarter, an increase of $416.0 million from year-end 2016, consisting primarily of $895.4 million of debt related to our securitized notes receivable.

During the third quarter of 2017, the company completed the securitization of a pool of $360.8 million of vacation ownership notes receivable at a blended borrowing rate of 2.51 percent and an advance rate of 97 percent. In connection with the securitization, investors purchased in a private placement $350.0 million in vacation ownership loan backed notes.

During the third quarter of 2017, the company issued $230.0 million of 1.50% convertible senior notes due 2022. In connection with the offering of the convertible notes, the company also entered into privately-negotiated convertible hedge and warrant transactions. Taken together, the convertible note hedges and the warrants are generally expected to reduce the potential dilution to the company's common stock (or, in the event the conversion is settled in cash, to reduce the company's cash payment obligation) in the event that at the time of conversion the company's stock price exceeds the conversion price under the convertible notes and to effectively increase the overall conversion price from $148.19 (or a conversion premium of 30 percent) to $176.68 per share (or a conversion premium of 55 percent).

As of September 30, 2017, the company had approximately $245.4 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit, and approximately $47.6 million of gross vacation ownership notes receivable eligible for securitization.

Fiscal Year Change

The table below shows the number of days for each reporting period in 2017 and 2016:


2017


2016

First Quarter

91 days


84 days

Second Quarter

91 days


84 days

Third Quarter

92 days


84 days

Fourth Quarter

92 days


112 days

Full Year

366 days


364 days

Full Year Impact of the Hurricanes

While many of the company's properties and sales centers impacted by the Hurricanes were fully or partially open by the end of September, two properties and a sales center on St. Thomas remain closed and the company is not currently in a position to predict when they will reopen. Further, while some of the properties were fully or partially open, many of the operations will continue to ramp-up throughout the fourth quarter of 2017, and potentially into 2018. At this time, the company estimates the following impacts from the Hurricanes on its financial results as shown on page A-14 of the Financial Schedules.


Third Quarter


Fourth Quarter


Full Year 2017

Net income

$4.5 million


$3.8 million


$8.3 million

Adjusted net income

$1.1 million


$2.0 million


$3.1 million

Adjusted EBITDA

$3.3 million


$3.6 million


$6.9 million

Contract sales

$11.9 million


$8.6 million


$20.5 million

Outlook (reflecting the adverse impact of the Hurricanes)

Pages A-1 through A-14 of the Financial Schedules reconcile the non-GAAP financial measures set forth below to the following full year 2017 expected GAAP results:

Net income

$146 million

to

$149 million

Fully diluted EPS

$5.26

to

$5.37

Net cash provided by operating activities

$120 million

to

$130 million

The company has updated its guidance for the full year 2017 for changes primarily related to the adverse impact of the Hurricanes as well as for changes in shares outstanding and to increase its adjusted free cash flow guidance.


Current Guidance


Previous Guidance

Adjusted net income

$147 million

to

$150 million


$149 million

to

$155 million

Adjusted fully diluted EPS

$5.30

to

$5.41


$5.31

to

$5.52

Adjusted EBITDA

$278 million

to

$283 million


$282 million

to

$292 million

Adjusted free cash flow

$205 million

to

$225 million


$190 million

to

$210 million

Contract sales growth

10 percent

to

13 percent


12 percent

to

16 percent

Third Quarter 2017 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. EDT today to discuss these results and the guidance for full year 2017. 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 www.marriottvacationsworldwide.com.

An audio replay of the conference call will be available for seven days and can be accessed at 877-660-6853 or 201-612-7415 for international callers. The conference ID for the recording is 13669704. The webcast will also be available on the company's website.

About Marriott Vacations Worldwide Corporation

Marriott Vacations Worldwide Corporation is a leading global pure-play vacation ownership company, offering a diverse portfolio of quality products, programs and management expertise with over 65 resorts. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. 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 future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading "Risk Factors" contained in the company's most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of November 2, 2017 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.

Financial Schedules Follow

MARRIOTT VACATIONS WORLDWIDE CORPORATION
FINANCIAL SCHEDULES

QUARTER 3, 2017 1


TABLE OF CONTENTS


Consolidated Statements of Income

A-1

Adjusted Net Income, Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted EBITDA

A-2

North America Segment Financial Results

A-3

Asia Pacific Segment Financial Results

A-4

Europe Segment Financial Results

A-5

Corporate and Other Financial Results

A-6

Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin(Adjusted Sale of Vacation Ownership Products Net of Expenses)

A-7

North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin(Adjusted Sale of Vacation Ownership Products Net of Expenses)

A-8

2017 Outlook - Adjusted Net Income, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Free Cash Flow

A-9

Non-GAAP Financial Measures

A-10

Consolidated Balance Sheets

A-12

Consolidated Statements of Cash Flows

A-13

Hurricane Impacts

A-14



1

Due to the change in the company's financial reporting calendar beginning in 2017, the 2017 third quarter included the period from July 1, 2017 through September 30, 2017 (92 days) compared to the 2016 third quarter, which included the period from June 18, 2016 to September 9, 2016 (84 days), and the 2017 first three quarters included the period from December 31, 2016 through September 30, 2017 (274 days) compared to the 2016 first three quarters which included the period from January 2, 2016 to September 9, 2016 (252 days). Prior year results have not been restated for the change in fiscal calendar.




NOTE:  When presenting contract sales performance on a comparable basis, we adjusted the prior year period to include contract sales from the same calendar days as the current year period.


 

A-1


MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)
(Unaudited)






Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

REVENUES








Sale of vacation ownership products

$

180,522



$

131,012



$

543,687



$

415,831


Resort management and other services

76,882



70,185



229,004



208,049


Financing

34,685



29,066



99,326



86,944


Rental

81,177



73,776



250,621



229,133


Cost reimbursements

113,724



97,598



348,091



303,973


TOTAL REVENUES

486,990



401,637



1,470,729



1,243,930


EXPENSES








Cost of vacation ownership products

42,826



34,779



131,589



104,149


Marketing and sales

100,527



79,017



305,217



236,348


Resort management and other services

44,696



39,825



130,349



123,695


Financing

5,062



4,581



12,528



11,782


Rental

71,048



60,970



211,643



191,658


General and administrative

26,666



22,151



83,739



72,871


Litigation settlement

2,033





2,216



(303)


Consumer financing interest

6,498



5,361



18,090



15,840


Royalty fee

15,220



14,624



47,597



42,007


Cost reimbursements

113,724



97,598



348,091



303,973


TOTAL EXPENSES

428,300



358,906



1,291,059



1,102,020


Gains and other income, net

6,977



454



6,752



11,129


Interest expense

(2,642)



(2,262)



(5,180)



(6,331)


Other

104



(75)



(365)



(4,528)


INCOME BEFORE INCOME TAXES

63,129



40,848



180,877



142,180


Provision for income taxes

(22,367)



(14,041)



(62,139)



(54,656)


NET INCOME

$

40,762



$

26,807



$

118,738



$

87,524










Earnings per share - Basic

$

1.50



$

0.99



$

4.36



$

3.10


Earnings per share - Diluted

$

1.47



$

0.97



$

4.26



$

3.05


Basic Shares

27,090



27,152



27,219



28,207


Diluted Shares

27,713



27,680



27,858



28,718















Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

Vacation ownership contract sales

$

198,460



$

169,831



$

602,186



$

489,317



NOTE: Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars. We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses.


 

A-2


MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In thousands, except per share amounts)


ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED








Quarter Ended


Year to Date Ended



September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016



(92 days)


(84 days)


(274 days)


(252 days)

Net income


$

40,762



$

26,807



$

118,738



$

87,524


Less certain items:









Acquisition costs


(56)



138



555



4,713


Variable compensation expense related to the impact of the Hurricanes


3,673





3,673




Operating results from the sold portion of the Surfers Paradise, Australia property








(275)


Litigation settlement


2,033





2,216



(303)


Gains and other income, net


(6,977)



(454)



(6,752)



(11,129)


Certain items before depreciation and provision for income taxes 1


(1,327)



(316)



(308)



(6,994)


Depreciation on the sold portion of the Surfers Paradise, Australia property








469


Provision for income taxes on certain items


(459)



86



(845)



2,568


Adjusted net income **


$

38,976



$

26,577



$

117,585



$

83,567


Earnings per share - Diluted


$

1.47



$

0.97



$

4.26



$

3.05


Adjusted earnings per share - Diluted **


$

1.41



$

0.96



$

4.22



$

2.91


Diluted Shares


27,713



27,680



27,858



28,718



EBITDA AND ADJUSTED EBITDA








Quarter Ended


Year to Date Ended



September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016



(92 days)


(84 days)


(274 days)


(252 days)

Net income


$

40,762



$

26,807



$

118,738



$

87,524


Interest expense 2


2,642



2,262



5,180



6,331


Tax provision


22,367



14,041



62,139



54,656


Depreciation and amortization


5,610



4,679



15,802



14,856


EBITDA **


71,381



47,789



201,859



163,367


Non-cash share-based compensation


3,898



3,139



12,349



9,995


Certain items before depreciation and provision for income taxes 1


(1,327)



(316)



(308)



(6,994)


Adjusted EBITDA **


$

73,952



$

50,612



$

213,900



$

166,368




**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



1

Please see pages A-10 and A-11 for additional information regarding these items. The certain items adjustments for the Adjusted EBITDA reconciliations exclude depreciation and the provision for income taxes on certain items included in the Adjusted Net Income reconciliations.



2

Interest expense excludes consumer financing interest expense.

 

A-3


MARRIOTT VACATIONS WORLDWIDE CORPORATION

NORTH AMERICA SEGMENT

(In thousands)






Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

REVENUES








Sale of vacation ownership products

$

163,454



$

116,184



$

495,958



$

373,341


Resort management and other services

68,236



62,956



206,830



182,665


Financing

32,854



27,438



93,812



81,699


Rental

69,458



63,387



224,588



201,524


Cost reimbursements

103,799



88,834



320,242



278,190


TOTAL REVENUES

437,801



358,799



1,341,430



1,117,419


EXPENSES








Cost of vacation ownership products

37,404



30,134



116,715



89,876


Marketing and sales

87,308



67,662



266,962



202,888


Resort management and other services

37,453



33,849



111,664



101,322


Rental

62,236



53,131



187,141



164,680


Litigation settlement

2,033





2,033



(303)


Royalty fee

1,956



2,813



7,684



6,753


Cost reimbursements

103,799



88,834



320,242



278,190


TOTAL EXPENSES

332,189



276,423



1,012,441



843,406


(Losses) gains and other (expense) income, net

(1,754)



(27)



(1,950)



12,297


Other

46



(55)



171



(4,068)


SEGMENT FINANCIAL RESULTS

$

103,904



$

82,294



$

327,210



$

282,242










SEGMENT FINANCIAL RESULTS

$

103,904



$

82,294



$

327,210



$

282,242


Less certain items:








Acquisition costs

1



123



28



4,260


Variable compensation expense related to the impact of the Hurricanes

1,754





1,754




Litigation settlement

2,033





2,033



(303)


Losses (gains) and other expense (income), net

1,754



27



1,950



(12,297)


Certain items

5,542



150



5,765



(8,340)


ADJUSTED SEGMENT FINANCIAL RESULTS **

$

109,446



$

82,444



$

332,975



$

273,902











Quarter Ended


Year to Date Ended


September 30, 2017


September 9, 2016


September 30, 2017


September 9, 2016


(92 days)


(84 days)


(274 days)


(252 days)

Vacation ownership contract sales

$

179,227



$

150,964



$

547,546



$

436,214




**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses. Further we have reclassified certain management and other services revenues between the North America and Asia Pacific segments.

 

A-4


MARRIOTT VACATIONS WORLDWIDE CORPORATION
ASIA PACIFIC SEGMENT
(In thousands)






Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

REVENUES








Sale of vacation ownership products

$

11,362



$

10,010



$

32,378



$

26,645


Resort management and other services

1,022



816



3,055



8,594


Financing

1,122



918



3,350



2,906


Rental

2,733



2,324



9,115



12,773


Cost reimbursements

713



692



2,584



2,250


TOTAL REVENUES

16,952



14,760



50,482



53,168


EXPENSES








Cost of vacation ownership products

2,687



1,712



6,642



5,018


Marketing and sales

8,754



7,166



25,672



20,072


Resort management and other services

1,144



900



3,297



8,546


Rental

3,902



3,330



12,136



15,884


Royalty fee

225



239



674



564


Cost reimbursements

713



692



2,584



2,250


TOTAL EXPENSES

17,425



14,039



51,005



52,334


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



490



(20)



(1,008)


Other

1



(20)



(9)



(249)


SEGMENT FINANCIAL RESULTS

$

(472)



$

1,191



$

(552)



$

(423)










SEGMENT FINANCIAL RESULTS

$

(472)



$

1,191



$

(552)



$

(423)


Less certain items:








Acquisition costs



15





242


Operating results from the sold portion of the Surfers Paradise, Australia property







194


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



(490)



20



1,008


Certain items



(475)



20



1,444


ADJUSTED SEGMENT FINANCIAL RESULTS **

$

(472)



$

716



$

(532)



$

1,021











Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

Vacation ownership contract sales

$

12,569



$

11,169



$

36,131



$

31,049




**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues and Resort management and other services expenses. Further we have reclassified certain management and other services revenues between the North America and Asia Pacific segments.


 

A-5


MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
(In thousands)






Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

REVENUES








Sale of vacation ownership products

$

5,706



$

4,818



$

15,351



$

15,845


Resort management and other services

7,624



6,413



19,119



16,790


Financing

709



710



2,164



2,339


Rental

8,986



8,065



16,918



14,836


Cost reimbursements

9,212



8,072



25,265



23,533


TOTAL REVENUES

32,237



28,078



78,817



73,343


EXPENSES








Cost of vacation ownership products

715



1,599



2,081



4,158


Marketing and sales

4,465



4,189



12,583



13,388


Resort management and other services

6,099



5,076



15,388



13,827


Rental

4,910



4,509



12,366



11,094


Royalty fee

70



97



195



264


Cost reimbursements

9,212



8,072



25,265



23,533


TOTAL EXPENSES

25,471



23,542



67,878



66,264


SEGMENT FINANCIAL RESULTS

$

6,766



$

4,536



$

10,939



$

7,079











Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

Vacation ownership contract sales

$

6,664



$

7,698



$

18,509



$

22,054




**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues and Resort management and other services expenses.


 

A-6


MARRIOTT VACATIONS WORLDWIDE CORPORATION
CORPORATE AND OTHER
(In thousands)






Quarter Ended


Year to Date Ended


September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016


(92 days)


(84 days)


(274 days)


(252 days)

EXPENSES








Cost of vacation ownership products

$

2,020



$

1,334



$

6,151



$

5,097


Financing

5,062



4,581



12,528



11,782


General and administrative

26,666



22,151



83,739



72,871


Litigation settlement





183




Consumer financing interest

6,498



5,361



18,090



15,840


Royalty fee

12,969



11,475



39,044



34,426


TOTAL EXPENSES

53,215



44,902



159,735



140,016


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

8,731



(9)



8,722



(160)


Interest expense

(2,642)



(2,262)



(5,180)



(6,331)


Other

57





(527)



(211)


TOTAL FINANCIAL RESULTS

$

(47,069)



$

(47,173)



$

(156,720)



$

(146,718)










TOTAL FINANCIAL RESULTS

$

(47,069)



$

(47,173)



$

(156,720)



$

(146,718)


Less certain items:








Acquisition costs

(57)





527



211


Variable compensation expense related to the impact of the Hurricanes

1,919





1,919




Litigation settlement





183




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

(8,731)



9



(8,722)



160


Certain items

(6,869)



9



(6,093)



371


ADJUSTED FINANCIAL RESULTS **

$

(53,938)



$

(47,164)



$

(162,813)



$

(146,347)




**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses.

 

A-7


MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)








Quarter Ended


Year to Date Ended



September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016



(92 days)


(84 days)


(274 days)


(252 days)

Vacation ownership contract sales


$

198,460



$

169,831



$

602,186



$

489,317


Revenue recognition adjustments:









Reportability 1


1,135



(18,994)



1,150



(17,029)


Sales reserve 2


(11,740)



(13,872)



(38,597)



(33,447)


Other 3


(7,333)



(5,953)



(21,052)



(23,010)


Sale of vacation ownership products


$

180,522



$

131,012



$

543,687



$

415,831




1

Adjustment for lack of required downpayment or contract sales in rescission period.



2

Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.



3

Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN
(ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)








Quarter Ended


Year to Date Ended



September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016



(92 days)


(84 days)


(274 days)


(252 days)

Sale of vacation ownership products


$

180,522



$

131,012



$

543,687



$

415,831


Less:









Cost of vacation ownership products


42,826



34,779



131,589



104,149


Marketing and sales


100,527



79,017



305,217



236,348


Development margin


37,169



17,216



106,881



75,334


Revenue recognition reportability adjustment


(718)



12,369



(690)



11,043


Variable compensation expense related to the impact of the Hurricanes


1,754





1,754




Adjusted development margin **


$

38,205



$

29,585



$

107,945



$

86,377


Development margin percentage 1


20.6

%


13.1

%


19.7

%


18.1

%

Adjusted development margin percentage


21.3

%


19.7

%


19.9

%


20.0

%



**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



1

Development margin percentage represents Development margin divided by Sale of vacation ownership products.


 

A-8


MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)








Quarter Ended


Year to Date Ended



September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016



(92 days)


(84 days)


(274 days)


(252 days)

Vacation ownership contract sales


$

179,227



$

150,964



$

547,546



$

436,214


Revenue recognition adjustments:









Reportability 1


1,446



(16,853)



1,887



(12,982)


Sales reserve 2


(10,277)



(11,923)



(33,090)



(26,960)


Other 3


(6,942)



(6,004)



(20,385)



(22,931)


Sale of vacation ownership products


$

163,454



$

116,184



$

495,958



$

373,341




1

Adjustment for lack of required downpayment or contract sales in rescission period.



2

Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve.



3

Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue.

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN
(ADJUSTED SALE OF VACATION OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)








Quarter Ended


Year to Date Ended



September 30,
2017


September 9,
2016


September 30,
2017


September 9,
2016



(92 days)


(84 days)


(274 days)


(252 days)

Sale of vacation ownership products


$

163,454



$

116,184



$

495,958



$

373,341


Less:









Cost of vacation ownership products


37,404



30,134



116,715



89,876


Marketing and sales


87,308



67,662



266,962



202,888


Development margin


38,742



18,388



112,281



80,577


Revenue recognition reportability adjustment


(971)



10,836



(1,260)



8,363


Variable compensation expense related to the impact of the Hurricanes


1,754





1,754




Adjusted development margin **


$

39,525



$

29,224



$

112,775



$

88,940


Development margin percentage 1


23.7

%


15.8

%


22.6

%


21.6

%

Adjusted development margin percentage


24.4

%


22.0

%


22.8

%


23.0

%



**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.



1

Development margin percentage represents Development margin divided by Sale of vacation ownership products.


 

A-9


MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions, except per share amounts)
2017 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK




Fiscal Year
2017 (low)


Fiscal Year
2017 (high)

Net income


$

146



$

149


Adjustments to reconcile Net income to Adjusted net income





Certain items 1


13



13


Business interruption insurance proceeds 2


(9)



(9)


Provision for income taxes on adjustments to net income


(3)



(3)


Adjusted net income **


$

147



$

150


Earnings per share - Diluted 3


$

5.26



$

5.37


Adjusted earnings per share - Diluted **, 3


$

5.30



$

5.41


Diluted shares 3


27.7



27.7




1

Certain items adjustment includes $7 million of variable compensation expense related to the impact of the Hurricanes, $2 million of Hurricane related insurance deductibles, $2 million of litigation settlements and $2 million of acquisition costs.



2

Includes net business interruption insurance proceeds associated with Hurricane Matthew.



3

Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through November 2, 2017.

 

2017 ADJUSTED EBITDA OUTLOOK




Fiscal Year
2017 (low)


Fiscal Year
2017 (high)

Net income


$

146



$

149


Interest expense 1


10



10


Tax provision


80



82


Depreciation and amortization


22



22


EBITDA **


258



263


Non-cash share-based compensation


16



16


Certain items 2 and business interruption insurance proceeds 3


4



4


Adjusted EBITDA **


$

278



$

283




1

Interest expense excludes consumer financing interest expense.



2

Certain items adjustment includes $7 million of variable compensation expense related to the impact of the Hurricanes, $2 million of Hurricane related insurance deductibles, $2 million of litigation settlements and $2 million of acquisition costs.



3

Includes net business interruption insurance proceeds associated with Hurricane Matthew.

 

2017 ADJUSTED FREE CASH FLOW OUTLOOK




Fiscal Year

2017 (low)


Fiscal Year

2017 (high)

Net cash provided by operating activities


$

120



$

130


Capital expenditures for property and equipment (excluding inventory):





New sales centers 1


(8)



(7)


Other


(22)



(21)


Borrowings from securitization transactions


400



400


Repayment of debt related to securitizations


(302)



(297)


Free cash flow **


188



205


Adjustments:





Net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility 2


27



30


Increase in restricted cash


(10)



(10)


Adjusted free cash flow **


$

205



$

225




1

Represents the incremental investment in new sales centers.



2

Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2016 and 2017 year ends.



**

Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use.


 

A-10


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 United States generally accepted accounting principles ("GAAP"). We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by a double 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, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and / or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP financial measures we report may not be comparable to those reported by others.


Adjusted Net Income


We evaluate non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, and Adjusted Development Margin, that exclude certain items in the quarters and first three quarters ended September 30, 2017 and September 9, 2016 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 our comparison of results from our on-going core operations before these items with results from other vacation ownership companies.


Certain items - Quarter and Three Quarters Ended September 30, 2017


In our Statement of Income for the quarter ended September 30, 2017, we recorded $1.3 million of net pre-tax items, which included $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew and a charge of $1.7 million associated with the estimated property damage insurance deductibles at several of our properties, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria (both of which were recorded in gains and other income), $3.7 million of variable compensation expense related to the impact of the Hurricanes, $2.0 million of litigation settlement expenses and a $0.1 million favorable true up of previously recorded acquisition costs.


In our Statement of Income for the first three quarters ended September 30, 2017, we recorded $0.3 million of net pre-tax items, which included $8.7 million in net insurance proceeds related to the settlement of business interruption insurance claims arising from Hurricane Matthew and a charge of $1.7 million associated with the estimated property damage insurance deductibles at several of our properties, primarily in Florida and the Caribbean, that were impacted by Hurricane Irma and Hurricane Maria (both of which were recorded in gains and other income), $3.7 million of variable compensation expense related to the impact of the Hurricanes, $2.2 million of litigation settlement expenses, $0.6 million of acquisition costs and $0.2 million of losses and other expense.


Certain items - Quarter and Three Quarters Ended September 9, 2016


In our Statement of Income for the quarter ended September 9, 2016, we recorded $0.3 million of net pre-tax items, which included $0.5 million of gains and other income and $0.1 million of acquisition costs.


In our Statement of Income for the three quarters ended September 9, 2016, we recorded $6.5 million of net pre-tax items, which included $11.1 million of gains and other income, $4.7 million of acquisition costs, a $0.3 million reversal of litigation settlement expense, and $0.2 million of losses (including $0.5 million of depreciation) from the operations of the property we acquired in Australia in 2015 that we sold in the second quarter of 2016.


Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses)


We evaluate Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) as an indicator of operating performance. Adjusted Development Margin adjusts Sale of vacation ownership products revenues for the impact of revenue reportability, includes corresponding adjustments to Cost of vacation ownership products expense and Marketing and sales expense associated with the change in revenues from the Sale of vacation ownership products, and may include adjustments for certain items as itemized in the discussion of Adjusted Net Income above. We evaluate Adjusted Development Margin because it allows for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development Margin.


A-11


MARRIOTT VACATIONS WORLDWIDE CORPORATION

NON-GAAP FINANCIAL MEASURES


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


EBITDA is defined as earnings, or net income, before interest expense (excluding consumer financing interest expense), provision for income taxes, depreciation and amortization. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense because the associated debt is secured by vacation ownership notes receivable that have been sold to bankruptcy remote special purpose entities and is generally non-recourse to us. Further, we consider consumer financing interest expense to be an operating expense of our business. We consider EBITDA and Adjusted EBITDA to be indicators of operating performance, which we use to measure our ability to service debt, fund capital expenditures and expand our business. We also use EBITDA and Adjusted EBITDA, as do analysts, lenders, investors and others, because these measures exclude 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 provision 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. Adjusted EBITDA reflects additional adjustments for certain items, as itemized in the discussion of Adjusted Net Income above, and excludes non-cash 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. Prior period presentation has been recast for consistency. We evaluate Adjusted EBITDA 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. Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of these items with results from other vacation ownership companies.


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, changes in restricted cash, and the borrowing and repayment activity related to our securitizations, which cash can be used for 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 organizational and separation related, litigation, and other cash charges, 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.

 

A-12


MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)



(Unaudited)
September
30, 2017


December
30, 2016

ASSETS




Cash and cash equivalents

$

440,074



$

147,102


Restricted cash (including $34,413 and $27,525 from VIEs, respectively)

61,701



66,000


Accounts and contracts receivable, net (including $5,702 and $4,865 from VIEs, respectively)

136,107



161,733


Vacation ownership notes receivable, net (including $875,237 and $717,543 from VIEs, respectively)

1,076,402



972,311


Inventory

735,072



712,536


Property and equipment

253,738



202,802


Other (including $13,153 and $0 from VIEs, respectively)

119,942



128,935


TOTAL ASSETS

$

2,823,036



$

2,391,419


LIABILITIES AND EQUITY




Accounts payable

$

76,766



$

124,439


Advance deposits

60,247



55,542


Accrued liabilities (including $739 and $584 from VIEs, respectively)

128,236



147,469


Deferred revenue

103,376



95,495


Payroll and benefits liability

97,080



95,516


Deferred compensation liability

72,803



62,874


Debt, net (including $906,701 and $738,362 from VIEs, respectively)

1,153,222



737,224


Other

12,789



15,873


Deferred taxes

169,295



149,168


TOTAL LIABILITIES

1,873,814



1,483,600


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; 36,857,186 and 36,633,868 shares issued, respectively

369



366


Treasury stock — at cost; 10,363,139 and 9,643,562 shares, respectively

(689,134)



(606,631)


Additional paid-in capital

1,184,635



1,162,283


Accumulated other comprehensive income

17,156



5,460


Retained earnings

436,196



346,341


TOTAL EQUITY

949,222



907,819


TOTAL LIABILITIES AND EQUITY

$

2,823,036



$

2,391,419



The abbreviation VIEs above means Variable Interest Entities.


 

A-13


MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)



Year to Date Ended


September 30,
2017


September 9,
2016


(274 days)


(252 days)

OPERATING ACTIVITIES




Net income

$

118,738



$

87,524


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation

15,802



14,856


Amortization of debt discount and issuance costs

5,783



3,784


Provision for loan losses

38,577



31,817


Share-based compensation

12,349



9,995


Loss (gain) on disposal of property and equipment, net

1,683



(11,129)


Deferred income taxes

20,769



21,823


Net change in assets and liabilities:




Accounts and contracts receivable

25,094



(2,824)


Notes receivable originations

(345,663)



(218,190)


Notes receivable collections

203,840



177,451


Inventory

27,112



(6,118)


Purchase of vacation ownership units for future transfer to inventory

(33,594)




Other assets

23,110



38,103


Accounts payable, advance deposits and accrued liabilities

(64,994)



(73,935)


Deferred revenue

7,121



26,832


Payroll and benefit liabilities

1,241



(20,898)


Deferred compensation liability

9,928



8,846


Other liabilities

(638)



1,190


Other, net

4,529



1,758


Net cash provided by operating activities

70,787



90,885


INVESTING ACTIVITIES




Capital expenditures for property and equipment (excluding inventory)

(21,167)



(22,445)


Purchase of company owned life insurance

(12,100)




Dispositions, net

17



68,525


Net cash (used in) provided by investing activities

(33,250)



46,080


FINANCING ACTIVITIES




Borrowings from securitization transactions

400,260



376,622


Repayment of debt related to securitization transactions

(231,921)



(254,510)


Borrowings from Revolving Corporate Credit Facility

87,500



85,000


Repayment of Revolving Corporate Credit Facility

(87,500)



(85,000)


Proceeds from issuance of Convertible Notes

230,000




Purchase of Convertible Note Hedges

(33,235)




Proceeds from issuance of Warrants

20,332




Debt issuance costs

(14,459)



(4,065)


Repurchase of common stock

(83,067)



(163,359)


Accelerated stock repurchase forward contract



(14,470)


Payment of dividends

(28,590)



(26,067)


Payment of withholding taxes on vesting of restricted stock units

(10,713)



(3,972)


Other, net

(502)



194


Net cash provided by (used in) financing activities

248,105



(89,627)


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

3,031



(3,247)


Increase in cash, cash equivalents, and restricted cash

288,673



44,091


Cash, cash equivalents and restricted cash, beginning of period

213,102



248,512


Cash, cash equivalents and restricted cash, end of period

$

501,775



$

292,603



 


A-14


MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In thousands, except per share amounts)


The information below in the column headed "Quarter and Year to Date Ended September 30, 2017" should be read in conjunction with our net income, adjusted net income, adjusted earnings per share - diluted, EBITDA and adjusted EBITDA results for such periods presented on pages A-1 and A-2 of these schedules, and provides our estimate of the amount by which the presented line items would have been increased or decreased had the Hurricanes not occurred. The information below in the column headed "Full Year Outlook 2017" should be read in conjunction with our outlook for net income, adjusted net income, adjusted earnings per share - diluted, EBITDA and adjusted EBITDA presented on page A-9 of these schedules, and provides our estimate of the amount by which our expectations for the presented line items have been increased or decreased due to the Hurricanes.


HURRICANE IMPACT ON ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED




Quarter and

Year to Date Ended

September 30, 2017


Full Year Outlook
2017

Vacation ownership contract sales


$

11,900



$

20,500


REVENUES





Sale of vacation ownership products


$

11,200



$

19,300


Resort management and other services


900



2,200


Rental


1,800



4,000


TOTAL REVENUES


13,900



25,500


EXPENSES





Cost of vacation ownership products


2,600



4,500


Marketing and sales


3,500



5,900


Resort management and other services


200



500


Rental


400



800


Royalty fee


200



300


Variable compensation expense related to the impact of the Hurricanes


3,700



6,600


TOTAL EXPENSES


10,600



18,600


IMPACT BEFORE INCOME TAXES


3,300



6,900


Provision for income taxes 1


(2,200)



(3,800)


Hurricane impact on adjusted net income


$

1,100



$

3,100







Hurricane impact on Adjusted Earnings per share - Diluted


$

0.04



$

0.11


Diluted shares


27,713



27,741







HURRICANE IMPACT ON NET INCOME, EBITDA AND ADJUSTED EBITDA




Quarter and

Year to Date Ended

September 30, 2017


Full Year Outlook
2017

Adjusted net income


$

1,100



$

3,100


Add certain items:





Variable compensation expense related to the impact of the Hurricanes


3,700



6,600


Hurricane related insurance deductibles


1,700



1,700


Certain items before provision for income taxes


5,400



8,300


Provision for income taxes on certain items


(2,000)



(3,100)


Net income


4,500



8,300


Interest expense





Tax provision 1


4,200



6,900


Depreciation and amortization





EBITDA


8,700



15,200


Certain items


(5,400)



(8,300)


Adjusted EBITDA


$

3,300



$

6,900




1

Includes employee disaster relief credits ($1 million and $1.2 million for the third quarter and full year, respectively).



 

View original content with multimedia:http://www.prnewswire.com/news-releases/marriott-vacations-worldwide-reports-third-quarter-financial-results-300548012.html