Marriott Vacations Worldwide ("MVW") Reports First Quarter 2022 Financial Results
ORLANDO, Fla., May 5, 2022 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) (the "Company") reported first quarter 2022 financial results.
"Our start to 2022 was very strong, with first quarter adjusted EBITDA totaling $188 million and contract sales of $394 million, both exceeding pre-pandemic levels," said Stephen P. Weisz, chief executive officer. "Vacations continue to play an infinitely more meaningful role in people's lives, and with our resilient business model and portfolio of leading brands, we are well positioned for growth."
First Quarter 2022 Highlights:
- Consolidated Vacation Ownership contract sales totaled $394 million in the first quarter of 2022; VPG remained strong at $4,706, slightly higher than the prior year quarter and up 9% sequentially.
- Net income attributable to common shareholders was $58 million, or $1.23 fully diluted earnings per share.
- Adjusted net income attributable to common shareholders was $81 million and adjusted fully diluted earnings per share was $1.70.
- Adjusted EBITDA was $188 million in the first quarter of 2022, 13% higher than 2019, as the Company continues to see a strong recovery in the business.
- During the first quarter of 2022, the Company returned approximately $168 million to shareholders, repurchasing nearly 765,000 shares of its common stock for $119 million at an average price per share of $156.50 and paying two quarterly dividends totaling $49 million.
- The Company amended its revolving corporate credit facility, increasing its borrowing capacity to $750 million and extending the maturity date to March 31, 2027.
- Subsequent to the end of the quarter, the Company closed on the sale of its VRI Americas business.
Vacation Ownership
Revenues excluding cost reimbursements increased 60% in the first quarter of 2022 compared to the prior year, reflecting improved performance from all of the Company's lines of business.
Segment financial results were $173 million in the first quarter of 2022 and Segment margin was 27%. Segment adjusted EBITDA increased $131 million to $199 million, with Segment adjusted EBITDA margin of 32%, over 1,400 basis points higher than the first quarter of 2021.
Exchange & Third-Party Management
Revenues excluding cost reimbursements increased 5% in the first quarter of 2022 compared to the prior year. Interval International active members increased 9% to 1.6 million and Average revenue per member decreased 6% compared to the prior year.
Segment financial results were $33 million in the first quarter of 2022 and Segment margin was 45%. Segment adjusted EBITDA was $43 million, an increase of $2 million compared to the prior year, with Segment adjusted EBITDA margin of 57%, roughly in line with the first quarter of 2021.
Corporate and Other
General and administrative costs increased $15 million in the first quarter of 2022 compared to the prior year as a result of higher salary costs due to reduced work week programs in the prior year, higher bonus expense, and a decrease in credits related to incentives under the CARES Act.
Balance Sheet and Liquidity
The Company ended the quarter with approximately $1.2 billion in liquidity, including $354 million of cash and cash equivalents, $120 million of gross notes receivable that were eligible for securitization, and $748 million of available capacity under its revolving corporate credit facility.
At the end of the first quarter of 2022, the Company had $2.7 billion of net corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.
Full Year 2022 Outlook (in millions, except per share amounts)
The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2022 expected GAAP results for the Company.
The Company is re-affirming guidance as reflected in the chart below for the full year 2022.
Income before income taxes attributable to common shareholders | $443 | to | $483 | |
Net income attributable to common shareholders | $317 | to | $347 | |
Earnings per share - diluted(1) | $6.85 | to | $7.49 | |
Net cash, cash equivalents and restricted cash provided by operating activities | $300 | to | $309 | |
Contract sales | $1,675 | to | $1,775 | |
Adjusted EBITDA | $860 | to | $920 | |
Adjusted pretax net income | $585 | to | $645 | |
Adjusted net income attributable to common shareholders | $424 | to | $469 | |
Adjusted earnings per share - diluted(1) | $9.13 | to | $10.09 | |
Adjusted free cash flow | $560 | to | $640 |
(1) Earnings per share - diluted and Adjusted earnings per share - diluted increased from the previous guidance of $6.52 to $7.14 and $8.72 to $9.65, respectively, primarily from the impact of additional share repurchase activity through |
Non-GAAP Financial Information
Non-GAAP financial measures, such as Adjusted net income or loss attributable to common shareholders, Adjusted EBITDA, Adjusted EBITDA margin, Segment adjusted EBITDA margin, Adjusted pretax net income, Adjusted fully diluted earnings or loss per share, Adjusted development profit, Adjusted development profit margin, and other adjusted financial measures, are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow.
First Quarter 2022 Financial Results Conference Call
The Company will hold a conference call on May 6, 2022 at 8:30 a.m. ET to discuss these financial results and provide an update on business conditions. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the Company's website at ir.mvwc.com. An audio replay of the conference call will be available for 30 days on the Company's website.
About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. The Company has over 120 vacation ownership resorts and approximately 700,000 owner families in a diverse portfolio that includes some of the most iconic vacation ownership brands. The Company also operates exchange networks and membership programs comprised of nearly 3,200 affiliated resorts in over 90 nations, as well as provides management services to other resorts and lodging properties. As a leader and innovator in the vacation industry, the Company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International, Inc. and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com.
Note on forward-looking statements
This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about expectations for future growth and projections for 2022, that are not historical facts. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the effects of the COVID-19 pandemic, including reduced demand for vacation ownership and exchange products and services, volatility in the international and national economy and credit markets, worker absenteeism, quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic, including its short and longer-term impact on the demand for travel and on consumer confidence; the impact of the availability and distribution of effective vaccines on the demand for travel and consumer confidence; the effectiveness of available vaccines against variants of the COVID-19 virus; the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines become widely available; competitive conditions; the availability of capital to finance growth; the effects of steps we have taken and may continue to take to reduce operating costs and/or enhance health and cleanliness protocols at our resorts due to the COVID-19 pandemic; political or social strife, and other matters referred to under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, and which may be discussed in our periodic filings with the U.S. Securities and Exchange Commission (the "SEC"), any of which could cause actual results to differ materially from those expressed or implied herein. These statements 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.
Financial Schedules Follow
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||
FINANCIAL SCHEDULES | ||
QUARTER 1, 2022 | ||
TABLE OF CONTENTS | ||
Summary Financial Information and Adjusted EBITDA by Segment | A-1 | |
Consolidated Statements of Income | A-2 | |
Revenues and Profit by Segment | A-3 | |
Adjusted Net Income (Loss) Attributable to Common Shareholders and Adjusted Earnings Per Share - Diluted | A-5 | |
Adjusted EBITDA | A-6 | |
Consolidated Contract Sales to Adjusted Development Profit | A-7 | |
Vacation Ownership and Exchange & Third-Party Management Segment Adjusted EBITDA | A-8 | |
Consolidated Balance Sheets | A-9 | |
Consolidated Statements of Cash Flows | A-10 | |
2022 Outlook | ||
Adjusted Net Income Attributable to Common Shareholders, Adjusted Earnings Per Share - Diluted | ||
and Adjusted EBITDA | A-11 | |
Adjusted Free Cash Flow | A-12 | |
Quarterly Operating Metrics | A-13 | |
Non-GAAP Financial Measures | A-14 | |
A-1 | ||||||||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||||||||
(In millions, except VPG, tours, total active members, average revenue per member and per share amounts) | ||||||||||
(Unaudited) | ||||||||||
SUMMARY FINANCIAL INFORMATION | ||||||||||
Three Months Ended | Change % | |||||||||
March 31, 2022 | March 31, 2021 | |||||||||
Key Measures | ||||||||||
Total consolidated contract sales | $ 394 | $ 226 | 75% | |||||||
VPG | $ 4,706 | $ 4,644 | 1% | |||||||
Tours | 78,505 | 45,871 | 71% | |||||||
Total active members (000's)(1) | 1,606 | 1,479 | 9% | |||||||
Average revenue per member(1) | $ 44.33 | $ 47.13 | (6%) | |||||||
GAAP Measures | ||||||||||
Revenues | $ 1,052 | $ 759 | 39% | |||||||
Income (loss) before income taxes and noncontrolling interests | $ 90 | $ (36) | NM | |||||||
Net income (loss) attributable to common shareholders | $ 58 | $ (28) | NM | |||||||
Earnings (loss) per share - diluted | $ 1.23 | $ (0.68) | NM | |||||||
Non-GAAP Measures ** | ||||||||||
Adjusted EBITDA | $ 188 | $ 69 | NM | |||||||
Adjusted pretax income (loss) | $ 120 | $ (23) | NM | |||||||
Adjusted net income (loss) attributable to common shareholders | $ 81 | $ (20) | NM | |||||||
Adjusted earnings (loss) per share - diluted | $ 1.70 | $ (0.49) | NM | |||||||
(1) Includes members at the end of each period for the Interval International exchange network only. | ||||||||||
ADJUSTED EBITDA BY SEGMENT | ||||||||||
Three Months Ended | Change % | |||||||||
March 31, 2022 | March 31, 2021 | |||||||||
Vacation Ownership | $ 199 | $ 68 | NM | |||||||
Exchange & Third-Party Management | 43 | 41 | 4% | |||||||
Segment adjusted EBITDA** | 242 | 109 | NM | |||||||
General and administrative | (54) | (40) | (35%) | |||||||
Consolidated property owners' associations(1) | — | — | NM | |||||||
Adjusted EBITDA** | $ 188 | $ 69 | NM | |||||||
(1) Prior year amounts eliminated to conform with our current year presentation. | ||||||||||
** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use. | ||||||||||
NM - Not meaningful | ||||||||||
A-2 | ||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||
CONSOLIDATED STATEMENTS OF INCOME | ||||
(In millions, except per share amounts) | ||||
(Unaudited) | ||||
Three Months Ended | ||||
March 31, 2022 | March 31, 2021 | |||
REVENUES | ||||
Sale of vacation ownership products | $ 310 | $ 163 | ||
Management and exchange | 222 | 193 | ||
Rental | 133 | 89 | ||
Financing | 71 | 59 | ||
Cost reimbursements | 316 | 255 | ||
TOTAL REVENUES | 1,052 | 759 | ||
EXPENSES | ||||
Cost of vacation ownership products | 60 | 40 | ||
Marketing and sales | 182 | 109 | ||
Management and exchange | 127 | 117 | ||
Rental | 81 | 82 | ||
Financing | 21 | 21 | ||
General and administrative | 61 | 46 | ||
Depreciation and amortization | 33 | 41 | ||
Litigation charges | 3 | 3 | ||
Royalty fee | 27 | 25 | ||
Cost reimbursements | 316 | 255 | ||
TOTAL EXPENSES | 911 | 739 | ||
Gains and other income, net | 4 | 6 | ||
Interest expense | (27) | (43) | ||
Transaction and integration costs | (28) | (19) | ||
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING | ||||
INTERESTS | 90 | (36) | ||
(Provision for) benefit from income taxes | (32) | 11 | ||
NET INCOME (LOSS) | 58 | (25) | ||
Net income attributable to noncontrolling interests | — | (3) | ||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 58 | $ (28) | ||
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON | ||||
SHAREHOLDERS | ||||
Basic | $ 1.36 | $ (0.68) | ||
Diluted | $ 1.23 | $ (0.68) | ||
NOTE: Earnings (loss) per share - Basic and Earnings (loss) per share - Diluted are calculated using whole dollars. |
A-3 | ||||||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||||||
REVENUES AND PROFIT BY SEGMENT | ||||||||
for the three months ended March 31, 2022 | ||||||||
(In millions) | ||||||||
(Unaudited) | ||||||||
Reportable Segment | Corporate and Other | Total | ||||||
Vacation Ownership | Exchange & Third-Party Management | |||||||
REVENUES | ||||||||
Sales of vacation ownership products | $ 310 | $ — | $ — | $ 310 | ||||
Management and exchange(1) | ||||||||
Ancillary revenues | 54 | 1 | — | 55 | ||||
Management fee revenues | 42 | 10 | (3) | 49 | ||||
Exchange and other services revenues | 30 | 53 | 35 | 118 | ||||
Management and exchange | 126 | 64 | 32 | 222 | ||||
Rental | 122 | 11 | — | 133 | ||||
Financing | 71 | — | — | 71 | ||||
Cost reimbursements(1) | 327 | 9 | (20) | 316 | ||||
TOTAL REVENUES | $ 956 | $ 84 | $ 12 | $ 1,052 | ||||
PROFIT | ||||||||
Development | $ 68 | $ — | $ — | $ 68 | ||||
Management and exchange(1) | 72 | 31 | (8) | 95 | ||||
Rental(1) | 32 | 11 | 9 | 52 | ||||
Financing | 50 | — | — | 50 | ||||
TOTAL PROFIT | 222 | 42 | 1 | 265 | ||||
OTHER | ||||||||
General and administrative | — | — | (61) | (61) | ||||
Depreciation and amortization | (22) | (9) | (2) | (33) | ||||
Litigation charges | (3) | — | — | (3) | ||||
Royalty fee | (27) | — | — | (27) | ||||
Gains and other income, net | 3 | — | 1 | 4 | ||||
Interest expense | — | — | (27) | (27) | ||||
Transaction and integration costs | — | — | (28) | (28) | ||||
INCOME (LOSS) BEFORE INCOME TAXES AND | ||||||||
NONCONTROLLING INTERESTS | 173 | 33 | (116) | 90 | ||||
Provision for income taxes | — | — | (32) | (32) | ||||
NET INCOME (LOSS) | 173 | 33 | (148) | 58 | ||||
Net income attributable to noncontrolling interests(1) | — | — | — | — | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON | ||||||||
SHAREHOLDERS | $ 173 | $ 33 | $ (148) | $ 58 | ||||
SEGMENT MARGIN(2) | 27% | 45% | ||||||
(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant accounting guidance, which represents the portion related to individual or third-party vacation ownership interest owners. | |||||||
(2) Segment margin represents the applicable segment's Net income (loss) attributable to common shareholders divided by the applicable segment's total revenues less cost reimbursement revenues. |
A-4 | ||||||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||||||
REVENUES AND PROFIT BY SEGMENT | ||||||||
for the three months ended March 31, 2021 | ||||||||
(In millions) | ||||||||
(Unaudited) | ||||||||
Reportable Segment | Corporate and Other | Total | ||||||
Vacation Ownership | Exchange & Third-Party Management | |||||||
REVENUES | ||||||||
Sales of vacation ownership products | $ 163 | $ — | $ — | $ 163 | ||||
Management and exchange(1) | ||||||||
Ancillary revenues | 28 | — | — | 28 | ||||
Management fee revenues | 38 | 5 | (6) | 37 | ||||
Exchange and other services revenues | 28 | 55 | 45 | 128 | ||||
Management and exchange | 94 | 60 | 39 | 193 | ||||
Rental | 77 | 12 | — | 89 | ||||
Financing | 59 | — | — | 59 | ||||
Cost reimbursements(1) | 268 | 14 | (27) | 255 | ||||
TOTAL REVENUES | $ 661 | $ 86 | $ 12 | $ 759 | ||||
PROFIT | ||||||||
Development | $ 14 | $ — | $ — | $ 14 | ||||
Management and exchange(1) | 59 | 29 | (12) | 76 | ||||
Rental(1) | (19) | 12 | 14 | 7 | ||||
Financing | 38 | — | — | 38 | ||||
TOTAL PROFIT | 92 | 41 | 2 | 135 | ||||
OTHER | ||||||||
General and administrative | — | — | (46) | (46) | ||||
Depreciation and amortization | (19) | (20) | (2) | (41) | ||||
Litigation charges | (3) | — | — | (3) | ||||
Restructuring | (1) | — | 1 | — | ||||
Royalty fee | (25) | — | — | (25) | ||||
Gains and other income, net | — | — | 6 | 6 | ||||
Interest expense | — | — | (43) | (43) | ||||
Transaction and integration costs | — | — | (19) | (19) | ||||
INCOME (LOSS) BEFORE INCOME TAXES AND | ||||||||
NONCONTROLLING INTERESTS | 44 | 21 | (101) | (36) | ||||
Benefit from income taxes | — | — | 11 | 11 | ||||
NET INCOME (LOSS) | 44 | 21 | (90) | (25) | ||||
Net income attributable to noncontrolling interests(1) | — | — | (3) | (3) | ||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON | ||||||||
SHAREHOLDERS | $ 44 | $ 21 | $ (93) | $ (28) | ||||
SEGMENT MARGIN(2) | 11% | 29% | ||||||
(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant accounting guidance, which represents the portion related to individual or third-party vacation ownership interest owners. | |||||||
(2) Segment margin represents the applicable segment's Net income (loss) attributable to common shareholders divided by the applicable segment's total revenues less cost reimbursement revenues. |
A-5 | |||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | |||
ADJUSTED NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS AND | |||
ADJUSTED EARNINGS PER SHARE - DILUTED | |||
(In millions, except per share amounts) | |||
(Unaudited) | |||
Three Months Ended | |||
March 31, 2022 | March 31, 2021 | ||
Net income (loss) attributable to common shareholders | $ 58 | $ (28) | |
Provision for (benefit from) income taxes | 32 | (11) | |
Income (loss) before income taxes attributable to common shareholders | 90 | (39) | |
Certain items:(1) | |||
Litigation charges | 3 | 3 | |
Gains and other income, net | (4) | (6) | |
Transaction and integration costs | 28 | 19 | |
Purchase price adjustments | 3 | — | |
Adjusted pretax income (loss) ** | 120 | (23) | |
(Provision for) benefit from income taxes | (39) | 3 | |
Adjusted net income (loss) attributable to common shareholders** | $ 81 | $ (20) | |
Diluted shares(2) | 47.9 | 41.4 | |
Adjusted earnings (loss) per share - Diluted ** | $ 1.70 | $ (0.49) | |
** 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. | |||
(1) See further details on A-6. | |||
(2) Diluted shares for the three months ended March 31, 2022 reflects the dilutive impact of the adoption of Accounting Standards Update 2020-06 – "Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" (5 million shares assumed converted from our 2022 and 2026 Convertible Notes). | |||
A-6 | ||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||
ADJUSTED EBITDA | ||||
(In millions) | ||||
(Unaudited) | ||||
Three Months Ended | ||||
March 31, 2022 | March 31, 2021 | |||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ 58 | $ (28) | ||
Interest expense | 27 | 43 | ||
Provision for (benefit from) income taxes | 32 | (11) | ||
Depreciation and amortization | 33 | 41 | ||
Share-based compensation | 8 | 8 | ||
Certain items before income taxes: | ||||
Litigation charges | 3 | 3 | ||
Gains and other income, net | ||||
Hurricane business interruption insurance claims | (3) | — | ||
Foreign currency translation | (1) | (4) | ||
Other | — | (2) | ||
Transaction and integration costs | 28 | 19 | ||
Purchase price adjustments | 3 | — | ||
ADJUSTED EBITDA** | $ 188 | $ 69 | ||
** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use |
A-7 | |||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | |||
CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT | |||
(In millions) | |||
(Unaudited) | |||
Three Months Ended | |||
March 31, 2022 | March 31, 2021 | ||
Consolidated contract sales | $ 394 | $ 226 | |
Less resales contract sales | (9) | (5) | |
Consolidated contract sales, net of resales | 385 | 221 | |
Plus: | |||
Settlement revenue | 7 | 5 | |
Resales revenue | 4 | 2 | |
Revenue recognition adjustments: | |||
Reportability | (33) | (36) | |
Sales reserve | (29) | (14) | |
Other(1) | (24) | (15) | |
Sale of vacation ownership products | 310 | 163 | |
Less: | |||
Cost of vacation ownership products | (60) | (40) | |
Marketing and sales | (182) | (109) | |
Development Profit | 68 | 14 | |
Revenue recognition reportability adjustment | 24 | 26 | |
Other(2) | 4 | — | |
Adjusted development profit ** | $ 96 | $ 40 | |
Development profit margin | 21.8% | 8.4% | |
Adjusted development profit margin | 28.3% | 20.5% | |
** 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. |
(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. |
(2) Primarily includes purchase price adjustments for the three months ended March 31, 2022. |
A-8 | ||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||
(In millions) | ||||
(Unaudited) | ||||
VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA | ||||
Three Months Ended | ||||
March 31, 2022 | March 31, 2021 | |||
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON | ||||
SHAREHOLDERS | $ 173 | $ 44 | ||
Depreciation and amortization | 22 | 19 | ||
Share-based compensation expense | 1 | 1 | ||
Certain items: | ||||
Litigation charges | 3 | 3 | ||
Gains and other income, net: | ||||
Hurricane business interruption net insurance proceeds | (3) | — | ||
Purchase price adjustments | 3 | — | ||
COVID-19 related restructuring | — | 1 | ||
SEGMENT ADJUSTED EBITDA ** | $ 199 | $ 68 | ||
SEGMENT ADJUSTED EBITDA MARGIN ** | 32% | 17% | ||
EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA | ||||
Three Months Ended | ||||
March 31, 2022 | March 31, 2021 | |||
SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON | ||||
SHAREHOLDERS | $ 33 | $ 21 | ||
Depreciation and amortization | 9 | 20 | ||
Share-based compensation expense | 1 | — | ||
SEGMENT ADJUSTED EBITDA ** | $ 43 | $ 41 | ||
SEGMENT ADJUSTED EBITDA MARGIN ** | 57% | 57% | ||
** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
A-9 | |||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | |||
CONSOLIDATED BALANCE SHEETS | |||
(In millions, except share and per share data) | |||
Unaudited | |||
March 31, 2022 | December 31, 2021 | ||
ASSETS | |||
Cash and cash equivalents | $ 354 | $ 342 | |
Restricted cash (including $78 and $139 from VIEs, respectively) | 296 | 461 | |
Accounts receivable, net (including $12 and $12 from VIEs, respectively) | 234 | 279 | |
Vacation ownership notes receivable, net (including $1,661 and $1,662 from VIEs, | |||
respectively) | 2,030 | 2,045 | |
Inventory | 693 | 719 | |
Property and equipment, net | 1,162 | 1,136 | |
Goodwill | 3,142 | 3,150 | |
Intangibles, net | 978 | 993 | |
Other (including $74 and $76 from VIEs, respectively) | 614 | 488 | |
TOTAL ASSETS | $ 9,503 | $ 9,613 | |
LIABILITIES AND EQUITY | |||
Accounts payable | $ 212 | $ 265 | |
Advance deposits | 194 | 160 | |
Accrued liabilities (including $2 and $2 from VIEs, respectively) | 347 | 345 | |
Deferred revenue | 507 | 453 | |
Payroll and benefits liability | 214 | 201 | |
Deferred compensation liability | 136 | 142 | |
Securitized debt, net (including $1,799 and $1,877 from VIEs, respectively) | 1,779 | 1,856 | |
Debt, net | 2,751 | 2,631 | |
Other | 206 | 224 | |
Deferred taxes | 333 | 350 | |
TOTAL LIABILITIES | 6,679 | 6,627 | |
Contingencies and Commitments (Note 11) | |||
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; 75,721,548 and | |||
75,519,049 shares issued, respectively | 1 | 1 | |
Treasury stock — at cost; 33,971,376 and 33,235,671 shares, respectively | (1,474) | (1,356) | |
Additional paid-in capital | 3,945 | 4,072 | |
Accumulated other comprehensive loss | 4 | (16) | |
Retained earnings | 338 | 275 | |
TOTAL MVW SHAREHOLDERS' EQUITY | 2,814 | 2,976 | |
Noncontrolling interests | 10 | 10 | |
TOTAL EQUITY | 2,824 | 2,986 | |
TOTAL LIABILITIES AND EQUITY | $ 9,503 | $ 9,613 | |
The abbreviation VIEs above means Variable Interest Entities. | |||
A-10 | ||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||
(In millions) | ||||
(Unaudited) | ||||
Three Months Ended | ||||
March 31, 2022 | March 31, 2021 | |||
OPERATING ACTIVITIES | ||||
Net income (loss) | $ 58 | $ (25) | ||
Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash | ||||
provided by (used in) operating activities: | ||||
Depreciation and amortization of intangibles | 33 | 41 | ||
Amortization of debt discount and issuance costs | 5 | 11 | ||
Vacation ownership notes receivable reserve | 29 | 14 | ||
Share-based compensation | 8 | 8 | ||
Deferred income taxes | 18 | 15 | ||
Net change in assets and liabilities: | ||||
Accounts receivable | 45 | 51 | ||
Vacation ownership notes receivable originations | (205) | (108) | ||
Vacation ownership notes receivable collections | 188 | 165 | ||
Inventory | 28 | (26) | ||
Other assets | (134) | (138) | ||
Accounts payable, advance deposits and accrued liabilities | 12 | (30) | ||
Deferred revenue | 54 | 102 | ||
Payroll and benefit liabilities | 13 | 31 | ||
Deferred compensation liability | (7) | (2) | ||
Other liabilities | (3) | 5 | ||
Deconsolidation of certain Consolidated Property Owners' Associations | — | (71) | ||
Purchase of vacation ownership units for future transfer to inventory | (12) | (99) | ||
Other, net | (1) | (4) | ||
Net cash, cash equivalents and restricted cash provided by (used in) operating activities | 129 | (60) | ||
INVESTING ACTIVITIES | ||||
Capital expenditures for property and equipment (excluding inventory) | (9) | (7) | ||
Purchase of company owned life insurance | (4) | (1) | ||
Dispositions, net | 3 | — | ||
Net cash, cash equivalents and restricted cash used in investing activities | (10) | (8) | ||
FINANCING ACTIVITIES | ||||
Borrowings from securitization transactions | 102 | — | ||
Repayment of debt related to securitization transactions | (178) | (159) | ||
Proceeds from debt | 30 | 561 | ||
Repayments of debt | (30) | (100) | ||
Purchase of convertible note hedges | — | (100) | ||
Proceeds from issuance of warrants | — | 70 | ||
Finance lease payment | (2) | — | ||
Payment of debt issuance costs | (4) | (2) | ||
Repurchase of common stock | (119) | — | ||
Payment of dividends | (49) | — | ||
Payment of withholding taxes on vesting of restricted stock units | (22) | (15) | ||
Net cash, cash equivalents and restricted cash (used in) provided by financing activities | (272) | 255 | ||
Effect of changes in exchange rates on cash, cash equivalents and restricted cash | — | (1) | ||
Change in cash, cash equivalents and restricted cash | (153) | 186 | ||
Cash, cash equivalents and restricted cash, beginning of period | 803 | 992 | ||
Cash, cash equivalents and restricted cash, end of period | $ 650 | $ 1,178 | ||
A-11 | ||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||
2022 ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND ADJUSTED | ||||
EARNINGS PER SHARE - DILUTED OUTLOOK | ||||
(In millions, except per share amounts) | ||||
Fiscal Year 2022 (low) | Fiscal Year 2022 (high) | |||
Net income attributable to common shareholders | $ 317 | $ 347 | ||
Provision for income taxes | 126 | 136 | ||
Income before income taxes attributable to common shareholders | 443 | 483 | ||
Certain items(1) | 142 | 162 | ||
Adjusted pretax income ** | 585 | 645 | ||
Provision for income taxes | (161) | (176) | ||
Adjusted net income attributable to common shareholders ** | $ 424 | $ 469 | ||
Earnings per share - Diluted(2) | $ 6.85 | $ 7.49 | ||
Adjusted earnings per share - Diluted(2) ** | $ 9.13 | $ 10.09 | ||
Diluted shares(2) | 47.0 | 47.0 | ||
(1) Certain items adjustment includes $120 to $140 million of anticipated transaction and integration costs and $22 million of anticipated purchase accounting adjustments. |
(2) Earnings per share - Diluted and Adjusted earnings per share - Diluted increased from the previous guidance of $6.52 to $7.14 and $8.72 to $9.65, respectively, primarily from the impact of additional share repurchase activity through May 4, 2022. |
2022 ADJUSTED EBITDA OUTLOOK | ||||
(In millions) | ||||
Fiscal Year 2022 (low) | Fiscal Year 2022 (high) | |||
Net income attributable to common shareholders | $ 317 | $ 347 | ||
Interest expense | 107 | 107 | ||
Provision for income taxes | 126 | 136 | ||
Depreciation and amortization | 127 | 127 | ||
Share-based compensation | 41 | 41 | ||
Certain items(1) | 142 | 162 | ||
Adjusted EBITDA ** | $ 860 | $ 920 | ||
(1) Certain items adjustment includes $120 to $140 million of anticipated transaction and integration costs and $22 million of anticipated purchase accounting adjustments. |
** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
A-12 | ||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||
2022 ADJUSTED FREE CASH FLOW OUTLOOK | ||||
(In millions) | ||||
Fiscal Year 2022 (low) | Fiscal Year 2022 (high) | |||
Net cash, cash equivalents and restricted cash provided by operating activities | $ 300 | $ 309 | ||
Capital expenditures for property and equipment (excluding inventory) | (75) | (85) | ||
Borrowings from securitization transactions | 859 | 894 | ||
Repayment of debt related to securitizations | (684) | (699) | ||
Free cash flow ** | 400 | 419 | ||
Adjustments: | ||||
Net change in borrowings available from the securitization of eligible | ||||
vacation ownership notes receivable(1) | 82 | 128 | ||
Certain items(2) | 92 | 108 | ||
Change in restricted cash | (14) | (15) | ||
Adjusted free cash flow ** | $ 560 | $ 640 | ||
** 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. |
(1) Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable between the 2021 and 2022 year ends. |
(2) Certain items adjustment includes the after-tax impact of anticipated transaction and integration costs. |
A-13 | |||||||||||
MARRIOTT VACATIONS WORLDWIDE CORPORATION | |||||||||||
QUARTERLY OPERATING METRICS | |||||||||||
(Contract sales in millions) | |||||||||||
Year | Quarter Ended | Full Year | |||||||||
March 31 | June 30 | September 30 | December 31 | ||||||||
Vacation Ownership | |||||||||||
Consolidated contract sales | |||||||||||
2022 | $ 394 | ||||||||||
2021 | $ 226 | $ 362 | $ 380 | $ 406 | $ 1,374 | ||||||
2020 | $ 306 | $ 30 | $ 140 | $ 178 | $ 654 | ||||||
VPG | |||||||||||
2022 | $ 4,706 | ||||||||||
2021 | $ 4,644 | $ 4,304 | $ 4,300 | $ 4,305 | $ 4,356 | ||||||
2020 | $ 3,680 | $ 3,717 | $ 3,904 | $ 3,826 | $ 3,767 | ||||||
Tours | |||||||||||
2022 | 78,505 | ||||||||||
2021 | 45,871 | 79,900 | 84,098 | 89,495 | 299,364 | ||||||
2020 | 79,131 | 6,216 | 33,170 | 44,161 | 162,678 | ||||||
Exchange & Third-Party Management | |||||||||||
Total active members (000's)(1) | |||||||||||
2022 | 1,606 | ||||||||||
2021 | 1,479 | 1,321 | 1,313 | 1,296 | 1,296 | ||||||
2020 | 1,636 | 1,571 | 1,536 | 1,518 | 1,518 | ||||||
Average revenue per member(1) | |||||||||||
2022 | $ 44.33 | ||||||||||
2021 | $ 47.13 | $ 46.36 | $ 42.95 | $ 42.93 | $ 179.48 | ||||||
2020 | $ 41.37 | $ 30.17 | $ 36.76 | $ 36.62 | $ 144.97 | ||||||
(1) Includes members at the end of each period for the Interval International exchange network only. | |||||||||||
A-14
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 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 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 Adjusted Net Income or Loss Attributable to Common Shareholders, Adjusted EBITDA, Adjusted Development Profit, and Adjusted Development Profit Margin.
We evaluate non-GAAP financial measures, including Adjusted pretax income or loss, Adjusted net income or loss attributable to common shareholders, Adjusted EBITDA, Adjusted EBITDA margin, Segment adjusted EBITDA, Segment adjusted EBITDA margin, Adjusted development profit, and Adjusted development profit margin, that exclude certain items in the three months ended March 31, 2022 and March 31, 2021, 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 vacation ownership companies.
Adjusted Development Profit (Adjusted Sale of Vacation Ownership Products Net of Expenses) 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 itemized on A-6, 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 (excluding consumer financing interest expense associated with term loan securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items, as itemized in the discussion of Adjusted EBITDA in the preceding pages, 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 loan 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 and expand our business. 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 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. 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 vacation 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 loan 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.
SOURCE Marriott Vacations Worldwide Corporation
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