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

Board of Directors authorizes the repurchase of an additional 4.5 million shares under the company's share repurchase program.

ORLANDO, Fla., July 31, 2019 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter financial results and updated its guidance for the full year 2019.

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

In addition to a discussion of the second quarter reported results presented in accordance with United States generally accepted accounting principles ("GAAP"), the company is providing adjusted results of operations from January 1 to June 30, 2019. To provide a more meaningful year-over-year comparison of financial results, the company is also providing second quarter 2018 financial information in the financial schedules that follow that combine the second quarter 2018 financial results of the Company's legacy brands and businesses and the brands and businesses acquired by the company in its acquisition of ILG, Inc. ("ILG") in September 2018, conformed to the current year presentations.  Throughout this press release, the results from the business associated with the brands that existed prior to the acquisition of ILG are referred to as "Legacy-MVW," while the results from the business and brands that were acquired from ILG are referred to as "Legacy-ILG.

Second Quarter 2019 Highlights:

  • Consolidated vacation ownership contract sales increased 66% to $386 million.
    • On a combined basis, consolidated vacation ownership contract sales increased 6%.
  • Net income attributable to common shareholders was $49 million, or $1.10 per fully diluted share ("EPS"), compared to net income attributable to common shareholders of $11 million, or $0.39 per fully diluted share, in the second quarter of 2018.
  • Adjusted net income attributable to common shareholders increased 107% to $90 million and Adjusted fully diluted EPS increased 25% to $1.99.
  • Adjusted EBITDA increased 157% to $195 million in the second quarter of 2019.
    • On a combined basis, Adjusted EBITDA increased 17% and, after adjusting 2018 to exclude VRI Europe, which was disposed of in the fourth quarter of 2018, Adjusted EBITDA increased 20%.
  • The company repurchased over 1.1 million shares of its common stock for $109 million in the second quarter of 2019 at an average price per share of $96.36 and paid dividends of $20 million.
    • Subsequent to the end of the second quarter, the company repurchased an additional 400 thousand shares of its common stock for $40 million.
  • On July 30, 2019, the Board of Directors authorized the company to repurchase up to 4.5 million additional shares of its common stock under its share repurchase program. Combined with the shares not yet purchased under its previous authorization, the company is authorized to purchase up to 4.7 million shares.

"I am very pleased with our strong performance in the second quarter with consolidated contract sales growing 6% and Adjusted EBITDA increasing 17% on a combined basis," said Stephen P. Weisz, president and chief executive officer. "The integration of ILG continues to progress very well.  We continue to gain traction on sales initiatives and remain very excited about the many opportunities provided by this transformational business combination."

Second Quarter 2019 Segment Results

Vacation Ownership

Consolidated vacation ownership contract sales increased 66%.  On a combined basis, consolidated contract sales increased 6%, with Legacy-MVW and Legacy-ILG each growing 6% in the quarter.

Vacation Ownership segment financial results were $183 million for the second quarter of 2019, an increase of 125%. On a combined basis, Vacation Ownership segment Adjusted EBITDA increased 16% to $208 million in the second quarter of 2019 and margin improved 230 basis points, excluding cost reimbursements.

Exchange & Third-Party Management

Exchange & Third-Party Management revenues totaled $115 million in the second quarter of 2019. For Interval International, average revenue per member increased 3% to $43.23 and active members totaled 1.7 million at the end of the second quarter of 2019.

Exchange & Third-Party Management segment financial results and Adjusted EBITDA were $45 million and $58 million, respectively, in the second quarter of 2019.  On a combined basis, Exchange & Third-Party Management segment Adjusted EBITDA decreased 5 percent after adjusting 2018 to exclude VRI Europe, which was disposed of in the fourth quarter of 2018.

Balance Sheet and Liquidity

On June 30, 2019, cash and cash equivalents totaled $179 million. The inventory balance at the end of the second quarter included $828 million of finished goods and $48 million of work-in-progress. The company had $3.9 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the second quarter. This debt included $2.2 billion of corporate debt and $1.8 billion of debt related to the company's securitized notes receivable.

As of June 30, 2019, the company had $516 million in available capacity under its revolving credit facility and $104 million of gross vacation ownership notes receivable eligible for securitization.

2019 Outlook

The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2019 expected GAAP results for the company.

 

Current Guidance

Net income attributable to common shareholders

$214 million

to

$221 million

Fully diluted EPS

$4.75

to

$4.90

Net cash provided by operating activities

$332 million

to

$362 million

2019 expected GAAP results and guidance above include an estimate of the impact of future spending associated with on-going ILG integration efforts.

The company updates its full year 2019 guidance as reflected in the chart below:

 

Current Guidance

Adjusted free cash flow

$440 million

to

$490 million

Adjusted net income attributable to common shareholders

$345 million

to

$367 million

Adjusted fully diluted EPS

$7.65

to

$8.14

Adjusted EBITDA

$750 million

to

$780 million

Combined consolidated contract sales growth

6%

to

9%

Non-GAAP Financial Information

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

Second Quarter 2019 Earnings Conference Call

The company will hold a conference call on August 1, 2019 at 8:30 a.m. ET to discuss these results and the guidance for full year 2019. 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. To access the replay, call (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13692036. The webcast will also be available on the company's website for 90 days following the call.

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 a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs, as well as management of 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 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 future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts, including guidance about full year 2019 results, expected full year 2019 GAAP results and expected synergies from the ILG acquisition. 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, changes in supply and demand 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 July 31, 2019 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 2, 2019

 

TABLE OF CONTENTS

   

Consolidated Statements of Income

A-1

Operating Metrics

A-2

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

A-3

Reconciliation of Adjusted Financial Information

A-4

Vacation Ownership Segment Financial Results

A-5

Consolidated Contract Sales to Adjusted Development Margin

A-6

Reconciliation of Vacation Ownership Segment Adjusted Financial Results

A-7

Reconciliation of Adjusted Financial Information - Consolidated and Vacation Ownership Segment EBITDA and Adjusted EBITDA

A-8

Exchange & Third-Party Management Segment Financial Results

A-9

Corporate and Other Financial Results

A-10

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

A-11

Reconciliation of Combined Financial Information - Consolidated Results

A-12

Reconciliation of Combined Financial Information - EBITDA, Adjusted EBITDA and Adjusted Development Margin

A-13

Reconciliation of Combined Financial Information - Vacation Ownership Segment Financial Results

A-14

Reconciliation of Combined Financial Information - Exchange & Third-Party Management Segment Financial Results and Corporate and Other Financial Results

A-15

Reconciliation of Combined Financial Information - Segment Adjusted EBITDA

A-16

2019 Outlook - Adjusted Net Income Attributable to Common Shareholders, Adjusted Earnings Per Share - Diluted and Adjusted EBITDA

A-17

2019 Outlook - Adjusted Free Cash Flow

A-18

Consolidated Balance Sheets

A-19

Consolidated Statements of Cash Flows

A-20

Non-GAAP Financial Measures

A-21

 

A-1

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

REVENUES

             

Sale of vacation ownership products

$

350

   

$

205

   

$

651

   

$

380

 

Management and exchange

239

   

78

   

478

   

148

 

Rental

158

   

74

   

323

   

149

 

Financing

69

   

36

   

137

   

71

 

Cost reimbursements

252

   

202

   

539

   

418

 

TOTAL REVENUES

1,068

   

595

   

2,128

   

1,166

 

EXPENSES

             

Cost of vacation ownership products

91

   

57

   

171

   

103

 

Marketing and sales

193

   

106

   

381

   

211

 

Management and exchange

118

   

39

   

234

   

75

 

Rental

104

   

62

   

212

   

117

 

Financing

25

   

10

   

47

   

21

 

General and administrative

79

   

33

   

157

   

61

 

Depreciation and amortization

36

   

5

   

73

   

11

 

Litigation charges

1

   

16

   

2

   

16

 

Royalty fee

26

   

16

   

52

   

31

 

Impairment

   

   

26

   

 

Cost reimbursements

252

   

202

   

539

   

418

 

TOTAL EXPENSES

925

   

546

   

1,894

   

1,064

 

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

2

   

(7)

   

10

   

(6)

 

Interest expense

(35)

   

(5)

   

(69)

   

(9)

 

ILG acquisition-related costs

(36)

   

(19)

   

(62)

   

(20)

 

Other

   

(1)

   

   

(3)

 

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

74

   

17

   

113

   

64

 

Provision for income taxes

(25)

   

(6)

   

(40)

   

(17)

 

NET INCOME

49

   

11

   

73

   

47

 

Net income attributable to noncontrolling interests

   

   

   

 

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

49

   

$

11

   

$

73

   

$

47

 
               

EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

             

Basic

$

1.11

   

$

0.40

   

$

1.62

   

$

1.75

 

Diluted

$

1.10

   

$

0.39

   

$

1.61

   

$

1.71

 
               

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

 

A-2

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

OPERATING METRICS

(Contract sales in millions)

 
 

Three Months Ended

 

Change
%

 

Six Months Ended

 

Change
%

 

June 30,
2019

 

June 30,
2018

   

June 30,
2019

 

June 30,
2018

 

Vacation Ownership

                     

Total contract sales

$

398

   

$

232

   

71%

 

$

763

   

$

436

   

75%

Consolidated contract sales

$

386

   

$

232

   

66%

 

$

740

   

$

436

   

70%

Legacy-MVW

                     

Consolidated contract sales

$

246

   

$

232

   

6%

 

$

469

   

$

436

   

8%

North America contract sales

$

219

   

$

211

   

4%

 

$

420

   

$

399

   

5%

North America VPG

$

3,700

   

$

3,672

   

1%

 

$

3,736

   

$

3,698

   

1%

Legacy-ILG

                     

Consolidated contract sales

$

140

   

$

   

NM

 

$

271

   

$

   

NM

VPG

$

2,981

   

$

   

NM

 

3,010

   

   

NM

                       

Exchange & Third-Party Management

                     

Total active members at end of period (000's)(1)

1,691

   

   

NM

 

1,691

   

   

NM

Average revenue per member(1)

$

43.23

   

   

NM

 

89.38

   

   

NM

 

(1) Only includes members of the Interval International exchange network.

 

COMBINED OPERATING METRICS

(Contract sales in millions)

 
   
 

Three Months Ended

 

Change %

 

Six Months Ended

 

Change
%

 

June 30,

 2019

 

June 30,
2018

   

June 30,
2019

 

June 30,
2018

 

Vacation Ownership

                     

Total contract sales

$

398

   

$

379

   

5%

 

$

763

   

$

731

   

4%

Consolidated contract sales

$

386

   

$

365

   

6%

 

$

740

   

$

702

   

6%

Legacy-ILG

                     

Consolidated contract sales

$

140

   

$

133

   

6%

 

$

271

   

$

266

   

2%

VPG

$

2,981

   

$

2,857

   

4%

 

$

3,010

   

$

3,032

   

(1%)

                       

Exchange & Third-Party Management

                     

Total active members at end of period (000's)(1)

1,691

   

1,800

   

(6%)

 

1,691

   

1,800

   

(6%)

Average revenue per member(1)

$

43.23

   

$

42.10

   

3%

 

$

89.38

   

$

89.77

   

—%

                       

(1) Only includes members of the Interval International exchange network.

 

 

A-3

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions, except per share amounts)

(Unaudited)

 

ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND

ADJUSTED EARNINGS PER SHARE - DILUTED

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

Net income attributable to common shareholders

$

49

   

$

11

   

$

73

   

$

47

 

Certain items:

             

Litigation charges

1

   

16

   

2

   

16

 

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

(2)

   

7

   

(10)

   

6

 

ILG acquisition-related costs

36

   

19

   

62

   

20

 

Impairment

   

   

26

   

 

Purchase price adjustments

17

   

   

32

   

 

Other

   

1

   

1

   

3

 

Certain items before provision for income taxes

52

   

43

   

113

   

45

 

Provision for income taxes on certain items

(11)

   

(10)

   

(29)

   

(11)

 

Adjusted net income attributable to common shareholders **

$

90

   

$

44

   

$

157

   

$

81

 

Earnings per share - Diluted

$

1.10

   

$

0.39

   

$

1.61

   

$

1.71

 

Adjusted earnings per share - Diluted **

$

1.99

   

$

1.59

   

$

3.44

   

$

2.98

 

Diluted Shares

45,179

   

27,253

   

45,613

   

27,281

 
               

Please see "Non-GAAP Financial Measures" for additional information about certain items.

 

EBITDA AND ADJUSTED EBITDA

 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

Net income attributable to common shareholders

$

49

   

$

11

   

$

73

   

$

47

 

Interest expense(1)

35

   

5

   

69

   

9

 

Tax provision

25

   

6

   

40

   

17

 

Depreciation and amortization

36

   

5

   

73

   

11

 

EBITDA **

145

   

27

   

255

   

84

 

Share-based compensation expense

11

   

6

   

20

   

10

 

Certain items before provision for income taxes(2)

39

   

43

   

86

   

45

 

Adjusted EBITDA **

$

195

   

$

76

   

$

361

   

$

139

 
               

(1) Interest expense excludes consumer financing interest expense.

(2) Excludes certain items included in depreciation and amortization and share-based compensation. Please see "Non-GAAP Financial Measures" for additional information about certain items.

 

ADJUSTED EBITDA BY SEGMENT

 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

Vacation Ownership

$

208

   

$

104

   

$

379

   

$

192

 

Exchange & Third-Party Management

58

   

   

124

   

 

Segment adjusted EBITDA**

266

   

104

   

503

   

192

 

General and administrative

(71)

   

(28)

   

(143)

   

(53)

 

Consolidated property owners' associations

   

   

1

   

 

Adjusted EBITDA**

$

195

   

$

76

   

$

361

   

$

139

 
 

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

 

A-4

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

RECONCILIATION OF ADJUSTED(1) FINANCIAL INFORMATION

THREE MONTHS ENDED JUNE 30, 2019 AND 2018

(In millions)

(Unaudited)

 
 

As Reported
Three Months
Ended

 

Less: Legacy-
ILG Three
Months Ended

 

As Adjusted
Three Months
Ended**

 

As Reported

Three Months
Ended

 

June 30, 2019

 

June 30, 2018

REVENUES

             

Sale of vacation ownership products

$

350

   

$

135

   

$

215

   

$

205

 

Management and exchange

239

   

157

   

82

   

78

 

Rental

158

   

78

   

80

   

74

 

Financing

69

   

27

   

42

   

36

 

Cost reimbursements

252

   

58

   

194

   

202

 

TOTAL REVENUES

1,068

   

455

   

613

   

595

 

EXPENSES

             

Cost of vacation ownership products

91

   

38

   

53

   

57

 

Marketing and sales

193

   

83

   

110

   

106

 

Management and exchange

118

   

77

   

41

   

39

 

Rental

104

   

46

   

58

   

62

 

Financing

25

   

11

   

14

   

10

 

General and administrative

79

   

44

   

35

   

33

 

Depreciation and amortization

36

   

29

   

7

   

5

 

Litigation charges

1

   

   

1

   

16

 

Royalty fee

26

   

11

   

15

   

16

 

Cost reimbursements

252

   

58

   

194

   

202

 

TOTAL EXPENSES

925

   

397

   

528

   

546

 

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

2

   

1

   

1

   

(7)

 

Interest expense

(35)

   

(2)

   

(33)

   

(5)

 

ILG acquisition-related costs

(36)

   

(7)

   

(29)

   

(19)

 

Other

   

   

   

(1)

 

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

74

   

50

   

24

   

17

 

(Provision) benefit for income taxes

(25)

   

(16)

   

(9)

   

(6)

 

NET INCOME

49

   

34

   

15

   

11

 

Net income attributable to noncontrolling interests

   

   

   

 

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

49

   

$

34

   

$

15

   

$

11

 
 

(1) Adjusted to exclude Legacy-ILG results.

 

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

 

A-5

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

VACATION OWNERSHIP SEGMENT FINANCIAL RESULTS

(In millions)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

REVENUES

             

Sale of vacation ownership products

$

350

   

$

205

   

$

651

   

$

380

 

Resort management and other services

134

   

78

   

259

   

148

 

Rental

141

   

74

   

288

   

149

 

Financing

68

   

36

   

135

   

71

 

Cost reimbursements

258

   

202

   

549

   

418

 

TOTAL REVENUES

951

   

595

   

1,882

   

1,166

 

EXPENSES

             

Cost of vacation ownership products

91

   

57

   

171

   

103

 

Marketing and sales

181

   

106

   

358

   

211

 

Resort management and other services

70

   

39

   

136

   

75

 

Rental

99

   

62

   

201

   

117

 

Financing

24

   

10

   

46

   

21

 

Depreciation and amortization

17

   

4

   

34

   

9

 

Litigation charges

1

   

16

   

2

   

16

 

Royalty fee

26

   

16

   

52

   

31

 

Impairment

   

   

26

   

 

Cost reimbursements

258

   

202

   

549

   

418

 

TOTAL EXPENSES

767

   

512

   

1,575

   

1,001

 

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

(1)

   

   

8

   

1

 

Other

   

(1)

   

   

(3)

 

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS

183

   

82

   

315

   

163

 

Net loss attributable to noncontrolling interests

   

   

1

   

 

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

183

   

$

82

   

$

316

   

$

163

 

 

A-6

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT MARGIN

(In millions)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

Consolidated contract sales

$

386

   

$

232

   

$

740

   

$

436

 

Less resales contract sales

(8)

   

(7)

   

(16)

   

(15)

 

Consolidated contract sales, net of resales

378

   

225

   

724

   

421

 

Plus:

             

Settlement revenue

11

   

4

   

20

   

8

 

Resales revenue

4

   

3

   

7

   

5

 

Revenue recognition adjustments:

             

Reportability

(8)

   

(4)

   

(38)

   

(16)

 

Sales reserve

(27)

   

(15)

   

(46)

   

(24)

 

Other(1)

(8)

   

(8)

   

(16)

   

(14)

 

Sale of vacation ownership products

350

   

205

   

651

   

380

 

Less:

             

Cost of vacation ownership products

(91)

   

(57)

   

(171)

   

(103)

 

Marketing and sales

(181)

   

(106)

   

(358)

   

(211)

 

Development margin

78

   

42

   

122

   

66

 

Revenue recognition reportability adjustment

5

   

2

   

26

   

10

 

Purchase price adjustment

3

   

   

5

   

 

Adjusted development margin **

$

86

   

$

44

   

$

153

   

$

76

 

Development margin percentage(2)

22.2%

   

19.9%

   

18.7%

   

17.2%

 

Adjusted development margin percentage(2)

24.2%

   

20.9%

   

22.4%

   

19.3%

 
 

** 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) Development margin percentage represents Development margin divided by Sale of vacation ownership products. Adjusted development margin percentage represents Adjusted development margin divided by Sale of vacation ownership products revenue after adjusting for revenue reportability and other charges.

 

A-7

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

RECONCILIATION OF VACATION OWNERSHIP SEGMENT ADJUSTED(1) FINANCIAL RESULTS

THREE MONTHS ENDED JUNE 30, 2019 AND 2018

(In millions)

(Unaudited)

 
 

As Reported
Three Months
Ended

 

Less: Legacy
-ILG Three
Months Ended

 

As Adjusted
Three Months
Ended**

 

As Reported
Three Months
Ended

 

June 30, 2019

 

June 30, 2018

REVENUES

             

Sale of vacation ownership products

$

350

   

$

135

   

$

215

   

$

205

 

Resort management and other services

134

   

52

   

82

   

78

 

Rental

141

   

61

   

80

   

74

 

Financing

68

   

26

   

42

   

36

 

Cost reimbursements

258

   

64

   

194

   

202

 

TOTAL REVENUES

951

   

338

   

613

   

595

 

EXPENSES

             

Cost of vacation ownership products

91

   

38

   

53

   

57

 

Marketing and sales

181

   

71

   

110

   

106

 

Resort management and other services

70

   

29

   

41

   

39

 

Rental

99

   

41

   

58

   

62

 

Financing

24

   

10

   

14

   

10

 

Depreciation and amortization

17

   

12

   

5

   

4

 

Litigation charges

1

   

   

1

   

16

 

Royalty fee

26

   

11

   

15

   

16

 

Impairment

   

   

   

 

Cost reimbursements

258

   

64

   

194

   

202

 

TOTAL EXPENSES

767

   

276

   

491

   

512

 

Losses and other expense, net

(1)

   

   

(1)

   

 

Other

   

   

   

(1)

 

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS

183

   

62

   

121

   

82

 

Net loss attributable to noncontrolling interests

   

   

   

 

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

183

   

$

62

   

$

121

   

$

82

 
 

(1) Adjusted to exclude Legacy-ILG results.

 

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

 

A-8

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

RECONCILIATION OF ADJUSTED(1) FINANCIAL INFORMATION

CONSOLIDATED AND VACATION OWNERSHIP SEGMENT EBITDA AND ADJUSTED EBITDA

THREE MONTHS ENDED JUNE 30, 2019 AND 2018

(In millions)

(Unaudited)

 

CONSOLIDATED

 

As Reported
Three Months
Ended

 

Less: Legacy
-ILG Three
Months Ended

 

As Adjusted
Three Months
Ended**

 

As Reported
Three Months
Ended

 

June 30, 2019

 

June 30, 2018

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

49

   

$

34

   

$

15

   

$

11

 

Interest expense

35

   

2

   

33

   

5

 

Tax provision

25

   

16

   

9

   

6

 

Depreciation and amortization

36

   

29

   

7

   

5

 

EBITDA **

145

   

81

   

64

   

27

 

Share-based compensation expense

11

   

4

   

7

   

6

 

Certain items

39

   

10

   

29

   

43

 

ADJUSTED EBITDA **

$

195

   

$

95

   

$

100

   

$

76

 
               

VACATION OWNERSHIP

 

As Reported
Three Months
Ended

 

Less: Legacy-
ILG Three
Months Ended

 

As Adjusted
Three Months
Ended**

 

As Reported
Three Months
Ended

 

June 30, 2019

 

June 30, 2018

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

183

   

$

62

   

$

121

   

$

82

 

Depreciation and amortization

17

   

12

   

5

   

4

 

EBITDA **

200

   

74

   

126

   

86

 

Share-based compensation expense

2

   

1

   

1

   

1

 

Certain items

6

   

4

   

2

   

17

 

SEGMENT ADJUSTED EBITDA **

$

208

   

$

79

   

$

129

   

$

104

 
 

** 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) Adjusted to exclude Legacy-ILG results.

 

A-9

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT FINANCIAL RESULTS

(In millions)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

REVENUES

             

Management and exchange

$

75

   

$

   

$

157

   

$

 

Rental

17

   

   

34

   

 

Financing

1

   

   

2

   

 

Cost reimbursements

22

   

   

46

   

 

TOTAL REVENUES

115

   

   

239

   

 

EXPENSES

             

Marketing and sales

12

   

   

23

   

 

Management and exchange

16

   

   

33

   

 

Rental

7

   

   

15

   

 

Financing

1

   

   

1

   

 

Depreciation and amortization

12

   

   

24

   

 

Cost reimbursements

22

   

   

46

   

 

TOTAL EXPENSES

70

   

   

142

   

 

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS

45

   

   

97

   

 

Net loss attributable to noncontrolling interests

   

   

   

 

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

45

   

$

   

$

97

   

$

 

 

A-10

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CORPORATE AND OTHER FINANCIAL RESULTS

(In millions)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

REVENUES

             

Management and exchange(1)

$

30

   

$

   

$

62

   

$

 

Rental(1)

   

   

1

   

 

Cost reimbursements(1)

(28)

   

   

(56)

   

 

TOTAL REVENUES

2

   

   

7

   

 

EXPENSES

             

Management and exchange(1)

32

   

   

65

   

 

Rental(1)

(2)

   

   

(4)

   

 

General and administrative

79

   

33

   

157

   

61

 

Depreciation and amortization

7

   

1

   

15

   

2

 

Cost reimbursements(1)

(28)

   

   

(56)

   

 

TOTAL EXPENSES

88

   

34

   

177

   

63

 

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

3

   

(7)

   

2

   

(7)

 

Interest expense

(35)

   

(5)

   

(69)

   

(9)

 

ILG acquisition-related costs

(36)

   

(19)

   

(62)

   

(20)

 

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

(154)

   

(65)

   

(299)

   

(99)

 

Provision for income taxes

(25)

   

(6)

   

(40)

   

(17)

 

Net income attributable to noncontrolling interests

   

   

(1)

   

 

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(179)

   

$

(71)

   

$

(340)

   

$

(116)

 
 

(1) Represents the impact of the consolidation of owners' associations of the acquired Legacy-ILG vacation ownership properties under the voting interest model, which represents the portion related to individual or third-party vacation ownership interest ("VOI") owners.

 

A-11

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

VACATION OWNERSHIP AND EXCHANGE & THIRD-PARTY MANAGEMENT

SEGMENT ADJUSTED EBITDA

(In millions)

(Unaudited)

 

VACATION OWNERSHIP

 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

183

   

$

82

   

$

316

   

$

163

 

Depreciation and amortization

17

   

4

   

34

   

9

 

EBITDA **

200

   

86

   

350

   

172

 

Share-based compensation expense

2

   

1

   

4

   

2

 

Certain items(1) (2)(3)(4)

6

   

17

   

25

   

18

 

SEGMENT ADJUSTED EBITDA **

$

208

   

$

104

   

$

379

   

$

192

 
               

EXCHANGE & THIRD-PARTY MANAGEMENT

 

Three Months Ended

 

Six Months Ended

 

June 30, 2019

 

June 30, 2018

 

June 30, 2019

 

June 30, 2018

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

45

   

$

   

$

97

   

$

 

Depreciation and amortization

12

   

   

24

   

 

EBITDA **

57

   

   

121

   

 

Share-based compensation expense

1

   

   

2

   

 

Certain items(5)

   

   

1

   

 

SEGMENT ADJUSTED EBITDA **

$

58

   

$

   

$

124

   

$

 
 

** 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) Certain items in the Vacation Ownership segment for the second quarter of 2019 consisted of $4 million of purchase accounting adjustments, $1 million of litigation charges, and $1 million of gains and other income.

 

(2) Certain items in the Vacation Ownership segment for the second quarter of 2018 consisted of $16 million of litigation charges (including $11 million related to a project in San Francisco and $5 million related to a project in Lake Tahoe) and $1 million of acquisition costs associated with the then anticipated capital efficient acquisition of the operating property in San Francisco.

 

(3)  Certain items in the Vacation Ownership segment for the first half of 2019 consisted of $26 million of asset impairments, $5 million of purchase accounting adjustments and $2 million of litigation charges, partially offset by $8 million of gains and other income.

 

(4)  Certain items in the Vacation Ownership segment for the first half of 2018 consisted of $16 million of litigation charges (including $11 million related to a project in San Francisco and $5 million related to a project in Lake Tahoe) and $3 million of acquisition costs associated with the then anticipated capital efficient acquisition of the operating property in San Francisco, partially offset by a $1 million favorable true up of previously recorded costs associated with Hurricane Irma and Hurricane Maria (recorded in Gains and other income).

 

(5) Certain items in the Exchange & Third-Party Management segment for the first half of 2019 consisted of $1 million of purchase accounting adjustments.

 

A-12

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

RECONCILIATION OF COMBINED(1) FINANCIAL INFORMATION

CONSOLIDATED RESULTS

THREE MONTHS ENDED JUNE 30, 2018

(In millions)

(Unaudited)

 
 

Legacy-ILG

 

Reclassifications(1)

 

Legacy-ILG
Reclassified**

 

Legacy-MVW

 

Combined**

REVENUES

                 

Sale of vacation ownership products

$

121

   

$

   

$

121

   

$

205

   

$

326

 

Service and membership related

148

   

(148)

   

   

   

 

Management and exchange

   

176

   

176

   

78

   

254

 

Rental and ancillary services

104

   

(104)

   

   

   

 

Rental

   

77

   

77

   

74

   

151

 

Financing

23

   

   

23

   

36

   

59

 

Cost reimbursements

65

   

(2)

   

63

   

202

   

265

 

TOTAL REVENUES

461

   

(1)

   

460

   

595

   

1,055

 

EXPENSES

                 

Cost of vacation ownership products

22

   

6

   

28

   

57

   

85

 

Marketing and sales

81

   

(1)

   

80

   

106

   

186

 

Cost of service and membership related sales

67

   

(67)

   

   

   

 

Management and exchange

   

82

   

82

   

39

   

121

 

Cost of sales of rental and ancillary services

70

   

(70)

   

   

   

 

Rental

   

47

   

47

   

62

   

109

 

Financing

7

   

   

7

   

10

   

17

 

General and administrative

65

   

(4)

   

61

   

33

   

94

 

Depreciation and amortization

21

   

1

   

22

   

5

   

27

 

Litigation charges

   

   

   

16

   

16

 

Royalty fee

11

   

   

11

   

16

   

27

 

Cost reimbursements

65

   

(2)

   

63

   

202

   

265

 

TOTAL EXPENSES

409

   

(8)

   

401

   

546

   

947

 

Losses and other expense, net

(5)

   

(1)

   

(6)

   

(7)

   

(13)

 

Interest expense

(6)

   

1

   

(5)

   

(5)

   

(10)

 

ILG acquisition-related costs

   

(9)

   

(9)

   

(19)

   

(28)

 

Other

   

1