Marriott Vacations Worldwide ("MVW") Reports Fourth Quarter and Full Year 2021 Financial Results and Provides 2022 Outlook

Feb 23, 2022

ORLANDO, Fla., Feb. 23, 2022 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) (the "Company") reported financial results for the fourth quarter and full year 2021 and provided guidance for full year 2022.

"We ended the year on a strong note, growing contract sales by 7% sequentially in the fourth quarter to $406 million, exceeding 2019 levels for the first time since the pandemic started," said Stephen P. Weisz, chief executive officer. "If the past two years have proven anything, it's that people appreciate their time with family and friends and want to go on vacations. As a company whose sole purpose is providing travelers great vacation experiences, we couldn't be in a better position. Despite the softness we experienced in January and early February due to Omicron, we expect 2022 full-year contract sales to be 13% higher than 2019 levels and 2022 Adjusted EBITDA to be 17% above 2019 levels, both at the midpoint of the guidance ranges, illustrating the recovery of the business and our synergy efforts."

Fourth Quarter 2021

  • Consolidated Vacation Ownership contract sales increased 7% sequentially to $406 million in the fourth quarter of 2021.
  • Net income attributable to common shareholders was $61 million, or $1.39 per fully diluted earnings per share.
  • Adjusted net income attributable to common shareholders was $103 million and adjusted fully diluted earnings per share was $2.38.
  • Adjusted EBITDA increased 6% on a sequential basis to $219 million in the fourth quarter of 2021.
  • The Company repurchased 463 thousand shares of its common stock for $74 million at an average price per share of $157.96 and paid a $23 million cash dividend in October, its first since the pandemic began.
  • The Company completed its second securitization of 2021, issuing $425 million of vacation ownership loan backed notes at an average weighted interest rate of 1.64% and a 98% gross advance rate.

Full Year 2021 and 2022 Outlook

  • Consolidated Vacation Ownership contract sales totaled nearly $1.4 billion for full year 2021.
  • Net income attributable to common shareholders was $49 million, or $1.13 per fully diluted earnings per share.
  • Adjusted net income attributable to common shareholders was $190 million and adjusted fully diluted earnings per share was $4.40.
  • Adjusted EBITDA totaled $657 million for the full year 2021.
  • The Company ended 2021 with approximately $1.1 billion of liquidity, including $342 million in cash and cash equivalents.
  • The Company generated net cash provided by operating activities of $343 million and Adjusted free cash flow of $417 million.
  • The Company expects contract sales in 2022 to be between $1,675 and $1,775 million and Adjusted EBITDA to be between $860 to $920 million, a 35% increase at the midpoint.

Fourth Quarter 2021 Segment Results

Vacation Ownership
Revenues excluding cost reimbursements increased 102% in the fourth quarter of 2021 compared to the prior year and increased 8% sequentially as occupancies continued to improve. Sale of vacation ownership products was $364 million in the quarter, a 10% improvement over the third quarter of 2021, and rental revenue increased 13% compared to the third quarter of 2021.

Vacation Ownership segment financial results were $205 million in the fourth quarter of 2021, and segment Adjusted EBITDA increased 8% on a sequential basis to $234 million, with segment Adjusted EBITDA margin expanding approximately 130 basis points compared to 2019.

Exchange & Third-Party Management
Revenues excluding cost reimbursements increased 8% in the fourth quarter of 2021 compared to the prior year and decreased 6% sequentially. Interval International active members declined 1% compared to the third quarter of 2021 to 1.3 million and Average revenue per member was largely unchanged on a sequential basis.

Exchange & Third-Party Management segment financial results were $22 million in the fourth quarter of 2021, and segment Adjusted EBITDA was $31 million.

Corporate and Other
General and administrative costs increased $19 million in the fourth quarter of 2021 compared to the prior year as a result of higher salary and wages costs, higher bonus expense, higher legal spending, and a decrease in credits related to incentives under the CARES Act. On a sequential basis, Corporate and Other remained relatively unchanged.

Balance Sheet and Liquidity

The Company ended the year with approximately $1.1 billion in liquidity, including $342 million of cash and cash equivalents, $113 million of gross notes receivable that were eligible for securitization, and $598 million of available capacity under its revolving credit facility.

The Company had $4.5 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the fourth quarter of 2021, an increase of $219 million from year-end 2020. This debt included $2.6 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.

The Company completed its second securitization of 2021, issuing $425 million of vacation ownership loan backed notes at an average weighted interest rate of 1.64% and a 98% gross advance rate. Of the $425 million in total proceeds from the transaction, approximately $107 million was used to repay all outstanding amounts previously drawn under its Warehouse Credit Facility, approximately $8 million was used to pay transaction expenses and fund required reserves, and the remaining proceeds are being used for general corporate purposes.

2022 Outlook (in millions)

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's 2022 guidance does not include any additional impact from the pandemic, potential new variants of COVID-19 or any actions taken in response to the pandemic that could have a material impact on demand for the Company's products and services.

Income before income taxes attributable to common shareholders

$443

to

$483

 

Net income attributable to common shareholders

$317

to

$347

 

Fully diluted EPS

$6.52

to

$7.14

 

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

$300

to

$309

 
   

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

 
   

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 fully diluted EPS

$8.72

to

$9.65

 

Adjusted free cash flow

$560

to

$640

 

Non-GAAP Financial Information

Non-GAAP financial measures, such as Adjusted net income or loss attributable to common shareholders, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted pretax net income, Adjusted fully diluted earnings per share, Adjusted development profit, Adjusted development profit margin, Adjusted free cash flow, and other adjusted financial measures, are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow.

Fourth Quarter 2021 Financial Results Conference Call

The Company will hold a conference call on February 24, 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 over 150 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 guidance for fiscal 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 virus, including the Delta and Omicron variants; 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" contained 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") and in subsequent SEC filings, 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 4, 2021

 
   

TABLE OF CONTENTS

 
   

Summary Financial Information and Adjusted EBITDA by Segment

A-1

 

Consolidated Statements of Income

A-2

 

Revenues and Profit by Segment

A-3

 

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

A-7

 

Adjusted EBITDA

A-8

 

Consolidated Contract Sales to Adjusted Development Margin

A-9

 

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

A-10

 

Consolidated Balance Sheets

A-11

 

Consolidated Statements of Cash Flows

A-12

 

2022 Outlook

   

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

   

 and Adjusted EBITDA

A-14

 

Adjusted Free Cash Flow

A-15

 

Quarterly Operating Metrics

A-16

 

Non-GAAP Financial Measures

A-17

 

 

A-1

 
   

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 
   

SUMMARY FINANCIAL INFORMATION

 

(In millions, except VPG, total active members, average revenue per member and per share amounts)

 
   
 

Quarter Ended

     

Fiscal Year Ended

 

Change
%

 
 

December 31,
2021

 

December 31,
2020

 

Change
%

 

December 31,
2021

 

December 31,
2020

   

Key Measures

                       

Total consolidated contract sales

$               406

 

$               178

 

128%

 

$           1,374

 

$               654

 

110%

 

VPG

$            4,305

 

$            3,826

 

13%

 

$           4,356

 

$            3,767

 

16%

 

Tours

89,495

 

44,161

 

103%

 

299,364

 

162,678

 

84%

 

Total active members (000's)(1)

1,296

 

1,518

 

(15%)

 

1,296

 

1,518

 

(15%)

 

Average revenue per member(1)

$            42.93

 

$            36.62

 

17%

 

$         179.48

 

$          144.97

 

24%

 
                         

GAAP Measures

                       

Revenues

$            1,100

 

$               747

 

47%

 

$           3,890

 

$            2,886

 

35%

 

     Income (loss) before income taxes

                       

and noncontrolling interests

$                 70

 

$               (24)

 

NM

 

$              127

 

$              (340)

 

NM

 

     Net income (loss) attributable to

                       

common shareholders

$                 61

 

$               (37)

 

NM

 

$                49

 

$              (275)

 

NM

 

Earnings (loss) per share - diluted

$              1.39

 

$            (0.88)

 

NM

 

$             1.13

 

$             (6.65)

 

NM

 
                         

Non-GAAP Measures **

                       

Adjusted EBITDA

$               219

 

$                72

 

NM

 

$              657

 

$               235

 

NM

 

Adjusted pretax income (loss)

$               131

 

$                  5

 

NM

 

$              296

 

$               (18)

 

NM

 

     Adjusted net income (loss)

                       

attributable to common shareholders

$               103

 

$                 (3)

 

NM

 

$              190

 

$               (19)

 

NM

 

     Adjusted earnings (loss) per share -

                       

diluted

$              2.38

 

$            (0.05)

 

NM

 

$             4.40

 

$            (0.45)

 

NM

 
   

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

 

 

ADJUSTED EBITDA BY SEGMENT

(In millions)

 
 

Quarter Ended

 

Change
%

 

Fiscal Year Ended

 

Change
%

 

December 31,
2021

 

December 31,
2020

   

December 31,
2021

 

December 31,
2020

 

Vacation Ownership

$               234

 

$                 73

 

NM

 

$               699

 

$               229

 

NM

Exchange & Third-Party Management

31

 

28

 

14%

 

144

 

119

 

23%

Segment Adjusted EBITDA**

265

 

101

 

NM

 

843

 

348

 

NM

General and administrative

(46)

 

(27)

 

(59%)

 

(186)

 

(118)

 

(58%)

Consolidated Property Owners' Associations

 

(2)

 

NM

 

 

5

 

NM

Adjusted EBITDA**

$               219

 

$                 72

 

NM

 

$               657

 

$               235

 

NM

                       

** 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)

 
 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

REVENUES

             

Sale of vacation ownership products

$               364

 

$               137

 

$           1,153

 

$               546

Management and exchange

217

 

207

 

855

 

755

Rental

146

 

67

 

486

 

276

Financing

72

 

61

 

268

 

267

Cost reimbursements

301

 

275

 

1,128

 

1,042

TOTAL REVENUES

1,100

 

747

 

3,890

 

2,886

EXPENSES

             

Cost of vacation ownership products

72

 

40

 

250

 

150

Marketing and sales

178

 

89

 

617

 

386

Management and exchange

140

 

133

 

521

 

475

Rental

97

 

76

 

344

 

321

Financing

24

 

22

 

88

 

107

General and administrative

61

 

33

 

227

 

154

Depreciation and amortization

34

 

30

 

146

 

123

Litigation charges

2

 

2

 

10

 

6

Restructuring

 

5

 

 

25

Royalty fee

28

 

23

 

106

 

95

Impairment

(2)

 

2

 

3

 

100

Cost reimbursements

301

 

275

 

1,128

 

1,042

TOTAL EXPENSES

935

 

730

 

3,440

 

2,984

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

(24)

 

16

 

(51)

 

(26)

Interest expense

(36)

 

(38)

 

(164)

 

(150)

Transaction and integration costs

(35)

 

(19)

 

(110)

 

(66)

Other

 

 

2

 

INCOME (LOSS) BEFORE INCOME TAXES AND

             

NONCONTROLLING INTERESTS

70

 

(24)

 

127

 

(340)

(Provision for) benefit from income taxes

(11)

 

(7)

 

(74)

 

84

NET INCOME (LOSS)

59

 

(31)

 

53

 

(256)

Net loss (income) attributable to noncontrolling interests

2

 

(6)

 

(4)

 

(19)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON

             

SHAREHOLDERS

$                 61

 

$               (37)

 

$                 49

 

$             (275)

               

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO

             

COMMON SHAREHOLDERS

             

Basic

$              1.42

 

$            (0.88)

 

$              1.15

 

$            (6.65)

Diluted

$              1.39

 

$            (0.88)

 

$              1.13

 

$            (6.65)

               

NOTE: Basic and diluted earnings or loss per share are calculated using whole dollars.

 

A-3

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the three months ended December 31, 2021

(In millions)

 
 

Reportable Segment

 

Corporate
and Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$          364

 

$              —

 

$              —

 

$            364

Management and exchange(1)

             

Ancillary revenues

53

 

1

 

 

54

Management fee revenues

41

 

8

 

(4)

 

45

Exchange and other services revenues

33

 

45

 

40

 

118

Management and exchange

127

 

54

 

36

 

217

Rental

138

 

8

 

 

146

Financing

72

 

 

 

72

Cost reimbursements(1)

320

 

9

 

(28)

 

301

TOTAL REVENUES

$        1,021

 

$              71

 

$                8

 

$        1,100

               

PROFIT

             

Development(2)

$           114

 

$              —

 

$              —

 

$           114

Management and exchange(1)

63

 

22

 

(8)

 

77

Rental(1)

32

 

8

 

9

 

49

Financing

48

 

 

 

48

TOTAL PROFIT

257

 

30

 

1

 

288

               

OTHER

             

General and administrative

 

 

(61)

 

(61)

Depreciation and amortization

(23)

 

(8)

 

(3)

 

(34)

Litigation charges

(2)

 

 

 

(2)

Royalty fee

(28)

 

 

 

(28)

Impairment

 

 

2

 

2

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

1

 

 

(25)

 

(24)

Interest expense

 

 

(36)

 

(36)

Transaction and integration costs

 

 

(35)

 

(35)

INCOME (LOSS) BEFORE INCOME TAXES AND

             

NONCONTROLLING INTERESTS

205

 

22

 

(157)

 

70

Provision for income taxes

 

 

(11)

 

(11)

NET INCOME (LOSS)

205

 

22

 

(168)

 

59

Net loss attributable to noncontrolling interests

 

 

2

 

2

NET INCOME (LOSS) ATTRIBUTABLE TO

             

COMMON SHAREHOLDERS

$         205

 

$              22

 

$          (166)

 

$              61

               

(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 ("VOI") owners.

(2) The Company previously used the term Development margin to refer to revenues from the Sale of vacation ownership products
less the Cost of vacation ownership products and marketing and sales costs. Beginning in the first quarter of 2021, the Company now
refers to this financial measure as Development Profit. While the calculation remains unchanged, the Company believes the revised
term better depicts the financial results being presented.

 

A-4

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the three months ended December 31, 2020

(In millions)

 
 

Reportable Segment

 

Corporate
and Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$                137

 

$                  —

 

$                  —

 

$                137

Management and exchange(1)

             

Ancillary revenues

20

 

 

 

20

Management fee revenues

36

 

3

 

(8)

 

31

Exchange and other services revenues

33

 

48

 

75

 

156

Management and exchange

89

 

51

 

67

 

207

Rental

59

 

8

 

 

67

Financing

61

 

 

 

61

Cost reimbursements(1)

300

 

14

 

(39)

 

275

TOTAL REVENUES

$                646

 

$                  73

 

$                  28

 

$                747

               

PROFIT

             

Development(2)

$                    8

 

$                  —

 

$                  —

 

$                    8

Management and exchange(1)

58

 

22

 

(6)

 

74

Rental(1)

(24)

 

5

 

10

 

(9)

Financing

39

 

 

 

39

TOTAL PROFIT

81

 

27

 

4

 

112

               

OTHER

             

General and administrative

 

 

(33)

 

(33)

Depreciation and amortization

(18)

 

(8)

 

(4)

 

(30)

Litigation charges

(2)

 

 

 

(2)

Restructuring

(4)

 

(1)

 

 

(5)

Royalty fee

(23)

 

 

 

(23)

Impairment

(2)

 

 

 

(2)

Gains and other income, net

 

3

 

13

 

16

Interest expense

 

 

(38)

 

(38)

Transaction and integration costs

 

 

(19)

 

(19)

INCOME (LOSS) BEFORE INCOME TAXES AND

             

NONCONTROLLING INTERESTS

32

 

21

 

(77)

 

(24)

Provision for income taxes

 

 

(7)

 

(7)

NET INCOME (LOSS)

32

 

21

 

(84)

 

(31)

Net income attributable to noncontrolling interests(1)

 

 

(6)

 

(6)

NET INCOME (LOSS) ATTRIBUTABLE TO

             

COMMON SHAREHOLDERS

$                  32

 

$                  21

 

$                (90)

 

$                (37)

               

(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 VOI owners.

(2) The Company previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the Cost
of vacation ownership products and marketing and sales costs. Beginning in the first quarter of 2021, the Company now refers to this financial
measure as Development Profit. While the calculation remains unchanged, the Company believes the revised term better depicts the financial
results being presented.

 

A-5

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the twelve months ended December 31, 2021

(In millions)

 
 

Reportable Segment

 

Corporate
and Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$            1,153

 

$                  —

 

$                  —

 

$            1,153

Management and exchange(1)

             

Ancillary revenues

188

 

3

 

 

191

Management fee revenues

158

 

32

 

(19)

 

171

Exchange and other services revenues

124

 

198

 

171

 

493

Management and exchange

470

 

233

 

152

 

855

Rental

446

 

40

 

 

486

Financing

268

 

 

 

268

Cost reimbursements(1)

1,202

 

47

 

(121)

 

1,128

TOTAL REVENUES

$            3,539

 

$                320

 

$                  31

 

$            3,890

               

PROFIT

             

Development(2)

$               286

 

$                  —

 

$                  —

 

$               286

Management and exchange(1)

270

 

102

 

(38)

 

334

Rental(1)

52

 

40

 

50

 

142

Financing

180

 

 

 

180

TOTAL PROFIT

788

 

142

 

12

 

942

               

OTHER

             

General and administrative

 

 

(227)

 

(227)

Depreciation and amortization

(89)

 

(48)

 

(9)

 

(146)

Litigation charges

(9)

 

 

(1)

 

(10)

Restructuring

 

(1)

 

1

 

Royalty fee

(106)

 

 

 

(106)

Impairment

 

 

(3)

 

(3)

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

1

 

 

(52)

 

(51)

Interest expense

 

 

(164)

 

(164)

Transaction and integration costs

(2)

 

 

(108)

 

(110)

Other

2

 

 

 

2

INCOME (LOSS) BEFORE INCOME TAXES AND

             

NONCONTROLLING INTERESTS

585

 

93

 

(551)

 

127

Provision for income taxes

 

 

(74)

 

(74)

NET INCOME (LOSS)

585

 

93

 

(625)

 

53

Net income attributable to noncontrolling interests(1)

 

 

(4)

 

(4)

NET INCOME (LOSS) ATTRIBUTABLE TO

             

COMMON SHAREHOLDERS

$                585

 

$                  93

 

$              (629)

 

$                 49

               

(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 VOI owners.

(2) The Company previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the
Cost of vacation ownership products and marketing and sales costs. Beginning in the first quarter of 2021, the Company now refers to this
financial measure as Development Profit. While the calculation remains unchanged, the Company believes the revised term better depicts
the financial results being presented.

 

A-6

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the twelve months ended December 31, 2020

(In millions)

 
 

Reportable Segment

 

Corporate
and Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$               546

 

$                  —

 

$                  —

 

$               546

Management and exchange(1)

             

Ancillary revenues

89

 

1

 

 

90

Management fee revenues

149

 

17

 

(22)

 

144

Exchange and other services revenues

118

 

193

 

210

 

521

Management and exchange

356

 

211

 

188

 

755

Rental

239

 

37

 

 

276

Financing

265

 

2

 

 

267

Cost reimbursements(1)

1,124

 

59

 

(141)

 

1,042

TOTAL REVENUES

$            2,530

 

$                309

 

$                  47

 

$            2,886

               

PROFIT

             

Development(2)

$                 10

 

$                  —

 

$                  —

 

$                 10

Management and exchange(1)

220

 

89

 

(29)

 

280

Rental(1)

(124)

 

26

 

53

 

(45)

Financing

159

 

1

 

 

160

TOTAL PROFIT

265

 

116

 

24

 

405

               

OTHER

             

General and administrative

 

 

(154)

 

(154)

Depreciation and amortization

(79)

 

(32)

 

(12)

 

(123)

Litigation charges

(6)

 

 

 

(6)

Restructuring

(15)

 

(4)

 

(6)

 

(25)

Royalty fee

(95)

 

 

 

(95)

Impairment

(8)

 

(92)

 

 

(100)

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

12

 

(2)

 

(36)

 

(26)

Interest expense

 

 

(150)

 

(150)

Transaction and integration costs

(3)

 

 

(63)

 

(66)

INCOME (LOSS) BEFORE INCOME TAXES AND

             

NONCONTROLLING INTERESTS

71

 

(14)

 

(397)

 

(340)

Benefit from income taxes

 

 

84

 

84

NET INCOME (LOSS)

71

 

(14)

 

(313)

 

(256)

Net income attributable to noncontrolling interests(1)

 

 

(19)

 

(19)

NET INCOME (LOSS) ATTRIBUTABLE TO

             

COMMON SHAREHOLDERS

$                 71

 

$                (14)

 

$              (332)

 

$             (275)

               

(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 VOI owners.

(2) The Company previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the
Cost of vacation ownership products and marketing and sales costs. Beginning in the first quarter of 2021, the Company now refers to this
financial measure as Development Profit. While the calculation remains unchanged, the Company believes the revised term better depicts
the financial results being presented.

 

A-7

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND

ADJUSTED EARNINGS PER SHARE - DILUTED

(In millions, except per share amounts)

 
 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

Net income (loss) attributable to common shareholders

$                   61

 

$                  (37)

 

$                   49

 

$                (275)

Provision for (benefit from) income taxes

11

 

7

 

74

 

(84)

Income (loss) before income taxes attributable to

             

common shareholders

72

 

(30)

 

123

 

(359)

Certain items:(1)

             

Litigation charges

2

 

2

 

10

 

6

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

24

 

(16)

 

51

 

26

Transaction and integration costs

35

 

19

 

110

 

66

Impairment charges

(2)

 

2

 

3

 

100

Purchase accounting adjustments(2) 

3

 

14

 

10

 

61

COVID-19 related adjustments 

 

13

 

(2)

 

77

Other(3)

(3)

 

1

 

(9)

 

5

Adjusted pretax income (loss) **

131

 

5

 

296

 

(18)

Provision for income taxes

(28)

 

(8)

 

(106)

 

(1)

Adjusted net income (loss) attributable to common

             

shareholders**

$                 103

 

$                    (3)

 

$                 190

 

$                  (19)

Diluted shares

43.6

 

41.3

 

43.3

 

41.3

Adjusted earnings (loss) per share - Diluted **

$                2.38

 

$               (0.05)

 

$                4.40

 

$               (0.45)

               

** 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-8.

(2) Includes certain items included in depreciation and amortization for the three and twelve months ended December 31, 2020.

(3) 2021 amounts include eliminating the impact of consolidating property owners' associations.

 

A-8

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

ADJUSTED EBITDA

(In millions)

 
 

Quarter Ended

 

Fiscal Year Ended

 

December
31, 2021

 

December
31, 2020

 

December
31, 2021

 

December
31, 2020

NET INCOME (LOSS) ATTRIBUTABLE TO

             

COMMON SHAREHOLDERS

$                 61

 

$                (37)

 

$                 49

 

$              (275)

Interest expense

36

 

38

 

164

 

150

Provision for (benefit from) income taxes

11

 

7

 

74

 

(84)

Depreciation and amortization

34

 

30

 

146

 

123

EBITDA

142

 

38

 

433

 

(86)

Share-based compensation

18

 

13

 

51

 

37

Certain items before income taxes:

             

Litigation charges

2

 

2

 

10

 

6

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

             

Dispositions

 

 

 

(1)

Hurricane business interruption insurance claims

 

 

 

(4)

Various tax related matters

(1)

 

 

(7)

 

26

Redemption premium from debt repayment

19

 

 

55

 

Foreign currency translation

4

 

(14)

 

 

11

Other

2

 

(2)

 

3

 

(6)

Transaction and integration costs

35

 

19

 

110

 

66

Impairment charges

(2)

 

2

 

3

 

100

Purchase accounting adjustments

3

 

 

10

 

4

COVID-19 related adjustments:

             

Sales reserve adjustment, net

 

13

 

 

50

           Accrual for health and welfare costs for furloughed

             

associates

 

(5)

 

(2)

 

2

Restructuring

 

5

 

 

25

Other(1)

(3)

 

1

 

(9)

 

5

ADJUSTED EBITDA**

$               219

 

$                 72

 

$               657

 

$               235

               

** 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) 2021 amounts include eliminating the impact of consolidating property owners' associations.

 

A-9

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

 
 

Quarter Ended

 

Fiscal Year Ended

 

December
31, 2021

 

December
31, 2020

 

December
31, 2021

 

December
31, 2020

Consolidated contract sales

$               406

 

$               178

 

$            1,374

 

$               654

Less resales contract sales

(7)

 

(3)

 

(26)

 

(12)

Consolidated contract sales, net of resales

399

 

175

 

1,348

 

642

Plus:

             

Settlement revenue

7

 

2

 

28

 

14

Resales revenue

4

 

1

 

12

 

7

Revenue recognition adjustments:

             

Reportability

7

 

10

 

(44)

 

58

Sales reserve

(28)

 

(39)

 

(101)

 

(129)

Other(1)

(25)

 

(12)

 

(90)

 

(46)

Sale of vacation ownership products

364

 

137

 

1,153

 

546

Less:

             

Cost of vacation ownership products

(72)

 

(40)

 

(250)

 

(150)

Marketing and sales

(178)

 

(89)

 

(617)

 

(386)

Development profit

114

 

8

 

286

 

10

Revenue recognition reportability adjustment

(6)

 

(7)

 

32

 

(39)

Other(2)

3

 

13

 

12

 

43

Adjusted development profit **

$               111

 

$                 14

 

$               330

 

$                 14

Development profit margin(3)

31.3%

 

5.9%

 

24.8%

 

1.8%

Adjusted development profit margin(3)

31.1%

 

10.0%

 

27.6%

 

2.6%

 

** 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 purchases price adjustments for the three and twelve months ended December 31, 2021, as well as a sales reserve
charge related to the COVID-19 pandemic and purchase accounting adjustments for the three and twelve months ended December 31, 2020.

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

 

A-10

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

 

VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

 
 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE

             

TO COMMON SHAREHOLDERS

$               205

 

$                 32

 

$               585

 

$                 71

Depreciation and amortization

23

 

18

 

89

 

79

Share-based compensation expense

2

 

2

 

6

 

6

Certain items:

             

Litigation charges

2

 

2

 

9

 

6

Gains and other income, net:

             

Dispositions

 

 

 

(6)

                Hurricane business interruption net insurance

             

proceeds

 

 

 

(4)

Foreign currency translation

 

 

 

(1)

Other

(1)

 

 

(1)

 

(1)

Transaction and integration costs

 

 

2

 

3

Impairment charges

 

2

 

 

8

Purchase price adjustments

3

 

 

10

 

3

COVID-19 related adjustments:

             

Sales reserve adjustment, net

 

13

 

 

50

Restructuring

 

4

 

 

15

Other

 

 

(1)

 

SEGMENT ADJUSTED EBITDA **

$               234

 

$                 73

 

$               699

 

$               229

 
 

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

 
 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2021

 

December 31,
2020

 

December 31,
2021

 

December 31,
2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE

             

TO COMMON SHAREHOLDERS

$                 22

 

$                 21

 

$                 93

 

$               (14)

Depreciation and amortization

8

 

8

 

48

 

32

Share-based compensation expense

1

 

1

 

2

 

2

Certain items:

             

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

             

Dispositions

 

 

 

5

Foreign currency translation

 

(2)

 

 

Other

 

(1)

 

 

(3)

Impairment charges

 

 

 

92

Purchase price adjustments

 

 

 

1

COVID-19 related adjustments:

             

Restructuring

 

1

 

1

 

4

SEGMENT ADJUSTED EBITDA **

$                 31

 

$                 28

 

$               144

 

$              119

               

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

 

 

A-11

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED BALANCE SHEETS

FISCAL YEAR-END 2021 AND 2020

(In millions, except share and per share data)

 
 

2021

 

2020

ASSETS

     

Cash and cash equivalents

$                       342

 

$                       524

Restricted cash (including $139 and $68 from VIEs, respectively)

461

 

468

Accounts receivable, net (including $12 and $11 from VIEs, respectively)

279

 

276

Vacation ownership notes receivable, net (including $1,662 and $1,493 from VIEs,

     

respectively)

2,045

 

1,840

Inventory

719

 

759

Property and equipment, net

1,136

 

791

Goodwill

3,150

 

2,817

Intangibles, net

993

 

952

Other (including $76 and $54 from VIEs, respectively)

488

 

471

TOTAL ASSETS

$                    9,613

 

$                    8,898

       

LIABILITIES AND EQUITY

     

Accounts payable

$                       265

 

$                       209

Advance deposits

160

 

147

Accrued liabilities (including $2 and $1 from VIEs, respectively)

345

 

349

Deferred revenue

453

 

488

Payroll and benefits liability

201

 

157

Deferred compensation liability

142

 

127

Securitized debt, net (including $1,877 and $1,604 from VIEs, respectively)

1,856

 

1,588

Debt, net

2,631

 

2,680

Other

224

 

197

Deferred taxes

350

 

274

TOTAL LIABILITIES

6,627

 

6,216

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; 75,519,049 and

     

75,279,061 shares issued, respectively

1

 

1

Treasury stock — at cost; 33,235,671 and 34,184,813 shares, respectively

(1,356)

 

(1,334)

Additional paid-in capital

4,072

 

3,760

Accumulated other comprehensive loss

(16)

 

(48)

Retained earnings

275

 

272

TOTAL MVW SHAREHOLDERS' EQUITY

2,976

 

2,651

Noncontrolling interests

10

 

31

TOTAL EQUITY

2,986

 

2,682

TOTAL LIABILITIES AND EQUITY

$                    9,613

 

$                    8,898

 

The abbreviation VIEs above means Variable Interest Entities.

 

A-12

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

FISCAL YEARS 2021 AND 2020

(In millions)

 
 

2021

 

2020

OPERATING ACTIVITIES

     

Net income (loss)

$             53

 

$       (256)

Adjustments to reconcile net income (loss) to net cash, cash equivalents, and restricted cash

     

provided by operating activities:

     

Depreciation and amortization of intangibles

146

 

123

Amortization of debt discount and issuance costs

56

 

22

Vacation ownership notes receivable reserve

101

 

150

Share-based compensation

51

 

36

Impairment charges

3

 

100

Gain on disposal of property and equipment, net

 

(4)

Deferred income taxes

34

 

(38)

Net change in assets and liabilities, net of the effects of acquisition:

     

Accounts receivable

 

21

Vacation ownership notes receivable originations

(750)

 

(377)

Vacation ownership notes receivable collections

686

 

620

Inventory

61

 

18

Other assets

(46)

 

44

Accounts payable, advance deposits and accrued liabilities

42

 

(146)

Deferred revenue

88

 

59

Payroll and benefit liabilities

35

 

(29)

Deferred compensation liability

22

 

17

Other liabilities

27

 

Deconsolidation of certain Consolidated Property Owners' Associations

(168)

 

Purchase of vacation ownership units for future transfer to inventory

(98)

 

(61)

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

343

 

299

INVESTING ACTIVITIES

     

Acquisition of a business, net of cash and restricted cash acquired

(157)

 

Capital expenditures for property and equipment (excluding inventory)

(47)

 

(41)

Purchase of company owned life insurance

(14)

 

(6)

Dispositions, net

3

 

15

Other, net

2

 

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

(213)

 

(32)

 

A-13

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

FISCAL YEARS 2021 AND 2020

(In millions)

 
 

2021

 

2020

FINANCING ACTIVITIES

     

Borrowings from securitization transactions

957

 

690

Repayment of debt related to securitization transactions

(868)

 

(960)

Proceeds from debt

1,111

 

1,166

Repayments of debt

(1,339)

 

(705)

Purchase of convertible note hedges

(100)

 

Proceeds from issuance of warrants

70

 

Payment of debt issuance costs

(22)

 

(14)

Finance lease payment

(5)

 

(11)

Repurchase of common stock

(78)

 

(82)

Payment of dividends

(23)

 

(45)

Payment of withholding taxes on vesting of restricted stock units

(20)

 

(16)

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

     

activities

(317)

 

23

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

(2)

 

1

Change in cash, cash equivalents, and restricted cash

(189)

 

291

Cash, cash equivalents, and restricted cash, beginning of year

992

 

701

Cash, cash equivalents, and restricted cash, end of year

$          803

 

$          992

 

A-14

 

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)

(Unaudited)

 
 

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)

$                    6.52

 

$                    7.14

Adjusted earnings per share - Diluted ** (2)

$                    8.72

 

$                    9.65

Diluted shares(2)

48.6

 

48.6

 

** 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 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, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of
share repurchase activity only through February 18, 2022.

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

 

** 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 adjustment includes $120 to $140 million of anticipated transaction and integration
costs and $22 million of anticipated purchase accounting adjustments.

 

A-15

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

2022 ADJUSTED FREE CASH FLOW OUTLOOK

(In millions)

(Unaudited)

 
   

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)