Marriott Vacations Worldwide ("MVW") Reports Second Quarter 2021 Financial Results

Jul 28, 2021

ORLANDO, Fla., July 28, 2021 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter 2021 financial results.

"Today, more than ever, people want to vacation to see new places, reunite with family and friends, or just to relax, and the products we offer, with extra square footage in a resort setting, are resonating with them, translating into higher occupancies and strong first time buyer growth," said Stephen P. Weisz, chief executive officer. "Contract sales in the second quarter grew 60% sequentially to $362 million and Adjusted EBITDA more than doubled compared to the first quarter. With the recovery in full swing, we've been able to turn our focus back towards the digitally enabled growth initiatives we have in front of us to transform our business, drive long-term growth and improve margins."

On April 1, 2021, the Company completed its acquisition of Welk Resorts for $405 million, including approximately 1.4 million shares of its common stock. The financial results for Welk Resorts for the second quarter of 2021 are included in the Company's financial results.

Second Quarter 2021 Highlights and Operational Update:

  • Consolidated Vacation Ownership contract sales totaled $362 million in the second quarter of 2021, with VPG 30% higher than the second quarter of 2019.
  • Net income attributable to common shareholders was $6 million, or $0.15 fully diluted earnings per share.
  • Adjusted net income attributable to common shareholders was $37 million and adjusted fully diluted earnings per share was $0.85.
  • Adjusted EBITDA more than doubled on a sequential basis to $164 million in the second quarter of 2021.
  • The Company completed a securitization of timeshare receivables, issuing $434 million of notes at an overall average weighted interest rate of 1.5% and a 98% gross advance rate, the lowest interest rate ever achieved by a MVW 144A securitization, generating net proceeds of $425 million.
  • After the repayment of $500 million of its 6.5% Senior Notes due 2026 following the end of the quarter, the Company had pro forma liquidity of nearly $1.5 billion, including unrestricted cash and cash equivalents of $780 million.
  • With recovery in the business expected to continue, the Company projects contract sales of $380 million to $410 million in the third quarter of 2021, a sequential increase of 9% at the mid-point.

Second Quarter 2021 Segment Results

Vacation Ownership

Revenues excluding cost reimbursements increased 189% in the second quarter of 2021 compared to the prior year and increased 52% from the first quarter of 2021 as the business continued to recover. Compared to the first quarter, revenue from the sale of vacation ownership products increased 82% and Development profit margin increased to 22%. Excluding the impact of revenue reportability, Adjusted development profit more than doubled sequentially to $81 million, with Adjusted development profit margin increasing nearly 570 basis points to 26%, approximately 240 basis points above second quarter 2019 levels.

Vacation Ownership segment financial results were $151 million in the second quarter of 2021 and segment Adjusted EBITDA more than doubled on a sequential basis to $182 million, with Adjusted EBITDA margin in line with second quarter 2019 despite lower revenue.

Exchange & Third-Party Management

Revenues excluding cost reimbursements increased 56% in the second quarter of 2021 compared to the prior year and was largely unchanged compared to the first quarter. Interval International exchange volumes increased 13% compared to the prior year but decreased 22% on a sequential basis largely due to normal seasonality and were only down 1% compared to second quarter 2019. Active members declined 11% compared to the first quarter to 1.3 million, primarily due to the non-renewal of one of Interval's corporate customers which the Company announced in February of 2021. Average revenue per member increased 54% compared to the prior year and was up 7% compared to the second quarter of 2019.

Exchange & Third-Party Management segment financial results were $27 million in the second quarter of 2021 and, as expected, segment Adjusted EBITDA declined $4 million sequentially to $37 million, with Adjusted EBITDA margin 245 basis points higher than second quarter 2019.

Corporate and Other

General and administrative costs increased $47 million in the second quarter of 2021 compared to the prior year as a result of higher net overall spending as operations continue to ramp-up, reinstating compensation plans following 2020, and a lower credit in the current year related to incentives under the CARES Act for companies who continued paying associates' benefit costs while not working as a result of the COVID-19 pandemic.

Balance Sheet and Liquidity

On June 30, 2021, cash and cash equivalents totaled $1.3 billion. In the second quarter of 2021, the Company issued $500 million of 4.5% Senior Notes maturing in 2029 and used the proceeds in early July to repay $500 million of its $750 million 6.5% Senior Notes. Pro forma, the Company ended the quarter with $780 million of cash and total liquidity of nearly $1.5 billion, including gross notes receivable eligible for securitization of $97 million.

In the second quarter of 2021, the Company completed a securitization of timeshare receivables, issuing $434 million of notes at an overall average weighted interest rate of 1.5% and a 98% gross advance rate, the lowest interest rate ever achieved by a MVW 144A securitization, generating net proceeds of $425 million.

The Company had $5.3 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the second quarter of 2021. This included $3.5 billion of corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

Non-GAAP Financial Information

Non-GAAP financial measures, such as Adjusted net income or loss attributable to common shareholders, Adjusted EBITDA, 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.

Second Quarter 2021 Financial Results Conference Call

The Company will hold a conference call on July 29, 2021 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 nearly 120 resorts and approximately 700,000 Owners and Members in a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs comprised of nearly 3,200 resorts in over 90 nations, as well as management of more than 160 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 contract sales in the third quarter that are not historical facts. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including, without limitation, conditions beyond our control such as the length and severity of the current COVID-19 pandemic and its effect on our operations, its short and longer-term impacts on the demand for travel and consumer confidence, and the availability and distribution of effective vaccines; the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines become widely available; the Company's ability to manage and reduce expenditures in a low revenue environment; volatility in the economy and the credit markets, changes in supply and demand for vacation ownership products, competitive conditions, the availability of additional financing when and if required, and other matters disclosed 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 the date of issuance 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, 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 Profit

A-9

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

A-10

Quarterly Operating Metrics

A-11

Non-GAAP Financial Measures

A-12

 
 

A-1

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

(Unaudited)

 

SUMMARY FINANCIAL INFORMATION

 
 

Three Months Ended

 

Change %

 

Six Months Ended

 

Change %

 

June 30,
2021

 

June 30,
2020

   

June 30,
2021

 

June 30,
2020

 

Key Measures

                     

Total consolidated contract sales

$

362

   

$

30

   

N/M

 

$

588

   

$

336

   

75%

VPG

$

4,304

   

$

3,717

   

16%

 

$

4,428

   

$

3,683

   

20%

Tours

79,900

   

6,216

   

N/M

 

125,771

   

85,347

   

47%

Total active members (000's)(1)

1,321

   

1,571

   

(16%)

 

1,321

   

1,571

   

(16%)

Average revenue per member(1)

$

46.36

   

$

30.17

   

54%

 

$

93.77

   

$

71.74

   

31%

                       

GAAP Measures

                     

Revenues

$

979

   

$

480

   

N/M

 

$

1,738

   

$

1,490

   

17%

Income (loss) before income taxes and
noncontrolling interests

$

35

   

$

(81)

   

N/M

 

$

(1)

   

$

(244)

   

N/M

Net income (loss) attributable to common
shareholders

$

6

   

$

(70)

   

N/M

 

$

(22)

   

$

(176)

   

88%

Earnings (loss) per share - diluted

$

0.15

   

$

(1.68)

   

N/M

 

$

(0.52)

   

$

(4.25)

   

88%

                       

Non-GAAP Measures **

                     

Adjusted EBITDA

$

164

   

$

(10)

   

N/M

 

$

233

   

$

128

   

82%

Adjusted pretax income (loss)

$

70

   

$

(78)

   

N/M

 

$

47

   

$

5

   

N/M

Adjusted net income (loss) attributable to
common shareholders

$

37

   

$

(72)

   

N/M

 

$

17

   

$

17

   

2%

Adjusted earnings (loss) per share - diluted

$

0.85

   

$

(1.76)

   

N/M

 

$

0.40

   

$

0.40

   

—%

 

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

 
 
 

ADJUSTED EBITDA BY SEGMENT

                       
 

Three Months Ended

 

Change %

 

Six Months Ended

 

Change %

 

June 30,
2021

 

June 30,
2020

   

June 30,
2021

 

June 30,
2020

 

Vacation Ownership

$

182

   

$

(19)

   

N/M

 

$

250

   

$

128

   

94%

Exchange & Third-Party Management

37

   

19

   

94%

 

78

   

60

   

31%

Segment adjusted EBITDA**

219

   

   

N/M

 

328

   

188

   

74%

General and administrative

(56)

   

(13)

   

N/M

 

(95)

   

(64)

   

(49%)

Consolidated property owners' associations

1

   

3

   

N/M

 

   

4

   

N/M

Adjusted EBITDA**

$

164

   

$

(10)

   

N/M

 

$

233

   

$

128

   

82%

                       

** 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-2

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

REVENUES

             

Sale of vacation ownership products

$

296

   

$

53

   

$

459

   

$

311

 

Management and exchange

220

   

145

   

413

   

372

 

Rental

121

   

18

   

210

   

153

 

Financing

68

   

70

   

127

   

142

 

Cost reimbursements

274

   

194

   

529

   

512

 

TOTAL REVENUES

979

   

480

   

1,738

   

1,490

 

EXPENSES

             

Cost of vacation ownership products

67

   

23

   

107

   

83

 

Marketing and sales

164

   

49

   

273

   

219

 

Management and exchange

126

   

85

   

243

   

236

 

Rental

81

   

73

   

163

   

171

 

Financing

21

   

23

   

42

   

61

 

General and administrative

66

   

19

   

112

   

89

 

Depreciation and amortization

36

   

31

   

77

   

63

 

Litigation charges

3

   

   

6

   

2

 

Royalty fee

27

   

23

   

52

   

49

 

Impairment

5

   

1

   

5

   

96

 

Cost reimbursements

274

   

194

   

529

   

512

 

TOTAL EXPENSES

870

   

521

   

1,609

   

1,581

 

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

(2)

   

14

   

4

   

(42)

 

Interest expense

(44)

   

(42)

   

(87)

   

(75)

 

Transaction and integration costs

(29)

   

(12)

   

(48)

   

(36)

 

Other

1

   

   

1

   

 
                       

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

35

   

(81)

   

(1)

   

(244)

 

(Provision for) benefit from income taxes

(27)

   

19

   

(16)

   

77

 

NET INCOME (LOSS)

8

   

(62)

   

(17)

   

(167)

 

Net income attributable to noncontrolling interests

(2)

   

(8)

   

(5)

   

(9)

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS

$

6

   

$

(70)

   

$

(22)

   

$

(176)

 
               

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO
COMMON SHAREHOLDERS

             

Basic

$

0.15

   

$

(1.68)

   

$

(0.52)

   

$

(4.25)

 

Diluted

$

0.15

   

$

(1.68)

   

$

(0.52)

   

$

(4.25)

 
               

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 June 30, 2021

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

296

   

$

   

$

   

$

296

 

Management and exchange(1)

             

Ancillary revenues

52

   

1

   

   

53

 

Management fee revenues

39

   

9

   

(5)

   

43

 

Exchange and other services revenues

32

   

50

   

42

   

124

 

Management and exchange

123

   

60

   

37

   

220

 

Rental

110

   

11

   

   

121

 

Financing

68

   

   

   

68

 

Cost reimbursements(1)

286

   

15

   

(27)

   

274

 

TOTAL REVENUES

$

883

   

$

86

   

$

10

   

$

979

 
               

PROFIT

             

Development(2)

$

65

   

$

   

$

   

$

65

 

Management and exchange(1)

77

   

25

   

(8)

   

94

 

Rental(1)

15

   

11

   

14

   

40

 

Financing

47

   

   

   

47

 

TOTAL PROFIT

204

   

36

   

6

   

246

 
               

OTHER

             

General and administrative

   

   

(66)

   

(66)

 

Depreciation and amortization

(23)

   

(9)

   

(4)

   

(36)

 

Litigation charges

(3)

   

   

   

(3)

 

Royalty fee

(27)

   

   

   

(27)

 

Impairment

   

   

(5)

   

(5)

 

Losses and other expense, net

   

   

(2)

   

(2)

 

Interest expense

   

   

(44)

   

(44)

 

Transaction and integration costs

(1)

   

   

(28)

   

(29)

 

Other

1

   

   

   

1

 
                       

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

151

   

27

   

(143)

   

35

 

Provision for income taxes

   

   

(27)

   

(27)

 

NET INCOME (LOSS)

151

   

27

   

(170)

   

8

 

Net income attributable to noncontrolling interests(1)

   

   

(2)

   

(2)

 
 

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

151

   

$

27

   

$

(172)

   

$

6

 
               

(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 June 30, 2020

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate
and Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

53

   

$

   

$

   

$

53

 

Management and exchange(1)

             

Ancillary revenues

6

   

   

   

6

 

Management fee revenues

38

   

   

(5)

   

33

 

Exchange and other services revenues

29

   

39

   

38

   

106

 

Management and exchange

73

   

39

   

33

   

145

 

Rental

12

   

6

   

   

18

 

Financing

69

   

1

   

   

70

 

Cost reimbursements(1)

198

   

12

   

(16)

   

194

 

TOTAL REVENUES

$

405

   

$

58

   

$

17

   

$

480

 
               

PROFIT

             

Development(2)

$

(19)

   

$

   

$

   

$

(19)

 

Management and exchange(1)

51

   

13

   

(4)

   

60

 

Rental(1)

(75)

   

5

   

15

   

(55)

 

Financing

46

   

1

   

   

47

 

TOTAL PROFIT

3

   

19

   

11

   

33

 
               

OTHER

             

General and administrative

   

   

(19)

   

(19)

 

Depreciation and amortization

(20)

   

(7)

   

(4)

   

(31)

 

Royalty fee

(23)

   

   

   

(23)

 

Impairment

(1)

   

   

   

(1)

 

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

5

   

(1)

   

10

   

14

 

Interest expense

   

   

(42)

   

(42)

 

Transaction and integration costs

   

   

(12)

   

(12)

 
                       

(LOSS) INCOME BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

(36)

   

11

   

(56)

   

(81)

 

Benefit from income taxes

   

   

19

   

19

 

NET (LOSS) INCOME

(36)

   

11

   

(37)

   

(62)

 

Net income attributable to noncontrolling interests(1)

   

   

(8)

   

(8)

 
 

NET (LOSS) INCOME ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

(36)

   

$

11

   

$

(45)

   

$

(70)

 
               

(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-5

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the six months ended June 30, 2021

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

459

   

$

   

$

   

$

459

 

Management and exchange(1)

             

Ancillary revenues

80

   

1

   

   

81

 

Management fee revenues

77

   

14

   

(11)

   

80

 

Exchange and other services revenues

60

   

105

   

87

   

252

 

Management and exchange

217

   

120

   

76

   

413

 

Rental

187

   

23

   

   

210

 

Financing

127

   

   

   

127

 

Cost reimbursements(1)

554

   

29

   

(54)

   

529

 

TOTAL REVENUES

$

1,544

   

$

172

   

$

22

   

$

1,738

 
               

PROFIT

             

Development(2)

$

79

   

$

   

$

   

$

79

 

Management and exchange(1)

136

   

54

   

(20)

   

170

 

Rental(1)

(4)

   

23

   

28

   

47

 

Financing

85

   

   

   

85

 

TOTAL PROFIT

296

   

77

   

8

   

381

 
               

OTHER

             

General and administrative

   

   

(112)

   

(112)

 

Depreciation and amortization

(42)

   

(29)

   

(6)

   

(77)

 

Litigation charges

(6)

   

   

   

(6)

 

Restructuring

(1)

   

   

1

   

 

Royalty fee

(52)

   

   

   

(52)

 

Gains and other income, net

   

   

4

   

4

 

Interest expense

   

   

(87)

   

(87)

 

Transaction and integration costs

(1)

   

   

(47)

   

(48)

 

Other

1

   

   

   

1

 
                       

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

195

   

48

   

(244)

   

(1)

 

Benefit from income taxes

   

   

(16)

   

(16)

 

NET INCOME (LOSS)

195

   

48

   

(260)

   

(17)

 

Net income attributable to noncontrolling interests(1)

   

   

(5)

   

(5)

 
 

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

195

   

$

48

   

$

(265)

   

$

(22)

 
               

(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-6

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the six months ended June 30, 2020

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

311

   

$

   

$

   

$

311

 

Management and exchange(1)

             

Ancillary revenues

52

   

1

   

   

53

 

Management fee revenues

76

   

10

   

(9)

   

77

 

Exchange and other services revenues

57

   

100

   

85

   

242

 

Management and exchange

185

   

111

   

76

   

372

 

Rental

134

   

19

   

   

153

 

Financing

140

   

2

   

   

142

 

Cost reimbursements(1)

543

   

33

   

(64)

   

512

 

TOTAL REVENUES

$

1,313

   

$

165

   

$

12

   

$

1,490

 
               

PROFIT

             

Development(2)

$

9

   

$

   

$

   

$

9

 

Management and exchange(1)

107

   

45

   

(16)

   

136

 

Rental(1)

(60)

   

13

   

29

   

(18)

 

Financing(3)

80

   

1

   

   

81

 

TOTAL PROFIT

136

   

59

   

13

   

208

 
               

OTHER

             

General and administrative

   

   

(89)

   

(89)

 

Depreciation and amortization

(41)

   

(16)

   

(6)

   

(63)

 

Litigation charges

(2)

   

   

   

(2)

 

Royalty fee

(49)

   

   

   

(49)

 

Impairment

(5)

   

(91)

   

   

(96)

 

Gains and other income, net

6

   

   

(48)

   

(42)

 

Interest expense

   

   

(75)

   

(75)

 

Transaction and integration costs

(3)

   

   

(33)

   

(36)

 
 

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

42

   

(48)

   

(238)

   

(244)

 

Benefit from income taxes

   

   

77

   

77

 

NET INCOME (LOSS)

42

   

(48)

   

(161)

   

(167)

 

Net income attributable to noncontrolling interests(1)

   

   

(9)

   

(9)

 
 

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

42

   

$

(48)

   

$

(170)

   

$

(176)

 
               

(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.

(3) Includes a $10 million impact related to increased bad debt expense recorded in the six months ended June 30, 2020 related to the COVID-19 pandemic.

 
 
 

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)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

Net income (loss) attributable to common shareholders

$

6

   

$

(70)

   

$

(22)

   

$

(176)

 

Provision for (benefit from) income taxes

27

   

(19)

   

16

   

(77)

 

Income (loss) before income taxes attributable to common
shareholders

33

   

(89)

   

(6)

   

(253)

 

Certain items:(1)

             

Litigation charges

3

   

   

6

   

2

 

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

2

   

(14)

   

(4)

   

42

 

Transaction and integration costs

29

   

12

   

48

   

36

 

Impairment charges

5

   

1

   

5

   

96

 

Purchase price adjustments(2) 

2

   

14

   

2

   

30

 

Other(3)

(4)

   

(2)

   

(4)

   

52

 

Adjusted pretax income (loss) **

70

   

(78)

   

47

   

5

 

(Provision for) benefit from income taxes

(33)

   

6

   

(30)

   

12

 

Adjusted net income (loss) attributable to common
shareholders**

$

37

   

$

(72)

   

$

17

   

$

17

 

Diluted shares

43.8

   

41.2

   

43.0

   

41.4

 

Adjusted earnings (loss) per share - Diluted **

$

0.85

   

$

(1.76)

   

$

0.40

   

$

0.40

 
               

** 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.

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

 
 
 

A-8

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

ADJUSTED EBITDA

(In millions)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS

$

6

   

$

(70)

   

$

(22)

   

$

(176)

 

Interest expense

44

   

42

   

87

   

75

 

Provision for (benefit from) income taxes

27

   

(19)

   

16

   

(77)

 

Depreciation and amortization

36

   

31

   

77

   

63

 

Share-based compensation

14

   

9

   

22

   

13

 

Certain items before income taxes:

             

Litigation charges

3

   

   

6

   

2

 

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

                     

Hurricane business interruption insurance claims

   

(4)

   

   

(4)

 

Various tax related matters

2

   

(1)

   

2

   

26

 

Foreign currency translation

(2)

   

(8)

   

(6)

   

24

 

Other

2

   

(1)

   

   

(4)

 

Transaction and integration costs

29

   

12

   

48

   

36

 

Impairment charges

5

   

1

   

5

   

96

 

Purchase price adjustments

2

   

   

2

   

2

 

COVID-19 related adjustments:

             

Sales reserve adjustment, net

   

   

   

37

 

Accrual for health and welfare costs for furloughed
associates

(2)

   

   

(2)

   

11

 

Other(1)

(2)

   

(2)

   

(2)

   

4

 

ADJUSTED EBITDA**

$

164

   

$

(10)

   

$

233

   

$

128

 
               

** 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)

(Unaudited)

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

Consolidated contract sales

$

362

   

$

30

   

$

588

   

$

336

 

Less resales contract sales

(7)

   

(1)

   

(12)

   

(8)

 

Consolidated contract sales, net of resales

355

   

29

   

576

   

328

 

Plus:

             

Settlement revenue

8

   

2

   

13

   

8

 

Resales revenue

1

   

1

   

3

   

5

 

Revenue recognition adjustments:

             

Reportability

(17)

   

32

   

(53)

   

66

 

Sales reserve

(28)

   

(9)

   

(42)

   

(80)

 

Other(1)

(23)

   

(2)

   

(38)

   

(16)

 

Sale of vacation ownership products

296

   

53

   

459

   

311

 

Less:

             

Cost of vacation ownership products

(67)

   

(23)

   

(107)

   

(83)

 

Marketing and sales

(164)

   

(49)

   

(273)

   

(219)

 

Development Profit

65

   

(19)

   

79

   

9

 

Revenue recognition reportability adjustment

13

   

(21)

   

39

   

(44)

 

Other(2)

3

   

   

3

   

29

 

Adjusted development profit **

$

81

   

$

(40)

   

$

121

   

$

(6)

 

Development profit margin(3)

22.3%

   

(34.8%)

   

17.3%

   

3.0%

 

Adjusted development profit margin(3)

26.2%

   

N/M

   

24.0%

   

(2.1%)

 
 

** 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) Includes purchase price adjustments for the second quarter of 2021, as well as a sales reserve charge related to the COVID-19 pandemic and purchase price adjustments in the six months ended June 30, 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)

(Unaudited)

 

VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

151

   

$

(36)

   

$

195

   

$

42

 

Depreciation and amortization

23

   

20

   

42

   

41

 

Share-based compensation expense

2

   

1

   

3

   

2

 

Certain items:

             

Litigation charges

3

   

   

6

   

2

 

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

             

Hurricane business interruption net insurance proceeds

   

(4)

   

   

(4)

 

Foreign currency translation

   

   

   

(1)

 

Other

   

(1)

   

   

(1)

 

Impairment charges

   

1

   

   

5

 

Purchase price adjustments

2

   

   

2

   

2

 

Effects of COVID-19:

             

Sales reserve adjustment, net

   

   

   

37

 

Restructuring

   

   

1

   

 

Other

1

   

   

1

   

3

 

SEGMENT ADJUSTED EBITDA **

$

182

   

$

(19)

   

$

250

   

$

128

 
               
 
 

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

 
 

Three Months Ended

 

Six Months Ended

 

June 30, 2021

 

June 30, 2020

 

June 30, 2021

 

June 30, 2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

27

   

$

11

   

$

48

   

$

(48)

 

Depreciation and amortization

9

   

7

   

29

   

16

 

Share-based compensation expense

1

   

   

1

   

1

 

Certain items:

             

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

             

Foreign currency translation

   

1

   

   

3

 

Other

   

   

   

(3)

 

Impairment charges

   

   

   

91

 

SEGMENT ADJUSTED EBITDA **

$

37

   

$

19

   

$

78

   

$

60

 
               

** 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

 

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

                     
 

2021

 

$

226

   

$

362

             
 

2020

 

$

306

   

$

30

   

$

140

   

$

178

   

$

654

 
 

2019

 

$

354

   

$

386

   

$

390

   

$

394

   

$

1,524

 
                       

VPG

                     
 

2021

 

$

4,644

   

$

4,304

             
 

2020

 

$

3,680

   

$

3,717

   

$

3,904

   

$

3,826

   

$

3,767

 
 

2019

 

$

3,350

   

$

3,299

   

$

3,461

   

$

3,499

   

$

3,403

 
                       

Tours

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