Marriott Vacations Worldwide ("MVW") Reports Second Quarter 2022 Financial Results

Aug 8, 2022

ORLANDO, Fla., Aug. 8, 2022 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) (the "Company") reported second quarter 2022 financial results.

Second Quarter 2022 Highlights:

  • Consolidated Vacation Ownership contract sales were $506 million, a 40% increase compared to the second quarter of 2021, and VPG increased 7% to $4,613.
     
  • Net income attributable to common shareholders was $136 million, or $2.97 fully diluted earnings per share.
     
  • Adjusted net income attributable to common shareholders was $131 million, or $2.87 adjusted fully diluted earnings per share.
     
  • Adjusted EBITDA was $255 million, a 55% increase compared to the second quarter of 2021, as the Company continues to see a strong recovery in the business.
     
  • The Company returned $219 million to shareholders, repurchasing more than 1.4 million shares of its common stock for $193 million at an average price per share of $136 and paying a quarterly dividend of $26 million.
     
    • Subsequent to the end of the second quarter, the Company repurchased approximately 1.1 million shares of its common stock for $131 million at an average price per share of $124 through the end of July.
       
  • Consistent with its strategy to dispose of non-strategic assets, during the second quarter, the Company closed on the sale of its VRI Americas business and its hotel in Puerto Vallarta, Mexico for total cash proceeds in excess of $100 million.

"We had a very strong second quarter, generating $506 million in contract sales, up 40% from the prior year, with contract sales and Adjusted EBITDA up 31% from the second quarter of 2019," said Stephen P. Weisz, chief executive officer. "We introduced Abound by Marriott VacationsTM during the quarter, an exclusive new program providing more options and access for Owners. With the strong recovery of our operations, as well as cash proceeds from dispositions, we accelerated our return of cash to shareholders, surpassing $500 million this year through the end of July."

Second Quarter 2022 Results

Vacation Ownership

Revenues excluding cost reimbursements increased 28% in the second quarter of 2022 compared to the prior year, reflecting growth in all of the Company's lines of business.

Segment financial results attributable to common shareholders were $277 million in the second quarter of 2022 and Segment margin was 36%. Segment adjusted EBITDA increased 51% to $274 million, with Segment adjusted EBITDA margin of 36%, over 500 basis points higher than the second quarter of 2021.

Exchange & Third-Party Management

Revenues excluding cost reimbursements decreased 4% in the second quarter of 2022 compared to the prior year. Interval International active members increased 21% to 1.6 million and Average revenue per member decreased 16% compared to the prior year.

Segment financial results attributable to common shareholders were $46 million in the second quarter of 2022 and Segment margin was 66%. Segment adjusted EBITDA decreased $2 million to $35 million compared to the prior year primarily due to the sale of VRI Americas, with Segment adjusted EBITDA margin of 52%, in line with the second quarter of 2021.

Corporate and Other

General and administrative costs decreased $2 million in the second quarter of 2022 compared to the prior year primarily as a result of lower bonus expense.

Balance Sheet and Liquidity

The Company ended the quarter with approximately $1.2 billion in liquidity, including $324 million of cash and cash equivalents, $106 million of gross notes receivable that were eligible for securitization, and $749 million of available capacity under its revolving corporate credit facility.

At the end of the second quarter of 2022, the Company had $2.7 billion of net corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

The Company completed its first timeshare receivable securitization of 2022 in the second quarter, issuing $375 million of notes backed by a pool of $383 million of vacation ownership notes receivable from all of the Company's timeshare brands. The overall weighted average interest rate of the notes was 4.59% and the transaction had a gross advance rate of 98%.

Abound by Marriott Vacations

During the quarter, the Company introduced Abound by Marriott Vacations, a new Owner benefit and exchange program providing access to over 90 vacation club resorts, including Marriott Vacation Club®, Sheraton® Vacation Club and Westin® Vacation Club, as well as access to more than 8,000 Marriott Bonvoy® hotels, 2,000 vacation homes, and 2,000 unique experiences like cruises, guided and culinary tours, premiere events, outdoor adventures and more with a continued ability to exchange through Interval International, a premier exchange partner.

Full Year 2022 Outlook (in millions, except per share amounts)

The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2022 expected GAAP results for the Company.

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

Income before income taxes attributable to common shareholders

$511

to

$551

 

Net income attributable to common shareholders

$365

to

$395

 

Earnings per share - diluted

$8.15

to

$8.81

 

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

$470

 

$500

 
         

Contract sales

$1,775

to

$1,875

 

Adjusted EBITDA

$880

to

$930

 

Adjusted pretax net income

$600

to

$650

 

Adjusted net income attributable to common shareholders

$425

to

$465

 

Adjusted earnings per share - diluted

$9.47

to

$10.35

 

Adjusted free cash flow

$650

to

$730

 

Revenue Recognition

In connection with the launch of Abound by Marriott Vacations and the unification of the Company's Marriott-, Westin-, and Sheraton-branded vacation ownership products, the Company intends to align its revenue recognition on the sale of vacation ownership interests across all of its brands in the third quarter. This will result in the acceleration of revenue and a one-time benefit to Adjusted EBITDA but will have no impact on cash flow. The Company is unable to estimate the impact at this time and its guidance excludes this one-time benefit, which will be provided in connection with the release of its third quarter results.

Non-GAAP Financial Information

Non-GAAP financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use. In addition to the foregoing non-GAAP financial measures, we present certain key metrics as performance measures which are further described in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission.

Second Quarter 2022 Financial Results Conference Call

The Company will hold a conference call on August 9, 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 countries and territories, as well as provides management services to other resorts and lodging properties. As a leader and innovator in the vacation industry, the Company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International, Inc. and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements

This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about expectations for future growth and projections for full year 2022. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words "believe," "expect," "plan," "intend," "anticipate," "estimate," "predict," "potential," "continue," "may," "might," "should," "could" or the negative of these terms or similar expressions. 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 continuing effects of the COVID-19 pandemic, including 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 consumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or as effective treatments or vaccines against variants of the COVID-19 virus become widely available; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price inflation; global supply chain disruptions; volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic and the ongoing conflict between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the effects of steps we have taken and may continue to take to reduce operating costs and/or enhance health and cleanliness protocols at our resorts due to the COVID-19 pandemic; political or social strife, and other matters referred to under the heading "Risk Factors" in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission. All forward-looking statements in this press release 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, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.

Financial Schedules Follow

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

   

FINANCIAL SCHEDULES

   

QUARTER 2, 2022

   
     

TABLE OF CONTENTS

   
     

Summary Financial Information and Adjusted EBITDA by Segment

A-1

   

Consolidated Statements of Income

A-2

   

Revenues and Profit by Segment

A-3

   

 Adjusted Net Income 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

   

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

(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,
2022

 

June 30,
2021

   

June 30,
2022

 

June 30,
2021

 

Key Measures

                       

Total consolidated contract sales

 

$        506

 

$        362

 

40 %

 

$        900

 

$        588

 

53 %

VPG

 

$     4,613

 

$     4,304

 

7 %

 

$     4,653

 

$     4,428

 

5 %

Tours

 

102,857

 

79,900

 

29 %

 

181,362

 

125,771

 

44 %

Total active members (000's)(1)

 

1,596

 

1,321

 

21 %

 

1,596

 

1,321

 

21 %

Average revenue per member(1)

 

$     38.79

 

$     46.36

 

(16 %)

 

$     83.32

 

$     93.77

 

(11 %)

                         

GAAP Measures

                       

Revenues

 

$     1,164

 

$        979

 

19 %

 

$     2,216

 

$     1,738

 

28 %

Income (loss) before income taxes and noncontrolling interests

 

$        178

 

$          35

 

NM

 

$        268

 

$           (1)

 

NM

Net income (loss) attributable to common shareholders

 

$        136

 

$            6

 

NM

 

$        194

 

$         (22)

 

NM

Earnings (loss) per share - diluted

 

$       2.97

 

$       0.15

 

NM

 

$       4.18

 

$      (0.52)

 

NM

                         

Non-GAAP Measures **

                       

Adjusted EBITDA

 

$        255

 

$        164

 

55 %

 

$        443

 

$        233

 

90 %

Adjusted pretax income

 

$        181

 

$          70

 

154 %

 

$        301

 

$          47

 

NM

Adjusted net income attributable to common shareholders

 

$        131

 

$          37

 

252 %

 

$        212

 

$          17

 

NM

Adjusted earnings per share - diluted

 

$       2.87

 

$       0.85

 

238 %

 

$       4.55

 

$       0.40

 

NM

 

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

 

ADJUSTED EBITDA BY SEGMENT

                         
   

Three Months Ended

 

Change

%

 

Six Months Ended

 

Change
%

   

June 30,
2022

 

June 30,
2021

   

June 30,
2022

 

June 30,
2021

 

Vacation Ownership

 

$        274

 

$        182

 

51 %

 

$        473

 

$        250

 

89 %

Exchange & Third-Party Management

 

35

 

37

 

(5 %)

 

78

 

78

 

— %

Segment adjusted EBITDA**

 

309

 

219

 

41 %

 

551

 

328

 

68 %

General and administrative

 

(54)

 

(55)

 

1 %

 

(108)

 

(95)

 

(14 %)

Adjusted EBITDA**

 

$        255

 

$        164

 

55 %

 

$        443

 

$        233

 

90 %

                         

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

NM - Not meaningful

 

A-2

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

 
   

Three Months Ended

 

Six Months Ended

   

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

REVENUES

               

Sale of vacation ownership products

 

$               425

 

$               296

 

$               735

 

$               459

Management and exchange

 

203

 

220

 

425

 

413

Rental

 

140

 

121

 

273

 

210

Financing

 

72

 

68

 

143

 

127

Cost reimbursements

 

324

 

274

 

640

 

529

TOTAL REVENUES

 

1,164

 

979

 

2,216

 

1,738

EXPENSES

               

Cost of vacation ownership products

 

80

 

67

 

140

 

107

Marketing and sales

 

214

 

164

 

396

 

273

Management and exchange

 

102

 

126

 

229

 

243

Rental

 

87

 

81

 

168

 

163

Financing

 

23

 

21

 

44

 

42

General and administrative

 

64

 

66

 

125

 

112

Depreciation and amortization

 

32

 

36

 

65

 

77

Litigation charges

 

2

 

3

 

5

 

6

Royalty fee

 

29

 

27

 

56

 

52

Impairment

 

 

5

 

 

5

Cost reimbursements

 

324

 

274

 

640

 

529

TOTAL EXPENSES

 

957

 

870

 

1,868

 

1,609

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

 

37

 

(2)

 

41

 

4

Interest expense

 

(30)

 

(44)

 

(57)

 

(87)

Transaction and integration costs

 

(37)

 

(29)

 

(65)

 

(48)

Other

 

1

 

1

 

1

 

1

INCOME (LOSS) BEFORE INCOME TAXES AND

               

NONCONTROLLING INTERESTS

 

178

 

35

 

268

 

(1)

Provision for income taxes

 

(43)

 

(27)

 

(75)

 

(16)

NET INCOME (LOSS)

 

135

 

8

 

193

 

(17)

Net loss (income) attributable to noncontrolling interests

 

1

 

(2)

 

1

 

(5)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON

   

SHAREHOLDERS

 

$               136

 

$                   6

 

$               194

 

$               (22)

                 

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO

               

COMMON SHAREHOLDERS

               

Basic

 

$              3.30

 

$              0.15

 

$              4.64

 

$            (0.52)

Diluted

 

$              2.97

 

$              0.15

 

$              4.18

 

$            (0.52)

                 

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, 2022

(In millions)

(Unaudited)

 
   

Reportable Segment

 

Corporate and
Other

 

Total

   

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

               

Sales of vacation ownership products

 

$                425

 

$                  —

 

$                  —

 

$               425

Management and exchange(1)

               

Ancillary revenues

 

66

 

1

 

 

67

Management fee revenues

 

41

 

11

 

(1)

 

51

Exchange and other services revenues

 

33

 

46

 

6

 

85

Management and exchange

 

140

 

58

 

5

 

203

Rental

 

129

 

11

 

 

140

Financing

 

72

 

 

 

72

Cost reimbursements(1)

 

325

 

5

 

(6)

 

324

TOTAL REVENUES

 

$             1,091

 

$                  74

 

$                  (1)

 

$            1,164

                 

PROFIT

               

Development

 

$                131

 

$                  —

 

$                  —

 

$               131

Management and exchange(1)

 

80

 

26

 

(5)

 

101

Rental(1)

 

38

 

11

 

4

 

53

Financing

 

49

 

 

 

49

TOTAL PROFIT

 

298

 

37

 

(1)

 

334

                 

OTHER

               

General and administrative

 

 

 

(64)

 

(64)

Depreciation and amortization

 

(22)

 

(7)

 

(3)

 

(32)

Litigation charges

 

(2)

 

 

 

(2)

Royalty fee

 

(29)

 

 

 

(29)

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

 

32

 

16

 

(11)

 

37

Interest expense

 

 

 

(30)

 

(30)

Transaction and integration costs

 

(1)

 

 

(36)

 

(37)

Other

 

1

 

 

 

1

INCOME (LOSS) BEFORE INCOME TAXES AND

               

NONCONTROLLING INTERESTS

 

277

 

46

 

(145)

 

178

Provision for income taxes

 

 

 

(43)

 

(43)

NET INCOME (LOSS)

 

277

 

46

 

(188)

 

135

Net loss attributable to noncontrolling interests(1)

 

 

 

1

 

1

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON

   

SHAREHOLDERS

 

$                277

 

$                  46

 

$              (187)

 

$                136

SEGMENT MARGIN(2)

 

36 %

 

66 %

       
                 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant
accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment's net income or loss attributable to common shareholders divided by the applicable
segment's total revenues less cost reimbursement revenues.

 

A-4

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the three months ended 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

 

$                  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

SEGMENT MARGIN(2)

 

25 %

 

38 %

       
                 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant
accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment's net income or loss attributable to common shareholders divided by the applicable
segment's total revenues less cost reimbursement revenues.

 

A-5

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

REVENUES AND PROFIT BY SEGMENT

for the six months ended June 30, 2022

(In millions)

(Unaudited)

 
   

Reportable Segment

 

Corporate and
Other

 

Total

   

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

               

Sales of vacation ownership products

 

$                735

 

$                  —

 

$                  —

 

$                735

Management and exchange(1)

               

Ancillary revenues

 

120

 

2

 

 

122

Management fee revenues

 

83

 

21

 

(4)

 

100

Exchange and other services revenues

 

63

 

99

 

41

 

203

Management and exchange

 

266

 

122

 

37

 

425

Rental

 

251

 

22

 

 

273

Financing

 

143

 

 

 

143

Cost reimbursements(1)

 

652

 

14

 

(26)

 

640

TOTAL REVENUES

 

$             2,047

 

$                158

 

$                  11

 

$             2,216

                 

PROFIT

               

Development

 

$                199

 

$                  —

 

$                  —

 

$                199

Management and exchange(1)

 

152

 

57

 

(13)

 

196

Rental(1)

 

70

 

22

 

13

 

105

Financing

 

99

 

 

 

99

TOTAL PROFIT

 

520

 

79

 

 

599

                 

OTHER

               

General and administrative

 

 

 

(125)

 

(125)

Depreciation and amortization

 

(44)

 

(16)

 

(5)

 

(65)

Litigation charges

 

(5)

 

 

 

(5)

Restructuring

 

 

 

 

Royalty fee

 

(56)

 

 

 

(56)

Impairment

 

 

 

 

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

 

35

 

16

 

(10)

 

41

Interest expense

 

 

 

(57)

 

(57)

Transaction and integration costs

 

(1)

 

 

(64)

 

(65)

Other

 

1

 

 

 

1

INCOME (LOSS) BEFORE INCOME TAXES AND

               

NONCONTROLLING INTERESTS

 

450

 

79

 

(261)

 

268

Provision for income taxes

 

 

 

(75)

 

(75)

NET INCOME (LOSS)

 

450

 

79

 

(336)

 

193

Net loss attributable to noncontrolling interests(1)

 

 

 

1

 

1

NET INCOME (LOSS) ATTRIBUTABLE TO 

   

COMMON SHAREHOLDERS

 

$                450

 

$                  79

 

$              (335)

 

$                194

SEGMENT MARGIN(2)

 

32 %

 

55 %

       
                 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant
accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment's net income or loss attributable to common shareholders divided by the applicable
segment's total revenues less cost reimbursement revenues.

 

A-6

 

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

 

$                  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)

Impairment

 

 

 

(5)

 

(5)

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)

Provision for 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)

SEGMENT MARGIN(2)

 

20 %

 

34 %

       
                 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant
accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment's net income or loss attributable to common shareholders divided by the applicable
segment's total revenues less cost reimbursement revenues.

 

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, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

Net income (loss) attributable to common shareholders

 

$               136

 

$                   6

 

$               194

 

$               (22)

Provision for income taxes

 

43

 

27

 

75

 

16

Income (loss) before income taxes attributable to common shareholders

 

179

 

33

 

269

 

(6)

Certain items:

               

Litigation charges

 

2

 

3

 

5

 

6

(Gains) losses and other (income) expense, net(1)

 

(37)

 

2

 

(41)

 

(4)

Transaction and integration costs

 

37

 

29

 

65

 

48

Impairment charges

 

 

5

 

 

5

Purchase price adjustments

 

5

 

2

 

8

 

2

Other

 

(5)

 

(4)

 

(5)

 

(4)

Adjusted pretax income **

 

181

 

70

 

301

 

47

Provision for income taxes

 

(50)

 

(33)

 

(89)

 

(30)

Adjusted net income attributable to common shareholders **

 

$               131

 

$                 37

 

$               212

 

$                 17

Diluted shares(2)

 

46.5

 

43.8

 

47.2

 

43.0

Adjusted earnings per share - Diluted **

 

$              2.87

 

$              0.85

 

$              4.55

 

$              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) Diluted shares for the six months ended June 30, 2022 reflects the dilutive impact of the adoption of Accounting Standards Update 2020-
06 – "Debt — Debt With Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity's Own
Equity (Subtopic 815-40): Accounting for Convertible Instruments and Contracts in an Entity's Own Equity" (Diluted shares increased by
5 million shares based on the assumed conversion of our 2022 and 2026 Convertible Notes).

 

A-8

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

ADJUSTED EBITDA

(In millions)

(Unaudited)

 
   

Three Months Ended

 

Six Months Ended

   

June 30,
2022

 

June 30,
2021

 

June 30,
2019

 

June 30,
2022

 

June 30,
2021

 

June 30,
2019

NET INCOME (LOSS) ATTRIBUTABLE

                       

TO COMMON SHAREHOLDERS

 

$              136

 

$                  6

 

$                49

 

$              194

 

$               (22)

 

$                73

Interest expense

 

30

 

44

 

35

 

57

 

87

 

69

Provision for income taxes

 

43

 

27

 

25

 

75

 

16

 

40

Depreciation and amortization

 

32

 

36

 

36

 

65

 

77

 

73

Share-based compensation

 

12

 

14

 

11

 

20

 

22

 

20

Certain items:

                       

Litigation charges

 

2

 

3

 

1

 

5

 

6

 

2

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

                       

Dispositions

 

(49)

 

 

 

(49)

 

 

Hurricane business interruption net insurance proceeds

 

 

 

 

(3)

 

 

(9)

Various tax related matters

 

3

 

2

 

 

3

 

2

 

Foreign currency translation

 

8

 

(2)

 

1

 

7

 

(6)

 

1

Other

 

1

 

2

 

(3)

 

1

 

 

(2)

Transaction and integration costs

 

37

 

29

 

36

 

65

 

48

 

62

Impairment charges

 

 

5

 

 

 

5

 

26

Purchase price adjustments

 

5

 

2

 

4

 

8

 

2

 

5

COVID-19 related adjustments

 

 

(2)

 

 

 

(2)

 

Other

 

(5)

 

(2)

 

 

(5)

 

(2)

 

1

ADJUSTED EBITDA**

 

$              255

 

$              164

 

$              195

 

$              443

 

$              233

 

$              361

                         

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

                         

 

A-9

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

(Unaudited)

 
   

Three Months Ended

 

Six Months Ended

   

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

Consolidated contract sales

 

$               506

 

$               362

 

$               900

 

$               588

Less resales contract sales

 

(11)

 

(7)

 

(20)

 

(12)

Consolidated contract sales, net of resales

 

495

 

355

 

880

 

576

Plus:

               

Settlement revenue

 

9

 

8

 

16

 

13

Resales revenue

 

4

 

1

 

8

 

3

Revenue recognition adjustments:

               

Reportability

 

(14)

 

(17)

 

(47)

 

(53)

Sales reserve

 

(37)

 

(28)

 

(66)

 

(42)

Other(1)

 

(32)

 

(23)

 

(56)

 

(38)

Sale of vacation ownership products

 

425

 

296

 

735

 

459

Less:

               

Cost of vacation ownership products

 

(80)

 

(67)

 

(140)

 

(107)

Marketing and sales

 

(214)

 

(164)

 

(396)

 

(273)

Development Profit

 

131

 

65

 

199

 

79

Revenue recognition reportability adjustment

 

11

 

13

 

35

 

39

Purchase price adjustments

 

5

 

3

 

9

 

3

Adjusted development profit **

 

$               147

 

$                 81

 

$               243

 

$               121

Development profit margin

 

31.0 %

 

22.3 %

 

27.1 %

 

17.3 %

Adjusted development profit margin

 

33.6 %

 

26.2 %

 

31.3 %

 

24.0 %

 

** 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.

 

A-10

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

(Unaudited)

 

VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

 
   

Three Months Ended

 

Six Months Ended

   

June 30, 2022

 

June 30, 2021

 

June 30, 2022

 

June 30, 2021

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO

               

COMMON SHAREHOLDERS

 

$               277

 

$               151

 

$               450

 

$               195

Depreciation and amortization

 

22

 

23

 

44

 

42

Share-based compensation expense

 

2

 

2

 

3

 

3

Certain items:

               

Litigation charges

 

2

 

3

 

5

 

6

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