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

Nov 8, 2021

ORLANDO, Fla., November 8, 2021 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported third quarter 2021 financial results.

"Occupancies at our resorts this quarter were very strong despite the Delta variant and contract sales were within 3% of 2019 levels, driving 25% sequential growth in Adjusted EBITDA and exceeding 2019 for the first time since the pandemic began," said Stephen P. Weisz, chief executive officer. "First time buyers represented more than 30% of contract sales in the third quarter, which is important for the long-term health of the system. The fourth quarter has started well with October contract sales above 2019 levels and reservations on the books for the first half of next year are already strong."

Third Quarter 2021 Highlights and Operational Update:

  • Consolidated Vacation Ownership contract sales totaled $380 million in the third quarter of 2021, with VPG 24% higher than the third quarter of 2019.
     
  • Net income attributable to common shareholders was $10 million, or $0.23 fully diluted earnings per share.
     
  • Adjusted net income attributable to common shareholders was $70 million and adjusted fully diluted earnings per share was $1.60.
     
  • Adjusted EBITDA increased 25% on a sequential basis to $205 million in the third quarter of 2021, 8% higher than the third quarter of 2019.
     
    • Adjusted EBITDA margin (excluding cost reimbursements) was 27%, the Company's highest quarterly Adjusted EBITDA margin as a stand alone public company.
       
  • During the quarter, the Company's Board of Directors authorized a share repurchase program of up to $250 million and declared a quarterly cash dividend of $0.54 per share of common stock, which was paid in October 2021.
     
  • In September, the Company repaid the remaining $250 million of its 6.50% Senior Unsecured Notes due 2026 and, subsequent to the end of the quarter, repaid $250 million of its 6.125% Senior Secured Notes due 2025.
     
  • With recovery in the business expected to continue, the Company projects contract sales of $385 million to $405 million in the fourth quarter of 2021.

Third Quarter 2021 Segment Results

Vacation Ownership

Revenues excluding cost reimbursements increased 123% in the third quarter of 2021 compared to the prior year and increased 8% from the second quarter of 2021 as the business continued to recover. Compared to the second quarter, revenue from the sale of vacation ownership products increased 12% and Development profit margin increased to 28%. Excluding the impact of revenue reportability, Adjusted development profit increased sequentially to $98 million, with Adjusted development profit margin increasing nearly 335 basis points to 30%.

Vacation Ownership segment financial results were $185 million in the third quarter of 2021 and segment Adjusted EBITDA increased 18% on a sequential basis to $215 million, with Adjusted EBITDA margin nearly 360 basis points higher than third quarter 2019.

Exchange & Third-Party Management

Revenues excluding cost reimbursements increased 12% in the third quarter of 2021 compared to the prior year. Interval International active members declined 1% compared to the second quarter of 2021 to 1.3 million and Average revenue per member declined 7% sequentially.

Exchange & Third-Party Management segment financial results were $23 million in the third quarter of 2021 and segment Adjusted EBITDA declined $2 million sequentially to $35 million, with Adjusted EBITDA margin approximately 240 basis points higher than 2019.

Corporate and Other

General and administrative costs increased $22 million in the third quarter of 2021 compared to the prior year as a result of higher salary and wages costs as the prior year quarter benefited from savings related to programs implemented in response to the impact of the COVID-19 pandemic, higher bonus expense, and a decrease in credits related to incentives under the CARES Act.

Balance Sheet and Liquidity

On September 30, 2021, cash and cash equivalents totaled $448 million.

The Company had $4.4 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the third quarter of 2021. This included $2.8 billion of corporate debt and $1.6 billion of non-recourse debt related to its securitized notes receivable.

In September, the Company repaid the remaining $250 million of its 6.50% Senior Unsecured Notes due 2026 and, subsequent to the end of the quarter, repaid $250 million of its 6.125% Senior Secured Notes due 2025. Pro forma, the Company ended the quarter with more than $1.0 billion of liquidity.

During the quarter, the Company's Board of Directors authorized a share repurchase program of up to $250 million and declared a quarterly cash dividend of $0.54 per share of common stock, which was paid in October 2021.

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.

Third Quarter 2021 Financial Results Conference Call

The Company will hold a conference call on November 8, 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 3,200 resorts in over 90 nations, as well as management of more than 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 expectations for business recovery and contract sales in the fourth quarter, 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 variant; 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 herein and also in our most recent Annual Report on Form 10-K, and which may be discussed in our periodic filings with the U.S. Securities and Exchange Commission (the "SEC"), any of which could cause actual results to differ materially from those expressed or implied herein. 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. 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 3, 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

Consolidated Balance Sheets

A-11

Consolidated Statements of Cash Flows

A-12

Quarterly Operating Metrics

A-13

Non-GAAP Financial Measures

A-14

 

A-1

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

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

(Unaudited)

 

SUMMARY FINANCIAL INFORMATION

 
 

Three Months Ended

 

Change

 %

 

Nine Months Ended

 

Change

 %

 

September
30, 2021

 

September
30, 2020

   

September
30, 2021

 

September
30, 2020

 

Key Measures

                     

Total consolidated contract sales

$

380

 

$

140

 

171%

 

$

968

 

$

476

 

103%

VPG

$

4,300

 

$

3,904

 

10%

 

$

4,377

 

$

3,745

 

17%

Tours

84,098

 

33,170

 

154%

 

209,869

 

118,517

 

77%

Total active members (000's)(1)

1,313

 

1,536

 

(15%)

 

1,313

 

1,536

 

(15%)

Average revenue per member(1)

$

42.95

 

$

36.76

 

17%

 

$

136.57

 

$

108.44

 

26%

                               

GAAP Measures

                     

Revenues

$

1,052

 

$

649

 

62%

 

$

2,790

 

$

2,139

 

30%

Income (loss) before income taxes and
noncontrolling interests

$

58

 

$

(72)

 

NM

 

$

57

 

$

(316)

 

NM

Net income (loss) attributable to common
shareholders

$

10

 

$

(62)

 

NM

 

$

(12)

 

$

(238)

 

NM

Earnings (loss) per share - diluted

$

0.23

 

$

(1.51)

 

NM

 

$

(0.28)

 

$

(5.76)

 

NM

                       

Non-GAAP Measures **

                     

Adjusted EBITDA

$

205

 

$

35

 

NM

 

$

438

 

$

163

 

NM

Adjusted pretax income (loss)

$

118

 

$

(28)

 

NM

 

$

165

 

$

(23)

 

NM

Adjusted net income (loss) attributable to
common shareholders

$

70

 

$

(33)

 

NM

 

$

87

 

$

(16)

 

NM

Adjusted earnings (loss) per share - diluted

$

1.60

 

$

(0.81)

 

NM

 

$

2.01

 

$

(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
%

 

Nine Months Ended

 

Change
%

 

September
30, 2021

 

September
30, 2020

   

September
30, 2021

 

September
30, 2020

 

Vacation Ownership

$

215

 

$

28

 

NM

 

$

465

 

$

156

 

NM

Exchange & Third-Party Management

35

 

31

 

13%

 

113

 

91

 

25%

Segment adjusted EBITDA**

250

 

59

 

NM

 

578

 

247

 

134%

General and administrative

(45)

 

(27)

 

NM

 

(140)

 

(91)

 

NM

Consolidated property owners' associations

 

3

 

NM

 

 

7

 

NM

Adjusted EBITDA**

$

205

 

$

35

 

NM

 

$

438

 

$

163

 

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)

(Unaudited)

 
 

Three Months Ended

 

Nine Months Ended

 

September
30, 2021

 

September
30, 2020

 

September
30, 2021

 

September
30, 2020

REVENUES

             

Sale of vacation ownership products

$

330

 

$

98

 

$

789

 

$

409

Management and exchange

225

 

176

 

638

 

548

Rental

130

 

56

 

340

 

209

Financing

69

 

64

 

196

 

206

Cost reimbursements

298

 

255

 

827

 

767

TOTAL REVENUES

1,052

 

649

 

2,790

 

2,139

EXPENSES

             

Cost of vacation ownership products

71

 

27

 

178

 

110

Marketing and sales

166

 

78

 

439

 

297

Management and exchange

138

 

106

 

381

 

342

Rental

84

 

74

 

247

 

245

Financing

22

 

24

 

64

 

85

General and administrative

54

 

32

 

166

 

121

Depreciation and amortization

35

 

30

 

112

 

93

Litigation charges

2

 

2

 

8

 

4

Restructuring

 

20

 

 

20

Royalty fee

26

 

23

 

78

 

72

Impairment

 

2

 

5

 

98

Cost reimbursements

298

 

255

 

827

 

767

TOTAL EXPENSES

896

 

673

 

2,505

 

2,254

Losses and other expense, net

(31)

 

 

(27)

 

(42)

Interest expense

(41)

 

(37)

 

(128)

 

(112)

Transaction and integration costs

(27)

 

(11)

 

(75)

 

(47)

Other

1

 

 

2

 

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

58

 

(72)

 

57

 

(316)

(Provision for) benefit from income taxes

(47)

 

14

 

(63)

 

91

NET INCOME (LOSS)

11

 

(58)

 

(6)

 

(225)

Net income attributable to noncontrolling interests

(1)

 

(4)

 

(6)

 

(13)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS

$

10

 

$

(62)

 

$

(12)

 

$

(238)

                       

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO
COMMON SHAREHOLDERS

             

Basic

$

0.24

 

$

(1.51)

 

$

(0.28)

 

$

(5.76)

Diluted

$

0.23

 

$

(1.51)

 

$

(0.28)

 

$

(5.76)

               

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 September 30, 2021

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

330

 

$

 

$

 

$

330

Management and exchange(1)

             

Ancillary revenues

55

 

1

 

 

56

Management fee revenues

40

 

10

 

(4)

 

46

Exchange and other services revenues

31

 

48

 

44

 

123

Management and exchange

126

 

59

 

40

 

225

Rental

121

 

9

 

 

130

Financing

69

 

 

 

69

Cost reimbursements(1)

328

 

9

 

(39)

 

298

TOTAL REVENUES

$

974

 

$

77

 

$

1

 

$

1,052

               

PROFIT

             

Development(2)

$

93

 

$

 

$

 

$

93

Management and exchange(1)

71

 

26

 

(10)

 

87

Rental(1)

24

 

9

 

13

 

46

Financing

47

 

 

 

47

TOTAL PROFIT

235

 

35

 

3

 

273

                       

OTHER

             

General and administrative

 

 

(54)

 

(54)

Depreciation and amortization

(24)

 

(11)

 

 

(35)

Litigation charges

(1)

 

 

(1)

 

(2)

Restructuring

1

 

(1)

 

 

Royalty fee

(26)

 

 

 

(26)

Losses and other expense, net

 

 

(31)

 

(31)

Interest expense

 

 

(41)

 

(41)

Transaction and integration costs

(1)

 

 

(26)

 

(27)

Other

1

 

 

 

1

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

185

 

23

 

(150)

 

58

Provision for income taxes

 

 

(47)

 

(47)

NET INCOME (LOSS)

185

 

23

 

(197)

 

11

Net income attributable to noncontrolling interests(1)

 

 

(1)

 

(1)

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

185

 

$

23

 

$

(198)

 

$

10

               

(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 September 30, 2020

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

98

 

$

 

$

 

$

98

Management and exchange(1)

             

Ancillary revenues

17

 

 

 

17

Management fee revenues

37

 

4

 

(5)

 

36

Exchange and other services revenues

28

 

45

 

50

 

123

Management and exchange

82

 

49

 

45

 

176

Rental

46

 

10

 

 

56

Financing

64

 

 

 

64

Cost reimbursements(1)

281

 

12

 

(38)

 

255

TOTAL REVENUES

$

571

 

$

71

 

$

7

 

$

649

                       

PROFIT

             

Development(2)

$

(7)

 

$

 

$

 

$

(7)

Management and exchange(1)

55

 

22

 

(7)

 

70

Rental(1)

(40)

 

8

 

14

 

(18)

Financing

40

 

 

 

40

TOTAL PROFIT

48

 

30

 

7

 

85

               

OTHER

             

General and administrative

 

 

(32)

 

(32)

Depreciation and amortization

(20)

 

(8)

 

(2)

 

(30)

Litigation charges

(2)

 

 

 

(2)

Restructuring

(11)

 

(3)

 

(6)

 

(20)

Royalty fee

(23)

 

 

 

(23)

Impairment

(1)

 

(1)

 

 

(2)

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

6

 

(5)

 

(1)

 

Interest expense

 

 

(37)

 

(37)

Transaction and integration costs     

 

 

(11)

 

(11)

(LOSS) INCOME BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS   

(3)

 

13

 

(82)

 

(72)

Benefit from income taxes  

 

 

14

 

14

NET (LOSS) INCOME 

(3)

 

13

 

(68)

 

(58)

Net income attributable to noncontrolling interests(1)  

 

 

(4)

 

(4)

NET (LOSS) INCOME ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

(3)

 

$

13

 

$

(72)

 

$

(62)

               

(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 nine months ended September 30, 2021

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

789

 

$

 

$

 

$

789

Management and exchange(1)

             

Ancillary revenues

135

 

2

 

 

137

Management fee revenues

117

 

24

 

(15)

 

126

Exchange and other services revenues

91

 

153

 

131

 

375

Management and exchange

343

 

179

 

116

 

638

Rental

308

 

32

 

 

340

Financing

196

 

 

 

196

Cost reimbursements(1)

882

 

38

 

(93)

 

827

TOTAL REVENUES

$

2,518

 

$

249

 

$

23

 

$

2,790

                       

PROFIT

             

Development(2)

$

172

 

$

 

$

 

$

172

Management and exchange(1)

207

 

80

 

(30)

 

257

Rental(1)

20

 

32

 

41

 

93

Financing

132

 

 

 

132

TOTAL PROFIT

531

 

112

 

11

 

654

               

OTHER

             

General and administrative

 

 

(166)

 

(166)

Depreciation and amortization

(66)

 

(40)

 

(6)

 

(112)

Litigation charges

(7)

 

 

(1)

 

(8)

Restructuring

 

(1)

 

1

 

Royalty fee

(78)

 

 

 

(78)

Impairment

 

 

(5)

 

(5)

Gains and other income, net

 

 

(27)

 

(27)

Interest expense

 

 

(128)

 

(128)

Transaction and integration costs

(2)

 

 

(73)

 

(75)

Other  

2

 

 

 

2

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

380

 

71

 

(394)

 

57

Benefit from income taxes

 

 

(63)

 

(63)

NET INCOME (LOSS)

380

 

71

 

(457)

 

(6)

Net income attributable to noncontrolling interests(1)

 

 

(6)

 

(6)

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

380

 

$

71

 

$

(463)

 

$

(12)

               

(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 nine months ended September 30, 2020

(In millions)

(Unaudited)

 
 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

   

REVENUES

             

Sales of vacation ownership products

$

409

 

$

 

$

 

$

409

Management and exchange(1)

             

Ancillary revenues

69

 

1

 

 

70

Management fee revenues

113

 

14

 

(14)

 

113

Exchange and other services revenues

85

 

145

 

135

 

365

Management and exchange

267

 

160

 

121

 

548

Rental

180

 

29

 

 

209

Financing

204

 

2

 

 

206

Cost reimbursements(1)

824

 

45

 

(102)

 

767

TOTAL REVENUES

$

1,884

 

$

236

 

$

19

 

$

2,139

                               

PROFIT

             

Development(2)

$

2

 

$

 

$

 

$

2

Management and exchange(1)

162

 

67

 

(23)

 

206

Rental(1)

(100)

 

21

 

43

 

(36)

Financing(3)

120

 

1

 

 

121

TOTAL PROFIT

184

 

89

 

20

 

293

               

OTHER

             

General and administrative

 

 

(121)

 

(121)

Depreciation and amortization

(61)

 

(24)

 

(8)

 

(93)

Litigation charges

(4)

 

 

 

(4)

Restructuring

(11)

 

(3)

 

(6)

 

(20)

Royalty fee

(72)

 

 

 

(72)

Impairment

(6)

 

(92)

 

 

(98)

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

12

 

(5)

 

(49)

 

(42)

Interest expense

 

 

(112)

 

(112)

Transaction and integration costs      

(3)

 

 

(44)

 

(47)

INCOME (LOSS) BEFORE INCOME TAXES AND
NONCONTROLLING INTERESTS

39

 

(35)

 

(320)

 

(316)

Benefit from income taxes

 

 

91

 

91

NET INCOME (LOSS)

39

 

(35)

 

(229)

 

(225)

Net income attributable to noncontrolling interests(1)    

 

 

(13)

 

(13)

NET INCOME (LOSS) ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

39

 

$

(35)

 

$

(242)

 

$

(238)

               

(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 nine months ended September 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

 

Nine Months Ended

 

September
30, 2021

 

September
30, 2020

 

September
30, 2021

 

September
30, 2020

Net income (loss) attributable to common shareholders

$

10

 

$

(62)

 

$

(12)

 

$

(238)

Provision for (benefit from) income taxes

47

 

(14)

 

63

 

(91)

Income (loss) before income taxes attributable to common
shareholders

57

 

(76)

 

51

 

(329)

Certain items:(1)

                             

Litigation charges

2

 

2

 

8

 

4

Losses and other expense, net

31

 

 

27

 

42

Transaction and integration costs

27

 

11

 

75

 

47

Impairment charges

 

2

 

5

 

98

Purchase price adjustments(2) 

5

 

17

 

7

 

47

COVID-19 related adjustments

 

16

 

(2)

 

64

Other(3)

(4)

 

 

(6)

 

4

Adjusted pretax income (loss) **

118

 

(28)

 

165

 

(23)

(Provision for) benefit from income taxes

(48)

 

(5)

 

(78)

 

7

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

$

70

 

$

(33)

 

$

87

 

$

(16)

Diluted shares

43.7

 

41.2

 

43.2

 

41.3

Adjusted earnings (loss) per share - Diluted **

$

1.60

 

$

(0.81)

 

$

2.01

 

$

(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 for the three and nine months ended September 30, 2020.

(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

 

Nine Months Ended

 

September
30, 2021

 

September
30, 2020

 

September
30, 2021

 

September
30, 2020

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON
SHAREHOLDERS

$

10

   

$

(62)

   

$

(12)

   

$

(238)

 

Interest expense

41

   

37

   

128

   

112

 

Provision for (benefit from) income taxes

47

   

(14)

   

63

   

(91)

 

Depreciation and amortization

35

   

30

   

112

   

93

 

Share-based compensation

11

   

11

   

33

   

24

 

Certain items before income taxes:

             

Litigation charges

2

   

2

   

8

   

4

 

Losses and other expense, net:

             

Dispositions

   

(1)

   

   

(1)

 

Hurricane business interruption insurance claims

   

   

   

(4)

 

Various tax related matters

(8)

   

   

(6)

   

26

 

Redemption premium from debt repayment

36

   

   

36

   

 

Foreign currency translation

2

   

1

   

(4)

   

25

 

Other

1

   

   

1

   

(4)

 

Transaction and integration costs

27

   

11

   

75

   

47

 

Impairment charges

   

2

   

5

   

98

 

Purchase price adjustments

5

   

2

   

7

   

4

 

COVID-19 related adjustments:

             

Sales reserve adjustment, net

   

   

   

37

 

Accrual for health and welfare costs for furloughed
associates

   

(4)

   

(2)

   

7

 

Restructuring

   

20

   

   

20

 

Other(1)

(4)

   

   

(6)

   

4

 

ADJUSTED EBITDA**

$

205

   

$

35

   

$

438

   

$

163

 
               

** 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

 

Nine Months Ended

 

September
30, 2021

 

September
30, 2020

 

September
30, 2021

 

September
30, 2020

Consolidated contract sales

$

380

 

$

140

 

$

968

 

$

476

Less resales contract sales

(7)

 

(1)

 

(19)

 

(9)

Consolidated contract sales, net of resales

373

 

139

 

949

 

467

Plus:

               

Settlement revenue

8

 

4

 

21

 

12

Resales revenue

5

 

1

 

8

 

6

Revenue recognition adjustments:

                     

Reportability

2

 

(18)

 

(51)

 

48

Sales reserve

(31)

 

(10)

 

(73)

 

(90)

Other(1)

(27)

 

(18)

 

(65)

 

(34)

Sale of vacation ownership products

330

 

98

 

789

 

409

Less:

             

Cost of vacation ownership products

(71)

 

(27)

 

(178)

 

(110)

Marketing and sales

(166)

 

(78)

 

(439)

 

(297)

Development Profit

93

 

(7)

 

172

 

2

Revenue recognition reportability adjustment

(1)

 

12

 

38

 

(32)

Other(2)

6

 

1

 

9

 

30

Adjusted development profit **

$

98

 

$

6

 

$

219

 

$

Development profit margin(3)

28.0%

 

(7.4%)

 

21.8%

 

0.5%

Adjusted development profit margin(3)

29.5%

 

5.2%

 

26.2%

 

(0.1%)

 

** 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) Primarily includes purchase price adjustments for the three and nine months ended September 30, 2021, as well as a sales reserve charge related to the COVID-19 pandemic and purchase price adjustments for the three and nine months ended September 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

 

Nine Months Ended

 

September
30, 2021

 

September
30, 2020

 

September
30, 2021

 

September
30, 2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

185

 

$

(3)

 

$

380

 

$

39

Depreciation and amortization

24

 

20

 

66

 

61

Share-based compensation expense

1

 

2

 

4

 

4

Certain items:

                             

Litigation charges

1

 

2

 

7

 

4

Gains and other income, net:

             

Dispositions

 

(6)

 

 

(6)

Hurricane business interruption net insurance proceeds

 

 

 

(4)

Foreign currency translation

 

 

 

(1)

Other

 

 

 

(1)

Transaction and integration costs

1

 

 

2

 

3

Impairment charges

 

1

 

 

6

Purchase price adjustments

5

 

1

 

7

 

3

COVID-19 related adjustments:

             

Sales reserve adjustment, net

 

 

 

37

Restructuring

(1)

 

11

 

 

11

Other

(1)

 

 

(1)

 

SEGMENT ADJUSTED EBITDA **

$

215

 

$

28

 

$

465

 

$

156

 

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

 
 

Three Months Ended

 

Nine Months Ended

 

September
30, 2021

 

September
30, 2020

 

September
30, 2021

 

September
30, 2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO
COMMON SHAREHOLDERS

$

23

 

$

13

 

$

71

 

$

(35)

Depreciation and amortization

11

 

8

 

40

 

24

Share-based compensation expense

 

 

1

 

1

Certain items:

             

Losses and other expense, net:

             

Dispositions

 

5

 

 

5

Foreign currency translation

 

(1)

 

 

2

Other

 

1

 

 

(2)

Impairment charges

 

1

 

 

92

Purchase price adjustments

 

1

 

 

1

COVID-19 related adjustments:

             

Restructuring

1

 

3

 

1

 

3

SEGMENT ADJUSTED EBITDA **

$

35

 

$

31

 

$

113

 

$

91

               

** 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

(In millions, except share and per share data)

 
 

Unaudited

   
 

September 30, 2021

 

December 31, 2020

ASSETS

     

Cash and cash equivalents

$

448

 

$

524

Restricted cash (including $69 and $68 from VIEs, respectively)

434

 

468

Accounts receivable, net (including $10 and $11 from VIEs, respectively)

223

 

276

Vacation ownership notes receivable, net (including $1,486 and $1,493 from
VIEs, respectively)

2,026

 

1,840

Inventory

741

 

759

Property and equipment, net

1,077

 

791

Goodwill

3,086

 

2,817

Intangibles, net

1,007

 

952

Other (including $70 and $54 from VIEs, respectively)

501

 

471

TOTAL ASSETS

$

9,543

 

$

8,898

               

LIABILITIES AND EQUITY

     

Accounts payable

$

190

 

$

209

Advance deposits

166

 

147

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

375

 

349

Deferred revenue

540

 

488

Payroll and benefits liability

201

 

157

Deferred compensation liability

135

 

127

Securitized debt, net (including $1,611 and $1,604 from VIEs, respectively)

1,594

 

1,588

Debt, net

2,795

 

2,680

Other

218

 

197

Deferred taxes

325

 

274

TOTAL LIABILITIES

6,539

 

6,216

Contingencies and Commitments (Note 11)

     

Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued
or outstanding

 

Common stock — $0.01 par value; 100,000,000 shares authorized;
75,491,621 and 75,279,061 shares issued, respectively

1

 

1

Treasury stock — at cost; 32,776,162 and 34,184,813 shares, respectively

(1,282)

 

(1,334)

Additional paid-in capital

4,056

 

3,760

Accumulated other comprehensive loss

(39)

 

(48)

Retained earnings

237

 

272

TOTAL MVW SHAREHOLDERS' EQUITY

2,973

 

2,651

Noncontrolling interests

31

 

31

TOTAL EQUITY

3,004

 

2,682

TOTAL LIABILITIES AND EQUITY

$

9,543

 

$

8,898

 

The abbreviation VIEs above means Variable Interest Entities.

 

A-12

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

 
 

Nine Months Ended

 

September 30,
2021

 

September 30,
2020

OPERATING ACTIVITIES

     

Net loss

$

(6)

 

$

(225)

Adjustments to reconcile net loss to net cash, cash equivalents and restricted cash
used by operating activities:

     

Depreciation and amortization of intangibles

112

 

93

Amortization of debt discount and issuance costs

41

 

16

Vacation ownership notes receivable reserve

73

 

97

Share-based compensation

33

 

23

Impairment charges

5

 

98

Deferred income taxes

10

 

1

Net change in assets and liabilities:

             

Accounts receivable

54

 

24

Vacation ownership notes receivable originations

(545)

 

(265)

Vacation ownership notes receivable collections

532

 

487

Inventory

59

 

(4)

Other assets

(29)

 

57

Accounts payable, advance deposits and accrued liabilities

(44)

 

(231)

Deferred revenue

119

 

57

Payroll and benefit liabilities

35

 

Deferred compensation liability

14

 

8

Other liabilities

23

 

(11)

Deconsolidation of certain Consolidated Property Owners' Associations

(87)

 

Purchase of vacation ownership units for future transfer to inventory

(99)

 

(61)

Other, net

3

 

(6)

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

303

 

158

INVESTING ACTIVITIES

     

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

(157)

 

Capital expenditures for property and equipment (excluding inventory)

(19)

 

(36)

Purchase of company owned life insurance

(11)

 

(3)

Dispositions, net

 

15

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

(187)

 

(24)

FINANCING ACTIVITIES

     

Borrowings from securitization transactions

425

 

690

Repayment of debt related to securitization transactions

(602)

 

(793)

Proceeds from debt

1,061

 

1,166

Repayments of debt

(1,039)

 

(703)

Purchase of convertible note hedges

(100)

 

Proceeds from issuance of warrants

70

 

Finance lease payment

(2)

 

(10)

Payment of debt issuance costs

(17)

 

(14)

Repurchase of common stock

(4)

 

(82)

Payment of dividends

 

(45)

Payment of withholding taxes on vesting of restricted stock units

(17)

 

(14)

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

(225)

 

195

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

(1)

 

(2)

Change in cash, cash equivalents and restricted cash

(110)

 

327

Cash, cash equivalents and restricted cash, beginning of period

992

 

701

Cash, cash equivalents and restricted cash, end of period

$

882

 

$

1,028

 

A-13

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

 

QUARTERLY OPERATING METRICS

(Contract sales in millions)

 
 

Year

 

Quarter Ended

 

Full Year

   

March 31

 

June 30

 

September 30

 

December 31

 

Vacation Ownership

                     

Consolidated Contract Sales

                     
 

2021

 

$

226

 

$