SEC Filing | Marriott Vacations Worldwide

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vac-20220331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

_________________________

FORM 10-Q

___________________________________________

(Mark One)


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission file number 001-35219

_________________________

Marriott Vacations Worldwide Corporation

(Exact name of registrant as specified in its charter)

_________________________

Delaware

45-2598330

(State or other jurisdiction of
incorporation or organization)

(I.R.S. Employer
Identification No.)

9002 San Marco Court

Orlando

32819

(Address of principal executive offices)

(Zip Code)

(407) 206-6000 (Registrant’s telephone number, including area code)

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, $0.01 Par Value	VAC	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

The number of shares outstanding of the issuer’s common stock, par value $0.01 per share, as of May 2, 2022 was 41,432,080.

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FORM 10-Q TABLE OF CONTENTS


		Page
Part I.	FINANCIAL INFORMATION	1
Item 1.	Financial Statements	1
	Interim Consolidated Statements of Income	1
	Interim Consolidated Statements of Comprehensive Income	2
	Interim Consolidated Balance Sheets	3
	Interim Consolidated Statements of Cash Flows	4
	Interim Consolidated Statements of Shareholders’ Equity	6
	Interim Condensed Notes to Consolidated Financial Statements	7


















Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	37
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	58
Item 4.	Controls and Procedures	58
Part II.	OTHER INFORMATION	58
Item 1.	Legal Proceedings	58
Item 1A.	Risk Factors	58
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	59
Item 6.	Exhibits	59
	SIGNATURES	61

Throughout this report, we refer to Marriott Vacations Worldwide Corporation, together with its consolidated subsidiaries, as “Marriott Vacations Worldwide,” “MVW,” “we,” “us,” or “the Company.” We also refer to brands that we own, as well as those brands that we license, as our brands. All brand names, trademarks, service marks, and trade names cited in this report are the property of their respective owners, including those of other companies and organizations. Solely for convenience, trademarks, trade names, and service marks referred to in this report may appear without the ® or TM symbols, however such references are not intended to indicate in any way that MVW or the owner, as applicable, will not assert, to the fullest extent under applicable law, all rights to such trademarks, trade names, and service marks.

Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the year ended December 31, 2021 (the “2021 Annual Report”). When discussing our properties or markets, we refer to the United States, Mexico, Central America, and the Caribbean as “North America.”

The COVID-19 pandemic has caused significant disruptions in international and U.S. economies and markets, and has also had an unprecedented impact on the travel and hospitality industries, as well as the Company. We discuss the impacts of the COVID-19 pandemic and its potential future implications throughout this report; however, the COVID-19 pandemic, and any recovery therefrom, continues to evolve and further potential impacts on our business in the future remain uncertain.

Table of Contents

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
REVENUES
Sale of vacation ownership products	$	310	$	163
Management and exchange	222		193
Rental	133		89
Financing	71		59
Cost reimbursements	316		255
TOTAL REVENUES	1,052		759
EXPENSES
Cost of vacation ownership products	60		40
Marketing and sales	182		109
Management and exchange	127		117
Rental	81		82
Financing	21		21
General and administrative	61		46
Depreciation and amortization	33		41
Litigation charges	3		3

Royalty fee	27		25

Cost reimbursements	316		255
TOTAL EXPENSES	911		739
Gains and other income, net	4		6
Interest expense	(27)		(43)
Transaction and integration costs	(28)		(19)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS	90		(36)
(Provision for) benefit from income taxes	(32)		11
NET INCOME (LOSS)	58		(25)
Net income attributable to noncontrolling interests	—		(3)
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	58	$	(28)

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS
Basic	$	1.36	$	(0.68)
Diluted	$	1.23	$	(0.68)

CASH DIVIDENDS DECLARED PER SHARE	$	0.62	$	—

See Notes to Interim Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
NET INCOME (LOSS)	$	58	$	(25)

Foreign currency translation adjustments	4		(3)
Derivative instrument adjustment, net of tax	16		6
OTHER COMPREHENSIVE GAIN, NET OF TAX	20		3

Net income attributable to noncontrolling interests	—		(3)
Other comprehensive income attributable to noncontrolling interests	—		—
COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS	—		(3)

COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	78	$	(25)

See Notes to the Interim Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)


	Unaudited
	March 31, 2022		December 31, 2021
ASSETS
Cash and cash equivalents	$	354	$	342
Restricted cash (including $78 and $139 from VIEs, respectively)	296		461
Accounts receivable, net (including $12 and $12 from VIEs, respectively)	234		279
Vacation ownership notes receivable, net (including $1,661 and $1,662 from VIEs, respectively)	2,030		2,045
Inventory	693		719
Property and equipment, net	1,162		1,136
Goodwill	3,142		3,150
Intangibles, net	978		993
Other (including $74 and $76 from VIEs, respectively)	614		488
TOTAL ASSETS	$	9,503	$	9,613

LIABILITIES AND EQUITY
Accounts payable	$	212	$	265
Advance deposits	194		160
Accrued liabilities (including $2 and $2 from VIEs, respectively)	347		345
Deferred revenue	507		453
Payroll and benefits liability	214		201
Deferred compensation liability	136		142
Securitized debt, net (including $1,799 and $1,877 from VIEs, respectively)	1,779		1,856
Debt, net	2,751		2,631
Other	206		224
Deferred taxes	333		350
TOTAL LIABILITIES	6,679		6,627
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; 75,721,548 and 75,519,049 shares issued, respectively	1		1
Treasury stock — at cost; 33,971,376 and 33,235,671 shares, respectively	(1,474)		(1,356)
Additional paid-in capital	3,945		4,072
Accumulated other comprehensive loss	4		(16)
Retained earnings	338		275
TOTAL MVW SHAREHOLDERS' EQUITY	2,814		2,976
Noncontrolling interests	10		10
TOTAL EQUITY	2,824		2,986
TOTAL LIABILITIES AND EQUITY	$	9,503	$	9,613

The abbreviation VIEs above means Variable Interest Entities.

See Notes to Interim Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
OPERATING ACTIVITIES
Net income (loss)	$	58	$	(25)
Adjustments to reconcile net income (loss) to net cash, cash equivalents and restricted cash provided by (used in) operating activities:
Depreciation and amortization of intangibles	33		41
Amortization of debt discount and issuance costs	5		11

Vacation ownership notes receivable reserve	29		14
Share-based compensation	8		8


Deferred income taxes	18		15
Net change in assets and liabilities:
Accounts receivable	45		51
Vacation ownership notes receivable originations	(205)		(108)
Vacation ownership notes receivable collections	188		165
Inventory	28		(26)

Other assets	(134)		(138)
Accounts payable, advance deposits and accrued liabilities	12		(30)
Deferred revenue	54		102
Payroll and benefit liabilities	13		31
Deferred compensation liability	(7)		(2)
Other liabilities	(3)		5
Deconsolidation of certain Consolidated Property Owners' Associations	—		(71)
Purchase of vacation ownership units for future transfer to inventory	(12)		(99)
Other, net	(1)		(4)
Net cash, cash equivalents and restricted cash provided by (used in) operating activities	129		(60)
INVESTING ACTIVITIES

Capital expenditures for property and equipment (excluding inventory)	(9)		(7)

Purchase of company owned life insurance	(4)		(1)
Dispositions, net	3		—
Net cash, cash equivalents and restricted cash used in investing activities	(10)		(8)

Continued

See Notes to Interim Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In millions)

(Unaudited)


	Three Months Ended
	March 31, 2022		March 31, 2021
FINANCING ACTIVITIES
Borrowings from securitization transactions	102		—
Repayment of debt related to securitization transactions	(178)		(159)
Proceeds from debt	30		561
Repayments of debt	(30)		(100)
Purchase of convertible note hedges	—		(100)
Proceeds from issuance of warrants	—		70
Finance lease payment	(2)		—
Payment of debt issuance costs	(4)		(2)
Repurchase of common stock	(119)		—
Payment of dividends	(49)		—
Payment of withholding taxes on vesting of restricted stock units	(22)		(15)

Net cash, cash equivalents and restricted cash (used in) provided by financing activities	(272)		255
Effect of changes in exchange rates on cash, cash equivalents and restricted cash	—		(1)
Change in cash, cash equivalents and restricted cash	(153)		186
Cash, cash equivalents and restricted cash, beginning of period	803		992
Cash, cash equivalents and restricted cash, end of period	$	650	$	1,178

SUPPLEMENTAL DISCLOSURES

Non-cash transfer from property and equipment to inventory	$	2	$	3
Non-cash transfer from inventory to property and equipment	31		2
Non-cash transfer of other assets to property and equipment	13		22
Non-cash issuance of debt in connection with asset acquisition	11		—
Non-cash issuance of treasury stock for employee stock purchase plan	1		—


Interest paid, net of amounts capitalized	30		53
Income tax refunds, net of income taxes paid	(7)		(30)

See Notes to Interim Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY

(In millions)

(Unaudited)


Common Stock Issued		Common Stock		Treasury Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total MVW Shareholders' Equity		Noncontrolling Interests		Total Equity


75.5	BALANCE AT DECEMBER 31, 2021	$	1	$	(1,356)	$	4,072	$	(16)	$	275	$	2,976	$	10	$	2,986
—	Impact of adoption of ASU 2020-06	—		—		(111)		—		31		(80)		—		(80)
75.5	OPENING BALANCE 2022	1		(1,356)		3,961		(16)		306		2,896		10		2,906
—	Net income	—		—		—		—		58		58		—		58
—	Foreign currency translation adjustments	—		—		—		4		—		4		—		4
—	Derivative instrument adjustment	—		—		—		16		—		16		—		16
0.2	Share-based compensation plans	—		1		(16)		—		—		(15)		—		(15)
—	Repurchase of common stock	—		(119)		—		—		—		(119)		—		(119)
—	Dividends	—		—		—		—		(26)		(26)		—		(26)


75.7	BALANCE AT MARCH 31, 2022	$	1	$	(1,474)	$	3,945	$	4	$	338	$	2,814	$	10	$	2,824


Common Stock Issued		Common Stock		Treasury Stock		Additional Paid-In Capital		Accumulated Other Comprehensive (Loss) Income		Retained Earnings		Total MVW Shareholders' Equity		Noncontrolling Interests		Total Equity


75.3	BALANCE AT DECEMBER 31, 2020	$	1	$	(1,334)	$	3,760	$	(48)	$	272	$	2,651	$	31	$	2,682
—	Net (loss) income	—		—		—		—		(28)		(28)		3		(25)
—	Foreign currency translation adjustments	—		—		—		(3)		—		(3)		—		(3)
—	Derivative instrument adjustment	—		—		—		6		—		6		—		6
0.2	Share-based compensation plans	—		—		(4)		—		—		(4)		—		(4)
—	Equity component of convertible notes, net of issuance costs	—		—		117		—		—		117		—		117
—	Purchase of convertible note hedges	—		—		(100)		—		—		(100)		—		(100)
—	Issuance of warrants	—		—		70		—		—		70		—		70
—	Deconsolidation of certain Consolidated Property Owners' Associations	—		—		—		—		—		—		(5)		(5)
75.5	BALANCE AT MARCH 31, 2021	$	1	$	(1,334)	$	3,843	$	(45)	$	244	$	2,709	$	29	$	2,738

See Notes to Interim Consolidated Financial Statements

Table of Contents

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


1.			BASIS OF PRESENTATION

The Interim Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide,” “MVW” or “the Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity, or (ii) “MVWC,” which shall refer only to Marriott Vacations Worldwide Corporation, without its consolidated subsidiaries). In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in these Notes to Interim Consolidated Financial Statements, unless otherwise noted. Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the fiscal year ended December 31, 2021 (the “2021 Annual Report”). We use certain other terms that are defined within these Financial Statements.