UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_________________________
FORM 8-K
_________________________
Current Report
Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) November 1, 2023
_________________________
(Exact name of registrant as specified in its charter)
_________________________
| (State or other jurisdiction | (Commission | (IRS Employer | ||||||||||||
| of incorporation) | File Number) | Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||||||||
Registrant’s telephone number, including area code (407 ) 206-6000
N/A
(Former name or former address, if changed since last report)
_________________________
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
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. ☐
Item 2.02 Results of Operations and Financial Condition
On November 1, 2023, Marriott Vacations Worldwide Corporation (the “Company,” “we” or “our”) issued a press release reporting financial results for the quarter ended September 30, 2023. A copy of the press release is attached as Exhibit 99.1 hereto and incorporated herein by reference.
As provided in General Instruction B.2 of Form 8-K, the information contained in Item 2.02 of this Current Report on Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Exchange Act of 1934, as amended, nor shall any such information be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended.
Item 9.01 Financial Statements and Exhibits.
(d) The following exhibits are being furnished herewith:
| Exhibit Number | Description | |||||||
Press release reporting financial results for the quarter ended September 30, 2023 | ||||||||
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document) | |||||||
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||||||||
| (Registrant) | ||||||||
| Dated: November 1, 2023 | By: | /s/ Jason P. Marino | ||||||
| Name: | Jason P. Marino | |||||||
| Title: | Executive Vice President and Chief Financial Officer | |||||||
1
Exhibit 99.1
 | Neal Goldner Investor Relations 407-206-6149 neal.goldner@mvwc.com | ||||||||||
| [DRAFT 9] | Cameron Klaus Global Communications 407-513-6066 cameron.klaus@mvwc.com | ||||||||||
Marriott Vacations Worldwide Reports
Third Quarter 2023 Financial Results
ORLANDO, Fla. – November 1, 2023 – Marriott Vacations Worldwide Corporation (NYSE: VAC) (“MVW” or the “Company”) reported third quarter 2023 financial results.
Third Quarter 2023 Highlights
•Consolidated Vacation Ownership contract sales were $438 million and volume per guest (“VPG”) increased $87 sequentially from the second quarter, or 2%, to $4,055. The Company estimates the Maui wildfires negatively impacted contract sales by $28 million and VPG by approximately $66, or 2%, in the quarter.
•Net income attributable to common shareholders was $42 million compared to $109 million in the prior year, and fully diluted earnings per share was $1.09.
•The Company recorded a $59 million charge to its loan loss provision in the third quarter resulting in a $36 million negative impact to Net income attributable to common shareholders and a $49 million negative impact to Adjusted EBITDA.
•Adjusted net income attributable to common shareholders was $48 million and adjusted fully diluted earnings per share was $1.20.
•Adjusted EBITDA was $150 million. The Company estimates the Maui wildfires negatively impacted Adjusted EBITDA by $24 million in the quarter and the increased loan loss provision impacted Adjusted EBITDA by $49 million.
•The Company repurchased 793,300 shares of its common stock for $86 million during the quarter and declared a $0.72 per share quarterly dividend, which was paid in October.
•The Company updated its full year outlook.
“We had a difficult quarter between the devastating wildfires in Maui and default rates on our loan portfolio remaining above our recent experience. However, our loan delinquencies are stabilizing and with Maui reopen for tourism we have started to see our resort occupancies recover,” said John Geller, president and chief executive officer. “We've also been working hard educating consumers about the benefits of Abound by Marriott Vacations and our salespeople are getting more comfortable selling the new product, which was evident in our results this quarter, with VPG growing sequentially from the prior quarter.”
Third Quarter 2023 Results
On August 8, 2023, a wildfire devastated the area of West Maui. While the Company operates four vacation ownership resorts and sales centers in the area, it did not sustain any physical damage to these resorts and sales centers. However, the Company estimates the Maui wildfires negatively impacted its third quarter contract sales by approximately $28 million, its third quarter Net income attributable to common shareholders by $18 million and its Adjusted EBITDA by $24 million.
Marriott Vacations Worldwide Reports Third Quarter 2023 Financial Results / 2
In the third quarter of 2022, the Company aligned its contract terms for the sale of its Marriott-, Westin-, and Sheraton-branded vacation ownership products, resulting in the acceleration of revenue from the sale of Marriott-branded vacation ownership interests. In addition, the Company aligned its reserve methodology for vacation ownership notes receivable for these brands, resulting in a decrease in the reserve for the acquired notes offset by an increase in the reserve for the originated notes. Together, these changes were referred to as the “Alignment.”
The tables below illustrate the comparison of the reported results from the third quarter of 2023, as well as adjusted results that reflect the estimated impact of the Maui fires, to the results from the third quarter of 2022, including the impact of the Alignment on the Company’s reported results for that time period. In the tables below “*” denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.
Consolidated
| Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||||||||||||
| ($ in millions) | As Reported | Estimated Impact of Maui Fires | As Adjusted* | As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 42 | $ | 18 | $ | 60 | $ | 109 | $ | (33) | $ | 76 | |||||||||||||||||||||||
| Adjusted net income attributable to common shareholders* | $ | 48 | $ | 18 | $ | 66 | $ | 131 | $ | (33) | $ | 98 | |||||||||||||||||||||||
| Adjusted EBITDA* | $ | 150 | $ | 24 | $ | 174 | $ | 284 | $ | (44) | $ | 240 | |||||||||||||||||||||||
Vacation Ownership
Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||||||||||||
| ($ in millions) | As Reported | Estimated Impact of Maui Fires | As Adjusted* | As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||
| Sale of vacation ownership products | $ | 319 | $ | 19 | $ | 338 | $ | 444 | $ | (27) | $ | 417 | |||||||||||||||||||||||
| Development profit | $ | 67 | $ | 13 | $ | 80 | $ | 161 | $ | (25) | $ | 136 | |||||||||||||||||||||||
Management and exchange profit | $ | 74 | $ | 3 | $ | 77 | $ | 72 | $ | — | $ | 72 | |||||||||||||||||||||||
Rental profit | $ | 6 | $ | 5 | $ | 11 | $ | 24 | $ | — | $ | 24 | |||||||||||||||||||||||
| Financing profit | $ | 51 | $ | — | $ | 51 | $ | 69 | $ | (19) | $ | 50 | |||||||||||||||||||||||
Other | $ | (1) | $ | 1 | $ | — | $ | (1) | $ | — | $ | (1) | |||||||||||||||||||||||
| Segment financial results attributable to common shareholders | $ | 149 | $ | 22 | $ | 171 | $ | 270 | $ | (33) | $ | 237 | |||||||||||||||||||||||
| Segment margin | 22.3% | 24.5% | 33.5% | 30.6% | |||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA* | $ | 173 | $ | 22 | $ | 195 | $ | 299 | $ | (44) | $ | 255 | |||||||||||||||||||||||
| Segment Adjusted EBITDA margin* | 25.8% | 27.9% | 37.1% | 32.7% | |||||||||||||||||||||||||||||||
Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||||||||||||
(Contract sales $ in millions) | As Reported | Estimated Impact of Maui Fires | As Adjusted* | As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||
Consolidated contract sales | $ | 438 | $ | 28 | $ | 466 | $ | 483 | $ | — | $ | 483 | |||||||||||||||||||||||
VPG | $ | 4,055 | $ | 66 | $ | 4,121 | $ | 4,353 | $ | — | $ | 4,353 | |||||||||||||||||||||||
Tours | 100,609 | 5,101 | 105,710 | 104,000 | — | 104,000 | |||||||||||||||||||||||||||||
Marriott Vacations Worldwide Reports Third Quarter 2023 Financial Results / 3
Revenues excluding cost reimbursements decreased 17% in the third quarter of 2023 compared to the prior year. The decline was driven by a 9% year-over-year reduction in consolidated contract sales resulting from 7% lower VPG and a 3% decline in tours, and a $59 million increase in its loan loss provision. Adjusted for the estimated $28 million impact of the Maui wildfires, consolidated contract sales would have declined 4% year-over-year, tours would have increased 2% and VPG would have declined 5%.
Segment financial results attributable to common shareholders declined $121 million to $149 million in the third quarter of 2023. Adjusting for the estimated impact from the Maui wildfires and the prior year Alignment benefit:
•Segment Adjusted EBITDA declined $60 million year-over-year primarily due to lower development and rental profit and a $49 million net loan loss impact in the current year.
•Development profit declined $56 million year-over-year primarily due to a $49 million net loan loss impact in the current year and 4% lower contract sales.
•Rental profit declined $13 million year-over-year primarily due to lower ADR and higher inventory costs.
•Management and exchange profit increased $5 million year-over-year due to higher revenue from management fees and club dues.
Exchange & Third-Party Management
Three Months Ended | |||||||||||||||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||||||||||||
| ($ in millions) | As Reported | Estimated Impact of Maui Fires | As Adjusted* | As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||
Management and exchange profit | $ | 19 | $ | 1 | $ | 20 | $ | 27 | $ | — | $ | 27 | |||||||||||||||||||||||
| Segment financial results attributable to common shareholders | $ | 23 | $ | 1 | $ | 24 | $ | 29 | $ | — | $ | 29 | |||||||||||||||||||||||
Segment margin | 37.4% | 38.1% | 44.4% | 44.4% | |||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA* | $ | 30 | $ | 1 | $ | 31 | $ | 39 | $ | — | $ | 39 | |||||||||||||||||||||||
| Segment Adjusted EBITDA margin* | 49.8% | 50.3% | 57.6% | 57.6% | |||||||||||||||||||||||||||||||
Revenues excluding cost reimbursements decreased 7% in the third quarter of 2023 compared to the prior year driven primarily by lower exchange and Getaway volumes. Interval International active members decreased 1% compared to the prior year to 1.6 million and Average revenue per member increased 1% year-over-year.
Segment financial results attributable to common shareholders were $23 million in the third quarter of 2023 and Segment margin was 37%. Adjusted for the estimated $1 million negative impact from the Maui wildfires, Segment Adjusted EBITDA decreased to $31 million and Segment Adjusted EBITDA Margin was 50%.
Corporate and Other
General and administrative costs decreased $5 million in the third quarter of 2023 compared to the prior year primarily as a result of lower variable compensation costs.
Marriott Vacations Worldwide Reports Third Quarter 2023 Financial Results / 4
Balance Sheet and Liquidity
The Company ended the quarter with $1.0 billion in liquidity, including $265 million of cash and cash equivalents, $70 million of gross notes receivable that were eligible for securitization, and $659 million of available capacity under its revolving corporate credit facility.
At the end of the third quarter of 2023, the Company had $3.0 billion of corporate debt and $2.0 billion of non-recourse debt related to its securitized notes receivable.
Full Year 2023 Outlook
While the Company’s resorts in West Maui have reopened, it expects the wildfires to negatively impact its fourth quarter contract sales by approximately $32 to $37 million, its Net income attributable to common shareholders by approximately $19 to $22 million and its Adjusted EBITDA by approximately $26 to $31 million.
The Company updated its full year 2023 guidance as reflected in the chart below. The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2023 expected GAAP results for the Company.
In the table below “*” 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.
| (in millions, except per share amounts) | 2023 Guidance | Full Year Estimated Impact of Maui Wildfires | |||||||||||||||||||||
| Contract sales | $1,750 | to | $1,770 | $60 | to | $65 | |||||||||||||||||
| Net income attributable to common shareholders | $268 | to | $278 | $37 | to | $40 | |||||||||||||||||
| Earnings per share - diluted | $6.59 | to | $6.82 | $0.85 | to | $0.94 | |||||||||||||||||
| Net cash, cash equivalents and restricted cash provided by operating activities | $271 | to | $307 | $50 | to | $55 | |||||||||||||||||
| Adjusted EBITDA* | $745 | to | $765 | $50 | to | $55 | |||||||||||||||||
| Adjusted earnings per share - diluted* | $7.44 | to | $7.78 | $0.85 | to | $0.94 | |||||||||||||||||
| Adjusted free cash flow* | $430 | to | $460 | $50 | to | $55 | |||||||||||||||||
Note: 2023 guidance includes the estimated impact of the Maui wildfires on the Company’s 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.
Third Quarter 2023 Financial Results Conference Call
The Company will hold a conference call on November 2, 2023 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.
Marriott Vacations Worldwide Reports Third Quarter 2023 Financial Results / 5
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 an exchange network and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries and territories, and 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 an affiliate of 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, results of operations, cash flows, future growth and projections for full year 2023. 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 effects of a future health crisis, including its short and longer-term impacts on consumer confidence and demand for travel, and the pace of recovery following a health crisis; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price and wage inflation; global supply chain disruptions; volatility in the international and national economy and credit markets; the impact of the current or a future banking crisis; wars involving Russia, Ukraine, Israel and Gaza 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 impact of rising interest rates; political or social strife; difficulties associated with implementing new or maintaining existing technology; changes in privacy laws; the effects of steps that we or our affiliates have taken and may continue to take to reduce operating costs; impacts from natural or man-made disasters and wildfires, including the Maui wildfires; 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 future 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 3, 2023
TABLE OF CONTENTS
| Summary Financial Information | A-1 | ||||||||||
| Adjusted EBITDA by Segment | A-2 | ||||||||||
| Interim Consolidated Statements of Income | A-3 | to | A-4 | ||||||||
| Revenues and Profit by Segment | A-5 | to | A-8 | ||||||||
| Consolidated Contract Sales to Adjusted Development Profit | A-9 | to | A-10 | ||||||||
| Adjusted Net Income Attributable to Common Shareholders and Adjusted Earnings Per Share - Diluted | A-11 | ||||||||||
| Adjusted EBITDA | A-12 | ||||||||||
Segment Adjusted EBITDA Vacation Ownership Exchange & Third-Party Management | A-13 | ||||||||||
| Interim Consolidated Balance Sheets | A-14 | ||||||||||
| Interim Consolidated Statements of Cash Flows | A-15 | to | A-16 | ||||||||
| 2023 Outlook | |||||||||||
| Adjusted Net Income Attributable to Common Shareholders, Adjusted Earnings Per Share - Diluted and Adjusted EBITDA | A-17 | ||||||||||
| Adjusted Free Cash Flow | A-18 | ||||||||||
| Quarterly Operating Metrics | A-19 | ||||||||||
| Non-GAAP Financial Measures | A-20 | to | A-21 | ||||||||
A-1
MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions, except VPG, tours, total active Interval International members, average revenue per member, and per share amounts)
(Unaudited)
SUMMARY FINANCIAL INFORMATION
| Three Months Ended | Change % | Nine Months Ended | Change % | ||||||||||||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||||||||||||
| Key Measures | |||||||||||||||||||||||||||||||||||
| Total consolidated contract sales | $ | 438 | $ | 483 | (9%) | $ | 1,325 | $ | 1,383 | (4%) | |||||||||||||||||||||||||
| VPG | $ | 4,055 | $ | 4,353 | (7%) | $ | 4,118 | $ | 4,544 | (9%) | |||||||||||||||||||||||||
| Tours | 100,609 | 104,000 | (3%) | 300,245 | 285,362 | 5% | |||||||||||||||||||||||||||||
Total active Interval International members (000's)(1) | 1,571 | 1,591 | (1%) | 1,571 | 1,591 | (1%) | |||||||||||||||||||||||||||||
| Average revenue per Interval International member | $ | 39.15 | $ | 38.91 | 1% | $ | 120.48 | $ | 122.30 | (1%) | |||||||||||||||||||||||||
| GAAP Measures | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,186 | $ | 1,252 | (5%) | $ | 3,533 | $ | 3,468 | 2% | |||||||||||||||||||||||||
| Income before income taxes and noncontrolling interests | $ | 66 | $ | 169 | (61%) | $ | 334 | $ | 437 | (24%) | |||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 42 | $ | 109 | (61%) | $ | 219 | $ | 303 | 28% | |||||||||||||||||||||||||
| Diluted shares | 43.3 | 43.4 | —% | 43.8 | 45.9 | (5%) | |||||||||||||||||||||||||||||
| Earnings per share - diluted | $ | 1.09 | $ | 2.53 | (57%) | $ | 5.33 | $ | 6.68 | (20%) | |||||||||||||||||||||||||
| Non-GAAP Measures* | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 150 | $ | 284 | (47%) | $ | 575 | $ | 727 | (21%) | |||||||||||||||||||||||||
| Adjusted pretax income | $ | 75 | $ | 207 | (64%) | $ | 345 | $ | 508 | (32%) | |||||||||||||||||||||||||
| Adjusted net income attributable to common shareholders | $ | 48 | $ | 131 | (64%) | $ | 247 | $ | 343 | (28%) | |||||||||||||||||||||||||
| Adjusted earnings per share - diluted | $ | 1.20 | $ | 3.02 | (60%) | $ | 5.95 | $ | 7.53 | (21%) | |||||||||||||||||||||||||
(1) Includes members at the end of each period. | |||||||||||||||||||||||||||||||||||
| * 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
ADJUSTED EBITDA BY SEGMENT
(In millions)
(Unaudited)
Three Months Ended | |||||||||||||||||||||||
| September 30, 2022 | |||||||||||||||||||||||
| September 30, 2023 | As Reported | Impact of Alignment | As Adjusted* | ||||||||||||||||||||
| Vacation Ownership | $ | 173 | $ | 299 | $ | (44) | $ | 255 | |||||||||||||||
| Exchange & Third-Party Management | 30 | 39 | — | 39 | |||||||||||||||||||
| Segment Adjusted EBITDA* | 203 | 338 | (44) | 294 | |||||||||||||||||||
| General and administrative | (57) | (62) | — | (62) | |||||||||||||||||||
Other | 4 | 8 | — | 8 | |||||||||||||||||||
| Adjusted EBITDA* | $ | 150 | $ | 284 | $ | (44) | $ | 240 | |||||||||||||||
Nine Months Ended | |||||||||||||||||||||||
| September 30, 2022 | |||||||||||||||||||||||
| September 30, 2023 | As Reported | Impact of Alignment | As Adjusted* | ||||||||||||||||||||
| Vacation Ownership | $ | 647 | $ | 772 | $ | (44) | $ | 728 | |||||||||||||||
| Exchange & Third-Party Management | 99 | 117 | — | 117 | |||||||||||||||||||
| Segment Adjusted EBITDA* | 746 | 889 | (44) | 845 | |||||||||||||||||||
| General and administrative | (189) | (187) | — | (187) | |||||||||||||||||||
Other | 18 | 25 | — | 25 | |||||||||||||||||||
| Adjusted EBITDA* | $ | 575 | $ | 727 | $ | (44) | $ | 683 | |||||||||||||||
| * 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-3
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
| Three Months Ended | |||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sale of vacation ownership products | $ | 319 | $ | 444 | $ | (27) | $ | 417 | |||||||||||||||
| Management and exchange | 205 | 198 | — | 198 | |||||||||||||||||||
| Rental | 138 | 165 | — | 165 | |||||||||||||||||||
| Financing | 81 | 74 | — | 74 | |||||||||||||||||||
| Cost reimbursements | 443 | 371 | — | 371 | |||||||||||||||||||
| TOTAL REVENUES | 1,186 | 1,252 | (27) | 1,225 | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Cost of vacation ownership products | 50 | 76 | (2) | 74 | |||||||||||||||||||
| Marketing and sales | 202 | 207 | — | 207 | |||||||||||||||||||
| Management and exchange | 115 | 101 | — | 101 | |||||||||||||||||||
| Rental | 119 | 126 | — | 126 | |||||||||||||||||||
| Financing | 30 | 5 | 19 | 24 | |||||||||||||||||||
| General and administrative | 57 | 62 | — | 62 | |||||||||||||||||||
| Depreciation and amortization | 33 | 33 | — | 33 | |||||||||||||||||||
| Litigation charges | 2 | 2 | — | 2 | |||||||||||||||||||
| Royalty fee | 30 | 28 | — | 28 | |||||||||||||||||||
| Impairment | — | 1 | — | 1 | |||||||||||||||||||
| Cost reimbursements | 443 | 371 | — | 371 | |||||||||||||||||||
| TOTAL EXPENSES | 1,081 | 1,012 | 17 | 1,029 | |||||||||||||||||||
| Gains (losses) and other income (expense), net | 3 | (2) | — | (2) | |||||||||||||||||||
| Interest expense, net | (36) | (34) | — | (34) | |||||||||||||||||||
| Transaction and integration costs | (5) | (34) | — | (34) | |||||||||||||||||||
| Other | (1) | (1) | — | (1) | |||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 66 | 169 | (44) | 125 | |||||||||||||||||||
| Provision for income taxes | (24) | (59) | 11 | (48) | |||||||||||||||||||
NET INCOME (LOSS) | 42 | 110 | (33) | 77 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | — | (1) | — | (1) | |||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 42 | $ | 109 | $ | (33) | $ | 76 | |||||||||||||||
| EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS | |||||||||||||||||||||||
| Basic shares | 36.4 | 39.5 | 39.5 | ||||||||||||||||||||
| Basic | $ | 1.16 | $ | 2.76 | $ | (0.80) | $ | 1.96 | |||||||||||||||
| Diluted shares | 43.3 | 43.4 | 43.4 | ||||||||||||||||||||
| Diluted | $ | 1.09 | $ | 2.53 | $ | (0.74) | $ | 1.79 | |||||||||||||||
| * 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-4
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
(Unaudited)
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sale of vacation ownership products | $ | 1,085 | $ | 1,179 | $ | (27) | $ | 1,152 | |||||||||||||||
| Management and exchange | 611 | 623 | — | 623 | |||||||||||||||||||
| Rental | 435 | 438 | — | 438 | |||||||||||||||||||
| Financing | 239 | 217 | — | 217 | |||||||||||||||||||
| Cost reimbursements | 1,163 | 1,011 | — | 1,011 | |||||||||||||||||||
| TOTAL REVENUES | 3,533 | 3,468 | (27) | 3,441 | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Cost of vacation ownership products | 174 | 216 | (2) | 214 | |||||||||||||||||||
| Marketing and sales | 618 | 603 | — | 603 | |||||||||||||||||||
| Management and exchange | 332 | 330 | — | 330 | |||||||||||||||||||
| Rental | 344 | 294 | — | 294 | |||||||||||||||||||
| Financing | 81 | 49 | 19 | 68 | |||||||||||||||||||
| General and administrative | 189 | 187 | — | 187 | |||||||||||||||||||
| Depreciation and amortization | 99 | 98 | — | 98 | |||||||||||||||||||
| Litigation charges | 7 | 7 | — | 7 | |||||||||||||||||||
| Royalty fee | 88 | 84 | — | 84 | |||||||||||||||||||
| Impairment | 4 | 1 | — | 1 | |||||||||||||||||||
| Cost reimbursements | 1,163 | 1,011 | — | 1,011 | |||||||||||||||||||
| TOTAL EXPENSES | 3,099 | 2,880 | 17 | 2,897 | |||||||||||||||||||
| Gains and other income, net | 34 | 39 | — | 39 | |||||||||||||||||||
| Interest expense, net | (106) | (91) | — | (91) | |||||||||||||||||||
| Transaction and integration costs | (28) | (99) | — | (99) | |||||||||||||||||||
INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 334 | 437 | (44) | 393 | |||||||||||||||||||
| Provision for income taxes | (115) | (134) | 11 | (123) | |||||||||||||||||||
NET INCOME (LOSS) | 219 | 303 | (33) | 270 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | |||||||||||||||||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 219 | $ | 303 | $ | (33) | $ | 270 | |||||||||||||||
EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS | |||||||||||||||||||||||
| Basic shares | 36.9 | 41.1 | 41.1 | ||||||||||||||||||||
| Basic | $ | 5.96 | $ | 7.39 | $ | (0.78) | $ | 6.61 | |||||||||||||||
| Diluted shares | 43.8 | 45.9 | 45.9 | ||||||||||||||||||||
| Diluted | $ | 5.33 | $ | 6.68 | $ | (0.69) | $ | 5.99 | |||||||||||||||
| * 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-5
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the three months ended September 30, 2023
(In millions)
(Unaudited)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | ||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sales of vacation ownership products | $ | 319 | $ | — | $ | — | $ | 319 | |||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||
| Ancillary revenues | 62 | 1 | — | 63 | |||||||||||||||||||
| Management fee revenues | 44 | 5 | — | 49 | |||||||||||||||||||
| Exchange and other services revenues | 37 | 44 | 12 | 93 | |||||||||||||||||||
| Management and exchange | 143 | 50 | 12 | 205 | |||||||||||||||||||
| Rental | 128 | 10 | — | 138 | |||||||||||||||||||
| Financing | 81 | — | — | 81 | |||||||||||||||||||
Cost reimbursements(1) | 455 | 4 | (16) | 443 | |||||||||||||||||||
| TOTAL REVENUES | $ | 1,126 | $ | 64 | $ | (4) | $ | 1,186 | |||||||||||||||
| PROFIT | |||||||||||||||||||||||
| Development | $ | 67 | $ | — | $ | — | $ | 67 | |||||||||||||||
Management and exchange(1) | 74 | 19 | (3) | 90 | |||||||||||||||||||
Rental(1) | 6 | 10 | 3 | 19 | |||||||||||||||||||
| Financing | 51 | — | — | 51 | |||||||||||||||||||
| TOTAL PROFIT | 198 | 29 | — | 227 | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| General and administrative | — | — | (57) | (57) | |||||||||||||||||||
| Depreciation and amortization | (23) | (7) | (3) | (33) | |||||||||||||||||||
| Litigation charges | (2) | — | — | (2) | |||||||||||||||||||
| Royalty fee | (30) | — | — | (30) | |||||||||||||||||||
| Gains (losses) and other income (expense), net | 7 | 1 | (5) | 3 | |||||||||||||||||||
| Interest expense, net | — | — | (36) | (36) | |||||||||||||||||||
| Transaction and integration costs | — | — | (5) | (5) | |||||||||||||||||||
| Other | (1) | — | — | (1) | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 149 | 23 | (106) | 66 | |||||||||||||||||||
| Provision for income taxes | — | — | (24) | (24) | |||||||||||||||||||
| NET INCOME (LOSS) | 149 | 23 | (130) | 42 | |||||||||||||||||||
Net income attributable to noncontrolling interests(1) | — | — | — | — | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 149 | $ | 23 | $ | (130) | $ | 42 | |||||||||||||||
SEGMENT MARGIN(2) | 22% | 37% | |||||||||||||||||||||
(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 three months ended September 30, 2022
(In millions)
(Unaudited)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | As Reported | As Adjusted* | ||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||||||||||||||
| Sales of vacation ownership products | $ | 444 | $ | (27) | $ | 417 | $ | — | $ | — | $ | 444 | $ | 417 | |||||||||||||||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||||||||||||||||||||
| Ancillary revenues | 63 | — | 63 | 1 | — | 64 | 64 | ||||||||||||||||||||||||||||||||||
| Management fee revenues | 41 | — | 41 | 7 | (1) | 47 | 47 | ||||||||||||||||||||||||||||||||||
| Exchange and other services revenues | 32 | — | 32 | 47 | 8 | 87 | 87 | ||||||||||||||||||||||||||||||||||
| Management and exchange | 136 | — | 136 | 55 | 7 | 198 | 198 | ||||||||||||||||||||||||||||||||||
| Rental | 154 | — | 154 | 11 | — | 165 | 165 | ||||||||||||||||||||||||||||||||||
| Financing | 74 | — | 74 | — | — | 74 | 74 | ||||||||||||||||||||||||||||||||||
Cost reimbursements(1) | 374 | — | 374 | 5 | (8) | 371 | 371 | ||||||||||||||||||||||||||||||||||
| TOTAL REVENUES | $ | 1,182 | $ | (27) | $ | 1,155 | $ | 71 | $ | (1) | $ | 1,252 | $ | 1,225 | |||||||||||||||||||||||||||
| PROFIT | |||||||||||||||||||||||||||||||||||||||||
| Development | $ | 161 | $ | (25) | $ | 136 | $ | — | $ | — | $ | 161 | $ | 136 | |||||||||||||||||||||||||||
Management and exchange(1) | 72 | — | 72 | 27 | (2) | 97 | 97 | ||||||||||||||||||||||||||||||||||
Rental(1) | 24 | — | 24 | 11 | 4 | 39 | 39 | ||||||||||||||||||||||||||||||||||
| Financing | 69 | (19) | 50 | — | — | 69 | 50 | ||||||||||||||||||||||||||||||||||
| TOTAL PROFIT | 326 | (44) | 282 | 38 | 2 | 366 | 322 | ||||||||||||||||||||||||||||||||||
| OTHER | |||||||||||||||||||||||||||||||||||||||||
| General and administrative | — | — | — | — | (62) | (62) | (62) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (23) | — | (23) | (8) | (2) | (33) | (33) | ||||||||||||||||||||||||||||||||||
| Litigation charges | (2) | — | (2) | — | — | (2) | (2) | ||||||||||||||||||||||||||||||||||
| Royalty fee | (28) | — | (28) | — | — | (28) | (28) | ||||||||||||||||||||||||||||||||||
| Impairment | (1) | — | (1) | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||||
| Gains (losses) and other income (expense), net | 1 | — | 1 | (1) | (2) | (2) | (2) | ||||||||||||||||||||||||||||||||||
| Interest expense, net | — | — | — | — | (34) | (34) | (34) | ||||||||||||||||||||||||||||||||||
| Transaction and integration costs | (2) | — | (2) | — | (32) | (34) | (34) | ||||||||||||||||||||||||||||||||||
| Other | (1) | — | (1) | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 270 | (44) | 226 | 29 | (130) | 169 | 125 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | — | 11 | 11 | — | (59) | (59) | (48) | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) | 270 | (33) | 237 | 29 | (189) | 110 | 77 | ||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests(1) | — | — | — | — | (1) | (1) | (1) | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 270 | $ | (33) | $ | 237 | $ | 29 | $ | (190) | $ | 109 | $ | 76 | |||||||||||||||||||||||||||
SEGMENT MARGIN(2) | 34% | 31% | 44% | ||||||||||||||||||||||||||||||||||||||
(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. | |||||||||||||||||||||||||||||||||||||||||
| * 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-7
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the nine months ended September 30, 2023
(In millions)
(Unaudited)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | ||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sales of vacation ownership products | $ | 1,085 | $ | — | $ | — | $ | 1,085 | |||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||
| Ancillary revenues | 193 | 3 | — | 196 | |||||||||||||||||||
| Management fee revenues | 134 | 18 | (2) | 150 | |||||||||||||||||||
| Exchange and other services revenues | 98 | 136 | 31 | 265 | |||||||||||||||||||
| Management and exchange | 425 | 157 | 29 | 611 | |||||||||||||||||||
| Rental | 404 | 31 | — | 435 | |||||||||||||||||||
| Financing | 239 | — | — | 239 | |||||||||||||||||||
Cost reimbursements(1) | 1,182 | 12 | (31) | 1,163 | |||||||||||||||||||
| TOTAL REVENUES | $ | 3,335 | $ | 200 | $ | (2) | $ | 3,533 | |||||||||||||||
| PROFIT | |||||||||||||||||||||||
| Development | $ | 293 | $ | — | $ | — | $ | 293 | |||||||||||||||
Management and exchange(1) | 223 | 66 | (10) | 279 | |||||||||||||||||||
Rental(1) | 50 | 31 | 10 | 91 | |||||||||||||||||||
| Financing | 158 | — | — | 158 | |||||||||||||||||||
| TOTAL PROFIT | 724 | 97 | — | 821 | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| General and administrative | — | — | (189) | (189) | |||||||||||||||||||
| Depreciation and amortization | (69) | (23) | (7) | (99) | |||||||||||||||||||
| Litigation charges | (8) | — | 1 | (7) | |||||||||||||||||||
| Royalty fee | (88) | — | — | (88) | |||||||||||||||||||
| Impairment | (4) | — | — | (4) | |||||||||||||||||||
| Gains and other income, net | 23 | 1 | 10 | 34 | |||||||||||||||||||
| Interest expense, net | — | — | (106) | (106) | |||||||||||||||||||
| Transaction and integration costs | — | — | (28) | (28) | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 578 | 75 | (319) | 334 | |||||||||||||||||||
| Provision for income taxes | — | — | (115) | (115) | |||||||||||||||||||
| NET INCOME (LOSS) | 578 | 75 | (434) | 219 | |||||||||||||||||||
Net income attributable to noncontrolling interests(1) | — | — | — | — | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 578 | $ | 75 | $ | (434) | $ | 219 | |||||||||||||||
SEGMENT MARGIN(2) | 27% | 40% | |||||||||||||||||||||
(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-8
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the nine months ended September 30, 2022
(In millions)
(Unaudited)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | As Reported | As Adjusted* | ||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||||||||||||||
| Sales of vacation ownership products | $ | 1,179 | $ | (27) | $ | 1,152 | $ | — | $ | — | $ | 1,179 | $ | 1,152 | |||||||||||||||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||||||||||||||||||||
| Ancillary revenues | 183 | — | 183 | 3 | — | 186 | 186 | ||||||||||||||||||||||||||||||||||
| Management fee revenues | 124 | — | 124 | 28 | (5) | 147 | 147 | ||||||||||||||||||||||||||||||||||
| Exchange and other services revenues | 95 | — | 95 | 146 | 49 | 290 | 290 | ||||||||||||||||||||||||||||||||||
| Management and exchange | 402 | — | 402 | 177 | 44 | 623 | 623 | ||||||||||||||||||||||||||||||||||
| Rental | 405 | — | 405 | 33 | — | 438 | 438 | ||||||||||||||||||||||||||||||||||
| Financing | 217 | — | 217 | — | — | 217 | 217 | ||||||||||||||||||||||||||||||||||
Cost reimbursements(1) | 1,026 | — | 1,026 | 19 | (34) | 1,011 | 1,011 | ||||||||||||||||||||||||||||||||||
| TOTAL REVENUES | $ | 3,229 | $ | (27) | $ | 3,202 | $ | 229 | $ | 10 | $ | 3,468 | $ | 3,441 | |||||||||||||||||||||||||||
| PROFIT | |||||||||||||||||||||||||||||||||||||||||
| Development | $ | 360 | $ | (25) | $ | 335 | $ | — | $ | — | $ | 360 | $ | 335 | |||||||||||||||||||||||||||
Management and exchange(1) | 224 | — | 224 | 84 | (15) | 293 | 293 | ||||||||||||||||||||||||||||||||||
Rental(1) | 94 | — | 94 | 33 | 17 | 144 | 144 | ||||||||||||||||||||||||||||||||||
| Financing | 168 | (19) | 149 | — | — | 168 | 149 | ||||||||||||||||||||||||||||||||||
| TOTAL PROFIT | 846 | (44) | 802 | 117 | 2 | 965 | 921 | ||||||||||||||||||||||||||||||||||
| OTHER | |||||||||||||||||||||||||||||||||||||||||
| General and administrative | — | — | — | — | (187) | (187) | (187) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (67) | — | (67) | (24) | (7) | (98) | (98) | ||||||||||||||||||||||||||||||||||
| Litigation charges | (7) | — | (7) | — | — | (7) | (7) | ||||||||||||||||||||||||||||||||||
| Royalty fee | (84) | — | (84) | — | — | (84) | (84) | ||||||||||||||||||||||||||||||||||
| Impairment | (1) | — | (1) | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||||
| Gains (losses) and other income (expense), net | 36 | — | 36 | 15 | (12) | 39 | 39 | ||||||||||||||||||||||||||||||||||
| Interest expense, net | — | — | — | — | (91) | (91) | (91) | ||||||||||||||||||||||||||||||||||
| Transaction and integration costs | (3) | — | (3) | — | (96) | (99) | (99) | ||||||||||||||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 720 | (44) | 676 | 108 | (391) | 437 | 393 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | — | 11 | 11 | — | (134) | (134) | (123) | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) | 720 | (33) | 687 | 108 | (525) | 303 | 270 | ||||||||||||||||||||||||||||||||||
Net income attributable to noncontrolling interests(1) | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 720 | $ | (33) | $ | 687 | $ | 108 | $ | (525) | $ | 303 | $ | 270 | |||||||||||||||||||||||||||
SEGMENT MARGIN(2) | 33% | 32% | 52% | ||||||||||||||||||||||||||||||||||||||
(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. | |||||||||||||||||||||||||||||||||||||||||
| * 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 | |||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| Consolidated contract sales | $ | 438 | $ | 483 | $ | — | $ | 483 | |||||||||||||||
| Less resales contract sales | (11) | (10) | — | (10) | |||||||||||||||||||
| Consolidated contract sales, net of resales | 427 | 473 | — | 473 | |||||||||||||||||||
| Plus: | |||||||||||||||||||||||
| Settlement revenue | 12 | 10 | — | 10 | |||||||||||||||||||
| Resales revenue | 6 | 5 | — | 5 | |||||||||||||||||||
| Revenue recognition adjustments: | |||||||||||||||||||||||
| Reportability | — | 54 | (46) | 8 | |||||||||||||||||||
| Sales reserve | (102) | (64) | 19 | (45) | |||||||||||||||||||
Other(1) | (24) | (34) | — | (34) | |||||||||||||||||||
| Sale of vacation ownership products | 319 | 444 | (27) | 417 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of vacation ownership products | (50) | (76) | 2 | (74) | |||||||||||||||||||
| Marketing and sales | (202) | (207) | — | (207) | |||||||||||||||||||
| Development Profit | 67 | 161 | (25) | 136 | |||||||||||||||||||
| Revenue recognition reportability adjustment | — | (43) | 39 | (4) | |||||||||||||||||||
| Purchase accounting adjustments | 2 | 5 | — | 5 | |||||||||||||||||||
| Other | — | (5) | — | (5) | |||||||||||||||||||
| Adjusted development profit* | $ | 69 | $ | 118 | $ | 14 | $ | 132 | |||||||||||||||
| Development profit margin | 20.7% | 36.1% | 32.6% | ||||||||||||||||||||
| Adjusted development profit margin* | 21.5% | 29.9% | 32.0% | ||||||||||||||||||||
(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. | |||||||||||||||||||||||
| * 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-10
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT
(In millions)
(Unaudited)
| Nine Months Ended | |||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| Consolidated contract sales | $ | 1,325 | $ | 1,383 | $ | — | $ | 1,383 | |||||||||||||||
| Less resales contract sales | (32) | (30) | — | (30) | |||||||||||||||||||
| Consolidated contract sales, net of resales | 1,293 | 1,353 | — | 1,353 | |||||||||||||||||||
| Plus: | |||||||||||||||||||||||
| Settlement revenue | 29 | 26 | — | 26 | |||||||||||||||||||
| Resales revenue | 18 | 13 | — | 13 | |||||||||||||||||||
| Revenue recognition adjustments: | |||||||||||||||||||||||
| Reportability | 5 | 7 | (46) | (39) | |||||||||||||||||||
| Sales reserve | (185) | (130) | 19 | (111) | |||||||||||||||||||
Other(1) | (75) | (90) | — | (90) | |||||||||||||||||||
| Sale of vacation ownership products | 1,085 | 1,179 | (27) | 1,152 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of vacation ownership products | (174) | (216) | 2 | (214) | |||||||||||||||||||
| Marketing and sales | (618) | (603) | — | (603) | |||||||||||||||||||
| Development Profit | 293 | 360 | (25) | 335 | |||||||||||||||||||
| Revenue recognition reportability adjustment | (3) | (8) | 39 | 31 | |||||||||||||||||||
| Purchase accounting adjustments | 6 | 14 | — | 14 | |||||||||||||||||||
| Other | — | (5) | — | (5) | |||||||||||||||||||
| Adjusted development profit* | $ | 296 | $ | 361 | $ | 14 | $ | 375 | |||||||||||||||
| Development profit margin | 27.0% | 30.5% | 29.1% | ||||||||||||||||||||
| Adjusted development profit margin* | 27.4% | 30.8% | 31.6% | ||||||||||||||||||||
(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. | |||||||||||||||||||||||
| * 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
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, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | 42 | $ | 109 | $ | 219 | $ | 303 | |||||||||||||||
| Provision for income taxes | 24 | 59 | 115 | 134 | |||||||||||||||||||
| Income before income taxes attributable to common shareholders | 66 | 168 | 334 | 437 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| ILG integration | — | 22 | $ | 15 | $ | 80 | |||||||||||||||||
| Welk acquisition and integration | 5 | 5 | 13 | 10 | |||||||||||||||||||
| Other transformation initiatives | — | 6 | — | 6 | |||||||||||||||||||
| Other transaction costs | — | 1 | — | 3 | |||||||||||||||||||
| Transaction and integration costs | 5 | 34 | 28 | 99 | |||||||||||||||||||
| Early redemption of senior secured notes | — | — | 10 | — | |||||||||||||||||||
| Gain on disposition of hotel, land and other | (1) | — | (8) | (33) | |||||||||||||||||||
| Gain on disposition of VRI Americas | — | (1) | — | (17) | |||||||||||||||||||
| Foreign currency translation | 5 | 3 | 1 | 10 | |||||||||||||||||||
| Insurance proceeds | (1) | — | (3) | (5) | |||||||||||||||||||
| Change in indemnification asset | (6) | (1) | (30) | 2 | |||||||||||||||||||
| Other | — | 1 | (4) | 4 | |||||||||||||||||||
| (Gains) losses and other (income) expense, net | (3) | 2 | (34) | (39) | |||||||||||||||||||
| Purchase accounting adjustments | 3 | 5 | 6 | 13 | |||||||||||||||||||
| Litigation charges | 2 | 2 | 7 | 7 | |||||||||||||||||||
| Impairment | — | 1 | 4 | 1 | |||||||||||||||||||
| Expiration/forfeiture of deposits on pre-acquisition preview packages | — | (6) | — | (6) | |||||||||||||||||||
| Early termination of VRI management contract | — | — | — | (2) | |||||||||||||||||||
| Change in estimate relating to pre-acquisition contingencies | — | (2) | — | (5) | |||||||||||||||||||
| Other | 2 | 3 | — | 3 | |||||||||||||||||||
| Adjusted pretax income* | 75 | 207 | 345 | 508 | |||||||||||||||||||
| Provision for income taxes | (27) | (76) | (98) | (165) | |||||||||||||||||||
| Adjusted net income attributable to common shareholders* | $ | 48 | $ | 131 | $ | 247 | $ | 343 | |||||||||||||||
| Diluted shares | 43.3 | 43.4 | 43.8 | 45.9 | |||||||||||||||||||
| Adjusted earnings per share - Diluted* | $ | 1.20 | $ | 3.02 | $ | 5.95 | $ | 7.53 | |||||||||||||||
| Excluding the Impact of Alignment: | |||||||||||||||||||||||
| Adjusted net income attributable to common shareholders* | $ | 48 | $ | 98 | $ | 247 | $ | 310 | |||||||||||||||
| Adjusted earnings per share - Diluted* | $ | 1.20 | $ | 2.28 | $ | 5.95 | $ | 6.83 | |||||||||||||||
| * 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-12
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ADJUSTED EBITDA
(In millions)
(Unaudited)
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 42 | $ | 109 | $ | 219 | $ | 303 | |||||||||||||||
| Interest expense, net | 36 | 34 | 106 | 91 | |||||||||||||||||||
| Provision for income taxes | 24 | 59 | 115 | 134 | |||||||||||||||||||
| Depreciation and amortization | 33 | 33 | 99 | 98 | |||||||||||||||||||
| Share-based compensation | 6 | 10 | 25 | 30 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| ILG integration | — | 22 | 15 | 80 | |||||||||||||||||||
| Welk acquisition and integration | 5 | 5 | 13 | 10 | |||||||||||||||||||
| Other transformation initiatives | — | 6 | — | 6 | |||||||||||||||||||
| Other transaction costs | — | 1 | — | 3 | |||||||||||||||||||
| Transaction and integration costs | 5 | 34 | 28 | 99 | |||||||||||||||||||
| Early redemption of senior secured notes | — | — | 10 | — | |||||||||||||||||||
| Gain on disposition of hotel, land and other | (1) | — | (8) | (33) | |||||||||||||||||||
| Gain on disposition of VRI Americas | — | (1) | — | (17) | |||||||||||||||||||
| Foreign currency translation | 5 | 3 | 1 | 10 | |||||||||||||||||||
| Insurance proceeds | (1) | — | (3) | (5) | |||||||||||||||||||
| Change in indemnification asset | (6) | (1) | (30) | 2 | |||||||||||||||||||
| Other | — | 1 | (4) | 4 | |||||||||||||||||||
| (Gains) losses and other (income) expense, net | (3) | 2 | (34) | (39) | |||||||||||||||||||
| Purchase accounting adjustments | 3 | 5 | 6 | 13 | |||||||||||||||||||
| Litigation charges | 2 | 2 | 7 | 7 | |||||||||||||||||||
| Impairment | — | 1 | 4 | 1 | |||||||||||||||||||
| Expiration/forfeiture of deposits on pre-acquisition preview packages | — | (6) | — | (6) | |||||||||||||||||||
| Early termination of VRI management contract | — | — | — | (2) | |||||||||||||||||||
| Change in estimate relating to pre-acquisition contingencies | — | (2) | — | (5) | |||||||||||||||||||
| Other | 2 | 3 | — | 3 | |||||||||||||||||||
| ADJUSTED EBITDA* | $ | 150 | $ | 284 | $ | 575 | $ | 727 | |||||||||||||||
| ADJUSTED EBITDA MARGIN* | 20% | 32% | 24% | 30% | |||||||||||||||||||
| Excluding the Impact of Alignment | |||||||||||||||||||||||
| ADJUSTED EBITDA* | $ | 150 | $ | 240 | $ | 575 | $ | 683 | |||||||||||||||
| ADJUSTED EBITDA MARGIN* | 20% | 28% | 24% | 28% | |||||||||||||||||||
| * 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-13
MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions)
(Unaudited)
VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||
| SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 149 | $ | 270 | $ | 578 | $ | 720 | |||||||||||||||
| Depreciation and amortization | 23 | 23 | 69 | 67 | |||||||||||||||||||
| Share-based compensation | 2 | 2 | 6 | 5 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| Transaction and integration costs | — | 2 | — | 3 | |||||||||||||||||||
| Gain on disposition of hotel, land and other | — | — | (7) | (33) | |||||||||||||||||||
| Foreign currency translation | — | (1) | — | — | |||||||||||||||||||
| Insurance proceeds | (1) | — | (3) | (3) | |||||||||||||||||||
| Change in indemnification asset | (6) | — | (9) | — | |||||||||||||||||||
| Other | — | — | (4) | — | |||||||||||||||||||
| Gains and other income, net | (7) | (1) | (23) | (36) | |||||||||||||||||||
| Purchase accounting adjustments | 3 | 5 | 6 | 13 | |||||||||||||||||||
| Litigation charges | 2 | 2 | 8 | 7 | |||||||||||||||||||
| Impairment | — | 1 | 4 | 1 | |||||||||||||||||||
| Expiration/forfeiture of deposits on pre-acquisition preview packages | — | (6) | — | (6) | |||||||||||||||||||
| Change in estimate relating to pre-acquisition contingencies | — | (2) | — | (5) | |||||||||||||||||||
| Other | 1 | 3 | (1) | 3 | |||||||||||||||||||
| SEGMENT ADJUSTED EBITDA* | $ | 173 | $ | 299 | $ | 647 | $ | 772 | |||||||||||||||
| SEGMENT ADJUSTED EBITDA MARGIN* | 26% | 37% | 30% | 35% | |||||||||||||||||||
| Excluding the Impact of Alignment | |||||||||||||||||||||||
| SEGMENT ADJUSTED EBITDA* | $ | 173 | $ | 255 | $ | 647 | $ | 728 | |||||||||||||||
| SEGMENT ADJUSTED EBITDA MARGIN* | 26% | 33% | 30% | 34% | |||||||||||||||||||
EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA
| Three Months Ended | Nine Months Ended | ||||||||||||||||||||||
| September 30, 2023 | September 30, 2022 | September 30, 2023 | September 30, 2022 | ||||||||||||||||||||
| SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 23 | $ | 29 | $ | 75 | $ | 108 | |||||||||||||||
| Depreciation and amortization | 7 | 8 | 23 | 24 | |||||||||||||||||||
| Share-based compensation | — | 1 | 1 | 2 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| Gain on disposition of hotel, land and other | (1) | — | (1) | — | |||||||||||||||||||
| Gain on disposition of VRI Americas | — | (1) | — | (17) | |||||||||||||||||||
| Early termination of VRI management contract | — | — | — | (2) | |||||||||||||||||||
| Foreign currency translation | — | 2 | — | 2 | |||||||||||||||||||
| Other | 1 | — | 1 | — | |||||||||||||||||||
| SEGMENT ADJUSTED EBITDA* | $ | 30 | $ | 39 | $ | 99 | $ | 117 | |||||||||||||||
| SEGMENT ADJUSTED EBITDA MARGIN* | 50% | 58% | 53% | 55% | |||||||||||||||||||
| * 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-14
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In millions, except share and per share data)
| Unaudited | |||||||||||
| September 30, 2023 | December 31, 2022 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 265 | $ | 524 | |||||||
Restricted cash (including $84 and $85 from VIEs, respectively) | 238 | 330 | |||||||||
Accounts receivable, net (including $14 and $13 from VIEs, respectively) | 298 | 292 | |||||||||
Vacation ownership notes receivable, net (including $1,885 and $1,792 from VIEs, respectively) | 2,291 | 2,198 | |||||||||
| Inventory | 642 | 660 | |||||||||
| Property and equipment, net | 1,250 | 1,139 | |||||||||
| Goodwill | 3,117 | 3,117 | |||||||||
| Intangibles, net | 868 | 911 | |||||||||
Other (including $88 and $76 from VIEs, respectively) | 484 | 468 | |||||||||
| TOTAL ASSETS | $ | 9,453 | $ | 9,639 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Accounts payable | $ | 238 | $ | 356 | |||||||
| Advance deposits | 169 | 158 | |||||||||
Accrued liabilities (including $3 and $5 from VIEs, respectively) | 359 | 369 | |||||||||
| Deferred revenue | 371 | 344 | |||||||||
| Payroll and benefits liability | 193 | 251 | |||||||||
| Deferred compensation liability | 156 | 139 | |||||||||
Securitized debt, net (including $2,048 and $1,982 from VIEs, respectively) | 2,026 | 1,938 | |||||||||
| Debt, net | 3,031 | 3,088 | |||||||||
| Other | 165 | 167 | |||||||||
| Deferred taxes | 335 | 331 | |||||||||
| TOTAL LIABILITIES | 7,043 | 7,141 | |||||||||
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; 75,807,873 and 75,744,524 shares issued, respectively | 1 | 1 | |||||||||
Treasury stock — at cost; 40,122,822 and 38,263,442 shares, respectively | (2,298) | (2,054) | |||||||||
| Additional paid-in capital | 3,953 | 3,941 | |||||||||
| Accumulated other comprehensive income | 18 | 15 | |||||||||
| Retained earnings | 734 | 593 | |||||||||
| TOTAL MVW SHAREHOLDERS' EQUITY | 2,408 | 2,496 | |||||||||
| Noncontrolling interests | 2 | 2 | |||||||||
| TOTAL EQUITY | 2,410 | 2,498 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 9,453 | $ | 9,639 | |||||||
The abbreviation VIEs above means Variable Interest Entities. | |||||||||||
A-15
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In millions)
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 219 | $ | 303 | |||||||
| Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities: | |||||||||||
| Depreciation and amortization of intangibles | 99 | 98 | |||||||||
| Amortization of debt discount and issuance costs | 17 | 20 | |||||||||
| Vacation ownership notes receivable reserve | 182 | 130 | |||||||||
| Share-based compensation | 25 | 30 | |||||||||
| Impairment charges | 2 | 1 | |||||||||
| Gains and other income, net | (8) | (48) | |||||||||
| Deferred income taxes | 2 | 64 | |||||||||
| Net change in assets and liabilities: | |||||||||||
| Accounts and contracts receivable | (16) | 6 | |||||||||
| Vacation ownership notes receivable originations | (749) | (728) | |||||||||
| Vacation ownership notes receivable collections | 461 | 469 | |||||||||
| Inventory | 80 | 74 | |||||||||
| Other assets | (10) | (21) | |||||||||
| Accounts payable, advance deposits and accrued liabilities | (103) | (28) | |||||||||
| Deferred revenue | 24 | (5) | |||||||||
| Payroll and benefit liabilities | (58) | 52 | |||||||||
| Deferred compensation liability | 12 | 8 | |||||||||
| Other liabilities | (2) | 7 | |||||||||
| Deconsolidation of certain Consolidated Property Owners' Associations | — | (48) | |||||||||
| Purchase of property for future transfer to inventory | (27) | (12) | |||||||||
| Other, net | (1) | 8 | |||||||||
| Net cash, cash equivalents and restricted cash provided by operating activities | 149 | 380 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred | — | 94 | |||||||||
| Capital expenditures for property and equipment (excluding inventory) | (92) | (36) | |||||||||
| Issuance of note receivable to VIE | — | (47) | |||||||||
| Proceeds from collection of note receivable from VIE | — | 47 | |||||||||
| Purchase of company owned life insurance | (8) | (14) | |||||||||
| Other dispositions, net | 15 | 5 | |||||||||
| Net cash, cash equivalents and restricted cash (used in) provided by investing activities | (85) | 49 | |||||||||
Continued
A-16
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
(In millions)
(Unaudited)
| Nine Months Ended | |||||||||||
| September 30, 2023 | September 30, 2022 | ||||||||||
| FINANCING ACTIVITIES | |||||||||||
| Borrowings from securitization transactions | 916 | 609 | |||||||||
| Repayment of debt related to securitization transactions | (828) | (655) | |||||||||
| Proceeds from debt | 790 | 505 | |||||||||
| Repayments of debt | (956) | (505) | |||||||||
| Finance lease incentive | 10 | — | |||||||||
| Finance lease payment | (2) | (3) | |||||||||
| Payment of debt issuance costs | (6) | (10) | |||||||||
| Repurchase of common stock | (248) | (528) | |||||||||
| Payment of dividends | (80) | (75) | |||||||||
| Payment of withholding taxes on vesting of restricted stock units | (10) | (23) | |||||||||
| Net cash, cash equivalents and restricted cash used in financing activities | (414) | (685) | |||||||||
| Effect of changes in exchange rates on cash, cash equivalents and restricted cash | (1) | (4) | |||||||||
| Change in cash, cash equivalents and restricted cash | (351) | (260) | |||||||||
| Cash, cash equivalents and restricted cash, beginning of period | 854 | 803 | |||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | 503 | $ | 543 | |||||||
A-17
MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions, except per share amounts)
2023 ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND
ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK
| Fiscal Year 2023 (Low) | Fiscal Year 2023 (High) | ||||||||||
| Net income attributable to common shareholders | $ | 268 | $ | 278 | |||||||
| Provision for income taxes | 141 | 146 | |||||||||
| Income before income taxes attributable to common shareholders | 409 | 424 | |||||||||
Certain items(1) | 23 | 28 | |||||||||
| Adjusted pretax income* | 432 | 452 | |||||||||
| Provision for income taxes | (127) | (132) | |||||||||
| Adjusted net income attributable to common shareholders* | $ | 305 | $ | 320 | |||||||
Earnings per share - Diluted(2) | $ | 6.59 | $ | 6.82 | |||||||
Adjusted earnings per share - Diluted(2)* | $ | 7.44 | $ | 7.78 | |||||||
Diluted shares(2) | 43.5 | 43.5 | |||||||||
2023 ADJUSTED EBITDA OUTLOOK
| Fiscal Year 2023 (Low) | Fiscal Year 2023 (High) | ||||||||||
| Net income attributable to common shareholders | $ | 268 | $ | 278 | |||||||
| Interest expense | 145 | 145 | |||||||||
| Provision for income taxes | 141 | 146 | |||||||||
| Depreciation and amortization | 135 | 135 | |||||||||
| Share-based compensation | 33 | 33 | |||||||||
Certain items(1) | 23 | 28 | |||||||||
| Adjusted EBITDA* | $ | 745 | $ | 765 | |||||||
(1) Certain items adjustment includes $40 million of anticipated transaction and integration costs, $10 million of anticipated litigation charges, $9 million of anticipated purchase accounting adjustments, and $4 million of impairments, partially offset by $34 million of gains and other income, net, and $1 million of other adjustments. | ||
(2) We expect 6.5 million shares to be included in diluted shares, reflecting the assumed conversion of our convertible notes and an add back of $18 million for interest expense to the numerator of the diluted earnings per share calculation. | ||
| * 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-18
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2023 ADJUSTED FREE CASH FLOW OUTLOOK
(In millions)
| Fiscal Year 2023 (Low) | Fiscal Year 2023 (High) | |||||||||||||
| Net cash, cash equivalents and restricted cash provided by operating activities | $ | 271 | $ | 307 | ||||||||||
| Capital expenditures for property and equipment (excluding inventory) | (110) | (125) | ||||||||||||
| Borrowings from securitizations, net of repayments | (30) | (25) | ||||||||||||
| Securitized debt issuance costs | (12) | (12) | ||||||||||||
| Free cash flow* | 119 | 145 | ||||||||||||
| Adjustments: | ||||||||||||||
Net change in borrowings available from the securitization of eligible vacation ownership notes receivable(1) | 230 | 230 | ||||||||||||
Certain items(2) | 81 | 85 | ||||||||||||
| Change in restricted cash | — | — | ||||||||||||
| Adjusted free cash flow* | $ | 430 | $ | 460 | ||||||||||
(1) Represents the anticipated net change in borrowings available from the securitization of eligible vacation ownership notes receivable between the 2022 and 2023 year ends. | ||
(2) Certain items adjustment consists primarily of the after-tax impact of anticipated transaction and integration costs. | ||
| * 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-19
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 | |||||||||||||||||||||||||||||||||||
| 2023 | $ | 434 | $ | 453 | $ | 438 | |||||||||||||||||||||||||||||
| 2022 | $ | 394 | $ | 506 | $ | 483 | $ | 454 | $ | 1,837 | |||||||||||||||||||||||||
| 2021 | $ | 226 | $ | 362 | $ | 380 | $ | 406 | $ | 1,374 | |||||||||||||||||||||||||
| VPG | |||||||||||||||||||||||||||||||||||
| 2023 | $ | 4,358 | $ | 3,968 | $ | 4,055 | |||||||||||||||||||||||||||||
| 2022 | $ | 4,706 | $ | 4,613 | $ | 4,353 | $ | 4,088 | $ | 4,421 | |||||||||||||||||||||||||
| 2021 | $ | 4,644 | $ | 4,304 | $ | 4,300 | $ | 4,305 | $ | 4,356 | |||||||||||||||||||||||||
| Tours | |||||||||||||||||||||||||||||||||||
| 2023 | 92,890 | 106,746 | 100,609 | ||||||||||||||||||||||||||||||||
| 2022 | 78,505 | 102,857 | 104,000 | 105,231 | 390,593 | ||||||||||||||||||||||||||||||
| 2021 | 45,871 | 79,900 | 84,098 | 89,495 | 299,364 | ||||||||||||||||||||||||||||||
| Exchange & Third-Party Management | |||||||||||||||||||||||||||||||||||
Total active Interval International members (000's)(1) | |||||||||||||||||||||||||||||||||||
| 2023 | 1,568 | 1,566 | 1,571 | ||||||||||||||||||||||||||||||||
| 2022 | 1,606 | 1,596 | 1,591 | 1,566 | 1,566 | ||||||||||||||||||||||||||||||
| 2021 | 1,479 | 1,321 | 1,313 | 1,296 | 1,296 | ||||||||||||||||||||||||||||||
| Average revenue per Interval International member | |||||||||||||||||||||||||||||||||||
| 2023 | $ | 42.07 | $ | 39.30 | $ | 39.15 | |||||||||||||||||||||||||||||
| 2022 | $ | 44.33 | $ | 38.79 | $ | 38.91 | $ | 35.60 | $ | 157.97 | |||||||||||||||||||||||||
| 2021 | $ | 47.13 | $ | 46.36 | $ | 42.95 | $ | 42.93 | $ | 179.48 | |||||||||||||||||||||||||
(1) Includes members at the end of each period. | |||||||||||||||||||||||||||||||||||
A-20
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NON-GAAP FINANCIAL MEASURES
In our press release and schedules, and on the related conference call, we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules included herein reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by an asterisk (“*”) on the preceding pages). Although we evaluate and present these non-GAAP financial measures for the reasons described below, please be aware that these non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for revenues, net income or loss attributable to common shareholders, earnings or loss per share or any other comparable operating measure prescribed by GAAP. In addition, other companies in our industry may calculate these non-GAAP financial measures differently than we do or may not calculate them at all, limiting their usefulness as comparative measures.
Certain Items Excluded from Non-GAAP Financial Measures
We evaluate non-GAAP financial measures, including those identified by an asterisk (“*”) on the preceding pages, that exclude certain items as further described in the financial schedules included herein, and believe these measures provide useful information to investors because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of these items. These non-GAAP financial measures also facilitate the comparison of results from our on-going core operations before these items with results from other companies.
Adjusted Development Profit and Adjusted Development Profit Margin
We evaluate Adjusted development profit (Adjusted sale of vacation ownership products, net of expenses) and Adjusted development profit margin as indicators of operating performance. Adjusted development profit margin is calculated by dividing Adjusted development profit by revenues from the Sale of vacation ownership products. Adjusted development profit and Adjusted development profit margin adjust Sale of vacation ownership products revenues for the impact of revenue reportability, include corresponding adjustments to Cost of vacation ownership products associated with the change in revenues from the Sale of vacation ownership products, and may include adjustments for certain items as necessary. We evaluate Adjusted development profit and Adjusted development profit margin and believe they provide useful information to investors because they allow for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development profit and Development profit margin.
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to shareholders. We also use Adjusted EBITDA, as do analysts, lenders, investors and others, because this measure excludes certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. EBITDA and Adjusted
A-21
EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others, of results from our on-going core operations before the impact of these items with results from other companies.
Adjusted EBITDA Margin and Segment Adjusted EBITDA Margin
We evaluate Adjusted EBITDA margin and Segment Adjusted EBITDA margin as indicators of operating performance. Adjusted EBITDA margin represents Adjusted EBITDA divided by the Company’s total revenues less cost reimbursement revenues. Segment Adjusted EBITDA margin represents Segment Adjusted EBITDA divided by the applicable segment’s total revenues less cost reimbursement revenues. We evaluate Adjusted EBITDA margin and Segment Adjusted EBITDA margin and believe it provides useful information to investors because it allows for period-over-period comparisons of our on-going core operations.
Free Cash Flow and Adjusted Free Cash Flow
We evaluate Free Cash Flow and Adjusted Free Cash Flow as liquidity measures that provide useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment and the borrowing and repayment activity related to our term securitizations, which cash can be used for, among other purposes, strategic opportunities, including acquisitions and strengthening the balance sheet. Adjusted Free Cash Flow, which reflects additional adjustments to Free Cash Flow for the impact of transaction and integration charges, impact of borrowings available from the securitization of eligible vacation ownership notes receivable, and changes in restricted cash, allows for period-over-period comparisons of the cash generated by our business before the impact of these items. Analysis of Free Cash Flow and Adjusted Free Cash Flow also facilitates management’s comparison of our results with our competitors’ results.
Results As Adjusted for the Estimated Impact of the Maui Fires
In our press release and schedules we provide As Adjusted results for the three- and nine-months ended September 30, 2023 for comparison purposes. The As Adjusted results reflect the estimated impact of the Maui fires on the Company’s reported results on a GAAP basis, as well as to the Company’s non-GAAP financial measures. We provide this As Adjusted information because we believe that it facilitates the comparison of results from our on-going core operations before the estimated impact of the Maui fires. We believe that the As Adjusted results provide useful information to assist with period-over-period comparisons of our on-going operations excluding any estimated impact from the Maui fires.
Results As Adjusted for the Impact of the Alignment
In our press release and schedules we provide As Adjusted results for the three- and nine-months ended September 30, 2022 for comparison purposes. The As Adjusted results exclude any impacts to the Company’s reported results on a GAAP basis, as well as to the Company’s non-GAAP financial measures, due to the Alignment. We provide this As Adjusted information because we believe that it facilitates the comparison of results from our on-going core operations before the impact of the Alignment. We believe that the As Adjusted results provide useful information to assist with period-over-period comparisons of our on-going operations excluding any impact from the Alignment.