Le Lézard
Classified in: Business
Subjects: EARNINGS, Conference Call, Webcast

Marriott Vacations Worldwide Reports Third Quarter 2023 Financial Results


Marriott Vacations Worldwide Corporation (NYSE: VAC) ("MVW" or the "Company") reported third quarter 2023 financial results.

Third Quarter 2023 Highlights

"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.

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

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:

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.

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.

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

A-13

Vacation Ownership

Exchange & Third-Party Management

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

)