Marriott Vacations Worldwide (“MVW”) Reports Second Quarter 2023 Financial Results

Marriott Vacations Worldwide Corporation (NYSE: VAC) (the “Company”) reported second quarter 2023 financial results.

Second Quarter 2023 Highlights

• Consolidated Vacation Ownership contract sales were $453 million, a 10% decrease compared to the second quarter of 2022, and VPG was $3,968.
• Net income attributable to common shareholders was $90 million compared to $136 million in the prior year, and fully diluted earnings per share decreased 27% to $2.17.
• Adjusted net income attributable to common shareholders was $90 million compared to $131 million in the prior year, and adjusted fully diluted earnings per share decreased 24% to $2.19.
• Adjusted EBITDA decreased 13% compared to the prior year to $222 million.
• The Company repurchased 621,000 shares of its common stock for $82 million during the quarter and paid a quarterly dividend of $26 million. The Board of Directors also increased the Company’s share repurchase authorization during the quarter to $600 million.
• The Company updated its full year outlook.

“Occupancy was nearly 90% in the second quarter reflecting the continued high demand for vacation experiences from our Owners, members and guests. However, with the tough comparison from last year, as well as the continued transition to the Abound by Marriott Vacations program and the integration of our Hyatt and legacy-Welk businesses, contract sales declined 10% in the quarter, though we still expect to grow contract sales for the full year and generate significant cash flow from operations,” said John Geller, president and chief executive officer. “While the changes to our programs impacted our near-term results, I am confident these are the right strategic changes that will position us for long-term growth.”

Vacation Ownership
Revenues excluding cost reimbursements decreased 2% in the second quarter of 2023 compared to the prior year. The decline was driven by a 10% year-over-year reduction in consolidated contract sales resulting from 14% lower VPG, partially offset by 4% higher tours. While the Company expected VPGs to decline due to the tough comparison to the prior year, we saw larger declines at the legacy-Vistana sites due to the continued transition associated with the launch of Abound by Marriott Vacations. In addition, VPG was impacted by the continued alignment of the Hyatt and Legacy-Welk business models and sales processes.

Segment financial results attributable to common shareholders were $224 million in the second quarter of 2023 compared to $277 million in the prior year and Segment margin was 30%. Development profit declined $12 million year-over-year primarily due to lower contract sales and higher sales reserve while Development profit margin was 31%. Rental profit was down $19 million primarily due to lower rental occupancy and higher unsold inventory costs. As a result, Segment Adjusted EBITDA was $245 million compared to $274 million in the prior year while Segment Adjusted EBITDA margin remained strong at more than 32%.

Exchange & Third-Party Management
Revenues excluding cost reimbursements decreased 11% in the second quarter of 2023 compared to the prior year and decreased 4% excluding the sale of VRI Americas in April of 2022. Interval International active members decreased 2% compared to the prior year to 1.6 million but were in-line with first quarter of 2023, and Average revenue per member increased 1% year-over-year.

Segment financial results attributable to common shareholders were $24 million in the second quarter of 2023, Segment margin was 40% and Segment Adjusted EBITDA was $32 million. Excluding the VRI Americas business, Segment Adjusted EBITDA declined $3 million compared to the prior year due to lower management fees at Aqua-Aston and Adjusted EBITDA margin was 52%.

Corporate and Other
General and administrative costs were largely unchanged in the second quarter of 2023 compared to the prior year primarily as a result of new product development initiatives and higher wage and benefit costs offset by lower variable compensation.

Balance Sheet and Liquidity
The Company ended the quarter with approximately $1.0 billion in liquidity, including $242 million of cash and cash equivalents, $59 million of gross notes receivable that were eligible for securitization, and $684 million of available capacity under its revolving corporate credit facility.

At the end of the second 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
The Company is updating its full year 2023 outlook 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.

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

Second Quarter 2023 Financial Results Conference Call
The Company will hold a conference call on August 3, 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, 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; impact of the current or a future banking crisis; the ongoing war between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the impact of rising interest rates; political or social strife; difficulties associated with implementing new or maintaining existing technology; changes in privacy laws 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.