Marriott Vacations Worldwide ("MVW") Reports Second Quarter 2020 Financial Results

ORLANDO, Fla., July 29, 2020 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter 2020 financial results and provided an update on business conditions in light of the COVID-19 pandemic.

"The COVID-19 pandemic continues to severely impact our business and create nearer term uncertainty," said Stephen P. Weisz, president and chief executive officer. "However, beginning in late May, we saw our resort occupancies quickly build in states where restrictions had been lifted, illustrating the resilience of our customers and our leisure-focused business model.  With occupancies returning, we have already reopened approximately 70% of our sales centers and are very encouraged as sales start to return. With results improving, we now expect cash flow in the second half of the year to be positive."

Second Quarter 2020 Highlights and Operational Update:

• Consolidated Vacation Ownership contract sales totaled $30 million in the second quarter of 2020.
• Net loss attributable to common shareholders was $70 million, or $1.68 loss per fully diluted share.
• Adjusted net loss attributable to common shareholders was $72 million and Adjusted fully diluted loss per share was $1.76.
• Adjusted EBITDA reflected a loss of $10 million in the second quarter of 2020.
• Cash and cash equivalents totaled $566 million at the end of the second quarter of 2020 and the Company had nearly all of its capacity available under its $600 million Revolving Corporate Credit Facility.
• Subsequent to the end of the second quarter, the Company completed a securitization of timeshare receivables, issuing $375 million of notes at an overall weighted average interest rate of 2.53% and a 98% gross advance rate, generating net proceeds of $53 million after payoff of the Company's Warehouse Credit Facility and required expenses.

Second Quarter 2020 Segment Results

Vacation Ownership

Revenues excluding cost reimbursements decreased 69% in the second quarter of 2020. Growth in management fees and financing revenue was offset by a 92% decline in contract sales and a 91% decrease in rental revenues due to substantially lower resort occupancies resulting from the COVID-19 pandemic.

Vacation Ownership segment financial results were a loss of $34 million in the second quarter of 2020. Vacation Ownership segment Adjusted EBITDA was a loss of $19 million in the second quarter of 2020.

Exchange & Third-Party Management

Exchange & Third-Party Management revenues decreased 50% in the second quarter of 2020 primarily due to lower exchange and rental transactions due to the impact of the COVID-19 pandemic on its Interval International business. Interval International average revenue per member decreased 30% to $30.17 compared to the prior year and active members declined 7% to 1.6 million.

Exchange & Third-Party Management segment financial results were $14 million for the second quarter of 2020. Exchange & Third-Party Management segment Adjusted EBITDA was $19 million in the second quarter of 2020.

Corporate and Other

General and administrative costs improved $45 million in the second quarter of 2020 related mainly to synergy savings and lower costs associated with the furlough and reduced work week programs, including reduced salary related costs, as well as a $6 million credit available under the CARES Act legislation, which incentivized companies to continue paying associates' benefit costs while not working.

Operational Update to COVID - 19

The Company has begun reopening its resorts and sales centers.

• In its vacation ownership business, eight of the Company's sales centers were open as of the end of the second quarter of 2020 with an additional 34 sales centers having since re-opened;
• In its Interval International business, fewer than 240 resorts remain closed today;
• The Company has 40% of its associates still on furlough and 16% on reduced work week or reduced pay. Of the associates who have returned from furlough, 80% are in the resort operations area.
• Share repurchases and dividends continue to be temporarily suspended.

Balance Sheet and Liquidity

On June 30, 2020, cash and cash equivalents totaled $566 million and the Company had $47 million of gross notes receivable that are eligible for securitization.

The Company had $4.6 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the second quarter of 2020, an increase of $0.5 billion from year-end 2019. This debt included $2.7 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.

During the second quarter of 2020, the Company issued $500 million of senior secured notes and repaid the entire outstanding balance on its Revolving Corporate Credit Facility.

Subsequent to the end of the second quarter, the Company completed a securitization of timeshare receivables, issuing $375 million of notes at an overall weighted average interest rate of 2.53% and a 98% gross advance rate, generating net proceeds of $53 million after payoff of the Company's Warehouse Credit Facility and required expenses.

Non-GAAP Financial Information

Non-GAAP financial measures, such as adjusted net income attributable to common shareholders, adjusted EBITDA, adjusted fully diluted earnings per share, adjusted development margin and adjusted financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow.

Second Quarter 2020 Financial Results Conference Call

The Company will hold a conference call on July 30, 2020 at 9:00 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 a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs, as well as management of 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 and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com.   

Note on forward-looking statements

This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including, without limitation, conditions beyond our control such as the length and severity of the current COVID-19 pandemic and its effect on our operations; the effect of any governmental actions, including restrictions on travel, or mandated employer-paid benefits in response to the COVID-19 pandemic; the Company's ability to manage and reduce expenditures in a low revenue environment;  volatility in the economy and the credit markets, changes in supply and demand for vacation ownership products, competitive conditions, the availability of additional financing when and if required, and other matters disclosed under the heading "Risk Factors" contained in the Company's most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of the date of issuance and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

                                                            Financial Schedules Follow