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

ORLANDO, Fla., Nov. 4, 2020 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported third quarter 2020 financial results and provided an update on business conditions.

"We are very encouraged by how quickly occupancy and exchange transactions recovered in the third quarter, illustrating the desire of timeshare customers to get back on vacation as well as the resiliency of our business model," said Stephen P. Weisz, president and chief executive officer. "We've now reopened most of our sales centers and tour flow continues to recover. As a result, we delivered $140 million of contract sales in the third quarter of 2020 and currently expect contract sales to increase to $160 to $185 million in the fourth quarter."

Third Quarter 2020 Highlights and Operational Update:

• Consolidated Vacation Ownership contract sales totaled $140 million in the third quarter of 2020.
• Net loss attributable to common shareholders was $62 million, or $1.51 loss per fully diluted share.
• Adjusted net loss attributable to common shareholders was $33 million and adjusted fully diluted loss per share was $0.81.
• Adjusted EBITDA was $35 million in the third quarter of 2020.
• Cash and cash equivalents totaled $660 million at the end of the third quarter of 2020 and the Company had nearly all of its capacity available under its $600 million revolving corporate credit facility.
• The Company expects to generate $335 million of cash from operations and at least $130 million of total cash flow in the second half of 2020.
• The Company now expects to generate at least $200 million of synergy and other cost savings, a $75 million increase from its prior goal.

Third Quarter 2020 Segment Results

Vacation Ownership

Revenues excluding cost reimbursements decreased 56% in the third quarter of 2020 compared to the prior year but increased 40% from the second quarter of 2020 as occupancies continued to improve. Management fees increased 4% compared to the prior year and financing revenue declined 9% due to lower year-to-date contract sales resulting in a smaller notes receivable portfolio.  Sale of vacation ownership products was $98 million in the quarter, an 85% improvement from the second quarter of 2020, and rental revenue was $46 million compared to $12 million in the second quarter.

Vacation Ownership segment financial results were a loss of $1 million in the third quarter of 2020 and segment Adjusted EBITDA was $28 million.

Exchange & Third-Party Management

Revenues excluding cost reimbursements decreased 34% in the third quarter of 2020 compared to the prior year primarily due to lower exchange and rental transactions as a result of the COVID-19 pandemic, but increased 29% from the second quarter. Interval International exchange volumes increased 1% compared to the prior year and increased 11% from the second quarter of 2020. Active members declined 2% compared to the second quarter to 1.5 million. Average revenue per member decreased 10% to $36.76 compared to the prior year and increased 22% from the second quarter of 2020 as exchange and getaway rental activity increased.

Exchange & Third-Party Management segment financial results were $16 million in the third quarter of 2020 and segment Adjusted EBITDA was $31 million, with Adjusted EBITDA margin improving 180 basis points year-over-year.

Corporate and Other

General and administrative costs declined $25 million in the third quarter of 2020 primarily related to synergy savings and lower costs associated with the furlough and reduced work week programs including salary related costs as well as a $5 million credit available under the CARES Act, which incentivized companies to continue paying associates' benefit costs while not working.

Operational Update to COVID - 19

• In its Vacation Ownership business, most of the Company's sales centers were open as of the end of the third quarter of 2020.  In addition, the Company was able to resume sales at its Hawaiian sales centers in mid-October;
• In its Interval International business, 93% of its resorts had reopened by the end of the third quarter of 2020;
• On September 10, 2020, the Company approved a workforce reduction plan, which is currently expected to impact approximately 3,000 associates. In connection with this plan, the Company estimates that it will incur approximately $25 to $30 million in restructuring and related charges primarily related to employee severance and benefit costs, including a portion that is included in cost reimbursements;
• Share repurchases and dividends continue to be temporarily suspended.

Balance Sheet and Liquidity

On September 30, 2020, cash and cash equivalents totaled $660 million and the Company had $62 million of gross notes receivable that were eligible for securitization.

The Company had $4.4 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the third quarter of 2020, an increase of $0.3 billion from year-end 2019. This debt included $2.7 billion of corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

During the third quarter of 2020, the Company completed a securitization of timeshare receivables, issuing $375 million of notes at an overall weighted average interest rate of 2.5% 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.

Third Quarter 2020 Financial Results Conference Call

The Company will hold a conference call on November 5, 2020 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 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 expectations for contract sales in the fourth quarter, synergies expected by the end of 2021, 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