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

ORLANDO, Fla., Nov. 4, 2019 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported third quarter financial results.

In addition to a discussion of the third quarter reported results presented in accordance with United States generally accepted accounting principles ("GAAP"), to provide a more meaningful year-over-year comparison of financial results, the company is also providing third quarter 2018 financial information in the financial schedules that follow that combine the third quarter reported 2018 financial results of the company with the financial results for the first two months of the 2018 third quarter for the brands and businesses acquired by the company in its acquisition of ILG, Inc. ("ILG") in September 2018, conformed to the current year presentations.

Third Quarter 2019 Highlights:

• Consolidated vacation ownership contract sales increased 40% to $390 million.
• On a combined basis, consolidated vacation ownership contract sales increased nearly 5%. After adjusting for a $7 million adverse impact from Hurricane Dorian (the "Hurricane"), sales would have increased 6.5%.
• Net loss attributable to common shareholders was $9 million, or $0.21 loss per fully diluted share ("EPS"), compared to net loss attributable to common shareholders of $36 million, or $1.08 loss per fully diluted share, in the third quarter of 2018.
• Adjusted net income attributable to common shareholders increased 83% to $86 million and Adjusted fully diluted EPS increased 39% to $1.97.
• Adjusted EBITDA increased 89% to $190 million in the third quarter of 2019.
• On a combined basis, Adjusted EBITDA increased 18% and would have increased 21% excluding VRI Europe, which was disposed of in the fourth quarter of 2018.
• The company estimates that the Hurricane negatively impacted its third quarter Adjusted EBITDA by $1 million and expects the 2019 full-year impact to be $4 million.
• The company received $38 million of insurance proceeds during the quarter related to business interruption losses at its Westin St. John property. These proceeds have been excluded from the company's calculation of Adjusted EBITDA and Adjusted Free Cash Flow.
• Subsequent to the end of the third quarter, the company completed a $315 million note securitization at a blended interest rate of 2.29 percent and a 98 percent advance rate.
• The company repurchased over 1.3 million shares of its common stock for $127 million in the third quarter of 2019 at an average price per share of $97.06.
• Subsequent to the end of the quarter, the company repurchased an additional 431 thousand shares of its common stock for $46 million bringing its year-to-date share repurchases to 4.1 million shares, or $388 million.
• The company updated its 2019 guidance primarily to reflect the impact of the Hurricane.

"I'm very excited about the improvements we've been able to drive at the acquired vacation ownership brands contributing to our 18% Adjusted EBITDA growth in the third quarter on a combined basis," said Stephen P. Weisz, president and chief executive officer. "The third quarter also marked the one-year anniversary of the ILG acquisition and the integration continues to  progress nicely, which enabled us to recently increase our run-rate synergy target to $125 million by the end of 2021."

Third Quarter 2019 Segment Results

Vacation Ownership

Revenues excluding cost reimbursements increased 43% in the third quarter driven by a 40% increase in consolidated vacation ownership contract sales. On a combined basis, revenues excluding cost reimbursements increased 4% with consolidated contract sales increasing nearly 5%.  Contract sales in the quarter were adversely impacted by $7 million due to the Hurricane.

Vacation Ownership segment financial results were $100 million for the third quarter of 2019.  On a combined basis, Vacation Ownership segment Adjusted EBITDA increased 11% to $195 million in the third quarter and margin improved 180 basis points, excluding cost reimbursements.

Exchange & Third-Party Management

Exchange & Third-Party Management revenues totaled $112 million in the third quarter of 2019.  Interval International average revenue per member increased 2% to $40.89 and active members totaled 1.7 million at the end of the third quarter of 2019.

Exchange & Third-Party Management segment financial results and Adjusted EBITDA were $46 million and $56 million, respectively, in the third quarter of 2019.  On a combined basis, Exchange & Third-Party Management segment Adjusted EBITDA decreased 7% after adjusting 2018 to exclude VRI Europe.

Corporate and Other

Corporate and Other results, which consist primarily of general and administrative costs, decreased $19 million in the third quarter of 2019 as a result of synergy savings and lower compensation related expenses, partially offset by normal inflationary cost increases.

Balance Sheet and Liquidity

On September 30, 2019, cash and cash equivalents totaled $183 million. The inventory balance at the end of the third quarter included $840 million of finished goods and $59 million of work-in-progress. The company had $4.0 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the third quarter. This debt included $2.3 billion of corporate debt and $1.7 billion of non-recourse debt related to the company's securitized notes receivable.

As of September 30, 2019, the company had $372 million in available capacity under its revolving credit facility.

Subsequent to the end of the third quarter, the company completed a $315 million note securitization at a blended interest rate of 2.29 percent and a 98 percent advance rate.

Subsequent to the end of the third quarter, the company issued $350 million of 4.750% senior notes due in 2028 and redeemed its 5.625% senior notes due in 2023 and repaid a portion of its outstanding borrowings under its Revolving Credit Facility.

Proceeds from Asset Dispositions

As a result of the ILG Acquisition, the company performed a comprehensive review of its Vacation Ownership property and equipment including undeveloped parcels, future phases of existing resorts, operating hotels and other non-core assets, to determine the best strategic direction with respect to these assets.  As a result of the review, the company currently expects proceeds from future asset dispositions to be between $160 million and $220 million.

2019 Hurricane Impact

During the third quarter of 2019, several properties in the company's Vacation Ownership segment were negatively impacted by the Hurricane. As a result of mandatory evacuations, resort and sales center shutdowns, and cancellations of reservations and scheduled tours, the company estimates contract sales in the third quarter were adversely impacted by $7 million. In addition, the company estimates full year 2019 Adjusted EBITDA to be adversely impacted by roughly $4 million, of which $1 million related to the third quarter of 2019.

2019 Outlook

The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2019 expected GAAP results for the company.

2019 expected GAAP results and guidance above include an estimate of the impact of future spending associated with on-going ILG integration efforts.

The company updated its full year 2019 guidance as reflected in the chart below:

Non-GAAP Financial Information

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

Third Quarter 2019 Earnings Conference Call

The company will hold a conference call on November 5, 2019 at 8:30 a.m. ET to discuss these results and the guidance for full year 2019. 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 www.marriottvacationsworldwide.com.

Investors will be able to access an audio replay of the conference call at ir.mvwc.com from 10:00 a.m. on November 5, 2019 until 10:00 p.m. on November 19, 2019. To access the replay, dial (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13695443.

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, including guidance about full year 2019 results, expected full year 2019 GAAP results and expected synergies from the ILG acquisition. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, changes in supply and demand for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to 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 November 4, 2019 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