ORLANDO, Fla., July 21, 2016 /PRNewswire/ -- Marriott
Vacations Worldwide Corporation (NYSE: VAC) today reported second
quarter financial results and reaffirmed its guidance for the full
year 2016.
"Our second quarter results, including contract sales, were
solid and in line with our expectations," said Stephen P. Weisz, president and chief executive
officer. "And even more importantly, contract sales growth gained
momentum as we moved through the second half of the quarter.
Additionally, tour activations for the second half of 2016 are
substantially ahead of this time last year, and four of our six new
sales centers are open and gaining momentum, giving us confidence
that we will achieve our 2016 goals and are well positioned for
solid growth in the years to come."
Second quarter 2016 highlights:
- Net income was $36.3 million, or
$1.26 fully diluted earnings per
share (EPS), compared to net income of $34.0
million, or $1.05 fully
diluted EPS, in the second quarter of 2015, an increase of 6.7
percent and 20.0 percent, respectively.
- Adjusted EBITDA totaled $64.2
million, an increase of $2.5
million year-over-year, or 4.1 percent.
- Adjusted fully diluted EPS was $1.08 compared to $0.91 in the second quarter of 2015, an increase
of 18.7 percent.
- Company vacation ownership contract sales (which exclude
residential sales) were $166.0
million, slightly ahead of prior year.
- Company development margin percentage was 23.1 percent compared
to 21.3 percent in the second quarter of 2015. Company
adjusted development margin percentage was 22.8 percent compared to
21.0 percent in the second quarter of 2015.
- During the second quarter of 2016, the company repurchased
nearly 1.5 million shares of its common stock for $90.1 million.
- The company completed the disposition of the non-timeshare
portion of its Surfers Paradise, Australia property for approximately
$50.9 million in gross cash
proceeds.
- The company completed a bulk sale of the remaining 19
residential units at its San
Francisco property for $19.5
million in gross cash proceeds.
Non-GAAP financial measures, such as adjusted EBITDA, adjusted
net income, adjusted fully diluted earnings per share, and adjusted
development margin are reconciled and adjustments are shown and
described in further detail on pages A-10 and A-11 of the Financial
Schedules that follow.
Second quarter 2016 Results
Company Results
Second quarter 2016 company net income was $36.3 million, a $2.3
million increase from the second quarter of 2015. These
results were driven mainly by a $10.5
million gain on the bulk sale of the remaining 19 units at
the San Francisco property,
$3.0 million of higher resort
management and other services revenues net of expenses,
$1.7 million of higher financing
revenues net of expenses, a $1.7
million reversal of a liability associated with the
disposition of a golf course and related assets in Kauai, Hawaii, and $0.7
million of higher development margin. These increases were
partially offset by an $8.7 million
gain associated with the sale of undeveloped land in Kauai, Hawaii in the prior year, $1.8 million of lower rental revenues net of
expenses, $1.7 million of higher
general and administrative costs, a $1.5
million loss on the disposition of the non-timeshare portion
of the Surfers Paradise, Australia
property, $0.7 million of higher
acquisition related transaction costs, and $0.6 million of higher royalty fees.
Total company vacation ownership contract sales were
$166.0 million, $0.1 million higher than the second quarter of
last year. These results reflect increased contract sales of
$2.6 million and $2.5 million, respectively, from the company's
Europe and Asia Pacific segments, partially offset by
$5.0 million of lower contract sales
in the company's North America
segment, as the first half of the prior year second quarter
benefited from enhancements the company made to owner recognition
levels. Also contributing to the decrease, the company's
Latin America sales channels were
down roughly $2.1 million compared to
the second quarter of last year, as the company continued to be
impacted by a stronger U.S. dollar.
Development margin was $33.8
million, a $0.7 million
increase from the second quarter of 2015. Development margin
percentage was 23.1 percent compared to 21.3 percent in the prior
year quarter, reflecting $9.1 million
of lower product costs driven primarily by $6.9 million of favorable product cost true-up
activity year-over-year, offset partially by $3.2 million related to higher usage of Plus
Points for sales incentives, $3.0
million from higher sales reserve activity mainly associated
with a 30 percent, or 12.5 percentage point, increase in financing
propensity, and $2.2 million of
higher marketing and sales costs driven primarily from start-up
costs associated with the company's new sales distributions.
Adjusted development margin percentage, which excludes the impact
of revenue reportability year-over-year, was 22.8 percent in the
second quarter of 2016 compared to 21.0 percent in the second
quarter of 2015.
Rental revenues totaled $75.1
million, a $2.4 million
increase from the second quarter of 2015. Results were driven
mainly by $1.9 million of revenue
from the non-timeshare portion of the Surfers Paradise,
Australia property the company
sold at the end of the second quarter and $1.8 million from a 3 percent increase in
transient keys rented, partially offset by $1.6 million from a 3 percent decrease in average
transient rate resulting from the mix of inventory available to
rent. Rental revenues net of expenses were $9.0 million, a $1.8
million decrease from the second quarter of 2015, primarily
reflecting a $0.7 million loss from
the portion of the Australia
property sold in the quarter as well as higher operating expenses
primarily on increased transient keys rented in the quarter.
Resort management and other services revenues totaled
$80.9 million, a $6.9 million increase from the second quarter of
2015. Resort management and other services revenues, net of
expenses, totaled $31.6 million, a
$3.0 million increase, or 10.6
percent, from the second quarter of 2015.
Financing revenues totaled $28.7
million, a $0.4 million
increase from the second quarter of 2015. Financing revenues, net
of expenses and consumer financing interest expense, were
$18.7 million, a $1.7 million increase, or 10.1 percent, from the
second quarter of 2015.
General and administrative expenses were $24.6 million in the second quarter of 2016, a
$1.7 million increase from the second
quarter of 2015, driven by higher spending related to enhancements
to the company's owner facing technology as well as inflationary
cost increases.
Net income was $36.3 million,
compared to net income of $34.0
million in the second quarter of 2015, an increase of
$2.3 million, or 6.7 percent.
Adjusted EBITDA was $64.2 million in
the second quarter of 2016, a $2.5
million, or 4.1 percent, increase from $61.7 million in the second quarter of 2015.
Segment Results
North America
North America vacation
ownership contract sales were $145.6
million in the second quarter of 2016, a decrease of
$5.0 million, or 3.3 percent, from
the prior year period, as the first half of the prior year second
quarter benefited from enhancements the company made to owner
recognition levels. Also contributing to the decrease, the
company's Latin America sales
channels were down roughly $2.1
million compared to the second quarter of last year, as the
company continued to be impacted by a stronger U.S.
dollar.
Total tours in the second quarter of 2016 increased 0.3 percent,
driven by a 4 percent increase in first time buyer tours, partially
offset by a 2 percent decline in owner tours driven in part by the
impact of the enhancements to the owner recognition levels in the
first half of last year's second quarter. VPG decreased
$20 to $3,384 in the second quarter of 2016 from the
second quarter of 2015.
Second quarter 2016 North America segment financial results were
$111.7 million, an increase of
$7.1 million from the second quarter
of 2015. The increase was driven primarily by the $10.5 million gain on the bulk sale at the
San Francisco property,
$3.0 million of higher development
margin, $2.9 million of higher resort
management and other services revenues net of expenses, the
$1.7 million reversal of a liability
associated with the disposition in Kauai,
Hawaii, and $0.5 million of
higher financing revenues. These increases were partially offset by
the $8.7 million gain in the prior
year, $1.8 million of acquisition
related transaction costs, $0.6
million of higher royalty fees, and $0.6 million of lower rental revenues net of
expenses. North America adjusted
segment financial results, which exclude the transaction costs in
the current year and the gains and other income in both years, were
$101.2 million in the second quarter
of 2016, a $5.3 million increase from
$96.0 million of adjusted segment
results in the second quarter of 2015.
Development margin was $36.5
million, a $3.0 million
increase from the second quarter of 2015. Development margin
percentage was 27.5 percent compared to 23.6 percent in the prior
year quarter, reflecting $9.0 million
of lower product costs driven primarily by $6.5 million of favorable product cost true-up
activity year-over-year, offset partially by $3.2 million related to higher usage of Plus
Points for sales incentives, $1.6
million from higher sales reserve activity mainly associated
with a 30 percent, or 12.1 percentage point, increase in financing
propensity, and $1.3 million of
higher marketing and sales costs driven primarily from start-up
costs associated with the company's new sales distributions.
Adjusted development margin, which excludes the impact of revenue
reportability year-over-year, was $34.1
million, a $1.8 million
increase from the prior year quarter. Adjusted development margin
percentage was 26.5 percent in the second quarter of 2016 compared
to 23.0 percent in the second quarter of 2015.
Asia Pacific
Total vacation ownership contract sales in the segment were
$10.5 million, an increase of
$2.5 million, or roughly 31 percent,
from the second quarter of 2015. Segment financial results were a
loss of $2.5 million, a $2.4 million decrease from the second quarter of
2015, driven by a $1.5 million loss
on the sale of the non-timeshare portion of the Surfers Paradise
property, $1.5 million of lower
development margin, and $0.6 million
of lower rental revenues net of expenses, partially offset by
$1.3 million of transaction related
costs in the prior year. The lower development margin reflected the
impact of start-up costs in the current year associated with the
company's new sales distribution in Surfers Paradise, Australia, partially offset by the increase in
contract sales. The lower rental revenues net of expenses were
driven by losses from operating the Surfers Paradise property.
Europe
Second quarter 2016 contract sales were $9.9 million, an increase of $2.6 million, or more than 35 percent, from the
second quarter of 2015. Segment financial results were $2.2 million, an $0.8
million decrease from the second quarter of 2015, driven by
$0.5 million of lower rental revenues
net of expenses.
Share Repurchase Program and Dividends
During the second quarter of 2016, the company repurchased
nearly 1.5 million shares of its common stock for a total of
$90.1 million under its share
repurchase program, of which nearly 1.2 million shares were
purchased under an accelerated share repurchase agreement. In
addition, the company paid a quarterly cash dividend of
$8.5 million. Through the end of the
second quarter, the company returned nearly $190 million to its shareholders through the
repurchase of 2.8 million shares for $163.4
million and more than $26
million in dividends paid.
Balance Sheet and Liquidity
On June 17, 2016, cash and cash
equivalents totaled $97.4 million.
Since the beginning of the year, real estate inventory balances
increased $33.9 million to
$697.9 million, including
$296.5 million of finished goods,
$76.6 million of work-in-progress,
and $324.8 million of land and
infrastructure. The company had $746.3
million in gross debt outstanding at the end of the second
quarter, an increase of $58.2 million
from year-end 2015, consisting primarily of $691.8 million in gross non-recourse securitized
notes and $45.0 million in gross debt
outstanding under the company's revolving corporate credit
facility. In addition, $40.0 million
of gross mandatorily redeemable preferred stock of a subsidiary of
the company was outstanding at the end of the second quarter of
2016.
As of June 17, 2016, the company
had approximately $151.7 million in
available capacity under its revolving credit facility after taking
into account outstanding letters of credit and approximately
$104.8 million of gross vacation
ownership notes receivable eligible for securitization in its
warehouse credit facility.
Outlook
Pages A-1 through A-11 of the Financial Schedules reconcile the
non-GAAP financial measures set forth below to the following full
year 2016 expected GAAP results:
Net Income
|
$130 million to $140
million
|
Fully diluted
EPS
|
$4.57
to $4.92
|
Net cash provided by
operating activities
|
$136 million to $146
million
|
|
The company is
reaffirming the following guidance for the full year
2016:
|
|
Adjusted net
income
|
$126 million to $136
million
|
Adjusted fully
diluted EPS
Adjusted
EBITDA
|
$4.43 to
$4.78
$261 million to $276
million
|
Adjusted free cash
flow
|
$135 million to $155
million
|
Contract
sales
|
4 percent to 8
percent
|
Adjusted fully diluted EPS increased from the previous guidance
of $4.31 to $4.66 due entirely to a
reduction in shares outstanding.
Second quarter 2016 Earnings Conference Call
The company will hold a conference call at 10:00 a.m. ET today to discuss these results and
its guidance for full year 2016. 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.
An audio replay of the conference call will be available for
seven days and can be accessed at (877) 660-6853 or (201) 612-7415
for international callers. The conference ID for the recording
is 13640097. The webcast will also be available on the
company's website.
About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global
pure-play vacation ownership company, offering a diverse portfolio
of quality products, programs and management expertise with over 60
resorts. Its brands include Marriott Vacation Club, The
Ritz-Carlton Destination Club and Grand Residences by Marriott.
Since entering the industry in 1984 as part of Marriott
International, Inc., the company earned its position as a leader
and innovator in vacation ownership products. The company preserves
high standards of excellence in serving its customers, investors
and associates while maintaining a long-term relationship with
Marriott International. 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
volatility in the economy and the credit markets, supply and demand
changes 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
July 21, 2016 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
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
FINANCIAL
SCHEDULES
|
QUARTER 2,
2016
|
TABLE OF
CONTENTS
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Consolidated
Statements of Income - 12 Weeks and 24 Weeks Ended June 17, 2016
and June 19,
2015
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A-1
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Adjusted Net Income,
Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted EBITDA -
12 Weeks and 24 Weeks Ended June 17, 2016 and June 19,
2015
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A-2
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North America Segment
Financial Results - 12 Weeks and 24 Weeks Ended June 17, 2016 and
June 19,
2015
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A-3
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Asia Pacific Segment
Financial Results - 12 Weeks and 24 Weeks Ended June 17, 2016 and
June 19,
2015
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A-4
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Europe Segment
Financial Results - 12 Weeks and 24 Weeks Ended June 17, 2016 and
June 19,
2015
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A-5
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Corporate and Other
Segment Financial Results - 12 Weeks and 24 Weeks Ended June 17,
2016 and June 19,
2015
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A-6
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Consolidated Contract
Sales to Sale of Vacation Ownership Products and Adjusted
Development Margin
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|
(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12
Weeks and 24 Weeks Ended June 17, 2016 and June 19,
2015
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A-7
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North America
Contract Sales to Sale of Vacation Ownership Products and Adjusted
Development Margin
|
|
(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12
Weeks and 24 Weeks Ended June 17, 2016 and June 19,
2015
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A-8
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2016 Outlook -
Adjusted Net Income, Adjusted Earnings Per Share - Diluted,
Adjusted EBITDA and Adjusted Free Cash
Flow
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A-9
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Non-GAAP Financial
Measures
|
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A-10
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Consolidated Balance
Sheets
|
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A-12
|
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Consolidated
Statements of Cash
Flows
|
A-13
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A-1
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MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
CONSOLIDATED
STATEMENTS OF INCOME
|
12 Weeks and 24
Weeks Ended June 17, 2016 and June 19, 2015
|
(In thousands, except
per share amounts)
|
|
|
|
|
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|
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12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
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June 17,
2016
|
|
June 19,
2015
|
|
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June 17,
2016
|
|
June 19,
2015
|
Revenues
|
|
|
|
|
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|
|
|
|
|
Sale of vacation
ownership products
|
$
146,450
|
|
$
155,370
|
|
|
$
284,819
|
|
$
339,276
|
|
Resort management and
other services
|
80,930
|
|
74,063
|
|
|
150,559
|
|
138,480
|
|
Financing
|
28,654
|
|
28,294
|
|
|
57,878
|
|
57,346
|
|
Rental
|
75,069
|
|
72,642
|
|
|
155,357
|
|
148,841
|
|
Cost
reimbursements
|
98,842
|
|
92,458
|
|
|
206,375
|
|
193,764
|
|
|
|
|
|
Total
revenues
|
429,945
|
|
422,827
|
|
|
854,988
|
|
877,707
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
33,753
|
|
45,119
|
|
|
69,370
|
|
110,081
|
|
Marketing and
sales
|
78,919
|
|
77,137
|
|
|
157,331
|
|
157,132
|
|
Resort management and
other services
|
49,311
|
|
45,480
|
|
|
95,108
|
|
87,889
|
|
Financing
|
4,864
|
|
6,085
|
|
|
9,493
|
|
10,990
|
|
Rental
|
66,028
|
|
61,835
|
|
|
130,688
|
|
121,993
|
|
General and
administrative
|
24,588
|
|
22,892
|
|
|
49,885
|
|
45,669
|
|
Organizational and
separation related
|
-
|
|
101
|
|
|
-
|
|
293
|
|
Litigation
settlement
|
-
|
|
26
|
|
|
(303)
|
|
(236)
|
|
Consumer financing
interest
|
5,117
|
|
5,248
|
|
|
10,479
|
|
11,269
|
|
Royalty
fee
|
14,026
|
|
13,431
|
|
|
27,383
|
|
26,431
|
|
Cost
reimbursements
|
98,842
|
|
92,458
|
|
|
206,375
|
|
193,764
|
|
|
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Total
expenses
|
375,448
|
|
369,812
|
|
|
755,809
|
|
765,275
|
Gains and other
income
|
10,668
|
|
8,625
|
|
|
10,675
|
|
9,512
|
Interest
expense
|
(2,087)
|
|
(3,009)
|
|
|
(4,069)
|
|
(5,983)
|
Other
|
|
|
|
|
(1,911)
|
|
(1,187)
|
|
|
(4,453)
|
|
(1,174)
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Income before income
taxes
|
61,167
|
|
57,444
|
|
|
101,332
|
|
114,787
|
Provision for income
taxes
|
(24,858)
|
|
(23,403)
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(40,615)
|
|
(46,692)
|
Net income
|
$
36,309
|
|
$
34,041
|
|
|
$
60,717
|
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$
68,095
|
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Earnings per share -
Basic
|
$
1.28
|
|
$
1.07
|
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$
2.11
|
|
$
2.12
|
|
|
|
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|
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|
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|
|
Earnings per share -
Diluted
|
$
1.26
|
|
$
1.05
|
|
|
$
2.08
|
|
$
2.08
|
|
|
|
|
|
|
|
|
|
|
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|
|
|
|
Basic
Shares
|
|
28,345
|
|
31,858
|
|
|
28,734
|
|
32,078
|
Diluted
Shares
|
28,834
|
|
32,517
|
|
|
29,244
|
|
32,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
165,992
|
|
$
165,938
|
|
|
$
319,486
|
|
$
335,888
|
|
|
Residential
products
|
-
|
|
-
|
|
|
-
|
|
28,420
|
|
|
|
|
Total contract
sales
|
$
165,992
|
|
$
165,938
|
|
|
$
319,486
|
|
$
364,308
|
|
NOTE: Earnings
per share - Basic and Earnings per share - Diluted are calculated
using whole dollars.
|
A-2
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
12 Weeks and 24
Weeks Ended June 17, 2016 and June 19, 2015
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET
INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
36,309
|
|
$
34,041
|
|
|
$
60,717
|
|
$
68,095
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
2,005
|
|
1,272
|
|
|
4,575
|
|
1,272
|
|
|
Operating results
from the sold portion of the Surfers Paradise, Australia
property
|
190
|
|
-
|
|
|
(275)
|
|
-
|
|
|
Litigation
settlement
|
-
|
|
26
|
|
|
(303)
|
|
(236)
|
|
|
Gains and other
income
|
(10,668)
|
|
(8,625)
|
|
|
(10,675)
|
|
(9,512)
|
|
|
Asia Pacific bulk
sale
|
-
|
|
-
|
|
|
-
|
|
(5,915)
|
|
|
Organizational and
separation related
|
-
|
|
101
|
|
|
-
|
|
293
|
|
|
|
|
Certain items before
depreciation and provision for income taxes 1
|
(8,473)
|
|
(7,226)
|
|
|
(6,678)
|
|
(14,098)
|
|
|
Depreciation on the
sold portion of the Surfers Paradise, Australia property
|
188
|
|
-
|
|
|
469
|
|
-
|
|
|
Provision for income
taxes on certain items
|
3,261
|
|
2,804
|
|
|
2,482
|
|
3,779
|
|
|
|
Adjusted net income
**
|
$
31,285
|
|
$
29,619
|
|
|
$
56,990
|
|
$
57,776
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted
|
$
1.26
|
|
$
1.05
|
|
|
$
2.08
|
|
$
2.08
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share - Diluted **
|
$
1.08
|
|
$
0.91
|
|
|
$
1.95
|
|
$
1.76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Shares
|
28,834
|
|
32,517
|
|
|
29,244
|
|
32,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA AND
ADJUSTED EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
36,309
|
|
$
34,041
|
|
|
$
60,717
|
|
$
68,095
|
Interest expense
2
|
2,087
|
|
3,009
|
|
|
4,069
|
|
5,983
|
Tax
provision
|
24,858
|
|
23,403
|
|
|
40,615
|
|
46,692
|
Depreciation and
amortization
|
5,052
|
|
4,493
|
|
|
10,177
|
|
8,558
|
|
|
EBITDA **
|
68,306
|
|
64,946
|
|
|
115,578
|
|
129,328
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash share-based
compensation 3
|
4,332
|
|
3,945
|
|
|
6,856
|
|
6,588
|
Certain items before
depreciation and provision for income taxes 1
|
(8,473)
|
|
(7,226)
|
|
|
(6,678)
|
|
(14,098)
|
|
|
Adjusted EBITDA
**
|
$
64,165
|
|
$
61,665
|
|
|
$
115,756
|
|
$
121,818
|
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
|
1
Please see pages A-10 and A-11 for additional information regarding
these items. The certain items adjustment for the Adjusted EBITDA
reconciliation excludes depreciation and the provision for income
taxes on certain items included in the Adjusted Net Income
reconciliation.
|
2 Interest expense excludes
consumer financing interest expense.
|
3 Beginning with the first
quarter of 2016, non-cash share-based compensation expense is
excluded from our Adjusted EBITDA, and prior period presentation
has been recast for consistency. Please see pages A-10 and
A-11 for additional information.
|
A-3
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
NORTH AMERICA
SEGMENT
|
12 Weeks and 24
Weeks Ended June 17, 2016 and June 19, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
132,473
|
|
$
142,148
|
|
|
$
257,157
|
|
$
283,876
|
|
Resort management and
other services
|
69,357
|
|
66,194
|
|
|
131,022
|
|
124,769
|
|
Financing
|
26,853
|
|
26,354
|
|
|
54,261
|
|
53,410
|
|
Rental
|
65,629
|
|
65,756
|
|
|
138,137
|
|
137,471
|
|
Cost
reimbursements
|
90,174
|
|
84,037
|
|
|
189,356
|
|
176,891
|
|
|
|
|
|
Total
revenues
|
384,486
|
|
384,489
|
|
|
769,933
|
|
776,417
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
29,080
|
|
40,834
|
|
|
59,742
|
|
81,335
|
|
Marketing and
sales
|
66,911
|
|
67,837
|
|
|
135,226
|
|
136,854
|
|
Resort management and
other services
|
39,337
|
|
39,101
|
|
|
77,489
|
|
76,069
|
|
Rental
|
55,593
|
|
55,128
|
|
|
111,549
|
|
109,739
|
|
Organizational and
separation related
|
-
|
|
115
|
|
|
-
|
|
254
|
|
Reversal of
litigation expense
|
-
|
|
(108)
|
|
|
(303)
|
|
(370)
|
|
Royalty
fee
|
2,254
|
|
1,686
|
|
|
3,940
|
|
2,946
|
|
Cost
reimbursements
|
90,174
|
|
84,037
|
|
|
189,356
|
|
176,891
|
|
|
|
|
|
Total
expenses
|
283,349
|
|
288,630
|
|
|
576,999
|
|
583,718
|
Gains and other
income
|
12,317
|
|
8,658
|
|
|
12,324
|
|
9,538
|
Other
|
|
|
|
|
(1,733)
|
|
86
|
|
|
(4,013)
|
|
102
|
|
|
|
|
|
Segment financial
results
|
$
111,721
|
|
$
104,603
|
|
|
$
201,245
|
|
$
202,339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment financial
results
|
$
111,721
|
|
$
104,603
|
|
|
$
201,245
|
|
$
202,339
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
1,829
|
|
-
|
|
|
4,137
|
|
-
|
|
Reversal of
litigation expense
|
-
|
|
(108)
|
|
|
(303)
|
|
(370)
|
|
Gains and other
income
|
(12,317)
|
|
(8,658)
|
|
|
(12,324)
|
|
(9,538)
|
|
Organizational and
separation related
|
-
|
|
115
|
|
|
-
|
|
254
|
|
|
|
Certain
items
|
(10,488)
|
|
(8,651)
|
|
|
(8,490)
|
|
(9,654)
|
|
|
|
|
|
Adjusted segment
financial results **
|
$
101,233
|
|
$
95,952
|
|
|
$
192,755
|
|
$
192,685
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
145,600
|
|
$
150,605
|
|
|
$
285,250
|
|
$
306,598
|
|
|
|
|
Total contract
sales
|
$
145,600
|
|
$
150,605
|
|
|
$
285,250
|
|
$
306,598
|
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
A-4
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
ASIA PACIFIC
SEGMENT
|
12 Weeks and 24
Weeks Ended June 17, 2016 and June 19, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
8,110
|
|
$
7,575
|
|
|
$
16,635
|
|
$
43,853
|
|
Resort management and
other services
|
4,573
|
|
964
|
|
|
8,070
|
|
1,827
|
|
Financing
|
1,007
|
|
1,043
|
|
|
1,988
|
|
2,049
|
|
Rental
|
4,828
|
|
1,503
|
|
|
10,449
|
|
3,855
|
|
Cost
reimbursements
|
685
|
|
632
|
|
|
1,558
|
|
1,498
|
|
|
|
|
|
Total
revenues
|
19,203
|
|
11,717
|
|
|
38,700
|
|
53,082
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
1,597
|
|
1,803
|
|
|
3,306
|
|
23,799
|
|
Marketing and
sales
|
6,695
|
|
4,432
|
|
|
12,906
|
|
9,989
|
|
Resort management and
other services
|
4,226
|
|
655
|
|
|
7,778
|
|
1,505
|
|
Rental
|
6,766
|
|
2,794
|
|
|
12,554
|
|
5,290
|
|
Royalty
fee
|
179
|
|
150
|
|
|
325
|
|
307
|
|
Cost
reimbursements
|
685
|
|
632
|
|
|
1,558
|
|
1,498
|
|
|
|
|
|
Total
expenses
|
20,148
|
|
10,466
|
|
|
38,427
|
|
42,388
|
Losses and other
expense
|
(1,498)
|
|
(33)
|
|
|
(1,498)
|
|
(30)
|
Other
|
|
|
|
|
(21)
|
|
(1,273)
|
|
|
(229)
|
|
(1,276)
|
|
|
|
|
|
Segment financial
results
|
$
(2,464)
|
|
$
(55)
|
|
|
$
(1,454)
|
|
$
9,388
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment financial
results
|
$
(2,464)
|
|
$
(55)
|
|
|
$
(1,454)
|
|
$
9,388
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
19
|
|
1,272
|
|
|
227
|
|
1,272
|
|
Operating results
from the sold portion of the Surfers Paradise, Australia
property
|
378
|
|
-
|
|
|
194
|
|
-
|
|
Losses and other
expense
|
1,498
|
|
33
|
|
|
1,498
|
|
30
|
|
Asia Pacific bulk
sale
|
-
|
|
-
|
|
|
-
|
|
(5,915)
|
|
|
|
Certain
items
|
1,895
|
|
1,305
|
|
|
1,919
|
|
(4,613)
|
|
|
|
|
|
Adjusted segment
financial results **
|
$
(569)
|
|
$
1,250
|
|
|
$
465
|
|
$
4,775
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
10,454
|
|
$
7,992
|
|
|
$
19,880
|
|
$
16,651
|
|
|
Residential
products
|
-
|
|
-
|
|
|
-
|
|
28,420
|
|
|
|
|
Total contract
sales
|
$
10,454
|
|
$
7,992
|
|
|
$
19,880
|
|
$
45,071
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
A-5
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
EUROPE
SEGMENT
|
12 Weeks and 24
Weeks Ended June 17, 2016 and June 19, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
5,867
|
|
$
5,647
|
|
|
$
11,027
|
|
$
11,547
|
|
Resort management and
other services
|
7,000
|
|
6,905
|
|
|
11,467
|
|
11,884
|
|
Financing
|
794
|
|
897
|
|
|
1,629
|
|
1,887
|
|
Rental
|
4,612
|
|
5,383
|
|
|
6,771
|
|
7,515
|
|
Cost
reimbursements
|
7,983
|
|
7,789
|
|
|
15,461
|
|
15,375
|
|
|
|
|
|
Total
revenues
|
26,256
|
|
26,621
|
|
|
46,355
|
|
48,208
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
1,268
|
|
1,233
|
|
|
2,559
|
|
2,085
|
|
Marketing and
sales
|
5,313
|
|
4,868
|
|
|
9,199
|
|
10,289
|
|
Resort management and
other services
|
5,748
|
|
5,724
|
|
|
9,841
|
|
10,315
|
|
Rental
|
3,669
|
|
3,913
|
|
|
6,585
|
|
6,964
|
|
Royalty
fee
|
118
|
|
88
|
|
|
167
|
|
164
|
|
Cost
reimbursements
|
7,983
|
|
7,789
|
|
|
15,461
|
|
15,375
|
|
|
|
|
|
Total
expenses
|
24,099
|
|
23,615
|
|
|
43,812
|
|
45,192
|
Gains and other
income
|
-
|
|
-
|
|
|
-
|
|
4
|
|
|
|
|
|
Segment financial
results
|
$
2,157
|
|
$
3,006
|
|
|
$
2,543
|
|
$
3,020
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment financial
results
|
$
2,157
|
|
$
3,006
|
|
|
$
2,543
|
|
$
3,020
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Gains and other
income
|
-
|
|
-
|
|
|
-
|
|
(4)
|
|
|
|
Certain
items
|
-
|
|
-
|
|
|
-
|
|
(4)
|
|
|
|
|
|
Adjusted segment
financial results **
|
$
2,157
|
|
$
3,006
|
|
|
$
2,543
|
|
$
3,016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
9,938
|
|
$
7,341
|
|
|
$
14,356
|
|
$
12,639
|
|
|
|
|
Total contract
sales
|
$
9,938
|
|
$
7,341
|
|
|
$
14,356
|
|
$
12,639
|
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
A-6
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
CORPORATE AND
OTHER
|
12 Weeks and 24
Weeks Ended June 17, 2016 and June 19, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
$
1,808
|
|
$
1,249
|
|
|
$
3,763
|
|
$
2,862
|
|
Financing
|
4,864
|
|
6,085
|
|
|
9,493
|
|
10,990
|
|
General and
administrative
|
24,588
|
|
22,892
|
|
|
49,885
|
|
45,669
|
|
Organizational and
separation related
|
-
|
|
(14)
|
|
|
-
|
|
39
|
|
Litigation
settlement
|
-
|
|
134
|
|
|
-
|
|
134
|
|
Consumer financing
interest
|
5,117
|
|
5,248
|
|
|
10,479
|
|
11,269
|
|
Royalty
fee
|
11,475
|
|
11,507
|
|
|
22,951
|
|
23,014
|
|
|
|
|
|
Total
expenses
|
47,852
|
|
47,101
|
|
|
96,571
|
|
93,977
|
Losses and other
expense
|
(151)
|
|
-
|
|
|
(151)
|
|
-
|
Interest
expense
|
(2,087)
|
|
(3,009)
|
|
|
(4,069)
|
|
(5,983)
|
Other
|
|
|
|
|
(157)
|
|
-
|
|
|
(211)
|
|
-
|
|
|
|
|
|
Financial
results
|
$
(50,247)
|
|
$
(50,110)
|
|
|
$
(101,002)
|
|
$
(99,960)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
results
|
$
(50,247)
|
|
$
(50,110)
|
|
|
$
(101,002)
|
|
$
(99,960)
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
157
|
|
-
|
|
|
211
|
|
-
|
|
Litigation
settlement
|
-
|
|
134
|
|
|
-
|
|
134
|
|
Losses and other
expense
|
151
|
|
-
|
|
|
151
|
|
-
|
|
Organizational and
separation related
|
-
|
|
(14)
|
|
|
-
|
|
39
|
|
|
|
Certain
items
|
308
|
|
120
|
|
|
362
|
|
173
|
|
|
|
|
|
Adjusted financial
results **
|
$
(49,939)
|
|
$
(49,990)
|
|
|
$
(100,640)
|
|
$
(99,787)
|
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
A-7
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
CONSOLIDATED
CONTRACT SALES TO SALE OF VACATION OWNERSHIP
PRODUCTS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
|
|
|
$
165,992
|
|
$
165,938
|
|
|
$
319,486
|
|
$
335,888
|
|
Residential
products
|
|
|
|
-
|
|
-
|
|
|
-
|
|
28,420
|
|
|
Total contract
sales
|
|
|
|
165,992
|
|
165,938
|
|
|
319,486
|
|
364,308
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognition
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportability1
|
|
|
|
1,179
|
|
1,440
|
|
|
1,965
|
|
(73)
|
|
Sales Reserve
2
|
|
|
|
(11,352)
|
|
(7,179)
|
|
|
(19,575)
|
|
(15,546)
|
|
Other
3
|
|
|
|
|
(9,369)
|
|
(4,829)
|
|
|
(17,057)
|
|
(9,413)
|
Sale of vacation
ownership products
|
|
|
$
146,450
|
|
$
155,370
|
|
|
$
284,819
|
|
$
339,276
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1
Adjustment for lack of required downpayment or contract sales in
rescission period.
|
2 Represents allowance for bad
debts for our financed vacation ownership product sales, which we
also refer to as sales reserve.
|
3
Adjustment for sales incentives that will not be recognized as Sale
of vacation ownership products revenue.
|
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF VACATION
OWNERSHIP PRODUCTS NET OF EXPENSES)
(In thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Sale of vacation
ownership products
|
|
|
|
|
|
|
$
146,450
|
|
$
155,370
|
|
|
$
284,819
|
|
$
339,276
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost
of vacation ownership products
|
|
|
|
33,753
|
|
45,119
|
|
|
69,370
|
|
110,081
|
Marketing and sales
|
|
|
|
|
|
78,919
|
|
77,137
|
|
|
157,331
|
|
157,132
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
margin
|
|
|
|
|
|
|
33,778
|
|
33,114
|
|
|
58,118
|
|
72,063
|
Certain items 1
|
|
|
|
|
|
|
-
|
|
-
|
|
|
-
|
|
(5,915)
|
Revenue recognition reportability adjustment
|
|
|
|
(726)
|
|
(819)
|
|
|
(1,326)
|
|
27
|
Adjusted development
margin**
|
|
|
|
|
|
|
$
33,052
|
|
$
32,295
|
|
|
$
56,792
|
|
$
66,175
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development margin percentage 2
|
|
|
|
|
23.1%
|
|
21.3%
|
|
|
20.4%
|
|
21.2%
|
Adjusted development margin percentage
|
|
|
|
22.8%
|
|
21.0%
|
|
|
20.1%
|
|
21.3%
|
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
1 Certain items adjustment in
the 24 weeks ended June 19, 2015, represents $5.9 million of
development margin from the disposition of units in Macau as whole
ownership residential units rather than through our Marriott
Vacation Club, Asia Pacific points program.
|
2 Development margin
percentage represents Development margin divided by Sale of
vacation ownership products. Development margin percentage is
calculated using whole dollars.
|
A-8
MARRIOTT VACATIONS WORLDWIDE CORPORATION
|
NORTH AMERICA
CONTRACT SALES TO SALE OF VACATION OWNERSHIP
PRODUCTS
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
sales
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
|
|
|
$
145,600
|
|
$
150,605
|
|
|
$
285,250
|
|
$
306,598
|
|
|
Total contract
sales
|
|
|
|
145,600
|
|
150,605
|
|
|
285,250
|
|
306,598
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognition
adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Reportability1
|
|
|
|
3,783
|
|
1,942
|
|
|
3,871
|
|
(1,502)
|
|
Sales Reserve
2
|
|
|
|
(7,631)
|
|
(5,651)
|
|
|
(15,037)
|
|
(11,985)
|
|
Other
3
|
|
|
|
|
(9,279)
|
|
(4,748)
|
|
|
(16,927)
|
|
(9,235)
|
Sale of vacation
ownership products
|
|
|
$
132,473
|
|
$
142,148
|
|
|
$
257,157
|
|
$
283,876
|
|
1
Adjustment for lack of required downpayment or contract sales in
rescission period.
|
2 Represents allowance for bad
debts for our financed vacation ownership product sales, which we
also refer to as sales reserve.
|
3
Adjustment for sales incentives that will not be recognized as Sale
of vacation ownership products revenue.
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
NORTH AMERICA ADJUSTED DEVELOPMENT MARGIN (ADJUSTED SALE OF
VACATION OWNERSHIP PRODUCTS NET OF EXPENSES) (In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
24 Weeks
Ended
|
|
|
|
|
|
|
|
|
June 17,
2016
|
|
June 19,
2015
|
|
|
June 17,
2016
|
|
June 19,
2015
|
Sale of vacation
ownership products
|
|
|
|
$
132,473
|
|
$
142,148
|
|
|
$
257,157
|
|
$
283,876
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
|
|
29,080
|
|
40,834
|
|
|
59,742
|
|
81,335
|
|
Marketing and
sales
|
|
|
|
66,911
|
|
67,837
|
|
|
135,226
|
|
136,854
|
Development
margin
|
|
|
|
|
36,482
|
|
33,477
|
|
|
62,189
|
|
65,687
|
|
Certain
items
|
|
|
|
|
-
|
|
-
|
|
|
-
|
|
-
|
|
Revenue recognition
reportability adjustment
|
|
(2,417)
|
|
(1,207)
|
|
|
(2,473)
|
|
933
|
Adjusted development
margin**
|
|
|
|
$
34,065
|
|
$
32,270
|
|
|
$
59,716
|
|
66,620
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development margin
percentage1
|
|
|
|
27.5%
|
|
23.6%
|
|
|
24.2%
|
|
23.1%
|
|
Adjusted
development margin percentage
|
|
|
26.5%
|
|
23.0%
|
|
|
23.6%
|
|
23.3%
|
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
1 Development margin
percentage represents Development margin divided by Sale of
vacation ownership products. Development margin percentage is
calculated using whole dollars.
|
A-9
MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions, except
per share amounts)
2016 ADJUSTED NET
INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED
OUTLOOK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
2016 (low)
|
|
Fiscal Year
2016 (high)
|
Net income
|
|
|
$
130
|
|
$
140
|
|
Adjustments to
reconcile Net income to Adjusted net income
|
|
|
|
|
|
|
Certain
items1
|
|
5
|
|
5
|
|
|
Gain on dispositions
2
|
|
(11)
|
|
(11)
|
|
|
Provision for income
taxes on adjustments to net income
|
2
|
|
2
|
|
|
|
Adjusted net
income**
|
|
$
126
|
|
$
136
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted 3
|
|
$
4.57
|
|
$
4.92
|
|
Adjusted earnings per
share - Diluted**, 3
|
|
$
4.43
|
|
$
4.78
|
|
Diluted
shares3
|
|
28.5
|
|
28.5
|
1 Certain items adjustment
primarily includes approximately $5 million of non-capitalizable
transaction costs.
|
2 Gain on dispositions
adjustment includes the net impact to pre-tax income associated
with dispositions in the North America segment and Asia Pacific
segment.
|
3 Earnings per share -
Diluted, Adjusted earnings per share - Diluted, and Diluted shares
outlook includes the impact of share repurchase activity only
through July 21, 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 ADJUSTED
EBITDA OUTLOOK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
2016 (low)
|
|
Fiscal Year
2016 (high)
|
Net income
|
|
$
130
|
|
$
140
|
Interest
expense1
|
|
9
|
|
9
|
Tax
provision
|
|
91
|
|
96
|
Depreciation and
amortization
|
|
22
|
|
22
|
|
EBITDA **
|
|
|
252
|
|
267
|
Non-cash share-based
compensation 2
|
|
15
|
|
15
|
Certain items
3and Gain on dispositions4
|
|
(6)
|
|
(6)
|
|
Adjusted
EBITDA**
|
|
$
261
|
|
$
276
|
1 Interest expense excludes
consumer financing interest expense.
|
2 Beginning with the first
quarter of 2016, non-cash share-based compensation expense is
excluded from our Adjusted EBITDA, and prior period presentation
has been recast for consistency. Please see pages A-10 and A-11 for
additional information.
|
3 Certain items adjustment
primarily includes approximately $5 million of non-capitalizable
transaction costs.
|
4 Gain on
dispositions adjustment includes the net impact to pre-tax income
associated with dispositions in the North America segment and Asia
Pacific segment.
|
2016 ADJUSTED FREE
CASH FLOW OUTLOOK
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fiscal Year
2016 (low)
|
|
Fiscal Year
2016 (high)
|
Net cash provided by
operating activities
|
|
$
136
|
|
$
146
|
|
Capital expenditures
for property and equipment (excluding inventory):
|
|
|
|
|
|
|
New sales centers
1
|
|
(20)
|
|
(18)
|
|
|
Other
|
|
|
(24)
|
|
(22)
|
|
Decrease in
restricted cash
|
|
(5)
|
|
(5)
|
|
Borrowings from
securitization transactions
|
|
375
|
|
377
|
|
Repayment of debt
related to securitizations
|
(320)
|
|
(318)
|
|
|
|
Free cash
flow**
|
|
142
|
|
160
|
Adjustments:
|
|
|
|
|
|
|
Net change in
borrowings available from the securitization of eligible
vacation ownership notes
receivable through the warehouse credit facility
2
|
|
(7)
|
|
(5)
|
|
|
|
|
|
|
|
|
Adjusted free cash
flow**
|
|
$
135
|
|
$
155
|
|
1
Represents the incremental investment in new sales
centers.
|
2
Represents the net change in borrowings available from the
securitization of eligible vacation ownership notes receivable
through the warehouse credit facility between the 2015 and 2016
year ends.
|
** Denotes
non-GAAP financial measures. Please see pages A-10 and A-11
for additional information about our reasons for providing these
alternative financial measures and limitations on their
use.
|
A-10
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
NON-GAAP FINANCIAL
MEASURES
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
In our press release
and schedules, and on the related conference call, we report
certain financial measures that are not prescribed or authorized by
United States generally accepted accounting principles
("GAAP"). We discuss our reasons for reporting these non-GAAP
financial measures below, and the financial schedules reconcile the
most directly comparable GAAP financial measure to each non-GAAP
financial measure that we report (identified by a double asterisk
("**") on the preceding pages). Although we evaluate and
present these non-GAAP financial measures for the reasons described
below, please be aware that these non-GAAP financial measures have
limitations and should not be considered in isolation or as a
substitute for revenues, net income, earnings per share or any
other comparable operating measure prescribed by GAAP. In
addition, these non-GAAP financial measures may be calculated and /
or presented differently than measures with the same or similar
names that are reported by other companies, and as a result, the
non-GAAP financial measures we report may not be comparable to
those reported by others.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net
Income. We evaluate non-GAAP financial measures,
including Adjusted Net Income, Adjusted EBITDA, and Adjusted
Development Margin, that exclude certain items in the 12 weeks and
24 weeks ended June 17, 2016 and June 19, 2015 because these
non-GAAP financial measures allow for period-over-period
comparisons of our on-going core operations before the impact of
these items. These non-GAAP financial measures also
facilitate our comparison of results from our on-going core
operations before these items with results from other vacation
ownership companies.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain
items - 12 weeks and 24 weeks ended June 17, 2016. In our
Statement of Income for the 12 weeks ended June 17, 2016, we
recorded $8.3 million of net pre-tax charges, which included $10.7
million of gains and other income, $2.0 million of transaction
costs associated with acquisitions, and $0.4 million of losses
(including $0.2 million of depreciation) from the operations of the
property we acquired in Australia in 2015 that we sold in the
second quarter of 2016. In our Statement of Income for the 24 weeks
ended June 17, 2016, we recorded $6.2 million of net pre-tax
charges, which included $10.7 million of gains and other income,
$4.6 million of transaction costs associated with acquisitions,
$0.2 million of losses (including $0.5 million of depreciation)
from the operations of the property we acquired in Australia in
2015 that we sold in the second quarter of 2016, and a $0.3 million
reversal of litigation expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain
items - 12 weeks and 24 weeks ended June 19, 2015. In our
Statement of Income for the 12 weeks ended June 19, 2015, we
recorded $7.2 million of net pre-tax items, which included $8.6
million of gains and other income, $1.3 million of transaction
costs associated with acquisitions, $0.1 million of organizational
and separation related costs and less than $0.1 million of
litigation expense. In our Statement of Income for the 24 weeks
ended June 19, 2015, we recorded $14.1 million of net pre-tax
items, which included $9.5 million of gains and other income, $5.9
million of development profit from the disposition of units in
Macau as whole ownership residential units rather than through our
Marriott Vacation Club, Asia Pacific points program, $1.3 million
of transaction costs associated with acquisitions, $0.3 million of
organizational and separation related costs, and a $0.2 million
reversal of litigation expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
Development Margin (Adjusted Sale of Vacation Ownership Products
Net of Expenses). We evaluate Adjusted Development Margin
(Adjusted Sale of Vacation Ownership Products Net of Expenses) as
an indicator of operating performance. Adjusted Development
Margin adjusts Sale of vacation ownership products revenues for the
impact of revenue reportability, includes corresponding adjustments
to Cost of vacation ownership products expense and Marketing and
sales expense associated with the change in revenues from the Sale
of vacation ownership products, and includes adjustments for
certain items as itemized in the discussion of Adjusted Net Income
above. We evaluate Adjusted Development Margin because it
allows for period-over-period comparisons of our on-going core
operations before the impact of revenue reportability and certain
items to our Development Margin.
|
A-11
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
NON-GAAP FINANCIAL
MEASURES
|
|
Earnings Before
Interest Expense, Taxes, Depreciation and Amortization ("EBITDA")
and Adjusted EBITDA. EBITDA is defined as earnings, or
net income, before interest expense (excluding consumer financing
interest expense), provision for income taxes, depreciation and
amortization. For purposes of our EBITDA and Adjusted EBITDA
calculations, we do not adjust for consumer financing interest
expense because the associated debt is secured by vacation
ownership notes receivable that have been sold to bankruptcy remote
special purpose entities and is generally non-recourse to us.
Further, we consider consumer financing interest expense to be an
operating expense of our business. We consider EBITDA and
Adjusted EBITDA to be indicators of operating performance, which we
use to measure our ability to service debt, fund capital
expenditures and expand our business. We also use EBITDA and
Adjusted EBITDA, as do analysts, lenders, investors and others,
because these measures exclude certain items that can vary widely
across different industries or among companies within the same
industry. For example, interest expense can be dependent on a
company's capital structure, debt levels and credit ratings.
Accordingly, the impact of interest expense on earnings can vary
significantly among companies. The tax positions of companies
can also vary because of their differing abilities to take
advantage of tax benefits and because of the tax policies of the
jurisdictions in which they operate. As a result, effective
tax rates and provision for income taxes can vary considerably
among companies. EBITDA and Adjusted EBITDA also exclude
depreciation and amortization because companies utilize productive
assets of different ages and use different methods of both
acquiring and depreciating productive assets. These
differences can result in considerable variability in the relative
costs of productive assets and the depreciation and amortization
expense among companies. Adjusted EBITDA reflects additional
adjustments for certain items, as itemized in the discussion of
Adjusted Net Income above, including, beginning with the first
quarter of 2016, the exclusion of non-cash share-based compensation
expense to address considerable variability among companies in
recording compensation expense because companies use share-based
payment awards differently, both in the type and quantity of awards
granted. Prior period presentation has been recast for consistency.
We evaluate Adjusted EBITDA as an indicator of operating
performance because it allows for period-over-period comparisons of
our on-going core operations before the impact of the excluded
items. Together, EBITDA and Adjusted EBITDA facilitate our
comparison of results from our on-going core operations before the
impact of these items with results from other vacation ownership
companies.
|
|
Free Cash Flow and
Adjusted Free Cash Flow. We evaluate Free Cash Flow and
Adjusted Free Cash Flow as liquidity measures that provide useful
information to management and investors about the amount of cash
provided by operating activities after capital expenditures for
property and equipment, changes in restricted cash, and the
borrowing and repayment activity related to our securitizations,
which cash can be used for strategic opportunities, including
acquisitions and strengthening the balance sheet. Adjusted Free
Cash Flow, which reflects additional adjustments to Free Cash Flow
for the impact of organizational and separation related,
litigation, and other cash charges, allows for period-over-period
comparisons of the cash generated by our business before the impact
of these items. Analysis of Free Cash Flow and Adjusted Free
Cash Flow also facilitates management's comparison of our results
with our competitors' results.
|
|
A-12
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
CONSOLIDATED
BALANCE SHEETS
|
(In thousands, except
share and per share data)
|
|
|
|
|
|
|
|
|
(unaudited)
|
|
|
|
|
|
June 17,
2016
|
|
January 1,
2016
|
|
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
97,418
|
|
$
177,061
|
|
Restricted cash
(including $39,395 and $26,884 from VIEs, respectively)
|
68,340
|
|
71,451
|
|
Accounts and
contracts receivable, net (including $4,112 and $4,893 from VIEs,
respectively)
|
142,864
|
|
131,850
|
|
Vacation ownership
notes receivable, net (including $679,185 and $669,179 from VIEs,
respectively)
|
903,747
|
|
920,631
|
|
Inventory
|
702,377
|
|
669,243
|
|
Property and
equipment
|
228,848
|
|
288,803
|
|
Other
|
109,960
|
|
140,679
|
|
Total
Assets
|
$
2,253,554
|
|
$
2,399,718
|
|
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
|
Accounts
payable
|
$
74,484
|
|
$
139,120
|
|
Advance
deposits
|
80,876
|
|
69,064
|
|
Accrued liabilities
(including $1,401 and $669 from VIEs, respectively)
|
132,733
|
|
164,791
|
|
Deferred
revenue
|
30,600
|
|
35,276
|
|
Payroll and benefits
liability
|
75,309
|
|
104,331
|
|
Liability for
Marriott Rewards customer loyalty program
|
-
|
|
35
|
|
Deferred compensation
liability
|
57,567
|
|
51,031
|
|
Mandatorily
redeemable preferred stock of consolidated subsidiary,
net
|
39,068
|
|
38,989
|
|
Debt, net (including
$691,845 and $684,604 from VIEs, respectively)
|
733,828
|
|
678,793
|
|
Other
|
56,248
|
|
32,945
|
|
Deferred
taxes
|
126,093
|
|
109,076
|
|
Total
Liabilities
|
1,406,806
|
|
1,423,451
|
|
|
|
|
|
|
|
Preferred stock -
$.01 par value; 2,000,000 shares authorized; none issued or
outstanding
|
-
|
|
-
|
|
Common stock - $.01
par value; 100,000,000 shares authorized; 36,620,686 and 36,393,800
shares issued,
respectively
|
|
|
|
|
366
|
|
364
|
|
Treasury stock - at
cost; 9,640,473 and 6,844,256 shares, respectively
|
(593,052)
|
|
(429,990)
|
|
Additional paid-in
capital
|
1,139,366
|
|
1,150,731
|
|
Accumulated other
comprehensive income
|
12,735
|
|
11,381
|
|
Retained
earnings
|
287,333
|
|
243,781
|
|
Total
Equity
|
846,748
|
|
976,267
|
|
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
2,253,554
|
|
$
2,399,718
|
|
|
|
|
|
|
|
The abbreviation VIEs
above means Variable Interest Entities
|
|
|
|
|
A-13
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(In
thousands)
|
(Unaudited)
|
|
|
24 weeks
ended
|
|
|
June 17,
2016
|
|
June 19,
2015
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net
income
|
|
$60,717
|
|
$68,095
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation
|
|
10,177
|
|
8,558
|
|
Amortization of
debt issuance costs
|
|
2,559
|
|
2,506
|
|
Provision for
loan losses
|
|
19,591
|
|
15,662
|
|
Share-based
compensation
|
|
6,856
|
|
6,588
|
|
Employee stock
purchase plan
|
|
307
|
|
-
|
|
Deferred income
taxes
|
|
15,792
|
|
17,850
|
|
Gain on
disposal of property and equipment, net
|
|
(10,675)
|
|
(9,512)
|
|
Non-cash
reversal of litigation expense
|
|
(303)
|
|
(262)
|
|
Net change in
assets and liabilities:
|
|
|
|
|
|
Accounts and
contracts receivable
|
|
(11,084)
|
|
(6,068)
|
|
Notes receivable
originations
|
|
(124,318)
|
|
(112,060)
|
|
Notes receivable
collections
|
|
120,548
|
|
132,397
|
|
Inventory
|
|
(13,924)
|
|
68,629
|
|
Purchase of operating
hotels for future conversion to inventory
|
|
-
|
|
(46,614)
|
|
Other
assets
|
|
26,111
|
|
8,154
|
|
Accounts payable,
advance deposits and accrued liabilities
|
|
(78,190)
|
|
(66,223)
|
|
Deferred
revenue
|
|
(4,805)
|
|
(5,955)
|
|
Payroll and benefit
liabilities
|
|
(27,313)
|
|
(18,382)
|
|
Liability for
Marriott Rewards customer loyalty program
|
|
(36)
|
|
(9,345)
|
|
Deferred compensation
liability
|
|
6,536
|
|
4,858
|
|
Other
liabilities
|
|
20,348
|
|
18,013
|
|
Other,
net
|
|
2,184
|
|
1,776
|
Net cash provided by operating activities
|
|
21,078
|
|
78,665
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Capital
expenditures for property and equipment (excluding
inventory)
|
|
(15,142)
|
|
(15,718)
|
|
Decrease in
restricted cash
|
|
2,969
|
|
43,758
|
|
Dispositions,
net
|
|
69,738
|
|
20,346
|
|
Net cash provided by investing activities
|
|
57,565
|
|
48,386
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Borrowings from
securitization transactions
|
|
91,281
|
|
-
|
|
Repayment of
debt related to securitization transactions
|
|
(84,040)
|
|
(143,374)
|
|
Borrowings on
Revolving Corporate Credit Facility
|
|
85,000
|
|
-
|
|
Repayment of
Revolving Corporate Credit Facility
|
|
(40,000)
|
|
-
|
|
Proceeds from
vacation ownership inventory arrangement
|
|
-
|
|
5,375
|
|
Debt issuance
costs
|
|
(231)
|
|
(30)
|
|
Repurchase of
common stock
|
|
(163,359)
|
|
(66,237)
|
|
Accelerated
stock repurchase forward contract
|
|
(14,470)
|
|
-
|
|
Payment of
dividends
|
|
(26,067)
|
|
(8,085)
|
|
Payment of
withholding taxes on vesting of restricted stock units
|
|
(3,876)
|
|
(9,353)
|
|
Other
|
|
572
|
|
201
|
Net
cash used in financing activities
|
|
(155,190)
|
|
(221,503)
|
|
Effect of changes in
exchange rates on cash and cash equivalents
|
|
(3,096)
|
|
(1,157)
|
DECREASE IN
CASH AND CASH EQUIVALENTS
|
|
(79,643)
|
|
(95,609)
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
177,061
|
|
346,515
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$97,418
|
|
$250,906
|
|
|
|
|
|
|
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SOURCE Marriott Vacations Worldwide