ORLANDO, Fla., Oct. 13, 2016 /PRNewswire/ -- Marriott
Vacations Worldwide Corporation (NYSE: VAC) today reported third
quarter financial results and updated its guidance for the full
year 2016.
"We continued to execute our growth strategy in the third
quarter. Contract sales in our key North America and Asia Pacific segments were up 8.3 percent in
the quarter, an acceleration of the year-over-year growth that
began near the end of the second quarter. Our sales growth in
the quarter came not only from the continued ramp-up of sales at
our new North America and
Asia Pacific sales centers, but
also from sales improvement at our existing sites," said
Stephen P. Weisz, president and
chief executive officer. "With the momentum we have seen in
our new sales centers during the third quarter and our fourth
quarter tour activations well ahead of this time last year, we
remain confident in our growth strategy and the solid foundation we
are building for continued sales growth going into 2017."
Third quarter 2016 highlights:
- Net income was $26.8 million, or
$0.97 fully diluted earnings per
share (EPS), compared to net income of $21.6
million, or $0.67 fully
diluted EPS, in the third quarter of 2015, an increase of 24.4
percent and 44.8 percent, respectively.
- Adjusted EBITDA totaled $50.6
million, a decrease of $4.1
million year-over-year, as the quarter was impacted by
$12.4 million of lower revenue
reportability, the majority of which should benefit the fourth
quarter. Adjusting for the timing impact of revenue reportability,
2016 Adjusted EBITDA would have been $63.0
million, an increase of $1.3
million over 2015.
- Adjusted fully diluted EPS was $0.96 compared to $0.82 in the third quarter of 2015, an increase
of 17.1 percent.
- Total company vacation ownership contract sales (which exclude
residential sales) were $169.8
million, $10.1 million, or 6.3
percent, ahead of the prior year period. Contract sales in our key
North America and Asia Pacific segments were $12.5 million, or 8.3 percent, ahead of the prior
year period.
- Company development margin percentage was 13.1 percent compared
to 17.8 percent in the third quarter of 2015. Company adjusted
development margin percentage was 19.7 percent compared to 21.2
percent in the third quarter of 2015.
- Resort management and other services revenues net of expenses
were $30.1 million, an increase of
$3.7 million, or 13.9 percent,
compared to the third quarter of 2015.
- Financing revenues net of expenses and consumer financing
interest expense were $18.9 million,
an increase of $1.3 million, or 7.6
percent, compared to the third quarter of 2015.
- In August 2016, the company
completed a securitization of $259
million of vacation ownership notes receivable at a blended
borrowing rate of 2.28 percent, generating total gross proceeds of
$250 million.
Non-GAAP financial measures, such as adjusted EBITDA, 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.
Third quarter 2016 Results
Company Results
Third quarter 2016 company net income was $26.8 million, a $5.3
million increase from the third quarter of 2015. These
results were driven mainly by $5.1
million of lower acquisition related transaction costs,
$3.7 million of higher resort
management and other services revenues net of expenses,
$1.6 million of lower general and
administrative costs, $1.3 million of
higher financing revenues net of expenses, $0.6 million of lower interest expense, and
$0.5 million of higher gains and
other income due to a change in the estimated costs associated with
the disposition of the portion of the Surfers Paradise,
Australia property that the
company did not convert to vacation ownership inventory. These
increases were partially offset by $7.2
million of lower development margin, of which $5.4 million related to the timing of revenue
reportability year-over-year, and $0.7
million of lower rental revenues net of expenses.
Total company vacation ownership contract sales were
$169.8 million, $10.1 million, or 6.3 percent, higher than the
third quarter of last year. These results were driven by
$8.2 million of higher contract sales
in the company's North America
segment and $4.3 million of higher
contract sales in the company's Asia
Pacific segment, partially offset by $2.4 million of lower contract sales in the
company's Europe segment as it
continues to sell through the remaining developer
inventory.
Development margin was $17.2
million, a $7.2 million
decrease from the third quarter of 2015. Development margin
percentage was 13.1 percent compared to 17.8 percent in the prior
year quarter. The decline in development margin reflected
$5.4 million related to the timing of
revenue reportability year-over-year, $4.0
million from higher sales reserve activity mainly associated
with a 19 percent, or 10.1 percentage point, increase in financing
propensity as well as higher Latin
America default activity, $3.4
million of higher marketing and sales costs from ramp-up
costs associated with the company's new sales distributions, and
$1.3 million related mainly to higher
usage of plus points for sales incentives. These changes were
offset partially by $5.1 million of
lower product costs, and $1.8 million
from higher contract sales volumes net of expenses. Adjusted
development margin percentage, which excludes the impact of revenue
reportability year-over-year, was 19.7 percent in the third quarter
of 2016 compared to 21.2 percent in the third quarter of
2015.
Rental revenues totaled $73.8
million, a $2.3 million
decrease from the third quarter of 2015. Results reflected
$1.9 million of lower revenue from
our San Diego property during its
conversion from an operating property to vacation ownership
inventory, $0.8 million of lower
revenue due to the disposition of the portion of the
Surfers Paradise, Australia
property, and $0.6 million of lower
plus points revenues, partially offset by $1.0 million from increases in transient and
preview keys rented. Rental revenues net of expenses were
$12.8 million, a $0.7 million, or 4.9 percent, decrease from the
third quarter of 2015, primarily reflecting the lower plus points
revenues in the quarter.
Resort management and other services revenues totaled
$75.5 million, a $1.7 million increase from the third quarter of
2015. Resort management and other services revenues, net of
expenses, totaled $30.1 million, a
$3.7 million, or 13.9 percent,
increase from the third quarter of 2015.
Financing revenues totaled $29.1
million, a $0.8 million
increase from the third quarter of 2015. Financing revenues, net of
expenses and consumer financing interest expense, were $18.9 million, a $1.3
million, or 7.6 percent, increase from the third quarter of
2015.
Net income was $26.8 million,
compared to net income of $21.6
million in the third quarter of 2015, an increase of
$5.3 million, or 24.4 percent.
Adjusted EBITDA was $50.6 million in
the third quarter of 2016, a $4.1
million, or 7.6 percent, decrease from $54.7 million in the third quarter of 2015.
Segment Results
North America
North America vacation
ownership contract sales were $151.0
million in the third quarter of 2016, an increase of
$8.2 million, or 5.7 percent, from
the prior year period, reflecting higher sales from existing sales
centers, driven by the success of our new marketing programs, as
well as the ramp-up of new sales centers. Total tours in the third
quarter of 2016 increased 9.1 percent, driven by an increase in
first time buyer and owner tours of 12 percent and 7 percent,
respectively. VPG decreased $57 to
$3,371 in the third quarter of 2016
from the third quarter of 2015.
Third quarter 2016 North America segment financial results were
$82.0 million, a decrease of
$3.4 million from the third quarter
of 2015. The decrease was driven primarily by $6.1 million of lower development margin, of
which $4.7 million related to the
timing of revenue reportability year-over-year, $1.1 million of lower rental revenues net of
expense, and $0.6 million of higher
royalty expenses. These decreases were offset by $3.5 million of higher resort management and
other services revenues net of expenses, and $1.0 million of higher financing revenues.
Development margin was $18.4
million, a $6.1 million
decrease from the third quarter of 2015. Development margin
percentage was 15.8 percent compared to 20.0 percent in the prior
year quarter. The decline in development margin reflected
$4.7 million related to the timing of
revenue reportability year-over-year, $3.9
million from higher sales reserve activity mainly associated
with an 18 percent, or 9.7 percentage point, increase in financing
propensity as well as higher Latin
America default activity, $2.3
million of higher marketing and sales costs from ramp-up
costs associated with the company's new sales distributions, and
$1.3 million related mainly to higher
usage of plus points for sales incentives. These decreases were
offset partially by $4.2 million of
lower product costs, and $1.9 million
from higher contract sales volumes net of expenses. Adjusted
development margin, which excludes the impact of revenue
reportability year-over-year, was $29.2
million, a $1.4 million
decrease from the prior year quarter. Adjusted development margin
percentage was 22.0 percent in the third quarter of 2016 compared
to 23.1 percent in the third quarter of 2015.
Asia Pacific
Total vacation ownership contract sales in the segment were
$11.2 million, an increase of
$4.3 million, or 62.4 percent, from
the third quarter of 2015. Segment financial results were
$1.3 million, a $5.3 million increase from the third quarter of
2015, driven by $4.1 million of lower
acquisition related transaction costs in the current year,
$0.6 million of higher rental
revenues net of expenses, $0.5
million of higher gains and other income due to a change in
the estimated costs associated with the disposition of the portion
of the Surfers Paradise, Australia
property, and $0.3 million of higher
development margin.
Europe
Third quarter 2016 contract sales were $7.7 million, a decrease of $2.4 million from the third quarter of 2015.
Segment financial results were $4.5
million, a $1.6 million
decrease from the third quarter of 2015, driven by $1.5 million of lower development margin.
Share Repurchase Program and Dividends
The company did not repurchase any shares of its common stock in
the third quarter due to limitations resulting from the accelerated
share repurchase (ASR) arrangement entered into during the second
quarter, which effectively accelerated third quarter repurchases.
The ASR arrangement closed out after the end of the third quarter,
at which time the company received 17,511 additional shares,
bringing the total number of shares received under the ASR
arrangement to 1,186,428 at a cost of $85.0
million.
Year to date, 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 September 9, 2016, cash and
cash equivalents totaled $174.8
million. Since the beginning of the year, real estate
inventory balances increased $45.9
million to $709.9 million,
including $319.7 million of finished
goods, $66.5 million of
work-in-progress, and $323.7 million
of land and infrastructure. The company had $815.2 million in gross debt outstanding at the
end of the third quarter, an increase of $127.1 million from year-end 2015, consisting
primarily of $806.7 million in gross
non-recourse securitized notes receivable. In addition,
$40.0 million of mandatorily
redeemable preferred stock of a subsidiary of the company was
outstanding at the end of the third quarter of 2016. The company
has notified the holders of the mandatorily redeemable preferred
stock that it will redeem the preferred stock on October 26, 2016 at par plus any accrued
dividends.
In August 2016, the company
completed a securitization of $259
million of vacation ownership notes receivable at a blended
borrowing rate of 2.28 percent and an advance rate of 96.5 percent,
generating $250 million in gross cash
proceeds. Approximately $207 million
of the vacation ownership notes receivable were purchased on
August 11, 2016 by the MVW Owner
Trust 2016-1 (the "2016-1 Trust"), and the company received
$200 million of the proceeds. When
the remaining $51.8 million of
vacation ownership notes receivable were purchased by the 2016-1
Trust subsequent to the end of the third quarter, the remaining
$50 million of proceeds, which had
been held in restricted cash, was released.
As of September 9, 2016, the
company had approximately $197
million in available capacity under its revolving credit
facility after taking into account outstanding letters of
credit.
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
|
$133 million to $136
million
|
|
Fully diluted
EPS
|
$4.69 to
$4.79
|
|
Net cash provided by
operating activities
|
$136 million to $146
million
|
|
The company is providing the following updated guidance for the
full year 2016:
|
Current
Guidance
|
Previous
Guidance
|
|
|
|
Adjusted net
income
|
$129 million to $132
million
|
$126 million to $136
million
|
Adjusted fully
diluted EPS
|
$4.55 to
$4.65
|
$4.43 to
$4.78
|
Adjusted
EBITDA
|
$261 million to $266
million
|
$261 million to $276
million
|
Adjusted free cash
flow
|
$145 million to $160
million
|
$135 million to $155
million
|
Contract
sales
|
~4 percent
|
4 percent to 8
percent
|
Third 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 13643872. 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, as well as the Marriott Vacation Club
PulseSM brand extension. 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
October 13, 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 3,
2016
|
TABLE OF
CONTENTS
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Income - 12 Weeks and 36 Weeks Ended September 9,
2016 and September 11,
2015
|
A-1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Net Income,
Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted EBITDA -
12 Weeks and 36 Weeks Ended September 9, 2016 and September 11,
2015
|
A-2
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America Segment
Financial Results - 12 Weeks and 36 Weeks Ended September 9, 2016
and September 11, 2015
|
A-3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Asia Pacific Segment
Financial Results - 12 Weeks and 36 Weeks Ended September 9, 2016
and September 11, 2015
|
A-4
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Europe Segment
Financial Results - 12 Weeks and 36 Weeks Ended September 9, 2016
and September 11, 2015
|
A-5
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Corporate and Other
Segment Financial Results - 12 Weeks and 36 Weeks Ended September
9, 2016 and September 11, 2015
|
A-6
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Contract
Sales to Sale of Vacation Ownership Products and Adjusted
Development Margin
|
|
(Adjusted Sale of Vacation Ownership Products Net of Expenses) - 12
Weeks and 36 Weeks Ended September 9, 2016 and September 11,
2015
|
A-7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 36 Weeks Ended September 9, 2016 and September 11,
2015
|
A-8
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2016 Outlook -
Adjusted Net Income, Adjusted Earnings Per Share - Diluted,
Adjusted EBITDA and Adjusted Free Cash
Flow
|
A-9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-GAAP Financial
Measures
|
|
A-10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated Balance
Sheets
|
|
A-12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated
Statements of Cash
Flows
|
A-13
|
A-1
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
CONSOLIDATED
STATEMENTS OF INCOME
|
12 Weeks and 36
Weeks Ended September 9, 2016 and September 11, 2015
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
131,012
|
|
$
136,802
|
|
|
$
415,831
|
|
$
476,078
|
|
Resort management and
other services
|
75,539
|
|
73,828
|
|
|
226,098
|
|
212,308
|
|
Financing
|
29,066
|
|
28,294
|
|
|
86,944
|
|
85,640
|
|
Rental
|
73,776
|
|
76,039
|
|
|
229,133
|
|
224,880
|
|
Cost
reimbursements
|
97,598
|
|
92,173
|
|
|
303,973
|
|
285,937
|
|
|
|
|
|
Total
revenues
|
406,991
|
|
407,136
|
|
|
1,261,979
|
|
1,284,843
|
Expenses
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
34,779
|
|
40,776
|
|
|
104,149
|
|
150,857
|
|
Marketing and
sales
|
79,017
|
|
71,628
|
|
|
236,348
|
|
228,760
|
|
Resort management and
other services
|
45,437
|
|
47,409
|
|
|
140,545
|
|
135,298
|
|
Financing
|
4,855
|
|
5,488
|
|
|
14,348
|
|
16,478
|
|
Rental
|
60,970
|
|
62,567
|
|
|
191,658
|
|
184,560
|
|
General and
administrative
|
21,619
|
|
23,214
|
|
|
71,504
|
|
68,883
|
|
Organizational and
separation related
|
-
|
|
439
|
|
|
-
|
|
732
|
|
Litigation
settlement
|
-
|
|
-
|
|
|
(303)
|
|
(236)
|
|
Consumer financing
interest
|
5,361
|
|
5,289
|
|
|
15,840
|
|
16,558
|
|
Royalty
fee
|
14,624
|
|
14,000
|
|
|
42,007
|
|
40,431
|
|
Cost
reimbursements
|
97,598
|
|
92,173
|
|
|
303,973
|
|
285,937
|
|
|
|
|
|
Total
expenses
|
364,260
|
|
362,983
|
|
|
1,120,069
|
|
1,128,258
|
Gains (losses) and
other income (expense)
|
454
|
|
(20)
|
|
|
11,129
|
|
9,492
|
Interest
expense
|
(2,262)
|
|
(2,839)
|
|
|
(6,331)
|
|
(8,822)
|
Other
|
(75)
|
|
(5,131)
|
|
|
(4,528)
|
|
(6,305)
|
|
|
|
|
|
Income before income
taxes
|
40,848
|
|
36,163
|
|
|
142,180
|
|
150,950
|
Provision for income
taxes
|
(14,041)
|
|
(14,608)
|
|
|
(54,656)
|
|
(61,300)
|
Net income
|
$
26,807
|
|
$
21,555
|
|
|
$
87,524
|
|
$
89,650
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Basic
|
$
0.99
|
|
$
0.69
|
|
|
$
3.10
|
|
$
2.81
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted
|
$
0.97
|
|
$
0.67
|
|
|
$
3.05
|
|
$
2.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
Shares
|
27,152
|
|
31,455
|
|
|
28,207
|
|
31,870
|
Diluted
Shares
|
27,680
|
|
32,128
|
|
|
28,718
|
|
32,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
169,831
|
|
$
159,757
|
|
|
$
489,317
|
|
$
495,645
|
|
|
Residential
products
|
-
|
|
-
|
|
|
-
|
|
28,420
|
|
|
|
|
Total contract
sales
|
$
169,831
|
|
$
159,757
|
|
|
$
489,317
|
|
$
524,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE: Earnings
per share - Basic and Earnings per share - Diluted are calculated
using whole dollars.
|
A-2
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
12 Weeks and 36
Weeks Ended September 9, 2016 and September 11, 2015
|
(In thousands, except
per share amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ADJUSTED NET
INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
26,807
|
|
$
21,555
|
|
|
$
87,524
|
|
$
89,650
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
138
|
|
5,181
|
|
|
4,713
|
|
6,453
|
|
|
Refurbishment
costs
|
-
|
|
1,767
|
|
|
-
|
|
1,767
|
|
|
Operating results
from the sold portion of the Surfers Paradise, Australia
property
|
-
|
|
-
|
|
|
(275)
|
|
-
|
|
|
Litigation
settlement
|
-
|
|
-
|
|
|
(303)
|
|
(236)
|
|
|
(Gains) losses and
other (income) expense
|
(454)
|
|
20
|
|
|
(11,129)
|
|
(9,492)
|
|
|
Asia Pacific bulk
sale
|
-
|
|
-
|
|
|
-
|
|
(5,915)
|
|
|
Organizational and
separation related
|
-
|
|
439
|
|
|
-
|
|
732
|
|
|
|
|
Certain items before
depreciation and provision for income taxes 1
|
(316)
|
|
7,407
|
|
|
(6,994)
|
|
(6,691)
|
|
|
Depreciation on the
sold portion of the Surfers Paradise, Australia property
|
-
|
|
-
|
|
|
469
|
|
-
|
|
|
Provision for income
taxes on certain items
|
86
|
|
(2,491)
|
|
|
2,568
|
|
1,288
|
|
|
|
Adjusted net income
**
|
$
26,577
|
|
$
26,471
|
|
|
$
83,567
|
|
$
84,247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted
|
$
0.97
|
|
$
0.67
|
|
|
$
3.05
|
|
$
2.75
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted earnings per
share - Diluted **
|
$
0.96
|
|
$
0.82
|
|
|
$
2.91
|
|
$
2.59
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted
Shares
|
27,680
|
|
32,128
|
|
|
28,718
|
|
32,550
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
EBITDA AND
ADJUSTED EBITDA
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
$
26,807
|
|
$
21,555
|
|
|
$
87,524
|
|
$
89,650
|
Interest expense
2
|
2,262
|
|
2,839
|
|
|
6,331
|
|
8,822
|
Tax
provision
|
14,041
|
|
14,608
|
|
|
54,656
|
|
61,300
|
Depreciation and
amortization
|
4,679
|
|
5,292
|
|
|
14,856
|
|
13,850
|
|
|
EBITDA **
|
47,789
|
|
44,294
|
|
|
163,367
|
|
173,622
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Non-cash share-based
compensation 3
|
3,139
|
|
3,045
|
|
|
9,995
|
|
9,633
|
Certain items before
depreciation and provision for income taxes 1
|
(316)
|
|
7,407
|
|
|
(6,994)
|
|
(6,691)
|
|
|
Adjusted EBITDA
**
|
$
50,612
|
|
$
54,746
|
|
|
$
166,368
|
|
$
176,564
|
|
** 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 adjustments for the Adjusted EBITDA
reconciliations exclude depreciation and the provision for income
taxes on certain items included in the Adjusted Net Income
reconciliations.
|
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 36
Weeks Ended September 9, 2016 and September 11, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
116,184
|
|
$
122,908
|
|
|
$
373,341
|
|
$
406,784
|
|
Resort management and
other services
|
67,599
|
|
64,437
|
|
|
198,621
|
|
189,206
|
|
Financing
|
27,438
|
|
26,399
|
|
|
81,699
|
|
79,809
|
|
Rental
|
63,387
|
|
65,135
|
|
|
201,524
|
|
202,606
|
|
Cost
reimbursements
|
88,834
|
|
83,561
|
|
|
278,190
|
|
260,452
|
|
|
|
|
|
Total
revenues
|
363,442
|
|
362,440
|
|
|
1,133,375
|
|
1,138,857
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
30,134
|
|
35,736
|
|
|
89,876
|
|
117,071
|
|
Marketing and
sales
|
67,662
|
|
62,652
|
|
|
202,888
|
|
199,506
|
|
Resort management and
other services
|
38,831
|
|
39,175
|
|
|
116,320
|
|
115,244
|
|
Rental
|
53,131
|
|
53,742
|
|
|
164,680
|
|
163,481
|
|
Organizational and
separation related
|
|
-
|
|
59
|
|
|
-
|
|
313
|
|
Litigation
settlement
|
|
-
|
|
-
|
|
|
(303)
|
|
(370)
|
|
Royalty
fee
|
2,813
|
|
2,228
|
|
|
6,753
|
|
5,174
|
|
Cost
reimbursements
|
88,834
|
|
83,561
|
|
|
278,190
|
|
260,452
|
|
|
|
|
|
Total
expenses
|
281,405
|
|
277,153
|
|
|
858,404
|
|
860,871
|
(Losses) gains and
other (expense) income
|
|
(27)
|
|
(4)
|
|
|
12,297
|
|
9,534
|
Other
|
|
|
|
|
|
(55)
|
|
54
|
|
|
(4,068)
|
|
156
|
|
|
|
|
|
Segment financial
results
|
$
81,955
|
|
$
85,337
|
|
|
$
283,200
|
|
$
287,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment financial
results
|
$
81,955
|
|
$
85,337
|
|
|
$
283,200
|
|
$
287,676
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
123
|
|
-
|
|
|
4,260
|
|
-
|
|
Litigation
settlement
|
-
|
|
-
|
|
|
(303)
|
|
(370)
|
|
Losses (gains) and
other expense (income)
|
27
|
|
4
|
|
|
(12,297)
|
|
(9,534)
|
|
Organizational and
separation related
|
-
|
|
59
|
|
|
-
|
|
313
|
|
|
|
Certain
items
|
150
|
|
63
|
|
|
(8,340)
|
|
(9,591)
|
|
|
|
|
|
Adjusted segment
financial results **
|
$
82,105
|
|
$
85,400
|
|
|
$
274,860
|
|
$
278,085
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
150,964
|
|
$
142,787
|
|
|
$
436,214
|
|
$
449,385
|
|
|
|
|
Total contract
sales
|
$
150,964
|
|
$
142,787
|
|
|
$
436,214
|
|
$
449,385
|
|
** 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 36
Weeks Ended September 9, 2016 and September 11, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
10,010
|
|
$
6,303
|
|
|
$
26,645
|
|
$
50,156
|
|
Resort management and
other services
|
977
|
|
2,212
|
|
|
9,047
|
|
4,039
|
|
Financing
|
918
|
|
1,008
|
|
|
2,906
|
|
3,057
|
|
Rental
|
2,324
|
|
2,569
|
|
|
12,773
|
|
6,424
|
|
Cost
reimbursements
|
692
|
|
609
|
|
|
2,250
|
|
2,107
|
|
|
|
|
|
Total
revenues
|
14,921
|
|
12,701
|
|
|
53,621
|
|
65,783
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
1,712
|
|
1,432
|
|
|
5,018
|
|
25,231
|
|
Marketing and
sales
|
7,166
|
|
4,022
|
|
|
20,072
|
|
14,011
|
|
Resort management and
other services
|
980
|
|
2,264
|
|
|
8,758
|
|
3,769
|
|
Rental
|
3,330
|
|
4,129
|
|
|
15,884
|
|
9,419
|
|
Royalty
fee
|
239
|
|
139
|
|
|
564
|
|
446
|
|
Cost
reimbursements
|
692
|
|
609
|
|
|
2,250
|
|
2,107
|
|
|
|
|
|
Total
expenses
|
14,119
|
|
12,595
|
|
|
52,546
|
|
54,983
|
Gains (losses) and
other income (expense)
|
490
|
|
1
|
|
|
(1,008)
|
|
(29)
|
Other
|
|
|
|
|
|
(20)
|
|
(4,163)
|
|
|
(249)
|
|
(5,439)
|
|
|
|
|
|
Segment financial
results
|
$
1,272
|
|
$
(4,056)
|
|
|
$
(182)
|
|
$
5,332
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment financial
results
|
$
1,272
|
|
$
(4,056)
|
|
|
$
(182)
|
|
$
5,332
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
15
|
|
4,159
|
|
|
242
|
|
5,431
|
|
Operating results
from the sold portion of the Surfers Paradise, Australia
property
|
-
|
|
-
|
|
|
194
|
|
-
|
|
(Gains) losses and
other (income) expense
|
(490)
|
|
(1)
|
|
|
1,008
|
|
29
|
|
Asia Pacific bulk
sale
|
-
|
|
-
|
|
|
-
|
|
(5,915)
|
|
|
|
Certain
items
|
(475)
|
|
4,158
|
|
|
1,444
|
|
(455)
|
|
|
|
|
|
Adjusted segment
financial results **
|
$
797
|
|
$
102
|
|
|
$
1,262
|
|
$
4,877
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
11,169
|
|
$
6,877
|
|
|
$
31,049
|
|
$
23,528
|
|
|
Residential
products
|
-
|
|
-
|
|
|
-
|
|
28,420
|
|
|
|
|
Total contract
sales
|
$
11,169
|
|
$
6,877
|
|
|
$
31,049
|
|
$
51,948
|
|
** 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 36
Weeks Ended September 9, 2016 and September 11, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
4,818
|
|
$
7,591
|
|
|
$
15,845
|
|
$
19,138
|
|
Resort management and
other services
|
6,963
|
|
7,179
|
|
|
18,430
|
|
19,063
|
|
Financing
|
710
|
|
887
|
|
|
2,339
|
|
2,774
|
|
Rental
|
8,065
|
|
8,335
|
|
|
14,836
|
|
15,850
|
|
Cost
reimbursements
|
8,072
|
|
8,003
|
|
|
23,533
|
|
23,378
|
|
|
|
|
|
Total
revenues
|
28,628
|
|
31,995
|
|
|
74,983
|
|
80,203
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
1,599
|
|
2,070
|
|
|
4,158
|
|
4,155
|
|
Marketing and
sales
|
4,189
|
|
4,954
|
|
|
13,388
|
|
15,243
|
|
Resort management and
other services
|
5,626
|
|
5,970
|
|
|
15,467
|
|
16,285
|
|
Rental
|
4,509
|
|
4,696
|
|
|
11,094
|
|
11,660
|
|
Royalty
fee
|
97
|
|
126
|
|
|
264
|
|
290
|
|
Cost
reimbursements
|
8,072
|
|
8,003
|
|
|
23,533
|
|
23,378
|
|
|
|
|
|
Total
expenses
|
24,092
|
|
25,819
|
|
|
67,904
|
|
71,011
|
Losses and other
expense
|
-
|
|
(17)
|
|
|
-
|
|
(13)
|
|
|
|
|
|
Segment financial
results
|
$
4,536
|
|
$
6,159
|
|
|
$
7,079
|
|
$
9,179
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment financial
results
|
$
4,536
|
|
$
6,159
|
|
|
$
7,079
|
|
$
9,179
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Losses and other
expense
|
-
|
|
17
|
|
|
-
|
|
13
|
|
|
|
Certain
items
|
-
|
|
17
|
|
|
-
|
|
13
|
|
|
|
|
|
Adjusted segment
financial results **
|
$
4,536
|
|
$
6,176
|
|
|
$
7,079
|
|
$
9,192
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Contract
Sales
|
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
7,698
|
|
$
10,093
|
|
|
$
22,054
|
|
$
22,732
|
|
|
|
|
Total contract
sales
|
$
7,698
|
|
$
10,093
|
|
|
$
22,054
|
|
$
22,732
|
|
** 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 36
Weeks Ended September 9, 2016 and September 11, 2015
|
(In
thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Expenses
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
$
1,334
|
|
$
1,538
|
|
|
$
5,097
|
|
$
4,400
|
|
Financing
|
4,855
|
|
5,488
|
|
|
14,348
|
|
16,478
|
|
General and
administrative
|
21,619
|
|
23,214
|
|
|
71,504
|
|
68,883
|
|
Organizational and
separation related
|
-
|
|
380
|
|
|
-
|
|
419
|
|
Litigation
settlement
|
-
|
|
-
|
|
|
-
|
|
134
|
|
Consumer financing
interest
|
5,361
|
|
5,289
|
|
|
15,840
|
|
16,558
|
|
Royalty
fee
|
11,475
|
|
11,507
|
|
|
34,426
|
|
34,521
|
|
|
|
|
|
Total
expenses
|
44,644
|
|
47,416
|
|
|
141,215
|
|
141,393
|
Losses and other
expense
|
(9)
|
|
-
|
|
|
(160)
|
|
-
|
Interest
expense
|
(2,262)
|
|
(2,839)
|
|
|
(6,331)
|
|
(8,822)
|
Other
|
-
|
|
(1,022)
|
|
|
(211)
|
|
(1,022)
|
|
|
|
|
|
Financial
results
|
$
(46,915)
|
|
$
(51,277)
|
|
|
$
(147,917)
|
|
$
(151,237)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Financial
results
|
$
(46,915)
|
|
$
(51,277)
|
|
|
$
(147,917)
|
|
$
(151,237)
|
Less certain
items:
|
|
|
|
|
|
|
|
|
|
Transaction
costs
|
-
|
|
1,022
|
|
|
211
|
|
1,022
|
|
Refurbishment
costs
|
-
|
|
1,767
|
|
|
-
|
|
1,767
|
|
Litigation
settlement
|
-
|
|
-
|
|
|
-
|
|
134
|
|
Losses and other
expense
|
9
|
|
-
|
|
|
160
|
|
-
|
|
Organizational and
separation related
|
-
|
|
380
|
|
|
-
|
|
419
|
|
|
|
Certain
items
|
9
|
|
3,169
|
|
|
371
|
|
3,342
|
|
|
|
|
|
Adjusted financial
results **
|
$
(46,906)
|
|
$
(48,108)
|
|
|
$
(147,546)
|
|
$
(147,895)
|
|
** 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
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
sales
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
169,831
|
|
$
159,757
|
|
|
$
489,317
|
|
$
495,645
|
|
Residential
products
|
-
|
|
-
|
|
|
-
|
|
28,420
|
|
|
Total contract
sales
|
169,831
|
|
159,757
|
|
|
489,317
|
|
524,065
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognition
adjustments:
|
|
|
|
|
|
|
|
|
|
Reportability1
|
(18,994)
|
|
(11,051)
|
|
|
(17,029)
|
|
(11,124)
|
|
Sales Reserve
2
|
(13,872)
|
|
(7,600)
|
|
|
(33,447)
|
|
(23,146)
|
|
Other
3
|
(5,953)
|
|
(4,304)
|
|
|
(23,010)
|
|
(13,717)
|
Sale of vacation
ownership products
|
$
131,012
|
|
$
136,802
|
|
|
$
415,831
|
|
$
476,078
|
|
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
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Sale of vacation
ownership products
|
$
131,012
|
|
$
136,802
|
|
|
$
415,831
|
|
$
476,078
|
Less:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
34,779
|
|
40,776
|
|
|
104,149
|
|
150,857
|
|
Marketing and
sales
|
79,017
|
|
71,628
|
|
|
236,348
|
|
228,760
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
margin
|
17,216
|
|
24,398
|
|
|
75,334
|
|
96,461
|
|
Certain items
1
|
-
|
|
-
|
|
|
-
|
|
(5,915)
|
|
Revenue recognition
reportability adjustment
|
12,369
|
|
6,928
|
|
|
11,043
|
|
6,955
|
Adjusted development
margin**
|
$
29,585
|
|
$
31,326
|
|
|
$
86,377
|
|
$
97,501
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development margin
percentage2
|
13.1%
|
|
17.8%
|
|
|
18.1%
|
|
20.3%
|
|
Adjusted
development margin percentage
|
19.7%
|
|
21.2%
|
|
|
20.0%
|
|
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 36 weeks ended September 11, 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.
|
|
|
A-8
|
MARRIOTT VACATIONS
WORLDWIDE CORPORATION
|
NORTH AMERICA
CONTRACT SALES TO SALE OF VACATION OWNERSHIP
PRODUCTS
|
(In
thousands)
|
|
|
|
|
|
|
12 Weeks
Ended
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Contract
sales
|
|
|
|
|
|
|
|
|
|
Vacation
ownership
|
$
150,964
|
|
$
142,787
|
|
|
$
436,214
|
|
$
449,385
|
|
|
Total contract
sales
|
150,964
|
|
142,787
|
|
|
436,214
|
|
449,385
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue recognition
adjustments:
|
|
|
|
|
|
|
|
|
|
Reportability1
|
(16,853)
|
|
(9,849)
|
|
|
(12,982)
|
|
(11,351)
|
|
Sales Reserve
2
|
(11,923)
|
|
(5,901)
|
|
|
(26,960)
|
|
(17,886)
|
|
Other
3
|
(6,004)
|
|
(4,129)
|
|
|
(22,931)
|
|
(13,364)
|
Sale of vacation
ownership products
|
$
116,184
|
|
$
122,908
|
|
|
$
373,341
|
|
$
406,784
|
|
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
|
|
|
36 Weeks
Ended
|
|
|
|
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
|
|
September 9,
2016
|
|
September 11,
2015
|
Sale of vacation
ownership products
|
$
116,184
|
|
$
122,908
|
|
|
$
373,341
|
|
$
406,784
|
Less:
|
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
30,134
|
|
35,736
|
|
|
89,876
|
|
117,071
|
|
Marketing and
sales
|
67,662
|
|
62,652
|
|
|
202,888
|
|
199,506
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development
margin
|
18,388
|
|
24,520
|
|
|
80,577
|
|
90,207
|
|
Certain
items
|
-
|
|
-
|
|
|
-
|
|
-
|
|
Revenue recognition
reportability adjustment
|
10,836
|
|
6,116
|
|
|
8,363
|
|
7,049
|
Adjusted development
margin**
|
$
29,224
|
|
$
30,636
|
|
|
$
88,940
|
|
$
97,256
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Development margin
percentage1
|
15.8%
|
|
20.0%
|
|
|
21.6%
|
|
22.2%
|
|
Adjusted
development margin percentage
|
22.0%
|
|
23.1%
|
|
|
23.0%
|
|
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.
|
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
|
$
133
|
|
$
136
|
|
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**
|
$
129
|
|
$
132
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted 3
|
$
4.69
|
|
$
4.79
|
|
Adjusted earnings per
share - Diluted**, 3
|
$
4.55
|
|
$
4.65
|
|
Diluted
shares3
|
28.4
|
|
28.4
|
|
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 October 13, 2016.
|
2016 ADJUSTED
EBITDA OUTLOOK
|
|
|
|
|
|
|
Fiscal Year
2016 (low)
|
|
Fiscal Year
2016 (high)
|
Net income
|
$
133
|
|
$
136
|
Interest
expense1
|
9
|
|
9
|
Tax
provision
|
90
|
|
92
|
Depreciation and
amortization
|
21
|
|
21
|
|
EBITDA **
|
253
|
|
258
|
Non-cash share-based
compensation 2
|
14
|
|
14
|
Certain items
3and Gain on dispositions4
|
(6)
|
|
(6)
|
|
Adjusted
EBITDA**
|
$
261
|
|
$
266
|
|
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
|
(18)
|
|
(17)
|
|
|
Other
|
(23)
|
|
(22)
|
|
Decrease in
restricted cash
|
(5)
|
|
(5)
|
|
Borrowings from
securitization transactions
|
377
|
|
377
|
|
Repayment of debt
related to securitizations
|
(328)
|
|
(327)
|
|
|
Free cash
flow**
|
139
|
|
152
|
Adjustments:
|
|
|
|
|
Net change in
borrowings available from the securitization of eligible
vacation ownership notes
receivable through the warehouse credit facility
2
|
6
|
|
8
|
|
|
|
|
|
|
Adjusted free cash
flow**
|
$
145
|
|
$
160
|
|
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
36 Weeks Ended September 9, 2016 and September 11, 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 36 Weeks Ended September 9, 2016. In
our Statement of Income for the 12 weeks ended September 9, 2016,
we recorded $0.3 million of net pre-tax items, which included $0.5
million of gains and other income not associated with our on-going
core operations and $0.1 million of transaction costs associated
with acquisitions. In our Statement of Income for the 36 Weeks
Ended September 9, 2016, we recorded $6.5 million of net pre-tax
items, which included $11.1 million of gains and other income not
associated with our on-going core operations, $4.7 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 settlement expense.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain items - 12
weeks and 36 Weeks Ended September 11, 2015. In our
Statement of Income for the 12 weeks ended September 11, 2015, we
recorded $7.4 million of net pre-tax items, which included $5.2
million of transaction costs associated with acquisitions, a $1.8
million adjustment for refurbishment costs at a project in our
North America segment, $0.4 million of organizational and
separation related costs and less than $0.1 million of losses and
other expense not associated with our on-going core operations. In
our Statement of Income for the 36 weeks ended September 11, 2015,
we recorded $6.7 million of net pre-tax items, which included $9.5
million of gains and other income not associated with our on-going
core operations, $6.5 million of transaction costs associated with
acquisitions, $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, a $1.8 million adjustment for refurbishment costs at a
project in our North America segment, $0.7 million of
organizational and separation related costs, and a $0.2 million
reversal of litigation settlement 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)
|
|
|
|
|
September 9,
2016
|
|
January 1,
2016
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
174,764
|
|
$
177,061
|
Restricted cash
(including $88,559 and $26,884 from VIEs, respectively)
|
117,839
|
|
71,451
|
Accounts and
contracts receivable, net (including $4,687 and $4,893 from VIEs,
respectively)
|
134,706
|
|
131,850
|
Vacation ownership
notes receivable, net (including $730,076 and $669,179 from VIEs,
respectively)
|
927,348
|
|
920,631
|
Inventory
|
714,404
|
|
669,243
|
Property and
equipment
|
214,445
|
|
288,803
|
Other
|
102,664
|
|
140,679
|
Total
Assets
|
$
2,386,170
|
|
$
2,399,718
|
|
|
|
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
79,024
|
|
$
139,120
|
Advance
deposits
|
86,130
|
|
69,064
|
Accrued liabilities
(including $1,361 and $669 from VIEs, respectively)
|
144,475
|
|
164,791
|
Deferred
revenue
|
47,000
|
|
35,276
|
Payroll and benefits
liability
|
81,720
|
|
104,331
|
Liability for
Marriott Rewards customer loyalty program
|
-
|
|
35
|
Deferred compensation
liability
|
59,877
|
|
51,031
|
Mandatorily
redeemable preferred stock of consolidated subsidiary,
net
|
39,108
|
|
38,989
|
Debt, net (including
$806,716 and $684,604 from VIEs, respectively)
|
804,721
|
|
678,793
|
Other
|
43,106
|
|
32,945
|
Deferred
taxes
|
132,735
|
|
109,076
|
Total
Liabilities
|
1,517,896
|
|
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; 36,626,327 and 36,393,800
shares issued,
respectively
|
366
|
|
364
|
Treasury stock - at
cost; 9,634,735 and 6,844,256 shares, respectively
|
(592,700)
|
|
(429,990)
|
Additional paid-in
capital
|
1,142,480
|
|
1,150,731
|
Accumulated other
comprehensive income
|
12,104
|
|
11,381
|
Retained
earnings
|
306,024
|
|
243,781
|
Total
Equity
|
868,274
|
|
976,267
|
|
|
|
|
|
Total Liabilities and
Equity
|
$
2,386,170
|
|
$
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)
|
|
|
|
36 Weeks
Ended
|
|
|
|
September 9,
2016
|
|
September 11,
2015
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net
income
|
|
$87,524
|
|
$89,650
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
|
|
Depreciation
|
|
14,856
|
|
13,850
|
|
Amortization of
debt issuance costs
|
|
3,784
|
|
3,739
|
|
Provision for
loan losses
|
|
31,817
|
|
22,753
|
|
Share-based
compensation
|
|
9,995
|
|
9,633
|
|
Employee stock
purchase plan
|
|
673
|
|
-
|
|
Deferred income
taxes
|
|
21,823
|
|
17,261
|
|
Gain on
disposal of property and equipment, net
|
|
(11,129)
|
|
(9,492)
|
|
Non-cash
reversal of litigation expense
|
|
(303)
|
|
(262)
|
|
Net change in
assets and liabilities:
|
|
|
|
|
|
Accounts and
contracts receivable
|
|
(2,824)
|
|
(17,799)
|
|
Notes receivable
originations
|
|
(218,190)
|
|
(189,029)
|
|
Notes receivable
collections
|
|
177,451
|
|
192,852
|
|
Inventory
|
|
(6,118)
|
|
51,467
|
|
Purchase of operating
hotels for future conversion to inventory
|
|
-
|
|
(61,554)
|
|
Other
assets
|
|
38,103
|
|
26,524
|
|
Accounts payable,
advance deposits and accrued liabilities
|
|
(64,643)
|
|
(52,380)
|
|
Deferred
revenue
|
|
11,592
|
|
5,742
|
|
Payroll and benefit
liabilities
|
|
(20,898)
|
|
(4,959)
|
|
Liability for
Marriott Rewards customer loyalty program
|
|
(37)
|
|
(15,384)
|
|
Deferred compensation
liability
|
|
8,846
|
|
6,791
|
|
Other
liabilities
|
|
7,138
|
|
6,236
|
|
Other,
net
|
|
1,425
|
|
5,085
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
90,885
|
|
100,724
|
INVESTING
ACTIVITIES
|
|
|
|
|
|
Capital
expenditures for property and equipment (excluding
inventory)
|
|
(22,445)
|
|
(20,873)
|
|
Purchase of
operating hotel to be sold
|
|
-
|
|
(47,658)
|
|
Decrease in
restricted cash
|
|
(46,709)
|
|
(12,616)
|
|
Dispositions,
net
|
|
68,525
|
|
20,605
|
|
|
|
|
|
|
|
Net cash provided by investing activities
|
|
(629)
|
|
(60,542)
|
FINANCING
ACTIVITIES
|
|
|
|
|
|
Borrowings from
securitization transactions
|
|
376,622
|
|
255,000
|
|
Repayment of
debt related to securitization transactions
|
|
(254,510)
|
|
(186,383)
|
|
Borrowings on
Revolving Corporate Credit Facility
|
|
85,000
|
|
-
|
|
Repayment of
Revolving Corporate Credit Facility
|
|
(85,000)
|
|
-
|
|
Proceeds from
vacation ownership inventory arrangement
|
|
-
|
|
5,375
|
|
Debt issuance
costs
|
|
(4,065)
|
|
(4,405)
|
|
Repurchase of
common stock
|
|
(163,359)
|
|
(106,110)
|
|
Accelerated
stock repurchase forward contract
|
|
(14,470)
|
|
-
|
|
Payment of
dividends
|
|
(26,067)
|
|
(16,003)
|
|
Payment of
withholding taxes on vesting of restricted stock
units
|
|
(3,972)
|
|
(9,615)
|
|
Other
|
|
194
|
|
377
|
|
|
|
|
|
|
Net cash used in financing activities
|
|
(89,627)
|
|
(61,764)
|
|
|
|
|
|
|
|
Effect of
changes in exchange rates on cash and cash
equivalents
|
|
(2,926)
|
|
(3,243)
|
|
|
|
|
|
|
DECREASE IN
CASH AND CASH EQUIVALENTS
|
|
(2,297)
|
|
(24,825)
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, beginning of period
|
|
177,061
|
|
346,515
|
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, end of period
|
|
$174,764
|
|
$321,690
|
Logo -
http://photos.prnewswire.com/prnh/20130702/CG40568LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/marriott-vacations-worldwide-reports-third-quarter-financial-results-300343895.html
SOURCE Marriott Vacations Worldwide