ORLANDO, Fla., Aug. 3,
2017 /PRNewswire/ -- Marriott Vacations Worldwide Corporation
(NYSE: VAC) today reported second quarter financial results and
updated its guidance for the full year 2017. Due to the change in
the company's financial reporting calendar beginning in 2017, the
second quarter of 2017 included the period from April 1, 2017
through June 30, 2017 (91 days) compared to the 2016 second
quarter, which included the period from March 26, 2016 through
June 17, 2016 (84 days). Prior year results have not been
restated for the change in the company's reporting calendar.
Second quarter 2017 highlights:
- Total company vacation ownership contract sales were
$209.9 million, an increase of
$43.9 million, or 26 percent,
compared to the prior year period. North
America vacation ownership contract sales were $190.9 million, an increase of $45.3 million, or 31 percent, compared to the
prior year period.
-
- Excluding the estimated impact of the change in the company's
financial reporting calendar, total company and North America vacation ownership contract
sales would have increased 18 percent and 22 percent, respectively,
compared to the prior year period.
- North America VPG totaled $3,579,
a 6 percent increase from the second quarter of 2016.
- North America tours increased
28 percent year-over-year.
-
- Excluding the estimated impact of the change in the company's
financial reporting calendar, tours would have increased 18
percent, compared to the prior year period.
- Net income was $44.3 million, or
$1.58 fully diluted earnings per
share (EPS), compared to net income of $36.3
million, or $1.26 fully
diluted EPS, in the second quarter of 2016, an increase of 22
percent and 25 percent, respectively.
- Adjusted net income was $44.6
million, compared to adjusted net income of $31.3 million in the second quarter of 2016, an
increase of 43 percent. Adjusted fully diluted EPS was $1.60, compared to adjusted fully diluted EPS of
$1.08 in the second quarter of 2016,
an increase of 48 percent.
- Adjusted EBITDA totaled $77.9
million, an increase of $13.7
million, or 21 percent, year-over-year.
"I am extremely pleased with how 2017 has continued to progress.
Contract sales, on a comparable basis, grew over 18 percent,
marking the third quarter in a row that we've generated sales
growth in excess of 15 percent. Adjusted EBITDA grew 21 percent, to
$77.9 million, with strong
contributions from all lines of business," said Stephen P. Weisz, president and chief executive
officer. "With the performance we've delivered through the end of
the second quarter, we are raising our full year outlook for
contract sales growth to 12 percent to 16 percent, net income to
$154 million to $160 million,
adjusted EBITDA to $282 million to $292
million, and adjusted free cash flow to $190 million to $210 million."
Non-GAAP financial measures, such as adjusted net income,
adjusted EBITDA, adjusted fully diluted earnings per share,
adjusted free cash flow, and adjusted development margin are
reconciled and adjustments are shown and described in further
detail on pages A-1 through A-11 of the Financial Schedules that
follow.
Second Quarter 2017 Results
As a result of the change in the company's financial reporting
calendar, financial results for the second quarter 2017 include the
impact of seven additional days of operations.
Company Results
Second quarter 2017 company net income was $44.3 million, an $8.0
million increase from the second quarter of 2016. Excluding
the impact of the provision for income taxes, these results were
driven by $7.1 million of higher
development margin, $5.0 million of
higher rental revenues net of expenses, $5.0
million of higher resort management and other services
revenues net of expenses, $2.5
million of higher financing revenues net of expenses and
consumer financing interest expense, $1.8
million of lower acquisition costs, and $0.3 million of lower interest expense, partially
offset by $10.8 million of lower
gains and other income, $4.2 million
of higher general and administrative costs, $2.3 million of higher royalty fees, and
$0.2 million of higher litigation
settlement costs.
Total company vacation ownership contract sales were
$209.9 million, $43.9 million, or 26 percent, higher than the
second quarter of 2016. These results were driven by $45.3 million of higher contract sales in the
company's North America segment
and $1.2 million of higher contract
sales in the company's Asia
Pacific segment, partially offset by $2.5 million of lower contract sales in the
company's Europe segment.
Excluding the estimated impact of the change in the company's
financial reporting calendar, total company vacation ownership
contract sales would have increased 18 percent, compared to the
prior year period.
Development margin was $40.8
million, a $7.1 million
increase from the second quarter of 2016. Development margin
percentage was 21.4 percent compared to 23.1 percent in the prior
year quarter. The increase in development margin reflected
$11.0 million from higher contract
sales volumes net of expenses, $6.8
million from lower product costs, and $1.9 million related to favorable revenue
reportability year-over-year, partially offset by $7.0 million from lower favorable product cost
true-up activity year-over-year, $5.4
million of higher marketing and sales costs including costs
to ramp up the company's new sales distributions, and $0.3 million from higher sales reserve activity.
Adjusted development margin percentage, which excludes the impact
of revenue reportability year-over-year, was 20.4 percent in the
second quarter of 2017 compared to 22.8 percent in the second
quarter of 2016.
Rental revenues totaled $84.2
million, a $9.1 million
increase from the second quarter of 2016. Rental revenues net of
expenses were $14.0 million, a
$5.0 million, or 55 percent, increase
from the second quarter of 2016.
Resort management and other services revenues totaled
$79.2 million, a $5.0 million increase from the second quarter of
2016. Resort management and other services revenues, net of
expenses, totaled $35.2 million, a
$5.0 million, or 17 percent, increase
from the second quarter of 2016.
Financing revenues totaled $32.5
million, a $3.9 million
increase from the second quarter of 2016. Financing revenues, net
of expenses and consumer financing interest expense, were
$23.4 million, a $2.5 million, or 12 percent, increase from the
second quarter of 2016.
Net income was $44.3 million,
compared to net income of $36.3
million in the second quarter of 2016, an increase of
$8.0 million, or 22 percent. Adjusted
EBITDA was $77.9 million, a
$13.7 million, or 21 percent,
increase from $64.2 million in the
second quarter of 2016.
Segment Results
North America
North America vacation
ownership contract sales were $190.9
million, an increase of $45.3
million, or 31 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 continued
ramp-up of new sales distributions. VPG increased $195, or 6 percent, to $3,579 in the second quarter of 2017 from the
second quarter of 2016. Total tours in the second quarter of 2017
increased 28 percent, reflecting a 34 percent increase in first
time buyer tours and a 23 percent increase in owner tours.
Excluding the estimated impact of the change in the company's
financial reporting calendar, vacation ownership contract sales and
tours would have increased 22 percent and 18 percent, respectively,
compared to the prior year period.
Second quarter 2017 North America segment financial results were
$118.7 million, an increase of
$8.3 million from the second quarter
of 2016. The increase was driven primarily by $6.9 million of higher development margin,
$5.0 million of higher resort
management and other services revenues net of expenses,
$4.1 million of higher rental
revenues net of expenses, $3.9
million of higher financing revenues, and $1.8 million of lower acquisition costs,
partially offset by $12.5 million of
lower gains and other income, and $0.8
million of higher royalty fees.
Development margin was $43.4
million, a $6.9 million
increase from the second quarter of 2016. Development margin
percentage was 24.7 percent compared to 27.5 percent in the prior
year quarter. The increase in development margin reflected
$11.2 million from higher contract
sales volumes net of expenses, $6.5
million from lower product costs, and $1.1 million related to favorable revenue
reportability year-over-year, partially offset by $6.8 million from lower favorable product cost
true-up activity year-over-year, $3.6
million of higher marketing and sales costs including costs
to ramp up the company's new sales distributions, and $1.5 million from higher sales reserve activity
mainly associated with an 11.0 percentage point increase in
financing propensity. Adjusted development margin percentage, which
excludes the impact of revenue reportability, was 23.4 percent in
the second quarter of 2017, compared to 26.5 percent in the second
quarter of 2016.
Asia Pacific
Total vacation ownership contract sales in the segment were
$11.6 million, an increase of
$1.2 million, or 11 percent, from the
second quarter of 2016, due primarily to the opening of the new
sales distribution in Surfers Paradise, Australia in the second quarter of 2016.
Segment financial results were a loss of $1.1 million, a $1.5
million improvement from the second quarter of 2016.
Excluding the estimated impact of the change in the company's
financial reporting calendar, vacation ownership contract sales
would have increased 6 percent, compared to the prior year
period.
Europe
Second quarter 2017 contract sales were $7.4 million, a decrease of $2.5 million, or 25.6 percent, from the second
quarter of 2016. Segment financial results were $3.4 million, an increase of $1.3 million, or 58.8 percent, from the second
quarter of 2016.
Share Repurchase Program
During the 2017 second quarter, the company repurchased 32,500
shares of its common stock for a total of $3.9 million under its share repurchase program.
Subsequent to the end of the 2017 second quarter, the company's
Board of Directors authorized the company to repurchase up to 1
million additional shares under its share repurchase program,
bringing the current remaining authorization to approximately 2.0
million shares and extending the program through May 31, 2018.
Balance Sheet and Liquidity
On June 30, 2017, cash and cash equivalents totaled
$85.2 million. Since the beginning of
the year, real estate inventory balances increased $31.3 million to $739.4
million, including $421.1
million of finished goods and $318.3
million of land and infrastructure. The company had
$789.7 million in gross debt
outstanding at the end of the second quarter, an increase of
$43.3 million from year-end 2016,
consisting primarily of $671.2
million in gross securitized notes receivable, $63.6 million related to a non-interest bearing
note issued in conjunction with the capital efficient acquisition
of vacation ownership units, $47.5
million outstanding under its revolving corporate credit
facility, and approximately $7
million related to capital leases and other miscellaneous
debt.
As of June 30, 2017, the company had approximately
$147.9 million in available capacity
under its revolving credit facility after taking into account
outstanding letters of credit, and approximately $239.7 million of gross vacation ownership notes
receivable eligible for securitization.
Fiscal Year Change
The table below shows the number of days for each reporting
period in 2017 and 2016:
|
2017
|
|
2016
|
First
Quarter
|
91 days
|
|
84 days
|
Second
Quarter
|
91 days
|
|
84 days
|
Third
Quarter
|
92 days
|
|
84 days
|
Fourth
Quarter
|
92 days
|
|
112 days
|
Full Year
|
366 days
|
|
364 days
|
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 2017 expected GAAP results:
Net income
|
$154
million
|
to
|
$160
million
|
Fully diluted
EPS
|
$5.48
|
to
|
$5.70
|
Net cash provided by
operating activities
|
$115
million
|
to
|
$130
million
|
The company is providing the following updated guidance for the
full year 2017:
|
Current
Guidance
|
|
Previous
Guidance
|
Adjusted net
income
|
$149
million
|
to
|
$155
million
|
|
$139
million
|
to
|
$148
million
|
Adjusted fully
diluted EPS
|
$5.31
|
to
|
$5.52
|
|
$4.97
|
to
|
$5.29
|
Adjusted
EBITDA
|
$282
million
|
to
|
$292
million
|
|
$276
million
|
to
|
$291
million
|
Adjusted free cash
flow
|
$190
million
|
to
|
$210
million
|
|
$160
million
|
to
|
$180
million
|
Contract sales
growth
|
12
percent
|
to
|
16 percent
|
|
9 percent
|
to
|
15 percent
|
|
|
|
|
|
|
|
|
|
Second Quarter 2017 Earnings Conference Call
The company will hold a conference call at 10:00 a.m. EDT today to discuss these results and
the guidance for full year 2017. 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
13666344. 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 65 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
August 3, 2017 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, 2017 1
|
|
TABLE OF
CONTENTS
|
|
Consolidated
Statements of Income
|
A-1
|
Adjusted Net Income,
Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted
EBITDA
|
A-2
|
North America Segment
Financial Results
|
A-3
|
Asia Pacific Segment
Financial Results
|
A-4
|
Europe Segment
Financial Results
|
A-5
|
Corporate and Other
Financial Results
|
A-6
|
Consolidated Contract
Sales to Sale of Vacation Ownership Products and Adjusted
Development Margin
(Adjusted Sale of Vacation Ownership Products Net of
Expenses)
|
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)
|
A-8
|
2017 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
|
|
|
1
|
Due to the change in
the company's financial reporting calendar beginning in 2017, the
2017 second quarter included the period from April 1, 2017
through June 30, 2017 (91 days) compared to the 2016 second
quarter, which included the period from March 26, 2016 to
June 17, 2016 (84 days), and the 2017 first half included the
period from December 31, 2016 through June 30, 2017 (182
days) compared to the 2016 first half which included the period
from January 2, 2016 to June 17, 2016 (168 days). Prior
year results have not been restated for the change in fiscal
calendar.
|
|
NOTE: When
presenting contract sales performance on a comparable basis, we
adjusted the prior year period to include contract sales from the
same calendar days as the current year period.
|
A-1 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
REVENUES
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
|
191,010
|
|
|
$
|
146,450
|
|
|
$
|
363,165
|
|
|
$
|
284,819
|
|
Resort management and
other services
|
79,158
|
|
|
74,156
|
|
|
152,122
|
|
|
137,864
|
|
Financing
|
32,530
|
|
|
28,654
|
|
|
64,641
|
|
|
57,878
|
|
Rental
|
84,188
|
|
|
75,069
|
|
|
169,444
|
|
|
155,357
|
|
Cost
reimbursements
|
110,734
|
|
|
98,842
|
|
|
234,367
|
|
|
206,375
|
|
TOTAL
REVENUES
|
497,620
|
|
|
423,171
|
|
|
983,739
|
|
|
842,293
|
|
EXPENSES
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
46,143
|
|
|
33,753
|
|
|
88,763
|
|
|
69,370
|
|
Marketing and
sales
|
104,029
|
|
|
78,919
|
|
|
204,690
|
|
|
157,331
|
|
Resort management and
other services
|
44,008
|
|
|
44,007
|
|
|
85,653
|
|
|
83,870
|
|
Financing
|
3,449
|
|
|
2,621
|
|
|
7,466
|
|
|
7,201
|
|
Rental
|
70,163
|
|
|
66,028
|
|
|
140,595
|
|
|
130,688
|
|
General and
administrative
|
29,534
|
|
|
25,361
|
|
|
57,073
|
|
|
50,720
|
|
Litigation
settlement
|
183
|
|
|
—
|
|
|
183
|
|
|
(303)
|
|
Consumer financing
interest
|
5,654
|
|
|
5,117
|
|
|
11,592
|
|
|
10,479
|
|
Royalty
fee
|
16,307
|
|
|
14,026
|
|
|
32,377
|
|
|
27,383
|
|
Cost
reimbursements
|
110,734
|
|
|
98,842
|
|
|
234,367
|
|
|
206,375
|
|
TOTAL
EXPENSES
|
430,204
|
|
|
368,674
|
|
|
862,759
|
|
|
743,114
|
|
(Losses) gains and
other (expense) income
|
(166)
|
|
|
10,668
|
|
|
(225)
|
|
|
10,675
|
|
Interest
expense
|
(1,757)
|
|
|
(2,087)
|
|
|
(2,538)
|
|
|
(4,069)
|
|
Other
|
(100)
|
|
|
(1,911)
|
|
|
(469)
|
|
|
(4,453)
|
|
INCOME BEFORE
INCOME TAXES
|
65,393
|
|
|
61,167
|
|
|
117,748
|
|
|
101,332
|
|
Provision for income
taxes
|
(21,117)
|
|
|
(24,858)
|
|
|
(39,772)
|
|
|
(40,615)
|
|
NET
INCOME
|
$
|
44,276
|
|
|
$
|
36,309
|
|
|
$
|
77,976
|
|
|
$
|
60,717
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Basic
|
$
|
1.62
|
|
|
$
|
1.28
|
|
|
$
|
2.86
|
|
|
$
|
2.11
|
|
Earnings per share -
Diluted
|
$
|
1.58
|
|
|
$
|
1.26
|
|
|
$
|
2.79
|
|
|
$
|
2.08
|
|
Basic
Shares
|
27,319
|
|
|
28,345
|
|
|
27,285
|
|
|
28,734
|
|
Diluted
Shares
|
27,965
|
|
|
28,834
|
|
|
27,929
|
|
|
29,244
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Vacation ownership
contract sales
|
$
|
209,892
|
|
|
$
|
165,992
|
|
|
$
|
403,726
|
|
|
$
|
319,486
|
|
|
NOTE: Earnings per
share—Basic and Earnings per share—Diluted are calculated using
whole dollars. We have reclassified certain prior year amounts to
conform to our current period presentation. In addition, we
reclassified certain revenues and expenses for the 2016 second
quarter and 2016 first half to correct immaterial presentation
errors within the following lines: Resort management and other
services revenues, Resort management and other services expenses
and General and administrative expenses.
|
A-2 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
(In thousands, except per share amounts)
ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE -
DILUTED
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Net income
|
|
$
|
44,276
|
|
|
$
|
36,309
|
|
|
$
|
77,976
|
|
|
$
|
60,717
|
|
Less certain
items:
|
|
|
|
|
|
|
|
|
Acquisition
costs
|
|
199
|
|
|
2,005
|
|
|
611
|
|
|
4,575
|
|
Operating results
from the sold portion of the Surfers Paradise, Australia
property
|
|
—
|
|
|
190
|
|
|
—
|
|
|
(275)
|
|
Litigation
settlement
|
|
183
|
|
|
—
|
|
|
183
|
|
|
(303)
|
|
Losses (gains) and
other expense (income)
|
|
166
|
|
|
(10,668)
|
|
|
225
|
|
|
(10,675)
|
|
Certain items before
depreciation and provision for income taxes 1
|
|
548
|
|
|
(8,473)
|
|
|
1,019
|
|
|
(6,678)
|
|
Depreciation on the
sold portion of the Surfers Paradise, Australia property
|
|
—
|
|
|
188
|
|
|
—
|
|
|
469
|
|
Provision for income
taxes on certain items
|
|
(213)
|
|
|
3,261
|
|
|
(386)
|
|
|
2,482
|
|
Adjusted net income
**
|
|
$
|
44,611
|
|
|
$
|
31,285
|
|
|
$
|
78,609
|
|
|
$
|
56,990
|
|
|
|
|
|
|
|
|
|
|
Earnings per share -
Diluted
|
|
$
|
1.58
|
|
|
$
|
1.26
|
|
|
$
|
2.79
|
|
|
$
|
2.08
|
|
Adjusted earnings per
share - Diluted **
|
|
$
|
1.60
|
|
|
$
|
1.08
|
|
|
$
|
2.81
|
|
|
$
|
1.95
|
|
Diluted
Shares
|
|
27,965
|
|
|
28,834
|
|
|
27,929
|
|
|
29,244
|
|
|
EBITDA AND
ADJUSTED EBITDA
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Net income
|
|
$
|
44,276
|
|
|
$
|
36,309
|
|
|
$
|
77,976
|
|
|
$
|
60,717
|
|
Interest expense
2
|
|
1,757
|
|
|
2,087
|
|
|
2,538
|
|
|
4,069
|
|
Tax
provision
|
|
21,117
|
|
|
24,858
|
|
|
39,772
|
|
|
40,615
|
|
Depreciation and
amortization
|
|
5,001
|
|
|
5,052
|
|
|
10,192
|
|
|
10,177
|
|
EBITDA **
|
|
72,151
|
|
|
68,306
|
|
|
130,478
|
|
|
115,578
|
|
Non-cash share-based
compensation
|
|
5,175
|
|
|
4,332
|
|
|
8,451
|
|
|
6,856
|
|
Certain items before
depreciation and provision for income taxes 1
|
|
548
|
|
|
(8,473)
|
|
|
1,019
|
|
|
(6,678)
|
|
Adjusted EBITDA
**
|
|
$
|
77,874
|
|
|
$
|
64,165
|
|
|
$
|
139,948
|
|
|
$
|
115,756
|
|
|
|
**
|
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.
|
A-3 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
NORTH AMERICA SEGMENT
(In thousands)
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
REVENUES
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
|
175,847
|
|
|
$
|
132,473
|
|
|
$
|
332,504
|
|
|
$
|
257,157
|
|
Resort management and
other services
|
71,057
|
|
|
63,296
|
|
|
138,594
|
|
|
119,709
|
|
Financing
|
30,719
|
|
|
26,853
|
|
|
60,958
|
|
|
54,261
|
|
Rental
|
75,990
|
|
|
65,629
|
|
|
155,130
|
|
|
138,137
|
|
Cost
reimbursements
|
101,488
|
|
|
90,174
|
|
|
216,443
|
|
|
189,356
|
|
TOTAL
REVENUES
|
455,101
|
|
|
378,425
|
|
|
903,629
|
|
|
758,620
|
|
EXPENSES
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
41,676
|
|
|
29,080
|
|
|
79,311
|
|
|
59,742
|
|
Marketing and
sales
|
90,784
|
|
|
66,911
|
|
|
179,654
|
|
|
135,226
|
|
Resort management and
other services
|
37,452
|
|
|
34,666
|
|
|
74,211
|
|
|
67,473
|
|
Rental
|
61,900
|
|
|
55,593
|
|
|
124,905
|
|
|
111,549
|
|
Litigation
settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(303)
|
|
Royalty
fee
|
3,038
|
|
|
2,254
|
|
|
5,728
|
|
|
3,940
|
|
Cost
reimbursements
|
101,488
|
|
|
90,174
|
|
|
216,443
|
|
|
189,356
|
|
TOTAL
EXPENSES
|
336,338
|
|
|
278,678
|
|
|
680,252
|
|
|
566,983
|
|
(Losses) gains and
other (expense) income
|
(162)
|
|
|
12,317
|
|
|
(196)
|
|
|
12,324
|
|
Other
|
74
|
|
|
(1,733)
|
|
|
125
|
|
|
(4,013)
|
|
SEGMENT FINANCIAL
RESULTS
|
$
|
118,675
|
|
|
$
|
110,331
|
|
|
$
|
223,306
|
|
|
$
|
199,948
|
|
|
|
|
|
|
|
|
|
SEGMENT FINANCIAL
RESULTS
|
$
|
118,675
|
|
|
$
|
110,331
|
|
|
$
|
223,306
|
|
|
$
|
199,948
|
|
Less certain
items:
|
|
|
|
|
|
|
|
Acquisition
costs
|
27
|
|
|
1,829
|
|
|
27
|
|
|
4,137
|
|
Litigation
settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(303)
|
|
Losses (gains) and
other expense (income)
|
162
|
|
|
(12,317)
|
|
|
196
|
|
|
(12,324)
|
|
Certain
items
|
189
|
|
|
(10,488)
|
|
|
223
|
|
|
(8,490)
|
|
ADJUSTED SEGMENT
FINANCIAL RESULTS **
|
$
|
118,864
|
|
|
$
|
99,843
|
|
|
$
|
223,529
|
|
|
$
|
191,458
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Vacation ownership
contract sales
|
$
|
190,883
|
|
|
$
|
145,600
|
|
|
$
|
368,319
|
|
|
$
|
285,250
|
|
|
|
**
|
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.
|
|
NOTE: We have
reclassified certain prior year amounts to conform to our current
period presentation. In addition, we reclassified certain revenues
and expenses for the 2016 second quarter and 2016 first half to
correct immaterial presentation errors within the following lines:
Resort management and other services revenues, Resort management
and other services expenses and General and administrative
expenses. Further we have reclassified certain management and other
services revenues between the North America and Asia Pacific
segments.
|
A-4 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
ASIA PACIFIC SEGMENT
(In thousands)
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
REVENUES
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
|
10,094
|
|
|
$
|
8,110
|
|
|
$
|
21,016
|
|
|
$
|
16,635
|
|
Resort management and
other services
|
1,030
|
|
|
4,412
|
|
|
2,033
|
|
|
7,778
|
|
Financing
|
1,105
|
|
|
1,007
|
|
|
2,228
|
|
|
1,988
|
|
Rental
|
2,644
|
|
|
4,828
|
|
|
6,382
|
|
|
10,449
|
|
Cost
reimbursements
|
724
|
|
|
685
|
|
|
1,871
|
|
|
1,558
|
|
TOTAL
REVENUES
|
15,597
|
|
|
19,042
|
|
|
33,530
|
|
|
38,408
|
|
EXPENSES
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
1,866
|
|
|
1,597
|
|
|
3,955
|
|
|
3,306
|
|
Marketing and
sales
|
8,717
|
|
|
6,695
|
|
|
16,918
|
|
|
12,906
|
|
Resort management and
other services
|
1,060
|
|
|
4,145
|
|
|
2,153
|
|
|
7,646
|
|
Rental
|
4,097
|
|
|
6,766
|
|
|
8,234
|
|
|
12,554
|
|
Royalty
fee
|
221
|
|
|
179
|
|
|
449
|
|
|
325
|
|
Cost
reimbursements
|
724
|
|
|
685
|
|
|
1,871
|
|
|
1,558
|
|
TOTAL
EXPENSES
|
16,685
|
|
|
20,067
|
|
|
33,580
|
|
|
38,295
|
|
Losses and other
expense
|
—
|
|
|
(1,498)
|
|
|
(20)
|
|
|
(1,498)
|
|
Other
|
(2)
|
|
|
(21)
|
|
|
(10)
|
|
|
(229)
|
|
SEGMENT FINANCIAL
RESULTS
|
$
|
(1,090)
|
|
|
$
|
(2,544)
|
|
|
$
|
(80)
|
|
|
$
|
(1,614)
|
|
|
|
|
|
|
|
|
|
SEGMENT FINANCIAL
RESULTS
|
$
|
(1,090)
|
|
|
$
|
(2,544)
|
|
|
$
|
(80)
|
|
|
$
|
(1,614)
|
|
Less certain
items:
|
|
|
|
|
|
|
|
Acquisition
costs
|
—
|
|
|
19
|
|
|
—
|
|
|
227
|
|
Operating results
from the sold portion of the Surfers Paradise, Australia
property
|
—
|
|
|
378
|
|
|
—
|
|
|
194
|
|
Losses and other
expense
|
—
|
|
|
1,498
|
|
|
20
|
|
|
1,498
|
|
Certain
items
|
—
|
|
|
1,895
|
|
|
20
|
|
|
1,919
|
|
ADJUSTED SEGMENT
FINANCIAL RESULTS **
|
$
|
(1,090)
|
|
|
$
|
(649)
|
|
|
$
|
(60)
|
|
|
$
|
305
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Vacation ownership
contract sales
|
$
|
11,614
|
|
|
$
|
10,454
|
|
|
$
|
23,562
|
|
|
$
|
19,880
|
|
|
|
**
|
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.
|
|
NOTE: We have
reclassified certain prior year amounts to conform to our current
period presentation. In addition, we reclassified certain revenues
and expenses for the 2016 second quarter and 2016 first half to
correct immaterial presentation errors within the following lines:
Resort management and other services revenues and Resort management
and other services expenses. Further we have reclassified certain
management and other services revenues between the North America
and Asia Pacific segments.
|
A-5 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
EUROPE SEGMENT
(In thousands)
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
REVENUES
|
|
|
|
|
|
|
|
Sale of vacation
ownership products
|
$
|
5,069
|
|
|
$
|
5,867
|
|
|
$
|
9,645
|
|
|
$
|
11,027
|
|
Resort management and
other services
|
7,071
|
|
|
6,448
|
|
|
11,495
|
|
|
10,377
|
|
Financing
|
706
|
|
|
794
|
|
|
1,455
|
|
|
1,629
|
|
Rental
|
5,554
|
|
|
4,612
|
|
|
7,932
|
|
|
6,771
|
|
Cost
reimbursements
|
8,522
|
|
|
7,983
|
|
|
16,053
|
|
|
15,461
|
|
TOTAL
REVENUES
|
26,922
|
|
|
25,704
|
|
|
46,580
|
|
|
45,265
|
|
EXPENSES
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
705
|
|
|
1,268
|
|
|
1,366
|
|
|
2,559
|
|
Marketing and
sales
|
4,528
|
|
|
5,313
|
|
|
8,118
|
|
|
9,199
|
|
Resort management and
other services
|
5,496
|
|
|
5,196
|
|
|
9,289
|
|
|
8,751
|
|
Rental
|
4,166
|
|
|
3,669
|
|
|
7,456
|
|
|
6,585
|
|
Royalty
fee
|
79
|
|
|
118
|
|
|
125
|
|
|
167
|
|
Cost
reimbursements
|
8,522
|
|
|
7,983
|
|
|
16,053
|
|
|
15,461
|
|
TOTAL
EXPENSES
|
23,496
|
|
|
23,547
|
|
|
42,407
|
|
|
42,722
|
|
SEGMENT FINANCIAL
RESULTS
|
$
|
3,426
|
|
|
$
|
2,157
|
|
|
$
|
4,173
|
|
|
$
|
2,543
|
|
|
|
|
|
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Vacation ownership
contract sales
|
$
|
7,395
|
|
|
$
|
9,938
|
|
|
$
|
11,845
|
|
|
$
|
14,356
|
|
|
|
**
|
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.
|
|
NOTE: We have
reclassified certain prior year amounts to conform to our current
period presentation. In addition, we reclassified certain revenues
and expenses for the 2016 second quarter and 2016 first half to
correct immaterial presentation errors within the following lines:
Resort management and other services revenues and Resort management
and other services expenses.
|
A-6 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
CORPORATE AND OTHER
(In thousands)
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
EXPENSES
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
$
|
1,896
|
|
|
$
|
1,808
|
|
|
$
|
4,131
|
|
|
$
|
3,763
|
|
Financing
|
3,449
|
|
|
2,621
|
|
|
7,466
|
|
|
7,201
|
|
General and
administrative
|
29,534
|
|
|
25,361
|
|
|
57,073
|
|
|
50,720
|
|
Litigation
settlement
|
183
|
|
|
—
|
|
|
183
|
|
|
—
|
|
Consumer financing
interest
|
5,654
|
|
|
5,117
|
|
|
11,592
|
|
|
10,479
|
|
Royalty
fee
|
12,969
|
|
|
11,475
|
|
|
26,075
|
|
|
22,951
|
|
TOTAL
EXPENSES
|
53,685
|
|
|
46,382
|
|
|
106,520
|
|
|
95,114
|
|
Losses and other
expense
|
(4)
|
|
|
(151)
|
|
|
(9)
|
|
|
(151)
|
|
Interest
expense
|
(1,757)
|
|
|
(2,087)
|
|
|
(2,538)
|
|
|
(4,069)
|
|
Other
|
(172)
|
|
|
(157)
|
|
|
(584)
|
|
|
(211)
|
|
TOTAL FINANCIAL
RESULTS
|
$
|
(55,618)
|
|
|
$
|
(48,777)
|
|
|
$
|
(109,651)
|
|
|
$
|
(99,545)
|
|
|
|
|
|
|
|
|
|
TOTAL FINANCIAL
RESULTS
|
$
|
(55,618)
|
|
|
$
|
(48,777)
|
|
|
$
|
(109,651)
|
|
|
$
|
(99,545)
|
|
Less certain
items:
|
|
|
|
|
|
|
|
Acquisition
costs
|
172
|
|
|
157
|
|
|
584
|
|
|
211
|
|
Litigation
settlement
|
183
|
|
|
—
|
|
|
183
|
|
|
—
|
|
Losses and other
expense
|
4
|
|
|
151
|
|
|
9
|
|
|
151
|
|
Certain
items
|
359
|
|
|
308
|
|
|
776
|
|
|
362
|
|
ADJUSTED FINANCIAL
RESULTS **
|
$
|
(55,259)
|
|
|
$
|
(48,469)
|
|
|
$
|
(108,875)
|
|
|
$
|
(99,183)
|
|
|
|
**
|
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.
|
|
NOTE: We have
reclassified certain prior year amounts to conform to our current
period presentation. In addition, we reclassified certain revenues
and expenses for the 2016 second quarter and 2016 first half to
correct immaterial presentation errors within the following lines:
Resort management and other services revenues, Resort management
and other services expenses and General and administrative
expenses.
|
A-7 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP
PRODUCTS
(In thousands)
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Vacation ownership
contract sales
|
|
$
|
209,892
|
|
|
$
|
165,992
|
|
|
$
|
403,726
|
|
|
$
|
319,486
|
|
Revenue recognition
adjustments:
|
|
|
|
|
|
|
|
|
Reportability
1
|
|
4,045
|
|
|
1,179
|
|
|
15
|
|
|
1,965
|
|
Sales reserve
2
|
|
(14,636)
|
|
|
(11,352)
|
|
|
(26,857)
|
|
|
(19,575)
|
|
Other
3
|
|
(8,291)
|
|
|
(9,369)
|
|
|
(13,719)
|
|
|
(17,057)
|
|
Sale of vacation
ownership products
|
|
$
|
191,010
|
|
|
$
|
146,450
|
|
|
$
|
363,165
|
|
|
$
|
284,819
|
|
|
|
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)
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Sale of vacation
ownership products
|
|
$
|
191,010
|
|
|
$
|
146,450
|
|
|
$
|
363,165
|
|
|
$
|
284,819
|
|
Less:
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
|
46,143
|
|
|
33,753
|
|
|
88,763
|
|
|
69,370
|
|
Marketing and
sales
|
|
104,029
|
|
|
78,919
|
|
|
204,690
|
|
|
157,331
|
|
Development
margin
|
|
40,838
|
|
|
33,778
|
|
|
69,712
|
|
|
58,118
|
|
Revenue recognition
reportability adjustment
|
|
(2,662)
|
|
|
(726)
|
|
|
27
|
|
|
(1,326)
|
|
Adjusted development
margin **
|
|
$
|
38,176
|
|
|
$
|
33,052
|
|
|
$
|
69,739
|
|
|
$
|
56,792
|
|
Development margin
percentage 1
|
|
21.4%
|
|
|
23.1%
|
|
|
19.2%
|
|
|
20.4%
|
|
Adjusted
development margin percentage
|
|
20.4%
|
|
|
22.8%
|
|
|
19.2%
|
|
|
20.1%
|
|
|
|
**
|
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-8 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP
PRODUCTS
(In thousands)
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Vacation ownership
contract sales
|
|
$
|
190,883
|
|
|
$
|
145,600
|
|
|
$
|
368,319
|
|
|
$
|
285,250
|
|
Revenue recognition
adjustments:
|
|
|
|
|
|
|
|
|
Reportability
1
|
|
5,135
|
|
|
3,783
|
|
|
441
|
|
|
3,871
|
|
Sales reserve
2
|
|
(12,131)
|
|
|
(7,631)
|
|
|
(22,813)
|
|
|
(15,037)
|
|
Other
3
|
|
(8,040)
|
|
|
(9,279)
|
|
|
(13,443)
|
|
|
(16,927)
|
|
Sale of vacation
ownership products
|
|
$
|
175,847
|
|
|
$
|
132,473
|
|
|
$
|
332,504
|
|
|
$
|
257,157
|
|
|
|
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)
|
|
|
|
|
Quarter
Ended
|
|
Year to Date
Ended
|
|
|
June 30,
2017
|
|
June 17,
2016
|
|
June 30,
2017
|
|
June 17,
2016
|
|
|
(91
days)
|
|
(84
days)
|
|
(182
days)
|
|
(168
days)
|
Sale of vacation
ownership products
|
|
$
|
175,847
|
|
|
$
|
132,473
|
|
|
$
|
332,504
|
|
|
$
|
257,157
|
|
Less:
|
|
|
|
|
|
|
|
|
Cost of vacation
ownership products
|
|
41,676
|
|
|
29,080
|
|
|
79,311
|
|
|
59,742
|
|
Marketing and
sales
|
|
90,784
|
|
|
66,911
|
|
|
179,654
|
|
|
135,226
|
|
Development
margin
|
|
43,387
|
|
|
36,482
|
|
|
73,539
|
|
|
62,189
|
|
Revenue recognition
reportability adjustment
|
|
(3,475)
|
|
|
(2,417)
|
|
|
(289)
|
|
|
(2,473)
|
|
Adjusted development
margin **
|
|
$
|
39,912
|
|
|
$
|
34,065
|
|
|
$
|
73,250
|
|
|
$
|
59,716
|
|
Development margin
percentage 1
|
|
24.7%
|
|
|
27.5%
|
|
|
22.1%
|
|
|
24.2%
|
|
Adjusted
development margin percentage
|
|
23.4%
|
|
|
26.5%
|
|
|
22.1%
|
|
|
23.6%
|
|
|
|
**
|
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)
2017 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE -
DILUTED OUTLOOK
|
|
|
|
|
Fiscal Year
2017 (low)
|
|
Fiscal Year
2017 (high)
|
Net income
|
|
$
|
154
|
|
|
$
|
160
|
|
Adjustments to
reconcile Net income to Adjusted net income
|
|
|
|
|
|
|
Certain
items1
|
|
1
|
|
|
1
|
|
Business interruption
insurance proceeds2
|
|
(9)
|
|
|
(9)
|
|
Provision for income
taxes on adjustments to net income
|
|
3
|
|
|
3
|
|
Adjusted net income
**
|
|
$
|
149
|
|
|
$
|
155
|
|
Earnings per share -
Diluted3
|
|
$
|
5.48
|
|
|
$
|
5.70
|
|
Adjusted earnings per
share - Diluted **, 3
|
|
$
|
5.31
|
|
|
$
|
5.52
|
|
Diluted
shares2
|
|
28.1
|
|
|
28.1
|
|
|
|
1
|
Certain items
adjustment primarily includes approximately $1 million of after tax
combined acquisition costs, litigation settlements and losses and
other expenses that have been incurred in the first half of
2017.
|
2
|
Includes estimated
net business interruption insurance proceeds associated with
Hurricane Matthew.
|
3
|
Earnings per share -
Diluted, Adjusted earnings per share - Diluted, and Diluted shares
outlook includes the impact of share repurchase activity only
through August 3, 2017.
|
2017 ADJUSTED
EBITDA OUTLOOK
|
|
|
|
Fiscal Year
2017 (low)
|
|
Fiscal Year
2017 (high)
|
Net income
|
|
$
|
154
|
|
|
$
|
160
|
|
Interest
expense1
|
|
7
|
|
|
7
|
|
Tax
provision
|
|
90
|
|
|
94
|
|
Depreciation and
amortization
|
|
22
|
|
|
22
|
|
EBITDA **
|
|
273
|
|
|
283
|
|
Non-cash share-based
compensation
|
|
17
|
|
|
17
|
|
Certain
items2 and business interruption insurance
proceeds3
|
|
(8)
|
|
|
(8)
|
|
Adjusted EBITDA
**
|
|
$
|
282
|
|
|
$
|
292
|
|
|
|
1
|
Interest expense
excludes consumer financing interest expense.
|
2
|
Certain items
adjustment primarily includes approximately $1 million of after tax
combined acquisition costs, litigation settlements and losses and
other expenses that have been incurred in the first half of
2017.
|
3
|
Includes estimated
net business interruption insurance proceeds associated with
Hurricane Matthew.
|
2017 ADJUSTED FREE
CASH FLOW OUTLOOK
|
|
|
|
Fiscal Year
2017
(low)
|
|
Fiscal Year
2017
(high)
|
Net cash provided by
operating activities
|
|
$
|
115
|
|
|
$
|
130
|
|
Capital expenditures
for property and equipment (excluding inventory):
|
|
|
|
|
New sales
centers1
|
|
(9)
|
|
|
(7)
|
|
Other
|
|
(28)
|
|
|
(25)
|
|
Borrowings from
securitization transactions
|
|
393
|
|
|
398
|
|
Repayment of debt
related to securitizations
|
|
(281)
|
|
|
(286)
|
|
Free cash flow
**
|
|
190
|
|
|
210
|
|
Adjustments:
|
|
|
|
|
Net change in
borrowings available from the securitization of eligible vacation
ownership notes receivable through the warehouse credit
facility2
|
|
10
|
|
|
10
|
|
Increase in
restricted cash
|
|
(10)
|
|
|
(10)
|
|
Adjusted free cash
flow **
|
|
$
|
190
|
|
|
$
|
210
|
|
|
|
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 2016 and 2017 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 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 quarters and first halves ended
June 30, 2017 and June 17, 2016 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 - Quarter and First Half Ended June 30, 2017
In our Statement of Income for the quarter ended June 30, 2017, we recorded $0.5 million of net pre-tax items, which included
$0.2 million of acquisition costs,
less than $0.2 million of litigation
settlement expenses and less than $0.2
million of losses and other expense. In our Statement of
Income for the first half ended June 30,
2017, we recorded $1.0 million
of net pre-tax items, which included $0.6
million of acquisition costs, $0.2
million of litigation settlement expenses and $0.2 million of losses and other expense.
Certain items - Quarter and First Half Ended June 17, 2016
In our Statement of Income for the quarter ended June 17, 2016, we recorded $8.3 million of net pre-tax items, which included
$10.7 million of gains and other
income, $2.0 million of acquisition
costs, 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
first half ended June 17, 2016, we
recorded $6.2 million of net pre-tax
items, which included $10.7 million
of gains and other income, $4.6
million of acquisition costs, a $0.3
million reversal of litigation settlement expense, and
$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.
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 may include 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.
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, and
excludes 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
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
|
|
|
|
(Unaudited)
June 30,
2017
|
|
December
30, 2016
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
85,151
|
|
|
$
|
147,102
|
|
Restricted cash
(including $31,005 and $27,525 from VIEs, respectively)
|
58,753
|
|
|
66,000
|
|
Accounts and
contracts receivable, net (including $4,311 and $4,865 from VIEs,
respectively)
|
131,395
|
|
|
161,733
|
|
Vacation ownership
notes receivable, net (including $655,180 and $717,543 from VIEs,
respectively)
|
1,036,449
|
|
|
972,311
|
|
Inventory
|
744,430
|
|
|
712,536
|
|
Property and
equipment
|
249,264
|
|
|
202,802
|
|
Other (including
$10,647 and $0 from VIEs, respectively)
|
127,994
|
|
|
128,935
|
|
TOTAL
ASSETS
|
$
|
2,433,436
|
|
|
$
|
2,391,419
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
|
76,456
|
|
|
$
|
124,439
|
|
Advance
deposits
|
59,401
|
|
|
55,542
|
|
Accrued liabilities
(including $537 and $584 from VIEs, respectively)
|
112,916
|
|
|
147,469
|
|
Deferred
revenue
|
115,536
|
|
|
95,495
|
|
Payroll and benefits
liability
|
87,000
|
|
|
95,516
|
|
Deferred compensation
liability
|
69,928
|
|
|
62,874
|
|
Debt, net (including
$671,221 and $738,362 from VIEs, respectively)
|
773,557
|
|
|
737,224
|
|
Other
|
12,989
|
|
|
15,873
|
|
Deferred
taxes
|
156,835
|
|
|
149,168
|
|
TOTAL
LIABILITIES
|
1,464,618
|
|
|
1,483,600
|
|
Preferred stock —
$0.01 par value; 2,000,000 shares authorized; none issued or
outstanding
|
—
|
|
|
—
|
|
Common stock — $0.01
par value; 100,000,000 shares authorized; 36,839,064 and 36,633,868
shares issued, respectively
|
368
|
|
|
366
|
|
Treasury stock — at
cost; 9,669,970 and 9,643,562 shares, respectively
|
(610,115)
|
|
|
(606,631)
|
|
Additional paid-in
capital
|
1,161,507
|
|
|
1,162,283
|
|
Accumulated other
comprehensive income
|
12,189
|
|
|
5,460
|
|
Retained
earnings
|
404,869
|
|
|
346,341
|
|
TOTAL
EQUITY
|
968,818
|
|
|
907,819
|
|
TOTAL LIABILITIES
AND EQUITY
|
$
|
2,433,436
|
|
|
$
|
2,391,419
|
|
|
The abbreviation
VIEs above means Variable Interest Entities.
|
A-13 MARRIOTT VACATIONS WORLDWIDE
CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
|
|
|
|
Year to Date
Ended
|
|
June 30,
2017
|
|
June 17,
2016
|
|
(182
days)
|
|
(168
days)
|
OPERATING
ACTIVITIES
|
|
|
|
Net income
|
$
|
77,976
|
|
|
$
|
60,717
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation
|
10,192
|
|
|
10,177
|
|
Amortization of debt
issuance costs
|
2,726
|
|
|
2,559
|
|
Provision for loan
losses
|
26,821
|
|
|
19,591
|
|
Share-based
compensation
|
8,451
|
|
|
6,856
|
|
Loss (gain) on
disposal of property and equipment, net
|
225
|
|
|
(10,675)
|
|
Deferred income
taxes
|
11,778
|
|
|
15,792
|
|
Net change in assets
and liabilities:
|
|
|
|
Accounts and
contracts receivable
|
30,079
|
|
|
(11,084)
|
|
Notes receivable
originations
|
(227,643)
|
|
|
(124,318)
|
|
Notes receivable
collections
|
136,731
|
|
|
120,548
|
|
Inventory
|
16,007
|
|
|
(13,924)
|
|
Purchase of vacation
ownership units for future transfer to inventory
|
(33,594)
|
|
|
—
|
|
Other
assets
|
4,406
|
|
|
26,111
|
|
Accounts payable,
advance deposits and accrued liabilities
|
(70,470)
|
|
|
(86,355)
|
|
Deferred
revenue
|
19,654
|
|
|
22,627
|
|
Payroll and benefit
liabilities
|
(8,698)
|
|
|
(27,313)
|
|
Deferred compensation
liability
|
7,053
|
|
|
6,536
|
|
Other
liabilities
|
(585)
|
|
|
1,081
|
|
Other, net
|
3,021
|
|
|
2,152
|
|
Net cash provided by
operating activities
|
14,130
|
|
|
21,078
|
|
INVESTING
ACTIVITIES
|
|
|
|
Capital expenditures
for property and equipment (excluding inventory)
|
(11,344)
|
|
|
(15,142)
|
|
Purchase of company
owned life insurance
|
(10,092)
|
|
|
—
|
|
Dispositions,
net
|
11
|
|
|
69,738
|
|
Net cash (used in)
provided by investing activities
|
(21,425)
|
|
|
54,596
|
|
FINANCING
ACTIVITIES
|
|
|
|
Borrowings from
securitization transactions
|
50,260
|
|
|
91,281
|
|
Repayment of debt
related to securitization transactions
|
(117,400)
|
|
|
(84,040)
|
|
Borrowings from
Revolving Corporate Credit Facility
|
60,000
|
|
|
85,000
|
|
Repayment of
Revolving Corporate Credit Facility
|
(12,500)
|
|
|
(40,000)
|
|
Debt issuance
costs
|
(1,219)
|
|
|
(231)
|
|
Repurchase of common
stock
|
(3,868)
|
|
|
(163,359)
|
|
Accelerated stock
repurchase forward contract
|
—
|
|
|
(14,470)
|
|
Payment of
dividends
|
(28,552)
|
|
|
(26,067)
|
|
Payment of
withholding taxes on vesting of restricted stock units
|
(9,962)
|
|
|
(3,876)
|
|
Other, net
|
(624)
|
|
|
572
|
|
Net cash used in
financing activities
|
(63,865)
|
|
|
(155,190)
|
|
Effect of changes in
exchange rates on cash, cash equivalents and restricted
cash
|
1,962
|
|
|
(3,238)
|
|
Decrease in cash,
cash equivalents, and restricted cash
|
(69,198)
|
|
|
(82,754)
|
|
Cash, cash
equivalents and restricted cash, beginning of period
|
213,102
|
|
|
248,512
|
|
Cash, cash
equivalents and restricted cash, end of period
|
$
|
143,904
|
|
|
$
|
165,758
|
|
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SOURCE Marriott Vacations Worldwide