MARRIOTT VACATIONS WORLDWIDE CORPORATION ORLANDO, Fla., July 23, 2015 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter 2015 financial results and provided updated guidance for the full year 2015.
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Second quarter 2015 highlights:
-- Adjusted fully diluted earnings per share (EPS) increased to $0.91, up
4.6 percent from $0.87 in the second quarter of 2014.
-- Adjusted EBITDA totaled $57.7 million, an increase of $1.0 million, or 2
percent, year-over-year.
-- North America contract sales were $150.6 million, up 3.4 percent
year-over-year.
-- North America tours increased 1.2 percent year-over-year.
-- North America volume per guest (VPG) increased 0.6 percent
year-over-year to $3,404.
-- Company adjusted development margin was 21.0 percent and North America
adjusted development margin was 23.0 percent.
-- The company completed the sale of its undeveloped land in Kauai, Hawaii,
for gross cash proceeds of $20 million.
-- During the second quarter of 2015, the company repurchased $15 million
of its common stock, bringing total 2015 repurchases through the end of
the second quarter to $66.2 million.
-- Subsequent to the end of the second quarter, the company purchased 71
units in The Mayflower Hotel, Autograph Collection in Washington, D.C.
Second quarter 2015 net income was $34.0 million, or $1.05 diluted EPS, compared to net income of $35.3 million, or $1.00 diluted EPS, in the second quarter of 2014. Company development margin was 21.3 percent and North America development margin was 23.6 percent in the second quarter of 2015.
Non-GAAP financial measures such as adjusted EBITDA, adjusted net income, adjusted earnings per share and adjusted development margin are reconciled and adjustments are shown and described in further detail on pages A-1 through A-19 of the Financial Schedules that follow.
"We're pleased with our solid second quarter financial results, delivering nearly $58 million of Adjusted EBITDA," said Stephen P. Weisz, president and chief executive officer. "Our North America contract sales grew 3.4 percent on continued growth in tour volumes and slightly higher VPG and our company development margin remained in line with our full year expectations. With a strong first half of the year behind us, we are reaffirming Adjusted EBITDA guidance of $222 million to $232 million for full year 2015."
Second Quarter 2015 Results
Company Results
Total company contract sales were $165.9 million, $1.3 million higher than the second quarter of last year. The increase was driven by $5.0 million of higher contract sales in the company's North America segment and $0.7 million of higher contract sales in the company's Asia Pacific segment, partially offset by $4.3 million of lower contract sales in the company's Europe segment.
Adjusted development margin was $32.3 million, a $4.4 million decrease from the second quarter of 2014. Adjusted development margin percentage was 21.0 percent in the second quarter of 2015 compared to 24.2 percent in the second quarter of 2014. Development margin was $33.1 million, a $3.8 million decrease from the second quarter of 2014. Development margin percentage was 21.3 percent in the second quarter of 2015 compared to 24.2 percent in the second quarter of 2014.
Rental revenues totaled $72.6 million, a $10.8 million increase from the second quarter of 2014, reflecting a 4 percent increase in transient rate and a 6 percent increase in transient keys rented. Rental revenues, net of expenses, were $10.8 million, a $4.0 million increase from the second quarter of 2014.
Resort management and other services revenues totaled $74.1 million, a $0.8 million decrease from the second quarter of 2014. Resort management and other services revenues, net of expenses, were $28.6 million, a $2.1 million, or 8 percent, increase over the second quarter of 2014.
Financing revenues totaled $28.3 million, a $1.5 million decrease from the second quarter of 2014. Financing revenues, net of expenses and consumer financing interest expense, were $17.0 million, a $1.7 million decrease from the second quarter of 2014.
Adjusted EBITDA was $57.7 million in the second quarter of 2015, a $1.0 million, or 1.7 percent, increase from $56.7 million in the second quarter of 2014.
Segment Results
North America
VPG increased 0.6 percent to $3,404 in the second quarter of 2015 from $3,383 in the second quarter of 2014, driven by improved closing efficiency and higher pricing, offset partially by fewer points purchased per contract. North America contract sales were $150.6 million in the second quarter of 2015, an increase of $5.0 million, or 3.4 percent, over the prior year period.
Second quarter 2015 North America segment financial results were $104.6 million, an increase of $2.9 million from the second quarter of 2014. The increase was driven primarily by $8.2 million of higher gains mainly associated with the disposition of the company's property in Kauai, Hawaii, $4.2 million of higher rental revenues net of expenses, $2.1 million of higher resort management and other services revenues net of expenses and $0.8 million related to an impairment charge in the prior year period. These increases were offset partially by $7.5 million of lower litigation settlements due mainly to the settlement of a dispute with a former service provider in the prior year period, $2.0 million of lower development margin, $2.0 million from the reversal of a charge in the prior year period related to the company's interest in an equity method investment in a joint venture project and $1.5 million of lower financing revenues.
Adjusted development margin was $32.3 million, a $3.0 million decrease from the prior year quarter. Adjusted development margin percentage was 23.0 percent in the second quarter of 2015 compared to 26.3 percent in the second quarter of 2014. Development margin was $33.5 million, a $2.0 million decrease from the second quarter of 2014. Development margin percentage was 23.6 percent in the second quarter of 2015 compared to 26.3 percent in the prior year quarter.
Asia Pacific
Total contract sales in the segment were $8.0 million, an increase of $0.7 million in the second quarter of 2015. Segment financial results were a loss of $0.1 million, a $1.5 million decrease from the second quarter of 2014, reflecting $1.3 million of transaction costs associated with the company's future new resort and sales distribution in Australia.
Europe
Second quarter 2015 contract sales were $7.3 million, a decrease of $4.3 million from the second quarter of 2014. Segment financial results were $3.0 million, a $2.2 million decrease from the second quarter of 2014 due to lower development margin from lower contract sales.
Share Repurchase Program
In total for 2015, through the end of the second quarter, the company repurchased approximately $66.2 million of its common stock.
Balance Sheet and Liquidity
On June 19, 2015, cash and cash equivalents totaled $250.9 million. Since the beginning of the year, real estate inventory balances declined $69.1 million to $699.1 million, including $335.3 million of finished goods and $363.8 million of land and infrastructure. The company had $568.1 million in gross debt outstanding at the end of the second quarter of 2015, a decrease of $143.3 million from year-end 2014, consisting primarily of $564.7 million in gross non-recourse securitized notes. In addition, $40.0 million of gross mandatorily redeemable preferred stock of a subsidiary of the company was outstanding at the end of the second quarter of 2015.
As of June 19, 2015, the company had approximately $197 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit, and approximately $207 million of gross vacation ownership notes receivable eligible for securitization into its warehouse credit facility.
Outlook
The company is providing the following updated guidance for the full year 2015:
Current Guidance Previous Guidance
---------------- -----------------
Adjusted
free
cash
flow $175 million to $200 million $145 million to $170 million
The company is reaffirming the following guidance for the
full year 2015:
Current Guidance
----------------
Adjusted
EBITDA $222 million to $232 million
Company
contract
sales
growth
(excluding
residential) 5 percent to 8 percent
Adjusted
company
development
margin 21 percent to 22 percent
Adjusted
net
income $108 million to $114 million
Adjusted
fully
diluted
earnings
per
share $3.29 to $3.48
Pages A-1 through A-19 of the Financial Schedules reconcile the non-GAAP financial measures set forth above to the following full year 2015 expected GAAP results: net income of $114 million to $121 million; fully diluted EPS of $3.49 to $3.70; company development margin of 21.1 percent to 22.1 percent; and net cash provided by operating activities of $170 million to $185 million.
Second Quarter 2015 Earnings Conference Call
The company will hold a conference call at 10:00 a.m. EST today to discuss these results and the updated guidance for full year 2015. 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 13613029. 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 60 resorts. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. For more information, please visit www.marriottvacationsworldwide.com.
Note on forward-looking statements: This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading "Risk Factors" contained in the company's most recent Annual Report on Form 10-K filed with the U.S Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of July 23, 2015 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, 2015
TABLE OF CONTENTS
Consolidated Statements of Income - 12 Weeks Ended June 19, 2015 and June 20, 2014 A-1
Consolidated Statements of Income - 24 Weeks Ended June 19, 2015 and June 20, 2014 A-2
North America Segment Financial Results -12 Weeks Ended June 19, 2015 and June 20,
2014 A-3
North America Segment Financial Results -24 Weeks Ended June 19, 2015 and June 20,
2014 A-4
Asia Pacific Segment Financial Results -12 Weeks Ended June 19, 2015 and June 20,
2014 A-5
Asia Pacific Segment Financial Results -24 Weeks Ended June 19, 2015 and June 20,
2014 A-6
Europe Segment Financial Results - 12 Weeks Ended June 19, 2015 and June 20, 2014 A-7
Europe Segment Financial Results - 24 Weeks Ended June 19, 2015 and June 20, 2014 A-8
Corporate and Other Financial Results -12 Weeks and 24 Weeks Ended June 19, 2015 and
June 20, 2014 A-9
Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin
(Adjusted Sale of Vacation Ownership Products Net of Expenses) -12 Weeks Ended June
19, 2015 and June 20, 2014 A-10
Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin
(Adjusted Sale of Vacation Ownership Products Net of Expenses) -24 Weeks Ended June
19, 2015 and June 20, 2014 A-11
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 Ended June
19, 2015 and June 20, 2014 A-12
North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin
(Adjusted Sale of Vacation Ownership Products Net of Expenses) -24 Weeks Ended June
19, 2015 and June 20, 2014 A-13
EBITDA and Adjusted EBITDA -12 Weeks and 24 Weeks Ended June 19, 2015 and June 20,
2014 A-14
2015 Outlook -Adjusted Net Income and Adjusted Earnings Per Share -Diluted,
Adjusted EBITDA and Adjusted Development Margin A-15
2015 Outlook - Adjusted Free Cash Flow and Normalized Adjusted Free Cash Flow A-16
Non-GAAP Financial Measures A-17
Consolidated Balance Sheets A-20
Consolidated Statements of Cash Flows A-21
A-1
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands, except per share amounts)
As Reported As Adjusted As Reported As Adjusted
12 Weeks Ended Certain 12 Weeks Ended 12 Weeks Ended Certain 12 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $155,370 $ - $155,370 $152,562 $ - $152,562
Resort management and
other services 74,063 - 74,063 74,821 - 74,821
Financing 28,294 - 28,294 29,817 - 29,817
Rental 72,642 - 72,642 61,827 - 61,827
Cost reimbursements 92,458 - 92,458 90,875 - 90,875
Total revenues 422,827 - 422,827 409,902 - 409,902
------- --- ------- ------- --- -------
Expenses
Cost of vacation
ownership products 45,119 - 45,119 43,414 - 43,414
Marketing and sales 77,137 - 77,137 72,227 (287) 71,940
Resort management and
other services 45,480 - 45,480 48,308 - 48,308
Financing 6,085 - 6,085 5,438 - 5,438
Rental 61,835 - 61,835 54,991 - 54,991
General and
administrative 22,892 - 22,892 23,153 - 23,153
Organizational and
separation related 101 (101) - 1,089 (1,089) -
Litigation settlement 26 (26) - (7,575) 7,575 -
Consumer financing
interest 5,248 - 5,248 5,737 - 5,737
Royalty fee 13,431 - 13,431 13,653 - 13,653
Impairment - - - 834 (834) -
Cost reimbursements 92,458 - 92,458 90,875 - 90,875
Total expenses 369,812 (127) 369,685 352,144 5,365 357,509
------- ---- ------- ------- ----- -------
Gains and other income 8,625 (8,625) - 409 (409) -
Interest Expense (3,009) - (3,009) (2,601) - (2,601)
Equity in earnings 85 - 85 81 - 81
Impairment reversals on equity investment - - - 2,000 (2,000) -
Other (1,272) 1,272 - - - -
Income before
income taxes 57,444 (7,226) 50,218 57,647 (7,774) 49,873
Provision for income taxes (23,403) 2,804 (20,599) (22,344) 3,158 (19,186)
Net income $34,041 $(4,422) $29,619 $35,303 $(4,616) $30,687
======= ======= ======= ======= ======= =======
Earnings per share - Basic $1.07 $0.93 $1.03 $0.89
===== ===== ===== =====
Earnings per share - Diluted $1.05 $0.91 $1.00 $0.87
===== ===== ===== =====
Basic Shares 31,858 31,858 34,292 34,292
Diluted Shares 32,517 32,517 35,239 35,239
As Reported As Reported
12 Weeks Ended 12 Weeks Ended
Contract Sales June 19, 2015 June 20, 2014
------------- -------------
Vacation ownership $165,938 $164,589
Residential
products - -
--- ---
Total contract
sales $165,938 $164,589
======== ========
** Denotes non-GAAP financial
measures. Please see pages A-
17 through A-19 for additional
information about our reasons
for providing these alternative
financial measures and
limitations on their use.
NOTE: Earnings per share -
Basic and Earnings per share -
Diluted are calculated using
whole dollars. Beginning with
the fourth quarter of 2014, we
have combined results from
Other into Resort management
and other services and have
recast prior year presentation
for consistency.
A-2
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands, except per share amounts)
As Reported As Adjusted As Reported As Adjusted
24 Weeks Ended Certain 24 Weeks Ended 24 Weeks Ended Certain 24 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $339,276 $(28,420) $310,856 $297,412 $ - $297,412
Resort management and
other services 138,480 - 138,480 138,367 - 138,367
Financing 57,346 - 57,346 60,457 - 60,457
Rental 148,841 - 148,841 125,352 - 125,352
Cost reimbursements 193,764 - 193,764 190,261 - 190,261
Total revenues 877,707 (28,420) 849,287 811,849 - 811,849
------- ------- ------- ------- --- -------
Expenses
Cost of vacation
ownership products 110,081 (21,583) 88,498 90,285 - 90,285
Marketing and sales 157,132 (922) 156,210 143,447 (287) 143,160
Resort management and
other services 87,889 - 87,889 93,204 200 93,404
Financing 10,990 - 10,990 10,542 - 10,542
Rental 121,993 - 121,993 111,781 - 111,781
General and
administrative 45,669 - 45,669 44,981 - 44,981
Organizational and
separation related 293 (293) - 1,940 (1,940) -
Litigation settlement (236) 236 - (7,575) 7,575 -
Consumer financing
interest 11,269 - 11,269 12,362 - 12,362
Royalty fee 26,431 - 26,431 27,081 - 27,081
Impairment - - - 834 (834) -
Cost reimbursements 193,764 - 193,764 190,261 - 190,261
Total expenses 765,275 (22,562) 742,713 719,143 4,714 723,857
------- ------- ------- ------- ----- -------
Gains and other income 9,512 (9,512) - 1,642 (1,642) -
Interest Expense (5,983) - (5,983) (4,748) - (4,748)
Equity in earnings 98 - 98 118 - 118
Other (1,272) 1,272 - - - -
Income before
income taxes 114,787 (14,098) 100,689 89,718 (6,356) 83,362
Provision for income taxes (46,692) 3,779 (42,913) (35,107) 2,537 (32,570)
Net income $68,095 $(10,319) $57,776 $54,611 $(3,819) $50,792
======= ======== ======= ======= ======= =======
Earnings per share - Basic $2.12 $1.80 $1.58 $1.47
===== ===== ===== =====
Earnings per share - Diluted $2.08 $1.76 $1.54 $1.43
===== ===== ===== =====
Basic Shares 32,078 32,078 34,583 34,583
Diluted Shares 32,760 32,760 35,557 35,557
As Reported As Reported
24 Weeks Ended 24 Weeks Ended
Contract Sales June 19, 2015 June 20, 2014
------------- -------------
Vacation ownership $335,888 $319,837
Residential
products 28,420 6,326
------ -----
Total contract
sales $364,308 $326,163
======== ========
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for
providing these alternative financial measures and limitations on their use.
NOTE: Earnings per share -Basic and Earnings per share -Diluted are calculated using whole dollars. Beginning with the fourth
quarter of 2014, we have combined results from Other into Resort management and other services and have recast prior year
presentation for consistency.
A-3
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA SEGMENT
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
12 Weeks Ended Certain 12 Weeks Ended 12 Weeks Ended Certain 12 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $142,148 $ - $142,148 $134,590 $ - $134,590
Resort management and
other services 66,194 - 66,194 65,480 - 65,480
Financing 26,354 - 26,354 27,807 - 27,807
Rental 65,756 - 65,756 54,404 - 54,404
Cost reimbursements 84,037 - 84,037 80,642 - 80,642
Total revenues 384,489 - 384,489 362,923 - 362,923
------- --- ------- ------- --- -------
Expenses
Cost of vacation
ownership products 40,834 - 40,834 37,433 - 37,433
Marketing and sales 67,837 - 67,837 61,722 - 61,722
Resort management and
other services 39,101 - 39,101 40,527 - 40,527
Rental 55,128 - 55,128 47,985 - 47,985
Organizational and
separation related 115 (115) - 388 (388) -
Litigation settlement (108) 108 - (7,575) 7,575 -
Royalty fee 1,686 - 1,686 1,820 - 1,820
Impairment - - - 834 (834) -
Cost reimbursements 84,037 - 84,037 80,642 - 80,642
Total expenses 288,630 (7) 288,623 263,776 6,353 270,129
------- --- ------- ------- ----- -------
Gains and other income 8,658 (8,658) - 448 (448) -
Equity in earnings 86 - 86 81 - 81
Impairment reversals on equity investment - - - 2,000 (2,000) -
--- --- --- ----- ------ ---
Segment
financial
results $104,603 $(8,651) $95,952 $101,676 $(8,801) $92,875
======== ======= ======= ======== ======= =======
As Reported As Reported
12 Weeks Ended 12 Weeks Ended
Contract Sales June 19, 2015 June 20, 2014
------------- -------------
Vacation ownership $150,605 $145,597
Residential
products - -
--- ---
Total contract
sales $150,605 $145,597
======== ========
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons
for providing these alternative financial measures and limitations on their use.
NOTE: Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other
services and have recast prior year presentation for consistency.
A-4
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA SEGMENT
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
24 Weeks Ended Certain 24 Weeks Ended 24 Weeks Ended Certain 24 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $283,876 $ - $283,876 $265,932 $ - $265,932
Resort management and
other services 124,769 - 124,769 122,640 - 122,640
Financing 53,410 - 53,410 56,368 - 56,368
Rental 137,471 - 137,471 113,727 - 113,727
Cost reimbursements 176,891 - 176,891 170,585 - 170,585
Total revenues 776,417 - 776,417 729,252 - 729,252
------- --- ------- ------- --- -------
Expenses
Cost of vacation
ownership products 81,335 - 81,335 78,938 - 78,938
Marketing and sales 136,854 - 136,854 124,409 - 124,409
Resort management and
other services 76,069 - 76,069 79,616 - 79,616
Rental 109,739 - 109,739 99,022 - 99,022
Organizational and
separation related 254 (254) - 405 (405) -
Litigation settlement (370) 370 - (7,575) 7,575 -
Royalty fee 2,946 - 2,946 3,497 - 3,497
Impairment - - - 834 (834) -
Cost reimbursements 176,891 - 176,891 170,585 - 170,585
Total expenses 583,718 116 583,834 549,731 6,336 556,067
------- --- ------- ------- ----- -------
Gains and other income 9,538 (9,538) - 1,690 (1,690) -
Equity in earnings 102 - 102 120 - 120
--- --- --- --- --- ---
Segment
financial
results $202,339 $(9,654) $192,685 $181,331 $(8,026) $173,305
======== ======= ======== ======== ======= ========
As Reported As Reported
24 Weeks Ended 24 Weeks Ended
Contract Sales June 19, 2015 June 20, 2014
------------- -------------
Vacation ownership $306,598 $285,774
Residential
products - 6,326
--- -----
Total contract
sales $306,598 $292,100
======== ========
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons
for providing these alternative financial measures and limitations on their use.
NOTE: Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and other
services and have recast prior year presentation for consistency.
A-5
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ASIA PACIFIC SEGMENT
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
12 Weeks Ended Certain 12 Weeks Ended 12 Weeks Ended Certain 12 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $7,575 $ - $7,575 $7,954 $ - $7,954
Resort management and
other services 964 - 964 926 - 926
Financing 1,043 - 1,043 1,047 - 1,047
Rental 1,503 - 1,503 1,581 - 1,581
Cost reimbursements 632 - 632 722 - 722
Total revenues 11,717 - 11,717 12,230 - 12,230
------ --- ------ ------ --- ------
Expenses
Cost of vacation
ownership products 1,803 - 1,803 2,047 - 2,047
Marketing and sales 4,432 - 4,432 4,243 - 4,243
Resort management and
other services 655 - 655 642 - 642
Rental 2,794 - 2,794 2,936 - 2,936
Royalty fee 150 - 150 147 - 147
Cost reimbursements 632 - 632 722 - 722
Total expenses 10,466 - 10,466 10,737 - 10,737
------ --- ------ ------ --- ------
Gains and other income (33) 33 - - - -
Equity in losses (1) - (1) - - -
Other (1,272) 1,272 - - - -
Segment
financial
results $(55) $1,305 $1,250 $1,493 $ - $1,493
==== ====== ====== ====== ============== ======
As Reported As Reported
12 Weeks Ended 12 Weeks Ended
Contract Sales June 19, 2015 June 20, 2014
------------- -------------
Vacation ownership $7,992 $7,337
Residential
products - -
--- ---
Total contract
sales $7,992 $7,337
====== ======
** Denotes non-GAAP financial
measures. Please see pages A-
17 through A-19 for additional
information about our reasons
for providing these alternative
financial measures and
limitations on their use.
NOTE: Beginning with the
fourth quarter of 2014 we have
combined results from Other
into Resort management and
other services and have recast
prior year presentation for
consistency.
A-6
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ASIA PACIFIC SEGMENT
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
24 Weeks Ended Certain 24 Weeks Ended 24 Weeks Ended Certain 24 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $43,853 $(28,420) $15,433 $14,222 $ - $14,222
Resort management and
other services 1,827 - 1,827 1,832 - 1,832
Financing 2,049 - 2,049 2,104 - 2,104
Rental 3,855 - 3,855 3,556 - 3,556
Cost reimbursements 1,498 - 1,498 1,663 - 1,663
Total revenues 53,082 (28,420) 24,662 23,377 - 23,377
------ ------- ------ ------ --- ------
Expenses
Cost of vacation
ownership products 23,799 (21,583) 2,216 3,500 - 3,500
Marketing and sales 9,989 (922) 9,067 8,021 - 8,021
Resort management and
other services 1,505 - 1,505 1,342 - 1,342
Rental 5,290 - 5,290 5,532 - 5,532
Royalty fee 307 - 307 324 - 324
Cost reimbursements 1,498 - 1,498 1,663 - 1,663
Total expenses 42,388 (22,505) 19,883 20,382 - 20,382
------ ------- ------ ------ --- ------
Gains and other income (30) 30 - (8) 8 -
Equity in losses (4) - (4) (2) - (2)
Other (1,272) 1,272 - - - -
Segment
financial
results $9,388 $(4,613) $4,775 $2,985 $8 $2,993
====== ======= ====== ====== === ======
As Reported As Reported
24 Weeks Ended 24 Weeks Ended
Contract Sales June 19, 2015 June 20, 2014
------------- -------------
Vacation ownership 16,651 13,960
Residential
products 28,420 -
------ ---
Total contract
sales $45,071 $13,960
======= =======
** Denotes non-GAAP financial
measures. Please see pages A-17
through A-19 for additional
information about our reasons for
providing these alternative financial
measures and limitations on their
use.
NOTE: Asia Pacific segment revenues
and expenses for the twelve weeks
ended March 28, 2014 have been
restated to reclassify a portion of
Cost reimbursements from the Asia
Pacific segment to the Europe segment
to correct certain immaterial prior
period errors. Beginning with the
fourth quarter of 2014 we have
combined results from Other into
Resort management and other services
and have recast prior year
presentation for consistency.
A-7
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
12 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
12 Weeks Ended Certain 12 Weeks Ended 12 Weeks Ended Certain 12 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $5,647 $ - $5,647 $10,018 $ - $10,018
Resort management and
other services 6,905 - 6,905 8,415 - 8,415
Financing 897 - 897 963 - 963
Rental 5,383 - 5,383 5,842 - 5,842
Cost reimbursements 7,789 - 7,789 9,511 - 9,511
Total revenues 26,621 - 26,621 34,749 - 34,749
------ --- ------ ------ --- ------
Expenses
Cost of vacation
ownership products 1,233 - 1,233 2,389 - 2,389
Marketing and sales 4,868 - 4,868 6,262 (287) 5,975
Resort management and
other services 5,724 - 5,724 7,139 - 7,139
Rental 3,913 - 3,913 4,070 - 4,070
Royalty fee 88 - 88 180 - 180
Cost reimbursements 7,789 - 7,789 9,511 - 9,511
Total expenses 23,615 - 23,615 29,551 (287) 29,264
------ --- ------ ------ ---- ------
Gains and other income - - - (39) 39 -
Segment
financial
results $3,006 $ - $3,006 $5,159 $326 $5,485
====== ============== ====== ====== ==== ======
As Reported As Reported
12 Weeks Ended 12 Weeks Ended
June 19, 2015 June 20, 2014
------------- -------------
Contract Sales $7,341 $11,655
====== =======
** Denotes non-GAAP financial
measures. Please see pages A-
17 through A-19 for additional
information about our reasons
for providing these alternative
financial measures and
limitations on their use.
NOTE: Beginning with the
fourth quarter of 2014 we have
combined results from Other
into Resort management and
other services and have recast
prior year presentation for
consistency.
A-8
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EUROPE SEGMENT
24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
24 Weeks Ended Certain 24 Weeks Ended 24 Weeks Ended Certain 24 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Revenues
Sale of vacation
ownership products $11,547 $ - $11,547 $17,258 $ - $17,258
Resort management and
other services 11,884 - 11,884 13,895 - 13,895
Financing 1,887 - 1,887 1,985 - 1,985
Rental 7,515 - 7,515 8,069 - 8,069
Cost reimbursements 15,375 - 15,375 18,013 - 18,013
Total revenues 48,208 - 48,208 59,220 - 59,220
------ --- ------ ------ --- ------
Expenses
Cost of vacation
ownership products 2,085 - 2,085 3,835 - 3,835
Marketing and sales 10,289 - 10,289 11,017 (287) 10,730
Resort management and
other services 10,315 - 10,315 12,246 200 12,446
Rental 6,964 - 6,964 7,227 - 7,227
Royalty fee 164 - 164 282 - 282
Cost reimbursements 15,375 - 15,375 18,013 - 18,013
Total expenses 45,192 - 45,192 52,620 (87) 52,533
------ --- ------ ------ --- ------
Gains and other income 4 (4) - (39) 39 -
Segment
financial
results $3,020 $(4) $3,016 $6,561 $126 $6,687
====== === ====== ====== ==== ======
As Reported As Reported
24 Weeks Ended 24 Weeks Ended
June 19, 2015 June 20, 2014
------------- -------------
Contract Sales $12,639 $20,103
======= =======
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons
for providing these alternative financial measures and limitations on their use.
NOTE: Europe segment revenues and expenses for the twelve weeks ended March 28, 2014 have been restated to reclassify a
portion of Cost reimbursements from the Asia Pacific segment to the Europe segment to correct certain immaterial prior
period errors. Beginning with the fourth quarter of 2014 we have combined results from Other into Resort management and
other services and have recast prior year presentation for consistency.
A-9
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CORPORATE AND OTHER
12 Weeks and 24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
12 Weeks Ended Certain 12 Weeks Ended 12 Weeks Ended Certain 12 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Expenses
Cost of vacation
ownership products $1,249 $ - $1,249 $1,545 $ - $1,545
Financing 6,085 - 6,085 5,438 - 5,438
General and
administrative 22,892 - 22,892 23,153 - 23,153
Organizational and
separation related (14) 14 - 701 (701) -
Litigation settlement 134 (134) - - - -
Consumer financing
interest 5,248 - 5,248 5,737 - 5,737
Royalty fee 11,507 - 11,507 11,506 - 11,506
Total expenses $47,101 $(120) $46,981 $48,080 $(701) $47,379
======= ===== ======= ======= ===== =======
As Reported As Adjusted As Reported As Adjusted
24 Weeks Ended Certain 24 Weeks Ended 24 Weeks Ended Certain 24 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Expenses
Cost of vacation
ownership products $2,862 $ - $2,862 $4,012 $ - $4,012
Financing 10,990 - 10,990 10,542 - 10,542
General and
administrative 45,669 - 45,669 44,981 - 44,981
Organizational and
separation related 39 (39) - 1,535 (1,535) -
Litigation settlement 134 (134) - - - -
Consumer financing
interest 11,269 - 11,269 12,362 - 12,362
Royalty fee 23,014 - 23,014 22,978 - 22,978
Total expenses $93,977 $(173) $93,804 $96,410 $(1,535) $94,875
======= ===== ======= ======= ======= =======
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons
for providing these alternative financial measures and limitations on their use.
NOTE: Corporate and Other consists of results not specifically attributable to an individual segment, including expenses
incurred to support our financing operations, non-capitalizable development expenses supporting overall company
development, company-wide general and administrative costs, and the fixed royalty fee payable under the license agreements
that we entered into with Marriott International in connection with the spin-off, as well as consumer financing interest
expense.
A-10
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)
12 Weeks Ended
--------------
June 19, 2015 June 20, 2014
------------- -------------
Contract sales
Vacation
ownership $165,938 $164,589
Residential
products - -
Total
contract
sales 165,938 164,589
------- -------
Revenue recognition adjustments:
Reportability(1) 1,440 829
Sales
Reserve(2) (7,179) (8,047)
Other(3) (4,829) (4,809)
Sale of vacation ownership
products $155,370 $152,562
======== ========
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)
Revenue Revenue
As Reported Recognition As Adjusted As Reported Recognition As Adjusted
12 Weeks Ended Certain Reportability 12 Weeks Ended 12 Weeks Ended Certain Reportability 12 Weeks Ended
June 19, 2015 Items Adjustment June 19, 2015 ** June 20, 2014 Items Adjustment June 20, 2014 **
------------- ----- ---------- ------------- ------------- ----- ---------- -------------
Sale of vacation ownership
products $155,370 $ - $(1,440) $153,930 $152,562 $ - $(829) $151,733
Less:
Cost of vacation ownership
products 45,119 - (464) 44,655 43,414 - (198) 43,216
Marketing and sales 77,137 - (157) 76,980 72,227 (287) (121) 71,819
Development margin $33,114 $ - $(819) $32,295 $36,921 $287 $(510) $36,698
======= ============== ===== ======= ======= ==== ===== =======
21.3% 21.0% 24.2% 24.2%
Development margin percentage(1)
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative
financial measures and limitations on their use.
(1) Development margin percentage represents Development margin divided by Sale of vacation ownership products. Development margin percentage is calculated
using whole dollars.
A-11
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)
24 Weeks Ended
--------------
June 19, 2015 June 20, 2014
------------- -------------
Contract sales
Vacation
ownership $335,888 $319,837
Residential
products 28,420 6,326
Total
contract
sales 364,308 326,163
------- -------
Revenue recognition adjustments:
Reportability(1) (73) (3,725)
Sales
Reserve(2) (15,546) (15,698)
Other(3) (9,413) (9,328)
Sale of vacation ownership
products $339,276 $297,412
======== ========
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)
Revenue Revenue
As Reported Recognition As Adjusted As Reported Recognition As Adjusted
24 Weeks Ended Certain Reportability 24 Weeks Ended 24 Weeks Ended Certain Reportability 24 Weeks Ended
June 19, 2015 Items Adjustment June 19, 2015 ** June 20, 2014 Items Adjustment June 20, 2014 **
------------- ----- ---------- ------------- ------------- ----- ---------- -------------
Sale of vacation ownership
products $339,276 $(28,420) $73 $310,929 $297,412 $ - $3,725 $301,137
Less:
Cost of vacation ownership
products 110,081 (21,583) 98 88,596 90,285 - 1,216 91,501
Marketing and sales 157,132 (922) (52) 156,158 143,447 (287) 253 143,413
Development margin $72,063 $(5,915) $27 $66,175 $63,680 $287 $2,256 $66,223
======= ======= === ======= ======= ==== ====== =======
21.2% 21.3% 21.4% 22.0%
Development margin percentage(1)
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative
financial measures and limitations on their use.
(1) Development margin percentage represents Development margin divided by Sale of vacation ownership products. Development margin percentage is calculated
using whole dollars.
A-12
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)
12 Weeks Ended
--------------
June 19, 2015 June 20, 2014
------------- -------------
Contract sales
Vacation
ownership $150,605 $145,597
Residential
products - -
Total
contract
sales 150,605 145,597
------- -------
Revenue recognition adjustments:
Reportability(1) 1,942 208
Sales Reserve
(2) (5,651) (6,424)
Other (3) (4,748) (4,791)
Sale of vacation ownership
products $142,148 $134,590
======== ========
(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)
Revenue Revenue
As Reported Recognition As Adjusted As Reported Recognition As Adjusted
12 Weeks Ended Certain Reportability 12 Weeks Ended 12 Weeks Ended Certain Reportability 12 Weeks Ended
June 19, 2015 Items Adjustment June 19, 2015 ** June 20, 2014 Items Adjustment June 20, 2014 **
------------- ----- ---------- ------------- ------------- ----- ---------- -------------
Sale of vacation ownership
products $142,148 $ - $(1,942) $140,206 $134,590 $ - $(208) $134,382
Less:
Cost of vacation ownership
products 40,834 - (553) 40,281 37,433 - (58) 37,375
Marketing and sales 67,837 - (182) 67,655 61,722 - (20) 61,702
Development margin $33,477 $ - $(1,207) $32,270 $35,435 $ - $(130) $35,305
======= ============ ======= ======= ======= ============ ===== =======
23.6% 23.0% 26.3% 26.3%
Development margin percentage(1)
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative
financial measures and limitations on their use.
(1) Development margin percentage represents Development margin divided by Sale of vacation ownership products. Development margin percentage is calculated
using whole dollars.
A-13
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NORTH AMERICA CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS
(In thousands)
24 Weeks Ended
--------------
June 19, 2015 June 20, 2014
------------- -------------
Contract sales
Vacation
ownership $306,598 $285,774
Residential
products - 6,326
Total
contract
sales 306,598 292,100
------- -------
Revenue recognition adjustments:
Reportability(1) (1,502) (4,192)
Sales Reserve
(2) (11,985) (12,751)
Other (3) (9,235) (9,225)
Sale of vacation ownership
products $283,876 $265,932
======== ========
(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)
Revenue Revenue
As Reported Recognition As Adjusted As Reported Recognition As Adjusted
24 Weeks Ended Certain Reportability 24 Weeks Ended 24 Weeks Ended Certain Reportability 24 Weeks Ended
June 19, 2015 Items Adjustment June 19, 2015 ** June 20, 2014 Items Adjustment June 20, 2014 **
------------- ----- ---------- ------------- ------------- ----- ---------- -------------
Sale of vacation ownership products $283,876 $ - $1,502 $285,378 $265,932 $ - $4,192 $270,124
Less:
Cost of vacation
ownership
products 81,335 - 427 81,762 78,938 - 1,318 80,256
Marketing and
sales 136,854 - 142 136,996 124,409 - 394 124,803
Development margin $65,687 $ - $933 $66,620 $62,585 $ - $2,480 $65,065
======= ============ ==== ======= ======= ============ ====== =======
23.1% 23.3% 23.5% 24.1%
Development
margin
percentage(1)
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative
financial measures and limitations on their use.
(1) Development margin percentage represents Development margin divided by Sale of vacation ownership products. Development margin percentage is calculated
using whole dollars.
A-14
MARRIOTT VACATIONS WORLDWIDE CORPORATION
EBITDA AND ADJUSTED EBITDA
12 Weeks and 24 Weeks Ended June 19, 2015 and June 20, 2014
(In thousands)
As Reported As Adjusted As Reported As Adjusted
12 Weeks Ended Certain 12 Weeks Ended 12 Weeks Ended Certain 12 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Net income $34,041 $(4,422) $29,619 $35,303 $(4,616) $30,687
Interest expense 1 3,009 - 3,009 2,601 - 2,601
Tax provision 23,403 (2,804) 20,599 22,344 (3,158) 19,186
Depreciation and amortization 4,493 - 4,493 4,264 - 4,264
----- --- ----- ----- --- -----
EBITDA ** $64,946 $(7,226) $57,720 $64,512 $(7,774) $56,738
======= ======= ======= ======= ======= =======
As Reported As Adjusted As Reported As Adjusted
24 Weeks Ended Certain 24 Weeks Ended 24 Weeks Ended Certain 24 Weeks Ended
June 19, 2015 Items June 19, 2015 ** June 20, 2014 Items June 20, 2014 **
------------- ----- ------------- ------------- ----- -------------
Net income $68,095 $(10,319) $57,776 $54,611 $(3,819) $50,792
Interest expense 1 5,983 - 5,983 4,748 - 4,748
Tax provision 46,692 (3,779) 42,913 35,107 (2,537) 32,570
Depreciation and amortization 8,558 - 8,558 8,922 - 8,922
----- --- ----- ----- --- -----
EBITDA ** $129,328 $(14,098) $115,230 $103,388 $(6,356) $97,032
======== ======== ======== ======== ======= =======
** Denotes non-GAAP
financial measures. Please
see pages A-17 through A-
19 for additional
information about our
reasons for providing these
alternative financial
measures and limitations on
their use.
(1) Interest expense
excludes consumer financing
interest expense.
A-15
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK
(In millions, except per share amounts)
Fiscal Year 2015 (low) Fiscal Year 2015 (high)
--------------------- ----------------------
Net income $114 $121
Adjustments to
reconcile Net
income to
Adjusted net
income
Organizational
and separation
related and
other
charges(1) 7 6
Gain on
dispositions
(2) (10) (10)
Bulk sales (3) (6) (6)
Provision for
income taxes on
adjustments to
net income 3 3
--- ---
Adjusted net income** $108 $114
==== ====
Earnings per
share -Diluted
4 $3.49 $3.70
Adjusted earnings
per share -
Diluted**, 4 $3.29 $3.48
Diluted shares4 32.7 32.7
** Denotes non-GAAP financial
measures. Please see pages A-17
through A-19 for additional
information about our reasons for
providing these alternative
financial measures and limitations
on their use.
(1) Organizational and separation
related and other charges
adjustment includes $1.8 million
for organizational and separation
related efforts and $4 million to
$5 million of non-capitalizable
transaction costs in our Asia
Pacific and North America
segments.
(2) Gain on dispositions
adjustment includes a $0.9 million
gain associated with the sale of a
golf course and adjacent
undeveloped land and an $8.7
million gain on the sale of
undeveloped land in our North
America segment.
3 Bulk sales adjustment
includes the net $5.9 million of
pre-tax income associated with
the sale of the 18 units in the
Asia Pacific segment.
4 Earnings per share -
Diluted, Adjusted earnings per
share -Diluted, and Diluted
shares outlook includes the impact
of share repurchase activity only
through June 19, 2015.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED EBITDA OUTLOOK
(In millions)
Fiscal Year 2015 (low) Fiscal Year 2015 (high)
--------------------- ----------------------
Adjusted net income ** $108 $114
Interest expense1 12 12
Tax provision 81 85
Depreciation and amortization 21 21
--- ---
Adjusted EBITDA** $222 $232
** Denotes non-GAAP
financial measures. Please
see pages A-17 through A-
19 for additional
information about our
reasons for providing these
alternative financial
measures and limitations on
their use.
(1) Interest expense
excludes consumer financing
interest expense.
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED DEVELOPMENT MARGIN OUTLOOK
Total MVW
---------
Fiscal Year 2015 Fiscal Year 2015
(low) (high)
----------------- -----------------
Development margin(1) 21.1% 22.1%
Adjustments to reconcile
Development margin to
Adjusted development
margin
Revenue
recognition
reportability (0.1%) (0.1%)
Adjusted development margin**, 1 21.0% 22.0%
==== ====
** Denotes non-GAAP financial
measures. Please see pages A-
17 through A-19 for additional
information about our reasons
for providing these alternative
financial measures and
limitations on their use.
(1) Development margin
represents Development margin
dollars divided by Sale of
vacation ownership products
revenues. Development margin
is calculated using whole
dollars.
A-16
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2015 ADJUSTED FREE CASH FLOW AND NORMALIZED ADJUSTED FREE CASH FLOW OUTLOOK
(In millions)
Current Guidance
----------------
Low High Mid-Point Adjustments Normalized
--- ---- --------- ----------- ----------
Adjusted net income ** $108 $114 $111 $ - $111
Adjustments to
reconcile Adjusted
net income to net
cash provided by
operating activities:
Adjustments for
non-cash
items(1) 73 75 74 - 74
Deferred income
taxes /income
taxes payable 18 20 19 - 19
Net changes in
assets and
liabilities:
Notes
receivable
originations (293) (299) (296) - (296)
Notes
receivable
collections 269 275 272 - 272
Inventory 47 52 50 (60) 6 (10)
Purchase of
operating
hotel for
future
conversion to
inventory(2) (47) (47) (47) 47 (2) -
Liability for
Marriott
Rewards
customer
loyalty
program (21) (21) (21) 21 7 -
Organizational
and separation
related and
other charges (5) (5) (5) 5 8 -
Other working
capital
changes 21 21 21 (6) 9 15
--- --- ---
Net cash provided by operating activities 170 185 178 7 185
Capital expenditures
for property and
equipment (excluding
inventory):
New sales centers
(3) (20) (18) (19) 19 (3) -
Organizational and
separation
related capital
expenditures (4) (4) (4) 4 8 -
Other (24) (23) (24) 4 10 (20)
Investment in
operating portion
of Surfers
Paradise hotel
that will be sold
4 (45) (45) (45) 45 4 -
Decrease in restricted
cash 1 5 3 - 3
Borrowings from
securitization
transactions 251 258 255 (45) 11 210
Repayment of debt
related to
securitizations (244) (250) (247) - (247)
Free cash
flow** 85 108 97 34 131
Adjustments:
Organizational and
separation related
and other charges 9 9 9 (9) 7 -
Proceeds from sale of
operating portion of
Surfers Paradise
hotel4 45 45 45 (45) 4 -
Net change in
borrowings available
from the
securitization of
eligible vacation
ownership notes
receivable through
the warehouse credit
facility 5 36 38 37 - 37
Adjusted free
cash flow** $175 $200 $188 $(20) $168
==== ==== ==== ==== ====
** Denotes non-GAAP financial measures. Please see pages A-17 through A-19 for additional information about our reasons for providing these alternative financial measures and limitations on
their use.
(1) Includes depreciation, amortization of debt issuance costs, provision for loan losses, and share-based compensation.
(2) Represents adjustment for investment in an operating hotel prior to future conversion to inventory.
(3) Represents incremental investment in new sales centers, mainly to support new sales distributions.
4 Represents the estimated investment in, as well as the estimated proceeds from the subsequent sale of, the operating portion of the Surfers Paradise hotel.
5 Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2014 and 2015 year
ends.
6 Represents adjustment to align real estate inventory spending with real estate inventory costs (i.e., product costs).
7 Represents payment for Marriott Rewards Points issued prior to the Spin-off. Liability to be fully paid in 2016.
8 Represents costs associated with organizational and separation related efforts.
9 Represents normalized other working capital changes.
10 Represents normalized capital expenditures for property and equipment.
11 Represents normalized borrowings from securitization transactions.
A-17
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
Adjusted Net Income. We evaluate non-GAAP financial measures,
including Adjusted Net Income, Adjusted EBITDA, and Adjusted
Development Margin, that exclude certain items and net gains in the
12 weeks and 24 weeks ended June 19, 2015 and June 20, 2014 because
these non-GAAP financial measures allow for period-over-period
comparisons of our on-going core operations before the impact of
certain items and gains. These non-GAAP financial measures also
facilitate our comparison of results from our on-going core
operations before certain items and gains with results from other
vacation ownership companies.
Certain items - 12 weeks and 24 weeks ended June 19, 2015. In our
Statement of Income for the 12 weeks ended June 19, 2015, we
recorded $1.4 million of net pre-tax items, which included a $1.3
million adjustment for transaction costs associated with a
commitment to purchase an operating hotel in our Asia Pacific
segment recorded under the "Other transaction related" caption, $0.1
million of organizational and separation related costs recorded
under the "Organizational and separation related" caption and less
than $0.1 million of net litigation related matters recorded under
the "Litigation settlement" caption. In our Statement of Income for
the 24 weeks ended June 19, 2015, we recorded $4.6 million of net
Certain items - 12 weeks and 24 weeks ended June 20, 2014. In our
Statement of Income for the 12 weeks ended June 20, 2014, we
recorded $7.4 million of net pre-tax income, which included $7.6
million of income associated with the settlement of a dispute with a
former service provider in our North America segment recorded under
the "Litigation settlement" caption and the reversal of a $2.0
million reserve for remaining costs we expect to incur in connection
with our interest in an equity method investment in a joint venture
project in our North America segment recorded under the "Impairment
reversals on equity investment" caption, partially offset by $1.1
million of organizational and separation related costs recorded
A-18
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NON-GAAP FINANCIAL MEASURES
Net gains -12 weeks and 24 weeks ended June 19, 2015. In our Statement of Income for the 12
weeks ended June 19, 2015, we recorded an $8.7 million gain associated with the sale of
undeveloped land in our North America segment under the "Gains and other income" caption. In our
Statement of Income for the 24 weeks ended June 19, 2015, we recorded $9.5 million of net gains
associated with the sale of undeveloped land and the sale of a golf course and adjacent
undeveloped land in our North America segment under the "Gains and other income" caption.
Net gains -12 weeks and 24 weeks ended June 20, 2014. In our Statement of Income for the 12
weeks ended June 20, 2014, we recorded $0.4 million of net gains associated with the sale of a
golf course and adjacent undeveloped land, the sale of an undeveloped parcel of land, and the
disposition of a project, all of which occurred in our North America segment and were recorded
under the "Gains and other income" caption. In our Statement of Income for the 24 weeks ended
June 20, 2014, we recorded $1.6 million of net gains associated with the sale of a golf course
and adjacent undeveloped land, the sale of an undeveloped parcel of land, and the disposition of
a project, all of which occurred in our North America segment and were recorded under the "Gains
and other income" caption.
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.
Earnings Before Interest, Taxes, Depreciation and Amortization ("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
calculation (which previously adjusted for consumer financing interest expense), 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 to be an indicator of operating performance, and we use it to measure our
ability to service debt, fund capital expenditures and expand our business. We also use it, as do
analysts, lenders, investors and others, because it excludes 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 also excludes depreciation and amortization because companies utilize
productive assets of different ages and use different methods of both acquiring and depreciating
Adjusted EBITDA. We also evaluate Adjusted EBITDA, which reflects additional adjustments for
certain items and gains, as itemized in the discussion of Adjusted Net Income above. 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 certain items and gains.
Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going
core operations before the impact of certain items and gains with results from other vacation
ownership companies.
A-19
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NON-GAAP FINANCIAL MEASURES
Free Cash Flow. We also evaluate Free Cash Flow as a liquidity measure that provides 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. We consider Free Cash Flow to be a liquidity measure that
provides useful information to management and investors about the amount of cash generated by the
business that can be used for strategic opportunities, including acquisitions and strengthening the
balance sheet. Analysis of Free Cash Flow also facilitates management's comparison of our results with
our competitors' results.
Adjusted Free Cash Flow. We also evaluate Adjusted Free Cash Flow, which reflects additional adjustments
for organizational and separation related, litigation, and other cash items, as referred to in the
discussion of Adjusted Net Income above. We evaluate Adjusted Free Cash Flow as a liquidity measure
that provides 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, excluding the impact of
organizational and separation related, litigation, and other cash charges. We consider Adjusted Free
Cash Flow to be a liquidity measure that provides useful information to management and investors about
the amount of cash generated by the business that can be used for strategic opportunities, including
acquisitions and strengthening the balance sheet. Analysis of Adjusted Free Cash Flow also facilitates
management's comparison of our results with our competitors' results.
Normalized Adjusted Free Cash Flow. We also evaluate Normalized Adjusted Free Cash Flow as a liquidity
measure that provides 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, the borrowing and repayment activity related to our securitizations, and adjustments to remove the
impact of cash flow items not expected to occur on a regular basis. Adjustments eliminate the impact of
excess cash taxes, payments for Marriott Rewards Points issued prior to the Spin-off, payments for
organizational and separation related efforts, litigation cash settlements and other working capital
changes. We consider Normalized Adjusted Free Cash Flow to be a liquidity measure that provides useful
information to management and investors about the amount of cash generated by the business that can be
used for strategic opportunities, including acquisitions and strengthening the balance sheet. Analysis
of Normalized Adjusted Free Cash Flow also facilitates management's comparison of our results with our
A-20
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED BALANCE SHEETS
(In thousands, except share and per share data)
(unaudited)
June 19, 2015 January 2, 2015
------------- ---------------
ASSETS
Cash and cash
equivalents $250,906 $346,515
Restricted cash
(including $37,017
and $34,986 from
VIEs, respectively) 65,559 109,907
Accounts and contracts
receivable (including
$3,429 and $4,992
from VIEs,
respectively) 116,544 109,700
Vacation ownership
notes receivable
(including $547,158
and $750,680 from
VIEs, respectively) 878,858 917,228
Inventory 704,707 772,784
Property and equipment 188,714 147,379
Other 117,924 127,066
Total Assets $2,323,212 $2,530,579
========== ==========
LIABILITIES AND EQUITY
Accounts payable $80,450 $114,079
Advance deposits 64,148 60,192
Accrued liabilities
(including $1,576 and
$1,088 from VIEs,
respectively) 137,261 165,969
Deferred revenue 32,845 38,818
Payroll and benefits
liability 74,582 93,073
Liability for Marriott
Rewards customer
loyalty program 79,939 89,285
Deferred compensation
liability 46,534 41,677
Mandatorily redeemable
preferred stock of
consolidated
subsidiary 38,895 38,816
Debt (including
$564,657 and $708,031
from VIEs,
respectively) 561,133 703,013
Other 50,053 27,071
Deferred taxes 96,748 78,883
------ ------
Total Liabilities 1,262,588 1,450,876
--------- ---------
Preferred stock -$.01
par value; 2,000,000
shares authorized;
none issued or
outstanding - -
Common stock -$.01 par value;
100,000,000 shares authorized;
36,346,990 and 36,089,513 shares
issued, respectively
363 361
Treasury stock -at
cost; 4,814,451 and
3,996,725 shares,
respectively (295,466) (229,229)
Additional paid-in
capital 1,135,143 1,137,785
Accumulated other
comprehensive income 14,756 17,054
Retained earnings 205,828 153,732
------- -------
Total Equity 1,060,624 1,079,703
Total Liabilities and
Equity $2,323,212 $2,530,579
========== ==========
The abbreviation VIEs above means Variable Interest Entities.
A-21
MARRIOTT VACATIONS WORLDWIDE CORPORATION
INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
24 weeks ended
--------------
June 19, 2015 June 20, 2014
------------- -------------
OPERATING ACTIVITIES
Net income $68,095 $54,611
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 8,558 8,922
Amortization of debt issuance costs 2,506 2,566
Provision for loan losses 15,662 15,603
Share-based compensation 6,588 6,180
Deferred income taxes 17,850 (5,299)
Equity method income (98) (118)
Gain on disposal of property and
equipment, net (9,512) (1,642)
Non-cash litigation settlement (262) -
Impairment charges - 834
Impairment charges on equity investment - -
Net change in assets and liabilities:
Accounts and contracts receivable (6,068) (11,822)
Notes receivable originations (112,060) (103,908)
Notes receivable collections 132,397 137,460
Inventory 68,629 36,805
Purchase of operating hotel for future
conversion to inventory (46,614) -
Other assets 8,154 26,546
Accounts payable, advance deposits and
accrued liabilities (66,223) (55,865)
Liability for Marriott Rewards customer
loyalty program (9,345) (14,284)
Deferred revenue (5,955) (310)
Payroll and benefit liabilities (18,382) (14,832)
Deferred compensation liability 4,858 1,882
Other liabilities 18,013 15,397
Other, net 1,874 (564)
Net cash provided by operating activities 78,665 98,162
------ ------
INVESTING ACTIVITIES
Capital expenditures for property and
equipment (excluding inventory) (15,718) (3,003)
Decrease in restricted cash 43,758 43,958
Dispositions, net 20,346 33,169
Net cash provided by investing activities 48,386 74,124
------ ------
FINANCING ACTIVITIES
Borrowings from securitization
transactions - 22,638
Repayment of debt related to
securitization transactions (143,374) (130,954)
Debt issuance costs (30) (140)
Proceeds from vacation ownership
inventory arrangement 5,375 -
Repurchase of common stock (66,237) (89,448)
Payment of dividends (8,085) -
Proceeds from stock option exercises 92 968
Payment of withholding taxes on vesting
of restricted stock units (9,353) (5,091)
Other 109 -
Net cash used in financing activities (221,503) (202,027)
-------- --------
Effect of changes in exchange rates on
cash and cash equivalents (1,157) 3
DECREASE IN CASH AND CASH EQUIVALENTS (95,609) (29,738)
CASH AND CASH EQUIVALENTS, beginning of
period 346,515 199,511
CASH AND CASH EQUIVALENTS, end of period $250,906 $169,773
======== ========
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SOURCE Marriott Vacations Worldwide Corporation
