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Marriott Vacations Worldwide Reports First Quarter Financial Results

ORLANDO, Fla. – May 3, 2018 – Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported first quarter financial results and reaffirmed its guidance for the full year 2018.

The company adopted Accounting Standards Update 2014-09, “Revenue from Contracts with Customers,” as amended, at the beginning of 2018. With this adoption, the company also restated its 2017 reported financial results and has provided a reconciliation to its previously reported financial results.

First Quarter 2018 Results:

"I am very pleased with our start to 2018. In the first quarter, despite the lingering impact of the 2017 hurricanes, contract sales increased 2 percent and adjusted EBITDA grew 17 percent, as our business continues to grow from the ramp-up of our new locations as well as from marketing programs that continue to grow our tour flow,” said Stephen P. Weisz, president and chief executive officer. “Our first quarter performance was in line with our expectations, giving us confidence we can achieve our 2018 full year guidance, including contract sales growth of 7 to 12 percent, net income of $182 million to $193 million, and adjusted EBITDA of $310 million to $325 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-17 of the Financial Schedules that follow.

Balance Sheet and Liquidity

On March 31, 2018, cash and cash equivalents totaled $324 million. Since the beginning of the year, real estate inventory balances decreased $2 million to $722 million, including $372 million of finished goods and $350 million of land and infrastructure. The company had $1 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the first quarter, an increase of $83 million from year-end 2017, consisting primarily of $750 million of debt related to our securitized notes receivable and $194 million of convertible notes.

As of March 31, 2018, the company had approximately $244 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit, and approximately $267 million of gross vacation ownership notes receivable eligible for securitization.

Impact of Accounting Changes

The company adopted Accounting Standards Update 2014-09, "Revenue from Contracts with Customers (Topic 606)," which, as amended, created ASC Topic 606, "Revenue from Contracts with Customers" ("ASC 606"), also referred to as the new "Revenue Standard," on a retrospective basis, at the beginning of 2018, and as a result, recognition of revenue from the sale of vacation ownership products that is deemed collectible is deferred from the point in time at which the statutory rescission period expires to closing, when control of the vacation ownership product is transferred to the customer. In addition, the company aligned its assessment of collectibility of the transaction price for sales of vacation ownership products with its credit granting policies. The company elected the practical expedient to expense all marketing and sales costs as they are incurred. Its consolidated cost reimbursements revenues and expenses increased significantly, as all costs reimbursed to it by property owners’ associations are now reported on a gross basis. In connection with the adoption of the new Revenue Standard, the company also reclassified certain revenues and expenses.

Summary Restated 2017 Financial Results Reflecting the Impact of Adopting the new Revenue Standard

The retrospective adoption of the new Revenue Standard resulted in the following restated quarterly financial results for 2017 for net income and adjusted EBITDA as highlighted below. Net income and adjusted EBITDA are reconciled to the quarterly 2017 reported results on pages A-10 through A-14 of the Financial Schedules.

Q1 2017 Q2 2017 Q3 2017 Q4 2017
$ in millions Reported Adjusted Reported Adjusted Reported Adjusted Reported Adjusted
Net income $33.7 $27.9 $44.3 $48.2 $40.8 $47.0 $108.0 $112.2
Adjusted EBITDA $62.1 $53.6 $77.9 $83.6 $74.0 $84.8 $66.1 $72.0

Outlook

The company is reaffirming guidance for the full year 2018 on the non-GAAP financial measures provided below. Pages A-1 through A-17 of the Financial Schedules reconcile the non-GAAP financial measures set forth below to the following full year 2018 expected GAAP results:

Net income $182 million to $193 million
Fully diluted EPS $6.61 to $7.01
Net cash provided by operating activities $180 million to $205 million
       
Adjusted net income $184 million to $195 million
Adjusted fully diluted EPS $6.69 to $7.09
Adjusted EBITDA $310 million to $325 million
Adjusted free cash flow $185 million to $215 million
Contract sales growth 7 percent to 12 percent

First Quarter 2018 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. ET today to discuss these results and the guidance for full year 2018. 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 13678402. The webcast will also be available on the company’s website.

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