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Marriott Vacations Worldwide Reports Fourth Quarter and Full Year 2018 Financial Results and Provides 2019 Outlook

ORLANDO, Fla. – February 28, 2019 - Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported fourth quarter and full year 2018 financial results and provided guidance for the full year 2019.

On September 1, 2018, the company completed its previously announced acquisition of ILG, Inc. (“ILG”). In addition to a discussion of fourth quarter and full year reported results presented in accordance with United States generally accepted accounting principles (“GAAP”), the company is providing adjusted results that exclude ILG results from September 1 to December 31, 2018 to further assist investors. Throughout this press release, the business associated with the operating results for the company excluding the impact of the ILG acquisition is referred to as “Legacy-MVW,” while the business and operating results related to the businesses acquired from ILG are referred to as “Legacy-ILG.” In addition, to provide a more meaningful year-over-year comparison of financial results, the company is providing combined financial information in the Financial Schedules that assume the company’s acquisition of ILG had been completed at the beginning of the 2017 fiscal year.

Fourth Quarter 2018 Results

Full Year 2018 Results


“I am very pleased with how we closed out 2018, with Adjusted EBITDA and Adjusted Free Cash Flow exceeding our previous guidance,” said Stephen P. Weisz, president and chief executive officer. “Looking ahead to 2019, we continue to target strong growth into the new year, with contract sales of $1.53 billion to $1.6 billion, Adjusted EBITDA of $745 million to $785 million, and Adjusted Free Cash Flow of $400 million to $475 million. But, I am even more excited about what lies ahead for Marriott Vacations Worldwide as we continue to integrate and transform the new company, which we believe will drive significant growth opportunities well into the future. We continue to target at least $100 million of savings from synergy initiatives and are pleased to report that, as of the end of 2018, our run-rate savings exceeded $30 million. By the end of 2019, we are targeting run-rate savings of over $50 million, which we estimate will generate $35 million to $40 million of in-the-year savings.”

Fourth Quarter 2018 Segment Results

Vacation Ownership

Vacation Ownership segment financial results were $184 million, an increase of $91 million, or 99 percent. Vacation Ownership segment adjusted EBITDA was $196 million, an increase of $93 million, or 89 percent.

Consolidated vacation ownership contract sales were $358 million, an increase of $151 million, or 73 percent. Legacy-MVW contract sales were $224 million, an increase of $17 million, or 8 percent. Legacy-MVW North America VPG was $3,496, roughly in line with the prior year.

Development margin was $94 million compared to $54 million in the fourth quarter of 2017 and development margin percentage was 26.4 percent compared to 25.7 percent in the prior year quarter. Adjusted development margin percentage, which excludes the impact of revenue reportability and other charges, was 23.4 percent in the fourth quarter of 2018 compared to 20.6 percent in the fourth quarter of 2017.

Rental revenues totaled $117 million, a $58 million increase from the fourth quarter of 2017. Rental revenues net of expenses were $31 million, a $25 million increase from the fourth quarter of 2017. Legacy-MVW rental revenues net of expenses were $11 million, a $5 million, or 90 percent, increase from the fourth quarter of 2017.

Financing revenues totaled $63 million, a $27 million, or 79 percent, increase from the fourth quarter of 2017. Financing revenues, net of expenses and consumer financing interest expense, were $39 million, a $16 million, or 66 percent, increase from the fourth quarter of 2017. Legacy-MVW financing revenues, net of expenses and consumer financing interest expense, were $24 million, nearly $1 million, or 2 percent, above the fourth quarter of 2017.

Resort management and other services revenues totaled $120 million, a $50 million, or 72 percent, increase from the fourth quarter of 2017. Resort management and other services revenues, net of expenses, totaled $53 million, a $19 million, or 54 percent, increase from the fourth quarter of 2017. Legacy-MVW resort management and other services revenues, net of expenses, totaled $38 million, a $4 million, or 10 percent, increase from the fourth quarter of 2017.

Exchange & Third-Party Management

Exchange & Third-Party Management segment financial results were $45 million. Exchange & Third-Party Management segment adjusted EBITDA was $58 million.

Management and exchange revenues totaled $81 million. Management and exchange revenues, net of marketing and sales and related expenses, totaled $48 million. Rental revenues totaled $14 million. Rental revenues net of expenses were $7 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 in the Financial Schedules that follow.

Balance Sheet and Liquidity

On December 31, 2018, cash and cash equivalents totaled $231 million. Since the beginning of the year, real estate inventory balances increased $459 million to $852 million, including $475 million related to the ILG acquisition offset partially by a $16 million decrease in Legacy-MVW inventory balances since the beginning of 2018. The inventory balance at the end of the year included $843 million of finished goods and $9 million of work-in-progress. The company had $3.8 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the year, an increase of $2.7 billion from year-end 2017. This debt included $2.1 billion of corporate debt and $1.7 billion of debt related to its securitized notes receivable. As of December 31, 2018, the company’s debt to combined adjusted EBITDA ratio was 2.7x, as described further in the Financial Schedules that follow.

As of December 31, 2018, the company had approximately $596 million in available capacity under its revolving corporate credit facility after taking into account outstanding letters of credit, and approximately $51 million of gross vacation ownership notes receivable eligible for securitization under its warehouse credit facility.

2019 Outlook

The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2019 expected GAAP results for MVW.

Net income attributable to common shareholders $243 million to $257 million
Fully diluted EPS $5.21 to $5.52
Net cash provided by operating activities $286 million to $311 million

The company is providing guidance as reflected in the chart below for the full year 2019:

Adjusted free cash flow $400 million to $475 million
Adjusted net income attributable to common shareholders $337 million to $365 million
Adjusted fully diluted EPS $7.23 to $7.83
Adjusted EBITDA $745 million to $785 million
Contract sales $1,530 million to $1,600 million

2019 expected GAAP results and guidance above include an estimate of the impact of future spending associated with on-going integration efforts resulting from the acquisition of ILG.

Fourth 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 2019. 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 13687364. The webcast will also be available on the company’s website.

About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. The company has more than 100 resorts and over 660,000 owners and members in a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs comprised of more than 3,200 resorts in over 80 nations and nearly two million members, as well as management of more than 180 other resorts and lodging properties. As a leader and innovator in the vacation industry, the company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit 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 exchange 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 February 28, 2019 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.

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