Marriott Vacations Worldwide (“MVW”) Reports Second Quarter Financial Results
Board of Directors authorizes the repurchase of an additional 4.5 million shares under the company’s share repurchase program.
ORLANDO, Fla. – July 31, 2019 – Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported second quarter financial results and updated its guidance for the full year 2019.
In addition to a discussion of the second quarter reported results presented in accordance with United States generally accepted accounting principles (“GAAP”), the company is providing adjusted results of operations from January 1 to June 30, 2019. To provide a more meaningful year-over-year comparison of financial results, the company is also providing second quarter 2018 financial information in the financial schedules that follow that combine the second quarter 2018 financial results of the Company’s legacy brands and businesses and the brands and businesses acquired by the company in its acquisition of ILG, Inc. (“ILG”) in September 2018, conformed to the current year presentations. Throughout this press release, the results from the business associated with the brands that existed prior to the acquisition of ILG are referred to as “Legacy-MVW,” while the results from the business and brands that were acquired from ILG are referred to as “Legacy-ILG.
Second Quarter 2019 Highlights:
- Consolidated vacation ownership contract sales increased 66% to $386 million.
- On a combined basis, consolidated vacation contract sales increased 6%.
- Net income attributable to common shareholders was $49 million, or $1.10 per fully diluted share (“EPS”), compared to net income attributable to common shareholders of $11 million, or $0.39 per fully diluted share, in the second quarter of 2018.
- Adjusted net income attributable to common shareholders increased 107% to $90 million and Adjusted fully diluted EPS increased 25% to $1.99.
- Adjusted EBITDA increased 157% to $195 million in the second quarter of 2019.
- On a combined basis, Adjusted EBITDA increased 17% and, after adjusting 2018 to exclude VRI Europe, which was disposed of in the fourth quarter of 2018, Adjusted EBITDA increased 20%.
- The company repurchased over 1.1 million shares of its common stock for $109 million in the second quarter of 2019 at an average price per share of $96.36 and paid dividends of $20 million.
- Subsequent to the end of the second quarter, the company repurchased an additional 400 thousand shares of its common stock for $40 million.
- On July 30, 2019, the Board of Directors authorized the company to repurchase up to 4.5 million additional shares of its common stock under its share repurchase program. Combined with the shares not yet purchased under its previous authorization, the company is authorized to purchase up to 4.7 million shares.
‘I am very pleased with our strong performance in the second quarter with consolidated contract sales growing 6% and Adjusted EBITDA increasing 17% on a combined basis,” said Stephen P. Weisz, president and chief executive officer. “The integration of ILG continues to progress very well. We continue to gain traction on sales initiatives and remain very excited about the many opportunities provided by this transformational business combination.’
Second Quarter 2019 Segment Results
Consolidated vacation ownership contract sales increased 66%. On a combined basis, consolidated contract sales increased 6%, with Legacy-MVW and Legacy-ILG each growing 6% in the quarter.
Vacation Ownership segment financial results were $183 million for the second quarter of 2019, an increase of 125%. On a combined basis, Vacation Ownership segment Adjusted EBITDA increased 16% to $208 million in the second quarter of 2019 and margin improved 230 basis points, excluding cost reimbursements.
Exchange & Third-Party Management
Exchange & Third-Party Management revenues totaled $115 million in the second quarter of 2019. For Interval International, average revenue per member increased 3% to $43.23 and active members totaled 1.7 million at the end of the second quarter of 2019.
Exchange & Third-Party Management segment financial results and Adjusted EBITDA were $45 million and $58 million, respectively, in the second quarter of 2019. On a combined basis, Exchange & Third-Party Management segment Adjusted EBITDA decreased 5 percent after adjusting 2018 to exclude VRI Europe, which was disposed of in the fourth quarter of 2018.
Balance Sheet and Liquidity
On June 30, 2019, cash and cash equivalents totaled $179 million. The inventory balance at the end of the second quarter included $828 million of finished goods and $48 million of work-in-progress. The company had $3.9 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the second quarter. This debt included $2.2 billion of corporate debt and $1.8 billion of debt related to the company’s securitized notes receivable.
As of June 30, 2019, the company had $516 million in available capacity under its revolving credit facility and $104 million of gross vacation ownership notes receivable eligible for securitization.
The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2019 expected GAAP results for the company.
|Net income attributable to common shareholders||$214 million||to||$221 million|
|Fully diluted EPS||$4.75||to||$4.90|
|Net cash provided by operating activities||$332 million||to||$362 million|
2019 expected GAAP results and guidance above include an estimate of the impact of future spending associated with on-going ILG integration efforts.
The company updates its full year 2019 guidance as reflected in the chart below:
|Adjusted free cash flow||$440 million||to||$490 million|
|Adjusted net income attributable to common shareholders||$345 million||to||$367 million|
|Adjusted fully diluted EPS||$7.65||to||$8.14|
|Adjusted EBITDA||$750 million||to||$780 million|
|Combined consolidated contract sales growth||6%||to||9%|
Non-GAAP Financial Information
Non-GAAP financial measures, such as adjusted net income, adjusted EBITDA, adjusted fully diluted earnings per share, adjusted free cash flow, adjusted development margin and adjusted and combined financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow.
Second Quarter 2019 Earnings Conference Call
The company will hold a conference call on August 1, 2019 at 8:30 a.m. ET 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. To access the replay, call (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13692036. The webcast will also be available on the company’s website for 90 days following the call.
About Marriott Vacation Worldwide Corporation
Marriott Vacation 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 a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs, as well as management of 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 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, including guidance about full year 2019 results, expected full year 2019 GAAP results and expected synergies from the ILG acquisition. 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, changes in supply and demand 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 31, 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.