Exhibit 99.1
 | Neal Goldner Investor Relations 407-206-6149 | ||||||||||
Cameron Klaus Global Communications 407-513-6066 | |||||||||||
Marriott Vacations Worldwide (“MVW”) Reports Fourth Quarter
and Full Year 2022 Financial Results and Provides 2023 Outlook
ORLANDO, Fla. – February 22, 2023 – Marriott Vacations Worldwide Corporation (NYSE: VAC) (the “Company”) reported financial results for the fourth quarter and full year 2022 and provided guidance for full year 2023.
Fourth Quarter 2022 Highlights:
•Consolidated Vacation Ownership contract sales were $454 million, a 12% increase compared to the fourth quarter of 2021, and VPG was $4,088. The Company estimates that hurricanes negatively impacted contract sales by approximately $13 million in the fourth quarter of 2022.
•Net income attributable to common shareholders was $88 million, or $2.08 fully diluted earnings per share.
•Adjusted net income attributable to common shareholders was $115 million, or $2.74 Adjusted fully diluted earnings per share. The Company estimates that hurricanes negatively impacted Adjusted net income attributable to common shareholders by $5 million, or $0.12 per Adjusted fully diluted earnings per share.
•Adjusted EBITDA was $239 million; excluding the impact of the Alignment (as defined below), Adjusted EBITDA increased 6% compared to the prior year fourth quarter to $232 million. The Company estimates that hurricanes negatively impacted Adjusted EBITDA by approximately $7 million in the fourth quarter of 2022.
•The Company repurchased 1.2 million shares of its common stock for $173 million during the quarter at an average price per share of $139.90.
Full Year 2022 Highlights and 2023 Outlook:
•Consolidated Vacation Ownership contract sales were $1.84 billion, a 34% increase compared to 2021, and VPG increased 1% to $4,421. The Company estimates that hurricanes negatively impacted contract sales by approximately $14 million in 2022.
•Net income attributable to common shareholders was $391 million, or $8.77 fully diluted earnings per share.
•Adjusted net income attributable to common shareholders was $458 million, or $10.26 Adjusted fully diluted earnings per share.
•Adjusted EBITDA was $966 million; excluding the impact of the Alignment (as defined below), Adjusted EBITDA was $915 million, an increase of 39% compared to the prior year. The Company estimates that hurricanes negatively impacted Adjusted EBITDA by approximately $8 million in 2022.
 | marriottvacationsworldwide.com | |||||||
Marriott Vacations Worldwide Reports Fourth Quarter 2022 Financial Results / 2
•During 2022, the Company repurchased 5.1 million shares of its common stock for $701 million at an average price of $137.83 and paid $99 million in dividends.
•The Company expects contract sales in 2023 to grow 5% to 9% compared to the prior year and for Net income attributable to common shareholders to be $405 million to $440 million, or $9.51 to $10.30 fully diluted earnings per share.
•Excluding the impact of the Alignment (as defined below) in 2022, the Company expects Adjusted EBITDA to grow 4% to 9% in 2023 and Adjusted earnings per share - diluted to increase 14% to 23%.
“2022 was a great year for Marriott Vacations Worldwide. We generated over $1.8 billion of contract sales, a new high for our Company, and returned more than $800 million in cash to shareholders. We also launched Abound by Marriott Vacations, added over 20,000 new owners in our Vacation Ownership business and grew active Interval International members by 21%,” said John Geller, president & chief executive officer. “Looking forward, we expect occupancies in North America and Europe to remain strong this year and for Asia-Pacific to continue to improve. We also expect to grow contract sales this year by 5% to 9% compared to the prior year and for Adjusted Free Cash Flow to be between $600 million and $670 million, illustrating the continued demand for leisure travel and the strength of our business model.”
Fourth Quarter 2022 Results:
In the third quarter of 2022, in connection with the unification of the Company’s Marriott-, Westin-, and Sheraton-branded vacation ownership products under the Abound by Marriott Vacations program, the Company aligned its contract terms for the sale of vacation ownership products, resulting in the acceleration of revenue from the sale of Marriott-branded vacation ownership interests. In addition, the Company aligned its reserve methodology for these brands, resulting in an adjustment to its notes receivable reserve in the third quarter. Together, these changes are herein referred to as the “Alignment.” As a result of the Alignment, the Company reported an additional $5 million of Net income attributable to common shareholders and an additional $7 million of Adjusted EBITDA during the fourth quarter. The tables and financial schedules below illustrate the impact of the Alignment on the Company’s reported results.
In the tables below “*” denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.
Consolidated
| Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | As Reported | As Adjusted* | |||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 88 | $ | (5) | $ | 83 | $ | 61 | $ | 27 | 45% | $ | 22 | 35% | |||||||||||||||||||||||||||||||||
| Adjusted net income attributable to common shareholders* | $ | 115 | $ | (5) | $ | 110 | $ | 103 | $ | 12 | 12% | $ | 7 | 6% | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA* | $ | 239 | $ | (7) | $ | 232 | $ | 219 | $ | 20 | 10% | $ | 13 | 6% | |||||||||||||||||||||||||||||||||
| Adjusted EBITDA margin* | 28.7% | 28.2% | 27.4% | 1.3 pts | 0.8 pts | ||||||||||||||||||||||||||||||||||||||||||
Marriott Vacations Worldwide Reports Fourth Quarter 2022 Financial Results / 3
Vacation Ownership
| Three Months Ended December 31, 2022 | Three Months Ended December 31, 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | As Reported | As Adjusted* | |||||||||||||||||||||||||||||||||||||||||||
| ($ in millions) | $ | % | $ | % | |||||||||||||||||||||||||||||||||||||||||||
| Sale of vacation ownership products | $ | 439 | $ | (12) | $ | 427 | $ | 364 | $ | 75 | 21% | $ | 63 | 18% | |||||||||||||||||||||||||||||||||
| Development profit | $ | 162 | $ | (7) | $ | 155 | $ | 114 | $ | 48 | 42% | $ | 41 | 36% | |||||||||||||||||||||||||||||||||
| Segment financial results attributable to common shareholders | $ | 241 | $ | (5) | $ | 236 | $ | 205 | $ | 36 | 17% | $ | 31 | 14% | |||||||||||||||||||||||||||||||||
| Segment margin | 31.9% | 31.7% | 29.3% | 2.6 pts | 2.4 pts | ||||||||||||||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA* | $ | 261 | $ | (7) | $ | 254 | $ | 234 | $ | 27 | 12% | $ | 20 | 8% | |||||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA margin* | 34.6% | 34.2% | 33.4% | 1.2 pts | 0.8 pts | ||||||||||||||||||||||||||||||||||||||||||
Exchange & Third-Party Management
Revenues excluding cost reimbursements decreased 7% in the fourth quarter of 2022 compared to the prior year and increased 4% excluding the results of VRI Americas, which was sold in April of 2022. Interval International active members increased 21% to 1.6 million and Average revenue per member decreased 17% compared to the prior year as the new accounts at Interval International that were added at the beginning of the year continued to ramp up.
Segment financial results attributable to common shareholders were $24 million in the fourth quarter of 2022, Segment margin was 41% and Segment Adjusted EBITDA was $31 million. Excluding the VRI Americas business, Segment Adjusted EBITDA increased 11% compared to the prior year and Segment Adjusted EBITDA margin increased to 55%.
Corporate and Other
General and administrative costs were largely unchanged in the fourth quarter of 2022 compared to the prior year.
Balance Sheet and Liquidity
The Company ended the quarter with approximately $1.3 billion in liquidity, including $524 million of cash and cash equivalents, $72 million of gross notes receivable that were eligible for securitization, and $749 million of available capacity under its revolving corporate credit facility.
In December 2022, the Company issued $575 million of 3.25% convertible notes due 2027 with an initial conversion price of $189.65. The Company used the proceeds from the offering to redeem $250 million of 6.125% secured notes due 2025 (which was paid in January), repurchase $55 million of its own shares, repay the outstanding balance on its revolving credit facility (which was used to redeem $230 million of convertible notes that matured in September 2022) and pay transaction expenses and other fees. In addition, to reduce the potential economic dilution to the Company's earnings per share upon conversion of the notes, the Company used a portion of the proceeds to enter into privately negotiated bond hedge and warrant transactions, with such warrant transactions at an initial strike price of $286.26 per share, which represented a premium of 100% over the last reported sale price of the Company's common stock on December 5, 2022.
Marriott Vacations Worldwide Reports Fourth Quarter 2022 Financial Results / 4
At the end of the fourth quarter of 2022, pro-forma for the repayment of the 2025 secured senior notes, the Company had $2.8 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.
The Company completed its second timeshare receivable securitization of 2022 in the fourth quarter, issuing $280 million of notes backed by a pool of $286 million of vacation ownership notes receivable from all of the Company's timeshare brands. The overall weighted average interest rate of the notes was 6.58%, without giving effect to the Company’s retention of the Class D Notes, and the transaction had a gross advance rate of 98%.
Full Year 2023 Outlook (in millions, except per share amounts)
The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2023 expected GAAP results for the Company.
The Company is providing guidance for the full year 2023. In the table below “*” denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.
| (In millions, except per share amounts) | 2023 Guidance | ||||||||||
| Contract sales | $1,930 | to | $2,000 | ||||||||
| Net income attributable to common shareholders | $405 | to | $440 | ||||||||
| Earnings per share - diluted | $9.51 | to | $10.30 | ||||||||
| Net cash, cash equivalents, and restricted cash provided by operating activities | $365 | to | $415 | ||||||||
| Adjusted EBITDA* | $950 | to | $1,000 | ||||||||
| Adjusted earnings per share - diluted* | $10.75 | to | $11.54 | ||||||||
| Adjusted free cash flow* | $600 | to | $670 | ||||||||
In calculating diluted earnings per share and Adjusted diluted earnings per share, shares issuable upon conversion of our convertible notes are assumed to be converted into common stock, to the extent dilutive, and net interest expense associated with the convertible notes is added back to the numerator of the diluted earnings per share and Adjusted diluted earnings per share calculations.
Non-GAAP Financial Information
Non-GAAP financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. In addition to the foregoing non-GAAP financial measures, we present certain key metrics as performance measures which are further described in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission.
Fourth Quarter 2022 Financial Results Conference Call
The Company will hold a conference call on February 23, 2023 at 8:30 a.m. ET to discuss these financial results and provide an update on business conditions. 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 ir.mvwc.com. An audio replay of the conference call will be available for 30 days on the Company’s website.
Marriott Vacations Worldwide Reports Fourth Quarter 2022 Financial Results / 5
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 over 120 vacation ownership resorts and approximately 700,000 owner families in a diverse portfolio that includes some of the most iconic vacation ownership brands. The Company also operates exchange networks and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries and territories, and provides management services to 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, Inc. and an affiliate of 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 expectations for future growth and projections for full year 2023. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the continuing effects of the COVID-19 pandemic or future health crises, including quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic or future health crises, including short and longer-term impacts on consumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or future health crises or as effective treatments or vaccines against variants of the COVID-19 pandemic or future health crises become widely available; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price and wage inflation; global supply chain disruptions; volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic or future health crises and the ongoing conflict between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the impact of rising interest rates; political or social strife, difficulties associated with implementing new or maintaining existing technology; changes in privacy laws and other matters referred to under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission. All forward-looking statements in this press release are made as of the date of this press release 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, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.
Financial Schedules Follow
MARRIOTT VACATIONS WORLDWIDE CORPORATION
FINANCIAL SCHEDULES
QUARTER 4, 2022
TABLE OF CONTENTS
| Summary Financial Information | A-1 | ||||
| Adjusted EBITDA by Segment | A-2 | ||||
| Consolidated Statements of Income | A-3 | ||||
| Revenues and Profit by Segment | A-5 | ||||
| Adjusted Net Income Attributable to Common Shareholders and Adjusted Earnings Per Share - Diluted | A-9 | ||||
| Adjusted EBITDA | A-10 | ||||
| Consolidated Contract Sales to Adjusted Development Profit | A-11 | ||||
| Vacation Ownership and Exchange & Third-Party Management Segment Adjusted EBITDA | A-13 | ||||
| Cash Flow and Adjusted Free Cash Flow | A-14 | ||||
| Consolidated Balance Sheets | A-15 | ||||
| Consolidated Statements of Cash Flows | A-16 | ||||
| 2023 Outlook | |||||
| Adjusted Net Income Attributable to Common Shareholders, Adjusted Earnings Per Share - Diluted and Adjusted EBITDA | A-18 | ||||
| Adjusted Free Cash Flow | A-19 | ||||
| Quarterly Operating Metrics | A-20 | ||||
| Non-GAAP Financial Measures | A-21 | ||||
A-1
MARRIOTT VACATIONS WORLDWIDE CORPORATION
SUMMARY FINANCIAL INFORMATION
(In millions, except VPG, tours, total active members, average revenue per member and per share amounts)
(Unaudited)
| Quarter Ended | Change % | Fiscal Year Ended | Change % | ||||||||||||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||||||||||||
| Key Measures | |||||||||||||||||||||||||||||||||||
| Total consolidated contract sales | $ | 454 | $ | 406 | 12% | $ | 1,837 | $ | 1,374 | 34% | |||||||||||||||||||||||||
| VPG | $ | 4,088 | $ | 4,305 | (5%) | $ | 4,421 | $ | 4,356 | 1% | |||||||||||||||||||||||||
| Tours | 105,231 | 89,495 | 18% | 390,593 | 299,364 | 30% | |||||||||||||||||||||||||||||
Total active members (000's)(1) | 1,566 | 1,296 | 21% | 1,566 | 1,296 | 21% | |||||||||||||||||||||||||||||
Average revenue per member(1) | $ | 35.60 | $ | 42.93 | (17%) | $ | 157.97 | $ | 179.48 | (12%) | |||||||||||||||||||||||||
| GAAP Measures | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,188 | $ | 1,100 | 8% | $ | 4,656 | $ | 3,890 | 20% | |||||||||||||||||||||||||
| Income before income taxes and noncontrolling interests | $ | 145 | $ | 70 | 108% | $ | 582 | $ | 127 | NM | |||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 88 | $ | 61 | 45% | $ | 391 | $ | 49 | NM | |||||||||||||||||||||||||
| Earnings per share - diluted | $ | 2.08 | $ | 1.39 | 50% | $ | 8.77 | $ | 1.13 | NM | |||||||||||||||||||||||||
| Non-GAAP Measures* | |||||||||||||||||||||||||||||||||||
| Adjusted EBITDA | $ | 239 | $ | 219 | 10% | $ | 966 | $ | 657 | 47% | |||||||||||||||||||||||||
| Adjusted pretax income | $ | 169 | $ | 131 | 30% | $ | 677 | $ | 296 | 128% | |||||||||||||||||||||||||
| Adjusted net income attributable to common shareholders | $ | 115 | $ | 103 | 12% | $ | 458 | $ | 190 | 140% | |||||||||||||||||||||||||
| Adjusted earnings per share - diluted | $ | 2.74 | $ | 2.38 | 15% | $ | 10.26 | $ | 4.40 | 133% | |||||||||||||||||||||||||
| Financial Measures, Excluding the Impact of Alignment* | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 1,176 | $ | 1,100 | 7% | $ | 4,617 | $ | 3,890 | 19% | |||||||||||||||||||||||||
| Income before income taxes and noncontrolling interests | $ | 138 | $ | 70 | 97% | $ | 531 | $ | 127 | NM | |||||||||||||||||||||||||
| Net income attributable to common shareholders | $ | 83 | $ | 61 | 35% | $ | 353 | $ | 49 | NM | |||||||||||||||||||||||||
| Earnings per share - diluted | $ | 1.94 | $ | 1.39 | 40% | $ | 7.94 | $ | 1.13 | NM | |||||||||||||||||||||||||
| Adjusted EBITDA | $ | 232 | $ | 219 | 6% | $ | 915 | $ | 657 | 39% | |||||||||||||||||||||||||
| Adjusted pretax income | $ | 162 | $ | 131 | 24% | $ | 626 | $ | 296 | 111% | |||||||||||||||||||||||||
| Adjusted net income attributable to common shareholders | $ | 110 | $ | 103 | 6% | $ | 420 | $ | 190 | 121% | |||||||||||||||||||||||||
| Adjusted earnings per share - diluted | $ | 2.60 | $ | 2.38 | 9% | $ | 9.42 | $ | 4.40 | 114% | |||||||||||||||||||||||||
(1) Includes members at the end of each period for the Interval International exchange network only. | |||||||||||||||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||||||||||||||
| NM = Not meaningful. | |||||||||||||||||||||||||||||||||||
A-2
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ADJUSTED EBITDA BY SEGMENT
(In millions)
(Unaudited)
| Quarter Ended December 31, 2022 | Quarter Ended December 31, 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | As Reported | As Adjusted* | |||||||||||||||||||||||||||||||||||||||||||
| Revenue | Reserve | Combined | |||||||||||||||||||||||||||||||||||||||||||||
| Vacation Ownership | $ | 261 | $ | (7) | $ | — | $ | (7) | $ | 254 | $ | 234 | 12% | 8% | |||||||||||||||||||||||||||||||||
| Exchange & Third-Party Management | 31 | — | — | — | 31 | 31 | 5% | 5% | |||||||||||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA* | 292 | (7) | — | (7) | 285 | 265 | 11% | 8% | |||||||||||||||||||||||||||||||||||||||
| General and administrative | (53) | — | — | — | (53) | (46) | (17%) | (17%) | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA* | $ | 239 | $ | (7) | $ | — | $ | (7) | $ | 232 | $ | 219 | 10% | 6% | |||||||||||||||||||||||||||||||||
| Fiscal Year Ended December 31, 2022 | Fiscal Year Ended December 31, 2021 | Change | |||||||||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | As Reported | As Adjusted* | |||||||||||||||||||||||||||||||||||||||||||
| Revenue | Reserve | Combined | |||||||||||||||||||||||||||||||||||||||||||||
| Vacation Ownership | $ | 1,033 | $ | (46) | $ | (5) | $ | (51) | $ | 982 | $ | 699 | 48% | 41% | |||||||||||||||||||||||||||||||||
| Exchange & Third-Party Management | 148 | — | — | — | 148 | 144 | 3% | 3% | |||||||||||||||||||||||||||||||||||||||
| Segment Adjusted EBITDA* | 1,181 | (46) | (5) | (51) | 1,130 | 843 | 40% | 34% | |||||||||||||||||||||||||||||||||||||||
| General and administrative | (215) | — | — | — | (215) | (186) | (16%) | (16%) | |||||||||||||||||||||||||||||||||||||||
| Adjusted EBITDA* | $ | 966 | $ | (46) | $ | (5) | $ | (51) | $ | 915 | $ | 657 | 47% | 39% | |||||||||||||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | ||
A-3
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
| Quarter Ended | |||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sale of vacation ownership products | $ | 439 | $ | (12) | $ | 427 | $ | 364 | |||||||||||||||
| Management and exchange | 204 | — | 204 | 217 | |||||||||||||||||||
| Rental | 113 | — | 113 | 146 | |||||||||||||||||||
| Financing | 76 | — | 76 | 72 | |||||||||||||||||||
| Cost reimbursements | 356 | — | 356 | 301 | |||||||||||||||||||
| TOTAL REVENUES | 1,188 | (12) | 1,176 | 1,100 | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Cost of vacation ownership products | 73 | (5) | 68 | 72 | |||||||||||||||||||
| Marketing and sales | 204 | — | 204 | 178 | |||||||||||||||||||
| Management and exchange | 114 | — | 114 | 140 | |||||||||||||||||||
| Rental | 88 | — | 88 | 97 | |||||||||||||||||||
| Financing | 26 | — | 26 | 24 | |||||||||||||||||||
| General and administrative | 62 | — | 62 | 61 | |||||||||||||||||||
| Depreciation and amortization | 34 | — | 34 | 34 | |||||||||||||||||||
| Litigation charges | 4 | — | 4 | 2 | |||||||||||||||||||
| Royalty fee | 30 | — | 30 | 28 | |||||||||||||||||||
| Impairment | 1 | — | 1 | (2) | |||||||||||||||||||
| Cost reimbursements | 356 | — | 356 | 301 | |||||||||||||||||||
| TOTAL EXPENSES | 992 | (5) | 987 | 935 | |||||||||||||||||||
| Gains (losses) and other income (expense), net | 1 | — | 1 | (24) | |||||||||||||||||||
| Interest expense | (27) | — | (27) | (36) | |||||||||||||||||||
| Transaction and integration costs | (26) | — | (26) | (35) | |||||||||||||||||||
| Other | 1 | — | 1 | — | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 145 | (7) | 138 | 70 | |||||||||||||||||||
| Provision for income taxes | (57) | 2 | (55) | (11) | |||||||||||||||||||
| NET INCOME (LOSS) | 88 | (5) | 83 | 59 | |||||||||||||||||||
| Net loss attributable to noncontrolling interests | — | — | — | 2 | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 88 | $ | (5) | $ | 83 | $ | 61 | |||||||||||||||
| EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS | |||||||||||||||||||||||
| Basic shares | 38.2 | — | 38.2 | 42.7 | |||||||||||||||||||
| Basic | $ | 2.30 | $ | (0.16) | $ | 2.14 | $ | 1.42 | |||||||||||||||
Diluted shares(1) | 43.0 | — | 43.0 | 43.6 | |||||||||||||||||||
| Diluted | $ | 2.08 | $ | (0.14) | $ | 1.94 | $ | 1.39 | |||||||||||||||
(1) Diluted shares include 4.2 million shares for the quarter-ended December 31, 2022 related to our convertible notes, reflecting the impact of the adoption of Accounting Standards Update 2020-06 in 2022. | |||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
NOTE: Earnings (loss) per share - Basic and Earnings (loss) per share - Diluted are calculated using whole dollars. | |||||||||||||||||||||||
A-4
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(In millions, except per share amounts)
| Fiscal Year Ended | |||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sale of vacation ownership products | $ | 1,618 | $ | (39) | $ | 1,579 | $ | 1,153 | |||||||||||||||
| Management and exchange | 827 | — | 827 | 855 | |||||||||||||||||||
| Rental | 551 | — | 551 | 486 | |||||||||||||||||||
| Financing | 293 | — | 293 | 268 | |||||||||||||||||||
| Cost reimbursements | 1,367 | — | 1,367 | 1,128 | |||||||||||||||||||
| TOTAL REVENUES | 4,656 | (39) | 4,617 | 3,890 | |||||||||||||||||||
| EXPENSES | |||||||||||||||||||||||
| Cost of vacation ownership products | 289 | (7) | 282 | 250 | |||||||||||||||||||
| Marketing and sales | 807 | — | 807 | 617 | |||||||||||||||||||
| Management and exchange | 444 | — | 444 | 521 | |||||||||||||||||||
| Rental | 382 | — | 382 | 344 | |||||||||||||||||||
| Financing | 75 | 19 | 94 | 88 | |||||||||||||||||||
| General and administrative | 249 | — | 249 | 227 | |||||||||||||||||||
| Depreciation and amortization | 132 | — | 132 | 146 | |||||||||||||||||||
| Litigation charges | 11 | — | 11 | 10 | |||||||||||||||||||
| Royalty fee | 114 | — | 114 | 106 | |||||||||||||||||||
| Impairment | 2 | — | 2 | 3 | |||||||||||||||||||
| Cost reimbursements | 1,367 | — | 1,367 | 1,128 | |||||||||||||||||||
| TOTAL EXPENSES | 3,872 | 12 | 3,884 | 3,440 | |||||||||||||||||||
| Gains (losses) and other income (expense), net | 40 | — | 40 | (51) | |||||||||||||||||||
| Interest expense | (118) | — | (118) | (164) | |||||||||||||||||||
| Transaction and integration costs | (125) | — | (125) | (110) | |||||||||||||||||||
| Other | 1 | — | 1 | 2 | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 582 | (51) | 531 | 127 | |||||||||||||||||||
| (Provision for) benefit from income taxes | (191) | 13 | (178) | (74) | |||||||||||||||||||
| NET INCOME (LOSS) | 391 | (38) | 353 | 53 | |||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | (4) | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 391 | $ | (38) | $ | 353 | $ | 49 | |||||||||||||||
| EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS | |||||||||||||||||||||||
| Basic shares | 40.4 | — | 40.4 | 42.5 | |||||||||||||||||||
| Basic | $ | 9.69 | $ | (0.93) | $ | 8.76 | $ | 1.15 | |||||||||||||||
Diluted shares(1) | 45.2 | — | 45.2 | 43.3 | |||||||||||||||||||
| Diluted | $ | 8.77 | $ | (0.83) | $ | 7.94 | $ | 1.13 | |||||||||||||||
(1) Diluted shares include 4.3 million shares for the year-ended December 31, 2022 related to our convertible notes, reflecting the impact of the adoption of Accounting Standards Update 2020-06 in 2022. | |||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
NOTE: Earnings (loss) per share - Basic and Earnings (loss) per share - Diluted are calculated using whole dollars. | |||||||||||||||||||||||
A-5
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the three months ended December 31, 2022
(In millions)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | As Reported | As Adjusted* | ||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||||||||||||||
| Sales of vacation ownership products | $ | 439 | $ | (12) | $ | 427 | $ | — | $ | — | $ | 439 | $ | 427 | |||||||||||||||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||||||||||||||||||||
| Ancillary revenues | 58 | — | 58 | 1 | — | 59 | 59 | ||||||||||||||||||||||||||||||||||
| Management fee revenues | 42 | — | 42 | 6 | — | 48 | 48 | ||||||||||||||||||||||||||||||||||
| Exchange and other services revenues | 32 | — | 32 | 42 | 23 | 97 | 97 | ||||||||||||||||||||||||||||||||||
| Management and exchange | 132 | — | 132 | 49 | 23 | 204 | 204 | ||||||||||||||||||||||||||||||||||
| Rental | 104 | — | 104 | 9 | — | 113 | 113 | ||||||||||||||||||||||||||||||||||
| Financing | 76 | — | 76 | — | — | 76 | 76 | ||||||||||||||||||||||||||||||||||
Cost reimbursements(1) | 362 | — | 362 | 4 | (10) | 356 | 356 | ||||||||||||||||||||||||||||||||||
| TOTAL REVENUES | $ | 1,113 | $ | (12) | $ | 1,101 | $ | 62 | $ | 13 | $ | 1,188 | $ | 1,176 | |||||||||||||||||||||||||||
| PROFIT (LOSS) | |||||||||||||||||||||||||||||||||||||||||
| Development | $ | 162 | $ | (7) | $ | 155 | $ | — | $ | — | $ | 162 | $ | 155 | |||||||||||||||||||||||||||
Management and exchange(1) | 70 | — | 70 | 22 | (2) | 90 | 90 | ||||||||||||||||||||||||||||||||||
Rental(1) | 15 | — | 15 | 9 | 1 | 25 | 25 | ||||||||||||||||||||||||||||||||||
| Financing | 50 | — | 50 | — | — | 50 | 50 | ||||||||||||||||||||||||||||||||||
| TOTAL PROFIT (LOSS) | 297 | (7) | 290 | 31 | (1) | 327 | 320 | ||||||||||||||||||||||||||||||||||
| OTHER | |||||||||||||||||||||||||||||||||||||||||
| General and administrative | — | — | — | — | (62) | (62) | (62) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (25) | — | (25) | (7) | (2) | (34) | (34) | ||||||||||||||||||||||||||||||||||
| Litigation charges | (2) | — | (2) | — | (2) | (4) | (4) | ||||||||||||||||||||||||||||||||||
| Royalty fee | (30) | — | (30) | — | — | (30) | (30) | ||||||||||||||||||||||||||||||||||
| Impairment | (1) | — | (1) | — | — | (1) | (1) | ||||||||||||||||||||||||||||||||||
| Gains and other income, net | 1 | — | 1 | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||
| Interest expense | — | — | — | — | (27) | (27) | (27) | ||||||||||||||||||||||||||||||||||
| Transaction and integration costs | — | — | — | — | (26) | (26) | (26) | ||||||||||||||||||||||||||||||||||
| Other | 1 | — | 1 | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 241 | (7) | 234 | 24 | (120) | 145 | 138 | ||||||||||||||||||||||||||||||||||
| Provision for income taxes | — | 2 | 2 | — | (57) | (57) | (55) | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) | 241 | (5) | 236 | 24 | (177) | 88 | 83 | ||||||||||||||||||||||||||||||||||
| Net (income) loss attributable to noncontrolling interests | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 241 | $ | (5) | $ | 236 | $ | 24 | $ | (177) | $ | 88 | $ | 83 | |||||||||||||||||||||||||||
SEGMENT MARGIN(2) | 32% | 32% | — | 41% | |||||||||||||||||||||||||||||||||||||
(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners. | |||||||||||||||||||||||||||||||||||||||||
(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues. | |||||||||||||||||||||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||||||||||||||||||||
A-6
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the three months ended December 31, 2021
(In millions)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | ||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sales of vacation ownership products | $ | 364 | $ | — | $ | — | $ | 364 | |||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||
| Ancillary revenues | 53 | 1 | — | 54 | |||||||||||||||||||
| Management fee revenues | 41 | 8 | (4) | 45 | |||||||||||||||||||
| Exchange and other services revenues | 33 | 45 | 40 | 118 | |||||||||||||||||||
| Management and exchange | 127 | 54 | 36 | 217 | |||||||||||||||||||
| Rental | 138 | 8 | — | 146 | |||||||||||||||||||
| Financing | 72 | — | — | 72 | |||||||||||||||||||
Cost reimbursements(1) | 320 | 9 | (28) | 301 | |||||||||||||||||||
| TOTAL REVENUES | $ | 1,021 | $ | 71 | $ | 8 | $ | 1,100 | |||||||||||||||
PROFIT | |||||||||||||||||||||||
| Development | $ | 114 | $ | — | $ | — | $ | 114 | |||||||||||||||
Management and exchange(1) | 63 | 22 | (8) | 77 | |||||||||||||||||||
Rental(1) | 32 | 8 | 9 | 49 | |||||||||||||||||||
| Financing | 48 | — | — | 48 | |||||||||||||||||||
| TOTAL PROFIT | 257 | 30 | 1 | 288 | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| General and administrative | — | — | (61) | (61) | |||||||||||||||||||
| Depreciation and amortization | (23) | (8) | (3) | (34) | |||||||||||||||||||
| Litigation charges | (2) | — | — | (2) | |||||||||||||||||||
| Royalty fee | (28) | — | — | (28) | |||||||||||||||||||
| Impairment | — | — | 2 | 2 | |||||||||||||||||||
| Gains (losses) and other income (expense), net | 1 | — | (25) | (24) | |||||||||||||||||||
| Interest expense | — | — | (36) | (36) | |||||||||||||||||||
| Transaction and integration costs | — | — | (35) | (35) | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 205 | 22 | (157) | 70 | |||||||||||||||||||
| Provision for income taxes | — | — | (11) | (11) | |||||||||||||||||||
| NET INCOME (LOSS) | 205 | 22 | (168) | 59 | |||||||||||||||||||
Net loss attributable to noncontrolling interests(1) | — | — | 2 | 2 | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 205 | $ | 22 | $ | (166) | $ | 61 | |||||||||||||||
SEGMENT MARGIN(2) | 29% | 33% | |||||||||||||||||||||
(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners. | |||||||||||||||||||||||
(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues. | |||||||||||||||||||||||
A-7
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the twelve months ended December 31, 2022
(In millions)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | As Reported | As Adjusted* | ||||||||||||||||||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||||||||||||||||||||
| Sales of vacation ownership products | $ | 1,618 | $ | (39) | $ | 1,579 | $ | — | $ | — | $ | 1,618 | $ | 1,579 | |||||||||||||||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||||||||||||||||||||
| Ancillary revenues | 241 | — | 241 | 4 | — | 245 | 245 | ||||||||||||||||||||||||||||||||||
| Management fee revenues | 166 | — | 166 | 34 | (5) | 195 | 195 | ||||||||||||||||||||||||||||||||||
| Exchange and other services revenues | 127 | — | 127 | 188 | 72 | 387 | 387 | ||||||||||||||||||||||||||||||||||
| Management and exchange | 534 | — | 534 | 226 | 67 | 827 | 827 | ||||||||||||||||||||||||||||||||||
| Rental | 509 | — | 509 | 42 | — | 551 | 551 | ||||||||||||||||||||||||||||||||||
| Financing | 293 | — | 293 | — | — | 293 | 293 | ||||||||||||||||||||||||||||||||||
Cost reimbursements(1) | 1,388 | — | 1,388 | 23 | (44) | 1,367 | 1,367 | ||||||||||||||||||||||||||||||||||
| TOTAL REVENUES | $ | 4,342 | $ | (39) | $ | 4,303 | $ | 291 | $ | 23 | $ | 4,656 | $ | 4,617 | |||||||||||||||||||||||||||
| PROFIT (LOSS) | |||||||||||||||||||||||||||||||||||||||||
| Development | $ | 522 | $ | (32) | $ | 490 | $ | — | $ | — | $ | 522 | $ | 490 | |||||||||||||||||||||||||||
Management and exchange(1) | 294 | — | 294 | 106 | (17) | 383 | 383 | ||||||||||||||||||||||||||||||||||
Rental(1) | 109 | — | 109 | 42 | 18 | 169 | 169 | ||||||||||||||||||||||||||||||||||
| Financing | 218 | (19) | 199 | — | — | 218 | 199 | ||||||||||||||||||||||||||||||||||
| TOTAL PROFIT (LOSS) | 1,143 | (51) | 1,092 | 148 | 1 | 1,292 | 1,241 | ||||||||||||||||||||||||||||||||||
| OTHER | |||||||||||||||||||||||||||||||||||||||||
| General and administrative | — | — | — | — | (249) | (249) | (249) | ||||||||||||||||||||||||||||||||||
| Depreciation and amortization | (92) | — | (92) | (31) | (9) | (132) | (132) | ||||||||||||||||||||||||||||||||||
| Litigation charges | (9) | — | (9) | — | (2) | (11) | (11) | ||||||||||||||||||||||||||||||||||
| Royalty fee | (114) | — | (114) | — | — | (114) | (114) | ||||||||||||||||||||||||||||||||||
| Impairment | (2) | — | (2) | — | — | (2) | (2) | ||||||||||||||||||||||||||||||||||
| Gains (losses) and other income (expense), net | 37 | — | 37 | 15 | (12) | 40 | 40 | ||||||||||||||||||||||||||||||||||
| Interest expense | — | — | — | — | (118) | (118) | (118) | ||||||||||||||||||||||||||||||||||
| Transaction and integration costs | (3) | — | (3) | — | (122) | (125) | (125) | ||||||||||||||||||||||||||||||||||
| Other | 1 | — | 1 | — | — | 1 | 1 | ||||||||||||||||||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 961 | (51) | 910 | 132 | (511) | 582 | 531 | ||||||||||||||||||||||||||||||||||
| Benefit from (provision for) income taxes | — | 13 | 13 | — | (191) | (191) | (178) | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) | 961 | (38) | 923 | 132 | (702) | 391 | 353 | ||||||||||||||||||||||||||||||||||
| Net income attributable to noncontrolling interests | — | — | — | — | — | — | — | ||||||||||||||||||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 961 | $ | (38) | $ | 923 | $ | 132 | $ | (702) | $ | 391 | $ | 353 | |||||||||||||||||||||||||||
SEGMENT MARGIN(2) | 33% | 32% | 49% | ||||||||||||||||||||||||||||||||||||||
(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners. | |||||||||||||||||||||||||||||||||||||||||
(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues. | |||||||||||||||||||||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||||||||||||||||||||
A-8
MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT
for the twelve months ended December 31, 2021
(In millions)
| Reportable Segment | Corporate and Other | Total | |||||||||||||||||||||
| Vacation Ownership | Exchange & Third-Party Management | ||||||||||||||||||||||
| REVENUES | |||||||||||||||||||||||
| Sales of vacation ownership products | $ | 1,153 | $ | — | $ | — | $ | 1,153 | |||||||||||||||
Management and exchange(1) | |||||||||||||||||||||||
| Ancillary revenues | 188 | 3 | — | 191 | |||||||||||||||||||
| Management fee revenues | 158 | 32 | (19) | 171 | |||||||||||||||||||
| Exchange and other services revenues | 124 | 198 | 171 | 493 | |||||||||||||||||||
| Management and exchange | 470 | 233 | 152 | 855 | |||||||||||||||||||
| Rental | 446 | 40 | — | 486 | |||||||||||||||||||
| Financing | 268 | — | — | 268 | |||||||||||||||||||
Cost reimbursements(1) | 1,202 | 47 | (121) | 1,128 | |||||||||||||||||||
| TOTAL REVENUES | $ | 3,539 | $ | 320 | $ | 31 | $ | 3,890 | |||||||||||||||
| PROFIT | |||||||||||||||||||||||
| Development | $ | 286 | $ | — | $ | — | $ | 286 | |||||||||||||||
Management and exchange(1) | 270 | 102 | (38) | 334 | |||||||||||||||||||
Rental(1) | 52 | 40 | 50 | 142 | |||||||||||||||||||
| Financing | 180 | — | — | 180 | |||||||||||||||||||
| TOTAL PROFIT | 788 | 142 | 12 | 942 | |||||||||||||||||||
| OTHER | |||||||||||||||||||||||
| General and administrative | — | — | (227) | (227) | |||||||||||||||||||
| Depreciation and amortization | (89) | (48) | (9) | (146) | |||||||||||||||||||
| Litigation charges | (9) | — | (1) | (10) | |||||||||||||||||||
| Restructuring | — | (1) | 1 | — | |||||||||||||||||||
| Royalty fee | (106) | — | — | (106) | |||||||||||||||||||
| Impairment | — | — | (3) | (3) | |||||||||||||||||||
| Gains (losses) and other income (expense), net | 1 | — | (52) | (51) | |||||||||||||||||||
| Interest expense | — | — | (164) | (164) | |||||||||||||||||||
| Transaction and integration costs | (2) | — | (108) | (110) | |||||||||||||||||||
| Other | 2 | — | — | 2 | |||||||||||||||||||
| INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS | 585 | 93 | (551) | 127 | |||||||||||||||||||
| Provision for income taxes | — | — | (74) | (74) | |||||||||||||||||||
| NET INCOME (LOSS) | 585 | 93 | (625) | 53 | |||||||||||||||||||
Net income attributable to noncontrolling interests(1) | — | — | (4) | (4) | |||||||||||||||||||
| NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 585 | $ | 93 | $ | (629) | $ | 49 | |||||||||||||||
SEGMENT MARGIN(2) | 25% | 34% | |||||||||||||||||||||
(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners. | |||||||||||||||||||||||
(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues. | |||||||||||||||||||||||
A-9
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND
ADJUSTED EARNINGS PER SHARE - DILUTED
(In millions, except per share amounts)
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||
| Net income attributable to common shareholders | $ | 88 | $ | 61 | $ | 391 | $ | 49 | |||||||||||||||
| Provision for income taxes | 57 | 11 | 191 | 74 | |||||||||||||||||||
| Income before income taxes attributable to common shareholders | 145 | 72 | 582 | 123 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| ILG integration | 15 | $ | 29 | $ | 82 | $ | 93 | ||||||||||||||||
| Welk acquisition and integration | 4 | 8 | 14 | 16 | |||||||||||||||||||
| I/T transformation | 3 | — | 16 | — | |||||||||||||||||||
| Other transformation initiatives | 4 | — | 10 | — | |||||||||||||||||||
| Other transaction costs | — | (2) | 3 | 1 | |||||||||||||||||||
| Transaction and integration costs | 26 | 35 | 125 | 110 | |||||||||||||||||||
| Early redemption of senior unsecured notes | — | 19 | — | 55 | |||||||||||||||||||
| Gain on disposition of hotel | — | — | (33) | — | |||||||||||||||||||
| Gain on disposition of VRI Americas | — | — | (17) | — | |||||||||||||||||||
| Foreign currency translation | — | 4 | 10 | — | |||||||||||||||||||
| Insurance proceeds | (1) | — | (6) | — | |||||||||||||||||||
| Change in indemnification asset | 1 | (1) | 3 | (7) | |||||||||||||||||||
| Other | (1) | 2 | 3 | 3 | |||||||||||||||||||
| (Gains) losses and other (income) expense, net | (1) | 24 | (40) | 51 | |||||||||||||||||||
| Purchase accounting adjustments | (2) | 3 | 11 | 10 | |||||||||||||||||||
| Litigation charges | 4 | 2 | 11 | 10 | |||||||||||||||||||
| Impairment | 1 | (2) | 2 | 3 | |||||||||||||||||||
| Expiration/forfeiture of deposits on pre-acquisition preview packages | — | — | (6) | — | |||||||||||||||||||
| Early termination of VRI management contract | — | — | (2) | — | |||||||||||||||||||
| Eliminate impact of Consolidated Property Owners' Associations | — | (3) | — | (8) | |||||||||||||||||||
| Change in estimate relating to pre-acquisition contingencies | (7) | — | (12) | — | |||||||||||||||||||
| Other | 3 | — | 6 | (3) | |||||||||||||||||||
| Adjusted pretax income* | 169 | 131 | 677 | 296 | |||||||||||||||||||
| Provision for income taxes | (54) | (28) | (219) | (106) | |||||||||||||||||||
| Adjusted net income attributable to common shareholders* | $ | 115 | $ | 103 | $ | 458 | $ | 190 | |||||||||||||||
Diluted shares(1) | 43.0 | 43.6 | 45.2 | 43.3 | |||||||||||||||||||
| Adjusted earnings per share - Diluted* | $ | 2.74 | $ | 2.38 | $ | 10.26 | $ | 4.40 | |||||||||||||||
| Excluding the Impact of Alignment: | |||||||||||||||||||||||
| Adjusted net income attributable to common shareholders* | $ | 110 | $ | 103 | $ | 421 | $ | 190 | |||||||||||||||
| Adjusted earnings per share - Diluted* | $ | 2.60 | $ | 2.38 | $ | 9.42 | $ | 4.40 | |||||||||||||||
(1) Diluted shares include 4.2 million and 4.3 million shares for the quarter and year-ended December 31, 2022, respectively, related to our convertible notes, reflecting the impact of the adoption of Accounting Standards Update 2020-06 in 2022. | |||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
A-10
MARRIOTT VACATIONS WORLDWIDE CORPORATION
ADJUSTED EBITDA
(In millions)
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||
| NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 88 | $ | 61 | $ | 391 | $ | 49 | |||||||||||||||
| Interest expense | 27 | 36 | 118 | 164 | |||||||||||||||||||
| Provision for income taxes | 57 | 11 | 191 | 74 | |||||||||||||||||||
| Depreciation and amortization | 34 | 34 | 132 | 146 | |||||||||||||||||||
| Share-based compensation | 9 | 18 | 39 | 51 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| ILG integration | 15 | $ | 29 | $ | 82 | $ | 93 | ||||||||||||||||
| Welk acquisition and integration | 4 | 8 | 14 | 16 | |||||||||||||||||||
| I/T transformation | 3 | — | 16 | — | |||||||||||||||||||
| Other transformation initiatives | 4 | — | 10 | — | |||||||||||||||||||
| Other transaction costs | — | (2) | 3 | 1 | |||||||||||||||||||
| Transaction and integration costs | 26 | 35 | 125 | 110 | |||||||||||||||||||
| Early redemption of senior unsecured notes | — | 19 | — | 55 | |||||||||||||||||||
| Gain on disposition of hotel | — | — | (33) | — | |||||||||||||||||||
| Gain on disposition of VRI Americas | — | — | (17) | — | |||||||||||||||||||
| Foreign currency translation | — | 4 | 10 | — | |||||||||||||||||||
| Insurance proceeds | (1) | — | (6) | — | |||||||||||||||||||
| Change in indemnification asset | 1 | (1) | 3 | (7) | |||||||||||||||||||
| Other | (1) | 2 | 3 | 3 | |||||||||||||||||||
| (Gains) losses and other (income) expense, net | (1) | 24 | (40) | 51 | |||||||||||||||||||
| Purchase accounting adjustments | (2) | 3 | 11 | 10 | |||||||||||||||||||
| Litigation charges | 4 | 2 | 11 | 10 | |||||||||||||||||||
| Impairment | 1 | (2) | 2 | 3 | |||||||||||||||||||
| Expiration/forfeiture of deposits on pre-acquisition preview packages | — | — | (6) | — | |||||||||||||||||||
| Early termination of VRI management contract | — | — | (2) | — | |||||||||||||||||||
| Eliminate impact of Consolidated Property Owners' Associations | — | (3) | — | (8) | |||||||||||||||||||
| Change in estimate relating to pre-acquisition contingencies | (7) | — | (12) | — | |||||||||||||||||||
| Other | 3 | — | 6 | (3) | |||||||||||||||||||
| ADJUSTED EBITDA* | $ | 239 | $ | 219 | $ | 966 | $ | 657 | |||||||||||||||
| ADJUSTED EBITDA MARGIN* | 29% | 27% | 29% | 24% | |||||||||||||||||||
| Excluding the Impact of Alignment: | |||||||||||||||||||||||
| ADJUSTED EBITDA* | $ | 232 | $ | 219 | $ | 915 | $ | 657 | |||||||||||||||
| ADJUSTED EBITDA MARGIN* | 28% | 27% | 28% | 24% | |||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
A-11
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT
(In millions)
(Unaudited)
| Quarter Ended | |||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| Consolidated contract sales | $ | 454 | $ | — | $ | 454 | $ | 406 | |||||||||||||||
| Less resales contract sales | (10) | — | (10) | (7) | |||||||||||||||||||
| Consolidated contract sales, net of resales | 444 | — | 444 | 399 | |||||||||||||||||||
| Plus: | |||||||||||||||||||||||
| Settlement revenue | 10 | — | 10 | 7 | |||||||||||||||||||
| Resales revenue | 7 | — | 7 | 4 | |||||||||||||||||||
| Revenue recognition adjustments: | |||||||||||||||||||||||
| Reportability | 36 | (12) | 24 | 7 | |||||||||||||||||||
| Sales reserve | (40) | — | (40) | (28) | |||||||||||||||||||
Other(1) | (18) | — | (18) | (25) | |||||||||||||||||||
| Sale of vacation ownership products | 439 | (12) | 427 | 364 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of vacation ownership products | (73) | 5 | (68) | (72) | |||||||||||||||||||
| Marketing and sales | (204) | — | (204) | (178) | |||||||||||||||||||
| Development Profit (Loss) | 162 | (7) | 155 | 114 | |||||||||||||||||||
| Revenue recognition reportability adjustment | (27) | 7 | (20) | (6) | |||||||||||||||||||
| Purchase accounting adjustments | (1) | — | (1) | 3 | |||||||||||||||||||
| Other | (8) | — | (8) | — | |||||||||||||||||||
| Adjusted development profit* | $ | 126 | $ | — | $ | 126 | $ | 111 | |||||||||||||||
| Development profit margin | 36.8% | 36.2% | 31.3% | ||||||||||||||||||||
| Adjusted development profit margin* | 31.5% | 31.5% | 31.1% | ||||||||||||||||||||
(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. | |||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
A-12
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT
(In millions)
(Unaudited)
| Fiscal Year Ended | |||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | ||||||||||||||||||||||
| As Reported | Impact of Alignment | As Adjusted* | |||||||||||||||||||||
| Consolidated contract sales | $ | 1,837 | $ | — | $ | 1,837 | $ | 1,374 | |||||||||||||||
| Less resales contract sales | (40) | — | (40) | (26) | |||||||||||||||||||
| Consolidated contract sales, net of resales | 1,797 | — | 1,797 | 1,348 | |||||||||||||||||||
| Plus: | |||||||||||||||||||||||
| Settlement revenue | 36 | — | 36 | 28 | |||||||||||||||||||
| Resales revenue | 20 | — | 20 | 12 | |||||||||||||||||||
| Revenue recognition adjustments: | |||||||||||||||||||||||
| Reportability | 43 | (58) | (15) | (44) | |||||||||||||||||||
| Sales reserve | (170) | 19 | (151) | (101) | |||||||||||||||||||
Other(1) | (108) | — | (108) | (90) | |||||||||||||||||||
| Sale of vacation ownership products | 1,618 | (39) | 1,579 | 1,153 | |||||||||||||||||||
| Less: | |||||||||||||||||||||||
| Cost of vacation ownership products | (289) | 7 | (282) | (250) | |||||||||||||||||||
| Marketing and sales | (807) | — | (807) | (617) | |||||||||||||||||||
| Development Profit (Loss) | 522 | (32) | 490 | 286 | |||||||||||||||||||
| Revenue recognition reportability adjustment | (35) | 46 | 11 | 32 | |||||||||||||||||||
| Purchase accounting adjustments | 13 | — | 13 | 12 | |||||||||||||||||||
| Other | (13) | — | (13) | — | |||||||||||||||||||
| Adjusted development profit* | $ | 487 | $ | 14 | $ | 501 | $ | 330 | |||||||||||||||
| Development profit margin | 32.2% | 31.0% | 24.8% | ||||||||||||||||||||
| Adjusted development profit margin* | 31.0% | 31.5% | 27.6% | ||||||||||||||||||||
(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. | |||||||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
A-13
MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions)
(Unaudited)
VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||
| SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 241 | $ | 205 | $ | 961 | $ | 585 | |||||||||||||||
| Depreciation and amortization | 25 | 23 | 92 | 89 | |||||||||||||||||||
| Share-based compensation expense | 2 | 2 | 7 | 6 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| Transaction and integration costs | — | — | 3 | 2 | |||||||||||||||||||
| Gain on disposition of hotel | — | — | (33) | — | |||||||||||||||||||
| Insurance proceeds | (1) | — | (4) | — | |||||||||||||||||||
| Other | — | (1) | — | (1) | |||||||||||||||||||
| Gains and other income, net | (1) | (1) | (37) | (1) | |||||||||||||||||||
| Purchase accounting adjustments | (2) | 3 | 11 | 10 | |||||||||||||||||||
| Litigation charges | 2 | 2 | 9 | 9 | |||||||||||||||||||
| Impairment | 1 | — | 2 | — | |||||||||||||||||||
| Expiration/forfeiture of deposits on pre-acquisition preview packages | — | — | (6) | — | |||||||||||||||||||
| Change in estimate relating to pre-acquisition contingencies | (7) | — | (12) | — | |||||||||||||||||||
| Other | — | — | 3 | (1) | |||||||||||||||||||
| SEGMENT ADJUSTED EBITDA* | $ | 261 | $ | 234 | $ | 1,033 | $ | 699 | |||||||||||||||
| SEGMENT ADJUSTED EBITDA MARGIN* | 35% | 33% | 35% | 30% | |||||||||||||||||||
| Excluding the Impact of Alignment: | |||||||||||||||||||||||
| SEGMENT ADJUSTED EBITDA* | $ | 254 | $ | 234 | $ | 982 | $ | 699 | |||||||||||||||
| SEGMENT ADJUSTED EBITDA MARGIN* | 34% | 33% | 34% | 30% | |||||||||||||||||||
EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA
| Quarter Ended | Fiscal Year Ended | ||||||||||||||||||||||
| December 31, 2022 | December 31, 2021 | December 31, 2022 | December 31, 2021 | ||||||||||||||||||||
| SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS | $ | 24 | $ | 22 | $ | 132 | $ | 93 | |||||||||||||||
| Depreciation and amortization | 7 | 8 | 31 | 48 | |||||||||||||||||||
| Share-based compensation expense | — | 1 | 2 | 2 | |||||||||||||||||||
| Certain items: | |||||||||||||||||||||||
| Gain on disposition of VRI Americas | — | — | (17) | — | |||||||||||||||||||
| Foreign currency translation | — | — | 2 | — | |||||||||||||||||||
| COVID-19 related restructuring | — | — | — | 1 | |||||||||||||||||||
| Other | — | — | (2) | — | |||||||||||||||||||
| SEGMENT ADJUSTED EBITDA* | $ | 31 | $ | 31 | $ | 148 | $ | 144 | |||||||||||||||
| SEGMENT ADJUSTED EBITDA MARGIN* | 55% | 49% | 55% | 53% | |||||||||||||||||||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | |||||||||||||||||||||||
A-14
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CASH FLOW AND ADJUSTED FREE CASH FLOW
(In millions)
| CASH FLOW | 2022 | ||||
| Cash, cash equivalents and restricted cash provided by (used in): | |||||
| Operating activities | $ | 522 | |||
| Investing activities | 16 | ||||
| Financing activities | (486) | ||||
| Effect of changes in exchange rates on cash, cash equivalents, and restricted cash | (1) | ||||
| Net change in cash, cash equivalents and restricted cash | $ | 51 | |||
| ADJUSTED FREE CASH FLOW | |||||
| Net cash, cash equivalents and restricted cash provided by operating activities | $ | 522 | |||
| Capital expenditures for property and equipment (excluding inventory) | (65) | ||||
| Borrowings from securitization transactions | 1,031 | ||||
| Repayment of debt related to securitizations | (945) | ||||
| Securitized debt issuance costs | (10) | ||||
| Free cash flow* | 533 | ||||
| Adjustments: | |||||
| Decrease in restricted cash | 131 | ||||
Transaction and integration costs(1) | 93 | ||||
Capital expenditures(2) | 24 | ||||
Litigation charges(3) | 7 | ||||
Insurance proceeds(4) | (4) | ||||
Net change in borrowings available from the securitization of eligible vacation ownership notes receivable(5) | (40) | ||||
| Adjusted free cash flow* | $ | 744 | |||
(1) Represents adjustment to exclude the after-tax impact of transaction and integration costs in connection with the ILG Acquisition and Welk Acquisition. | ||
(2) Represents adjustment to exclude capital expenditures, primarily related to our new global corporate headquarters in Orlando, FL. | ||
(3) Represents adjustment to exclude the after-tax impact of litigation charges. | ||
(4) Represents adjustment to exclude the after-tax impact of insurance proceeds. | ||
(5) Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable between the 2021 and 2022 year ends. | ||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | ||
A-15
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED BALANCE SHEETS
FISCAL YEAR-END 2022 AND 2021
(In millions, except share and per share data)
| 2022 | 2021 | ||||||||||
| ASSETS | |||||||||||
| Cash and cash equivalents | $ | 524 | $ | 342 | |||||||
Restricted cash (including $85 and $139 from VIEs, respectively) | 330 | 461 | |||||||||
Accounts receivable, net (including $13 and $12 from VIEs, respectively) | 292 | 279 | |||||||||
Vacation ownership notes receivable, net (including $1,792 and $1,662 from VIEs, respectively) | 2,198 | 2,045 | |||||||||
| Inventory | 660 | 719 | |||||||||
| Property and equipment, net | 1,139 | 1,136 | |||||||||
| Goodwill | 3,117 | 3,150 | |||||||||
| Intangibles, net | 911 | 993 | |||||||||
Other (including $76 and $76 from VIEs, respectively) | 468 | 488 | |||||||||
| TOTAL ASSETS | $ | 9,639 | $ | 9,613 | |||||||
| LIABILITIES AND EQUITY | |||||||||||
| Accounts payable | $ | 356 | $ | 265 | |||||||
| Advance deposits | 158 | 160 | |||||||||
Accrued liabilities (including $5 and $2 from VIEs, respectively) | 369 | 345 | |||||||||
| Deferred revenue | 344 | 453 | |||||||||
| Payroll and benefits liability | 251 | 201 | |||||||||
| Deferred compensation liability | 139 | 142 | |||||||||
Securitized debt, net (including $1,982 and $1,877 from VIEs, respectively) | 1,938 | 1,856 | |||||||||
| Debt, net | 3,088 | 2,631 | |||||||||
| Other | 167 | 224 | |||||||||
| Deferred taxes | 331 | 350 | |||||||||
| TOTAL LIABILITIES | 7,141 | 6,627 | |||||||||
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding | — | — | |||||||||
Common stock — $0.01 par value; 100,000,000 shares authorized; 75,744,524 and 75,519,049 shares issued, respectively | 1 | 1 | |||||||||
Treasury stock — at cost; 38,263,442 and 33,235,671 shares, respectively | (2,054) | (1,356) | |||||||||
| Additional paid-in capital | 3,941 | 4,072 | |||||||||
| Accumulated other comprehensive income (loss) | 15 | (16) | |||||||||
| Retained earnings | 593 | 275 | |||||||||
| TOTAL MVW SHAREHOLDERS' EQUITY | 2,496 | 2,976 | |||||||||
| Noncontrolling interests | 2 | 10 | |||||||||
| TOTAL EQUITY | 2,498 | 2,986 | |||||||||
| TOTAL LIABILITIES AND EQUITY | $ | 9,639 | $ | 9,613 | |||||||
The abbreviation VIEs above means Variable Interest Entities. | |||||||||||
A-16
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FISCAL YEARS 2022 AND 2021
(In millions)
| 2022 | 2021 | ||||||||||
| OPERATING ACTIVITIES | |||||||||||
| Net income | $ | 391 | $ | 53 | |||||||
| Adjustments to reconcile net income to net cash, cash equivalents, and restricted cash provided by operating activities: | |||||||||||
| Depreciation and amortization of intangibles | 132 | 146 | |||||||||
| Amortization of debt discount and issuance costs | 25 | 56 | |||||||||
| Vacation ownership notes receivable reserve | 150 | 101 | |||||||||
| Share-based compensation | 39 | 51 | |||||||||
| Impairment charges | — | 3 | |||||||||
| Gains and other income, net | (48) | — | |||||||||
| Deferred income taxes | 87 | 34 | |||||||||
| Net change in assets and liabilities, net of the effects of acquisition: | |||||||||||
| Accounts and contracts receivable | (45) | — | |||||||||
| Vacation ownership notes receivable originations | (980) | (750) | |||||||||
| Vacation ownership notes receivable collections | 642 | 686 | |||||||||
| Inventory | 104 | 61 | |||||||||
| Other assets | (49) | (46) | |||||||||
| Accounts payable, advance deposits and accrued liabilities | 112 | 42 | |||||||||
| Deferred revenue | (9) | 88 | |||||||||
| Payroll and benefit liabilities | 53 | 35 | |||||||||
| Deferred compensation liability | 13 | 22 | |||||||||
| Other liabilities | (38) | 27 | |||||||||
| Deconsolidation of certain Consolidated Property Owners' Associations | (48) | (168) | |||||||||
| Purchase of vacation ownership units for future transfer to inventory | (12) | (98) | |||||||||
| Other, net | 3 | — | |||||||||
| Net cash, cash equivalents, and restricted cash provided by operating activities | 522 | 343 | |||||||||
| INVESTING ACTIVITIES | |||||||||||
| Acquisition of a business, net of cash and restricted cash acquired | — | (157) | |||||||||
| Proceeds from disposition of subsidiaries, net of cash and restricted cash transferred | 94 | — | |||||||||
| Capital expenditures for property and equipment (excluding inventory) | (65) | (47) | |||||||||
| Issuance of note receivable to VIE | (47) | — | |||||||||
| Proceeds from collection of note receivable from VIE | 47 | — | |||||||||
| Purchase of company owned life insurance | (18) | (14) | |||||||||
| Dispositions, net | 3 | 3 | |||||||||
| Other, net | 2 | 2 | |||||||||
| Net cash, cash equivalents, and restricted cash provided by (used in) investing activities | 16 | (213) | |||||||||
Continued
A-17
MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
FISCAL YEARS 2022 AND 2021
(In millions)
| 2022 | 2021 | ||||||||||
| FINANCING ACTIVITIES | |||||||||||
| Borrowings from securitization transactions | 1,031 | 957 | |||||||||
| Repayment of debt related to securitization transactions | (945) | (868) | |||||||||
| Proceeds from debt | 1,266 | 1,111 | |||||||||
| Repayments of debt | (935) | (1,339) | |||||||||
| Purchase of convertible note hedges | (107) | (100) | |||||||||
| Proceeds from issuance of warrants | 43 | 70 | |||||||||
| Payment of debt issuance costs | (15) | (22) | |||||||||
| Finance lease payments | (4) | (5) | |||||||||
| Repurchase of common stock | (701) | (78) | |||||||||
| Payment of dividends | (99) | (23) | |||||||||
| Payment of withholding taxes on vesting of restricted stock units | (23) | (20) | |||||||||
| Other, net | 3 | — | |||||||||
| Net cash, cash equivalents, and restricted cash used in financing activities | (486) | (317) | |||||||||
| Effect of changes in exchange rates on cash, cash equivalents, and restricted cash | (1) | (2) | |||||||||
| Change in cash, cash equivalents, and restricted cash | 51 | (189) | |||||||||
| Cash, cash equivalents, and restricted cash, beginning of year | 803 | 992 | |||||||||
| Cash, cash equivalents, and restricted cash, end of year | $ | 854 | $ | 803 | |||||||
A-18
MARRIOTT VACATIONS WORLDWIDE CORPORATION
(In millions, except per share amounts)
2023 ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND ADJUSTED EARNINGS PER SHARE - DILUTED OUTLOOK
| Fiscal Year 2023 (low) | Fiscal Year 2023 (high) | ||||||||||
| Net income attributable to common shareholders | $ | 405 | $ | 440 | |||||||
| Provision for income taxes | 165 | 180 | |||||||||
| Income before income taxes attributable to common shareholders | 570 | 620 | |||||||||
Certain items(1) | 75 | 75 | |||||||||
| Adjusted pretax income* | 645 | 695 | |||||||||
| Provision for income taxes | (185) | (200) | |||||||||
| Adjusted net income attributable to common shareholders* | $ | 460 | $ | 495 | |||||||
Earnings per share - Diluted(2) | $ | 9.51 | $ | 10.30 | |||||||
Adjusted earnings per share - Diluted(2)* | $ | 10.75 | $ | 11.54 | |||||||
Diluted shares(2) | 44.5 | 44.5 | |||||||||
2023 ADJUSTED EBITDA OUTLOOK
| Fiscal Year 2023 (low) | Fiscal Year 2023 (high) | ||||||||||
| Net income attributable to common shareholders | $ | 405 | $ | 440 | |||||||
| Interest expense | 140 | 140 | |||||||||
| Provision for income taxes | 165 | 180 | |||||||||
| Depreciation and amortization | 125 | 125 | |||||||||
| Share-based compensation | 40 | 40 | |||||||||
Certain items(1) | 75 | 75 | |||||||||
| Adjusted EBITDA* | $ | 950 | $ | 1,000 | |||||||
(1) Certain items adjustment includes $50 million of anticipated transaction and integration costs, $20 million of anticipated purchase accounting adjustments, and $5 million of anticipated litigation charges. | ||
(2) We expect 6.5 million shares to be included in diluted shares related to our convertible notes and an add back of $18 million for interest expense to the numerator of the diluted earnings per share calculation. | ||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | ||
A-19
MARRIOTT VACATIONS WORLDWIDE CORPORATION
2023 ADJUSTED FREE CASH FLOW OUTLOOK
(In millions)
| Fiscal Year 2023 (low) | Fiscal Year 2023 (high) | |||||||||||||
| Net cash, cash equivalents and restricted cash provided by operating activities | $ | 365 | $ | 415 | ||||||||||
| Capital expenditures for property and equipment (excluding inventory) | (80) | (90) | ||||||||||||
| Borrowings from securitization transactions | 950 | 1,000 | ||||||||||||
| Repayment of debt related to securitizations | (810) | (830) | ||||||||||||
| Securitized Debt Issuance Costs | (15) | (15) | ||||||||||||
| Free cash flow* | 410 | 480 | ||||||||||||
| Adjustments: | ||||||||||||||
Net change in borrowings available from the securitization of eligible vacation ownership notes receivable(1) | 120 | 120 | ||||||||||||
Certain items(2) | 85 | 85 | ||||||||||||
| Change in restricted cash | (15) | (15) | ||||||||||||
| Adjusted free cash flow* | $ | 600 | $ | 670 | ||||||||||
(1) Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable between the 2022 and 2023 year ends. | ||
(2) Certain items adjustment consists primarily of the after-tax impact of anticipated transaction and integration costs. | ||
* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. | ||
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MARRIOTT VACATIONS WORLDWIDE CORPORATION
QUARTERLY OPERATING METRICS
(Contract sales in millions)
| Year | Quarter Ended | Full Year | |||||||||||||||||||||||||||||||||
| March 31 | June 30 | September 30 | December 31 | ||||||||||||||||||||||||||||||||
| Vacation Ownership | |||||||||||||||||||||||||||||||||||
| Consolidated contract sales | |||||||||||||||||||||||||||||||||||
| 2022 | $ | 394 | $ | 506 | $ | 483 | $ | 454 | $ | 1,837 | |||||||||||||||||||||||||
| 2021 | $ | 226 | $ | 362 | $ | 380 | $ | 406 | $ | 1,374 | |||||||||||||||||||||||||
| 2020 | $ | 306 | $ | 30 | $ | 140 | $ | 178 | $ | 654 | |||||||||||||||||||||||||
| VPG | |||||||||||||||||||||||||||||||||||
| 2022 | $ | 4,706 | $ | 4,613 | $ | 4,353 | $ | 4,088 | $ | 4,421 | |||||||||||||||||||||||||
| 2021 | $ | 4,644 | $ | 4,304 | $ | 4,300 | $ | 4,305 | $ | 4,356 | |||||||||||||||||||||||||
| 2020 | $ | 3,680 | $ | 3,717 | $ | 3,904 | $ | 3,826 | $ | 3,767 | |||||||||||||||||||||||||
| Tours | |||||||||||||||||||||||||||||||||||
| 2022 | 78,505 | 102,857 | 104,000 | 105,231 | 390,593 | ||||||||||||||||||||||||||||||
| 2021 | 45,871 | 79,900 | 84,098 | 89,495 | 299,364 | ||||||||||||||||||||||||||||||
| 2020 | 79,131 | 6,216 | 33,170 | 44,161 | 162,678 | ||||||||||||||||||||||||||||||
| Exchange & Third-Party Management | |||||||||||||||||||||||||||||||||||
Total active members (000's)(1) | |||||||||||||||||||||||||||||||||||
| 2022 | 1,606 | 1,596 | 1,591 | 1,566 | 1,566 | ||||||||||||||||||||||||||||||
| 2021 | 1,479 | 1,321 | 1,313 | 1,296 | 1,296 | ||||||||||||||||||||||||||||||
| 2020 | 1,636 | 1,571 | 1,536 | 1,518 | 1,518 | ||||||||||||||||||||||||||||||
Average revenue per member(1) | |||||||||||||||||||||||||||||||||||
| 2022 | $ | 44.33 | $ | 38.79 | $ | 38.91 | $ | 35.60 | $ | 157.97 | |||||||||||||||||||||||||
| 2021 | $ | 47.13 | $ | 46.36 | $ | 42.95 | $ | 42.93 | $ | 179.48 | |||||||||||||||||||||||||
| 2020 | $ | 41.37 | $ | 30.17 | $ | 36.76 | $ | 36.62 | $ | 144.97 | |||||||||||||||||||||||||
(1) Includes members at the end of each period for the Interval International exchange network only. | |||||||||||||||||||||||||||||||||||
A-21
MARRIOTT VACATIONS WORLDWIDE CORPORATION
NON-GAAP FINANCIAL MEASURES
In our press release and schedules, and on the related conference call, we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules included herein reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by an asterisk (“*”) on the preceding pages). Although we evaluate and present these non-GAAP financial measures for the reasons described below, please be aware that these non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for revenues, net income or loss attributable to common shareholders, earnings or loss per share or any other comparable operating measure prescribed by GAAP. In addition, other companies in our industry may calculate these non-GAAP financial measures differently than we do or may not calculate them at all, limiting their usefulness as comparative measures.
Certain Items Excluded from Non-GAAP Financial Measures
We evaluate non-GAAP financial measures, including those identified by an asterisk (“*”) on the preceding pages, that exclude certain items as further described in the financial schedules included herein, and believe these measures provide useful information to investors because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of these items. These non-GAAP financial measures also facilitate the comparison of results from our on-going core operations before these items with results from other companies.
Adjusted Development Profit and Adjusted Development Profit Margin
We evaluate Adjusted development profit (Adjusted sale of vacation ownership products, net of expenses) and Adjusted development profit margin as indicators of operating performance. Adjusted development profit margin is calculated by dividing Adjusted development profit by revenues from the Sale of vacation ownership products. Adjusted development profit and Adjusted development profit margin adjust Sale of vacation ownership products revenues for the impact of revenue reportability, include corresponding adjustments to Cost of vacation ownership products associated with the change in revenues from the Sale of vacation ownership products, and may include adjustments for certain items as necessary. We evaluate Adjusted development profit and Adjusted development profit margin and believe they provide useful information to investors because they allow for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development profit and Development profit margin.
Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA
EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income or loss attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to shareholders. We also use Adjusted EBITDA, as do analysts, lenders, investors, and others, because this
A-22
measure 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 provisions for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Adjusted EBITDA also facilitates comparison by us, analysts, investors, and others, of results from our on-going core operations before the impact of these items with results from other companies.
Adjusted EBITDA Margin and Segment Adjusted EBITDA Margin
We evaluate Adjusted EBITDA margin and Segment Adjusted EBITDA margin as indicators of operating performance. Adjusted EBITDA margin represents Adjusted EBITDA divided by the Company’s total revenues less cost reimbursement revenues. Segment Adjusted EBITDA margin represents Segment Adjusted EBITDA divided by the applicable segment’s total revenues less cost reimbursement revenues. We evaluate Adjusted EBITDA margin and Segment Adjusted EBITDA margin and believe it provides useful information to investors because it allows for period-over-period comparisons of our on-going core operations.
Free Cash Flow and Adjusted Free Cash Flow
We evaluate Free Cash Flow and Adjusted Free Cash Flow as liquidity measures that provide useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment and the borrowing and repayment activity related to our term securitizations, which cash can be used for, among other purposes, strategic opportunities, including acquisitions and strengthening the balance sheet. Adjusted Free Cash Flow, which reflects additional adjustments to Free Cash Flow for the impact of transaction and integration charges, impact of borrowings available from the securitization of eligible vacation ownership notes receivable, and changes in restricted cash, allows for period-over-period comparisons of the cash generated by our business before the impact of these items. Analysis of Free Cash Flow and Adjusted Free Cash Flow also facilitates management’s comparison of our results with our competitors’ results.
Results As Adjusted
In our press release and schedules we provide As Adjusted results for comparison. The As Adjusted results exclude any impacts to the Company’s reported results on a GAAP basis due to the Alignment. We provide this As Adjusted information because we believe that it facilitates the comparison of results from our on-going core operations before the impact of the Alignment. We believe that the As Adjusted results provide useful information to assist with period-over-period comparisons of our on-going operations excluding any impact from the Alignment.