Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Q2 2024 Earnings Presentation
35 slides from Marriott Vacations Worldwide's earnings presentation, Aug 1, 2024
Slide 1: Investor Presentation
Investor Presentation August 1, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation 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 2024. Forward-looking statements include all statements
Slide 3: Driving Sustained Long-Term Growth
Driving Sustained Long-Term Growth Unique and resilient business model Consistent and sustainable growth 3
Slide 4: Leading Provider of Vacation Experiences
Leading Provider of Vacation Experiences Vacation Ownership – 87% of Adjusted EBITDA Contribution* • Sales of vacation ownership products & financing • Management & rentals 7 ~120 ~700,000 Leader in Iconic Brands Resorts Owner Families Upper Upscale Resorts Exchange and Third-Party Management – 13%
Slide 5: Evolving and Resilient Business Model
Evolving and Resilient Business Model Pre-2011 Today Outcome Timeshare + residence + Timeshare + Products Diverse cash flow fractional ownership exchange Brand Now selling Marriott- and 3 brands 7 brands Expansion Hyatt-branded products Perpetual sales centers Sales Centers Site-specific “Sell the s
Slide 6: Large and Attractive Addressable Market and Customer Base
Large and Attractive Addressable Market and Customer Base Vacation Ownership ~48M Households – addressable market in U.S. alone 735 Average FICO score ~80% Owners with no loan Owner median ~$125K annual income Addressable households based on 2022 data from the American Community Survey. FICO score b
Slide 7: On-Site Guests Drive Vacation Ownership Sales
On-Site Guests Drive Vacation Ownership Sales Pre-paid Vacations Drive Most Vacation Ownership High Resort Occupancy Sales Come from On-Property Guests1 88% 89% 88% ~85% from resort guests 2019 2022 2023 1. Sales from resort guests based on full year 2023 contract sales. 7
Slide 8: High-Margin Exchange and Third-Party Management Business with Low Capital Intensity
High-Margin Exchange and Third-Party Management Business with Low Capital Intensity ~40% of Members are MVW Vacation Ownership Owners $130M Segment Adjusted EBITDA* 1% 52% Capital Expenditure Segment as % of Revenue (excluding Adjusted EBITDA Margin* Cost Reimbursements) All numbers based on full ye
Slide 9: Substantial Adjusted EBITDA from Recurring Sources
Substantial Adjusted EBITDA from Recurring Sources Adjusted EBITDA Contribution* Development Management and Exchange 30% 40% ~35% of Adjusted EBITDA contribution from recurring sources 20% 10% Financing Rentals All numbers are approximate. *Adjusted EBITDA Contribution is based on full year 2023 res
Slide 10: Well Positioned To Grow
Well Positioned To Grow 4 High margin/cash flow business • Efficient capital and cost controls provide substantial free cash flow 3 Strong value proposition • Versus lodging average rates 2 Spacious upper upscale resorts • Product well aligned with current vacation style 1 100% leisure focused • Fle
Slide 11: Strong Liquidity Position
Strong Liquidity Position As of June 30, 2024 Available cash on hand $206M Gross notes available for securitization 1 $71M Additional borrowing capacity under revolving credit facility $543M More Than $800 Million of Liquidity 1. Represents gross notes receivable eligible for securitization that are
Slide 12: No Near-Term Maturities
No Near-Term Maturities Q2 2024 Corporate Debt Maturity Schedule ($M) Ending Leverage of s $1,325 4.4x $575 Revolving Credit Facility1 $800 $575 $175 $500 $350 $575 - - - 2024 2025 2026 2027 2028 2029 2030 2031 Convertible notes Unsecured notes Term loan2 Drawn portion of revolver All numbers as of
Slide 13: Disciplined Capital Allocation Model
Disciplined Capital Allocation Model Strong Free Cash Flow Generation Return Corporate Organic Strategic capital to debt growth M&A shareholders reduction • Inventory acquisition • Bolt-on • Share repurchases • Reduce leverage • Technology • New leisure-related • Dividends investment opportunities 1
Slide 14: Driving Sustained Long-Term Growth
Driving Sustained Long-Term Growth Unique and resilient business model Consistent and sustainable growth 14
Slide 15: Three-Point Growth Strategy
Three-Point Growth Strategy 3 Disciplined use of free cash flow 2 Leverage technology to 1 expand our Drive growth businesses and through new product continued offerings transformation of our products 15
Slide 16: Driving Vacation Ownership Growth
Driving Vacation Ownership Growth 1 2 3 High Owner Engagement Leveraging our Brands to Technology-Driven Sales with Customer-Driven Drive Growth and Marketing Growth Product Strategies 16
Slide 17: Leveraging Strong License Relationships
Vacation Ownership Growth Strategy #1 Leveraging Strong License Relationships Number of Loyalty Members 210M 188M 110M 46M Marriott and Wyndham as of June 30, 2024. Hyatt as of June 28, 2024. Hilton as of March 31, 2024. 17
Slide 18: Adding Resorts and Sales Centers in Premium Locations
Vacation Ownership Growth Strategy #1 Adding Resorts and Sales Centers in Premium Locations Waikiki Savannah Hawaii Georgia Opening 2024 Opening 2026 110 keys 73 keys Charleston Khao Lak South Carolina Thailand Opening 2026 Opening 2026 50 keys 60 keys Nusa Dua, Bali Nusa Dua, Bali (Sequel) (Expansi
Slide 19: Transforming Hyatt Vacation Ownership Business
Vacation Ownership Growth Strategy #1 Transforming Hyatt Vacation Ownership Business 1 2 3 4 Capitalize on Optimize Implement best Product development marketing practices enhancements opportunities channels 19
Slide 20: Unified Products and Enhancing Digital Capabilities
Vacation Ownership Growth Strategy #2 Unified Products and Enhancing Digital Capabilities 1 Unified product drives growth 2 Transform marketing, sales, and service with technology Enhance internet- Invest in AI and data Leverage data & Expand virtual sales based marketing science to improve analytic
Slide 21: Focusing on First-Time Buyer Growth
Vacation Ownership Growth Strategy #3 Focusing on First-Time Buyer Growth Increasing Sales to Younger Generations1 Growing New Owners2 Other ~5% Boomers Millennial & ~160K GenX First-time buyers ~35% ~60% added since 2016 1. Based on 2023 contract sales. First-time buyers only. 2. 2016 – 2023. 21
Slide 22: Repurchases Refresh Owner Base to Improve Margins and Satisfaction
Vacation Ownership Growth Strategy #3 Repurchases Refresh Owner Base to Improve Margins and Satisfaction Low-cost repurchased Refresh inventory less engaged owners Points owners are 2.5x as likely to tour and 2x Increased First-time as likely buyers owner Higher reload multiple to buy1 engagement de
Slide 23: Adding Highly Engaged New Owners Drives Revenue Growth
Vacation Ownership Growth Strategy #3 Adding Highly Engaged New Owners Drives Revenue Growth Ongoing Relationship Drives Future Revenue Other Revenue Financing Management Revenue Fees, Ancillary, Rental, Other Financing Revenue Development Revenue Potential Incremental Development Purchase Revenue I
Slide 24: Exchange & Third-Party Management Business Growth Strategies
Exchange & Third-Party Management Business Growth Strategies 1 2 3 Increase share of Grow affiliations and Expand distribution wallet with enhanced management channels product offerings contracts 24
Slide 25: Growing 2024 Contract Sales and Adjusted Free Cash Flow
Growing 2024 Contract Sales and Adjusted Free Cash Flow Full Year 2024 Guidance Adjusted Adjusted Contract sales EBITDA* Free Cash Flow* $1,790M- $685M- $300M- 1,825M 715M 340M Adjusted EBITDA reflects $57M net impact of higher sales reserve. * Adjusted EBITDA and Adjusted Free Cash Flow are non-GAA
Slide 26: Resilient, Well-Positioned Business Executing on Proven Strategy
Resilient, Well-Positioned Business Executing on Proven Strategy ▶ Proven resilient business model ▶ Well-positioned products with iconic brands ▶ Expansion through organic growth, acquisitions, and new product lines ▶ Enhancing value and efficiency with technology ▶ High-margin businesses yielding
Slide 27: Appendix
Appendix A-1
Slide 28: Non-GAAP Financial Measures
Non-GAAP Financial Measures In our presentation we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below and we have made footnote references to them on the preceding pages. The financial schedules included her
Slide 29: Expect to Generate Substantial Adjusted Free Cash Flow in 2024
Expect to Generate Substantial Adjusted Free Cash Flow in 2024 ($M) Low High Adjusted EBITDA* $685 $715 Cash interest (155) (150) Cash taxes (150) (155) Corporate capital expenditures (70) (75) Inventory (45) (40) Financing activity and other 35 45 Adjusted Free Cash Flow* $300 $340 *Adjusted EBITDA
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In millions) 2024 Consolidated Adjusted EBITDA Low High Net income attributable to common stockholders $ 195 $ 215 Interest expense 169 169 Provision for income taxes 92 102 Depreciation and amortization 146 146 EBITDA 602 632 Share-based compensation 33 33 Certain items
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reportable Segments Add Total Exchange & VO and Exchange % Exchange & Vacation Third-Party Corporate 2023 & Third-Party % Vacation Third-Party (In millions) Ownership Management and Other Total Management Ownership Management Net income attributable to common stockholders
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA Contribution. We calculate Adjusted EBITDA Contribution by calculating profit by revenue source (development, management and exchange, rental and financing) and then calculating profit by revenue source as a percentage of total profit, as reconciled herein
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures 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 pr
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In millions) Adjusted free cash flow 2023 Net cash, cash equivalents, and restricted cash provided by operating activities $ 232 Capital expenditures for property and equipment (excluding inventory) (118) Borrowings from securitizations, net of repayments 161 Securitized
Slide 35: Thank you.
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