Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Q1 2023 Earnings Presentation
37 slides from Marriott Vacations Worldwide's earnings presentation, May 4, 2023
Slide 1: Investor Presentation
Investor Presentation May 4, 2023
Slide 2: Forward-Looking Statements
Forward-Looking Statements We refer throughout this presentation to the business acquired by our acquisition of Welk Resorts as “Legacy Welk.” This presentation and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including statements about e
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 – ~85% 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 – ~15
Slide 5: Evolving and Resilient Business Model
Evolving and Resilient Business Model Pre 2011 Today Outcome Strong consumer Brand 3 brands 7 brands demographic/ New Expansion Marriott/Hyatt programs Timeshare + residence + Timeshare + Product Diverse cash flow fractional ownership exchange Development Deeded Primarily points-based Capital effici
Slide 6: Large and Attractive Addressable Market and Customer Base
Large and Attractive Addressable Market and Customer Base Vacation Ownership ~43M Households – addressable market in U.S. alone1 ~735 FICO score ~$125K Median annual income $1.5M Median net worth 1. Based on 2021 data from the American Community Survey. 6
Slide 7: On-Site Guests Drive Sales
On-Site Guests Drive Sales High Resort Most Vacation Ownership Occupancy Sales Come from On-Property Guests1 88% 89% 82% ~85% from resort guests 2019 2021 2022 1. Sales from resort guests based on 2022 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 $148M Segment Adjusted EBITDA* 2% 55% Capital Expenditure Segment as % of Revenue (excluding Adjusted EBITDA Margin* Cost Reimbursements) All numbers represent FY 2022. *Segment Adjusted EBITDA and Segment Adjusted E
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 15% 15% Financing Rentals All numbers approximate. *Adjusted EBITDA Contribution is based on 2022 results as adjust
Slide 10: Well Positioned To Continue Rapid Growth
Well Positioned To Continue Rapid Growth 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% leis
Slide 11: Strong Liquidity Position
Strong Liquidity Position As of March 31, 2023 Available cash on hand $306M Gross notes available for securitization $120M Additional borrowing capacity under revolving credit facility 1 $550M ~$1.0 Billion of Liquidity1 1. Excludes $1 million of outstanding Letters of Credit. 11
Slide 12: Conservative Balance Sheet with Interest Rates Primarily Fixed
Conservative Balance Sheet with Interest Rates Primarily Fixed Debt Maturity Schedule Fixed vs Floating Rate Debt2 ($M) $1,325 Floating 15% $550 (cost: 6.6%) Revolving Credit $784 Facility1 $575 $200 $500 $350 Fixed $575 85% (cost: 3.2%) 2023 2024 2025 2026 2027 2028 2029 Convertible notes Unsecured
Slide 13: Disciplined Capital Allocation Model
Disciplined Capital Allocation Model Strong Free Cash Flow Q1 2023 Generation Ending Leverage of s 3.1x Additional Return Strategic organic capital to M&A growth shareholders • Inventory acquisition • Bolt-on to existing • Share repurchases • Technology investment • New leisure-related • Dividends o
Slide 14: Well Positioned to Face Recessionary Challenges
Well Positioned to Face Recessionary Challenges ✓ Strong customer base ✓ Vacations are “pre-paid” driving high resort occupancy rates ✓ The Interval International exchange model performs well in typical recessionary periods ✓ Minimal inventory commitments and debt maturities for the next few years ✓
Slide 15: Driving Sustained Long-Term Growth
Driving Sustained Long-Term Growth Unique and resilient business model Consistent and sustainable growth 15
Slide 16: 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 16
Slide 17: Driving Vacation Ownership Growth
Driving Vacation Ownership Growth 1 2 3 4 Integrate Digital High Owner Leveraging our Experience & Technology-Driven Engagement with Brands to Drive Enhance Service for Sales and Customer-Driven Growth Next Generation of Marketing Growth Product Strategies Travelers 17
Slide 18: Leveraging Strong License Relationships
Vacation Ownership Growth Strategy #1 Leveraging Strong License Relationships Number of Loyalty Members 182M 158M 101M 36M Marriott, Hilton, and Wyndham as of March 31, 2023. Hyatt as of December 31, 2022. 18
Slide 19: Global Footprint in Premium Locations
Vacation Ownership Growth Strategy #1 Global Footprint in Premium Locations Scottsdale, AZ Orlando, FL Maui, HI Oahu, HI Big Island, HI Kauai, HI Las Vegas, NV New York, NY Aruba Cancun, Mexico Los Cabos, Mexico Asia Pacific Hyatt Residence Club includes Sirena del Mar, a Legacy Welk resort in Los C
Slide 20: 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 20
Slide 21: Vacation Next – Multi-Year Transformation for Key Advantages
Vacation Ownership Growth Strategy #2 Vacation Next – Multi-Year Transformation for Key Advantages 1 Unify products and New Owner Program Create integrated digital experience for 2 associates and owners 3 Transform marketing, sales and service Screenshot is a prototype and does not reflect the final
Slide 22: Initiatives to Optimize Direct Marketing
Vacation Ownership Growth Strategy #3 Initiatives to Optimize Direct Marketing Modern CRM Improving Expanded Enhancing campaign implementation performance access to digital program management across across all members efficiency tools business channels Digital Advanced Programs Analytics 22
Slide 23: Focusing on First Time Buyer Growth
Vacation Ownership Growth Strategy #4 Focusing on First Time Buyer Growth Increasing Sales to Younger Generations1 Growing New Owners2 Other 4% Boomers Millennial & ~140K GenX First-time buyers 36% 60% added since 2016 1. FY 2022 contract sales. First time buyers only. 2. 2016 – 2022. Includes legac
Slide 24: Adding Highly Engaged New Owners Drives Revenue Growth
Vacation Ownership Growth Strategy #4 Adding Highly Engaged New Owners Drives Revenue Growth Average Revenue Contribution of Initial Purchases Through First Five Years Other Financing Management Fees, Ancillary, Financing Rental, Other Development Revenue Revenue Additional Purchase Development Reve
Slide 25: 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 25
Slide 26: Strong Contract Sales and Adjusted EBITDA Growth
Strong Contract Sales and Adjusted EBITDA Growth FY Contract Sales FY Adjusted EBITDA* ($M) ($M) 7% 7% YoY YoY $1,930-2,000 $1,837 $950-1,000 $915 Excludes Alignment Benefit 1* 2022 2023 2022 2023 CAGRs calculated using the 2023 midpoint. 1. Excludes $51 million of Alignment benefit. Including the A
Slide 27: Expect to Generate Substantial Adjusted Free Cash Flow in 2023
Expect to Generate Substantial Adjusted Free Cash Flow in 2023 ($M) Low High Adjusted EBITDA* $950 $1,000 Cash interest (115) (115) Cash taxes (190) (205) Corporate capital expenditures (90) (100) Inventory 75 95 Financing activity and other (30) (5) Adjusted Free Cash Flow* $600 $670 * Adjusted EBI
Slide 28: Resilient, Well-Positioned Business Executing on Proven Strategy
Resilient, Well-Positioned Business Executing on Proven Strategy ▶ Proven resilient business model ▶ Well-positioned products with iconic brands ▶ Rapid expansion through organic growth, acquisitions, and new product lines ▶ Enhancing value and efficiency with technology ▶ High-margin businesses yie
Slide 29: Appendix
Appendix A-1
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures In our presentation we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below and we have made footnote references to them on the preceding pages. The financial schedules included her
Slide 31: Robust Q1 Contract Sales and Adjusted EBITDA Growth
Robust Q1 Contract Sales and Adjusted EBITDA Growth Q1 Contract Sales Q1 Adjusted EBITDA* ($M) ($M) 10% YoY 8% YoY $434 $203 $394 $188 Margin 25% 25% 2022 2023 2022 2023 *Adjusted EBITDA and Adjusted EBITDA margin are non-GAAP measures. For definition and reconciliation, please see appendix. A-3
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In millions) 2023 Consolidated Adjusted EBITDA Low High Net income attributable to common shareholders $ 410 $ 445 Interest expense 140 140 Provision for income taxes 175 190 Depreciation and amortization 130 130 EBITDA 855 905 Share-based compensation 37 37 Certain item
Slide 33: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In millions) Consolidated Adjusted EBITDA Margin Q1 2022 Q1 2023 Net income attributable to common shareholders $ 58 $ 87 Interest expense 27 34 Provision for income taxes 32 41 Depreciation and amortization 33 32 EBITDA 150 194 Share-based compensation 8 7 Certain items
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reportable Segments As Adjusted (1) Vacation Exchange & VO and Exchange % Exchange & Vacation 2022 Ownership Third-Party Corporate 2022 & Third-Party % Vacation Third-Party (In millions) Ownership Alignment As Adjusted (1) Management and Other Total Management Ownership M
Slide 35: 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 36: 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 37: Thank you.
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