Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Investor Presentation (February 2013)
30 slides from Marriott Vacations Worldwide's investor presentation, Feb 25, 2013
Slide 1: Marriott Vacations Worldwide Corporation
Exhibit 99.1 Marriott Vacations Worldwide Corporation February 25, 2013
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of federal securities laws, including statements about earnings trends, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historic
Slide 3: Introduction
Introduction Stephen P. Weisz President and Chief Executive Officer John E. Geller, Jr. Executive Vice President and Chief Financial Officer Jeff Hansen Vice President, Investor Relations 2
Slide 4: Who We Are and What We Do
Who We Are and What We Do Who we are: – Marriott Vacations Worldwide Corporation (“VAC”) is an industry leader in the upscale and luxury vacation ownership segments – More than 420,000 owners – Over 60 global vacation and resort destinations What we do: – Sell vacation ownership products – Rent vaca
Slide 5: Strategic Initiatives
Strategic Initiatives Improve Development Margin: • Marketing and Sales • Cost of Vacation Ownership Products Growth: • New Timeshare Properties / Sales Distributions • New Timeshare Business Opportunities Rationalize Organizational Structure and Costs Sell Excess Land and Luxury Inventory 4
Slide 6: Segment Strategies
Segment Strategies NORTH AMERICA Improve development margins Asia Pacific Leverage fixed marketing and sales costs through increased sales efficiency Europe $68 Lower cost of vacation ownership products $63 sold Improve rental margins Continue to enhance Marriott Vacation Club Destinations™ offering
Slide 7: Segment Strategies
Segment Strategies EUROPE Sell remaining developed inventory over next 2Asia years Pacific Enhanced value proposition through access Europe $68 America points program to the North $63 LUXURY Sell excess Luxury inventory through the North America points program over the next 2 to 3 years Reduce Luxur
Slide 8: Diversified Revenue Sources
Diversified Revenue Sources 2012 Revenues** Sale of Vacation Ownership Products Resort 49% Management and Other Services 20% Rental Financing 17% 12% Other 2% $1,286 Million** ** 2012 revenues excludes cost reimbursements of $362 million. See non-GAAP financial measures. 7
Slide 9: Gross Contract Sales Performance
Gross Contract Sales Performance Total gross contract sales for 2013 are North America gross contract sales are projected to be flat to 5% higher than 2012 projected to increase 5% to 10% from 2012 ($ in millions) $688 - $722 $750 $676 $688 $607 - $636 $578 $600 $514 $450 $300 2011 2012 2013 North A
Slide 10: Improving Development Margins
Improving Development Margins Adjusted development margin 1, ** 100% 7.4% 16.5% 8.3% 16.1% to 19.6% 17.5% 80% 37.9% 39.1% 33.5% 32.6% to 1% pt margin 32.7% improvement = 60% 34.5% ~$7M in Adj. EBITDA 40% 54.7% 51.3% 52.6% 49% 47.7% 20% 0% 2011 2012 2013 North America North America 2011 2012 Adjusted
Slide 11: Resort Management and Other Services revenues net of expenses
Resort Management and Other Services revenues net of expenses Increasing management Resort Management and Other fees and club Resort Management and Other Services revenues dues; improving Services revenues net of expenses margins ($ in millions) ($ in millions) $300 $60 $54 $50 $253 $40 $250 $238 $4
Slide 12: Rental revenues net of expenses
Rental revenues net of expenses Improving rental margins Rental revenues Rental revenues net of expenses ($ in millions) ($ in millions) $250 $20 $17 $225 $15 $212 $16 $12 $195 $12 $200 $187 $180 $8 $152 $4 $0 $150 $0 ($4) ($8) $(7) $(8) $100 ($12) 2010 2011 2012 2010 2011 2012 All segments North Am
Slide 13: Financing revenues net of financing expenses and consumer financing interest expense
Financing revenues net of financing expenses and consumer financing interest expense Profits should ($ in millions) stabilize as of $200 $188 2012 $169 $151 $160 $120 $99 $91 $84 $80 $40 2010 2011 2012 Financing revenue Financing revenue, net of financing expenses and consumer financing interest exp
Slide 14: 2013 Guidance
2013 Guidance ($ in millions) 2011 2012 2013 Outlook (ranges) Gross Contract Sales $ 676 $ 688 $ 688 $ 722 Adjusted Development Margin** 7.4% 16.1% 16.5% 17.5% Adjusted Net Income** $ 20 $ 50 $ 66 $ 74 Adjusted EBITDA, as adjusted** $ 96 $ 138 $ 150 $ 165 ** See Non-GAAP Financial Measures. 13
Slide 15: Normalized Adjusted Free Cash Flow - 2013
Normalized Adjusted Free Cash Flow ** - 2013 ($ in millions) 2013 Outlook 2013 Low High Mid-Point Adjustments Normalized ** Adjusted net income ** $ 66 $ 74 $ 70 $ 70 Adjustments to reconcile Adjusted net income to net cash provided by operating activities: Adjustments for non-cash items ¹ 84 86 85
Slide 16: Inventory Calculation - Example
Inventory Calculation - Example Example assumes revenue from the sale of vacation ownership products grows annually at 5%. With those growth levels, MVW would target inventory of $514M on hand at the end of 2016 which represents 2 years of inventory on hand (considered stabilized level). As such, wi
Slide 17: Strategic Initiatives
Strategic Initiatives Improve Development Margin: • Marketing and Sales • Cost of Vacation Ownership Products Growth: • New Timeshare Properties / Sales Distributions • New Timeshare Business Opportunities Rationalize Organizational Structure and Costs Sell Excess Land and Luxury Inventory 16
Slide 18: Appendix
Appendix MARRIOTT VACATIONS WORLDWIDE
Slide 19: Normalized Adjusted Free Cash Flow - 2012
Normalized Adjusted Free Cash Flow ** - 2012 ($ in millions) 2012 2012 Actual Adjustments Normalized ** Adjusted net income ** $ 50 $ 50 Adjustments to reconcile Adjusted net income to net cash provided by operating activities: Adjustments for non-cash items ¹ 77 77 4 Deferred income taxes (50) $ 50
Slide 20: Non-GAAP Financial Measures
Non-GAAP Financial Measures In this presentation we report certain financial measures that are not prescribed or authorized by United States generally accepted accounting principles (“GAAP”). We discuss management’s reasons for reporting these non-GAAP financial measures below, and reconcile the mos
Slide 21: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Net Income and Adjusted Pro Forma Net Income (continued) Other Charges - 16 weeks and 52 weeks ended December 30, 2011. In our 16 weeks ended December 30, 2011 Statements of Operations, we recorded $10 million of pre-tax charges comprised of $4 million of spin-of
Slide 22: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted Net Income and Adjusted Pro Forma Net Income (continued) Gain on the disposition of a Luxury segment golf course and related assets - 16 weeks and 52 weeks ended December 28, 2012. In our 16 weeks and 52 weeks ended December 28, 2012 Statements of Operations, we
Slide 23: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA. We also evaluate Adjusted EBITDA, another non-GAAP financial measure, as an indicator of performance. Our Adjusted EBITDA excludes the impact of non-cash impairment charges or reversals and restructuring charges and includes the impact of interest expense
Slide 24: Non-GAAP Financial Measures
Non-GAAP Financial Measures Free Cash Flow. Management also evaluates Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment and changes in rest
Slide 25: Non-GAAP Financial Measures
Non-GAAP Financial Measures Financing Revenue, Net of Financing Expenses and Consumer Financing Interest Expense. Financing revenue, net of financing expenses and consumer financing interest expense includes interest income earned on vacation ownership notes receivable as well as fees earned from se
Slide 26: Non-GAAP Financial Measures – Consolidated
Non-GAAP Financial Measures – Consolidated Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) CONSOLIDATED GROSS COMPANY-OWNED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS 52 Weeks Ended ($ in millions) December 28, 2012 December 30, 2011 1 Gross comp
Slide 27: Non-GAAP Financial Measures — North America
Non-GAAP Financial Measures — North America Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) NORTH AMERICA GROSS COMPANY-OWNED CONTRACT SALES TO SALE OF VACATION OWNERSHIP PRODUCTS ($ in millions) 52 Weeks Ended December 28, 2012 December 30, 2011 Gross comp
Slide 28: Non-GAAP Financial Measures – 2012
Non-GAAP Financial Measures – 2012 Adjusted Net Income and 2011 Adjusted Pro Forma Net Income As Adjusted As Reported As Adjusted As Reported Pro-Forma ($ in millions) 52 Weeks Ended Other 52 Weeks Ended 52 Weeks Ended Other 52 Weeks Ended December 28, 2012 Charges December 28, 2012 ** December 30,
Slide 29: Non-GAAP Financial Measures – 2012 and 2011 EBITDA
Non-GAAP Financial Measures – 2012 and 2011 EBITDA, Adjusted EBITDA, and Adjusted Pro Forma EBITDA as adjusted As Adjusted As Reported As Adjusted As Reported Pro-Forma ($'s in millions) 52 Weeks Ended Other 52 Weeks Ended 52 Weeks Ended Other 52 Weeks Ended December 28, 2012 Charges December 28, 20
Slide 30: Non-GAAP Financial Measures – 2013 Outlook
Non-GAAP Financial Measures – 2013 Outlook (EBITDA and Adjusted EBITDA) 2013 EBITDA and ADJUSTED EBITDA OUTLOOK Fiscal Year 2013 Fiscal Year 2013 ($ in millions) (low) (high) Adjusted net income $ 66 $ 74 Interest expense 43 45 Tax provision 51 58 Depreciation and amortization 23 23 EBITDA, as adjus
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