Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Q4 2021 Earnings Presentation
35 slides from Marriott Vacations Worldwide's earnings presentation, February 2022
Slide 1: Investor Presentation February 2022
INVESTOR PRESENTATION FEBRUARY 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements We refer throughout this presentation to the results from the business associated with the brands that existed prior to our acquisition of ILG, Inc. (“ILG”) as “Legacy-MVW,” and we refer to the results from the business and brands that were acquired from ILG as “Legacy-ILG
Slide 3: Leading Provider of Vacation Experiences
Leading Provider of Vacation Experiences Vacation Ownership More than Approximately Leading 7 120 700,000 Upper Upscale Iconic brands Resorts Owner families & Luxury Vacation Ownership Developer Exchange and Third-Party Management More than Nearly More Than 1.6M 3,200 150 Members Exchange Properties
Slide 4: Agenda: Powerful Business Model Driving Long-Term Growth
AGENDA Powerful Business Model Driving Long-Term Growth • Ideally Positioned For Travel Recovery • Unique Business Model • Long-Term Growth Strategy MARRIOTT VACATIONS WORLDWIDE I 4
Slide 5: Ideally Positioned For Travel Recovery
Ideally Positioned For Travel Recovery 100% focused on leisure travel Timeshare owners are avid travelers with vested interests in their vacations Enviable owner base with large & attractive addressable market Large square footage & in-room kitchens make properties better suited for social distancin
Slide 6: Highly Resilient Business Model
Highly Resilient Business Model Adjusted EBITDA Contribution Recurring Management and Vacation Exchange Ownership Sales 30% 36% ~40% of Adjusted EBITDA Contribution from 15% Recurring Sources 19% Rentals Financing Adjusted EBITDA Contribution is based on 2021 results and is a non-GAAP measure (see A
Slide 7: Most Contract Sales Historically Come From Guests Staying on Property
Most Contract Sales Historically Come From Guests Staying on Property Other ~85% 55% 15% of Sales Come From On-Property Guests Vacationing On-Property Package Tours 30% Based on 2021 contract sales Other includes off-premise marketing, Linkage and other channels, a portion of which have been discont
Slide 8: Leisure Customers Are Traveling
Leisure Customers Are Traveling Select occupancies Florida Hawaii Beaches Orlando 93% 97% 94% 97% 87% 86% Q4 2019 Q4 2021 Q4 2019 Q4 2021 Q4 2019 Q4 2021 South Desert Newport Carolina Coast 94% 97% 98% 91% 88% 83% Q4 2019 Q4 2021 Q4 2019 Q4 2021 Q4 2019 Q4 2021 Desert includes Arizona and Palm Deser
Slide 9: Strong Liquidity Position
Strong Liquidity Position . . . As of December 31, 2021 • Available cash on hand $342M • Gross notes available for securitization $113M • Additional borrowing capacity under revolving credit facility $598M Nearly $1.1 Billion of Liquidity MARRIOTT VACATIONS WORLDWIDE I 9
Slide 10: With No Long-Term Debt Maturities Before Late 2022
. . . With No Long-Term Debt Maturities Before Late 2022 Debt Maturity Schedule ($M) $1,034 Revolving Credit Facility $600 $575 $500 $350 $230 2022 2023 2024 2025 2026 2027 2028 2029 Convertible Notes Unsecured Notes Secured Notes Term loan Excludes $2 million of outstanding Letters of Credit. MARRI
Slide 11: Targeting $200M+ Total Cost Savings
Targeting $200M+ Total Cost Savings ~$40M+ To-Go Opportunities ~$200M+ ADDITIONAL Total Savings SAVINGS • Process consolidation • Digital transformation ~$160M • Reduced applications Synergies • IT platform optimization COMPLETED • Infrastructure modernization INITIATIVES • Duplicate positions • Pub
Slide 12: 2022 Contract Sales and Adjusted EBITDA Expected to Exceed 2019 Levels
2022 Contract Sales and Adjusted EBITDA Expected to Exceed 2019 Levels Contract Sales Adjusted EBITDA ($M) ($M) 10-16% 13-21% $1,675-$1,775 $860-$920 $1,524 $758 2019 2022E 2019 2022E See Appendix for reconciliation of Net Income to Adjusted EBITDA MARRIOTT VACATIONS WORLDWIDE I 12
Slide 13: Full-Year 2022 Adjusted Free Cash Flow Guidance
Full-Year 2022 Adjusted Free Cash Flow Guidance ($M) Low High Adjusted EBITDA $860 $920 Cash interest (100) (100) Cash taxes (160) (175) Corporate capital expenditures (75) (85) Inventory 85 100 Financing activity and other (50) (20) Adjusted Free Cash Flow $560 $640 Adj. Free Cash Flow Conversion 6
Slide 14: Agenda: Unique Business Model
AGENDA Powerful Business Model Driving Long-Term Growth • Ideally Positioned For Travel Recovery • Unique Business Model • Long-Term Growth Strategy MARRIOTT VACATIONS WORLDWIDE I 14
Slide 15: We Have a Broad, Diverse Portfolio
We Have a Broad, Diverse Portfolio Strengthened by the ILG and Welk Acquisitions Vacation Ownership ~90% of Revenues • Sales of vacation ownership products & financing • Management & rentals Exchange & Third-Party Management ~10% of Revenues • Exchange • Third-party management MARRIOTT VACATIONS WOR
Slide 16: Large and Attractive Addressable Market
Large and Attractive Addressable Market >35M households – addressable market in U.S. alone >$130k median annual income ~730 FICO score $1.5M median net worth MARRIOTT VACATIONS WORLDWIDE I 16
Slide 17: High-Margin and Low Capital-Intensive Exchange & Third-Party Management Business
High-Margin and Low Capital-Intensive Exchange & Third- Party Management Business Provides Strong Cash Flow Adjusted EBITDA Contribution Key Metrics Interval International Third-Party Active Members 1.6M Management ~10% Average Revenue per Member Exchange ~90% $179 Adj. EBITDA Margin 53% Average Rev
Slide 18: A Powerful Free Cash Flow Engine
A Powerful Free Cash Flow Engine Adjusted Free Cash Flow before Inventory and Capex $2.6B Inventory Investment Adjusted Free Cash Flow Capital Expenditure $1.0B $1.4B $0.2B Shares Repurchased Dividends ~90% Returned $1.0B $0.2B to Shareholders Cumulative 2015 to 2019. Free Cash Flow and Adjusted Fre
Slide 19: Agenda: Long-Term Growth Strategy
AGENDA Powerful Business Model Driving Long-Term Growth • Ideally Positioned For Travel Recovery • Unique Business Model • Long-Term Growth Strategy MARRIOTT VACATIONS WORLDWIDE I 19
Slide 20: Leveraging Strong License Relationships
Leveraging Strong License Relationships Number of Loyalty Members 160M 128M 92M 30M As of December 31, 2021. MARRIOTT VACATIONS WORLDWIDE I 20
Slide 21: Driving Growth with Digital
Driving Growth with Digital Strengthen Our Grow Online Enhance Customer Digital Infrastructure Tour Packages Experiences MARRIOTT VACATIONS WORLDWIDE I 21
Slide 22: Acquired Brands Underrepresented in Major Markets
Acquired Brands Underrepresented in Major Markets • Las Vegas, NV • Orlando, FL • Maui, HI • Oahu, HI • Big Island, HI • Urban • Key West, FL • Aruba • Cancun, Mexico • Los Cabos, Mexico • Asia Pacific Hyatt Residence Club includes Sirena del Mar by Welk Resorts, which is expected to be rebranded. M
Slide 23: Focus on New Owners and Younger Generations
Focus on New Owners and Younger Generations Increasing Sales to Younger Growing New Generations1 Owners2 New Owner Other Growth 6% Millennial & GenX ~120K 32% 62% first-time buyers added since 2016!! Boomers 1. Based on 2021 contract sales. Younger generation is first time buyers only and excludes H
Slide 24: Adding New Owners to the System Grows Revenue
Adding New Owners to the System Grows Revenue Average Revenue Contribution of Initial Purchases Through First Five Years Other Financing Management Revenue Fees, Ancillary, Financing Rental, Other Development Revenue Revenue Additional Purchase Development Revenue Initial Vacation Total Revenue Owne
Slide 25: Grow Exchange & Third-Party Management Business
Grow Exchange & Third-Party Management Business Increase share of Expand Grow affiliations wallet with distribution & management enhanced product channels contracts offerings MARRIOTT VACATIONS WORLDWIDE I 25
Slide 26: Acquisition of Welk Resorts Provides Long-term Growth and Margin Improvement
Acquisition of Welk Resorts Provides Long-term Growth and Margin Improvement Contract sales ($M) • Will expand number of Hyatt Residence Club Plan to rebrand keys by 90% $150 - $160 Welk to Hyatt • More than double number of Owners to ~80k $123 $109 Residence Club • 3+ years of built inventory 2019A
Slide 27: Linking All Marriott-Branded Vacation Ownership Resorts
Linking All Marriott-Branded Vacation Ownership Resorts Today Target Future Product Form MARRIOTT VACATIONS WORLDWIDE I 27
Slide 28: Well Positioned For Travel Recovery
IN SUMMARY Well Positioned For Travel Recovery 100% focused on leisure travel Timeshare owners are avid travelers with vested interests in their vacations Enviable owner base with large & attractive addressable market Large square footage & in-room kitchens make properties better suited for social d
Slide 29: Appendix
APPENDIX MARRIOTT VACATIONS WORLDWIDE I A-1
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures In our presentation we report certain financial measures that are not prescribed by United States generally accepted accounting principles ("GAAP"). We discuss below our reasons for reporting these non-GAAP financial measures, and we’ve made footnote references to them on
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA Profit. We calculate Adjusted EBITDA Profit by dividing segment or total company Adjusted EBITDA, where applicable, by segment or total company revenues excluding cost reimbursements, where applicable. We consider Adjusted EBITDA Profit to be an indicator
Slide 32: Non-GAAP Financial Measures
Non-GAAP Financial Measures Revenues Excluding Cost Reimbursements. Cost reimbursements revenue includes direct and indirect costs that property owners' associations and joint ventures we participate in reimburse to us, and relates, predominantly, to payroll costs where we are the employer. As we re
Slide 33: Cumulative Adjusted Free Cash Flow – 2015 through 2019
Cumulative Adjusted Free Cash Flow – 2015 through 2019 ($'s in millions) 2015 2016 2017 2018 2019 Cumulative Net cash provided by operating activities $ 109 $ 141 $ 142 $ 97 $ 382 $ 871 Capital expenditures for property and equipment (excluding inventory): Other (36) (35) (26) (40) (46) (183) Invest
Slide 34: Non-GAAP Financial Measures
Non-GAAP Financial Measures (In millions) Fiscal Year Fiscal Year Adjusted EBITDA 2019 2022 (low) 2022 (high) Net income attributable to common shareholders $ 138 $ 317 $ 347 Interest expense 132 107 107 Provision for income taxes 83 126 136 Depreciation and amortization 141 127 127 Share-based comp
Slide 35: More Diverse, Less Capital-Intensive Model
More Diverse, Less Capital-Intensive Model Then Now Timeshare + More Business Residences + Timeshare + Exchange diverse Fractional Development Less capital Weeks-based Points-based intensive Model Sales Site-specific Perpetual Sell the system Centers sales centers Funding On balance Solid free Capit
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