Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Investor Presentation (September 2020)
38 slides from Marriott Vacations Worldwide's investor presentation, September 2020
Slide 1: Investor Presentation September 2020
INVESTOR PRESENTATION SEPTEMBER 2020
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 Over Leading 7 110 660,000 Upper Upscale Iconic brands Resorts around the world Owner families & Luxury Vacation Ownership Developer Exchange and Third-Party Management Serving Nearly Across 1.8M 3,200 160 Members Exchange Properties Resort
Slide 4: Agenda
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 2019 Adjusted EBITDA Contribution Recurring ~ Management and Vacation Exchange Ownership Sales 28% 36% ~45% of Adjusted EBITDA Contribution from Recurring Sources 19% 17% Rentals Financing MARRIOTT VACATIONS WORLDWIDE I 6
Slide 7: Leisure Customers Are Returning to Mountain and Beach Resorts
Leisure Customers Are Returning to Mountain and Beach Resorts Select July August September October Occupancies: • South Carolina 71% 68% 77% 78% • Florida Beaches 65% 66% 69% 74% • Mountain Resorts 73% 81% 81% 80% • Newport Coast, CA 75% 84% 80% 92% • Palm Desert, CA 60% 62% 56% 71% • Hawaii 3% 4% 4
Slide 8: Most Contract Sales Come From Guests Staying on Property
Most Contract Sales Come From Guests Staying on Property Other 20% ~80% Vacationing of Sales Come From On-Property On-Property Guests 50% Package Tours 30% Based on 2019 contract sales MARRIOTT VACATIONS WORLDWIDE I 8
Slide 9: Majority Of Our Sales Centers Have Reopened
Majority Of Our Sales Centers Have Reopened 10 7 sales centers Hawaiian sales 8 reopened centers reopened sales centers reopened 1 sales center reopened May Jun Jul Aug Sep Oct Nov Launched remote phone sales 3 sales centers 26 reopened sales centers reopened MARRIOTT VACATIONS WORLDWIDE I 9
Slide 10: Contract Sales Are Recovering
Contract Sales Are Recovering Contract Sales ($M) $306 $160-$185 $140 $30 Q1 2020 Q2 2020 Q3 2020 Q4 2020E MARRIOTT VACATIONS WORLDWIDE I 10
Slide 11: Substantial Third Quarter Improvement At Interval International
Substantial Third Quarter Improvement At Interval International Exchange Volume Average Revenue per Member (q/q % chg.) 137,048 123,374 -10% -30% Second Quarter Third Quarter Second Quarter Third Quarter 2020 2020 2020 2020 MARRIOTT VACATIONS WORLDWIDE I 11
Slide 12: Substantial Fourth Quarter Bookings Versus Same Time Last Year
Substantial Fourth Quarter Bookings Versus Same Time Last Year Owner & Exchanger Interval International Nights Booked Bookings (000’s) (000’s) 1,590 1,476 145.2 135.5 78% Q4 2019 Q4 2020 Q4 2019 Q4 2020 Owner & Exchanger nights booked as of October 10, 2020. MARRIOTT VACATIONS WORLDWIDE I 12
Slide 13: Robust Tour Package Pipeline
Robust Tour Package Pipeline Tour Package Pipeline 184,026 171,463 September September 2019 2020 MARRIOTT VACATIONS WORLDWIDE I 13
Slide 14: Over $1.3 Billion of Total Liquidity
Over $1.3 Billion of Total Liquidity As of September 30, 2020 • Available cash on hand $660M • Gross notes available for securitization under warehouse facility $62M • Additional borrowing capacity under revolving credit facility $597M Expect to Generate at Least $130M of Total Cash Flow in 2020 Sec
Slide 15: Strong Liquidity Position With No Long-Term Debt Maturities Before 2022
Strong Liquidity Position With No Long-Term Debt Maturities Before 2022 Debt Maturity Schedule ($M) $1,387 Revolving Credit Facility $750 $600 $350 $230 2020 2021 2022 2023 2024 2025 2026 2027 2028 Maturities above exclude the 1% annual term loan amortization, capital lease payments and non-recourse
Slide 16: Now Targeting $200M Total Cost Savings
Now Targeting $200M Total Cost Savings ~$75M+ New Opportunities ~$200M+ Total ADDITIONAL Savings ~$45M+ COST SAVINGS To-Go ILG Synergies • Driving marketing and sales efficiencies PLANNED ~$80M INITIATIVES • Leverage technology Synergies to drive efficiencies • Back of house technology across the bu
Slide 17: Agenda
AGENDA Powerful Business Model Driving Long-Term Growth • Ideally Positioned For Travel Recovery • Unique Business Model • Long-Term Growth Strategy MARRIOTT VACATIONS WORLDWIDE I 17
Slide 18: We Have a Broad, Diverse Portfolio
We Have a Broad, Diverse Portfolio Strengthened by the ILG Acquisition Vacation Ownership 88% of Revenues • Sales of vacation ownership products & financing • Management & rentals Exchange & Third-Party Management 12% of Revenues • Exchange • Third-party management MARRIOTT VACATIONS WORLDWIDE I 18
Slide 19: 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
Slide 20: Large And Attractive Addressable Market
Large And Attractive Addressable Market >35M households – addressable market in U.S. alone >$130k median annual income ~740 FICO score $1.5M median net worth MARRIOTT VACATIONS WORLDWIDE I 20
Slide 21: High-Margin Exchange & Third-Party Management Business Provides Strong Free Cash Flow
High-Margin Exchange & Third-Party Management Business Provides Strong Free Cash Flow 2019 Adjusted EBITDA Contribution Key Metrics Interval International Third-Party Active Members 1.7M Management ~20% Adjusted EBITDA Margin Exchange ~80% 63% Capital Expenditures $13M All numbers as of December 31,
Slide 22: Strong Performance Record
Strong Performance Record Legacy Legacy Combined MVW Contract Sales ILG Contract Sales Contract Sales ($M) ($M) ($M) 8% CAGR $1,524 7% CAGR $1,112 $952 10% CAGR $719 $572 $393 2015 2019 2015 2019 2015 2019 MARRIOTT VACATIONS WORLDWIDE I 22
Slide 23: 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 24: Agenda
AGENDA Powerful Business Model Driving Long-Term Growth • Ideally Positioned For Travel Recovery • Unique Business Model • Long-Term Growth Strategy MARRIOTT VACATIONS WORLDWIDE I 24
Slide 25: Leveraging Strong License Relationships
Leveraging Strong License Relationships Number of Loyalty Members 142M 106M 84M 22M As of June 30, 2020. MARRIOTT VACATIONS WORLDWIDE I 25
Slide 26: Driving Growth with Digital
Driving Growth with Digital Strengthen Our Digital Infrastructure Grow Online Tour Packages Enhance Experiences MARRIOTT VACATIONS WORLDWIDE I 26
Slide 27: Acquired Brands Underrepresented in Major Markets
Acquired Brands Underrepresented in Major Markets • Las Vegas, NV • Orlando, FL • Maui, HI • Waikiki, HI • Big Island, HI • Urban • Key West, FL • Aruba • Cancun, Mexico • Los Cabos, Mexico • Asia Pacific Announced development of a new Waikiki resort in October 2019. MARRIOTT VACATIONS WORLDWIDE I 2
Slide 28: Focus on New Owners and Younger Generations
Focus on New Owners and Younger Generations Increasing Sales to Younger Growing New Generations Owners Millennial New Owner Not Disclosed Growth & GenX 10% 33% ~95k first-time buyers added since 2016!! 57% Boomers MARRIOTT VACATIONS WORLDWIDE I 28
Slide 29: 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 30: 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 30
Slide 31: Capturing Revenue Synergies From ILG Acquisition
Capturing Revenue Synergies From ILG Acquisition A few examples… Hotel In-House Owner Trial Program Volume per Call Marketing Tour and Site Guest Transfer Locations Penetration Packages Sold (VPG) Increased Market Best Practices Sales Excellence Penetration MARRIOTT VACATIONS WORLDWIDE I 31
Slide 32: Linking All Marriott-Branded Vacation Ownership Resorts
Linking All Marriott-Branded Vacation Ownership Resorts Today Target Future Product Form MARRIOTT VACATIONS WORLDWIDE I 32
Slide 33: Well Positioned For Travel Recovery
IN SUMMARY Well Positioned For Travel Recovery 100% Leisure Travel Focused Expect to Generate at Least $130M of Cash Flow in Second Half of 2020 Resilient Business Model with History of Strong Performance Strong Liquidity Position with Substantial Cost Saving Opportunities Large Owner Base Committed
Slide 34: Appendix
APPENDIX MARRIOTT VACATIONS WORLDWIDE I A-1
Slide 35: 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 36: 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 37: Cumulative Adjusted Free Cash Flow – 2015 through 2019
Cumulative Adjusted Free Cash Flow – 2015 through 2019 (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) 1 Investme
Slide 38: Non-GAAP Financial Measures
Non-GAAP Financial Measures Marriott Vacations Worldwide Corporation Total Cash Flow Outlook – Second Half of 2020 Second Half of 2020 (In millions) Net cash, cash equivalents and restricted cash provided by operating activities $ 335 Capital expenditures for property and equipment (excluding invent
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