Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Investor Presentation (February 2021)
37 slides from Marriott Vacations Worldwide's investor presentation, February 2021
Slide 1: Investor Presentation February 2021
INVESTOR PRESENTATION FEBRUARY 2021
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 7 110 650,000 Upper Upscale Iconic brands Resorts around the world Owner families & Luxury Vacation Ownership Developer Exchange and Third-Party Management Serving Nearly Across 1.7M 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 Adjusted EBITDA Contribution Recurring ~ Management and Vacation Exchange Ownership Sales 28% 36% ~45% of Adjusted EBITDA Contribution from Recurring Sources 19% 17% Rentals Financing Adjusted EBITDA Contribution is based on 2019 results and is a non-GAAP measure (see
Slide 7: Leisure Customers Are Returning to Mountain and Beach Resorts
Leisure Customers Are Returning to Mountain and Beach Resorts Select Occupancies: October November December • South Carolina 78% 74% 66% • Florida Beaches 74% 74% 79% • Colorado Mountains 78% 63% 74% • Park City, UT 81% 71% 76% • Aruba 47% 60% 65% • Oahu, HI 38% 69% 73% • Maui, HI 21% 53% 54% • Orla
Slide 8: Majority Of Our Sales Centers Have Reopened
Majority Of Our Sales Centers Have Reopened 10 7 sales sales centers centers 6 8 reopened reopened sales sales centers centers reopened 1 reopened sales center reopened May Jun Jul Aug Sep Oct Nov Dec Jan Launched 11 remote phone sales 3 sales centers closed sales centers temporarily reopened 26 sal
Slide 9: Most Contract Sales Historically Come From Guests Staying on Property
Most Contract Sales Historically 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 9
Slide 10: Contract Sales Continue to Recover
Contract Sales Continue to Recover Contract Sales ($M) 190-210 178 140 30 Q2 2020 Q3 2020 Q4 2020 Q1 2021E MARRIOTT VACATIONS WORLDWIDE I 10
Slide 11: Positive Second Half 2021 Bookings
Positive Second Half 2021 Bookings Total Nights Booked (000’s) 1,882 1,741 H2 2019 H2 2021 Nights booked as of 1/26/2021 compared to the same time in 2019. MARRIOTT VACATIONS WORLDWIDE I 11
Slide 12: Continued Improvement At Interval International
Continued Improvement At Interval International Exchange Volume Average Revenue per Member (y/y % chg.) ~0-2% 1 ~1-3% -5% 139,973 137,048 -10% 123,374 -30% Q2 2020 Q3 2020 Q4 2020 Q1 2021E Q2 2020 Q3 2020 Q4 2020 Q1 2021E 1. Year-over-year change. MARRIOTT VACATIONS WORLDWIDE I 12
Slide 13: Strong Liquidity Position
Strong Liquidity Position . . . As of December 31, 2020 • Available cash on hand $524M • Gross notes available for securitization under warehouse facility $147M • Additional borrowing capacity under revolving credit facility $597M Ended 2020 With $1.3 Billion of Liquidity MARRIOTT VACATIONS WORLDWID
Slide 14: With No Long-Term Debt Maturities Before Late 2022
. . . With No Long-Term Debt Maturities Before Late 2022 Debt Maturity Schedule ($M) $1,325 $1,284 Revolving Credit Facility $600 $350 $230 2021 2022 2023 2024 2025 2026 2027 2028 Convertible Notes Unsecured Notes Secured Notes Term loan Pro-forma for February 2021 convertible note offering and $100
Slide 15: Now Targeting $200M+ Total Cost Savings
Now Targeting $200M+ Total Cost Savings ~$65M+ To-Go Opportunities ~$200M+ ADDITIONAL Total Savings SAVINGS • Process consolidation • Digital transformation ~$135M 1 • Reduced applications Synergies • IT platform optimization COMPLETED • Infrastructure modernization INITIATIVES • Duplicate Positions
Slide 16: 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 16
Slide 17: 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 1
Slide 18: 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 19: 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 19
Slide 20: High-Margin Exchange & Third-Party Management Business Provides Strong Free Cash Flow
High-Margin Exchange & Third-Party Management Business Provides Strong Free Cash Flow Adjusted EBITDA Contribution Key Metrics Interval International Third-Party Active Members 1.5M Management ~20% Average Revenue per Member Exchange ~80% $169 Capital Expenditures $13M All numbers are based on 2019
Slide 21: Strong Performance Record
Strong Performance Record Legacy Legacy Combined MVW Contract Sales ILG Contract Sales Contract Sales ($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 21
Slide 22: 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 23: 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 23
Slide 24: Leveraging Strong License Relationships
Leveraging Strong License Relationships Number of Loyalty Members 147M 112M 86M 25M As of December 31, 2020. MARRIOTT VACATIONS WORLDWIDE I 24
Slide 25: Driving Growth with Digital
Driving Growth with Digital Strengthen Our Grow Online Enhance Customer Digital Infrastructure Tour Packages Experiences MARRIOTT VACATIONS WORLDWIDE I 25
Slide 26: 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. Hyatt Residence Club includes Si
Slide 27: 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 Based on 2019 contract sales. MARRIOTT VACATIONS WORLDWIDE I 27
Slide 28: 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 29: 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 29
Slide 30: Capturing Revenue Synergies From ILG Acquisition
Capturing Revenue Synergies From ILG Acquisition Hotel Volume per Call Marketing Guest Transfer Locations (VPG) Best Practices Sales Excellence MARRIOTT VACATIONS WORLDWIDE I 30
Slide 31: 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 resorts by 50% and keys by 90% $150 - $160 Welk to Hyatt • More than double number of Owners to ~90k $123 Residence Club • 3+ years of built i
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% 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 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
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