Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Investor Day (May 2015)
124 slides from Marriott Vacations Worldwide's investor day presentation, May 15, 2015
Slide 1: MVW Investor Day
May 2015 MVW INVESTOR DAY Exhibit 99.1
Slide 2: Foreword: A Balanced Approach
2 Foreword: A Balanced Approach Jeff Hansen Vice President Investor Relations
Slide 3: Forward-Looking Statements
3 Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of federal securities laws, including statements about future operating results, performance and targets, earnings trends, estimates, and assumptions, and similar statements concerning anticipated
Slide 4: Why Are We Here?
4 Why Are We Here? 28% of respondents completely understand our story Source: MVW 2014 Perception Analysis conducted by Ipreo No Unclear Aspects
Slide 5: Why Are We Here?
5 Why Are We Here? However, that leaves 72% of our investor community requiring further clarity Requires More Clarity Source: MVW 2014 Perception Analysis conducted by Ipreo
Slide 6: Your Feedback
6 Your Feedback Recent survey results provided areas we realize need additional focus Areas of Focus Asset Light Model Inventory Strategy Development M&A Strategy Sales Strategy Capital Allocation Source: MVW 2014 Perception Analysis conducted by Ipreo
Slide 7: Prologue
7 Prologue Steve Weisz President and Chief Executive Officer
Slide 8: We Are Marriott Vacations Worldwide
Marriott’s Mai Khao Beach, Phuket, Thailand Long-term license to operate under the Marriott and The Ritz - Carlton brands Over 400,000 Owners with over 500,000 weeks equivalents owned 59 vacation properties in the United States and seven other countries and territories Marriott Vacations Worldwide C
Slide 9: Deliver Unforgettable Experiences That Make Vacation Dreams Come True
Marriott’s Frenchman’s Cove, St. Thomas, U.S. Virgin Islands Deliver Unforgettable Experiences That Make Vacation Dreams Come True! Statement
Slide 10: We Do
Marriott’s Shadow Ridge, Palm Desert, California Sell vacation ownership products Earn revenue from diverse sources • Nearly half of revenues derived from lines of business other than sales of vacation ownership products • Rent vacation ownership units • Finance consumer purchases of our vacation ow
Slide 11: Global Destinations
11 Park City Vail Breckenridge Aspen Lake Tahoe San Francisco Las Vegas Phoenix Newport Coast Palm Desert Bangkok Phuket Kauai Oahu Maui Aruba St. Kitts St. Thomas Marco Island Panama City Beach Orlando The Palm Beaches Fort Lauderdale Branson Williamsburg Absecon Boston London Marbella Estepona Par
Slide 12: Global Destinations: Planned New Resorts
12 Global Destinations Planned New Resorts Big Island South Beach San Diego NOTE: We have not yet closed on commitments to acquire inventory at future dates in South Beach and Big Island of Hawaii.
Slide 13: Long and Distinguished History
13 Long and Distinguished History More than 30 years of industry leading experience 4 Resorts 1984 100,000 Owners 1997 Asia Pacific Launch 2001 Introduction of North America Points-Based Product 2010 2011 Over 400,000 Owners 59 Resorts 2014
Slide 14: Spin Related Accomplishments
14 Marriott’s Mountain Valley Lodge, Breckenridge, Colorado Spin Related Accomplishments In our first three years as an independent public company: Separated from Marriott International • Established independent IT systems • Optimized our infrastructure based on our size • Built up new public compan
Slide 15: Strategies: Almost threefold improvement since 2011
15 2011 Strategies Almost threefold improvement since 2011 Improve Adjusted Development Margin** Dispose of Excess Land and Inventory Grow Adjusted EBITDA** Reduce Inventory Balances 28% CAGR ** See Appendix for non-GAAP financial measures. 0% 5% 10% 15% 20% 25% 30% 2011 2012 2013 2014 MVW North Ame
Slide 16: Our Commitment to Our Associates
16 Marriott’s Cypress Harbour, Orlando, Florida Our Commitment to Our Associates • World class associate engagement • More than 40% of new hires come from referrals from existing associates • Average associate tenure is seven years Impressive Accomplishments
Slide 17: Our Spirit To Serve
17 Our Spirit To Serve • A longstanding commitment to the communities in which we live and work Impressive Accomplishments
Slide 18: Impressive Accomplishments
18 • The Stevie Awards (The American Business Awards) • “10 Best Travel Companies To Work For” ( Forbes 2014) • TripAdvisor’s Travelers’ Choice Awards (2014 U.S., Thailand, and France) Impressive Accomplishments
Slide 19: Howard Nusbaum, American Resort Development Association
19 Howard Nusbaum President & CEO, American Resort Development Association • Update from ARDA World • State of the industry • Why do people buy timeshare?
Slide 20: ARDA World
ARDAW 8}
Slide 21: Today's Timeshare Owners: They're Changing
Today's Timeshare Owners: They’re Changing e @AIF @ARDA
Slide 22: Banner Year for Timeshare Industry
BANNER YEAR FOR TIMESHARE INDUSTRY 1,540 8.5 million Resorts SSS ate SRE 520,460 Average Sales Price AO% Number of asp Intervals Sotd 1% 66,200 370,600 vst www arda.org/foundation won vacationbetter org DARDA
Slide 23: Contributing to Our Economy
Contributing to Our Economy 23
Slide 24: Kitchens: The Key to a Happier Vacation
KITCHENS: THE KEY TO A HAPPIER VACATION! a ‘ of vacationers said a kitehen improved their vacation experience PERFECT FOR FAMLIES ‘WITH YOUNG CHLOREN i (UTS VACATON cosTs LOWS FOR ADU DANG TE OPTION FOR THOSE WHO COOK BRING RECPES FROM HOME that your family wl Jove Browse VaationBetter. org’ Pintere
Slide 25: If This Looks Like Your Vacation Sleeping Arrangements
IF THIS LOOKS LIKE YOUR VACATION SLEEPING ARRANGEMENTS... THEN IT’S TIME TO CHECK OUT TIMESHARE. The space to be together with room for privacy.
Slide 26: AIF Insights: Why Buy, Why Continue to Own
AIF Insights 26 Why Buy • Save money on future vacations • Resort location • Overall flexibility • Makes vacations a certainty • Certainty of quality accommodations • Resort location • Overall flexibility • Save money on future vacation costs • Certainty of quality accommodations • Exchange Why Cont
Slide 27: Owner Attitude about Timeshare
Owner Attitude about Timeshare 27 Home away from home Place to spend with people important in my life Makes me look forward to vacations More space for family and friends Makes vacation planning easier
Slide 28: Thank You
Thank You 28
Slide 29: Outline for Growth
Marriott’s Ko Olina Beach Resort, Kapolei, Oahu, Hawaii 29 Evolving and growing points product Expanding fee-based revenue streams Strong and disciplined marketing and sales approach New destinations and sales distributions Strong long-term financial results Strong rental program Outline for Growth
Slide 30: Chapter 1: Our Product Value
30 Chapter 1: Our Product Value Lee Cunningham Executive Vice President and Chief Operating Officer
Slide 31: Our Business: Four primary revenue streams
31 Four primary revenue streams Our Business Rentals and recurring revenue streams Marriott Vacation Club Destinations – points based ownership product Marriott’s OceanWatch, Myrtle Beach, South Carolina
Slide 32: Marriott Vacation Club Destinations Program
32 Marriott’s Summit Watch, Park City, Utah Broader appeal to customers Flexible customized usage options Unique points program Marriott Vacation Club Destinations Program
Slide 33: Satisfied Owners
33 Satisfied Owners The First Choice Index measures how frequently our Owners are able to receive their first choice when making a reservation to stay at one of our resorts, or are satisfied with the alternatives that are offered if their first choice is not available. First Choice Index (North Amer
Slide 34: Growth of Explorer Collection
34 2011 Explorer Usage 41M Points 2015 Explorer Usage 125M Points • 5 times more product offerings since 2011 • Regional, luxury & river cruises and Owner cruises • Custom-built, Owner-exclusive group tours • City Explorer packages • Luxury residences • Adventure travel • Golf packages • Premier eve
Slide 35: Growth in Points Program Participation
35 Growth in Points Program Participation 24% Overall CAGR 69% CAGR 74,800 177,500 46% CAGR 11% CAGR Hybrid Owners Legacy Owners Enrolled Pure Points Owners 20,000 40,000 60,000 80,000 100,000 120,000 140,000 160,000 180,000 2011 YTD 2015
Slide 36: Capital Efficiency of Points Program
36 Marriott’s Ocean Pointe, Palm Beach Shores, Florida Capital Efficiency of Points Program Consumers buy portfolio rather than location Efficient development planning and inventory management Ability to sell indefinitely at sales galleries
Slide 37: Inventory, Operational Finance and Resort Operations Presenters
37 Nick Rossi Senior Vice President Global Inventory and Rental Management Tony Terry Senior Vice President Global Operational Finance John Albert Vice President Resort Operations
Slide 38: 2014 Owner Usage Comparison
38 2014 Owner Usage Comparison (North America) Legacy Week Usage Points Usage 65% 35% Occupy Rental Availability/Other 71% 29% Occupy Rental Availability/Other
Slide 39: Rental Margin
39 Rental Margin minus equals
Slide 40: Satisfied Owners & Guests
40 Satisfied Owners & Guests Guest Satisfaction Survey (North America) 88% 88% 89% 88% 89% 91% 87% 88% 89% 90% 91% 92% 2009 2010 2011 2012 2013 2014
Slide 41: Guest Satisfaction: Service Index Scores
41 Guest Satisfaction Service Index Scores (North America) 91% 91% 92% 93% 90% 91% 92% 93% 94% 2011 2012 2013 2014 Service Index is the weighted average score for the following questions: friendliness of front desk associate; time front desk associate took; knowledge of front desk associate and all
Slide 42: Guest Satisfaction: Product Index Scores
42 Guest Satisfaction Product Index Scores (North America) 88% 89% 90% 90% 87% 88% 89% 90% 91% 2011 2012 2013 2014 Product Index is the weighted average score for the following questions: everything in working order; condition of furnishings and decor; well maintained facilities; landscaping; fitnes
Slide 43: Guest Satisfaction: Experience Index Scores
43 Guest Satisfaction Experience Index Scores (North America) 82% 83% 85% 86% 81% 82% 83% 84% 85% 86% 87% 2011 2012 2013 2014 Experience Index is the weighted average score for the following questions: variety of resort activities; availability of resort activities; and activity center/kids’ area.
Slide 44: Annual Cost of Ownership
44 Marriott’s Desert Springs Villas II, Palm Desert, California The experience (resort operations) 60% Fixed costs (property taxes, insurance, and utilities) 20% Asset protection (property refurbishment/reserve) 20% Total 100% Annual Cost of Ownership Typical management fee earned 10%
Slide 45: Recurring Fees
45 Marriott’s Village d’lle-de-France, Paris, France Ancillary revenue derived from owner activity onsite Management fee – typically 10 percent of annual resort operating costs (including property tax and reserves) and trust operating costs Exchange company (club dues) provides services to points ow
Slide 46: A Balanced Approach
46 A Balanced Approach Development Margin Management Revenue Exchange Revenue Development Margin (++) Development Margin (+) Exchange Revenue Development Margin (+) Management Fee Revenue Owner Reload First Time Buyer
Slide 47: Chapter 2: Why Vacation Ownership?
47 Chapter 2: Why Vacation Ownership? Brian Miller Executive Vice President Chief Sales and Marketing Officer
Slide 48: Our Formula for Success
48 Marriott’s Shadow Ridge, Palm Desert, California • World class brands • Effective prospect targeting and preparation • Highly efficient direct sales model • Experienced leadership team Our Formula for Success
Slide 49: Contract Sales
49 Contract Sales Global North America Gross contract sales excludes residential and joint venture sales. $526 $582 $608 $620 $653 $687 $679 $699 $450 $500 $550 $600 $650 $700 $750 2011 2012 2013 2014
Slide 50: Volume Per Guest North America
50 Volume Per Guest North America Volume Per Guest (VPG) is calculated by dividing contract sales (excluding sales that are not attributed to a tour at a sales location) by the number of sales tours. $2,504 $2,963 $3,200 $3,386 $2,400 $2,600 $2,800 $3,000 $3,200 $3,400 2011 2012 2013 2014
Slide 51: Adjusted Marketing and Sales Costs
51 Adjusted Marketing and Sales Costs** Global North America (Vacation Ownership) 52.7% 48.4% 46.6% 46.3% 54.7% 51.3% 48.5% 47.7% 25% 30% 35% 40% 45% 50% 55% 2011 2012 2013 2014 ** Adjusted for certain charges and the impact of revenue reportability. See Appendix for non-GAAP financial measures.
Slide 52: Segmentation and Targeting
Segmentation and Targeting The “Average” Buyer 51 years of age $155,000 average household income Married Children in household College educated But no one is average Marketing
Slide 53: Resort Experience and Marketing Process
53 Marriott’s Marbella Beach Resort, Marbella, Spain 70% of Our Tours are Already Staying at Our Resorts This allows for: • Enhanced targeting and prioritization • Pre-arrival touch points • Personalized services Resort Experience and Marketing Process
Slide 54: Cost Effective Marketing Channel Mix
54 Percent of Marketing Channel Contract Sales Cost Percent In house 49% 9% Central marketing previews 9% 19% Trial memberships 13% 6% Hotel marketing/off property contact 13% 18% Direct/site events/other 16% 11% Total 100% 11% Cost Effective Marketing Channel Mix* *Full year 2014. Cost percent is t
Slide 55: Owner Reload Penetration
55 Owner Reload Penetration North America 1% 2% 3% 4% 5% 6% 0% 4.6% 4.3% 4.3% 3.3% 4.6% 4.9% 5.4% 5.3% 5.2% Launch of Points 2006 2007 2008 2009 2010 2011 2012 2013 2014 Reload Percentage
Slide 56: Our Sales Model
56 Marriott’s Newport Coast ® Villas, Newport Coast, California Proprietary disciplined sales process Gallery experience with private presentation areas World-class, centralized training Technology to customize the presentation Multiple levels of ownership Our Sales Model
Slide 57: Marriott Vacations Worldwide
MARRIOTT VACATIONS WORLDWIDE
Slide 58: John Ruble, Global Sales Operations – Talent Development
58 John Ruble Vice President Global Sales Operations – Talent Development
Slide 59: Slide 59
Slide 60: How We Sell… Left Brain Logic
60 How We Sell… Yes to me Yes to our brand Yes to our vacation choices Yes to vacation ownership Yes to a personal vacation plan Yes we can afford it Yes to today Left Brain “Logic”
Slide 61: How We Sell… Right Brain Emotions
61 How We Sell… Left Brain “Logic” Right Brain “Emotions” Yes to me Yes to our brand Yes to our vacation choices Yes to vacation ownership Yes to a personal vacation plan Yes we can afford it Yes to today
Slide 62: Emotional Selling
62 Emotional Selling
Slide 63: Rent vs. Own
63 Rent vs. Own Owning Your Vacations A villa lets your family spread out
Slide 64: Marriott Vacations Worldwide
MARRIOTT VACATIONS WORLDWIDE
Slide 65: Marriott Vacations Worldwide
MARRIOTT ee Tees WORLDWIDE
Slide 66: Emotional Value – Mercedes Benz
66 Emotional Value – Mercedes Benz
Slide 67: What is Value?
67 What is Value? What Justifies the Price Difference? A Patek Philippe “Complications” watch sells for $79,000 The Timex “Easy Reader” sells on Amazon for $28.22
Slide 68: What is Value?
68 What is Value? What Justifies the Price Difference? A first-class seat from Orlando to Maui on United Airlines is $5,091 A coach seat on the same plane, located 10 feet away, is $1,488
Slide 69: How Our Customers Want to Buy…
69 How Our Customers Want to Buy…
Slide 70: From the Voice of Our Customers
Marriott’s Newport Coast ® Villas, Newport Coast, California 70 What was deemed essential in deciding whether or not to buy? • “Having the Sales Executive spend time getting to know us…” • “… to understand our current and future travel needs…” • “… customizing / personalizing the presentation to mee
Slide 71: Your Vacation Plan
71 Your Vacation Plan 5 year vacation plan using 3,500 Vacation Club points
Slide 72: Looking Ahead
72 Marriott’s Newport Coast ® Villas, Newport Coast, California Looking Ahead New markets for distribution Increased first time buyer activity Optimize margins
Slide 73: New Markets for Distribution
73 New Distributions $75 million – $100 million total annual stabilized contract sales New Markets • • • New Markets for Distribution Marriott’s Marbella Beach Resort, Marbella, Spain South Beach Big Island, Hawaii San Diego
Slide 74: Chapter 3: Growth
74 Chapter 3: Growth Lani Kane-Hanan Executive Vice President and Chief Growth and Inventory Officer
Slide 75: Growth Strategy: Satisfy Customer Demand
75 Marriott’s Grand Chateau ® , Las Vegas, Nevada • Add new profitable sales distributions and attractive destinations • Maintain an efficient balance sheet • Minimize development spending • Optimize product cost Growth Strategy Satisfy Customer Demand
Slide 76: How Do We Know Where to Grow
76 Marriott’s Grande Vista, Orlando, Florida Customer Insights are a Primary Driver of MVW’s Target Market Strategy • Owner usage patterns Marriott Rewards, Explorer, Exchange • Owner and prospect surveys • “Tour-no sale” feedback How Do We Know… Where to Grow
Slide 77: Recent Insights: Target Markets
77 New York City, New York Recent Insights • • • • Target Markets Destination cities Hawaii, Caribbean, Florida beach Mexico Selected destinations in Asia Pacific
Slide 78: Marriott's Crystal Shores, Marco Island, Florida
Developer's conceptual rendering; features and amenities are proposed and subject to change. Marriott’s Crystal Shores, Marco Island, Florida Opening Planned 2017 Two-tower, 152 unit, expansion of existing Marriott’s Crystal Shores resort Expansion of on-site sales gallery with incremental 2017 volu
Slide 79: The Declan Suites, San Diego, California
The Declan Suites, San Diego, California Opening Planned 2016 On-site sales gallery with incremental 20 16 volume Conversion of Declan Suites Hotel to 264 timeshare units Near the Gaslamp Quarter Balance sheet impact – self developed Plans include:
Slide 80: Projects
South Beach, Miami Beach, Florida Waikoloa Beach Marriott Resort and Spa, Waikoloa Beach, Big Island, Hawaii Projects
Slide 81: South Beach, Miami Beach, Florida
South Beach, Miami Beach, Florida Plans include: Opening Planned 2016 We have not yet closed on the commitment to acquire this inventory. Local sales gallery with incremental 2016 volume 182 timeshare units Amenities include a pool bar and on- site restaurant Pursuing an asset light structure
Slide 82: Waikoloa Beach Marriott Resort and Spa, Big Island, Hawaii
Waikoloa Beach Marriott Resort and Spa, Waikoloa Beach, Big Island, Hawaii Plans include: Opening Planned 2017 We have not yet closed on the commitment to acquire this inventory. Conversion of 246 hotel units into 112 timeshare units On-site sales gallery with incremental 2016 volume Pursuing an ass
Slide 83: Surfers Paradise, Australia
Surfers Paradise, Australia Plans include: • Purchase of 329 unit Surfers Paradise Marriott Resort & Spa • Flagship presence on the Gold Coast • Conversion of 8 dedicated floors into 88 timeshare units • Co-located hotel to be managed by Marriott International • On-site sales gallery with incrementa
Slide 84: Planned New Locations and Distributions
84 Planned New Locations and Distributions Planned Marco Island San Diego South Beach Waikoloa Surfers Paradise Status Under contract Owned Under contract Under contract Under contract Deal structure Asset light Self developed Pursuing asset light Pursuing asset light Self developed Initial Phase Op
Slide 85: Inventory Requirements for Growth
85 Inventory Registration (6-9 Months) Negotiation, Planning & Design, Construction (12-18 Months) Inventory Requirements for Growth Additional Distribution and Incremental Sales Volume Consumes Larger Amounts of Inventory: Inventory investment requires lead time to cover: At minimum, years of inven
Slide 86: Inventory Balance Targeted Mix
86 Future Annual Sales 20-30% supported by asset light repurchases at favorable product cost 70-80% supported by mix of new asset light inventory and developed land & infrastructure Incremental sales volume supported by new destinations with sales distributions New Asset Light Inventory Developed La
Slide 87: Balanced Approach
87 Risk Sales Growth Shareholders Balanced Approach Customer Satisfaction Cost
Slide 88: Chapter 4: Financial Performance
88 Chapter 4: Financial Performance John Geller Executive Vice President and Chief Financial Officer
Slide 89: Structure Established for Long-Term Sustainability and Growth
89 Structure Established for Long-Term Sustainability and Growth Improve Adjusted Development Margin** Grow Adjusted EBITDA** Reduce Inventory Balances 28% CAGR ** See Appendix for non-GAAP financial measures. 0% 5% 10% 15% 20% 25% 2011 2012 2013 2014 $0 $50 $100 $150 $200 $250 2011 2012 2013 2014 $
Slide 90: Diversified Businesses: 2014 Revenues and Margins
90 Development $648M (48%) Rentals $264M (20%) Financing $129M (10%) Development $136M (40%) Rentals $26M (8%) Financing $79M (23%) Diversified Businesses 2014 Revenues** $1,339 Million** Resort Management $298M (22%) 2014 Margins** Resort Management $99M (29%) $340 Million** ** Revenues exclude cos
Slide 91: Key Takeaways From Today
91 Marriott’s Phuket Beach Club, Phuket, Thailand Key Takeaways From Today • 2018 performance, given two growth scenarios • Annualized contract sales growth scenarios of 5% and 10% • Development margin of 21% • Balanced growth • Inter-related businesses
Slide 92: Timeshare Contract Sales Growth
Timeshare Contract Sales Growth ¹ 92 2014: $699M 2018: $850M / $1,005M Excludes residential contract sales. Vacation Ownership Contract Sales 2015E: 5% to 8% Growth • Higher VPG • Increased tour flow 2018: Growth Scenarios of 5% and 10% Annualized Growth • Modest long-term “same store” growth from c
Slide 93: Development Margin Growth
Development Margin Growth 93 2014: $136M 2018: $164M / $193M Note: Development margin represents sale of vacation ownership products revenues, net of expenses (sale of vacation ownership products revenues less the cost of vacation ownership products expenses and marketing and sales expenses). Develo
Slide 94: Resort Management – Management Fees
94 2014: $74M 2018: $90M / $92M Resort Management – Management Fees • Strong and growing recurring revenue stream • Typically calculated as a percentage of costs to operate a resort • Increase with new development, larger owner base, and inflation • 2018: Growth scenarios of 5% and 10% annualized co
Slide 95: Resort Management – Exchange Company Revenues
95 2014: $44M 2018: $57M / $60M Resort Management – Exchange Company Revenues • Strong and growing recurring revenue stream • Increases with new development • 2018: Growth scenarios of 5% and 10% annualized contract sales growth 2015E: $47M – $49M
Slide 96: Resort Management – Ancillary Margins
96 2014: $7M 2018: $18M / $20M Resort Management – Ancillary Margins Note: Ancillary margin represents ancillary revenues, net of expenses. 2015E: $15M – $17M • Amenities enhance resort experience for our owners • Growth includes the benefit from dispositions of under- performing assets and other op
Slide 97: Resort Management and Other Services Margin
97 2014: $99M 2018: $131M / $137M • Strong and growing recurring revenue streams • Improved ancillary margins Resort Management and Other Services Margin Note: Resort management and other services margin represents resort management and other services revenues, net of expenses. 2015E: $111M – $113M
Slide 98: Financing – How We Make Money
Financing – Provide financing for vacation ownership purchases Service loans internally Securitize loans in the ABS market Leverage corporate warehouse facility How We Make Money
Slide 99: Key Financing Characteristics
99 Marriott’s Kauai Lagoons, Lihue, Kauai, Hawaii Key Financing Characteristics (North America) • Average loan size of $20,000 – $25,000 • Average down payment of 10% – 15% • Average loan coupon of 12.5% • Average term of 10 years • Monthly payments of $300 – $400 • Average FICO score of 730 • Finan
Slide 100: Established Securitization Platform
100 600 - 649 9% 650- 699 20% 700-749 24% > 749 45% • Securitized over $4 billion in vacation ownership notes receivable since 2000 • Strong notes receivable portfolio • Second best performing asset class behind automobiles • Advance rates of ~95% on recent securitizations • Average cost of funds on
Slide 101: Financing Margin
101 2014: $79M 2018: $79M / $85M • Financing margins begin to stabilize in 2015 • Securitization market assumed to remain strong with excess spreads close to historic high levels • Assumptions: • 5% and 10% annualized contract sales growth scenarios • 45% financing propensity (North America) Financi
Slide 102: Rental Margin Growth
102 2014: $26M 2018: $48M / $50M • Significant improvement in rental margins since spin-off • 4% – 6% annualized topline growth through 2018 • Variety of rental inventory sources • Declining inventory costs: • Unsold maintenance fees (benefit from sale of luxury inventory) • Low to mid double digit
Slide 103: Other Expenses Including G&A and Royalty Fees
103 2014: $140M 2018: $152M / $155M • General & administrative costs: • Inflationary growth • Costs to support new development • Royalty fees: • Variable – Aligned with contract sales growth and mix of sales • Fixed – Increases by half of GDP deflator (every five years) 2015E: $144M – $147M Other Ex
Slide 104: Adjusted EBITDA
104 2015E $148 – 111 – 32 – 75 – (144 – 147) $222 - Adjusted EBITDA** ** See Appendix for non-GAAP financial measures. Development Resort Management Rentals Financing Other Expenses Adjusted EBITDA** 2014 $136 (140) $200 2018 5% Scenario $164 (152) $270 2018 10% Scenario $193 (155) $310 (in millions
Slide 105: Return on Invested Capital
105 Return on Invested Capital** Targeting Meaningful ROIC Improvement 15% 26% – 30% 18% – 20% ** See Appendix for non-GAAP financial measures. 0% 5% 10% 15% 20% 25% 30% 2014 2015E 2018
Slide 106: Adjusted Free Cash Flow
106 Sources of Cash: Adjusted cash flow from operations** Borrowings from securitization transactions Repayment of debt related to securitizations Subtotal Uses of Cash: Inventory spending Marriott Rewards loyalty program Other, including other capex Subtotal – Uses of Cash Adjusted Free Cash Flow**
Slide 107: Strong Cash Flow Potential
107 Adjusted free cash flow** Additional leverage (excess debt capacity) Further inventory optimization Disposition proceeds Adjusted free cash flow available for shareholders** Low $700 $1,145 Strong Cash Flow Potential High $775 $1,470 Cumulative 2015E to 2018 ** See Appendix for non-GAAP financia
Slide 108: Balanced Capital Allocation Approach
108 Marriott’s Kauai Beach Club, Lihue, Kauai, Hawaii Balanced Capital Allocation Approach • Continued growth through new resort locations with on-site sales distributions • Pursue new business opportunities • Return excess capital to shareholders • Share repurchase program • Quarterly cash dividend
Slide 109: Marriott Vacations Worldwide
MARRIOTT VACATIONS WORLDWIDE
Slide 110: Question and Answer Session
110 Question and Answer Session John Geller Executive Vice President and Chief Financial Officer Steve Weisz President and Chief Executive Officer Brian Miller Executive Vice President Chief Sales and Marketing Officer Lani Kane-Hanan Executive Vice President and Chief Growth and Inventory Officer L
Slide 111: Final Thoughts
111 Final Thoughts Steve Weisz President and Chief Executive Officer
Slide 112: Marriott Vacations Worldwide
MARRIOTT VACATIONS. WORLDWIDE
Slide 113: Non-GAAP Financial Measures
A-2 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 our reasons for reporting these non-GAAP financial measures below, and reconcile the most dir
Slide 114: Non-GAAP Financial Measures
A-3 Non-GAAP Financial Measures Certain Charges - weeks ended December 28, 2012. In our Statement of Income for the weeks ended December 28, 2012, we recorded $62 million of pre-tax charges,which included $41 million for litigation settlement charges in our North America segment recorded under the "
Slide 115: Non-GAAP Financial Measures
A-4 Non-GAAP Financial Measures Europe Rescission Adjustments. In the second quarter of 2013, during the course of an internal review of certain sales documentation processes related to the sale of certain vacation ownership interests in properties associated with our Europe segment, we determined t
Slide 116: Non-GAAP Financial Measures
A-5 Non-GAAP Financial Measures Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") . EBITDA is defined as earnings, or net income, before interest expense (excluding consumer financing interest expense), provision for income taxes, depreciation and amortization. For purposes o
Slide 117: Non-GAAP Financial Measures
A-6 Non-GAAP Financial Measures (In millions) 2014 Total revenues 1,736 $ Less: cost reimbursements (397) Total revenues excluding cost reimbursements** 1,339 $ ** Denotes non-GAAP financial measures. (In millions) 2014 2015E 2015 to 2018 Cumulative (Low) 2015 to 2018 Cumulative (High) Cash flow fro
Slide 118: Non-GAAP Financial Measures
A-7 Non-GAAP Financial Measures 2014 and 2013 Adjusted Net Income and Adjusted EBITDA (In millions) As Reported As Adjusted As Reported Europe As Adjusted 52 Weeks Ended Certain 52 Weeks Ended 53 Weeks Ended Certain Rescission 53 Weeks Ended January 2, 2015 Charges January 2, 2015 ** January 3, 2014
Slide 119: Non-GAAP Financial Measures
A-8 Non-GAAP Financial Measures 2012 and 2011 Adjusted Net Income and Adjusted EBITDA (In millions) As Reported Europe As Adjusted As Reported Europe As Adjusted 52 Weeks Ended Certain Rescission 52 Weeks Ended 52 Weeks Ended Certain Rescission 52 Weeks Ended December 28, 2012 Charges Adjustment Dec
Slide 120: Non-GAAP Financial Measures
A-9 Non-GAAP Financial Measures 2014, 2013, 2012 and 2011 Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended 52 Weeks Ended (In millions) January 2, 2015 January 3, 2014 December 28, 2012 December 30, 2011 Contract
Slide 121: Non-GAAP Financial Measures
A-10 Non-GAAP Financial Measures 2014, 2013, 2012 and 2011 Adjusted Development Margin – North America (Adjusted Sale of Vacation Ownership Products Net of Expenses) 52 Weeks Ended 53 Weeks Ended 52 Weeks Ended 52 Weeks Ended (In millions) January 2, 2015 January 3, 2014 December 28, 2012 December 3
Slide 122: Non-GAAP Financial Measures
A-11 Non-GAAP Financial Measures 2015E and 2018 Scenarios – Net Income, Adjusted EBITDA, and Adjusted Development Margin (In millions) Fiscal Year 2015 (low) Fiscal Year 2015 (high) Fiscal Year 2018 (5% scenario) Fiscal Year 2018 (10% scenario) Net income $ $ $ $ Adjustments to reconcile Net income
Slide 123: Non-GAAP Financial Measures
A-12 Non-GAAP Financial Measures 2012, 2013, 2014, 2015E and 2018 Scenarios - Adjusted Free Cash Flow (In millions) 2012 2013 2014 Low High Low High Adjusted net income ** $ $ $ $ $ $ $ Adjustments to reconcile Adjusted net income to net cash provided by operating activities: Adjustments for non-cas
Slide 124: Non-GAAP Financial Measures
A-13 Non-GAAP Financial Measures 2014, 2015E and 2018 Scenarios - Return on Invested Capital (ROIC) (In millions) 2013 2014 2015E 2018 - (Low) 2018 - (High) Total Assets 2,632 $ 2,540 $ Less: Cash balance (200) (347) Add: Assumed minimum cash balance Adjusted total assets 2,507 2,268 2,287 2,281 2,4
Marriott Vacations Worldwide — Investor Day (May 2015) on 6ix