Marriott International · NASDAQ:MAR
Marriott International — Q2 2018 Earnings Presentation
39 slides from Marriott International's earnings presentation, Aug 6, 2018
Slide 1: Marriott International Second Quarter 2018 Earnings Conference Call
MARRIOTT INTERNATIONAL SECOND QUARTER 2018 EARNINGS CONFERENCE CALL
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS NOTE ON FORWARD-LOOKING STATEMENTS: This document contains “forward-looking statements” within the meaning of federal securities laws, including our RevPAR, profit margin and earnings outlook and assumptions; the number of lodging properties we expect to add to or remove f
Slide 3: RevPAR Results Comparable Systemwide Properties
REVPAR RESULTS COMPARABLE SYSTEMWIDE PROPERTIES 2018 Second Second Quarter Outlook Quarter Results as of May 8, 2018 North America 3.1% 3% to 4% Asia Pacific 8.7% High-single digit rate Greater China 9.8% Rest of Asia Pacific 7.7% Caribbean & Latin America 7.6% Mid-single digit rate Europe 4.9% Mid-
Slide 4: North America RevPAR Results
NORTH AMERICA REVPAR RESULTS COMPARABLE SYSTEMWIDE PROPERTIES 2018 Second NORTH AMERICA Quarter Strong corporate business, particularly energy, retail Luxury 3.9% and professional services. Higher leisure demand. Upper Upscale 3.6% Limited-Service 2.5% Favorable Easter timing and strong group attend
Slide 5: RevPAR Results & Outlook
REVPAR RESULTS &OUTLOOK 2018 2018 Systemwide 2018E 2018E 2018E First Second Comparable Third Quarter Fourth Quarter Full Year Quarter Quarter North America 2.0% 3.1% 1.5% to 2% 1.5% to 2% 2% to 3% Asia Pacific 10.0% 8.7% High-single digit rate High-single digit rate High-single digit rate Caribbean
Slide 6: Loyalty
LOYALTY Launch Day August 18 • Unified benefits across three loyalty programs • Earn points faster • Earn and redeem points across hotel portfolio • Achieve elite status sooner • Redeem easier & without blackout dates • Full portfolio shopping on our websites & apps • Marriott Moments redemption opp
Slide 7: Luxury Brands
LUXURY BRANDS • Leading market share with 7 brands, 477 open properties, and 206 properties in the pipeline • 9 percent of systemwide rooms • 17 percent of loyalty point redemptions • 19 percent of property-based fee revenue 7
Slide 8: 2018 Openings
2018 Openings African Pride Arabella Hotel & Spa (Autograph Collection), Hermanus, South Africa OPENED 23,000 Aloft New Delhi Aerocity, India ROOMS in Q2 Element Me’aisam, IMP Zone, Dubai W Brisbane, Australia AC Hotel Times Square, New York, NY 8
Slide 9: Second Quarter 2018
SECOND QUARTER 2018 ($ millions, except EPS) Q2 2018 Q2 2017 B/(W) Q2 2018 Prior Outlook Gross fee revenues $951 $848 12% $935 to $945 Contract investment amortization (13) (12) (8)% Approx. ($15) Owned, leased, and other, net 89 98 (9)% Approx. $80 Depreciation, amortization, and other (58) (71) 18
Slide 10: Second Quarter 2018 Development Pipeline
SECOND QUARTER 2018 DEVELOPMENT PIPELINE 466,000 ROOMS WORLDWIDE 41% Upscale 43% Signed 49% North 30% Upper New Build 46% Under America 30% Asia Upscale Construction Pacific 4% Caribbean & Latin America 18% Upper 2% Signed 9% Approved, 9% Middle 8% Europe Midscale Conversions Not Signed 11% Luxury E
Slide 11: Third Quarter 2018 Outlook
THIRD QUARTER 2018 OUTLOOK Third Quarter Third Quarter ($ millions, except EPS) 2018 Outlook 2017 Gross fee revenues $915 to $935 $826 Contract investment amortization Approx. ($15) ($11) Owned, leased and other revenue, net Approx. $65 $82 Depreciation, amortization, and other Approx. ($60) ($54) G
Slide 12: Fourth Quarter 2018 Outlook
FOURTH QUARTER 2018 OUTLOOK Fourth Quarter Fourth Quarter ($ millions, except EPS) 2018 Outlook 2017 Gross fee revenues $929 to $944 $862 Contract investment amortization Approx. ($14) ($16) Owned, leased and other revenue, net Approx. $91 $89 Depreciation, amortization, and other Approx. ($53) ($53
Slide 13: 2018 Full Year Outlook
2018 FULL YEAR OUTLOOK Full Year 2018 Full Year May 8, 2018 Full Year ($ millions, except EPS) Outlook 2017 2018 Outlook Gross fee revenues $3,640 to $3,675 $3,295 $3,650 to $3,690 Contract investment amortization Approx. ($60) ($50) Approx. ($60) Owned, leased and other revenue, net Approx. $315 $3
Slide 14: 2018 Outlook
2018 OUTLOOK • $800 million to $900 million investment spending, including $225 million for maintenance capital and $255 million for Sheraton Grand Phoenix • Year-to-date recycled more than $500 million of capital through asset sales & loan repayments • Since the Starwood acquisition, recycled $1.8
Slide 15: Questions & Answers
Marriott INTERNATIONAL, QUESTIONS & ANSWERS
Slide 16: Non-GAAP Reconciliations
Marriott NON-GAAP RECONCILIATIONS
Slide 17: Press Release Schedules Table of Contents
MARRIOTT INTERNATIONAL, INC. PRESS RELEASE SCHEDULES TABLE OF CONTENTS QUARTER 2, 2018 Consolidated Statements of Income - As Reported A-1 Non-GAAP Financial Measures A-3 Total Lodging Products A-4 Key Lodging Statistics A-7 Adjusted EBITDA A-11 Adjusted EBITDA Forecast - Third Quarter 2018 A-12 Adj
Slide 18: Consolidated Statements of Income - Second Quarter 2018 and 2017
MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED SECOND QUARTER 2018 AND 2017 (in millions except per share amounts, unaudited) As Reported As Reported 10 Percent Three Months Ended Three Months Ended Better/(Worse) June 30, 2018 June 30, 2017 Reported 2018 vs. 2017 REVEN
Slide 19: Consolidated Statements of Income - Second Quarter Year-to-Date
MARRIOTT INTERNATIONAL, INC. CONSOLIDATED STATEMENTS OF INCOME - AS REPORTED SECOND QUARTER YEAR-TO-DATE 2018 AND 2017 (in millions except per share amounts, unaudited) As Reported As Reported 10 Percent Six Months Ended Six Months Ended Better/(Worse) June 30, 2018 June 30, 2017 Reported 2018 vs. 2
Slide 20: Non-GAAP Financial Measures
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ($ in millions except per share amounts) The following table presents our reconciliations of Adjusted operating income, Adjusted operating income margin, Adjusted net income, and Adjusted diluted EPS, to the most directly comparable GAAP measu
Slide 21: Total Lodging Products
MARRIOTT INTERNATIONAL, INC. TOTAL LODGING PRODUCTS As of June 30, 2018 North America Total International Total Worldwide Units Rooms Units Rooms Units Rooms Managed 822 248,999 1,107 293,233 1,929 542,232 Marriott Hotels 127 68,092 168 48,801 295 116,893 Sheraton 28 23,595 184 63,096 212 86,691 She
Slide 22: Total Lodging Products
MARRIOTT INTERNATIONAL, INC. TOTAL LODGING PRODUCTS As of June 30, 2018 North America Total International Total Worldwide Units Rooms Units Rooms Units Rooms Franchised 4,017 582,480 479 103,435 4,496 685,915 Courtyard 753 100,354 65 12,161 818 112,515 Fairfield Inn & Suites 927 84,974 6 1,157 933 8
Slide 23: Total Lodging Products
MARRIOTT INTERNATIONAL, INC. TOTAL LODGING PRODUCTS As of June 30, 2018 North America Total International Total Worldwide Total Systemwide Units Rooms Units Rooms Units Rooms Luxury 176 47,940 301 71,293 477 119,233 JW Marriott 26 14,463 55 21,245 81 35,708 The Ritz-Carlton 39 11,387 57 15,539 96 26
Slide 24: Key Lodging Statistics - North American Properties, Three Months
MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS In Constant $ Comparable Company-Operated North American Properties Three Months Ended June 30, 2018 and June 30, 2017 REVPAR Occupancy Average Daily Rate Brand 2018 vs. 2017 2018vs. 2017 2018 vs. 2017 JW Marriott $198.18 1.1% 81.4% 0.1% pts. $243.
Slide 25: Key Lodging Statistics - International Properties, Three Months
MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS In Constant $ Comparable Company-Operated International Properties Three Months Ended June 30, 2018 and June 30, 2017 REVPAR Occupancy Average Daily Rate Region 2018 vs. 2017 2018vs. 2017 2018 vs. 2017 Greater China $95.94 10.0% 72.7% 3.9% pts. $13
Slide 26: Key Lodging Statistics - North American Properties, Six Months
MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS In Constant $ Comparable Company-Operated North American Properties Six Months Ended June 30, 2018 and June 30, 2017 REVPAR Occupancy Average Daily Rate Brand 2018 vs. 2017 2018 vs. 2017 2018 vs. 2017 JW Marriott $195.04 0.7% 79.6% 0.4% pts. $245.1
Slide 27: Key Lodging Statistics - International Properties, Six Months
MARRIOTT INTERNATIONAL, INC. KEY LODGING STATISTICS In Constant $ Comparable Company-Operated International Properties Six Months Ended June 30, 2018 and June 30, 2017 REVPAR Occupancy Average Daily Rate Region 2018 vs. 2017 2018vs. 2017 2018 vs. 2017 Greater China $94.35 11.0% 70.8% 4.6% pts. $133.
Slide 28: Non-GAAP Financial Measures: Adjusted EBITDA
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA ($ in millions) Fiscal Year 2018 First Second Quarter Quarter Total Net income, as reported $ 398 $ 610 $ 1,008 Cost reimbursement revenue (3,773) (3,985) (7,758) Reimbursed expenses 3,835 3,979 7,814 Interest expense 75 85 160
Slide 29: Adjusted EBITDA Forecast Third Quarter 2018
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA FORECAST THIRD QUARTER 2018 ($ in millions) Range Estimated Third Quarter 2018 Third Quarter 2017 2 ** Net income excluding certain items 1 $ 445 $ 464 Interest expense 90 90 Interest expense from unconsolidated joint ventures
Slide 30: Adjusted EBITDA Forecast Fourth Quarter 2018
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA FORECAST FOURTH QUARTER 2018 ($ in millions) Range Estimated Fourth Quarter 2018 Fourth Quarter 2017 2 ** Net income excluding certain items 1 $ 514 $ 529 Interest expense 85 85 Interest expense from unconsolidated joint ventur
Slide 31: Adjusted EBITDA Forecast Full Year 2018
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES ADJUSTED EBITDA FORECAST FULL YEAR 2018 ($ in millions) Range Estimated Full Year 2018 Full Year 2017 2 ** Net income excluding certain items 1 $ 2,047 $ 2,081 Interest expense 335 335 Interest expense from unconsolidated joint ventures 10 10
Slide 32: Explanation of Non-GAAP Financial and Performance Measures
MARRIOTT INTERNATIONAL, INC. EXPLANATION OF NON-GAAP FINANCIAL AND PERFORMANCE MEASURES In our press release and schedules, and on the related conference call, we report certain financial measures that are not required by, or presented in accordance with, United States generally accepted accounting
Slide 33: Explanation of Non-GAAP Financial and Performance Measures
MARRIOTT INTERNATIONAL, INC. EXPLANATION OF NON-GAAP FINANCIAL AND PERFORMANCE MEASURES We believe that Adjusted EBITDA is a meaningful indicator of our operating performance because it permits period-over-period comparisons of our ongoing operations before these items and facilitates our comparison
Slide 34: Recast of Selected Financial Information Table of Contents
MARRIOTT INTERNATIONAL, INC. RECAST OF SELECTED FINANCIAL INFORMATION TABLE OF CONTENTS Results of Operations Information 2 Non-GAAP Financial Measures 3 Explanation of Non-GAAP Financial Measures 5 1
Slide 35: Results of Operations 2017 Recast Under ASU 2014-09
MARRIOTT INTERNATIONAL, INC. RESULTS OF OPERATIONS 2017 RECAST UNDER ASU 2014-09 (in millions except per share amounts, unaudited) We adopted ASU 2014-09 “Revenue from Contracts with Customers” (Topic 606) and several related ASUs (collectively referred to as “ASU 2014-09”) in the 2018 first quarter
Slide 36: Non-GAAP Financial Measures 2017 Recast Under ASU 2014-09
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES 2017 RECAST UNDER ASU 2014-09 ($ in millions except per share amounts) The following table presents our reconciliations of 2017 Adjusted operating income, Adjusted operating income margin, Adjusted net income, and Adjusted diluted EPS, to the
Slide 37: Non-GAAP Financial Measures 2017 Recast: Adjusted EBITDA
MARRIOTT INTERNATIONAL, INC. NON-GAAP FINANCIAL MEASURES 2017 RECAST UNDER ASU 2014-09 ($ in millions except per share amounts) The following table presents our reconciliation of 2017 Adjusted EBITDA to Net income as recast under ASU 2014-09. Fiscal Year 2017 First Second Third Fourth Quarter Quarte
Slide 38: Explanation of Non-GAAP Financial Measures
MARRIOTT INTERNATIONAL, INC. EXPLANATION OF NON-GAAP FINANCIAL MEASURES We report certain financial measures that are not required by, or presented in accordance with, United States generally accepted accounting principles (“GAAP”). We discuss management’s reasons for reporting these non-GAAP measur
Slide 39: Explanation of Non-GAAP Financial Measures
MARRIOTT INTERNATIONAL, INC. EXPLANATION OF NON-GAAP FINANCIAL MEASURES Marriott-owned assets, for which we receive cash from owners to reimburse the company for its investments made for the benefit of the system. These differences can result in considerable variability in the relative costs of prod
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