Marriott Vacations Worldwide Corporation · NYSE:VAC
Marriott Vacations Worldwide — Investor Presentation (May 2022)
34 slides from Marriott Vacations Worldwide's investor presentation, May 2022
Slide 1: Investor Presentation May 2022
INVESTOR PRESENTATION MAY 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements We refer throughout this presentation to the business acquired by our acquisition of Welk Resorts as “Legacy Welk.“ This presentation contains “forward-looking statements” within the meaning of federal securities laws, including statements about expectations for future gro
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 Approximately Nearly 1.7M 3,200 Members Affiliated Resorts Vacation O
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 Continued Travel Recovery
Ideally Positioned For Continued 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
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, not pro forma for the sale of V
Slide 7: Most Contract Sales Historically Come From Guests Staying on Property
Most Contract Sales Historically Come From Guests Staying on Property Other 15% ~85% 55% 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 discon
Slide 8: Strong Liquidity Position
Strong Liquidity Position . . . As of March 31, 2022 • Available cash on hand $354M • Gross notes available for securitization $120M • Additional borrowing capacity under revolving credit facility $748M $1.2 Billion of Liquidity MARRIOTT VACATIONS WORLDWIDE I 8
Slide 9: With No Long-Term Debt Maturities Before Late 2022
. . . With No Long-Term Debt Maturities Before Late 2022 Debt Maturity Schedule ($M) Fixed vs. Floating Rate Corporate Debt 2 ($M) $1,034 $750 $234 (2.3%)2 $575 $500 Revolving Credit $2,455 Facility 1 $350 (3.3%)2 $230 Fixed Floating 2022 2023 2024 2025 2026 2027 2028 2029 Convertible Notes Unsecure
Slide 10: Targeting $200M+ Total Cost Savings
Targeting $200M+ Total Cost Savings ~$40M+ To-Go Opportunities ~$200M+ ADDITIONAL Total Savings SAVINGS • Process consolidation • Digital transformation ~$160M • Reduced applications Synergies • IT platform optimization COMPLETED • Infrastructure modernization INITIATIVES 2023 • Duplicate positions
Slide 11: 2022 Contract Sales and Adjusted EBITDA Expected to Exceed 2019
2022 Contract Sales and Adjusted EBITDA Expected to Exceed 2019 Contract Sales Adjusted EBITDA ($M) ($M) 10-16% 13-21% $1,675-$1,775 $860-$920 $1,524 $758 2019 2022E 2019 2022E See Appendix for reconciliation of Net Income to Adjusted EBITDA MARRIOTT VACATIONS WORLDWIDE I 11
Slide 12: Full-Year 2022 Adjusted Free Cash Flow Guidance
Full-Year 2022 Adjusted Free Cash Flow Guidance ($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 13: 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 13
Slide 14: 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 Percent of Revenues is
Slide 15: Large and Attractive Addressable Market and Customer Base
Large and Attractive Addressable Market and Customer base >35M households – addressable market in U.S. alone >$130k median annual income ~730 FICO score $1.5M median net worth MARRIOTT VACATIONS WORLDWIDE I 15
Slide 16: High-Margin Exchange & Third-Party Management Business Provides Strong Cash Flow
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% 2021 Averag
Slide 17: 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 18: 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 18
Slide 19: Leveraging Strong License Relationships
Leveraging Strong License Relationships Number of Loyalty Members 164M 133M 94M 30M As of December 31, 2021. MARRIOTT VACATIONS WORLDWIDE I 19
Slide 20: Driving Growth with Digital
Driving Growth with Digital Strengthen Our Grow Online Enhance Customer Digital Infrastructure Tour Packages Experiences MARRIOTT VACATIONS WORLDWIDE I 20
Slide 21: 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, a Legacy Welk resort, which is expected to be rebran
Slide 22: 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 Hya
Slide 23: 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 24: 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 24
Slide 25: 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 keys by 90% Plan to rebrand $150 - $160 • More than double number of Owners to ~80K Welk to Hyatt $123 $109 • 3+ years of built inventory 2019A 2021 2023/4E Increase • Repla
Slide 26: Linking All Marriott-Branded Vacation Ownership Resorts
Linking All Marriott-Branded Vacation Ownership Resorts Today Target Future Product Form MARRIOTT VACATIONS WORLDWIDE I 26
Slide 27: Well Positioned For Continued Travel Recovery
IN SUMMARY Well Positioned For Continued Travel Recovery 100% focused on leisure travel Timeshare owners are avid travelers with vested interests in their vacations Enviable owner base with large & attractive addressable market Large square footage & in-room kitchens make properties better suited fo
Slide 28: Appendix
APPENDIX MARRIOTT VACATIONS WORLDWIDE I A-1
Slide 29: Non-GAAP Financial Measures
Non-GAAP Financial Measures In our presentation we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below and we’ve made footnote references to them on the preceding pages. The financial schedules included herei
Slide 30: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA Contribution. We calculate Adjusted EBITDA Contribution by adding up the results of operations from our Development, Resort management / Management and exchange, Rental and Financing businesses, excluding allocations for general and administrative costs, r
Slide 31: Non-GAAP Financial Measures
Non-GAAP Financial Measures Adjusted EBITDA Margin and Segment Adjusted EBITDA Margin. We evaluate Adjusted EBITDA margin and Segment adjusted EBITDA margin as indicators of operating performance. Adjusted EBITDA margin represents Adjusted EBITDA divided by the Company’s total revenues less cost rei
Slide 32: Cumulative Adjusted Free Cash Flow – 2015 through 2019
Cumulative Adjusted Free Cash Flow – 2015 through 2019 ($'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 33: 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 34: 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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