Marriott Vacations Worldwide (“MVW”) Reports Fourth Quarter and Full Year 2022 Financial Results and Provides 2023 Outlook

ORLANDO, Fla.--()--Marriott Vacations Worldwide Corporation (NYSE: VAC) (the “Company”) reported financial results for the fourth quarter and full year 2022 and provided guidance for full year 2023.

Fourth Quarter 2022 Highlights:

  • Consolidated Vacation Ownership contract sales were $454 million, a 12% increase compared to the fourth quarter of 2021, and VPG was $4,088. The Company estimates that hurricanes negatively impacted contract sales by approximately $13 million in the fourth quarter of 2022.
  • Net income attributable to common shareholders was $88 million, or $2.08 fully diluted earnings per share.
  • Adjusted net income attributable to common shareholders was $115 million, or $2.74 Adjusted fully diluted earnings per share. The Company estimates that hurricanes negatively impacted Adjusted net income attributable to common shareholders by $5 million, or $0.12 per Adjusted fully diluted earnings per share.
  • Adjusted EBITDA was $239 million; excluding the impact of the Alignment (as defined below), Adjusted EBITDA increased 6% compared to the prior year fourth quarter to $232 million. The Company estimates that hurricanes negatively impacted Adjusted EBITDA by approximately $7 million in the fourth quarter of 2022.
  • The Company repurchased 1.2 million shares of its common stock for $173 million during the quarter at an average price per share of $139.90.

Full Year 2022 Highlights and 2023 Outlook:

  • Consolidated Vacation Ownership contract sales were $1.84 billion, a 34% increase compared to 2021, and VPG increased 1% to $4,421. The Company estimates that hurricanes negatively impacted contract sales by approximately $14 million in 2022.
  • Net income attributable to common shareholders was $391 million, or $8.77 fully diluted earnings per share.
  • Adjusted net income attributable to common shareholders was $458 million, or $10.26 Adjusted fully diluted earnings per share.
  • Adjusted EBITDA was $966 million; excluding the impact of the Alignment (as defined below), Adjusted EBITDA was $915 million, an increase of 39% compared to the prior year. The Company estimates that hurricanes negatively impacted Adjusted EBITDA by approximately $8 million in 2022.
  • During 2022, the Company repurchased 5.1 million shares of its common stock for $701 million at an average price of $137.83 and paid $99 million in dividends.
  • The Company expects contract sales in 2023 to grow 5% to 9% compared to the prior year and for Net income attributable to common shareholders to be $405 million to $440 million, or $9.51 to $10.30 fully diluted earnings per share.
  • Excluding the impact of the Alignment (as defined below) in 2022, the Company expects Adjusted EBITDA to grow 4% to 9% in 2023 and Adjusted earnings per share - diluted to increase 14% to 23%.

“2022 was a great year for Marriott Vacations Worldwide. We generated over $1.8 billion of contract sales, a new high for our Company, and returned more than $800 million in cash to shareholders. We also launched Abound by Marriott Vacations, added over 20,000 new owners in our Vacation Ownership business and grew active Interval International members by 21%,” said John Geller, president & chief executive officer. “Looking forward, we expect occupancies in North America and Europe to remain strong this year and for Asia-Pacific to continue to improve. We also expect to grow contract sales this year by 5% to 9% compared to the prior year and for Adjusted Free Cash Flow to be between $600 million and $670 million, illustrating the continued demand for leisure travel and the strength of our business model.”

Fourth Quarter 2022 Results:
In the third quarter of 2022, in connection with the unification of the Company’s Marriott-, Westin-, and Sheraton-branded vacation ownership products under the Abound by Marriott Vacations program, the Company aligned its contract terms for the sale of vacation ownership products, resulting in the acceleration of revenue from the sale of Marriott-branded vacation ownership interests. In addition, the Company aligned its reserve methodology for these brands, resulting in an adjustment to its notes receivable reserve in the third quarter. Together, these changes are herein referred to as the “Alignment.” As a result of the Alignment, the Company reported an additional $5 million of Net income attributable to common shareholders and an additional $7 million of Adjusted EBITDA during the fourth quarter. The tables and financial schedules below illustrate the impact of the Alignment on the Company’s reported results.

In the tables below “*” denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

Consolidated

 

Three Months Ended December 31, 2022

 

Three
Months
Ended
December
31, 2021

 

Change

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

 

As Reported

 

As Adjusted*

($ in millions)

 

 

 

 

$

 

%

 

$

 

%

Net income attributable to common shareholders

$

88

 

 

$

(5

)

 

$

83

 

 

$

61

 

 

$

27

 

45

%

 

$

22

 

 

35

%

Adjusted net income attributable to common shareholders*

$

115

 

 

$

(5

)

 

$

110

 

 

$

103

 

 

$

12

 

 

12

%

 

$

7

 

6

%

Adjusted EBITDA*

$

239

 

 

$

(7

)

 

$

232

 

 

$

219

 

 

$

20

 

 

10

%

 

$

13

 

 

6

%

Adjusted EBITDA margin*

28.7%

 

 

 

28.2%

 

27.4%

 

1.3 pts

 

0.8 pts

Vacation Ownership

 

Three Months Ended December 31, 2022

 

Three
Months
Ended
December
31, 2021

 

Change

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

 

As Reported

 

As Adjusted*

($ in millions)

 

 

 

 

$

 

%

 

$

 

%

Sale of vacation ownership products

$

439

 

 

$

(12

)

 

$

427

 

 

$

364

 

 

$

75

 

21

%

 

$

63

 

18

%

Development profit

$

162

 

 

$

(7

)

 

$

155

 

 

$

114

 

 

$

48

 

 

42

%

 

$

41

 

 

36

%

Segment financial results attributable to common shareholders

$

241

 

 

$

(5

)

 

$

236

 

 

$

205

 

 

$

36

 

 

17

%

 

$

31

 

 

14

%

Segment margin

31.9%

 

 

 

31.7%

 

29.3%

 

2.6 pts

 

2.4 pts

Segment Adjusted EBITDA*

$

261

 

 

$

(7

)

 

$

254

 

 

$

234

 

 

$

27

 

 

12

%

 

$

20

 

 

8

%

Segment Adjusted EBITDA margin*

34.6%

 

 

 

34.2%

 

33.4%

 

1.2 pts

 

0.8 pts

Exchange & Third-Party Management
Revenues excluding cost reimbursements decreased 7% in the fourth quarter of 2022 compared to the prior year and increased 4% excluding the results of VRI Americas, which was sold in April of 2022. Interval International active members increased 21% to 1.6 million and Average revenue per member decreased 17% compared to the prior year as the new accounts at Interval International that were added at the beginning of the year continued to ramp up.

Segment financial results attributable to common shareholders were $24 million in the fourth quarter of 2022, Segment margin was 41% and Segment Adjusted EBITDA was $31 million. Excluding the VRI Americas business, Segment Adjusted EBITDA increased 11% compared to the prior year and Segment Adjusted EBITDA margin increased to 55%.

Corporate and Other
General and administrative costs were largely unchanged in the fourth quarter of 2022 compared to the prior year.

Balance Sheet and Liquidity
The Company ended the quarter with approximately $1.3 billion in liquidity, including $524 million of cash and cash equivalents, $72 million of gross notes receivable that were eligible for securitization, and $749 million of available capacity under its revolving corporate credit facility.

In December 2022, the Company issued $575 million of 3.25% convertible notes due 2027 with an initial conversion price of $189.65. The Company used the proceeds from the offering to redeem $250 million of 6.125% secured notes due 2025 (which was paid in January), repurchase $55 million of its own shares, repay the outstanding balance on its revolving credit facility (which was used to redeem $230 million of convertible notes that matured in September 2022) and pay transaction expenses and other fees. In addition, to reduce the potential economic dilution to the Company's earnings per share upon conversion of the notes, the Company used a portion of the proceeds to enter into privately negotiated bond hedge and warrant transactions, with such warrant transactions at an initial strike price of $286.26 per share, which represented a premium of 100% over the last reported sale price of the Company's common stock on December 5, 2022.

At the end of the fourth quarter of 2022, pro-forma for the repayment of the 2025 secured senior notes, the Company had $2.8 billion of corporate debt and $1.9 billion of non-recourse debt related to its securitized notes receivable.

The Company completed its second timeshare receivable securitization of 2022 in the fourth quarter, issuing $280 million of notes backed by a pool of $286 million of vacation ownership notes receivable from all of the Company's timeshare brands. The overall weighted average interest rate of the notes was 6.58%, without giving effect to the Company’s retention of the Class D Notes, and the transaction had a gross advance rate of 98%.

Full Year 2023 Outlook (in millions, except per share amounts)
The Financial Schedules that follow reconcile the non-GAAP financial measures set forth below to the following full year 2023 expected GAAP results for the Company.

The Company is providing guidance for the full year 2023. In the table below “*” denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

(In millions, except per share amounts)

2023 Guidance

Contract sales

$1,930

to

$2,000

Net income attributable to common shareholders

$405

to

$440

Earnings per share - diluted

$9.51

to

$10.30

Net cash, cash equivalents, and restricted cash provided by operating activities

$365

to

$415

Adjusted EBITDA*

$950

to

$1,000

Adjusted earnings per share - diluted*

$10.75

to

$11.54

Adjusted free cash flow*

$600

to

$670

In calculating diluted earnings per share and Adjusted diluted earnings per share, shares issuable upon conversion of our convertible notes are assumed to be converted into common stock, to the extent dilutive, and net interest expense associated with the convertible notes is added back to the numerator of the diluted earnings per share and Adjusted diluted earnings per share calculations.

Non-GAAP Financial Information
Non-GAAP financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use. In addition to the foregoing non-GAAP financial measures, we present certain key metrics as performance measures which are further described in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission.

Fourth Quarter 2022 Financial Results Conference Call
The Company will hold a conference call on February 23, 2023 at 8:30 a.m. ET to discuss these financial results and provide an update on business conditions. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the Company's website at ir.mvwc.com. An audio replay of the conference call will be available for 30 days on the Company’s website.

About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products, and services. The Company has over 120 vacation ownership resorts and approximately 700,000 owner families in a diverse portfolio that includes some of the most iconic vacation ownership brands. The Company also operates exchange networks and membership programs comprised of more than 3,200 affiliated resorts in over 90 countries and territories, and provides management services to other resorts and lodging properties. As a leader and innovator in the vacation industry, the Company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International, Inc. and an affiliate of Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements
This press release and accompanying schedules contain “forward-looking statements” within the meaning of federal securities laws, including statements about expectations for future growth and projections for full year 2023. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: the continuing effects of the COVID-19 pandemic or future health crises, including quarantines or other government-imposed travel or health-related restrictions; the length and severity of the COVID-19 pandemic or future health crises, including short and longer-term impacts on consumer confidence and demand for travel, and the pace of recovery following the COVID-19 pandemic or future health crises or as effective treatments or vaccines against variants of the COVID-19 pandemic or future health crises become widely available; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price and wage inflation; global supply chain disruptions; volatility in the international and national economy and credit markets, including as a result of the COVID-19 pandemic or future health crises and the ongoing conflict between Russia and Ukraine and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the impact of rising interest rates; political or social strife, difficulties associated with implementing new or maintaining existing technology; changes in privacy laws and other matters referred to under the heading “Risk Factors” in our most recent Annual Report on Form 10-K, and which may be updated in our periodic filings with the U.S. Securities and Exchange Commission. All forward-looking statements in this press release are made as of the date of this press release and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise, except as required by law. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements.

Financial Schedules Follow

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FINANCIAL SCHEDULES

QUARTER 4, 2022

 

TABLE OF CONTENTS

Summary Financial Information

A-1

Adjusted EBITDA by Segment

A-2

Consolidated Statements of Income

A-3

Revenues and Profit by Segment

A-5

Adjusted Net Income Attributable to Common Shareholders and Adjusted Earnings Per Share - Diluted

A-9

Adjusted EBITDA

A-10

Consolidated Contract Sales to Adjusted Development Profit

A-11

Vacation Ownership and Exchange & Third-Party Management Segment Adjusted EBITDA

A-13

Cash Flow and Adjusted Free Cash Flow

A-14

Consolidated Balance Sheets

A-15

Consolidated Statements of Cash Flows

A-16

2023 Outlook

 

Adjusted Net Income Attributable to Common Shareholders, Adjusted Earnings Per Share - Diluted and Adjusted EBITDA

A-18

Adjusted Free Cash Flow

A-19

Quarterly Operating Metrics

A-20

Non-GAAP Financial Measures

A-21

A-1

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
SUMMARY FINANCIAL INFORMATION

(In millions, except VPG, tours, total active members, average revenue per member and per share amounts)

(Unaudited)

 

Quarter Ended

 

Change %

 

Fiscal Year Ended

 

Change %

 

December
31, 2022

 

December
31, 2021

 

 

December
31, 2022

 

December
31, 2021

 

Key Measures

 

 

 

 

 

 

 

 

 

 

 

Total consolidated contract sales

$

454

 

$

406

 

12%

 

$

1,837

 

$

1,374

 

34%

VPG

$

4,088

 

 

$

4,305

 

 

(5%)

 

$

4,421

 

 

$

4,356

 

 

1%

Tours

 

105,231

 

 

 

89,495

 

 

18%

 

 

390,593

 

 

 

299,364

 

 

30%

Total active members (000's)(1)

 

1,566

 

 

 

1,296

 

 

21%

 

 

1,566

 

 

 

1,296

 

 

21%

Average revenue per member(1)

$

35.60

 

 

$

42.93

 

 

(17%)

 

$

157.97

 

 

$

179.48

 

 

(12%)

 

 

 

 

 

 

 

 

 

 

 

 

GAAP Measures

 

 

 

 

 

 

 

 

 

 

 

Revenues

$

1,188

 

 

$

1,100

 

 

8%

 

$

4,656

 

 

$

3,890

 

 

20%

Income before income taxes and noncontrolling interests

$

145

 

 

$

70

 

 

108%

 

$

582

 

 

$

127

 

 

NM

Net income attributable to common shareholders

$

88

 

 

$

61

 

 

45%

 

$

391

 

 

$

49

 

 

NM

Earnings per share - diluted

$

2.08

 

 

$

1.39

 

 

50%

 

$

8.77

 

 

$

1.13

 

 

NM

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP Measures*

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA

$

239

 

 

$

219

 

 

10%

 

$

966

 

 

$

657

 

 

47%

Adjusted pretax income

$

169

 

 

$

131

 

 

30%

 

$

677

 

 

$

296

 

 

128%

Adjusted net income attributable to common shareholders

$

115

 

 

$

103

 

 

12%

 

$

458

 

 

$

190

 

 

140%

Adjusted earnings per share - diluted

$

2.74

 

 

$

2.38

 

 

15%

 

$

10.26

 

 

$

4.40

 

 

133%

 

 

 

 

 

 

 

 

 

 

 

 

Financial Measures, Excluding the Impact of Alignment*

 

 

 

 

 

 

 

 

Revenues

$

1,176

 

 

$

1,100

 

 

7%

 

$

4,617

 

 

$

3,890

 

 

19%

Income before income taxes and noncontrolling interests

$

138

 

 

$

70

 

 

97%

 

$

531

 

 

$

127

 

 

NM

Net income attributable to common shareholders

$

83

 

 

$

61

 

 

35%

 

$

353

 

 

$

49

 

 

NM

Earnings per share - diluted

$

1.94

 

 

$

1.39

 

 

40%

 

$

7.94

 

 

$

1.13

 

 

NM

Adjusted EBITDA

$

232

 

 

$

219

 

 

6%

 

$

915

 

 

$

657

 

 

39%

Adjusted pretax income

$

162

 

 

$

131

 

 

24%

 

$

626

 

 

$

296

 

 

111%

Adjusted net income attributable to common shareholders

$

110

 

 

$

103

 

 

6%

 

$

420

 

 

$

190

 

 

121%

Adjusted earnings per share - diluted

$

2.60

 

 

$

2.38

 

 

9%

 

$

9.42

 

 

$

4.40

 

 

114%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Includes members at the end of each period for the Interval International exchange network only.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NM = Not meaningful.

 

A-2

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
ADJUSTED EBITDA BY SEGMENT

(In millions)

(Unaudited)

 

 

Quarter Ended December 31, 2022

 

Quarter
Ended
December
31, 2021

 

Change

 

As
Reported

 

Impact of Alignment

 

As
Adjusted*

 

 

As
Reported

 

As
Adjusted*

 

 

Revenue

 

Reserve

 

Combined

 

 

 

 

Vacation Ownership

$

261

 

 

$

(7

)

 

$

 

$

(7

)

 

$

254

 

 

$

234

 

 

12%

 

8%

Exchange & Third-Party Management

 

31

 

 

 

 

 

 

 

 

 

 

 

 

31

 

 

 

31

 

 

5%

 

5%

Segment Adjusted EBITDA*

 

292

 

 

 

(7

)

 

 

 

 

 

(7

)

 

 

285

 

 

 

265

 

 

11%

 

8%

General and administrative

 

(53

)

 

 

 

 

 

 

 

 

 

 

 

(53

)

 

 

(46

)

 

(17%)

 

(17%)

Adjusted EBITDA*

$

239

 

 

$

(7

)

 

$

 

 

$

(7

)

 

$

232

 

 

$

219

 

 

10%

 

6%

 

Fiscal Year Ended December 31, 2022

 

Fiscal
Year
Ended
December
31, 2021

 

Change

 

As Reported

 

Impact of Alignment

 

As Adjusted*

 

 

As Reported

 

As Adjusted*

 

 

Revenue

 

Reserve

 

Combined

 

 

 

 

Vacation Ownership

$

1,033

 

 

$

(46

)

 

$

(5

)

 

$

(51

)

 

$

982

 

 

$

699

 

 

48%

 

41%

Exchange & Third-Party Management

 

148

 

 

 

 

 

 

 

 

 

 

 

 

148

 

 

 

144

 

 

3%

 

3%

Segment Adjusted EBITDA*

 

1,181

 

 

 

(46

)

 

 

(5

)

 

 

(51

)

 

 

1,130

 

 

 

843

 

 

40%

 

34%

General and administrative

 

(215

)

 

 

 

 

 

 

 

 

 

 

 

(215

)

 

 

(186

)

 

(16%)

 

(16%)

Adjusted EBITDA*

$

966

 

 

$

(46

)

 

$

(5

)

 

$

(51

)

 

$

915

 

 

$

657

 

 

47%

 

39%

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

 

A-3

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

 

 

Quarter Ended

 

December 31, 2022

 

December 31,
2021

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

REVENUES

 

 

 

 

 

 

 

Sale of vacation ownership products

$

439

 

 

$

(12

)

 

$

427

 

 

$

364

 

Management and exchange

 

204

 

 

 

 

 

 

204

 

 

 

217

 

Rental

 

113

 

 

 

 

 

 

113

 

 

 

146

 

Financing

 

76

 

 

 

 

 

 

76

 

 

 

72

 

Cost reimbursements

 

356

 

 

 

 

 

 

356

 

 

 

301

 

TOTAL REVENUES

 

1,188

 

 

 

(12

)

 

 

1,176

 

 

 

1,100

 

EXPENSES

 

 

 

 

 

 

 

Cost of vacation ownership products

 

73

 

 

 

(5

)

 

 

68

 

 

 

72

 

Marketing and sales

 

204

 

 

 

 

 

 

204

 

 

 

178

 

Management and exchange

 

114

 

 

 

 

 

 

114

 

 

 

140

 

Rental

 

88

 

 

 

 

 

 

88

 

 

 

97

 

Financing

 

26

 

 

 

 

 

 

26

 

 

 

24

 

General and administrative

 

62

 

 

 

 

 

 

62

 

 

 

61

 

Depreciation and amortization

 

34

 

 

 

 

 

 

34

 

 

 

34

 

Litigation charges

 

4

 

 

 

 

 

 

4

 

 

 

2

 

Royalty fee

 

30

 

 

 

 

 

 

30

 

 

 

28

 

Impairment

 

1

 

 

 

 

 

 

1

 

 

 

(2

)

Cost reimbursements

 

356

 

 

 

 

 

 

356

 

 

 

301

 

TOTAL EXPENSES

 

992

 

 

 

(5

)

 

 

987

 

 

 

935

 

Gains (losses) and other income (expense), net

 

1

 

 

 

 

 

 

1

 

 

 

(24

)

Interest expense

 

(27

)

 

 

 

 

 

(27

)

 

 

(36

)

Transaction and integration costs

 

(26

)

 

 

 

 

 

(26

)

 

 

(35

)

Other

 

1

 

 

 

 

 

 

1

 

 

 

 

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

145

 

 

 

(7

)

 

 

138

 

 

 

70

 

Provision for income taxes

 

(57

)

 

 

2

 

 

 

(55

)

 

 

(11

)

NET INCOME (LOSS)

 

88

 

 

 

(5

)

 

 

83

 

 

 

59

 

Net loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

2

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

88

 

 

$

(5

)

 

$

83

 

 

$

61

 

 

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

 

 

 

 

 

 

Basic shares

 

38.2

 

 

 

 

 

 

38.2

 

 

 

42.7

 

Basic

$

2.30

 

 

$

(0.16

)

 

$

2.14

 

 

$

1.42

 

Diluted shares(1)

 

43.0

 

 

 

 

 

 

43.0

 

 

 

43.6

 

Diluted

$

2.08

 

 

$

(0.14

)

 

$

1.94

 

 

$

1.39

 

(1) Diluted shares include 4.2 million shares for the quarter-ended December 31, 2022 related to our convertible notes, reflecting the impact of the adoption of Accounting Standards Update 2020-06 in 2022.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: Earnings (loss) per share - Basic and Earnings (loss) per share - Diluted are calculated using whole dollars.

A-4

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

 

 

Fiscal Year Ended

 

December 31, 2022

 

December 31,
2021

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

REVENUES

 

 

 

 

 

 

 

Sale of vacation ownership products

$

1,618

 

 

$

(39

)

 

$

1,579

 

 

$

1,153

 

Management and exchange

 

827

 

 

 

 

 

 

827

 

 

 

855

 

Rental

 

551

 

 

 

 

 

 

551

 

 

 

486

 

Financing

 

293

 

 

 

 

 

 

293

 

 

 

268

 

Cost reimbursements

 

1,367

 

 

 

 

 

 

1,367

 

 

 

1,128

 

TOTAL REVENUES

 

4,656

 

 

 

(39

)

 

 

4,617

 

 

 

3,890

 

EXPENSES

 

 

 

 

 

 

 

Cost of vacation ownership products

 

289

 

 

 

(7

)

 

 

282

 

 

 

250

 

Marketing and sales

 

807

 

 

 

 

 

 

807

 

 

 

617

 

Management and exchange

 

444

 

 

 

 

 

 

444

 

 

 

521

 

Rental

 

382

 

 

 

 

 

 

382

 

 

 

344

 

Financing

 

75

 

 

 

19

 

 

 

94

 

 

 

88

 

General and administrative

 

249

 

 

 

 

 

 

249

 

 

 

227

 

Depreciation and amortization

 

132

 

 

 

 

 

 

132

 

 

 

146

 

Litigation charges

 

11

 

 

 

 

 

 

11

 

 

 

10

 

Royalty fee

 

114

 

 

 

 

 

 

114

 

 

 

106

 

Impairment

 

2

 

 

 

 

 

 

2

 

 

 

3

 

Cost reimbursements

 

1,367

 

 

 

 

 

 

1,367

 

 

 

1,128

 

TOTAL EXPENSES

 

3,872

 

 

 

12

 

 

 

3,884

 

 

 

3,440

 

Gains (losses) and other income (expense), net

 

40

 

 

 

 

 

 

40

 

 

 

(51

)

Interest expense

 

(118

)

 

 

 

 

 

(118

)

 

 

(164

)

Transaction and integration costs

 

(125

)

 

 

 

 

 

(125

)

 

 

(110

)

Other

 

1

 

 

 

 

 

 

1

 

 

 

2

 

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

582

 

 

 

(51

)

 

 

531

 

 

 

127

 

(Provision for) benefit from income taxes

 

(191

)

 

 

13

 

 

 

(178

)

 

 

(74

)

NET INCOME (LOSS)

 

391

 

 

 

(38

)

 

 

353

 

 

 

53

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

(4

)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

391

 

 

$

(38

)

 

$

353

 

 

$

49

 

 

EARNINGS (LOSS) PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

 

 

 

 

 

 

 

Basic shares

 

40.4

 

 

 

 

 

 

40.4

 

 

 

42.5

 

Basic

$

9.69

 

 

$

(0.93

)

 

$

8.76

 

 

$

1.15

 

Diluted shares(1)

 

45.2

 

 

 

 

 

 

45.2

 

 

 

43.3

 

Diluted

$

8.77

 

 

$

(0.83

)

 

$

7.94

 

 

$

1.13

 

(1) Diluted shares include 4.3 million shares for the year-ended December 31, 2022 related to our convertible notes, reflecting the impact of the adoption of Accounting Standards Update 2020-06 in 2022.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

NOTE: Earnings (loss) per share - Basic and Earnings (loss) per share - Diluted are calculated using whole dollars.

A-5

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION
REVENUES AND PROFIT BY SEGMENT

for the three months ended December 31, 2022

(In millions)

 

 

Reportable Segment

 

Corporate
and
Other

 

Total

 

Vacation Ownership

 

Exchange &
Third-Party
Management

 

 

As
Reported

 

As
Adjusted*

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of vacation ownership products

$

439

 

 

$

(12

)

 

$

427

 

 

$

 

 

$

 

 

$

439

 

 

$

427

 

Management and exchange(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Ancillary revenues

 

58

 

 

 

 

 

 

58

 

 

 

1

 

 

 

 

 

 

59

 

 

 

59

 

Management fee revenues

 

42

 

 

 

 

 

 

42

 

 

 

6

 

 

 

 

 

 

48

 

 

 

48

 

Exchange and other services revenues

 

32

 

 

 

 

 

 

32

 

 

 

42

 

 

 

23

 

 

 

97

 

 

 

97

 

Management and exchange

 

132

 

 

 

 

 

 

132

 

 

 

49

 

 

 

23

 

 

 

204

 

 

 

204

 

Rental

 

104

 

 

 

 

 

 

104

 

 

 

9

 

 

 

 

 

 

113

 

 

 

113

 

Financing

 

76

 

 

 

 

 

 

76

 

 

 

 

 

 

 

 

 

76

 

 

 

76

 

Cost reimbursements(1)

 

362

 

 

 

 

 

 

362

 

 

 

4

 

 

 

(10

)

 

 

356

 

 

 

356

 

TOTAL REVENUES

$

1,113

 

 

$

(12

)

 

$

1,101

 

 

$

62

 

 

$

13

 

 

$

1,188

 

 

$

1,176

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Development

$

162

 

 

$

(7

)

 

$

155

 

 

$

 

 

$

 

 

$

162

 

 

$

155

 

Management and exchange(1)

 

70

 

 

 

 

 

 

70

 

 

 

22

 

 

 

(2

)

 

 

90

 

 

 

90

 

Rental(1)

 

15

 

 

 

 

 

 

15

 

 

 

9

 

 

 

1

 

 

 

25

 

 

 

25

 

Financing

 

50

 

 

 

 

 

 

50

 

 

 

 

 

 

 

 

 

50

 

 

 

50

 

TOTAL PROFIT (LOSS)

 

297

 

 

 

(7

)

 

 

290

 

 

 

31

 

 

 

(1

)

 

 

327

 

 

 

320

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

(62

)

 

 

(62

)

 

 

(62

)

Depreciation and amortization

 

(25

)

 

 

 

 

 

(25

)

 

 

(7

)

 

 

(2

)

 

 

(34

)

 

 

(34

)

Litigation charges

 

(2

)

 

 

 

 

 

(2

)

 

 

 

 

 

(2

)

 

 

(4

)

 

 

(4

)

Royalty fee

 

(30

)

 

 

 

 

 

(30

)

 

 

 

 

 

 

 

 

(30

)

 

 

(30

)

Impairment

 

(1

)

 

 

 

 

 

(1

)

 

 

 

 

 

 

 

 

(1

)

 

 

(1

)

Gains and other income, net

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

(27

)

 

 

(27

)

 

 

(27

)

Transaction and integration costs

 

 

 

 

 

 

 

 

 

 

 

 

 

(26

)

 

 

(26

)

 

 

(26

)

Other

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

241

 

 

 

(7

)

 

 

234

 

 

 

24

 

 

 

(120

)

 

 

145

 

 

 

138

 

Provision for income taxes

 

 

 

 

2

 

 

 

2

 

 

 

 

 

 

(57

)

 

 

(57

)

 

 

(55

)

NET INCOME (LOSS)

 

241

 

 

 

(5

)

 

 

236

 

 

 

24

 

 

 

(177

)

 

 

88

 

 

 

83

 

Net (income) loss attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

241

 

 

$

(5

)

 

$

236

 

 

$

24

 

 

$

(177

)

 

$

88

 

 

$

83

 

SEGMENT MARGIN(2)

32%

 

 

 

32%

41%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-6

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the three months ended December 31, 2021

(In millions)

 

 

Reportable Segment

 

Corporate
and Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

 

 

REVENUES

 

 

 

 

 

 

 

Sales of vacation ownership products

$

364

 

 

$

 

 

$

 

 

$

364

 

Management and exchange(1)

 

 

 

 

 

 

 

Ancillary revenues

 

53

 

 

 

1

 

 

 

 

 

 

54

 

Management fee revenues

 

41

 

 

 

8

 

 

 

(4

)

 

 

45

 

Exchange and other services revenues

 

33

 

 

 

45

 

 

 

40

 

 

 

118

 

Management and exchange

 

127

 

 

 

54

 

 

 

36

 

 

 

217

 

Rental

 

138

 

 

 

8

 

 

 

 

 

 

146

 

Financing

 

72

 

 

 

 

 

 

 

 

 

72

 

Cost reimbursements(1)

 

320

 

 

 

9

 

 

 

(28

)

 

 

301

 

TOTAL REVENUES

$

1,021

 

 

$

71

 

 

$

8

 

 

$

1,100

 

 

 

 

 

 

 

 

 

PROFIT

 

 

 

 

 

 

 

Development

$

114

 

 

$

 

 

$

 

 

$

114

 

Management and exchange(1)

 

63

 

 

 

22

 

 

 

(8

)

 

 

77

 

Rental(1)

 

32

 

 

 

8

 

 

 

9

 

 

 

49

 

Financing

 

48

 

 

 

 

 

 

 

 

 

48

 

TOTAL PROFIT

 

257

 

 

 

30

 

 

 

1

 

 

 

288

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

(61

)

 

 

(61

)

Depreciation and amortization

 

(23

)

 

 

(8

)

 

 

(3

)

 

 

(34

)

Litigation charges

 

(2

)

 

 

 

 

 

 

 

 

(2

)

Royalty fee

 

(28

)

 

 

 

 

 

 

 

 

(28

)

Impairment

 

 

 

 

 

 

 

2

 

 

 

2

 

Gains (losses) and other income (expense), net

 

1

 

 

 

 

 

 

(25

)

 

 

(24

)

Interest expense

 

 

 

 

 

 

 

(36

)

 

 

(36

)

Transaction and integration costs

 

 

 

 

 

 

 

(35

)

 

 

(35

)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

205

 

 

 

22

 

 

 

(157

)

 

 

70

 

Provision for income taxes

 

 

 

 

 

 

 

(11

)

 

 

(11

)

NET INCOME (LOSS)

 

205

 

 

 

22

 

 

 

(168

)

 

 

59

 

Net loss attributable to noncontrolling interests(1)

 

 

 

 

 

 

 

2

 

 

 

2

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

205

 

 

$

22

 

 

$

(166

)

 

$

61

 

SEGMENT MARGIN(2)

29%

 

33%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues.

A-7

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the twelve months ended December 31, 2022

(In millions)

 

 

Reportable Segment

 

Corporate
and
Other

 

Total

 

Vacation Ownership

 

Exchange &
Third-Party
Management

 

 

As
Reported

 

As
Adjusted*

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

 

 

 

REVENUES

 

 

 

 

 

 

 

 

 

 

 

 

 

Sales of vacation ownership products

$

1,618

 

 

$

(39

)

 

$

1,579

 

 

$

 

 

$

 

 

$

1,618

 

 

$

1,579

 

Management and exchange(1)

 

 

 

 

 

 

 

 

 

 

 

 

 

Ancillary revenues

 

241

 

 

 

 

 

 

241

 

 

 

4

 

 

 

 

 

 

245

 

 

 

245

 

Management fee revenues

 

166

 

 

 

 

 

 

166

 

 

 

34

 

 

 

(5

)

 

 

195

 

 

 

195

 

Exchange and other services revenues

 

127

 

 

 

 

 

 

127

 

 

 

188

 

 

 

72

 

 

 

387

 

 

 

387

 

Management and exchange

 

534

 

 

 

 

 

 

534

 

 

 

226

 

 

 

67

 

 

 

827

 

 

 

827

 

Rental

 

509

 

 

 

 

 

 

509

 

 

 

42

 

 

 

 

 

 

551

 

 

 

551

 

Financing

 

293

 

 

 

 

 

 

293

 

 

 

 

 

 

 

 

 

293

 

 

 

293

 

Cost reimbursements(1)

 

1,388

 

 

 

 

 

 

1,388

 

 

 

23

 

 

 

(44

)

 

 

1,367

 

 

 

1,367

 

TOTAL REVENUES

$

4,342

 

 

$

(39

)

 

$

4,303

 

 

$

291

 

 

$

23

 

 

$

4,656

 

 

$

4,617

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PROFIT (LOSS)

 

 

 

 

 

 

 

 

 

 

 

 

 

Development

$

522

 

 

$

(32

)

 

$

490

 

 

$

 

 

$

 

 

$

522

 

 

$

490

 

Management and exchange(1)

 

294

 

 

 

 

 

 

294

 

 

 

106

 

 

 

(17

)

 

 

383

 

 

 

383

 

Rental(1)

 

109

 

 

 

 

 

 

109

 

 

 

42

 

 

 

18

 

 

 

169

 

 

 

169

 

Financing

 

218

 

 

 

(19

)

 

 

199

 

 

 

 

 

 

 

 

 

218

 

 

 

199

 

TOTAL PROFIT (LOSS)

 

1,143

 

 

 

(51

)

 

 

1,092

 

 

 

148

 

 

 

1

 

 

 

1,292

 

 

 

1,241

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

 

 

 

 

 

 

(249

)

 

 

(249

)

 

 

(249

)

Depreciation and amortization

 

(92

)

 

 

 

 

 

(92

)

 

 

(31

)

 

 

(9

)

 

 

(132

)

 

 

(132

)

Litigation charges

 

(9

)

 

 

 

 

 

(9

)

 

 

 

 

 

(2

)

 

 

(11

)

 

 

(11

)

Royalty fee

 

(114

)

 

 

 

 

 

(114

)

 

 

 

 

 

 

 

 

(114

)

 

 

(114

)

Impairment

 

(2

)

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

(2

)

 

 

(2

)

Gains (losses) and other income (expense), net

 

37

 

 

 

 

 

 

37

 

 

 

15

 

 

 

(12

)

 

 

40

 

 

 

40

 

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

(118

)

 

 

(118

)

 

 

(118

)

Transaction and integration costs

 

(3

)

 

 

 

 

 

(3

)

 

 

 

 

 

(122

)

 

 

(125

)

 

 

(125

)

Other

 

1

 

 

 

 

 

 

1

 

 

 

 

 

 

 

 

 

1

 

 

 

1

 

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

961

 

 

 

(51

)

 

 

910

 

 

 

132

 

 

 

(511

)

 

 

582

 

 

 

531

 

Benefit from (provision for) income taxes

 

 

 

 

13

 

 

 

13

 

 

 

 

 

 

(191

)

 

 

(191

)

 

 

(178

)

NET INCOME (LOSS)

 

961

 

 

 

(38

)

 

 

923

 

 

 

132

 

 

 

(702

)

 

 

391

 

 

 

353

 

Net income attributable to noncontrolling interests

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

961

 

 

$

(38

)

 

$

923

 

 

$

132

 

 

$

(702

)

 

$

391

 

 

$

353

 

SEGMENT MARGIN(2)

33%

 

 

 

32%

 

49%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-8

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

REVENUES AND PROFIT BY SEGMENT

for the twelve months ended December 31, 2021

(In millions)

 

 

Reportable Segment

 

Corporate and
Other

 

Total

 

Vacation
Ownership

 

Exchange &
Third-Party
Management

 

 

REVENUES

 

 

 

 

 

 

 

Sales of vacation ownership products

$

1,153

 

 

$

 

 

$

 

 

$

1,153

 

Management and exchange(1)

 

 

 

 

 

 

 

Ancillary revenues

 

188

 

 

 

3

 

 

 

 

 

 

191

 

Management fee revenues

 

158

 

 

 

32

 

 

 

(19

)

 

 

171

 

Exchange and other services revenues

 

124

 

 

 

198

 

 

 

171

 

 

 

493

 

Management and exchange

 

470

 

 

 

233

 

 

 

152

 

 

 

855

 

Rental

 

446

 

 

 

40

 

 

 

 

 

 

486

 

Financing

 

268

 

 

 

 

 

 

 

 

 

268

 

Cost reimbursements(1)

 

1,202

 

 

 

47

 

 

 

(121

)

 

 

1,128

 

TOTAL REVENUES

$

3,539

 

 

$

320

 

 

$

31

 

 

$

3,890

 

 

 

 

 

 

 

 

 

PROFIT

 

 

 

 

 

 

 

Development

$

286

 

 

$

 

 

$

 

 

$

286

 

Management and exchange(1)

 

270

 

 

 

102

 

 

 

(38

)

 

 

334

 

Rental(1)

 

52

 

 

 

40

 

 

 

50

 

 

 

142

 

Financing

 

180

 

 

 

 

 

 

 

 

 

180

 

TOTAL PROFIT

 

788

 

 

 

142

 

 

 

12

 

 

 

942

 

 

 

 

 

 

 

 

 

OTHER

 

 

 

 

 

 

 

General and administrative

 

 

 

 

 

 

 

(227

)

 

 

(227

)

Depreciation and amortization

 

(89

)

 

 

(48

)

 

 

(9

)

 

 

(146

)

Litigation charges

 

(9

)

 

 

 

 

 

(1

)

 

 

(10

)

Restructuring

 

 

 

 

(1

)

 

 

1

 

 

 

 

Royalty fee

 

(106

)

 

 

 

 

 

 

 

 

(106

)

Impairment

 

 

 

 

 

 

 

(3

)

 

 

(3

)

Gains (losses) and other income (expense), net

 

1

 

 

 

 

 

 

(52

)

 

 

(51

)

Interest expense

 

 

 

 

 

 

 

(164

)

 

 

(164

)

Transaction and integration costs

 

(2

)

 

 

 

 

 

(108

)

 

 

(110

)

Other

 

2

 

 

 

 

 

 

 

 

 

2

 

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

 

585

 

 

 

93

 

 

 

(551

)

 

 

127

 

Provision for income taxes

 

 

 

 

 

 

 

(74

)

 

 

(74

)

NET INCOME (LOSS)

 

585

 

 

 

93

 

 

 

(625

)

 

 

53

 

Net income attributable to noncontrolling interests(1)

 

 

 

 

 

 

 

(4

)

 

 

(4

)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

585

 

 

$

93

 

 

$

(629

)

 

$

49

 

SEGMENT MARGIN(2)

25%

 

34%

 

 

 

 

 

 

 

 

 

 

 

 

(1) Amounts included in Corporate and other represent the impact of the consolidation of certain owners’ associations under the relevant accounting guidance, and represent the portion attributable to individual or third-party vacation ownership interest owners.

(2) Segment margin represents the applicable segment’s net income or loss attributable to common shareholders divided by the applicable segment’s total revenues less cost reimbursement revenues.

A-9

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND

ADJUSTED EARNINGS PER SHARE - DILUTED

(In millions, except per share amounts)

 

 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

Net income attributable to common shareholders

$

88

 

 

$

61

 

 

$

391

 

 

$

49

 

Provision for income taxes

 

57

 

 

 

11

 

 

 

191

 

 

 

74

 

Income before income taxes attributable to common shareholders

 

145

 

 

 

72

 

 

 

582

 

 

 

123

 

Certain items:

 

 

 

 

 

 

 

ILG integration

 

15

 

 

$

29

 

 

$

82

 

 

$

93

 

Welk acquisition and integration

 

4

 

 

 

8

 

 

 

14

 

 

 

16

 

I/T transformation

 

3

 

 

 

 

 

 

16

 

 

 

 

Other transformation initiatives

 

4

 

 

 

 

 

 

10

 

 

 

 

Other transaction costs

 

 

 

 

(2

)

 

 

3

 

 

 

1

 

Transaction and integration costs

 

26

 

 

 

35

 

 

 

125

 

 

 

110

 

Early redemption of senior unsecured notes

 

 

 

 

19

 

 

 

 

 

 

55

 

Gain on disposition of hotel

 

 

 

 

 

 

 

(33

)

 

 

 

Gain on disposition of VRI Americas

 

 

 

 

 

 

 

(17

)

 

 

 

Foreign currency translation

 

 

 

 

4

 

 

 

10

 

 

 

 

Insurance proceeds

 

(1

)

 

 

 

 

 

(6

)

 

 

 

Change in indemnification asset

 

1

 

 

 

(1

)

 

 

3

 

 

 

(7

)

Other

 

(1

)

 

 

2

 

 

 

3

 

 

 

3

 

(Gains) losses and other (income) expense, net

 

(1

)

 

 

24

 

 

 

(40

)

 

 

51

 

Purchase accounting adjustments

 

(2

)

 

 

3

 

 

 

11

 

 

 

10

 

Litigation charges

 

4

 

 

 

2

 

 

 

11

 

 

 

10

 

Impairment

 

1

 

 

 

(2

)

 

 

2

 

 

 

3

 

Expiration/forfeiture of deposits on pre-acquisition preview packages

 

 

 

 

 

 

 

(6

)

 

 

 

Early termination of VRI management contract

 

 

 

 

 

 

 

(2

)

 

 

 

Eliminate impact of Consolidated Property Owners' Associations

 

 

 

 

(3

)

 

 

 

 

 

(8

)

Change in estimate relating to pre-acquisition contingencies

 

(7

)

 

 

 

 

 

(12

)

 

 

 

Other

 

3

 

 

 

 

 

 

6

 

 

 

(3

)

Adjusted pretax income*

 

169

 

 

 

131

 

 

 

677

 

 

 

296

 

Provision for income taxes

 

(54

)

 

 

(28

)

 

 

(219

)

 

 

(106

)

Adjusted net income attributable to common shareholders*

$

115

 

 

$

103

 

 

$

458

 

 

$

190

 

Diluted shares(1)

 

43.0

 

 

 

43.6

 

 

 

45.2

 

 

 

43.3

 

Adjusted earnings per share - Diluted*

$

2.74

 

 

$

2.38

 

 

$

10.26

 

 

$

4.40

 

 

Excluding the Impact of Alignment:

 

 

 

 

 

 

 

Adjusted net income attributable to common shareholders*

$

110

 

 

$

103

 

 

$

421

 

 

$

190

 

Adjusted earnings per share - Diluted*

$

2.60

 

 

$

2.38

 

 

$

9.42

 

 

$

4.40

 

(1) Diluted shares include 4.2 million and 4.3 million shares for the quarter and year-ended December 31, 2022, respectively, related to our convertible notes, reflecting the impact of the adoption of Accounting Standards Update 2020-06 in 2022.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-10

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ADJUSTED EBITDA

(In millions)

 

 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

88

 

 

$

61

 

 

$

391

 

 

$

49

 

Interest expense

 

27

 

 

 

36

 

 

 

118

 

 

 

164

 

Provision for income taxes

 

57

 

 

 

11

 

 

 

191

 

 

 

74

 

Depreciation and amortization

 

34

 

 

 

34

 

 

 

132

 

 

 

146

 

Share-based compensation

 

9

 

 

 

18

 

 

 

39

 

 

 

51

 

Certain items:

 

 

 

 

 

 

 

ILG integration

 

15

 

 

$

29

 

 

$

82

 

 

$

93

 

Welk acquisition and integration

 

4

 

 

 

8

 

 

 

14

 

 

 

16

 

I/T transformation

 

3

 

 

 

 

 

 

16

 

 

 

 

Other transformation initiatives

 

4

 

 

 

 

 

 

10

 

 

 

 

Other transaction costs

 

 

 

 

(2

)

 

 

3

 

 

 

1

 

Transaction and integration costs

 

26

 

 

 

35

 

 

 

125

 

 

 

110

 

Early redemption of senior unsecured notes

 

 

 

 

19

 

 

 

 

 

 

55

 

Gain on disposition of hotel

 

 

 

 

 

 

 

(33

)

 

 

 

Gain on disposition of VRI Americas

 

 

 

 

 

 

 

(17

)

 

 

 

Foreign currency translation

 

 

 

 

4

 

 

 

10

 

 

 

 

Insurance proceeds

 

(1

)

 

 

 

 

 

(6

)

 

 

 

Change in indemnification asset

 

1

 

 

 

(1

)

 

 

3

 

 

 

(7

)

Other

 

(1

)

 

 

2

 

 

 

3

 

 

 

3

 

(Gains) losses and other (income) expense, net

 

(1

)

 

 

24

 

 

 

(40

)

 

 

51

 

Purchase accounting adjustments

 

(2

)

 

 

3

 

 

 

11

 

 

 

10

 

Litigation charges

 

4

 

 

 

2

 

 

 

11

 

 

 

10

 

Impairment

 

1

 

 

 

(2

)

 

 

2

 

 

 

3

 

Expiration/forfeiture of deposits on pre-acquisition preview packages

 

 

 

 

 

 

 

(6

)

 

 

 

Early termination of VRI management contract

 

 

 

 

 

 

 

(2

)

 

 

 

Eliminate impact of Consolidated Property Owners' Associations

 

 

 

 

(3

)

 

 

 

 

 

(8

)

Change in estimate relating to pre-acquisition contingencies

 

(7

)

 

 

 

 

 

(12

)

 

 

 

Other

 

3

 

 

 

 

 

 

6

 

 

 

(3

)

ADJUSTED EBITDA*

$

239

 

 

$

219

 

 

$

966

 

 

$

657

 

ADJUSTED EBITDA MARGIN*

29%

 

27%

 

29%

 

24%

 

 

 

 

 

 

 

 

Excluding the Impact of Alignment:

 

 

 

 

 

 

 

ADJUSTED EBITDA*

$

232

 

 

$

219

 

 

$

915

 

 

$

657

 

ADJUSTED EBITDA MARGIN*

28%

 

27%

 

28%

 

24%

 

 

 

 

 

 

 

 

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-11

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

(Unaudited)

 

 

Quarter Ended

 

December 31, 2022

 

December 31,
2021

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

Consolidated contract sales

$

454

 

 

$

 

 

$

454

 

 

$

406

 

Less resales contract sales

 

(10

)

 

 

 

 

 

(10

)

 

 

(7

)

Consolidated contract sales, net of resales

 

444

 

 

 

 

 

 

444

 

 

 

399

 

Plus:

 

 

 

 

 

 

 

Settlement revenue

 

10

 

 

 

 

 

 

10

 

 

 

7

 

Resales revenue

 

7

 

 

 

 

 

 

7

 

 

 

4

 

Revenue recognition adjustments:

 

 

 

 

 

 

 

Reportability

 

36

 

 

 

(12

)

 

 

24

 

 

 

7

 

Sales reserve

 

(40

)

 

 

 

 

 

(40

)

 

 

(28

)

Other(1)

 

(18

)

 

 

 

 

 

(18

)

 

 

(25

)

Sale of vacation ownership products

 

439

 

 

 

(12

)

 

 

427

 

 

 

364

 

Less:

 

 

 

 

 

 

 

Cost of vacation ownership products

 

(73

)

 

 

5

 

 

 

(68

)

 

 

(72

)

Marketing and sales

 

(204

)

 

 

 

 

 

(204

)

 

 

(178

)

Development Profit (Loss)

 

162

 

 

 

(7

)

 

 

155

 

 

 

114

 

Revenue recognition reportability adjustment

 

(27

)

 

 

7

 

 

 

(20

)

 

 

(6

)

Purchase accounting adjustments

 

(1

)

 

 

 

 

 

(1

)

 

 

3

 

Other

 

(8

)

 

 

 

 

 

(8

)

 

 

 

Adjusted development profit*

$

126

 

 

$

 

 

$

126

 

 

$

111

 

Development profit margin

36.8%

 

 

 

36.2 %

 

31.3 %

Adjusted development profit margin*

31.5%

 

 

 

31.5%

 

31.1%

 

 

 

 

 

 

 

 

(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-12

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

(Unaudited)

 

 

Fiscal Year Ended

 

December 31, 2022

 

December 31,
2021

 

As
Reported

 

Impact of
Alignment

 

As
Adjusted*

 

Consolidated contract sales

$

1,837

 

 

$

 

 

$

1,837

 

 

$

1,374

 

Less resales contract sales

 

(40

)

 

 

 

 

 

(40

)

 

 

(26

)

Consolidated contract sales, net of resales

 

1,797

 

 

 

 

 

 

1,797

 

 

 

1,348

 

Plus:

 

 

 

 

 

 

 

Settlement revenue

 

36

 

 

 

 

 

 

36

 

 

 

28

 

Resales revenue

 

20

 

 

 

 

 

 

20

 

 

 

12

 

Revenue recognition adjustments:

 

 

 

 

 

 

 

Reportability

 

43

 

 

 

(58

)

 

 

(15

)

 

 

(44

)

Sales reserve

 

(170

)

 

 

19

 

 

 

(151

)

 

 

(101

)

Other(1)

 

(108

)

 

 

 

 

 

(108

)

 

 

(90

)

Sale of vacation ownership products

 

1,618

 

 

 

(39

)

 

 

1,579

 

 

 

1,153

 

Less:

 

 

 

 

 

 

 

Cost of vacation ownership products

 

(289

)

 

 

7

 

 

 

(282

)

 

 

(250

)

Marketing and sales

 

(807

)

 

 

 

 

 

(807

)

 

 

(617

)

Development Profit (Loss)

 

522

 

 

 

(32

)

 

 

490

 

 

 

286

 

Revenue recognition reportability adjustment

 

(35

)

 

 

46

 

 

 

11

 

 

 

32

 

Purchase accounting adjustments

 

13

 

 

 

 

 

 

13

 

 

 

12

 

Other

 

(13

)

 

 

 

 

 

(13

)

 

 

 

Adjusted development profit*

$

487

 

 

$

14

 

 

$

501

 

 

$

330

 

Development profit margin

32.2%

 

 

 

31.0%

 

24.8%

Adjusted development profit margin*

31.0%

 

 

 

31.5%

 

27.6%

 

 

 

 

 

 

 

 

(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-13

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

(Unaudited)
VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

 

 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

241

 

 

$

205

 

 

$

961

 

 

$

585

 

Depreciation and amortization

 

25

 

 

 

23

 

 

 

92

 

 

 

89

 

Share-based compensation expense

 

2

 

 

 

2

 

 

 

7

 

 

 

6

 

Certain items:

 

 

 

 

 

 

 

Transaction and integration costs

 

 

 

 

 

 

 

3

 

 

 

2

 

Gain on disposition of hotel

 

 

 

 

 

 

 

(33

)

 

 

 

Insurance proceeds

 

(1

)

 

 

 

 

 

(4

)

 

 

 

Other

 

 

 

 

(1

)

 

 

 

 

 

(1

)

Gains and other income, net

 

(1

)

 

 

(1

)

 

 

(37

)

 

 

(1

)

Purchase accounting adjustments

 

(2

)

 

 

3

 

 

 

11

 

 

 

10

 

Litigation charges

 

2

 

 

 

2

 

 

 

9

 

 

 

9

 

Impairment

 

1

 

 

 

 

 

 

2

 

 

 

 

Expiration/forfeiture of deposits on pre-acquisition preview packages

 

 

 

 

 

 

 

(6

)

 

 

 

Change in estimate relating to pre-acquisition contingencies

 

(7

)

 

 

 

 

 

(12

)

 

 

 

Other

 

 

 

 

 

 

 

3

 

 

 

(1

)

SEGMENT ADJUSTED EBITDA*

$

261

 

 

$

234

 

 

$

1,033

 

 

$

699

 

SEGMENT ADJUSTED EBITDA MARGIN*

35%

 

33%

 

35%

 

30%

 

 

 

 

 

 

 

 

Excluding the Impact of Alignment:

 

 

 

 

 

 

 

SEGMENT ADJUSTED EBITDA*

$

254

 

 

$

234

 

 

$

982

 

 

$

699

 

SEGMENT ADJUSTED EBITDA MARGIN*

34%

 

33%

 

34%

 

30%

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

 

 

Quarter Ended

 

Fiscal Year Ended

 

December 31,
2022

 

December 31,
2021

 

December 31,
2022

 

December 31,
2021

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

24

 

 

$

22

 

 

$

132

 

 

$

93

 

Depreciation and amortization

 

7

 

 

 

8

 

 

 

31

 

 

 

48

 

Share-based compensation expense

 

 

 

 

1

 

 

 

2

 

 

 

2

 

Certain items:

 

 

 

 

 

 

 

Gain on disposition of VRI Americas

 

 

 

 

 

 

 

(17

)

 

 

 

Foreign currency translation

 

 

 

 

 

 

 

2

 

 

 

 

COVID-19 related restructuring

 

 

 

 

 

 

 

 

 

 

1

 

Other

 

 

 

 

 

 

 

(2

)

 

 

 

SEGMENT ADJUSTED EBITDA*

$

31

 

 

$

31

 

 

$

148

 

 

$

144

 

SEGMENT ADJUSTED EBITDA MARGIN*

55%

 

49%

 

55%

 

53%

 

 

 

 

 

 

 

 

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-14

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CASH FLOW AND ADJUSTED FREE CASH FLOW

(In millions)

 

CASH FLOW

 

2022

 

Cash, cash equivalents and restricted cash provided by (used in):

 

Operating activities

$

522

 

Investing activities

 

16

 

Financing activities

 

(486

)

Effect of changes in exchange rates on cash, cash equivalents, and restricted cash

 

(1

)

Net change in cash, cash equivalents and restricted cash

$

51

 

 

 

ADJUSTED FREE CASH FLOW

 

Net cash, cash equivalents and restricted cash provided by operating activities

$

522

 

Capital expenditures for property and equipment (excluding inventory)

 

(65

)

Borrowings from securitization transactions

 

1,031

 

Repayment of debt related to securitizations

 

(945

)

Securitized debt issuance costs

 

(10

)

Free cash flow*

 

533

 

Adjustments:

 

Decrease in restricted cash

 

131

 

Transaction and integration costs(1)

 

93

 

Capital expenditures(2)

 

24

 

Litigation charges(3)

 

7

 

Insurance proceeds(4)

 

(4

)

Net change in borrowings available from the securitization of eligible vacation ownership notes receivable(5)

 

(40

)

Adjusted free cash flow*

$

744

 

(1) Represents adjustment to exclude the after-tax impact of transaction and integration costs in connection with the ILG Acquisition and Welk Acquisition.

(2) Represents adjustment to exclude capital expenditures, primarily related to our new global corporate headquarters in Orlando, FL.

(3) Represents adjustment to exclude the after-tax impact of litigation charges.

(4) Represents adjustment to exclude the after-tax impact of insurance proceeds.

(5) Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable between the 2021 and 2022 year ends.

* Denotes non-GAAP financial measures. Please see “Non-GAAP Financial Measures” for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-15

 

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED BALANCE SHEETS

FISCAL YEAR-END 2022 AND 2021

(In millions, except share and per share data)

 

 

 

2022

 

 

 

2021

 

ASSETS

 

 

 

Cash and cash equivalents

$

524

 

 

$

342

 

Restricted cash (including $85 and $139 from VIEs, respectively)

 

330

 

 

 

461

 

Accounts receivable, net (including $13 and $12 from VIEs, respectively)

 

292

 

 

 

279

 

Vacation ownership notes receivable, net (including $1,792 and $1,662 from VIEs, respectively)

 

2,198

 

 

 

2,045

 

Inventory

 

660

 

 

 

719

 

Property and equipment, net

 

1,139

 

 

 

1,136

 

Goodwill

 

3,117

 

 

 

3,150

 

Intangibles, net

 

911

 

 

 

993

 

Other (including $76 and $76 from VIEs, respectively)

 

468

 

 

 

488

 

TOTAL ASSETS

$

9,639

 

 

$

9,613

 

 

 

 

 

LIABILITIES AND EQUITY

 

 

 

Accounts payable

$

356

 

 

$

265

 

Advance deposits

 

158

 

 

 

160

 

Accrued liabilities (including $5 and $2 from VIEs, respectively)

 

369

 

 

 

345

 

Deferred revenue

 

344

 

 

 

453

 

Payroll and benefits liability

 

251

 

 

 

201

 

Deferred compensation liability

 

139

 

 

 

142

 

Securitized debt, net (including $1,982 and $1,877 from VIEs, respectively)

 

1,