Key Highlights

  • Third quarter Revenue rose 8.2% to USD 1,367 million, below the USD 1.42 billion estimate.
  • Vacation Ownership contract sales jumped 29% to USD 565 million as Volume per guest climbed 30%.
  • Net income reached USD 82 million, or USD 2.24 per diluted share, versus a loss of USD 2 million.
  • Corporate Debt fell to USD 2,977 million from USD 3,534 million, while cash dropped to USD 229 million.

Marriott Vacations Worldwide (NYSE:VAC) reported third quarter revenue of USD 1,367 million, up 8.2% from USD 1,263 million but below the USD 1.42 billion estimate. Net Income attributable to common stockholders was USD 82 million, or USD 2.24 per diluted share, compared with a loss of USD 2 million, or USD 0.07 per share, a year earlier. Nine month diluted EPS was USD 5.07 versus USD 3.27.

Contract Sales and Owner Engagement

Vacation Ownership contract sales rose 29% to USD 565 million, and volume per guest increased 30% to USD 4,822, even though tours declined 2% to 107,687. Management credited owner engagement initiatives, including enhanced owner benefit levels and the Inner Circle platform, and said development Margin benefited from a much higher mix of sales to existing owners, which spread Marketing and sales costs over higher volume per guest. Nine month contract sales were USD 1,521 million, up 17%.

Revenue from the sale of vacation ownership products rose to USD 459 million from USD 358 million. Management and exchange revenue edged down to USD 212 million from USD 214 million, rental revenue rose to USD 155 million from USD 150 million, and financing revenue rose to USD 95 million from USD 90 million. Cost reimbursements were USD 446 million, down from USD 451 million.

Profitability and Cost Items

Segment adjusted EBITDA rose to USD 276 million from USD 216 million, with Vacation Ownership at USD 255 million versus USD 195 million and Exchange and Third-Party Management steady at USD 21 million. Corporate and other costs were USD 60 million versus USD 46 million. Marketing and sales expense increased to USD 268 million from USD 234 million, and general and administrative expense rose to USD 71 million from USD 53 million.

Several charges that weighed on last year's quarter shrank. Modernization costs fell to USD 6 million from USD 53 million, and an Impairment of USD 31 million did not recur. Restructuring cost USD 10 million this quarter. Net interest expense held at USD 43 million, and the tax provision rose to USD 31 million from USD 3 million. The closure of the Sheraton Kauai hotel after hurricane damage weighs on rental results, and rental expense rose to USD 143 million from USD 129 million.

Balance Sheet, Cash Flow and Dividends

Cash and equivalents were USD 229 million at September 30, down from USD 406 million at year end, with restricted cash of USD 304 million. Corporate debt, net, fell to USD 2,977 million from USD 3,534 million. Nine month Operating Cash Flow was USD 204 million, compared with USD 22 million a year earlier, and net cash used in financing was USD 416 million. The company paid USD 110 million of dividends and did not repurchase stock, versus USD 36 million of repurchases a year earlier. Dividends declared were USD 0.80 per share for the quarter. No financial guidance was provided.

Balance Sheet and Cash Markers

Quarterly contract sales of USD 565 million compare with USD 439 million a year earlier, and volume per guest of USD 4,822 compares with USD 3,700. Cash of USD 229 million compares with USD 406 million at year end, while corporate debt of USD 2,977 million compares with USD 3,534 million. Nine month operating cash flow of USD 204 million compares with USD 110 million of dividends paid.