Marriott Vacations Worldwide(US:VAC)2024-08-01 21:44Revenue Performance - Total revenues for the six months ended June 30, 2024, were $2.335 billion, compared to $2.347 billion for the same period in 2023[133] - Sale of vacation ownership products revenue for the six months ended June 30, 2024, was $661 million, down from $766 million in the same period in 2023[133] - Management and exchange revenue increased to $426 million for the six months ended June 30, 2024, from $406 million in the same period in 2023[133] - Rental revenue rose to $311 million for the six months ended June 30, 2024, compared to $297 million in the same period in 2023[133] - Financing revenue increased to $168 million for the six months ended June 30, 2024, from $158 million in the same period in 2023[133] - Total Segment Revenues decreased by $41 million (4%) to $1,136 million in Q2 2024 compared to Q2 2023[136] - Vacation Ownership segment's revenues decreased by 3% to $1.078 billion in Q2 2024 from $1.112 billion in Q2 2023[151] - Sale of vacation ownership products revenue for Q2 2024 was $309 million, a 21% decrease compared to $391 million in Q2 2023[154] - Resort management and other services revenues for Q2 2024 were $157 million, a 7% increase compared to $147 million in Q2 2023[161] - Rental revenues increased to $143 million in Q2 2024, up 6% from $135 million in Q2 2023[162] - Financing revenues rose 7% to $85 million in Q2 2024 from $80 million in Q2 2023[165] - Management and exchange revenues decreased 9% to $45 million in Q2 2024 from $51 million in Q2 2023[168] - Total revenues for the three months ended June 30, 2024 were $4 million, compared to $1 million in the same period in 2023[171] - Total revenues for the six months ended June 30, 2024 were $4 million, compared to $2 million in the same period in 2023[171] Profitability and Margins - Net income attributable to common stockholders for the six months ended June 30, 2024, was $84 million, down from $177 million in the same period in 2023[133] - Net income attributable to common stockholders decreased by $53 million (59%) to $37 million in Q2 2024 compared to Q2 2023[140] - Adjusted EBITDA decreased by $65 million (29%) to $157 million in Q2 2024 compared to Q2 2023[140] - Adjusted EBITDA Margin decreased by 6.2 percentage points to 20.7% in Q2 2024 compared to 26.9% in Q2 2023[140] - Vacation Ownership segment's Adjusted EBITDA decreased by 26% to $180 million in Q2 2024 compared to $245 million in Q2 2023[144][145] - Exchange & Third-Party Management segment's Adjusted EBITDA declined by 22% to $25 million in Q2 2024 from $32 million in Q2 2023[144][149] - Total Adjusted EBITDA for the company fell by 29% to $157 million in Q2 2024 versus $222 million in Q2 2023[144] - Vacation Ownership segment's Adjusted EBITDA margin dropped by 6.5 percentage points to 26.0% in Q2 2024 compared to 32.5% in Q2 2023[145] - Exchange & Third-Party Management segment's Adjusted EBITDA margin decreased by 7.6 percentage points to 44.3% in Q2 2024 from 51.9% in Q2 2023[149] - Vacation Ownership segment's financial results attributable to common stockholders declined by 36% to $144 million in Q2 2024 from $224 million in Q2 2023[145][151] - Exchange & Third-Party Management segment's financial results attributable to common stockholders decreased by 35% to $15 million in Q2 2024 from $24 million in Q2 2023[149] - Development profit for Q2 2024 was $45 million, a 62% decrease compared to $119 million in Q2 2023[158] - Development profit margin for Q2 2024 was 14.7%, a 16.1 percentage point decrease compared to 30.8% in Q2 2023[158] - Resort management and other services profit for Q2 2024 was $84 million, a 9% increase compared to $78 million in Q2 2023[161] - Rental profit surged 64% to $30 million in Q2 2024 compared to $19 million in Q2 2023[162] - Financing profit margin declined by 11.1 percentage points to 58.0% in Q2 2024[165] - Gains and other income dropped 82% to $1 million in Q2 2024 from $7 million in Q2 2023[166] Expenses - Total expenses for the six months ended June 30, 2024, were $2.096 billion, compared to $2.018 billion in the same period in 2023[133] - Marketing and sales expenses increased to $449 million for the six months ended June 30, 2024, from $416 million in the same period in 2023[133] - General and administrative expenses decreased to $117 million for the six months ended June 30, 2024, from $132 million in the same period in 2023[133] - Depreciation and amortization expenses rose to $73 million for the six months ended June 30, 2024, from $66 million in the same period in 2023[133] - General and administrative expenses decreased by $10 million (15%) in the second quarter of 2024 compared to the same period in 2023, primarily due to lower information technology costs, insurance expense, and compensation expense[175] - General and administrative expenses decreased by $15 million (11%) in the first half of 2024 compared to the same period in 2023, primarily due to lower information technology costs, insurance expense, and compliance-related expenses[175] - Interest expense, net increased by $7 million (21%) in the second quarter of 2024 compared to the same period in 2023, and by $13 million (19%) in the first half of 2024 compared to the same period in 2023[179] - Litigation charges increased significantly to $10 million in Q2 2024 from $3 million in Q2 2023[167] Vacation Ownership Performance - Total contract sales for Vacation Ownership decreased by $10 million (2%) to $452 million in Q2 2024 compared to Q2 2023[135] - Consolidated contract sales for Vacation Ownership decreased by $4 million (1%) to $449 million in Q2 2024 compared to Q2 2023[135] - Joint venture contract sales for Vacation Ownership decreased by $6 million (65%) to $3 million in Q2 2024 compared to Q2 2023[135] - VPG (Volume Per Guest) decreased by $227 (6%) to $3,741 in Q2 2024 compared to Q2 2023[135] - Total active members at the end of the period decreased by 36,000 (2%) to 1,530,000 in Q2 2024 compared to Q2 2023[135] - Average revenue per member decreased by $1.00 (3%) to $38.30 in Q2 2024 compared to Q2 2023[135] - Vacation Ownership segment's sale of vacation ownership products revenue dropped by 21% to $309 million in Q2 2024 from $391 million in Q2 2023[151] - Vacation Ownership segment's cost of vacation ownership products decreased by 42% to $38 million in Q2 2024 from $66 million in Q2 2023[151] - Consolidated contract sales for Q2 2024 were $449 million, a 1% decrease compared to $453 million in Q2 2023[154] - Total contract sales for Q2 2024 were $452 million, a 2% decrease compared to $462 million in Q2 2023[154] - The company increased its sales reserve by $70 million in Q2 2024 to reflect higher expected cumulative loss rates for vacation ownership notes receivable[156] - The company expects full-year 2024 contract sales to reflect lower VPG for the second half of 2024, partially offset by tour growth in first-time buyer tours[156] Rental and Resort Performance - Resort occupancy for Q2 2024 was 90.1%, a 1.4 percentage point increase compared to 88.7% in Q2 2023[161] - Transient keys rented grew 5% to 575,704 in Q2 2024 from 549,329 in Q2 2023[162] - Average transient rate decreased 7% to $245 in Q2 2024 from $263 in Q2 2023[162] - Rental occupancy improved by 3.6 percentage points to 74.4% in Q2 2024[162] Financial Position and Debt - The company's corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 4.4 as of June 30, 2024, above the targeted range of 2.5 to 3.0, with a goal to reduce this ratio to 3.0 by the end of 2025[182] - In the second quarter of 2024, the company amended the Corporate Credit Facility to provide for a new $800 million term loan facility scheduled to mature on April 1, 2031[182] - The company has issued approximately $9.4 billion of debt securities in securitization transactions in the term ABS market since 2000[184] - As of June 30, 2024, $108 million of borrowings were outstanding under the Warehouse Credit Facility[186] - $71 million of gross vacation ownership notes receivable were eligible for securitization as of June 30, 2024[186] - The Revolving Corporate Credit Facility provides for up to $750 million of aggregate borrowings, with $175 million of borrowings and $32 million of letters of credit outstanding as of June 30, 2024[186] - Inventory spending for the six months ended June 30, 2024 was $63 million, compared to $41 million for the same period in 2023[189] - Vacation ownership notes receivable collections for the six months ended June 30, 2024 were $67 million (non-securitized) and $244 million (securitized), compared to $90 million and $218 million respectively for the same period in 2023[191] - The company repurchased 410,377 shares during the first half of 2024 at an average price of $88.99 per share, totaling $36 million[192] - Total future material cash requirements as of June 30, 2024 are $7.517 billion, including $3.541 billion in debt and $2.710 billion in securitized debt[195] - The company expects to pay quarterly dividends in the future, subject to board approval and financial conditions, with the last three dividends paid at $0.76 per share[193] - The company amended its Corporate Credit Facility in Q2 2024 to provide for a New Term Loan scheduled to mature on April 1, 2031, used to refinance a $784 million Term Loan[195] - Consolidated revenues for the six months ended June 30, 2024, were $2.335 billion, with expenses totaling $2.206 billion, resulting in a net income of $84 million[198] - Total assets as of June 30, 2024, amounted to $9.611 billion, with liabilities and equity also totaling $9.611 billion[198] - Cash and cash equivalents as of June 30, 2024, were $206 million, with restricted cash at $326 million[198] - Accounts and contracts receivable, net, stood at $251 million, while vacation ownership notes receivable, net, were $2.308 billion[198] - Property and equipment, net, were valued at $1.295 billion, and goodwill was reported at $3.117 billion[198] - Total liabilities as of June 30, 2024, were $7.239 billion, with MVW stockholders' equity at $2.372 billion[198] - As of December 31, 2023, total assets were $9.680 billion, with liabilities and equity also totaling $9.680 billion[199] - Cash and cash equivalents as of December 31, 2023, were $248 million, with restricted cash at $326 million[199] - Accounts and contracts receivable, net, as of December 31, 2023, were $385 million, while vacation ownership notes receivable, net, were $2.343 billion[199] - Property and equipment, net, as of December 31, 2023, were valued at $1.260 billion, and goodwill was reported at $3.117 billion[199] - 67% of the company's corporate debt ($2.0 billion) has a fixed interest rate, while 33% ($975 million) is variable as of June 30, 2024[204] - A 100 basis point increase in the benchmark rate on variable-rate debt would result in an annual cash interest increase of $8 million[204] - Vacation ownership notes receivable (nonsecuritized) have an average interest rate of 12.0% and a total carrying value of $402 million[204] - Securitized vacation ownership notes receivable have an average interest rate of 13.4% and a total carrying value of $1.906 billion[204] - Securitized debt has an average interest rate of 4.8% and a total carrying value of ($2.124 billion)[204] - The Term Loan has an average interest rate of 7.6% and a total carrying value of ($800 million)[204] - The Revolving Corporate Credit Facility has an average interest rate of 7.4% and a total carrying value of ($175 million)[204] - The 2028 Notes have an average interest rate of 4.8% and a total carrying value of ($350 million)[204] - The 2029 Notes have an average interest rate of 4.5% and a total carrying value of ($500 million)[204] - The 2026 Convertible Notes have an average interest rate of 0.0% and a total carrying value of ($575 million)[204] Tax and Interest Rates - The effective tax rate for the three months ended June 30, 2024 was 22.0%, compared to 35.4% in the same period in 2023[179] - The effective tax rate for the six months ended June 30, 2024 was 35.2%, compared to 33.9% in the same period in 2023[180]