Marriott Vacations Worldwide(US:VAC)2022-05-06 15:13Financial Data and Key Metrics Changes - Adjusted EBITDA for Q1 2022 totaled $188 million, representing a 13% increase compared to Q1 2019, with a margin improvement of over 300 basis points to nearly 25% [34] - Contract sales reached $394 million, a 75% increase year-over-year, and exceeded pre-pandemic levels [12][25] - Total occupancy levels were 88%, consistent with pre-COVID-19 results, despite some recovery lag in urban and international markets [13] Business Line Data and Key Metrics Changes - Vacation ownership business saw significant year-over-year improvement, with contract sales for North America over 7% higher than Q1 2019, and VPGs reaching $4,706, up 9% sequentially [25][30] - Development profit increased to $68 million, with an adjusted development profit margin expanding by 780 basis points to 28.3% [27] - Rental profit remained stable, with domestic occupancies averaging 90%, but still has room for improvement due to reduced rental inventory availability [28] Market Data and Key Metrics Changes - 61% of Americans indicated that travel will be a high budget priority over the next three months, reflecting strong leisure demand [10] - International travel to the U.S. is forecasted to be significantly higher in 2022 compared to 2021, indicating a recovery in international travel [11] Company Strategy and Development Direction - The company is focused on integrating the Welk and Hyatt vacation ownership businesses, with the introduction of the Hyatt Vacation Club and rebranding of Welk's program [15][16] - A new combined product offering at Marriott, Westin, and Sheraton sales centers is expected to launch later in the summer, enhancing flexibility for owners [14] - The company aims to increase the percentage of first-time buyers to 40%-45%, which is seen as optimal for long-term growth [63][64] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the ongoing uncertainties in the world, including geopolitical issues and inflationary pressures, but expressed confidence in the demand for leisure travel [8][9] - The company is optimistic about the remainder of the year, expecting to be closer to the upper end of their ranges for contract sales and adjusted EBITDA [40] Other Important Information - The company closed the sale of its VRI Americas business for approximately $60 million, which is not expected to impact guidance for the year [19][21] - The company ended Q1 2022 with $1.2 billion in liquidity, including $354 million in cash [36] Q&A Session Summary Question: Tracking of prepaid packages for the rest of the year - Management indicated that for the first half of the year, prepaid packages are tracking 9% over 2019, and for the second half, 14% over 2019, averaging 11% overall [46] Question: Unchanged EBITDA guidance despite strong Q1 performance - Management acknowledged the strong Q1 but maintained a conservative full-year guidance due to uncertainties in the macro environment [48][51] Question: Inventory cost benefits and future expectations - Management expects lower inventory product cost levels to continue for the next few years due to ongoing repurchase activity [56] Question: First-time buyer mix and strategies to increase it - Management aims to increase first-time buyers to 40%-45% by opening new source channels and selectively turning back on linkage locations [63][66] Question: Challenges in attracting younger sales staff - Management noted challenges in recruiting marketing personnel but reported being well-staffed on the sales side, with ongoing efforts to improve recruitment [70][71]