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Marriott Vacations Worldwide(VAC) - 2024 Q4 - Earnings Call Transcript
VACMarriott Vacations Worldwide(VAC)2025-02-28 00:53
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Financial Data and Key Metrics Changes - The company reported a 7% year-over-year increase in contract sales for Q4 2024, with first-time buyer sales growing by 9% [22][39] - Adjusted EBITDA for the total company decreased by 1% to 185million,whileadjustedEBITDAintheVacationOwnershipsegmentwas185 million, while adjusted EBITDA in the Vacation Ownership segment was 221 million with a margin of 27% [26][27] - The company ended the year with leverage of approximately four times, higher than the long-term goal of three times, but still manageable [28] Business Line Data and Key Metrics Changes - In the Vacation Ownership segment, rental occupancy increased by 300 basis points, and profit increased by 20% compared to the previous year [26] - The Exchange and Third-Party Management segment saw adjusted EBITDA decline by 9millionyear−over−year,primarilyduetolowerprofitatAquaAstonandreducedtransactionsatInterval[27]MarketDataandKeyMetricsChanges−System−wideresortoccupancyreached909 million year-over-year, primarily due to lower profit at Aqua Aston and reduced transactions at Interval [27] Market Data and Key Metrics Changes - System-wide resort occupancy reached 90%, with Hawaii occupancy at 95% [8] - Research indicates that 80% of American adults plan to take a vacation this year, with international travelers to the U.S. expected to increase, particularly from the Asia Pacific region [14] Company Strategy and Development Direction - The company is focused on business modernization to enhance operational efficiencies and accelerate revenue growth, expecting to generate an additional 150 million to 200millioninannualizedadjustedEBITDAbytheendof2026[17][35]−Newdevelopmentsincludea168−unitMarriottVacationClubinDowntownNashvilleandexpansionplansinThailandandBali[12][10]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementnotedthatconsumersareprioritizingtravelandexperiences,whichbodeswellforthecompany′sleisure−focusedbusinessmodel[7][40]−Thecompanyanticipatescontractsalesgrowthintherangeof2200 million in annualized adjusted EBITDA by the end of 2026 [17][35] - New developments include a 168-unit Marriott Vacation Club in Downtown Nashville and expansion plans in Thailand and Bali [12][10] Management's Comments on Operating Environment and Future Outlook - Management noted that consumers are prioritizing travel and experiences, which bodes well for the company's leisure-focused business model [7][40] - The company anticipates contract sales growth in the range of 2% to 6% for the upcoming year, with a focus on enhancing customer interactions through technology [29][36] Other Important Information - The company plans to spend 90 million to 95milliononreacquiredinventorythisyear,whichisbelowreplacementcost[28]−Thecompanyhasover95 million on reacquired inventory this year, which is below replacement cost [28] - The company has over 900 million in liquidity and no corporate debt maturities until early 2026 [28] Q&A Session Summary Question: Is the trend of new owner mix expected to continue in 2025? - Management confirmed the goal is to continue growing first-time buyers, which contributed to contract sales growth in Q4 [45] Question: Does the 90millionto90 million to 95 million of inventory repurchase correlate with the increased reserve taken last year? - Management explained that the repurchase relates to owners not using their vacations as much and maintenance fee defaults [48] Question: Can you clarify the headwinds for 2025 EBITDA guidance? - Management indicated a 15millionto15 million to 20 million increase in variable compensation and a $10 million hard comp from rental benefits in 2024 [60][62] Question: How did the modernization initiatives come about? - Management stated that the modernization effort was driven by the need to accelerate growth and improve efficiencies, focusing on technology and process improvements [72][75]