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Marriott Vacations Worldwide Reports First Quarter 2015 Financial Results

ORLANDO, Fla. – April 30, 2015 – Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported first quarter 2015 financial results and provided updated guidance for the full year 2015.

First quarter 2015 highlights:

First quarter 2015 net income was $34.1 million, or $1.03 diluted earnings per share, compared to net income of $19.3 million, or $0.54 diluted earnings per share, in the first quarter of 2014. Company development margin was 21.2 percent and North America development margin was 22.7 percent in the first quarter of 2015 compared to 18.5 percent and 20.7 percent, respectively, in the first quarter of 2014.

Non-GAAP financial measures such as adjusted EBITDA, adjusted net income, adjusted earnings per share and adjusted development margin are reconciled and adjustments are shown and described in further detail on pages A-1 through A-12 of the Financial Schedules that follow.

“I’m extremely pleased with how we started 2015, with first quarter year-over-year growth in tours, VPG and adjusted development margin, all contributing to $57.5 million of Adjusted EBITDA,” said Stephen P. Weisz, president and chief executive officer. “With a strong first quarter behind us, we are increasing our Adjusted EBITDA guidance range by $7 million to $222 million to $232 million.”

First Quarter 2015 Results

Company Results

Total company contract sales, excluding residential sales, were $170.0 million, $14.7 million higher than the first quarter of last year. Total company contract sales were $198.4 million, a $36.8 million, or 23 percent, increase from $161.6 million in the first quarter of 2014. The increase was driven by $30.5 million of higher contract sales in the company’s Asia Pacific segment, including $28.4 million of residential sales, and $9.5 million of higher contract sales in the company’s North America segment, partially offset by $3.2 million of lower contract sales in the company’s Europe segment.

Adjusted development margin was $33.9 million, a $4.4 million increase from the first quarter of 2014. Adjusted development margin percentage was 21.6 percent in the first quarter of 2015 compared to 19.8 percent in the first quarter of 2014. Development margin was $38.9 million, a $12.2 million increase from the first quarter of 2014. Development margin percentage was 21.2 percent in the first quarter of 2015 compared to 18.5 percent in the first quarter of 2014.

Rental revenues totaled $76.2 million, a $12.7 million increase from the first quarter of 2014, reflecting a 10 percent increase in transient keys and a 6 percent increase in transient rate. Rental revenues, net of expenses, were $16.0 million, a $9.3 million increase from the first quarter of 2014.

Resort management and other services revenues totaled $64.4 million, a $0.9 million increase from the first quarter of 2014. Resort management and other services revenues, net of expenses, were $22.0 million, a $3.4 million, or 18 percent, increase over the first quarter of 2014.

Financing revenues totaled $29.1 million, a $1.6 million decrease from the first quarter of 2014. Financing revenues, net of expenses and consumer financing interest expense, were $18.1 million, a $0.8 million decrease from the first quarter of 2014.

Adjusted EBITDA was $57.5 million in the first quarter of 2015, a $17.2 million, or 43 percent, increase from $40.3 million in the first quarter of 2014.

Segment Results

North America

VPG increased 4.7 percent to $3,640 in the first quarter of 2015 from $3,477 in the first quarter of 2014, driven mainly by improved closing efficiency and higher pricing, offset partially by fewer points purchased per contract. North America contract sales were $156.0 million in the first quarter of 2015, an increase of $9.5 million, or more than 6 percent, over the prior year period. Excluding the impact of residential sales in the first quarter of 2014, North America vacation ownership contract sales increased $15.8 million, or 11 percent, over the prior year period.

First quarter 2015 North America segment financial results were $97.7 million, an increase of $18.1 million from the first quarter of 2014. The increase was driven by $8.8 million of higher rental revenues net of expenses, $5.1 million of higher development margin, $3.5 million of higher resort management and other services net of expenses and $2.0 million from a charge in the prior year period in connection with the company’s interest in an equity method investment in a joint venture project in its North America segment, partially offset by $1.5 million of lower financing revenues.

Adjusted development margin was $34.4 million, a $4.6 million increase from the prior year quarter. Adjusted development margin percentage was 23.7 percent in the first quarter of 2015 compared to 22.0 percent in the first quarter of 2014. Development margin was $32.2 million, a $5.1 million increase from the first quarter of 2014. Development margin percentage was 22.7 percent in the first quarter of 2015 compared to 20.7 percent in the prior year quarter.

Asia Pacific

Total contract sales in the segment were $37.1 million, an increase of $30.5 million in the first quarter of 2015, reflecting $28.4 million of residential contract sales from the sale of all 18 units at its former Macau location. Segment financial results were $9.4 million, an $8.0 million increase from the first quarter of 2014, reflecting $7.7 million of higher development margin. Excluding the $28.4 million of residential sales, Asia Pacific contract sales were $8.7 million, $2.0 million higher than the first quarter of last year, and adjusted segment results were $3.5 million, a $2.0 million increase from the first quarter of 2014.

Europe

First quarter 2015 contract sales were $5.3 million, a decrease of $3.2 million from the first quarter of 2014. Segment financial results were breakeven, a $1.4 million decrease from the first quarter of 2014 due to lower development margin from lower contract sales.

Share Repurchase Program

During the first quarter of 2015, the company repurchased approximately $51 million of its common stock.

Balance Sheet and Liquidity

On March 27, 2015, cash and cash equivalents totaled $272.2 million. Since the beginning of the year, real estate inventory balances declined $48.3 million to $720.0 million, including $361.2 million of finished goods and $358.8 million of land and infrastructure. The company had $632.6 million in gross debt outstanding at the end of the first quarter of 2015, a decrease of $78.7 million from year-end 2014, consisting primarily of $629.2 million in gross non-recourse securitized notes. In addition, $40.0 million of gross mandatorily redeemable preferred stock of a subsidiary of the company was outstanding at the end of the first quarter of 2015.

As of March 27, 2015, the company had $197 million in available capacity under its revolving credit facility after taking into account outstanding letters of credit, and approximately $94 million of gross vacation ownership notes receivable eligible for securitization.

Outlook

The company is providing the following updated guidance for the full year 2015:

Current Guidance

Previous Guidance

Adjusted EBITDA

$222 million to $232 million

$215 million to $225 million

Adjusted fully diluted earnings per share

$3.29 to $3.48

$3.16 to $3.35

Adjusted net income

$108 million to $114 million

$106 million to $112 million

Company contract sales growth (excluding residential)

5 percent to 8 percent

4 percent to 7 percent

Adjusted company development margin

21 percent to 22 percent

21 percent to 22 percent

Adjusted free cash flow

$145 million to $170 million

$135 million to $160 million

Pages A-1 through A-12 of the Financial Schedules reconcile the non-GAAP financial measures set forth above to the following full year 2015 expected GAAP results: net income of $118 million to $124 million; fully diluted EPS of $3.61 to $3.79; company development margin of 21.1 percent to 22.1 percent; and net cash provided by operating activities of $135 million to $152 million.

First Quarter 2015 Earnings Conference Call

The company will hold a conference call at 10:00 a.m. EST today to discuss these results and the updated guidance for full year 2015. 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 www.marriottvacationsworldwide.com.

An audio replay of the conference call will be available for seven days and can be accessed at (877) 660-6853 or (201) 612-7415 for international callers. The conference ID for the recording is 13604885. The webcast will also be available on the company’s website.

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About Marriott Vacations Worldwide Corporation
Marriott Vacations Worldwide Corporation is a leading global pure-play vacation ownership company, offering a diverse portfolio of quality products, programs and management expertise with 58 resorts and approximately 415,000 Owners and Members. Its brands include Marriott Vacation Club, The Ritz-Carlton Destination Club and Grand Residences by Marriott. Since entering the industry in 1984 as part of Marriott International, Inc., the company earned its position as a leader and innovator in vacation ownership products. The company preserves high standards of excellence in serving its customers, investors and associates while maintaining a long-term relationship with Marriott International. 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 future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including volatility in the economy and the credit markets, supply and demand changes for vacation ownership and residential products, competitive conditions, the availability of capital to finance growth, and other matters referred to under the heading “Risk Factors” contained in the company’s most recent Annual Report on Form 10-K filed with the U.S Securities and Exchange Commission (the “SEC”) and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of April 30, 2015 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.

Financial Schedules Follow

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