Delaware | 001-35219 | 45-2598330 | ||
(State or other jurisdiction | (Commission | (IRS Employer | ||
of incorporation) | File Number) | Identification No.) |
6649 Westwood Blvd., Orlando, FL | 32821 |
(Address of principal executive offices) | (Zip Code) |
Emerging growth company | ☐ |
Exhibit Number | Description | |
Press release dated November 2, 2017, reporting financial results for the quarter ended September 30, 2017. |
MARRIOTT VACATIONS WORLDWIDE CORPORATION | ||
(Registrant) | ||
Date: November 2, 2017 | By: | /s/ John E. Geller, Jr. |
Name: | John E. Geller, Jr. | |
Title: | Executive Vice President and Chief Financial Officer |
• | Net income was $40.8 million, or $1.47 fully diluted earnings per share (“EPS”), compared to net income of $26.8 million, or $0.97 fully diluted EPS, in the third quarter of 2016. |
• | Adjusted net income was $39.0 million, compared to adjusted net income of $26.6 million in the third quarter of 2016, an increase of 47 percent. Adjusted fully diluted EPS was $1.41, compared to adjusted fully diluted EPS of $0.96 in the third quarter of 2016, an increase of 47 percent. |
• | The company estimates that the Hurricanes negatively impacted adjusted net income and adjusted fully diluted EPS by $1.1 million, and $0.04, respectively, in the third quarter. Excluding that impact, adjusted net income and adjusted fully diluted EPS would have totaled $40.1 million, and $1.45, respectively. |
• | Adjusted EBITDA totaled $74.0 million, an increase of $23.3 million, or 46 percent, year-over-year. |
• | The company estimates that the Hurricanes negatively impacted adjusted EBITDA by approximately $3.3 million in the third quarter. Excluding that impact, adjusted EBITDA would have totaled approximately $77.3 million in the third quarter, an increase of 53 percent. |
• | Total company vacation ownership contract sales were $198.5 million, an increase of $28.6 million, or 17 percent, compared to the prior year period. North America vacation ownership contract sales were $179.2 million, an increase of $28.3 million, or 19 percent, compared to the prior year period. |
• | Excluding the estimated impact of the change in the company’s financial reporting calendar, total company and North America vacation ownership contract sales would have increased 6 percent and 8 percent, respectively, compared to the prior year period. |
• | The company estimates that the Hurricanes negatively impacted contract sales by approximately $12 million in the third quarter. Excluding that impact, as well as the impact of the change in the financial reporting calendar, total company and North America vacation ownership contract sales would have grown by approximately 13 percent and 15 percent, respectively, over the prior year period. |
• | North America VPG totaled $3,482, a 3 percent increase from the third quarter of 2016. North America tours increased 18 percent year-over-year. |
• | Excluding the estimated impact of the change in the company’s financial reporting calendar, tours would have increased 7 percent compared to the prior year period. |
• | In addition, the company estimates that the Hurricanes negatively impacted tour growth by approximately 6.5 percentage points. Excluding that impact, as well as the impact of the change in the financial reporting calendar, tours would have increased 13 percent over the prior year period. |
• | During the third quarter of 2017, the company repurchased 695,885 shares of its common stock for $79 million. |
2017 | 2016 | ||
First Quarter | 91 days | 84 days | |
Second Quarter | 91 days | 84 days | |
Third Quarter | 92 days | 84 days | |
Fourth Quarter | 92 days | 112 days | |
Full Year | 366 days | 364 days |
Third Quarter | Fourth Quarter | Full Year 2017 | |||
Net income | $4.5 million | $3.8 million | $8.3 million | ||
Adjusted net income | $1.1 million | $2.0 million | $3.1 million | ||
Adjusted EBITDA | $3.3 million | $3.6 million | $6.9 million | ||
Contract sales | $11.9 million | $8.6 million | $20.5 million |
Net income | $146 million | to | $149 million |
Fully diluted EPS | $5.26 | to | $5.37 |
Net cash provided by operating activities | $120 million | to | $130 million |
Current Guidance | Previous Guidance | ||||||
Adjusted net income | $147 million | to | $150 million | $149 million | to | $155 million | |
Adjusted fully diluted EPS | $5.30 | to | $5.41 | $5.31 | to | $5.52 | |
Adjusted EBITDA | $278 million | to | $283 million | $282 million | to | $292 million | |
Adjusted free cash flow | $205 million | to | $225 million | $190 million | to | $210 million | |
Contract sales growth | 10 percent | to | 13 percent | 12 percent | to | 16 percent |
Consolidated Statements of Income | A-1 |
Adjusted Net Income, Adjusted Earnings Per Share - Diluted, EBITDA and Adjusted EBITDA | A-2 |
North America Segment Financial Results | A-3 |
Asia Pacific Segment Financial Results | A-4 |
Europe Segment Financial Results | A-5 |
Corporate and Other Financial Results | A-6 |
Consolidated Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) | A-7 |
North America Contract Sales to Sale of Vacation Ownership Products and Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) | A-8 |
2017 Outlook - Adjusted Net Income, Adjusted Earnings Per Share - Diluted, Adjusted EBITDA and Adjusted Free Cash Flow | A-9 |
Non-GAAP Financial Measures | A-10 |
Consolidated Balance Sheets | A-12 |
Consolidated Statements of Cash Flows | A-13 |
Hurricane Impacts | A-14 |
1 | Due to the change in the company’s financial reporting calendar beginning in 2017, the 2017 third quarter included the period from July 1, 2017 through September 30, 2017 (92 days) compared to the 2016 third quarter, which included the period from June 18, 2016 to September 9, 2016 (84 days), and the 2017 first three quarters included the period from December 31, 2016 through September 30, 2017 (274 days) compared to the 2016 first three quarters which included the period from January 2, 2016 to September 9, 2016 (252 days). Prior year results have not been restated for the change in fiscal calendar. |
NOTE: When presenting contract sales performance on a comparable basis, we adjusted the prior year period to include contract sales from the same calendar days as the current year period. |
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
REVENUES | |||||||||||||||
Sale of vacation ownership products | $ | 180,522 | $ | 131,012 | $ | 543,687 | $ | 415,831 | |||||||
Resort management and other services | 76,882 | 70,185 | 229,004 | 208,049 | |||||||||||
Financing | 34,685 | 29,066 | 99,326 | 86,944 | |||||||||||
Rental | 81,177 | 73,776 | 250,621 | 229,133 | |||||||||||
Cost reimbursements | 113,724 | 97,598 | 348,091 | 303,973 | |||||||||||
TOTAL REVENUES | 486,990 | 401,637 | 1,470,729 | 1,243,930 | |||||||||||
EXPENSES | |||||||||||||||
Cost of vacation ownership products | 42,826 | 34,779 | 131,589 | 104,149 | |||||||||||
Marketing and sales | 100,527 | 79,017 | 305,217 | 236,348 | |||||||||||
Resort management and other services | 44,696 | 39,825 | 130,349 | 123,695 | |||||||||||
Financing | 5,062 | 4,581 | 12,528 | 11,782 | |||||||||||
Rental | 71,048 | 60,970 | 211,643 | 191,658 | |||||||||||
General and administrative | 26,666 | 22,151 | 83,739 | 72,871 | |||||||||||
Litigation settlement | 2,033 | — | 2,216 | (303 | ) | ||||||||||
Consumer financing interest | 6,498 | 5,361 | 18,090 | 15,840 | |||||||||||
Royalty fee | 15,220 | 14,624 | 47,597 | 42,007 | |||||||||||
Cost reimbursements | 113,724 | 97,598 | 348,091 | 303,973 | |||||||||||
TOTAL EXPENSES | 428,300 | 358,906 | 1,291,059 | 1,102,020 | |||||||||||
Gains and other income, net | 6,977 | 454 | 6,752 | 11,129 | |||||||||||
Interest expense | (2,642 | ) | (2,262 | ) | (5,180 | ) | (6,331 | ) | |||||||
Other | 104 | (75 | ) | (365 | ) | (4,528 | ) | ||||||||
INCOME BEFORE INCOME TAXES | 63,129 | 40,848 | 180,877 | 142,180 | |||||||||||
Provision for income taxes | (22,367 | ) | (14,041 | ) | (62,139 | ) | (54,656 | ) | |||||||
NET INCOME | $ | 40,762 | $ | 26,807 | $ | 118,738 | $ | 87,524 | |||||||
Earnings per share - Basic | $ | 1.50 | $ | 0.99 | $ | 4.36 | $ | 3.10 | |||||||
Earnings per share - Diluted | $ | 1.47 | $ | 0.97 | $ | 4.26 | $ | 3.05 | |||||||
Basic Shares | 27,090 | 27,152 | 27,219 | 28,207 | |||||||||||
Diluted Shares | 27,713 | 27,680 | 27,858 | 28,718 | |||||||||||
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
Vacation ownership contract sales | $ | 198,460 | $ | 169,831 | $ | 602,186 | $ | 489,317 |
Quarter Ended | Year to Date Ended | |||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | |||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | |||||||||||||
Net income | $ | 40,762 | $ | 26,807 | $ | 118,738 | $ | 87,524 | ||||||||
Less certain items: | ||||||||||||||||
Acquisition costs | (56 | ) | 138 | 555 | 4,713 | |||||||||||
Variable compensation expense related to the impact of the Hurricanes | 3,673 | — | 3,673 | — | ||||||||||||
Operating results from the sold portion of the Surfers Paradise, Australia property | — | — | — | (275 | ) | |||||||||||
Litigation settlement | 2,033 | — | 2,216 | (303 | ) | |||||||||||
Gains and other income, net | (6,977 | ) | (454 | ) | (6,752 | ) | (11,129 | ) | ||||||||
Certain items before depreciation and provision for income taxes 1 | (1,327 | ) | (316 | ) | (308 | ) | (6,994 | ) | ||||||||
Depreciation on the sold portion of the Surfers Paradise, Australia property | — | — | — | 469 | ||||||||||||
Provision for income taxes on certain items | (459 | ) | 86 | (845 | ) | 2,568 | ||||||||||
Adjusted net income ** | $ | 38,976 | $ | 26,577 | $ | 117,585 | $ | 83,567 | ||||||||
Earnings per share - Diluted | $ | 1.47 | $ | 0.97 | $ | 4.26 | $ | 3.05 | ||||||||
Adjusted earnings per share - Diluted ** | $ | 1.41 | $ | 0.96 | $ | 4.22 | $ | 2.91 | ||||||||
Diluted Shares | 27,713 | 27,680 | 27,858 | 28,718 | ||||||||||||
EBITDA AND ADJUSTED EBITDA | ||||||||||||||||
Quarter Ended | Year to Date Ended | |||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | |||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | |||||||||||||
Net income | $ | 40,762 | $ | 26,807 | $ | 118,738 | $ | 87,524 | ||||||||
Interest expense 2 | 2,642 | 2,262 | 5,180 | 6,331 | ||||||||||||
Tax provision | 22,367 | 14,041 | 62,139 | 54,656 | ||||||||||||
Depreciation and amortization | 5,610 | 4,679 | 15,802 | 14,856 | ||||||||||||
EBITDA ** | 71,381 | 47,789 | 201,859 | 163,367 | ||||||||||||
Non-cash share-based compensation | 3,898 | 3,139 | 12,349 | 9,995 | ||||||||||||
Certain items before depreciation and provision for income taxes 1 | (1,327 | ) | (316 | ) | (308 | ) | (6,994 | ) | ||||||||
Adjusted EBITDA ** | $ | 73,952 | $ | 50,612 | $ | 213,900 | $ | 166,368 |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
1 | Please see pages A-10 and A-11 for additional information regarding these items. The certain items adjustments for the Adjusted EBITDA reconciliations exclude depreciation and the provision for income taxes on certain items included in the Adjusted Net Income reconciliations. |
2 | Interest expense excludes consumer financing interest expense. |
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
REVENUES | |||||||||||||||
Sale of vacation ownership products | $ | 163,454 | $ | 116,184 | $ | 495,958 | $ | 373,341 | |||||||
Resort management and other services | 68,236 | 62,956 | 206,830 | 182,665 | |||||||||||
Financing | 32,854 | 27,438 | 93,812 | 81,699 | |||||||||||
Rental | 69,458 | 63,387 | 224,588 | 201,524 | |||||||||||
Cost reimbursements | 103,799 | 88,834 | 320,242 | 278,190 | |||||||||||
TOTAL REVENUES | 437,801 | 358,799 | 1,341,430 | 1,117,419 | |||||||||||
EXPENSES | |||||||||||||||
Cost of vacation ownership products | 37,404 | 30,134 | 116,715 | 89,876 | |||||||||||
Marketing and sales | 87,308 | 67,662 | 266,962 | 202,888 | |||||||||||
Resort management and other services | 37,453 | 33,849 | 111,664 | 101,322 | |||||||||||
Rental | 62,236 | 53,131 | 187,141 | 164,680 | |||||||||||
Litigation settlement | 2,033 | — | 2,033 | (303 | ) | ||||||||||
Royalty fee | 1,956 | 2,813 | 7,684 | 6,753 | |||||||||||
Cost reimbursements | 103,799 | 88,834 | 320,242 | 278,190 | |||||||||||
TOTAL EXPENSES | 332,189 | 276,423 | 1,012,441 | 843,406 | |||||||||||
(Losses) gains and other (expense) income, net | (1,754 | ) | (27 | ) | (1,950 | ) | 12,297 | ||||||||
Other | 46 | (55 | ) | 171 | (4,068 | ) | |||||||||
SEGMENT FINANCIAL RESULTS | $ | 103,904 | $ | 82,294 | $ | 327,210 | $ | 282,242 | |||||||
SEGMENT FINANCIAL RESULTS | $ | 103,904 | $ | 82,294 | $ | 327,210 | $ | 282,242 | |||||||
Less certain items: | |||||||||||||||
Acquisition costs | 1 | 123 | 28 | 4,260 | |||||||||||
Variable compensation expense related to the impact of the Hurricanes | 1,754 | — | 1,754 | — | |||||||||||
Litigation settlement | 2,033 | — | 2,033 | (303 | ) | ||||||||||
Losses (gains) and other expense (income), net | 1,754 | 27 | 1,950 | (12,297 | ) | ||||||||||
Certain items | 5,542 | 150 | 5,765 | (8,340 | ) | ||||||||||
ADJUSTED SEGMENT FINANCIAL RESULTS ** | $ | 109,446 | $ | 82,444 | $ | 332,975 | $ | 273,902 | |||||||
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
Vacation ownership contract sales | $ | 179,227 | $ | 150,964 | $ | 547,546 | $ | 436,214 |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses. Further we have reclassified certain management and other services revenues between the North America and Asia Pacific segments. |
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
REVENUES | |||||||||||||||
Sale of vacation ownership products | $ | 11,362 | $ | 10,010 | $ | 32,378 | $ | 26,645 | |||||||
Resort management and other services | 1,022 | 816 | 3,055 | 8,594 | |||||||||||
Financing | 1,122 | 918 | 3,350 | 2,906 | |||||||||||
Rental | 2,733 | 2,324 | 9,115 | 12,773 | |||||||||||
Cost reimbursements | 713 | 692 | 2,584 | 2,250 | |||||||||||
TOTAL REVENUES | 16,952 | 14,760 | 50,482 | 53,168 | |||||||||||
EXPENSES | |||||||||||||||
Cost of vacation ownership products | 2,687 | 1,712 | 6,642 | 5,018 | |||||||||||
Marketing and sales | 8,754 | 7,166 | 25,672 | 20,072 | |||||||||||
Resort management and other services | 1,144 | 900 | 3,297 | 8,546 | |||||||||||
Rental | 3,902 | 3,330 | 12,136 | 15,884 | |||||||||||
Royalty fee | 225 | 239 | 674 | 564 | |||||||||||
Cost reimbursements | 713 | 692 | 2,584 | 2,250 | |||||||||||
TOTAL EXPENSES | 17,425 | 14,039 | 51,005 | 52,334 | |||||||||||
Gains (losses) and other income (expense), net | — | 490 | (20 | ) | (1,008 | ) | |||||||||
Other | 1 | (20 | ) | (9 | ) | (249 | ) | ||||||||
SEGMENT FINANCIAL RESULTS | $ | (472 | ) | $ | 1,191 | $ | (552 | ) | $ | (423 | ) | ||||
SEGMENT FINANCIAL RESULTS | $ | (472 | ) | $ | 1,191 | $ | (552 | ) | $ | (423 | ) | ||||
Less certain items: | |||||||||||||||
Acquisition costs | — | 15 | — | 242 | |||||||||||
Operating results from the sold portion of the Surfers Paradise, Australia property | — | — | — | 194 | |||||||||||
(Gains) losses and other (income) expense, net | — | (490 | ) | 20 | 1,008 | ||||||||||
Certain items | — | (475 | ) | 20 | 1,444 | ||||||||||
ADJUSTED SEGMENT FINANCIAL RESULTS ** | $ | (472 | ) | $ | 716 | $ | (532 | ) | $ | 1,021 | |||||
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
Vacation ownership contract sales | $ | 12,569 | $ | 11,169 | $ | 36,131 | $ | 31,049 |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues and Resort management and other services expenses. Further we have reclassified certain management and other services revenues between the North America and Asia Pacific segments. |
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
REVENUES | |||||||||||||||
Sale of vacation ownership products | $ | 5,706 | $ | 4,818 | $ | 15,351 | $ | 15,845 | |||||||
Resort management and other services | 7,624 | 6,413 | 19,119 | 16,790 | |||||||||||
Financing | 709 | 710 | 2,164 | 2,339 | |||||||||||
Rental | 8,986 | 8,065 | 16,918 | 14,836 | |||||||||||
Cost reimbursements | 9,212 | 8,072 | 25,265 | 23,533 | |||||||||||
TOTAL REVENUES | 32,237 | 28,078 | 78,817 | 73,343 | |||||||||||
EXPENSES | |||||||||||||||
Cost of vacation ownership products | 715 | 1,599 | 2,081 | 4,158 | |||||||||||
Marketing and sales | 4,465 | 4,189 | 12,583 | 13,388 | |||||||||||
Resort management and other services | 6,099 | 5,076 | 15,388 | 13,827 | |||||||||||
Rental | 4,910 | 4,509 | 12,366 | 11,094 | |||||||||||
Royalty fee | 70 | 97 | 195 | 264 | |||||||||||
Cost reimbursements | 9,212 | 8,072 | 25,265 | 23,533 | |||||||||||
TOTAL EXPENSES | 25,471 | 23,542 | 67,878 | 66,264 | |||||||||||
SEGMENT FINANCIAL RESULTS | $ | 6,766 | $ | 4,536 | $ | 10,939 | $ | 7,079 | |||||||
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
Vacation ownership contract sales | $ | 6,664 | $ | 7,698 | $ | 18,509 | $ | 22,054 |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues and Resort management and other services expenses. |
Quarter Ended | Year to Date Ended | ||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | ||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | ||||||||||||
EXPENSES | |||||||||||||||
Cost of vacation ownership products | $ | 2,020 | $ | 1,334 | $ | 6,151 | $ | 5,097 | |||||||
Financing | 5,062 | 4,581 | 12,528 | 11,782 | |||||||||||
General and administrative | 26,666 | 22,151 | 83,739 | 72,871 | |||||||||||
Litigation settlement | — | — | 183 | — | |||||||||||
Consumer financing interest | 6,498 | 5,361 | 18,090 | 15,840 | |||||||||||
Royalty fee | 12,969 | 11,475 | 39,044 | 34,426 | |||||||||||
TOTAL EXPENSES | 53,215 | 44,902 | 159,735 | 140,016 | |||||||||||
Gains (losses) and other income (expense), net | 8,731 | (9 | ) | 8,722 | (160 | ) | |||||||||
Interest expense | (2,642 | ) | (2,262 | ) | (5,180 | ) | (6,331 | ) | |||||||
Other | 57 | — | (527 | ) | (211 | ) | |||||||||
TOTAL FINANCIAL RESULTS | $ | (47,069 | ) | $ | (47,173 | ) | $ | (156,720 | ) | $ | (146,718 | ) | |||
TOTAL FINANCIAL RESULTS | $ | (47,069 | ) | $ | (47,173 | ) | $ | (156,720 | ) | $ | (146,718 | ) | |||
Less certain items: | |||||||||||||||
Acquisition costs | (57 | ) | — | 527 | 211 | ||||||||||
Variable compensation expense related to the impact of the Hurricanes | 1,919 | — | 1,919 | — | |||||||||||
Litigation settlement | — | — | 183 | — | |||||||||||
(Gains) losses and other (income) expense, net | (8,731 | ) | 9 | (8,722 | ) | 160 | |||||||||
Certain items | (6,869 | ) | 9 | (6,093 | ) | 371 | |||||||||
ADJUSTED FINANCIAL RESULTS ** | $ | (53,938 | ) | $ | (47,164 | ) | $ | (162,813 | ) | $ | (146,347 | ) |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
NOTE: We have reclassified certain prior year amounts to conform to our current period presentation. In addition, we reclassified certain revenues and expenses for the 2016 third quarter and 2016 first three quarters to correct immaterial presentation errors within the following lines: Resort management and other services revenues, Resort management and other services expenses and General and administrative expenses. |
Quarter Ended | Year to Date Ended | |||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | |||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | |||||||||||||
Vacation ownership contract sales | $ | 198,460 | $ | 169,831 | $ | 602,186 | $ | 489,317 | ||||||||
Revenue recognition adjustments: | ||||||||||||||||
Reportability 1 | 1,135 | (18,994 | ) | 1,150 | (17,029 | ) | ||||||||||
Sales reserve 2 | (11,740 | ) | (13,872 | ) | (38,597 | ) | (33,447 | ) | ||||||||
Other 3 | (7,333 | ) | (5,953 | ) | (21,052 | ) | (23,010 | ) | ||||||||
Sale of vacation ownership products | $ | 180,522 | $ | 131,012 | $ | 543,687 | $ | 415,831 |
1 | Adjustment for lack of required downpayment or contract sales in rescission period. |
2 | Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve. |
3 | Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue. |
Quarter Ended | Year to Date Ended | |||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | |||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | |||||||||||||
Sale of vacation ownership products | $ | 180,522 | $ | 131,012 | $ | 543,687 | $ | 415,831 | ||||||||
Less: | ||||||||||||||||
Cost of vacation ownership products | 42,826 | 34,779 | 131,589 | 104,149 | ||||||||||||
Marketing and sales | 100,527 | 79,017 | 305,217 | 236,348 | ||||||||||||
Development margin | 37,169 | 17,216 | 106,881 | 75,334 | ||||||||||||
Revenue recognition reportability adjustment | (718 | ) | 12,369 | (690 | ) | 11,043 | ||||||||||
Variable compensation expense related to the impact of the Hurricanes | 1,754 | — | 1,754 | — | ||||||||||||
Adjusted development margin ** | $ | 38,205 | $ | 29,585 | $ | 107,945 | $ | 86,377 | ||||||||
Development margin percentage 1 | 20.6 | % | 13.1 | % | 19.7 | % | 18.1 | % | ||||||||
Adjusted development margin percentage | 21.3 | % | 19.7 | % | 19.9 | % | 20.0 | % |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
1 | Development margin percentage represents Development margin divided by Sale of vacation ownership products. |
Quarter Ended | Year to Date Ended | |||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | |||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | |||||||||||||
Vacation ownership contract sales | $ | 179,227 | $ | 150,964 | $ | 547,546 | $ | 436,214 | ||||||||
Revenue recognition adjustments: | ||||||||||||||||
Reportability 1 | 1,446 | (16,853 | ) | 1,887 | (12,982 | ) | ||||||||||
Sales reserve 2 | (10,277 | ) | (11,923 | ) | (33,090 | ) | (26,960 | ) | ||||||||
Other 3 | (6,942 | ) | (6,004 | ) | (20,385 | ) | (22,931 | ) | ||||||||
Sale of vacation ownership products | $ | 163,454 | $ | 116,184 | $ | 495,958 | $ | 373,341 |
1 | Adjustment for lack of required downpayment or contract sales in rescission period. |
2 | Represents allowance for bad debts for our financed vacation ownership product sales, which we also refer to as sales reserve. |
3 | Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue. |
Quarter Ended | Year to Date Ended | |||||||||||||||
September 30, 2017 | September 9, 2016 | September 30, 2017 | September 9, 2016 | |||||||||||||
(92 days) | (84 days) | (274 days) | (252 days) | |||||||||||||
Sale of vacation ownership products | $ | 163,454 | $ | 116,184 | $ | 495,958 | $ | 373,341 | ||||||||
Less: | ||||||||||||||||
Cost of vacation ownership products | 37,404 | 30,134 | 116,715 | 89,876 | ||||||||||||
Marketing and sales | 87,308 | 67,662 | 266,962 | 202,888 | ||||||||||||
Development margin | 38,742 | 18,388 | 112,281 | 80,577 | ||||||||||||
Revenue recognition reportability adjustment | (971 | ) | 10,836 | (1,260 | ) | 8,363 | ||||||||||
Variable compensation expense related to the impact of the Hurricanes | 1,754 | — | 1,754 | — | ||||||||||||
Adjusted development margin ** | $ | 39,525 | $ | 29,224 | $ | 112,775 | $ | 88,940 | ||||||||
Development margin percentage 1 | 23.7 | % | 15.8 | % | 22.6 | % | 21.6 | % | ||||||||
Adjusted development margin percentage | 24.4 | % | 22.0 | % | 22.8 | % | 23.0 | % |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
1 | Development margin percentage represents Development margin divided by Sale of vacation ownership products. |
Fiscal Year 2017 (low) | Fiscal Year 2017 (high) | |||||||
Net income | $ | 146 | $ | 149 | ||||
Adjustments to reconcile Net income to Adjusted net income | ||||||||
Certain items 1 | 13 | 13 | ||||||
Business interruption insurance proceeds 2 | (9 | ) | (9 | ) | ||||
Provision for income taxes on adjustments to net income | (3 | ) | (3 | ) | ||||
Adjusted net income ** | $ | 147 | $ | 150 | ||||
Earnings per share - Diluted 3 | $ | 5.26 | $ | 5.37 | ||||
Adjusted earnings per share - Diluted **, 3 | $ | 5.30 | $ | 5.41 | ||||
Diluted shares 3 | 27.7 | 27.7 |
1 | Certain items adjustment includes $7 million of variable compensation expense related to the impact of the Hurricanes, $2 million of Hurricane related insurance deductibles, $2 million of litigation settlements and $2 million of acquisition costs. |
2 | Includes net business interruption insurance proceeds associated with Hurricane Matthew. |
3 | Earnings per share - Diluted, Adjusted earnings per share - Diluted, and Diluted shares outlook includes the impact of share repurchase activity only through November 2, 2017. |
Fiscal Year 2017 (low) | Fiscal Year 2017 (high) | |||||||
Net income | $ | 146 | $ | 149 | ||||
Interest expense 1 | 10 | 10 | ||||||
Tax provision | 80 | 82 | ||||||
Depreciation and amortization | 22 | 22 | ||||||
EBITDA ** | 258 | 263 | ||||||
Non-cash share-based compensation | 16 | 16 | ||||||
Certain items 2 and business interruption insurance proceeds 3 | 4 | 4 | ||||||
Adjusted EBITDA ** | $ | 278 | $ | 283 |
1 | Interest expense excludes consumer financing interest expense. |
2 | Certain items adjustment includes $7 million of variable compensation expense related to the impact of the Hurricanes, $2 million of Hurricane related insurance deductibles, $2 million of litigation settlements and $2 million of acquisition costs. |
3 | Includes net business interruption insurance proceeds associated with Hurricane Matthew. |
Fiscal Year 2017 (low) | Fiscal Year 2017 (high) | |||||||
Net cash provided by operating activities | $ | 120 | $ | 130 | ||||
Capital expenditures for property and equipment (excluding inventory): | ||||||||
New sales centers 1 | (8 | ) | (7 | ) | ||||
Other | (22 | ) | (21 | ) | ||||
Borrowings from securitization transactions | 400 | 400 | ||||||
Repayment of debt related to securitizations | (302 | ) | (297 | ) | ||||
Free cash flow ** | 188 | 205 | ||||||
Adjustments: | ||||||||
Net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility 2 | 27 | 30 | ||||||
Increase in restricted cash | (10 | ) | (10 | ) | ||||
Adjusted free cash flow ** | $ | 205 | $ | 225 |
1 | Represents the incremental investment in new sales centers. |
2 | Represents the net change in borrowings available from the securitization of eligible vacation ownership notes receivable through the warehouse credit facility between the 2016 and 2017 year ends. |
** | Denotes non-GAAP financial measures. Please see pages A-10 and A-11 for additional information about our reasons for providing these alternative financial measures and limitations on their use. |
(Unaudited) September 30, 2017 | December 30, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 440,074 | $ | 147,102 | |||
Restricted cash (including $34,413 and $27,525 from VIEs, respectively) | 61,701 | 66,000 | |||||
Accounts and contracts receivable, net (including $5,702 and $4,865 from VIEs, respectively) | 136,107 | 161,733 | |||||
Vacation ownership notes receivable, net (including $875,237 and $717,543 from VIEs, respectively) | 1,076,402 | 972,311 | |||||
Inventory | 735,072 | 712,536 | |||||
Property and equipment | 253,738 | 202,802 | |||||
Other (including $13,153 and $0 from VIEs, respectively) | 119,942 | 128,935 | |||||
TOTAL ASSETS | $ | 2,823,036 | $ | 2,391,419 | |||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 76,766 | $ | 124,439 | |||
Advance deposits | 60,247 | 55,542 | |||||
Accrued liabilities (including $739 and $584 from VIEs, respectively) | 128,236 | 147,469 | |||||
Deferred revenue | 103,376 | 95,495 | |||||
Payroll and benefits liability | 97,080 | 95,516 | |||||
Deferred compensation liability | 72,803 | 62,874 | |||||
Debt, net (including $906,701 and $738,362 from VIEs, respectively) | 1,153,222 | 737,224 | |||||
Other | 12,789 | 15,873 | |||||
Deferred taxes | 169,295 | 149,168 | |||||
TOTAL LIABILITIES | 1,873,814 | 1,483,600 | |||||
Preferred stock — $0.01 par value; 2,000,000 shares authorized; none issued or outstanding | — | — | |||||
Common stock — $0.01 par value; 100,000,000 shares authorized; 36,857,186 and 36,633,868 shares issued, respectively | 369 | 366 | |||||
Treasury stock — at cost; 10,363,139 and 9,643,562 shares, respectively | (689,134 | ) | (606,631 | ) | |||
Additional paid-in capital | 1,184,635 | 1,162,283 | |||||
Accumulated other comprehensive income | 17,156 | 5,460 | |||||
Retained earnings | 436,196 | 346,341 | |||||
TOTAL EQUITY | 949,222 | 907,819 | |||||
TOTAL LIABILITIES AND EQUITY | $ | 2,823,036 | $ | 2,391,419 |
Year to Date Ended | |||||||
September 30, 2017 | September 9, 2016 | ||||||
(274 days) | (252 days) | ||||||
OPERATING ACTIVITIES | |||||||
Net income | $ | 118,738 | $ | 87,524 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation | 15,802 | 14,856 | |||||
Amortization of debt discount and issuance costs | 5,783 | 3,784 | |||||
Provision for loan losses | 38,577 | 31,817 | |||||
Share-based compensation | 12,349 | 9,995 | |||||
Loss (gain) on disposal of property and equipment, net | 1,683 | (11,129 | ) | ||||
Deferred income taxes | 20,769 | 21,823 | |||||
Net change in assets and liabilities: | |||||||
Accounts and contracts receivable | 25,094 | (2,824 | ) | ||||
Notes receivable originations | (345,663 | ) | (218,190 | ) | |||
Notes receivable collections | 203,840 | 177,451 | |||||
Inventory | 27,112 | (6,118 | ) | ||||
Purchase of vacation ownership units for future transfer to inventory | (33,594 | ) | — | ||||
Other assets | 23,110 | 38,103 | |||||
Accounts payable, advance deposits and accrued liabilities | (64,994 | ) | (73,935 | ) | |||
Deferred revenue | 7,121 | 26,832 | |||||
Payroll and benefit liabilities | 1,241 | (20,898 | ) | ||||
Deferred compensation liability | 9,928 | 8,846 | |||||
Other liabilities | (638 | ) | 1,190 | ||||
Other, net | 4,529 | 1,758 | |||||
Net cash provided by operating activities | 70,787 | 90,885 | |||||
INVESTING ACTIVITIES | |||||||
Capital expenditures for property and equipment (excluding inventory) | (21,167 | ) | (22,445 | ) | |||
Purchase of company owned life insurance | (12,100 | ) | — | ||||
Dispositions, net | 17 | 68,525 | |||||
Net cash (used in) provided by investing activities | (33,250 | ) | 46,080 | ||||
FINANCING ACTIVITIES | |||||||
Borrowings from securitization transactions | 400,260 | 376,622 | |||||
Repayment of debt related to securitization transactions | (231,921 | ) | (254,510 | ) | |||
Borrowings from Revolving Corporate Credit Facility | 87,500 | 85,000 | |||||
Repayment of Revolving Corporate Credit Facility | (87,500 | ) | (85,000 | ) | |||
Proceeds from issuance of Convertible Notes | 230,000 | — | |||||
Purchase of Convertible Note Hedges | (33,235 | ) | — | ||||
Proceeds from issuance of Warrants | 20,332 | — | |||||
Debt issuance costs | (14,459 | ) | (4,065 | ) | |||
Repurchase of common stock | (83,067 | ) | (163,359 | ) | |||
Accelerated stock repurchase forward contract | — | (14,470 | ) | ||||
Payment of dividends | (28,590 | ) | (26,067 | ) | |||
Payment of withholding taxes on vesting of restricted stock units | (10,713 | ) | (3,972 | ) | |||
Other, net | (502 | ) | 194 | ||||
Net cash provided by (used in) financing activities | 248,105 | (89,627 | ) | ||||
Effect of changes in exchange rates on cash, cash equivalents and restricted cash | 3,031 | (3,247 | ) | ||||
Increase in cash, cash equivalents, and restricted cash | 288,673 | 44,091 | |||||
Cash, cash equivalents and restricted cash, beginning of period | 213,102 | 248,512 | |||||
Cash, cash equivalents and restricted cash, end of period | $ | 501,775 | $ | 292,603 |
HURRICANE IMPACT ON ADJUSTED NET INCOME AND ADJUSTED EARNINGS PER SHARE - DILUTED | ||||||||
Quarter and Year to Date Ended September 30, 2017 | Full Year Outlook 2017 | |||||||
Vacation ownership contract sales | $ | 11,900 | $ | 20,500 | ||||
REVENUES | ||||||||
Sale of vacation ownership products | $ | 11,200 | $ | 19,300 | ||||
Resort management and other services | 900 | 2,200 | ||||||
Rental | 1,800 | 4,000 | ||||||
TOTAL REVENUES | 13,900 | 25,500 | ||||||
EXPENSES | ||||||||
Cost of vacation ownership products | 2,600 | 4,500 | ||||||
Marketing and sales | 3,500 | 5,900 | ||||||
Resort management and other services | 200 | 500 | ||||||
Rental | 400 | 800 | ||||||
Royalty fee | 200 | 300 | ||||||
Variable compensation expense related to the impact of the Hurricanes | 3,700 | 6,600 | ||||||
TOTAL EXPENSES | 10,600 | 18,600 | ||||||
IMPACT BEFORE INCOME TAXES | 3,300 | 6,900 | ||||||
Provision for income taxes 1 | (2,200 | ) | (3,800 | ) | ||||
Hurricane impact on adjusted net income | $ | 1,100 | $ | 3,100 | ||||
Hurricane impact on Adjusted Earnings per share - Diluted | $ | 0.04 | $ | 0.11 | ||||
Diluted shares | 27,713 | 27,741 | ||||||
HURRICANE IMPACT ON NET INCOME, EBITDA AND ADJUSTED EBITDA | ||||||||
Quarter and Year to Date Ended September 30, 2017 | Full Year Outlook 2017 | |||||||
Adjusted net income | $ | 1,100 | $ | 3,100 | ||||
Add certain items: | ||||||||
Variable compensation expense related to the impact of the Hurricanes | 3,700 | 6,600 | ||||||
Hurricane related insurance deductibles | 1,700 | 1,700 | ||||||
Certain items before provision for income taxes | 5,400 | 8,300 | ||||||
Provision for income taxes on certain items | (2,000 | ) | (3,100 | ) | ||||
Net income | 4,500 | 8,300 | ||||||
Interest expense | — | — | ||||||
Tax provision 1 | 4,200 | 6,900 | ||||||
Depreciation and amortization | — | — | ||||||
EBITDA | 8,700 | 15,200 | ||||||
Certain items | (5,400 | ) | (8,300 | ) | ||||
Adjusted EBITDA | $ | 3,300 | $ | 6,900 |
1 | Includes employee disaster relief credits ($1 million and $1.2 million for the third quarter and full year, respectively). |