Marriott Vacations Worldwide ("MVW") Reports First Quarter 2021 Financial Results

MARRIOTT VACATIONS WORLDWIDE CORPORATION

FINANCIAL SCHEDULES

QUARTER 1, 2021

TABLE OF CONTENTS

Summary Financial Information and Adjusted EBITDA by Segment

A-1

Consolidated Statements of Income

A-2

Revenues and Profit by Segment

A-3

Adjusted Net Income Attributable to Common Shareholders and Adjusted Earnings Per Share - Diluted

A-5

Adjusted EBITDA

A-6

Consolidated Contract Sales to Adjusted Development Profit

A-7

Vacation Ownership Segment Adjusted EBITDA

A-8

Exchange & Third-Party Management Segment Adjusted EBITDA

A-9

Consolidated Balance Sheets

A-10

Consolidated Statements of Cash Flows

A-11

Quarterly Operating Metrics

A-12

Non-GAAP Financial Measures

A-13

A-1

MARRIOTT VACATIONS WORLDWIDE CORPORATION

SUMMARY FINANCIAL INFORMATION

(In millions, except VPG, tours, total active members, average revenue per member and per share amounts)

(Unaudited)

Three Months Ended

Change %

March 31, 2021

March 31, 2020

Key Measures

Total consolidated contract sales

$

226

$

306

(26%)

VPG

$

4,644

$

3,680

26%

Tours

45,871

79,131

(42%)

Total active members (000's)⁽¹⁾

1,479

1,636

(10%)

Average revenue per member⁽¹⁾

$

47.13

$

41.37

14%

GAAP Measures

Revenues

$

759

$

1,010

(25%)

Loss before income taxes and noncontrolling interests

$

(36)

$

(163)

78%

Net loss attributable to common shareholders

$

(28)

$

(106)

73%

Loss per share - diluted

$

(0.68)

$

(2.56)

(73%)

Non-GAAP Measures **

Adjusted EBITDA

$

69

$

138

(50%)

Adjusted pretax (loss) income

$

(23)

$

83

(129%)

Adjusted net (loss) income attributable to common shareholders

$

(20)

$

89

(123%)

Adjusted (loss) earnings per share - diluted

$

(0.49)

$

2.15

(123%)

⁽¹⁾ Includes members at the end of each period for the Interval International exchange network only.

ADJUSTED EBITDA BY SEGMENT

Three Months Ended

March 31, 2021

March 31, 2020

Vacation Ownership

$

68

$

147

Exchange & Third-Party Management

41

41

Segment adjusted EBITDA**

109

188

General and administrative

(39)

(51)

Consolidated property owners' associations

(1)

1

Adjusted EBITDA**

$

69

$

138

A-2

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

REVENUES

Sale of vacation ownership products

$

163

$

258

Management and exchange

193

227

Rental

89

135

Financing

59

72

Cost reimbursements

318

TOTAL REVENUES

759

1,010

EXPENSES

Cost of vacation ownership products

40

60

Marketing and sales

109

170

Management and exchange

117

151

Rental

82

98

Financing

21

38

General and administrative

46

70

Depreciation and amortization

41

32

Litigation charges

3

2

Royalty fee

25

26

Impairment

—

95

Cost reimbursements

255

318

TOTAL EXPENSES

739

1,060

Gains (losses) and other income (expense), net

6

(56)

Interest expense

(43)

(33)

Transaction costs

(19)

(24)

LOSS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

(36)

(163)

Benefit from income taxes

11

58

NET LOSS

(25)

(105)

Net income attributable to noncontrolling interests

(3)

(1)

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(28)

$

(106)

LOSS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic

$

(0.68)

$

(2.56)

Diluted

$

(0.68)

$

(2.56)

NOTE: Loss per share - Basic and Loss per share - Diluted are calculated using whole dollars.

A-3

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

(Unaudited)

REVENUES AND PROFIT BY SEGMENT

for the three months ended March 31, 2021

Reportable Segment

Corporate and
Other

Total

Vacation
Ownership

Exchange &
Third-Party
Management

REVENUES

Sales of vacation ownership products

$

163

$

—

$

—

$

163

Management and exchange⁽¹⁾

Ancillary revenues

28

—

—

28

Management fee revenues

38

5

(6)

37

Exchange and other services revenues

28

55

45

128

Management and exchange

94

60

39

193

Rental⁽¹⁾

77

12

—

89

Financing

59

—

—

59

Cost reimbursements⁽¹⁾

268

14

(27)

255

TOTAL REVENUES

$

661

$

86

$

12

$

759

PROFIT

Development⁽²⁾

$

14

$

—

$

—

$

14

Management and exchange⁽¹⁾

59

29

(12)

76

Rental⁽¹⁾

(19)

12

14

7

Financing

38

—

—

38

TOTAL PROFIT

92

41

2

135

OTHER

General and administrative

—

—

(46)

(46)

Depreciation and amortization

(19)

(20)

(2)

(41)

Litigation charges

(3)

—

—

(3)

Restructuring

(1)

—

1

—

Royalty fee

(25)

—

—

(25)

Gains and other income, net

—

—

6

6

Interest expense

—

—

(43)

(43)

Transaction costs

—

—

(19)

(19)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

44

21

(101)

(36)

Benefit from income taxes

—

—

11

11

NET INCOME (LOSS)

44

21

(90)

(25)

Net income attributable to noncontrolling interests⁽¹⁾

—

—

(3)

(3)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

44

$

21

$

(93)

$

(28)

⁽¹⁾ Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant accounting guidance, which represents the portion related to individual or third-party vacation ownership interest ("VOI") owners.

⁽²⁾ The company previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the Cost of vacation ownership products and marketing and sales costs. Beginning in the first quarter of 2021, the company now refers to this financial measure as Development profit. While the calculation remains unchanged, the company believes the revised term better depicts the financial results being presented.

A-4

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions)

(Unaudited)

REVENUES AND PROFIT BY SEGMENT

for the three months ended March 31, 2020

Reportable Segment

Corporate and
Other

Total

Vacation
Ownership

Exchange &
Third-Party
Management

REVENUES

Sales of vacation ownership products

$

258

$

—

$

—

$

258

Management and exchange⁽¹⁾

Ancillary revenues

46

1

—

47

Management fee revenues

38

10

(4)

44

Exchange and other services revenues

28

61

47

136

Management and exchange

112

72

43

227

Rental⁽¹⁾

122

13

—

135

Financing

71

1

—

72

Cost reimbursements⁽¹⁾

345

21

(48)

318

TOTAL REVENUES

$

908

$

107

$

(5)

$

1,010

PROFIT

Development⁽²⁾

$

28

$

—

$

—

$

28

Management and exchange⁽¹⁾

56

32

(12)

76

Rental⁽¹⁾

15

8

14

37

Financing⁽³⁾

34

—

—

34

TOTAL PROFIT

133

40

2

175

OTHER

General and administrative

—

—

(70)

(70)

Depreciation and amortization

(21)

(9)

(2)

(32)

Litigation charges

(2)

—

—

(2)

Royalty fee

(26)

—

—

(26)

Impairment

(4)

(91)

—

(95)

Gains (losses) and other income (expense), net

1

1

(58)

(56)

Interest expense

—

—

(33)

(33)

Transaction costs

(3)

—

(21)

(24)

INCOME (LOSS) BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS

78

(59)

(182)

(163)

Benefit from income taxes

—

—

58

58

NET INCOME (LOSS)

78

(59)

(124)

(105)

Net income attributable to noncontrolling interests⁽¹⁾

—

—

(1)

(1)

NET INCOME (LOSS) ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

78

$

(59)

$

(125)

$

(106)

⁽¹⁾ Amounts included in Corporate and other represent the impact of the consolidation of certain owners' associations under the relevant accounting guidance, which represents the portion related to individual or third-party vacation ownership interest ("VOI") owners.

⁽²⁾ The company previously used the term Development margin to refer to revenues from the Sale of vacation ownership products less the Cost of vacation ownership products and marketing and sales costs. Beginning in the first quarter of 2021, the company now refers to this financial measure as Development profit. While the calculation remains unchanged, the company believes the revised term better depicts the financial results being presented.

⁽³⁾ Includes a $10 million impact related to increased bad debt expense recorded in the first quarter of 2020 related to the COVID-19 pandemic.

A-5

MARRIOTT VACATIONS WORLDWIDE CORPORATION

(In millions, except per share amounts)

(Unaudited)

ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND

ADJUSTED EARNINGS PER SHARE - DILUTED

Three Months Ended

March 31, 2021

March 31, 2020

Net loss attributable to common shareholders

$

(28)

$

(106)

Benefit from income taxes

(11)

(58)

Loss before income taxes attributable to common shareholders

(39)

(164)

Certain items:⁽¹⁾

Litigation charges

3

2

(Gains) losses and other (income) expense, net

(6)

56

Transaction costs

19

24

Impairment charges

—

95

Purchase price adjustments⁽²⁾ 

—

16

Other

—

54

Adjusted pretax (loss) income **

(23)

83

Benefit from income taxes

3

6

Adjusted net (loss) income attributable to common shareholders**

$

(20)

$

89

Diluted shares

41.4

41.5

Adjusted (loss) earnings per share - Diluted **

$

(0.49)

$

2.15

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

⁽¹⁾ See further details on A-6.

⁽²⁾ Includes certain items included in depreciation and amortization.

A-6

MARRIOTT VACATIONS WORLDWIDE CORPORATION

ADJUSTED EBITDA

(In millions)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

NET LOSS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

(28)

$

(106)

Interest expense

43

33

Benefit from income taxes

(11)

(58)

Depreciation and amortization

41

32

Share-based compensation

8

4

Certain items before income taxes:

Litigation charges

3

2

(Gains) losses and other (income) expense, net:

Various tax related matters

—

27

Foreign currency translation

(4)

32

Other

(2)

(3)

Transaction costs

19

24

Impairment charges

—

95

Purchase price adjustments

—

2

COVID-19 related adjustments:

Sales reserve adjustment, net

—

37

Accrual for health and welfare costs for furloughed associates

—

11

Other

—

6

ADJUSTED EBITDA**

$

69

$

138

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-7

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT PROFIT

(In millions)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

Consolidated contract sales

$

226

$

306

Less resales contract sales

(5)

(7)

Consolidated contract sales, net of resales

221

299

Plus:

Settlement revenue

5

6

Resales revenue

2

4

Revenue recognition adjustments:

Reportability

(36)

34

Sales reserve

(14)

(71)

Other⁽¹⁾

(15)

(14)

Sale of vacation ownership products

163

258

Less:

Cost of vacation ownership products

(40)

(60)

Marketing and sales

(109)

(170)

Development Profit

14

28

Revenue recognition reportability adjustment

26

(23)

Other⁽²⁾

—

29

Adjusted development profit **

$

40

$

34

Development profit margin⁽³⁾

8.4%

10.7%

Adjusted development profit margin⁽³⁾

20.5%

12.6%

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

⁽¹⁾ Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue.

⁽²⁾ Includes sales reserve charge related to the COVID-19 pandemic and purchase price adjustments for the first quarter of 2020.

⁽³⁾ Development profit margin represents Development profit divided by Sale of vacation ownership products. Adjusted development profit margin represents Adjusted development profit divided by Sale of vacation ownership products revenue after adjusting for revenue reportability and other charges.

A-8

MARRIOTT VACATIONS WORLDWIDE CORPORATION

VACATION OWNERSHIP SEGMENT ADJUSTED EBITDA

(In millions)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

44

$

78

Depreciation and amortization

19

21

Share-based compensation expense

1

1

Certain items:

Litigation charges

3

2

Gains and other income, net:

Foreign currency translation

—

(1)

Impairment charges

—

4

Purchase price adjustments

—

2

Effects of COVID-19:

Sales reserve adjustment, net

—

37

Restructuring

1

—

Other

—

3

SEGMENT ADJUSTED EBITDA **

$

68

$

147

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-9

MARRIOTT VACATIONS WORLDWIDE CORPORATION

EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT ADJUSTED EBITDA

(In millions)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS

$

21

$

(59)

Depreciation and amortization

20

9

Share-based compensation expense

—

1

Certain items:

Gains and other income, net:

Foreign currency translation

—

2

Other

—

(3)

Impairment charges

—

91

SEGMENT ADJUSTED EBITDA **

$

41

$

41

** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-10

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

Unaudited

March 31, 2021

December 31, 2020

ASSETS

Cash and cash equivalents

$

643

$

524

Restricted cash (including $73 and $68 from VIEs, respectively)

535

468

Accounts receivable, net (including $10 and $11 from VIEs, respectively)

219

276

Vacation ownership notes receivable, net (including $1,338 and $1,493 from VIEs, respectively)

1,769

1,840

Inventory

785

759

Property and equipment, net

887

791

Goodwill

2,817

2,817

Intangibles, net

938

952

Other (including $56 and $54 from VIEs, respectively)

594

471

TOTAL ASSETS

$

9,187

$

8,898

LIABILITIES AND EQUITY

Accounts payable

$

159

$

209

Advance deposits

167

147

Accrued liabilities (including $1 and $1 from VIEs, respectively)

345

349

Deferred revenue

524

488

Payroll and benefits liability

188

157

Deferred compensation liability

124

127

Securitized debt, net (including $1,446 and $1,604 from VIEs, respectively)

1,431

1,588

Debt, net

3,025

2,680

Other

200

197

Deferred taxes

286

274

TOTAL LIABILITIES

6,449

6,216

Contingencies and Commitments (Note 11)

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; 75,454,906 and 75,279,061 shares issued, respectively

1

1

Treasury stock — at cost; 34,182,278 and 34,184,813 shares, respectively

(1,334)

(1,334)

Additional paid-in capital

3,843

3,760

Accumulated other comprehensive loss

(45)

(48)

Retained earnings

244

272

TOTAL MVW SHAREHOLDERS' EQUITY

2,709

2,651

Noncontrolling interests

29

31

TOTAL EQUITY

2,738

2,682

TOTAL LIABILITIES AND EQUITY

$

9,187

$

8,898

The abbreviation VIEs above means Variable Interest Entities.

A-11

MARRIOTT VACATIONS WORLDWIDE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions)

(Unaudited)

Three Months Ended

March 31, 2021

March 31, 2020

OPERATING ACTIVITIES

Net loss

$

(25)

$

(105)

Adjustments to reconcile net loss to net cash, cash equivalents and restricted cash used by operating activities:

Depreciation and amortization of intangibles

41

32

Amortization of debt discount and issuance costs

11

5

Vacation ownership notes receivable reserve

14

71

Share-based compensation

8

3

Impairment charges

—

95

Deferred income taxes

15

(10)

Net change in assets and liabilities:

Accounts receivable

51

45

Vacation ownership notes receivable originations

(108)

(174)

Vacation ownership notes receivable collections

165

174

Inventory

(26)

(8)

Purchase of vacation ownership units for future transfer to inventory

(99)

(61)

Other assets

(138)

(83)

Accounts payable, advance deposits and accrued liabilities

(30)

(184)

Deferred revenue

102

107

Payroll and benefit liabilities

31

(20)

Deferred compensation liability

(2)

(7)

Other liabilities

5

(7)

Deconsolidation of certain Consolidated Property Owners' Associations

(71)

—

Other, net

(4)

5

Net cash, cash equivalents and restricted cash used in operating activities

(60)

(122)

INVESTING ACTIVITIES

Capital expenditures for property and equipment (excluding inventory)

(7)

(17)

Purchase of company owned life insurance

(1)

(4)

Net cash, cash equivalents and restricted cash used in investing activities

(8)

(21)

FINANCING ACTIVITIES

Borrowings from securitization transactions

—

202

Repayment of debt related to securitization transactions

(159)

(148)

Proceeds from debt

561

666

Repayments of debt

(100)

(102)

Purchase of convertible note hedges

(100)

—

Proceeds from issuance of warrants

70

—

Finance lease payment

—

(9)

Debt issuance costs

(2)

—

Repurchase of common stock

—

(82)

Payment of dividends

—

(45)

Payment of withholding taxes on vesting of restricted stock units

(15)

(14)

Net cash, cash equivalents and restricted cash provided by financing activities

255

468

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

(1)

(6)

Change in cash, cash equivalents and restricted cash

186

319

Cash, cash equivalents and restricted cash, beginning of period

992

701

Cash, cash equivalents and restricted cash, end of period

$

1,178

$

1,020

A-12

MARRIOTT VACATIONS WORLDWIDE CORPORATION

QUARTERLY OPERATING METRICS

(Contract sales in millions)

Year

Quarter Ended

Full Year

March 31

June 30

September 30

December 31

Vacation Ownership

Consolidated Contract Sales

2021

$

226

2020

$

306

$

30

$

140

$

178

$

654

2019

$

354

$

386

$

390

$

394

$

1,524

VPG

2021

$

4,644

2020

$

3,680

$

3,717

$

3,904

$

3,826

$

3,767

2019

$

3,350

$

3,299

$

3,461

$

3,499

$

3,403

Tours

2021

45,871

2020

79,131

6,216

33,170

44,161

162,678

2019

99,957

111,241

107,401

108,272

426,871

Exchange & Third-Party Management

Total active members (000's)⁽¹⁾

2021

1,479

2020

1,636

1,571

1,536

1,518

1,518

2019

1,694

1,691

1,701

1,670

1,670

Average revenue per member⁽¹⁾

2021

$

47.13

2020

$

41.37

$

30.17

$

36.76

$

36.62

$

144.97

2019

$

46.24

$

43.23

$

40.89

$

38.38

$

168.73

⁽¹⁾ Includes members at the end of each period for the Interval International exchange network only.