VAC Q3 2021 Earnings

Call Details

• Call Title: Marriott Vacations Q3 2021 Earnings Call
• Date: November 8, 2021 at 1:30 PM UTC
• Management Team:
  • Neal Goldner (Vice President, Investor Relations)
  • Stephen Weisz (Chief Executive Officer)
  • John Geller' (President)
  • Tony Terry (Executive Vice President and Chief Financial Officer)

Call Summary

Financial Performance

• Contract sales in Q3 were $380 million, which the company stated was within 3% of 2019 levels.
• Adjusted development profit increased 19% sequentially to $98 million, and adjusted development profit margin expanded sequentially by 335 basis points to 30%.
• Vacation ownership segment total adjusted EBITDA increased 18% sequentially to $215 million.
• Company total adjusted EBITDA increased 25% sequentially to $205 million, and adjusted EBITDA margin improved to over 27%, more than 300 basis points above Q3 2019.
• Rental revenues increased 11% sequentially while rental profit grew 73% sequentially, with average revenue per key up 9% sequentially.
• Corporate G&A expense declined 20% sequentially in the quarter, primarily driven by lower bonus expense.

Guidance

• The company explicitly stated it is not providing formal guidance for the year but provided directional expectations for Q4 and 2022.
• The company expects fourth quarter contract sales to be between $385 and $405 million, which it said is around or just above Q4 2019 at the midpoint.
• The company expects fourth quarter reportability benefit to be approximately $10 to $12 million versus a $22 million benefit in Q4 2019.
• The company said it is not providing free cash flow guidance but expects adjusted EBITDA to adjusted free cash flow conversion to be well above its normal 55% range for a number of years due to excess inventory.
• The company expects 2022 financing profit to be well above 2019 levels driven in part by the Wealth acquisition and improving financing propensity.