VAC Q4 2021 Earnings

Call Details

• Call Title: Marriott Vacations Q4 2021 Earnings Call
• Date: February 24, 2022 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

• The company reported $406 million in contract sales in Q4 2021, which exceeded 2019 levels for the first time since the pandemic began.
• Adjusted development profit was $111 million in Q4 2021, representing adjusted development profit margin of 31%, the highest since becoming a public company.
• Vacation ownership segment adjusted EBITDA was $234 million in the quarter and benefited from stronger contract sales, higher rental profit, and business transformation initiatives.
• Rental profit for the quarter was $32 million, which represented a 26% sequential increase reported by the company.
• Total company adjusted EBITDA was $219 million in Q4 2021, which was up 6% sequentially and delivered margin improvement of nearly 250 basis points versus Q4 2019.
• Wealth business contributed $27 million of contract sales and $14 million of adjusted EBITDA in Q4 2021, as reported on the call.

Guidance

• The company expects full-year 2022 contract sales to grow 22% to 29% versus 2021 based on higher tours and continued strong VPG.
• The company expects 2022 adjusted EBITDA of $860 million to $920 million, representing more than 35% year-over-year growth at the midpoint and approximately 17% above 2019 at the midpoint.
• Adjusted EBITDA margins are expected to improve roughly 250 basis points versus 2021 at the midpoint of the range, with the largest increases in rental and development businesses.
• Guidance includes roughly $25 million to $30 million of incremental in-year synergy savings toward a $200 million run-rate synergy target.
• The company expects financing profits to increase by more than 15% year-over-year in 2022 as notes balances approach 2019 averages and contract sales grow double digits.
• The company expects adjusted free cash flow of $560 million to $640 million and free cash flow conversion of 65% to 70% in 2022, and expects to spend more than $100 million on reacquired low-cost inventory.