VAC Q4 2023 Earnings

Call Details

• Call Title: Marriott Vacations Q4 2023 Earnings Call
• Date: February 22, 2024 at 1:30 PM UTC
• Management Team:
  • Neal Goldner (Vice President, Investor Relations)
  • John Geller (Chief Executive Officer)
  • Jason Marino (Executive Vice President and Chief Financial Officer)

Call Summary

Financial Performance

• Contract sales in the fourth quarter declined 2% year-over-year and increased 4% when adjusting for the estimated Maui impact.
• VPG was unchanged year-over-year after adjusting for the estimated Maui impact, and system VPGs were essentially flat in Q4 excluding Maui.
• Adjusted development margin increased 160 basis points year-over-year to 33% in the vacation ownership segment.
• Adjusted EBITDA for the exchange and third-party management segment was $31M in the quarter and adjusted EBITDA margin was 52%.
• Total company adjusted EBITDA would have declined 10% year-over-year in Q4 after adjusting for Maui and the prior-year alignment benefit.
• Delinquencies and defaults were each up around 60 basis points year-over-year, and the company stated the sales reserve is at appropriate levels.

Guidance

• The company expects adjusted EBITDA of $760 million to $800 million for 2024.
• Contract sales are expected to be flat in Q1 and to grow 6% to 9% for the full year 2024.
• The company expects development margin to be down a couple hundred basis points in Q1 and to be down slightly for the year.
• Financing revenue is expected to increase in 2024 while financing profit is expected to be down due to resetting borrowing costs in the ABS market.
• Rental profit in 2024 is expected to be impacted by higher inventory expense and maintenance fees compared to the prior year.
• The company expects adjusted free cash flow conversion to be in the 55% range and adjusted free cash flow to be $400 million to $450 million in 2024.