Marriott Vacations Worldwide Corp. (NYSE:VAC) Q4 2017 Earnings Conference Call Transcript

Feb 27, 2018 • 10:00 am ET


Marriott Vacations Worldwide Corp. (NYSE:VAC) Q4 2017 Earnings Conference Call Transcript


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Greetings, and welcome to Marriott Vacations Worldwide Fourth Quarter 2017 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

It is now my pleasure to turn the conference over to your host, Mr. Jeff Hansen, VP, IR. Thank you. You may begin.

Jeffrey A. Hansen

Thank you, Rob. Welcome to the Marriott Vacations Worldwide Fourth Quarter 2017 Earnings Conference Call. I am joined today by Steve Weisz, President and CEO; and John Geller, EVP and Chief Financial and Administrative Officer.

(Forward-Looking Cautionary Statements)

I will now turn the call over to Steve Weisz, President and CEO of Marriott Vacations Worldwide.

Stephen P. Weisz

Thanks, Jeff. Good morning, everyone, and thank you for joining our fourth quarter earnings call. As I'm sure you've seen in our press release we issued earlier this morning, we have a lot to discuss today, starting with our performance for the full year and the fourth quarter of 2017. After that, I'll walk through the highlights of recent amendments to some of our agreements with Marriott International and how they will positively affect our 2018 results as well as the future benefits that will accrue to us over time. I'll then hand the call over to John to provide a more detailed review of our 2017 results and our outlook for 2018. This will include a deeper dive into the new revenue recognition standard that will begin affecting our results in 2018 and the recently enacted tax reform.

In the fourth quarter, company contract sales were $201 million and adjusted EBITDA was $76 million -- $66 million. As we have mentioned throughout the year, the calendar change we implemented at the beginning of 2017 has impacted comparability to the prior year. This impact was most pronounced in our fourth quarter when it resulted in 20 fewer days in the fourth quarter of 2016.

Adjusting for this calendar change to provide a more meaningful comparison, contract sales improved 5%. Further adjusting for the negative impacts from the Hurricanes Irma and Maria, primarily at our resorts in Marco Island, Florida and St. Thomas, contract sales in the quarter would have improved 9%. The impact of Hurricane Irma delayed the expected delivery of 116 units at our resort on Marco Island well into the first quarter of 2018.

In St. Thomas, our Marriott Vacation Club property just recently reopened, along with a smaller temporary on-site sales center. Even with these impacts throughout the fourth quarter, VPG remained strong at $3,518, down slightly to the prior year. And sales to first-time buyers, adjusted for the calendar change, continued to grow double digits, improving 13% over the fourth quarter of 2016.

For the full year, contract sales improved almost 11% to $803 million and adjusted EBITDA was $280 million. This performance underscores our strategy for top line sales growth through new destinations and marketing channels as well as the strength of our business model to deliver strong bottom line results. VPG for the full year was $3,565, a 3% increase over 2016, a solid