VAC - Earnings call transcript Q3 2018 | Marriott Vacations Worldwide Corporation

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Operator

Greetings, and welcome to Marriott Vacations Worldwide Third Quarter 2018 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 today, Jeff Hanson, Head of Investor Relations. Thank you.

You may begin.

Jeffrey Hansen

welcome, Earnings the Conference and Third Vacations Rob, XXXX Quarter Call. you, everyone, Marriott to Worldwide Thank I'm joined and today Executive Administrative Officer; by Steve Weisz, John Officer. Executive President Geller, Vice President Chief and and Financial and Chief do our today of are forward-looking are that securities federal and comments statements facts need under to historical laws. I everyone considered many remind not or future These implied those SEC filings, our as described statements in from comments. are subject our materially could by to results cause numerous expressed differ risks in and uncertainties to which

the statements to this unfold. November events be Forward-looking financial non-GAAP effective this that morning, not along press actual references today, in release call, Throughout information. we the with X, only on will as issued XXXX, call, and our we comments updated make are will

measures on a in turn will at our CEO press now You reconciliation to Weisz, President Worldwide. in schedules the financial of as our over the page well and Marriott call non-GAAP of Investor attached Vacations referred the find Relations website release to to remarks Steve our I can ir.mvwc.com. as

Stephen Weisz

everyone, thank Good morning, third and call. Jeff. you our for quarter Thanks, earnings joining

year transformation integration Let we the me company. welcome for to longer-term through have over the performance John the our fall every team a through both our provide and seamless to I'll continued results guidance virtually as amazed, at what publicly can MVW opportunity minutes I begin relates as this a X, for efforts about associates tirelessly do, I'm well what of associates well and of initially earlier before our quarter, month walk about call where into questions. detail now on very acquisition ILG as sides Their as more integration summer, September taking the updated by to day, one your truly our family. Everyone on excited discussing targeted. than Today, before we're third more company. efforts the it over few has hand spend stand, producing full I'll the this a to the means of XX,XXX transaction worked the the ILG. then our to I'm our taking throughout closing in on as

With ILG, manage business Vacation have our structure realigned Third-Party the and acquisition Management. through the of Exchange operating we to Ownership & segments: two

As These an $XX consolidated increase or the for results, $XXX the of XX%. company contract reportable segments all MVW. result, our from team, and $XXX geographic realigned work. well. a EBITDA related includes ownership of segment, all couldn't of happening Vacation consolidated ILG acquisition performance changes. & In includes we properties results our part only the been company, our not of with an regions. our Hospitality. happier integration surrounding XXXX. our our well a performance across comparison much the Interval be Management the prior for selling includes company improvement timeshare we from million, supplemental exclude third-party quarter to quarter of for Resorts over the have the refer MVW and our our the International world-class Aqua-Aston International, reflect and financing management Exchange legacy but I apples-to-apples our to has This considering million have Overall, Vacation quarter million, XX% will of adjusted which to as from year. third month work approach Third-Party been International, month Ownership included a as entire Places Vacation how and as totaled third businesses the sales branded companies totaled exchange vacation Ownership we therefore, these results, the to ILG only has of September, functions management more geographic financial Beginning rental Trading of especially as of inventory, with additional

legacy it primary XX% our increased MVW, the $XXX As million. to to sales which million contributor the was relates $XX to or quarter, results contract in

driven which strong MVW legacy centers sales were our performance drive from results to line marketing and continued newer by Our growth. top channels,

solid how a year X% new and Let VPG almost very reflection over me versus driven Related from Vacation America business last legacy efficiency. with you Waikoloa, for well was growth, D.C. MVW tour from as performance Washington, stay programs the of the it'd by expectations. to as as MVW as be North X% legacy improved our closing like and call $X,XXX, our a up destinations just feel and I moment Encore third quarter improved York, quarter helpful our performed a of Ownership of transfer we New

In addition, the our hurricanes, negatively were affected by quarter. in in impacted the locations results us which third multiple

Hawaiian affected second, East while The affected the Islands, the Coast, first, Carolinas. Hurricane Lane, Hurricane primarily the Florence, the

by degree and legacy with Adjusted our aware sure would October, $X have the all were Panama through cancellations, it in safely. XX% was prayers the to estimate Michael, however, resort and devastation Legends quarter did, our was & performance for two go these for storms results Club growth have we as quarter and through Adjusting experience we XX%. in associates of strong to numerous properties impacted sales that mandatory but and a of including Hurricane severely as will sales damage EBITDA adjusted year. of who our impacted you center. of segment, million several impact very even shutdowns have for And seen does and our guests sales resort legacy The Third-Party MVW are adjusted may fourth some was the evacuations, Hurricane those the in that the that not of affected. damage, contract third I'm did million, hearts $X out our it MVW. the a to loss however, Vacation total, our it in We by impacted EBITDA City of impacted, In Marriott as directly million, material Edge, and have in million report storms Florida was to by some impacted well a Michael on VRI Panhandle you're including sustain not of expect resulting not thankfully, We growth Management do contract believe region. quarter end MVW. II which of some were $X the EBITDA legacy the been Overall, impacts, the impacted, in In greater Panama pleased these to family remain results. Exchange City made we tours. $X closed negatively in better,

of within the as while from the performance X. X only that last quarter, over the I've in the year. metrics XX% And closing X.X September sales acquisition for business, to As September remained only members. included growing that, we International month mentioned, consolidated over quarter, To the we've total in I'm to say ILG it pleased pertains of contract the their million in well, have date just membership steady of Vacation Exchange performed ILG business Interval Ownership at end,

our we we're that, integration once-in-a-lifetime companies wonderful embraced continued together how into we work Now MVW we integration let me looking associates make opportunity I'm opportunity brands the one more to the from change pleased brands the businesses. of pivot transformational just sides do on family with as of companies have the and way in a as and view ILG together and to learn and combination. the another, both the The at of very see and a coming a I business. chance acquisition. our more it's the

public would we provide you companies would comes from If to on million achieve IT XX, recall, you first began together of company minimum April systems our this a $XX that of expect when our announcing the bring savings About cost of synergies. at structures, cost. management this that as combination size, natural duplicate half such two of journey look you this and

is of costs associated target, them. total our $XXX We stress we believe excess opportunities a teams synergies and as we and like that to I would achieving and in savings this stage the and is of ability still of view that incremental leadership to asked are lens, a a have review there many million. costs potential we've minimum that the more with time in for produce to the these now to had transformational both sides this work through on stressed

We strategy. will our endeavor to keep refine you up-to-date longer-term we continue as to

Marriott the to grow weren't shift most licensed impactful have With of me which, in companies. channels over Ownership umbrella, under term, Vacation and with new should combination to line one all let growth two longer opportunities the brands possible the be to before. top the of our Now that we directions new opportunities, rationale the prove for

focused loyalty their and buyer for Club brands marketing Sheraton We all what Marriott to across how Marriott now best a a throughout leadership instance, tour the closing For across and our enhance improvements how Vacation in are learning customer, makes on all efficiencies production have we different to brands. and from of business. connect of Vacation practices Ownership allow our to channels Westin

By driving our ability mid-next that into sales to the just nearly we As opportunity for to well call more expect improve should our below and looking transfer to VPG marketing most is we programs in best our digital through growth. year, Marriott are program program our to are and the driving legacy look great and digital environment. $XXXX we of promotions in forward was as $X,XXX as view products, launch tap Vistana, We International. under September, VPG our users an at allow at quarter. digital example, Similar with of the the to higher this transfer what branded linked VPG locations. higher broadly new in offers Perhaps fantastic one will to flow tour channel particular contract successful transfer This expanded receive promotions practices, all portfolio. today, Marriott offering marriott.com efficiencies of across a

Hyatt Chief as me, of we the directly Strategy opportunity similar today, sales we other to within see media see of accelerate transformational the In have to new view arena our leveraging grow and in strategies. digital the digital platforms. in of meaningful company, to Marriott Officer, value Ownership addition we designed the resort from development a digital advertising brand, see and reporting with Digital destinations our our And the portfolio value and capabilities. we Vacation building Brand linked XX Ownership the our Vacation by the we've new created part to Therefore, programs, role the social

a on under closely there. and you working with walked senior your combination, longer-term our Hyatt how what me this future of strategic brand executive will get can the leadership. are the we excited expectations on team about help vision set through are our of shared We the view Having let accomplish

sold. is several materialize not to as package does As good a initially of portion months call production after for a XX we our package tour to ago, years a program tour we XX launched saw, transfer when up our

see in So Keep best generate package both should we and to I opportunities, tour the sales from for utilizing while referenced By and order us upcoming the across future call program brands. tour too, from from year practices practices come in other and to XXXX growth XXXX. which more begin EBITDA be channels as shifting channels, begin adjusted lower should focus transitional our VPG to a best expect opportunities, -- transitional perspective, expect seeing efficient year, also combined from like organization other to With applying our transfer mind, improve a we as and companies that longer-term rationalizing transfer that new XXXX channels you will our our I from to in these contract digital less growth. across mind more immediate will VPG. as early Vistana sales efficient in impacts our from be at us a programs we

incentive in could see to financing we our something material opportunity buyers, their that an net propensity. As a the example, improvement program financing offer Vistana an to create

that enhance improve the MVW's value. the VPG to overall enhancing while closing strategy We also utilizing efficiency see Vistana's by potential average designed contract pricing to are

and XXXX. of Some providing in rollout are in underway these growth being for changes the are solid others earlier already term, evaluated nearer

newer tour our guidance strong XXXX, we growth within $XXX range expect solid updated with at programs million sales of meaningful with and quarter we contract EBITDA million. adjusted destinations driven rest by As of fourth to package $XXX look our a the

by future results John? let further and that, quarter excited are the the call about above forward. going roughly $XX to for synergies With million the year. our the opportunities, the to of through We which including end our initial rate hand on walk position of this expectations, revenue will annual John me over and expectations cost run an us detail well third

John Geller

fashion, completing accomplished not you, also the but ILG only an quarter Thank with morning, results. everyone. very quarter, acquisition Steve, in good I'm accelerated pleased what third generating and we've this strong

background, Exchange established as being reorganized the Management acquisition how Vacation manage and of mentioned, ILG, $XX we from forward. combined two the to results. quarter the and they going reporting a the have shift Third-Party Total represent we Ownership business business totaled $XXX Steve discuss financial third and EBITDA With an As result new increase of adjusted our company let that will million segments, year. of as & prior or XX% as million, me

acquisition. of for ILG totaled mentioned, impacted was in the or exchange and the hurricanes, the adjusted our an adjusting negative both in Vacation $XX million, the of quarter. Carolinas, totaled year. for million, which million for XX% segment recent XXXX all Steve Ownership results. for of the increase segment EBITDA $XXX EBITDA As company's totaled by Hawaii financial the Management million the driven Adjusted the $XXX Third-Party the would have After from impact Adjusted EBITDA prior hurricanes, $XX

Adjusting Turning increased our In development in third business, over sales have or to grown contract related sales including increase $XX the to contract $XXX impact acquisition the quarter, XX%. the $XX contract of of would Vacation for to negative legacy the the million related million Ownership million business, by XX% consolidated and the MVW hurricanes sales segment. to XXXX the a ILG ILG.

additional million $XX in development prior development million, margin million million And quarter year. year. compared revenue, to the income MVW from balance, this $X and interest Legacy in increase $XX expenses $X Financing consumer financing up or consumer Legacy timing financing higher accelerated MVW in margin to from expense the of the programs, or receivable of third In results incentive our offset increased an last $XX XX% development XX% cost million of increased million million our interest adjusted with XXXX. $X MVW million, growing total the financing the to business, of increase financing higher notes Our over year. include revenues a $X financing funds. the net year. by was XX%. was of from of XX% first Legacy was adjusted to XX.X% revenue, in million prior million and interest our was line million XX.X% expense, $XX margin or of $XX cost prior expense expenses percentage quarter $X $X securitization due interest and slightly or net in of year's

remained score Our XXX, notes very to of who remained to propensity in The receivable perform strong well. with August, gross a rate, and financing a proceeds. XX% portfolio buyers historic us average securitization quarter generating financed FICO ILG In XX%. continues interest nearly blended the near and was at while million delinquency acquisition of of rates of prior ILG, lows at advance our the X.XX% million $XXX note successfully rate completed $XXX

year. higher In expect These the XX, revenues, September Subsequent by business, the increase rental million before $XX rental additional results sell remaining or notes to G&A of $XX the prior rental inflationary MVW litigation Legacy rate technology or normal the were points, net to million, Royalty quarter, of XX% in adjusted management partially $XX included a plus XX% were and higher the cost end deliver MVW and the a the cash increase increase of quarter. $XX club royalty of services of by higher business, the fees were securitization. were margin the the $XX MVW XX% adjusted reflecting $X $X In for expenses. $XX million $XX the sold. spending from of MVW $XX a XX% in revenues well the Legacy These terms roughly mix inventory increase our rental were were being in higher increased the increased and other an million and notes cost X% million, prior transient and million of quarter, As quarter. in third remaining of resort by the XXXX, higher of fees in increased X% Legacy expenses of the $XX the remaining increased managing and million sales $XX from expenses. revenues we million until in to million to new driven results proceeds or notes were an million resorts portfolio or quarter million G&A and we net million $X a year. offset revenues in driven the in as sold with accordance $XX of of $X Rental increases increased receivable XX% trust the and by million restricted driven higher $XX fees higher to contract revenues increased higher million. million, the margin costs $XX receive mainly end from expenses or million XX% to million and activity. of our million quarter. of $XX related funds we year. as the $X were Legacy our million the quarter.

balance our totaled quarter, the cash to end the Moving million. equivalents cash of sheet, and $XXX at

also in approximately under warehouse ownership our securitization million million roughly of debt our had million for gross facility. facility, under credit receivable revolving $XX We $XXX vacation capacity eligible available and $XXX notes

of legacy notes ILG nonrecourse the part $X.X acquisition of roughly end debt quarter, million corporate with Subsequent paid most the the was the to receivable. which quarter outstanding to debt, as securitized $XXX related of of consisting of total roughly of end associated ILG from primarily unsecured $X.X ILG, the resulted assumed at acquisition. $X.X our billion we of Our billion, notes down and billion the the senior

business diversified experienced. are more debt than we the levels following ILG, and higher these historically larger much a of have As acquisition

last million we part new savings XX basis, With less. do interest slightly rate a X.Xx recognize our pro as or companies as $XXX adjusted estimate of with including the of higher receivable, forma well were higher in to X.Xx, that combined of that corporate notes our debt our $XXX only associated million, longer-term our have of and to rising risk ratio issued non-recourse a environment. months floating as the debt synergy we exposure interest rate current debt on we the for EBITDA of ILG assuming rate However, acquisition target now more securitized than

this mitigating However, progress we take have to begun already in make and risk.

we our did it X.X% have financing for our debt, help as basis to years a changes of our that risk. rate For corporate of And making fixed have relates five of point increase roughly to over weighted $XXX manage a the variable rate business, been year, we roughly in over swap a principal million portion average rate. coupon past XX resulted programmatic in this

Given any not impact customers sensitive, been less program have overall interest-rate on have our propensity financing our historically our we seen above financing XX%. remaining with that

our higher adjust to help opportunities identify costs to rates to lending of continue will funds. We mitigate

we nearly nearly we program. for of capital, return repurchase $XX.X to repurchased million, third to X.X stock million, As under XXX,XXX and share repurchase $XX outstanding it relates leaving our quarterly our our of end million existing dividend subsequent the available shares common of paid of the for quarter, our shares

Hurricanes of XXXX. you Let me Maria from the take related claims to update a on our Irma moment insurance to and status

both property associations and the the well claims submitted For damage both majority legacy the legacy related our to and owners both have as losses us from our by been as interruption business MVW hurricanes. experienced of ILG,

when claims settled. be know However, the time, will do we at this not

settling As we've proceeds adjusted our from reflect do guidance any insurance past, flow the free in adjusted our not EBITDA cash claims. these done and

these update efforts to continue progress. will as you We

includes we results our Now the guidance end year. full the results acquisition, legacy through turning revised from ILG for X XXXX, to of year September the ILG's of financial reflect have overall to the outlook which our

fourth for expected $XXX As EBITDA are Steve when and the adjusted full contract million. and combined a to mentioned, solid billion we generate and million billion our expect between year between company, which, $XXX full $X.XX with quarter $X.XX year results, year-to-date sales

our majority savings. of through our While XXXX, year $X savings full of current the include roughly are does to expected synergy synergy guidance materialize million

we to and flow, For overall continue free our inventory manage capital spending. cash adjusted other

combined company, the $XXX million for targeting adjusted free cash between flow million are result, and for we a As $XXX XXXX.

coupled acquisition We momentum have the growth future opportunities sales ILG, We of we growth strong finish tour this year. revenue strong excuse contract as you updating we initiatives, solid foundation giving on delivered from integrate drive and create momentum, me, The growth with forward top -- out look a to growth. momentum to as line us progress. the VPG our

Marriott will in interest with Rob? your Vacations the appreciate Q&A. up open we for that, always, call and Worldwide, As we

Operator

Instructions] Cameron [Operator comes Suisse. question McKnight from Crédit with Our first

Cameron McKnight

question what's what's and out of a So in EBITDA. of terms in

XX% something there EBITDA So up the quarter, below impacting results level? line EBITDA legacy the at segment revenues up were was was that Was in but the XX%. adjusted

John Geller

Ownership of see type I flowing up should you're Third-Party of that for Exchange the of mean, & going the I September think, Vacation that from down, most a picking Management, to perspective, not month you get growth.

So that's going to bit. a down weight little it

Cameron McKnight

So were guess, we EBITDA? third items one-offs or terms I aware there a of quarter in mix should that issue; be of any,

John Geller

a these thing but one a down and few have costs we've litigation have the is, we over good think, we there, some I time, higher adjust our hope of mean, have litigation of don't that, which cases we I some defense perspective, as -- of The been EBITDA G&A settled year-over-year. still given out been news just we claims, running that'll we mentioned we've come that those out No. settled, obviously. running from

Cameron McKnight

Okay, got it. And then...

John Geller

impact mean, but called the of the adjust into it other that hurricanes, where the million gave we I the $X impact. Just EBITDA you don't out the was back we we thing, obviously,

Cameron McKnight

opinion, And centers in to the Vistana ILG quarter? there sales any -- legacy disruption your any was sales was in the in at there

Stephen Weisz

hurricanes? the As a result of

Cameron McKnight

merger? of result a the as Or

Stephen Weisz

seen the But sales -- No. front, was even -- on hurricane And Beach. nature. any of Myrtle remarks, our some in loss wasn't included at there was million. there that No, meaningful it $X of about had we anything haven't they so

Operator

Brian from with Dobsun is question next [ph] Our Nomura.

Unidentified Analyst

give you from into And strategic low the benefit see little guess, particularly, beneficial could how the advantages bit synergies. you some program? VPG first, you When acquisition, will testing then, a I that so just on do and begin wondering better earnest can expect a color did digital of if in dig really on mentioned you to we be? revenue transfer I'm channels that those get earlier? and of that idea high sales when long-term from more So the can

Stephen Weisz

Yes.

Let me try just take of reverse and it in top order, mind. because it's

with We expect work the to digital put place mid-next be into year. Marriott by

probably You're Marriott lots of that Marriott the has aware Starwood very between platform. going the well integration through of been fact the reservation platform reservation and

might started, tours as it'll once remarks, to months contract take mentioned XX sales. start the digital in you transfer, the we yet. to this able -- to we've year, as it say my done. said, the come once why XX very get to we're that. have So start and it. once work to about we're started With through optimistic queue to expect, that we're those in They're materialize committed for we haven't mid-next and But I That's in we house

contract we we'll the of and that And then, channels thing relatively to license we now with branded And the turn Vistana of linkage Westin cost On at in can be question opportunities the up. what's some all way their work, Enhancing some trim we trying down do with tree of I into which -- try businesses, see on. back agreement kind the cost, you move to do recall tree lowest look going to to understand so Sheraton looking has yield, of linkage former off-premise the renegotiated bottom on International, the Starwood it. they may done. Marriott OPC on a and have rationalize yield we single a that and every various to out the think, low ability our in work, could typically from Vistana's the those for things. lowest as essentially to us to market-by-market highest with you preempted highest properties, VPG improve We yield, basis, we when

that not able have experience it pull believe flip and be nor to we and doing. clearly we'll is the and talent to switch what team a know But happens doing be one overnight. process, It's have you -- we something simple that that's So it it's off. it the a we

Unidentified Analyst

And do those changes? start you when implementing

Stephen Weisz

Well, sales through teams you are the some that -- have on-site then the time once those to that already on opportunities team a working after to go training X identify marketing then on going. didn't about we've it get side, they lot leadership the We're teams afoot. beginning the we but sales how VSE you to get approach closed we of had are are changes done with to and it for updated waste and September

Unidentified Analyst

benefit XXXX the So could materialize you in think? first half,

Stephen Weisz

-- can it. assured that that's but be there'll to some longer, take we're and -- XXXX, be already can reference, will at I rest little Well tried transitional everything try you as done we a that things to get in to materialize

Operator

next Research. [ph] with Wolfe from Jared question comes Our

Unidentified Analyst

synergy other there difference of Or the period? between contribution four is that's that, we million prior $X of that your year contribution. to out new out the know And to the ask for called assume But called about EBITDA than million better. a the assumptions consider? $XX million and stand-alone hurricanes, ILG It that want that roughly bit $XX right areas are the higher the I looks just guidance. puts EBITDA about you to need like you're takes guidance, you month in first guidance, understand you it guiding $XX to full I million call prior $X and the the guidance the it, little million-or-so

John Geller

areas There's of and definitely takes. other puts

the mentioned for you hurricane, So example.

are the the from part said to cases and which four than million the high-level $X if contribution, fourth coming Florence $X -- if but from legacy Michael is is we've continuing do you an the halves you of first the that another is where on slightly not are trial Lane, -- months. got impact. litigation ILG in some on on We of business to better. that you trial quarter -- these basis, at million, terms an second While have will, of that, some going probably going in quarters the EBITDA side year third was and defense to stronger going their annualize impact, the then And have probably first as the for some million type or so $X the is of quarter, we we has are soon. to not expenses higher overall, ILG remember still impact On elevated which absolute are

it's quarter, contribution. thing bit terms more of will. the the always move a probably of we fourth then quarters, the four same obviously, a rental side it's for in And the EBITDA on you businesses, the on exchange the season weaker As timeshare into it's of as if little shoulder the and been us

Stephen Weisz

And worth see in in of have fourth the fourth the roughly million we'll quarter, synergy of we savings that also course, quarter. $X

Unidentified Analyst

And you XXXX a of give I times being about imagine prepared couple transition you're year. not a talked to us guidance. Steve, any

how And us can willing growth can to you're thinking be you'd tours, just you about VPGs, So achieved or what cost think would specifically, can if share. to EBITDA, sales maybe means anything I that about think share, million curious anything year? how you if be of do know curious the you much next there's contract and exactly. I'm be help And $XXX synergies

Stephen Weisz

thanks. Sure. Well,

the all, question First your one synergies. on of

identified we this So will of run synergies. end of have the year, we by believe, million $XX rate

be run million 'XX the of by see for $XX the in. range. pretty would full I you in should much bake expect savings that's to $XX to So rate million end next year

that of $XXX talked about. we've half million roughly So the

in that think thing, on I'm got we that they're you for Vistana employed the to that you've some unfortunately, us into that practices doesn't that quite and relates like for years we've work frustrating it and the it you'd line, Unfortunately, sure, for is top immediately As MVW, translatable what business. best see to when the way.

to force. reeducate You have your sales

You with new have them approach get to else. comfortable the and everything

So much be I some say things our would some it it referenced side, certainly in identified for in assured be we guidance And got longer, today line immediate. rest to a and good give in -- will can. everything it cost them, Suffice put can we prior not still but as is in to opportunities, the position to price terms year a that, more then you the going growth transitional I to top of drive upside get done. to the will doing we our what things not possibly next next while But power are of that terms year. to timing it's that to to we be have implement, you in while take the as

Operator

Our with Patrick next question comes SunTrust. from Scholes

Patrick Scholes

apples-to-apples questions just clear you. be guidance. Two want EBITDA on sort I One, absolutely for of to

apples-to-apples for was now, $XXX you be to only the guidance? Your legacy prior if right would million. $XXX What year were legacy for the that giving the company million

John Geller

be I way. we'd say, of we it looking we're thought would guidance that of at not -- for Well. just probably a Patrick, if adjust quarter would be range the and the we impact, the lot hurricane towards you quarter we mentioned, fourth obviously, that I But started we'd moving that would middle both the when here in third and probably the where parts kind of year.

Patrick Scholes

should back then looks How least think dabbling trajectory you've year? And in it share next started forward the going like about into repurchases. we at

John Geller

in out. Yes. when we're comment, We Patrick, and don't obviously

go be next and about I with how we to the said, on we one more acquisition, from capital kind less. that of was on probably in you wanted basis. we're year on point year a debt new -- notwithstanding or for we've had I the into things to a the leverage. of call look, return -- X.Xx always out our the we'll we're very and we to think related thinking But ratio give We full as that wanted guidance of guidance, like leverage comfortable bit little give you done,

basis, As business about got good we a free We've of generate that. to price. to that's feel amount forma when stock sit a significant good in cash be a on pro opportunistic the see going we're a value we today we And here flow. going

Operator

Katz with next comes question Our Jefferies. from David

David Katz

identified, to wanted that the and a side would essentially, other? get far $XXX But to that trying done synergy that I you've of wanted just and, how appreciate how to looking? that you where just Within But cost be synergies categories? of up. of there -- and different be. to I What you say covered I you'll of essentially, sort to it out go don't back you've what procurement figure am million the information to so I detail. follow I lot to do just know have left And cost is much number? much all would labor-driven kinds versus what's

John Geller

the The time amount together. In at will a businesses years organization. of you this takes Remember, of the through take lot level, of different layers acquisition the synergies and term, of the as the work senior put integration next near a are significant as size the over to couple time. this right, going we integrate redundancies be of and management the

have automating own yet, we perspective company, IT company detailed to So originally things we around right? from Now and to due become operate. both centralizing we we get activities, plenty applications didn't made obviously, of opportunities, deeper, we're that see digging in own information, the through we the things in estimates, like consolidating because cost didn't overhead went the and all to diligence, high-level cheaper especially, activities, that did the we much

really the just it, as we're of the it's gotten a lot we've same pencil. but areas, into So sharpening

But take technology, going of We're create about to We but an it's and undertaking -- value to can automate, without longer continue those to it's it. time to with get to long-term imagine, there's in the going of explore size, additional plenty But here. continue opportunities. term, investment invest include this than you to excited so also ways, more things. ever as more see, might we'll we some to

David Katz

I'll so of or has And generic suppose surprised a this you anything But be negatively? for so far, apologize question, may it. bit either I positively a

Stephen Weisz

we've been been things I -- would if pleased have with say, gone. how it's anything,

together -- like to eliminations be, the a things sides to is receptiveness going go businesses putting has you reorganization, some good. these of kind think I that. have to as any there both There's the job through and be of transaction going of on been been very -- always

most we as what severance believe how we've nature. of people for understand part, of And very and the I again, looked packages been certainly things the in that the inning more we're see over. don't of we discovery process ballgame believe spend, that forward. appropriate it's believe I at we we in in think, And more we've done and is here terms opportunities I that. why. And time a probably I more -- going the third the, maybe, X-inning --

peel it's onion So two-way this as we're been have what's ILG think are that that looking from to want practices that go very continue in that the business. apply the the make there. to to things a are as we business and some of that sure There back at and can clear, here street. And legacy understand I things done we best are and good we kind MVW

both directions. as And about I'm that it goes well. So excited

about So where very bullish I'm are. we

Operator

Our comes with Group. Macquarie from Engel question Edward next

Edward Engel

ballpark? moving sense wondering Certainly XX-months you some have be lot rate of just a if if maybe flow forma of ILG, at any least and your I or the run cash credit then year synergies parts, but for of full even XXXX free pro what trailing of give flow we or adjusted adjusted sort just free full of cash kind was you may the

John Geller

guidance period at look their at go they obviously, But $XXX excuse a calculation, million, give for didn't the upside have for a me, what will, out guidance, you and what we to out didn't the million our you we it. probably Since own business the was really of when you as put what for that you if ballpark can supposed a business. look the million to lot Yes. as is business, back And $XXX year. to $XXX didn't in we of own put the deliver -- we revised

our the four they the is legacy way tell once I corresponds mentioned of have terms some and the again, side, on and that cash the down as the MVW, this the comes just of better legacy In we've into as with beginning the the free capital of months, in managed cash portion I flow EBITDA timing, can business, year that ILG you spend, the for business.

just it, So pickup our year legacy MVW, given upside timing for while you're seeing of for the there most months flows. own ILG full to we our is their the of some guidance in four here cash the related is really that

Edward Engel

the ILG down And be VPG improve should slow flow legacy margin that their XXXX outlook if and margin then tour then outlook? or offset least should so, by your at for maybe we expect to and

Stephen Weisz

of will down happen. channels. will low-yield Well, in will some tour high-cost, you've be I generalities, think volume deduced There that kind what appropriately these go from

timing clearly that's the transition But lower-cost, difference. the be we there goal. channels, As some to higher-yield may

that's right? essence think I of your the question,

John Geller

more should margins. as efficient better part, Steve, VPGs second sales that there up yes, to, and was go a equate

Stephen Weisz

I your... of sorry Yes. didn't answer part second the

John Geller

will ability proven the the out. be it talked Marriott we a impact call say, -- transition. little agreement that look term, But I with legacy over model and our have transfer, think long their to as -- -- It's there be today. the with VPGs about, point legacy about better obviously, you through manage there'll our to it's or we huge when do to opportunity hard Steve's again, But of if all little have. transfer, should Vistana the bit once access relationships as a you ability linkage And everything on can possible. digital that We'll at and because didn't the to to where we Marriott of the business our are get -- tours that as

So huge once term, is huge together it. this and to a But over we execute integration. again, long there's going best acquisition and businesses the be put practices as the opportunity across it's

Edward Engel

guess, higher to new that In pricing a out or regard delta, efficiency? have just much broke they because bridge just, you how is mix to Of VPG owners versus that that I earlier.

John Geller

we the that mix sourcing they it's much not a little on -- It new some of really just to just it's with probably, to they want again, that. do probably Yes, not really of to do to off-property had to channels owners. access tour that say higher It's efficient on to. -- the the were that do, forced has bit relative Marriott to I don't had once but access and better having stuff that do

first-time the there there on where that's a I little in buyer meaningful. bit of be it's don't and the too. they got So But really lot their could a think sourcing tours,

Operator

turn we've call comments. Weisz gentlemen, At the for the and this reached back like of to the question-and-answer Steve closing I'd Ladies time to end session.

Stephen Weisz

seen far made Vacation Thank what Marriott Grand Club, Marriott, Westin Club, lies Vacation so the you in the We're us Residence with has Club, early but Sheraton St. and I've Ritz-Carlton Club. what Destination Residence the Hyatt Rob. very Club, very much, by still Club Residences excited integration ahead Vacation Regis

and everyone what best finally, Exchange We International. and combined the have updating future enjoy you and Interval forward families, can results your on calls. your on I the brands we to the on Ownership in industry next call the do to And and company Vacation look our vacation. best a with in direction as company

Operator

conference. concludes This today's

your for thank at disconnect lines may this You you time, participation. we and your

Marriott Vacations Worldwide (VAC) 8 Nov 182018 Q3 Earnings call transcript