VAC - Earnings call transcript Q1 2020 | Marriott Vacations Worldwide Corporation

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John Geller

…declined 2% through the end of February, and revenue per member was roughly flat. But with roughly 1,300 of Interval's Exchange resorts either closed or not taking reservations in the short term, due to COVID-19, transaction activity was adversely impacted in March resulting in a decline in average revenue per member.

As a result, adjusted EBITDA for the segment was down $13 million in the quarter. After adjusting for one-time costs, including those related to COVID-19 G&A expense declined $10 million in the quarter, reflecting the continued benefit from our synergy initiatives. We realized $17 million of synergies in the first quarter, bringing our total run-rate savings to roughly $70 million.

about investment we've being. spending talked most to we our of for as in decided March, defer However, the time

a we're goal, take achieve may this amount to result, little by least As to the synergies longer time generating us at our we but a million of remain done. committed $XXX it

actions, spend the my time of So first behind quarter rest through with manage us, about the we've the the current to environment. I want to taken talking

of financing and businesses management generate generate resort Exchange recurring of our earlier, mentioned resorts. from recurring XX% Diving two our I amount stickier adjusted substantial about These for from our including revenue comes contribution. Management Businesses revenue the high-margin deeper represent managing coming about businesses sources, of a EBITDA and As a XX% little the we EBITDA in annual XX% revenue. our contribution adjusted with of nearly this

more represents XX% from remaining adjusted our business years. our The EBITDA nearly XX% of comes financing and transactional to other tough through sensitive and in to we've end originated come prior we position, comes strong contribution which our a competitive notes, the adjusted make the of current some And in In XX% nearly of manage had order through economically very environment contribution EBITDA decisions. businesses. from

can spending. instituted but deferred all positions all increases eliminated starts reduced for level We've critical meetings the contributions. weeks and our These merit we manage and XXXX hard until work this hiring remainder all furloughed and discretionary also on return. we business associates match were XXX(k) example, XX% average. our deferred at to choices, For site We've of XX% freeze and think we travel curtailed by but all a for

allow are all this also million activity cost-reduction share and we're we and dividend up to spending integration and project the all these suspending foreseeable that year of $XXX of top On investments inventory payments us for CapEx, will defer minimizing actions, to repurchase future.

with combined monthly revenue don't financing generated burn this even businesses, our As for from a believe per our rentals will management year. be cash sales million flow if the through December, and and cash May actions, resume of result and roughly $XX month these we

in our that Moving and market quarter we April million $XXX at isn't are terms. of sure increased We to ended securitization available notes and to cash capacity make gross sheet to facility million receivable our securitization. the with for balance million beginning liquidity. the eligible case unrestricted of on $XX warehouse reasonable of We enough the have $XXX

At the million end support of only April, XX% have financing enough new warehouse to sales $XXX used total about the we so of assuming capacity we propensity. had half amount, another

time. only credit note at environment, sales of $XXX we to million that's We extended notes, closed period and centers our which have XXXX, maturities $XXX which through is secured at remain markets until no convertible remain rates for September additional decided of levels and attractive current take available XXXX least raise million, liquidity relatively and if our our will with open occupancies the an debt senior corporate given the an

above in the Our shutdown, XX third on end by March to first-lien the could on the compared quarter. only of the stood leverage purposes times Depending number ratio leverage length of three X.X for the three the covenant – at limit times credit times we our be agreement.

quarter of amendment As through XXXX. the facility are a this to suspend an pursuing to result, first our credit covenant we

to position situation current and when believe the as we business the have difficult business a is as we rebound. starts in emerge to storm weather positioned strong So the

answer will are you Melissa, there? be I your Steve that, questions. Operator? With happy and to Operator?

of Patrick We you. Thank line Instructions] a question have Operator: from the [Operator Scholes.

Patrick Scholes

Hi, good morning gentlemen.

on these -- mention So the I your you prepared in already. remarks if did apologize

a unsurprisingly took not the You on provision. charge loss loan large

be that provision of to the the expect forward trends would rest the loss Going what percentage? loan year, you in for

John Geller

Sure.

of we time it roughly and So went we We our then looked to starting XX at saw call 'XX. did in they XX% to was what a financial back go And were on portfolio Vistana XX-month 'XX, back up to portfolios the MVW business; those the we in from 'XX to levels. 'XX, call looked the more it crisis. the normalized well late point where a And we saw we down thought average for and how what reference. call Legacy as for it quarter this there rates both delinquency they at period started as come we was, good at performed

came went thing. We charge and that we $XX up percent the So on to a how increase we same then trends current default the we that's we levels portfolio the those million our COVID-XX the XX-month period up existing quarter. took to defaults and to prior with took for did assuming XX-ish in the a XX and

and will Time a different a It disciplined this bit of this a sales little at the the bit then in business been you but more to our too were lot back Obviously, was -- was grow little time. time chasing Patrick. terms economic if we've topline. tell is good different remember a environment we

target generally household strong incomes with average customer where terms we've in or million. like $XXX,XXX worth So, $X net of we've we talked excess of more a about of got in always and

hopefully But now comes reserve us what with higher we'll see that said, So for think down the road. defaults. we at will cover that

Patrick Scholes

for Thank you Okay. the that. detail on

month where requirement Is your due assumptions for maintained. in changes had your have dividend question was a to next that a you macro your receive that conditions since your ago? taken? you update previously call cut lending You the just yesterday the cut was that additional just -- it obviously Or you to

Steve Weisz

Yes.

that pay an any go said, indication there were the to term. there's your question continue in gave let address John which whether short require that call all something covenant we about that end or of going a I'll dividend additional is if With I that you think the don't that at I not. we the to we to First think Patrick, back March, of had

John Geller

Right. I Patrick environment we're $XXX expect in think to liquidity. we you out the went million No going that in not this additional we I need and saw mean

measures felt all we've like we're there's of -- sure making we furloughing we risks folks forward. the the the would going and until got up a company management we clearly going better forward. sales given And the back uncertainty point be in got to and of visibility we start decision while it and do a pay as of to As back taken reducing the a position to better the have the that you've business, at dividend, unless open readdress cash terms ball, all come didn't we lot There's sure other and good manage a that. crystal prudent to could that, risk. clearly And workweeks those this things into those have able think sense when we in and be to start we'll decisions then, how clearly time we've

Patrick Scholes

an last are Thank doing securitization the might market Okay. question. from be hearing on what you you issuance? and far if you. when Thoughts securitization appetite feeling your as and as next Thank you. an for One

John Geller

of right term in that. still our default on working things stuff working the like rating some through now, assumptions with securitization normal We're Yes. terms Sure. agencies

see our little going is time performs. age it'll I here. friend our because bit how we'll expect for able think think be our portfolio I perform help. And for And our to portfolio That's portfolio I to to us, a well.

increased about our talked But we said, million hundred a couple warehouse capacity as that there. we of being We got facility. dollars

remarks, prepared warehouse XX% advance which on my than future XX% less cost is goes roughly financing We in at sales that's of said rate of million through get late that I X%. As all-in $XXX our propensity. an funds and XXXX a

But get can I term we're advance you warehouse higher. much given on rates better and under we could not what now, market, What the better now, the than right the tell slightly our are getting market rates. right

the reason do the position rates to our we'd optionality. and the for. is term and securitization in And the it right we gives to and be place we looking go market liquidity a has that costs advance always need market put borrowing warehouse given until don't So, that us

ready this if over the here to bond of take to to advantage But or go market and the play the we'll back month bit. it point, just were we're market at a going we'll be and out like things to we So, next to that. here continue little two how see go comes

Patrick Scholes

Okay. Thank much. you very

John Geller

you. Thank

Operator

Brandt Montour. from Your next question line the of comes

Brandt Montour

morning. Good

Steve Weisz

Brandt. morning Good

Brandt Montour

We Good morning. details. for all appreciate it. the Thanks

you So, just markets I reopening more And hoping heavy then bit to potentially some little generation be of going think John more be do look are seeing early thereafter in out say what might sort about flesh able a more to quarter summer, you open like approach? on you if Steve phased a comparable? that's or what the might could was the let's of you drive tour to

Steve Weisz

Okay. Thanks Brandt.

of XX% I obliged I are remind our to everyone all, only that of First feel guess, closed. resorts

of The et substantial and local be municipalities fairly state cetera. restrictions in although from what can of others remain services open under terms kind offered,

that we when opening are two So, activity. for ramp to -- are in currently we it or of speak different open up currently continue reopening phases. will Obviously, I'll those take

reservations We the have May. until for new taken end of arrival call not

are all honoring existing are owner in that we May. reservations However, arriving

on up our beginning take of rentals guests preview which all begin canceled June. will to thing June have and in We and back same we'll also the begin those

travel, New back I parts to there implemented seem different as saw this South to is much call that additional are think more to that this in while there instance an what has Jersey get morning, on in the patchwork now to is regulations are other businesses of it allowing open restriction recently you're for Carolina country as that XX-day see place. be some of because place I going

at demand people single-digit as particular into what looking our is to maintained increase and will those up, back business. each pick continue skeleton the in required and obviously do will might to facility good. we imagine staffing occupancies. low largely to We've keep with staff begin we'll level see So, case you resorts, as a the But we got we bring

on a begin neutral that resort operate occupancy as operate then sales levels when we to we our least to speaking And believe with can co-resident we'll resorts we operation those up can when basis at property activities. the at continue build sales flow cash ramp is that which generally following a

even that the into even are beach middle here So, Florida, look I you this system-wide Florida. tell this, like can Florida, looking to here and May while I'd to give going -- it's you I than really you approach. in is the this to some for think day looking a mean or tell of that locations this of wait-and-see those sit I month bookings the on our say I that and going the can just like or in stronger advanced Central end be

I parks would in when say in upon various it reopen. of contingent a and attractions Central Orlando, be Florida lot here will the

that's helpful -- I doing. know of more to So, you. what hopefully a certainly don't I I if you it we're gives but get particulars, sense can into

Brandt Montour

Thank then plan move us quarters? for does. your follow-up tour actually you comments do the virtual that. for be that of that couple you kind you capabilities? expect sales that how original tours. rollout needle you? next this will digital the will Maybe over has virtual And Like meaningful tell Yes to for the on those could And wanted on the affected

Steve Weisz

a talking -- Let we're telesales. what me about operation we've about. within telesales talking number the our is company. be This We're about had expanding always clear

XXX done our sales normally we've we've what that executives our tours people the top at the of taken However, call resorts. it the line is take

place like in over people but selling sound phone. There's huge the We've tour phone sell And versus trained not fact the fact difference, in no a se we're sales per in with person. in them virtual to it how conducting is. over May today.

at more the executive we'll think – good have say executives telesales business so some they at of sales that to many very telesales. that always a write base that is see "Hey some that of very the like telesales. cases very out at to book there'll will of their existing had aren't always some good it's talking been with an a that over people comes have owner see learning honestly says that face-to-face we'll and a sales and done. best with In And at I I'd They all some it's touch and fielding call or are which consistently they've that years of the what contract be face-to-face our good are this be tours or owner good in I said had this buy form points." will

downsides even about arena. and that another early victory we're may but but it's any in had that anticipated. in that And more successful horrific in even telesales circumstances certainly we we're be. this I innovative kind is. it's I be we an find tell wait I declare set it's So very But soon results not. originally be to how It's causing might cautiously then kind If us predict big it going the we'll optimistic of what prong of of to – too certainly think more see of a can just see to getting piece you than you of telesales little it we're think to the try how so forward bigger impossible or we it's think

Brandt Montour

luck. guys. again, Thanks Okay. Good

Steve Weisz

you. Thank

Operator

have from Shojaian. the We question Jared of line a

Steve Weisz

Jared morning, Good

Operator

withdrawn. been has question That

the have a from question Dobson. of Brian We line

Steve Weisz

Hi, Brian.

Brian Dobson

morning. Hey, good

wanted I us to forward about percentage comprising travel of XXXX? the quick see the the it sales year what levels the back to following of like bookings overall to give questions of in comparison resorts you for look half call first this of to in existing your idea appetite of next this half advisories. owners? a owner of terms half in of you existing And year lift couple for in and of owners return So Could what XXXX year comparison to sales an that do second

Steve Weisz

Yes.

X.XXX use, million you So can X.X%. in XX% July That million total that at keys stays about to to the you are nights have or total last want look X.XXX and from if we Of you to of on keys depending million, XXXX. the X.XXX total tell room December XXXX. so down they vernacular were year, that owner of contrasts of the XX% I

up Owner I think X.X%. of it the transients the down the X%. second Previews transient call year is – thing XX%. is So arithmetic fair. most half actually for occupancy doing you. are for logical be to down And the the are That's

and owners. I think our percentage are to XX% feel with I the facilities actually state people more will of et typically begin book call About to travel to sales about that cetera. would our to they it reservations XX% as of being opened be comfortable full resorts expect are a very on owners them activity there's attractive dark add you little of imagine telesales think our in might sales galleries, in that higher we portfolio. in a because as been to offer even giving our what time a lot to focus the we is and their

from not But surprise up the percentage we if So say it. of it just me, – will owner degree logical sales think. with it's any it's assurance have goes can't I that obviously, traditionally where I

John Geller

of know average And run on at you're remember I aware Brian occupancy. our this XX% resorts

year. to So year, we this last in ran occupancy when of what's XX-ish the right compares books second would Steve year on have last half a percent the

a high it's only So and begin very slightly. to down it's occupancy with

Brian Dobson

right. that's Yes

than generate margins to those margins expect done usually existing which sales. lower incentives a higher those are at you margin? hold – or higher are to sales offering would new-to-timeshare So owner somewhat you Do

Steve Weisz

cash we're flow. some kind Well now sales, for per purchase rolled back incenting in plus at to are cash degree the of our we incentives. an cost make We've point. a additional providing sales supplement certainly decision finance incentives in effort a And people all than better little to offering we're we're

marketing terms In – an because a mean, with of I already have a – that owner cost carries typically lower purchase yes, owner. relationship we've

little incentives. other somewhat lower We've point that. would you that to said, improve higher got you got got than being think a they've because in your of so And With equal had that they price things before. would a all factor that margin

the So the tap we appropriate at we'll it's us certainly prognosticate happen exactly end. and but balance year the will is to of how to vein for believe the that the now trying and out do what come numbers to owner to thing see difficult in logical for that most

Brian Dobson

much. very Excellent. Thank you

Steve Weisz

Brian. on you, Thank the are anymore [Indiscernible], questions line? there

Operator

Yes.

line open. your a have Jared. the of line from is Jared, We question

Steve Weisz

Hi, Jared.

Jared Shojaian

everyone. you Hi. hear okay? Can Good me morning,

Steve Weisz

yes. We can,

Jared Shojaian

I I'm made XXXX least you've I call more in covered comments some little this, technical having if just since but beyond you the a liquidity hoping sorry. believe. I'm to difficulties you on have said liquidity, because of bit any And Okay. already shutdown I've started. understand you apologize a this through before been of of at

a But, I burning you're through about lot through a XXXX. think, you said, month year-end. would that you would only than And $XX have at million it that seem rate longer

costs inventory that obligations help there are just next some other think are coming me Can So or year? you that? about up

John Geller

the all about effect of Yes, it close Those John. it's at right to here all went reductions get to talked much on. getting When pretty and it to you're possible. the April. and Jared, Hey, at with Sure. end furloughs as that we into

call you at So $XX it, of we different close initiatives. million, of all May we we the doing at, get the what December, talked end burn end year, look through to thought about rate's when the roughly to cash started when when March, our back the could we it so pretty first that

year. think own it, end But time our our at sold you call inventory business about we pay, if yet, that part to have year, the of fees haven't beginning for we model, you maintenance capital early significant normal the working we that that the of outflows, the

like maintenance the pay So owners Just right? their that's fees, all inventory.

as San a as $XXX our Bali next to first of in about Costa year. at about you these call others, That that's commitments, we've million got have maintenance the Rica, and New million or typically, deal, look York it, lesser well degree and aren't asset-light quarter Francisco, fees, the the go pay. then new, to generally which, if so we'd $XXX is, And

everything all no outflow, first rentals, next that's $XXX of you first the about it's back those together, put we're just to the a shut with no being right? you're quarter, of kind But year; equal, timing. quarter down, items Once get sales; about of else you rate here. that typical talking through kind So when two run million

at. no That to earlier and announced commitments. that would hopefully, later a to for partner it. that and be, here, And Waikiki, given develop. built work we're would as But get with years we working need take other inventory did got down And that's we We've significant asset-light through capital we which and couple have where deal. develop an would a we're

don't We about development find we into get the needed and have out new to as year, -- there we talked deals. coming

So a point. have we this commitments other don't lot of at

on And it in so, you're on think call just outflow it, year a yes, the numbers rate that talked quarter. burn if year, about looking normalize for first you a I probably about, if you full based given full big basis, the $XX at, million the

Jared Shojaian

the really That's angle switching you here in out still meaningful the are that how gross And, open. I still resorts telesales Thank you. then sales many can figure I'm to trying Okay. have just are you helpful. just how tell is, gears, guess, me And declined much VOI and April?

just a wondering, I'm if just shares any bit little at trying to time dynamic those understand and that you're So resorts selling better.

Steve Weisz

Yes, Jared. No.

All been of are end centers, since resorts those March. have open, the our closed sales in that even of still

that, kind normalized there's me. to still that on telesales traditional I'm front of of some I going telesales basis, it don't have program. number under yes, call So, our -- here in the activity a

all program up in telesales that the just May. of material. spun And you it's beginning new we've here tell will I that the

you I that's the probably and assume in business. close to would and across purposes, think, April that intents entire So, in VOI business sales XXX% the for decline for all

Jared Shojaian

down a are then, new to know owners the retired? owners percentage And even one That's those follow-up Thank difference Okay. you. versus that you from Do loan are you. and that owners me. and more there's just further between selling if for what meaningful retired maybe have you're Thank existing balances broken quick your of helpful.

Steve Weisz

are those something certainly or might they else and years to still is The decision their make mean, have what we answer decision. of somebody this everything when ago, They a is a and retire. that gainfully of XX XXX%. them own no. percentage they were We sold I don't working. one whether don't retired things make inquire know -- they're inventory I They employed

And not nothing a than so I in and I'm of business. -- kind it swag that more would be

I So, can't. tell but wish I could I you,

Jared Shojaian

Okay. Understood. appreciate I it.

was the travel. job on much the angle in. coming this you And stable a very industry Thank and just that, I particular the a just and the But income right. if more already would you're leisure anyway you're question Just time. think, in you have lot have idea in think retirees would not, particularly for dependent all I with retired you of obviously,

John Geller

key XX talked Hey, household Jared, But I I trend years mean worth the other income owners think tend right? or net minus. earlier to about is mean, of some as plus retired first-time I I or our old interesting, buyers statistics,

-- So average about the aren't your than but worth consumer are generally if they that you're target. talking income more household we people have got retired, net given where

just said, points because retire. knowing -- once, So, mean like XX again, other nowadays doesn't whether somebody Steve just some is you data

that, but but good are of poll So those don't metrics on other owners. people think our thinking I of some terms about understand your pretty we in question,

Jared Shojaian

Thank Okay. very you much.

John Geller

you. Thank

Steve Weisz

Thank you.

Operator

you at are do further no closing Weisz, Mr. There have any this time. remarks? questions

Steve Weisz

We along conduct patience. have traditionally been -- our the apologize. your Thank technical everybody challenges there we joining is call, appreciate do. few We we do this you you, know the Alicia. a but Thank how And call we I for today. not way.

to liquidity this quickly as strong and taken in possible. have I vacationing base business a unique steps do. proven we in and don't an revenue with get illustrated great know see difficult company we've back the we hope position recurring when owner that that end. when past protect emerge necessary Well, desire a balance this substantial obviously today sheet all will its to We've have to our and model to I the and through has as and

able future, you. care to in wish other, we of And next to enjoy be Thank well encourage you be yourself. I you will Finally, and of safe, take each not-too-distant take vacation. the our hopefully, all all of care

Operator

call. This conference concludes today's

disconnect. now may You

Steve Weisz	President & Chief Executive Officer
John Geller	Executive Vice President & Chief Financial & Administrative Officer
Patrick Scholes	SunTrust Robinson Humphrey
Brandt Montour	JP Morgan
Brian Dobson	Nomura Instinet
Jared Shojaian	Wolfe Research
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Marriott Vacations Worldwide (VAC) 8 May 202020 Q1 Earnings call transcript