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MV

MARRIOTT VACATIONS WORLDWIDE Corp (VAC)·Q3 2025 Earnings Summary

Executive Summary

  • Q3 performance was mixed: consolidated contract sales fell 4% YoY to $439M, VPG declined 5%, and Adjusted EBITDA fell 15% to $170M, while management & exchange and financing profits grew; GAAP net loss was $2M (−$0.07 diluted EPS) but Adjusted EPS was $1.69 .
  • Versus S&P Global consensus, VAC delivered an EPS beat but EBITDA miss: Adjusted EPS $1.69 vs $1.60 consensus*; Adjusted EBITDA $170M vs $184.6M consensus*; revenue reporting is mixed (see Estimates Context) .
  • Guidance tightened/lowered: 2025 Adjusted EBITDA to $740–$755M (from $750–$780M) and Adjusted FCF to $235–$270M (from $270–$330M); contract sales narrowed to $1.76–$1.78B; tax rate reduced to 29%–30% .
  • Management outlined corrective actions (realigning S&M incentives, curbing commercial rentals, implementing FICO screening) and flagged Investor Day on Dec 17 as a catalyst to detail modernization benefits ($150–$200M run-rate by end 2026) .

What Went Well and What Went Wrong

What Went Well

  • Recurring revenue engines were resilient: Management & exchange profit +12% YoY to $96M; financing profit +5% to $52M .
  • Credit and liquidity improved: delinquencies declined 100 bps YoY; $1.428B of liquidity; issued $575M 6.5% senior notes to refinance 0% converts maturing January; next corporate maturity December 2027 .
  • Operational initiatives underway: $20M annualized cost savings from HR/Finance reorg in August; modernization program still targeting $150–$200M run-rate EBITDA benefit by end 2026 .
    Quote: “We are not satisfied with this performance and are taking concrete actions to return to growth… curbing third-party commercial rental activity… implementing FICO-based screening…” .

What Went Wrong

  • Sales softness in key markets: Orlando and Maui combined drove roughly $20M contract sales shortfall; VPG −5% and tours −1% pressured VOI development profit (−$33M YoY) .
  • Rental pressure: rental profit fell $17M YoY to $21M on higher unsold maintenance fees and Interval getaways; rental profit margin dropped 1,060 bps to 14.3% .
  • Margin compression: VO segment Adjusted EBITDA margin fell 410 bps (30.2%→26.1%); consolidated Adjusted EBITDA margin −320 bps YoY .

Financial Results

GAAP & Non-GAAP summary (YoY)

MetricQ3 2024Q3 2025
Total Revenues ($USD Millions)$1,305 $1,263
Revenues ex. Cost Reimbursements ($USD Millions)$832 $812
Diluted EPS (GAAP)$2.12 $(0.07)
Adjusted EPS (Diluted)$1.83 $1.69
Adjusted EBITDA ($USD Millions)$200 $170

Sequential view on key operating and profit metrics

MetricQ2 2025Q3 2025
Adjusted EBITDA ($USD Millions)$203 $170
Consolidated Contract Sales ($USD Millions)$445 $439
VPG ($)$3,631 $3,700
Tours (count)114,402 109,609

Note: We searched for Q2 2025 8‑K/press release revenue and EPS and did not find them in the retrieved documents; hence we show sequential comparison on available operating/profit metrics – .

Segment breakdown (Q3)

SegmentRevenues ex. Cost Reimbursements ($USD Millions)Adjusted EBITDA ($USD Millions)Adjusted EBITDA Margin
Vacation Ownership (Q3’24)$766 $232 30.2%
Vacation Ownership (Q3’25)$748 $195 26.1%
Exchange & 3rd-Party Mgmt (Q3’24)$55 $23 43.3%
Exchange & 3rd-Party Mgmt (Q3’25)$51 $21 42.3%

KPIs and other P&L line items (Q3)

KPI / Profit LineQ3 2024Q3 2025
Consolidated Contract Sales ($USD Millions)$459 $439
VPG ($)$3,888 $3,700
Tours (count)110,557 109,609
Sales Reserve (% of contract sales, net)12.0% (FY guide reference) 13%
Development Profit ($USD Millions)$105 $72
Rental Profit ($USD Millions)$38 $21
Mgmt & Exchange Profit ($USD Millions)$84 $96
Financing Profit ($USD Millions)$50 $52

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Contract Sales ($B)FY 2025$1.74–$1.83 $1.76–$1.78 Narrowed
Adjusted EBITDA ($M)FY 2025$750–$780 $740–$755 Lowered
Adjusted NI ($M)FY 2025$250–$280 $262–$279 Tightened
Adjusted EPS (Diluted)FY 2025$6.40–$7.10 $6.70–$7.10 Midpoint raised
Adjusted FCF ($M)FY 2025$270–$330 $235–$270 Lowered
Net Interest Exp ($M)FY 2025$175–$172 $172–$170 Lowered
D&A ($M)FY 2025$150–$148 $150–$149 Slight ↑
Tax Rate (Adj)FY 202533%–34% 29%–30% Lowered

Other FY commentary: 2025 rental profit now “decline $30M” (slightly worse), management & exchange profit “$380M”, financing profit “~$210M”, corporate G&A flat to down slightly; Adjusted FCF excludes ~$100M of one-time modernization cash costs .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q2 & Q1)Current Period (Q3)Trend
Modernization programOn track for $150–$200M run-rate by end 2026; $35M 2025 P&L, $60–$80M 2026; AI propensity modeling; sales training ramp .Still on track; $20M annual cost saves from Aug reorg; expecting $60–$80M to flow in 2026, full run-rate 2027 .Execution continuing; cost saves materializing.
Sales drivers (VPG/tours)First-time buyer growth; VPG pressure from mix; initiatives to drive near-term owner stays –.VPG −5%; tours −1%; comp headwind Orlando/Maui; changes to incentives; FICO-screening; owner arrival capture .Near-term softness; corrective levers deployed.
Commercial rental activityNot highlighted prior.Identified small subset exploiting rentals; tech monitoring; enforcement planned to boost owner arrivals/VPG –.New focus; medium-term fix.
Rental businessQ2 rental profit −$7M YoY; ADR up but costs elevated .Q3 rental profit −$17M YoY; higher unsold maintenance fees; expect higher costs into 2026; working to offset with VEDPAR .Headwind persists.
Credit/ReservesQ2 reserve ~13% on higher propensity; delinquencies at 2‑yr lows; FY reserve 12.5% guide –.Q3 reserve 13%; delinquencies down 100 bps YoY; financing propensity higher .Reserve elevated; credit trends improving.
Maui recoveryQ2: Hawaii strength; Maui sales flat; repiping; wildfire risk .Maui one of two soft spots; sales talent turnover and package pipeline still normalizing .Gradual recovery; still choppy.

Management Commentary

  • “We are not satisfied… taking concrete actions to return to growth, including realigning sales and marketing field incentives… curbing third-party commercial rental activity… implementing FICO-based screening…” – John Geller, CEO .
  • “Adjusted EBITDA decreased 15% YoY to $170M… We issued $575M of 6.5% senior notes… leverage 4.1x and $1.4B in liquidity… updating full-year guidance…” – Jason Marino, CFO .
  • “October VPGs were down less than they were in Q3, and we expect occupancy to remain strong… 270,000 packages in our pipeline… delinquencies are down meaningfully year-over-year.” – John Geller .
  • “We reorganized HR and finance/accounting… transitioned work to third-party providers… $20M in annual costs that will fall to the bottom line.” – John Geller .

Q&A Highlights

  • Top-line revival levers: incentives reset, sales training, FICO screening, curb commercial rentals; October VPG flattish as Q4 starts .
  • Commercial rental enforcement: a small subset of owners arbitraging high-demand inventory; tech tracking; enforcement to free owner inventory and lift tours/VPG .
  • Strategic alternatives: Board evaluating all options to enhance shareholder value amid underperformance .
  • Q4 confidence: guided mostly reduced by Q3 miss; early Q4 VPG trends better; strong occupancy and keys on the books .
  • Rental/unsold maintenance fees: higher unsold maintenance fees expected into 2026; profitability depends on market ADRs; Orlando/desert ADRs often don’t cover reserves .
  • Salesforce dynamics: turnover in competitive markets (Orlando, Vegas); Maui staffing impacted by wildfire displacement; retaining/recruiting high-VPG talent is critical .

Estimates Context

  • Q3 2025 vs S&P Global consensus:
    • Primary EPS: Actual $1.69 vs $1.60 consensus* → beat .
    • Adjusted EBITDA: Actual $170M vs $184.6M consensus* → miss .
    • Revenue: Press release reports total revenue $1.263B and revenues ex cost reimbursements $812M; S&P Global revenue consensus for Q3 shows $1.313B*, with the dataset’s “actual” field showing $812M*, which aligns to revenues ex cost reimbursements, not total revenue .
  • Q4 2025 (next quarter) consensus: EPS $1.733*, EBITDA $180.7M*, Revenue $1.313B*.

Values retrieved from S&P Global.

Key Takeaways for Investors

  • Mix headwinds and market-specific softness (Orlando/Maui) drove a top-line/margin miss on EBITDA, but EPS was protected by lower tax and adjustments; recurring revenue engines (management/exchange, financing) are stabilizing earnings quality .
  • Guidance reset narrows risk: EBITDA/FCF bars lowered, tax rate reduced; execution against modernization/cost savings and curbing commercial rentals are the primary levers into 2026 .
  • Credit quality improving (delinquencies −100 bps YoY) even as financing propensity rises; reserve at ~13% near-term but could ease with sustained improvement .
  • Rental remains a swing factor given higher unsold maintenance fees; watch VEDPAR trajectory and Q4 seasonality rebound to gauge 2026 run-rate .
  • Investor Day (Dec 17) is a near-term catalyst for more detailed 2026–2027 bridge on modernization and capital allocation (deleveraging vs buybacks) .
  • Sequentially, Adjusted EBITDA and tours dipped, but early Q4 VPG stabilization and 270k package pipeline are constructive leading indicators .
  • Balance sheet manageable post-refi (6.5% notes) with ample liquidity; next maturity in late 2027 reduces near-term refinancing risk .

Appendix: Consensus vs Actual (Q3 2025)

MetricConsensus (Q3 2025)Actual (Q3 2025)
Primary EPS (Diluted)$1.6006*$1.69
EBITDA ($USD Millions)184.6*170
Revenue ($USD Millions)1,312.8*Total: 1,263 ; Ex cost reimbursements: 812

Values retrieved from S&P Global.