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MARRIOTT VACATIONS WORLDWIDE Corp (VAC)·Q4 2024 Earnings Summary

Executive Summary

  • Q4 2024 delivered 11% revenue growth to $1.33B, GAAP EPS $1.30, adjusted EPS $1.86, and adjusted EBITDA $185M; consolidated VO contract sales rose 7% to $477M with 9% first‑time buyer growth, but margins compressed on lower development/financing profit and higher M&S costs .
  • Management introduced 2025 guidance: contract sales $1.85–$1.93B, adjusted EBITDA $750–$780M, adjusted EPS $6.30–$7.00, adjusted FCF $290–$350M; supplemental assumptions include net interest $168–$173M, D&A $148–$150M, tax 34–36% .
  • Strategic modernization targeted to add $150–$200M run‑rate adjusted EBITDA by end of 2026 (half cost efficiencies, half revenue acceleration); 2025 guide embeds $15–$25M of benefits, stepping up $70–$80M in 2026, with full P&L benefit in 2027 .
  • Setup into 2025: 260K preview packages, stabilized delinquencies (12% reserve), but near‑term headwinds include lower rental profit ($15M), higher variable comp ($15–$20M), and mix to lower‑ADR markets; Q1 contract sales could be “flattish” after early‑February softness that has stabilized .
  • Dividend increased to $0.79/share (payable Mar 19, 2025) from $0.76 in Oct 2024; liquidity >$900M, leverage ~4x, no corporate maturities until early 2026—key supports for equity holders into execution of modernization .

What Went Well and What Went Wrong

  • What Went Well

    • Leisure demand remained resilient; system occupancy 90% (Hawaii 95%); tours +8% YoY; VO contract sales +7% with first‑time buyer sales +9% YoY; Hawaii sales grew double digits .
    • Cost discipline: corporate G&A down $20M YoY in Q4; total company adjusted EBITDA -1% YoY despite margin pressure; VO rental profit increased 20% YoY; VO rental occupancy +300 bps .
    • Strategic roadmap: business modernization expected to generate $150–$200M run‑rate adjusted EBITDA by 2026 with technology, automation, and inventory/revenue management upgrades; Investor Day planned for 2025 .

  • What Went Wrong

    • Margin compression: VO segment adj. EBITDA margin fell to 27.0% (‑550 bps YoY) on lower development and financing profit and higher marketing & sales; VO segment margin 21.0% (‑630 bps YoY) .
    • Exchange headwinds: Exchange & Third‑Party Management revenues ex‑reimbursements down 13% YoY; segment adj. EBITDA down 27% on weaker Interval transactions and Maui‑related fee pressure at Aqua‑Aston .
    • 2025 near‑term headwinds: expected ~$15M decline in VO rental profit; higher variable comp ($15–$20M) and resumption of project spend ($8–$10M); Q1 sales may be flat after early‑Feb softness .

Financial Results

Overall results vs prior year and sequential:

MetricQ4 2023Q3 2024Q4 2024
Revenue ($B)$1.19 $1.31 $1.33
GAAP Diluted EPS ($)$0.93 $2.12 $1.30
Adjusted EPS ($)$1.88 $1.80 $1.86
Adjusted EBITDA ($M)$186 $198 $185
Adjusted EBITDA Margin (%)23.3% 23.8% 21.0%

Segment detail:

SegmentMetricQ4 2023Q3 2024Q4 2024
Vacation OwnershipRevenues ex cost reimbursements ($M)$728 $766 $817
Segment Adj. EBITDA ($M)$236 $231 $221
Segment Adj. EBITDA Margin (%)32.5% 30.1% 27.0%
Exchange & TPMRevenues ex cost reimbursements ($M)$58 $55 $49
Segment Adj. EBITDA ($M)$31 $23 $22
Segment Adj. EBITDA Margin (%)52.2% 43.1% 44.2%

Vacation Ownership KPIs:

KPIQ4 2023Q3 2024Q4 2024
Consolidated Contract Sales ($M)$447 $459 $477
VPG ($)$4,002 $3,888 $3,916
Tours105,580 110,557 113,828

Exchange KPIs:

KPIQ4 2023Q3 2024Q4 2024
Active Interval Members (000s)1,564 1,545 1,546
Avg Revenue per Member ($)36.16 38.93 35.36

Balance sheet and cash flow (select):

  • Liquidity ~$914M; cash and cash equivalents $197M; revolver availability $607M .
  • Corporate debt ~$3.1B; non‑recourse securitized debt ~$2.1B (notes receivable) .
  • FY24 cash provided by operations $205M; adjusted FCF $278M .

Non‑GAAP adjustments (Q4 2024 prominent items): impairment $28M; FX translation loss $13M; litigation $2M; restructuring $6M; insurance proceeds ($5M); gain on disposition ($6M) .

Estimates vs. actuals

  • Wall Street consensus (S&P Global) was unavailable due to a temporary data access limit at the time of analysis. As a result, we cannot present vs‑consensus deltas for revenue or EPS this quarter (Values retrieved from S&P Global unavailable).

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Contract Sales ($B)FY2025N/A$1.85–$1.93New
Adjusted EBITDA ($M)FY2025N/A$750–$780New
Adjusted EPS ($)FY2025N/A$6.30–$7.00New
Adjusted Net Income ($M)FY2025N/A$250–$280New
Adjusted Free Cash Flow ($M)FY2025N/A$290–$350New
Net Interest Expense ($M)FY2025N/A$168–$173New
D&A ($M)FY2025N/A$148–$150New
Tax RateFY2025N/A34%–36%New
VO Adj. EBITDAFY2025N/A~+5% YoY (qualitative)New color
Exchange Adj. EBITDAFY2025N/A~Flat YoY (qualitative)New color
Rental Profit (VO)FY2025N/A~($15M) YoY headwindNew color
Corporate G&AFY2025N/AHigher YoY (variable comp $15–$20M; project spend +$8–$10M)New color
Dividend/Share ($)Quarterly$0.76 (paid Oct 2024)$0.79 (payable Mar 19, 2025)Raised

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q4 2024)Trend
Modernization/cost & revenue programInitiated SBO office; $50–$100M annual efficiencies targeted over 2 years; IT/digital progress, data/analytics Program expanded to $150–$200M run‑rate adj. EBITDA by end‑2026; $15–$25M in 2025, +$70–$80M in 2026 Improving scope/visibility
First‑time buyersQ2: VPG softness; raised reserve $70M; tours +9%; focus on promotions First‑time buyer sales +9%; >20K FTB added in 2024; pipeline 260K packages Positive mix for long‑term growth; near‑term M&S pressure
Credit/DelinquenciesDelinquencies stabilized; reserve 11–12% exit run‑rate; below‑700 FICO ~28% of book Defaults/delinquencies largely unchanged YoY in Q4; sales reserve near 12%; Q1 slight headwind then tailwind after Q2 lap Stabilizing
Maui/Aqua‑AstonRecovery slower than expected in 1H; Interval transactions soft Interval transactions soft; reduced management fees at Aqua‑Aston; improvement expected 2H25 Gradual recovery
Rental dynamics2024 rentals strong; occupancy +700 bps in Q3; one‑time benefits 2025 rental profit guided down ~$15M; 2024 saw ~$10M one‑time benefits; mix to lower‑ADR markets Normalizing lower
Technology/digital/AISalesforce platform; chatbot/voice; 60% self‑service; >$1B digital payments Continued focus on digitization, rev/inventory systems to lift VPG, occupancy, ADR Ongoing execution

Management Commentary

  • “We had a solid fourth quarter… contract sales growing 7% year‑over‑year… We expect to generate $150 million to $200 million in run‑rate benefits… by the end of 2026, with half coming from cost savings and efficiencies and the balance from accelerating revenue growth.” — John Geller, CEO .
  • “Adjusted EBITDA in our Vacation Ownership segment was $221 million… defaults and delinquencies were largely unchanged… our sales reserve was nearly 12%… leverage of roughly 4x… more than $900 million in liquidity and no corporate debt maturities until early 2026.” — Jason Marino, CFO .
  • “After a good January, we saw some softness at the beginning of February, which has since stabilized… contract sales in Q1 could be flattish…” — Jason Marino .
  • “We will continue to… harness… data and analytics… [and] leverage a new state‑of‑the‑art revenue and inventory management platform… [to] drive increased occupancy and higher ADR.” — John Geller .

Q&A Highlights

  • First‑time buyer strategy: Expect continued outsized first‑time buyer growth; financing propensity unchanged; higher acquisition cost vs. owner upgrades acknowledged .
  • Inventory repurchase: $90–$95M in reacquired inventory planned in 2025; driven by long‑tenured owners churning and HOA returns, not tied to sales reserve increases .
  • Rental headwind and costs: 2024 benefited by ~$10M one‑time rental items; 2025 mix to lower‑ADR markets; variable comp +$15–$20M and project spend +$8–$10M YoY .
  • Sales reserve cadence: Around 12% in Q1 (slight YoY headwind), tailwind after lapping the 2024 reserve increase from Q2; second half relatively flat YoY .
  • Segment outlook color: VO adj. EBITDA +~5% in 2025; Exchange roughly flat; G&A up on incentives and tech spend but aided by modernization savings .

Estimates Context

  • We attempted to retrieve S&P Global (Capital IQ) consensus for Q4 2024 (revenue, EPS, EBITDA, target price, recommendation) but access was temporarily rate‑limited, so consensus figures were unavailable at the time of this analysis. As a result, vs‑consensus comparisons are not shown this quarter (Values retrieved from S&P Global unavailable).

Key Takeaways for Investors

  • Demand is intact (90% occupancy; 95% Hawaii) and tour pipeline is robust (260K), supporting contract sales growth, though near‑term Q1 sales could be flattish after early‑Feb softness that stabilized .
  • Mix shift toward first‑time buyers supports long‑term owner base expansion but pressures near‑term margins and marketing & sales efficiency; watch VPG progression and sales reserve cadence through 1H25 .
  • Modernization is the central catalyst: $150–$200M run‑rate adjusted EBITDA by end‑2026, with initial $15–$25M in 2025 and a larger step in 2026; execution on automation, procurement, IT consolidation, and revenue systems is key to multiple expansion .
  • 2025 earnings bridge implies transitory headwinds (rental ~$15M, variable comp ~$15–$20M) offset by cost actions and revenue systems; track sequential margin stabilization as benefits build in 2H .
  • Balance sheet/liquidity and dividend growth (to $0.79) underpin capital returns while management targets leverage reduction toward ~3x over time and no maturities until early 2026 .
  • Exchange/Aqua‑Aston remains a drag near term; improvement expected with Maui visitation recovery in 2H25—monitor Interval transactions and fee trends .
  • Watch for Investor Day in 2025 for deeper detail on modernization milestones, segment growth levers, and product pipeline (e.g., City Collection, Nashville, APAC expansion) .

Appendix: Additional Data Points

  • Development margin (Q4 2024): 25.7% (reported) vs 32.0% in Q4 2023; adjusted development profit $103M (Q4 2024) vs $124M (Q4 2023) .
  • Corporate/Other: G&A down 23% YoY in Q4; total company adjusted EBITDA down 1% YoY to $185M .
  • Dividend: $0.79 per share authorized (record March 5, payable ~March 19, 2025); prior dividend $0.76 paid in Oct 2024 .

Sources: Q4 2024 press release and 8‑K (Item 2.02) ; Q4 2024 earnings call transcript ; Q3 2024 press release and transcript ; Q2 2024 transcript ; Dividend press release (Feb 20, 2025) .