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Marriott Vacations (VAC) Q4 Earnings Lag Estimates, Stock Down

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Marriott Vacations Worldwide Corporation (VAC - Free Report) reported mixed results for fourth-quarter 2020, with earnings missing the Zacks Consensus Estimate and revenues beating the same. However, the top and the bottom line declined year over year due to the effects of the  pandemic. Following the results, shares of the company fell 2.4% during after-hours trading session on Feb 24.

Nonetheless, the management stated to have witnessed sequential improvements in occupancy, exchange transactions and contract sales. Given a rise in vaccinations, the company is optimistic about business recovery and pent-up travel demand. Also, margin improvements and sales growth are likely, following the closing of Welk Resorts acquisition.

Q4 Earnings and Revenues

In the quarter under review, adjusted loss per share came in at 5 cents, wider than the Zacks Consensus Estimate of a loss of 1 cent. In the prior-year quarter, the company reported adjusted earnings of $2.43 per share.

Total revenues of $747 million beat the consensus mark of $724 million by 3.2%. However, the top line declined 33.1% on a year-over-year basis.

 

Segmental Performances

Vacation Ownership: During the fourth quarter, the segment’s revenues declined 34.9% year over year to $646 million compared with $992 million in the prior-year quarter. Revenues, excluding cost reimbursements, fell 50% year over year due to 6% decline in financing revenues, partially offset by 3% growth in management fees.
 
The segment’s adjusted EBITDA came in at $73 million compared with $224 million in the prior-year quarter.

Exchange & Third-Party Management: The segment’s revenues totaled $73 million in the fourth quarter, down 29.1% from $103 million in the prior-year quarter. The downside was primarily caused by lower exchange and rental transactions as well as lower management fees due to the impact of the coronavirus pandemic.

During the fourth quarter, total Interval Network active members declined 9% (compared with the previous quarter’s levels) to 1.5 million, while interval International average revenue per member fell 5% to $36.62. The segment’s adjusted EBITDA declined 26.3% year over year to $28 million.

Corporate and Other results

During the fourth quarter, General and administrative costs declined $27 million year over year, courtesy of synergy savings, decline in compensation-related expenses as well as lower spending across technology, travel, and training owing to the pandemic.

Expenses & EBITDA

Total expenses in the quarter declined 24.1% year over year to $730 million compared with $962 million reported in the year-ago quarter.

The company’s adjusted EBITDA in the fourth quarter came in at $72 million compared with $207 million reported in the year-ago quarter.

Balance Sheet

As of Dec 31, 2020, cash and cash equivalents were $524 million compared with $287 million as of Dec 31, 2019.

The company had $4.3 billion in debt outstanding (net of unamortized debt issuance costs) at the end of the fourth quarter, up $0.2 billion from 2019-end. This includes $2.7 billion of corporate debt and $1.6 billion of non-recourse debt related to its securitized notes receivable.

Thanks to uncertainties related to the pandemic, the company temporarily suspended its share repurchases and dividend payouts.

2020 Highlights

Total revenues in 2020 came in at $2,886 million compared with $4,259 million in 2019.

Adjusted EBITDA in 2020 came in at $235 million compared with $758 million in 2019.

In 2020, adjusted loss per share, came in at 45 cents against earnings of $7.81 in the previous year.

Operational Update

As of Dec 31, 2020, majority of the company's sales centers under the Vacation Ownership business remained open. The company resumed operations in its California sales centers. However, sales centers were closed in Kauai and Hawaii due to government restrictions. Marriott Vacations stated that more than 90% of its resorts were reopened in its Interval International business. The company stated to have witnessed sequential improvement in resort occupancies.

During the fourth quarter, the company entered into a definitive agreement to acquire Welk Resorts. Priced at approximately $430 million (including 1.4 million of common shares), the company expects to close the deal by the second quarter of 2021. Following the integration of the business, the company is optimistic about sales growth and margin improvement opportunities derived from the same.

Zacks Rank & Peer Releases

Marriott Vacations currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Hilton Worldwide Holdings Inc. (HLT - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues missing the Zacks Consensus Estimate as well as declining on a year-over-year basis. Notably, the company’s operations were negatively impacted by strict travel restrictions stemming from rise in COVID-19 cases. In the quarter under review, Hilton’s adjusted loss per share was 10 cents, wider than the Zacks Consensus Estimate of earnings of 4 cents. In the prior-year quarter, the company reported adjusted earnings per share (EPS) of $1.00. Quarterly revenues of $890 million missed the consensus mark of $1,057 million and declined 62.4% from the year-ago quarter’s levels.

Hyatt Hotels Corporation (H - Free Report) reported dismal fourth-quarter 2020 results, with earnings and revenues not only missing the Zacks Consensus Estimate but also declining on a year-over-year basis. Notably, the top and the bottom line missed the Zacks Consensus Estimate for the third straight quarter. The company reported adjusted loss per share of $1.77, wider than the Zacks Consensus Estimate of a loss of $1.36. In the prior-year quarter, it reported adjusted EPS of 47 cents per share. Quarterly revenues of $424 million missed the consensus mark of $454 million and declined 66.7% from the year-ago quarter’s levels.

Marriott International, Inc. (MAR - Free Report) reported mixed fourth-quarter 2020 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. However, both the top and bottom lines declined sharply on a year-over-year basis. In the quarter under review, Marriott’s adjusted EPS was 12 cents, which beat the Zacks Consensus Estimate of 10 cents. In the prior-year quarter, the company had reported adjusted earnings of $1.51 per share. Meanwhile, quarterly revenues of $2,172 million missed the consensus mark of $2,425 million and declined 60% from the year-ago quarter’s levels.

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