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Marriott Vacations (VAC) Q2 Earnings Lag, Revenues Top Estimates

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Marriott Vacations Worldwide Corporation (VAC - Free Report) reported mixed second-quarter 2021 results, wherein earnings missed the Zacks Consensus Estimate but revenues surpassed the same. Following the announcement, shares of the company dropped 2.2% on Jul 28.

However, the top and the bottom line increased significantly on a year-over-year basis owing to the increase in contract sales and the company’s digital growth strategies.

Stephen P. Weisz, CEO, said “Contract sales in the second quarter grew 60% sequentially to $362 million and Adjusted EBITDA more than doubled compared to the first quarter. With the recovery in full swing, we've been able to turn our focus back towards the digitally enabled growth initiatives we have in front of us to transform our business, drive long-term growth and improve margins.”

Q2 Earnings and Revenues

The company reported adjusted earnings per share of 85 cents, missing the Zacks Consensus Estimate of 89 cents per share by 4.5%. In the year-ago quarter, the company had reported adjusted loss of $1.76 per share.

Total revenues of $979 million surpassed the consensus mark of $921 million by 6.3%. Moreover, the top line increased 104% on a year-over-year basis.

Segmental Performances

Vacation Ownership: During the second quarter, the segment’s revenues significantly increased 118% year over year to $883 million from $405 million. Revenues, excluding cost reimbursements, increased 189% year over year. Also, the figure improved 52% compared with first-quarter 2021. Moreover, in the second quarter, revenues from sale of vacation ownership products increased 82% and development profit margin improved to 22%, quarter over quarter.

The segment’s adjusted EBITDA came in at $182 million against ($19) million in the prior-year quarter.

Exchange & Third-Party Management: The segment’s revenues totaled $86 million in the second quarter, up 48.3% from $58 million in the prior-year quarter.

During the second quarter, total Interval Network active members declined 10.7% (compared with the previous quarter’s levels) to 1.3 million, while interval average revenue per member rose 53.7% to $46.36. The segment’s adjusted EBITDA declined $4 million to $37 million, quarter over quarter.

Corporate and Other Results

During the second quarter, general and administrative costs increased $47 million year over year on an increase in net overall spending, reinstating compensation plans following 2020 and lower credit in the current year related to incentives under the CARES Act.

Expenses & EBITDA

Total expenses in the quarter increased 67% year over year to $870 million from $521 million reported in the year-ago quarter.

The company’s adjusted EBITDA in the second quarter amounted to $164 million against ($10) million reported in the year-ago quarter.

Balance Sheet

As of Jun 30, 2021, cash and cash equivalents were $1.3 billion, significantly up from $524 million as of Dec 31, 2020.

The company had $5.3 billion in debt outstanding (net of unamortized debt issuance costs) at the end of the second quarter, up $0.1 billion from 2020-end. This includes $3.5 billion of corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

Zacks Rank & Key Picks

Marriott Vacations carries a Zacks Rank #3 (Hold). Some top-ranked stocks in the Zacks Hotels and Motels industry include Huazhu Group Limited (HTHT - Free Report) , Choice Hotels International, Inc. (CHH - Free Report) and Playa Hotels & Resorts N.V. (PLYA - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Huazhu Group, Choice Hotels and Playa Hotels & Resorts’ earnings for 2021 are expected to surge 167%, 54.5% and 37.7% year over year, respectively.