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Marriott (MAR) Q3 Earnings Match Estimates, Revenues Top

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Marriott International, Inc. (MAR - Free Report) reported third-quarter 2022 results, with earnings meeting the Zacks Consensus Estimate and revenues surpassing the same. The top and the bottom line increased on a year-over-year basis.

During the quarter, the company benefited from solid demand across all customer segments and robust leisure demand. Also, it reported a recovery in RevPAR above 2019 levels. With global trends improving, the company expects the recovery momentum to continue in the upcoming periods as well.

Earnings & Revenue Discussion

In the quarter under review, Marriott’s adjusted earnings per share (EPS) were $1.69, in line with the Zacks Consensus Estimate. In the prior-year quarter, the company reported adjusted earnings of 99 cents per share.

Marriott International, Inc. Price, Consensus and EPS Surprise

 

Marriott International, Inc. Price, Consensus and EPS Surprise

Marriott International, Inc. price-consensus-eps-surprise-chart | Marriott International, Inc. Quote

 

Quarterly revenues of $5,313 million surpassed the consensus mark of $5,266 million. The top line surged 34.6% on a year-over-year basis. During the quarter, revenues from Base management and Franchise fee came in at $275 million and $678 million compared with $190 million and $533 million reported in the prior-year quarter. The upside was primarily backed by strength in lodging demand and unit growth. During the quarter, the company reported solid contributions from co-brand credit card fees, backed by strength in global cardholder acquisitions and cardholder spending.

RevPAR & Margins

In the quarter under review, RevPAR for worldwide comparable system-wide properties increased 1.8% (in constant dollars) compared with 2019 levels. The upside was primarily backed by a 10.2% increase in average daily rate (ADR) from 2019 levels. However, occupancy declined 5.8% from 2019 levels.

Comparable system-wide RevPAR in the Asia Pacific (excluding China) fell 14.1% (in constant dollars) from 2019 levels. Occupancy declined 11.3% from 2019 levels but ADR inched up 1.4% from 2019 levels. Comparable system-wide RevPAR in Greater China fell 23% from 2019 levels.

On a constant-dollar basis, international comparable system-wide RevPAR fell 2.4% from 2019 levels. Occupancy declined 7.9% from 2019 levels. However, ADR was up 9.8% from 2019 levels. Comparable system-wide RevPAR in Europe increased 5.9%, while RevPAR in the Caribbean & Latin America increased 17.6% from 2019 levels.

Total expenses during the quarter increased 28.1% year over year to $ 4,355 million, primarily owing to a rise in Reimbursed expenses.

During the third quarter, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) amounted to $985 million compared with $683 million reported in the prior-year quarter.

Balance sheet

At the end of the third quarter, Marriott's net debt amounted to $8.4 billion compared with $8.3 billion reported in the previous quarter. Cash and cash equivalents, as of Sep 30, 2022, came in at $1 billion compared with $1.4 billion reported in the previous quarter.

Year to date (through Oct 31, 2022), the company repurchased 11.1 million shares of its common stock worth approximately $1.7 billion.

Unit Developments

At the end of third-quarter 2022, Marriott's development pipeline totaled 3,024 hotels, with approximately 502,000 rooms. Nearly 204,800 rooms were under construction.

During the quarter, the company added 77 new properties (14,071 rooms) to its worldwide lodging portfolio. For 2022, the company anticipates net room growth at approximately 3% year over year.

Outlook

For fourth-quarter 2022, the company anticipates gross fee revenues in the range of $1,070-$1,090 million. Adjusted EBITDA is expected to be between $1,007 million and $1,037 million. The company expects fourth-quarter diluted EPS to be between $1.77 and $1.84.

For the fourth quarter, the company anticipates worldwide system-wide RevPAR to increase 2-4% growth from 2019 levels. RevPAR in the United States and Canada is expected to increase 4-6% from 2019 levels. Meanwhile, international RevPAR is expected to lie between negative 2% to flat from 2019 levels.

For 2022, the company anticipates gross fee revenues in the range of $ $4,017-$4,037 million. General and administrative expenses for 2022 are projected to be between $890 million and $880 million. Adjusted EBITDA is expected to be between $3,770 million to $3,800 million. The company expects 2022 diluted EPS in the range of $6.51-$6.58. Full-year capital return is projected to be more than $2,700 million.

The company anticipates 2022 worldwide RevPAR to decline 3-5% from 2019 levels.

Zacks Rank & Other Key Picks

Marriott sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Some other top-ranked stocks in the Zacks Consumer Discretionary sector are BJ's Wholesale Club Holdings, Inc. (BJ - Free Report) , Crocs, Inc. (CROX - Free Report) and Boyd Gaming Corporation (BYD - Free Report) .

BJ's Wholesale Club sports a Zacks Rank #1. BJ has a trailing four-quarter earnings surprise of 16.5%, on average. The stock has increased 24.4% in the past year.

The Zacks Consensus Estimate for BJ’s 2023 sales and EPS indicates a surge of 14.3% and 10.8%, respectively, from the year-ago period’s reported levels.

Crocs carries a Zacks Rank #2 (Buy). CROX has a long-term earnings growth rate of 15%. Shares of Crocs have plunged 61.4% in the past year.

The Zacks Consensus Estimate for CROX’s 2022 sales and EPS indicates a rise of 49.8% and 20.9%, respectively, from the year-ago period’s levels.

Boyd Gaming carries a Zacks Rank #2. BYD has a long-term earnings growth rate of 12.8%. The stock has declined 13.3% in the past year.

The Zacks Consensus Estimate for BYD’s 2022 sales and EPS indicates growth of 4.4% and 11.7%, respectively, from the year-ago period’s reported levels.

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