MARRIOTT VACATIONS WORLDWIDE Corp Q1 FY2025 earnings call

• Strong start to the year with first-time buyer sales and adjusted EBITDA growth. - Progress on modernization initiative to drive $150M-$200M run rate benefits by 2026. - Resort occupancy over 90% in Q1, forward bookings strong. - Actions to drive package pipeline, including new program on marriott.com and expanded call transfer with Marriott. - Digital strategy focus: AI-powered phone agent, optimized housekeeping, online reservations growth, virtual voice agents, and Marriott branded owners booking into Marriott hotels. - Forward-looking KPIs: Occupancy strong, tours growing, in-house core capture rates higher, package sales healthy, loan and maintenance fee delinquencies better.

Total company revenue increased year-over-year, enabling 3% higher adjusted EBITDA. Development business: tours up 1.5%, VPG down 4% (partly due to first-time buyer mix); owner sales down due to lower arrivals and VPG. Development profit up 4%, margin up 70 basis points. Rental profit down 10% to $46M. Management exchange profit up 4% to $98M. Financing profit up 6%. Corporate G&A down 3%. Total adjusted EBITDA up 3% to $192M, margins 23%.

• Updated full year contract sales guidance: tours expected to grow low single digits, VPG to decline; midpoint of contract sales range confident, initiatives to improve VPG. - Total company rental profit expected to decline ~$15M, corporate G&A flat to down slightly. - Modernization savings increased from $15M-$25M to $35M, product cost increase more modest, additional $40M-$50M savings. Reaffirmed adjusted EBITDA guidance. - Adjusted free cash flow expected $270M-$330M, excluding modernization costs; plan to dispose of $150M-$200M noncore assets.

• Volatile economic environment could impact results. - Dependence on owner arrivals and tour flow. - Uncertainty in consumer confidence affecting sales.

Q: Ben Chaiken asks about contract sales in March/April and assumptions for remainder of year A: John Geller says March was down ~4%, April similar but first-time buyer VPGs and contract sales up; owner VPGs down slightly but ramping up.

Q: Ben Chaiken asks about cost saves, product cost, and efficiencies A: Jason Marino explains $15M-$25M savings now ~$35M, product cost better than anticipated, additional $40M-$50M savings.

Q: Patrick Scholes asks about inventory availability and new inventory A: John Geller says in good position on inventory, shifting to Marriott Vacation Points product, still have inventory in other trusts.

Q: David Katz asks about tour flow activation and inventory acquisitions A: John Geller says leveraging data and analytics for tour flow, Jason Marino talks about modulating inventory repurchase prices.

Q: Stephen Grambling asks about owner growth and contract sales guidance A: John Geller and Jason Marino discuss owner growth mix towards first-time buyers, contract sales midpoint and VPG expectations.

Q: Shaun Kelley asks about contract sales change and inventory mechanics A: John Geller talks about first-time buyer mix, start of year performance, and inventory mix shift affecting product cost.