Marriott Vacations Worldwide Corporation

Greetings. Welcome to Marriott Vacations Worldwide 4th Quarter 2021 Earnings Call. At this time, all participants will be in listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero from your telephone keypad. Please note, this conference is being recorded. At this time, I'll turn the conference over to Neal Goldner, Vice President of Investor Relations. Neal, you may now begin.

Thank you, Rob, and welcome to Marriott Vacations Worldwide Fourth Quarter 2021 Earnings Conference Call. I am joined today by Steve Wise, Chief Executive Officer, our President, John Geller, and Tony Terry, our Executive Vice President and Chief Financial Officer. I need to remind everyone that many of our comments today are not historical facts and are considered forward-looking statements under federal securities laws. These statements are subject to numerous risks and uncertainties, as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the press release that we issued last night and the presentation we issued to our website this morning, as well as our comments on this call, are effective only when made and will not be updated as actual events unfold. Throughout the call, we will make references to non-GAAP financial information. You can find a reconciliation of non-GAF financial measures referred to in our remarks in the schedules attached to our press release, as well as the investor relations page of our website at ir.mvwc.com. It's now my pleasure to turn the call over to CEO Steve Weiss.

Thanks, Neil. Good morning, everyone, and thank you for joining our fourth quarter earnings call. At the start of 2020, I couldn't have imagined we'd still be navigating the landscape we have over the past two years. But despite the continued challenges of the COVID pandemic, the past two years proved people still enjoy going on vacation, arguably now more than ever. It also shows we have a resilient business model that's leisure-focused and that our owners, members, and guests value the time they spend with us. I couldn't be more proud of our associates' continued dedication to our owners, guests, and each other, and how our organization performed this past year. culminating with our highest quarterly adjusted EBITDA since being spun off more than 10 years ago. As you know, we have a long history of supporting philanthropic efforts such as Children's Miracle Network Hospitals, Clean the World, and our Harvest for Hunger campaign. With that in mind, I'm very happy to say we are making an exciting commitment with Make-A-Wish to offer unique Phyllis days and other memorable vacation experiences for deserving children and their families. We all know how vacations are restorative and invigorating, and we are honored to share our vacation destinations and experiences with those who need them most. With a strong recovery in our business, we were able to restart our longstanding history of returning excess cash to shareholders, returning nearly $100 million in the fourth quarter, including repurchasing nearly $74 million of our common stock and reinstating our dividend at pre-pandemic levels. And last week, our board approved a 15% increase to our quarterly dividend to $0.62 per share and increased our share repurchase authorization, bringing our remaining capacity to approximately $445 million. Looking ahead, we see continued strength in our business and our products, which we expect will enable us to drive strong growth and free cash flow this year and for years to come. Before I turn the call over to John and Tony, I'd like to share what I think are some of the highlights of the quarter, and I'll start with our vacation ownership business. Occupancies were again very strong despite the emergence of the Omicron variant late in the quarter, illustrating people's desire to go on vacation. In fact, many of our North American resorts had occupancies in line with or better than 2019. For example, we ran over 95% occupancy in Hawaii and our Florida beach resorts for the quarter. Occupancy in our desert resorts, which include Phoenix, Scottsdale, and Palm Desert, exceeded 90%. Orlando, another large market for us, ran over 85%. And a couple of our urban locations have also come back nicely, with San Diego running 85% occupancy and Boston running nearly 95%. With domestic occupancy averaging nearly 90% in the quarter, strong sequential tour growth, and VPG 23% higher than two years ago, we delivered $406 million in contract sales exceeding 2019 levels for the first time since the pandemic began. First-time buyers represented 28% of contract sales, which was a 600 basis point improvement from last year's fourth quarter. As I've mentioned in the past, growing first-time buyers is a key part of our overall strategy as they historically double their revenue contribution within the first five years of ownership. So I'm excited to see the progress we're making in this area. In addition, our digital booking tool that enables guests to buy preview packages online and, in many cases, book their vacation dates is now live and positively impacting our package sales growth. We're also making good progress integrating Welk into our Hyatt vacation ownership business. Interval International successfully welcomed Welk owners as members effective January 1st. Our plan to rebrand Welk's points program to Hyatt in the second quarter is progressing. This will enable our former Welk sales centers to start selling a Hyatt branded vacation ownership product. In the second quarter, the resorts are also expected to be added to the Hyatt reservation system giving us the ability to list our rental inventory on hyatt.com. We also plan to implement new owner benefits, including enabling Welk owners the ability to trade their points for World of Hyatt points. And later this year, we will begin rebranding the individual resorts, which we expect to complete next year. So 2022 is looking to be very busy, but exciting, an exciting year for our Hyatt business. Moving to our exchange and third-party management business, in December, we announced an exciting new agreement affiliating Disney Vacation Club with Interval. With its nearly 270,000 members, Disney Vacation Club is one of the largest brand names in the vacation ownership business, and this agreement further solidifies Interval's position as the premier exchange company in the industry, representing some of the highest quality and most sought-after resorts in the business. Interval also welcomed more than 38,000 new WELC members in January, as well as nearly 12,000 new members from El Cid Resorts. Interval also entered into a long-term agreement with RCD Hotels to affiliate their newest project, Nobu Residences Las Cabos, which is expected to open later this year. So let's talk about the coming year. Our marketing team continues to do a great job growing our tour package pipeline. We ended the year with nearly 224,000 tours in our pipeline, which was 5% higher than where we stood at the end of the third quarter, and roughly in line with year-end 2019. This puts us in a great position to drive tours and sales this year. In a recent CNBC survey, 70% of leisure travelers said they plan to spend more money on travel in 2022 than they have in any of the past five years. In a separate Expedia survey, 81% of people said they planned to take at least one vacation with family members this year. And two-thirds of our owners surveyed said they were likely to travel in the next three months. If the past two years have proven anything, it's that people appreciate their time with family and friends and want to go on vacation. As a company whose sole purpose is providing travelers great vacation experiences, we couldn't be in a better position. We also have a lot of new things we've been working on to grow our business long term, which we will discuss in more detail during our June 17th Investor Day. From launching a new unified product combining our Westin, Marriott, and Sheraton branded products into one new offering, to investing to provide more personalized experiences for our customer, to using data analytics in new and exciting ways to further enhance our business, We are in a great position to grow our company this year and for many years to come. With that, I'll turn the call over to John.