Marriott Vacations Worldwide Corporation

Welcome to the Marriott Vacations Worldwide First Quarter 2025 Earnings Call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the call over to your host, Mr. Neil Goldner, Vice President, Investor Relations. Thank you. You may begin.

Thank you, Melissa, and welcome to the Marriott Vacations Worldwide First Quarter Earnings Conference Call. I am joined today by John Geller, our President and Chief Executive Officer, and Jason Marino, 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, which could cause future results that differ materially from those expressed in or implied by our comments. Forward-looking statements in the press release, as well as 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-GAF financial information. You can find a reconciliation of non-GAF financial measures in the schedules attached to our press release and on our website. In response to investor feedback, we changed the presentation of revenue and profit on pages A7 and H8. A8 at the press release this quarter to facilitate easier year-over-year comparisons. Importantly, we have not removed any information that we previously provided. In addition, on page A7, we also added a bridge from profit to adjusted EBITDA. With that, it's now my pleasure to turn the call over to John Geller.

Thanks, Neil. Good morning, everyone, and thank you for joining our first quarter earnings call. We had a strong beginning to the year, growing first-time buyer sales and adjusted EBITDA, illustrating the power of our leisure-focused business model. We are also making good progress on our modernization initiative to accelerate revenue growth, reduce costs, and enhance operational efficiencies. We remain on track to deliver $150 to $200 million in run rate benefits by the end of 2026. We have some of the best brands in the vacation ownership industry and continue to see people prioritizing their vacations, running more than a 90% resort occupancy in the first quarter, with forward bookings remaining strong. It's also important to remember that our owners prepay for a lifetime of vacations and typically pay their annual maintenance fees by the beginning of the year, so we know they will be vacationing with us. In addition, we offer a very attractive value proposition and create our own demand. About a quarter of our annual tours come from customers we target with subsidized packages, and we are leveraging data and analytics to improve the quality of our tours. TimeSure also remains the sole product that we sell face-to-face every day, with around 80% of our sales happening on-site. which helps our business relative to others when customers have concerns about the broader macro environment, and we have several tools to employ when sales soften. For example, we adjusted our strategies, helping drive 6% higher first-time buyer sales. But with owners having fewer plus points coming into the year, We saw fewer owner arrivals this quarter than last year, which resulted in fewer owner tours. Some of our modernization initiatives are focused on driving more owner tours as well as higher VPGs. Most importantly, we are seeing owner arrivals improving as we progress through the year, so we feel confident about our updated contract sales guidance. We also continue to take actions to drive our package pipeline. For example, we recently launched a new program on Marriott.com that combines a villa rental booking with a tour, and we have expanded our call transfer program with Marriott, which we expect to help drive higher tour package sales. We will also be implementing a new process to leverage data, which we expect will drive profit by increasing qualified tours and driving higher VPGs. We are making good progress on our comprehensive digital strategy, focusing on increasing product utilization, expanding e-commerce and travel options, and introducing new digital capabilities as we strive to make digital the channel of choice while lowering costs. For example, our resort operations team is expanding the use of an AI-powered phone agent that provides guests quicker responses, freeing up associate capacity. We are also optimizing room cleaning and scheduling processes to standardize housekeeping operations across sites. Nearly 70% of Marriott Vacation's points reservations for stays at our resorts are being booked online, a substantial jump from just a few years ago. We continue to expand the our use of virtual voice agents to lower our costs at our call centers. And this summer, we plan to launch the ability for our Marriott branded owners to seamlessly book directly into nearly any of Marriott's 9,000 plus hotels around the world using their vacation ownership points. All of these initiatives are helping drive higher owner and guest satisfaction while lowering our costs. Our forward-looking KPIs also give us comfort in our updated projections. Occupancy remains strong and total keys on the books for the summer remain solid. Tours continue to grow and in-house tour capture rates are higher than a year ago. Package sales have remained healthy, and we ended the quarter with nearly 265,000 packages, 35% of which have already been activated to take a tour this year, slightly higher than the same time last year. And loan and maintenance fee delinquencies are better than last year. In terms of VPG, we made adjustments in March for first-time buyers, and we saw those VPGs grow 10% in April over last year. And we're making promotional adjustments to enhance the owner value proposition to drive owner VPGs. While this is the most volatile economic environment I've seen in a while, our consumer remains strong and our forward-looking KPIs remain healthy. We are also focused on our initiatives to improve our tour flow and DPGs. But given the lower contract sales we experienced to start the year, we felt it was prudent to update our full-year sales guidance. Looking out longer term, our business remains on solid footing with strong margins, positive free cash flow, a product that resonates with today's consumer, long-term growth opportunities, and the bulk of the benefits from our modernization program still ahead of us. We generate around 40% of our adjusted EBITDA contribution from very high margin recurring revenue streams, which makes our results more consistent. Meanwhile, in the short term, we are focusing on what we can control, including providing our owners and guests great vacation experiences, reducing our costs, executing on our modernization program, and continuing to invest for the long term. With that, I'll turn it over to Jason to discuss our results in more detail.