PR Newswire | Nov 4, 2020 04:16PM EST

Results

11/04 15:15 CST

Marriott Vacations Worldwide ("MVW") Reports Third Quarter 2020 Financial Results ORLANDO, Fla., Nov. 4, 2020

ORLANDO, Fla., Nov. 4, 2020 /PRNewswire/ -- Marriott Vacations Worldwide Corporation (NYSE: VAC) today reported third quarter 2020 financial results and provided an update on business conditions.

"We are very encouraged by how quickly occupancy and exchange transactions recovered in the third quarter, illustrating the desire of timeshare customers to get back on vacation as well as the resiliency of our business model," said Stephen P. Weisz, president and chief executive officer. "We've now reopened most of our sales centers and tour flow continues to recover. As a result, we delivered $140 million of contract sales in the third quarter of 2020 and currently expect contract sales to increase to $160 to $185 million in the fourth quarter."

Third Quarter 2020 Highlights and Operational Update:

* Consolidated Vacation Ownership contract sales totaled $140 million in the third quarter of 2020. * Net loss attributable to common shareholders was $62 million, or $1.51 loss per fully diluted share. * Adjusted net loss attributable to common shareholders was $33 million and adjusted fully diluted loss per share was $0.81. * Adjusted EBITDA was $35 million in the third quarter of 2020. * Cash and cash equivalents totaled $660 million at the end of the third quarter of 2020 and the Company had nearly all of its capacity available under its $600 million revolving corporate credit facility. * The Company expects to generate $335 million of cash from operations and at least $130 million of total cash flow in the second half of 2020. * The Company now expects to generate at least $200 million of synergy and other cost savings, a $75 million increase from its prior goal.

Third Quarter 2020 Segment Results

Vacation Ownership

Revenues excluding cost reimbursements decreased 56% in the third quarter of 2020 compared to the prior year but increased 40% from the second quarter of 2020 as occupancies continued to improve. Management fees increased 4% compared to the prior year and financing revenue declined 9% due to lower year-to-date contract sales resulting in a smaller notes receivable portfolio. Sale of vacation ownership products was $98 million in the quarter, an 85% improvement from the second quarter of 2020, and rental revenue was $46 million compared to $12 million in the second quarter.

Vacation Ownership segment financial results were a loss of $1 million in the third quarter of 2020 and segment Adjusted EBITDA was $28 million.

Exchange & Third-Party Management

Revenues excluding cost reimbursements decreased 34% in the third quarter of 2020 compared to the prior year primarily due to lower exchange and rental transactions as a result of the COVID-19 pandemic, but increased 29% from the second quarter. Interval International exchange volumes increased 1% compared to the prior year and increased 11% from the second quarter of 2020. Active members declined 2% compared to the second quarter to 1.5 million. Average revenue per member decreased 10% to $36.76 compared to the prior year and increased 22% from the second quarter of 2020 as exchange and getaway rental activity increased.

Exchange & Third-Party Management segment financial results were $16 million in the third quarter of 2020 and segment Adjusted EBITDA was $31 million, with Adjusted EBITDA margin improving 180 basis points year-over-year.

Corporate and Other

General and administrative costs declined $25 million in the third quarter of 2020 primarily related to synergy savings and lower costs associated with the furlough and reduced work week programs including salary related costs as well as a $5 million credit available under the CARES Act, which incentivized companies to continue paying associates' benefit costs while not working.

Operational Update to COVID - 19

* In its Vacation Ownership business, most of the Company's sales centers were open as of the end of the third quarter of 2020. In addition, the Company was able to resume sales at its Hawaiian sales centers in mid-October; * In its Interval International business, 93% of its resorts had reopened by the end of the third quarter of 2020; * On September 10, 2020, the Company approved a workforce reduction plan, which is currently expected to impact approximately 3,000 associates. In connection with this plan, the Company estimates that it will incur approximately $25 to $30 million in restructuring and related charges primarily related to employee severance and benefit costs, including a portion that is included in cost reimbursements; * Share repurchases and dividends continue to be temporarily suspended.

Balance Sheet and Liquidity

On September 30, 2020, cash and cash equivalents totaled $660 million and the Company had $62 million of gross notes receivable that were eligible for securitization.

The Company had $4.4 billion in debt outstanding, net of unamortized debt issuance costs, at the end of the third quarter of 2020, an increase of $0.3 billion from year-end 2019. This debt included $2.7 billion of corporate debt and $1.8 billion of non-recourse debt related to its securitized notes receivable.

During the third quarter of 2020, the Company completed a securitization of timeshare receivables, issuing $375 million of notes at an overall weighted average interest rate of 2.5% and a 98% gross advance rate, generating net proceeds of $53 million after payoff of the Company's Warehouse Credit Facility and required expenses.

Non-GAAP Financial Information

Non-GAAP financial measures, such as adjusted net income attributable to common shareholders, adjusted EBITDA, adjusted fully diluted earnings per share, adjusted development margin and adjusted financial measures are reconciled and adjustments are shown and described in further detail in the Financial Schedules that follow.

Third Quarter 2020 Financial Results Conference Call

The Company will hold a conference call on November 5, 2020 at 8:30 a.m. ET to discuss these financial results and provide an update on business conditions. Participants may access the call by dialing (877) 407-8289 or (201) 689-8341 for international callers. A live webcast of the call will also be available in the Investor Relations section of the Company's website at ir.mvwc.com. An audio replay of the conference call will be available for 30 days on the Company's website.

About Marriott Vacations Worldwide Corporation

Marriott Vacations Worldwide Corporation is a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. The Company has a diverse portfolio that includes seven vacation ownership brands. It also includes exchange networks and membership programs, as well as management of other resorts and lodging properties. As a leader and innovator in the vacation industry, the Company upholds the highest standards of excellence in serving its customers, investors and associates while maintaining exclusive, long-term relationships with Marriott International and Hyatt Hotels Corporation for the development, sales and marketing of vacation ownership products and services. For more information, please visit www.marriottvacationsworldwide.com.

Note on forward-looking statements

This press release and accompanying schedules contain "forward-looking statements" within the meaning of federal securities laws, including statements about expectations for contract sales in the fourth quarter, synergies expected by the end of 2021, future operating results, estimates, and assumptions, and similar statements concerning anticipated future events and expectations that are not historical facts. The Company cautions you that these statements are not guarantees of future performance and are subject to numerous risks and uncertainties, including, without limitation, conditions beyond our control such as the length and severity of the current COVID-19 pandemic and its effect on our operations; the effect of any governmental actions, including restrictions on travel, or mandated employer-paid benefits in response to the COVID-19 pandemic; the Company's ability to manage and reduce expenditures in a low revenue environment; volatility in the economy and the credit markets, changes in supply and demand for vacation ownership products, competitive conditions, the availability of additional financing when and if required, and other matters disclosed under the heading "Risk Factors" contained in the Company's most recent Annual Report on Form 10-K filed with the U.S. Securities and Exchange Commission (the "SEC") and in subsequent SEC filings, any of which could cause actual results to differ materially from those expressed in or implied in this press release. These statements are made as of the date of issuance and the Company undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Financial Schedules Follow

MARRIOTT VACATIONS WORLDWIDE CORPORATION FINANCIAL SCHEDULES QUARTER 3, 2020



TABLE OF CONTENTS



Summary Financial Information and Adjusted EBITDA by Segment A-1

Consolidated Statements of Income A-2

Adjusted Net Income Attributable to Common Shareholders, Adjusted A-3 Earnings Per Share - Diluted, and Adjusted EBITDA

Vacation Ownership Segment Financial Results A-4

Consolidated Contract Sales to Adjusted Development Margin A-5

Exchange & Third-Party Management Segment Financial Results A-6

Corporate and Other Financial Results A-7

Vacation Ownership Segment Adjusted EBITDA A-8

Exchange & Third-Party Management Segment Adjusted EBITDA A-9

Consolidated Balance Sheets A-10

Consolidated Statements of Cash Flows A-11

Quarterly Operating Metrics A-12

Total Cash Flow Outlook - Second Half of 2020 A-13

Non-GAAP Financial Measures A-14

A-1



MARRIOTT VACATIONS WORLDWIDE CORPORATION SUMMARY FINANCIAL INFORMATION (In millions, except VPG, total active members, average revenue per member and per share amounts) (Unaudited)



Three Months Ended Nine Months Ended Change Change September 30,September 30,% September 30,September 30,% 2020 2019 2020 2019

Key Measures

Total consolidated contract sales $140 $390 (64%) $476 $1,130 (58%)

VPG $3,904 $3,461 13% $3,745 $3,370 11%

Total Interval International active members (000's)^(1) 1,536 1,701 (10%) 1,536 1,701 (10%)

Average revenue per member^(1) $36.76 $40.89 (10%) $108.44 $130.21 (17%)



GAAP Measures

Revenues $649 $1,066 (39%) $2,139 $3,143 (32%)

(Loss) income before income taxes and noncontrolling $(72) $3 (2,923%)$(316) $116 (354%)interests

Net (loss) income attributable to common shareholders $(62) $(9) 610% $(238) $64 (438%)

(Loss) earnings per share - diluted $(1.51) $(0.21) 619% $(5.76) $1.43 (503%)



Non-GAAP Measures **

Adjusted EBITDA $35 $190 (82%) $163 $551 (72%)

Adjusted pretax (loss) income $(28) $129 (123%) $(23) $355 (107%)

Adjusted net (loss) income attributable to common $(33) $86 (138%) $(16) $243 (107%)shareholders

Adjusted (loss) earnings per share - diluted $(0.81) $1.97 (141%) $(0.40) $5.40 (107%)



^(1) Includes members at the end of each period for the Interval International exchange network only.

ADJUSTED EBITDA BY SEGMENT



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

Vacation Ownership $28 $195 $ 156 $ 570

Exchange & Third-Party Management 31 45 91 145

Segment adjusted EBITDA** 59 240 247 715

General and administrative (27) (50) (91) (167)

Consolidated property owners' associations 3 - 7 3

Adjusted EBITDA** $35 $190 $ 163 $ 551



** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

A-2



MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited)



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

REVENUES

Sale of vacation ownership products $ 98 $ 341 $ 409 $975

Management and exchange 176 238 548 708

Rental 56 135 209 432

Financing 64 72 206 209

Cost reimbursements 255 280 767 819

TOTAL REVENUES 649 1,066 2,139 3,143

EXPENSES

Cost of vacation ownership products 27 89 110 258

Marketing and sales 82 184 322 559

Management and exchange 102 136 317 392

Rental 74 92 245 269

Financing 24 22 85 65

General and administrative 32 57 121 188

Depreciation and amortization 30 33 93 106

Litigation charges 2 3 4 5

Restructuring 20 - 20 -

Royalty fee 23 27 72 79

Impairment 2 73 98 99

Cost reimbursements 255 280 767 819

TOTAL EXPENSES 673 996 2,254 2,839

(Losses) gains and other (expense) income, net - (5) (42) 5

Interest expense (37) (31) (112) (100)

ILG acquisition-related costs (11) (32) (44) (94)

Other - 1 (3) 1

(LOSS) INCOME BEFORE INCOME TAXES AND (72) 3 (316) 116 NONCONTROLLING INTERESTS

Benefit (provision) for income taxes 14 (10) 91 (50)

NET (LOSS) INCOME (58) (7) (225) 66

Net income attributable to noncontrolling interests(4) (2) (13) (2)

NET (LOSS) INCOME ATTRIBUTABLE TO COMMON $ (62) $ (9) $ (238) $64 SHAREHOLDERS



(LOSS) EARNINGS PER SHARE ATTRIBUTABLE TO COMMON SHAREHOLDERS

Basic $ (1.51) $ (0.21) $ (5.76) $1.44

Diluted $ (1.51) $ (0.21) $ (5.76) $1.43



NOTE: Earnings per share - Basic and Earnings per share - Diluted are calculated using whole dollars.

A-3



MARRIOTT VACATIONS WORLDWIDE CORPORATION (In millions, except per share amounts) (Unaudited)



ADJUSTED NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS AND ADJUSTED EARNINGS PER SHARE - DILUTED



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

Net (loss) income attributable to common $ (62) $ (9) $ (238) $ 64 shareholders

(Benefit) provision for income taxes (14) 10 (91) 50

(Loss) income before income taxes attributable(76) 1 (329) 114 to common shareholders

Certain items:

Litigation charges 2 3 4 5

Restructuring 20 - 20 -

Losses (gains) and other expense (income), net- 5 42 (5)

ILG acquisition-related costs 11 32 44 94

Impairment charges 2 73 98 99

Purchase price adjustments^(1) 17 14 47 46

Other (4) 1 51 2

Adjusted pretax (loss) income ** (28) 129 (23) 355

Benefit (provision) for income taxes (5) (43) 7 (112)

Adjusted net (loss) income attributable to $ (33) $ 86 $ (16) $ 243 common shareholders**

Diluted shares 41.2 43.4 41.3 45.1

Adjusted (loss) earnings per share - Diluted $ (0.81) $ 1.97 $ (0.40) $ 5.40 **





ADJUSTED EBITDA



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

Net (loss) income attributable to common $ (62) $ (9) $ (238) $ 64 shareholders

Interest expense^(2) 37 31 112 100

Tax (benefit) provision (14) 10 (91) 50

Depreciation and amortization 30 33 93 106

Share-based compensation 11 9 24 29

Certain items before income taxes 33 116 263 202

Adjusted EBITDA ** $ 35 $ 190 $ 163 $ 551



** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

^(1)^ Includes certain items included in depreciation and amortization. Please see "Non-GAAP Financial Measures" for additional information about certain items.

^(2)^ Interest expense excludes consumer financing interest expense associated with term loan securitization transactions.



A-4



MARRIOTT VACATIONS WORLDWIDE CORPORATION VACATION OWNERSHIP SEGMENT FINANCIAL RESULTS (In millions) (Unaudited)



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

REVENUES

Sale of vacation ownership products $98 $341 $409 $ 975

Resort management and other services 82 120 267 369

Rental 46 122 180 384

Financing 64 71 204 206

Cost reimbursements 281 286 824 835

TOTAL REVENUES 571 940 1,884 2,769

EXPENSES

Cost of vacation ownership products 27 89 110 258

Marketing and sales 78 170 297 518

Resort management and other services 27 57 105 174

Rental 86 98 280 285

Financing 24 22 84 64

Depreciation and amortization 18 16 54 50

Litigation charges 2 2 4 4

Restructuring 11 - 11 -

Royalty fee 23 27 72 79

Impairment 1 73 6 99

Cost reimbursements 281 286 824 835

TOTAL EXPENSES 578 840 1,847 2,366

Gains and other income, net 6 1 12 9

Other - 1 (3) 1

SEGMENT FINANCIAL RESULTS BEFORE NONCONTROLLING INTERESTS (1) 102 46 413

Net income attributable to noncontrolling interests - (2) - (1)

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $(1) $100 $46 $ 412

A-5



MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED CONTRACT SALES TO ADJUSTED DEVELOPMENT MARGIN (In millions) (Unaudited)



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

Consolidated contract sales $ 140 $390 $476 $1,130

Less resales contract sales (1) (7) (9) (23)

Consolidated contract sales, net of resales 139 383 467 1,107

Plus:

Settlement revenue 4 7 12 19

Resales revenue 1 3 6 10

Revenue recognition adjustments:

Reportability (18) (2) 48 (40)

Sales reserve (10) (33) (90) (79)

Other^(1) (18) (17) (34) (42)

Sale of vacation ownership products 98 341 409 975

Less:

Cost of vacation ownership products (27) (89) (110) (258)

Marketing and sales (78) (170) (297) (518)

Development margin (7) 82 2 199

Revenue recognition reportability adjustment 12 2 (32) 28

Other^(2) 1 3 30 8

Adjusted development margin ** $ 6 $87 $- $235

Development margin percentage^(3) (7.4%) 23.9% 0.5% 20.4%

Adjusted development margin percentage^(3) 5.2% 25.1% (0.1%) 23.3%



** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.

^(1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacationownership products revenue as well as the impact of reversing revenue for certain Legacy-ILG closed contracts for which no first mortgage payment had been received.

^(2) Includes sales reserve charge related to COVID-19 and purchase price adjustments.

^(3) Development margin percentage represents Development Margin divided by Sale of vacation ownership products. Adjusted development margin percentage represents Adjusted development margin divided by Sale of vacation ownership products revenue after adjusting for revenue reportability and other charges.

A-6



MARRIOTT VACATIONS WORLDWIDE CORPORATION EXCHANGE & THIRD-PARTY MANAGEMENT SEGMENT FINANCIAL RESULTS (In millions) (Unaudited)



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

REVENUES

Management and exchange $ 49 $ 74 $ 160 $ 232

Rental 10 14 29 48

Financing - 1 2 3

Cost reimbursements 12 22 45 68

TOTAL REVENUES 71 111 236 351

EXPENSES

Marketing and sales 4 14 25 41

Management and exchange 23 25 68 77

Rental 2 5 8 22

Financing - - 1 1

Depreciation and amortization 5 12 14 36

Restructuring 3 - 3 -

Impairment 1 - 92 -

Cost reimbursements 12 22 45 68

TOTAL EXPENSES 50 78 256 245

(Losses) gains and other (expense) income, net (5) 1 (5) 1

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON $ 16 $ 34 $ (25) $ 107 SHAREHOLDERS

A-7



MARRIOTT VACATIONS WORLDWIDE CORPORATION CORPORATE AND OTHER FINANCIAL RESULTS (In millions) (Unaudited)



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

REVENUES

Management and exchange^(1) 45 $ 44 $ 121 $ 107

Rental^(1) - (1) - -

Cost reimbursements^(1) (38) (28) (102) (84)

TOTAL REVENUES 7 15 19 23

EXPENSES

Management and exchange^(1) 52 54 144 141

Rental^(1) (14) (11) (43) (38)

General and administrative 32 57 121 188

Depreciation and amortization 7 5 25 20

Litigation charges - 1 - 1

Restructuring 6 - 6 -

Cost reimbursements^(1) (38) (28) (102) (84)

TOTAL EXPENSES 45 78 151 228

Losses and other expense, net (1) (7) (49) (5)

Interest expense (37) (31) (112) (100)

ILG acquisition-related costs (11) (32) (44) (94)

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING (87) (133) (337) (404) INTERESTS

Benefit (provision) for income taxes 14 (10) 91 (50)

Net income attributable to noncontrolling interests^(1) (4) - (13) (1)

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (77) $ (143) $ (259) $ (455)



^(1)^ Represents the impact of the consolidation of owners' associations of the acquired Legacy-ILG vacation ownership properties under the voting interest model, which represents the portion related to individual or third-party vacation ownership interest ("VOI") owners.



A-8



MARRIOTT VACATIONS WORLDWIDE CORPORATION SEGMENT ADJUSTED EBITDA (In millions) (Unaudited)



VACATION OWNERSHIP



Three Months Ended Nine Months Ended

SeptemberSeptemberSeptemberSeptember 30, 2020 30, 2019 30, 2020 30, 2019

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON $ (1) $ 100 $ 46 $ 412 SHAREHOLDERS

Depreciation and amortization 18 16 54 50

Share-based compensation expense 2 2 4 6

Certain items^(1)(2) 9 77 52 102

SEGMENT ADJUSTED EBITDA ** $ 28 $ 195 $ 156 $ 570



** Denotes non-GAAP financial measures. Please see "Non-GAAP FinancialMeasures" for additional information about our reasons for providing thesealternative financial measures and limitations on their use.

^(1) Certain items in the Vacation Ownership segment for the third quarter of2020 consisted of $11 million of restructuring costs, $2 million of litigationcharges, $1 million asset impairment charge, and $1 million of purchaseaccounting adjustments, partially offset by $6 million of gains and otherincome related to the disposition of excess land parcels in Orlando, Floridaand Steamboat Springs, Colorado.

Certain items in the Vacation Ownership segment for the third quarter of 2019consisted of $73 million of asset impairment charges, $2 million of purchaseaccounting adjustments, $2 million of litigation charges, and $1 million ofacquisition costs, partially offset by $1 million of gains and other income.

^(2) Certain items in the Vacation Ownership segment for the first threequarters of 2020 consisted of $37 million related to the net sales reserveadjustment, $11 million of restructuring costs, $6 million of asset impairmentcharges, $4 million of litigation charges, $3 million related to transactioncosts associated with our asset light inventory arrangements, and $3 million ofpurchase accounting adjustments, partially offset by $12 million of gains andother income, including $6 million of gains and other income related to thedisposition of excess land parcels in Orlando, Florida and Steamboat Springs,Colorado, $4 million related to net insurance proceeds from the finalsettlement of Legacy-MVW business interruption insurance claims arising from aprior year hurricane, $1 million related to foreign currency translation, and$1 million of miscellaneous gains and other income.

Certain items in the Vacation Ownership segment for the first three quarters of2019 consisted of $99 million of asset impairment charges, $7 million ofpurchase accounting adjustments, $4 million of litigation charges, and $1million of acquisition costs, partially offset by $9 million of gains and otherincome.

A-9



MARRIOTT VACATIONS WORLDWIDE CORPORATION SEGMENT ADJUSTED EBITDA (In millions) (Unaudited)



EXCHANGE & THIRD-PARTY MANAGEMENT



Three Months Ended Nine Months Ended

September 30,September 30,September 30,September 30, 2020 2019 2020 2019

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON $ 16 $ 34 $(25) $107 SHAREHOLDERS

Depreciation and amortization 5 12 14 36

Share-based compensation expense- - 1 2

Certain items^(1)(2) 10 (1) 101 -

SEGMENT ADJUSTED EBITDA ** $ 31 $ 45 $91 $145



** Denotes non-GAAP financial measures. Please see "Non-GAAP FinancialMeasures" for additional information about our reasons for providing thesealternative financial measures and limitations on their use.

^(1) Certain items in the Exchange & Third-Party Management segment for thethird quarter of 2020 consisted of a $5 million loss and other expense relatedto the disposition of a formerly consolidated subsidiary, $3 million ofrestructuring costs, $1 million of purchase accounting adjustments, and $1million of asset impairment charges.

Certain items in the Exchange & Third-Party Management segment for the thirdquarter of 2019 consisted of $1 million of gains and other income.

^(2) Certain items in the Exchange & Third-Party Management segment for thefirst three quarters of 2020 consisted of $92 million of impairment charges(primarily Goodwill and Indefinite-Lived Intangibles), a $5 million loss andother expense related to the disposition of a formerly consolidated subsidiary,$3 million of restructuring costs, and $1 million of purchase accountingadjustments.

Certain items in the Exchange & Third-Party Management segment for the firstthree quarters of 2019 consisted of $1 million of purchase accountingadjustments, offset by $1 million of gains and other income.

A-10



MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED BALANCE SHEETS (In millions, except share and per share data)



Unaudited

September 30, 2020December 31, 2019

ASSETS

Cash and cash equivalents $ 660 $ 287

Restricted cash (including $69 and $64 from VIEs, respectively) 368 414

Accounts receivable, net (including $12 and $13 from VIEs, respectively)272 323

Vacation ownership notes receivable, net (including $1,650 and $1,750 1,913 2,233 from VIEs, respectively)

Inventory 761 859

Property and equipment, net 809 718

Goodwill 2,817 2,892

Intangibles, net 963 1,027

Other (including $45 and $39 from VIEs, respectively) 448 461

TOTAL ASSETS $ 9,011 $ 9,214



LIABILITIES AND EQUITY

Accounts payable $ 143 $ 286

Advance deposits 154 187

Accrued liabilities (including $2 and $2 from VIEs, respectively) 320 397

Deferred revenue 488 433

Payroll and benefits liability 185 186

Deferred compensation liability 117 110

Securitized debt, net (including $1,769 and $1,871 from VIEs, 1,751 1,871 respectively)

Debt, net 2,680 2,216

Other 184 197

Deferred taxes 306 300

TOTAL LIABILITIES 6,328 6,183

Contingencies and Commitments (Note 11)

Preferred stock - $0.01 par value; 2,000,000 shares authorized; none - - issued or outstanding

Common stock - $0.01 par value; 100,000,000 shares authorized; 1 1 75,250,627 and 75,020,272 shares issued, respectively

Treasury stock - at cost; 34,187,868 and 33,438,176 shares, respectively(1,334) (1,253)

Additional paid-in capital 3,749 3,738

Accumulated other comprehensive loss (67) (36)

Retained earnings 309 569

TOTAL MVW SHAREHOLDERS' EQUITY 2,658 3,019

Noncontrolling interests 25 12

TOTAL EQUITY 2,683 3,031

TOTAL LIABILITIES AND EQUITY $ 9,011 $ 9,214



The abbreviation VIEs above means Variable Interest Entities.

A-11



MARRIOTT VACATIONS WORLDWIDE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited)



Nine Months Ended

September 30,September 30, 2020 2019

OPERATING ACTIVITIES

Net (loss) income $(225) $66

Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities:

Depreciation and amortization of intangibles 93 106

Amortization of debt discount and issuance costs16 14

Vacation ownership notes receivable reserve 97 81

Share-based compensation 23 25

Impairment charges 98 99

Deferred income taxes 1 24

Net change in assets and liabilities:

Accounts receivable 24 16

Vacation ownership notes receivable originations(265) (681)

Vacation ownership notes receivable collections 487 462

Inventory (4) 10

Purchase of vacation ownership units for future (61) - transfer to inventory

Other assets 57 11

Accounts payable, advance deposits and accrued (231) (122) liabilities

Deferred revenue 57 41

Payroll and benefit liabilities - (21)

Deferred compensation liability 8 13

Other liabilities (11) 26

Other, net (6) 10

Net cash, cash equivalents and restricted cash 158 180 provided by operating activities

INVESTING ACTIVITIES

Capital expenditures for property and equipment (36) (32) (excluding inventory)

Proceeds from collection of notes receivable - 38

Purchase of company owned life insurance (3) (5)

Dispositions, net 15 -

Net cash, cash equivalents and restricted cash (24) 1 (used in) provided by investing activities

FINANCING ACTIVITIES

Borrowings from securitization transactions 690 631

Repayment of debt related to securitization (793) (673) transactions

Proceeds from debt 1,166 495

Repayments of debt (703) (308)

Finance lease payment (10) (11)

Debt issuance costs (14) (11)

Repurchase of common stock (82) (342)

Payment of dividends (45) (61)

Payment of withholding taxes on vesting of (14) (11) restricted stock units

Other, net - 1

Net cash, cash equivalents and restricted cash 195 (290) provided by (used in) financing activities

Effect of changes in exchange rates on cash, (2) - cash equivalents and restricted cash

Change in cash, cash equivalents and restricted 327 (109) cash

Cash, cash equivalents and restricted cash, 701 614 beginning of period

Cash, cash equivalents and restricted cash, end $1,028 $505 of period

A-12



MARRIOTT VACATIONS WORLDWIDE CORPORATION QUARTERLY OPERATING METRICS (Contract sales in millions)



Quarter Ended Year Full Year March 31June 30 SeptemberDecember 30 31

Vacation Ownership

Consolidated Contract Sales

Total 2020 ? $306 $30 $140

2019 ? $354 $386 $390 $394 $1,524

2018^(1)$337 $365 $372 $358 $1,432



Legacy-MVW 2020 ? $185 $25 $109

2019 ? $223 $246 $244 $239 $952

2018 ? $204 $232 $242 $224 $902



Legacy-ILG 2020 ? $121 $5 $31

2019 ? $131 $140 $146 $155 $572

2018^(1)$133 $133 $130 $134 $530



VPG^(4)

Total 2020 ? $3,680$3,717$3,904

2019 ? $3,350$3,299$3,461 $3,499$3,403

2018^(1)$3,426$3,248$3,367 $3,208$3,308



Legacy-MVW^(2) 2020 ? $3,989$6,039$4,717

2019 ? $3,777$3,700$3,789 $3,727$3,747

2018 ? $3,728$3,672$3,781 $3,496$3,666



Legacy-ILG 2020 ? $3,442$1,871$3,129

2019 ? $3,042$2,981$3,232 $3,394$3,163

2018^(1)$3,227$2,857$2,966 $3,039$3,017



Exchange & Third-Party Management

Total Interval International active2020 ? 1,636 1,571 1,536 members (000's)^(3)

2019 ? 1,694 1,691 1,701 1,670 1,670

2018^(1)1,822 1,800 1,802 1,802 1,802



Average revenue per member^(3) 2020 ? $41.37$30.17$36.76

2019 ? $46.24$43.23$40.89 $38.38$168.73

2018^(1)$47.61$42.10$39.97 $37.37$167.12



^(1) Includes Legacy-ILG as if acquired at the beginning of fiscal year 2018.

^(2) Represents Legacy-MVW North America VPG.

^(3) Includes members at the end of each period for the Interval International exchange network only. phone sales program that do not count as a tour in the VPG calculation. Also, there were limited site-based tours in the second quarter due to sales center closures.

^(4) VPG for the second quarter of 2020 is impacted by the majority of the sales in the quarter coming from our enhanced phone sales program that do not count as a tour in the VPG calculation. Also, there were limited site-based tours in the second quarter due to sales center closures.

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MARRIOTT VACATIONS WORLDWIDE CORPORATION TOTAL CASH FLOW OUTLOOK - SECOND HALF OF 2020 (In millions)



Second Half of 2020

Net cash, cash equivalents and restricted cash provided by $335 operating activities

Capital expenditures for property and equipment (excluding (15) inventory)

Borrowings from securitization transactions 375

Repayment of debt related to securitizations (655)

Free cash flow ** 40

Adjustments:

Borrowings available from the securitization of eligible 88 vacation ownership notes receivable^(1)

Certain items^(2) 25

Change in restricted cash (23)

Total cash flow ** $130



** Denotes non-GAAP financial measures. Please see "Non-GAAP Financial Measures" for additional information about our reasons for providing these alternative financial measures and limitations on their use.



^(1) Represents borrowings available from the securitization of eligible vacation ownership notes receivable at the end of 2020.



^(2) Certain items adjustment includes the after-tax impact of anticipated ILG acquisition-related and restructuring costs.

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MARRIOTT VACATIONS WORLDWIDE CORPORATIONNON-GAAP FINANCIAL MEASURES

In our press release and schedules, and on the related conference call, we report certain financial measures that are not prescribed by GAAP. We discuss our reasons for reporting these non-GAAP financial measures below, and the financial schedules included herein reconcile the most directly comparable GAAP financial measure to each non-GAAP financial measure that we report (identified by a double asterisk ("**") on the preceding pages). Although we evaluate and present these non-GAAP financial measures for the reasons described below, please be aware that these non-GAAP financial measures have limitations and should not be considered in isolation or as a substitute for revenues, net income attributable to common shareholders, earnings per share or any other comparable operating measure prescribed by GAAP. In addition, these non-GAAP financial measures may be calculated and / or presented differently than measures with the same or similar names that are reported by other companies, and as a result, the non-GAAP financial measures we report may not be comparable to those reported by others.

Certain Items Excluded from Adjusted Net Income Attributable to Common Shareholders, Adjusted EBITDA and Adjusted Development Margin

We evaluate non-GAAP financial measures, including Adjusted pretax (loss) income, Adjusted net (loss) income attributable to common shareholders, Adjusted EBITDA and Adjusted development margin, that exclude certain items in the three and nine months ended September 30, 2020 and September 30, 2019, because these non-GAAP financial measures allow for period-over-period comparisons of our on-going core operations before the impact of these items. These non-GAAP financial measures also facilitate our comparison of results from our on-going core operations before these items with results from other vacation ownership companies.

Certain items - Third Quarter and First Three Quarters Ended September 30, 2020

Certain items for the third quarter of 2020 consisted of $20 million of restructuring costs, $11 million of ILG acquisition-related costs, a $5 million loss and other expense related to the disposition of a formerly consolidated subsidiary, $2 million of purchase price adjustments, $2 million of litigation charges, $2 million of asset impairment charges, and $1 million of foreign currency translation losses, partially offset by $6 million of gains and other income related to the disposition of excess land parcels in Orlando, Florida and Steamboat Springs, Colorado and $4 million related to the change in accrual for health and welfare costs for furloughed associates.

Certain items for the first three quarters of 2020 consisted of $98 million of impairment charges, $44 million of ILG acquisition-related costs, $44 million other charges (including $37 million related to the net sales reserve adjustment and $7 million related to an accrual for the health and welfare costs for furloughed associates), $42 million of losses and other expense, $20 million of restructuring costs, $4 million of purchase accounting adjustments, $4 million related to the charge for VAT penalties and interest (see offset included in indemnification below), $4 million of litigation charges, and $3 million of transaction costs related to our asset light inventory arrangements.

The $42 million of losses and other expense included $32 million related to a true-up to a Marriott International indemnification receivable upon settlement (true-up to the offsetting accrual is included in the Benefit (provision) for income taxes line), $25 million related to foreign currency translation, and a $5 million loss related to the disposition of a formerly consolidated subsidiary, partially offset by $6 million of gains and other income related to the disposition of excess land parcels in Orlando, Florida and Steamboat Springs, Colorado, $6 million receivable related to an indemnification from Marriott International for certain VAT charges, $4 million related to net insurance proceeds from the final settlement of Legacy-MVW business interruption insurance claims arising from a prior year hurricane, $3 million related to other insurance proceeds, and $1 million of miscellaneous gains and other income.

Certain items - Third Quarter and First Three Quarters Ended September 30, 2019

Certain items for the third quarter of 2019 consisted of $73 million of asset impairment charges, $33 million of acquisition charges (including $32 million of ILG acquisition-related costs and $1 million of other acquisition costs), $5 million of losses and other expense, $3 million of litigation charges, and $2 million of purchase price adjustments.

Certain items for the first three quarters of 2019 consisted of $99 million of asset impairment charges, $95 million of acquisition costs (including $94 million of ILG acquisition-related costs and $1 million of other acquisition costs), $7 million of purchase price adjustments, $5 million of litigation charges, and $1 million of other severance costs, partially offset by $5 million of miscellaneous gains and other income.

A-15

Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses)

We evaluate Adjusted Development Margin (Adjusted Sale of Vacation Ownership Products Net of Expenses) as an indicator of operating performance. Adjusted Development Margin adjusts Sale of vacation ownership products revenues for the impact of revenue reportability, includes corresponding adjustments to Cost of vacation ownership products expense and Marketing and sales expense associated with the change in revenues from the Sale of vacation ownership products, and may include adjustments for certain items as itemized in the discussion in the preceding paragraph. We evaluate Adjusted Development Margin because it allows for period-over-period comparisons of our on-going core operations before the impact of revenue reportability and certain items to our Development Margin.

Earnings Before Interest Expense, Taxes, Depreciation and Amortization ("EBITDA") and Adjusted EBITDA

EBITDA is defined as earnings, or net income attributable to common shareholders, before interest expense (excluding consumer financing interest expense associated with term loan securitization transactions), provision for income taxes, depreciation and amortization. For purposes of our EBITDA and Adjusted EBITDA calculations, we do not adjust for consumer financing interest expense associated with term loan securitization transactions because we consider it to be an operating expense of our business. We consider EBITDA and Adjusted EBITDA to be indicators of operating performance, which we use to measure our ability to service debt, fund capital expenditures and expand our business. We also use EBITDA and Adjusted EBITDA, as do analysts, lenders, investors and others, because these measures exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company's capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provision for income taxes can vary considerably among companies. EBITDA and Adjusted EBITDA also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. Adjusted EBITDA reflects additional adjustments for certain items, as itemized in the discussion of Adjusted Net Income Attributable to Common Shareholders above, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. Prior period presentation has been recast for consistency. We evaluate Adjusted EBITDA as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. Together, EBITDA and Adjusted EBITDA facilitate our comparison of results from our on-going core operations before the impact of these items with results from our competitors.

Free Cash Flow and Total Cash Flow

We evaluate Free Cash Flow as a liquidity measure that provides useful information to management and investors about the amount of cash provided by operating activities after capital expenditures for property and equipment (excluding inventory) and the borrowing and repayment activity related to our securitizations, which cash can be used for strategic opportunities, including acquisitions and strengthening the balance sheet. Total Cash Flow, which reflects additional adjustments to Free Cash Flow for the impact of borrowings available from the securitization of eligible vacation ownership notes receivable, acquisition and restructuring charges, and changes in restricted cash, allows for period-over-period comparisons of the cash generated by our business before the impact of these items. Analysis of Free Cash flow and Total Cash Flow also facilities management's comparison of our results with our competitors' results.

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SOURCE Marriott Vacations Worldwide