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Marriott Vacations Worldwide Reports Heavy Earnings Losses, but Beats on Revenues

By Rhian Hunt – Jul 30, 2020 at 6:23PM

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The company securitized its timeshare receivables to repay a credit facility and more.

Reporting its Q2 2020 financial results yesterday, Marriott Vacations Worldwide (VAC -1.97%) revealed earnings well below analyst predictions, but the company still generated more revenues than expected as it navigated the travel and occupancy impact of COVID-19. While revenues fell year over year by -53.8%, the $480 million generated still surpassed consensus forecasts by nearly $17.6 million, delivering a 3.7% positive surprise.

Earnings per share (EPS), on the other hand, missed by a hefty margin. Adjusted EPS, predicted to be a loss of -$1.16 per share, was instead a loss of -$1.76 per share, $0.60 more than estimated.

Couple relaxing in beach chairs facing the ocean

Image source: Getty Images.

Marriott Vacations says it is in the process of reopening, though approximately 40% of its workforce remains on furlough to reduce costs. CEO Stephen Weisz says the company saw very fast recovery once COVID-19 health restrictions were lifted, noting "Beginning in late May, we saw our resort occupancies quickly build in states where restrictions had been lifted, illustrating the resilience of our customers and our leisure-focused business model." Striking an upbeat note, he continued, "We have already reopened approximately 70% of our sales centers and are very encouraged as sales start to return."

Marriott Vacations also raised additional cash by securitizing its timeshare receivables, issuing $375 million in notes that used the company's roughly $383 million worth of vacation ownership loans as backing. Most of the money, approximately $300 million, was immediately used to pay off Marriott's earlier drawdown on its warehouse credit facility. $53 million more is earmarked for company operations.

At the time of this writing, the company is continuing its temporary suspension of stock dividends.

Rhian Hunt has no position in any of the stocks mentioned. The Motley Fool owns shares of Marriott Vacations Worldwide. The Motley Fool has a disclosure policy.

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