Marriott Vacations reaches targeted leverage; most debt is fixed-rate

By Devika Patel

Knoxville, Tenn., Aug. 9 – Marriott Vacations Worldwide Corp. reached its targeted leverage range of 2.5x to 3x for the first time since late 2018 last quarter, reporting a 2.9x net-debt-to-adjusted EBITDA leverage ratio as of June 30.

“This is the first time since we acquired ILG that we’ve ended a quarter within our targeted 2.5x to 3x leverage range, illustrating the strong recovery of our business,” executive vice president and chief financial officer Anthony Terry said on the company’s second quarter ended June 30 earnings conference call on Tuesday.

In September 2018, Marriott Vacations acquired ILG, Inc. for approximately $4.6 billion.

Nearly all of the company’s debt is fixed-rate and Marriott Vacations will have no significant debt maturities until 2025 once it pays off its $230 million of convertibles due in September with revolver borrowings.

“With approximately 90% of our corporate debt, effectively fixed rate, we are very well-positioned in the current rising rate environment,” Terry said.

“Our only near-term debt maturity is $230 million of convertible notes that mature in September of this year.

“Given the current volatility in the corporate debt markets, we expect to repay the convertible notes with borrowings under our revolver, which we upsized earlier this year.

“After that, we have no significant corporate debt maturities until 2025,” he said.

Adjusted EBITDA was $255 million for the second quarter of 2022, a 55% increase compared to the second quarter of 2021 and a 31% increase compared to the second quarter of 2019.

The company ended the quarter with approximately $1.2 billion in liquidity, including $324 million of cash and cash equivalents, $106 million of gross notes receivable that were eligible for securitization and $749 million of availability under its revolving credit facility.

At the end of the second quarter, the company had $2.7 billion of net corporate debt.

The vacation ownership, exchange, rental and resort and property management company is based in Orlando, Fla.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.