Marriott Vacations refinances credit facility, adds loan option

ORLANDO - Marriott Vacations Worldwide Corporation (NYSE: VAC), a global vacation company with a market capitalization of $2.3 billion, disclosed a strategic financial move to refinance its credit facility and secure additional loan options. The company, currently trading near its 52-week low at $66.74, maintains strong liquidity with a current ratio of 3.34. The company announced the amendment of its credit agreement, which now includes a new $800 million senior secured revolving credit facility and a $450 million delayed-draw term loan facility.

The new revolving credit facility, which matures on March 24, 2030, replaces the previous $750 million facility due to mature on March 31, 2027. This refinancing initiative has led to reduced pricing, including a 25 basis point reduction in interest spreads, impacting both drawn and undrawn capital. According to InvestingPro data, the company’s liquid assets exceed its short-term obligations, suggesting strong financial positioning despite carrying total debt of $5.3 billion.

Furthermore, the delayed-draw term loan facility, set to mature on December 31, 2027, is designated exclusively to fund the redemption or repurchase of the company’s 0.00% Convertible Senior Notes due January 15, 2026.

Jason Marino, executive vice president and chief financial officer of Marriott Vacations, expressed satisfaction with the updated credit terms, highlighting the reduced interest rates and fees. He emphasized the flexibility the delayed-draw term loan facility offers the company in refinancing its convertible notes maturing in early 2026.

Marriott Vacations Worldwide is known for its vacation ownership, exchange, rental, and resort and property management services. With approximately 120 vacation ownership resorts and 700,000 owner families, the company operates a vast network, including over 3,200 affiliated resorts in more than 90 countries and territories. The company generates annual revenue of $3.28 billion, demonstrating its significant market presence in the vacation ownership industry.

This financial restructuring is expected to provide Marriott Vacations with enhanced liquidity and financial flexibility, positioning it for future growth. The information is based on a press release statement from Marriott Vacations Worldwide Corporation.

In other recent news, Marriott Vacations Worldwide reported its fourth-quarter 2024 earnings, surpassing analysts’ expectations with an earnings per share of $1.86 and revenue of $1.33 billion, both exceeding forecasts. The company saw a 7% increase in contract sales, driven by a 9% rise in first-time buyer sales. Additionally, Marriott Vacations secured new credit facilities totaling $1.25 billion, replacing and expanding its existing credit lines. This arrangement includes an $800 million revolving credit facility and a $450 million delayed-draw term loan A facility, aimed at enhancing financial flexibility.

Analyst firms have provided varied assessments of Marriott Vacations. Citizens JMP maintained a Market Outperform rating, noting the company’s adjusted EBITDA of $185 million, which surpassed expectations. Meanwhile, Barclays reiterated an Overweight rating, highlighting positive trends and potential growth opportunities from the company’s modernization program. On the other hand, Mizuho Securities reduced its price target to $112 but maintained an Outperform rating, citing unexpected challenges impacting financial projections.

The company is also optimistic about its future, projecting a 4% growth in contract sales for 2024 and announcing plans for new resorts in Waikiki and Thailand. Despite some challenges, such as headwinds in rentals and compensation, Marriott Vacations remains focused on its modernization initiatives to drive future growth and operational efficiencies.

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