Ladies and gentlemen, thank you for standing by, welcome to the Marriott Vacations Worldwide First Quarter 2014 Earnings Conference Call on the 29th of April 2014. I will now turn the conference over to Jeff Hansen. Please go ahead, sir.

Thank you, Kev. I'd like to welcome everyone to Marriott Vacations Worldwide First Quarter 2014 Earnings Conference Call. I'm joined today by Steve Weisz, President and CEO; and John Geller, Executive Vice President and CFO. I do 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 as described in our SEC filings, which could cause future results to differ materially from those expressed in or implied by our comments. Forward-looking statements in the press release that we issued this morning, along with our comments on this call, are effective only today, April 29, 2014, and will not be updated as actual events unfold. Throughout the call, we will make references to non-GAAP financial information. You can find a reconciliation of non-GAAP financial measures referred to in our remarks in the schedules attached to our press release, as well as the Investor Relations page on our website at ir.mvwc.com. I will now turn the call over to Steve Weisz, President and CEO of Marriott Vacations Worldwide.

Thanks Jeff and good morning everyone. Thanks for joining us for our first quarter earnings call. This morning I'll discuss the results for the first quarter of 2014 and will then turn the call over to John to provide a more detailed view of our first quarter performance. We'll then open the call for your questions. Before I begin. let me just take a moment to comment on an important milestone for our company as April 17 marks our 30th anniversary. It's hard to believe that 30 years ago Marriott International purchased 3 properties on Hilton Head becoming the first [indiscernible] branded timeshare company in America. We stand on our own as a public company and industry leader with over 60 resorts and over 400,000 owner families and almost 10,000 associates across the globe. I'm proud of our 30 year history and excited for what the next 30 years will bring. We started 2014 as expected ahead of 2013 in adjusted EBITDA, VPG and adjusted development margin. Keep in mind the first quarter was a tough comparison to last year due to the fact that our busy New Year's week fell into 2013 as the result of our financial reporting calendar. Additionally, the harsh winter impacted our North American segment and our Asia Pacific segment results were affected by the political unrest in Thailand which hindered sales in out Phuket sales gallery. That being said, we are on track and confident in our full year 2014 outlook. Total company contract sales were $162 million, up $6 million over the prior year. This was due to $6 million in residential sales in San Francisco. VPG continues its upward trend, improving 6.5% to almost $3,500, driven by higher pricing and improved closing efficiency. This rate of growth is impressive in itself, but…

Thank you, Steve, and good morning, everyone. We delivered solid performance in the first quarter, with adjusted EBITDA of $40 million, up $1 million over the first quarter of 2013, despite a tough comparison to last year. Our improvement was driven by our development margin, which was up $4 million, year-over-year. Our Rental business performed well, despite some minor headwinds, and Resort Management and Other Services improved as expected. This was offset slightly by lower financing results and higher G&A costs. While we do not adjust EBITDA for the impact of revenue reportability, it did negatively impact performance in the quarter by $3 million, which we expect to realize through the remainder of the year. In North America, adjusted segment results were $81 million, an improvement of $4 million over the first quarter of last year. Development margin was the primary contributor to this improvement, growing $5 million over the same quarter in 2013, to $27 million. Adjusted development margin percentage improved 3.2 percentage points to 22%. This improvement was driven by marketing and sales cost, which improved 200 basis points over last year, product cost which improved 40 basis points and slightly lower sales reserve activity. The improvement in marketing and sales cost reflected the lower cost associated with residential sales. Excluding the impact of residential sales, marketing and sales cost improved by 60 basis points, driven by stronger VPG, which benefited from almost 1 full point of higher closing efficiency. While 1 point of closing efficiency improvement has historically resulted in greater margin improvement, new tour production requires upfront spending. Despite this investment, we were successful in increasing margins while covering the cost associated with generating future tours. North America product cost, excluding the impact of our residential sales, improved 180 basis points over last year, driven by…

[Operator Instructions] The first question comes from Robert Higginbotham from SunTrust.

So, a few questions on the contracted land sale. Could you help us with what the use of proceeds would be from that? Presumably it would go towards your share repurchase program. I just want to get a sense to how it might change the cadence of that.

Well, I would tell you that the current share repurchase program, we have already anticipated that in our cash flow prognostications for between now and, well, the end of the first quarter of 2015. If and when this sale comes to pass, we'll obviously try to understand the best use of those proceeds and how we might choose to do that. Just to kind of reaffirm kind of our capital allocation strategy, we first look to use cash as a way of growing the business. Either through M&A, acquisitions of new properties, et cetera. In the absent of having any need for that petty cash, then we certainly look to ways to distribute that cash back to our shareholders. I suspect that when it comes to pass, if it comes to pass, then we'll have that discussion with our board and try to figure out where to go from there.

Okay. And on the impact it'll have to your Resort Management and Other profitability after the -- if the sale, I should say, is complete. Should we expect to still see the ancillary piece of that business segment still be negative or it'd be closer to breakeven or maybe even marginally positive?

I think the simple answer is, today, we do operate that ancillary business and those golf courses at a loss. So, obviously, if we complete this sale, that loss to go away. So at the worst case, it'll be breakeven. I don't anticipate any reason to think that our ancillary profits from that location would go up, but it certainly would reduce the loss.

Got it. And one more question on the rental side of the business. You pointed to the calendar shift of New Year's Eve negatively impacting rental. Could you help me better understand if that was a negative impact to the quarter on rate? Was it a negative impact to keys? I'm trying to get a sense kind of where you are in your progression of more available keys out there.

Yes. Specific to that, it's actually both rate and occupancy. As you might imagine, that week's a very popular week for people to travel to all sorts of destinations in our portfolio. Whether it be into warm weather climes with beach locations, which generally has very high rates, or into the west, in our ski locations. By not having that week in there, we got hit on both sides. Again, this is kind of a one-time anomaly. We hit this every 4 years based on -- 4 or 5 years, I guess, based on our 13-period reporting calendar. It just is one thing that hit us this year.

So could you quantify it all? What the impact to keys and rate?

I don't know that I have that specific information. I can tell you our estimate is that it costs about $2 million.

The next question comes from Chris Agnew from MKM Partners.

First of all, on tour flow. Can you just give us some sense of cadence through the year? I know you talked, previously, about tour flow turning positive in the second half. Could we see it turn positive in third quarter? And just some of the background drivers there.

Yes. You may recall that when we talked before, we mentioned that, starting mid-2013, we started to turn our attention towards more first-time buyers and tour generation in that area. And as I said in my remarks, it takes 9 to 12 months, on average, between the time you actually schedule the tour before that tour arrives. That's largely a function of the fact that many people have already completed their vacation plans for the latter half of '13, the first part of '14. So I would expect, without any degree of precision here, that we'll start to see more first-time buyers start to show up late in the second quarter and then into the third and then hopefully accelerating even further into the fourth quarter.

And then if I could shift to North American development margin, a couple of questions stemming from that. First of all, did I hear right, from all the numbers provided, that the residential sales impacted the North American development margin that you reported, 22%, by about 150 basis points? Related to that, when do you anticipate completing the residential sales? And then the final subject around -- just thinking about the development margin in general. Last year you had a steady sequential improvement through the year. What, if any, seasonal variation should we just keep in mind this year, with respect to the progression of the development margin?

Okay, Chris. I'll answer one part, this is Steve. We have 4 ownership residential units in San Francisco, remaining to be sold. We would hope that they'll be completed between now and the end of the year. Now I'll turn it to John to answer the more pesky questions in detail.

On the development margin, the impact of residential sales. The total margin was really not impacted. So the margin on the residential sales, in total, was similar to what we saw Timeshare. What we were talking about, Chris, was the impact was different. Those residential sales have a lower marketing and sales cost, in terms of the marketing and the commission piece of that. So those bring down your marketing and sales cost. However, they have a higher product cost. Net-net, you're still getting back to that, call it, 22% margin for the business line. But we wanted to highlight that from a marketing and sales perspective, you were getting an unfair pickup in terms of how we look at the marketing and sales margin. In terms of your last question. From a seasonality, I don't think you'll see much in that regard. I think what could impact reported development margin, as I mentioned in my remarks, as we run different financing programs, you could have reportability that would impact the reported margins. However, as you're aware, we do provide an adjusted development margin to take out the impact of reportability. Sure to that, there shouldn't be too much from seasonality.

And just a follow-up to that. Normally, the reportability evens itself out through the end of the year. But given the impact, there may be new owner sales are accelerating later through the year. Do you think that will still happen or could there be some lag over into next year?

Well, I think, as we said, new owner sales, or first-time buyer sales, they tend to have a higher financing propensity as -- typically, a much higher average contract price for our business, and as a result, they rely on financing a little bit more. So that will help the general trends of financing propensity. In terms of the reportability, unless we're running some specific program to try and increase our propensity, that would impact the timing from a revenue reportability. But to your point, for the full year, the programs we run will come back by the end of year. So we'll have a full year impact on our reported development margin.

And then, final small point. Can you explain the change in disclosure around consumer financing interest expense and who or what drove that change? Because it confused me a little, in terms of -- didn't appear to be material at all.

Chris, could you explain what you said. The disclosure?

You had a -- there was a note around adjusted EBITDA, in your press release, talking about consumer financing interest expense.

Yes. It's just that we break it out now and show it up in operating results as a separate line item. It's just a classification. And ultimately gets us to an EBITDA definition which is after consumer financing. Previously, we used the terminology adjusted EBITDA to get to that EBITDA after consumer financing interest expense. Now we're including it in the definition of our EBITDA.

Excellent. But is there a particular reason why you're changing this?

No, just to simplify it from a nomenclature, in terms of how we talk about EBITDA.

The next question comes from Steven Kent from Goldman Sachs.

So 2 questions. One, on just pace on buybacks. Should we expect a steady 35 to 40 per quarter? Are you more opportunistic? What factors are going to influence that over the next couple of quarters? And then, on VPG, how good are you? Or how can you model that? Or can you forecast that at a steady pace? Or is there is more volatility there than maybe what can I expect, as you try and balance that quarter-to-quarter?

Sure, I'll take the buyback question here. I think you've seen since we started the program, which was a little over 6 months ago, we've been in the market consistently buying it back and that's our expectation going forward. That said, I'd say from a strategy perspective to the extent we see a dip in the stock price, as you might expect, we're more aggressive in buying shares back on certain days. We like the price of the stock, we think it's a bargain and we're going to continue buying it back going forward here.

And on the VPG, Steve, there is some seasonality in VPG. So, think of it this way. First quarter, in particular, when either high demand destinations in the sun or ski, typically takes a higher number of points to be able to vacation during that time period. Often times people will -- when they're visiting one of our sales galleries, they'll make the decision to buy, because they want to come back at that time. And as a result, you have a higher contract average number of points sold. So your VPG gets a little higher. In the summertime, we have a similar effect in some of our summer locations. Less so in some of the shoulder seasons. And then we -- so we have that kind of as a given. Then we have to factor in what we try to do at all times, which is share best practices across our sales force, about new ways of presenting the product to potential owners and increase our efficiency of our sales force. So, there is some variability that is a little more difficult to forecast, but the seasonality piece is a little easier for us to understand.

The next question comes from Steve Altebrando from Sidoti & Company. Stephen Altebrando - Sidoti & Company, LLC: Can you provide a breakdown of pricing versus volume for realized sales?

Sure. Our average price was up in the quarter, about 5%, give or take. And we talked about closing efficiency, it was about 1 point improvement. Those were further the 2 key metrics there. Stephen Altebrando - Sidoti & Company, LLC: Okay. And then could you remind me of the tax basis on the remainder of the excess real estate and how significant or how much of that excess real estate is generating an operating loss for you?

Yes. I mean, in terms of the second part of the question, we've talked about -- especially with the real estate that has a golf course component, like we have at Kauai, one of our other locations. And then you take all the other carrying cost, you probably have $8 million to $10 million of embedded losses currently in our P&L related to that excess land. So, as we've talked about, as you sell through some of this -- Kauai for example, where you have a golf course and u have some ancillary losses associated with that, that's potential upside. In terms of the tax basis. I think, in most cases, our tax basis is probably close to book basis on these assets. So not much of a differential there.

Thank you. There appear to be no further questions. Please continue.

Okay. Well, if I can leave you with anything from our call today, it is that our first quarter performance was solid and was certainly in line with our expectations. We look forward to reporting our continued progress throughout the year. Thank you, again, for your participation on our call today, and your continued interest in Marriott Vacations Worldwide. And, finally, to everyone on the call and your family, enjoy your next vacation. Thank you.

Thank you. This includes the Marriott Vacations Worldwide First Quarter 2014 Earnings Conference Call. Thank you for participating, you may now disconnect.