Greetings, and welcome to Marriott Vacations Worldwide Fourth Quarter 2016 Earnings Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Mr. Jeff Hansen, Vice President, Investor Relations.

Thank you, Rob. And welcome everyone to the Marriott Vacations Worldwide fourth quarter 2016 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, February 23, 2017, 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 Web site at ir.mvwc.com. I will now turn the call over to Steve Weisz, President and CEO of Marriott Vacations Worldwide.

Thanks, Jeff. Good morning, everyone and thank you for joining our fourth quarter earnings call. This morning, I’ll spend a few moments on our 2016 results focusing on our outstanding fourth quarter performance highlighted by our contract sales and adjusted EBITDA growth. I’ll then walk through how we expect to build on that momentum to achieve our projected growth in 2017. In the fourth quarter, Company contract sales were $234.3 million, up almost 15% and adjusted EBITDA was $95 million an increase of almost 30% over last year. Each of which reflect the strongest results we’ve experienced since becoming a public company. These results would have been even more impressive if not from the impacts from hurricane Matthew which hit the east coast in October of last year. For us, the majority of the impact was felt primarily in two locations, Hilton Head island and Myrtle Beach. Both of which were shut down for about three weeks. Adjusting for the tours misted at these locations our tour flow would have been up over 7% in the quarter. We estimate these lost tours represent $8 million in additional contract sales volume equating to roughly $3.6 million of adjusted EBITDA. After considering this impact, contract sales growth in the quarter would have been almost 20% and adjusted EBITDA would have been just under $100 million. In North America, contract sales grew 14.9%, driven by a 12.7% improvement in VPG to $3,063 and a 3.4% improvement in tour flow. VPG growth benefited from a higher price per contract and a 1.3 point improvement in closing efficiency as well as a slightly easier comparison to the prior year. These improvements highlight the success of our growth strategy primarily related to new sales locations and new marketing channels. As it relates to our new destinations,…

Thank you, Steve and good morning, everyone. I couldn’t be more pleased with our strong performance in the fourth-quarter. With contract sales growth of nearly 15%, adjusted EBITDA totaled $95 million, $21.5 million higher than the fourth-quarter of 2015. As a reminder, we don’t adjust our results for the timing impact of revenue reportability. As you may recall on our third-quarter earnings, we were impacted by $12 million of unfavorable revenue reportability. While we did see $6.4 million of reportability come back in the fourth quarter, it was a couple million dollars below or expectations, however we do expect to get the benefits in future quarters. Our fourth quarter contract sales and adjusted EBITDA reflect the best quarterly performance since becoming a public company just over five years ago. And I’m happy to say that all parts of the business contributed to our improvement in adjusted EBITDA. Development margin grew $9.8 million, financing margin was higher by $1.7 million, our resort management business grew by $7.3 million, and lastly, our results benefited from $4.1 million of lower G&A costs resulting from cost savings initiatives as well as lower variable compensation related expenses. Company adjusted development margin increased $9.3 million to $47.4 million and adjusted development margin percentage grew to 2.2 points to 22.3%. In our North America segment, adjusted development margin increased $9.7 million to $47.1 million in the fourth-quarter and adjusted development margin percentage was 24.8% an increase of 2.7 points from the fourth-quarter of 2015. This increase reflected a 390 basis point improvement from product costs primarily from the continued success of our inventory repurchase program partially offset by 120 basis point increase in marketing and sales costs resulting primarily from continued ramp up costs associated with our new sales distributions. In our financing business, revenues net of…

Thank you. [Operator Instructions] Our first question is from Chris Agnew, with MKM Partners. Please, proceed with your question.

Thanks very much, good morning. First question, and I think maybe a little bit difficult, your contract sales growth EBITDA growth and free cash flow, I mean, there’s last year, you had noisy comps, you also you’re ramping the sales centers. Can you help us a little bit particularly with the change in your reporting calendar, think about the cadence through the year? I don’t know in there’s difference answers for those three line items I’m thinking about. Thank you.

Yes. Chris, it’s John. I think as you think about EBITDA or the earnings front you are going to have an extra week, if you will, in the first three quarters of earnings. Since we didn’t close the books last year on those calendar quarterly dates, it’s hard for us to really restate what those are going to be so you’d have to think about it as really that about an extra week of earnings. We’ll try and help you out on the calls but it’s hard to kind of estimate what that would be. And then you’re going to have three weeks less, if you will, in the fourth quarter because you’re making it up. So obviously, for the full year, it will balance back out. From a contract sales, we will try though we obviously we don’t provide guidance, we will be able to give comparable contract sales growth. Well actually have the extra week for actual reporting, but because our systems will allow us to kind of capture that extra week in the first three quarters and vice versa in the fourth quarter, we should be able to give you some comparable growth metrics there. As you think about contract sales for the year, we expect strong growth in all quarters in terms of growth, as you think about our guidance. Obviously we probably have slightly easier comps in the first half of the year as the new sales centers were opening and then start to ramp the comps will get a little more difficult as we move through the year.

Chris, this is Steve, let me see if I can add to that. You’ll recall particularly in the first quarter of 2015 we were disappointed with what we put on the board in terms of contract sales growth on a year-over-year basis. So that becomes a – did I say 2015? Sorry. Should have said 2016. I get my years screwed up. And so we do have an easier comp in the first quarter than we had last year. Plus, we hadn’t opened any new sales centers in the first quarter of last year. Obviously, those sales centers are now open. Now, with that in mind, some have a little longer in the tooth than others. For instance, we opened our DC sales center call it April, and then we added those others as they came through the year. But like Waikoloa, and as I mentioned even South Beach, which opened the last week in December, you know, that certainly wouldn’t have helped at all. So we’ve got those things happening and as a result – so and of course when you put almost 15% on the board for the fourth quarter of 2016 that becomes a little tougher comp to go after. So kind of summing it up, I would say that the first half of the year on a percentage growth basis may be a little stronger than the second half. But it still all comes out to the wash the 9% to 15% that we’ve given you as our guidance.

Thank you. And then just thinking about you’ve now net cash in your balance sheet and arguably that’s sub-optimal business model should support a turn or at least to debt. And then another year of strong free cash flow. Can you walk us through your thoughts around uses of cash? I mean, with continued buy backs, at what point do you run into – have to think about stock liquidity considerations? And then you’ve talked for a number of years, this is linked about M&A. What are your latest thoughts around opportunities around M&A? Thanks.

Sure. I think our thinking around capital allocation, Chris, hasn’t changed. I mean, first and foremost, we’re always looking to use excuse cash flow to grow the business and when we don’t have opportunities there, we’re going to continue to return capital to shareholders like we have. In terms of liquidity, we’ve obviously repurchased a significant amount of our shares since we started our capital return program a few years back. If anything, liquidity is even higher, market cap continues to grow. So you know, obviously something we’ll keep an eye on. But the Company’s much larger, we see more liquidity today in terms of volume than we did before we started actually repurchasing shares. So I haven’t seen that and I don’t see it here in the near term being an issue. I’ll let Steve take the second part.

On the M&A front. We’re going to sound a bit like a broken record here but it’s only because it’s how we feel. We always continue to look at various opportunities that present themselves. As I’ve mentioned before, we have taken a deep dive into several different opportunities but for whatever reason didn’t actually consummate any kind of a deal. We will continue to do that. As John mentioned first and foremost we should use our cash to find ways to grow the business either organically or through some sort of M&A kind of activity. Absent that, then we believe that there’s no credit given to us for carrying around a lot of cash in our balance sheet so we will return that to shareholders.

Excellent. That’s very clear. Thank you.

Thank you.

Thanks.

Our next question comes from Patrick Scholes, with SunTrust Robinson. Please, proceed with your question.

Just want to check on something. I had in my notes here that your prior guidance was for $20 million per new sales center. I believe on the call you said now seven locations $200 million per year which equates to $28 million. Are you taking that expectation up?

No actually Patrick it’s simply a function of the $20 million plus or minus was kind of a simple average. Some are lower and some are higher. Obviously, the addition of a second sales center in New York City, which we believe will be a better than average helps drive that average north. But no, we’re not making any meaningful change to the kind of the simple arithmetic of roughly $20 million a sales center.

Okay. That’s it. Thank you.

Thank you.

Our next question comes from David Katz, with Telsey Group. Please, proceed with your question.

Hi good morning all. So I wanted to ask kind of a bigger picture, longer term strategic question, which is you know we’ve gone through let’s say the past four to six quarters where we’ve added a bunch of sales centers and now we’re going to reap the benefits of those. How are you thinking longer term about when you might start to encounter another wave of spending? Is there any rhythm to it or how are you thinking about – Or are we thinking about adding one or two here or there at a time as we move along? Paint us a picture, if you would.

Sure. David, I mean, I think I might have said this one time before. We really didn’t strategically plan to add six new locations in one year. By virtue of the way in which deals came together and the timing of same, that kind of all created the perfect storm of opportunity of having to open six in one year. Ideally, we’d like to add one, two, three kind of on a yearly basis. We have a very active development pipeline that we continue to look at, both in North American and in the Asia-Pacific region. And I would expect us to continue to add along those lines. Unfortunately, one of the things that happens with deals is you can’t always control the exact timing of same. So you could have a situation where some things kind of bunch up together but that’s certainly not our intent.

Understood. Now, my other question is, and we’ll probably ask this many more times as will everyone else, your dealings with Marriott are obviously a fundamental aspect of your business. Have you had any discussions or observed any changes or, you know, altered any strategies with respect to how you’re dealing with Marriott since the closing of their deal? And is there any updated thought we can have as it relates to the loyalty program and your access to it?

Well, as you might imagine, we have an ongoing dialogue with Marriott as our licensor and we continue to have very good relationships with them. Obviously, there are deep ties between our management team and those in Bethesda because of the long tenure that we enjoy here with our staff and we were all part of Marriott before that. As you may recall, even last fall, we worked with Marriott to help them in their desires to try to link the two frequency programs together, that being Marriott Rewards and Starwood Preferred Guests, to allow some ability to have people take their earning experience in each program and apply them as separately or going across the system. That needed some help from us to help make that happen given some of our exclusivity arrangements that we have on the loyalty program side. Having said all that, Arnie Sorenson has been very forthcoming when he said the intent is over time is to eventually blend these two programs into one program. And we will continue to work collaboratively with them to try to make sure that they can get to where they are they want to get to and we can preserve the value that we have in our license agreement.

All right. And if I can just follow that up, I mean, I appreciate all of that, but where is it – where is it that you would like to get to? I mean, obviously you would like – I assume you would like to have rights to the entire combined loyalty program and presumably would say the same thing, right? I assume. Is that correct or

Well, no. I think you’ve articulated our position clearly and quite frankly by virtues of our license agreement that’s what’s stated in our license agreement, that we have exclusive space to the Marriott Rewards Program or it’s successor program. With that said, I can’t speak for ILG and what their intentions are. I know they have some rights to the SPG program. But I’m uncertain to be honest, as to whether or not they have any continuing rights in the event that the SPG program is no longer viable or available. So with all that said, we’re going to do everything we can to try to make sure that we can be helpful to Marriott in what they want to do but we’re not going to give up anything of value on our end.

Okay, That’s the spirit. Thank you very much.

Thank you.

Thanks.

Ladies and gentlemen, we have reached the end of the question and answer session. At this time I’d like to turn the call back over to Steve Weisz for closing comments.

Thank you very much, Rob. So let me close by repeating my excitement for how we ended the year with the strongest quarter-over-quarter contract sales growth and EBITDA performance we’ve had as a public company. And more importantly the momentum that we have carried into 2017. I certainly like what I’ve seen so far this year and look forward to discussing our results on future calls. And finally, to everyone on the call and your families, enjoy your next vacation. Thank you very much.

This includes today’s teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day.