Greetings, and welcome to Marriott Vacations Worldwide Fourth Quarter 2017 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. You may begin.

Thank you, Rob. Welcome to the Marriott Vacations Worldwide Fourth Quarter 2017 Earnings Conference Call. I am joined today by Steve Weisz, President and Chief Executive Officer; and John Geller, Executive Vice President and Chief Financial and Administrative Officer. 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 27, 2018, 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 and 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. Good morning, everyone, and thank you for joining our fourth quarter earnings call. As I'm sure you've seen in our press release we issued earlier this morning, we have a lot to discuss today, starting with our performance for the full year and the fourth quarter of 2017. After that, I'll walk through the highlights of recent amendments to some of our agreements with Marriott International and how they will positively affect our 2018 results as well as the future benefits that will accrue to us over time. I'll then hand the call over to John to provide a more detailed review of our 2017 results and our outlook for 2018. This will include a deeper dive into the new revenue recognition standard that will begin affecting our results in 2018 and the recently enacted tax reform. In the fourth quarter, company contract sales were $201 million and adjusted EBITDA was $66 million. As we have mentioned throughout the year, the calendar change we implemented at the beginning of 2017 has impacted comparability to the prior year. This impact was most pronounced in our fourth quarter when it resulted in 20 fewer days in the fourth quarter of 2016. Adjusting for this calendar change to provide a more meaningful comparison, contract sales improved 5%. Further adjusting for the negative impacts from the Hurricanes Irma and Maria, primarily at our resorts in Marco Island, Florida and St. Thomas, contract sales in the quarter would have improved 9%. The impact of Hurricane Irma delayed the expected delivery of 116 units at our resort on Marco Island well into the first quarter of 2018. In St. Thomas, our Marriott Vacation Club property just recently reopened, along with a smaller temporary on-site sales center. Even with these impacts throughout the fourth quarter,…

Thanks, Steve, and good morning, everyone. I, too, am very pleased with how we start - how we performed in 2017. For the full year, contract sales totaled $803 million, 11% above the prior year, and adjusted EBITDA totaled $280 million, $19 million or 7% over 2016, both in line with guidance provided on our last earnings call. For the fourth quarter, contract sales were $201 million, driven primarily by $181 million of sales in our key North America segment, and adjusted EBITDA totaled $66 million in the quarter. Our development business generated $35 million in the fourth quarter, driven by strong contract sales performance resulting from the continued ramp-up of our newest sales distributions as well as the continued growth from our marketing programs, namely our call transfer, Encore and hotel linkage programs. Our financing business continues to perform well, contributing $23 million in the fourth quarter. Higher full year contract sales, along with a strong financing propensity, drove an increasing notes receivable balance. And our notes receivable portfolio continues to perform very well. Average FICO scores of buyers who finance with us in the quarter were 744 and delinquency rates continued to remain near historic lows. Our resort management and other services business generated $35 million in the quarter. Results continue to reflect strong performance from management fees, exchange company activity and ancillary results. And our rental business contributed $3 million in the fourth quarter. Our rental results continue to be impacted by the use of more of our rental inventory to support call transfer and Encore packages, which are generally at lower rates than transient rentals. We also continue to have additional rental inventory from owners banking their points as well as taking advantage of other exchange options, like the Explorer program, highlighting just some of the…

[Operator Instructions]. Our first question is from Patrick Scholes with SunTrust Robinson Humphrey.

Questions here. The first is, from a big picture, certainly you're getting some cash benefits from the changes and also some exclusive rights. I wonder what you're maybe giving up. And it seems to me, and tell me if I'm correct or incorrect here, but you give up or you allow Interval to also market to the combined loyalty programs. Is that a fair sort of bottom line assumption?

Yes, it is.

Okay, good. I just wanted to be clear on that. And then is that - when you noted in the press release a limited exception, is that the main limited exception being Interval marketing to the combined loyalty programs?

Just to be clear, it's access to the loyalty programs and access to the reservation system, the combined system in both cases. That is the extent of the limited exception that we're making.

Yes. And just to highlight, Patrick, on the loyalty program. It will be a relative, call it, a jump ball, if you will, for direct marketing into that program with their other licensee. However, if you look at the makeup of the legacy systems, the Starwood platform has a lot more full-service hotels, roughly 70% to 80% of their nights versus Marriott, which I think is more like 30% or 40%. And when you look at the members and the demographic, we feel really good that, net-net, notwithstanding we're giving up some marketing into the old legacy, that we like our odds here on net-net being a winner in terms of getting additional sales on that direct marketing when all is said and done.

Okay. And how much of your tour flow or sales do come through that direct marketing?

We don't disclose that number specifically. I think the thing you've got to remember is there's actually the ability to use the database, the member list, to do marketing. But more broadly, what we've always said is it's really the loyalty that the program provides and our ability to touch those loyalty members when they're staying at hotels from a linkage perspective, when they call to make a reservation, whether that's on the phone or, in the future, with marriott.com, as we work on new programs there. That's really - you've got to look at it very holistically. Yes, there's some direct benefit for being able to make calls to people. But it's really getting people when they're on vacation, like we've always said. So from a bigger umbrella perspective, it's a significant amount of sales generation when you look at it from that perspective.

Our next question is from Edward Engel with Macquarie.

Just a quick one. Expected cash tax rate for 2018 and '19?

Cash tax rate. We'll have to get back to you. I just don't have that number right in front of me. But we'll continue to benefit obviously from our installment methods that we've been using historically. But we can get you that number. It will be obviously less than our effective rate.

Okay. And then if I think about the sales centers, which opened in 2016, in terms of ramping those, I guess, which inning do you think we are in, in terms of those ramping?

Well, in general, I think we've said all along, it takes, call it, three years to get a sales center to be fully stabilized. On average, we're about halfway through that cycle, maybe a little bit more. We are very pleased with what we have seen thus far. As you might imagine, some are a little less than we thought, some are meaningfully higher than we thought. But on balance, we're very pleased with where we see it. And like I said, we're about, call it, halfway to maybe almost 2/3 of the way through.

Edward, just to get back on the effective cash rate, call it, roughly 24% after. We'll have a lower cash rate here in 2018 because, as I've mentioned in my remarks, we do have some AMT tax credits, which I think under the new legislation are general business credits. But because of the change in the legislation, we're able to take advantage of most of those here in 2018. So if you'd normalize for that, it's more in that probably 23%, 24%.

Great. And then lastly, with, I guess, both you and the other franchisee with access to the combined loyalty program, are there any guardrails in place that could maybe limit your ability to mine as effectively as you have?

No, not at all. Obviously, Marriott will have to make sure that there is appropriate access. We certainly do not envision under the terms of our agreement to have any less access than we had to Marriott Rewards members. And as John mentioned, clearly now with having the access to the former Starwood Preferred Guest members, once these programs are consolidated towards the end of this year, we actually think that's a particular amount of upside for us going forward, given the demographic of that customer and how it lines up with how we typically target people.

[Operator Instructions]. Ladies and gentlemen, we've reached the end of the question-and-answer session. I'd like to turn the call back to Steve Weisz for closing comments.

Thank you, Rob. 2017 was a tremendous year of performance for us as we saw double-digit growth in tour flow and contract sales while we continued to build momentum in sales to first-time buyers. Equally as important, we have worked closely with Marriott International to support their planned merger of their true world-class loyalty programs while laying the groundwork for our future growth for many years to come. I'm excited about the opportunities that lie ahead from everything we have talked about today. And I look forward to reporting on our success in future calls. And finally, to everyone on the call and your families, enjoy your next vacation.

This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.