Marriott Vacations Worldwide Corp (VAC) 2012 Q2 法說會逐字稿

Good day, ladies and gentlemen, thank you for standing by. Welcome to the Marriott Vacations Worldwide Corporation conference call. (Operator Instructions). This is being recorded today, July 26, 2012, I would like to turn the conference call over to Jeff Hansen, Vice President, Investor Relations. Please, go ahead, sir.

Thank you, Alicia. Welcome to the Marriott Vacations Worldwide Corporation second quarter 2012 earnings conference call. I'm joined today by Stephen 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, July 26, 2012, and will not be updated as actual events unfold. Throughout the call we'll make refers through 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 www.MVWC.com. I will now turn it over to Steve Weisz, President and CEO of Marriott Vacations Worldwide.

Thanks, Jeff. Good morning everyone, and thank you for joining our second quarter 2012 earnings call. This morning I'll provide an overview of our second quarter results, and update you on our strategies and initiatives that we've executing since our spin off. I'll then turn the call over to John who will review our financial results in more detail.

Then we'll open up the call to your questions. Total gross contract sales for the company increased 3% to $168 million in the second quarter, carried by our core North American vacation ownership business. In North America, contract sales increased 10% in volume per guest, or VPG, was up 14%, continuing the strength we saw in the first quarter.

While two accounts are down slightly year-over-year as we focus on our most profitable sales channels, we've seen improvement in both pricing and closing efficiency.

As a result, our development margin continues to increase, and we are on track to achieve our 2012 goal of over 12%. As I said before, we believe our new points based product is very appealing to our customers as evidenced by the number of weeks owners who have already enrolled in the new program. Since the roll out of the program in mid 2010, more that 120, 000, or approximately a third of our owners who are eligible to enroll have done so adding roughly 208, 000 weeks, or nearly 45% of eligible weeks in the program.

This past quarter was one of our strongest quarters for enrollment since we launched this product, as we enroll an additional 22,000 owners, or 32,000 weeks into the program, due mainly to the end of the introductory enrollment pricing that was offered into the beginning of the summer.

As a reminder, these enrollments further augment our recurring revenue stream in the form of additional annual club dues that we'll receive going forward. Our rental business continues to improve as well, with rental revenues net of expenses increasing $3 million from the second quarter of 2011, from both higher rental revenues, and lower untold maintenance fees. With an additional 5% of inventory available to rent, as owners elected to bank their current year usage, or exchange their points for alternative usage options.

Transient keys rented, increased 11% in the quarter, reflecting continued strong demand for our product. We expect our rental business to continue to out perform the prior year over the remainder of 2012. However, recognize that rental results are typically stronger in the first half of the year in large part due to seasonality.

In our financing business, subsequent to the end of the second quarter, we completed our first notes receivables securitization, as an independent public company. This was one of our strongest securitization ever, with our offering being significantly oversubscribed. We securitized $250 million of vacation ownership loans, with a 95% advance rate, and a weighted average interest rate of 2.625%. The success of this transaction underscores the strength of the brand, and the quality of the underlying notes receivable.

The securitization clearly demonstrated our continued ability to successfully monetize notes we originate. Moving on to other segments. Contract sales in Asia Pacific were relatively flat. However, bottom line results grew as we saw a development margin improve, mainly resulting from the closure of certain higher costs off site sales locations since the second quarter of last year. As we mentioned on the last earnings call, on site sales locations have proven to be much more efficient sales challenge for us than off site sales location.

As a result, we continue to evaluate the performance of our off site sales locations, while focusing on capital efficient inventory acquisitions in exciting new locations that will also provide new cost effective on site sales, and marketing opportunities. In our Europe segment, our focus continues on selling through our remaining inventory over the next two years.

While the European economy is certainly not in our favor right now, we've recently strengthened the value proposition for this segment, by now allowing European weeks owners to enroll in the North American points exchange program providing them with a more flexible, and expansive product, and allowing us to continue to grow our recurring revenue stream.

In the luxury segment, you may have heard about actions that we're taking at the Ritz-Carlton Club, and residences at Capital Bay, a project we manage in Hawaii. The developer of the project, is a third party, in which we have a minority stake; and a minority investment was written off in 2009. Unfortunately, the lenders on the project have filed foreclosure action against the developers' interest in the project.

Further, the management company for the project, which is a subsidiary of ours, has not been paid since June, and we understand that the associations do not have sufficient funds to continue to operate the project in accordance with Ritz-Carlton's grand standards. In light of this, we have provided notice that we will be deflagging the resort in early September. There is always a possibility that a work out between the developer, and the lenders, might be achieved that could preempt the deflagging, but there is no assurance that a work out will occur. Please rest assured that we're exploring ways to mitigate the impact of the situation to our valued Ritz-Carlton members, as well as standing by in the event a work out can be achieved.

In regards to the over all luxury segment strategy, we've added inventory from our Ritz-Carlton project in Vail into the North American points program as we discussed during our first quarter call. We've also made the decision to place most of the remaining unsold luxury inventory into the North American points program, as well. We feel this strategy provides our North American owners with significantly more vacation options to choose from, while allowing us to monetize our luxury inventor factor, thereby reducing our near term real estate inventory spending needs in North America.

In addition, it will align with our strategy to continue to reduce the maintenance fees on unsold inventory. We have also announced to our luxury fractional members that they, too, will have access to the North American points exchange program sometime in the first quarter of 2013.

In preparation for their participation in the program, we plan to add options, such as luxury cruises, private home exchange, and numerous other experiences provided through outside partners that align with our luxury segment members vacation expectation.

At the corporate level, you may recall that although we spun off Marriott International last November, we continue to leverage them for certain technology, human resources, and other administrative services through transitional service agreements. Our plan is to complete our separation over the next 18 months, and to establish the appropriate infrastructure and systems necessary to support a company of our size. With this transition, and reorganization, we will require up front investment, but we expect these efforts to drive substantial long term cost savings. We continue to finalize these plans.

We will share more information around costs and on going savings next quarter. As it relates to our disposition of excess land and luxury inventory, we are receiving interest on listed parcels, and are continuing to prepare the remaining sites to be listed on the market. At the Abaco Club in Winding Bay, our luxury product in the Bahamas, we have announced that we are deflagging the resort, effectively unencumbering the remaining plans to increase the flexibility of its use, which we expect will attract potential buyers that otherwise would find the site too limiting with its current use and design.

We're working to entitlement and preparation issues for our remaining larger parcels, which once complete, will represent all of what we consider to be excess land listed with brokers. To recap, we are extremely pleased with the continued strength in our over all business results and particularly in our margin improvements efforts today. Given our current projections for cash flow for 2012, we are increasing our adjusted free cash flow guidance by $45 million to $130 million to $145 million for the year.

John will provide a bit more context around that increase in a few moments. As we're executing well on our strategic initiatives, we are reaffirming our 2012 guidance and continue to expect to be at the higher end of the range for adjusted EBITDA. With that I'm turn the call over to John.

Thank you, Steve. And good morning to everybody on the call this morning. Our portion in performance in the second quarter continued to build on many of the positive themes we saw in the first quarter. North America continued to be the key driver of our results, with this segment, once again, generating strong year-over-year performance. Efforts continued on selling to our luxury and European inventory.

We saw better development margins and rental results continue to improve year-over-year. In the second quarter, total company contract sales increased $5 million or 3% to $168 million. These results included strong growth in North America where contract sales increased $13 million or 10% to $141 million.

This was partially offset by lower volumes, primarily in our luxury segment, where we started transitioning to selling our remaining inventory through our North America points program, and to a lesser extent by softer sales in Europe, and the closing of certain off site sales locations in Asia to drive margin improvement.

In North America our strong contract sales performance reflects 14% growth in DPG to nearly $3,000. Driven by a 2 percentage point improvement in closing efficiency, and a 3% improvement in pricing. As Steve mentioned, our tour count is down slightly from 2011, as we continue to reduce tour volumes in our higher cost sales channels to drive our improving development margin.

Total company reported development margin improved 500 basis points to 11.2% from the prior year. However, similar to what we saw in the first quarter, the second quarter was impacted by revenue reportability comparisons year-over-year, which negatively impacted reported margins by roughly 200 basis points. Reportability in the quarter was impacted by certain finance sales in our North America segment, which had not yet met the down payment requirement for revenue recognition as of the end of the quarter.

As I mentioned last quarter, revenue reportability effects quarter-to-quarter earnings. However, on an annual basis we do not expect a material impact year-over-year. After adjusting for reportability. Total company development margin improved 690 basis points to 12.8% in the second quarter. We have provided supplemental information on schedules A12 through A15 in the earnings release that illustrates the impact of revenue reportability on the development margins for the total Company as well as for North America.

Growth in the Company's adjusted development margin continued to be driven by improvements in both marketing and sales costs, and the cost of vacation ownership products. Marketing and sales drove 3 percentage points of improvement, primarily from higher closing efficiency and lower cost.

The margin associated with the cost of vacation ownership products improved over 5 percentage points in the second quarter with, 3 of those points or $3 million resulting from a favorable product cost true up, and the remainder being driven by a favorable mix of lower cost inventory being sold.

As it relates to our North American segment, our adjusted development margin improved over 800 basis points to 17.3%. Over half of that improvement was driven by marketing and sales, with the remainder coming from improvement in vacation ownership products. On a reported basis our North America development margin improved 600 basis points to 15.4% in the quarter.

As you can see, we're well on our way to achieving our 2012 total company development marginal goal of 12% or higher, and our North America development margin goal of 15% or higher. As Steve mentioned, our rental business continues to show improvement from 2011. In the second quarter rental revenues totaled $54 million.

Remember our rental inventory comes to us in several ways. Through unsold inventory, which we still own and control, through our owners banking their points from one year to the next, and also when owners exchange their inventory for other usage options, whether that be through our explorer program, or for Marriott rewards points to use at Marriott hotels worldwide.

In the second quarter we experienced a 5% increase in available rental inventory as more of our owners chose to exchange their points for alternative usage options. With strong overall demand for our product, transient keys rented increased 11%, generating over $6 million of higher rental revenues. When combined with $2 million of higher revenues from our plus points program, total revenues increased $8 million year-over-year.

Total rental cost increased $6 million, reflecting higher operating costs in support of the higher rental revenues, offset by $1 million reduction in unsold maintenance fees. On a net basis, our rental business generated $2 million, which was $3 million higher than last year, and looking ahead we expect our rental business to continue to outperform the prior year for the remainder of 2012.

We continue to see favorable results in our resort management and other services business. For the quarter, revenues net of expenses were $13 million, or $3 million higher than the second quarter of 2011. Margins improved four percentage points over the last year.

Results included over $1 million of higher management fees, over $1 million from higher revenues net of expenses from our ancillary businesses, and nearly $1 million from higher enrollments in the North America points program.

This business continues to provide a steady stream of revenues and improved margin for us. Turning to our financing business, revenues net of expenses decreased $4 million year-over-year as our notes receivable portfolio continues to burn off faster than we're originating new notes. However, the big story was the completion of our first notes receivable securitization as an independent public company, subsequent to the end of the second quarter.

This was one of our strongest securitiations ever, selling $250 million of loans at a 95% advance rate and a weighted average interest rate of 2.625%, which is a historical low for our company. After transaction costs, cash reserves and the repayment of $100 million outstanding under our warehouse credit facility, we generated approximately $132 million of net cash proceeds. Our Asia Pacific segment generated adjusted segment results of $1 million versus a loss of $4 million this time last year.

While contract sales were lower by $1 million, results reflected lower cost of vacation ownership products from a favorable mix of inventory being sold, as well as reduced marketing and sales costs resulting from the shutdown of less efficient off site sales centers in the region subsequent to the second quarter of last year.

As we stated in our first quarter call, growth in our Asia Pacific segment was predicated upon acquiring inventory locations that provide a strong, on site sales presence. In Europe our sale-out strategy remains on track. Our second quarter adjusted financial results will break even $3 million below prior year due mainly to the impact of lower contract sales.

Despite a challenging environment we are hopeful that with the expansion of the North America points base exchange program to our European owners, segment results will improve as we strive toward selling out most of our remaining inventory over the next two years. In our luxury segment, adjusted segment results reflected a loss of $3 million, which was in line with the prior year.

The second quarter results included stronger performance from our resort management and rental businesses, which were offset by lower development margin due mainly to last year's second quarter benefiting from a notes receivable reserve through up associated with improved default and delinquency activity.

We are making significant progress towards our strategy in the luxury segment by selling luxury inventory through our North America points program, expanding the points program to our Ritz-Carlton for actual members, and continuing our efforts to dispose of excess land and inventory.

These efforts will help drive significant improvements in this segment, as we reduce maintenance fees on unsold inventory. Turning to our balance sheet and liquidity position, we continue to further strengthen our balance sheet position and drive strong cash flows. At the end of the quarter, cash and cash equivalent totaled $83 million.

Inventory balances continued to decline down $52 million since the end of last year. And since the end of 2011, total debt outstanding declined by $136 million to $714 million, which consists primarily of $711 million of non recourse debt associated with secured ownership notes.

Subsequent to the end of the second quarter, as I mentioned earlier, we securtiized $250 million of vacation ownership notes receivable, providing an additional $132 million of net cash flows. Given the strength of our recent notes receivable securitiation and projected higher cash flows from operating activities, we are raising our guidance range for adjusted free cash flow by $45 million to $130 million to $145 million for the year.

The higher operating cash flows reflect the impact of a higher percentage of cash sales and reduced real estate inventory spending, as we plan to sell existing luxury inventory through our North America points program, allowing us to defer development spending.

In wrapping this quarter up let me summarize by saying that we are very pleased with our overall results. With strong performance once again coming from our key North America segment, continued refinement within our luxury Europe and Asia Pacific segments that we believe position us well for the future, continued development margin improvement from low product cost and more efficient marketing and sales spending, and not but not least drive our ability to drive cash flow and further strengthen our balance sheet.

While we recognize that there is still a significant amount of work to continue growing and refining our business, we are excited with the progress today and look forward to updating you on continued improvements next quarter. . As always, we appreciate your interest in Marriott Vacations Worldwide. With that we'll open the call up to Q&A. Alicia?

Thank you. (Operator Instructions). The first question is from Eli Hackel with Goldman Sachs. Please, go ahead.

Good morning, Eli.

Good morning. I just have three questions. First, can you give a little bit color on the decline in tours in North America. I know you're trying to go after a higher quality customer, but does this put you in a little bit of a problem? Are you -- are there enough customers of high enough quality for you to go after to at some point, you know, regain tour growth. Second, just on land sales, I know you have some going on. Can you just maybe comment on the level of interest, if it's up to where you thought it would be in terms of price? Are people low-balling you? Are there some serious offers out there? And then second, just on the inventory spend, what were you going to spend, and then how much was that reduced by your expectation for what you're going to spend now? Thank you.

Eli, this is Steve. I'll take the first two and John will take the inventory side of things. On the decline of tours, to be honest, this is still some continuing work that we're doing, looking at every single marketing trend that we have, and then trying to understand where we get the highest yield out of these tours. We could have more tours if we wanted them. To be honest with you, as we continue to focus on margin improvement, we're deciding that -- where we want to put the biggest amount of emphasis into the high-yield channels.

So it's not an issue of could we get more tours? Yes. It's where we see the profitability coming out of those tours, which is where we're really trying to focus. Secondly, as it relates to land sales, again, we're still relatively early on in the process. We have had some meaningful interest on several of the parcels, and you know, I would characterize how people are viewing the value of those parcels as being within reason to what we believe the appropriate value is. As I'm sure you're aware, the sense of urgency about buying raw land today is probably not as great as it was a number of years ago, so it may take us awhile to get through this. As we said many times our goal here is to dispose of this land at what we think is a fair value, not to do something on a fire sale basis. I'm reasonably encouraged by what I see. As far as the inventory, John?.

We had total inventory development inventory spending, as I recall around $150 million for the year. There's probably some expense cost in that number, too, that's not all capitalizable. The improvement we're getting off of that, with some of the decisions we made here at Ritz-Carlton is called about $25 million to $30 million of that. The upside is what we'll see this year. It will also help in future years, but given where we're at in some of the existing development, you know, you don't get it all necessarily just this year.

So then what would you expend over the next couple of years in terms of cash inventory spend as you go out?

Yeah, I don't have the numbers. We're not providing anything around next year yet, but as we get closer to the end of the year, we'll be able to give you a little more guidance on that.

Okay, thank you very much.

Thank you.

Thank you. The next question is from the line of Chris Agnew with MKM Partners. Please, go ahead.

Hi Chris.

Thank you very much. Good morning. First question, you just talked about Q2 being one of the strongest quarters for enrollment of existing members, and that you'd come to the end of introductory offer for transitioning the points. Does that have an implication for margins or VPG going forward, given that I think an upgrade activity typically carries a higher margin. Is there anything that we need to be aware of?I'm not sure how big that was in terms of the sales. And then just a question on Kapalua. I know you have written this off. Are there financial implications or financial risks we need to be aware of? Is the loss of the management fee material, and is there any sort of financial liability to the Ritz-Carlton members that you might have, or any risks there? Thanks.

Yes, on the -- I'll take the enrollment question first. The enrollment fee was fairly modest, (inaudible) at $600. With that they -- with our owners for enrolling got single use of what we call the plus points. So, from a revenue perspective a lot of that enrollment fee was getting classified down and rentalling from as people use their plus points. The offset is going forward if we don't make that inventory available for plus points, we'll be able to rent it. So there should be really no impact there. I think the upside with the enrollment is the on going club dues that gets paid. So, that runs call it $175 a year, once people enroll. That's an annual. So with those enrollments that gets spread over the year. So we're still seeing the improvement in terms of revenues as well as margins, as those enrollments start to get recognized, the club dues get recognized going forward. I don't see any down side on the enrollment, and there is still upside going forward.

Led me add to that, this is Steve. I think part of this surge, for lack of a better word, that we saw this second quarter was really the -- we already always intended to have an end date to the introductory pricing about enrollment. I think people saw who were kind of sitting on the fence saw that the price was going to go up, materially. So that's what caused them to kind of pull the trigger in the second quarter. Having said that, we continue to enroll people every single day. After that it's just at a higher price point. I don't think this will be any meaningful impact in things, such as VPG or other.

And at Kapalua Bay, we actually today have about a $10 million reserve on our books related to Kapalua Bay that should handle any other additional exposure. We don't see any impact from an P&L perspective going forward. Steve mentioned in his comments, we are hopeful and active in hopefully, working something out here. Working with the developer to work something out with the lenders that hopefully we'll be able to preserve the Ritz-Carlton presence there at Kapalua Bay. But no guarantees there, and we're doing our best to get to a good conclusion.

Great, thanks. And then one more question. Can you just dig into the increase on a free cash flow guidance, mostly from cash flow from operations, and I'm guessing the securitization, but give more color there. Thanks.

If you look at where we were before, call it $85 million to $100 million, we were expecting slightly higher financing propensity year-over-year. What is actually happening our financing propensity has been running a little bit lower than we anticipated, so we get more cash sales. So most -- about half of your upside in that guidance is just really the fact that we're getting more cash.

Now the securitization activity, if you look at our adjustments to free cash flow, is broken out separately. So with lower financing propensity, we had less notes to securitize. However, based on our expectation of advance rate, we did much better on the advance, rate so we were able to make up some of the down side in terms of the securitization proceeds with the better advance rate. Then the other fees to the upside (inaudible) have been operating activities as our inventory spend, as I mentioned earlier. We're probably getting call it $25 million or so of less inventory spend this year because of some of the moves we're making with the Ritz-Carlton inventory..

Excellent. Thank you very much.

Yes, thank you.

Thank you. The next question is from the line of [Tim Wingard] with [Verger Bank]. Please, go ahead.

Good morning Tim.

Good morning. On the rental revenues line, I'm just wondering what's -- the transient keys I think you said were up 11% in the quarter. I'm just wondering, what's the main driver for owners banking their points? It seems like the past couple of quarters increased quite a bit.

Yes, there's really two major factors that come into play there. First of which is, I think you're aware of the fact of the explorer component that we have put in place with the introduction of our North America destination club, which allows people to take their points that they might normally use to go stay at one of our resorts, and, in fact, convert them to another kind of vacationing opportunity. It might an cruise, it might be a tour of Italy, it might an safari, wine tour, etc., etc. We have been pleasantly surprised with the number of people who have chosen to elect that option, which has in turn has given us, the way the process works, they give us their points back. We give them their vacationing opportunity, then we monetize those points through rental activity. The great news is that the rental demand has been commensurate to what we've gotten in terms of the incremental supply.

The second piece of that is there are some people that -- one of the advantages of our program is if you don't think you're going to be able to use all of your points for vacationing in this current year, you can chose to bank your points into next year. In the same fashion you can also choose to borrow from next year to add to points this year for a larger vacation, or longer vacation or a different type of vacation. So when people bank their points, then that in turn gives us inventory that we can rent as well. So it's those two factors that have contributed to the incremental number of keys available, and in turn how we rented them.

Okay. Thank you. And then you talked about the effect of moving the -- or adding the luxury inventory to the points program. How much will that impact lower maintenance fees in the rental segment?

Well, as we have, I think, communicated previously, the unsold maintenance fees from the luxury inventory of approximately $15 million a year. So as we move that inventory into the North American points trust, as that inventory gets sold, which we believe will be at a faster pace than if we were to continue to sell the inventory under our traditional Ritz-Carlton sales platform, we believe it accelerates the timing by which that inventory gets sold. When that inventory gets sold, then the unsold maintenance fee liability goes away. We actually believe that we will see an increase in velocity of Ritz-Carlton sales thereby the unsold maintenance fees will roll off faster.

Let me also add that there's two other meaningful advantages to taking that Ritz-Carlton inventory and putting it in North American trust. One of the things is that we now have a lot of great destinations in the North American trust that heretofore didn't exist. It's some outstanding property. So our North American points owners will have the ability to access that, albeit at a higher point value. The other point that was made earlier is, as we move that inventory into the North American trust it generates points, which pushes back our need for capital spending to add new inventory into North American points to support our sales volume.

The only point I had, just on a timing perspective, Tim. If this real estate needs to be deeded into the trust, there is already real estate in there, that deeding process can take several months And then since it is timeshare, and it's a registered product. Once it's deeded in, it needs to get registered, and you have to go to all the different states and there's probably another five or six months there. Then there is, obviously, built completed inventory headed at out the trust. So, we're going to move quickly to get it in. It won't be instantaneous, and our unsold maintenance fees don't go away until it's -- you've sold through the trust. So there's is a little bit of a lag once we get it into the trust and it gets to the point of sale.

Tim, this is Steve. Let me add just one other point I neglected to mention. That is, of course, the beginning of the first quarter of next year, as we add the ability for our Ritz-Carlton owners to, in fact, exchange into our North American trust, to use that inventory, obviously, it opens up a lot more case destinations for them, as well.

Thank you. And then one other question on capital allocation. you took up your cash flow guidance, it sounds like, by moving inventory into the trust, you can sell inventory faster and that should lead to cash flow sooner. Do you -- have you developed an outline or a plan for how you think about capital allocation, and where do share repurchases and dividends come in? How do you plan to use this extra cash that you have?

Well, I imagined that question might come forward given the very positive cash flow news we shared with you earlier this morning. At the risk of sounding like a broken record, I'll reiterate kind of what we said before. Clearly the objective of our company is to try to continue to grow in a very cost-efficient and accretive way for our shareholders. As we see opportunities to spend that cash that would meet our investment criteria, and give us the kind of return profile that we're looking for, that would be our first priority. If, in fact, those needs have been met and there is sufficient and excess cash that we have on our balance sheet, we'll take the appropriate steps to meet with our board and talk about return of capital to our shareholders. That might take the form of dividends. It might take the form of a share repurchase, but that would certainly be far too soon for us to make that kind of decision at this point.

How is the acquisition pipeline? Is there --

Well, we continue to get phone calls, we continue to make phone calls. Obviously, it would not be prudent on our part to kind of disclose things that may be in various stages of discussion at this point in time. Rest assured if we have something to share, we'll certainly make it a point to do so, even if it's before an earnings call, we'll do something through an AD or whatever.

Great, thank you.

Thank you.

Thank you ladies and gentlemen. That is all the time we have for questions. I'll turn it back over to management for any closing remarks.

Thank you, Alicia. Well, just to sum kind of up we're very pleased with the momentum we generated so far in 2012. We look forward to reporting our progress on future calls, and I want to thank you, again for your participation on our call today, and your continued interest in Marriott Vacations Worldwide. And finally to everybody on the call and your families, enjoy your next vacation. Thank you very much.

Ladies and gentlemen, this does conclude the conference call. You may now disconnect and thank you for your participation.