10-QPeriod: Q3 FY2015

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q3 Ended Sep 30, 2015

Filed October 29, 2015For Securities:MAR

Summary

Marriott International reported solid financial results for the nine months ended September 30, 2015, demonstrating robust top-line growth and improved profitability. Total revenues increased by 5% to $10.78 billion, driven primarily by a significant rise in cost reimbursements and strong performance in franchise and incentive management fees. Net income saw a substantial increase of 18%, reaching $657 million, with diluted earnings per share growing to $2.38 from $1.86 in the prior year period. The company's strategic focus on its asset-light management and franchising model continues to yield positive results, as evidenced by strong RevPAR growth across its segments and the successful integration of acquisitions like Delta Hotels and Resorts. Marriott's global system continues to expand, with a healthy development pipeline indicating future growth potential. The company also maintained a strong liquidity position and returned capital to shareholders through dividends and share repurchases.

Financial Highlights

49 data points
Beta

Revenue

$3.58B

Net Income

$210.00M

5.9% Net Margin

EPS (Diluted)

$0.78

Total Assets

$6.15B

Cash & Equivalents

$95.00M

Free Cash Flow

$269.00M

Financial Statements
Beta
Revenue$3.58B
Operating Expenses$3.24B
Operating Income$339.00M
Interest Expense$43.00M
Net Income$210.00M
EPS (Basic)$0.80
EPS (Diluted)$0.78
Shares Outstanding (Basic)262.20M
Shares Outstanding (Diluted)267.30M

Key Highlights

  • 1Total revenues for the first nine months of 2015 increased by 5% to $10.78 billion, compared to $10.24 billion in the same period of 2014.
  • 2Net income for the first nine months of 2015 rose by 18% to $657 million, up from $556 million in the prior year.
  • 3Diluted earnings per share (EPS) increased to $2.38 for the nine months ended September 30, 2015, compared to $1.86 in the same period of 2014, a 28% increase.
  • 4Comparable worldwide systemwide RevPAR increased by 5.6% for the first nine months of 2015, driven by a 4.3% increase in Average Daily Rate (ADR) and a 0.9 percentage point increase in occupancy.
  • 5The company added 229 lodging properties (40,690 rooms) during the first nine months of 2015, contributing to system growth.
  • 6Operating income increased by 20% to $1.04 billion for the first nine months of 2015, reflecting improved revenues and controlled operating expenses.
  • 7Marriott announced a total of $189 million in dividends paid during the first nine months of 2015, alongside significant share repurchases, indicating a commitment to returning value to shareholders.

Frequently Asked Questions

For the nine months ended September 30, 2015, Marriott International reported a 5% increase in total revenues, reaching $10.78 billion, up from $10.24 billion in the same period of 2014. Net income also saw a significant rise of 18%, from $556 million to $657 million.

Marriott's primary strategy is to manage or franchise hotels rather than own them. As of September 30, 2015, 41% of their worldwide system rooms were under management agreements, 56% under franchise agreements, and only 2% were owned or leased. This asset-light model aims to provide stable earnings with minimized financial leverage and risk.

The increase in franchise fees was driven by several factors, including unit growth across the system (adding $40 million), stronger RevPAR due to increased demand (adding $29 million), and higher fees from properties converting from managed to franchised status (adding $6 million). Increased relicensing and application fees also contributed $22 million.

Marriott maintains a $2 billion multicurrency revolving credit facility to support general corporate needs. As of September 30, 2015, the company had $95 million in cash and cash equivalents and $1.29 billion in available borrowing capacity. The company expects its credit facility, capital markets access, and operating cash flow to be adequate for its liquidity needs and growth plans.