10-QPeriod: Q1 FY2017

MARRIOTT INTERNATIONAL INC /MD/ Quarterly Report for Q1 Ended Mar 31, 2017

Filed May 9, 2017For Securities:MAR

Summary

Marriott International Inc. (MAR) reported a strong first quarter for 2017, significantly impacted by the acquisition of Starwood Hotels & Resorts. Total revenues surged by 43% to $5.56 billion, driven by substantial increases across all fee categories, notably base management fees (up 53%), franchise fees (up 46%), and incentive management fees (up 51%). This revenue growth is largely attributable to the inclusion of Starwood's operations, which contributed significantly to all reporting segments, particularly North American Full-Service and Asia Pacific. Net income increased by an impressive 67% to $365 million, or $0.94 per diluted share, compared to $219 million, or $0.85 per diluted share, in the prior year's first quarter. This performance demonstrates the immediate positive financial impact of the Starwood acquisition, even considering merger-related costs. The company also highlighted positive comparable RevPAR growth of 3.1% globally, indicating underlying brand strength beyond the acquisition's influence. Marriott continues to focus on its asset-light strategy, driving growth through management and franchising, while actively managing its capital through share repurchases and dividends.

Financial Highlights

46 data points
Beta

Revenue

$4.91B

Net Income

$371.00M

7.6% Net Margin

EPS (Diluted)

$0.95

Total Assets

$23.93B

Cash & Equivalents

$738.00M

Free Cash Flow

$414.00M

Financial Statements
Beta
Revenue$4.91B
Operating Expenses$4.37B
Operating Income$546.00M
Interest Expense$70.00M
Net Income$371.00M
EPS (Basic)$0.96
EPS (Diluted)$0.95
Shares Outstanding (Basic)384.90M
Shares Outstanding (Diluted)390.00M

Key Highlights

  • 1Total revenues increased by 43% to $5.56 billion, primarily due to the acquisition of Starwood Hotels & Resorts.
  • 2Net income grew by 67% to $365 million, resulting in diluted EPS of $0.94, up from $0.85 in the prior year.
  • 3Fee revenues (base management, franchise, and incentive management) collectively increased by 50% to $782 million, largely driven by Starwood's contribution.
  • 4Comparable worldwide systemwide RevPAR increased by 3.1%, indicating positive performance across existing brands.
  • 5The company repurchased approximately 6.7 million shares of common stock in the first quarter, reflecting a commitment to shareholder returns.
  • 6Merger-related costs and charges were $51 million for the quarter, impacting profitability but showing the integration process is underway.
  • 7Other comprehensive income was a significant positive $185 million, primarily driven by foreign currency translation adjustments.

Frequently Asked Questions

The acquisition of Starwood was the primary driver of Marriott's Q1 2017 financial performance. It led to a significant increase in total revenues (up 43%) and net income (up 67%) due to the consolidation of Starwood's operations, including its fee revenues from management and franchise agreements. While merger-related costs were incurred, the overall financial impact was strongly positive.

The integration of Starwood is ongoing. The Q1 2017 results reflect the initial inclusion of Starwood's financial performance. The company reported $51 million in merger-related costs and charges for the quarter. Marriott is actively working on integrating systems and operations, and noted that preliminary valuations of acquired assets and liabilities are subject to change within a one-year measurement period.

Marriott is returning value to shareholders through share repurchases and dividend payments. In Q1 2017, the company repurchased approximately 6.7 million shares of common stock and paid $0.30 per share in dividends. The Board also declared a dividend of $0.33 per share for the second quarter.

Marriott reported positive comparable worldwide systemwide RevPAR growth of 3.1% for Q1 2017. This indicates that the existing portfolio of hotels, beyond the Starwood acquisition, is performing well. Growth was driven by increases in occupancy and average daily rate across various regions, with particular strength noted in North America and parts of Asia.