Greetings and welcome to Marriott Vacations Worldwide Second Quarter 2016 Earnings Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to turn the conference over to your host, Mr.
Jeff Hansen. Thank you. You may begin.
Thank you, Rob. And welcome to the Marriott Vacations Worldwide Second Quarter 2016 Earnings Conference Call. I am joined today by Steve Weis, 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 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 website atir.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 2nd quarter earnings call. This morning, I'll walk through our second quarter results and provide an update on our top line growth initiatives, which give us confidence that we will achieve our full year guidance and provide a solid foundation for future growth. I'll then turn the call over to John to provide a more detailed review of our second quarter and outlook for the year.
Before we open the slightly ahead of the second quarter of last year and in line with our expectations as we indicated in our first quarter call. This stemmed primarily from strong performance in both our Asia Pacific and Europe segments, which combined improved over 30 percent or $5,000,000. In North America, contract sales were down 3 point as our Latin American sales channels continued decline. Occurred in late July of 2015. Contract sales in North America were also impacted by the owner recognition level or ORL changes, which occurred last year.
Since this promotion ran through the end of April 2015, the tough prior year comparison continued well into the second quarter. Since that time, we have seen positive indications that we are generating contract sales growth. To that end, let me take a moment to walk you through the high level trends we have seen in the latter half of the quarter. Total North America contract sales were $145,600,000, down $5,000,000 to the prior year. However, It is important to understand the pace of contract sales within the quarter our North America on-site contract sales were down over 6% to last year, as we continued to experience the comparison from the ORL changes 2015.
For the last 7 weeks of the quarter, after we lapped that tough comparison, we were up over 4% to the same 7 weeks in 2015, primarily due to a year over year increase of over 650 tours during this same timeframe. Putting in our new programs designed to drive tour flow, namely Call Transfer and Universal Encore. These programs continue to wrap up with the pipeline increasing an additional 3500 tours from the first quarter of this year, while just as important, activated tour packages were up almost 40% over this time last year. The vast majority of these tours are scheduled to arrive in the second half of twenty sixteen. Providing confidence that we will Now, let me turn to our other piece of our story, the one which is expected to provide a large part of our future growth, not just in 2016, but in the years to come.
We are very pleased to have 4 of our 6 new So, let me provide Feridigm Resort location early in the second quarter and sales are continuing to ramp up. Additionally, I pleased to announce that we have completed the renovations of In Washington, D. C, we opened our permanent sales gallery located Across the Street from our units at the Mayflower Hotel and are currently working on completing In New York, we began sales earlier in the quarter and have recently completed the permanent on-site sales center. We're off to a great start in our on-site location. We have also signed a lease for a much larger off-site sales center nearby.
This additional space will allow us to handle At our San Diego property, we've recently opened our on-site sales gallery in conjunction with our first set of beautifully renovated rooms. And common areas and are seeing good tour flow as sales in this location begins to grow. On the big island of Hawaii, The renovations of our 112, 1 and 2 bedroom units are well underway with the expectation of delivery in July 2017. Work on the permanent sales center is expected to be completed soon with an opening date in September of this year. And finally, in South Beach, we have signed a lease for the sales location very close to the property.
Our expectations remain to complete the sales center by the end of the year providing strong future sales growth as it starts to generate sales beginning in 2017. I'm excited to see all the new properties but also as great new vacation destinations for our owners and guests. I look forward to opening the 2 remaining new sales locations later this year, and updating you on their continued progress Moving to our recent disposition efforts, I'm pleased to announce that we have completed the sale of the downside surface Paradise Hotel as well as the bulk sale of our remaining units at the Ritz Carlton Club and residences in San Francisco. On a combined basis, These transactions generated over $65,000,000 only 2 parcels remain for disposition. A small oceanfront parcel in the Bahamas and our oceanfront parcel in Cancun, which remains a potential asset light transaction for future growth.
Now allow me to take a moment to discuss our contract sales outlook not only as it relates to our guidance of 4% to 8% for 2016, but also for 2017 and beyond. In order to achieve the midpoint of our over the second half of twenty fifteen. While challenging and not without risk, let me highlight several of the trends opportunities, which showcase why we remain confident. First, we expect to see growth in our Latin American sales channels as we last strengthening in the U. S.
Dollar, which occurred in late July of last year. Next, since we passed the tough comparison to the very successful ORL program change, which occurred in the first half of twenty fifteen, contract sales volume has grown and tour flow has increased substantially. In addition to these positive trends, our activated pipeline of tours in the second half of the year underscores strong growth potential of our same store contract in the second half of the year will come from these activated tours. Lastly, as it relates to our news distributions, destinations. We have already opened the majority of our new sales centers and are on pace to open our 5th new centered during the third quarter.
We expect these new locations to provide the remaining growth necessary to achieve our full year guidance. Looking past 2016, while each sales center could take 2 to 3 years to fully ramp up, we expect these locations alone. To generate well over $125,000,000 in sales volume once they are at full production. For these reasons, we remain confident not only in our 2016 contract sales and adjusted EBITDA guidance, but also in our ability to grow our top line in 2017 and beyond. With that, I'll turn the call over to John to provide a more detailed look at our second quarter results.
John?
Thank you, Steve, and good morning, everyone. Adjusted EBITDA totaled $64,200,000, 2.5000000 dollars or 4% higher than the second quarter of 2015, driven by year over year growth company adjusted development margin increased nearly $1,000,000 to $33,100,000 and adjusted development margin percentage improved 1.8 percentage points to 22.8 percent in the quarter. In our North America segment, adjusted development margin increased $1,800,000 to $34,100,000 in the 2nd quarter and adjusted development margin percentage was 26.5%, up 3.5 percentage points from the prior year quarter. The $1,800,000 adjusted development margin improvement was driven by $9,000,000 of lower product costs, of which 6.5 $1,000,000 came from favorable product cost true up activity, with the balance coming from a favorable mix of inventory being sold resulting from the success of our inventory repurchase program. The favorable product cost true up activity was driven by a reduction in and to a lesser extent from lower development spending.
Partially offsetting the lower product costs development margin was negatively impacted by more nearly $2,000,000 from startup of new sales distributions and roughly $1,000,000 from lower contract sales volumes. It's important to understand, however, that the majority of these higher costs will benefit us in the future. The plus points will eventually become rental revenues those points are used. The higher sales reserve activity was driven primarily by a 30% increase in financing propensity, which will drive financing profits in the future and the startup costs are associated with new sales distributions which will drive future contract sales growth revenue, net of related expenses, was $18,700,000, up 1.7000000 dollars or 10% from the second quarter of last year. The program we launched last summer to help drive financing propensity has continued to be successful with our North America propensity up 30% or 12 percentage points to almost 52% in the 2nd quarter.
With these higher financing propensity levels, as well as as we progress through the year. And our purchasers remain very credit worthy as average FICO scores grew 6 points to 743 for the second quarter of this year. Additionally, we expect to execute our annual notes receivable securitization during the third quarter. Given recent transactions in the ABS market and the quality of our vacation ownership notes receivable portfolio, we anticipate excluding the results of operations for the portion of the Surfer's Paradise Hotel that we sold during the quarter, total company rental revenues were $73,100,000, slightly higher than the prior year. This reflected a 3% increase in transient keys rented offset by a 3% decline in transient rate down roughly $1,000,000 from housekeeping on the increase in transient keys rented, as well as a In our resort management and other services business, excluding the results of operations for the portion of the Surfer's Paradise Hotel that we sold during the quarter, company results improved $2,700,000 or over 9 percent to $31,300,000 in the quarter.
Results reflected improved exchange company activity, higher fees from managing our portfolio of resorts, and higher ancillary profits. In our Asia Pacific segment, contract sales improved $2,500,000 or 31 percent quarter over quarter, driven by both improved performance at existing sales locations as well as the impact from opening our new sales location in Australia. Total adjusted results were down $1,800,000 from the prior year, driven mainly by lower development margin performance as a result of nearly $1,000,000 in preopening expenses associated with our new location. General and administrative expenses were 24 point $6,000,000 in the second quarter of 2016, a $1,700,000 increase over last year. Most of this increase related to technology spend in the quarter as we continue to enhance our owner facing technology and update our current web platforms.
Turning to our return of capital to shareholders. Bringing our year to date repurchases of the nearly 1,500,000 shares repurchased, nearly 1,200,000 were repurchased under an accelerated share repurchase agreement. This agreement effectively accelerated a significant amount of our 3rd quarter repurchases and is expected to be in place the end of the third quarter of 2016. As a result, we anticipate our ability to repurchase shares in the third quarter will be very limited As you know, we began our share repurchase program in the fourth quarter of 2013 and we have repurchased over 27% of our shares outstanding at that time for nearly $594,000,000. When you layer in the results of our quarterly dividend program, The total dollar amount we've returned to shareholders for these programs totaled over $652,000,000.
Moving to our balance sheet. At the end of the quarter, cash and cash equivalents totaled more than $97,000,000 and we had approximately $105,000,000 of gross vacation ownership notes receivable eligible for securitization in our warehouse credit facility. The company's total gross debt outstanding at the end of the quarter totaled $746,000,000, consisting of approximately 6 $2,000,000 of non recourse debt associated with securitized notes and $45,000,000 of gross debt outstanding under our corporate revolving credit facility. In addition, $40,000,000 of mandatory redeemable preferred stock remains outstanding which we expect to redeem in October of this year. Now let me turn to our outlook for the year and how that translates into contract sales performance in the second half.
As the owner recognition level changes are behind us and we lapped the FX headwinds in our Latin American sales channels beginning in late July. In addition, our programs to generate new tours and our new distributions are ramping up throughout the remainder of 2016 and into 2017. In order to achieve our full year guidance of between 4% 8% contract sales growth, We expect contract sales sales costs and maintain a solid product cost for the remainder of the year, achieving a full year company development margin of 21% or higher. Turning to free cash flow, we maintain our expectations for adjusted free cash flow of between 135 $155,000,000. As we always do, we will continue to evaluate all of our capital needs as we progress through this year with the intent of deferring or guidance for 2016, we have completed the sale Carlton Club And Residences in San Francisco.
On a combined basis, these transactions generated over 65,000,000 of additional net cash and look forward to sharing our achievements with And with that, we will open up the call for Q And A. Rob?
Session.
Our first question comes from Chris Agnew with MKM Partners. Please proceed with your question.
Good morning, Chris.
Thanks very much. Good morning. First question, I know you touched on two reasons that, for the favorable product costs true up. I was wondering, could you expand a little bit more upon those two items? And then What are the implications through the rest of the year from product costs true up?
Is that something that we should be expecting? To recur in the next few quarters? Thanks.
Sure. Chris, it's John. Yes, on the product cost, as we've talked about in the past, there are certain assumptions that go into how you recognize the product cost for time share accounting. And the 2 main ones are your revenues and your expenses. So your future revenues for selling the product and what your costs are related to developing that project.
In the quarter, we had some one time adjustments, if you will, related to, both, both pieces of those components. On the cost side, we had certain projects where the units were completed, but we had common area costs or other construction costs that were still on our estimates to complete. And those came in less than we expected. And as a result, we had a true up. So we had previously recognized too much product cost based on our estimates at the time.
So we fixed or cleaned that up. But that's a positive thing. Costs were less than we anticipated them. And then on the other side, one of our first day fits we've talked about is plus points. Well, plus points are a reduction in that estimated revenue stream.
And plus points have been around since we launched points a few years ago. But as we've continued to use them more and we've seen how those points are used, we've got a better sense for the actual value of cost, if you will, has come down relative to our previous expectations. So once again, a positive thing, it'll help going forward. But what you see in the quarter is actually truing up those estimates from where we were before. So you won't get that type of benefit, if you will, going forward.
In the case of the plus points, you will get slightly lower product costs relative to our previous, but it won't be as lumpier in terms of what you've seen.
Got you. Thanks for clarifying. And then the activated tour packages, did I hear you right? You're saying this up 40% year over year. And am I right in thinking that increase accelerated.
I think in the first quarter, you said it was up 25% year over year. So a couple of questions. 1, can you explain exactly what the activated tour package is? And then what drove the increase from the first quarter?
Sure. So I think you may recall that, we have been, moving on trying to generate many more tour packages, for the past, call it, almost 18 months. In anticipation of what we thought we were going to be needing, not only to support our new sales distributions that were coming online, but obviously to feed the existing same store sales growth. So what happens is that you make an offer to someone to take a future tour and, you, you take a deposit for that tour from that party. But you don't have an expected arrival date.
At that point in time. Oftentimes, so for instance, in the case of our encore packages, these are people that just completed a sales tour They like the product. They think they may be interested, but they're just not prepared to, sign a contract today. So they say, Hey, I'd like to come back in another time, and I'd like to give it some more thought. So, since they were just on vacation, they're not to commit to an exact arrival date for that return vacation.
So once we have that tour, sold as it were, then it's up to us to try to get that tour activated, working with that particular, party to say, alright, when do you want to, in fact, take that minivac, that vacation to go visit one of our resorts. And that's what we've been about is we were in the 1st part of that call it 18 months, loading up tour packages. And then in the 2nd part of this year, and there are 2nd part of last year in the beginning of this year, we've been in the process of activating those so that they'll come through the house. And the reason why the number of activations has grown from the first quarter to 2nd quarter is that we continue to make progress in getting those stores activated. That helpful?
Yes, perfect. Thank you. And then just a quick final question. On Europe, are you where are you in terms of selling out, of Europe, given the strength you had this quarter?
I suspect, well, two things. Sell out of developer inventory, where within a year of being able to do that. There will always be a sales, active sales channel in Europe for, resales, for what people previously owned, etcetera. One of the things that, by virtue of being kind of at the tail end of that developer inventory that gets to be some lumpiness that about the quarters in which it comes in, for instance, one of the reasons why, the second quarter was a little higher than, you might have expected was because we had a bulk sale, in Paris as a result. So, but, we're at about a year from sell out.
Great. Thanks so much.
Thank you.
Our next question is from Benjamin Chalkin with Credit Suisse. Please proceed with your question.
Hi, Ben. Hey, how's it going? Fine.
How are
you? You guys mentioned contract sales growth accelerated. I think in the second half of the quarter. Was this a function of new sales centers or was this more on an organic basis? I guess any color on where these sales were sourced from?
Primarily same store sales, the, a little bit from new sales centers, but we're in such an early phase of some of these new sales centers. I mean, for instance, San Diego opened on July 1st. It wasn't even in the quarter. So it is predominantly same store. And it's a function of, we, you know, we were moving off on a comparative basis in the 1st, call it, 5 weeks of the quarter when we had the comparison against the ORL numbers.
The in house tours were down meaningfully in the first half or 1st 5 weeks of the quarter. But then in house became a much more robust in the 2nd 7 weeks or 7 weeks of the, of the tail end of the quarter. So it was predominantly same store stuff.
Got it. It's really helpful. Thanks a lot.
Thank you. Our next question is from Patrick Scholes with SunTrust Robinson Humphrey. Please proceed with your question.
Good morning, Patrick. Good morning.
Two questions. 1, we start the first last the second half of last year, your Latin American Japanese sales were down about 40% year over year. What was that comparable figure in 2Q? And can you remind us what it was in 1Q of this year?
It was down about 17% in Q2, about the same amount in Q1. And as you referenced, third quarter of last year, down 39% and Q4 was down 33%.
Okay. Thank you. Next, last question, on the 16% midpoint growth for the sales, how do you see the mix of new versus existing customers driving that acceleration in sales growth? And where did you finish with 2Q for your mix of sales to new versus existing?
Yes, on the mix We're still in that kind of sixty-forty, that where we've been. It might have been slightly better. We haven't seen a significant change in that direction. And And I would say even over the course of the second half of the year, it should start our assumptions assume that starts to trend. More towards the fifty-fifty.
But as we talked about in the past, that's a multi year. The programs like the call transfer program that we've referenced. Those are, targeted more forms first time buyers. So that should help, drive that mix that way, but it's not meaningfully different than what we saw in the first half of the year.
Same thing, obviously, Patrick, in new sales centers where we have sales distribution in markets where we heretofore have not had a presence that will help drive, new first time buyers as well. Okay.
Thank you. And then one more question. Any news or update on what you're thinking about, how the sales leads are going to be distributed from Marriott versus Vistana?
Well, let me see if I can kind of read between the lies and your question. As you know, we have an exclusive license agreement with Marriott for, the ability to, gain access to the, Marriott rewards loyalty program as well as the Marriott reservation system, etcetera. It is our understanding that, Vistana's signature experiences, which is now owned by Intervalor National, has somewhat of a similar relationship with Starwood. That transaction between Marriott and Starwood hasn't closed, although as our understanding is simply waiting for Chinese approval to make that happen. So the question comes forward is what happens post, that consolidation And, essentially, there's been some dialogue between ourselves and Marriott.
That Marriott has communicated that there's their intent in the next several years to try to combine the Marriott rewards program and the Starwood preferred guest program. And that obviously has some implications about the exclusivity arrangements that exist between ourselves and Mary rewards and between VSE and, Starwood preferred guest. So we've had some conversations. We certainly understand what Mary has tried to accomplish in the long run. And, while we put great value on our contractual relationship of our license agreement, we believe that there can be some middle ground that could be found where, the, the parties can come together and, and, finds, kind of a win win for everybody.
Okay. Thank you.
Our next question is from Chris Woronka with Deutsche Bank. Please proceed with your question.
Hey, good morning guys. Hi, Chris. I want to ask you, appreciate the color on how you kind of get to the full year number in the back half. I'm wondering if you could break that down just a little bit more between what you think is going to come from new sales centers versus same store and lapping some of those tougher challenges last year?
Sure, Chris. Steve mentioned in his remarks that on a kind of a straight line basis, it's 6 16% growth is the math to get to that midpoint. If you think about that 16% growth, call it, 6% to 7% of that 16% is coming from new stores. So that's how we have it forecasted out as those ramp up. Very little sales at those new stores in the first half of the year.
Those are really, as Steve touched on, starting to ramp up now. San Diego just opened, and in New York, we just completed last week. The permanent sales center in the, in the property there. So, we should really start to see some acceleration into that. So that's about 6% to 7% of the 16% and then the other 9% to 10% in the math would be same store.
But when you peel back the same store, that all, the encore call transfer is probably 7 to 8 percentage points of that 9 to 10. So the majority of that growth in tours that we've talked about is that ramp up. And the good news is I can say, as we look at our forecast, call it about 90% of those tours that Steve talked about in our forecast are activated. So they're on the books, if you will. Obviously, the people need to show up, take their vacation, take their tour.
And we need to close those, at the right VPGs and all that. But We feel good about that pipeline of tours showing up. The rest about 1% of that growth is really we talked about. So you're getting those easier comps we just talked to. You were down, as we talked, 40% in third quarter last year.
We don't expect to get all that back, but we expect to do better, obviously. So there's some growth in Latin. And then the rest, the other 1% of the on-site is really all our other channels, which is a big chunk of the remaining tours, but relatively flat, if you will. So you can see the mix, a lot of that is coming or almost all the 16% won't be straight line, but as it ramps up from these new stores, as well as that the encore and the call transfer programs.
Okay, very good. And then the, I think the provision, the increase provision in the quarter was mainly due to the, higher financing propensity you mentioned. What are you guys thinking about for the back half in terms of financing propensity
Yes, there was for the full company, we did have, you'll see an adjustment in Europe and Asia. Related to, we had found an issue with, our static pool data and how we calculated that. So there was, call it, about $1,500,000 impact in the quarter. That was kind of one time. The rest of the increase is really related to the higher financing propensity.
So higher propensity. Now we'll lap that a little bit. The other thing and I mentioned this on the last call is, we have seen slightly higher defaults through our Latin channel. So we're keeping an eye on that. We'll probably lap most of that here fairly soon.
If they haven't defaulted, obviously, they they obviously still could, but some of the stuff that's gone bad. So there's a couple of moving components in there, but we would expect based on propensity, which should continue to be higher that, the bad debt should kind of flow with that higher financing propensity or more notes outstanding.
Yes. Thank you.
Our next question is from Benjamin Chalkin with Credit Suisse. Please proceed with your question.
Thank you. Thanks for the color on the SPG Marriott Rewards, member based dynamic. What about simply the Starwood Hotels? When that closes, they're all essentially Marriott Hotels. So does that help you have a presence in one way or another?
Give you any does that put you any closer to the customers?
At the risk of being slightly disagreeable. They'll still be operated as Western Hotels, Sheridan Hotels, St. Regis Hotels, etcetera. Our license agreement is specific to Marriott Hotels, Ritz Carlton Hotels. And so, I would expect that Vistana will, would certainly continue to make pain that they have exclusive rights to do that.
Now, there could be a situation where, a Sheraton Hotel owner or a Western Hotel owner if, Vistana Signature experiences said that they didn't have any interest in having a linkage agreement or something like that. That might be, in, in, in fair play. Turning it around the other way could be a Marriott Hotel, which, which, by virtue of our license agreement, they shouldn't be able to do. Vistana might have aspirations there. But I would expect at least for the near term that the state of play that exists with ourselves and Numeric Hotels and Vosanna with, the Starwood Hotels will remain relatively static.
Got it. That's helpful. Thank you.
Our next question comes from David Katz with Telsey Group. Please proceed with your question.
Good morning. Good morning, Paul. Thank you for all color on the top line and the trends in the business. I just wanted to ask for one clarification, or some additional color on the range of sales centers that are there. Can you talk about sort of the order of magnitude across those?
Are there a couple of them that are considerably larger than the rest. As we think about sort of the timing as we roll forward, for example, is New York proportionally larger or Hawaii proportionally larger than any of the others? And then I have a couple of other detailed questions, please.
Sure. So, there's really 2 answers to your question. One is the physical size and one is what the potential is in terms sales. So, and New York, it's interesting because our existing, permanent on-site sales center in New York relatively modest in size. It's at the lower level of our, our verification for a pulse property in New York City.
It will, the, but the distribution in New York will get meaningfully larger when we add that off-site sales header, which is literally around the corner, and that'll be completed by the end of the year. We would expect New York, given the size of the city, the amount of, people that see that as a great vacation destination, etcetera, would be, you know, at the higher end of the amount of volume that it could contribute in a kind of a similar vein, South Beach, which, doesn't have, will not have an on-site sales center. But obviously, South, South Beach relative to not only a draw from the northeast, but also from the Latin American market, once that sales center is in place at the end of the year, we think that will be a very good producing sales center. And then somewhere in the middle of all that would be, DC at Dave Flower. We think that's probably a midsized sales distribution location, San Diego, again, probably mid sized or so.
And Waikaloa, I think Waikaloa, while it's a great destination, Wikaloa, as you probably are well aware, is kind of the number 3 island in terms of destination. Behind Oahu and Maui, and then you get to the big island. So it'll probably be a midsized as well.
Got it. Thank you for that. And then just from a cash perspective, I know you've been very helpful at giving us, you know, a bit of a rough picture for later this year or next year. You touched on a couple of parcels of land and it sounds like Cancun is something that is not for sale. Are there any other land sales or any divestitures that we should be thinking about or contemplating and by the same token, if you could just talk about any capital needs or CapEx that you expect over the next 4 to 6 quarters, that would be helpful as well.
Sure. So, so David, let me take the first part, and I'll defer to John on the second part. As I mentioned in my remarks, we do have 2 remaining parcels that we originally envisioned as being disposition targets. 1 is a small parcel in the Bahamas. We would hope to be able continue to work to dispose of that and, however long that takes to happen, it'll happen.
Regarding Cancun, it's not that it's not for sale, but Cancun as a, destination market, particularly particularly for time share customers is one of the top markets in the world. It's one of the reasons why we had interest in getting into the market back a long time ago when we purchased the property. We continue to have, dialogue with various parties about, are there potential ways to do something here on an asset light basis that would give us a presence in Cancun without the enormous capital outlay on the front end. However, if someone were to come along and make us substantial offer for that parcel that seemed attractive to us, we would certainly consider a sale.
Yes. And David, on the CapEx, really 2 components I think you're referring to. We have our corporate CapEx, which are things like investment in sales centers, which been elevated this year, just given the new sales centers coming online. We don't have as many really queued up for next year, given all the growth we got going this year. So that will be a little bit less.
From a technology, we'll continue to have higher. We have higher technology spend this year. I would expect to see that here for another into next year and even into the following years, we're making investments in our customer facing platforms. But relative to our overall cash flow is not meaningful. If you will, if you recall, we typically spend $20,000,000 to $25,000,000 a year on corporate CapEx technology being a piece of that.
On the inventory side, the nice thing with how we've structured Our new inventory is we have a fairly good pace of knowing when our inventory payment do is we bring it online. So, there's nothing significant. I would expect our inventory spend to be aligned with kind of what we have this year. The only wildcard would be if there was a new destination or opportunity, we'd obviously, do our best to structure that in a very capital efficient way like we have so far. But that can play into timing, but we don't have anything on the horizon there, but we're always obviously out there looking.
Got it. And one last detail. How much exactly is left on your repurchase authorization. And did you tell us whether you'd bought any since the end of the quarter?
There's about 1,200,000 shares left I mentioned in my prepared remarks, we entered into towards the latter half of the quarter, an accelerated share repurchase program with one of our banks. And so with that, we got the the bulk of those shares delivered this quarter, they have to actually under the agreement. They actually have to go out there and complete all the trades. So There probably won't be a lot of shares repurchased in the third quarter because we've essentially accelerated into the third quarter, some of those repurchases with that agreement. So don't expect a significant amount of referred is here just for the third quarter until that agreement is behind us.
Got it. Okay. I'm all set. Thank you very much.
There are no further questions. At this time,
I'd like to turn the call back
to Steve Weis for closing comments.
Thank you very much, Rob. Our second quarter has highlighted the trends we are expecting to see as we enter the second half of the year. We continue to ramp up tour production and have opened several new sales centers with more to come. I'm very pleased with where we sit at this point in the year and look forward to updating you on our performance on future calls.
Thank you. This concludes today's teleconference.