Greetings, and welcome to Marriott Vacations Worldwide 4th Quarter 2015 Earnings Conference Call. This time, all participants are in a listen only mode. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Jeff Hansen, Vice President, Investor Relations.
Thank you. You may begin.
Thank you, Rob, and welcome to the Marriott Vacations Worldwide 4th quarter 2015 earnings conference call. I am joined today by Steve 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 unfold.
Throughout the call, 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 dotmvwc.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 4th quarter earnings call. This morning, I'll 2015 full year results highlighted by our strong adjusted EBITDA, which was driven by continued improvements in our diverse lines of business. I will then take some time to discuss our expectations for 2016 before turning the call over to John to provide a more detailed review of our fourth quarter performance after which we will open up the call for your questions. Adjusted EBITDA exceeded our expectations ending the year at nearly $236,000,000, $4,000,000 above the high end These bottom line results highlight the strength of our diverse business model as our adjusted EBITDA growth was driven by improvements in our rental business, and continued solid results from our management and ancillary businesses, as well as improvement in the second half of the year from higher financing propensity.
Adjusted fully diluted EPS was $3.70 and adjusted free cash flow, which Sean will speak to in a moment. Was $229,000,000, both exceeding the high end of our guidance. The company adjusted development margin was 20.9 percent just below the lower end of our range of 21% to 22%. Time share contract sales were roughly flat year over year, improving two $1,000,000 to $700,000,000 in 20.15 where growth in our North America segment was offset by lower sales were $631,000,000, up $12,000,000 or 1.9% from 2014. Tours in North America improved by 2.5% over 2014.
While VPG remains strong at $33.86 in line with 2014. Not unexpectedly, we continued to see softness in our Latin American sales channels in the fourth quarter stemming from the continued strength of the U. S. Dollar. However, excluding this impact, North America full year contracts with sales grew almost $25,000,000 or 4.4% year over year.
As we stated at our primarily resulting from significant growth in VPG, up over 35% since 2011, which helped drive our image from 7% to roughly 21% during that same period. While VPG is an important metric, it is not the only driver of ex sales growth. Going forward, we expect our contract sales growth will come from a combination of increasing tours at our existing sales centers and adding new sales locations and exciting new destinations, all while targeting a 21% or better development margin. Regarding increasing tours at our existing sales locations, tour bookings or activations on the books for 2014 from our Call Transfer and Oncor line of new tours continues to grow. In fact, we have seen over a 40% improvement in tour package production from these programs over the same time last year including another 5000 new tours in our pipeline since the end of third quarter.
The growth in our new tour programs, coupled with our in house and linkage channels, should continue to as well as This puts pressure on VPG as first time buyers typically have a lower VPG than owner reloads. While we are always focused on optimizing VPG, as I stated a moment ago. As well as from new destinations. Now let me take a moment to update you on our progress as it relates to our strategy to open new destinations with strong site sales distribution. We announced in January that through a capital efficient arrangement with a third party, we began managing the Strand Hotel in New York City, for the commitment to begin purchasing units in early 2018.
This 176 Unit Property in Midtown Manhattan is an exciting new addition to our portfolio and will include a new on-site sales distribution, which we expect to open toward the middle of the year. Once stabilized, this location should be a significant contributor to our contract sales growth in the years to come. As you know, Manhattan has been a top target of ours for some time, and I'm thrilled that we were able to find this location to carry our name, one of the most sought after travel destinations in the world. In addition, just last week, we purchased the Edgewater Wedgewater Hotel a 49 unit oceanfront arc decodesign property in the heart of South Beach for $23,500,000 While this location will undergo some renovation with its relatively small size, we felt purchasing and operating the hope of the property while renovations occur similar to that to what we are doing in San Diego minimizes our cost of carrying the asset until it is sold as vacation in late 2016 or early 2017 and will keep you updated as the year progresses. In San Diego and at the Mayflower in Washington, CC, with the expectation of opening a sales center in each location mid year.
On the big island of Hawaii, capital efficient arrangements are well advanced relative to our commitment to purchase units in the Waikalo area. Assuming we meet our expectations of completing the transaction early this year, quarter. In our Asia Pacific segment, we expect sales to start by the end of March at our location in Surface Paradise Australia. To and we look forward to sharing good news on that front by the middle of the year. In addition, I'm very ways to announce that we have commitments to add 2 new destinations in Nusadua Valley.
The first of these two turnkey acquisitions that will be developed by third parties includes 51 purpose built units co located with an existing Marriott Courtyard Hotel. It is expected to be constructed over the next 18 months with delivery of units by the middle of 2017. Our second resort includes 88 units to be co located with a new Renaissance Hotel, which has recently broken ground with an anticipated completion date in 20 19. We expect our Valley sales operation will open with the completion of the units at the Courtyard in mid 2007 and are looking forward to welcoming these new additions in Valley to our Asia Pacific portfolio. Now let me take a moment to discuss our full year guidance and also provide some insight around how we see 2016 unfolding.
We expect significant improvement tour arrivals, which are already trending well ahead of last year and incremental growth from our 6 sales centers at the new destinations, which I just us. For that reason, we expect full year contract sales growth of 4% to 8%. Although we don't provide quarterly guidance, I want to point out we expect our first quarter contract sales performance to be down compared to the prior year. This is due to several reasons. The first of which is a tough comparison stemming from the owner recognition level changes that drove a 10% increase in contract sales in the first quarter of last year.
Additionally, we are still facing headwinds Shifting to the bottom line, we expect significant bottom line improvement in the second $261,000,000 $276,000,000. Similar to our pace of contract sales growth, we do expect the 1st quarter adjusted EBITDA performance performance to be down to prior year as well. This is anticipated due to the lower contract sales, the startup costs associated with our new sales centers, as well as roughly $2,000,000 earlier in the year as well. Looking back in 2015, we delivered adjusted EBITDA above our guidance range even while facing a challenging contract sales environment. More importantly, looking ahead to 2016, We are executing our strategy to grow our top line sales as activations of our tour packages are up significantly and new sales centers begin coming online in March.
I am confident that we can deliver even stronger results this year from top line growth as well as continued contributions from our diverse lines of business. I look forward to reporting on our progress throughout the year. With that, I'll turn the call over to John to provide a more detailed look at and the outlook for 2016. John?
Thank you, Steve, and good morning, everyone. I am pleased with our strong performance in the fourth quarter adjusted EBITDA totaled $69,000,000, $20,000,000 higher than the fourth quarter of 2014. North America adjusted development margin was 22.1% and company adjusted development margin was 20.1% and all of our business lines business continued to outperform growing $12,000,000, our development business contributed $5,000,000 benefiting as expected from the turnaround of the unfavorable 3rd quarter revenue reportability. Our resort management business improved nearly $4,000,000 while modest our financing business also contributed to year over year growth for the first time since we spun off for Marriott International. Turning to our North America segment, timeshare contract sales totaled $182,000,000, down 2% the fourth quarter of last year.
As Steve discussed, a strong US dollar continued to unfavorably impact our sales, primarily in our Latin American sales channels. Excluding this impact, North America contract sales were up 1.4% in the quarter. Tours in the 4th quarter were up 4.5%, VPG totaled $3162, down 2.9% from the fourth quarter of 2014. In an effort to mitigate the impact to sales of the strong U. S.
Dollar in the fourth quarter, we ran a short term marketing campaign during the fourth quarter that provided incremental incentives for in house guests in North America to take a tour. While successful in driving increased tour volumes and contract sales, short term programs like this do come with the risk of being less efficient and negatively impacting development margin in the 4th quarter was $37,000,000. 4th quarter adjusted development margin percentage was once again strong at 22.1%. These results reflected a 130 basis point reduction in our timeshare product costs, driven by the continued success of our inventory program. As it relates to our marketing and sales costs, we saw a 270 basis point increase over the fourth quarter of last year.
As we've discussed throughout the year, we've been ramping up our investment in new programs to help generate future incremental tour volumes, particularly as it relates to new buyer tours. As Steve discussed, our pipeline of future tours continues to increase significantly adding another 5 1000 tour packages just since the end of the third quarter and tour activations, the actual booking of the tour have increased significantly as well. In the company's financing business, revenues net of related expenses was $22,600,000, up slightly from the fourth quarter of to help drive increased financing propensity. And this program has continued to prove very successful. In fact, our North America propensity reached 56% the 4th quarter, a full 13 percentage points or 30% higher than the fourth quarter of 2014.
With our business going forward. Shifting to our rental business, excluding the results of operations for the portion of the Surfer's Paradise Hotel, that we expect to sell, total company rental revenues were up over $10,000,000. This was primarily driven by a 4% increase in transient rate a 2% increase in transient keys rented $4,400,000 from higher revenue associated with operating hotels that we intend to convert to timeshare and higher plus points revenue. Renterrevenues net of expenses remained strong totaling $13,600,000 While results reflected the impact of the higher revenues, our from lower Marriott rewards costs related to our pre spin liability. In 2014, we recorded a charge of nearly $4,000,000 due higher redemption costs.
However, with overall redemption costs declining throughout 2015, fourth quarter of 20 15 benefited from a favorable true up of roughly $2,000,000 driving a $6,000,000 year over year benefit. As I will discuss in a moment, we repaid our remaining pre spin Marriott rewards liability at the end of the year, so the puts and takes related to this liability are now behind us. In our resort management and other services business, excluding the results of operations for the portion of the surface Paradise Hotel that we expect to sell, company results improved $3,700,000 in the 4th quarter to $34,400,000. Results reflected higher ancillary profits as well as higher fees for managing our portfolio of resorts and improved exchange company activity. Our Asia Pacific and Europe segments, total adjusted results were $1,000,000 from the prior year fourth quarter.
I share Steve's excitement with the great strides we are making in growing our Asia Pacific portfolio as we expect new suspend to sell through our remaining developer inventory as efficiently as possible. Turning to our cash flow, we generate $229,000,000 our guidance as we were able to defer roughly $35,000,000 of development spending to 2016. The $229,000,000 for our pre spin Marriott rewards liability that we accelerated into December of 2015. Should point out that we points at the time of issuance, which
does
we returned roughly 2 activity while the remainder related to our 18, we repurchased nearly 1,600,000 shares and repurchased an additional 900,000 shares through yesterday for 45 $600,000. Based on our current rate of repurchases and our confidence in the strength of our share buyback program, we announced on February 12, that our Board of Directors increased our share repurchase authorization by an additional 2,000,000 shares, bringing our current remaining authorization to 3,100,000 shares. Shifting approximately 110,000,000 facility. The company's total gross debt outstanding decreased $23,000,000 from the end of 2014 to $688,000,000, all but roughly $3,000,000 of which is non recourse debt associated with securitized notes. In addition, $40,000,000 of mandatory redeemable preferred stock remains outstanding, which we have the option to redeem beginning in October of this year.
And based of 2015. And EBITDA calculation. Beginning in 2016, we will also adjust for the impact of non cash share based compensation expense given that companies use share based payments awards differently, both in the type and the quantity of awards granted. While this adjustment does not have a significant impact on our year over year adjusted EBITDA growth, it will align our calculation to be consistent with other lodging and timeshare companies who also exclude these non withstanding some of the challenges related to the stronger U. S.
Dollar and the other uncertain market conditions, which are likely to continue this year, We remain confident that we will achieve our strategy given the strength of our products and the new sales distributions that will be coming online later this year. With that said, we expect to which at the midpoint of this range reflects nearly a 7.5% increase over 20 fifteen's adjusted EBITDA on a comparable basis. We expect this growth to be driven by higher top line revenue from as well as from incremental sales from our new distributions. These new distributions will drive incremental sales beginning this However, recognize that there is a multi year ramp up period until sales volumes from these locations are stabilized. As it relates to development margin, we are targeting margins of 21% or better, similar to 2015.
We expect product costs will continue to remain low potentially down 1 to 2 additional percentage points from 2015 to below 27%, driven mainly from the continued success of our inventory repurchase program. We expect these lower product costs to more than offset 2016, as well as higher costs related to the new marketing programs to drive incremental tour volumes. Shifting to other lines of business, in our rental business, we expect to see year over year growth. However, not at the pace seen in the past few a higher percentage will be dedicated to preview rooms Resort management will continue to grow from higher management fees and increased ancillary and exchange company activity. And as we saw in the fourth quarter of 2015, we expect propensity levels.
We expect adjusted free cash flow of between 135 $155,000,000, while slightly below normalized levels, recall that this range reflects approximately $35,000,000 of development capital spending deferred from 2015. And as we've done in the past, we will continue to evaluate we progress through the year with the intent of delaying spending where possible. We expect inventory levels to remain relatively flat to 2016, even after including the inventory spend deferred from 2015. This assumes that we will complete our Waikaloa transaction on a capital efficient basis, thereby deferring our capital investment. We will continue to report on progress throughout the year.
Lastly, while it is not while it will not be included in our adjusted free cash flow results, we anticipate selling the downside 1st Paradise Hotel, along with the bulk sale of the remaining units at our Ritz Carlton Club And Residences in San Francisco later in the year. We expect this activity could generate Turning to investment activities, we expect $36,000,000 of other capital spending in 2016, roughly $15,000,000 higher than our normalized spending as we have Regarding the technology spending, we are excited about these upcoming enhancements to our owner facing technology as our increased investment in 20162017 will allow us to improve our owner experience and update and are optimistic about the future. While we, like many others, continue to be faced with uncertain economic conditions, we maintain confidence in our product our business model and 16 as we continue to grow our business model and also look forward to sharing our accomplishments with you throughout the year. As always, we appreciate Tom.
Our first question comes from Christopher Agnew with MKM Partners.
Good morning, Chris.
Thanks very much. Good morning. First question, What's the what's your appetite in the near term for additional locations in Gateway Cities and maybe give us some idea of the opportunities you have. I mean, I'm wondering, would you look for additional locations in New York and given the weaker performance of hotels and increased supply? Is there maybe more opportunities presenting themselves to convert into time share?
Thank you.
Yes. I, let's kind of step back and think about the points model in general. We believe that there is advantage to having more flags in more cities, instead of having multiple flags in the same city. Having said that, under the right set of circumstances, conditions, financial arrangements, etcetera. If there was another great opportunity in New York has the example you used, we would certainly give a serious consideration.
But by and large, I mean, we'd rather, kind of plan to flag someplace where we don't have a presence today, which are, well defined, well demanded, vacation destinations.
Got it. Thanks. And maybe a couple of little detail model questions. When do you start lapping Latin American weakness or should we expect that to be a headwind through the first quarter? Given that you're ramping some of these sales locations, I think, midyear third quarter.
Should we expect, the tour flow to be a little backend loaded as those bring on additional turf flow? And then finally, when do you anticipate selling through in Europe?
Okay. I'll the Latin American piece, if you look at the what currency fluctuation charts, that happened in Latin America largely, the biggest impact was started in Q3. So I would say Q1 and too will probably still be, tough comparisons from that standpoint. I'm assuming there's no, meaningful change in the FX, difference between sales in Latin America. As far as tour flow, I'm sorry, I lost the question there.
Just give to our flow, the timing is, I think you kind of answered it.
Yes. Number 1. Yes, I would say it's more towards the second half of the year than the first for two reasons. Number 1, as we've been activating these tour packages that we talked about, they seem to be skewing more towards the second half of the year than first half of the year. Part of that, to be honest with you, based somewhat on availability.
Many of our resorts in the first half of the year are pretty full. So, finding availability to house those tour packages is tougher. So it's more in the second half. And then, of course, as we have new sales centers coming online, that's when additional tours will be coming through the system.
And then the final question just on Europe and the wind down, I'll grab that real quick. We're getting close to selling out of our develop, the remaining developer inventory here over the next, call it, year to 18 months, maybe 2 years. But remember, we'll always have a sale program over there. We'll have a great management business with the resorts that we have. So, it's just, you'll continue to see our contract sales to come down.
And then they'll kind of normalize once we get into that resale program of existing weeks.
Thanks. Maybe one follow-up. With the new sales centers, is there anything bear in mind in terms of mix impact on VPG, whether it's closing efficiency or just the selling amount? Thanks.
Well, clearly, as you bring on new sales centers, almost by definition, you're going to get more first time buyers. As we've discussed in the past, first time buyers typically have a slightly lower VPG, although when you take everything through the sausage grinder in terms of the profitability of business. The first time buyer is every bit as valuable to us over the long term as it is an existing customer. So as those sales centers come online, I would expect to see some continuing pressure in VPG. It's one of the reasons why I mentioned the fact that while heretofore, much of our improvement in development margin has been a result of improving VPG, The reality is as we go forward, it'll probably be less so VPG driven, but more so by virtue of increasing tours and new sites.
Great. Thank you.
Thank you. Thanks.
Our next question is from Patrick Spoolis with SunTrust. Please proceed with your question.
Hi, good morning. First question, can you give a little bit more color on how your South American international customers did. Recall, obviously, it was an issue in the previous quarter. Any noticeable changes in propensity to, buy your product from them in the most recent quarter?
Yes. Go ahead. I was just going to say, I think, obviously, we were still down on that front year over year. I think the trends that we're seeing, Patrick, in the third quarter, 4th quarter, and then kind of moving into the first quarter this year is we're down less. There the trends are kind of going the right direction.
We're still down significantly, but not as much year over year when you look at it that way. As Steve mentioned earlier, that we'll lap that here at the end of the second quarter, and And the reality is if you could look at what the major currencies in Latin have done, really since the second quarter, beginning of 3rd quarter last year, they haven't dramatically improved. So as I think we had mentioned in the past, it becomes a little bit of the normal, in terms of that. So we're starting to see that a little bit, at least in terms of some of the moderated decline, but, it'll continue to be ahead through the end of the second quarter and then we're lapping some of that downside.
Okay. And then on the Miami deal, which was appears to be outsized from the previous property? Did that, did you take into account sort of weakness in the South American customer? In this new deal?
That was not the primary driver of us making a shift. When we had a commitment to purchase units in the the larger project in South Beach that was subject to certain conditions. And when those conditions weren't met, We decided not to proceed and terminate the contract with no financial liability to us as a result of that. When we found this 49 Unit Property, the Edgewater, with its great location in addition to being, you know, an Art Deco project, etcetera. We do decided that, that was an acceptable alternative.
You know, clearly, the Latin customer believe over time that this will rebound, but that was not the driving force to effectively downsize our presence in Miami.
Okay. Thank you for the color. That's all.
Thank you. Thanks.
Our next question is from Ben Chokin with Credit Suisse. Please proceed with your question.
Hey guys. Again, you mentioned down less impact from the LatAm customers. Is that consistent with what you've seen in the past, basically outside of lapping easy comps, not easy comps, but lapping comps in 2H. When you look at previous move in FX? Is there a dynamic where the sticker shock wears off?
Yes, I mean, obviously, the sticker shock we experienced here this past year is from a historical perspective, then probably significantly higher than anything we've seen before. There's always fluctuations obviously in those currencies in Latin. And exactly what you said, yes, what typically happens is even if there's not a rebound in the currency, we're obviously targeting a consumer down there that meets our target market in terms of average house hold income, things like that. Those consumers like to travel. And over time, if they want to continue to travel and do stuff that they've got to get their head around what the foreign currency translation looks like.
And so that's what we're really starting to see a little bit of that in terms of it's now been almost three quarters, two and a half quarters, and there hasn't been much improvement. So, the Latin is still down significantly, But it's starting to be down less here as we've seen it over the last couple of quarters.
Then I'd add one other thing. Unlike we used to be when we were selling a weak space product, selling a point space product, you can, you know, the purchaser can modulate how much money they want to put out of their pocket at any given point in time. So they might not purchase a full week's worth of vacation points. They can actually buy 4 or 5 days to help mitigate some of that impact. And then they can add some points later.
So, there's other advantages there, but I agree with John's point,
That's helpful. And then on the call, you mentioned lower margins from increased sales and marketing. Was that on a net basis? Because you also comment that there'd be a positive impact from lower product cost? I'm just trying to figure out is that?
Yes. Net net we expect to kind of stay where we finished up 20 which is, call it, 21% or better development margin is our target. So, and team, it'll come from a little bit different places as all we were pointing out. Our product cost continues to trend down. And so, we fact that the better product costs will experience in 'sixteen.
And quite frankly, I think those trends in product costs are staying lower should should last for even past 16 based on what we're seeing. And in the near term, that'll help offset some of the pre opening costs, we talked about that's probably about a 1% headwind relative to 'fifteen, just because you got all these new sales centers that you have to get up and running and you're expensing all those costs before you make your first sale. And then in addition, as we ramp up some these tour packages, you could have some higher marketing and sales costs here in the near term. But net net, we expect that the product costs should offset or maybe even be a little bit more favorable back the other way.
That's helpful. And then I could have missed it, but do you guys provide a North and tour flow growth, excluding LatAm?
No, no, we haven't. We haven't historically provided any specific tour flow metric.
And I assume you can't now?
Yes, we're not. Okay.
Thank you. Thanks a lot.
Our next question is from Stephen Kent with Goldman Please proceed with your question. Hi, Steve.
Hi, good morning. Got a couple of questions for you. First, what's know if you mentioned it, what's the split between new and existing owners now? And where would you think they would be in, let's say, 2 years also just on that same theme, you said that there's a pickup in people taking financing. What are they also increasing the amount of the loan meaning that maybe they're putting a lower deposit down and that's a way to facilitate, some of these new customers to decide to buy time share for the very first time.
And then just on an accounting issue, are you able to book sales from these new sales centers right away? Would they be deeded at that location or or at another. I just want to understand how that's going to work.
All right, Steve. I'll take the first one and I'm going to let John take the other 2. On the first time buyers versus existing customers. You've heard us say in the past that historically as a company, we've been roughly fifty-fifty mix of, first time buyers and existing customers. As 2000 and 8, 9, 10, 11 rolled around, That number got to be 40% first time buyers and 60% existing customers.
We have said that we aspire to get back towards that fiftyfifty number. Exactly when that will happen, whether that will be in 2 years or 3 years or 4 I can't tell you, except to say that that is our goal. And the reason for that is why do we want more first time buyers? Obviously first time buyers do a number of different things for us. A, they have a tendency to over time add more ownership, during the course of their time.
Secondly, they bring a new set of referrals to us that we have not here to foreseen. And we get another management fee, another exchange company fee as a result of all that. And, they have a slightly higher propensity to finance their purchase, which we make money off of financing. What happened in 20 gain was a little bit of a pleasant surprise to us when we rolled out our new owner recognition levels in the first quarter of last year. The take up rate from our existing owners was meaningful, driving that 10% increase contract sale on a quarter over quarter basis, 15 versus 14.
As a result, it kind of skewed that existing customer versus first time buyer number by call it a point, point and a half, something like that. So, when you get all up to the end of the year, we didn't make as much progress in seen is to changing the mix of first time buyers and existing customers. I'd say we moved to buy maybe point a half, two points, but we certainly have every intention and aspiration to do so further in the coming years.
And then on the financing side, Steve, a couple of things. Yes. We haven't changed any of our down payment requirements. I mean, we've never really restart down payment requirements, we require kind of that minimum 10% of the purchase price. Some of our customers decide put a little bit more down than that.
But if you think about our default rates, I would argue we have probably the lowest default rates in the industry or are pretty darn close. I mean, our we've got great customers. And actually, what you're seeing with the higher financing propensity, and it's a little bit counterintuitive, You're actually seeing FICO scores go up. So we've seen an average of about 9 to 10 point improvement in our average FICO score since we started this program. But what you're actually seeing is folks that might not have otherwise taken the financing are deciding to finance and they actually have higher FICO scores than I think kind of where you are going.
Are we kind of loosening up our underwriting standards? Haven't changed those at all. So, and then on the sales accounting side, remember, we sell a point space product here in North America. And it's a Florida based land trust. So people aren't buying beaded weeks at a specific property.
They're buying a beneficial interest in all the proper in the trust. So what we're selling is the inventory that's in the trust. When we announce these deals, they don't go into the trust immediately. And in the case of places like York, we won't actually get that into the trust until, call it, 2018, 2019 timeframe, the first piece of that inventory However, through our exchange company, that inventory will be available to owners on an exchange basis. So while it won't actually be owned by the trust for some period of time, the owners will have access to it until it actually gets deeded in there and sold through the trust.
That's the nice thing about our capital efficient model and how we source inventory is we're not selling that site's specific so we can open these new sales centers and we sell the portfolio.
There are no further questions. At this time, I'd like to turn the floor back over to Steve Weisz for closing comments.
Thank you, Rob. I hope you're as pleased as we are with our 2015 results. And your takeaway today is that we are executing our plan and are excited about what 2016 holds for our owners and for our shareholders. Thank you for your participation on our call today and your continuing interest in Marriott Vacations Worldwide and finally to everyone on the call on your families enjoy your next vacation. Thank you.
This concludes today's teleconference. Thank you for your participation. You may disconnect your lines at this time.