What changed in this filing

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Item 1. Financial Statements

2025-11-05 compared with 2025-08-06 · 213 added, 102 removed, 477 unchanged (40% of the section changed)

3 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

16 unchanged sentences

Interest income ( 1,435 ) ( 2,411 ) ( 4,450 ) ( 6,557 )

Other (gain) loss ( 5,374 ) 2,544 ( 4,938 ) 3,880

Gain from an acquisition of a joint venture ( 100,025 ) — ( 100,025 ) —

Gain on sale of assets ( 713 ) — ( 713 ) —

Loss on extinguishment of debt — 331 — 331

Other gains, net ( 721 ) ( 4,013 ) ( 5,659 ) ( 133 )

Equity in net loss (gain) of affiliates 10,904 ( 1,310 ) 11,035 ( 9,088 )

10 unchanged sentences

(IN THOUSANDS)

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Net income $ 179,996 $ 105,716 $ 306,264 $ 223,861

Other comprehensive income (loss), net of tax:

Other comprehensive (loss) income, net of tax:

Foreign currency translation adjustment ( 1,557 ) 532 585 292

Other comprehensive income (loss), net of tax 2,079 ( 694 ) 2,142 ( 240 )

Other comprehensive (loss) income, net of tax ( 1,557 ) 532 585 292

Comprehensive income $ 178,439 $ 106,248 $ 306,849 $ 224,153

3 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

Current assets

20 unchanged sentences

Total assets $ 2,907,534 $ 2,530,527

LIABILITIES AND SHAREHOLDERS’ DEFICIT

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

Current liabilities

7 unchanged sentences

Deferred compensation and retirement plan obligations 55,014 53,316

Deferred income taxes 22,914 —

Operating lease liabilities 109,782 113,255

5 unchanged sentences

160,000,000 shares authorized;

95,065,638 shares issued at June 30, 2025 and December 31, 2024;

46,263,374 and 46,856,567 shares outstanding at June 30, 2025 and December 31, 2024, respectively

95,065,638 shares issued at September 30, 2025 and December 31, 2024;

46,271,815 and 46,856,567 shares outstanding at September 30, 2025 and December 31, 2024, respectively

Additional paid-in-capital 397,775 370,201

1 unchanged sentence

Treasury stock, at cost;

48,802,264 and 48,209,071 shares at June 30, 2025 and December 31, 2024, respectively

48,793,823 and 48,209,071 shares at September 30, 2025 and December 31, 2024, respectively

( 2,510,911 ) ( 2,411,527 )

Retained earnings 2,267,567 2,001,297

Total shareholders’ deficit ( 26,238 ) ( 45,271 )

Total liabilities and shareholders’ deficit $ 2,664,762 $ 2,530,527

Total shareholders’ equity (deficit) 149,774 ( 45,271 )

Total liabilities and shareholders’ equity (deficit) $ 2,907,534 $ 2,530,527

The accompanying notes are an integral part of these consolidated financial statements.

2 unchanged sentences

(IN THOUSANDS)

Six Months Ended

Nine Months Ended

September 30,

CASH FLOWS FROM OPERATING ACTIVITIES

4 unchanged sentences

Franchise agreement acquisition cost amortization 25,020 20,584

Gain from an acquisition of a joint venture ( 100,025 ) —

Gain on sale of assets ( 713 ) —

Non-cash share-based compensation and other charges 27,439 32,445

11 unchanged sentences

Collections of notes receivable 3,036 2,277

Business acquisition, net of cash acquired ( 73,395 ) —

Proceeds from the sale of assets 52,000 —

Proceeds from sales of equity securities — 108,149

4 unchanged sentences

Net borrowings pursuant to revolving credit facilities 148,482 154,500

Proceeds from the issuance of long-term debt — 593,574

Proceeds from economic development loans 250 —

Repayment of long-term debt — ( 500,000 )

Debt issuance costs — ( 8,069 )

2 unchanged sentences

Proceeds from the exercise of stock options 7,488 9,279

Net cash used in financing activities ( 3,239 ) ( 18,564 )

Net cash provided by (used in) financing activities 3,068 ( 142,168 )

Net change in cash and cash equivalents 9,968 31,009

4 unchanged sentences

Cash payments during the period for

Income taxes, net of refunds $ 41,548 $ 28,961

Income taxes, net of refunds and transferable tax credits $ 75,992 $ 64,734

Interest, net of capitalized interest $ 76,338 $ 56,202

30 unchanged sentences

Balance as of June 30, 2024 47,350,867 $ 951 $ 344,173 $ ( 5,911 ) $ ( 2,332,736 ) $ 1,846,744 $ ( 146,779 )

Net income — — — — — 105,716 105,716

Other comprehensive (loss), net of tax — — — 532 — — 532

Share-based payment activity (1)

63,559 — 12,035 — 2,534 — 14,569

Dividends declared ($ 0.2875 per share)

— — — — — ( 13,499 ) ( 13,499 )

Treasury purchases ( 455,387 ) — — — ( 56,691 ) — ( 56,691 )

Balance as of September 30, 2024 46,959,039 $ 951 $ 356,208 $ ( 5,379 ) $ ( 2,386,893 ) $ 1,938,961 $ ( 96,152 )

Outstanding Common

22 unchanged sentences

Balance as of June 30, 2025 46,263,374 $ 951 $ 387,161 $ ( 4,051 ) $ ( 2,511,169 ) $ 2,100,870 $ ( 26,238 )

Net income — — — — — 179,996 179,996

Other comprehensive income, net of tax — — — ( 1,557 ) — — ( 1,557 )

Share-based payment activity (1)

10,060 — 10,614 — 451 — 11,065

Dividends declared ($ 0.2875 per share)

— — — — — ( 13,299 ) ( 13,299 )

Treasury purchases ( 1,619 ) — — — ( 193 ) — ( 193 )

Balance as of September 30, 2025 46,271,815 $ 951 $ 397,775 $ ( 5,608 ) $ ( 2,510,911 ) $ 2,267,567 $ 149,774

(1) During certain periods presented, accumulated dividends were paid to certain shareholders upon vesting of their performance vested restricted stock units ("PVRSU"), which are presented in Share-based payment activity.

26 unchanged sentences

The reclassifications had no effect on the Company's previously reported total revenues, total operating expenses, operating income, or net income.

The following table presents the effect of the reclassifications on the three and six months ended June 30, 2024 consolidated statements of income.

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2024

The following table presents the effect of the reclassifications on the three and nine months ended September 30, 2024 consolidated statements of income.

Three Months Ended Nine Months Ended

September 30, 2024 September 30, 2024

As previously reported Reclassification As reclassified As previously reported Reclassification As reclassified

17 unchanged sentences

Depreciation and amortization - other expenses from franchised and managed properties was revised to depreciation and amortization - reimbursable expenses from franchised and managed properties in the consolidated statements of cash flows.

Investments in owned hotel properties and investments in other property and equipment, which were previously presented in investments in property and equipment, are now presented within standalone financial statement line items in the consolidated statements of cash flows.

Investments in intangible assets, purchases of investments for employee benefits plans, and proceeds from sales of investments for employee benefits plans, which were previously presented in standalone financial statement line items, are now presented within other items, net in the consolidated statements of cash flows.

17 unchanged sentences

Loyalty points are typically redeemed within three years of issuance.

The following table summarizes the significant changes in the contract liabilities balances during the period from December 31, 2024 to June 30, 2025:

The following table summarizes the significant changes in the contract liabilities balances during the period from December 31, 2024 to September 30, 2025:

(in thousands)

2 unchanged sentences

Revenue recognized in the period ( 92,947 )

Balance as of June 30, 2025 $ 217,936

Balance as of September 30, 2025 $ 234,200

Remaining Performance Obligations

The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $ 217.9 million as of June 30, 2025.

The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $ 234.2 million as of September 30, 2025.

This amount represents the fixed transaction price that will be recognized as revenue in future periods, which is presented as current and non-current deferred revenue in the consolidated balance sheets.

Based on the practical expedient elections permitted by ASU 2014-09, Revenue From Contracts with Customers (Topic 606) and subsequent amendments ("Topic 606"), the Company does not disclose the value of unsatisfied performance obligations for (i) variable consideration subject to the sales or usage-based royalty constraint or comprising a component of a series (including franchise, partnership, qualified vendor, and SaaS agreements), (ii) variable consideration for which the Company recognizes revenue at the amount to which it has the right to invoice for the services performed, or (iii) contracts with an expected original duration of one year or less.

The loyalty points represent a performance obligation attributable to the usage of the points, and thus the revenues are recognized at the point in time when the loyalty points are redeemed by the members for benefits (with both franchisees and

third-party partners), net of the cost of redemptions.

The loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $ 37.2 million and $ 36.3 million for the three months ended June 30, 2025 and 2024, respectively, and $ 56.7 million and $ 55.8 million for the six months ended June 30, 2025 and 2024, respectively.

The loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $ 31.8 million and $ 23.7 million for the three months ended September 30, 2025 and 2024, respectively, and $ 88.5 million and $ 79.5 million for the nine months ended September 30, 2025 and 2024, respectively.

Receivables and Allowance for Credit Losses

3 unchanged sentences

The following table summarizes the composition of the notes receivable balances by credit quality indicator and the allowance for credit losses:

(in thousands) June 30, 2025 December 31, 2024

(in thousands) September 30, 2025 December 31, 2024

Senior $ 99,849 $ 94,963

13 unchanged sentences

The following table summarizes the activity related to the Company’s notes receivable allowance for credit losses:

(in thousands) June 30, 2025 December 31, 2024

(in thousands) September 30, 2025 December 31, 2024

Beginning balance $ 7,331 $ 8,616

3 unchanged sentences

During the year ended December 31, 2024, the recoveries were primarily associated with cash collections pursuant to a settlement agreement with a borrower.

As of June 30, 2025 and December 31, 2024, three and one note receivable loans, respectively, with senior credit quality indicators met the definition of collateral-dependent and are collateralized by the membership interests in the borrowing entities, the associated land parcel, or the operating hotel.

As of September 30, 2025 and December 31, 2024, three and one note receivable loans, respectively, with senior credit quality indicators met the definition of collateral-dependent and are collateralized by the membership interests in the borrowing entities, the associated land parcel, or the operating hotel.

The Company used both a market approach that uses quoted market prices and an income approach that uses discounted cash flows to value the underlying collateral.

1 unchanged sentence

These nonrecurring fair value measurements are classified as Level 3 in the fair value measurement hierarchy because they are unobservable inputs which are significant to the overall fair value.

Based on the Company's analysis, the fair value of the collateral secures substantially all of the carrying value of the

respective note receivable loan.

The allowance for credit losses attributable to the collateral-dependent note receivable loans was $ 3.2 million and $ 2.2 million as of June 30, 2025 and December 31, 2024, respectively.

Based on the Company's analysis, the fair value of the collateral secures substantially all of the carrying value of the respective note receivable loan.

The allowance for credit losses attributable to the collateral-dependent note receivable loans was $ 3.2 million and $ 2.2 million as of September 30, 2025 and December 31, 2024, respectively.

The following table summarizes the past due balances by credit quality indicator of the notes receivable:

5 unchanged sentences

Notes Receivable

As of June 30, 2025

As of September 30, 2025

Senior $ — $ — $ 42,900 $ 42,900 $ 56,949 $ 99,849

7 unchanged sentences

$ — $ — $ 18,248 $ 18,248 $ 97,266 $ 115,514

The amortized cost basis of the notes receivable in a non-accrual status was $ 45.2 million and $ 17.5 million as of June 30, 2025 and December 31, 2024, respectively.

The amortized cost basis of the notes receivable in a non-accrual status was $ 45.2 million and $ 17.5 million as of September 30, 2025 and December 31, 2024, respectively.

Variable Interest through Notes Receivable

The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $ 105.0 million and $ 103.1 million as of June 30, 2025 and December 31, 2024, respectively.

The Company has issued notes receivable loans to certain entities that have created variable interests in the associated borrowers totaling $ 107.8 million and $ 103.1 million as of September 30, 2025 and December 31, 2024, respectively.

The Company has determined that it is not the primary beneficiary of these variable interest entities ("VIEs").

2 unchanged sentences

The Company has extended loans to various unconsolidated affiliates or members of our unconsolidated affiliates.

The Company had a total principal balance on these loans of $ 65.8 million and $ 66.2 million as of June 30, 2025 and December 31, 2024, respectively.

The Company had a total principal balance on these loans of $ 65.6 million and $ 66.2 million as of September 30, 2025 and December 31, 2024, respectively.

These loans mature at various dates and bear interest at fixed or variable rates.

1 unchanged sentence

Accounts receivable consists primarily of franchise and related fees due from the hotel franchisees and are recorded at the invoiced amount.

During the six months ended June 30, 2025, the Company recognized provisions for credit losses on accounts receivable of $ 9.2 million in selling, general and administrative expenses, and $ 6.9 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the nine months ended September 30, 2025, the Company recognized provisions for credit losses on accounts receivable of $ 12.4 million in selling, general and administrative expenses, and $ 8.7 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the year ended December 31, 2024, the Company recognized provisions for credit losses on accounts receivable of $ 11.0 million in selling, general and administrative expenses, and $ 9.7 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the six months ended June 30, 2025, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 12.5 million.

During the nine months ended September 30, 2025, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 18.4 million.

During the year ended December 31, 2024, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 14.4 million.

1 unchanged sentence

The Company has equity method investments in affiliates primarily related to the Company's program to offer equity support to qualified franchisees to develop and operate Cambria Hotels and Everhome Suites in strategic markets.

As of June 30, 2025 and December 31, 2024, the Company had total investments in affiliates in the consolidated balance sheets of $ 125.5 million and $ 117.0 million, respectively, which included investments in affiliates that represent VIEs of $ 110.5 million and $ 104.2 million, respectively.

As of September 30, 2025 and December 31, 2024, the Company had total investments in affiliates in the consolidated balance sheets of $ 134.4 million and $ 117.0 million, respectively, which included investments in affiliates that represent VIEs of $ 134.0 million and $ 104.2 million, respectively.

The Company has determined that it is not the primary beneficiary of any of these VIEs, however the Company does exercise significant influence through its equity ownership and as a result, the investments in these affiliates are accounted for under the equity method of accounting.

During the three months ended June 30, 2025 and 2024, the Company recognized losses totaling $ 1.0 million and gains totaling $ 6.8 million, respectively, from these investments that represent VIEs.

During the six months ended June 30, 2025 and 2024, the Company recognized losses totaling $ 1.9 million

and gains totaling $ 5.6 million, respectively, from these investments that represent VIEs.

During the three months ended September 30, 2025 and 2024, the Company recognized losses totaling $ 10.9 million and $ 0.6 million, respectively, from these investments that represent VIEs.

During the nine months ended September 30, 2025 and 2024, the Company recognized losses totaling $ 12.8 million and gains totaling $ 5.0 million, respectively, from these investments that represent VIEs.

The Company's maximum exposure to losses related to its investments in the VIEs is limited to the total of its respective equity investment as well as certain limited payment guaranties, which are described in Note 12 to these consolidated financial statements.

On July 10, 2025, the Company entered into a joint venture agreement to develop and operate Everhome Suites in certain strategic markets (the "Joint Venture").

The Company contributed $ 71.6 million in cash to the Joint Venture in exchange for an equity ownership interest.

The Company concluded that the Joint Venture represents a VIE.

The Company determined that it is not the primary beneficiary of the VIE, however, the Company does exercise significant influence through its equity ownership and as a result, the Company's investment in the Joint Venture is accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets.

Subsequent to the formation of the Joint Venture, the following transactions were completed:

• The Joint Venture entered into a loan facility for up to $ 500 million.

In connection with the loan facility, the Company has provided a limited payment guarantee, which applies to all hotel projects funded by the loan facility, with the applicable guaranteed amount being determined on a hotel project by hotel project basis.

The Company’s obligation under the limited payment guarantee with respect to any hotel project is effective upon the earlier of (a) the hotel's opening date or (b) 18 months after the date on which construction first started for the hotel.

The maximum exposure to losses related to this limited payment guarantee is described in Note 12 to these consolidated financial statements.

• The Company sold four wholly-owned Everhome Suites hotels under construction to the Joint Venture for an aggregate sale price of $ 52.0 million, resulting in a gain of $ 0.7 million which is reported within gain on sale of assets in the consolidated statements of income.

Prior to the sale, the four wholly-owned Everhome Suites hotels were reported within property and equipment in the consolidated balance sheets.

• Seven of the Company's unconsolidated affiliates, which the Company previously accounted for under the equity method of accounting, contributed their underlying assets to the Joint Venture.

Prior to the transaction, the seven unconsolidated affiliates had an aggregate investment balance of $ 42.1 million, which was reported within investments in affiliates in the consolidated balance sheets.

On May 24, 2024, one of the Company's unconsolidated affiliates sold its underlying assets.

The Company received a distribution from the unconsolidated affiliate and recognized a gain of $ 7.2 million, which was recognized in equity in net gain of affiliates in the consolidated statements of income for the three and six months ended June 30, 2024.

During the three and six months ended June 30, 2025 and 2024, the Company recognized no impairment charges related to its equity method investments.

The Company received a distribution from the unconsolidated affiliate and recognized a gain of $ 7.2 million, which was reported within equity in net gain of affiliates in the consolidated statements of income for the nine months ended September 30, 2024.

During the three and nine months ended September 30, 2025 and 2024, the Company recognized no impairment charges related to its equity method investments.

Debt consisted of the following:

June 30, 2025 December 31, 2024

September 30, 2025 December 31, 2024

(in thousands)

$ 400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88 %, less a discount and deferred issuance costs of $ 2.7 million and $ 3.0 million at June 30, 2025 and December 31, 2024, respectively

$ 400 million senior unsecured notes due 2029 ("2019 Senior Notes") with an effective interest rate of 3.88 %, less a discount and deferred issuance costs of $ 2.5 million and $ 3.0 million at September 30, 2025 and December 31, 2024, respectively

$ 397,493 $ 397,042

$ 450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86 %, less a discount and deferred issuance costs of $ 3.4 million and $ 3.7 million at June 30, 2025 and December 31, 2024, respectively

$ 450 million senior unsecured notes due 2031 ("2020 Senior Notes") with an effective interest rate of 3.86 %, less a discount and deferred issuance costs of $ 3.2 million and $ 3.7 million at September 30, 2025 and December 31, 2024, respectively

446,757 446,300

$ 600 million senior unsecured notes due 2034 ("2024 Senior Notes") with an effective interest rate of 6.11 %, less a discount and deferred issuance costs of $ 10.7 million and $ 11.2 million at June 30, 2025 and December 31, 2024, respectively

$ 600 million senior unsecured notes due 2034 ("2024 Senior Notes") with an effective interest rate of 6.11 %, less a discount and deferred issuance costs of $ 10.4 million and $ 11.2 million at September 30, 2025 and December 31, 2024, respectively

589,643 588,764

$ 1 billion senior unsecured revolving credit facility with an effective interest rate of 5.72 %, less deferred issuance costs of $ 3.2 million and $ 3.6 million at June 30, 2025 and December 31, 2024, respectively

$ 1 billion senior unsecured revolving credit facility with an effective interest rate of 5.65 %, less deferred issuance costs of $ 3.0 million and $ 3.6 million at September 30, 2025 and December 31, 2024, respectively

484,361 336,420

Economic development loans with an effective interest rate of 3.00 % at September 30, 2025

Total long-term debt

2 unchanged sentences

Accumulated Other Comprehensive Loss

The changes in accumulated other comprehensive loss, net of tax, for the six months ended June 30, 2025 and 2024 were as follows:

The changes in accumulated other comprehensive loss, net of tax, for the nine months ended September 30, 2025 and 2024 were as follows:

(in thousands)

1 unchanged sentence

Other comprehensive income before reclassification 585

Balance as of June 30, 2025 $ ( 4,051 )

Balance as of September 30, 2025 $ ( 5,608 )

(in thousands)

1 unchanged sentence

Other comprehensive income before reclassification 292

Balance as of June 30, 2024 $ ( 5,911 )

Other comprehensive loss, net of tax, for both the six months ended June 30, 2025 and 2024 relates entirely to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period.

Balance as of September 30, 2024 $ ( 5,379 )

Other comprehensive loss, net of tax, for both the nine months ended September 30, 2025 and 2024 relates entirely to foreign currency items, and there were no amounts reclassified from accumulated other comprehensive loss during either period.

Fair Value Measurements

6 unchanged sentences

Level 3 - Unobservable inputs, supported by little or no market data available, where the reporting entity is required to develop its own assumptions to determine the fair value of the instrument.

The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the six months ended June 30, 2025 and during the year ended December 31, 2024.

The Company does not currently have any assets recorded at fair value on a recurring basis whose fair value was determined using Level 3 inputs and there were no transfers of Level 3 assets during the nine months ended September 30, 2025 and during the year ended December 31, 2024.

The Company recognized the following assets at fair value on a recurring basis in the consolidated balance sheets:

1 unchanged sentence

(in thousands) Total Level 1 Level 2 Level 3

As of June 30, 2025

As of September 30, 2025

Mutual funds (1)

17 unchanged sentences

Refer to Note 5 for additional information on debt.

As of June 30, 2025 and December 31, 2024, the carrying amounts and the fair values were as follows:

June 30, 2025 December 31, 2024

As of September 30, 2025 and December 31, 2024, the carrying amounts and the fair values were as follows:

September 30, 2025 December 31, 2024

(in thousands) Carrying Amount Fair Value Carrying Amount Fair Value

4 unchanged sentences

The settlement of such fair value amounts may not be possible or a prudent management decision.

The Company's effective income tax rates were 24.7 % and 25.3 % for the three months ended June 30, 2025 and 2024, respectively.

The Company's effective income tax rates were 25.0 % and 24.6 % for the six months ended June 30, 2025 and 2024, respectively.

The effective income tax rates were higher than the U.S.

The Company's effective income tax rates were 14.7 % and 22.9 % for the three months ended September 30, 2025 and 2024, respectively.

The Company's effective income tax rates were 19.3 % and 23.8 % for the nine months ended September 30, 2025 and 2024, respectively.

The effective income tax rates for the three and nine months ended September 30, 2025 were lower than the U.S.

federal income tax rate of 21.0% primarily due to the impact of a $ 100.0 million non-taxable gain from an acquisition of a joint venture and the purchase of transferable tax credits, which were partially offset by the impact of state income taxes.

The effective income tax rates for the three and nine months ended September 30, 2024 were higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes.

1 unchanged sentence

The components of the Company’s share-based compensation expense were as follows:

Three Months Ended June 30,

Six Months Ended June 30,

Three Months Ended September 30,

Nine Months Ended September 30,

(in thousands) 2025 2024 2025

3 unchanged sentences

Total share-based compensation expense $ 11,208 $ 9,749 $ 32,576 $ 28,120

A summary of the share-based award activity during the six months ended June 30, 2025 is presented below:

A summary of the share-based award activity during the nine months ended September 30, 2025 is presented below:

Stock Options Restricted Stock Performance Vested

11 unchanged sentences

Forfeited ( 613 ) 134.58 ( 11,381 ) 125.15 ( 22,904 ) 136.71

Outstanding as of June 30, 2025 701,153 $ 110.88 5.7 years 340,621 $ 138.21 504,817 $ 137.62

Options exercisable as of June 30, 2025 561,418 $ 107.64 5.2 years

(1) Any revisions to the outstanding PVRSUs during the six months ended June 30, 2025 is based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.

The fair value of the restricted stock and the PVRSUs with performance conditions that were granted during the six months ended June 30, 2025 was equal to the market price of the Company’s common stock on the date of the grant.

Outstanding as of September 30, 2025 696,153 $ 111.02 5.5 years 342,317 $ 138.43 490,758 $ 137.85

Options exercisable as of September 30, 2025 560,584 $ 107.86 5.0 years

(1) Any revisions to the outstanding PVRSUs during the nine months ended September 30, 2025 is based on the Company's performance relative to the targeted performance conditions in the respective PVRSUs.

The fair value of the restricted stock and the PVRSUs with performance conditions that were granted during the nine months ended September 30, 2025 was equal to the market price of the Company’s common stock on the date of the grant.

The fair value of the PVRSUs with market conditions that are based on the Company’s total shareholder return relative to a predetermined peer group was estimated using a Monte Carlo simulation method as of the date of the grant.

6 unchanged sentences

The computation of basic and diluted earnings per share was as follows:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in thousands, except per share amounts) 2025 2024 2025 2024

12 unchanged sentences

The following securities have been excluded from the calculation of the diluted weighted average shares of common stock outstanding because the inclusion of these securities would have an anti-dilutive effect:

Three Months Ended Six Months Ended

June 30, June 30,

Three Months Ended Nine Months Ended

September 30, September 30,

(in thousands) 2025 2024 2025 2024

14 unchanged sentences

The following tables present the financial information for the Company's segments:

Three Months Ended June 30, 2025 Three Months Ended June 30, 2024

Three Months Ended September 30, 2025 Three Months Ended September 30, 2024

(in thousands) Hotel Franchising & Management Corporate &

9 unchanged sentences

Interest income ( 1,435 ) ( 2,411 )

Other (gain) loss ( 5,374 ) 2,544

Gain from an acquisition of a joint venture ( 100,025 ) —

Gain on sale of assets ( 713 ) —

Loss on extinguishment of debt — 331

Other gains, net ( 721 ) ( 4,013 )

Equity in net loss (gain) of affiliates 10,904 ( 1,310 )

Income before income taxes $ 210,916 $ 137,148

Six Months Ended June 30, 2025 Six Months Ended June 30, 2024

Nine Months Ended September 30, 2025 Nine Months Ended September 30, 2024

(in thousands) Hotel Franchising & Management Corporate &

9 unchanged sentences

Interest income ( 4,450 ) ( 6,557 )

Other (gain) loss ( 4,938 ) 3,880

Gain from an acquisition of a joint venture ( 100,025 ) —

Gain on sale of assets ( 713 ) —

Loss on extinguishment of debt — 331

Other gains, net ( 5,659 ) ( 133 )

Equity in net loss (gain) of affiliates 11,035 ( 9,088 )

7 unchanged sentences

Under these limited payment guaranties, the Company has agreed to guarantee a portion of the outstanding debt until certain conditions are met, such as (a) the loan matures, (b) certain debt covenants are achieved, (c) the maximum amount guaranteed by the Company is paid in full, or (d) the Company, through its affiliates, ceases to be a member of the VIE.

As of June 30, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $ 47.4 million, plus unpaid expenses and accrued but unpaid interest.

As of September 30, 2025, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $ 36.5 million, plus unpaid expenses and accrued but unpaid interest.

The Company believes the likelihood of having to perform under these guaranties is remote.

In the event of performance, the Company has recourse for certain of the guaranties in the form of partial guaranties from third parties.

The Company had the following outstanding commitments as of June 30, 2025:

The Company had the following outstanding commitments as of September 30, 2025:

• As part of the acquisition of Radisson Hotels Americas in August 2022, the Company entered into a long-term management arrangement, with an expiration date of July 31, 2031, to manage hotels owned by a third-party.

As of June 30, 2025, the Company managed seven hotels pursuant to the long-term management arrangement.

As of September 30, 2025, the Company managed seven hotels pursuant to the long-term management arrangement.

In conjunction with the management arrangement, the Company entered into a guarantee with the third-party to fund any shortfalls in the payment of the third-party owner’s priority that is stipulated in the management agreement.

As of June 30, 2025, no liability was recognized in the consolidated balance sheets.

For the six months ended June 30, 2025, the Company recognized guarantee payments of $ 2.0 million in selling, general and administrative expenses in the consolidated statements of income.

As of June 30, 2025, the maximum unrecorded exposure of the guarantee was $ 20.0 million.

As of September 30, 2025, no liability was recognized in the consolidated balance sheets.

For the nine months ended September 30, 2025, the Company recognized guarantee payments of $ 2.0 million in selling, general and administrative expenses in the consolidated statements of income.

As of September 30, 2025, the maximum unrecorded exposure of the guarantee was $ 20.0 million.

• The Company strategically deploys capital in the form of franchise agreement acquisition cost payments across our brands to incentivize franchise development.

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• The Company has committed to provide financing in the form of loans or credit facilities to franchisees for brand development efforts.

As of June 30, 2025, the Company had remaining commitments of up to $ 4.3 million, if certain conditions are met.

As of September 30, 2025, the Company had remaining commitments of up to $ 2.3 million, if certain conditions are met.

• The Company’s franchise agreements require the payment of franchise fees, which include marketing and reservation system fees.

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Conversely, to the extent the expenditures incurred exceed the revenues collected, the Company has the contractual enforceable right to assess and collect such amounts from the franchisees.

• The Company has committed to purchase transferable production tax credits generated by a qualified solar energy facility for an aggregate purchase price of approximately $ 125 million over a ten year period, from 2025 through 2035.

The Company’s commitment is contingent upon the satisfaction of certain legal and contractual conditions from the seller, and the continued availability of the credits under federal tax laws.

The Company expects to utilize these credits in the same quarter in which they are purchased, offsetting federal income tax estimated payments and reducing income tax expense each year.

In the ordinary course of business, the Company enters into numerous agreements that contain standard indemnities whereby the Company indemnifies another party for breaches of representations and warranties.

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With respect to certain of the aforementioned indemnities, such as the indemnifications of the landlords against third-party claims for the use of real estate property leased by the Company, the Company maintains insurance coverage that mitigates any potential liability.

Subsequent Events

On July 2, 2025, the Company acquired the remaining 50 % of the outstanding shares of Choice Hotels Canada, Inc.

("Choice Hotels Canada") and amended the existing master franchise agreement for a purchase price of approximately $ 112.0 million, subject to customary adjustments related to working capital and cash.

Choice Hotels Canada Acquisition

On July 2, 2025, the Company completed the acquisition (the “Transaction”) of the remaining 50 % of the outstanding shares of Choice Hotels Canada, Inc.

("Choice Hotels Canada") and amended the existing master franchise agreement for a purchase price of approximately $ 114.5 million, inclusive of preliminary customary adjustments related to working capital and cash.

The acquisition was funded with available cash and borrowings under the Company's senior unsecured revolving credit facility.

Choice Hotels Canada franchises more than 26,000 rooms in Canada, which have been included in the Company's franchised hotel statistics as a result of the existing master franchise agreement, and will soon have the ability to offer developers access to all 22 hotel brands, including the Company's extended stay brands.

Choice Hotels Canada franchises more than 26,000 rooms in Canada, which have historically been included in the Company's franchised hotel statistics as a result of the prior master franchise agreement.

Following the completion of the Transaction, Choice Hotels Canada will have the ability to offer developers access to all of the Company's 22 hotel brands and brand extensions, including the Company's extended stay brands.

Prior to the acquisition date, the Company owned 50 % of the outstanding shares of Choice Hotels Canada, which was accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets.

Due to the close proximity of the Choice Hotels Canada acquisition date and the Company's filing of its Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025, the initial accounting for the acquisition is incomplete as of the filing date.

The initial accounting for the acquisition will be included in the Company's Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2025.

On July 10, 2025, the Company entered into a joint venture agreement to develop and operate Everhome Suites in certain strategic markets (the "Joint Venture").

The Company contributed $ 71.6 million in cash to the Joint Venture in exchange for an equity ownership interest.

The Company concluded that the Joint Venture represents a VIE.

The Company determined that it is not the primary beneficiary of the VIE, however, the Company does exercise significant influence through its equity ownership and as a result, the Company's investment in the Joint Venture will be accounted for under the equity method of accounting and reported within investments in affiliates in the consolidated balance sheets.

Subsequent to the formation of the Joint Venture, the following transactions were completed:

• The Joint Venture entered into a loan facility for up to $ 500 million.

As of the date of the loan facility, the Company's maximum unrecorded exposure of the principal associated with the limited payment guarantee was $ 11.5 million, plus unpaid expenses and accrued but unpaid interest.

The Company believes the likelihood of having to perform under the guarantee is remote.

In the event of performance, the Company has recourse for the limited payment guarantee in the form of partial guaranties from third parties associated with the Joint Venture.

• The Company sold four wholly-owned Everhome Suites hotels under construction to the Joint Venture for an aggregate sale price of $ 52.0 million, subject to customary prorations.

Prior to the sale, the four wholly-owned Everhome Suites hotels were reported within property and equipment in the consolidated balance sheets.

As a result of the Transaction, Choice Hotels Canada is now a wholly-owned and consolidated subsidiary of the Company, and the Transaction was accounted for as a business combination using the acquisition method.

In connection with the Transaction, the Company remeasured the value of its previously held 50 % equity investment to its acquisition date fair value of $ 114.5 million, which resulted in a gain of approximately $ 100.0 million that is reported within gain from an acquisition of a joint venture in the consolidated statements of income.

The fair value of the previously held equity investment was determined using a market approach based on the cash consideration exchanged for the newly acquired 50 % equity interest.

The following is a summary of the purchase consideration transferred:

Purchase Consideration

(in thousands)

Cash consideration transferred for the newly acquired interest $ 114,470

Fair value of the previously held interest 114,470

Effective settlement of intercompany payables 3,280

Total consideration, including previously held interest $ 232,220

During both the three and nine months ended September 30, 2025, the Company recognized transaction and transition costs of $ 1.5 million in business combination, diligence and transition costs in the consolidated statements of income.

Preliminary Fair Values of the Assets Acquired and the Liabilities Assumed

The Company allocated the purchase price based upon a preliminary assessment of the fair value of the assets acquired and the liabilities assumed on July 2, 2025.

The preliminary fair values are based on management’s estimates and assumptions, using the best information available at the time of this filing.

The final valuation and related allocation of the purchase price will be completed no later than 12 months after the closing date of the acquisition.

The final acquisition accounting adjustments could be materially different and may include (1) changes in the allocations to the intangible assets as well as goodwill, and (2) other changes to assets and liabilities, such as working capital.

The preliminary allocation of the purchase price is as follows:

(in thousands) July 2, 2025

Assets acquired

Cash and cash equivalents $ 44,356

Accounts receivable 10,706

Income taxes receivable 149

Prepaid expenses and other current assets 335

Operating lease right-of-use assets 358

Intangible assets 150,665

Total assets acquired $ 206,569

Liabilities assumed

Accounts payable $ 5,235

Accrued expenses and other current liabilities 1,926

Deferred revenue - current 333

Liability for guest loyalty program - current 7,194

Deferred income taxes 38,045

Long-term deferred revenue 1,845

Operating lease liabilities 358

Liability for guest loyalty program - noncurrent 5,607

Total liabilities assumed $ 60,543

Fair value of net assets acquired $ 146,026

Goodwill 86,194

Total consideration, including previously held interest $ 232,220

Identified Intangible Assets

The following table presents the estimated fair values of the acquired identified intangible assets and their estimated useful lives:

Estimated Useful Life Estimated Fair Value

(in years) (in thousands)

Reacquired territory rights 38 $ 76,523

Franchise agreements 12 74,142

Total intangible assets $ 150,665

The reacquired territory rights represent the reacquired rights for the use of certain Choice brands within Canada.

The fair value of the reacquired territory rights and the franchise agreements was estimated using a multi-period excess earnings method, which is a variation of the income approach.

This method uses the present value of the incremental after-tax cash flows attributable to the intangible asset in order to estimate the fair value.

This valuation methodology utilizes Level 3 inputs, and the Company is continuing to assess the assumptions used in estimating these values as well as the respective useful lives, which could result in changes to the provisional values.

As the Transaction is accounted for as a business combination, deferred tax assets and liabilities are generally recognized on the differences between the fair value of the assets acquired and the liabilities assumed and the tax bases of the assets acquired and the liabilities assumed in the business combination.

The Transaction consists of a foreign entity, so the Company asserts an indefinite reinvestment and has not recorded a deferred tax liability on the outside basis difference in its investment.

Pro Forma Results of Operations

The following unaudited pro forma information presents the combined results of operations of Choice and Choice Hotels Canada as if the Company had completed the Transaction on January 1, 2024, but using the preliminary fair values of the assets acquired and the liabilities assumed as of the acquisition date.

The unaudited pro forma information reflects adjustments relating to (i) the allocation of the purchase price and related adjustments, including the incremental amortization expense based on the preliminary fair values of the intangible assets acquired, (ii) the incremental impact of the senior unsecured revolving credit facility draw on interest expense, (iii) nonrecurring transaction costs, and (iv) the income tax impact of the aforementioned pro forma adjustments.

As required by GAAP, these unaudited pro forma results do not reflect any cost saving synergies from operating efficiencies.

Accordingly, these unaudited pro forma results are presented for informational purposes only and are not necessarily indicative of what the actual results of operations of the combined company would have been if the Transaction had occurred at the beginning of the period presented, nor are they indicative of the future results of operations.

Nine Months Ended

(in thousands) September 30, 2025 September 30, 2024

Revenues $ 1,222,972 $ 1,225,458

Net income (1)

$ 204,397 $ 222,300

(1) The gain on the previously held 50 % equity interest in Choice Hotels Canada is excluded from the pro forma results of operations.

Choice Hotels Canada Results of Operations

The Company's consolidated statements of income include Choice Hotels Canada's results of operations since the July 2, 2025 acquisition date.

Choice Hotels Canada contributed $ 13.2 million and $ 5.9 million in total revenues and net income, respectively, for both the three and nine months ended September 30, 2025.

The $ 86.2 million of goodwill recognized is primarily attributable to the value that the Company expects to realize from the existing customer base, cost synergies, and new agreements signed with new franchisees and developers.

The goodwill for the Transaction is fully attributable to the Hotel Franchising & Management reportable segment and is not deductible for tax purposes.

The following table summarizes the carrying amount of the Company's goodwill, including the goodwill arising from the acquisition of Choice Hotels Canada, as of September 30, 2025.

(in thousands)

Goodwill, excluding goodwill arising from the Choice Hotels Canada acquisition $ 227,765

Goodwill arising from the Choice Hotels Canada acquisition 86,194

Effect of foreign currency translation ( 1,870 )

Total goodwill, gross carrying amount 312,089

Accumulated impairment losses ( 7,578 )

Goodwill, net carrying amount $ 304,511

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 1. Financial Statements