What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2026-04-30 compared with 2025-11-05 · 102 added, 229 removed, 461 unchanged (42% of the section changed)

3 unchanged sentences

(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Three Months Ended

Franchise and management fees $ 149,631 $ 145,068

15 unchanged sentences

Interest income ( 1,211 ) ( 1,559 )

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 )

Other losses, net 721 436

Equity in net loss of affiliates 6,252 51

Total other expenses and (income), net 29,724 20,170

9 unchanged sentences

(IN THOUSANDS)

Three Months Ended Nine Months Ended

September 30, September 30,

2025 2024 2025 2024

Three Months Ended

Net income $ 20,304 $ 44,534

7 unchanged sentences

(IN THOUSANDS, EXCEPT SHARE AMOUNTS)

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

Current assets

20 unchanged sentences

Total assets $ 2,944,586 $ 2,918,203

LIABILITIES AND SHAREHOLDERS’ EQUITY (DEFICIT)

LIABILITIES AND SHAREHOLDERS’ EQUITY

Current liabilities

15 unchanged sentences

160,000,000 shares authorized;

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

95,065,638 shares issued at March 31, 2026 and December 31, 2025;

45,617,358 and 45,996,087 shares outstanding at March 31, 2026 and December 31, 2025, respectively

Additional paid-in-capital 407,781 403,927

1 unchanged sentence

Treasury stock, at cost;

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

49,448,280 and 49,069,551 shares at March 31, 2026 and December 31, 2025, respectively

( 2,588,349 ) ( 2,536,373 )

Retained earnings 2,325,220 2,318,031

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

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

Total shareholders’ equity 137,427 181,229

Total liabilities and shareholders’ equity $ 2,944,586 $ 2,918,203

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

2 unchanged sentences

(IN THOUSANDS)

Nine Months Ended

September 30,

Three Months Ended

CASH FLOWS FROM OPERATING ACTIVITIES

Net income $ 20,304 $ 44,534

Adjustments to reconcile net income to net cash provided by operating activities:

Adjustments to reconcile net income to net cash (used in) provided by operating activities:

Depreciation and amortization 16,821 13,748

1 unchanged sentence

Franchise agreement acquisition cost amortization 9,580 9,791

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

Gain on sale of assets ( 713 ) —

Non-cash share-based compensation and other charges 8,434 9,834

Non-cash interest, investments, and affiliate income, net ( 6,131 ) ( 7,529 )

Non-cash interest, investments, and affiliate loss, net 1,800 1,515

Deferred income taxes 7,657 626

2 unchanged sentences

Change in working capital and other ( 56,295 ) ( 38,594 )

Net cash provided by operating activities 184,757 236,540

Net cash (used in) provided by operating activities ( 23,174 ) 20,467

CASH FLOWS FROM INVESTING ACTIVITIES

4 unchanged sentences

Collections of notes receivable 24,610 1,487

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

Proceeds from the sale of assets 52,000 —

Proceeds from sales of equity securities — 108,149

Distributions from sales of affiliates 44,617 15,850

Other items, net 197 ( 1,067 )

2 unchanged sentences

Net borrowings pursuant to revolving credit facilities 97,000 105,500

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 )

Purchases of treasury stock ( 56,480 ) ( 64,624 )

1 unchanged sentence

Proceeds from the exercise of stock options 880 4,803

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

Net cash provided by financing activities 28,285 32,208

Net change in cash and cash equivalents ( 1,065 ) ( 277 )

17 unchanged sentences

Comprehensive

Income (Loss) Treasury

Income (Loss) (2)

Stock Retained

9 unchanged sentences

Balance as of March 31, 2025 46,589,011 $ 951 $ 376,014 $ ( 6,130 ) $ ( 2,467,209 ) $ 2,032,440 $ ( 63,934 )

Net income — — — — — 87,136 87,136

Other comprehensive loss, net of tax — — — ( 694 ) — — ( 694 )

Share-based payment activity (1)

17,095 — 8,561 — 685 — 9,246

Dividends declared ($ 0.2875 per share)

— — — — — ( 13,613 ) ( 13,613 )

Treasury purchases ( 1,950,432 ) — — — ( 235,581 ) — ( 235,581 )

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

2 unchanged sentences

Comprehensive

Income (Loss) Treasury

Income (Loss) (2)

Stock Retained

9 unchanged sentences

Balance as of March 31, 2026 45,617,358 $ 951 $ 407,781 $ ( 8,176 ) $ ( 2,588,349 ) $ 2,325,220 $ 137,427

Net income — — — — — 81,734 81,734

Other comprehensive income, net of tax — — — 2,079 — — 2,079

Share-based payment activity (1)

29,639 — 11,147 — 1,181 — 12,328

Dividends declared ($ 0.2875 per share)

— — — — — ( 13,304 ) ( 13,304 )

Treasury purchases ( 355,276 ) — — — ( 45,141 ) — ( 45,141 )

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.

(2) Accumulated other comprehensive income (loss) relates entirely to foreign currency items.

There were no amounts reclassified from accumulated other comprehensive income (loss) during the three months ended March 31, 2026 and 2025 .

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

14 unchanged sentences

The interim results are not necessarily indicative of the entire year's results.

Certain prior year amounts in our consolidated financial statements have been reclassified in order to maintain comparability with the current year presentation.

The reclassifications were not as a result of any error in our consolidated financial statements.

The Company reclassified certain prior year amounts in the consolidated statements of income in order to maintain comparability with the current year presentation.

• Royalty, licensing and management fees were revised to franchise and management fees in the consolidated statements of income, and now include the revenues previously presented in royalty, licensing and management fees, with the exception of partnership licensing revenues which are now presented in partnership services and fees in the consolidated statements of income, and the addition of the revenues generated from programs, platforms, and services associated with the Company's franchise operations which were previously presented in other revenues from franchised and managed properties in the consolidated statements of income.

• Initial franchise fees, which were previously presented as a standalone financial statement line item, are now presented within franchise and management fees in the consolidated statements of income.

• Platform and procurement services fees were revised to partnership services and fees in the consolidated statements of income, and now include the revenues previously presented in platform and procurement services fees, with the exception of the revenues from the Company’s annual franchisee convention which are now presented in other revenues, the addition of partnership licensing revenues which were previously presented in royalty, licensing and management fees, and the addition of the revenues generated from other non-franchising agreements which are primarily software as a service (“SaaS”) arrangements for non-franchised hoteliers which were previously presented in other revenues in the consolidated statements of income.

• Other revenues from franchised and managed properties were revised to revenue for reimbursable costs from franchised and managed properties in the consolidated statements of income, and now include the revenues previously presented in other revenues from franchised and managed properties, with the exception of the revenues generated from programs, platforms, and services associated with the Company’s franchise operations which are now presented in franchise and management fees in the consolidated statements of income.

• Selling, general and administrative expenses were revised to include the expenses incurred related to programs, platforms, and services associated with the Company’s franchise operations, which were previously presented in other expenses from franchised and managed properties in the consolidated statements of income.

• Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in other expenses from franchised and managed properties in the consolidated statements of income.

• Other expenses from franchised and managed properties were revised to reimbursable expenses from franchised and managed properties in the consolidated statements of income, and now include the expenses previously presented in other expenses from franchised and managed properties, with the exception of the expenses incurred from programs, platforms, and services associated with the Company’s franchise operations which are now presented in selling, general and administrative expenses, and amortization expense from information technology platforms which is now presented in depreciation and amortization expense in the consolidated statements of income.

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 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

Franchise and management fees $ 147,151 $ 41,086 $ 188,237 $ 394,431 $ 117,019 $ 511,450

Initial franchise fees 5,866 ( 5,866 ) — 19,133 ( 19,133 ) —

Partnership services and fees 16,178 8,142 24,320 58,060 13,467 71,527

Owned hotels 31,936 — 31,936 85,345 — 85,345

Other 13,857 ( 2,210 ) 11,647 45,251 4,420 49,671

Revenue for reimbursable costs from franchised and managed properties 212,976 ( 41,152 ) 171,824 592,849 ( 115,773 ) 477,076

Total revenues 427,964 — 427,964 1,195,069 — 1,195,069

OPERATING EXPENSES

Selling, general and administrative 49,077 19,945 69,022 162,697 67,323 230,020

Business combination, diligence and transition costs 984 — 984 17,723 — 17,723

Depreciation and amortization 10,861 2,032 12,893 32,623 5,922 38,545

Owned hotels 22,343 — 22,343 62,370 — 62,370

Reimbursable expenses from franchised and managed properties 192,916 ( 21,977 ) 170,939 575,102 ( 73,245 ) 501,857

Total operating expenses 276,181 — 276,181 850,515 — 850,515

Operating income $ 151,783 $ — $ 151,783 $ 344,554 $ — $ 344,554

The Company also reclassified certain prior year amounts in the consolidated statements of cash flows in order to maintain comparability with the current year presentation.

Depreciation and amortization was revised to include amortization expense from information technology platforms, which was previously presented in depreciation and amortization - other expenses from franchised and managed properties in the consolidated statements of cash flows.

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 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.

The reclassifications had no effect on the Company's previously reported net cash provided by operating activities, the net cash used in investing activities, or the net change in cash and cash equivalents.

Summary of Significant Accounting Policies

1 unchanged sentence

Recently Issued Accounting Standards

In December 2023, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2023-09, Improvements to Income Tax Disclosures ("ASU 2023-09").

ASU 2023-09 is designed to provide additional information to financial statement users in regard to how an entity's operations, risks, and planning affect its tax rate, opportunities, and future cash flows.

ASU 2023-09 is effective for the annual reporting period beginning after December 15, 2024.

Based on the Company's assessment, the adoption of this standard is not expected to have an impact on the Company's consolidated financial statements, but it will require enhanced income tax disclosures in the notes to the consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03").

In November 2024, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2024-03, Disaggregation of Income Statement Expenses ("ASU 2024-03").

ASU 2024-03 requires public entities to provide detailed disclosure of the income statement expenses in the footnotes to the consolidated financial statements.

3 unchanged sentences

The Company is currently evaluating the potential impact that ASU 2024-03 will have on the Company's consolidated financial statements.

In December 2025, the FASB issued ASU 2025-11, Interim Reporting ("ASU 2025-11").

ASU 2025-11 provides a comprehensive list of required interim disclosures and requires entities to disclose events that have a material impact on the entity since the end of the last annual reporting period.

ASU 2025-11 is effective for the annual reporting period beginning after December 15, 2027, including the interim periods within that annual reporting period.

Early adoption is permitted.

The Company is currently evaluating the potential impact that ASU 2025-11 will have on the Company's consolidated financial statements.

Contract Liabilities

2 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 September 30, 2025:

The following table summarizes the significant changes in the contract liabilities balances during the period from December 31, 2025 to March 31, 2026:

(in thousands)

2 unchanged sentences

Revenue recognized in the period ( 27,705 )

Balance as of September 30, 2025 $ 234,200

Balance as of March 31, 2026 $ 221,760

Remaining Performance Obligations

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.

The aggregate amount of the transaction price that is allocated to unsatisfied, or partially unsatisfied, performance obligations was $ 221.8 million as of March 31, 2026.

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.

1 unchanged sentence

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 $ 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.

The loyalty net revenues, inclusive of adjustments to the estimated redemption rates, were $ 22.9 million and $ 19.5 million for the three months ended March 31, 2026 and 2025, 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) September 30, 2025 December 31, 2024

(in thousands) March 31, 2026 December 31, 2025

Senior $ 56,546 $ 98,257

13 unchanged sentences

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

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

(in thousands) March 31, 2026 December 31, 2025

Beginning balance $ 8,481 $ 7,331

Provision (reversal) for credit losses 152 ( 609 )

Recoveries — ( 676 )

(Reversal) provision for credit losses ( 30 ) 1,150

Ending balance $ 8,451 $ 8,481

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 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.

As of March 31, 2026 and December 31, 2025, three note receivable loans 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 September 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 loans.

The allowance for credit losses attributable to the collateral-dependent note receivable loans was $ 4.6 million as of both March 31, 2026 and December 31, 2025.

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

5 unchanged sentences

Notes Receivable

As of September 30, 2025

As of March 31, 2026

Senior $ — $ — $ 42,900 $ 42,900 $ 13,646 $ 56,546

7 unchanged sentences

$ — $ — $ 43,304 $ 43,304 $ 72,353 $ 115,657

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.

The amortized cost basis of the notes receivable in a non-accrual status was $ 42.9 million as of both March 31, 2026 and December 31, 2025.

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 $ 107.8 million and $ 103.1 million as of September 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 $ 78.7 million and $ 103.2 million as of March 31, 2026 and December 31, 2025, 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 $ 65.6 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.

The Company had a total principal balance on these loans of $ 42.5 million and $ 65.3 million as of March 31, 2026 and December 31, 2025, respectively.

Accounts Receivable

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

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 three months ended March 31, 2026, the Company recognized provisions for credit losses on accounts receivable of $ 9.5 million in selling, general and administrative expenses, and $ 7.4 million in reimbursable expenses from franchised and managed properties, in the consolidated statements of income.

During the year ended December 31, 2025, the Company recognized provisions for credit losses on accounts receivable of $ 20.2 million in selling, general and administrative expenses, and $ 15.0 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 recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 18.4 million.

During the three months ended March 31, 2026, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 5.8 million.

During the year ended December 31, 2025, the Company recorded write-offs, net of recoveries, through the accounts receivable allowance for credit losses of $ 29.6 million.

Investments in Affiliates

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 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.

As of March 31, 2026 and December 31, 2025, the Company had total investments in affiliates in the consolidated balance sheets of $ 132.8 million and $ 135.0 million, respectively, which included investments in affiliates that represent VIEs of $ 132.4 million and $ 134.4 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 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.

During the three months ended March 31, 2026 and 2025, the Company recognized losses totaling $ 6.3 million and $ 0.9 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 11 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 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.

During the three months ended March 31, 2026 and 2025, the Company recognized no impairment charges related to its equity method investments.

Debt consisted of the following:

September 30, 2025 December 31, 2024

March 31, 2026 December 31, 2025

(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 $ 2.5 million and $ 3.0 million at September 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 $ 2.2 million and $ 2.4 million at March 31, 2026 and December 31, 2025, respectively

$ 397,794 $ 397,643

$ 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

$ 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 $ 2.9 million and $ 3.1 million at March 31, 2026 and December 31, 2025, respectively

447,062 446,910

$ 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

$ 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 $ 9.8 million and $ 10.1 million at March 31, 2026 and December 31, 2025, respectively

590,229 589,936

$ 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

$ 1 billion senior unsecured revolving credit facility with an effective interest rate of 4.93 %, less deferred issuance costs of $ 2.6 million and $ 2.8 million at March 31, 2026 and December 31, 2025, respectively

566,301 469,783

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

Economic development loans with an effective interest rate of 3.00 % at March 31, 2026 and December 31, 2025

Total long-term debt

$ 2,003,236 $ 1,906,122

Refer to Note 12 and the Liquidity and Capital Resources section of "Management's Discussion and Analysis of Financial Condition and Results of Operations" for more information.

Accumulated Other Comprehensive Loss

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)

Balance as of December 31, 2024 $ ( 6,193 )

Other comprehensive income before reclassification 585

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

(in thousands)

Balance as of December 31, 2023 $ ( 5,671 )

Other comprehensive income before reclassification 292

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 nine months ended September 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 three months ended March 31, 2026 and during the year ended December 31, 2025.

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 September 30, 2025

As of March 31, 2026

Mutual funds (1)

17 unchanged sentences

Refer to Note 5 for additional information on debt.

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

As of March 31, 2026 and December 31, 2025, the carrying amounts and the fair values were as follows:

March 31, 2026 December 31, 2025

(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 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.

The Company's effective income tax rates were 33.0 % and 25.5 % for the three months ended March 31, 2026 and 2025, respectively.

The effective income tax rate for the three months ended March 31, 2026 was higher than the U.S.

federal income tax rate of 21.0% primarily due to the impact of state income taxes and tax expense related to compensation.

The effective income tax rate for the three months ended March 31, 2025 was 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 September 30,

Nine Months Ended September 30,

Three Months Ended March 31,

(in thousands) 2026 2025

3 unchanged sentences

Total share-based compensation expense $ 8,292 $ 10,415

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

A summary of the share-based award activity during the three months ended March 31, 2026 is presented below:

Stock Options Restricted Stock Performance Vested

11 unchanged sentences

Forfeited ( 752 ) 136.14 ( 6,235 ) 123.36 ( 22,031 ) 161.60

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.

Outstanding as of March 31, 2026 616,594 $ 114.62 5.6 years 388,127 $ 127.84 432,295 $ 144.29

Options exercisable as of March 31, 2026 553,953 $ 114.48 5.4 years

(1) Any revisions to the outstanding PVRSUs during the three months ended March 31, 2026 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 three months ended March 31, 2026 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 Nine Months Ended

September 30, September 30,

Three Months Ended

(in thousands, except per share amounts) 2026 2025

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 Nine Months Ended

September 30, September 30,

Three Months Ended

(in thousands) 2026 2025

Stock options 509 137

PVRSUs 38 7 38 7

Reportable Segments

11 unchanged sentences

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

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

Three Months Ended March 31, 2026

(in thousands) Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated

7 unchanged sentences

Interest income ( 1,211 )

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 )

Other losses, net 721

Equity in net loss of affiliates 6,252

Income before income taxes $ 30,310

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

Three Months Ended March 31, 2025

(in thousands) Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated Hotel Franchising & Management Corporate &

Other Intersegment Eliminations Consolidated

7 unchanged sentences

Interest income ( 1,559 )

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 )

Other losses, net 436

Equity in net loss of affiliates 51

Income before income taxes $ 59,762

6 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 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.

As of March 31, 2026, the maximum unrecorded exposure of the principal associated with these limited payment guaranties was $ 40.4 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 September 30, 2025:

The Company had the following outstanding commitments as of March 31, 2026:

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

As of March 31, 2026, 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 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.

As of March 31, 2026, no liability was recognized in the consolidated balance sheets.

For the three months ended March 31, 2026, the Company recognized no guarantee payments in selling, general and administrative expenses in the consolidated statements of income.

As of March 31, 2026, the maximum unrecorded exposure of the guarantee was $ 18.2 million.

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

2 unchanged sentences

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

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.

In accordance with the terms of our franchise agreements, the Company is obligated to use the marketing and reservation system revenues it collects from the current franchisees to provide marketing and reservation services that are appropriate to support the operation of the overall system.

As of March 31, 2026, the Company had remaining commitments of up to $ 3.1 million, if certain conditions are met.

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

In accordance with the terms of our franchise agreements, the Company is obligated to use the marketing and reservation revenues it collects from the current franchisees to provide marketing and reservation services that are appropriate to support the operation of the overall system.

To the extent the revenues collected exceed the expenditures incurred, the Company has a commitment to the franchisee system to make expenditures in future years.

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 has committed to purchase transferable production tax credits generated by qualified solar energy facilities for an aggregate purchase price of approximately $ 193 million over an eleven year period, from 2026 through 2036.

The Company’s commitments are contingent upon the satisfaction of certain legal and contractual conditions from the sellers, 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.

1 unchanged sentence

Such indemnifications are granted under various agreements, including those governing (i) purchases or sales of assets or businesses, (ii) leases of real estate, (iii) licensing of trademarks, (iv) access to credit facilities, (v) issuances of debt or equity securities, and (vi) certain operating agreements.

The indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) financial institutions in credit facility arrangements, (v) underwriters in debt or equity security issuances, and (vi) parties under certain operating agreements.

The indemnifications issued are for the benefit of the (i) buyers in sale agreements and sellers in purchase

agreements, (ii) landlords in lease contracts, (iii) franchisees in licensing agreements, (iv) financial institutions in credit facility arrangements, (v) underwriters in debt or equity security issuances, and (vi) parties under certain operating agreements.

In addition, these parties are also generally indemnified against any third-party claim resulting from the transaction that is contemplated in the underlying agreement.

4 unchanged sentences

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.

("Choice Hotels Canada") and amended the existing master franchise agreement for a purchase price of approximately $ 114.5 million, inclusive of 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 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.

Choice Hotels Canada now has 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.

9 unchanged sentences

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:

During the three months ended March 31, 2026, the Company recognized transaction and transition costs of $ 0.2 million in business combination, diligence and transition costs in the consolidated statements of income.

Fair Values of the Assets Acquired and the Liabilities Assumed

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

The final valuation and related allocation of the purchase price was completed in the first quarter of 2026.

There were no measurement period adjustments.

The final allocation of the purchase price, as presented in our consolidated balance sheets is as follows:

(in thousands) July 2, 2025

30 unchanged sentences

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.

This valuation methodology utilizes Level 3 inputs.

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.

1 unchanged sentence

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.

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 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 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

Three Months Ended

(in thousands) March 31, 2025

Revenues $ 339,898

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.

1 unchanged sentence

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.

Choice Hotels Canada contributed $ 8.9 million and $ 3.2 million in total revenues and net income, respectively, for the three months ended March 31, 2026.

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.

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 March 31, 2026.

(in thousands)

6 unchanged sentences

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