What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-05-09 compared with 2023-11-06 · 222 added, 192 removed, 357 unchanged (54% of the section changed)

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Forward-looking statements include all statements that are not historical facts and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “would,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “future,” “guidance,” “target,” or the negative version of these words or other comparable words, although not all forward-looking statements may contain such words.

The forward-looking statements contained in this Quarterly Report on Form 10-Q include statements related to HGV’s revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are not historical facts, including, related to the proposed transaction between HGV and Bluegreen Vacations Holding Corporation (“Bluegreen”).

The forward-looking statements contained in this Quarterly Report on Form 10-Q include statements related to HGV’s revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are not historical facts, including, related to the acquisition and integration of Bluegreen Vacations Holding Corporation (“Bluegreen”).

HGV cautions you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond HGV’s control, which may cause the actual results, performance or achievements to be materially different from the future results.

Any one or more of these risks or uncertainties, including those related to the proposed merger transaction between HGV and Bluegreen, could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics discussed under “—Operational Metrics” below, financial condition or credit rating.

Any one or more of these risks or uncertainties, including those related to HGV's acquisition of Bluegreen, could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics discussed under “—Operational Metrics” below, financial condition or credit rating.

For additional information regarding factors that could cause HGV’s actual results to differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q, please see the risk factors discussed in “Part I—Item 1A.

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“Just-in-time” refers to VOI inventory that is primarily sourced in transactions that are designed to closely correlate the timing of the acquisition by us with our sale of that inventory to purchasers.

“Points-based” refers to VOI sales that are backed by physical real estate that is contributed to a trust.

“Points-based” refers to VOI sales that are backed by physical real estate that is or will be contributed to a trust.

“VOI” refers to vacation ownership intervals and interests.

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Generally Accepted Accounting Principles (“U.S.

GAAP”), and financial measures that are not calculated in accordance

GAAP, including earnings before interest expense (excluding interest expense relating to our non-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, fee-for-service commissions and brand fees, sales and marketing expense, net, sales revenue, real estate expense, and profits and profit margins for our real estate, financing, resort and club management, and rental and ancillary services.

GAAP”), and financial measures that are not calculated in accordance with U.S.

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fee-for-service commissions and brand fees, sales and marketing expense, net, sales revenue, real estate expense, and profits and profit margins for our real estate, financing, resort and club management, and rental and ancillary services.

Operational Metrics

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See “Key Business and Financial Metrics” and “Results of Operations” for a discussion of the meanings of these terms, the Company’s reasons for providing the applicable non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S.

We are a global timeshare company engaged in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services, primarily under the Hilton Grand Vacations brand.

On January 17, 2024 (“Bluegreen Acquisition Date”), we completed the acquisition of Bluegreen Vacations Holding Corporation (“Bluegreen”) (the “Bluegreen Acquisition”).

Our operations primarily consist of:

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operating resorts and timeshare plans;

and managing our points-based Hilton Grand Vacations Club and Hilton Club exchange programs and the Diamond points-based multi-resort timeshare clubs and exchange programs.

During 2022, we began offering a new club membership called HGV Max across certain of our sales centers.

For any customer who purchases a VOI, this membership provides the ability to use points across all properties within our network.

The membership provides new destinations for existing club owners and broader vacation opportunities for new buyers.

It also combines the best benefits from our existing programs, new travel benefits, Hilton hotel discounts and benefits and alternative experiential options available to HGV Max owners.

Our club offerings, including HGV Max, are collectively referred to as “Clubs”.

As of September 30, 2023, we have over 150 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada, and Japan.

A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, California, Arizona, Nevada and Virginia and feature spacious, condominium-style accommodations with superior amenities and quality service.

As of September 30, 2023, we had approximately 526,000 members across our club offerings.

Based on the type of Club membership, members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort, any property in the Hilton system of 22 industry-leading brands across approximately 7,300 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program.

In August 2023, a series of wildfires in Maui caused widespread property destruction, damage and loss of life.

The fires resulted in resort closures and travel restrictions, adversely impacting travel, including in the surrounding Hawaiian Islands.

We have 13 properties and six sales centers in the Hawaiian Islands, including two properties and sales centers in Maui.

While neither of our Maui properties sustained physical damage, the decline in tourism throughout the region has negatively impacted our business and financial results, and there continues to be a level of uncertainty as to the extent of our continued business interruption.

Therefore, we will continue to evaluate the overall impact of the wildfires on our operations through the remainder of the year and into 2024.

and managing our clubs and exchange programs that include HGV Max, Hilton Grand Vacations Club, and Hilton Club, Diamond points-based multi-resort timeshare clubs and Bluegreen Vacation Club (collectively referred to as “Clubs”).

As of March 31, 2024, we have approximately 200 properties located in the United States (“U.S.”), Europe, Mexico, the Caribbean, Canada and Asia.

A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, California, Arizona, Nevada and Virginia inclusive of the new locations we have expanded into through the Bluegreen Acquisition.

Our properties feature spacious, condominium-style accommodations with superior amenities and quality service.

We are in the process of rebranding many of the Diamond properties and anticipate rebranding the majority of Bluegreen properties.

As of March 31, 2024, we expect to begin rebranding of certain Bluegreen properties during the fourth quarter of 2024 to the Hilton Grand Vacations brands and Hilton standards.

As of March 31, 2024, we had approximately 718,000 members across our Club offerings.

Based on the type of Club membership, certain members have the flexibility to exchange their VOIs for stays at any Hilton Grand Vacations resort, any property in the Hilton system of 23 industry-leading brands across approximately 7,600 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program, including travel services options.

Bluegreen Vacation Club members have the flexibility to stay at units available at any of Bluegreen’s resorts and have access to other hotels and resorts through Bluegreen partnerships and exchange networks.

We operate our business across two segments:

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Real Estate Sales and Financing

Our primary product includes the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties.

Our primary deeded product includes the marketing and selling of fee-simple VOIs deeded in perpetuity and right to use real estate interests, developed either by us or by third parties.

This ownership interest is an interest in real estate generally equivalent to one week on an annual or biennial basis, at the timeshare resort in which the VOI is located.

Through the Bluegreen Acquisition, we also offer a points based use right in perpetuity coupled with a freehold estate whereby upon purchase of a VOI, the purchaser directs conveyance of the VOI to the trustee of the Bluegreen Vacation Club who holds the timeshare interest pursuant to the Bluegreen Vacation Club Trust Agreement, dated as of May 18, 1994.

At the time of conveyance of the timeshare interest, the purchaser becomes a member and is designated an "Owner Beneficiary" of the Bluegreen Vacation Club.

Bluegreen Vacation Club members may use their allotment of points for stays at Bluegreen’s resorts or other hotels and resorts available through partnerships and exchange networks.

Our primary trust VOI product is the marketing and selling of beneficial interests in one of our Collections, which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in that Collection.

In general, purchasers of a VOI in a collection do not acquire a direct ownership interest in the resort properties in the Collection.

Rather for each Collection, one or more trustees hold legal title to the deeded fee simple real estate interests or the functional equivalent, or, in some cases, leasehold real estate interests for the benefit of the respective Collection’s association members in accordance with the applicable agreements.

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Traditionally, timeshare operators have funded 100% of the investment necessary to acquire land and construct timeshare properties.

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The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs.

The just-in-time agreements enable us to source

VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers.

The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers.

Sales of owned, including just-in-time, inventory generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth.

Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital.

Another one of our products is the marketing and selling of beneficial interests in one of our Collections, which are represented by an annual or biennial allotment of points that can be utilized for vacations at any of the resorts in that Collection.

In general, purchasers of a VOI in a collection do not acquire a direct ownership interest in the resort properties in the Collection.

For the nine months ended September 30, 2023, sales from fee-for-service and just-in-time inventory were 30%, and 17% of contract sales, respectively.

For the three months ended March 31, 2024, sales from fee-for-service and just-in-time inventory were 16%, and 25% of contract sales, respectively.

See “ Key Business and Financial Metrics — Real Estate Sales Operating Metrics ” for additional discussion of contract sales.

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We sell our vacation ownership products primarily through our distribution network of both-in-market and off-site sales centers.

Our products are currently marketed for sale throughout the United States, Mexico, Canada, Europe, and Japan.

Our products are currently marketed for sale throughout the United States, Mexico, Canada, Europe, and Asia.

We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership.

We have over 60 sales distribution centers in various domestic and international locations.

We have approximately 100 sales distribution centers in various domestic and international locations.

Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach.

We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products, are frequent leisure travelers, and have an affinity with our brands.

With the Bluegreen Acquisition, our marketing and sales activities also includes marketing relationships with nationally-recognized consumer brands, such as Bass Pro, a nationally-recognized retailer of fishing, marine, hunting, camping and sports gear, and Choice Hotels.

HGV signed a new 10-year exclusive marketing agreement with Bass Pro that provides HGV with the right to market and sell vacation packages at kiosks in Bass Pro’s and Cabela’s retail locations and through other means.

As of March 31, 2024, HGV had sales and marketing operations at a total of 132 Bass Pro Shops and Cabela’s Stores, including 16 virtual kiosks.

Additionally, the joint venture between HGV and Bass Pro includes four high-end wilderness resorts under the Big Cedar Lodge brand.

Through the Bluegreen Acquisition, we also gained access to an exclusive strategic relationship with Choice Hotels that involves several areas of its business, including a sales and marketing alliance that enables us to leverage Choice Hotels’ brands, customer relationships and marketing channels to sell vacation packages.

Tour flow quality impacts key metrics such as close rate and VPG, defined in “ Key Business and Financial Metrics—Real Estate Sales Operating Metrics .” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables.

For the nine months ended September 30, 2023, 69% of our contract sales were to our existing owners, compared to 71% for the nine months ended September 30, 2022.

For the three months ended March 31, 2024, 76% of our contract sales were to our existing owners, compared to 69% for the three months ended March 31, 2023.

We provide financing for members purchasing our developed and acquired inventory and generate interest income on the loans.

Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year , fully-amortizing loans that bear a fixed interest rate typically ranging from 2.5% to 25% per annum.

Financing propensity was 62% and 63% for the nine months ended September 30, 2023 and 2022, respectively.

Financing propensity was 65% and 59% for the three months ended March 31, 2024 and 2023, respectively.

We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume of all contracts originated in the period.

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and Canadian borrowers at the time of origination were as follows:

Nine Months Ended September 30,

Three Months Ended March 31,

Weighted-average FICO score 744 737

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Prepayment is permitted without penalty.

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For additional information see Note 6:

Timeshare Financing Receivables in our condensed consolidated financial statements.

Timeshare Financing Receivables in our unaudited condensed consolidated financial statements.

In addition, we earn fees from servicing our securitized timeshare financing receivables and the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs.

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• Contract sales represents the total amount of VOI products (fee-for-service, just-in-time, developed, and points-based) under purchase agreements signed during the period where we have received a down payment of at least 10% of the contract price.

Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives.

Contract sales differ from revenues from the Sales of VOIs, net that we report in our unaudited condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives.

While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S.

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We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate.

EBITDA and Adjusted EBITDA

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EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders

EBITDA, presented herein, is a financial measure that is not recognized under U.S.

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and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges.

EBITDA and Adjusted EBITDA are not recognized terms under U.S.

Adjusted EBITDA Attributable to Stockholders is Adjusted EBITDA excluding amounts attributable to the noncontrolling interest in HGV/Big Cedar Vacations LLC, a joint venture in which HGV is deemed to hold a controlling financial interest based on its 51% equity interest (“Big Cedar”), its active role as the day-to-day manager of its activities, and majority voting control of its management committee.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are not recognized terms under U.S.

GAAP and should not be considered as alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S.

In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons:

(i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions;

and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income, cash flow or other methods of analyzing our results as reported under U.S.

In addition, our definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may not be comparable to similarly titled measures of other companies.

We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders provide useful information to investors about us and our financial condition and results of operations for the following reasons:

(i) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions;

and (ii) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry.

EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income, cash flow or other methods of analyzing our results as reported under U.S.

Some of these limitations are:

• EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA and Adjusted EBITDA do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness;

• EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;

• EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

• EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

• EBITDA and Adjusted EBITDA do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized;

• EBITDA and Adjusted EBITDA may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

See below under “Segment Results” for reconciliation of our EBITDA and Adjusted EBITDA to net income, our most comparable U.S.

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect changes in, or cash requirements for, our working capital needs;

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness;

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our tax expense or the cash requirements to pay our taxes;

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized;

• EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.

Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

See below under “Segment Results” for reconciliation of our EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders to net income, our most comparable U.S.

GAAP financial measure.

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Non-GAAP Measures within Our Segments

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• Sales revenue represents sales of VOIs, net, and Fee-for-service commissions and brand fees earned from the sale of fee-for-service VOIs.

Fee-for-service commissions and brand fees represents sales, marketing, brand and other fees, which corresponds to the applicable line item from our condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners.

Fee-for-service commissions and brand fees represents sales, marketing, brand and other fees, which corresponds to the applicable line item from our unaudited condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners.

Real estate expense represents costs of VOI sales and Sales and marketing expense, net .

Sales and marketing expense, net represents sales and marketing expense, which corresponds to the applicable line item from our condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners.

Sales and marketing expense, net represents sales and marketing expense, which corresponds to the applicable line item from our unaudited condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners.

Both fee-for-service commissions and brand fees and sales and marketing expense, net , represent non-GAAP measures.

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We consider real estate profit margin to be an important non-GAAP operating measure because it measures the efficiency of our sales and marketing spending, management of inventory costs, and initiatives intended to improve profitability.

• Financing profit represents financing revenue, net of financing expense, both of which correspond to the applicable line items from our condensed consolidated statements of operations.

• Financing profit represents financing revenue, net of financing expense, both of which correspond to the applicable line items from our unaudited condensed consolidated statements of operations.

Financing profit margin is calculated as a percentage by dividing financing profit by financing revenue.

We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our financing business in connection with our VOI sales.

• Resort and club management profit represents resort and club management revenue, net of resort and club management expense, both of which correspond to the applicable line items from our condensed consolidated statements of operations.

Resort and club management profit margin is calculated as a percentage by dividing resort and club management profit by resort and club management revenue.

We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our resort and club management business that support our VOI sales business.

• Rental and ancillary services profit represents rental and ancillary services revenues, net of rental and ancillary services expenses, both of which correspond to the applicable line items from our condensed consolidated statements of operations.

Rental and ancillary services profit margin is calculated as a percentage by dividing rental and ancillary services profit by rental and ancillary services revenue.

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Furthermore, these measures have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income or other methods of analyzing our results as reported under U.S.

Such limitations include the fact that these measures only include those revenues and expenses related to one of the four specified operating activities as opposed to on a consolidated basis, and other limitations that are similar to those discussed above under “EBITDA and Adjusted EBITDA.” See below under “ Reconciliation of Non-GAAP Profit Measures to GAAP Measure ” for reconciliation of these four profit measures to net income, our most comparable U.S.

Such limitations include the fact that these measures only include those revenues and expenses related to one of the four specified operating activities as opposed to on a consolidated basis, and other limitations that are similar to those discussed above under “EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders.” See below under “ Reconciliation of Non-GAAP Profit Measures to GAAP Measure ” for reconciliation of these four profit measures to net income, our most comparable U.S.

GAAP financial measure.

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Results of Operations

Three and Nine Months Ended September 30, 2023 Compared with the Three and Nine Months Ended September 30, 2022

Three Months Ended March 31, 2024 Compared with the Three Months Ended March 31, 2023

Segment Results

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We do not include equity in earnings (losses) from unconsolidated affiliates in our measures of segment operating performance.

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

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(1) See Note 17:

Business Segments in our condensed consolidated financial statements for details on the intersegment eliminations.

Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations.

Real estate sales and financing segment revenues increased by $137 million for the three months ended March 31, 2024, compared to the same period in 2023, primarily due to a $77 million increase in sales revenue and a $30 million increase in financing revenue.

Excluding the impact of the Bluegreen Acquisition, Real estate sales and financing revenues were flat when compared to the same period in the prior year.

The sales revenue increase is driven by an increase in Sales of VOIs, net of $120 million primarily resulting from a $2 million decrease in net deferrals of sales of VOIs under construction, and $108 million increase in contract sales driven by the Bluegreen Acquisition.

Real estate sales and financing segment revenues were also impacted by a $34 million higher provision for financing receivable losses and lower commissions earned on sales of fee-for-service properties.

This was partially offset by a $30 million increase in financing revenue primarily related to an increase in our loan portfolio balance driven by the Bluegreen Acquisition and an increase in the weighted average interest rate earned.

Resort operations and club management segment revenues increased by $58 million for the three months ended March 31, 2024, compared to the same period in 2023.

Excluding the impact of $29 million related to the Bluegreen Acquisition, Resort operations and club management segment revenues increased $29 million, primarily due to an increase in occupied room nights and higher daily rates compared to the same period in 2023.

For the three months ended March 31, 2024, the additional increase in Resort operations and club management revenue was due to an increase in resort management revenue, primarily driven by higher fees.

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The following table reconciles net income, our most comparable U.S.

GAAP financial measure, to EBITDA and Adjusted EBITDA:

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

GAAP financial measure, to EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders:

Three Months Ended March 31, Variance (1)

($ in millions) 2024 2023 $ %

Net income $ 92 $ 150 $ (58) (38.7) $ 245 $ 274 $ (29) (10.6)

Net (loss) income attributable to stockholders $ (4) $ 73 $ (77) NM

Net income attributable to noncontrolling interest 2 — 2 100.0

Net (loss) income (2) 73 (75) NM

Interest expense 79 44 35 79.5

Income tax expense 44 54 (10) (18.5) 96 115 (19) (16.5)

Income tax (benefit) expense

(11) 17 (28) NM

Depreciation and amortization 62 51 11 21.6

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Other loss (gain), net

1 (2) 3 NM (3) (1) (2) NM

Share-based compensation expense 9 10 (1) (10.0)

Impairment expense — — — NM 3 — 3 100%

Acquisition and integration-related expense 12 19 (7) (36.8) 42 49 (7) (14.3)

Impairment expense 2 — 2 100.0

Acquisition and integration-related expense 109 17 92 NM

Other adjustment items (2)

10 7 3 42.9 24 48 (24) (50.0)

Adjusted EBITDA 276 218 58 26.6

Adjusted EBITDA attributable to noncontrolling interest

Total Adjusted EBITDA attributable to stockholders

$ 273 $ 218 $ 55 25.2

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) These amounts include costs associated with restructuring, one-time charges, the amortization of premiums resulting from purchase accounting and other non-cash items.

We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 16:

Business Segments in our condensed consolidated financial statements.

For a discussion of our definition of EBITDA and Adjusted EBITDA, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics—EBITDA and Adjusted EBITDA.” The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA:

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

(2) These amounts include costs associated with restructuring, one-time charges, other non-cash items, and amortization of fair premiums and discounts resulting from purchase accounting.

We evaluate our business segment operating performance using segment Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders, as described in Note 17:

Business Segments in our unaudited condensed consolidated financial statements.

For a discussion of our definition of EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders, how management uses them to manage our business and material limitations on their usefulness, refer to “—Key Business and Financial Metrics—EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders.” The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA to Adjusted EBITDA Attributable to Stockholders:

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

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Adjusted EBITDA 276 218 58 26.6

Adjusted EBITDA attributable to noncontrolling interest

Total Adjusted EBITDA attributable to stockholders

$ 273 $ 218 $ 55 25.2

(1) Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.

(2) Excludes segment related share-based compensation, depreciation and other adjustment items.

(2) Adjusts for segment related share-based compensation, depreciation and other adjustment items.

Real estate sales and financing Adjusted EBITDA increased by $37 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Real estate sales and financing Adjusted EBITDA increased $1 million, excluding the $36 million impact related to the Bluegreen Acquisition, primarily due to higher Sales of VOIs, net and financing revenues, mostly offset by an increase in marketing costs due to our emphasis in adding new

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owners, which typically carry a higher cost per tour, lower commissions earned on sales of fee-for-service properties, and higher financing expenses.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the Real estate sales and financing segment.

Resort operations and club management segment adjusted EBITDA increased by $25 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Resort operations and club management segment adjusted EBITDA increased $15 million, excluding the $10 million impact related to the Bluegreen Acquisition, primarily due to the increase in Resort and club management and rental revenues described above, partially offset by an increase in resort and club management expenses due to personnel-related costs incurred to service increased arrivals and transaction activity.

Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the Resort operations and club management segment.

Reconciliation of Non-GAAP Profit Measures to GAAP Measure

1 unchanged sentence

GAAP financial measure, to EBITDA and the total of our real estate, financing, resort and club management, and rental and ancillary services profit measures.

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

Three Months Ended March 31, Variance (1)

($ in millions) 2024 2023 $ %

Net income $ 92 $ 150 $ (58) (38.7) $ 245 $ 274 $ (29) (10.6)

Net (loss) income attributable to stockholders $ (4) $ 73 $ (77) NM

Net income attributable to noncontrolling interest 2 — 2 100.0

Net (loss) income (2) 73 (75) NM

Interest expense 79 44 35 79.5

Income tax expense 44 54 (10) (18.5) 96 115 (19) (16.5)

Income tax (benefit) expense

(11) 17 (28) NM

Depreciation and amortization 62 51 11 21.6

2 unchanged sentences

Other loss (gain), net

1 (2) 3 NM (3) (1) (2) NM

Equity in earnings from unconsolidated affiliates (2)

1 unchanged sentence

Impairment expense

— — — 100% 3 — 3 100%

License fee expense 35 30 5 16.7

Acquisition and integration-related expense 12 19 (7) (36.8) 42 49 (7) (14.3)

Acquisition and integration-related expense 109 17 92 NM

General and administrative 45 42 3 7.1

6 unchanged sentences

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $1 million for the nine months ended September 30, 2023.

Also excludes impact of aforementioned items of $2 million for both the three and nine months ended September 30, 2022.

(2) Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $1 million for the three months ended March 31, 2024.

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Reconciliation of Non-GAAP Real Estate Measures to GAAP Measures

4 unchanged sentences

See “Real Estate Sales and Financing Segment—Real Estate” below.

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

8 unchanged sentences

(1) Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

Real Estate Sales and Financing

Real Estate Sales and Financing Segment

In accordance with Accounting Standards Codification Topic 606, “ Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed.

3 unchanged sentences

The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction:

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $

1 unchanged sentence

Sales of VOIs recognitions 41 4 37

Net Sales of VOIs (deferrals) recognitions (12) 86 (98) (14) 34 (48)

Net Sales of VOIs recognitions (deferrals)

Cost of VOI sales (deferrals) (11) — (11)

3 unchanged sentences

Sales and marketing expense recognitions 6 1 5

Net Sales and marketing expense (deferrals) recognitions (2) 13 (15) (2) 5 (7)

Net construction (deferrals) recognitions $ (7) $ 43 $ (50) $ (9) $ 17 $ (26)

Real estate sales and financing segment revenues decreased by $133 million for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to a $133 million decrease in Sales of VOI, net, resulting from a $98 million decrease in net deferrals of sales of VOIs under construction, $18 million decrease in contract sales driven by lower VPG and the impact of the Maui wildfires, and $14 million higher provision for financing receivable losses.

Sales, marketing, brand and other fees decreased $7 million driven by lower commissions earned on sales of fee-

for-service properties.

This was partially offset by a $7 million increase in financing revenue primarily related to an increase in our loan portfolio and an increase in the weighted average interest rate.

Real estate sales and financing segment revenues decreased by $17 million for the nine months ended September 30, 2023, compared to the same period in 2022, primarily due to a $90 million decrease in Sales of VOI, net, driven by a $48 million increase in net deferrals of sales of VOIs under construction, a 15.5% decrease in VPG, the impact of Maui wildfires, and $14 million higher provision for financing receivable losses.

Sales, marketing, brand and other fees increased $44 million driven by higher commissions earned on sales of fee-for-service properties.

In addition, there was a $29 million increase in financing revenue primarily related to an increase in our loan portfolio and an increase in the weighted average interest rate.

Real estate sales and financing Adjusted EBITDA decreased by $90 million and $103 million for the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to an increase in marketing costs due to our emphasis in adding new owners, which typically carry a higher cost per tour, in addition to the overall decrease in segment revenues described above.

Refer to “—Real Estate” and “—Financing” for further discussion on the revenues and expenses of the Real estate sales and financing segment.

Resort Operations and Club Management

Resort operations and club management segment revenues increased by $23 million and $74 million for the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to an increase in rental revenue.

The rental revenue increase was driven primarily by an increase in occupied room nights compared to the same periods in 2022.

For the nine months ended September 30, 2023, the additional increase in Resort operations and club management revenue was due to an increase in resort management revenue, primarily driven by higher fees.

Resort operations and club management segment adjusted EBITDA increased by $14 million and $26 million for the three and nine months ended September 30, 2023, compared to the same periods in 2022, primarily due to the increase in Resort and club management and rental revenues described above, partially offset by an increase in resort and club management expenses due to personnel-related costs incurred to service increased arrivals and transaction activity.

Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the Resort operations and club management segment.

Real Estate Sales and Financing Segment

Net Sales and marketing expense recognitions (deferrals)

Net construction recognitions

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See “Reconciliation of Profit Measures to GAAP Measure” above.

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

Three Months Ended March 31, Variance (1)

($ in millions, except Tour flow and VPG) 2024 2023 $ %

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(100) (174) 74 (42.5)

Provision for financing receivables losses (46) (32) (14) 43.8 (117) (103) (14) 13.6

Provision for financing receivables losses (64) (30) (34) NM

Reportability and other:

Net (deferral) recognition of sales of VOIs under construction (3)

(12) 86 (98) NM (14) 34 (48) NM

Fee-for-service sale upgrades, net 6 5 1 20.0 18 14 4 28.6

2 4 (2) (50.0)

Fee-for-service sale upgrades, net — 5 (5) (100.0)

(31) (10) (21) NM

Sales of VOIs, net $ 438 $ 318 $ 120 37.7

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(4) Includes adjustments for revenue recognition, including amounts in rescission and sales incentives.

Contract sales decreased by $18 million for the three months ended September 30, 2023, compared to the same period in 2022, primarily due to a 13.5% decrease in VPG, and impact of Maui wildfires, partially offset by a 14.8% increase in tour flow.

Contract sales decreased by $9 million for the nine months ended September 30, 2023, compared to the same period in 2022, primarily due to a 15.5% decrease in VPG, and impact of Maui wildfires, partially offset by a 21.5% increase in tour flow.

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Contract sales increased by $108 million for the three months ended March 31, 2024, compared to the same period in 2023.

Excluding the impact of $136 million related to the Bluegreen Acquisition, contract sales decreased $28 million, primarily due to a VPG decrease of 5.0% while tours remained flat compared to the same period in 2023.

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

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26.7 % 29.4 %

(1) Excluding the marketing revenue and other fees adjustment, Real estate profit margin was 29.8% and 37.4% for the three months ended September 30, 2023 and 2022, respectively, and 27.8% and 33.5% for the nine months ended September 30, 2023 and 2022, respectively.

Real estate profit decreased by $93 million for the three months ended September 30, 2023, compared to the same period in 2022, driven by a decrease in Sales revenue of $151 million due to lower Sales of VOIs, net of $133 million driven primarily by net deferrals of sales of VOIs under construction and lower Fee-for-service commissions and brand fees of $18 million, partially offset by a decrease in Real estate expense of $58 million due to a decrease in the Cost of VOI sales.

Real estate profit decreased by $102 million for the nine months ended September 30, 2023, compared to the same period in 2022, driven by a decrease in Sales revenue of $58 million due to a decrease in Sales of VOIs, net, driven by a decrease in the net recognition of sales of VOIs under construction of $90 million.

This was partially offset by an increase in Fee-for-service commissions and brand fees of $32 million.

Additionally, there was a $44 million increase in Real estate expense due to an increase in marketing costs of $110 million, partially offset by a decrease in the Cost of VOI sales of $66 million.

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

(1) Excluding the marketing revenue and other fees adjustment, Real estate profit margin was 23.0% and 26.3% for the three months ended March 31, 2024, and 2023, respectively.

Real estate profit increased by $9 million for the three months ended March 31, 2024, compared to the same period in 2023.

Real estate profit decreased $5 million, excluding the impact of $14 million related to the Bluegreen

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Acquisition, primarily due to lower Fee-for-service commissions and brand fees, partially offset by an increase in sales of VOIs, net, lower cost of VOI sales, and higher marketing package revenues.

Three Months Ended March 31, Variance (1)

($ in millions) 2024 2023 $ %

Interest income (2)

$ 96 $ 66 $ 30 45.5

Other financing revenue 8 8 — —

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Financing profit margin 62.5 % 67.6 %

Financing profit increased by $7 million and $22 million for the three and nine months ended September 30, 2023, compared to the same periods in 2022, driven by an increase of $7 million and $29 million in financing revenue.

For the nine months ended September 30, 2023, this was partially offset by a $7 million increase in Financing expense, compared to the same periods in 2022.

Financing revenue increased primarily due to interest income driven by an increase in our loan portfolio and an increase in the weighted-average interest rate.

Financing expense increased in line with the related revenues and due to the increase in the weighted-average interest rate on our non-recourse debt.

(1) NM - fluctuation in terms of percentage change is not meaningful.

(2) For the three months ended March 31, 2024, this amount includes $16 million of amortization of the premium related to the acquired timeshare financing receivables resulting from the Bluegreen Acquisition and Diamond Acquisition.

For the three months ended March 31, 2023, this amount includes $4 million of amortization of the premium related to the acquired timeshare financing receivables resulting from the Diamond Acquisition.

(3) For the three months ended March 31, 2024, this amount includes $2 million of amortization of the discount related to the acquired non-recourse debt resulting from the Bluegreen Acquisition.

For the three months ended March 31, 2023, this amount includes $1 million of amortization of the premium related to the related to the acquired non-recourse debt resulting from the Diamond Acquisition.

Financing profit increased by $15 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Financing profit increased $6 million, excluding the $9 million impact related to the Bluegreen Acquisition, primarily due to higher financing revenues of $13 million partially offset by higher financing expense of $7 million.

Financing revenue increased $30 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Financing revenue increased $13 million, excluding the $17 million impact related to the Bluegreen Acquisition, primarily due to an increase in the weighted average interest rate and carrying balance of the timeshare financing receivables portfolio.

Financing expense increased by $15 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Financing expense increased $7 million, excluding the $8 million impact related to the Bluegreen Acquisition, primarily due to the increase in the weighted-average interest rate on our non-recourse debt.

Resort Operations and Club Management Segment

Resort and Club Management

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

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Resort and club management profit margin 67.5 % 67.9 %

Resort and club management profit increased by $10 million for the three months ended September 30, 2023, compared to the same period in 2022, largely driven by a $8 million increase in Club management revenue due to an increase in reservation and maintenance fees.

Resort and club management expenses remained relatively consistent when compared to the three months ended September 30, 2022.

Resort and club management profit increased by $12 million for the nine months ended September 30, 2023, compared to the same period in 2022, largely driven by a $23 million increase in Resort and club management revenue, as a result of an increase in fee revenue for the period.

This was offset by a $11 million increase in Resort and club management expenses due to personnel related costs incurred to service the increased transactions for the period.

Resort and club management profit increased by $23 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Resort and club management profit increased $7 million, excluding the $16 million impact related to the Bluegreen Acquisition, largely driven by higher management fees partially offset by associated Resort and club management expense to support the higher revenues.

Resort and club management revenue increased $35 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Resort and club management revenue increased $11 million,

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excluding the $24 million impact related to the Bluegreen Acquisition, primarily due to higher fee revenue during the period.

Resort and club management expenses increased by $12 million for the three months ended March 31, 2024, compared to the same period in 2023.

For the same period, Resort and club management expenses increased $4 million, excluding the $8 million impact related to the Bluegreen Acquisition, primarily due to personnel related costs incurred to service the increased transactions for the period.

Rental and Ancillary Services

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

Rental revenues $ 169 $ 147 $ 22 15.0

Ancillary services revenues 11 2 9 NM 33 30 3 10.0

Ancillary services revenues 12 11 1 9.1

Rental and ancillary services revenues 181 158 23 14.6

Rental expenses 163 143 20 14.0

Ancillary services expense 10 3 7 NM 29 25 4 16.0

Ancillary services expense 10 9 1 11.1

Rental and ancillary services expenses 173 152 21 13.8

1 unchanged sentence

Rental and ancillary services profit margin 4.4 % 3.8 %

(1) NM - fluctuation in terms of percentage change is not meaningful.

Rental and ancillary services profit for the three and nine months ended September 30, 2023 remained consistent with the same periods in 2022.

Rental revenues increased by $3 million and $33 million for the three and nine months ended September 30, 2023, respectively, primarily due to an increase in occupied room nights compared to the same periods in 2022.

Rental and ancillary services profit increased by $2 million for the three months ended March 31, 2024, compared to the same period in 2023.

Rental and ancillary services profit increased $7 million, excluding the $5 million unfavorable impact related to the Bluegreen Acquisition, primarily due to an increase in occupied room nights compared to the same period in 2023.

Rental and ancillary services expense increased consistently with the aforementioned increase in rental revenue.

Rental and ancillary services revenue increased $23 million for the three months ended March 31, 2024, compared to the same period in 2023.

Rental and ancillary services revenue increased $18 million, excluding the $5 million impact related to the Bluegreen Acquisition, primarily due to an increase in occupied room nights and higher daily rates compared to the same period in 2023.

Rental and ancillary services expenses increased $21 million for the three months ended March 31, 2024, compared to the same period in 2023.

Rental and ancillary services expenses increased $11 million, excluding the $10 million impact related to the Bluegreen Acquisition, Rental and ancillary services expense increased consistent with the aforementioned increase in rental revenue.

Other Operating Expenses

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $ %

3 unchanged sentences

Impairment expense

— — — 100% 3 — 3 100%

General and administrative expenses decreased by $10 million and $28 million for the three and nine months ended September 30, 2023, respectively, compared to the same periods in 2022, primarily due to lower legal and professional fees and lower personnel related costs.

Depreciation and amortization decreased by $4 million and $25 million for the three and nine months ended September 30, 2023, respectively, primarily due to certain intangible assets being fully amortized.

License fee expense increased by $4 million and $11 million, respectively, for the three and nine months ended September 30, 2023 when compared to the same periods in 2022.

General and administrative expenses increased by $3 million for the three months ended March 31, 2024, compared to the same period in 2023.

Excluding the impact of the Bluegreen Acquisition, General and administrative expenses decreased $4 million primarily due to lower legal and professional fees and lower personnel related costs.

Depreciation and amortization increased by $11 million for the three months ended March 31, 2024, primarily due to certain assets acquired related to the Bluegreen Acquisition.

License fee expense increased by $5 million for the three months ended March 31, 2024, when compared to the same period in 2023.

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Acquisition and Integration-Related Expense

Three Months Ended September 30, Variance Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance (1)

($ in millions) 2024 2023 $ %

Acquisition and integration-related expense $ 12 $ 19 $ (7) (36.8) $ 42 $ 49 $ (7) (14.3)

Acquisition and integration-related costs include direct expenses related to the Diamond Acquisition including integration costs, legal and other professional fees.

Acquisition and integration-related expense $ 109 $ 17 $ 92 NM

(1) NM - fluctuation in terms of percentage change is not meaningful.

Acquisition and integration-related costs for the three months ended March 31, 2023 include direct expenses related to the our recent acquisitions including integration costs, legal and other professional fees.

Integration costs include technology-related costs, fees paid to management consultants, rebranding fees and employee-related costs such as severance and retention.

For both the three and nine months ended September 30, 2023, acquisition and integration-related costs decreased by $7 million when compared to the same period in 2022.

The decrease was primarily driven by a decrease in professional fees.

For the three months ended March 31, 2024, acquisition and integration-related costs increased by $92 million when compared to the same period in 2023.

The increase was primarily driven by costs associated with the recent acquisitions.

Non-Operating Expenses

Three Months Ended September 30, Variance (1)

Nine Months Ended September 30, Variance (1)

Three Months Ended March 31, Variance (1)

($ in millions) 2024 2023 $ %

2 unchanged sentences

Other loss (gain), net

1 (2) 3 NM (3) (1) (2) NM

Income tax expense 44 54 (10) (18.5) 96 115 (19) (16.5)

Income tax (benefit) expense

(11) 17 (28) NM

(1) NM - fluctuation in terms of percentage change is not meaningful

The change in non-operating expenses for the three and nine months ended September 30, 2023, compared to the same periods in 2022, was primarily due to a decrease in income tax expense of $10 million and $19 million, partially offset by an increase in interest expense of $8 million and $28 million, respectively.

For the three and nine months ended September 30, 2023, the increase in interest expense was driven by an increase in weighted-average interest rates and an increase in net proceeds from debt.

For the three months ended September 30, 2023, the decrease in income tax expense was driven by the overall change in our earnings which was partially offset by discrete items, primarily unrecognized tax benefits.

For the nine months ended September 30, 2023, the decrease in income tax expense was driven by a change in earnings mix of our worldwide income and discrete items, primarily unrecognized tax benefits.

The change in non-operating expenses for the three months ended March 31, 2024, compared to the same period in 2023, was primarily due to a decrease in income tax expense of $28 million, partially offset by an increase in interest expense of $35 million.

For the three months ended March 31, 2024, the increase in interest expense was primarily due to an increase in the debt balance outstanding used to fund the Bluegreen Acquisition.

For the three months ended March 31, 2024, the decrease in income tax expense was driven by the overall change in our earnings.

Net income attributable to noncontrolling interest

We include in our unaudited condensed consolidated financial statements the results of operations and financial condition of Big Cedar, the joint venture with HGV/Big Cedar Vacations, LLC in which HGV holds 51% equity interest.

Net income attributable to noncontrolling interest is the portion of Big Cedar that is attributable to Big Cedar Vacations, LLC, which holds the remaining 49% equity interest.

Net income attributable to the noncontrolling interest in Big Cedar was $2 million during the three months ended March 31, 2024.

Liquidity and Capital Resources

Our cash management objectives are to maintain the availability of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects.

principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers.

Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, and capital expenditures for renovations and maintenance at our offices and sales centers.

Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments and costs associated with potential acquisitions and development projects, including rebranding.

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We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our revolver credit facility, our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables.

• During the nine months ended September 30, 2023, we acquired a property in New York for $136 million from a third-party developer for inventory.

• During the nine months ended September 30, 2023, we repurchased $269 million of shares under our share repurchase programs.

• In August 2023, we completed a securitization of approximately $293 million of gross timeshare financing receivables.

The proceeds were used to pay down in part some of the existing debt and for other general corporate purposes.

Debt and Non-Recourse Debt for additional information.

• As of September 30, 2023, we had total cash and cash equivalents of $227 million and restricted cash of $308 million.

• During the three months ended March 31, 2024, we repurchased 2.3 million of shares under our share repurchase programs.

• As of March 31, 2024, we had total cash and cash equivalents of $355 million and restricted cash of $323 million.

Restricted cash primarily consists of escrow deposits received on VOI sales and reserves related to non-recourse debt.

• As of September 30, 2023, we had $866 million remaining borrowing capacity under the revolver facility.

• As of September 30, 2023, we had an aggregate of $750 million remaining borrowing capacity under our Timeshare Facility.

• As of March 31, 2024, we had $293 million remaining borrowing capacity under the revolver facility.

• As of March 31, 2024, we had an aggregate of $460 million remaining borrowing capacity under our Timeshare Facility.

Of this amount, we have $455 million of mortgage notes that are available to be securitized and another $321 million of mortgage notes that we expect will become eligible as soon as they meet typical milestones including receipt of first payment, deeding, or recording.

The Grand Islander Timeshare Facility was terminated as of March 31, 2024.

• As of March 31, 2024, we had $70 million in junior subordinated debentures outstanding, which we subsequently paid down in April 2024.

Debt & Non-recourse Debt for more information.

We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the optimal level of receivables, and provides the ability to be strategically opportunistic in the marketplace.

We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand.

As of September 30, 2023, our inventory-related purchase commitments totaled $56 million over 2 years .

As of March 31, 2024, there are no future inventory commitments, and we have not entered into new arrangements with developers.

Sources and Uses of Our Cash

The following table summarizes our net cash flows and key metrics related to our liquidity:

Nine Months Ended September 30, Variance

Three Months Ended March 31, Variance

($ in millions) 2024 2023 $

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over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale.

Net cash provided by operating activities was $312 million for the nine months ended September 30, 2023, compared to $763 million in the same 2022 period in the prior year.

The decrease was primarily due to purchase of inventory from a third party developer, increases in cash utilized for working capital, and a decrease in net income during the nine months ended September 30, 2023.

The change in net cash provided by operating activities for the three months ended March 31, 2024, compared to the same period in 2023 was primarily due to purchase of inventory from a third party developer, increases in cash utilized for working capital, and a decrease in net income during the three months ended March 31, 2024.

The following table summarizes our VOI inventory spending:

Nine Months Ended September 30,

Three Months Ended March 31,

($ in millions) 2024 2023

3 unchanged sentences

Total VOI inventory spending $ 105 $ 152

(1) For the nine months ended September 30, 2023 and 2022, our VOI inventory spending on owned properties relates to deeded properties that are classified as Inventory on our unaudited condensed consolidated balance sheets.

(2) Includes expense related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects from developed projects of $11 million and $6 million recorded in Costs of VOI sales for the nine months ended September 30, 2023 and 2022, respectively.

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(1) Relates to costs on properties classified as Inventory on our unaudited condensed consolidated balance sheets.

(2) Relates to granting credit to customers for their existing ownership when upgrading into fee-for-service projects from developed projects.

Investing Activities

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We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate.

Net cash used in investing activities was $47 million for the nine months ended September 30, 2023 compared to $51 million for the nine months ended September 30, 2022.

The decrease was primarily due to decreased capital expenditures.

Net cash used in investing activities was $1,473 million for the three months ended March 31, 2024 compared to $11 million for the same period in 2023.

The increase was primarily due to the Bluegreen Acquisition and increased capital expenditures.

Financing Activities

Net cash used in financing activities for the nine months ended September 30, 2023 was $270 million compared to net cash used in financing activities of $644 million for the same period in 2022.

The decrease was primarily due to net proceeds from debt of $378 million and lower net repayments of non-recourse debt of $93 million compared to 2022, partially offset by $106 million increase in share repurchases when compared to 2022.

Net cash provided by financing activities for the three months ended March 31, 2024 was $1,272 million compared to net cash provided by financing activities of $183 million for the same period in 2023.

The increase was primarily due to net proceeds from debt of $1,667 million, offset by net repayments of non-recourse debt of $519 million, $39 million of other debt issuance costs, and $14 million increase in share repurchases when compared to 2023.

Contractual Obligations

Our commitments primarily relate to agreements with developers to purchase or construct vacation ownership units, operating leases, and obligations associated with our debt, non-recourse debt and the related interest.

As of September 30, 2023, we were committed to approximately $5,114 million in contractual obligations over 9 years, $167 million of which will be fulfilled in the remainder of 2023.

As of March 31, 2024, we were committed to approximately $8,947 million in contractual obligations over 11 years, $654 million of which will be fulfilled in the remainder of 2024.

The ultimate amount and timing of certain commitments is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances.

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The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating.

We have commitments from surety providers in the amount of $548 million as of September 30, 2023, which primarily consist of escrow, construction and subsidy related bonds.

We have commitments from surety providers in the amount of $503 million as of March 31, 2024, which primarily consist of escrow, construction and subsidy related bonds.

Guarantor Financial Information

2 unchanged sentences

The 2031 Notes were issued in June 2021 with an aggregate principal balance of $500 million, an interest rate of 4.875% , and maturity in July 2031.

The 2032 Notes were issued in January 2024 with an aggregate principal balance of $900 million, an interest rate of 6.625% , and maturity in January 2032.

The Notes were co-issued by Hilton Grand Vacations Borrower LLC and Hilton Grand Vacations Borrower Inc.

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(the “Parent”), Hilton Grand Vacations Parent LLC, the Issuers, and each of the Issuer’s existing and future wholly owned domestic restricted subsidiaries (all entities that guarantee the Notes, collectively, the “Obligor group”).

provide for their subordination to the notes and the related guarantees, and are structurally subordinated to all existing and future indebtedness claims of holders of preferred stock and other liabilities of the Issuer’s subsidiaries that do not guarantee the Notes.

The Notes rank equally in right of payment with all of the Issuers’ and each guarantor’s existing and future senior indebtedness, are subordinated to all of the Issuers’ and guarantors’ existing and future secured indebtedness to the extent of the value of the collateral securing such indebtedness, including the Senior Secured Credit Facilities, rank senior in right of payment to all of the Issuers’ and guarantors’ future subordinated indebtedness and other obligations that expressly provide for their subordination to the notes and the related guarantees, and are structurally subordinated to all existing and future indebtedness claims of holders of preferred stock and other liabilities of the Issuer’s subsidiaries that do not guarantee the Notes.

The guarantee of each guarantor subsidiary is limited to a maximum amount, subject to applicable U.S.

The guarantees can also be released upon the sale or transfer of a guarantor subsidiary’s capital stock or substantially all of its assets, becoming designated as an unrestricted subsidiary, or upon its consolidation into a co-Issuer or another subsidiary Guarantor.

Table of Contents .

The following tables provide summarized financial information of the Obligor group on a combined basis after elimination of (i) intercompany transactions and balances between the Parent and the subsidiary Guarantors and (ii) investments in and equity in the earnings of non-Guarantor subsidiaries and unconsolidated affiliates:

Summarized Financial Information

($ in millions) September 30,

($ in millions) March 31,

Cash and cash equivalents $ 163

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Operating lease liabilities 83

Deferred revenues 169

Deferred revenue

Deferred income tax liabilities 566

Total liabilities $ 7,134

($ in millions) Nine Months Ended September 30, 2023

($ in millions) Three Months Ended March 31, 2024

Total revenues - transactions with non-guarantor subsidiaries $ 10

Total revenues - other 767

Operating income 319

Net income 132

Operating loss

Subsequent Events

On November 5, 2023, we entered into a merger agreement with Bluegreen Vacations Holding Corporation (“Bluegreen”) to acquire Bluegreen.

Subject to the terms and conditions of the merger agreement, upon the consummation

of the transaction, we will acquire all of the shares of Bluegreen for $75.00 per share in an all-cash transaction, representing total consideration of approximately $1.5 billion, inclusive of net debt.

Consummation of this transaction is subject to customary conditions and receipt of regulatory approvals.

The transaction is anticipated to close during the first half of 2024.

On April 25, 2024, we completed a $240 million securitization of legacy Bluegreen Vacations timeshare loans through Hilton Grand Vacations Trust 2024-1B with an overall weighted average interest rate of 6.42% and an overall advance rate of 90.50%.

The proceeds will primarily used to pay down debt and for other general corporate purposes.

Critical Accounting Policies and Estimates

The preparation of our condensed consolidated financial statements in accordance with U.S.

The preparation of our unaudited condensed consolidated financial statements in accordance with U.S.

GAAP requires us to make estimates and assumptions that affect the reported amounts and related disclosures.

We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our Annual Report on Form 10-K for the year ended December 31, 2023.

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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 2. Management’s Discussion and Analysis