Hilton Grand Vacations Inc. 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2023. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements convey management’s expectations as to the future of HGV, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time HGV makes such statements. 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 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 HGV’s acquisition and integration 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. Risk Factors” and the Summary of Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, as supplemented and updated by the risk factors described from time to time in other periodic reports that we file with the SEC. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Except for HGV’s ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, changes in management’s expectations, or otherwise. Terms Used in this Quarterly Report on Form 10-Q Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” or “resorts” refer to the timeshare properties that we manage or own. Of these resorts and units, a portion is directly owned by us or joint ventures in which we have an interest; and the remaining resorts and units are owned by our third-party owners. “Developed” refers to VOI inventory that is sourced from projects developed by HGV. “Fee for service” refers to VOI inventory that we sell and manage on behalf of third-party developers. “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 or will be contributed to a trust. “VOI” refers to vacation ownership intervals and interests. “Collections” refers to the acquired portfolio of resort properties included in Diamond's single- and multi-use trusts. Non-GAAP Financial Measures This Quarterly Report on Form 10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including earnings before interest expense (excluding interest expense relating to our non-recourse debt), 35 Table of Contents taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA Attributable to Stockholders, 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 This Quarterly Report on Form 10-Q includes discussion of key business operational metrics, including contract sales, tour flow, and volume per guest (“VPG”). 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. GAAP. Overview Our Business 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 brands. 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: selling VOIs for us and third parties; financing and servicing loans provided to consumers for their VOI purchases; operating resorts and timeshare plans; and managing our clubs and exchange programs that include HGV Max, Hilton Grand Vacations Club, Hilton Club, Diamond clubs and Bluegreen Vacation Club (collectively referred to as “Clubs”). As of June 30, 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, South Carolina 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. 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 June 30, 2024, we had approximately 720,000 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. Our Segments We operate our business across two segments: (1) Real estate sales and financing; and (2) Resort operations and club management. Real Estate Sales and Financing Our deeded VOI product that we market and sell is fee-simple, deeded in perpetuity and right to use real estate interests, developed either by us or by third parties. This ownership interest is generally equivalent to one week on an annual or biennial basis, at the timeshare resort in which the VOI is located. Our trust VOI product that we market and sell is a beneficial interest 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. 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 36 Table of Contents "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. Traditionally, timeshare operators have funded 100% of the investment necessary to acquire land and construct timeshare properties. We source VOIs through developed properties and fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix. 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. 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. For the six months ended June 30, 2024, sales from fee-for-service and just-in-time inventory were 18%, and 23% of contract sales, respectively. See “ Key Business and Financial Metrics — Real Estate Sales Operating Metrics ” for additional discussion of contract sales. The estimated contract sales value related to our inventory that is currently available for sale at open or soon-to-be open projects and inventory at new or existing projects that will become available for sale in the future upon registration, delivery or construction is $12.8 billion at current pricing. Capital efficient arrangements, comprised of our fee-for-service and just-in-time inventory, represented approximately 30% of that supply. We believe that the visibility into our long-term supply allows us to efficiently manage inventory to meet predicted sales, reduce capital investments, minimize our exposure to the cyclicality of the real estate market and mitigate the risks of entering into new markets. 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 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 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 include 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. In November 2023, HGV signed a 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. This agreement became effective on the Bluegreen Acquisition Date. As of June 30, 2024, HGV had sales and marketing operations at a total of 132 Bass Pro Shops and Cabela’s Stores, including 12 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 six months ended June 30, 2024, 71% of our contract sales were to our existing owners, compared to 69% for the six months ended June 30, 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 65% and 61% for the six months ended June 30, 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. 37 Table of Contents The interest rate on our loans is determined by, among other factors, the amount of the down payment, the borrower’s credit profile and the loan term. The weighted-average FICO score for loans to U.S. and Canadian borrowers at the time of origination were as follows: Six Months Ended June 30, 2024 2023 Weighted-average FICO score 738 736 Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Clubs. Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 6: 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. Resort Operations and Club Management We enter into management agreements with the HOAs of the timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records including reports, budgets and projections, arranging for annual audits and maintenance fee billing and collections and employment training and personnel oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10% to 15% of the costs to operate the applicable resort. As a result, the fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are also reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services. The original terms of our management agreements typically range fro m three to five years and the agreements are subject to periodic renewal for one to three-year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term. We also manage and operate the Clubs and exchange programs. When owners purchase a VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system. We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our Club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties. Key Business and Financial Metrics Real Estate Sales Operating Metrics We measure our performance using the following key operating metrics: • 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 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. GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of our results to the results of our competitors which may source their VOI products differently. We believe that the presentation of contract sales on a combined basis (fee-for-service, just-in-time, 38 Table of Contents developed and points-based) is most appropriate for the purpose of the operating metric; additional information regarding the split of contract sales, is included in “—Real Estate” below. • Tour flow represents the number of sales presentations given at our sales centers during the period. • VPG represents the sales attributable to tours at our sales locations and is calculated by dividing contract sales, excluding telesales, by tour flow. 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, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income, before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization. Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) other gains, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; 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. Adjusted EBITDA Attributable to Stockholders is Adjusted EBITDA excluding amounts attributable to the noncontrolling interest in Bluegreen/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. GAAP. 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. GAAP. Some of these limitations are: • 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; and • 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. 39 Table of Contents 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. Non-GAAP Measures within Our Segments Within each of our two reportable segments, we present additional profit and profit margin information for certain key activities—real estate, financing, resort and club management, and rental and ancillary services. These non-GAAP measures are used by our management team to evaluate the operating performance of each of our key activities, and to make day-to-day operating decisions. We believe these additional measures are also important in helping investors understand the performance and efficiency with which we are able to convert revenues for each of these primary activities into operating profit, both in dollars and as margins, and are frequently used by securities analysts, investors and other interested parties as one of common performance measures to compare results or estimate valuations across companies in our industry. Specifically: — • 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 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 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. We present these items net because it provides a meaningful measure of our underlying real estate profit related to our primary real estate activities which focus on the sales and costs associated with our VOIs. • Real estate profit represents sales revenue less real estate expense. Real estate margin is calculated as a percentage by dividing real estate profit by sales revenue. 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 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 unaudited 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 unaudited 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. We consider this to be an important non-GAAP operating measure because it measures our ability to convert available inventory and unoccupied rooms into revenue and profit by transient rentals, as well as profitability of other services, such as food and beverage, retail, spa offerings and other guest services. Each of the foregoing four profit measures is not a recognized term under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our calculation of such measures may not be comparable to similarly titled measures of other companies. Furthermore, these measures have limitations as analytical tools and should not be considered either in isolation 40 Table of Contents or as a substitute for net income or other methods of analyzing our results as reported under U.S. GAAP. 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. Results of Operations Three and Six Months Ended June 30, 2024 Compared with the Three and Six Months Ended June 30, 2023 Segment Results The following tables present our revenues by segment. We do not include equity in earnings from unconsolidated affiliates in our measures of segment operating performance. Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Revenues: Real estate sales and financing $ 740 $ 604 $ 136 22.5 $ 1,427 $ 1,154 $ 273 23.7 Resort operations and club management 386 320 66 20.6 746 622 124 19.9 Total segment revenues 1,126 924 202 21.9 2,173 1,776 397 22.4 Cost reimbursements 129 97 32 33.0 251 192 59 30.7 Intersegment eliminations (1) (20) (14) (6) 42.9 (33) (27) (6) 22.2 Total revenues $ 1,235 $ 1,007 $ 228 22.6 $ 2,391 $ 1,941 $ 450 23.2 (1) See Note 17: Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations. 41 Table of Contents The following table reconciles net income, our most comparable U.S. GAAP financial measure, to EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders: Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Net income (loss) attributable to stockholders $ 2 $ 80 $ (78) (97.5) $ (2) $ 153 $ (155) NM Net income attributable to noncontrolling interest 2 — 2 100.0 4 — 4 100.0 Net income 4 80 (76) (95.0) 2 153 (151) (98.7) Interest expense 87 44 43 97.7 166 88 78 88.6 Income tax expense (benefit) 3 35 (32) (91.4) (8) 52 (60) NM Depreciation and amortization 68 52 16 30.8 130 103 27 26.2 Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 2 1 1 100.0 3 1 2 NM EBITDA 164 212 (48) (22.6) 293 397 (104) (26.2) Other loss (gain), net 3 (3) 6 NM 8 (4) 12 NM Share-based compensation expense 18 16 2 12.5 27 26 1 3.8 Impairment expense — 3 (3) (100.0) 2 3 (1) (33.3) Acquisition and integration-related expense 48 13 35 NM 157 30 127 NM Other adjustment items (2) 33 7 26 NM 55 14 41 NM Adjusted EBITDA 266 248 18 7.3 542 466 76 16.3 Adjusted EBITDA attributable to noncontrolling interest 4 — 4 100.0 7 — 7 100.0 Adjusted EBITDA attributable to stockholders $ 262 $ 248 $ 14 5.6 $ 535 $ 466 $ 69 14.8 (1) NM - fluctuation in terms of percentage change is not meaningful. (2) These amounts include costs associated with restructuring, one-time charges, other non-cash items, and amortization of fair value premiums and discounts resulting from purchase accounting. 42 Table of Contents 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 June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Adjusted EBITDA: Real estate sales and financing (1) $ 193 $ 189 $ 4 2.1 $ 399 $ 358 $ 41 11.5 Resort operations and club management (1) 152 123 29 23.6 286 232 54 23.3 Adjustments: Adjusted EBITDA from unconsolidated affiliates 5 3 2 66.7 11 6 5 83.3 License fee expense (40) (34) (6) 17.6 (75) (64) (11) 17.2 General and administrative (2) (44) (33) (11) 33.3 (79) (66) (13) 19.7 Adjusted EBITDA 266 248 18 7.3 542 466 76 16.3 Adjusted EBITDA attributable to noncontrolling interest 4 — 4 100.0 7 — 7 100.0 Total Adjusted EBITDA attributable to stockholders $ 262 $ 248 $ 14 5.6 $ 535 $ 466 $ 69 14.8 (1) Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments. (2) Adjusts for segment related share-based compensation, depreciation and other adjustment items. Real estate sales and financing Adjusted EBITDA increased by $4 million and $41 million, respectively, for the three and six months ended June 30, 2024, compared to the same period in 2023. For the same periods, Real estate sales and financing Adjusted EBITDA decreased $43 million and $42 million, respectively, excluding the $47 million and $83 million impact related to the Bluegreen Acquisition, primarily due to decreases in Sales, marketing, brand and other fees revenue, partially offset by increases in financing revenue and increases in financing expense. 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 $29 million for the three months ended June 30, 2024, compared to the same period in 2023. For the same period, Resort operations and club management segment Adjusted EBITDA remained relatively consistent, excluding the $25 million impact related to the Bluegreen Acquisition. Resort operations and club management segment adjusted EBITDA increased by $54 million for the six months ended June 30, 2024, compared to the same period in 2023. For the same period, Resort operations and club management segment Adjusted EBITDA increased by $19 million, excluding the $35 million impact related to the Bluegreen Acquisition, primarily due to increases in resort and club management revenue and rental and ancillary services revenue partially offset by increases in resort and club management and rental expenses. Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the Resort operations and club management segment. 43 Table of Contents Reconciliation of Non-GAAP Profit Measures to GAAP Measure The following table reconciles net income, our most comparable U.S. GAAP financial measure, to EBITDA and the total of our real estate, financing, resort and club management, and rental and ancillary services profit measures. Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Net income (loss) attributable to stockholders $ 2 $ 80 $ (78) (97.5) $ (2) $ 153 $ (155) NM Net income attributable to noncontrolling interest 2 — 2 100.0 4 — 4 100.0 Net income 4 80 (76) (95.0) 2 153 (151) (98.7) Interest expense 87 44 43 97.7 166 88 78 88.6 Income tax expense (benefit) 3 35 (32) (91.4) (8) 52 (60) NM Depreciation and amortization 68 52 16 30.8 130 103 27 26.2 Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates 2 1 1 100.0 3 1 2 NM EBITDA 164 212 (48) (22.6) 293 397 (104) (26.2) Other loss (gain), net 3 (3) 6 NM 8 (4) 12 NM Equity in earnings from unconsolidated affiliates (2) (5) (3) (2) 66.7 (11) (6) (5) 83.3 Impairment expense — 3 (3) (100.0) 2 3 (1) (33.3) License fee expense 40 34 6 17.6 75 64 (11) 17.2 Acquisition and integration-related expense 48 13 35 NM 157 30 127 NM General and administrative 58 48 10 20.8 103 90 13 14.4 Profit $ 308 $ 304 $ 4 1.3 $ 627 $ 574 $ 53 9.2 Real estate profit $ 120 $ 144 $ (24) (16.7) $ 254 $ 269 $ (15) (5.6) Financing profit 58 52 6 11.5 123 102 21 20.6 Resort and club management profit 123 89 34 38.2 235 178 57 32.0 Rental and ancillary services profit 7 19 (12) (63.2) 15 25 (10) (40.0) Profit $ 308 $ 304 $ 4 1.3 $ 627 $ 574 $ 53 9.2 (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 $2 million and $3 million, respectively, for the three and six months ended June 30, 2024 and $1 million for both the three and six months ended June 30, 2023. 44 Table of Contents Reconciliation of Non-GAAP Real Estate Measures to GAAP Measures The following table reconciles our Sales, marketing, brand and other fees revenue, our most comparable U.S. GAAP financial measure, to Fee-for-service commissions and brand fees, and Sales and marketing expense, our most comparable U.S. GAAP financial measure, to Sales and marketing expense, net. Fee-for-service commissions and brand fees and Sales and marketing expense, net, are used in calculating our real estate profit and real estate profit margin. See “Real Estate Sales and Financing Segment—Real Estate” below. Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Sales, marketing, brand and other fees $ 167 $ 173 $ (6) (3.5) $ 312 $ 331 $ (19) (5.7) Less: Marketing revenue and other fees (1) (79) (62) (17) 27.4 (160) (113) (47) 41.6 Fee-for-service commissions and brand fees $ 88 $ 111 $ (23) (20.7) $ 152 $ 218 $ (66) (30.3) Sales and marketing expense $ 453 $ 336 $ 117 34.8 $ 854 $ 637 $ 217 34.1 Less: Marketing revenue and other fees (1) (79) (62) (17) 27.4 (160) (113) (47) 41.6 Sales and marketing expense, net $ 374 $ 274 $ 100 36.5 $ 694 $ 524 $ 170 32.4 (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 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. The real estate sales and financing segment is impacted by construction related deferral and recognition activity. In periods where Sales of VOIs and related direct costs of projects under construction are deferred, margin percentages will generally contract as the indirect marketing and selling costs associated with these sales are recognized as incurred in the current period. In periods where previously deferred Sales of VOIs and related direct costs are recognized upon construction completion, margin percentages will generally expand as the indirect marketing and selling costs associated with these sales were recognized in prior periods. The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction: Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ 2024 2023 $ Sales of VOIs (deferrals) $ (20) $ (6) $ (14) $ (59) $ (6) $ (53) Sales of VOIs recognitions 7 — 7 48 4 44 Net Sales of VOIs (deferrals) (13) (6) (7) (11) (2) (9) Cost of VOI sales (deferrals) (6) (1) (5) (17) (1) (16) Cost of VOI sales recognitions 2 — 2 12 1 11 Net Cost of VOI sales (deferrals) (4) (1) (3) (5) — (5) Sales and marketing expense (deferrals) (2) (1) (1) (8) (1) (7) Sales and marketing expense recognitions 1 — 1 7 1 6 Net Sales and marketing expense (deferrals) (1) (1) — (1) — (1) Net construction (deferrals) $ (8) $ (4) $ (4) $ (5) $ (2) $ (3) 45 Table of Contents Real Estate See “Reconciliation of Profit Measures to GAAP Measure” above. Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance (1) ($ in millions, except Tour flow and VPG) 2024 2023 $ % 2024 2023 $ % Contract sales $ 757 $ 612 $ 145 23.7 $ 1,388 $ 1,135 $ 253 22.3 Adjustments: Fee-for-service sales (2) (148) (180) 32 (17.8) (248) (354) 106 (29.9) Provision for financing receivables losses (94) (41) (53) NM (158) (71) (87) NM Reportability and other: Net (deferral) of sales of VOIs under construction (3) (13) (6) (7) NM (11) (2) (9) NM Fee-for-service sale upgrades, net — 7 (7) (100.0) — 12 (12) (100.0) Other (4) (31) (37) 6 (16.2) (62) (47) (15) 31.9 Sales of VOIs, net $ 471 $ 355 $ 116 32.7 $ 909 $ 673 $ 236 35.1 Tour flow 226,388 162,444 63,944 400,526 292,712 107,814 VPG $ 3,320 $ 3,728 $ (408) $ 3,441 $ 3,835 $ (394) (1) NM - fluctuation in terms of percentage change is not meaningful. (2) Represents contract sales from fee-for-service properties on which we earn Fee-for-service commissions and brand fees. (3) Represents the net recognition of revenues related to the Sales of VOIs under construction that are recognized when construction is complete. (4) Includes adjustments for revenue recognition, including amounts in rescission and sales incentives. Contract sales increased by $145 million and $253 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. Excluding the impact of $189 million and $325 million related to the Bluegreen Acquisition, contract sales decreased $44 million and $72 million, respectively, primarily due to a decrease in tour flow and VPG, when compared to the same periods in 2023. Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Sales of VOIs, net $ 471 $ 355 $ 116 32.7 $ 909 $ 673 $ 236 35.1 Fee-for-service commissions and brand fees 88 111 (23) (20.7) 152 218 (66) (30.3) Sales revenue 559 466 93 20.0 1,061 891 170 19.1 Less: Cost of VOI sales 65 48 17 35.4 113 98 15 15.3 Sales and marketing expense, net 374 274 100 36.5 694 524 170 32.4 Real estate expense 439 322 117 36.3 807 622 185 29.7 Real estate profit $ 120 $ 144 $ (24) (16.7) $ 254 $ 269 $ (15) (5.6) Real estate profit margin (1) 21.5 % 30.9 % 23.9 % 30.2 % (1) Excluding the marketing revenue and other fees adjustment, Real estate profit margin was 18.8% and 27.3% for the three months ended June 30, 2024 and 2023, respectively, and 20.8% and 26.8% for the six months ended June 30, 2024 and 2023, respectively. Real estate profit decreased by $24 million for the three months ended June 30, 2024, compared to the same period in 2023. Real estate profit decreased $42 million excluding the impact of $18 million related to the Bluegreen Acquisition, primarily due to lower Fee-for-service commissions and brand fees compared to the same period in 2023. Real estate profit decreased by $15 million for the six months ended June 30, 2024, compared to the same period in 2023. Real estate profit decreased $47 million, excluding the impact of $32 million related to the Bluegreen Acquisition, primarily due to lower Fee-for-service commissions and brand fees, partially offset by an increase in Sales of VOIs, net and a decrease in sales and marketing expense, net compared to the same period in 2023. 46 Table of Contents Sales revenue increased $93 million and $170 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. Sales revenue decreased $47 million and $78 million, respectively, excluding the impact of $140 million and $248 million related to the Bluegreen Acquisition, primarily due to decreases in Fee-for-service commissions and brand fees revenues and lower contract sales, compared to the same periods in 2023. Real estate expense increased $117 million and $185 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. Real estate expense decreased $5 million and $31 million, respectively, excluding the impact of $122 million and $216 million related to the Bluegreen Acquisition, in line with the decrease in revenues, compared to the same periods in 2023. Financing Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Interest income $ 116 $ 68 $ 48 70.6 $ 228 $ 138 $ 90 65.2 Other financing revenue 14 11 3 27.3 22 19 3 15.8 Premium amortization of acquired timeshare financing receivables (28) (3) (25) NM (44) (7) (37) NM Financing revenue 102 76 26 34.2 206 150 56 37.3 Consumer financing interest expense 22 11 11 100.0 45 23 22 95.7 Other financing expense 20 13 7 53.8 34 26 8 30.8 Amortization of acquired non-recourse debt discounts and premiums, net 2 — 2 100.0 4 (1) 5 NM Financing expense 44 24 20 83.3 83 48 35 72.9 Financing profit $ 58 $ 52 $ 6 11.5 $ 123 $ 102 $ 21 20.6 Financing profit margin 56.9 % 68.4 % 59.7 % 68.0 % (1) NM - fluctuation in terms of percentage change is not meaningful. Financing profit increased by $6 million and $21 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Financing profit increased $1 million and $7 million, respectively, excluding the $5 million and $14 million impact related to the Bluegreen Acquisition, primarily due to higher interest income revenues partially offset by increased financing expense. Financing revenue increased by $26 million and $56 million, respectively, for three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Financing revenue increased $13 million and $26 million, respectively, excluding the $13 million and $30 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 $20 million and $35 million, respectively, for three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Financing expense increased $12 million and $19 million, respectively, excluding the $8 million and $16 million impact related to the Bluegreen Acquisition, primarily due to an increase in the balance and weighted average interest rate on our non-recourse debt. 47 Table of Contents Resort Operations and Club Management Segment Resort and Club Management Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Club management revenue $ 67 $ 53 $ 14 26.4 $ 130 $ 104 $ 26 25.0 Resort management revenue 104 80 24 30.0 207 160 47 29.4 Resort and club management revenues 171 133 38 28.6 337 264 73 27.7 Club management expense 21 15 6 40.0 41 30 11 36.7 Resort management expense 27 29 (2) (6.9) 61 56 5 8.9 Resort and club management expenses 48 44 4 9.1 102 86 16 18.6 Resort and club management profit $ 123 $ 89 $ 34 38.2 $ 235 $ 178 $ 57 32.0 Resort and club management profit margin 71.9 % 66.9 % 69.7 % 67.4 % Resort and club management profit increased by $34 million and $57 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Resort and club management profit increased $5 million and $12 million, respectively, excluding the $29 million and $45 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 $38 million and $73 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Resort and club management revenue increased $9 million and $20 million, excluding the $29 million and $53 million impact related to the Bluegreen Acquisition, primarily due to management fee revenue. Resort and club management expenses increased by $4 million and $16 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Resort and club management expenses increased $4 million and $8 million, respectively, excluding no impact related to the Bluegreen Acquisition for the three months ended June 30, 2024 and $8 million impact related to the Bluegreen Acquisition for the six months ended June 30, 2024, primarily due to personnel related costs incurred to service the increased transactions for the period. Rental and Ancillary Services Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Rental revenues $ 181 $ 162 $ 19 11.7 $ 350 $ 309 $ 41 13.3 Ancillary services revenues 14 11 3 27.3 26 22 4 18.2 Rental and ancillary services revenues 195 173 22 12.7 376 331 45 13.6 Rental expenses 177 144 33 22.9 340 287 53 18.5 Ancillary services expense 11 10 1 10.0 21 19 2 10.5 Rental and ancillary services expenses 188 154 34 22.1 361 306 55 18.0 Rental and ancillary services profit $ 7 $ 19 $ (12) (63.2) $ 15 $ 25 $ (10) (40.0) Rental and ancillary services profit margin 3.6 % 11.0 % 4.0 % 7.6 % Rental and ancillary services profit decreased by $12 million for the three months ended June 30, 2024, compared to the same period in 2023. Rental and ancillary services profit decreased by $7 million, excluding the $5 million 48 Table of Contents unfavorable impact related to the Bluegreen Acquisition, primarily due to increases in rental expenses partially offset by an increase in rental revenues when compared to the same period in 2023. Rental and ancillary services profit decreased by $10 million for the six months ended June 30, 2024, compared to the same period in 2023. Rental and ancillary services profit was consistent, excluding the $10 million unfavorable impact related to the Bluegreen Acquisition, when compared to the same period in 2023. Rental and ancillary services revenue increased $22 million and $45 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Rental and ancillary services revenue increased $7 million and $25 million, respectively, excluding the $15 million and $20 million impact related to the Bluegreen Acquisition, primarily due to an increase in occupied room nights and higher daily rates. Rental and ancillary services expenses increased $34 million and $55 million, respectively, for the three and six months ended June 30, 2024, compared to the same periods in 2023. For the same periods, Rental and ancillary services expenses increased $14 million and $25 million, respectively, excluding the $20 million and $30 million impact related to the Bluegreen Acquisition, primarily due to an increase in development and maintenance fees. Other Operating Expenses Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % General and administrative $ 58 $ 48 $ 10 20.8 $ 103 $ 90 $ 13 14.4 Depreciation and amortization 68 52 16 30.8 130 103 27 26.2 License fee expense 40 34 6 17.6 75 64 11 17.2 Impairment expense — 3 (3) (100.0) 2 3 (1) (33.3) General and administrative expenses increased by $10 million and $13 million for the three and six months ended June 30, 2024, respectively, compared to the same period in 2023. Excluding $12 million and $19 million, respectively, related to the impact of the Bluegreen Acquisition, General and administrative expenses were relatively consistent when comparing the three and six months ended June 30, 2024 to the same periods in 2023. Depreciation and amortization increased by $16 million and $27 million for the three and six months ended June 30, 2024, when compared to the same periods in 2023. The increases were due to certain assets acquired in connection with the Bluegreen Acquisition. License fee expense increased by $6 million and $11 million for the three and six months ended June 30, 2024, when compared to the same periods in 2023. The increase was primarily due to amendments to our License Agreement as a result of the Bluegreen Acquisition. Acquisition and Integration-Related Expense Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Acquisition and integration-related expense $ 48 $ 13 $ 35 NM $ 157 $ 30 $ 127 NM (1) NM - fluctuation in terms of percentage change is not meaningful. Acquisition and integration-related costs include direct expenses related to 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 the three and six months ended June 30, 2024, acquisition and integration-related costs increased by $35 million and $127 million when compared to the same periods in 2023. The increases were primarily driven by costs associated with the Bluegreen Acquisition. 49 Table of Contents Non-Operating Expenses Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Interest expense $ 87 $ 44 $ 43 97.7 $ 166 $ 88 $ 78 88.6 Equity in earnings from unconsolidated affiliates 3 2 1 50.0 8 5 3 60.0 Other loss (gain), net 3 (3) 6 NM 8 (4) 12 NM Income tax expense (benefit) 3 35 (32) (91.4) (8) 52 (60) NM (1) NM - fluctuation in terms of percentage change is not meaningful The changes in non-operating expenses for the three and six months ended June 30, 2024, compared to the same periods in 2023, were primarily due to increases in interest expense of $43 million and $78 million, respectively, partially offset by decreases in income tax expense of $32 million and $60 million, respectively. For both the three and six months ended June 30, 2024, the increases in interest expense were primarily due to an increase in the debt balance outstanding used to fund the Bluegreen acquisition compared to the same periods in 2023. For both the three and six months ended June 30, 2024, compared to the same period in 2023, the decrease in income tax expense was primarily driven by the impact due to discrete items in income before income taxes. 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 Bluegreen/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 and $4 million during the three and six months ended June 30, 2024. Liquidity and Capital Resources Overview Our cash management objectives are to maintain the availability of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects. 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. 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 six months ended June 30, 2024, we repurchased 4.6 million of shares under our share repurchase programs. • As of June 30, 2024, we had total cash and cash equivalents of $328 million and restricted cash of $273 million. Restricted cash primarily consists of escrow deposits received on VOI sales and reserves related to non-recourse debt. • On January 10, 2024, we completed an offering for $900 million of senior secured notes due 2032 (“Senior Notes due 2032”). See Note 11: Debt and Non-Recourse Debt for additional information. • On January 17, 2024, we completed the acquisition of Bluegreen Vacations Holding Corporation (“Bluegreen”) (the “Bluegreen Acquisition”) in an all-cash transaction, with total consideration of approximately $1.6 billion. See Note 3: Acquisitions for additional information. • On January 17, 2024, we entered into Amendment No. 4 (the “Amendment”) to the Credit Agreement and incurred $900 million of new term loans that will mature on January 17, 2031. See Note 11: Debt and Non-Recourse Debt for additional information. 50 Table of Contents • In April 2024, we completed a securitization of approximately $240 million of gross timeshare financing receivables. The proceeds were used to pay down in part some of our existing debt and for other general corporate purposes. See Note 11: Debt and Non-Recourse Debt for additional information. • In May 2024, we completed a securitization of approximately $375 million of gross timeshare financing receivables. The proceeds were used to pay down in part some of our existing debt and for other general corporate purposes. See Note 11: Debt and Non-Recourse Debt for additional information. • As of June 30, 2024, we had $446 million remaining borrowing capacity under the revolver facility. • As of June 30, 2024, we had an aggregate of $750 million remaining borrowing capacity under our Timeshare Facility. Of this amount, we have $647 million of mortgage notes that are available to be securitized and another $324 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 during the first quarter of 2024. • As of June 30, 2024, we had fully paid down the $171 million in junior subordinated debentures outstanding. See Note 11: Debt & Non-recourse Debt for more information. We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the optimal level of receivables, and provides the ability to be strategically opportunistic in the marketplace. As of June 30, 2024, there are no future inventory commitments, and we have not entered into new arrangements with developers. Sources and Uses of Our Cash The following table summarizes our net cash flows and key metrics related to our liquidity: Six Months Ended June 30, Variance ($ in millions) 2024 2023 $ Net cash provided by (used in): Operating activities $ 113 $ 220 $ (107) Investing activities (1,482) (25) (1,457) Financing activities 1,101 (152) 1,253 Operating Activities Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related rental and ancillary services. Cash flows provided by operating activities primarily include funding our working capital needs and purchase of VOI inventory, including the purchase and development of real estate for future conversion to inventory. Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs; the degree to which our owners finance their purchase and our owners’ repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale. The change in net cash provided by operating activities for the six months ended June 30, 2024, compared to the same period in 2023 was primarily due to a decrease in net income, an increase in purchases of inventory from a third-party developer, and an increase in cash utilized for working capital, partially offset by an increase in provision for financing receivable losses and increases in depreciation and amortization expenses. The following table summarizes our VOI inventory spending: Six Months Ended June 30, ($ in millions) 2024 2023 VOI spending - owned properties (1) $ 141 $ 159 VOI spending - fee-for-service upgrades (2) — 9 Purchases and development of real estate for future conversion to inventory 50 6 Total VOI inventory spending $ 191 $ 174 (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. 51 Table of Contents Investing Activities Investing activities include cash paid for acquisitions, capital expenditures and software capitalization costs. Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. 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 $1,482 million for the six months ended June 30, 2024 compared to $25 million for the same period in 2023. The increase was primarily due to the Bluegreen Acquisition and increased capital expenditures. Financing Activities Net cash provided by financing activities for the six months ended June 30, 2024 was $1,101 million compared to net cash used in financing activities of $152 million for the same period in 2023. The increase was primarily due to net proceeds from debt of $1,407 million, offset by net repayments of non-recourse debt of $104 million and payments of $51 million for other debt issuance costs when compared to 2023. Contractual Obligations Our commitments primarily relate to agreements with developers to purchase or construct vacation ownership units, operating leases, marketing and license fee agreements and obligations associated with our debt, non-recourse debt and the related interest. As of June 30, 2024, we were committed to approximately $9,366 million in contractual obligations over 11 years, $474 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. See Note 18: Commitments and Contingencies and Note 11: Debt and Non-recourse Debt for additional information. We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. 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 $805 million as of June 30, 2024, which primarily consist of escrow, construction and subsidy related bonds. Subsequent Events On August 7, 2024, our Board of Directors approved a new share repurchase program authorizing us to repurchase up to an aggregate of $500 million of our outstanding shares of common stock over a two-year period which is in addition to the amount remaining under the 2023 Share Repurchase Plan. Critical Accounting Policies and Estimates 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.