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), 36 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 September 30, 2024, we have approximately 200 properties located in the United States (“U.S.”), Europe, the Caribbean, Mexico, Canada, and Asia. A significant number of our properties and VOIs are concentrated in Florida, Europe, Hawaii, California, South Carolina, Arizona, Virginia, and Nevada, 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 in 2025 to the Hilton Grand Vacations brands and Hilton standards. As of September 30, 2024, we had approximately 722,000 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 24 industry-leading brands across approximately 8,000 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 37 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 nine months ended September 30, 2024, sales from fee-for-service and just-in-time inventory were 18%, and 21% 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 $12.9 billion at current pricing. Capital efficient arrangements, comprised of our fee-for-service and just-in-time inventory, represented approximately 29% 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 fishing, marine, hunting, camping and sports gear retailer, 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 September 30, 2024, HGV had sales and marketing operations at a total of 132 Bass Pro Shops and Cabela’s Stores, including 9 virtual kiosks. Additionally, the joint venture between HGV and Bass Pro includes four high-end wilderness resorts under the Big Cedar Lodge brand. We also assumed 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, 2024, 70% of our contract sales were to our existing owners, compared to 69% for the nine months ended September 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 69% and 62% for the nine months ended September 30, 2024 and 2023, respectively. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by all contract sales volume originated in the period. 38 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: Nine Months Ended September 30, 2024 2023 Weighted-average FICO score 740 734 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, 39 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. 40 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 attributable to stockholders and net income, our most comparable U.S. GAAP financial measures. 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 41 Table of Contents companies. 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. 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 attributable to stockholders and net income, our most comparable U.S. GAAP financial measures. Results of Operations Three and Nine Months Ended September 30, 2024 Compared with the Three and Nine Months Ended September 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 September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Revenues: Real estate sales and financing $ 814 $ 612 $ 202 33.0 $ 2,241 $ 1,766 $ 475 26.9 Resort operations and club management 383 322 61 18.9 1,129 944 185 19.6 Total segment revenues 1,197 934 263 28.2 3,370 2,710 660 24.4 Cost reimbursements 130 97 33 34.0 381 289 92 31.8 Intersegment eliminations (1) (21) (13) (8) 61.5 (54) (40) (14) 35.0 Total revenues $ 1,306 $ 1,018 $ 288 28.3 $ 3,697 $ 2,959 $ 738 24.9 (1) See Note 17: Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations. 42 Table of Contents The following table reconciles net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures, to EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders: Three Months Ended September 30, Variance (1) Nine Months Ended September 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Net income attributable to stockholders $ 29 $ 92 $ (63) (68.5) $ 27 $ 245 $ (218) (89.0) Net income attributable to noncontrolling interest 3 — 3 100.0 7 — 7 100.0 Net income 32 92 (60) (65.2) 34 245 (211) (86.1) Interest expense 84 45 39 86.7 250 133 117 88.0 Income tax expense 61 44 17 38.6 53 96 (43) (44.8) Depreciation and amortization 68 53 15 28.3 198 156 42 26.9 Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates (1) — (1) 100.0 2 1 1 100.0 EBITDA 244 234 10 4.3 537 631 (94) (14.9) Other (gain) loss, net (9) 1 (10) NM (1) (3) 2 (66.7) Share-based compensation expense 11 12 (1) (8.3) 38 38 — — Impairment expense — — — 100.0 2 3 (1) (33.3) Acquisition and integration-related expense 36 12 24 NM 193 42 151 NM Other adjustment items (2) 25 10 15 NM 80 24 56 NM Adjusted EBITDA 307 269 38 14.1 849 735 114 15.5 Adjusted EBITDA attributable to noncontrolling interest 4 — 4 100.0 11 — 11 100.0 Adjusted EBITDA attributable to stockholders $ 303 $ 269 $ 34 12.6 $ 838 $ 735 $ 103 14.0 (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. 43 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 September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Adjusted EBITDA: Real estate sales and financing (1) $ 233 $ 205 $ 28 13.7 $ 632 $ 563 $ 69 12.3 Resort operations and club management (1) 156 126 30 23.8 442 358 84 23.5 Adjustments: Adjusted EBITDA from unconsolidated affiliates 3 2 1 50.0 14 8 6 75.0 License fee expense (49) (37) (12) 32.4 (124) (101) (23) 22.8 General and administrative (2) (36) (27) (9) 33.3 (115) (93) (22) 23.7 Adjusted EBITDA 307 269 38 14.1 849 735 114 15.5 Adjusted EBITDA attributable to noncontrolling interest 4 — 4 100.0 11 — 11 100.0 Total Adjusted EBITDA attributable to stockholders $ 303 $ 269 $ 34 12.6 $ 838 $ 735 $ 103 14.0 (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 $28 million for the three months ended September 30, 2024, compared to the same period in 2023. For the same period, Real estate sales and financing Adjusted EBITDA decreased $24 million excluding the $52 million impact related to the Bluegreen Acquisition, primarily due to decreases in fee-for-service commissions, brand and other fees and marketing revenue and increases in overall real estate expenses, partially offset by an increase in Sales of VOI, net. Real estate sales and financing Adjusted EBITDA increased $69 million for the nine months ended September 30, 2024, compared to the same period in 2023. For the same period, Real estate sales and financing Adjusted EBITDA decreased $66 million, excluding the $135 million impact related to the Bluegreen Acquisition, primarily due to decreases in Sales, marketing, brand and other fees revenue and overall real estate expenses partially offset by increases in financing profit. 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 $30 million for the three months ended September 30, 2024, compared to the same period in 2023. For the same period, Resort operations and club management segment Adjusted EBITDA increased by $4 million, excluding the $26 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. Resort operations and club management segment adjusted EBITDA increased by $84 million for the nine months ended September 30, 2024, compared to the same period in 2023. For the same period, Resort operations and club management segment Adjusted EBITDA increased by $23 million, excluding the $61 million impact related to the Bluegreen Acquisition, primarily due to increases in resort and club management revenue and rental and ancillary services revenue partially offset by increases in resort and club management and rental expenses. Refer to “— Resort and Club Management” and “—Rental and Ancillary Services” for further discussion on the revenues and expenses of the Resort operations and club management segment. 44 Table of Contents Reconciliation of Non-GAAP Profit Measures to GAAP Measure The following table reconciles net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures, to EBITDA and the total of our real estate, financing, resort and club management, and rental and ancillary services profit measures. Three Months Ended September 30, Variance (1) Nine Months Ended September 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Net income attributable to stockholders $ 29 $ 92 $ (63) (68.5) $ 27 $ 245 $ (218) (89.0) Net income attributable to noncontrolling interest 3 — 3 100.0 7 — 7 100.0 Net income 32 92 (60) (65.2) 34 245 (211) (86.1) Interest expense 84 45 39 86.7 250 133 117 88.0 Income tax expense 61 44 17 38.6 53 96 (43) (44.8) Depreciation and amortization 68 53 15 28.3 198 156 42 26.9 Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates (1) — (1) 100.0 2 1 1 100.0 EBITDA 244 234 10 4.3 537 631 (94) (14.9) Other (gain) loss, net (9) 1 (10) NM (1) (3) 2 (66.7) Equity in earnings from unconsolidated affiliates (2) (3) (2) (1) 50.0 (14) (8) (6) 75.0 Impairment expense — — — 100.0 2 3 (1) (33.3) License fee expense 49 37 12 32.4 124 101 (23) 22.8 Acquisition and integration-related expense 36 12 24 NM 193 42 151 NM General and administrative 44 40 4 10.0 147 130 17 13.1 Profit $ 361 $ 322 $ 39 12.1 $ 988 $ 896 $ 92 10.3 Real estate profit $ 167 $ 160 $ 7 4.4 $ 421 $ 429 $ (8) (1.9) Financing profit 60 50 10 20.0 183 152 31 20.4 Resort and club management profit 129 95 34 35.8 364 273 91 33.3 Rental and ancillary services profit 5 17 (12) (70.6) 20 42 (22) (52.4) Profit $ 361 $ 322 $ 39 12.1 $ 988 $ 896 $ 92 10.3 (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 and $2 million, respectively, for the three and nine months ended September 30, 2024 and $1 million for the nine months ended September 30, 2023. 45 Table of Contents Reconciliation of Non-GAAP Real Estate Measures to GAAP Measures The following table reconciles our Sales, marketing, brand and other fees revenue, our most comparable U.S. GAAP financial measure, to Fee-for-service commissions and brand fees, and Sales and marketing expense, our most comparable U.S. GAAP financial measure, to Sales and marketing expense, net. Fee-for-service commissions and brand fees and Sales and marketing expense, net, are used in calculating our real estate profit and real estate profit margin. See “Real Estate Sales and Financing Segment—Real Estate” below. Three Months Ended September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Sales, marketing, brand and other fees $ 159 $ 170 $ (11) (6.5) $ 471 $ 501 $ (30) (6.0) Less: Marketing revenue and other fees (1) (76) (63) (13) 20.6 (236) (176) (60) 34.1 Fee-for-service commissions and brand fees $ 83 $ 107 $ (24) (22.4) $ 235 $ 325 $ (90) (27.7) Sales and marketing expense $ 467 $ 334 $ 133 39.8 $ 1,321 $ 971 $ 350 36.0 Less: Marketing revenue and other fees (1) (76) (63) (13) 20.6 (236) (176) (60) 34.1 Sales and marketing expense, net $ 391 $ 271 $ 120 44.3 $ 1,085 $ 795 $ 290 36.5 (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 September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ 2024 2023 $ Sales of VOIs (deferrals) $ (9) $ (12) $ 3 $ (68) $ (18) $ (50) Sales of VOIs recognitions 58 — 58 106 4 102 Net Sales of VOIs recognitions (deferrals) 49 (12) 61 38 (14) 52 Cost of VOI sales (deferrals) (3) (3) — (20) (4) (16) Cost of VOI sales recognitions 18 — 18 30 1 29 Net Cost of VOI sales recognitions (deferrals) 15 (3) 18 10 (3) 13 Sales and marketing expense (deferrals) (1) (2) 1 (9) (3) (6) Sales and marketing expense recognitions 8 — 8 15 1 14 Net Sales and marketing expense recognitions (deferrals) 7 (2) 9 6 (2) 8 Net construction recognitions (deferrals) $ 27 $ (7) $ 34 $ 22 $ (9) $ 31 46 Table of Contents Real Estate See “Reconciliation of Profit Measures to GAAP Measure” above. Three Months Ended September 30, Variance (1) Nine Months Ended September 30, Variance (1) ($ in millions, except Tour flow and VPG) 2024 2023 $ % 2024 2023 $ % Contract sales $ 777 $ 603 $ 174 28.9 $ 2,165 $ 1,738 $ 427 24.6 Adjustments: Fee-for-service sales (2) (139) (174) 35 (20.1) (387) (528) 141 (26.7) Provision for financing receivables losses (114) (46) (68) NM (272) (117) (155) NM Reportability and other: Net recognition (deferral) of sales of VOIs under construction (3) 49 (12) 61 NM 38 (14) 52 NM Fee-for-service sale upgrades, net — 6 (6) (100.0) — 18 (18) (100.0) Other (4) (23) (10) (13) NM (85) (57) (28) 49.1 Sales of VOIs, net $ 550 $ 367 $ 183 49.9 $ 1,459 $ 1,040 $ 419 40.3 Tour flow 227,790 163,699 64,091 628,316 456,411 171,905 VPG $ 3,392 $ 3,656 $ (264) $ 3,423 $ 3,771 $ (348) (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 $174 million and $427 million, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. Excluding the impact of $194 million and $519 million related to the Bluegreen Acquisition, contract sales decreased $20 million and $92 million, respectively, primarily due to a decrease in tour flow and VPG, when compared to the same periods in 2023. Three Months Ended September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Sales of VOIs, net $ 550 $ 367 $ 183 49.9 $ 1,459 $ 1,040 $ 419 40.3 Fee-for-service commissions and brand fees 83 107 (24) (22.4) 235 325 (90) (27.7) Sales revenue 633 474 159 33.5 1,694 1,365 329 24.1 Less: Cost of VOI sales 75 43 32 74.4 188 141 47 33.3 Sales and marketing expense, net 391 271 120 44.3 1,085 795 290 36.5 Real estate expense 466 314 152 48.4 1,273 936 337 36.0 Real estate profit $ 167 $ 160 $ 7 4.4 $ 421 $ 429 $ (8) (1.9) Real estate profit margin (1) 26.4 % 33.8 % 24.9 % 31.4 % (1) Excluding the marketing revenue and other fees adjustment, Real estate profit margin was 23.6% and 29.8% for the three months ended September 30, 2024 and 2023, respectively, and 21.8% and 27.8% for the nine months ended September 30, 2024 and 2023, respectively. Real estate profit increased $7 million for the three months ended September 30, 2024, compared to the same period in 2023. Real estate profit decreased $19 million excluding the impact of $26 million related to the Bluegreen Acquisition, primarily due to a decrease in fee-for-service commissions and brand fees revenue and an increase in sales and marketing expense, net and cost of VOI sales, partially offset by an increase in Sales of VOI, net when compared to the same period in 2023. Real estate profit decreased $8 million for the nine months ended September 30, 2024, compared to the same period in 2023. Real estate profit decreased by $66 million, excluding the impact of $58 million related to the Bluegreen 47 Table of Contents Acquisition, primarily due to a decrease in fee-for-service commissions and brand fees and an increase in cost of VOI sales, partially offset by an increase in Sales of VOIs, net compared to the same period in 2023. Sales revenue increased $159 million for the three months ended September 30, 2024, compared to the same period in 2023. Sales revenue increased by $18 million excluding the impact of $141 million related to the Bluegreen Acquisition, primarily due to an increase in Sales of VOI, net partially offset by decreases in Fee-for-service commissions and brand fees revenues and lower contract sales, compared to the same period in 2023. Sales revenue increased $329 million for the nine months ended September 30, 2024, compared to the same period in 2023. Sales revenue decreased by $60 million excluding the impact of $389 million related to the Bluegreen Acquisition, primarily due to decreases in fee-for-service commissions and brand fees revenues and lower contract sales partially offset by an increase in sales of VOI, net, compared to the same period in 2023. Real estate expense increased $152 million for the three months ended September 30, 2024, compared to the same periods in 2023. Real estate expense increased by $37 million excluding the impact of $115 million related to the Bluegreen Acquisition, primarily due to increases in sales and marketing expense, net, compared to the same period in 2023. Real estate expense increased $337 million for the nine months ended September 30, 2024, compared to the same periods in 2023. Real estate expense increased by $6 million excluding the impact of $331 million related to the Bluegreen Acquisition, primarily due to increases in cost of VOI sales, compared to the same period in 2023. Financing Three Months Ended September 30, Variance (1) Nine Months Ended September 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Interest income $ 118 $ 72 $ 46 63.9 $ 346 $ 210 $ 136 64.8 Other financing revenue 9 7 2 28.6 31 26 5 19.2 Premium amortization of acquired timeshare financing receivables (22) (4) (18) NM (66) (11) (55) NM Financing revenue 105 75 30 40.0 311 225 86 38.2 Consumer financing interest expense 26 12 14 NM 71 35 36 NM Other financing expense 18 13 5 38.5 52 39 13 33.3 Amortization of acquired non-recourse debt discounts and premiums, net 1 — 1 100.0 5 (1) 6 NM Financing expense 45 25 20 80.0 128 73 55 75.3 Financing profit $ 60 $ 50 $ 10 20.0 $ 183 $ 152 $ 31 20.4 Financing profit margin 57.1 % 66.7 % 58.8 % 67.6 % (1) NM - fluctuation in terms of percentage change is not meaningful. Financing profit increased by $10 million and $31 million, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Financing profit increased by $6 million and $13 million, respectively, excluding the $4 million and $18 million impact related to the Bluegreen Acquisition, primarily due to higher interest income revenues partially offset by increased financing expense. Financing revenue increased by $30 million and $86 million, respectively, for three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Financing revenue increased by $14 million and $40 million, respectively, excluding the $16 million and $46 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 $55 million, respectively, for three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Financing expense increased by $8 million and $27 million, respectively, excluding the $12 million and $28 million impact related to the Bluegreen Acquisition, primarily due to an increase in the balance and weighted average interest rate on our non-recourse debt. 48 Table of Contents Resort Operations and Club Management Segment Resort and Club Management Three Months Ended September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Club management revenue $ 74 $ 56 $ 18 32.1 $ 204 $ 160 $ 44 27.5 Resort management revenue 105 82 23 28.0 312 242 70 28.9 Resort and club management revenues 179 138 41 29.7 516 402 114 28.4 Club management expense 20 14 6 42.9 61 44 17 38.6 Resort management expense 30 29 1 3.4 91 85 6 7.1 Resort and club management expenses 50 43 7 16.3 152 129 23 17.8 Resort and club management profit $ 129 $ 95 $ 34 35.8 $ 364 $ 273 $ 91 33.3 Resort and club management profit margin 72.1 % 68.8 % 70.5 % 67.9 % Resort and club management profit increased by $34 million and $91 million, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Resort and club management profit increased by $6 million and $18 million, respectively, excluding the $28 million and $73 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 $41 million and $114 million, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Resort and club management revenue increased by $10 million and $30 million, respectively, excluding the $31 million and $84 million impact related to the Bluegreen Acquisition, primarily due to management fee revenue. Resort and club management expenses increased by $7 million and $23 million, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Resort and club management expenses increased by $4 million and $12 million, respectively, excluding the $3 million and $11 million impact related to the Bluegreen Acquisition, in line with the increases in revenues. Rental and Ancillary Services Three Months Ended September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Rental revenues $ 171 $ 160 $ 11 6.9 $ 521 $ 469 $ 52 11.1 Ancillary services revenues 12 11 1 9.1 38 33 5 15.2 Rental and ancillary services revenues 183 171 12 7.0 559 502 57 11.4 Rental expenses 167 144 23 16.0 507 431 76 17.6 Ancillary services expense 11 10 1 10.0 32 29 3 10.3 Rental and ancillary services expenses 178 154 24 15.6 539 460 79 17.2 Rental and ancillary services profit $ 5 $ 17 $ (12) (70.6) $ 20 $ 42 $ (22) (52.4) Rental and ancillary services profit margin 2.7 % 9.9 % 3.6 % 8.4 % Rental and ancillary services profit decreased by $12 million for the three months ended September 30, 2024, compared to the same period in 2023. Rental and ancillary services profit decreased by $10 million, excluding the $2 million unfavorable impact related to the Bluegreen Acquisition, primarily due to increases in rental expenses when compared to the same period in 2023. 49 Table of Contents Rental and ancillary services profit decreased by $22 million for the nine months ended September 30, 2024, compared to the same period in 2023. Rental and ancillary services profit decreased by $10 million, excluding the $12 million 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 revenue increased $12 million for the three months ended September 30, 2024, compared to the same period in 2023. For the same period, Rental and ancillary services revenue remained relatively consistent excluding the $13 million impact related to the Bluegreen Acquisition. Rental and ancillary services revenue increased $57 million for the nine months ended September 30, 2024, compared to the same period in 2023. For the same period, Rental and ancillary services revenue increased by $24 million, excluding the $33 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 $24 million and $79 million, respectively, for the three and nine months ended September 30, 2024, compared to the same periods in 2023. For the same periods, Rental and ancillary services expenses increased $9 million and $34 million, respectively, excluding the $15 million and $45 million impact related to the Bluegreen Acquisition, primarily due to an increase in development and maintenance fees. Other Operating Expenses Three Months Ended September 30, Variance Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % General and administrative $ 44 $ 40 $ 4 10.0 $ 147 $ 130 $ 17 13.1 Depreciation and amortization 68 53 15 28.3 198 156 42 26.9 License fee expense 49 37 12 32.4 124 101 23 22.8 Impairment expense — — — 100.0 2 3 (1) (33.3) General and administrative expenses increased by $4 million and $17 million for the three and nine months ended September 30, 2024, respectively, compared to the same period in 2023. Excluding $7 million and $26 million, respectively, related to the impact of the Bluegreen Acquisition, General and administrative expenses decreased by $3 million and $9 million when comparing the three and nine months ended September 30, 2024 to the same periods in 2023 primarily due to interest expense for a legal matter that was settled in early 2024. Depreciation and amortization increased by $15 million and $42 million for the three and nine months ended September 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 $12 million and $23 million for the three and nine months ended September 30, 2024, when compared to the same periods in 2023. The increase was primarily due to amendments to our License Agreement as a result of the Bluegreen Acquisition. Acquisition and Integration-Related Expense Three Months Ended September 30, Variance (1) Nine Months Ended September 30, Variance (1) ($ in millions) 2024 2023 $ % 2024 2023 $ % Acquisition and integration-related expense $ 36 $ 12 $ 24 NM $ 193 $ 42 $ 151 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 nine months ended September 30, 2024, acquisition and integration-related costs increased by $24 million and $151 million when compared to the same periods in 2023. The increases were primarily driven by costs associated with the Bluegreen Acquisition. 50 Table of Contents Non-Operating Expenses Three Months Ended September 30, Variance (1) Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ % 2024 2023 $ % Interest expense $ 84 $ 45 $ 39 86.7 $ 250 $ 133 $ 117 88.0 Equity in earnings from unconsolidated affiliates (4) (2) (2) 100.0 (12) (7) (5) 71.4 Other (gain) loss, net (9) 1 (10) NM (1) (3) 2 (66.7) Income tax expense 61 44 17 38.6 53 96 (43) (44.8) (1) NM - fluctuation in terms of percentage change is not meaningful The change in non-operating expenses for the three months ended September 30, 2024, compared to the same period in 2023, was primarily due to an increase in interest expense of $39 million and an increase in income tax expense of $17 million. The increase in interest expense was primarily due to an increase in the debt balance outstanding used to fund the Bluegreen acquisition compared to the same period in 2023. The increase in income tax expense was primarily driven by a change in overall earnings compared to the same period in 2023. The change in non-operating expenses for the nine months ended September 30, 2024, compared to the same period in 2023, was primarily due to an increase in interest expense of $117 million, partially offset by a decrease in income tax expense of $43 million. The increase in interest expense was primarily due to an increase in the debt balance outstanding used to fund the Bluegreen acquisition compared to the same period in 2023. The decrease in income tax expense was primarily driven by an overall change in earnings partially offset by discrete items relative to income before taxes compared to the same period in 2023. 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 $3 million and $7 million during the three and nine months ended September 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 nine months ended September 30, 2024, we repurchased 7.4 million shares for $307 million under our share repurchase programs. See Note 15: Earnings Per Share for additional information. • As of September 30, 2024, we had total cash and cash equivalents of $297 million and restricted cash of $244 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. 51 Table of Contents • 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. • 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 September 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. • As of September 30, 2024, we had $308 million remaining borrowing capacity under the revolver facility. • As of September 30, 2024, we had an aggregate of $750 million remaining borrowing capacity under our Timeshare Facility. As of September 30, 2024, we had $$1.7 billion of notes that were current on payments but not securitized. Of that figure, approximately $1.3 billion could be monetized through either warehouse borrowing or securitization while another $294 million of mortgage notes we anticipate being eligible following certain customary milestones such as first payment, deeding and recording. The Grand Islander and Bluegreen Timeshare Facilities were terminated in the first quarter of 2024. 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, 2024, our inventory-related purchase commitments totaled $52 million to be fulfilled over 2 years. Sources and Uses of Our Cash The following table summarizes our net cash flows and key metrics related to our liquidity: Nine Months Ended September 30, Variance ($ in millions) 2024 2023 $ Net cash provided by (used in): Operating activities $ 204 $ 312 $ (108) Investing activities (1,514) (47) (1,467) Financing activities 971 (270) 1,241 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 nine months ended September 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. 52 Table of Contents The following table summarizes our VOI inventory spending: Nine Months Ended September 30, ($ in millions) 2024 2023 VOI spending - owned properties (1) $ 225 $ 167 VOI spending - fee-for-service upgrades (2) — 15 Purchases and development of real estate for future conversion to inventory 61 28 Total VOI inventory spending $ 286 $ 210 (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 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 $1,514 million for the nine months ended September 30, 2024 compared to $47 million for the same period in 2023. The increase was primarily due to the Bluegreen Acquisition and increased software capitalization costs. Financing Activities Net cash provided by financing activities for the nine months ended September 30, 2024 was $971 million compared to net cash used in financing activities of $270 million for the same period in 2023. The increase was primarily due to net proceeds from debt of $1,766 million, offset by net repayments of non-recourse debt of $428 million, an increase in payment for debt issuance costs of $46 million, and a $39 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, marketing and license fee agreements and obligations associated with our debt, non-recourse debt and the related interest. As of September 30, 2024, we were committed to approximately $9,289 million in contractual obligations over 10 years, $270 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 $732 million as of September 30, 2024, which primarily consist of escrow, subsidy and construction related bonds. Subsequent Events On November 6, 2024, we entered into the Second Amended and Restated License Agreement (the “Amended License Agreement”) with Hilton Worldwide Holdings Inc. (“Hilton”). The Amended License Agreement amends, restates and supersedes the First Amended and Restated License Agreement, dated as of March 10, 2021, between HGV and Hilton, as amended by the First Amendment, dated as of April 4, 2022, the Second Amendment, dated as of November 5, 2023, and the Third Amendment, dated as of January 16, 2024. The Amended License Agreement covers certain amendments relating to, among other things, our continued integration of the Bluegreen Acquisition, including a rebranding plan of the Bluegreen properties to the Hilton Grand Vacations brands and Hilton standards and certain matters related to Bluegreen’s marketing arrangement with Choice Hotels International, Inc., which we assumed in connection with the Bluegreen Acquisition. On November 7, 2024, we completed a $500 million securitization of timeshare loans through Hilton Grand Vacations Trust 2024-3 with an overall weighted average interest rate of 5.18% and an overall advance rate of 98%. The proceeds will primarily be used to pay down debt and for other general corporate purposes. 53 Table of Contents 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.