What changed in this filing

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Item 2. Management’s Discussion and Analysis

2023-08-01 compared with 2023-05-02 · 154 added, 78 removed, 169 unchanged (58% of the section changed)

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We undertake no obligation to publicly update or revise these statements, whether as a result of new information, future events or otherwise.

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this

report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC.

We make forward-looking statements in Management’s Discussion and Analysis of Financial Condition and Results of Operations and elsewhere in this report based on the beliefs and assumptions of our management and on information available to us through the date this Form 10-Q is filed with the SEC.

Forward-looking statements include information related to future demand trends and expectations;

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and similar statements concerning anticipated future events and expectations that are not historical facts.

We caution you that these statements are not guarantees of future performance and are subject to numerous evolving risks and uncertainties that we may not be able to accurately predict or assess, including the risks and uncertainties we describe in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), Part II, Item 1A of this report, and other factors we describe from time to time in our periodic filings with the SEC.

uncertainties we describe in our Annual Report on Form 10-K for the fiscal year ended December 31, 2022 (“2022 Form 10-K”), Part II, Item 1A of this report, and other factors we describe from time to time in our periodic filings with the SEC.

BUSINESS AND OVERVIEW

We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under 31 brand names, including our newly added brand, City Express by Marriott ™ .

We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under 31 brand names.

Under our asset-light business model, we typically manage or franchise hotels, rather than own them .

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Business Trends

We saw strong global RevPAR improvement during the 2023 first quarter compared to the same period in 2022.

For the 2023 first quarter, worldwide RevPAR increased 34.3 percent compared to the 2022 first quarter, reflecting ADR growth of 11.3 percent and occupancy improvement of 11.2 percentage points.

The increase in

RevPAR was driven by improvement in all customer segments, including robust leisure demand as well as strengthening group and business transient demand as compared to the 2022 first quarter.

& Canada, RevPAR increased 25.6 percent in the 2023 first quarter compared to the 2022 first quarter, due to ADR growth of 10.1 percent and occupancy improvement of 8.2 percentage points.

The improvement in RevPAR reflected strong demand in many markets within the U.S.

& Canada, as compared to the 2022 first quarter, which was negatively impacted by the COVID-19 Omicron variant.

Internationally, RevPAR improved 63.1 percent in the 2023 first quarter compared to the 2022 first quarter, due to occupancy improvement of 18.3 percentage points and ADR growth of 16.4 percent.

The improvement in RevPAR was driven by strengthening demand, especially from cross-border guests, and meaningful growth in ADR in all regions, as compared to the 2022 first quarter, which in various geographic markets was heavily impacted by COVID-19 and government-imposed travel restrictions.

The lifting of travel restrictions throughout Asia Pacific, particularly in Greater China, significantly boosted 2023 first quarter demand in that region.

Our business is subject to the effects of changes in global and regional conditions and these conditions can change rapidly.

We continue to monitor global economic conditions, and although we are not currently seeing signs of a slowdown in lodging demand, the lodging booking window is short and trends can change quickly.

We saw strong global RevPAR improvement during the 2023 second quarter and 2023 first half compared to the same periods in 2022.

For the 2023 second quarter, worldwide RevPAR increased 13.5 percent compared to the 2022 second quarter, reflecting ADR growth of 6.0 percent and occupancy improvement of 4.7 percentage points.

For the 2023 first half, worldwide RevPAR increased 22.4 percent compared to the 2022 first half, reflecting ADR growth of 8.1 percent and occupancy improvement of 8.0 percentage points.

The increases in RevPAR were driven by improvement in all customer segments, including robust leisure demand as well as strengthening group and business transient demand as compared to the same periods in 2022.

& Canada, RevPAR improved 6.0 percent in the 2023 second quarter compared to the 2022 second quarter, driven by ADR growth of 4.1 percent and occupancy improvement of 1.3 percentage points.

While demand continued to be strong in the 2023 second quarter, year over year demand began to normalize.

In the 2023 first half, U.S.

& Canada RevPAR improved 14.3 percent compared to the 2022 first half due to strong demand and an improvement in ADR in many markets.

Internationally, RevPAR improved 39.1 percent in the 2023 second quarter and 49.5 percent in the 2023 first half compared to the same periods in 2022.

The improvement in RevPAR was driven by strengthening demand and meaningful growth in ADR in all regions, as compared to the same periods in 2022, which in various geographic markets were impacted by COVID-19 and government-imposed travel restrictions.

The lifting of travel restrictions throughout Asia Pacific, particularly in Greater China, significantly boosted 2023 second quarter and 2023 first half demand in that region.

Our business is subject to the effects of changes in global and regional economic conditions and these conditions can change rapidly.

We continue to monitor economic conditions, and although we are not currently seeing signs of a slowdown in lodging demand in most markets, the lodging booking window is short and trends can change quickly.

Starwood Data Security Incident

On November 30, 2018, we announced a data security incident involving unauthorized access to the Starwood reservations database (the “Data Security Incident”).

The Starwood reservations database is no longer used for busi ness operations.

We discontinued use of t he Starwood reservations database for business operations at the end of 2018 .

We are currently unable to reasonably estimate the range of total possible financial impact to the Company from the Data Security Incident in excess of the expenses already recorded.

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System Growth and Pipeline

At the end of the 2023 first quarter, our system had 8,353 properties (1,534,072 rooms), compared to 8,288 properties (1,525,407 rooms) at year-end 2022 and 8,048 properties (1,487,681 rooms) at the end of the 2022 first quarter.

The increase compared to year-end 2022 reflected gross additions of 79 properties (11,015 rooms) and deletions of 14 properties (2,351 rooms).

Approximately 53 percent of our 2023 first quarter gross room additions were located outside U.S.

& Canada, and 25 percent were conversions from competitor brands.

At the end of the 2023 first quarter, we had approximately 502,000 hotel rooms in our development pipeline, which includes roughly 200,000 hotel rooms under construction and more than 21,000 hotel rooms approved for development but not yet under signed contracts.

At the end of the 2023 second quarter, our system had 8,590 properties (1,565,258 rooms), compared to 8,288 properties (1,525,407 rooms) at year-end 2022 and 8,120 properties (1,500,744 rooms) at the end of the 2022 second quarter.

The increase compared to year-end 2022 reflected gross additions of 333 properties (44,112 rooms), including 149 properties (17,300 rooms) from the City Express acquisition, and deletions of 31 properties (4,346 rooms).

Our 2023 first half gross room additions included approximately 34,300 rooms located outside U.S.

& Canada and approximately 5,600 rooms converted from competitor brands.

At the end of the 2023 second quarter, we had nearly 547,000 hotel rooms in our development pipeline, which includes roughly 31,500 hotel rooms approved for development but not yet under signed contracts.

More than 240,000 hotel rooms in the pipeline, including approximately 37,000 rooms from the exclusive, long-term strategic licensing agreement with MGM Resorts International that we announced in July 2023, were under construction as of the end of the second quarter.

Over half of the rooms in our development pipeline are outside U.S.

We currently expect full-year 2023 total gross rooms growth of approximately 5.5 percent and net rooms growth of 4.0 to 4.5 percent.

We currently expect full-year 2023 net rooms growth of approximately 6.4 to 6.7 percent, including an anticipated 2.4 percent increase as a result of the expected addition of rooms to our system in the 2023 fourth quarter under our agreement with MGM Resorts International discussed above.

Properties and Rooms

At March 31, 2023, we operated, franchised, and licensed the following properties and rooms:

At June 30, 2023, we operated, franchised, and licensed the following properties and rooms:

Managed Franchised/Licensed Owned/Leased Residential Total

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Lodging Statistics

The following table presents RevPAR, occupancy, and ADR statistics for comparable properties.

The following tables present RevPAR, occupancy, and ADR statistics for comparable properties.

Systemwide statistics include data from our franchised properties, in addition to our company-operated properties.

Three Months Ended March 31, 2023 and Change vs.

Three Months Ended March 31, 2022

Three Months Ended June 30, 2023 and Change vs.

Three Months Ended June 30, 2022

RevPAR Occupancy Average Daily Rate

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$ 183.79 6.0 %

Six Months Ended June 30, 2023 and Change vs.

Six Months Ended June 30, 2022

RevPAR Occupancy Average Daily Rate

2022 2023 vs.

Comparable Company-Operated Properties

& Canada $ 176.19 16.3 % 69.4 % 6.6 % pts.

$ 253.92 5.3 %

Greater China $ 87.42 100.1 % 67.1 % 25.9 % pts.

$ 130.35 22.8 %

Asia Pacific excluding China $ 113.94 73.2 % 67.5 % 16.9 % pts.

$ 168.81 29.9 %

Caribbean & Latin America $ 178.07 25.3 % 64.6 % 6.2 % pts.

$ 275.87 13.1 %

Europe $ 166.09 37.4 % 68.0 % 12.3 % pts.

$ 244.08 12.5 %

Middle East & Africa $ 128.26 18.3 % 66.9 % 4.0 % pts.

$ 191.80 11.3 %

International - All (1)

$ 118.74 51.9 % 67.1 % 16.5 % pts.

$ 176.87 14.5 %

Worldwide (2)

$ 143.96 30.4 % 68.1 % 12.2 % pts.

$ 211.32 7.2 %

Comparable Systemwide Properties

& Canada $ 128.91 14.3 % 69.8 % 4.7 % pts.

$ 184.64 6.5 %

Greater China $ 81.68 100.6 % 66.0 % 26.1 % pts.

$ 123.72 21.3 %

Asia Pacific excluding China $ 113.64 73.5 % 67.4 % 16.2 % pts.

$ 168.73 31.9 %

Caribbean & Latin America $ 152.12 26.0 % 65.4 % 6.6 % pts.

$ 232.60 13.2 %

Europe $ 130.71 39.8 % 65.6 % 13.2 % pts.

$ 199.11 11.7 %

Middle East & Africa $ 119.67 20.7 % 65.6 % 4.0 % pts.

$ 182.48 13.4 %

International - All (1)

$ 114.17 49.5 % 66.1 % 15.4 % pts.

$ 172.71 14.6 %

Worldwide (2)

$ 124.38 22.4 % 68.7 % 8.0 % pts.

$ 181.11 8.1 %

(1) Includes Greater China, Asia Pacific excluding China, Caribbean & Latin America, Europe, and Middle East & Africa.

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CONSOLIDATED RESULTS

Our consolidated results in the 2023 first quarter improved significantly compared to the 2022 first quarter due to the continued recovery in lodging demand from the impacts of COVID-19.

The discussion below presents an additional analysis of our consolidated results of operations for the 2023 first quarter compared to the 2022 first quarter.

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Our consolidated results in the 2023 second quarter and 2023 first half improved significantly compared to the 2022 second quarter and 2022 first half due to the continued recovery in lodging demand from the impacts of COVID-19.

The discussion below presents an additional analysis of our consolidated results of operations for the 2023 second quarter compared to the 2022 second quarter and for the 2023 first half compared to the 2022 first half.

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Base management fees $ 318 $ 269 $ 49 18 % $ 611 $ 482 $ 129 27 %

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Net fee revenues $ 1,228 $ 1,054 $ 174 17 % $ 2,340 $ 1,845 $ 495 27 %

The increase in base management fees in the 2023 first quarter primarily reflected higher RevPAR.

The increase in franchise fees in the 2023 first quarter primarily reflected higher RevPAR, higher co-branded credit card fees ($21 million), and unit growth ($18 million).

The increase in incentive management fees in the 2023 first quarter primarily reflected higher profits at certain managed hotels.

The increases in base management fees in the 2023 second quarter and 2023 first half primarily reflected higher RevPAR.

The increases in franchise fees in the 2023 second quarter and 2023 first half primarily reflected higher RevPAR, unit growth ($25 million and $43 million, respectively), and higher co-branded credit card fees ($7 million and $27 million, respectively).

The increases in incentive management fees in the 2023 second quarter and 2023 first half primarily reflected higher profits at many managed hotels.

Owned, Leased, and Other

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Owned, leased, and other revenue $ 390 $ 364 $ 26 7 % $ 746 $ 626 $ 120 19 %

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Owned, leased, and other, net $ 103 $ 83 $ 20 24 % $ 178 $ 148 $ 30 20 %

Owned, leased, and other revenue, net of direct expenses, increased in the 2023 first quarter primarily due to stronger results at our owned and leased properties, partially offset by $29 million of subsidies received for certain of our leased hotels in the 2022 first quarter under German government COVID-19 assistance programs.

Owned, leased, and other revenue, net of direct expenses, increased in the 2023 second quarter primarily due to stronger results at our owned and leased properties.

Owned, leased, and other revenue, net of direct expenses, increased in the 2023 first half primarily due to stronger results at our owned and leased properties, partially offset by $29 million of subsidies received for certain of our leased hotels in the 2022 first half under German government COVID-19 assistance programs.

Cost Reimbursements

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Cost reimbursement revenue $ 4,457 $ 3,920 $ 537 14 % $ 8,604 $ 7,066 $ 1,538 22 %

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Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively.

The increase in cost reimbursements, net in the 2023 first quarter primarily reflected Loyalty Program activity, primarily due to higher program revenues, as well as higher revenues, net of expenses, for our centralized programs and services.

The decrease in cost reimbursements, net in the 2023 second quarter primarily reflected higher expenses related to our insurance program and lower revenues, net of expenses, for our centralized programs and services, partially offset by Loyalty Program activity, primarily due to higher program revenues.

The increase in cost reimbursements, net in the 2023 first half primarily reflected Loyalty Program activity, primarily due to higher program revenues, and higher revenues, net of expenses, for our centralized programs and services, partially offset by higher expenses related to our insurance program.

Other Operating Expenses

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Depreciation, amortization, and other $ 48 $ 49 $ (1) (2) % $ 92 $ 97 $ (5) (5) %

General, administrative, and other 240 231 9 4 % 442 439 3 1 %

Merger-related charges and other 1 9 (8) (89) %

Merger-related charges and other 38 — 38 nm* 39 9 30 333 %

* Percentage change is not meaningful.

Merger-related charges and other expenses increased in the 2023 second quarter and the 2023 first half primarily due to the Data Security Incident discussed in Note 5.

Non-Operating Income (Expense)

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Gains and other income, net $ 2 $ 2 $ — — % $ 5 $ 6 $ (1) (17) %

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Equity in earnings 7 15 (8) (53) % 8 17 (9) (53) %

Interest expense increased in the 2023 first quarter, primarily due to higher average debt balances driven by Senior Notes issuances.

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Interest expense increased in the 2023 second quarter and 2023 first half primarily due to higher debt balances driven by Senior Notes issuances, net of maturities ($19 million and $29 million, respectively) and higher average borrowings and interest rates related to our commercial paper and Credit Facility program ($17 million and $29 million, respectively).

Equity in earnings decreased in the 2023 second quarter and 2023 first half primarily due to gains recorded in the prior year on the sale of properties held by equity method investees ($13 million and $21 million, respectively).

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Provision for income taxes $ (238) $ (200) $ (38) (19) % $ (325) $ (299) $ (26) (9) %

Provision for income taxes decreased by $12 million in the 2023 first quarter, primarily due to the current year release of tax reserves ($103 million), which was mostly due to the completion of a prior year tax audit, partially offset by the increase in operating income ($86 million).

Provision for income taxes increased by $38 million in the 2023 second quarter primarily due to the increase in operating income ($24 million) and a shift in earnings to jurisdictions with higher tax rates ($7 million).

Provision for income taxes increased by $26 million in the 2023 first half primarily due to the increase in operating income ($110 million) and a shift in earnings to jurisdictions with higher tax rates ($15 million), partially offset by the current year release of tax reserves ($103 million), which was mostly due to the completion of a prior year tax audit.

BUSINESS SEGMENTS

Our segment results in the 2023 first quarter improved significantly compared to the 2022 first quarter due to the continued recovery in lodging demand from the impacts of COVID-19.

The following discussion presents an additional analysis of the operating results of our reportable business segments for the 2023 first quarter compared to the 2022 first quarter.

Three Months Ended

(in millions) March 31, 2023 March 31, 2022 Change 2023 vs.

Our segment results in the 2023 second quarter and 2023 first half improved significantly compared to the 2022 second quarter and 2022 first half due to the continued recovery in lodging demand from the impacts of COVID-19.

The following discussion presents an additional analysis of the operating results of our reportable business segments for the 2023 second quarter compared to the 2022 second quarter and for the 2023 first half compared to the 2022 first half.

Three Months Ended Six Months Ended

(in millions) June 30, 2023 June 30, 2022 Change 2023 vs.

2022 June 30, 2023 June 30, 2022 Change 2023 vs.

Segment revenues $ 4,502 $ 4,117 $ 385 9 % $ 8,780 $ 7,388 $ 1,392 19 %

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Properties Rooms

March 31, 2023 March 31, 2022 vs.

March 31, 2022 March 31, 2023 March 31, 2022 vs.

March 31, 2022

June 30, 2023 June 30, 2022 vs.

June 30, 2022 June 30, 2023 June 30, 2022 vs.

June 30, 2022

& Canada 5,906 5,790 116 2 % 972,181 958,025 14,156 1 %

International 2,590 2,238 352 16 % 570,183 520,018 50,165 10 %

& Canada 2023 first quarter segment profit increased, primarily due to $183 million of higher gross fee revenues.

The increase in gross fee revenues primarily reflected higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, higher profits at certain managed hotels, and unit growth.

Second Quarter

& Canada 2023 second quarter segment profit increased primarily due to:

• $68 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, as well as unit growth;

partially offset by:

• $40 million of lower cost reimbursement revenue, net of reimbursed expenses.

& Canada 2023 first half segment profit increased primarily due to:

• $251 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy, higher profits at certain managed hotels, and unit growth;

• $25 million of higher owned, leased, and other revenue, net of direct expenses, primarily reflecting stronger results at our owned and leased properties;

partially offset by:

• $36 million of lower cost reimbursement revenue, net of reimbursed expenses.

International

International 2023 first quarter segment profit increased, primarily due to $114 million of higher gross fee revenues, partially offset by $11 million of lower owned, leased, and other revenue, net of direct expenses.

The increase in gross fee revenues primarily reflected higher profits at certain managed hotels and higher comparable systemwide RevPAR driven by increases in both occupancy and ADR in all regions, partially offset by net unfavorable foreign exchange rates.

The decrease in owned, leased, and other revenue, net of direct expenses primarily reflected subsidies received for certain of our leased hotels in the 2022 first quarter under German government COVID-19 assistance programs, partially offset by stronger results at owned and leased properties.

Second Quarter

International 2023 second quarter segment profit increased primarily due to:

• $102 million of higher gross fee revenues, primarily reflecting higher profits at certain managed hotels and higher comparable systemwide RevPAR driven by increases in both ADR and occupancy in all regions;

partially offset by:

• $15 million of lower cost reimbursement revenue, net of reimbursed expenses.

International 2023 first half segment profit increased primarily due to:

• $216 million of higher gross fee revenues, primarily reflecting higher comparable systemwide RevPAR driven by increases in both ADR and occupancy in all regions, higher profits at certain managed hotels, and unit growth, partially offset by net unfavorable foreign exchange rates;

• $13 million of lower general, administrative, and other expenses, primarily reflecting a lower provision for credit losses;

partially offset by:

• $20 million of lower cost reimbursement revenue, net of reimbursed expenses;

• $10 million of lower owned, leased, and other revenue, net of direct expenses, primarily reflecting subsidies received for certain of our leased hotels in the 2022 first half under German government COVID-19 assistance programs, partially offset by stronger results at our owned and leased properties.

LIQUIDITY AND CAPITAL RESOURCES

Our long-term financial objectives include maintaining diversified financing sources, optimizing the mix and maturity of our long-term debt, and reducing our working capital.

At the end of the 2023 first quarter, our long-term debt had a weighted average interest rate of 4.2 percent and a weighted average maturity of approximately 5.8 years.

Including the effect of interest rate swaps, the ratio of our fixed-rate long-term debt to our total long-term debt was 0.9 to 1.0 at the end of the 2023 first quarter.

At the end of the 2023 second quarter, our long-term debt had a weighted average interest rate of 4.3 percent and a weighted average maturity of approximately 5.5 years.

Including the effect of interest rate swaps, the ratio of our fixed-rate long-term debt to our total long-term debt was 0.8 to 1.0 at the end of the 2023 second quarter.

Sources of Liquidity

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Because we do not have purchase commitments from buyers for our commercial paper, our ability to issue commercial paper is subject to market demand.

We do not expect that

fluctuations in the demand for commercial paper will affect our liquidity, given our borrowing capacity under the Credit Facility and access to capital markets.

Cash, cash equivalents, and restricted cash totaled $571 million at March 31, 2023, an increase of $46 million from year-end 2022, primarily due to net cash provided by operating activities ($887 million), Senior Notes issuances, net of repayments ($493 million), and commercial paper issuances, net of repayments ($117 million), partially offset by share repurchases ($1,135 million), dividends paid ($124 million), capital and technology expenditures ($95 million), and financing outflows for employee stock-based compensation withholding taxes ($72 million).

Net cash provided by operating activities increased by $489 million in the 2023 first quarter compared to the 2022 first quarter, primarily due to higher net income (adjusted for non-cash items) and working capital changes driven by accounts receivable timing.

Cash inflow from our Loyalty Program in 2020 included $920 million of cash received from the prepayment of certain future revenues under the 2020 amendments to our existing U.S.-issued co-branded credit card agreements, which reduced in both the 2023 first quarter and 2022 first quarter, and will in the future reduce, the amount of cash we receive from these card issuers.

We do not expect that fluctuations in the demand for commercial paper will affect our liquidity, given our borrowing capacity under the Credit Facility and access to capital markets.

Cash, cash equivalents, and restricted cash totaled $579 million at June 30, 2023, an increase of $54 million from year-end 2022, primarily due to net cash provided by operating activities ($1,538 million), commercial paper borrowings ($736 million), and Senior Notes issuances, net of repayments ($493 million), partially offset by share repurchases ($2,046 million), dividends paid ($281 million), capital and technology expenditures ($194 million), the City Express asset acquisition ($102 million), and financing outflows for employee stock-based compensation withholding taxes ($79 million).

Net cash provided by operating activities increased by $490 million in the 2023 first half compared to the 2022 first half, primarily due to higher net income (adjusted for non-cash items) and working capital changes driven by accounts receivable timing, partially offset by higher cash paid for income taxes.

first half and 2022 first half, and will in the future reduce, the amount of cash we receive from these card issuers.

We expect such reductions to end by year-end 2023.

Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2023 first quarter.

Our ratio of current assets to current liabilities was 0.5 to 1.0 at the end of the 2023 second quarter.

We have significant borrowing capacity under our Credit Facility should we need additional working capital.

Capital Expenditures and Other Investments

We made capital and technology expenditures of $95 million in the 2023 first quarter and $49 million in the 2022 first quarter.

We expect capital expenditures and other investments will total approximately $850 million to $1 billion for the 2023 full year, including capital and technology expenditures, loan advances, contract acquisition costs, and other investing activities (including approximately $250 million for maintenance capital spending).

This estimate also includes $100 million of investment spending related to the City Express brand acquisition discussed in Note 7, which closed on May 1, 2023.

We made capital and technology expenditures of $194 million in the 2023 first half and $119 million in the 2022 first half.

We expect capital expenditures and other investments will total approximately $900 million to $1 billion for the 2023 full year, including capital and technology expenditures, the completed City Express acquisition, loan advances, contract acquisition costs, and other investing activities (including approximately $200 million for maintenance capital spending).

This estimate also includes higher than typical spending on our worldwide technology systems, which is overwhelmingly expected to be reimbursed over time.

Share Repurchases and Dividends

We repurchased 6.8 million shares of our common stock for $1.1 billion in the 2023 first quarter.

Year-to-date through April 28, 2023, we repurchased 8.2 million shares for $1.4 billion.

We repurchased 5.2 million shares of our common stock for $903 million in the 2023 second quarter.

Year-to-date through July 28, 2023, we repurchased 13.6 million shares for $2.3 billion.

For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2.

On February 10, 2023, our Board of Directors declared a quarterly cash dividend of $0.40 per share, which was paid on March 31, 2023 to stockholders of record on February 24, 2023.

Our Board of Directors declared the following quarterly cash dividends in 2023 to date:

(1) $0.40 per share declared on February 10, 2023 and paid on March 31, 2023 to stockholders of record on February 24, 2023;

and (2) $0.52 per share declared on May 12, 2023 and paid on June 30, 2023 to stockholders of record on May 26, 2023.

We expect to continue to return cash to stockholders through a combination of share repurchases and cash dividends.

Material Cash Requirements

As of the end of the 2023 first quarter, there have been no material changes to our cash requirements as disclosed in our 2022 Form 10-K.

As of the end of the 2023 second quarter, there have been no material changes to our cash requirements as disclosed in our 2022 Form 10-K.

See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2022 Form 10-K for more information about our cash requirements.

Also, see Note 6 for information on our long-term debt.

At March 31, 2023, projected Deemed Repatriation Transition Tax payments under the U.S.

tax legislation enacted on December 22, 2017, commonly referred to as the 2017 Tax Cuts and Jobs Act, totaled $326 million, of which $84 million is payable within the next 12 months from March 31, 2023.

At June 30, 2023, projected Deemed Repatriation Transition Tax payments under the U.S.

tax legislation enacted on December 22, 2017, commonly referred to as the 2017 Tax Cuts and Jobs Act, totaled $245 million, of which $111 million is payable within the next 12 months from June 30, 2023.

CRITICAL ACCOUNTING POLICIES AND ESTIMATES

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis