MARRIOTT INTERNATIONAL INC /MD/ 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Cautionary Statement All statements in this report are made as of the date this Form 10-Q is filed with the U.S. Securities and Exchange Commission (the “SEC”). 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. Forward-looking statements include information related to our development pipeline; our expectations regarding rooms growth; our expectations regarding our ability to meet our liquidity requirements; our capital expenditures and other investment spending and reimbursement expectations; our expectations regarding future dividends and share repurchases; our expectations regarding certain claims, legal proceedings, settlements or resolutions; our comprehensive initiative to enhance our effectiveness and efficiency across the Company, including related plans and goals, anticipated charges and cost reductions, and other expected or potential benefits and outcomes; and other statements that are preceded by, followed by, or include the words “believes,” “expects,” “anticipates,” “intends,” “plans,” “estimates,” “foresees,” or similar expressions; 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, 2023 (“2023 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 Overview We are a worldwide operator, franchisor, and licensor of hotel, residential, timeshare, and other lodging properties under more than 30 brand names. Under our asset-light business model, we typically manage or franchise 15 Table of Contents hotels, rather than own them . We discuss our operations in the following reportable business segments: (1) U.S. & Canada, (2) Europe, Middle East & Africa (“EMEA”), (3) Greater China, and (4) Asia Pacific excluding China (“APEC”). Our Caribbean & Latin America (“CALA”) operating segment does not meet the applicable criteria for separate disclosure as a reportable business segment, and as such, we include its results in “Unallocated corporate and other.” Terms of our management agreements vary, but our management fees generally consist of base management fees and incentive management fees. Base management fees are typically calculated as a percentage of property-level revenue. Incentive management fees are typically calculated as a percentage of a hotel profitability measure, and, in many cases (particularly in our U.S. & Canada, Europe, and CALA regions), are subject to a specified owner return. Under our franchise and license agreements for most properties, franchise fees are calculated as a percentage of property-level revenue or a portion thereof. Additionally, we earn franchise fees for the use of our intellectual property, including primarily co-branded credit card fees, as well as timeshare and yacht fees, residential branding fees, franchise application and relicensing fees, and certain other non-hotel licensing fees. Performance Measures We believe Revenue per Available Room (“RevPAR”), which we calculate by dividing property level room revenue by total rooms available for the period, is a meaningful indicator of our performance because it measures the period-over-period change in room revenues. RevPAR may not be comparable to similarly titled measures, such as revenues, and should not be viewed as necessarily correlating with our fee revenue. We also believe occupancy and average daily rate (“ADR”), which are components of calculating RevPAR, are meaningful indicators of our performance. Occupancy, which we calculate by dividing total rooms sold by total rooms available for the period, measures the utilization of a property’s available capacity. ADR, which we calculate by dividing property level room revenue by total rooms sold, measures average room price and is useful in assessing pricing levels. RevPAR, occupancy, and ADR statistics are on a systemwide basis for comparable properties, unless otherwise stated. Unless otherwise stated, all changes refer to year-over-year changes for the comparable period. Comparisons to prior periods are on a constant U.S. dollar basis, which we calculate by applying exchange rates for the current period to the prior comparable period. We believe constant dollar analysis provides valuable information regarding our properties’ performance as it removes currency fluctuations from the presentation of such results. We define our comparable properties as our properties that were open and operating under one of our hotel brands since the beginning of the last full calendar year (since January 1, 2023 for the current period) and have not, in either the current or previous year: (1) undergone significant room or public space renovations or expansions, (2) been converted between company-operated and franchised, or (3) sustained substantial property damage or business interruption. Our comparable properties also exclude MGM Collection with Marriott Bonvoy, Design Hotels, The Ritz-Carlton Yacht Collection, and timeshare properties. Business Trends We saw solid global RevPAR growth during the 2024 third quarter and 2024 first three quarters compared to the same periods in 2023. For the 2024 third quarter, worldwide RevPAR increased 3.0 percent, reflecting ADR growth of 2.5 percent and occupancy improvement of 0.3 percentage points. For the 2024 first three quarters, worldwide RevPAR increased 4.0 percent, reflecting ADR growth of 2.7 percent and occupancy improvement of 0.9 percentage points. The increase in RevPAR in the 2024 third quarter and 2024 first three quarters was primarily driven by strong year-over-year demand growth in nearly all of our regions. In the U.S. & Canada, where demand has normalized, RevPAR increased 2.6 percent in the 2024 first three quarters, led by strong group business. In EMEA, RevPAR growth of 9.4 percent in the 2024 first three quarters was driven by strong demand across the region, strengthened by the 2024 Paris Olympics and other special events. In APEC, RevPAR increased 13.3 percent in the 2024 first three quarters, driven by strong growth in ADR and occupancy, including an increase in inbound demand into the region. In CALA, RevPAR increased 9.3 percent in the 2024 first three quarters, driven by strong demand throughout the region. In Greater China, RevPAR declined 2.7 percent in the 2024 first three 16 Table of Contents quarters and 7.9 percent in the 2024 third quarter due to lower domestic demand as a result of macro-economic conditions, severe weather, and an increase in outbound travel. Earlier this year, we launched a comprehensive initiative to enhance our effectiveness and efficiency across the Company. At this point in the process, we expect this initiative to yield $80 million to $90 million of annual general and administrative cost reductions beginning in 2025. These efforts are also anticipated to deliver cost savings to our owners and franchisees. As part of these efforts, we implemented a voluntary retirement program for certain above-property associates in the 2024 third quarter, and we also expect that some above-property roles in the organization will be eliminated or redefined going forward. We anticipate charges for employee termination benefits related to the above efforts primarily in the 2024 fourth quarter and expect to substantially complete this initiative by the end of the 2025 first quarter. 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”). 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; however, we do not believe this incident will impact our long-term financial health. See Note 5 for additional information related to legal proceedings and governmental investigations related to the Data Security Incident. System Growth and Pipeline At the end of the 2024 third quarter, our system had 9,068 properties (1,674,600 rooms), compared to 8,785 properties (1,597,380 rooms) at year-end 2023 and 8,675 properties (1,581,002 rooms) at the end of the 2023 third quarter. In the 2024 first three quarters, we added over 77,200 net rooms, including the addition of approximately 37,000 rooms from our exclusive, long-term strategic licensing agreement with MGM Resorts International. At the end of the 2024 third quarter, we had approximately 3,800 hotels and 585,000 rooms in our development pipeline, which includes roughly 34,000 rooms approved for development but not yet under signed contracts. More than 220,000 rooms in the pipeline, or 38 percent, including rooms from our long-term licensing agreement with Sonder Holdings Inc. that we announced in August 2024, were under construction at the end of the 2024 third quarter. Fifty-six percent of the rooms in our development pipeline are located outside U.S. & Canada. We currently expect full year 2024 net rooms growth to be around 6.5 percent. Properties and Rooms The following table shows our properties and rooms by ownership type. Properties Rooms September 30, 2024 September 30, 2023 vs. September 30, 2023 September 30, 2024 September 30, 2023 vs. September 30, 2023 Managed 1,999 2,039 (40) (2) % 572,731 573,991 (1,260) — % Franchised/Licensed/Other (1) 6,888 6,466 422 7 % 1,074,361 980,969 93,392 10 % Owned/Leased 50 51 (1) (2) % 13,108 13,432 (324) (2) % Residential 131 119 12 10 % 14,400 12,610 1,790 14 % Total 9,068 8,675 393 5 % 1,674,600 1,581,002 93,598 6 % (1) In addition to franchised, includes timeshare, The Ritz-Carlton Yacht Collection, and certain license and other agreements. Lodging Statistics 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. 17 Table of Contents Three Months Ended September 30, 2024 and Change vs. Three Months Ended September 30, 2023 RevPAR Occupancy Average Daily Rate 2024 vs. 2023 2024 vs. 2023 2024 vs. 2023 Comparable Company-Operated Properties U.S. & Canada $ 174.62 3.1 % 71.1 % 0.3 % pts. $ 245.46 2.7 % Europe $ 265.98 9.2 % 77.7 % 0.3 % pts. $ 342.42 8.9 % Middle East & Africa $ 98.15 7.2 % 64.9 % 1.5 % pts. $ 151.29 4.7 % Greater China $ 84.71 (8.4) % 71.1 % 0.2 % pts. $ 119.09 (8.6) % Asia Pacific excluding China $ 115.85 8.9 % 72.8 % 2.7 % pts. $ 159.05 4.8 % Caribbean & Latin America $ 140.89 9.0 % 63.0 % 1.6 % pts. $ 223.53 6.2 % International - All (1) $ 120.81 3.7 % 70.7 % 1.2 % pts. $ 170.92 2.0 % Worldwide (2) $ 143.66 3.4 % 70.9 % 0.8 % pts. $ 202.69 2.2 % Comparable Systemwide Properties U.S. & Canada $ 136.15 2.1 % 73.0 % (0.2) % pts. $ 186.48 2.3 % Europe $ 191.93 9.5 % 77.3 % 2.7 % pts. $ 248.42 5.8 % Middle East & Africa $ 94.30 8.0 % 65.0 % 1.4 % pts. $ 145.04 5.7 % Greater China $ 78.83 (7.9) % 69.9 % (0.2) % pts. $ 112.78 (7.7) % Asia Pacific excluding China $ 119.48 9.2 % 73.0 % 3.1 % pts. $ 163.77 4.6 % Caribbean & Latin America $ 123.06 6.7 % 61.8 % (0.1) % pts. $ 199.09 6.8 % International - All (1) $ 122.24 5.4 % 70.7 % 1.5 % pts. $ 172.88 3.2 % Worldwide (2) $ 131.72 3.0 % 72.3 % 0.3 % pts. $ 182.24 2.5 % Nine Months Ended September 30, 2024 and Change vs. Nine Months Ended September 30, 2023 RevPAR Occupancy Average Daily Rate 2024 vs. 2023 2024 vs. 2023 2024 vs. 2023 Comparable Company-Operated Properties U.S. & Canada $ 178.12 3.1 % 70.2 % 0.4 % pts. $ 253.56 2.5 % Europe $ 218.79 7.2 % 71.9 % 0.6 % pts. $ 304.26 6.3 % Middle East & Africa $ 121.86 12.4 % 66.7 % 2.8 % pts. $ 182.63 7.6 % Greater China $ 84.08 (3.0) % 68.5 % 1.0 % pts. $ 122.81 (4.5) % Asia Pacific excluding China $ 117.01 12.9 % 71.9 % 4.3 % pts. $ 162.81 6.1 % Caribbean & Latin America $ 177.61 8.4 % 65.9 % 2.5 % pts. $ 269.56 4.4 % International - All (1) $ 121.87 6.7 % 69.3 % 2.3 % pts. $ 175.92 3.2 % Worldwide (2) $ 145.78 4.8 % 69.7 % 1.5 % pts. $ 209.19 2.6 % Comparable Systemwide Properties U.S. & Canada $ 132.78 2.6 % 71.1 % 0.2 % pts. $ 186.65 2.3 % Europe $ 156.92 7.7 % 70.5 % 2.6 % pts. $ 222.73 3.7 % Middle East & Africa $ 113.59 13.3 % 66.1 % 2.6 % pts. $ 171.84 8.9 % Greater China $ 78.35 (2.7) % 67.5 % 0.8 % pts. $ 116.14 (3.9) % Asia Pacific excluding China $ 119.35 13.3 % 71.8 % 4.4 % pts. $ 166.26 6.4 % Caribbean & Latin America $ 152.15 9.3 % 66.0 % 2.4 % pts. $ 230.64 5.3 % International - All (1) $ 119.73 7.7 % 68.8 % 2.5 % pts. $ 174.12 3.8 % Worldwide (2) $ 128.63 4.0 % 70.4 % 0.9 % pts. $ 182.76 2.7 % (1) Includes Europe, Middle East & Africa, Greater China, Asia Pacific excluding China, and Caribbean & Latin America. (2) Includes U.S. & Canada and International - All. CONSOLIDATED RESULTS The discussion below presents an analysis of our consolidated results of operations for the 2024 third quarter compared to the 2023 third quarter and for the 2024 first three quarters compared to the 2023 first three quarters. Also see the “Business Trends” section above for further discussion. 18 Table of Contents Fee Revenues Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 Base management fees $ 312 $ 306 $ 6 2 % $ 955 $ 917 $ 38 4 % Franchise fees 812 748 64 9 % 2,318 2,126 192 9 % Incentive management fees 159 143 16 11 % 563 537 26 5 % Gross fee revenues 1,283 1,197 86 7 % 3,836 3,580 256 7 % Contract investment amortization (26) (23) (3) (13) % (76) (66) (10) (15) % Net fee revenues $ 1,257 $ 1,174 $ 83 7 % $ 3,760 $ 3,514 $ 246 7 % The increase in base management fees in the 2024 third quarter and 2024 first three quarters primarily reflected higher RevPAR. The increase in franchise fees in the 2024 third quarter and 2024 first three quarters primarily reflected unit growth ($26 million and $74 million, respectively), higher RevPAR, higher co-branded credit card fees ($10 million and $38 million, respectively), and higher residential branding fees ($12 million and $22 million, respectively). The increase in incentive management fees in the 2024 third quarter and 2024 first three quarters primarily reflected higher profits at managed hotels. Owned, Leased, and Other Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 Owned, leased, and other revenue $ 381 $ 363 $ 18 5 % $ 1,133 $ 1,109 $ 24 2 % Owned, leased, and other - direct expenses 300 293 7 2 % 882 861 21 2 % Owned, leased, and other, net $ 81 $ 70 $ 11 16 % $ 251 $ 248 $ 3 1 % Cost Reimbursements Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 Cost reimbursement revenue $ 4,617 $ 4,391 $ 226 5 % $ 13,778 $ 12,995 $ 783 6 % Reimbursed expenses 4,681 4,238 443 10 % 13,827 12,740 1,087 9 % Cost reimbursements, net $ (64) $ 153 $ (217) (142) % $ (49) $ 255 $ (304) (119) % Cost reimbursements, net (cost reimbursement revenue, net of reimbursed expenses) varies due to timing differences between the costs we incur for centralized programs and services and the related rei mbursemen ts we receive from property owners and franchisees. Over the long term, our centralized programs and services are not designed to impact our economics, either positively or negatively. The decrease in cost reimbursements, net in the 2024 third quarter and 2024 first three quarters primarily reflected lower revenues, net of expenses, for our other programs and services, higher Loyalty Program expenses, and higher expenses related to our insurance program. 19 Table of Contents Other Operating Expenses Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 Depreciation, amortization, and other $ 45 $ 46 $ (1) (2) % $ 137 $ 138 $ (1) (1) % General, administrative, and other 276 239 37 15 % 785 681 104 15 % Restructuring and merger-related charges 9 13 (4) (31) % 25 52 (27) (52) % General, administrative, and other expenses increased in the 2024 third quarter and 2024 first three quarters primarily due to higher guarantee reserves ($21 million and $25 million, respectively). The increase in the 2024 first three quarters was also due to higher compensation costs and higher legal expenses ($16 million). Restructuring and merger-related charges decreased in the 2024 first three quarters primarily due to lower charges related to the Data Security Incident discussed in Note 5. Non-Operating Income (Expense) Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 Gains and other income, net $ 7 $ 28 $ (21) (75) % $ 15 $ 33 $ (18) (55) % Interest expense (179) (146) (33) (23) % (515) (412) (103) (25) % Interest income 11 7 4 57 % 30 21 9 43 % Equity in earnings 3 1 2 200 % 8 9 (1) (11) % Gains and other income, net decreased in the 2024 third quarter and 2024 first three quarters primarily due to a gain recorded in the prior year on the sale of a hotel in the CALA region ($24 million). Interest expense increased in the 2024 third quarter and 2024 first three quarters primarily due to higher debt balances driven by Senior Notes issuances, net of maturities ($35 million and $93 million, respectively). Income Taxes Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 Provision for income taxes $ (202) $ (237) $ 35 15 % $ (633) $ (562) $ (71) (13) % Provision for income taxes decreased in the 2024 third quarter primarily due to the decrease in pre-tax income ($51 million), partially offset by a shift in earnings to jurisdictions with higher tax rates ($16 million). Provision for income taxes increased in the 2024 first three quarters primarily due to the prior year release of tax reserves ($103 million), which was mostly due to completion of a tax audit, and a shift in earnings to jurisdictions with higher tax rates ($37 million), partially offset by the decrease in pre-tax income ($61 million). 20 Table of Contents BUSINESS SEGMENTS The following discussion presents an analysis of the operating results of our reportable business segments for the 2024 third quarter compared to the 2023 third quarter and for the 2024 first three quarters compared to the 2023 first three quarters. Also see the “Business Trends” section above for further discussion. Three Months Ended Nine Months Ended ($ in millions) September 30, 2024 September 30, 2023 Change 2024 vs. 2023 September 30, 2024 September 30, 2023 Change 2024 vs. 2023 U.S. & Canada Segment net fee revenues $ 728 $ 674 $ 54 8 % $ 2,170 $ 2,064 $ 106 5 % Segment profit 617 707 (90) (13) % 2,029 2,120 (91) (4) % EMEA Segment net fee revenues 150 139 11 8 % 415 371 44 12 % Segment profit 152 144 8 6 % 386 354 32 9 % Greater China Segment net fee revenues 62 71 (9) (13) % 186 196 (10) (5) % Segment profit 46 60 (14) (23) % 144 165 (21) (13) % APEC Segment net fee revenues 80 68 12 18 % 239 196 43 22 % Segment profit 66 58 8 14 % 200 171 29 17 % Properties Rooms September 30, 2024 September 30, 2023 vs. September 30, 2023 September 30, 2024 September 30, 2023 vs. September 30, 2023 U.S. & Canada 6,090 5,927 163 3 % 1,030,074 975,391 54,683 6 % EMEA 1,198 1,105 93 8 % 226,447 213,366 13,081 6 % Greater China 572 516 56 11 % 168,692 157,939 10,753 7 % APEC 606 550 56 10 % 137,568 125,986 11,582 9 % In the 2024 third quarter and 2024 first three quarters, net fee revenue grew in U.S. & Canada, EMEA, and APEC, compared to the same periods in 2023, primarily reflecting higher RevPAR and unit growth (see the Lodging Statistics and Properties and Rooms tables above for more information), as well as higher profits at managed hotels. In Greater China, net fee revenue decreased in the 2024 third quarter and 2024 first three quarters, primarily due to lower demand. Additionally, U.S. & Canada segment profits in the 2024 third quarter and 2024 first three quarters compared to the same periods in 2023 reflected lower cost reimbursement revenue, net of reimbursed expenses ($129 million and $159 million, respectively) as well as higher general, administrative, and other expenses, primarily due to higher guarantee reserves ($21 million and $26 million, respectively). 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 2024 third quarter, our long-term debt had a weighted average interest rate of 4.5 percent and a weighted average maturity of approximately 5.4 years. 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 2024 third quarter. Sources of Liquidity Our Credit Facility We are party to a $4.5 billion multicurrency revolving credit agreement (as amended, the “Credit Facility”). Available borrowings under the Credit Facility support our commercial paper program and general corporate needs. U.S. dollar borrowings under the Credit Facility bear interest at SOFR (the Secured Overnight Financing Rate) plus a spread based on our public debt rating. We also pay quarterly fees on the Credit Facility at a rate based on our 21 Table of Contents public debt rating. We classify outstanding borrowings under the Credit Facility and outstanding commercial paper borrowings (which generally have short-term maturities of 45 days or less) as long-term based on our ability and intent to refinance the outstanding borrowings on a long-term basis. The Credit Facility expires on December 14, 2027. The Credit Facility contains certain covenants, including a single financial covenant that limits our maximum leverage (consisting of the ratio of Adjusted Total Debt to EBITDA, each as defined in the Credit Facility) to not more than 4.5 to 1.0. Our outstanding public debt does not contain a corresponding financial covenant or a requirement that we maintain certain financial ratios. We currently satisfy the covenants in our Credit Facility and public debt instruments, including the leverage covenant under the Credit Facility, and do not expect the covenants will restrict our ability to meet our anticipated borrowing and liquidity needs. We monitor the status of the capital markets and regularly evaluate the effect that changes in capital market conditions may have on our ability to fund our liquidity needs. We believe the Credit Facility, and our access to capital markets, together with cash we expect to generate from operations, remain adequate to meet our liquidity requirements. Commercial Paper We issue commercial paper in the U.S. 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. Sources and Uses of Cash Cash, cash equivalents, and restricted cash totaled $416 million at September 30, 2024, an increase of $50 million from year-end 2023, primarily due to net cash provided by operating activities ($2,431 million), Senior Notes issuances, net of repayments ($2,398 million), and issuances of common stock for our employee stock purchase plan ($73 million), partially offset by share repurchases ($3,176 million), net commercial paper repayments ($648 million), dividends paid ($506 million), capital and technology expenditures ($408 million), and financing outflows for employee stock-based compensation withholding taxes ($127 million). Our ratio of current assets to current liabilities was 0.4 to 1.0 at the end of the 2024 third 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 $408 million in the 2024 first three quarters and $318 million in the 2023 first three quarters. We expect capital expenditures and other investments will total approximately $1.1 billion to $1.2 billion for the 2024 full year, including capital and technology expenditures, loan advances, contract acquisition costs, and other investing activities (including approximately $160 million for maintenance capital spending). Our anticipated capital and technology expenditures include $200 million of spending related to our option to purchase the land underlying the Sheraton Grand Chicago, which we discuss in Note 5. Capital and technology expenditures in 2024 include higher than typical spending on our worldwide technology systems transformation, which is overwhelmingly expected to be reimbursed over time. Share Repurchases and Dividends We repurchased 4.5 million shares of our common stock for $1.0 billion in the 2024 third quarter. Year-to-date through October 31, 2024, we repurchased 14.2 million shares for $3.4 billion. For additional information, see “Issuer Purchases of Equity Securities” in Part II, Item 2. Our Board of Directors declared the following quarterly cash dividends in 2024 to date: (1) $0.52 per share declared on February 8, 2024 and paid on March 29, 2024 to stockholders of record on February 22, 2024; (2) $0.63 per share declared on May 10, 2024 and paid on June 28, 2024 to stockholders of record on May 24, 2024; and (3) 22 Table of Contents $0.63 per share declared on August 2, 2024 and paid on September 30, 2024 to stockholders of record on August 16, 2024. 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 2024 third quarter, there have been no material changes to our cash requirements as disclosed in our 2023 Form 10-K. See Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” of our 2023 Form 10-K for more information about our cash requirements. Also, see Note 6 for information on our long-term debt. At September 30, 2024, projected Deemed Repatriation Transition Tax payments under the 2017 Tax Cuts and Jobs Act totaled $135 million, which is payable within the next 12 months from September 30, 2024. CRITICAL ACCOUNTING POLICIES AND ESTIMATES Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect 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 2023 Form 10-K. We have made no material changes to our critical accounting policies or the methodologies or assumptions that we apply under them. Item 3. Quantitative and Qualitative Disclosures About Market Risk Our exposure to market risk has not materially changed since December 31, 2023. See Part II, Item 7A, “Quantitative and Qualitative Disclosures About Market Risk” in our 2023 Form 10-K for more information on our exposure to market risk.