What changed in this filing

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Item 7. Management’s Discussion and Analysis

2025-02-19 compared with 2024-02-21 · 172 added, 170 removed, 384 unchanged (47% of the section changed)

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• Vacation Ownership — develops, markets, and sells vacation ownership interests (“VOIs”) to individual consumers, provides consumer financing in connection with the sale of VOIs, and provides property management services at resorts.

This segment includes our Wyndham Destinations business line.

This segment is wholly comprised of our Vacation Ownership business line.

• Travel and Membership — operates a variety of travel businesses, including vacation exchange brands, travel technology platforms, travel memberships, and direct-to-consumer rentals.

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Economic Conditions and Key Business Trends

Our business continues to leverage demand for leisure travel, as consumers have prioritized leisure travel following COVID-19.

While we are experiencing the benefits of current demand levels, recent inflationary pressures, higher interest rates, and risk of recession inherently result in uncertainty in business trends and consumer behavior.

Since the peak of COVID-19, we have experienced trends of increased gross VOI sales, including sales to new owners, volume per guest (“VPG”), and tours.

With the strength in travel demand, we are once again focusing on increasing the mix of new owner sales in order to expand our pipeline of potential future owner upgrade sales.

As expected with this strategic shift, we are beginning to see our VPGs moderate, however they remain above pre-pandemic levels.

In addition to the new owner impact on our VPGs, during 2023 we saw a modest softening of close rates, which we believe reflects demand stabilization after the release of pent-up travel demand that benefited us in the prior year.

Despite this modest softening of close rates during the year, they still remain above pre-pandemic levels.

During the pandemic we made changes to our consumer credit quality marketing criteria.

These changes are intended to strengthen sales efficiencies as well as the performance of our vacation ownership contract receivables (“VOCR”) portfolio.

As a result of these changes we have seen an overall improvement in delinquencies, although we saw some normalization of delinquency rates during 2023, they remain below 2019 levels.

Our current VOI inventory levels are expected to be sufficient to support sales during the near term, which limits our exposure to increased inventory costs due to the potential effects of inflation.

Higher interest rates negatively impacted our interest expense during 2023 as well as the reporting periods since COVID-19 and, if interest rates remain elevated, we would expect this trend to continue.

Although we are not currently seeing meaningful signs of a slowdown in leisure travel demand at our Vacation Ownership business, we are monitoring economic conditions.

During 2023, our Travel and Membership segment saw a decrease in transactions due to an increasing mix of exchange members with a club affiliation, who have a lower transaction propensity.

This is a trend we expect to continue into 2024.

Transactions were also impacted by a slower than expected ramp-up of our travel clubs.

The decrease in transactions was partially offset by an improvement in revenue per transaction.

While our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, this business, and, to a greater extent, our Travel and Membership businesses are highly dependent on the health of the travel industry and we are subject to the other risks and uncertainties discussed in “ Risk Factors ” contained in Part I, Item 1A of our Annual Report on Form 10-K.

Inflation Reduction Act

On August 16, 2022, the United States (“U.S.”) enacted the Inflation Reduction Act.

Among other provisions, this new law imposes a 15% minimum tax rate for large corporations with an average of more than $1.0 billion of adjusted financial statement income over a three-year period, and a 1% excise tax on stock buybacks.

These changes became effective for the 2023 tax year.

We do not currently expect to be subject to the minimum tax, but we will continue to monitor as this could change.

We are subject to the 1% excise tax and during 2023 have incurred $3 million of excise tax related to share repurchases, which is expected to be paid in April 2024.

This excise tax is included within Treasury stock on the Consolidated Balance Sheets.

The Organization for Economic Co-operation and Development (“OECD”), continues to put forth various initiatives, including Pillar Two rules which include the introduction of a global minimum tax at a rate of 15%.

European Union member states agreed to implement the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for different

aspects of the directive and most have already enacted legislation.

A number of other countries are also implementing similar legislation.

These changes may increase our taxes in the applicable jurisdictions or cause us to change the way we operate our business and result in increased taxation of our international earnings.

We are currently in the process of evaluating the impact these changes will have on our consolidated financial statements, and are closely monitoring other countries that may enact similar legislation.

Playbook365 Acquisition

On January 3, 2023, we acquired the Playbook365 business for $13 million, comprised of $6 million of cash paid at closing and contingent consideration with a fair market value of $7 million, which can range to $24 million, based on the achievement of certain financial metrics.

Playbook365 is a youth and amateur sports management platform.

This platform was integrated with Alliance Reservations Network’s (“ARN”) event lodging management platform to create an all-in-one solution in the youth sports market.

This acquisition was made to broaden the products and services offered by ARN, and is included within the Travel and Membership segment.

During 2024, our business saw strong demand for leisure travel which resulted in higher tours and Gross VOI sales at our Vacation Ownership business, as compared to the prior year.

Our volume per guest (“VPG”) also continued to perform above pre-pandemic levels, despite VPG levels moderating in response to our strategic shift to increase our mix of new owners, which generally produce lower VPGs and lower close rates.

This strategic shift was made to grow our pipeline of potential future owner upgrade sales.

The 2024 full-year results also reflect the impact of cost savings realized as a result of the strategic realignment of our Travel and Membership segment at the end of 2023 and the implementation of additional cost saving initiatives at this segment in the third quarter of 2024.

As a result of these cost saving initiatives we saw an increase in net income and Adjusted EBITDA at this segment despite a decrease in revenue as compared to the prior year.

The Travel and Membership segment was also benefited by pricing increases which led to higher revenue per transaction and served to partially offset the impact of lower transactions, as compared to the prior year.

Lower transactions compared to the prior year were primarily the result of an increasing mix of exchange members with a club affiliation, who have a lower transaction propensity.

While we continue to benefit from the changes we made to our marketing criteria to strengthen sales efficiencies and improve the performance of our vacation ownership contract receivables (“VOCR”) portfolio, similar to a number of other companies, we are experiencing some pressure on our loan portfolio primarily due to an increase in delinquencies.

We have also taken steps to increase the percentage of developer-financed sales since 2022 with the goal of accelerating growth in our consumer financing revenues, while also balancing our portfolio performance.

While we are experiencing the benefits of positive demand trends, the sustained effects of inflationary pressures over time, high interest rates, and risk of recession inherently result in uncertainty in business trends and consumer behavior.

Although higher interest rates negatively impacted our interest expense during 2024, we have begun to experience improvements in the capital markets.

We closed on three term securitizations during 2024 with lower blended interest rates and higher advance rates than our securitizations in 2023, with our last securitization of the year closing with the lowest coupon rate and advance rate we have achieved in over two years.

Additionally, during the fourth quarter of 2024, we repriced and replaced the $593 million outstanding balance on the 2023 Incremental Term Loan B facility and refinanced the $282 million outstanding balance on the 2018 Term Loan B facility, which will provide future interest savings.

We also expect benefits in the interest on our floating rate debt as a result of the Federal Reserve benchmark interest rate reductions, which totaled 100 basis points in the second half of 2024.

Our Vacation Ownership business is benefited by the fact that the majority of our owners do not have loans and are therefore less dependent on economic conditions when making travel decisions, which provides opportunities for upgrade sales.

This business, and, to a greater extent, our Travel and Membership businesses are highly dependent on the health of the travel industry and we are subject to the other risks and uncertainties discussed in “ Risk Factors ” contained in Part I, Item 1A of this Annual Report on Form 10-K.

Accor Vacation Club Acquisition

On March 1, 2024, we acquired Accor Vacation Club for $50 million ($44 million net of cash acquired).

Accor Vacation Club represents 24 resorts and nearly 30,000 members.

This acquisition was undertaken to help the two companies establish a relationship to develop new timeshare products in the Asia Pacific, Middle East, Africa, and Türkiye regions under the Accor Vacation Club brand, leveraging the Travel + Leisure Co.

global platform.

Accor receives a percentage of vacation ownership sales revenue as a licensing fee under the exclusive licensing agreement and we receive the exclusive right to develop new vacation ownership clubs and products in the aforementioned regions, utilizing the Accor Vacation Club brand.

This acquisition

is included within the Vacation Ownership segment.

See Note 5— Acquisitions to the Consolidated Financial Statements for additional details.

Sports Illustrated Resorts Agreement

On September 11, 2023, we entered into an agreement to acquire the rights to the vacation ownership business of Sports Hospitality Ventures, LLC (“SHV”), a hotel and resorts licensee for the Sports Illustrated brand.

Together with SHV, we introduced a new concept for a network of sports-themed resort and lifestyle complexes in popular college towns and leisure destinations.

Sports Illustrated Resorts

On September 11, 2023, we entered into an agreement to acquire the rights to the vacation ownership business of Sports Hospitality Ventures, LLC (“SHV”), and introduced a new concept for a network of sports-themed resort and lifestyle complexes in popular college towns and leisure destinations under the Sports Illustrated Resorts brand.

The new resorts are anticipated to be developed using an asset-light development financing model.

The first resort in the new business line is expected to open in Tuscaloosa, Alabama, in late 2025.

This new business line is included within the Vacation Ownership segment.

There is no immediate earnings impact for us, but we expect this business to drive incremental growth starting in the second half of 2025.

We are still early in the development of the Sports Illustrated Resorts portfolio but expect to begin sales within the next 9 to 18 months.

This new product line is included within the Vacation Ownership segment.

There is no immediate earnings impact for us, but we expect this business to drive incremental growth starting in 2026.

European Union member states agreed to implement the OECD’s Pillar Two rules with effective dates of January 1, 2024 and January 1, 2025, for different aspects of the directive and most have already enacted legislation.

A number of other countries have also implemented similar legislation.

As of December 31, 2024, based on the countries in which we do business that have enacted legislation effective January 1, 2024, the impact of these rules to our financial statements was not material.

For the rules effective January 1, 2025, we do expect the impact to increase our effective tax rate but overall the rules are not expected to have a material impact on our financial statements.

This may change as other countries enact similar legislation and further guidance is released.

We continue to closely monitor regulatory developments to assess potential impacts.

SEGMENT OVERVIEW

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Our estimates of uncollectible amounts are based largely on the results of our static pool analysis which relies on historical payment data by customer class.

We leverage a number of different tools to impact the percentage of developer-financed sales, such as offering credit cards and other third-party financing directly to consumers to facilitate cash down payments and sales while balancing our consumer default risk profile.

In connection with entering into a VOI sale, we may provide our customers with certain non-cash incentives, such as credits for future stays at our resorts.

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These services may also include reservation and resort renovation activities.

Such agreements are generally for terms of one year or less and are renewed automatically on an annual basis.

The initial terms of the property management agreements are generally between three to five years;

however, the vast majority of the agreements provide a mechanism for an automatic one year renewal upon expiration of the terms.

Our management agreements contain cancellation clauses, which allow for either party to cancel the agreement, by either a majority board vote or a majority vote of non-developer interests.

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These reimbursable costs principally relate to the payroll costs for management of the associations, club and resort properties where we are the employer and are reflected as a component of Operating expenses on the Consolidated Statements of Income.

We reduce our management fees revenue for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we have concluded that such payments are consideration payable to a customer.

We reduce our management fees revenue for amounts paid to the property owners’ association that reflect maintenance fees for VOIs for which we retain ownership, as we

have concluded that such payments are consideration payable to a customer.

Property management fee revenues and reimbursable revenues are recognized when the services are performed and are recorded as a component of Service and membership fees on the Consolidated Statements of Income.

Within our Vacation Ownership segment, we measure operating performance using the following key operating statistics:

(i) gross VOI sales including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business’ tour selling efforts, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours.

(i) gross VOI sales including sales under our Fee-for-Service program before the effect of loan loss provisions, (ii) tours, which represents the number of tours taken by guests in our efforts to sell VOIs, and (iii) volume per guest, which measures the efficiency of this business’ efforts in generating sales from tours, is calculated by dividing the gross VOI sales (excluding telesales and virtual sales) by the number of tours.

We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel.

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Management uses Adjusted EBITDA to assess the performance of the reportable segments.

During the third quarter of 2024, we updated our definition of Adjusted EBITDA to exclude certain non-recurring costs directly incurred to integrate mergers and/or acquisitions into the existing business as these costs do not reflect recurring operating expenses.

This change was made as a result of our acquisition of Accor Vacation Club.

As this business is being further integrated into our operations, it has begun incurring certain discrete non-recurring costs directly attributable to

integration activities and we believe excluding these types of costs would assist investors in understanding our ongoing performance when considered with generally accepted accounting principles in the U.S.

(“GAAP”) measures.

We define Adjusted EBITDA as net income from continuing operations before depreciation and amortization, interest expense (excluding consumer financing interest), early extinguishment of debt, interest income (excluding consumer financing revenues) and income taxes.

Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction costs for acquisitions and divestitures, asset impairments/recoveries, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

Adjusted EBITDA also excludes stock-based compensation costs, separation and restructuring costs, legacy items, transaction and integration costs associated with mergers, acquisitions, and divestitures, asset impairments/recoveries, gains and losses on sale/disposition of business, and items that meet the conditions of unusual and/or infrequent.

Legacy items include the resolution of and adjustments to certain contingent assets and liabilities related to acquisitions of continuing businesses and dispositions, including the separation of Wyndham Hotels & Resorts, Inc.

(“Wyndham Hotels”) and Cendant Corporation (“Cendant”), and the sale of the vacation rentals businesses.

We believe that Adjusted EBITDA is a useful measure of

performance for our segments which, when considered with generally accepted accounting principles in the U.S.

(“GAAP”) measures, we believe gives a more complete understanding of our operating performance.

(“Wyndham Hotels”) and Avis Budget Group, Inc.

(“ABG”) formerly Cendant Corporation, and the sale of the vacation rentals businesses.

We believe that Adjusted EBITDA is a useful measure of performance for our segments which, when considered with GAAP measures, we believe gives a more complete understanding of our operating performance.

Our presentation of Adjusted EBITDA may not be comparable to similarly-titled measures used by other companies.

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2024 2023 % Change (h)

Vacation Ownership

Gross VOI sales (in millions) (a) (i)

Vacation Ownership (a)

Gross VOI sales (in millions) (b) (i)

$ 2,293 $ 2,149 6.7

Tours (in 000s) (b)

Volume per guest (c)

Tours (in 000s) (c)

Volume per guest (d)

$ 3,094 $ 3,128 (1.1)

Travel and Membership (d)

Travel and Membership (a)

Transactions (in 000s) (e)

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3,427 3,515 (2.5)

(a) Represents total sales of VOIs, including sales under the Fee-for-Service program before the effect of loan loss provisions.

(a) Includes the impact of acquisitions from the acquisition dates forward.

(b) Represents total sales of VOIs, including sales under the Fee-for-Service program, before the effect of loan loss provisions.

We believe that Gross VOI sales provides an enhanced understanding of the performance of our Vacation Ownership business because it directly measures the sales volume of this business during a given reporting period.

(b) Represents the number of tours taken by guests in our efforts to sell VOIs.

(d) VPG is calculated by dividing Gross VOI sales (excluding telesales and virtual sales) by the number of tours.

We have excluded non-tour sales in the calculation of VPG because they are generated by a different marketing channel.

We believe that VPG provides an enhanced understanding of the performance of our Vacation Ownership business because it directly measures the efficiency of this business’ tour selling efforts during a given reporting period.

(d) Includes the impact of acquisitions from the acquisition dates forward.

We believe that VPG provides an enhanced understanding of the performance of our Vacation Ownership business because it directly measures the efficiency of this business’ efforts in generating sales from tours during a given reporting period.

(e) Represents the number of exchanges and travel bookings recognized as revenue during the period, net of cancellations.

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Interest expense 249 251 2

Other (income), net (3) (22) (19)

Interest (income) (14) (13) 1

Other (income), net (15) (3) 12

Income before income taxes 513 485 28

Provision for income taxes 135 94 (41)

Net income from continuing operating 391 356 35

Net income from continuing operations 378 391 (13)

Gain on disposal of discontinued business, net of income taxes 33 5 28

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Excluding the impacts of foreign currency, the increase in net revenues was primarily due to:

• $212 million of increased revenues at our Vacation Ownership segment primarily due to an increase in gross VOI sales, net of Fee-for-Service sales as a result of increased tours, partially offset by an increase in our provision for loan losses associated with these sales;

• $131 million of increased revenues at our Vacation Ownership segment primarily due to an increase in net VOI sales as a result of increased tours, partially offset by a decrease in VPG due to a higher new owner transaction mix which generally produce lower VPGs;

higher property management revenues resulting from higher property management fees and reimbursable revenues;

increased other revenues due to higher VOI travel package and incentive revenues;

an increase in consumer financing revenues primarily due to a higher average portfolio balance;

and increased commission revenues due to higher volume of VOI Fee-for-Service sales;

partially offset by

• $23 million of decreased revenues at our Travel and Membership segment primarily due to lower transactions, partially offset by increased revenue per transaction.

and an increase in consumer financing revenues primarily due to a higher average portfolio balance;

partially offset by a decrease in commission revenues due to lower volume of VOI Fee-for-Service sales as a result of fewer commitments.

This increase in revenues was partially offset by

• $14 million of decreased revenues at our Travel and Membership segment primarily due to a decrease in transaction revenue driven by lower transactions and an increasing mix of exchange members with a club affiliation who have a lower transaction propensity, partially offset by higher revenue per transaction resulting from price increases.

Expenses increased $103 million during 2024 compared with 2023.

This increase in expenses, excluding immaterial foreign currency impacts, was primarily the result of:

• $56 million increase in marketing costs mainly in support of increased tour flow and new owner mix at our Vacation Ownership business;

• $45 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;

• $32 million increase in consumer financing interest expense primarily due to an increased weighted average coupon rate;

This increase in expenses was favorably impacted by foreign currency of $3 million (0.1%).

Excluding the impacts of foreign currency, the increase in expenses was primarily the result of:

• $64 million increase in sales and commission expenses at the Vacation Ownership segment due to higher Gross VOI sales, net of Fee-for-Service sales;

• $12 million increase in restructuring costs as we focused on enhancing organizational efficiency and rationalizing operations.

These increases were partially offset by a $25 million decrease in general and administrative expenses driven by lower professional fees and employee costs;

$24 million decrease in the cost of VOIs sold primarily due to estimated recoveries associated with the aforementioned provision increase and product mix;

and a $10 million decrease due to asset impairments recorded in the prior year.

• $43 million increase in marketing costs primarily due to an increase at our Vacation Ownership business in support of increased tour flow and new owner mix, partially offset by cost savings at the Travel and Membership segment;

• $29 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;

• $24 million increase in consumer financing interest expense primarily due to a higher average non-recourse debt balance and increased weighted average coupon rate;

• $21 million increase in general and administrative expenses driven by variable compensation and other employee related costs.

These increases were partially offset by:

• $39 million decrease in the cost of VOIs sold primarily due to product mix, partially offset by increased sales volume;

• $39 million decrease in sales and commission expense for VOI Fee-for-Service sales due to lower volume;

• $10 million decrease in restructuring costs.

We recognized a loss on sale of business of $2 million during 2023 resulting from the sale of the Love Home Swap business.

Interest expense increased $56 million during 2023 compared with 2022 primarily due to increased borrowing activity under the revolving credit facility, the issuance of the 2022 Incremental Term Loan B facility in the fourth quarter of 2022, and higher interest rates on variable borrowings in 2023.

Other income, net of other expense decreased $19 million during 2023 compared with 2022, primarily due to a $10 million benefit in the prior year, related to a reduction in the fair value of contingent consideration associated with a business acquisition.

Interest income increased $7 million during 2023 compared with 2022 primarily due to higher interest rates.

Interest expense decreased $2 million during 2024 compared with 2023 primarily due to a lower average outstanding balance on corporate debt, partially offset by a higher weighted average interest rate on corporate borrowings.

Other income, net of other expense increased $12 million during 2024 compared with 2023, primarily due to a $7 million reduction in the fair value of contingent consideration associated with business acquisitions.

Our effective tax rates were 26.4% and 19.4% for the years ended December 31, 2024 and 2023.

Our effective tax rate for 2023 is lower primarily due to the partial reversal of the valuation allowance related to our foreign tax credits based on our determination that it is more likely than not that the benefit will be realized.

Gain on disposal of discontinued business, net of income taxes increased $4 million during 2023 compared with 2022 primarily resulting from the release of an expired guarantee related to the sale of the European vacation rentals business in 2023.

Gain on disposal of discontinued business, net of income taxes increased $28 million during 2024 compared with 2023 driven by the release of expired guarantees of $32 million, net of tax in 2024, related to the sale of the European vacation rentals business.

As a result of these items, Net income attributable to Travel + Leisure Co.

shareholders increased $15 million in 2024 as compared with 2023.

The tables below present our segment information, followed by a discussion of each segment’s 2023 results compared to 2022 (in millions):

The tables below present our segment information (see Note 23— Segment Information to the Consolidated Financial Statements for a breakout of significant expenses related to our reportable segments), followed by a discussion of each segment’s 2024 results compared to 2023 (in millions):

Year Ended December 31,

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Legacy items 11 8

Loss on sale of business 2 —

Asset impairments, net (c)

Loss on equity investment

COVID-19 related costs (d)

Acquisition and divestiture related costs 2 —

Integration costs 1 —

Loss on sale of business — 2

Fair value change in contingent consideration (7) —

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(a) Includes the elimination of transactions between segments.

(b) Includes $2 million and $3 million of stock-based compensation expense for the years ended December 31, 2023 and 2022 associated with the 2023 and 2022 restructuring plans.

(c) Includes $1 million of inventory impairments for the years ended December 31, 2023 and 2022, included in Cost of vacation ownership interests on the Consolidated Statements of Income.

(d) Includes expenses related to COVID-19 testing and other expenses associated with our return-to-work program in 2022.

(b) Includes $1 million of stock-based compensation expense during 2024 associated with the 2022 restructuring plan and $2 million of stock-based compensation expense during 2023 associated with the 2023 restructuring plan.

(c) Includes $1 million of inventory impairments for the year ended December 31, 2023, included within Cost of vacation ownership interests on the Consolidated Statements of Income.

Vacation Ownership

Net revenues increased $130 million and Adjusted EBITDA increased $35 million during 2024 compared with 2023.

The net revenue growth was unfavorably impacted by foreign currency of $6 million (0.2%) and Adjusted EBITDA growth was unfavorably impacted by foreign currency of $3 million (0.5%).

The net revenue and Adjusted EBITDA growth were not materially impacted by foreign currency.

The net revenue growth excluding the impact of foreign currency was primarily driven by:

• $149 million increase in gross VOI sales, net of Fee-for-Service sales, due to increased tours, partially offset by a decrease in VPG due to higher mix of new owner tours (52% in the current year compared to 45% in the same period of 2022) which generally produce lower sales volume and lower close rates;

• $224 million increase in Gross VOI sales, net of Fee-for-Service sales, due to an 8.0% increase in tours, partially offset by a 1.1% decrease in VPG due to a higher new owner transaction mix (35% in the current year compared to 33% in the same period of 2023) which generally produce lower VPGs;

• $32 million increase in property management revenues primarily due to higher management fees and reimbursable revenues;

• $22 million increase in other revenues due to higher VOI travel package and incentive revenues;

• $23 million increase in consumer financing revenues primarily due to a higher average portfolio balance.

• $15 million increase in commission revenues due to the volume of VOI Fee-for-Service sales.

These increases were partially offset by a $47 million increase in our provision for loan losses primarily due to higher gross VOI sales, net of Fee-for-Service sales.

These increases were partially offset by a $84 million increase in our provision for loan losses primarily due to higher Gross VOI sales, net of Fee-for-Service sales and a higher provision rate resulting from a slight elevation in delinquencies and defaults, and a $63 million decrease in commission revenues due to lower volume of VOI Fee-for-Service sales as a result of fewer commitments.

In addition to the revenue change explained above, Adjusted EBITDA was further impacted by:

• $64 million increase in sales and commission expenses due to higher Gross VOI sales, net of Fee-for-Service sales;

• $56 million increase in marketing costs in support of increased tour flow and new owner mix;

• $29 million increase in property management expenses due to higher reimbursable resort operating costs and expenses;

• $32 million increase in consumer financing interest expense primarily due to an increased weighted average coupon rate;

• $31 million increase in sales and commission expenses due to higher gross VOI sales, net of Fee-for-Service sales;

• $8 million increase in other operating expenses due to higher VOI travel package and incentive expenses.

These increases were partially offset by a $24 million decrease in the cost of VOIs sold primarily due to estimated recoveries associated with the aforementioned provision increase and product mix, and a $19 million decrease in general and administrative expenses due to lower professional fees and employee related costs.

• $24 million increase in consumer financing interest expense primarily due to a higher average non-recourse debt balance and increased weighted average coupon rate.

These increases were partially offset by a $39 million decrease in the cost of VOIs sold primarily due to product mix, partially offset by increased sales volume, and a $39 million decrease in sales and commission expense for VOI Fee-for-Service sales due to lower volume.

Travel and Membership

Net revenues decreased $24 million and Adjusted EBITDA decreased $21 million during 2023 compared with 2022.

The net revenue decrease was unfavorably impacted by foreign currency of $1 million (0.1%) and the Adjusted EBITDA decrease was unfavorably impacted by foreign currency of $5 million (1.9%).

The decrease in net revenues excluding the impact of foreign currency was primarily driven by lower transactions, partially offset by increased revenue per transaction.

Transactions were impacted by an increasing mix of exchange members with a club affiliation.

who have a lower transaction propensity.

Net revenues decreased $16 million and Adjusted EBITDA increased $4 million during 2024 compared with 2023.

The net revenue decrease was unfavorably impacted by foreign currency of $2 million (0.3%) and the Adjusted EBITDA growth was not materially impacted by foreign currency.

The decrease in net revenues, excluding the impact of foreign currency, was primarily driven by a $11 million decrease in transaction revenue due to lower transactions, partially offset by higher revenue per transaction resulting from price increases;

and a $4 million decrease in subscription revenues.

Transactions were impacted by an increasing mix of exchange members with a club affiliation who have a lower transaction propensity.

In addition to the revenue change explained above, Adjusted EBITDA excluding the impact of foreign currency was further impacted by:

• $7 million decrease in cost of sales primarily associated with lower transactions;

partially offset by heavier weighting of rentals in Exchange’s revenue mix;

• $5 million decrease in marketing costs;

partially offset by a

• $5 million increase in other operating costs primarily related to business development activities.

• $11 million of employee related cost savings related to the strategic restructuring of this segment;

which focused on enhancing organizational efficiency and rationalizing operations including $5 million of other operating expenses, $4 million of marketing, and $2 million of general and administrative;

• $9 million of additional marketing cost savings.

These savings were partially offset by a $6 million increase in cost of sales due to a heavier weighting of rentals in addition to the revenue growth in Travel Clubs.

Corporate and other

Corporate and other revenue increased $1 million during 2023 compared with 2022 primarily due to $5 million of fees charged for managing an insurance program on behalf of homeowners associations;

partially offset by a $4 million increase in eliminated transactions between segments.

Adjusted EBITDA increased $6 million (8.1%) during 2023 compared with 2022 and was not materially impacted by foreign currency.

The growth in Adjusted EBITDA was primarily due to $5 million of fees charged for managing an insurance program on behalf of homeowners associations.

Corporate and other revenue was flat during 2024 compared with 2023 primarily due to a $3 million decrease in revenue from the insurance program we manage on behalf of homeowners associations;

wholly offset by a $3 million decrease in eliminated transactions between segments.

Adjusted EBITDA decreased $18 million (26.5%) during 2024 compared with 2023 and was not materially impacted by foreign currency.

The decrease in Adjusted EBITDA was primarily due to $15 million of higher general and administrative costs driven by $12 million of higher variable compensation and other employee related costs.

For a comparative review of our consolidated results of operations and those of our reportable segments for the fiscal years ended December 31, 2023 and 2022, refer to Part II, Item 7 of our Annual Report on Form 10-K filed with the SEC on February 21, 2024.

DISCONTINUED OPERATIONS

During 2023 and 2022, we recognized $5 million and $1 million Gains on disposal of discontinued business, net of income taxes.

During 2021, we recognized a Loss on disposal of discontinued business, net of income taxes of $5 million.

During 2022, we had $5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows.

See Note 6— Discontinued Operations to the Consolidated Financial Statements for additional information.

During 2024, 2023, and 2022, we recognized $33 million, $5 million, and $1 million within Gain on disposal of discontinued business, net of income taxes on the Consolidated Statements of Income.

During 2024, we had $1 million of Net cash provided by investing activities from discontinued operations and in 2022 we had $5 million of Net cash used in investing activities from discontinued operations on the Consolidated Statements of Cash Flows.

See Note 6— Discontinued Operations to the Consolidated Financial Statements for additional details of our discontinued operations.

RESTRUCTURING PLANS

2024 Restructuring Plan

During 2024, we incurred $15 million of restructuring charges associated with the 2024 restructuring plan.

These charges included personnel-related costs resulting from a reduction of approximately 300 employees and other expenses.

These charges consisted of (i) $10 million of personnel-related costs at the Travel and Membership segment, (ii) $3 million of personnel-related costs at our corporate operations, and (iii) $2 million of personnel-related costs at the Vacation Ownership segment.

All material initiative and related expenses have been incurred as of December 31, 2024.

We reduced our 2024 restructuring liability by $7 million of cash payments during 2024.

The remaining 2024 restructuring liability of $8 million is expected to be paid by the end of 2026.

2023 Restructuring Plan

We incurred $26 million of restructuring charges during the year ended December 31, 2023.

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These restructuring charges included $2 million of accelerated stock-based compensation expense.

Substantially all initiative and related expenses have been incurred as of December 31, 2023.

We reduced our 2023 restructuring liability by $14 million and $8 million of cash payments during the years ended December 31, 2024 and 2023.

The remaining 2023 restructuring liability of less than $1 million is expected to be paid by the end of 2025.

2022 Restructuring Plan

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These restructuring charges included $3 million of accelerated stock-based compensation expense.

During 2024, we recognized an additional $1 million of stock-based compensation expense associated with the 2022 restructuring plan.

The 2022 restructuring liability was reduced by $1 million, $7 million, and $5 million of cash payments during the years ended December 31, 2024, 2023, and 2022.

As of December 31, 2024, the 2022 restructuring liability has been fully settled.

See Note 26— Restructuring to the Consolidated Financial Statements for additional details of our restructuring activities.

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Total assets decreased $3 million from December 31, 2023 to December 31, 2024, due to:

• $268 million decrease in Cash and cash equivalents primarily driven by $400 million repayment of the 3.90% secured notes during the first quarter of 2023, $309 million of payments for share repurchases, $136 million of dividend payments, $74 million of property and equipment additions, $22 million of payments relating to debt issuances/modifications, and $15 million payment associated with the acquisition of the Travel + Leisure brand partially offset by $350 million of net cash provided by operating activities, proceeds from $300 million of borrowings on the 2023 Incremental Term Loan B facility, and $103 million of net proceeds from non-recourse debt;

• $58 million decrease in Inventory driven by the sale of $133 million of VOI inventory and $16 million of net transfers of completed unregistered VOI inventory to property and equipment;

partially offset by $88 million of inventory additions.

• $115 million decrease in Cash and cash equivalents primarily driven by repayment of the $300 million 5.65% notes which were due in April of 2024, $234 million of share repurchases, $142 million of dividend payments, $81 million of property and equipment additions, and $44 million of net payments related to the acquisition of Accor Vacation Club, partially offset by $464 million of net cash provided by operating activities, $196 million of net borrowings on the revolving credit facility, and $62 million of net proceeds on non-recourse debt;

• $64 million decrease in Property and equipment, net driven by $56 million of net transfers of completed VOI inventory from Property and equipment to Inventory;

• $24 million decrease in Trade receivables, net due to net collections of $15 million of developer receivables and $11 million of property management fees;

• $15 million decrease in Prepaid expenses driven by a $9 million decrease in prepaid maintenance fees.

These decreases were partially offset by:

• $38 million increase in Restricted cash driven by a $14 million increase in escrow deposits, $13 million increase in restricted cash for securitizations, and $11 million increase in funds on deposit related to our insurance program;

• $19 million increase in Trade receivables, net driven by increased receivables associated with property management fees and reimbursable expenses;

• $92 million increase in Inventory driven by $126 million of inventory acquisitions, including the $9 million from the Accor Vacation Club purchase;

and $56 million of net transfers of completed VOI inventory from property and equipment;

partially offset by $92 million for the sale of VOI inventory;

• $92 million increase in Vacation ownership contract receivables, net, driven by $1.53 billion of VOI originations, partially offset by $983 million of principal collections and net provision for loan losses of $432 million;

• $27 million increase in Prepaid expenses driven by $17 million increase in prepaid marketing costs and $9 million increase in prepaid travel credits;

• $70 million increase in Other assets driven by increases of $49 million of tax receivables;

$19 million in non-trade receivables, $9 million in capitalized contract costs, $9 million increase in deferred costs, and a $7 million increase in assets held-for-sale, partially offset by $16 million of amortization of right-of-use assets and the release of $12 million of collateral assets.

• $31 million increase in Other assets driven by an increase of $35 million related to timing of payroll payments.

Total liabilities decreased $40 million from December 31, 2023 to December 31, 2024, primarily due to:

• $69 million decrease in Accrued expenses and other liabilities primarily due to a $30 million decrease due to the relief of the inventory obligation in Las Vegas, Nevada, a $24 million decrease in lease liabilities, a $17 million decrease in accrued payroll and related costs primarily employee bonus and commissions, and a $15 million decrease in tax liabilities, partially offset by an $10 million increase in funds on deposit related to our insurance program;

• $94 million decrease in Debt driven by $400 million repayment of the 3.90% secured notes during the first quarter of 2023;

partially offset by $300 million of borrowings on the 2023 Incremental Term Loan B facility.

• $107 million decrease in Debt driven by repayment of the $300 million 5.65% notes which were due in April of 2024, partially offset by $196 million of net borrowings on the revolving credit facility;

• $29 million decrease in Accrued expenses and other liabilities primarily due to the release of a $36 million accrual related to the expiration of certain guarantees associated with the European vacation rentals business, a $17 million decrease in deferred contingent consideration due to a $10 million payment related to the Travel + Leisure brand acquisition and a $7 million fair value adjustment to contingent consideration related to the Playbook365 acquisition, and a $10 million decrease in accrued restructuring, partially offset by a $34 million increase in accrued payroll and related costs, primarily employee bonus and commissions.

These decreases were partially offset by a:

• $43 million increase in Deferred income driven primarily by deferred VOI trial package and incentive revenues;

• $98 million increase in Non-recourse vacation ownership debt primarily due to net borrowings.

Total deficit increased $13 million from December 31, 2022 to December 31, 2023, primarily due to $307 million of share repurchases and $137 million of dividends;

partially offset by $396 million of Net income attributable to Travel + Leisure Co.

• $52 million increase in Non-recourse vacation ownership debt primarily due to $62 million net borrowings, partially offset by $9 million of foreign exchange impacts;

• $35 million increase in Deferred income taxes primarily due to installment sales;

• $15 million increase in Deferred income due to increases of $15 million in deferred co-branded credit card programs, $6 million of VOI trial package revenue, and $5 million of VOI incentive revenue, partially offset by a $10 million decrease in deferred subscription revenue.

Total deficit decreased $37 million from December 31, 2023 to December 31, 2024, primarily due to $411 million of Net income attributable to Travel + Leisure Co.

shareholders and a $49 million increase in additional paid-in capital, primarily due to stock-based compensation;

partially offset by $235 million of share repurchases and $144 million of dividends, and $42 million of unfavorable currency translation adjustments driven by fluctuations in exchange rates, primarily the Australian Dollar, Euro, and the British Pound Sterling.

LIQUIDITY AND CAPITAL RESOURCES

We believe that we have sufficient sources of liquidity to meet our expected ongoing short-term and long-term cash needs, including capital expenditures, operational and/or strategic opportunities, and expenditures for human capital, intellectual property, contractual obligations, off-balance sheet arrangements, and other such requirements.

Our net cash from operations and cash and cash equivalents are key sources of liquidity along with our revolving credit facility, bank conduit facilities, and continued access to debt markets.

We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $300 million notes due in April 2024.

Our net cash from operations

and cash and cash equivalents are key sources of liquidity along with our revolving credit facility, bank conduit facilities, and continued access to debt markets.

We believe these anticipated sources of liquidity are sufficient to meet our expected ongoing short-term and long-term cash needs, including the repayment of our $350 million notes due in October 2025.

Our discussion below highlights these sources of liquidity and how they have been utilized to support our cash needs.

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As of December 31, 2024, we were in compliance with the financial covenants described above.

On March 30, 2023, we entered into the fourth amendment to the credit agreement governing our revolving credit facility and term loan B facilities.

Through this amendment we exercised our early opt-in election to change the benchmark rate on the revolving credit facility and 2018 Term Loan B Facility due May 2025 from the USD London Interbank Offered Rate (“LIBOR”) to the Secured Overnight Financing Rate (“SOFR”).

This change became effective on March 31, 2023, for both new borrowings and rollovers of then existing USD LIBOR based borrowings (except Base Rate borrowings) and eliminated our exposure to LIBOR.

Secured Notes and Term Loan B facilities

We generally utilize borrowing via secured note issuances to meet our long-term financing needs.

During 2022, we entered into the third amendment to the credit agreement governing our revolving credit facility and the original 2018 Term Loan B Facility which provided for the 2022 Incremental Term Loan B Facility of $300 million due 2029.

On December 20, 2023 we further amended the credit agreement governing our revolving credit facility and term loan B facilities (“Fifth Amendment”).

The Fifth Amendment refinanced $298 million of outstanding borrowings under the 2022 Incremental Term Loan B facility and included additional borrowings of $300 million.

This new 2023 Incremental Term Loan B facility matures on December 14, 2029.

These transactions reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.

During 2023, we used net proceeds from the 2022 Incremental Term Loan B Facility, along with cash on hand, and borrowings under our revolving credit facility, to repay our $400 million notes which came due in March 2023.

We expect to use net proceeds from the 2023 Incremental Term Loan B Facility, together with available cash on hand and revolving credit facility borrowings to repay our outstanding $300 million 5.65% secured notes due April 2024 and pay related fees and expenses.

As of December 31, 2023, we had $3.56 billion of outstanding borrowings under our secured notes and term loan B facilities with maturities ranging from 2024 to 2030.

During 2024, we amended the credit agreement governing our revolving credit facility and term loan B facilities (“Sixth Amendment”).

The Sixth Amendment repriced and replaced the $593 million outstanding balance on the 2023 Incremental Term Loan B facility and refinanced the $282 million outstanding balance on the 2018 Term Loan B facility which was due May 2025.

This amendment accomplished the dual benefit of extending the maturity of our 2018 Term Loan B facility and providing future interest savings.

The resulting new $875 million 2024 Term Loan B facility matures on December 14, 2029.

This transaction reinforces our expectation that we will maintain adequate liquidity for the next year and beyond.

As of December 31, 2024, we had $3.25 billion of outstanding borrowings under our secured notes and term loan B facility with maturities ranging from 2025 to 2030.

Non-recourse Vacation Ownership Debt

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We plan to continue using these sources to finance certain VOCRs.

On September 26, 2023, we renewed our USD bank conduit facility, extending its term through September 2025.

We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, with a term through December 2024, amounting to a combined capacity of $752 million ($388 million available as of December 31, 2023), along with our ability to issue term asset-backed securities, provide sufficient liquidity to finance the sale of VOIs beyond the next year.

We closed on securitization financings of $1.09 billion, $800 million, and $850 million during 2023, 2022, and 2021.

On December 20, 2024, we renewed our AUD/NZD bank conduit facility, extending its term through December 2026.

We believe that our USD bank conduit facility and our AUD/NZD bank conduit facility, amounting to a combined capacity of $738 million ($361 million available as of December 31, 2024), along with our ability to issue term asset-backed securities, provide sufficient liquidity to finance the sale of VOIs beyond the next year.

We closed on securitization financings of $1.05 billion, $1.09 billion, and $800 million during 2024, 2023, and 2022.

These transactions positively impacted our liquidity and reinforce our expectation that we will maintain adequate liquidity for the next year and beyond.

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(a) Represents required principal payments on notes, term loans, and finance leases.

(b) Represents required principal payments on debt that is securitized through bankruptcy-remote special purpose entities;

the creditors of which have no recourse to us for principal and interest.

(b) Represents required principal payments on debt that is securitized through bankruptcy-remote special purpose entities, the creditors of which have no recourse to us for principal and interest.

estimated using the stated interest rates.

(d) Includes $533 million for marketing related activities and $133 million for information technology activities.

(d) Includes $502 million for marketing related activities, $116 million relating to the development of vacation ownership properties, and $106 million for information technology activities.

(e) Excludes a $30 million liability for unrecognized tax benefits as it is not reasonably estimable to determine the periods in which such liability would be settled with the respective tax authorities.

In addition to the amounts shown in the table above and in connection with our separation from Cendant, we entered into certain guarantee commitments with Cendant (pursuant to our assumption of certain liabilities and our obligation to indemnify Cendant, Realogy (now Anywhere Real Estate Inc.), and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with Cendant and Realogy.

In addition to the amounts shown in the table above and in connection with our separation from ABG, we entered into certain guarantee commitments with ABG (pursuant to our assumption of certain liabilities and our obligation to indemnify ABG, Anywhere Real Estate Inc., and Travelport for such liabilities) and guarantee commitments related to deferred compensation arrangements with ABG and Anywhere Real Estate Inc.

We also entered into certain guarantee commitments and indemnifications related to the sale of our vacation rentals businesses.

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We would only be required to pay this maximum amount if none of the assessed owners paid their assessments.

Any assessments collected from the owners of the VOIs would reduce the maximum potential amount of future payments to be made by us.

Any assessments collected from the owners of the VOIs would reduce the maximum potential amount of future payments we would be required to make.

Additionally, should we be required to fund the deficit through the payment of any owners’ assessments under these guarantees, we would be permitted to use that property to engage in revenue-producing activities such as rentals.

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We generally utilize letters of credit to support the securitization of VOCR fundings, certain insurance policies, and development activities in our Vacation Ownership business.

As of December 31, 2023, we had $47 million of irrevocable standby letters of credit outstanding, $2 million of which were under our revolving credit facilities.

As of December 31, 2022, we had $34 million of irrevocable standby letters of credit outstanding, none of which were under our revolving credit facilities.

As of December 31, 2024, we had $45 million of irrevocable standby letters of credit outstanding, $1 million of which were under our revolving credit facility.

As of December 31, 2023, we had $47 million of irrevocable standby letters of credit outstanding, $2 million of which were under our revolving credit facility.

We also utilize surety bonds in our Vacation Ownership business for sales and development transactions in order to meet regulatory requirements of certain states.

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Financing activities (458) (500) 42

Effects of changes in exchange rates on cash and cash equivalents — (5) 5

Effect of changes in exchange rates on cash, cash equivalents and restricted cash (11) — (11)

Net change in cash, cash equivalents and restricted cash $ (129) $ (230) $ 101

Operating Activities

Net cash provided by operating activities was $350 million for the year ended December 31, 2023, compared to $442 million in the prior year.

This $92 million decrease in 2023 was primarily attributable to an increase in cash utilized for working capital, including the impacts of the Sports Illustrated agreement and continued growth in our loan portfolio.

Net cash provided by operating activities increased $114 million for the year ended December 31, 2024 compared to the prior year.

This increase was primarily attributable to an increase in Net income attributable to Travel + Leisure Co.

shareholders of $15 million, $82 million of non-cash add-back items, and $44 million of lower cash tax payments.

Investing Activities

Net cash used in investing activities from continuing operations increased $45 million during the year ended December 31, 2024.

This increase was primarily driven by $22 million of higher property and equipment additions and $8 million of proceeds from the sale of investments in 2022.

Net cash used in investing activities from discontinued operations was $5 million during 2022, primarily related to the settlement of post-closing adjustment claims associated with the sale of the European vacation rentals business.

This increase was primarily due to $44 million paid for the acquisition of Accor Vacation Club.

Net cash provided by investing activities from discontinued operations increased $1 million due to a tax refund received for pre-sale tax items related to the sale of the European vacation rentals business.

Financing Activities

Net cash used in financing activities increased $304 million during the year ended December 31, 2023.

This increase was primarily due to the $400 million repayment of the 3.90% secured notes during the first quarter of 2023 partially offset by higher net proceeds on non-recourse debt and decreased share repurchases in the current year.

Net cash used in financing activities decreased $42 million during the year ended December 31, 2024.

This decrease was primarily due to a $75 million decrease in share repurchases partially offset by a $41 million decrease in net proceeds on non-recourse debt.

Capital Deployment

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During 2024, we spent $81 million on capital expenditures, primarily for information technology and sales center improvement projects.

During 2024, we anticipate spending between $80 million and $90 million on capital expenditures, primarily for continuation of information technology digital initiatives, sales center facility and related system enhancements and resort improvements.

During 2025, we anticipate spending between $120 million and $130 million on capital expenditures, primarily for continuation of information technology digital and new club initiatives, sales center facility and related system enhancements, resort improvements, and a new corporate office.

In connection with our focus on optimizing cash flow, we are continuing our asset-light efforts in vacation ownership by seeking opportunities with financial partners whereby they make strategic investments to develop assets on our behalf.

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On August 20, 2007, our Board authorized a share repurchase program that enables us to purchase our common stock.

As of December 31, 2023, the Board has increased the capacity of the program nine times, most recently in April 2022 by $500 million, bringing the total authorization under the current program to $6.5 billion.

As of December 31, 2024, the Board has increased the capacity of the program 10 times, most recently in May 2024 by $500 million, bringing the total authorization under the current program to $7.0 billion.

Proceeds received from stock option exercises have increased the repurchase capacity by $87 million since the inception of this program.

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Repurchases may be conducted in the open market or in privately negotiated transactions.

We paid cash dividends of $0.45 per share for all four quarters of 2023 and $0.40 per share for all four quarters of 2022.

During 2021, we paid cash dividends of $0.30 per share for the first, second, and third quarters, and $0.35 per share for the fourth quarter.

We paid cash dividends of $0.50 per share for all four quarters of 2024, $0.45 per share for all four quarters of 2023, and $0.40 per share for all four quarters of 2022.

The aggregate dividends paid to shareholders for 2024, 2023, and 2022 were $142 million, $136 million, and $135 million.

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From time to time, we are involved in claims, legal and regulatory proceedings, and governmental inquiries related to our business, none of which, in the opinion of management, is expected to have a material effect on our results of operations or financial condition.

See Note 19— Commitments and Contingencies to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business along with our guarantees and indemnifications and Note 27— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations regarding Cendant contingent litigation, matters related to Wyndham Hotels, and matters related to the vacation rentals businesses.

See Note 19— Commitments and Contingencies to the Consolidated Financial Statements for a description of claims and legal actions arising in the ordinary course of our business along with our guarantees and indemnifications and Note 27— Transactions with Former Parent and Former Subsidiaries to the Consolidated Financial Statements for a description of our obligations regarding ABG contingent litigation, matters related to Wyndham Hotels, and matters related to the vacation rentals businesses.

CRITICAL ACCOUNTING ESTIMATES

In presenting our financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the amounts reported therein.

Several of the estimates and assumptions we are required to make relate to matters that are inherently uncertain as they pertain to future events.

Several of these estimates and assumptions relate to matters that are inherently uncertain as they pertain to future events.

However, events that are outside of our control cannot be predicted and, as such, they cannot be contemplated in evaluating such estimates and assumptions.

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A one percent change in projected losses would increase our allowance for loan losses by approximately $6 million.

Vacation Ownership Contract Receivables to the Consolidated Financial Statements for additional details of our allowance for loan losses.

See Note 9— Vacation Ownership Contract Receivables to the Consolidated Financial Statements for additional details of our allowance for loan losses.

We use the relative sales value method of costing and relieving our VOI inventory.

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The estimates used to calculate the fair value of other indefinite-lived intangible assets change from year to year based on operating results and market conditions.

There were no changes in the assumptions used in this analysis in 2023.

Changes in these estimates and assumptions could materially affect the determination of fair value and the other indefinite-lived intangible assets impairment.

There were no changes in the assumptions used in this analysis in 2024.

Business Combinations.

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Valuations are performed by management or independent valuation specialists under management’s supervision, where appropriate.

We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable assumptions that marketplace participants would use.

We believe that the estimated fair values assigned to the assets acquired and liabilities assumed are based on reasonable

assumptions that marketplace participants would use.

However, such assumptions are inherently uncertain and actual results could differ from those 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-K

Item 7. Management’s Discussion and Analysis