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Item 1. Financial Statements

2024-08-02 compared with 2024-05-07 · 255 added, 158 removed, 742 unchanged (36% of the section changed)

3 unchanged sentences

(In millions, except per share amounts)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Sale of vacation ownership products $ 309 $ 391 $ 661 $ 766

17 unchanged sentences

TOTAL EXPENSES 1,038 1,003 2,096 2,018

Gains and other income, net — 21

(Losses) gains and other (expense) income, net ( 7 ) 10 ( 7 ) 31

Interest expense, net ( 43 ) ( 36 ) ( 83 ) ( 70 )

4 unchanged sentences

NET INCOME 38 90 84 177

Net loss attributable to noncontrolling interests 1 —

Net income attributable to noncontrolling interests ( 1 ) — — —

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 37 $ 90 $ 84 $ 177

7 unchanged sentences

(In millions)

Three Months Ended

March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

NET INCOME $ 38 $ 90 $ 84 $ 177

1 unchanged sentence

Derivative instrument adjustment, net of tax ( 1 ) ( 1 ) ( 3 ) ( 4 )

OTHER COMPREHENSIVE (LOSS) GAIN, NET OF TAX ( 1 ) 3

Net loss attributable to noncontrolling interests 1 —

COMPREHENSIVE LOSS ATTRIBUTABLE TO NONCONTROLLING INTERESTS 1 —

OTHER COMPREHENSIVE (LOSS) INCOME, NET OF TAX ( 14 ) 5 ( 15 ) 8

Net income attributable to noncontrolling interests ( 1 ) — — —

COMPREHENSIVE INCOME ATTRIBUTABLE TO NONCONTROLLING INTERESTS ( 1 ) — — —

COMPREHENSIVE INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 23 $ 95 $ 69 $ 185

3 unchanged sentences

(In millions, except share and per share data)

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

Cash and cash equivalents $ 206 $ 248

42 unchanged sentences

(In millions)

Three Months Ended

March 31, 2024 March 31, 2023

Six Months Ended

June 30, 2024 June 30, 2023

OPERATING ACTIVITIES

6 unchanged sentences

Impairment charges 2 2

Gains and other income, net — ( 7 )

Deferred income taxes 79 10

12 unchanged sentences

Other, net 5 ( 4 )

Net cash, cash equivalents and restricted cash provided by (used in) operating activities 3 ( 50 )

Net cash, cash equivalents and restricted cash provided by operating activities 33 27

INVESTING ACTIVITIES

2 unchanged sentences

Purchase and development of property for future sale ( 49 ) —

Other dispositions, net — 14

Net cash, cash equivalents and restricted cash used in investing activities ( 88 ) ( 53 )

3 unchanged sentences

(In millions)

Three Months Ended

March 31, 2024 March 31, 2023

Six Months Ended

June 30, 2024 June 30, 2023

FINANCING ACTIVITIES

9 unchanged sentences

Payment of withholding taxes on vesting of restricted stock units ( 6 ) ( 10 )

Net cash, cash equivalents and restricted cash provided by (used in) financing activities 43 ( 194 )

Net cash, cash equivalents and restricted cash used in financing activities ( 59 ) ( 349 )

Effect of changes in exchange rates on cash, cash equivalents and restricted cash ( 3 ) 1

6 unchanged sentences

Non-cash transfer from property and equipment to inventory 23 63

Non-cash transfer from property and equipment to other assets — 2

Right-of-use asset obtained in exchange for finance lease obligation 12 80

18 unchanged sentences

75.8 BALANCE AT MARCH 31, 2024 1 ( 2,351 ) 3,951 15 763 2,379 ( 1 ) 2,378

— Net income — — — — 37 37 1 38

— Foreign currency translation adjustments — — — ( 13 ) — ( 13 ) — ( 13 )

— Derivative instrument adjustment — — — ( 1 ) — ( 1 ) — ( 1 )

— Share-based compensation plans — 1 8 — — 9 — 9

— Repurchase of common stock — ( 12 ) — — — ( 12 ) — ( 12 )

— Dividends — — — — ( 27 ) ( 27 ) — ( 27 )

75.8 BALANCE AT JUNE 30, 2024 $ 1 $ ( 2,362 ) $ 3,959 $ 1 $ 773 $ 2,372 $ — $ 2,372

Issued Common

10 unchanged sentences

75.8 BALANCE AT MARCH 31, 2023 1 ( 2,132 ) 3,937 18 654 2,478 2 2,480

— Net income — — — — 90 90 — 90

— Foreign currency translation adjustments — — — 6 — 6 — 6

— Derivative instrument adjustment — — — ( 1 ) — ( 1 ) — ( 1 )

— Share-based compensation plans — 1 10 — — 11 — 11

— Repurchase of common stock — ( 82 ) — — — ( 82 ) — ( 82 )

— Dividends — — — — ( 26 ) ( 26 ) — ( 26 )

75.8 BALANCE AT JUNE 30, 2023 $ 1 $ ( 2,213 ) $ 3,947 $ 23 $ 718 $ 2,476 $ 2 $ 2,478

See Interim Condensed Notes to Consolidated Financial Statements

3 unchanged sentences

The Interim Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide,” “MVW,” or the “Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity, or (ii) “MVWC,” which shall refer only to Marriott Vacations Worldwide Corporation, without its consolidated subsidiaries).

In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered Notes in the Interim Condensed Notes to Consolidated Financial Statements, unless otherwise noted.

In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered notes in the Financial Statements, unless otherwise noted.

Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023 (the “2023 Annual Report”).

6 unchanged sentences

Such estimates include, but are not limited to, revenue recognition, cost of vacation ownership products, inventory valuation, goodwill and intangibles valuation, accounting for acquired vacation ownership notes receivable, vacation ownership notes receivable reserves, income taxes, and loss contingencies.

The uncertainties in the broader macroeconomic environment, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity, have made it more challenging to make these estimates.

The uncertainties in the broader macroeconomic environment, including inflation, continuing high interest rates, mixed economic indicators, increased consumer debt and continuing global insecurity, have made it more challenging to make these estimates.

Actual results could differ from our estimates, and such differences may be material.

23 unchanged sentences

We will begin providing the enhanced disclosures required by this standard with our Annual Report on Form 10-K for the year ending December 31, 2025.

Savannah, Georgia

During the third quarter of 2023, we acquired a property in Savannah, Georgia for $ 19 million.

We plan to convert the property into a 73 -unit vacation ownership property.

The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net.

Charleston, South Carolina

4 unchanged sentences

Sources of Revenue by Segment

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

9 unchanged sentences

Total Revenues $ 1,078 $ 58 $ 4 $ 1,140

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

9 unchanged sentences

Total Revenues $ 1,112 $ 65 $ 1 $ 1,178

Six Months Ended June 30, 2024

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Sale of vacation ownership products $ 661 $ — $ — $ 661

Ancillary revenues 137 2 — 139

Management fee revenues 103 7 ( 2 ) 108

Exchange and other services revenues 65 88 26 179

Management and exchange 305 97 24 426

Rental 290 21 — 311

Cost reimbursements 784 5 ( 20 ) 769

Revenue from contracts with customers 2,040 123 4 2,167

Financing 168 — — 168

Total Revenues $ 2,208 $ 123 $ 4 $ 2,335

Six Months Ended June 30, 2023

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Sale of vacation ownership products $ 766 $ — $ — $ 766

Ancillary revenues 131 2 — 133

Management fee revenues 90 13 ( 2 ) 101

Exchange and other services revenues 61 92 19 172

Management and exchange 282 107 17 406

Rental 276 21 — 297

Cost reimbursements 727 8 ( 15 ) 720

Revenue from contracts with customers 2,051 136 2 2,189

Financing 158 — — 158

Total Revenues $ 2,209 $ 136 $ 2 $ 2,347

Timing of Revenue from Contracts with Customers by Segment

The following tables detail the timing of revenue from contracts with customers by segment for the time periods presented.

Three Months Ended March 31, 2024

Three Months Ended June 30, 2024

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

2 unchanged sentences

Revenue from contracts with customers $ 993 $ 58 $ 4 $ 1,055

Three Months Ended March 31, 2023

Three Months Ended June 30, 2023

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

2 unchanged sentences

Revenue from contracts with customers $ 1,032 $ 65 $ 1 $ 1,098

Six Months Ended June 30, 2024

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Services transferred over time $ 1,233 $ 46 $ 4 $ 1,283

Goods or services transferred at a point in time 807 77 — 884

Revenue from contracts with customers $ 2,040 $ 123 $ 4 $ 2,167

Six Months Ended June 30, 2023

($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total

Services transferred over time $ 1,145 $ 56 $ 2 $ 1,203

Goods or services transferred at a point in time 906 80 — 986

Revenue from contracts with customers $ 2,051 $ 136 $ 2 $ 2,189

Sale of Vacation Ownership Products

Revenues were reduced during the first quarter of 2024 by $ 4 million due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

Revenues were reduced during the second quarter and first half of 2024 by $ 60 million and $ 64 million, respectively, due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

Receivables from Contracts with Customers, Contract Assets, & Contract Liabilities

The following table shows the composition of our receivables from contracts with customers and contract liabilities.

We had no contract assets at either March 31, 2024 or December 31, 2023.

($ in millions) At March 31, 2024 At December 31, 2023

We had no contract assets at either June 30, 2024 or December 31, 2023.

($ in millions) At June 30, 2024 At December 31, 2023

Receivables from Contracts with Customers

5 unchanged sentences

Deferred revenue 418 382

Revenue recognized during the first quarter of 2024 that was included in our contract liabilities balance at December 31, 2023 was $ 121 million.

Revenue recognized during the second quarter and first half of 2024 that was included in our contract liabilities balance at December 31, 2023 was $ 95 million and $ 216 million, respectively.

Remaining Performance Obligations

Our remaining performance obligations represent the expected transaction price allocated to our contracts that we expect to recognize as revenue in future periods when we perform under the contracts.

At March 31, 2024, approximately 93 % of this amount is expected to be recognized as revenue over the next two years .

At June 30, 2024, approximately 92 % of this amount is expected to be recognized as revenue over the next two years .

Accounts and Contracts Receivable

1 unchanged sentence

The following table shows the composition of our accounts and contracts receivable balances:

($ in millions) At March 31, 2024 At December 31, 2023

($ in millions) At June 30, 2024 At December 31, 2023

Receivables from contracts with customers, net $ 212 $ 259

5 unchanged sentences

Certain items that do not relate directly to ordinary income are excluded from the AETR and included in the period in which they occur.

Our effective tax rate was 43.0 % and 32.3 % for the three months ended March 31, 2024 and March 31, 2023, respectively.

The effective tax rate for the three months ended March 31, 2024 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including $ 11 million primarily related to a $ 20 million increase to remove the permanent reinvestment assertion for certain non-U.S.

entities offset by a $ 9 million decrease for the expiration of statutes of limitation on certain unrecognized tax benefits.

The effective tax rate for the three months ended March 31, 2023 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including $ 9 million primarily related to an increase in uncertain tax benefits of $ 20 million for new unrecognized tax benefits in a foreign jurisdiction, offset by decreases in stock compensation of $ 7 million and $ 4 million related to prior year true-up adjustments.

Our effective tax rate was 22.0 % and 35.4 % for the three months ended June 30, 2024 and June 30, 2023, respectively, and 35.2 % and 33.9 % for the six months ended June 30, 2024 and June 30, 2023, respectively.

The effective tax rate for the three months ended June 30, 2024 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including a $ 13 million decrease for the expiration of statutes of limitation on certain unrecognized tax benefits, partially offset by a $ 4 million increase related to prior year true-up adjustments in non-U.S.

jurisdictions.

The effective tax rate for the three months ended June 30, 2023 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including a $ 5 million adjustment in stock compensation.

The effective tax rate for the six months ended June 30, 2024 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including a $ 20 million increase to remove the permanent reinvestment assertion for certain non-U.S.

entities and a $ 5 million increase related to prior year true-up adjustments in non-U.S.

jurisdictions, partially offset by a $ 22 million decrease for the expiration of statutes of limitation on certain unrecognized tax benefits.

The effective tax rate for the six months ended June 30, 2023 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including an $ 18 million increase to pre-acquisition reserves for unrecognized tax benefits.

Unrecognized Tax Benefits

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the three months ended March 31, 2024.

The following table summarizes the activity related to our unrecognized tax benefits (excluding interest and penalties) during the six months ended June 30, 2024.

($ in millions) Unrecognized Tax Benefits

Balance at December 31, 2023

Increases to tax positions related to a prior period 2

Decreases to tax positions related to a prior period (1)

Decreases as a result of a lapse of the applicable statute of limitation ( 9 )

Balance at March 31, 2024

The total amount of gross interest and penalties accrued related to unrecognized tax benefits was $ 41 million at March 31, 2024 and $ 48 million at December 31, 2023, a decrease of $ 7 million, which is predominantly attributable to the expiration of statutes of limitation, partially offset by additional interest and penalties related to non-U.S.

Balance at June 30, 2024

(1) Decrease due to filing of an automatic tax method change with the IRS during the second quarter of 2024.

The total amount of gross interest and penalties accrued related to unrecognized tax benefits was $ 33 million at June 30, 2024 and $ 48 million at December 31, 2023, a decrease of $ 15 million, which is predominantly attributable to the expiration of statutes of limitation, partially offset by additional interest and penalties related to non-U.S.

uncertain tax positions.

At March 31, 2024, unrecognized tax benefits (including interest and penalties) of $ 26 million, net of indemnification, would impact the effective tax rate if recognized.

At June 30, 2024, unrecognized tax benefits (including interest and penalties) of $ 16 million, net of indemnification, would impact the effective tax rate if recognized.

We anticipate $ 34 million of unrecognized tax benefits, including interest and penalties, to be indemnified pursuant to a Tax Matters Agreement dated May 11, 2016 by and among Starwood Hotels & Resorts Worldwide, Inc., Vistana Signature Experiences, Inc., and Interval Leisure Group, Inc., and consequently have recorded a corresponding indemnification asset.

5 unchanged sentences

The following table shows the composition of our vacation ownership notes receivable balances, net of reserves.

March 31, 2024 December 31, 2023

June 30, 2024 December 31, 2023

($ in millions) Originated Acquired Total Originated Acquired Total

9 unchanged sentences

The following table summarizes interest income associated with vacation ownership notes receivable.

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Interest income associated with securitized vacation ownership notes receivable

$ 72 $ 68 $ 143 $ 135

Interest income associated with non-securitized vacation ownership notes receivable

3 unchanged sentences

The estimates of the variable consideration for originated vacation ownership notes receivable and the reserve for credit losses on the acquired vacation ownership notes receivable are based on default rates that are an output of our static pool analyses and estimates regarding future defaults.

The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 724 and 723 , at March 31, 2024 and December 31, 2023, respectively, based upon the FICO score of the borrower at the time of origination.

In the third quarter of 2023, we increased our vacation ownership notes receivable reserve to reflect then-current trends in delinquencies and default rates.

We estimated the amount of the increase in our sales reserve primarily using a historical period of increased defaults.

The additional reserves recorded in 2023 adjusted our future default rate estimate to reflect then-current macroeconomic conditions, including inflation outpacing wage growth, continuing high interest rates, mixed economic indicators and increased global insecurity.

Subsequent to the third quarter of 2023, we increased our sales reserve rate to provide for higher expected cumulative losses on new originations.

We believe the cumulative impact of inflation on consumers and the related impact on year-over-year increases in maintenance fees for 2023 and 2024 are driving continued elevated delinquencies and defaults.

As a result, during the second quarter of 2024, we increased our sales reserve by $ 70 million to reflect increases in expected cumulative loss rates for our vacation ownership notes receivable originated during 2021-2024.

In estimating the increase in the sales reserve, we considered current macroeconomic conditions, including higher consumer debt levels, moderating inflation, continued high interest rates, uncertainty around timing and frequency of interest rate adjustments and continued mixed economic indicators.

The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 724 and 723 , at June 30, 2024 and December 31, 2023, respectively, based upon the FICO score of the borrower at the time of origination.

Acquired Vacation Ownership Notes Receivable

Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition.

The following table shows future contractual principal payments, net of a $ 14 million reserve, and interest rates for our acquired vacation ownership notes receivable at March 31, 2024.

The following table shows future contractual principal payments, net of a $ 12 million reserve, and interest rates for our acquired vacation ownership notes receivable at June 30, 2024.

Acquired Vacation Ownership Notes Receivable

2 unchanged sentences

Thereafter 3 23 26

Balance at March 31, 2024 $ 20 $ 129 $ 149

Balance at June 30, 2024 $ 19 $ 116 $ 135

Weighted average stated interest rate 13.8 % 14.2 % 14.1 %

3 unchanged sentences

The following tables show the acquired vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination.

Acquired Vacation Ownership Notes Receivable as of March 31, 2024

Acquired Vacation Ownership Notes Receivable as of June 30, 2024

($ in millions) 700+ 600 - 699 < 600 No Score Total

9 unchanged sentences

Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to each respective acquisition date, and all Legacy-MVW vacation ownership notes receivable.

The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at March 31, 2024.

The following table shows future principal payments, net of reserves, and interest rates for our originated vacation ownership notes receivable at June 30, 2024.

Originated Vacation Ownership Notes Receivable

6 unchanged sentences

Thereafter 187 1,092 1,279

Balance at March 31, 2024 $ 402 $ 1,785 $ 2,187

Balance at June 30, 2024 $ 383 $ 1,790 $ 2,173

Weighted average stated interest rate 12.0 % 13.3 % 13.0 %

6 unchanged sentences

Balance at December 31, 2023 $ 195 $ 260 $ 455

Increase (decrease) in vacation ownership notes receivable reserve

Increase in vacation ownership notes receivable reserve

Securitizations ( 86 ) 86 —

2 unchanged sentences

Defaulted vacation ownership notes receivable repurchase activity (1)

Balance at March 31, 2024 $ 201 $ 251 $ 452

Balance at June 30, 2024 $ 271 $ 257 $ 528

(1) Reflects the change attributable to the transfer of the reserve from the securitized vacation ownership notes receivable reserve to the non-securitized vacation ownership notes receivable reserve when we voluntarily repurchased securitized vacation ownership notes receivable.

The following tables show originated vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination.

Originated Vacation Ownership Notes Receivable as of March 31, 2024

Originated Vacation Ownership Notes Receivable as of June 30, 2024

($ in millions) 700 + 600 - 699 < 600 No Score Total

7 unchanged sentences

$ 1,569 $ 679 $ 59 $ 326 $ 2,633

The following tables detail the origination year of our originated vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination as of March 31, 2024, and gross write-offs by brand for the first quarter of 2024.

The following tables detail the origination year of our originated vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination as of June 30, 2024, and gross write-offs by brand for the first half of 2024.

Originated Vacation Ownership Notes Receivable - Marriott Vacation Ownership

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Vacation Ownership Notes Receivable on Non-Accrual Status

For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 12.62 % as of March 31, 2024 and 13.00 % as of December 31, 2023.

A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in the related vacation ownership notes receivable reserve of $ 13 million as of both March 31, 2024 and December 31, 2023.

For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 14.77 % as of June 30, 2024 and 13.00 % as of December 31, 2023.

The following table shows our recorded investment in non-accrual vacation ownership notes receivable, which are vacation ownership notes receivable that are 90 days or more past due.

1 unchanged sentence

($ in millions) Non-Securitized Securitized Total

Investment in vacation ownership notes receivable on non-accrual status at March 31, 2024

Investment in vacation ownership notes receivable on non-accrual status at June 30, 2024

$ 171 $ 22 $ 193

1 unchanged sentence

$ 141 $ 27 $ 168

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of March 31, 2024 and December 31, 2023.

As of March 31, 2024 As of December 31, 2023

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of June 30, 2024 and December 31, 2023.

As of June 30, 2024 As of December 31, 2023

($ in millions) Non-Securitized Securitized Total Non-Securitized Securitized Total

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The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts.

The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable (excluding contracts receivable for financed VOI sales, net), deposits included in Other assets, Accounts payable, Advance deposits, Accrued liabilities, and derivative instruments, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

At March 31, 2024 At December 31, 2023

The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable (excluding contracts receivable for financed VOI sales, net), deposits included in Other assets, Accounts payable, Advance deposits, and Accrued liabilities, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

At June 30, 2024 At December 31, 2023

($ in millions) Carrying

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Vacation Ownership Notes Receivable

At March 31, 2024 At December 31, 2023

At June 30, 2024 At December 31, 2023

($ in millions) Carrying

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We concluded that this fair value measurement should be categorized within Level 3.

Other assets include $ 110 million and $ 99 million of company owned insurance policies (the “COLI policies”) acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”) at March 31, 2024 and December 31, 2023, respectively, that are held in a rabbi trust.

Other assets include $ 118 million and $ 99 million of company owned insurance policies (the “COLI policies”) acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”) at June 30, 2024 and December 31, 2023, respectively, that are held in a rabbi trust.

The carrying value of the COLI policies is equal to their cash surrender value (Level 2 inputs).

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The table below illustrates the reconciliation of the earnings and number of shares used in our calculation of basic earnings per share attributable to common stockholders.

Three Months Ended

(in millions, except per share amounts) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income attributable to common stockholders

$ 37 $ 90 $ 84 $ 177

Shares for basic earnings per share 35.4 36.9 35.5 37.1

1 unchanged sentence

The table below illustrates the reconciliation of the earnings and number of shares used in our calculation of diluted earnings per share attributable to common stockholders.

Three Months Ended

(in millions, except per share amounts) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

(in millions, except per share amounts) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Net income attributable to common stockholders

$ 37 $ 90 $ 84 $ 177

Add back of interest expense related to convertible notes, net of tax 4 5 9 9

1 unchanged sentence

Shares for basic earnings per share

35.4 36.9 35.5 37.1

Effect of dilutive shares outstanding

1 unchanged sentence

Restricted stock units 0.1 0.3 0.1 0.3

2026 Convertible Notes ($ 575 million of principal)

2027 Convertible Notes ($ 575 million of principal)

2026 Convertible Notes

3.6 3.5 3.6 3.5

2027 Convertible Notes

3.1 3.0 3.0 3.0

Shares for diluted earnings per share 42.2 43.8 42.2 44.1

Diluted earnings per share $ 0.98 $ 2.17 $ 2.20 $ 4.23

The computations of diluted earnings per share attributable to common stockholders in the table above exclude approximately 396,000 and 239,000 shares of common stock, the maximum number of shares issuable as of March 31, 2024 and March 31, 2023, respectively, upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.

In accordance with the applicable accounting guidance for calculating earnings per share, for the first quarter of 2024, we excluded from our calculation of diluted earnings per share 645,524 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 93.73 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

For the first quarter of 2023, we excluded from our calculation of diluted earnings per share 237,249 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 153.10 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

The computations of diluted earnings per share attributable to common stockholders in the table above exclude approximately 393,000 and 213,000 shares of common stock, the maximum number of shares issuable as of June 30, 2024 and June 30, 2023, respectively, upon the vesting of certain performance-based awards, because the performance conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.

In accordance with the applicable accounting guidance for calculating earnings per share, for the second quarter of 2024, we excluded from our calculation of diluted earnings per share 559,444 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 96.82 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

For the first half of 2024, we excluded from our calculation of diluted earnings per share 646,203 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 93.73 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

For each of the second quarter and first half of 2023, we excluded from our calculation of diluted earnings per share 289,750 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $ 143.38 to $ 173.88 , were greater than the average market price of our common stock for the applicable period.

The following table shows the composition of our inventory balances:

($ in millions) At March 31, 2024 At December 31, 2023

($ in millions) At June 30, 2024 At December 31, 2023

Finished goods (1)

2 unchanged sentences

(1) Represents completed inventory that is registered for sale as VOIs and vacation ownership inventory expected to be reacquired pursuant to estimated future defaults on originated vacation ownership notes receivable.

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 5 million during the first quarter of 2024 and $ 11 million during the first quarter of 2023.

In addition to the above, at March 31, 2024 and December 31, 2023, we had $ 349 million and $ 370 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products.

We also had deposits on future purchases of inventory of $ 9 million at March 31, 2024, of which $ 5 million was included in Other assets and $ 4 million was included in Accounts and contracts receivable, net on our Balance Sheet, and $ 3 million at December 31, 2023, which was included in Other assets on our Balance Sheet.

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $ 20 million during the first half of 2024 and $ 15 million during the first half of 2023.

In addition to the above, at June 30, 2024 and December 31, 2023, we had $ 345 million and $ 370 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products.

We also had deposits on future purchases of inventory of $ 25 million at June 30, 2024, of which $ 21 million was included in Other assets and $ 4 million was included in Accounts and contracts receivable, net on our Balance Sheet, and $ 3 million at December 31, 2023, which was included in Other assets on our Balance Sheet.

CONTINGENCIES AND COMMITMENTS

Commitments and Letters of Credit

As of March 31, 2024, we had the following commitments outstanding:

As of June 30, 2024, we had the following commitments outstanding:

• We have various contracts for the use of information technology hardware and software that we use in the normal course of business.

Our aggregate commitment under these contracts was $ 81 million, of which we expect $ 29 million, $ 26 million, $ 16 million, $ 6 million, $ 4 million and less than $ 1 million will be paid in the remainder of 2024, 2025, 2026, 2027, 2028, and thereafter, respectively.

Our aggregate commitment under these contracts was $ 79 million, of which we expect $ 24 million, $ 29 million, $ 18 million, $ 6 million, and $ 2 million will be paid in the remainder of 2024, 2025, 2026, 2027, and 2028, respectively.

• We have remaining commitments of $ 34 million to purchase vacation ownership units located in Bali, Indonesia in two separate transactions, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment.

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$ 4 million in 2025, $ 31 million in 2026, and $ 2 million in 2027.

• We have $ 134 million of commitments to purchase property and vacation ownership units located in the continental United States, subject to various contingencies, that include, but are not limited to, the receipt of financing by third-party developers, governmental approvals, and the completion of construction to agreed-upon standards within specified timeframes.

We expect to complete these acquisitions by 2027.

We expect to make remaining payments when specific approvals are received and construction milestones are completed as follows:

$ 13 million in the remainder of 2024, $ 13 million in 2026, and $ 108 million in 2027.

• We have a commitment to acquire real estate in Waikiki, Hawaii for use in our Vacation Ownership segment via our involvement with a VIE.

Refer to Footnote 15 “Variable Interest Entities” for additional information and our activities relating to the VIE involved in this transaction.

As of March 31, 2024, we had $ 33 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”), of which $ 32 million were related to and in lieu of reserves required for our most recent outstanding securitization transactions completed during the first quarter of 2024 and the fourth quarter of 2023.

In addition, as of March 31, 2024, we had $ 1 million in letters of credit outstanding that were not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.

Surety bonds issued as of March 31, 2024 totaled $ 122 million, the majority of which were requested by federal, state or local governments in connection with our operations.

As of June 30, 2024, we had $ 32 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”), of which $ 31 million were related to and in lieu of reserves required for our most recent outstanding securitization transactions completed during the first quarter of 2024 and the fourth quarter of 2023.

In addition, as of June 30, 2024, we had $ 1 million in letters of credit outstanding that were not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.

Surety bonds issued as of June 30, 2024 totaled $ 129 million, the majority of which were requested by federal, state or local governments in connection with our operations.

Certain of our rental management agreements in our Exchange & Third-Party Management segment provide for owners of properties we manage to receive specified percentages of rental revenue or guaranteed amounts generated under our management.

In these cases, the operating expenses for the rental operations are paid from the revenue generated by the rentals, the owners are then paid their contractual percentages or guaranteed amounts, and we either retain the balance of the rental revenue (if any) as our fee or we make up the deficit if the owners have not received their guaranteed amounts.

At March 31, 2024, our maximum exposure under fixed dollar guarantees was $ 4 million, of which $ 1 million, $ 1 million, $ 1 million, $ 1 million, and less than $ 1 million relate to the remainder of 2024, 2025, 2026, 2027, and 2028, respectively.

At June 30, 2024, our maximum exposure under fixed dollar guarantees was $ 4 million, of which $ 1 million, $ 1 million, $ 1 million, $ 1 million, and less than $ 1 million relate to the remainder of 2024, 2025, 2026, 2027, and 2028, respectively.

We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of our payment of maintenance fees for unsold inventory.

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or (2) written notification of termination by either party.

At March 31, 2024, our expected commitment for the remainder of 2024 is $ 9 million, which will ultimately be recorded as a component of rental expense on our income statement.

At June 30, 2024, our expected commitment for the remainder of 2024 is $ 10 million, which will ultimately be recorded as a component of rental expense on our income statement.

Loss Contingencies

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In September 2023, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and denied plaintiff permission to file any additional amended complaints.

Plaintiff has appealed that dismissal.

As of March 31, 2024, the appeal remains pending.

We believe we have meritorious defenses to the claims in this matter and intend to vigorously defend against them.

Plaintiff’s appeal of the September 2023 ruling was dismissed as untimely by the appellate court on June 10, 2024.

In the ordinary course of our business, various claims and lawsuits have been filed or are pending against us.

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We review these accruals each reporting period and make revisions based on changes in facts and circumstances.

We have not accrued for the pending matter described above and we cannot estimate a range of the potential liability associated with this pending matter, if any, at this time.

We have not accrued for the matter described above and we cannot estimate a range of the potential liability associated with this matter, if any, at this time.

We have accrued for other claims and lawsuits, but the amount accrued is not material individually or in the aggregate.

For matters not requiring accrual, we do not believe that the ultimate outcome of such matters, individually or in the aggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available.

However, legal proceedings are inherently uncertain, and while we believe that our accruals, where required, are adequate and/or we have valid defenses to the claims asserted, unfavorable rulings could occur that could, individually or in the aggregate, have a material adverse effect on our business, financial condition, or operating results.

However, legal proceedings are inherently uncertain, and while we believe that our accruals, where required, are adequate and/or we have valid defenses to the claims

asserted, unfavorable rulings could occur that could, individually or in the aggregate, have a material adverse effect on our business, financial condition, or operating results.

SECURITIZED DEBT

The following table provides detail on our securitized debt, net of unamortized debt discount and issuance costs.

($ in millions) At March 31, 2024 At December 31, 2023

($ in millions) At June 30, 2024 At December 31, 2023

Vacation ownership notes receivable securitizations, gross (1)

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$ 2,098 $ 2,096

(1) Interest rates as of March 31, 2024 range from 1.5 % to 6.6 %, with a weighted average interest rate of 4.7 %.

(2) Excludes $ 1 million of unamortized debt issuance costs as of March 31, 2024, as no cash borrowings were outstanding on the Warehouse Credit Facility at that time.

(1) Interest rates as of June 30, 2024 range from 1.5 % to 6.6 %, with a weighted average interest rate of 4.7 %.

(2) The effective interest rate as of June 30, 2024 was 6.6 %.

All of our securitized debt is non-recourse.

See Footnote 15 “Variable Interest Entities” for a discussion of the collateral for the non-recourse debt associated with our securitized debt.

The following table shows anticipated future principal payments for our securitized debt as of March 31, 2024.

The following table shows anticipated future principal payments for our securitized debt as of June 30, 2024.

Vacation Ownership

Notes Receivable Securitizations

Notes Receivable Securitizations Warehouse Credit

($ in millions)

2024, remaining $ 92 $ 8 $ 100

2025 182 6 188

2026 187 7 194

2027 191 87 278

2028 189 — 189

Thereafter 1,175 — 1,175

$ 2,016 $ 108 $ 2,124

(1) Excludes future Warehouse Credit Facility renewals.

Vacation Ownership Notes Receivable Securitizations

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If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured.

During the first quarter of 2024, and as of March 31, 2024, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.

During the second quarter of 2024, and as of June 30, 2024, we had 14 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.

As the contractual terms of the underlying securitized vacation ownership notes receivable determine the maturities of the non-recourse debt associated with them, actual maturities may occur earlier than shown above due to prepayments by the vacation ownership notes receivable obligors.

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$ 284 million of Class A Notes, $ 89 million of Class B Notes, and $ 57 million of Class C Notes.

The Class A Notes have an interest rate of 5.32 %, the Class B Notes have an interest rate of 5.51 %, and the Class C Notes have an interest rate of 6.20 %, for an overall weighted average interest rate of 5.48 %.

Class A Notes have an interest rate of 5.32 %, the Class B Notes have an interest rate of 5.51 %, and the Class C Notes have an interest rate of 6.20 %, for an overall weighted average interest rate of 5.48 %.

Proceeds from the transaction, net of fees and a reserve, were used to repay the outstanding obligations on our warehouse credit facility (the “Warehouse Credit Facility”) and for other general corporate purposes.

Warehouse Credit Facility

During the second quarter of 2024, we amended certain agreements associated with our Warehouse Credit Facility (the “Warehouse Amendment”).

The Warehouse Amendment extended the revolving period from May 31, 2025 to June 11, 2026, and modified the benchmark interest rate applicable to most borrowings under the Warehouse Credit Facility to the Secured Overnight Financing Rate (“SOFR”).

The Warehouse Amendment removed the use of Adjusted SOFR, which was defined as SOFR plus a 0.10 % adjustment.

Additionally, as part of the Warehouse Amendment, the credit spread was changed from 135 basis points over Adjusted SOFR to 115 basis points over SOFR.

The Warehouse Amendment made no other material changes to the Warehouse Credit Facility.

The following table provides detail on our debt balances, net of unamortized debt discount and issuance costs.

($ in millions) At March 31, 2024 At December 31, 2023

($ in millions) At June 30, 2024 At December 31, 2023

Corporate Credit Facility

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$ 3,137 $ 3,049

(1) Effective interest rate as of March 31, 2024 was 7.2 %.

The following table shows scheduled principal payments for our debt, excluding finance leases, as of March 31, 2024.

(1) The effective interest rate as of June 30, 2024 was 7.6 %.

(2) The effective interest rate as of June 30, 2024 was 7.4 %.

The following table shows scheduled principal payments for our debt, excluding finance leases, as of June 30, 2024.

Payments Year

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Corporate Credit Facility

Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a $ 900 million term loan facility (the “Term Loan”), which, as of March 31, 2024, was scheduled to mature on August 31, 2025, and a revolving credit facility with a borrowing capacity of $ 750 million (the “Revolving Corporate Credit Facility”), which includes a letter of credit sub-facility of $ 75 million, that terminates on March 31, 2027.

Subsequent to the end of the first quarter of 2024, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which, among other things, provides for a new $ 800 million term loan facility scheduled to mature on April 1, 2031 (the “New Term Loan”).

The proceeds of the New Term Loan were used to refinance in full the Term Loan, which was scheduled to mature on August 31, 2025.

The interest rate applicable to the New Term Loan is the Secured Overnight Financing Rate (“SOFR”) plus 2.25 %.

Our corporate credit facility (“Corporate Credit Facility”), which provides support for our business, including ongoing liquidity and letters of credit, includes a term loan facility (the “Term Loan”), and a revolving credit facility with a borrowing capacity of $ 750 million (the “Revolving Corporate Credit Facility”), which includes a letter of credit sub-facility of $ 75 million, that terminates on March 31, 2027.

During the second quarter of 2024, we entered into an amendment to the Corporate Credit Facility (the “Amendment”), which, among other things, provided for a new $ 800 million term loan facility scheduled to mature on April 1, 2031 (the “New Term Loan”).

Prior to the Amendment, the Corporate Credit Facility included a $ 900 million term loan facility.

The proceeds of the New Term Loan were used to refinance, in full, the Term Loan, which had a balance of $ 784 million as of March 31, 2024 and was scheduled to mature on August 31, 2025.

The interest rate applicable to the New Term Loan is SOFR plus 2.25 %.

There were no changes to the borrowing capacity or the termination date of the Revolving Corporate Credit Facility or its letter of credit sub-facility.

As of March 31, 2024, we have $ 200 million of interest rate swaps, under which we may pay a fixed rate of 2.17 % and receive a floating interest rate through April 2024, and a $ 100 million interest rate collar with a cap strike price of 2.43 % through April 2024, in each case, that we entered into prior to 2023 to hedge a portion of our interest rate risk on the Term Loan.

Both the interest rate swap and the interest rate collar have been designated and qualify as cash flow hedges of interest rate risk and are recorded in Other assets on our Balance Sheets as of March 31, 2024 and December 31, 2023.

We characterize payments we make or receive in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income or loss for presentation purposes.

The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first quarter of 2024 and 2023.

During the second quarter of 2024, $ 200 million of interest rate swaps and a $ 100 million interest rate collar that were entered into prior to 2023 to hedge a portion of our interest rate risk on the Term Loan expired and are no longer recorded on our Balance Sheet as of June 30, 2024.

Both the interest rate swap and the interest rate collar were designated and qualified as cash flow hedges of interest rate risk and were recorded in Other assets on our Balance Sheets as of December 31, 2023.

We characterized payments we made or received in connection with these derivative instruments as interest expense and a reclassification of accumulated other comprehensive income or loss for presentation purposes.

The following table reflects the activity in accumulated other comprehensive income or loss related to our derivative instruments during the first half of 2024 and 2023.

There were no reclassifications to the Income Statement for any of the periods presented below.

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Derivative instrument adjustment balance, March 31 1 10

Other comprehensive loss before reclassifications ( 1 ) ( 1 )

Derivative instrument adjustment balance, June 30 $ — $ 9

Our senior notes include:

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The 2026 Convertible Notes mature on January 15, 2026, unless earlier repurchased or converted in accordance with their terms prior to that date.

The conversion rate of the 2026 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of March 31, 2024 to 6.2076 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 161.09 per share of our common stock), as a result of the dividends we declared since issuance of the 2026 Convertible Notes that were greater than the quarterly dividend we paid when the 2026 Convertible Notes were issued.

The conversion rate of the 2026 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes and was subject to adjustment as of June 30, 2024 to 6.2577 shares of common stock per $1,000 principal amount of 2026 Convertible Notes (equivalent to a conversion price of $ 159.80 per share of our common stock), as a result of the dividends we declared since issuance of the 2026 Convertible Notes that were greater than the quarterly dividend we paid when the 2026 Convertible Notes were issued.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

As of March 31, 2024, the effective interest rate was 0.55 %.

As of June 30, 2024, the effective interest rate was 0.55 %.

The following table shows interest expense information related to the 2026 Convertible Notes.

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Amortization of debt issuance costs $ 1 $ 1 $ 2 $ 2

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In connection with the offering of the 2026 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions:

convertible note hedge transactions with respect to our common stock (the “2026 Convertible Note Hedges”), covering a total of 3.6 million shares of our common stock, and warrant transactions (the “2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire 3.6 million shares of our common stock, in each case, as of March 31, 2024.

The strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to $ 161.09 and $ 201.36 , respectively, as of March 31, 2024, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.

The strike prices of the 2026 Convertible Note Hedges and the 2026 Warrants were subject to adjustment to $ 159.80 and $ 199.75 , respectively, as of June 30, 2024, and no 2026 Convertible Note Hedges or 2026 Warrants have been exercised.

2027 Convertible Notes

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The 2027 Convertible Notes mature on December 15, 2027, unless earlier repurchased or converted in accordance with their terms prior to that date.

The conversion rate of the 2027 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes, and was subject to adjustment as of March 31, 2024 to 5.2776 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $ 189.48 per share of our common stock), as a result of the dividends we declared since issuance of the 2027 Convertible Notes that were greater than the quarterly dividend we paid when the 2027 Convertible notes were issued.

The conversion rate of the 2027 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes and was subject to adjustment as of June 30, 2024 to 5.2798 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $ 189.40 per share of our common stock), as a result of the dividends we declared since issuance of the 2027 Convertible Notes that were greater than the quarterly dividend we paid when the 2027 Convertible notes were issued.

Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election.

As of March 31, 2024, the effective interest rate was 3.88 %.

As of June 30, 2024, the effective interest rate was 3.88 %.

The following table shows interest expense information related to the 2027 Convertible Notes .

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Contractual interest expense $ 5 $ 5 $ 9 $ 9

Amortization of debt issuance costs 1 1 2 2

$ 6 $ 6 $ 11 $ 11

2027 Convertible Note Hedges and Warrants

In connection with the offering of the 2027 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions:

convertible note hedge transactions with respect to our common stock (the “2027 Convertible Note Hedges”), covering a total of 3.0 million shares of our common stock, and warrant transactions (the “2027 Warrants”), whereby we sold to the counterparties to the 2027 Convertible Note Hedges warrants to acquire 3.0 million shares of our common stock, in each case, as of March 31, 2024.

The strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were subject to adjustment to $ 189.48 and $ 286.01 , respectively, as of March 31, 2024, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

The strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were subject to adjustment to $ 189.40 and $ 285.89 , respectively, as of June 30, 2024, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

Security and Guarantees

Amounts borrowed under the Corporate Credit Facility, as well as obligations with respect to letters of credit issued pursuant to the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowers under, and guarantors of, that facility (which include MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose subsidiaries), subject to certain exceptions.

In addition, the Corporate Credit Facility, the 2026 Convertible Notes, the 2027 Convertible Notes, the 2028 Notes, and the 2029 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding bankruptcy remote special purpose subsidiaries.

STOCKHOLDERS’ EQUITY

Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $ 0.01 per share.

At March 31, 2024, there were 75,847,526 shares of Marriott Vacations Worldwide common stock issued, of which 35,163,680 shares were outstanding and 40,683,846 shares were held as treasury stock.

At June 30, 2024, there were 75,847,792 shares of Marriott Vacations Worldwide common stock issued, of which 35,056,045 shares were outstanding and 40,791,747 shares were held as treasury stock.

At December 31, 2023, there were 75,807,882 shares of Marriott Vacations Worldwide common stock issued, of which 35,319,306 shares were outstanding and 40,488,576 shares were held as treasury stock.

Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $ 0.01 per share, none of which were issued or outstanding as of March 31, 2024 or December 31, 2023.

Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $ 0.01 per share, none of which were issued or outstanding as of June 30, 2024 or December 31, 2023.

Share Repurchase Program

From time to time, with the approval of our Board of Directors, we may undertake programs to purchase shares of our common stock (each, a “Share Repurchase Program”).

As of March 31, 2024, approximately $ 414 million remained available for share repurchases under the current Share Repurchase Program.

As of June 30, 2024, approximately $ 402 million remained available for share repurchases under the current Share Repurchase Program, which authorizes share repurchases through December 31, 2024.

Share repurchases may be made through open market purchases, privately negotiated transactions, block transactions, tender offers, or otherwise.

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As of December 31, 2023 25,141,073 $ 2,405 $ 95.65

For the first quarter of 2024 279,577 24 $ 87.37

As of March 31, 2024 25,420,650 $ 2,429 $ 95.56

We declared cash dividends to holders of common stock during the first quarter of 2024 as follows.

For the first half of 2024 410,377 36 $ 88.99

As of June 30, 2024 25,551,450 $ 2,441 $ 95.55

We declared cash dividends to holders of common stock during the first half of 2024 as follows.

Any future dividend payments will be subject to the restrictions imposed under the agreements covering our debt and approval of our Board of Directors.

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February 15, 2024 February 29, 2024 March 14, 2024 $ 0.76

May 9, 2024 May 23, 2024 June 6, 2024 $ 0.76

SHARE-BASED COMPENSATION

We maintain the Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW Equity Plan”) for the benefit of our officers, directors, and employees.

During the second quarter of 2024, our stockholders approved the Amended and Restated Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW Equity Plan”).

The MVW Equity Plan is maintained for the benefit of our officers, directors, and employees.

Under the MVW Equity Plan, we are authorized to award:

(1) restricted stock and restricted stock units (“RSUs”) of our common stock, (2) stock appreciation rights (“SARs”) relating to our common stock, and (3) stock options to purchase our common stock.

A total of 1.8 million shares are authorized for issuance pursuant to grants under the MVW Equity Plan.

As of March 31, 2024, less than 1 million shares were available for grants under the MVW Equity Plan.

A total of approximately 3 million shares are authorized for issuance pursuant to grants under the MVW Equity Plan.

As of June 30, 2024, approximately 2 million shares were available for grants under the MVW Equity Plan.

The following table details our share-based compensation expense related to award grants to our officers, directors, and employees:

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Service-based RSUs $ 10 $ 9 $ 16 $ 15

Performance-based RSUs ( 2 ) 2 ( 1 ) 3

$ 9 $ 12 $ 16 $ 19

The following table details our deferred compensation costs related to unvested awards:

($ in millions) At March 31, 2024 At December 31, 2023

($ in millions) At June 30, 2024 At December 31, 2023

Service-based RSUs $ 41 $ 22

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Restricted Stock Units

We granted 380,924 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 87.00 , to our employees and non-employee directors during the first quarter of 2024.

During the first quarter of 2024, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management.

A maximum of 204,020 RSUs may be earned under the performance-based RSU awards granted during the first quarter of 2024.

We granted 399,680 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $ 87.62 , to our employees and non-employee directors during the first half of 2024.

During the first half of 2024, we also granted performance-based RSUs, which are subject to performance-based vesting conditions, to members of management.

A maximum of 204,020 RSUs may be earned under the performance-based RSU awards granted during the first half of 2024.

Stock Appreciation Rights

We granted 86,759 SARs, with a weighted average grant-date fair value of $ 34.58 and a weighted average exercise price of $ 93.73 , to members of management during the first quarter of 2024.

We granted 86,759 SARs, with a weighted average grant-date fair value of $ 34.58 and a weighted average exercise price of $ 93.73 , to members of management during the first half of 2024.

We use the Black-Scholes model to estimate the fair value of the SARs granted.

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The dividend yield assumption listed below is based on the expectation of future payouts.

The following table outlines the assumptions used to estimate the fair value of grants during the first quarter of 2024:

The following table outlines the assumptions used to estimate the fair value of grants during the first half of 2024:

Expected volatility 45.78 %

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Variable Interest Entities Related to Our Vacation Ownership Notes Receivable Securitizations

The following table shows consolidated assets, which are collateral for the obligations of the VIEs related to our vacation ownership notes receivable securitizations, and consolidated liabilities included on our Balance Sheet at March 31, 2024:

($ in millions) Vacation Ownership

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Total $ 2,019 $ 109 $ 2,128

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first quarter of 2024:

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the second quarter of 2024:

($ in millions) Vacation Ownership

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Debt issuance cost amortization $ 2 $ 1 $ 3

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first half of 2024:

($ in millions) Vacation Ownership

Notes Receivable

Securitizations Warehouse

Credit Facility Total

Interest income $ 136 $ 7 $ 143

Interest expense $ 47 $ 4 $ 51

Debt issuance cost amortization $ 5 $ 1 $ 6

Administrative expenses $ 1 $ — $ 1

The following table shows cash flows between us and the vacation ownership notes receivable securitization VIEs:

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Six Months Ended

($ in millions) June 30, 2024 June 30, 2023

Net proceeds from vacation ownership notes receivable securitizations $ 426 $ 396

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The following table shows cash flows between us and the Warehouse Credit Facility VIE:

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Six Months Ended

($ in millions) June 30, 2024 June 30, 2023

Proceeds from vacation ownership notes receivable securitizations $ 203 $ 342

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The property is held by a VIE for which we are not the primary beneficiary.

We do not control the decisions that most significantly impact the economic performance of the entity during construction.

Further, our purchase commitment is generally contingent upon the property being redeveloped to our brand standards.

We do not control the decisions that most significantly impact the economic performance of the entity as we cannot prevent the variable interest entity from selling the property at a higher price.

Accordingly, we have not consolidated the VIE.

We expect to acquire the property over time and as of March 31, 2024, we expect to make remaining payments for the property as follows:

$ 65 million in the remainder of 2024, $ 82 million in 2025, and $ 41 million in 2026.

As of March 31, 2024, our Balance Sheet reflected $ 1 million in Accounts and contracts receivable, net, including a note receivable of less than $ 1 million, $ 8 million in Property and equipment, net, $ 1 million in Accrued liabilities and $ 1 million in the Other line within liabilities on our Balance Sheets.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 10 million as of March 31, 2024.

During the first quarter of 2024, we fulfilled our outstanding commitment to purchase retail space for $ 48 million and incurred $ 1 million of cost related to the fit-out of this space.

We expect to acquire the property over time and as of June 30, 2024, we expect to make remaining payments for the property as follows:

$ 65 million during the third quarter of 2024, $ 82 million in 2025, and $ 41 million in 2026.

As of June 30, 2024, our Balance Sheet reflected $ 1 million in Accounts and contracts receivable, net, including a note receivable of less than $ 1 million, $ 14 million in Property and equipment, net, and $ 1 million in the Other line within liabilities on our Balance Sheets.

We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $ 16 million as of June 30, 2024.

During the first half of 2024, we fulfilled our outstanding commitment to purchase retail space for $ 48 million and incurred $ 1 million of cost related to the fit-out of this space.

We have an agreement to sell the retail space to a third party, at cost, upon completion of construction, which we expect to occur in the second half of 2024.

3 unchanged sentences

We are the primary beneficiary of the rabbi trust because we direct the activities of the trust and are the beneficiary of the trust.

At March 31, 2024 and December 31, 2023, the value of the assets held in the rabbi trust was $ 110 million and $ 99 million, respectively, and was included in the Other line within assets on our Balance Sheets.

At June 30, 2024 and December 31, 2023, the value of the assets held in the rabbi trust was $ 118 million and $ 99 million, respectively, and was included in the Other line within assets on our Balance Sheets.

BUSINESS SEGMENTS

1 unchanged sentence

We operate in two operating and reportable business segments:

Vacation Ownership and Exchange & Third-Party Management.

Vacation Ownership includes a diverse portfolio of resorts that includes some of the world’s most iconic brands licensed under exclusive, long-term relationships.

19 unchanged sentences

Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income attributable to common stockholders is presented below.

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Vacation Ownership $ 1,078 $ 1,112 $ 2,208 $ 2,209

4 unchanged sentences

Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Stockholders

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

Adjusted EBITDA Vacation Ownership $ 180 $ 245 $ 393 $ 474

8 unchanged sentences

Net income attributable to common stockholders

($ in millions) At March 31, 2024 At December 31, 2023

$ 37 $ 90 $ 84 $ 177

($ in millions) At June 30, 2024 At December 31, 2023

Vacation Ownership $ 8,173 $ 8,167

4 unchanged sentences

Revenues Excluding Cost Reimbursements

Three Months Ended

($ in millions) March 31, 2024 March 31, 2023

Three Months Ended Six Months Ended

($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023

United States $ 643 $ 710 $ 1,342 $ 1,410

All other countries 119 113 224 217

$ 762 $ 823 $ 1,566 $ 1,627

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

What changed 10-Q

Item 1. Financial Statements