MARRIOTT VACATIONS WORLDWIDE Corp 10-Q

Item 1. Financial Statements MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED STATEMENTS OF INCOME (In millions, except per share amounts) (Unaudited) Three Months Ended Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 REVENUES Sale of vacation ownership products $ 309 $ 391 $ 661 $ 766 Management and exchange 215 206 426 406 Rental 153 146 311 297 Financing 85 80 168 158 Cost reimbursements 378 355 769 720 TOTAL REVENUES 1,140 1,178 2,335 2,347 EXPENSES Cost of vacation ownership products 38 66 91 124 Marketing and sales 226 206 449 416 Management and exchange 119 110 235 217 Rental 111 112 218 225 Financing 35 25 69 51 General and administrative 54 64 117 132 Depreciation and amortization 35 34 73 66 Litigation charges 10 2 13 5 Restructuring 1 — 3 — Royalty fee 29 29 57 58 Impairment 2 — 2 4 Cost reimbursements 378 355 769 720 TOTAL EXPENSES 1,038 1,003 2,096 2,018 (Losses) gains and other (expense) income, net ( 7 ) 10 ( 7 ) 31 Interest expense, net ( 43 ) ( 36 ) ( 83 ) ( 70 ) Transaction and integration costs ( 3 ) ( 10 ) ( 18 ) ( 23 ) Other ( 1 ) 1 ( 2 ) 1 INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 48 140 129 268 Provision for income taxes ( 10 ) ( 50 ) ( 45 ) ( 91 ) NET INCOME 38 90 84 177 Net income attributable to noncontrolling interests ( 1 ) — — — NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 37 $ 90 $ 84 $ 177 EARNINGS PER SHARE ATTRIBUTABLE TO COMMON STOCKHOLDERS Basic $ 1.04 $ 2.46 $ 2.36 $ 4.78 Diluted $ 0.98 $ 2.17 $ 2.20 $ 4.23 CASH DIVIDENDS DECLARED PER SHARE $ 0.76 $ 0.72 $ 1.52 $ 1.44 See Interim Condensed Notes to Consolidated Financial Statements 1 Table of Contents MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (In millions) (Unaudited) Three Months Ended Six Months Ended June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 NET INCOME $ 38 $ 90 $ 84 $ 177 Foreign currency translation adjustments ( 13 ) 6 ( 12 ) 12 Derivative instrument adjustment, net of tax ( 1 ) ( 1 ) ( 3 ) ( 4 ) 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 See Interim Condensed Notes to Consolidated Financial Statements 2 Table of Contents MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED BALANCE SHEETS (In millions, except share and per share data) Unaudited June 30, 2024 December 31, 2023 ASSETS Cash and cash equivalents $ 206 $ 248 Restricted cash (including $ 74 and $ 79 from VIEs, respectively) 251 326 Accounts and contracts receivable, net (including $ 17 and $ 15 from VIEs, respectively) 370 385 Vacation ownership notes receivable, net (including $ 1,906 and $ 1,912 from VIEs, respectively) 2,308 2,343 Inventory 643 634 Property and equipment, net 1,295 1,260 Goodwill 3,117 3,117 Intangibles, net 822 854 Other (including $ 118 and $ 99 from VIEs, respectively) 599 513 TOTAL ASSETS $ 9,611 $ 9,680 LIABILITIES AND EQUITY Accounts payable $ 198 $ 362 Advance deposits 166 164 Accrued liabilities (including $ 4 and $ 4 from VIEs, respectively) 371 343 Deferred revenue 418 382 Payroll and benefits liability 163 205 Deferred compensation liability 179 168 Securitized debt, net (including $ 2,124 and $ 2,121 from VIEs, respectively) 2,098 2,096 Debt, net 3,137 3,049 Other 139 249 Deferred taxes 370 280 TOTAL LIABILITIES 7,239 7,298 Contingencies and Commitments (Note 10) Preferred stock — $ 0.01 par value; 2,000,000 shares authorized; none issued or outstanding — — Common stock — $ 0.01 par value; 100,000,000 shares authorized; 75,847,792 and 75,807,882 shares issued, respectively 1 1 Treasury stock — at cost; 40,791,747 and 40,488,576 shares, respectively ( 2,362 ) ( 2,332 ) Additional paid-in capital 3,959 3,955 Accumulated other comprehensive income 1 16 Retained earnings 773 742 TOTAL MVW STOCKHOLDERS' EQUITY 2,372 2,382 Noncontrolling interests — — TOTAL EQUITY 2,372 2,382 TOTAL LIABILITIES AND EQUITY $ 9,611 $ 9,680 The abbreviation VIEs above means Variable Interest Entities. See Interim Condensed Notes to Financial Statements 3 Table of Contents MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (In millions) (Unaudited) Six Months Ended June 30, 2024 June 30, 2023 OPERATING ACTIVITIES Net income $ 84 $ 177 Adjustments to reconcile net income to net cash, cash equivalents and restricted cash provided by operating activities: Depreciation and amortization of intangibles 73 66 Amortization of debt discount and issuance costs 15 12 Vacation ownership notes receivable reserve 168 79 Share-based compensation 16 19 Impairment charges 2 2 Gains and other income, net — ( 7 ) Deferred income taxes 79 10 Net change in assets and liabilities: Accounts and contracts receivable 7 ( 31 ) Vacation ownership notes receivable originations ( 446 ) ( 470 ) Vacation ownership notes receivable collections 311 308 Inventory 4 54 Other assets ( 60 ) ( 61 ) Accounts payable, advance deposits and accrued liabilities ( 113 ) ( 129 ) Deferred revenue 36 69 Payroll and benefit liabilities ( 42 ) ( 78 ) Deferred compensation liability 2 7 Other liabilities ( 108 ) 12 Purchase of property for future transfer to inventory — ( 8 ) Other, net 5 ( 4 ) Net cash, cash equivalents and restricted cash provided by operating activities 33 27 INVESTING ACTIVITIES Capital expenditures for property and equipment (excluding inventory) ( 29 ) ( 63 ) Purchase of company owned life insurance ( 10 ) ( 4 ) 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 ) Continued See Interim Condensed Notes to Consolidated Financial Statements 4 Table of Contents MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) (In millions) (Unaudited) Six Months Ended June 30, 2024 June 30, 2023 FINANCING ACTIVITIES Borrowings from securitization transactions 633 743 Repayment of debt related to securitization transactions ( 629 ) ( 651 ) Proceeds from debt 1,460 515 Repayments of debt ( 1,378 ) ( 706 ) Finance lease incentive — 10 Finance lease payment ( 3 ) ( 2 ) Payment of debt issuance costs ( 19 ) ( 6 ) Repurchase of common stock ( 36 ) ( 162 ) Payment of dividends ( 81 ) ( 80 ) Payment of withholding taxes on vesting of restricted stock units ( 6 ) ( 10 ) 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 Change in cash, cash equivalents and restricted cash ( 117 ) ( 374 ) Cash, cash equivalents and restricted cash, beginning of period 574 854 Cash, cash equivalents and restricted cash, end of period $ 457 $ 480 SUPPLEMENTAL DISCLOSURES Non-cash issuance of treasury stock for employee stock purchase plan $ 4 $ 3 Non-cash transfer from inventory to property and equipment 15 10 Non-cash transfer from property and equipment to inventory 23 63 Right-of-use asset obtained in exchange for finance lease obligation 12 80 Non-cash issuance of debt in connection with finance lease 12 97 Interest paid, net of amounts capitalized $ 123 $ 99 Income taxes paid, net of refunds 114 133 See Interim Condensed Notes to Consolidated Financial Statements 5 MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY (In millions) (Unaudited) Common Stock Issued Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total MVW Stockholders' Equity Noncontrolling Interests Total Equity 75.8 BALANCE AT DECEMBER 31, 2023 $ 1 $ ( 2,332 ) $ 3,955 $ 16 $ 742 $ 2,382 $ — $ 2,382 — Net income (loss) — — — — 47 47 ( 1 ) 46 — Foreign currency translation adjustments — — — 1 — 1 — 1 — Derivative instrument adjustment — — — ( 2 ) — ( 2 ) — ( 2 ) — Share-based compensation plans — 5 ( 4 ) — — 1 — 1 — Repurchase of common stock — ( 24 ) — — — ( 24 ) — ( 24 ) — Dividends — — — — ( 26 ) ( 26 ) — ( 26 ) 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 Common Stock Issued Common Stock Treasury Stock Additional Paid-In Capital Accumulated Other Comprehensive Income (Loss) Retained Earnings Total MVW Stockholders' Equity Noncontrolling Interests Total Equity 75.7 BALANCE AT DECEMBER 31, 2022 $ 1 $ ( 2,054 ) $ 3,941 $ 15 $ 593 $ 2,496 $ 2 $ 2,498 — Net income — — — — 87 87 — 87 — Foreign currency translation adjustments — — — 6 — 6 — 6 — Derivative instrument adjustment — — — ( 3 ) — ( 3 ) — ( 3 ) 0.1 Share-based compensation plans — 2 ( 4 ) — — ( 2 ) — ( 2 ) — Repurchase of common stock — ( 80 ) — — — ( 80 ) — ( 80 ) — Dividends — — — — ( 26 ) ( 26 ) — ( 26 ) 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 6 Table of Contents MARRIOTT VACATIONS WORLDWIDE CORPORATION INTERIM CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. BASIS OF PRESENTATION 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 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”). We also use certain other terms that are defined within these Financial Statements. The Financial Statements presented herein and discussed below include 100 % of the assets, liabilities, revenues, expenses, and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance. References in these Financial Statements to net income attributable to common stockholders and MVW stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation. These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. 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, 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. In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, general macroeconomic conditions, including inflationary pressures and seasonal and short-term variations. These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our 2023 Annual Report. We refer to the business and brands that we acquired in the acquisition of ILG, LLC, formerly known as ILG, Inc. (“ILG”), in 2018 (the “ILG Acquisition”) as “Legacy-ILG.” We refer to the business we conducted prior to the ILG Acquisition and the associated brands as “Legacy-MVW.” We refer to the business and brand that we acquired in the acquisition of Welk Hospitality Group, Inc. (“Welk”) in 2021 (the “Welk Acquisition”) as “Legacy-Welk.” During 2023, we rebranded all Legacy-Welk resorts as Hyatt Vacation Club resorts. Additionally, we use the term “Marriott Vacation Ownership” to refer to our Marriott-, Sheraton-, and Westin-brands and the term “Hyatt Vacation Ownership” to refer to our Hyatt-brands. We have reclassified certain prior year amounts to conform with our current year presentation. 7 Table of Contents 2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS Future Adoption of Accounting Standards Accounting Standards Update 2023-07 – “Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures” (“ASU 2023-07”) In November 2023, the FASB issued ASU 2023-07, which updates reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses and information used to assess segment performance. This update is effective for fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. This update will be applied retrospectively for all prior periods presented in the financial statements. 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, 2024. Accounting Standards Update 2023-09 – “Income Taxes (Topic 740): Improvements to Income Tax Disclosures” (“ASU 2023-09”) In December 2023, the FASB issued ASU 2023-09, which is intended to enhance the transparency and decision usefulness of income tax disclosures. ASU 2023-09 primarily enhances and expands both the annual income tax rate reconciliation disclosure and the annual income taxes paid disclosure. This update is effective for fiscal years beginning after December 15, 2024 and may be adopted on a prospective or retrospective basis, with early adoption permitted. 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. 3. ACQUISITIONS Charleston, South Carolina During the first quarter of 2023, we acquired a parcel of land and an adjacent retail space in Charleston, South Carolina for $ 17 million. We plan to develop the parcel of land into a 50 -unit vacation ownership property and use a portion of the retail space to operate a sales center. The transaction was accounted for as an asset acquisition and was recorded in Property and equipment, net. 4. REVENUE AND RECEIVABLES Sources of Revenue by Segment Three Months Ended June 30, 2024 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Sale of vacation ownership products $ 309 $ — $ — $ 309 Ancillary revenues 72 1 — 73 Management fee revenues 51 2 ( 1 ) 52 Exchange and other services revenues 34 42 14 90 Management and exchange 157 45 13 215 Rental 143 10 — 153 Cost reimbursements 384 3 ( 9 ) 378 Revenue from contracts with customers 993 58 4 1,055 Financing 85 — — 85 Total Revenues $ 1,078 $ 58 $ 4 $ 1,140 8 Table of Contents Three Months Ended June 30, 2023 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Sale of vacation ownership products $ 391 $ — $ — $ 391 Ancillary revenues 70 1 — 71 Management fee revenues 45 5 ( 1 ) 49 Exchange and other services revenues 32 45 9 86 Management and exchange 147 51 8 206 Rental 135 11 — 146 Cost reimbursements 359 3 ( 7 ) 355 Revenue from contracts with customers 1,032 65 1 1,098 Financing 80 — — 80 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 9 Table of Contents 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 June 30, 2024 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Services transferred over time $ 607 $ 22 $ 4 $ 633 Goods or services transferred at a point in time 386 36 — 422 Revenue from contracts with customers $ 993 $ 58 $ 4 $ 1,055 Three Months Ended June 30, 2023 ($ in millions) Vacation Ownership Exchange & Third-Party Management Corporate and Other Total Services transferred over time $ 567 $ 27 $ 1 $ 595 Goods or services transferred at a point in time 465 38 — 503 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 10 Table of Contents Sale of Vacation Ownership Products 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 June 30, 2024 or December 31, 2023. ($ in millions) At June 30, 2024 At December 31, 2023 Receivables from Contracts with Customers Accounts and contracts receivable, net $ 212 $ 259 Vacation ownership notes receivable, net 2,308 2,343 $ 2,520 $ 2,602 Contract Liabilities Advance deposits $ 166 $ 164 Deferred revenue 418 382 $ 584 $ 546 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 June 30, 2024, approximately 92 % of this amount is expected to be recognized as revenue over the next two years . Accounts and Contracts Receivable Accounts and contracts receivable is composed of amounts due from customers, primarily owners’ associations, resort developers, owners and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables. The following table shows the composition of our accounts and contracts receivable balances: ($ in millions) At June 30, 2024 At December 31, 2023 Receivables from contracts with customers, net $ 212 $ 259 Interest receivable 20 18 Tax receivable 70 44 Indemnification assets 38 40 Employee tax credit receivable 10 11 Other 20 13 $ 370 $ 385 11 Table of Contents 5. INCOME TAXES Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), based upon expected annual income less losses in certain jurisdictions, non-deductible expenses under federal and local tax laws, statutory rates and planned tax strategies in the various jurisdictions in which we operate. 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 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 six months ended June 30, 2024. ($ in millions) Unrecognized Tax Benefits Balance at December 31, 2023 $ 106 Decreases to tax positions related to a prior period (1) ( 80 ) Decreases as a result of a lapse of the applicable statute of limitation ( 9 ) Balance at June 30, 2024 $ 17 (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 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. The unrecognized tax benefits, including accrued interest and penalties, are included in Other liabilities on our Balance Sheet. Our income tax returns are subject to examination by relevant tax authorities. Certain of our returns are being audited in various jurisdictions for tax years 2007 through 2020. The amount of the unrecognized tax benefits may increase or decrease within the next twelve months as a result of audits or audit settlements. 12 Table of Contents 6. VACATION OWNERSHIP NOTES RECEIVABLE The following table shows the composition of our vacation ownership notes receivable balances, net of reserves. June 30, 2024 December 31, 2023 ($ in millions) Originated Acquired Total Originated Acquired Total Securitized $ 1,790 $ 116 $ 1,906 $ 1,764 $ 148 $ 1,912 Eligible for securitization (1) 56 4 60 51 1 52 Not eligible for securitization (1) 327 15 342 363 16 379 Non-securitized 383 19 402 414 17 431 Total $ 2,173 $ 135 $ 2,308 $ 2,178 $ 165 $ 2,343 (1) Refer to Footnote 7 “Financial Instruments” for discussion of eligibility of our vacation ownership notes receivable for securitization. We reflect interest income associated with vacation ownership notes receivable on our Income Statements in the Financing revenues caption. The following table summarizes interest income associated with vacation ownership notes receivable. 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 10 8 20 17 Total interest income associated with vacation ownership notes receivable $ 82 $ 76 $ 163 $ 152 Credit Quality Indicators - Vacation Ownership Notes Receivable We use the origination of vacation ownership notes receivable and the FICO scores of the customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO score and the brand associated with the vacation ownership interest (“VOI”) they have acquired. 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. 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. 13 Table of Contents 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 $ 12 million reserve, and interest rates for our acquired vacation ownership notes receivable at June 30, 2024. Acquired Vacation Ownership Notes Receivable ($ in millions) Non-Securitized Securitized Total 2024, remaining $ 4 $ 14 $ 18 2025 5 25 30 2026 3 23 26 2027 2 19 21 2028 2 12 14 Thereafter 3 23 26 Balance at June 30, 2024 $ 19 $ 116 $ 135 Weighted average stated interest rate 13.8 % 14.2 % 14.1 % Range of stated interest rates 0.0 % to 21.9 % 0.0 % to 21.9 % 0.0 % to 21.9 % 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 June 30, 2024 ($ in millions) 700+ 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 38 $ 26 $ 3 $ 8 $ 75 Hyatt Vacation Ownership 43 28 1 — 72 $ 81 $ 54 $ 4 $ 8 $ 147 Acquired Vacation Ownership Notes Receivable as of December 31, 2023 ($ in millions) 700+ 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 46 $ 32 $ 4 $ 9 $ 91 Hyatt Vacation Ownership 53 34 1 1 89 $ 99 $ 66 $ 5 $ 10 $ 180 Originated Vacation Ownership Notes Receivable 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 June 30, 2024. Originated Vacation Ownership Notes Receivable ($ in millions) Non-Securitized Securitized Total 2024, remaining $ 34 $ 71 $ 105 2025 50 145 195 2026 41 154 195 2027 38 161 199 2028 33 167 200 Thereafter 187 1,092 1,279 Balance at June 30, 2024 $ 383 $ 1,790 $ 2,173 Weighted average stated interest rate 12.0 % 13.3 % 13.0 % Range of stated interest rates 0.0 % to 20.9 % 0.0 % to 20.9 % 0.0 % to 20.9 % 14 Table of Contents The following table summarizes the activity related to our originated vacation ownership notes receivable reserve. Originated Vacation Ownership Notes Receivable Reserve ($ in millions) Non-Securitized Securitized Total Balance at December 31, 2023 $ 195 $ 260 $ 455 Increase in vacation ownership notes receivable reserve 144 18 162 Securitizations ( 86 ) 86 — Clean-up call 34 ( 34 ) — Write-offs ( 89 ) — ( 89 ) Defaulted vacation ownership notes receivable repurchase activity (1) 73 ( 73 ) — 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 June 30, 2024 ($ in millions) 700 + 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 1,427 $ 618 $ 58 $ 326 $ 2,429 Hyatt Vacation Ownership 195 72 2 3 272 $ 1,622 $ 690 $ 60 $ 329 $ 2,701 Originated Vacation Ownership Notes Receivable as of December 31, 2023 ($ in millions) 700 + 600 - 699 < 600 No Score Total Marriott Vacation Ownership $ 1,381 $ 609 $ 57 $ 323 2,370 Hyatt Vacation Ownership 188 70 2 3 263 $ 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 June 30, 2024, and gross write-offs by brand for the first half of 2024. Originated Vacation Ownership Notes Receivable - Marriott Vacation Ownership ($ in millions) 2024 2023 2022 2021 2020 & Prior Total 700 + $ 247 $ 438 $ 319 $ 177 $ 246 $ 1,427 600 - 699 81 171 144 91 131 618 < 600 8 16 13 8 13 58 No Score 82 114 52 19 59 326 $ 418 $ 739 $ 528 $ 295 $ 449 $ 2,429 Gross write-offs $ 1 $ 18 $ 22 $ 14 $ 20 $ 75 15 Table of Contents Originated Vacation Ownership Notes Receivable - Hyatt Vacation Ownership ($ in millions) 2024 2023 2022 2021 2020 & Prior Total 700 + $ 49 $ 69 $ 50 $ 23 $ 4 $ 195 600 - 699 16 25 20 9 2 72 < 600 1 — 1 — — 2 No Score 1 1 1 — — 3 $ 67 $ 95 $ 72 $ 32 $ 6 $ 272 Gross write-offs $ — $ 5 $ 6 $ 3 $ — $ 14 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 14.77 % as of June 30, 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 June 30, 2024 and 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. Vacation Ownership Notes Receivable ($ in millions) Non-Securitized Securitized Total Investment in vacation ownership notes receivable on non-accrual status at June 30, 2024 $ 171 $ 22 $ 193 Investment in vacation ownership notes receivable on non-accrual status at December 31, 2023 $ 141 $ 27 $ 168 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 31 – 90 days past due $ 27 $ 77 $ 104 $ 31 $ 72 $ 103 91 – 120 days past due 8 16 24 7 19 26 Greater than 120 days past due 163 6 169 134 8 142 Total past due 198 99 297 172 99 271 Current 480 2,071 2,551 460 2,082 2,542 Total vacation ownership notes receivable $ 678 $ 2,170 $ 2,848 $ 632 $ 2,181 $ 2,813 16 Table of Contents 7. FINANCIAL INSTRUMENTS The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with the authoritative guidance for disclosures regarding the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. 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, 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 Amount Fair Value Carrying Amount Fair Value Vacation ownership notes receivable, net $ 2,308 $ 2,360 $ 2,343 $ 2,427 Contracts receivable for financed VOI sales, net 51 51 37 37 Other assets 118 118 99 99 Total financial assets $ 2,477 $ 2,529 $ 2,479 $ 2,563 Securitized debt, net $ ( 2,098 ) $ ( 2,085 ) $ ( 2,096 ) $ ( 2,068 ) Term Loan, net ( 789 ) ( 802 ) ( 781 ) ( 784 ) Revolving Corporate Credit Facility, net ( 172 ) ( 175 ) ( 101 ) ( 105 ) 2028 Notes, net ( 348 ) ( 331 ) ( 348 ) ( 322 ) 2029 Notes, net ( 495 ) ( 460 ) ( 495 ) ( 445 ) 2026 Convertible Notes, net ( 570 ) ( 503 ) ( 568 ) ( 508 ) 2027 Convertible Notes, net ( 565 ) ( 536 ) ( 563 ) ( 513 ) Non-interest bearing note payable, net — — ( 4 ) ( 4 ) Total financial liabilities $ ( 5,037 ) $ ( 4,892 ) $ ( 4,956 ) $ ( 4,749 ) Vacation Ownership Notes Receivable At June 30, 2024 At December 31, 2023 ($ in millions) Carrying Amount Fair Value Carrying Amount Fair Value Securitized $ 1,906 $ 1,954 $ 1,912 $ 1,994 Eligible for securitization 60 64 52 54 Not eligible for securitization 342 342 379 379 Non-securitized 402 406 431 433 Total $ 2,308 $ 2,360 $ 2,343 $ 2,427 We estimate the fair value of our vacation ownership notes receivable that have been securitized using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates, and loan terms for our securitized vacation ownership notes receivable portfolio as key drivers of risk and relative value to determine the fair value of the underlying vacation ownership notes receivable. We concluded that this fair value measurement should be categorized within Level 3. Due to factors that impact the general marketability of our vacation ownership notes receivable that have not been securitized, as well as current market conditions, we bifurcate our non-securitized vacation ownership notes receivable at each balance sheet date into those eligible and not eligible for securitization using criteria applicable to current securitization transactions in the asset-backed securities (“ABS”) market. Generally, vacation ownership notes receivable are considered not eligible for securitization if any of the following attributes are present: (1) payments are greater than 30 days past due; (2) the first payment has not been received; or (3) the collateral is located in Asia or Europe. In some cases, eligibility may also be determined based on the credit score of the borrower, the remaining term of the loans and other similar factors that may reflect investor demand in a securitization transaction or the cost to effectively securitize the vacation ownership notes receivable. 17 Table of Contents The table above shows the bifurcation of our vacation ownership notes receivable that have not been securitized into those eligible and not eligible for securitization based upon the aforementioned eligibility criteria. We estimate the fair value of the portion of our vacation ownership notes receivable that have not been securitized that we believe will ultimately be securitized in the same manner as vacation ownership notes receivable that have been securitized. We value the remaining vacation ownership notes receivable that have not been securitized at their carrying value, rather than using our pricing model. We believe that the carrying value of these particular vacation ownership notes receivable approximates fair value because the stated, or otherwise imputed, interest rates of these loans are generally consistent with current market rates and the reserve for these vacation ownership notes receivable appropriately accounts for risks in default rates, prepayment rates, discount rates, and loan terms. We concluded that this fair value measurement should be categorized within Level 3. Contracts Receivable for Financed VOI Sales At the time at which we recognize revenue for Marriott-branded VOI sales, we temporarily record a contract receivable for financed VOI sales, until the time at which we originate a vacation ownership note receivable, which occurs at closing. We believe that the carrying value of the contracts receivable for financed VOI sales approximates fair value because the stated, or otherwise imputed, interest rates of these receivables are generally consistent with current market rates and the reserve for these contracts receivable for financed VOI sales appropriately accounts for risks in default rates. We concluded that this fair value measurement should be categorized within Level 3. Other Assets 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). Securitized Debt We generate cash flow estimates by modeling all bond tranches for our active vacation ownership notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates, and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for vacation ownership securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable. We concluded that this fair value measurement should be categorized within Level 3. Term Loan We estimate the fair value of our Term Loan (as defined in Footnote 12 “Debt”) using quotes from securities dealers as of the last trading day for the quarter; however, this loan has only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the Term Loan could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 3. Revolving Corporate Credit Facility We estimate that the gross carrying value of our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”) approximates fair value as the contractual interest rate is variable plus an applicable margin. We concluded that this fair value measurement should be categorized within Level 3. Senior Notes We estimate the fair value of our 2028 Notes and 2029 Notes (each as defined in Footnote 12 “Debt”) using quoted market prices as of the last trading day for the quarter; however, these notes have only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which these notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. Convertible Notes We estimate the fair value of our convertible notes using quoted market prices as of the last trading day for the quarter; however, these notes have only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the convertible notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2. 18 Table of Contents 8. EARNINGS PER SHARE Basic earnings per common share attributable to common stockholders is calculated by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted earnings per common share attributable to common stockholders reflects the assumed conversion of all dilutive securities, calculated using the treasury stock method. 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 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 Basic earnings per share $ 1.04 $ 2.46 $ 2.36 $ 4.78 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 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 Numerator used to calculate diluted earnings per share $ 41 $ 95 $ 93 $ 186 Shares for basic earnings per share 35.4 36.9 35.5 37.1 Effect of dilutive shares outstanding Employee SARs — 0.1 — 0.2 Restricted stock units 0.1 0.3 0.1 0.3 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 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. 19 Table of Contents 9. INVENTORY The following table shows the composition of our inventory balances: ($ in millions) At June 30, 2024 At December 31, 2023 Finished goods (1) $ 629 $ 624 Work-in-progress 4 — Real estate inventory 633 624 Other 10 10 $ 643 $ 634 (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 $ 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. 10. CONTINGENCIES AND COMMITMENTS Commitments and Letters of Credit 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 $ 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. We expect to complete the acquisition of 32 vacation ownership units in 2025 pursuant to one of the commitments, and to make remaining payments with respect to these units when specific construction milestones are completed as follows: $ 2 million in the remainder of 2024, $ 10 million in 2025, and $ 1 million in 2026. We expect to complete the acquisition of 26 vacation ownership units in 2026 pursuant to the other commitment, and to make remaining payments with respect to these units when specific construction milestones are completed as follows: $ 4 million in the remainder of 2024, $ 2 million in 2025, $ 14 million in 2026, and $ 1 million in 2027. • We have a remaining commitment of $ 37 million to purchase 60 vacation ownership units located in Khao Lak, Thailand, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. We expect to complete the acquisition of these vacation ownership units in 2026. We expect to make remaining payments when specific construction milestones are completed as follows: $ 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. 20 Table of Contents 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. Guarantees 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 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. The agreement will terminate on the earlier of: (1) sale of 95 % of the total ownership interests in the owners’ association; or (2) written notification of termination by either party. 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 In February 2019, the owners’ association for the St. Regis Residence Club, New York filed a lawsuit in the Supreme Court for the State of New York, New York County, Commercial Division against ILG and several of its subsidiaries and certain third parties. The operative complaint alleges that the defendants breached their fiduciary duties related to sale and rental practices, aided and abetted certain breaches of fiduciary duty, engaged in self-dealing as the sponsor and manager of the club, tortiously interfered with the management agreement, were unjustly enriched, and engaged in anticompetitive conduct. The plaintiff is seeking unspecified damages, punitive damages and disgorgement of payments under the management and purchase agreements. In February 2022, the Court granted our motion to dismiss the complaint and dismissed with prejudice all claims except one (such claim, the “Remaining Claim”), with respect to which the plaintiff was granted leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and appealed the dismissal of the other claims. In June 2023, the appellate court upheld the dismissal of those claims. Plaintiff filed a motion for reconsideration of that appellate ruling, and in October 2023, the appellate court denied that motion. In November 2022, the Court granted our motion to dismiss the amended complaint with respect to the Remaining Claim and again granted plaintiff leave to amend its complaint. The plaintiff filed an amended complaint with respect to the Remaining Claim and again appealed the dismissal of the other claims. In January 2024, the appellate court upheld the dismissal of the other claims. 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’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. A number of these lawsuits and claims may exist at any given time. Additionally, the COVID-19 pandemic may give rise to various claims and lawsuits from owners, members and other parties. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances. 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 21 Table of Contents 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. 11. SECURITIZED DEBT The following table provides detail on our securitized debt, net of unamortized debt discount and issuance costs. ($ in millions) At June 30, 2024 At December 31, 2023 Vacation ownership notes receivable securitizations, gross (1) $ 2,016 $ 1,971 Unamortized debt discount and issuance costs ( 24 ) ( 23 ) 1,992 1,948 Warehouse Credit Facility, gross (2) 108 150 Unamortized debt issuance costs ( 2 ) ( 2 ) 106 148 $ 2,098 $ 2,096 (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 June 30, 2024. Vacation Ownership Notes Receivable Securitizations Warehouse Credit Facility (1) Total ($ in millions) Payment Year 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 Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. 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 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. During the first quarter of 2024, we securitized a pool of $ 439 million of vacation ownership notes receivable. In connection with the securitization, $ 430 million in vacation ownership loan backed notes were issued by MVW 2024-1 LLC (the “2024-1 LLC”) in a private placement. Three classes of vacation ownership loan backed notes were issued by the 2024-1 LLC: $ 284 million of Class A Notes, $ 89 million of Class B Notes, and $ 57 million of Class C Notes. The 22 Table of Contents 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. 12. DEBT The following table provides detail on our debt balances, net of unamortized debt discount and issuance costs. ($ in millions) At June 30, 2024 At December 31, 2023 Corporate Credit Facility Term Loan (1) $ 800 $ 784 Unamortized debt discount and issuance costs ( 11 ) ( 3 ) 789 781 Revolving Corporate Credit Facility (2) 175 105 Unamortized debt issuance costs ( 3 ) ( 4 ) 172 101 Senior Unsecured Notes 2028 Notes 350 350 Unamortized debt discount and issuance costs ( 2 ) ( 2 ) 348 348 2029 Notes 500 500 Unamortized debt discount and issuance costs ( 5 ) ( 5 ) 495 495 Convertible Notes 2026 Convertible Notes 575 575 Unamortized debt issuance costs ( 5 ) ( 7 ) 570 568 2027 Convertible Notes 575 575 Unamortized debt issuance costs ( 10 ) ( 12 ) 565 563 Finance Leases 198 189 Non-interest bearing note payable — 4 $ 3,137 $ 3,049 (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 %. 23 Table of Contents The following table shows scheduled principal payments for our debt, excluding finance leases, as of June 30, 2024. Payments Year ($ in millions) Remaining 2024 2025 2026 2027 2028 Thereafter Total Term Loan $ 4 $ 8 $ 8 $ 8 $ 8 $ 764 $ 800 Revolving Corporate Credit Facility — — — 175 — — 175 2028 Notes — — — — 350 — 350 2029 Notes — — — — — 500 500 2026 Convertible Notes — — 575 — — — 575 2027 Convertible Notes — — — 575 — — 575 $ 4 $ 8 $ 583 $ 758 $ 358 $ 1,264 $ 2,975 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 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. 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. ($ in millions) 2024 2023 Derivative instrument adjustment balance, January 1 $ 3 $ 13 Other comprehensive loss before reclassifications ( 2 ) ( 3 ) Derivative instrument adjustment balance, March 31 1 10 Other comprehensive loss before reclassifications ( 1 ) ( 1 ) Derivative instrument adjustment balance, June 30 $ — $ 9 Senior Notes Our senior notes include: • $ 350 million aggregate principal amount of 4.750 % Senior Unsecured Notes due 2028 issued in the fourth quarter of 2019 with a maturity date of January 15, 2028 (the “2028 Notes”). • $ 500 million aggregate principal amount of 4.500 % Senior Unsecured Notes due 2029 issued in the second quarter of 2021 with a maturity date of June 15, 2029 (the “2029 Notes”). 24 Table of Contents Convertible Notes 2026 Convertible Notes During 2021, we issued $ 575 million aggregate principal amount of convertible senior notes (the “2026 Convertible Notes”) that bear interest at a rate of 0.00 %. 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 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 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 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 2026 Convertible Note Hedges and Warrants 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 June 30, 2024. 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 During 2022, we issued $ 575 million aggregate principal amount of convertible senior notes (the “2027 Convertible Notes”) that bear interest at a rate of 3.25 %. 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 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 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 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 June 30, 2024. 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. 25 Table of Contents 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 certain bankruptcy remote special purpose subsidiaries. 13. STOCKHOLDERS’ EQUITY Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $ 0.01 per share. 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 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 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. The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors. In connection with the current Share Repurchase Program, we are authorized to adopt one or more plans pursuant to the provisions of Rule 10b5-1 under the Securities Exchange Act of 1934, as amended. The authorization for the current Share Repurchase Program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice. Acquired shares of our common stock are currently held as treasury shares and carried at cost in our Financial Statements. The following table summarizes share repurchase activity under our Share Repurchase Program: ($ in millions, except per share amounts) Number of Shares Repurchased Cost Basis of Shares Repurchased Average Price Paid per Share As of December 31, 2023 25,141,073 $ 2,405 $ 95.65 For the first half of 2024 410,377 36 $ 88.99 As of June 30, 2024 25,551,450 $ 2,441 $ 95.55 Dividends 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. There can be no assurance that we will pay dividends in the future. Declaration Date Stockholder Record Date Distribution Date Dividend per Share February 15, 2024 February 29, 2024 March 14, 2024 $ 0.76 May 9, 2024 May 23, 2024 June 6, 2024 $ 0.76 26 Table of Contents 14. SHARE-BASED COMPENSATION 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 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 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 8 11 15 18 SARs 1 1 1 1 $ 9 $ 12 $ 16 $ 19 The following table details our deferred compensation costs related to unvested awards: ($ in millions) At June 30, 2024 At December 31, 2023 Service-based RSUs $ 41 $ 22 Performance-based RSUs 7 1 48 23 SARs 2 1 $ 50 $ 24 Restricted Stock Units 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 half of 2024. We use the Black-Scholes model to estimate the fair value of the SARs granted. The expected stock price volatility was calculated based on the average of the historical and implied volatility of our stock price. The average expected life was calculated using the simplified method, as we have insufficient historical information to provide a basis for estimating average expected life. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. 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 half of 2024: Expected volatility 45.78 % Dividend yield 3.21 % Risk-free rate 4.23 % Expected term (in years) 6.25 27 Table of Contents 15. VARIABLE INTEREST ENTITIES 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 June 30, 2024: ($ in millions) Vacation Ownership Notes Receivable Securitizations Warehouse Credit Facility Total Consolidated Assets Vacation ownership notes receivable, net of reserves $ 1,789 $ 117 $ 1,906 Interest receivable 16 1 17 Restricted cash 70 4 74 Total $ 1,875 $ 122 $ 1,997 Consolidated Liabilities Interest payable $ 3 $ 1 $ 4 Securitized debt 2,016 108 2,124 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 second quarter of 2024: ($ in millions) Vacation Ownership Notes Receivable Securitizations Warehouse Credit Facility Total Interest income $ 70 $ 2 $ 72 Interest expense $ 25 $ 1 $ 26 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 28 Table of Contents The following table shows cash flows between us and the vacation ownership notes receivable securitization VIEs: Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Cash Inflows Net proceeds from vacation ownership notes receivable securitizations $ 426 $ 396 Principal receipts 275 255 Interest receipts 132 120 Reserve release 112 16 Total 945 787 Cash Outflows Principal payments ( 277 ) ( 259 ) Voluntary repurchases of defaulted vacation ownership notes receivable ( 78 ) ( 57 ) Voluntary clean-up call ( 29 ) ( 19 ) Interest payments ( 50 ) ( 34 ) Funding of restricted cash ( 112 ) ( 17 ) Total ( 546 ) ( 386 ) Net Cash Flows $ 399 $ 401 The following table shows cash flows between us and the Warehouse Credit Facility VIE: Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Cash Inflows Proceeds from vacation ownership notes receivable securitizations $ 203 $ 342 Principal receipts 12 25 Interest receipts 7 14 Reserve release 6 8 Total 228 389 Cash Outflows Principal payments ( 7 ) ( 19 ) Voluntary repurchases of defaulted vacation ownership notes receivable ( 2 ) ( 1 ) Repayment of Warehouse Credit Facility ( 236 ) ( 296 ) Interest payments ( 4 ) ( 5 ) Funding of restricted cash ( 5 ) ( 11 ) Total ( 254 ) ( 332 ) Net Cash Flows $ ( 26 ) $ 57 Under the terms of our vacation ownership notes receivable securitizations, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell, and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral. 29 Table of Contents Other Variable Interest Entities We have a commitment to purchase a property located in Waikiki, Hawaii. 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 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 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. Deferred Compensation Plan We consolidate the liabilities of the Deferred Compensation Plan and the related assets, which consist of the COLI policies held in a rabbi trust. The rabbi trust is considered a VIE. 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 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. 16. BUSINESS SEGMENTS We define our reportable segments based on the way in which the chief operating decision maker (“CODM”), currently our chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance. 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. We are the exclusive worldwide developer, marketer, seller and manager of vacation ownership and related products under the Marriott Vacation Club, Grand Residences by Marriott, Sheraton Vacation Club, Westin Vacation Club, and Hyatt Vacation Club brands. We are also the exclusive worldwide developer, marketer and seller of vacation ownership and related products under The Ritz-Carlton Club brand, and we have the non-exclusive right to develop, market and sell whole ownership residential products under The Ritz-Carlton Residences brand. We also have a license to use the St. Regis brand for specified fractional ownership products. Our Vacation Ownership segment generates most of its revenues from four primary sources: selling vacation ownership products; managing vacation ownership resorts, clubs, and owners’ associations; financing consumer purchases of vacation ownership products; and renting vacation ownership inventory. Exchange & Third-Party Management includes an exchange network and membership programs, as well as provision of management services to other resorts and lodging properties. We provide these services through our Interval International and Aqua-Aston businesses. Exchange & Third-Party Management revenue generally is fee-based and derived from membership, exchange, and rental transactions, property and owners’ association management, and other related products and services. Our CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation and amortization, other gains and losses, equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated owners’ associations, as our CODM does not use this information to make operating segment resource allocations. 30 Table of Contents Our CODM uses Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to evaluate the profitability of our operating segments, and the components of net income attributable to common stockholders excluded from Adjusted EBITDA are not separately evaluated. Adjusted EBITDA is defined as net income attributable to common stockholders, before interest expense (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization, excluding share-based compensation expense and adjusted for certain items that affect the comparability of our operating performance. Our reconciliation of the aggregate amount of Adjusted EBITDA for our reportable segments to consolidated net income attributable to common stockholders is presented below. Revenues 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 Exchange & Third-Party Management 58 65 123 136 Total segment revenues 1,136 1,177 2,331 2,345 Consolidated Property Owners’ Associations 4 1 4 2 $ 1,140 $ 1,178 $ 2,335 $ 2,347 Adjusted EBITDA and Reconciliation to Net Income Attributable to Common Stockholders 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 Adjusted EBITDA Exchange & Third-Party Management 25 32 57 69 Reconciling items: Corporate and other ( 48 ) ( 55 ) ( 106 ) ( 118 ) Interest expense, net ( 43 ) ( 36 ) ( 83 ) ( 70 ) Tax provision ( 10 ) ( 50 ) ( 45 ) ( 91 ) Depreciation and amortization ( 35 ) ( 34 ) ( 73 ) ( 66 ) Share-based compensation expense ( 9 ) ( 12 ) ( 16 ) ( 19 ) Certain items ( 23 ) — ( 43 ) ( 2 ) Net income attributable to common stockholders $ 37 $ 90 $ 84 $ 177 Assets ($ in millions) At June 30, 2024 At December 31, 2023 Vacation Ownership $ 8,173 $ 8,167 Exchange & Third-Party Management 783 813 Total segment assets 8,956 8,980 Corporate and other 655 700 $ 9,611 $ 9,680 Revenues Excluding Cost Reimbursements 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 31 Table of Contents