MARRIOTT VACATIONS WORLDWIDE Corp 10-Q

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations Forward-Looking Statements We make forward-looking statements throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations, and elsewhere in this Quarterly Report on Form 10-Q (this “Quarterly Report”), based on our management’s beliefs and assumptions and on information currently available to our management. Forward-looking statements include, among other things, the information concerning: timing of payments related to purchase commitments; our possible or assumed future results of operations, financial condition, leverage, the ratio of our corporate debt, net of cash and equivalents, to Adjusted EBITDA, liquidity, returns on investments, margins including financing profit and development profit margins; dividend payments; business strategies; financing plans; our competitive position; our plans to pursue growth opportunities; potential operating performance, including our expectations regarding contract sales, including contract sales from our Maui sales centers; our expectation that consumer financing interest expense will remain higher than our average outstanding interest rates on existing securitization transactions; our expectation that inventory spending will exceed cost of sales for the remainder of 2024 due to our commitment to acquire property in Waikiki and the quantity and impact of inventory repurchases on the future cost of our vacation ownership products; indemnification; capital requirements; taxes, including the impact of Pillar 2; our ability to securitize consumer loans and related default rates and reserve requirements; the pace of originations of vacation ownership notes receivable compared to payoffs of existing notes receivable; and the rate of maintenance fee increases. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions. Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in these forward-looking statements. We caution you that these statements are not guarantees of future performance and are subject to numerous and evolving risks and uncertainties that we may not be able to predict or assess, such as: a future health crisis and responses to such a health crisis, including possible quarantines or other government imposed travel or health-related restrictions and the effects of a health crisis, including the short and longer-term impact on consumer confidence and demand for travel and the pace of recovery following a health crisis; variations in demand for vacation ownership and exchange products and services; worker absenteeism; price inflation; difficulties associated with implementing new or maintaining existing technology; changes in privacy laws; the impact of a future banking crisis; impacts from natural or man-made disasters and wildfires, including the Maui wildfires; global supply chain disruptions; volatility in the international and national economy and credit markets, including as a result of the ongoing conflicts between Russia and Ukraine, Israel and Gaza and elsewhere in the world and related sanctions and other measures; our ability to attract and retain our global workforce; competitive conditions; the availability of capital to finance growth; the impact of changes in interest rates; the effects of steps we have taken and may continue to take to reduce operating costs; political or social strife; and other matters referred to under the heading “Risk Factors” contained herein and also in our 2023 Annual Report, and which may be updated in our future periodic filings with the U.S. Securities and Exchange Commission (the “SEC”). All forward-looking statements in this Quarterly Report apply only as of the date of this Quarterly Report or as of the date they were made or as otherwise specified herein. We do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. You should not put undue reliance on any forward-looking statements in this Quarterly Report. We do not have any intention or obligation to update forward-looking statements after the date of this Quarterly Report, except as required by law. The risk factors discussed in “Risk Factors” in our 2023 Annual Report could cause actual results to differ materially from those expressed or implied in forward-looking statements in this Quarterly Report. There may be other risks and uncertainties that we cannot predict at this time or that we currently do not expect will have a material adverse effect on our financial position, results of operations or cash flows. Any such risks could cause our results to differ materially from those we express in forward-looking statements. Our Financial Statements (as defined below), which we discuss below, reflect our historical financial condition, results of operations and cash flows. However, the financial information discussed below and included in this Quarterly Report may not necessarily reflect what our financial condition, results of operations or cash flows may be in the future. In order to make this report easier to read, we refer 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 that we include in the Financial Statements of this Quarterly Report. 32 Table of Contents Business Overview We are a leading global vacation company that offers vacation ownership, exchange, rental and resort and property management, along with related businesses, products and services. Our business operates in two reportable segments: Vacation Ownership and Exchange & Third-Party Management. Our Vacation Ownership segment 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. Our Exchange & Third-Party Management segment includes an exchange network and membership programs, as well as the provision of management services to other resorts and lodging properties. 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. We provide these services through our Interval International and Aqua-Aston businesses. Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated property owners’ associations (“Consolidated Property Owners’ Associations”). We routinely post important information, including news releases, announcements and other statements about our business and results of operations, that may be deemed material to investors on the Investor Relations section of our website, www.marriottvacationsworldwide.com. We use our website as a means of disclosing material, nonpublic information and for complying with our disclosure obligations under Regulation FD. Investors should monitor the Investor Relations section of our website in addition to following our press releases, filings with the SEC, public conference calls and webcasts. The information on our website is not part of, and is not incorporated by reference into this Quarterly Report. 33 Table of Contents Performance Measures We measure operating performance using the key metrics described below: • Contract sales from the sale of vacation ownership products, which consists of the total amount of vacation ownership product sales under contracts signed during the period where we have generally received a down payment of at least ten percent of the contract price, reduced by actual rescissions during the period, inclusive of contracts associated with sales of vacation ownership products on behalf of third parties, which we refer to as “resales contract sales.” In circumstances where customers apply any or all of their existing ownership interests as part of the purchase price for additional interests, we include only the incremental value purchased as contract sales. Contract sales differ from revenues from the sale of vacation ownership products that we report on our income statements due to the requirements for revenue recognition and adjustments for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business. • Total contract sales include contract sales from the sale of vacation ownership products including non-consolidated joint ventures. • Consolidated contract sales exclude contract sales from the sale of vacation ownership products for non-consolidated joint ventures. • Volume per guest (“VPG”) is calculated by dividing consolidated vacation ownership contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a tour, by the number of tours in a given period. We believe that this operating metric is valuable in evaluating the effectiveness of the sales process as it combines the impact of average contract price with the number of touring guests who make a purchase. • Development profit margin is calculated by dividing Development profit by revenues from the sale of vacation ownership products. We refer to revenues from the sale of vacation ownership products less the cost of vacation ownership products and marketing and sales costs as Development profit. We believe that Development profit margin is an important measure of the profitability of our development and subsequent marketing and sales of VOIs. • Total active members is the number of Interval Network active members at the end of the applicable period. We consider active members to be an important metric because it represents the population of owners eligible to book transactions using the Interval Network. • Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue for the Interval Network by the monthly weighted average number of Interval Network active members during the applicable period. We believe this metric is valuable in measuring the overall engagement of our Interval Network active members. • Segment financial results attributable to common stockholders represents revenues less expenses directly attributable to each applicable reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We consider this measure to be important in evaluating the performance of our reportable business segments. See Footnote 16 “Business Segments” to our Financial Statements for further information on our reportable business segments. • Adjusted EBITDA margin is calculated by dividing Adjusted EBITDA by total revenues less cost reimbursement revenues. • Segment Adjusted EBITDA margin is calculated by dividing Segment Adjusted EBITDA by the applicable segment’s total revenues less cost reimbursement revenues. NM = Not meaningful. 34 Table of Contents Consolidated Results Three Months Ended Six Months Ended ($ in millions) 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 35 Table of Contents Operating Statistics Three Months Ended Six Months Ended (Contract sales $ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Vacation Ownership Total contract sales $ 452 $ 462 $ (10) (2%) $ 885 $ 906 $ (21) (2%) Consolidated contract sales $ 449 $ 453 $ (4) (1%) $ 877 $ 887 $ (10) (1%) Joint venture contract sales $ 3 $ 9 $ (6) (65%) $ 8 $ 19 $ (11) (57%) VPG $ 3,741 $ 3,968 $ (227) (6%) $ 3,921 $ 4,150 $ (229) (6%) Exchange & Third-Party Management Total active members at end of period (000's) 1,530 1,566 (36) (2%) 1,530 1,566 (36) (2%) Average revenue per member $ 38.30 $ 39.30 $ (1.00) (3%) $ 80.14 $ 81.35 $ (1.21) (1%) Revenues Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Vacation Ownership $ 1,078 $ 1,112 $ (34) (3%) $ 2,208 2,209 $ (1) —% Exchange & Third-Party Management 58 65 (7) (11%) 123 136 (13) (10%) Total Segment Revenues 1,136 1,177 (41) (4%) 2,331 2,345 (14) (1%) Consolidated Property Owners’ Associations 4 1 3 NM 4 2 2 NM Total Revenues $ 1,140 $ 1,178 $ (38) (3%) 2,335 2,347 $ (12) (1%) Earnings Before Interest Expense, Taxes, Depreciation and Amortization (“EBITDA”) and Adjusted EBITDA EBITDA, a financial measure that is not prescribed by GAAP, is defined as earnings, or net income attributable to common stockholders, before interest expense, net (excluding consumer financing interest expense associated with term securitization transactions), income taxes, depreciation and amortization. Adjusted EBITDA reflects additional adjustments for certain items, and excludes share-based compensation expense to address considerable variability among companies in recording compensation expense because companies use share-based payment awards differently, both in the type and quantity of awards granted. For purposes of our EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin calculations, we do not adjust for consumer financing interest expense associated with term securitization transactions because we consider it to be an operating expense of our business. We consider Adjusted EBITDA to be an indicator of operating performance, which we use to measure our ability to service debt, fund capital expenditures, expand our business, and return cash to stockholders. We consider Adjusted EBITDA margin to be an indicator of our operating performance. We also use Adjusted EBITDA and Adjusted EBITDA margin, as do analysts, lenders, investors, and others, because these measures exclude certain items that can vary widely across different industries or among companies within the same industry. For example, interest expense can be dependent on a company’s capital structure, debt levels and credit ratings. Accordingly, the impact of interest expense on earnings can vary significantly among companies. The tax positions of companies can also vary because of their differing abilities to take advantage of tax benefits and because of the tax policies of the jurisdictions in which they operate. As a result, effective tax rates and provisions for income taxes can vary considerably among companies. EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin also exclude depreciation and amortization because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating productive assets. These differences can result in considerable variability in the relative costs of productive assets and the depreciation and amortization expense among companies. We believe Adjusted EBITDA is useful as an indicator of operating performance because it allows for period-over-period comparisons of our on-going core operations before the impact of the excluded items. We believe Adjusted EBITDA margin is useful as an indicator of operating profitability because it allows for period-over-period comparisons of the profitability of our on-going core operations before the impact of the excluded items. Adjusted 36 Table of Contents EBITDA and Adjusted EBITDA margin also facilitate comparisons by us, analysts, investors, and others of results from our on-going core operations before the impact of these items with results from other companies. EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin have limitations and should not be considered in isolation or as a substitute for performance measures calculated in accordance with GAAP. In addition, other companies in our industry may calculate EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin differently than we do or may not calculate them at all, limiting their usefulness as comparative measures. The table below shows our EBITDA and Adjusted EBITDA calculation and reconciles these measures with Net income attributable to common stockholders, which is the most directly comparable GAAP financial measure. Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Net income attributable to common stockholders $ 37 $ 90 $ (53) (59%) $ 84 $ 177 $ (93) (53%) Interest expense, net 43 36 7 21% 83 70 13 19% Provision for income taxes 10 50 (40) (79%) 45 91 (46) (50%) Depreciation and amortization 35 34 1 7% 73 66 7 12% EBITDA 125 210 (85) (40%) 285 404 (119) (29%) Share-based compensation expense 9 12 (3) (21%) 16 19 (3) (18%) Certain items 23 — 23 NM 43 2 41 NM Adjusted EBITDA $ 157 $ 222 $ (65) (29%) $ 344 $ 425 $ (81) (19%) Adjusted EBITDA Margin 20.7% 26.9% (6.2 pts) 22.0% 26.1% (4.1 pts) The table below details the components of Certain items for the periods presented. Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 ILG integration $ — $ 6 $ — $ 15 Welk acquisition and integration 3 4 18 8 Transaction and integration costs 3 10 18 23 Purchase accounting adjustments — 1 1 3 Litigation charges 10 2 13 5 Restructuring charges 1 — 3 — Impairment charges 2 — 2 4 Early redemption of senior secured notes — — — 10 Gain on disposition of hotel, land and other (1) (7) (1) (7) Foreign currency translation 4 (2) 6 (4) Insurance proceeds — — — (2) Change in indemnification asset 4 (1) 2 (24) Other — — — (4) Losses (gains) and other expense (income), net 7 (10) 7 (31) Other — (3) (1) (2) Total Certain items $ 23 $ — $ 43 $ 2 Commencing in the second quarter of 2024, we discontinued classifying adjustments related to Welk purchase accounting as Purchase accounting adjustments. Ongoing costs associated with the continued integration of Welk will be reflected in our operating results commencing in the third quarter of 2024. 37 Table of Contents Segment Adjusted EBITDA Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Vacation Ownership $ 180 $ 245 $ (65) (26%) $ 393 $ 474 $ (81) (17%) Exchange & Third-Party Management 25 32 (7) (22%) 57 69 (12) (17%) Segment adjusted EBITDA 205 277 (72) (26%) 450 543 (93) (17%) General and administrative (54) (64) 10 15% (117) (132) 15 11% Other 6 9 (3) (28%) $ 11 $ 14 $ (3) (22%) Adjusted EBITDA $ 157 $ 222 $ (65) (29%) $ 344 $ 425 $ (81) (19%) The following tables present segment financial results attributable to common stockholders reconciled to segment Adjusted EBITDA. Vacation Ownership Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Segment financial results $ 144 $ 224 $ (80) (36%) $ 326 $ 429 $ (103) (24%) Depreciation and amortization 25 23 2 7% 50 46 4 9% Share-based compensation expense 2 3 (1) (4%) 4 4 — (6%) Certain items 9 (5) 14 NM 13 (5) 18 NM Segment adjusted EBITDA $ 180 $ 245 $ (65) (26%) $ 393 $ 474 $ (81) (17%) Segment Adjusted EBITDA Margin 26.0% 32.5% (6.5 pts) 27.6% 32.0% (4.4 pts) The table below details the components of Certain items for Vacation Ownership segment financial results. Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 Purchase accounting adjustments $ — $ 1 1 3 Litigation charges 10 3 13 6 Impairment charges — — — 4 Gain on disposition of hotel, land and other (1) (7) (1) (7) Insurance proceeds — — — (2) Change in indemnification asset — — — (3) Other — — — (4) Gains and other income, net (1) (7) (1) (16) Other — (2) — (2) Total Certain items $ 9 $ (5) $ 13 $ (5) 38 Table of Contents Exchange & Third-Party Management Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Segment financial results $ 15 $ 24 $ (9) (35%) $ 40 $ 52 $ (12) (23%) Depreciation and amortization 7 8 (1) (4%) 14 16 (2) (9%) Share-based compensation expense 1 — 1 (15%) 1 1 — (13%) Certain items 2 — 2 NM 2 — 2 NM Segment adjusted EBITDA $ 25 $ 32 $ (7) (22%) $ 57 $ 69 $ (12) (17%) Segment Adjusted EBITDA Margin 44.3% 51.9% (7.6 pts) 48.0% 53.8% (5.8 pts) Certain items for the Exchange & Third-Party Management segment for the three and six months ended June 30, 2024 consisted of $2 million of impairment charges. Business Segments Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 16 “Business Segments” to our Financial Statements for further information on our segments. Vacation Ownership Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 REVENUES Sale of vacation ownership products $ 309 $ 391 $ 661 $ 766 Resort management and other services 157 147 305 282 Rental 143 135 290 276 Financing 85 80 168 158 Cost reimbursements 384 359 784 727 TOTAL REVENUES 1,078 1,112 2,208 2,209 EXPENSES Cost of vacation ownership products 38 66 91 124 Marketing and sales 226 206 449 416 Resort management and other services 73 69 144 133 Rental 113 116 223 232 Financing 35 25 69 51 Depreciation and amortization 25 23 50 46 Litigation charges 10 3 13 6 Royalty fee 29 29 57 58 Impairment — — — 4 Cost reimbursements 384 359 784 727 TOTAL EXPENSES 933 896 1,880 1,797 Gains and other income, net 1 7 1 16 Other (2) 1 (3) 1 SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 144 $ 224 $ 326 $ 429 39 Table of Contents Sale of Vacation Ownership Products Second Quarter and First Half Three Months Ended Six Months Ended ($ in millions) June 30, 2024 % of Consolidated Contract Sales, Net of Resales June 30, 2023 % of Consolidated Contract Sales, Net of Resales Change 2024 vs. 2023 June 30, 2024 % of Consolidated Contract Sales, Net of Resales June 30, 2023 % of Consolidated Contract Sales, Net of Resales Change 2024 vs. 2023 Consolidated contract sales $ 449 $ 453 $ (4) (1%) $ 877 $ 887 $ (10) (1%) Joint venture contract sales 3 9 (6) (65%) 8 19 (11) (57%) Total contract sales 452 462 (10) (2%) 885 906 (21) (2%) Less: Resales contract sales (9) (10) 1 (21) (21) — Less: Joint venture contract sales (3) (9) 6 (8) (19) 11 Consolidated contract sales, net of resales 440 443 (3) (1%) 856 866 (10) (1%) Plus: Settlement revenue 10 2% 9 2% 1 18 2% 17 2% 1 Resales revenue 6 1% 6 1% — 11 1% 12 1% (1) Revenue recognition adjustments: Reportability 1 —% 5 1% (4) (8) (1%) 5 1% (13) Sales reserve (122) (28%) (45) (10%) (77) (168) (20%) (83) (10%) (85) Other (1) (26) (6%) (27) (6%) 1 (48) (6%) (51) (6%) 3 Sale of vacation ownership products $ 309 70% $ 391 88% $ (82) (21%) $ 661 77% $ 766 88% $ (105) (14%) Financing propensity 54.5% 56.2% (1.7 pts) 54.0% 55.3% (1.3pts) Average FICO Score (2) 737 736 738 737 (1) Adjustment for sales incentives that will not be recognized as Sale of vacation ownership products revenue and other adjustments to Sale of vacation ownership products revenue. (2) For customers who financed a vacation ownership purchase and for whom a credit score was available, generally U.S. and Canadian residents. 40 Table of Contents Second Quarter and First Half Contract sales in the second quarter and first half of 2024 declined due to a 6% decrease in VPG in each period, partially offset by an increase in tours (5% and 4%, respectively). The decrease in VPG in both periods was due to a decline in first time buyer VPG, a larger percentage mix of international tours which carry a lower VPG, and the on-going impact from the reduced activity at our Maui sales centers. Excluding the $16 million and $32 million decline in contract sales at our Maui sales centers in the second quarter and first half of 2024, respectively, contract sales increased 3% in each period. 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 $70 million to reflect increases in expected cumulative loss rates for our vacation ownership notes receivable originated during 2021-2024. In estimating the increase in the sales reserve, we considered current macroeconomic conditions, including higher consumer debt levels, moderating inflation, continued high interest rates, uncertainty around timing and frequency of interest rate adjustments and continued mixed economic indicators. While we expect a return to normalized maintenance fee increases commencing in 2025, we plan to increase our sales reserve prospectively for new originations at a weighted average rate of 17% to 19% until we have sufficient evidence of improvement in delinquency and default rates. We expect our full year 2024 contracts sales will reflect lower VPG for the second half of 2024, partially offset by tour growth in first time buyer tours, which carry a lower VPG. 41 Table of Contents Development Profit Second Quarter Three Months Ended ($ in millions) June 30, 2024 % of Revenue June 30, 2023 % of Revenue Change 2024 vs. 2023 Sale of vacation ownership products $ 309 $ 391 $ (82) (21%) Cost of vacation ownership products (38) (12%) (66) (17%) 28 43% Marketing and sales (226) (73%) (206) (53%) (20) (10%) Development profit $ 45 $ 119 $ (74) (62%) Development profit margin 14.7% 30.8% (16.1 pts) The decrease in Development profit reflects lower sales of vacation ownership products and higher marketing and sales costs, including $8 million of higher preview costs, partially offset by $13 million of lower product cost associated with the additional sales reserve, $11 million of favorable product cost true-up activity compared to the prior comparable period and $4 million from the sale of lower average cost inventory. Development profit margin, excluding the impact of the sales reserve increase of $70 million, was 27.0% in the second quarter of 2024. We expect our full year 2024 Development profit margin to decline due to increased marketing and sales expense, the $57 million net impact from the additional sales reserve recorded in the second quarter, and our higher sales reserve rate to be applied to new originations. First Half Six Months Ended ($ in millions) June 30, 2024 % of Revenue June 30, 2023 % of Revenue Change 2024 vs. 2023 Sale of vacation ownership products $ 661 $ 766 $ (105) (14%) Cost of vacation ownership products (91) (14%) (124) (16%) 33 27% Marketing and sales (449) (68%) (416) (54%) (33) (8%) Development profit $ 121 $ 226 $ (105) (47%) Development profit margin 18.3% 29.6% (11.3 pts) The decrease in Development profit reflects lower sales of vacation ownership products and higher marketing and sales costs, including $14 million of higher preview costs, partially offset by $13 million of lower product cost associated with the additional sales reserve, $11 million due to the sale of lower cost inventory, $5 million of favorable product cost true-up activity compared to the prior comparable period, $2 million associated with lower sales volume and $2 million of other development related costs. Development profit margin, excluding the impact of the $70 million sales reserve increase in the second quarter of 2024, was 24.3% in the first half of 2024. 42 Table of Contents Resort Management and Other Services Revenues, Expenses and Profit Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Management fee revenues $ 51 $ 45 $ 6 16% $ 103 $ 90 $ 13 15% Ancillary revenues 72 70 2 3% 137 131 6 5% Other management and exchange revenues 34 32 2 3% 65 61 4 5% Resort management and other services revenues 157 147 10 7% 305 282 23 8% Resort management and other services expenses (73) (69) (4) (5%) (144) (133) (11) (8%) Resort management and other services profit $ 84 $ 78 $ 6 9% $ 161 $ 149 $ 12 8% Resort management and other services profit margin 53.9% 52.9% 1.0 pts 52.9% 52.8% 0.1 pts Resort occupancy (1) 90.1% 88.7% 1.4 pts 90.1% 88.8% 1.3 pts (1) Resort occupancy represents all transient, preview, and owner keys divided by total keys available, net of keys out of service. Second Quarter and First Half The increase in Other management and exchange revenues is attributed to higher club dues in both the second quarter and first half of 2024. The increase in Resort management and other services expenses reflects an increase in ancillary expenses of $3 million and $7 million, and an increase in customer service and exchange company expenses of $1 million and $4 million due to higher wages, benefits, and other operating cost increases in the second quarter and first half of 2024, respectively. Rental Revenues, Expenses and Profit Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Rental revenues $ 143 $ 135 $ 8 6% $ 290 $ 276 $ 14 5% Rental expenses (113) (116) 3 3% (223) (232) 9 4% Rental profit $ 30 $ 19 $ 11 64% $ 67 $ 44 $ 23 54% Rental profit margin 20.7% 13.4% 7.3 pts 23.0% 15.7% 7.3 pts Transient keys rented (1) 575,704 549,329 26,375 5% 1,118,674 1,096,869 21,805 2% Average transient rate $ 245 $ 263 $ (18) (7%) $ 265 $ 275 $ (10) (4%) Rental occupancy (2) 74.4% 70.8% 3.6 pts 73.6% 70.6% 3.0 pts (1) Transient keys rented exclude plus points and preview stays. (2) Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage. Second Quarter Rental profit, excluding profit from owned hotels, increased due to higher plus points revenue of $11 million, an $8 million increase in costs allocated to marketing and sales expense for occupancy used for previews, and $2 million of lower hotel loyalty and other costs. These changes were partially offset by $5 million of decreased profit due to lower average transient rate on higher keys rented and higher tidy and variable costs, $3 million of increased costs associated with higher owner utilization of third-party vacation and other offerings, and $2 million of higher unsold maintenance fees associated with developer owned inventory. Rental profit for our owned hotels remained in-line with the second quarter of 2023. First Half Rental profit, excluding profit from owned hotels, increased due to higher plus points revenue of $22 million, a $14 million increase in costs allocated to marketing and sales expense for occupancy used for previews, and $2 million of lower hotel loyalty and other costs. These changes were partially offset by $9 million of decreased profit due to lower 43 Table of Contents average transient rate on higher keys rented and higher tidy and variable costs and $6 million of increased costs associated with higher owner utilization of third-party vacation and other offerings. Rental profit for our owned hotels remained in-line with the first half of 2023. Financing Revenues, Expenses and Profit Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Financing revenues $ 85 $ 80 $ 5 7% 168 158 10 7% Financing expenses (8) (5) (3) (81%) (17) (15) (2) (17%) Consumer financing interest expense (27) (20) (7) (38%) (52) (36) (16) (43%) Financing profit $ 50 $ 55 $ (5) (10%) $ 99 $ 107 $ (8) (7%) Financing profit margin 58.0% 69.1% (11.1 pts) 58.7% 67.4% (8.7 pts) Financing propensity 54.5% 56.2% (1.7 pts) 54.0% 55.3% (1.3 pts) Second Quarter and First Half Financing revenues reflect higher interest income as a result of a higher average notes receivable balances and a slightly higher average interest rate for the three and six months ended June 30, 2024. The higher average notes receivable balances resulted from new loan originations in excess of the repayment of existing vacation ownership notes receivable, which we expect to continue for the remainder of 2024. The increase in consumer financing interest expense is attributable to the higher average securitized debt at a higher average interest rate for our more recent term securitization transactions. We expect consumer financing interest expense to continue to remain higher than our average outstanding interest rates on existing securitization transactions as a result of higher interest rates until meaningful market interest rate declines occur. We do not adjust interest rates on consumer financing offerings at the same pace as, or in lock-step with, broader market interest rates; as a result, we expect our financing profit margin to continue to decrease in 2024, as we repay existing securitization transactions with lower interest rates and enter into new securitization transactions with higher interest rates. Gains and Other Income Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Gains and other income, net $ 1 $ 7 $ (6) (82%) $ 1 $ 16 $ (15) (92%) Second Quarter During the second quarter of 2023, we recorded $7 million of gains on the disposition of excess real estate. First Half During the first half of 2023, we recorded $7 million of gains on the disposition of excess real estate, a $4 million gain associated with the earn out of additional proceeds from the 2019 disposition of a land parcel in Cancun, Mexico, a $3 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $2 million related to the receipt of business interruption insurance proceeds. Litigation Charges Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Litigation charges $ 10 $ 3 $ 7 NM $ 13 $ 6 $ 7 NM Second Quarter and First Half Litigation charges during the second quarter of 2024 and 2023, as well as the first half of 2024 and 2023, relate primarily to a land disposition in the U.S. and certain resorts in Europe. 44 Table of Contents Exchange & Third-Party Management Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 REVENUES Management and exchange $ 45 $ 51 $ 97 $ 107 Rental 10 11 21 21 Cost reimbursements 3 3 5 8 TOTAL REVENUES 58 65 123 136 EXPENSES Management and exchange 31 30 62 60 Depreciation and amortization 7 8 14 16 Impairment 2 — 2 — Cost reimbursements 3 3 5 8 TOTAL EXPENSES 43 41 83 84 SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 15 $ 24 $ 40 $ 52 Management and Exchange Profit Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Management and exchange revenue $ 45 $ 51 $ (6) (9%) $ 97 $ 107 $ (10) (9%) Management and exchange expense (31) (30) (1) (5%) (62) (60) (2) (4%) Management and exchange profit $ 14 $ 21 $ (7) (31%) $ 35 $ 47 $ (12) (26%) Management and exchange profit margin 30.6% 40.4% (9.8 pts) 35.9% 44.0% (8.1 pts) Second Quarter Interval International management and exchange revenues declined $3 million or 4% primarily attributed to 7% lower exchange transaction volume, partially offset by a 4% increase in average exchange fees.The decrease in management and exchange revenue reflects a $3 million decline in Aqua-Aston management revenues resulting from fewer available nights for rent, lower occupancy and a lower average daily rate in the Hawaii market due to changes in demand. The decrease in management and exchange profit was primarily attributed to lower revenues and higher information technology expenses. First Half Interval International management and exchange revenues declined $4 million or 4% primarily attributed to 6% lower exchange transaction volume, partially offset by a 3% increase in average exchange fees.The decrease in management and exchange revenue reflects a $6 million decline in Aqua-Aston management revenues resulting from fewer available nights for rent, lower occupancy and a lower average daily rate in the Hawaii market due to changes in demand. The decrease in management and exchange profit was primarily attributed to lower revenues and higher information technology expenses. Rental Revenues Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Rental revenues $ 10 $ 11 $ (1) (5%) $ 21 $ 21 $ — 1% Second Quarter Results reflect a 16% decrease in transaction volume, partially offset by a 10% increase in average fees per transaction. First Half Results reflect a 7% decrease in transaction volume offset by a 7% increase in average fees per transaction. 45 Table of Contents Corporate and Other Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from Consolidated Property Owners’ Associations. Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 REVENUES Resort management and other services $ 13 $ 8 $ 24 $ 17 Cost reimbursements (9) (7) (20) (15) TOTAL REVENUES 4 1 4 2 EXPENSES Resort management and other services 15 11 29 24 Rental (2) (4) (5) (7) General and administrative 54 64 117 132 Depreciation and amortization 3 3 9 4 Litigation charges — (1) — (1) Restructuring 1 — 3 — Cost reimbursements (9) (7) (20) (15) TOTAL EXPENSES 62 66 133 137 (Losses) gains and other (expense) income, net (8) 3 (8) 15 Interest expense, net (43) (36) (83) (70) Transaction and integration costs (3) (10) (18) (23) Other 1 — 1 — FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (111) (108) (237) (213) Provision for income taxes (10) (50) (45) (91) Net income attributable to noncontrolling interests (1) — — — FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (122) $ (158) $ (282) $ (304) 46 Table of Contents Consolidated Property Owners’ Associations The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance and the changes attributed to the deconsolidation of individual Consolidated Property Owners’ Associations. Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 June 30, 2024 June 30, 2023 REVENUES Resort management and other services $ 13 $ 8 $ 24 $ 17 Cost reimbursements (9) (7) (20) (15) TOTAL REVENUES 4 1 4 2 EXPENSES Resort management and other services 15 11 29 24 Rental (2) (4) (5) (7) Cost reimbursements (9) (7) (20) (15) TOTAL EXPENSES 4 — 4 2 Interest expense, net 1 1 1 1 FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 1 2 1 1 Provision for income taxes (1) — (1) — Net income attributable to noncontrolling interests (1) — — — FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (1) $ 2 $ — $ 1 General and Administrative Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 General and administrative $ 54 $ 64 $ (10) (15%) $ 117 $ 132 $ (15) (11%) Second Quarter The decrease in General and administrative expenses for the second quarter of 2024 is due to lower information technology costs, insurance expense and compensation expense of $5 million, $2 million and $3 million, respectively. First Half The decrease in General and administrative expenses for the first half of 2024 is due to lower information technology costs, insurance expense and compliance related expenses of $9 million, $3 million and $3 million, respectively. (Losses) Gains and Other (Expense) Income Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 (Losses) gains and other (expense) income, net $ (8) $ 3 $ (11) NM $ (8) $ 15 $ (23) NM Second Quarter In the second quarter of 2024, we recorded $4 million of foreign currency translation losses and $4 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters. In the second quarter of 2023, we recorded $2 million of foreign currency translation gains and a $1 million increase in our receivable from Marriott International for indemnified income tax matters (the true-up to the offsetting accrual is included in the Provision for income taxes line). 47 Table of Contents First Half In the first half of 2024, we recorded $6 million of foreign currency translation losses and $2 million net of tax related adjustments to the receivable from Marriott International for indemnified tax matters. In the first half of 2023, we recorded a $21 million increase in our receivable from Marriott International for indemnified income tax matters (the true-up to the offsetting accrual is included in the Provision for income taxes line) and $4 million of foreign currency translation gains, partially offset by $10 million attributed to the redemption premium and write-off of unamortized debt issuance costs resulting from the early redemption of our senior secured notes. Interest Expense Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Interest expense, net $ (43) $ (36) $ (7) (21%) $ (83) $ (70) $ (13) (19%) Second Quarter and First Half The increase in Interest expense, net is attributed to higher variable interest expense and changes in outstanding borrowings during the comparative periods. Income Tax 2024 Second Quarter Three Months Ended Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Change 2024 vs. 2023 June 30, 2024 June 30, 2023 Change 2024 vs. 2023 Provision for income taxes $ (10) $ (50) $ 40 79% $ (45) $ (91) $ 46 50% Second Quarter Our effective tax rate was 22.0% and 35.4% for the three 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. First Half Our effective tax rate was 35.2% and 33.9% for the six months ended June 30, 2024 and June 30, 2023, respectively. 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. The Organization for Economic Co-operation and Development has proposed a global minimum tax of 15% of reported profits (“Pillar 2”) that has been agreed upon in principle by over 140 non-U.S. countries. Although the model rules provide a framework for applying the minimum tax, countries may enact Pillar 2 differently than the model rules and/or on different timelines. While we continue to monitor legislative developments, we do not anticipate Pillar 2 will have a material impact on our 2024 or long-term financial results. 48 Table of Contents Liquidity and Capital Resources Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility, our ability to raise capital through securitizations in the ABS market, and, to the extent necessary, our ability to issue new debt and refinance existing debt. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to stockholders. We continuously monitor the capital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs. At June 30, 2024, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 4.4, above our targeted range of 2.5 to 3.0, and our goal is to reduce this ratio to 3.0 by the end of 2025. In the second quarter of 2024, we amended the Corporate Credit Facility to provide for a new $800 million term loan facility that is 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 had a balance of $784 million as of March 31, 2024 and was scheduled to mature on August 31, 2025. We have no material principal payment obligations on our debt prior to 2026. See Footnote 12 “Debt” to our Financial Statements for further information related to maturities of our debt. Sources of Liquidity Cash from Operations Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions, and (4) net cash generated from our rental and resort management and other services operations. Vacation Ownership Notes Receivable Securitizations We periodically securitize, without recourse through bankruptcy remote special purpose entities, the majority of the notes receivable originated in connection with the sale of vacation ownership products to institutional investors in the ABS term securitization market. These vacation ownership notes receivable securitizations provide liquidity for general corporate purposes. In a vacation ownership notes receivable term securitization, several classes of debt securities issued by a special purpose entity are collateralized by a single pool of transferred vacation ownership notes receivable. In connection with each vacation ownership notes receivable securitization, we may retain all or a portion of the securities that are issued. Typically, we receive cash at inception of the term securitization transaction for the amount of notes issued less fees and monies held in reserve and we receive cash during the life of the transaction in amounts reflecting the excess spread of interest received on the related vacation ownership notes receivable less the interest payable on the ABS securities, less administrative fees and amounts from related vacation ownership notes receivable that default. Given the recent increase in delinquencies and defaults above historical averages, the cash excess spread we received from our securitization transactions has been lower than previously anticipated. At the recent level of defaults, there is no impact to cash whether we repurchase defaulted vacation ownership notes receivable from a securitization VIE and pursue foreclosure or foreclose on behalf of a securitization VIE. 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 parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread of interest accruing on the related vacation ownership notes receivable less the interest accruing on the ABS securities and fees 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 term securitization transactions outstanding, all of which were in compliance with their respective required parameters. Since 2000, we have issued approximately $9.4 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions. On an ongoing basis, we have the ability to use our Warehouse Credit Facility to securitize, on a revolving non-recourse basis, eligible consumer loans derived from certain vacation ownership sales. Those loans may later be transferred to term securitization transactions in the ABS market, which typically occur twice a year. During the second quarter of 2024, we amended certain agreements associated with our Warehouse Credit Facility, which extended the revolving 49 Table of Contents period from May 31, 2025 to June 11, 2026. At June 30, 2024, we had $108 million of borrowings outstanding under our Warehouse Credit Facility. As of June 30, 2024, $71 million of gross vacation ownership notes receivable were eligible for securitization. Revolving Corporate Credit Facility Our Revolving Corporate Credit Facility, which expires on March 31, 2027, provides for up to $750 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions. At June 30, 2024, $175 million of borrowings and $32 million of le tters of credit were outstanding under our Revolving Corporate Credit Facility. Uses of Cash We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts. Our working capital needs fluctuate throughout the year given the timing of annual maintenance fees on unsold inventory we pay to owners’ associations and certain annual compensation-related outflows. In addition, our cash from operations varies due to the timing of repayment by owners of vacation ownership notes receivable, the closing or recording of sales contracts for vacation ownership products, financing propensity, and cash outlays for inventory acquisitions and development. Seasonality Our cash flow from operations fluctuates during the year due to the timing of certain receipts and contractual and compensation-related payments. Significant changes in cash flow can result from the timing of our collection of maintenance fees, club dues, and other customer payments, which typically occurs in either the fourth quarter or the first quarter of each year. Generally, cash outflows related to our payment of maintenance fees associated with unsold inventory occurs in the fourth quarter for our points-based products, and in the first quarter for our weeks-based products. In addition, during the first quarter of each year, we typically have significant variable compensation-related cash outflows associated with payment of annual bonuses. Operations In addition to net income and adjustments for non-cash items, the following are key drivers of our cash flow from operating activities: Inventory Spending Less Than Cost of Sales Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Inventory spending $ (63) $ (41) Purchase of property for future transfer to inventory — (8) Inventory costs 67 98 Inventory spending less than cost of sales $ 4 $ 49 Although we have significant inventory on hand, we intend to continue selectively pursuing growth opportunities by targeting high-quality inventory that allows us to add desirable new destinations to our systems with new on-site sales locations. Where possible, we will structure transactions to limit our up-front capital investment and allow us to purchase finished inventory closer to the time it is needed for sale. These capital efficient vacation ownership transaction structures may consist of the development of new inventory, or the conversion of previously built units, by third parties. In addition, we may develop inventory on our balance sheet in key markets where we believe the opportunities will generate acceptable risk adjusted returns. Through our existing VOI repurchase program, we proactively acquire previously sold VOIs from owners’ associations and individual owners at lower costs than would be required to develop new inventory. Among other reasons for repurchasing inventory, we expect these repurchases will help stabilize the future cost of our vacation ownership products. Our spending for real estate inventory in the first half of 2024 was lower than cost of sales and was primarily related to purchases under our VOI repurchase programs. Purchase of property for future transfer to inventory in 2023 included the acquisition of property in Charleston, South Carolina. We expect inventory spending to exceed cost of sales for the remainder of 2024, due to our remaining commitment to acquire property in Waikiki. 50 Table of Contents Vacation Ownership Notes Receivable Collections Less Than Originations Six Months Ended ($ in millions) June 30, 2024 June 30, 2023 Vacation ownership notes receivable collections — non-securitized $ 67 $ 90 Vacation ownership notes receivable collections — securitized 244 218 Vacation ownership notes receivable originations (446) (470) Vacation ownership notes receivable collections less than originations $ (135) $ (162) We expect vacation ownership notes receivable originations to continue to outpace vacation ownership notes receivable collections in 2024 due to sales growth. Repurchase of Common Stock 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 See Footnote 13 “Stockholders' Equity” to our Financial Statements for further information related to our current share repurchase program. Payment of Dividends to Common Stockholders We distributed cash dividends to holders of common stock during the first half of 2024 as follows: Declaration Date Stockholder Record Date Distribution Date Dividend per Share December 7, 2023 December 21, 2023 January 4, 2024 $0.76 February 15, 2024 February 29, 2024 March 14, 2024 $0.76 May 9, 2024 May 23, 2024 June 6, 2024 $0.76 We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to the approval of our Board of Directors, which will depend on our financial condition, results of operations and capital requirements at the time, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all. 51 Table of Contents Material Cash Requirements The following table summarizes our future material cash requirements from known contractual or other obligations as of June 30, 2024: Payments Due by Period ($ in millions) Total Remainder of 2024 2025 2026 2027 2028 Thereafter Debt (1)(2) $ 3,541 $ 64 $ 122 $ 690 $ 862 $ 426 $ 1,377 Securitized debt (1)(3) 2,710 150 281 276 348 250 1,405 Purchase obligations (4) 575 131 151 139 134 15 5 Operating lease obligations (5) 124 12 24 22 15 11 40 Finance lease obligations (5) 541 9 17 15 13 13 474 Other long-term obligations 26 21 4 — 1 — — $ 7,517 $ 387 $ 599 $ 1,142 $ 1,373 $ 715 $ 3,301 (1) Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs. (2) During the second quarter of 2024, we amended the Corporate Credit Facility to provide for the New Term Loan, which is scheduled to mature on April 1, 2031. The proceeds from 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. (3) Payments based on estimated timing of cash flow associated with securitized vacation ownership notes receivable. (4) Arrangements are considered purchase obligations if a contract specifies all significant terms, including fixed or minimum quantities to be purchased, a pricing structure, and approximate timing of the transaction. Amounts reflected herein represent expected funding requirements under such contracts and primarily relate to future purchases of property and vacation ownership units and information technology assets (hardware and software). Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above. (5) Includes interest. In the normal course of our resort management business, we enter into purchase commitments on behalf of owners’ associations to manage the daily operating needs of our resorts. Since we are reimbursed for these commitments from the cash flows of the owners’ associations, these obligations have minimal impact on our net income and cash flow. These purchase commitments are excluded from the table above. Supplemental Guarantor Information The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions. The following tables present consolidating financial information as of June 30, 2024 and December 31, 2023, and for the six months ended June 30, 2024 for MVWC and MORI on a stand-alone basis (collectively, the “Issuers”), the Senior Notes Guarantors, the combined non-guarantor subsidiaries of MVWC, and MVW on a consolidated basis. 52 Table of Contents Condensed Consolidating Statement of Income Six Months Ended June 30, 2024 Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated ($ in millions) MVWC MORI Revenues $ — $ 573 $ 1,236 $ 547 $ (21) $ 2,335 Expenses (23) (656) (1,152) (396) 21 (2,206) Benefit from (provision for) income taxes 7 26 (2) (76) — (45) Equity in net income (loss) of subsidiaries 100 219 — — (319) — Net income (loss) 84 162 82 75 (319) 84 Net loss attributable to noncontrolling interests — — — — — — Net income (loss) attributable to common stockholders $ 84 $ 162 $ 82 $ 75 $ (319) $ 84 Condensed Consolidating Balance Sheet As of June 30, 2024 Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated ($ in millions) MVWC MORI Cash and cash equivalents $ — $ 16 $ 61 $ 129 $ — $ 206 Restricted cash — 25 84 142 — 251 Accounts and contracts receivable, net 24 155 81 132 (22) 370 Vacation ownership notes receivable, net — 116 136 2,056 — 2,308 Inventory — 232 298 113 — 643 Property and equipment, net — 339 714 242 — 1,295 Goodwill — — 3,117 — — 3,117 Intangibles, net — — 792 30 — 822 Investments in subsidiaries 3,382 3,793 — — (7,175) — Other 139 150 244 152 (86) 599 Total assets $ 3,545 $ 4,826 $ 5,527 $ 2,996 $ (7,283) $ 9,611 Accounts payable $ 31 $ 26 $ 72 $ 69 $ — $ 198 Advance deposits — 66 84 16 — 166 Accrued liabilities 8 109 163 111 (20) 371 Deferred revenue — 14 196 224 (16) 418 Payroll and benefits liability — 70 67 26 — 163 Deferred compensation liability — 131 44 4 — 179 Securitized debt, net — — — 2,125 (27) 2,098 Debt, net 1,134 1,824 178 1 — 3,137 Other — 2 120 17 — 139 Deferred taxes — 128 248 39 (45) 370 MVW stockholders' equity 2,372 2,456 4,355 364 (7,175) 2,372 Noncontrolling interests — — — — — — Total liabilities and equity $ 3,545 $ 4,826 $ 5,527 $ 2,996 $ (7,283) $ 9,611 53 Table of Contents As of December 31, 2023 Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated ($ in millions) MVWC MORI Cash and cash equivalents $ — $ 20 $ 96 $ 132 $ — $ 248 Restricted cash — 25 153 148 — 326 Accounts and contracts receivable, net 30 106 142 120 (13) 385 Vacation ownership notes receivable, net — 121 176 2,046 — 2,343 Inventory — 186 336 112 — 634 Property and equipment, net — 265 736 259 — 1,260 Goodwill — — 3,117 — — 3,117 Intangibles, net — — 822 32 — 854 Investments in subsidiaries 3,421 3,943 — — (7,364) — Other 122 126 279 118 (132) 513 Total assets $ 3,573 $ 4,792 $ 5,857 $ 2,967 $ (7,509) $ 9,680 Accounts payable $ 55 $ 30 $ 196 $ 81 $ — $ 362 Advance deposits — 65 83 16 — 164 Accrued liabilities 5 95 137 113 (7) 343 Deferred revenue — 7 169 213 (7) 382 Payroll and benefits liability — 91 86 28 — 205 Deferred compensation liability — 126 39 3 — 168 Securitized debt, net — — — 2,121 (25) 2,096 Debt, net 1,131 1,736 177 5 — 3,049 Other — 2 229 18 — 249 Deferred taxes — 124 242 19 (105) 280 MVW stockholders' equity 2,382 2,516 4,499 350 (7,365) 2,382 Total liabilities and equity $ 3,573 $ 4,792 $ 5,857 $ 2,967 $ (7,509) $ 9,680 Recent Accounting Pronouncements See Footnote 2 “Significant Accounting Policies and Recent Accounting Standards” to our Financial Statements for a discussion of recently issued accounting pronouncements, including information on new accounting standards and the future adoption of such standards. Critical Accounting Policies and Estimates Our preparation of financial statements in accordance with GAAP requires management to make estimates and assumptions that affect reported amounts and related disclosures. We have discussed those policies and estimates that we believe are critical and require the use of complex judgment in their application in our 2023 Annual Report. Since the date of our 2023 Annual Report, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them. 54 Table of Contents