What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-05-08 compared with 2024-11-07 · 241 added, 354 removed, 406 unchanged (59% of the section changed)

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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, liquidity, returns on investments, margins including financing profit and development profit margins;

our possible or assumed future results of operations and growth opportunities, revenues, financial condition, leverage, liquidity, returns on investments, margins and related financing, development and rental profits;

dividend payments;

business strategies, ;

financing plans;

financing plans and the adequacy of capital to meet short-term and long-term liquidity requirements;

our competitive position;

our plans to pursue growth opportunities;

potential operating performance, including our expectations regarding full year contract sales, including contract sales from our Maui sales centers;

VPG and tour growth;

our expectation that consumer financing interest expense will remain higher than our average outstanding interest rates on existing securitization transactions and the resulting impact on our profit margin;

our expectation that inventory spending will exceed cost of sales for the remainder of 2024 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 our assumptions regarding related delinquency and 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.

our expectations regarding average consumer financing interest rates and our financing profit margin;

our expectations regarding the objectives, costs and benefits of our Strategic Business Operations office including revenue growth, operational efficiencies and savings;

our ability to reduce our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio;

our expectations regarding inventory spending in 2025 and the impact of inventory repurchases;

our ability to securitize consumer loans;

and expectations related to sales reserves, delinquencies and default rates.

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.

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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;

uncertainty in the current global macroeconomic environment created by rapid governmental policy and regulatory changes , a future health crisis and responses to 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;

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difficulties associated with implementing new or maintaining existing technology;

the ability to use artificial intelligence (“AI”) technologies successfully and potential business, compliance, or reputational risks associated with the use of AI technologies;

changes in privacy laws;

the impact of a future banking crisis;

impacts from natural or man-made disasters and wildfires, including the Maui wildfires;

impacts from natural or man-made disasters and wildfires, including the Maui and Los Angeles area wildfires;

delinquency and default rates;

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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.

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, except as required by law.

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.

The risk factors discussed in “Risk Factors” in our 2024 Annual Report and under Part II Item 1A of this 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.

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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.

The financial information discussed below and included in this Quarterly Report may not, however, 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.” References throughout to numbered “Footnotes” refer to the numbered Notes in the Interim Condensed Notes to Consolidated Financial Statements included in this Quarterly Report.

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.

Business Overview

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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 recently launched a strategic business operations function to lead modernization, process improvement and long-term value generating initiatives across our business.

We believe we can drive $50 million to $100 million of annual efficiencies over the next two years and plan to reinvest some of these savings to accelerate revenue growth and enhance our customer platforms, products, and services.

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.

Strategic Business Operations

In the fourth quarter of 2024, we announced the creation of a Strategic Business Operations office focused on accelerating our growth and driving operating efficiencies in all areas of our business while increasing organizational agility.

We intend to:

modernize and optimize our processes and systems, including through advanced technology and automation;

increase sales efficiency and inventory optimization;

and capture significant savings from initiatives related to procurement and corporate overhead.

We believe that we can drive $150 million to $200 million of run-rate benefits from these initiatives by the end of 2026, with half of these benefits coming from cost savings and efficiencies and the balance from accelerating revenue growth.

We also expect to realize additional savings that will benefit our owners’ maintenance fees.

We expect to incur one-time cash costs related to these modernization initiatives of approximately $100 million in each of 2025 and 2026.

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.” 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, the reserve for vacation ownership notes receivable 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.

• Contract sales from the sale of vacation ownership products is considered 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 sales tour (referred to as Tours ), by the number of tours in a given period.

Tours refers to the number of sales tours performed during the applicable period, and generally include virtual and offsite sales tours, and exclude telesales.

We believe that VPG 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.

• Tours is the number of sales tours performed during the applicable period, and generally includes virtual and offsite sales tours, and excludes telesales.

We believe that Tours is a valuable metric because it represents the volume of touring guests.

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See Footnote 15 “Business Segments” to our Financial Statements for further information about 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.

• Adjusted EBITDA margin represents Adjusted EBITDA divided by the Company’s total revenues less cost reimbursements revenues.

• Segment Adjusted EBITDA margin represents Segment Adjusted EBITDA divided by the applicable segment’s total revenues less cost reimbursements revenues.

NM = Not meaningful.

Consolidated Results

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Sale of vacation ownership products $ 355 $ 352

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Royalty fee 28 28

Impairment — — 2 4

Cost reimbursements 373 391

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Transaction and integration costs — (15)

Other 1 (1) (1) —

INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 102 81

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NET INCOME 57 46

Net income attributable to noncontrolling interests — — — —

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

NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 56 $ 47

Operating Statistics

Three Months Ended Nine Months Ended

(Contract sales $ in millions) September 30, 2024 September 30, 2023 Change

September 30, 2024 September 30, 2023 Change

Three Months Ended

(Contract sales $ in millions) March 31, 2025 March 31, 2024 Change

Vacation Ownership

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Average revenue per member $ 39.94 $ 41.74 $ (1.80) (4%)

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Vacation Ownership $ 1,135 $ 1,130 $ 5 —%

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Total Segment Revenues 1,193 1,195 (2) —%

Consolidated Property Owners’ Associations (1) (4) 3 NM 3 (2) 5 NM

Consolidated Property Owners’ Associations 7 — 7 NM

Total Revenues $ 1,200 $ 1,195 $ 5 —%

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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.

Adjusted EBITDA reflects additional adjustments for certain items, and excludes share-based compensation expense and amortization of cloud computing software implementation costs.

Share-based compensation expense is excluded 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.

Amortization of cloud computing software implementation costs, which are not included in depreciation and amortization, are excluded for comparability purposes.

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 consider Adjusted EBITDA margin to be an indicator of our operating profitability.

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.

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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 ongoing 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 ongoing core operations before the impact of the excluded items.

We believe Adjusted EBITDA and Adjusted EBITDA margin are useful as indicators of operating performance and profitability, respectively, because they allow for period-over-period comparisons of our ongoing core operations before the impact of the excluded items.

Adjusted EBITDA and Adjusted EBITDA margin also facilitate comparisons by us, analysts, investors, and others of results from our ongoing core operations before the impact of these items with results from other companies.

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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 Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Net income attributable to common stockholders

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Share-based compensation expense 7 7 — 6%

Certain items (4) 9 (13) NM 39 11 28 NM

Amortization of cloud computing software implementation costs 1 — 1 NM

Certain items 5 20 (15) NM

Adjusted EBITDA $ 192 $ 187 $ 5 3%

Adjusted EBITDA Margin 23.8% 20.3% 3.5 pts 22.6% 24.3% (1.7 pts)

Adjusted EBITDA Margin 23.2% 23.2% — pts

The table below details the components of Certain items for the periods presented.

Three Months Ended Nine Months Ended

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

ILG integration $ — $ — $ — $ 15

Welk acquisition and integration — 5 18 13

Transaction and integration costs — 5 18 28

Purchase accounting adjustments — 3 1 6

Litigation charges 2 2 15 7

Restructuring charges 1 — 4 —

Impairment charges — — 2 4

Early redemption of senior secured notes — — — 10

Gain on disposition of hotel, land and other (1) (1) (2) (8)

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Foreign currency translation $ (3) $ 2

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Change in estimates relating to pre-acquisition contingencies (2) —

Other — — — (4)

Gains and other income, net (13) —

Transaction and integration costs — 15

Purchase accounting adjustments — 1

Litigation charges 7 3

Restructuring charges 12 2

Other (1) (1)

Total Certain items $ 5 $ 20

During the second quarter of 2024, we discontinued classifying adjustments related to Welk purchase accounting as Purchase accounting adjustments.

Commencing in the third quarter of 2024, ongoing costs associated with the continued integration of Welk are reflected in our operating results.

During the second quarter of 2024, we discontinued classifying costs associated with the continued integration of Welk in Transaction and integration costs.

Welk integration costs incurred after this period are reflected in the operating results of each of our segments and/or General and administrative expenses.

Segment Adjusted EBITDA

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Vacation Ownership $ 221 $ 213 $ 8 4%

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General and administrative (61) (63) 2 3%

6 4 2 40% $ 17 $ 18 $ (1) (8%)

Adjusted EBITDA $ 192 $ 187 $ 5 3%

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Vacation Ownership

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Segment financial results $ 198 $ 182 $ 16 9%

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Share-based compensation expense 1 2 (1) 9%

Certain items (1) (1) — NM 12 (6) 18 NM

Amortization of cloud computing software implementation costs 1 — 1 NM

Certain items (5) 4 (9) NM

Segment adjusted EBITDA $ 221 $ 213 $ 8 4%

Segment Adjusted EBITDA Margin

30.1% 25.8% 4.3 pts 28.5% 30.1% (1.6 pts)

29.2% 29.2% — pts

The table below details the components of Certain items for Vacation Ownership segment financial results.

Three Months Ended Nine Months Ended

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

Purchase accounting adjustments $ — $ 3 1 6

Litigation charges 2 2 15 8

Restructuring charges 1 — 1 —

Impairment charges — — — 4

Gain on disposition of hotel, land and other — — (1) (7)

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Insurance proceeds $ (7) $ —

Change in indemnification asset — (6) — (9)

Change in estimates relating to pre-acquisition contingencies (2) —

Other — — — (4)

Gains and other income, net (9) —

Other — 1 — (1)

Purchase accounting adjustments — 1

Litigation charges 4 3

Total Certain items $ (5) $ 4

Exchange & Third-Party Management

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Segment financial results $ 18 $ 25 $ (7) (24%)

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Share-based compensation expense 1 — 1 2%

Certain items — — — NM 2 — 2 NM

Certain items 2 — 2 NM

Segment adjusted EBITDA $ 28 $ 32 $ (4) (13%)

Segment Adjusted EBITDA Margin

43.1% 49.8% (6.7 pts) 46.5% 52.5% (6.0 pts)

49.0% 51.3% (2.3 pts)

The table below details the components of Certain items for Exchange and Third-Party Management segment financial results.

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Restructuring charges $ 2 $ —

Impairment charges — — 2 —

Gain on disposition of hotel, land and other (1) (1) (1) (1)

Other — 1 — 1

Total Certain items $ 2 $ —

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Vacation Ownership

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Sale of vacation ownership products $ 355 $ 352

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Litigation charges 4 3

Restructuring 1 — 1 —

Royalty fee 28 28

Impairment — — — 4

Cost reimbursements 378 400

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Gains and other income, net 9 —

Other 2 (1) (1) —

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 198 $ 182

Sale of Vacation Ownership Products

Third Quarter and First Three Quarters

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 % of Consolidated Contract Sales, Net of Resales September 30, 2023 % of Consolidated Contract Sales, Net of Resales Change

September 30, 2024 % of Consolidated Contract Sales, Net of Resales September 30, 2023 % of Consolidated Contract Sales, Net of Resales Change

First Quarter

Three Months Ended

($ in millions) March 31, 2025 % of Consolidated Contract Sales, Net of Resales March 31, 2024 % of Consolidated Contract Sales, Net of Resales Change

Consolidated contract sales $ 420 $ 428 $ (8) (2%)

$ 459 $ 438 $ 21 5% $ 1,336 $ 1,325 $ 11 1%

Joint venture contract sales 5 5 — (4%)

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Resales contract sales (9) (12) 3

(8) (11) 3 (29) (32) 3

Joint venture contract sales (5) (5) —

(4) (5) 1 (12) (24) 12

Consolidated contract sales, net of resales 411 416 (5) (1%)

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Sale of vacation ownership products $ 355 86% $ 352 84% $ 3 1%

$ 3,888 $ 4,055 $(167) (4%) $ 3,910 $ 4,118 $(208) (5%)

110,557 100,609 9,948 10% 318,888 300,245 18,643 6%

Financing propensity

59.5% 64.0% (4.5 pts) 56.0% 58.2% (2.2 pts)

VPG $3,979 $4,129 $ (150) (4%)

Tours 97,998 96,579 1,419 1%

Financing propensity 54.2% 53.4% 0.8 pts

Average FICO Score (2)

733 729 736 734

(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.

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and Canadian residents.

Third Quarter and First Three Quarters

Contract sales increased during the third quarter and first three quarters of 2024 due to higher tours in each period compared to prior year periods of 10% and 6%, respectively, partially offset by lower VPGs of 4% and 5%, respectively.

The decrease in VPG in both periods was due to a decline in first time buyer VPG and a larger percentage mix of international tours, which carry a lower VPG than domestic tours, partially offset by a slight increase in VPG from existing owners, and the ongoing impact from the lack of comparability of activity at our Maui sales centers given the wildfires.

Excluding the $15 million increase at our Maui sales centers in the third quarter of 2024, contract sales and tours increased 2% and 6%, respectively.

Excluding the $17 million decline at our Maui sales centers in the first three quarters of 2024, contract sales and tours increased 2% and 7%, respectively.

We expect our full year 2024 contract sales will reflect lower VPG for the last quarter of 2024, partially offset by growth in first time buyer tours, which carry a lower VPG.

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 $59 million 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 of higher than historical year-over-year increases in maintenance fees for 2023 and 2024 have continued to drive elevated delinquencies and defaults.

As a result of the elevated delinquencies and defaults, 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 then-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.

As expected, maintenance fee increases for our points based products for 2025, which were approved by the relevant property owners’ association, returned to normal, however, consistent with the 2024 third quarter, we plan to continue to assume an increased sales reserve for new originations until we have sufficient evidence of improvement in delinquency and default rates.

First Quarter

The increase in Sale of vacation ownership products was due to the following:

• Contract sales decreased during the first quarter of 2025 due to a 4% decrease in VPG, partially offset by a 1% increase in tours.

• Approximately half of the VPG decrease was due to a larger percentage mix of first time buyer sales, which carry a lower VPG than existing owners.

• Both first time buyer and owner VPG decreased due to lower closing efficiencies.

• An increase in revenue reportability due to timing differences in the expiration of contractual rescission periods;

• An increase in our sales reserve to reflect higher expected cumulative losses on new originations, consistent with the increase in our sales reserve rate in the latter half of 2024.

Development Profit

Third Quarter

First Quarter

Three Months Ended

($ in millions) September 30, 2024 % of Revenue September 30, 2023 % of Revenue Change

Sale of vacation ownership products $ 387 $ 319 $ 68 22%

Cost of vacation ownership products (54) (14%) (50) (16%) (4) (8%)

Marketing and sales (228) (59%) (202) (64%) (26) (13%)

Development profit $ 105 $ 67 $ 38 60%

Development profit margin 27.2% 20.7% 6.5 pts

The increase in Development profit reflects higher sales of vacation ownership products ($59 million from the higher sales reserve recorded in the prior year), partially offset by higher marketing and sales costs, including $8 million of higher preview costs associated with higher tour volumes and higher cost of vacation ownership products ($10 million associated with the prior year sales reserve).

We expect our full year 2024 Development profit margin to decline due to increased marketing and sales expense, the $57 million net impact of the additional sales reserve recorded in the second quarter, and our higher sales reserve rate applied to new originations as discussed above.

First Three Quarters

Nine Months Ended

($ in millions) September 30, 2024 % of Revenue September 30, 2023 % of Revenue Change

($ in millions) March 31, 2025 % of Revenue March 31, 2024 % of Revenue Change

Sale of vacation ownership products $ 355 $ 352 $ 3 1%

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Development profit margin 22.2% 21.5% 0.7 pts

The decrease in Development profit reflects lower sales of vacation ownership products and higher marketing and sales costs, including $22 million of higher preview costs associated with higher tour volumes, partially offset by $24 million from the sale of lower average cost inventory and $7 million of more favorable product cost true-up activity.

The increase in Development profit was due to the following:

• higher sales of vacation ownership products (discussed above);

• lower cost of vacation ownership products due to the sale of lower average cost inventory, including product cost true-up activity, slightly offset by higher revenue reportability.

These changes were partially offset by higher marketing and sales costs due to:

• $3 million of higher preview costs, which were evenly split between higher keys and higher rate;

• $5 million increase in tour generation costs, including $1 million associated with the higher tour volume;

• $3 million of higher wages and benefits, including variable compensation.

Resort Management and Other Services Revenues, Expenses and Profit

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Management fee revenues $ 55 $ 52 $ 3 7%

Ancillary revenues 66 62 4 6% 203 193 10 5%

Ancillary revenues 65 65 — NM

Other management and exchange revenues 35 31 4 9%

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Resort management and other services profit $ 83 $ 77 $ 6 8%

Resort management and other services profit margin 52.1% 52.0% 0.1 pts 52.6% 52.5% 0.1 pts

Resort management and other services profit margin 53.6% 51.8% 1.8 pts

Resort occupancy (1)

89.1% 86.1% 3.0 pts 89.8% 87.9% 1.9 pts

90.3% 90.2% 0.1 pts

(1) Resort occupancy represents all transient, preview, and owner keys divided by total keys available, net of keys out of service.

The increase in Resort management and other services profit reflects higher management fees and higher club dues, partially offset by $1 million of higher wages and benefits.

Rental Revenues, Expenses and Profit

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Rental revenues $ 159 $ 147 $ 12 8%

Rental expenses (126) (110) (16) (15%)

Rental profit $ 20 $ 6 $ 14 NM $ 87 $ 50 $ 37 NM

Rental profit margin 14.7% 5.1% 9.6 pts 20.3% 12.3% 8.0 pts

Rental profit $ 33 $ 37 $ (4) (13%)

Rental profit margin 20.4% 25.3% (4.9 pts)

Transient keys rented (1)

569,470 542,970 26,500 5%

Average transient rate $ 239 $ 256 $ (17) (7%) $ 256 $ 269 $ (13) (5%)

Average transient key rate

$ 284 $ 286 $ (2) (1%)

Rental occupancy (2)

71.4% 64.3% 7.1 pts 72.8% 68.5% 4.3 pts

74.3% 72.7% 1.6 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.

Third Quarter

Rental profit, excluding profit from owned hotels, increased due to:

• $8 million of higher plus points revenue;

• an $8 million increase in costs allocated to marketing and sales expense for occupancy used for previews.

These changes were partially offset by:

First Quarter

Rental profit, excluding profit from owned hotels, declined due to:

• $5 million of higher unsold maintenance fees associated with increased developer-owned inventory;

• $4 million of lower plus points revenue;

• $2 million of higher tidy and variable costs on higher keys rented;

• $2 million of increased costs associated with higher owner utilization of third-party vacation and other offerings.

• $2 million of higher unsold maintenance fees associated with developer-owned inventory.

Rental profit for our owned hotels remained in-line with the third quarter of 2023.

First Three Quarters

Rental profit, excluding profit from owned hotels, increased due to:

• $31 million of higher plus points revenue;

• a $22 million increase in costs allocated to marketing and sales expense for occupancy used for previews.

These changes were partially offset by:

• $9 million of increased costs associated with higher owner utilization of third-party vacation and other offerings;

• $7 million of decreased profit due to a lower average transient rate on higher keys rented and higher tidy and variable costs.

Rental profit for our owned hotels remained in-line with the first three quarters of 2023.

• $6 million of higher transient rental revenue;

• a $3 million increase in costs allocated to marketing and sales expense for occupancy used for previews.

Rental profit for our owned hotels remained in-line with the first quarter of 2024.

Financing Revenues, Expenses and Profit

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Financing revenues $ 88 $ 83 $ 5 6%

Financing expenses (11) (9) (2) (16%)

Consumer financing interest expense (25) (19) (6) (32%) (77) (55) (22) (39%)

Consumer financing interest expense (25) (25) — NM

Financing profit $ 52 $ 49 $ 3 6%

Financing profit margin 57.9% 63.7% (5.8 pts) 58.4% 66.2% (7.8 pts)

Financing propensity 59.5% 64.0% (4.5 pts) 56.0% 58.2% (2.2 pts)

Third Quarter and First Three Quarters

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 nine months ended September 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 our average interest rate to continue to increase as the current interest rate environment for new securitization transactions is above the average interest rate on our existing securitized debt.

Financing profit margin 59.3% 59.5% (0.2 pts)

Financing propensity 54.2% 53.4% 0.8 pts

First Quarter

• Financing revenues reflect higher interest income as a result of a higher average notes receivable balance and a slightly higher average interest rate for the three months ended March 31, 2025.

• The increase in financing expense is primarily attributed to higher credit card fees and other operating costs.

• Consumer financing interest expense was flat due to lower average securitized debt at a slightly higher average interest rate for our more recent term securitization transactions.

We expect our average interest rate to continue to increase slightly as the current interest rate environment for new securitization transactions exceeds the average interest rate on our existing securitized debt.

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.

as a result, we expect our financing profit margin to continue to decrease in 2025, as we repay existing securitization transactions with proceeds from newer securitization transactions with lower interest rates.

Litigation Charges

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Litigation charges $ 2 $ 2 $ — NM $ 15 $ 8 $ 7 NM

Third Quarter and First Three Quarters

Litigation charges during the third quarter of 2024 and 2023, as well as the first three quarters of 2024 and 2023, relate primarily to a land disposition in the U.S.

and certain resorts in Europe.

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Litigation charges $ 4 $ 3 $ 1 28%

First Quarter

Litigation charges during the first quarter of 2025 as well as the first quarter of 2024, relate primarily to certain resorts in Europe.

Gains and Other Income

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Gains and other income, net $ 4 $ 7 $ (3) NM $ 5 $ 23 $ (18) NM

Third Quarter

During the third quarter of 2024, we recorded a $4 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition.

During the third quarter of 2023, we recorded a $6 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition.

First Three Quarters

During the first three quarters of 2024, we recorded a $4 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition.

During the first three quarters of 2023, we recorded a $9 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, $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, and $3 million related to the receipt of insurance proceeds.

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Gains and other income, net $ 9 $ — $ 9 NM

First Quarter

During the first quarter of 2025, we recorded $7 million related to the receipt of service interruption insurance proceeds from the Maui wildfires and a $2 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition.

Exchange & Third-Party Management

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Management and exchange $ 46 $ 52

Rental 11 10 32 31

Cost reimbursements 2 2

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Restructuring 2 —

Impairment — — 2 —

Cost reimbursements 2 2

TOTAL EXPENSES 40 40

Gains and other income, net 1 1 1 1

SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 18 $ 25

Management and Exchange Profit

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Management and exchange revenue $ 46 $ 52 $ (6) (10%)

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Management and exchange profit $ 17 $ 21 $ (4) (18%)

Management and exchange profit margin 28.0% 38.9% (10.9 pts) 33.4% 42.3% (8.9 pts)

Third Quarter

Interval International management and exchange revenues declined $3 million or 8% 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 Three Quarters

Interval International management and exchange revenues declined $7 million or 6% 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 $9 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 Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Rental revenues

$ 11 $ 10 $ 1 7% $ 32 $ 31 $ 1 3%

Third Quarter and First Three Quarters

Results reflect a 3% and 6% increase in average fees per transaction, partially offset by an 8% and 7% decrease in transaction volume, for the third quarter and first three quarters of 2024, respectively.

Management and exchange profit margin 37.1% 40.6% (3.5 pts)

First Quarter

• Interval International management and exchange revenues declined $4 million, or 7%, primarily due to 11% lower exchange transaction volume, partially offset by a 3% increase in average exchange fees.

• Management and exchange revenue reflects a $2 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 attributable to lower revenues, partially offset by lower wages and benefits and other costs.

Restructuring

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Restructuring $ 2 $ — $ 2 NM

First Quarter

During the first quarter of 2025, we recorded a $2 million impairment related to an operating lease and related assets.

Corporate and Other

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In addition, Corporate and Other includes the revenues and expenses from Consolidated Property Owners’ Associations.

Three Months Ended Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Resort management and other services $ 14 $ 11

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TOTAL EXPENSES 85 71

Gains (losses) and other income (expense), net 4 (5) (4) 10

Gains and other income, net 4 —

Interest expense, net (40) (40)

Transaction and integration costs — (15)

Other (1) — — —

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS (114) (126)

Provision for income taxes (45) (35)

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

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ (160) $ (160)

Litigation Charges

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Litigation charges $ 3 $ — $ 3 NM

First Quarter

Litigation charges during the first quarter of 2025 relate to a dispute with a service provider.

Restructuring

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Restructuring $ 10 $ 2 $ 8 NM

First Quarter

In November 2024, we announced the creation of a Strategic Business Operations office focused on accelerating our growth and driving operating efficiencies in all areas of our business while increasing organizational agility.

We intend to:

modernize and optimize our processes and systems, including through advanced technology and automation;

increase sales efficiency and inventory optimization;

and capture significant savings from initiatives related to procurement and corporate overhead.

During the first quarter of 2025, we incurred $10 million of restructuring charges associated with these efforts.

During the first quarter of 2024, we incurred $2 million of restructuring charges associated with the elimination of certain positions as a result of the realignment of our management structure and headcount reductions in 2023.

Gains and Other Income

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Gains and other income, net $ 4 $ — $ 4 NM

First Quarter

In the first quarter of 2025, we recorded $3 million of foreign currency translation gains and $1 million of other gains.

In the first quarter of 2024, we recorded $2 million of foreign currency translation losses, offset by $2 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters.

2025 First Quarter

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024 Change

Provision for income taxes $ (45) $ (35) $ (10) (27%)

First Quarter

Our effective tax rate was 43.6% and 43.0% for the three months ended March 31, 2025 and March 31, 2024, respectively.

The effective tax rate for the three months ended March 31, 2025 differed from the blended statutory tax rate for the same period due to lower pre-tax book income forecast for the current year, which is largely driven by our modernization efforts and related costs expected to be incurred, higher expected foreign losses, for which a valuation allowance will be recorded, and income tax adjustments for discrete items, primarily related to share-based compensation.

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

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

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 Nine Months Ended

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

The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance.

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Resort management and other services $ 14 $ 11

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TOTAL EXPENSES 6 —

Interest expense, net — — 1 1

FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 1 —

Provision for income taxes — (1) (1) (1)

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

FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ — $ 1

$ — $ (1) $ — $ —

General and Administrative

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

General and administrative $ 62 $ 57 $ 5 8% $ 179 $ 189 $ (10) (6%)

Third Quarter

General and administrative expenses for the third quarter of 2024 increased primarily due to $14 million of higher variable compensation expense and $3 million of higher insurance, partially offset by $11 million of lower information technology costs.

First Three Quarters

The decrease in General and administrative expenses for the first three quarters of 2024 is primarily due to $18 million lower information technology costs and $5 million of lower consulting and compliance related expenses, partially offset by $15 million of higher variable compensation expense.

Gain (Losses) and Other Income (Expense)

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Gains (losses) and other income (expense), net $ 4 $ (5) $ 9 NM $ (4) $ 10 $ (14) NM

Third Quarter

In the third quarter of 2024, we recorded $6 million of foreign currency translation gains.

In the third quarter of 2023, we recorded $5 million of foreign currency translation losses.

First Three Quarters

In the first three quarters of 2024, we recorded $4 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters.

In the first three quarters 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), 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 Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Interest expense, net $ (40) $ (36) $ (4) (13%) $ (123) $ (106) $ (17) (17%)

Third Quarter and First Three Quarters

The increase in Interest expense, net is attributed to higher variable interest expense and changes in outstanding borrowings during the comparative periods.

2024 Third Quarter

Three Months Ended Nine Months Ended

($ in millions) September 30, 2024 September 30, 2023 Change

2023 September 30, 2024 September 30, 2023 Change

Provision for income taxes $ (34) $ (24) $ (10) (43%) $ (79) $ (115) $ 36 31%

Third Quarter

Our effective tax rate was 28.7% and 36.1% for the three months ended September 30, 2024 and September 30, 2023, respectively.

The effective tax rate for the three months ended September 30, 2024 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including an $11 million decrease related to changes in valuation allowances on certain deferred tax assets in non-U.S.

jurisdictions and a $6 million decrease primarily attributable to the expiration of statutes of limitation on certain unrecognized tax benefits, partially offset by an $8 million increase to remove the permanent reinvestment assertion for our earnings in certain non-U.S.

entities and an increase of $3 million for deferred non-U.S.

withholding taxes.

The effective tax rate for the three months ended September 30, 2023 differed from the blended statutory tax rate for the same period due to losses in non-U.S.

jurisdictions for which we do not realize tax benefits.

First Three Quarters

Our effective tax rate was 32.1% and 34.3% for the nine months ended September 30, 2024 and September 30, 2023, respectively.

The effective tax rate for the nine months ended September 30, 2024 differed from the blended statutory tax rate for the same period due to income tax adjustments for discrete items, including a $27 million decrease attributable to the expiration of statutes of limitation on certain unrecognized tax benefits (inclusive of interest and penalties) and an $8 million net decrease related to changes in valuation allowances in non-U.S.

jurisdictions, partially offset by a $28 million increase to remove the permanent reinvestment assertion for our earnings in certain non-U.S.

entities and a $3 million increase for deferred non-U.S.

withholding taxes.

The effective tax rate for the nine months ended September 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.

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.

Liquidity and Capital Resources

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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 September 30, 2024, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 3.9, above our targeted range of 2.5 to 3.0, and we remain focused on reducing this ratio 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.

At March 31, 2025, our corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 4.1, above our targeted range of 2.5 to 3.0, and we remain focused on reducing this ratio over time.

We have no material principal payment obligations on our debt prior to 2026.

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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.

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) cash generated from our rental and resort management and other services operations.

Vacation Ownership Notes Receivable Securitizations

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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.

Loan defaults under securitizations offset a portion of the excess spread we receive, on a monthly basis.

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 third quarter of 2024, and as of September 30, 2024, we had 15 term securitization transactions outstanding, all of which were in compliance with their respective required parameters.

During the first quarter of 2025, and as of March 31, 2025, we had 12 term securitization transactions outstanding, all of which were in compliance with their respective required parameters.

Since 2000, we have issued approximately $10 billion of debt securities in securitization transactions in the term ABS market, excluding amounts securitized through warehouse credit facilities or private bank transactions.

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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 period from May 31, 2025 to June 11, 2026.

At September 30, 2024, we had no borrowings outstanding under our Warehouse Credit Facility.

As of September 30, 2024, $70 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 September 30, 2024, $75 million of borrowings and $20 million of le tters of credit were outstanding under our Revolving Corporate Credit Facility.

At March 31, 2025, we had $315 million of borrowings outstanding on our Warehouse Credit Facility.

As of March 31, 2025, $70 million of gross vacation ownership notes receivable were eligible for securitization.

Corporate Credit Facility

During the first quarter of 2025, we entered into an amendment to the Corporate Credit Facility, which, among other things, increased the borrowing capacity on our Revolving Corporate Credit Facility from $750 million to $800 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions.

The Amendment also extended the termination date from March 31, 2027 to March 24, 2030, reduced certain fees and interest costs, and increased the letter of credit sub-facility of the Revolving Corporate Credit Facility from $75 million to $150 million.

At March 31, 2025, $190 million of borrowings and $11 million of letters of credit were outstanding under our Revolving Corporate Credit Facility.

Additionally, the Amendment provided for a new $450 million senior secured Delayed-Draw Term Loan with a maturity date of December 31, 2027.

The Delayed-Draw Term Loan is only available to finance the redemption or repurchase of our 2026 Convertible Notes, which are due January 15, 2026.

As of March 31, 2025, there were no outstanding borrowings on the Delayed-Draw Term Loan.

See Footnote 11 “Debt” to our Financial Statements for further information.

We minimize our working capital needs through cash management, strict credit-granting policies, and disciplined collection efforts.

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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.

In addition, during the first quarter of each year, we generally have significant variable compensation-related cash outflows associated with payment of annual bonuses.

Timing of Estimated Tax Payments

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This relief allows us to delay making certain estimated tax payments, without interest or penalty.

As a result, we expect to defer $28 million of payments from 2024 to the second quarter of 2025.

Similarly, in the prior year, $32 million of estimated tax payments from the third and fourth quarters of 2023 were deferred to the first quarter 2024 related to hurricanes that occurred in 2023.

As a result, we deferred $38 million of estimated tax payments from the third and fourth quarters of 2024 to the second quarter of 2025.

Similarly, in the prior

year, as tax relief for businesses in parts of Florida affected by the hurricanes that occurred in 2023, we were able to defer $32 million of estimated tax payments from the third and fourth quarters of 2023 to the first quarter of 2024.

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 (In Excess of) Less Than Cost of Sales

Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Inventory spending $ (29) $ (25)

Purchase of property for future transfer to inventory — (27)

Purchase and development of property for future transfer to inventory (2) —

Inventory costs 30 42

Inventory spending (in excess of) less than cost of sales $ (1) $ 17

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.

Although we have adequate 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 to support anticipated future contract sales growth.

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.

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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 three quarters of 2024 was higher than cost of sales due to our acquisition of vacation ownership units in Waikiki and purchases under our VOI repurchase programs.

Refer to Footnote 3 “Acquisitions” for information about acquisitions that occurred during the first three quarters of 2024.

Purchases of property for future transfer to inventory in 2023 included the acquisition of property in Charleston, South Carolina and Savannah, Georgia.

We expect inventory spending to continue to exceed cost of sales for the remainder of 2024.

We expect inventory spending to continue to exceed cost of sales for the remainder of 2025 due to our remaining commitments to acquire property as disclosed in Footnote 9 “Contingencies and Commitments” to our Financial Statements.

Vacation Ownership Notes Receivable Collections Less Than Originations

Nine Months Ended

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

Three Months Ended

($ in millions) March 31, 2025 March 31, 2024

Vacation ownership notes receivable collections — non-securitized $ 41 $ 9

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Vacation ownership notes receivable collections less than originations $ (57) $ (40)

We expect vacation ownership notes receivable originations to continue to outpace vacation ownership notes receivable collections in the remainder of 2024.

Vacation ownership notes receivable collections were less than originations in the first quarters of 2025 and 2024 due to the growth of our vacation ownership notes receivable portfolio .

Repurchase of Common Stock

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As of December 31, 2024 25,790,550 $ 2,461 $ 95.40

For the first three quarters of 2024 530,377 45 $ 85.45

As of September 30, 2024 25,671,450 $ 2,450 $ 95.44

For the first quarter of 2025 496,484 36 $ 73.21

As of March 31, 2025 26,287,034 $ 2,497 $ 94.98

See Footnote 12 “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 three quarters of 2024 as follows:

Declaration Date Stockholder Record Date

Distribution Date Dividend per Share

We distributed cash dividends to holders of common stock during the first quarter of 2025 as follows:

Declaration Date Stockholder Record Date Distribution Date Dividend per Share

December 6, 2024 December 19, 2024 January 3, 2025 $0.79

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

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

February 20, 2025 March 5, 2025 March 19, 2025 $0.79

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.

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Material Cash Requirements

The following table summarizes our future material cash requirements from known contractual or other obligations as of September 30, 2024:

The following table summarizes our future material cash requirements from known contractual or other obligations as of March 31, 2025:

Payments Due by Period

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$ 7,383 $ 579 $ 1,156 $ 1,391 $ 703 $ 814 $ 2,740

$ 7,486 $ 175 $ 604 $ 1,144 $ 1,201 $ 735 $ 3,627

(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.

(2) Excludes the Delayed-Draw Term Loan as there were no outstanding borrowings at March 31, 2025.

See Footnote 11 “Debt” to our Financial Statements for further information.

(3) Payments based on estimated timing of cash flow associated with securitized 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.

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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 September 30, 2024 and December 31, 2023, and for the nine months ended September 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.

The following tables present consolidating financial information as of March 31, 2025 and December 31, 2024, and for the three months ended March 31, 2025 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.

Condensed Consolidating Statement of Income

Nine Months Ended September 30, 2024

Three Months Ended March 31, 2025

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

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Net income (loss) 56 83 52 36 (170) 57

Net loss attributable to noncontrolling interests — — — — — —

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

Net income (loss) attributable to common stockholders $ 56 $ 83 $ 52 $ 35 $ (170) $ 56

Condensed Consolidating Balance Sheet

As of September 30, 2024

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

($ in millions) MVWC MORI

As of March 31, 2025 As of December 31, 2024

Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated

($ in millions) MVWC MORI MVWC MORI

Cash and cash equivalents $ 1 $ 25 $ 64 $ 106 $ — $ 196 $ 1 $ 14 $ 59 $ 123 $ — $ 197

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Total liabilities and equity $ 3,600 $ 4,866 $ 5,537 $ 3,074 $ (7,195) $ 9,882 $ 3,633 $ 4,886 $ 5,610 $ 2,963 $ (7,284) $ 9,808

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

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

What changed 10-Q

Item 2. Management’s Discussion and Analysis