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: 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 and the adequacy of capital to meet short-term and long-term liquidity requirements; our competitive position; our plans to pursue growth opportunities; 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; taxes; 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. 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: 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; worker absenteeism; price inflation; 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 and Los Angeles area wildfires; delinquency and default rates; 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 and accelerate growth and profitability; political or social strife; and other matters referred to under the heading “Risk Factors” contained herein and also in our 2024 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, except as required by law. You should not put undue reliance on any 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. 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. 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. 30 Table of Contents 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 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”). 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. 31 Table of Contents Performance Measures We measure operating performance using the key metrics described below: • 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 , see below), by the number of tours in a given period. 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. • 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 15 “Business Segments” to our Financial Statements for further information about our reportable business segments. • 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. 32 Table of Contents Consolidated Results Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 REVENUES Sale of vacation ownership products $ 355 $ 352 Management and exchange 215 211 Rental 169 158 Financing 88 83 Cost reimbursements 373 391 TOTAL REVENUES 1,200 1,195 EXPENSES Cost of vacation ownership products 42 53 Marketing and sales 234 223 Management and exchange 117 116 Rental 123 107 Financing 36 34 General and administrative 61 63 Depreciation and amortization 38 38 Litigation charges 7 3 Restructuring 12 2 Royalty fee 28 28 Cost reimbursements 373 391 TOTAL EXPENSES 1,071 1,058 Gains and other income, net 13 — Interest expense, net (40) (40) Transaction and integration costs — (15) Other — (1) INCOME BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 102 81 Provision for income taxes (45) (35) NET INCOME 57 46 Net (income) loss attributable to noncontrolling interests (1) 1 NET INCOME ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 56 $ 47 Operating Statistics Three Months Ended (Contract sales $ in millions) March 31, 2025 March 31, 2024 Change Vacation Ownership Total contract sales $ 425 $ 433 $ (8) (2%) Consolidated contract sales $ 420 $ 428 $ (8) (2%) Joint venture contract sales $ 5 $ 5 $ — (4%) VPG $ 3,979 $ 4,129 $ (150) (4%) Tours 97,998 96,579 1,419 1% Exchange & Third-Party Management Total active members at end of period (000's) 1,538 1,566 (28) (2%) Average revenue per member $ 39.94 $ 41.74 $ (1.80) (4%) 33 Table of Contents Revenues Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Vacation Ownership $ 1,135 $ 1,130 $ 5 —% Exchange & Third-Party Management 58 65 (7) (10%) Total Segment Revenues 1,193 1,195 (2) —% Consolidated Property Owners’ Associations 7 — 7 NM Total Revenues $ 1,200 $ 1,195 $ 5 —% 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 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 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. 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 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. 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. 34 Table of Contents 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 ($ in millions) March 31, 2025 March 31, 2024 Change Net income attributable to common stockholders $ 56 $ 47 $ 9 20% Interest expense, net 40 40 — 1% Provision for income taxes 45 35 10 27% Depreciation and amortization 38 38 — —% EBITDA 179 160 19 12% Share-based compensation expense 7 7 — 6% 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 23.2% 23.2% — pts The table below details the components of Certain items for the periods presented. Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Foreign currency translation $ (3) $ 2 Insurance proceeds (7) — Change in indemnification asset — (2) Change in estimates relating to pre-acquisition contingencies (2) — Other (1) — 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 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 ($ in millions) March 31, 2025 March 31, 2024 Change Vacation Ownership $ 221 $ 213 $ 8 4% Exchange & Third-Party Management 28 32 (4) (13%) Segment adjusted EBITDA 249 245 4 1% General and administrative (61) (63) 2 3% Other 4 5 (1) 6% Adjusted EBITDA $ 192 $ 187 $ 5 3% 35 Table of Contents The following tables present segment financial results attributable to common stockholders reconciled to segment Adjusted EBITDA. Vacation Ownership Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Segment financial results $ 198 $ 182 $ 16 9% Depreciation and amortization 26 25 1 2% Share-based compensation expense 1 2 (1) 9% 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 29.2% 29.2% — pts The table below details the components of Certain items for Vacation Ownership segment financial results. Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Insurance proceeds $ (7) $ — Change in estimates relating to pre-acquisition contingencies (2) — Gains and other income, net (9) — Purchase accounting adjustments — 1 Litigation charges 4 3 Total Certain items $ (5) $ 4 Exchange & Third-Party Management Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Segment financial results $ 18 $ 25 $ (7) (24%) Depreciation and amortization 7 7 — (4%) Share-based compensation expense 1 — 1 2% Certain items 2 — 2 NM Segment adjusted EBITDA $ 28 $ 32 $ (4) (13%) Segment Adjusted EBITDA Margin 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 ($ in millions) March 31, 2025 March 31, 2024 Restructuring charges $ 2 $ — Total Certain items $ 2 $ — 36 Table of Contents Business Segments Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 15 “Business Segments” to our Financial Statements for further information about our segments. Vacation Ownership Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 REVENUES Sale of vacation ownership products $ 355 $ 352 Resort management and other services 155 148 Rental 159 147 Financing 88 83 Cost reimbursements 378 400 TOTAL REVENUES 1,135 1,130 EXPENSES Cost of vacation ownership products 42 53 Marketing and sales 234 223 Resort management and other services 72 71 Rental 126 110 Financing 36 34 Depreciation and amortization 26 25 Litigation charges 4 3 Royalty fee 28 28 Cost reimbursements 378 400 TOTAL EXPENSES 946 947 Gains and other income, net 9 — Other — (1) SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 198 $ 182 37 Table of Contents Sale of Vacation Ownership Products 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%) Joint venture contract sales 5 5 — (4%) Total contract sales 425 433 (8) (2%) Less: Resales contract sales (9) (12) 3 Less: Joint venture contract sales (5) (5) — Consolidated contract sales, net of resales 411 416 (5) (1%) Plus: Settlement revenue 9 2% 8 2% 1 Resales revenue 4 1% 5 1% (1) Revenue recognition adjustments: Reportability 5 1% (9) (2%) 14 Sales reserve (50) (12%) (46) (11%) (4) Other (1) (24) (6%) (22) (6%) (2) Sale of vacation ownership products $ 355 86% $ 352 84% $ 3 1% 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) 740 739 (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. 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; and • 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. 38 Table of Contents Development Profit First Quarter Three Months Ended ($ in millions) March 31, 2025 % of Revenue March 31, 2024 % of Revenue Change Sale of vacation ownership products $ 355 $ 352 $ 3 1% Cost of vacation ownership products (42) 12% (53) 15% 11 21% Marketing and sales (234) 66% (223) 63% (11) (5%) Development profit $ 79 $ 76 $ 3 4% Development profit margin 22.2% 21.5% 0.7 pts The increase in Development profit was due to the following: • higher sales of vacation ownership products (discussed above); and • 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; and • $3 million of higher wages and benefits, including variable compensation. Resort Management and Other Services Revenues, Expenses and Profit Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Management fee revenues $ 55 $ 52 $ 3 7% Ancillary revenues 65 65 — NM Other management and exchange revenues 35 31 4 9% Resort management and other services revenues 155 148 7 4% Resort management and other services expenses (72) (71) (1) (1%) Resort management and other services profit $ 83 $ 77 $ 6 8% Resort management and other services profit margin 53.6% 51.8% 1.8 pts Resort occupancy (1) 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 $1 million of higher wages and benefits. 39 Table of Contents Rental Revenues, Expenses and Profit Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Rental revenues $ 159 $ 147 $ 12 8% Rental expenses (126) (110) (16) (15%) Rental profit $ 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 key rate $ 284 $ 286 $ (2) (1%) Rental occupancy (2) 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. 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; and • $2 million of increased costs associated with higher owner utilization of third-party vacation and other offerings. These changes were partially offset by: • $6 million of higher transient rental revenue; and • a $3 million increase in costs allocated to marketing and sales expense for occupancy used for previews. Rental profit for our owned hotels remained in-line with the first quarter of 2024. Financing Revenues, Expenses and Profit Three Months Ended ($ 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) (25) — NM Financing profit $ 52 $ 49 $ 3 6% 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 2025, as we repay existing securitization transactions with proceeds from newer securitization transactions with lower interest rates. 40 Table of Contents Litigation Charges 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 ($ 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 $2 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition. Exchange & Third-Party Management Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 REVENUES Management and exchange $ 46 $ 52 Rental 10 11 Cost reimbursements 2 2 TOTAL REVENUES 58 65 EXPENSES Management and exchange 29 31 Depreciation and amortization 7 7 Restructuring 2 — Cost reimbursements 2 2 TOTAL EXPENSES 40 40 SEGMENT FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ 18 $ 25 Management and Exchange Profit Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Management and exchange revenue $ 46 $ 52 $ (6) (10%) Management and exchange expense (29) (31) 2 5% Management and exchange profit $ 17 $ 21 $ (4) (18%) 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 $2 million decline in Aqua-Aston management revenues resulting from fewer available nights for rent, lower occupancy, and a lower average daily rate in the Hawaii market due to changes in demand. • The decrease in management and exchange profit was primarily attributable to lower revenues, partially offset by lower wages and benefits and other costs. 41 Table of Contents Restructuring Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Change Restructuring $ 2 $ — $ 2 NM First Quarter During the first quarter of 2025, we recorded a $2 million impairment related to an operating lease and related assets. Corporate and Other Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative costs, corporate interest expense, transaction and integration costs, and income taxes. In addition, Corporate and Other includes the revenues and expenses from Consolidated Property Owners’ Associations. Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 REVENUES Resort management and other services $ 14 $ 11 Cost reimbursements (7) (11) TOTAL REVENUES 7 — EXPENSES Resort management and other services 16 14 Rental (3) (3) General and administrative 61 63 Depreciation and amortization 5 6 Litigation charges 3 — Restructuring 10 2 Cost reimbursements (7) (11) TOTAL EXPENSES 85 71 Gains and other income, net 4 — Interest expense, net (40) (40) Transaction and integration costs — (15) 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. 42 Table of Contents 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 $2 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters. Income Tax 2025 First Quarter Three Months Ended ($ 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 $9 million decrease for the expiration of statutes of limitation on certain unrecognized tax benefits. 43 Table of Contents Consolidated Property Owners’ Associations The following table illustrates the impact of certain Consolidated Property Owners’ Associations under the relevant accounting guidance. Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 REVENUES Resort management and other services $ 14 $ 11 Cost reimbursements (7) (11) TOTAL REVENUES 7 — EXPENSES Resort management and other services 16 14 Rental (3) (3) Cost reimbursements (7) (11) TOTAL EXPENSES 6 — FINANCIAL RESULTS BEFORE INCOME TAXES AND NONCONTROLLING INTERESTS 1 — Net (income) loss attributable to noncontrolling interests (1) 1 FINANCIAL RESULTS ATTRIBUTABLE TO COMMON STOCKHOLDERS $ — $ 1 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 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. See Footnote 11 “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) 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. Loan defaults under securitizations offset a portion of the excess spread we receive, on a monthly basis. 44 Table of Contents 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. 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. 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. 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. 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. 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 generally have significant variable compensation-related cash outflows associated with payment of annual bonuses. Timing of Estimated Tax Payments The Internal Revenue Service provided for the deferral of federal income tax payments as tax relief for businesses in parts of Florida affected by the hurricanes that occurred during the third and fourth quarters of 2024. This relief allows us to delay making certain estimated tax payments, without interest or penalty. 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 45 Table of Contents year, as tax relief for businesses in parts of Florida affected by the hurricanes that occurred in 2023, we were able to defer $32 million of estimated tax payments from the third and fourth quarters of 2023 to the first quarter of 2024. Operations In addition to net income and adjustments for non-cash items, the following are key drivers of our cash flow from operating activities: Inventory Spending (In Excess of) Less Than Cost of Sales Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Inventory spending $ (29) $ (25) 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 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. 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. 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 Three Months Ended ($ in millions) March 31, 2025 March 31, 2024 Vacation ownership notes receivable collections — non-securitized $ 41 $ 9 Vacation ownership notes receivable collections — securitized 135 151 Vacation ownership notes receivable originations (233) (200) Vacation ownership notes receivable collections less than originations $ (57) $ (40) 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 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, 2024 25,790,550 $ 2,461 $ 95.40 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. 46 Table of Contents Payment of Dividends to Common Stockholders 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 20, 2025 March 5, 2025 March 19, 2025 $0.79 We currently expect to pay quarterly dividends in the future, but any future dividend payments will be subject to the approval of our Board of Directors, which will depend on our financial condition, results of operations and capital requirements at the time, as well as applicable law, regulatory constraints, industry practice, and other business considerations that our Board of Directors considers relevant. In addition, our Corporate Credit Facility and the indentures governing our senior notes contain restrictions on our ability to pay dividends, and the terms of agreements governing debt that we may incur in the future may also limit or prohibit the payment of dividends. The payment of certain cash dividends may also result in an adjustment to the conversion rate of our convertible notes in a manner adverse to us. Accordingly, there can be no assurance that we will pay dividends in the future at any particular rate or at all. Material Cash Requirements The following table summarizes our future material cash requirements from known contractual or other obligations as of March 31, 2025: Payments Due by Period ($ in millions) Total Remainder of 2025 2026 2027 2028 2029 Thereafter Debt (1)(2) $ 3,469 $ 96 $ 689 $ 686 $ 428 $ 566 $ 1,004 Securitized debt (1)(3) 2,741 230 277 535 234 223 1,242 Purchase obligations (4) 524 204 150 139 16 3 12 Operating lease obligations (5) 94 16 22 15 11 9 21 Finance lease obligations (5) 532 13 17 15 13 13 461 Other long-term obligations 23 20 1 1 1 — — $ 7,383 $ 579 $ 1,156 $ 1,391 $ 703 $ 814 $ 2,740 (1) Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs. (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. 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. 47 Table of Contents 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 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 Three Months Ended March 31, 2025 Issuers Senior Notes Guarantors Non-Guarantor Subsidiaries Total Eliminations MVW Consolidated ($ in millions) MVWC MORI Revenues $ — $ 263 $ 684 $ 264 $ (11) $ 1,200 Expenses (10) (299) (603) (197) 11 (1,098) Benefit from (provision for) income taxes 3 12 (29) (31) — (45) Equity in net income (loss) of subsidiaries 63 107 — — (170) — Net income (loss) 56 83 52 36 (170) 57 Net income attributable to noncontrolling interests — — — (1) — (1) Net income (loss) attributable to common stockholders $ 56 $ 83 $ 52 $ 35 $ (170) $ 56 48 Table of Contents Condensed Consolidating Balance Sheet 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 Restricted cash — 28 95 168 — 291 — 25 134 172 — 331 Accounts and contracts receivable, net 24 279 80 96 (90) 389 18 166 118 88 (3) 387 Vacation ownership notes receivable, net — 145 149 2,152 — 2,446 — 177 161 2,102 — 2,440 Inventory — 329 301 107 — 737 — 282 345 108 — 735 Property and equipment, net — 281 647 238 — 1,166 — 280 652 238 — 1,170 Goodwill — — 3,117 — — 3,117 — — 3,117 — — 3,117 Intangibles, net — — 749 26 — 775 — — 763 27 — 790 Investments in subsidiaries 3,431 3,572 — — (7,003) — 3,466 3,743 — — (7,209) — Other 144 207 335 181 (102) 765 148 199 261 105 (72) 641 Total assets $ 3,600 $ 4,866 $ 5,537 $ 3,074 $ (7,195) $ 9,882 $ 3,633 $ 4,886 $ 5,610 $ 2,963 $ (7,284) $ 9,808 Accounts payable $ 20 $ 53 $ 101 $ 77 $ — $ 251 $ 51 $ 52 $ 164 $ 76 $ — $ 343 Advance deposits — 53 99 15 — 167 — 68 79 15 — 162 Accrued liabilities 6 94 210 202 (86) 426 2 103 149 127 3 384 Deferred revenue — 10 216 242 (26) 442 — 15 157 190 (8) 354 Payroll and benefits liability — 106 74 28 — 208 — 103 86 31 — 220 Deferred compensation liability — 138 44 4 — 186 — 143 48 4 — 195 Securitized debt, net — — — 2,171 (24) 2,147 — — — 2,163 (27) 2,136 Debt, net 1,139 1,833 179 — — 3,151 1,138 1,771 179 1 — 3,089 Other — 2 113 19 — 134 — 2 118 19 — 139 Deferred taxes — 140 220 31 (56) 335 — 121 236 31 (43) 345 MVW stockholders' equity 2,435 2,437 4,281 285 (7,003) 2,435 2,442 2,508 4,394 307 (7,209) 2,442 Noncontrolling interests — — — — — — — — — (1) — (1) 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 49 Table of Contents 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 about 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 2024 Annual Report. Since the date of our 2024 Annual Report, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.