Marriott Vacations Worldwide VAC Form 10-Q filing Q3 FY2026

Item 1. Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF INCOME

(In millions, except per share amounts, and unaudited)

See Interim Condensed Notes to Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In millions and unaudited)

See Interim Condensed Notes to Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED BALANCE SHEETS

(In millions, except share and per share data)

See Interim Condensed Notes to Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS

(In millions and unaudited)

Continued

See Interim Condensed Notes to Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In millions and unaudited)

See Interim Condensed Notes to Consolidated Financial Statements

5

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In millions and unaudited)

See Interim Condensed Notes to Consolidated Financial Statements

MARRIOTT VACATIONS WORLDWIDE CORPORATION

INTERIM CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1. BASIS OF PRESENTATION

The Interim Consolidated Financial Statements present the results of operations, financial position and cash flows of Marriott Vacations Worldwide Corporation (referred to in this report as (i) “we,” “us,” “Marriott Vacations Worldwide,” “MVW,” or the “Company,” which includes our consolidated subsidiaries except where the context of the reference is to a single corporate entity, or (ii) “MVWC,” which shall refer only to Marriott Vacations Worldwide Corporation, without its consolidated subsidiaries). In order to make this report easier to read, we refer throughout to (i) our Interim Consolidated Financial Statements as our “Financial Statements,” (ii) our Interim Consolidated Statements of Income as our “Income Statements,” (iii) our Interim Consolidated Balance Sheets as our “Balance Sheets,” and (iv) our Interim Consolidated Statements of Cash Flows as our “Cash Flows.” In addition, references throughout to numbered “Footnotes” refer to the numbered notes in the Financial Statements, unless otherwise noted. Capitalized terms used and not specifically defined herein have the same meanings given those terms in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 (the “2025 Annual Report”). We also use certain other terms that are defined within these Financial Statements.

The Financial Statements presented herein and discussed below include 100% of the assets, liabilities, revenues, expenses, and cash flows of Marriott Vacations Worldwide, all entities in which Marriott Vacations Worldwide has a controlling voting interest (“subsidiaries”), and variable interest entities (“VIEs”) for which Marriott Vacations Worldwide is the primary beneficiary in accordance with consolidation accounting guidance. References in these Financial Statements to net income or loss attributable to common stockholders and MVW stockholders’ equity do not include noncontrolling interests, which represent the outside ownership of our consolidated non-wholly owned entities and are reported separately. Intercompany accounts and transactions between consolidated entities have been eliminated in consolidation.

These Financial Statements reflect our financial position, results of operations, and cash flows as prepared in conformity with United States Generally Accepted Accounting Principles (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes. Such estimates include, but are not limited to, revenue recognition, cost of vacation ownership products, inventory valuation, goodwill and intangibles valuation, vacation ownership notes receivable reserves, income taxes, and loss contingencies. The uncertainties and volatility in the broader macroeconomic environment, including inflation, the impact of changing trade policy, continuing high interest rates, mixed economic indicators, increased consumer debt, continuing global insecurity and political uncertainty, have made it more challenging to make these estimates. Actual results could differ from our estimates, and such differences may be material.

In our opinion, our Financial Statements reflect all normal and recurring adjustments necessary to present fairly our financial position, the results of our operations, and cash flows for the periods presented. Interim results may not be indicative of fiscal year performance because of, among other reasons, general macroeconomic conditions, including inflationary pressures and seasonal and short-term variations. These Financial Statements have not been audited. We have condensed or omitted certain information and footnote disclosures normally included in financial statements presented in accordance with GAAP. Although we believe our footnote disclosures are adequate to make the information presented not misleading, the Financial Statements in this report should be read in conjunction with the consolidated financial statements and notes thereto in our 2025 Annual Report.

We use “Legacy-ILG” to refer to the business and brands acquired in our 2018 acquisition of ILG, Inc. (the “ILG Acquisition”), and we use “Legacy-MVW” to refer to the business we conducted and our associated brands prior to the ILG Acquisition. “Legacy-Welk” refers to the business and brand acquired in our 2021 acquisition of Welk Hospitality Group, Inc. (the “Welk Acquisition”); all of the Welk Acquisition resorts were rebranded as Hyatt Vacation Club resorts in 2023. We use “Marriott Vacation Ownership” for our Marriott, Sheraton, and Westin branded businesses, and “Hyatt Vacation Ownership” for our Hyatt branded business.

Certain amounts from the prior fiscal year have been reclassified to conform to the current period presentation. Additionally, commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.

2. SIGNIFICANT ACCOUNTING POLICIES AND RECENT ACCOUNTING STANDARDS

New Accounting Standards

Accounting Standards Update 2024-04 - “Debt - Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments” (“ASU 2024-04”)

In November 2024, the Financial Accounting Standards Board issued accounting standards update (“ASU”) 2024-04, which requires an entity to account for certain early settlements of convertible debt instruments as an induced conversion if the inducement offer includes the issuance of all consideration (in form and amount) issuable under the conversion privileges provided in the terms of the existing convertible debt instrument. We adopted ASU 2024-04 on a prospective basis on January 1, 2026, with no impact to our financial statements or disclosures.

Accounting Standards Update 2025-05 - “Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses for Accounts Receivable and Contract Assets” (“ASU 2025-05”)

In July 2025, the FASB issued ASU 2025-05, which introduces a practical expedient for estimating expected credit losses on current accounts receivable and contract assets. Under this expedient, entities may assume that conditions existing at the balance sheet date will persist for the remaining life of the asset, which simplifies the estimation process by eliminating the need to forecast future economic conditions for short-term assets. We adopted ASU 2025-05 and elected the practical expedient on a prospective basis on January 1, 2026, with no material impact to our financial statements or disclosures.

Accounting Standards Update 2025-11 - “Interim Reporting (Topic 270): Narrow-Scope Improvements” (“ASU 2025-11”)

In December 2025, the FASB issued ASU 2025-11, which updates Accounting Standards Codification (“ASC”) 270 to improve clarity and consistency, without fundamentally altering the nature or scope of interim reporting requirements. The guidance provides a comprehensive list of interim disclosures required by GAAP and incorporates a disclosure principle that requires disclosures at interim periods when an event or change that has a material effect on an entity has occurred since the last annual reporting period. The guidance is effective for interim reporting periods within annual reporting periods beginning after December 15, 2027, with early adoption permitted. We adopted ASU 2025-11 on a prospective basis on January 1, 2026, with no impact to our financial statements or disclosures.

Future Adoption of Accounting Standards

Accounting Standards Update 2024-03 - “Income Statement - Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”)

In November 2024, the FASB issued ASU 2024-03, which requires additional information about specific expense categories in the notes to financial statements for both interim and annual reporting periods. This update is effective for annual periods beginning after December 15, 2026, and interim periods within annual periods beginning after December 15, 2027, and may be adopted on a prospective or retrospective basis, with early adoption permitted. We are evaluating the impact that the adoption of this update, including the timing of implementation, will have on our disclosures.

Accounting Standards Update 2025-09 - “Derivatives and Hedging (Topic 815): Hedge Accounting Improvements” (“ASU 2025-09”)

In November 2025, the FASB issued ASU 2025-09, which amends certain aspects of hedge accounting guidance under ASC 815. The amendments clarify the assessment of risk for cash flow hedges; provide guidance on hedges of forecasted interest payments on choose‑your‑rate debt; expand the application of hedge accounting to certain nonfinancial forecasted transactions; permit the use of net written options as hedging instruments; and address the accounting for dual hedges of foreign‑currency‑denominated debt. This update is effective for annual periods beginning after December 15, 2026, and interim periods within those annual reporting periods, with early adoption permitted. We are evaluating the impact that the adoption of this update, including the timing of implementation, will have on our financial statements and disclosures.

3. ACQUISITIONS AND DISPOSITIONS

Cancun, Mexico

During the first quarter of 2026, we disposed of an entity that owned and operated a Vacation Ownership segment hotel in Cancun, Mexico, for proceeds of $50 million, consistent with our strategy to monetize non-core assets. The net carrying value of the entity disposed of, as of the date of the disposition, was $50 million, the majority of which was comprised of property and equipment that was recorded in Other Assets on our balance sheet. As a result of this disposition, we recorded a gain of $2 million in (Losses) gains and other (expense) income, net on our Income Statements for the six months ended June 30, 2026, which related to the realization of cumulative foreign currency translation gains.

Khao Lak, Thailand

During the second quarter of 2025, we acquired 52 completed vacation ownership units located in Khao Lak, Thailand for $50 million and included them in Property and equipment, net. We paid $43 million in cash consideration for these units during the second quarter of 2025. Additionally, during the second quarter of 2025, we reclassified $7 million of deposits paid in 2024 in connection with the project from Other assets to Property and equipment, net.

4. REVENUE AND RECEIVABLES

Sources of Revenue by Segment

Timing of Revenue from Contracts with Customers by Segment

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

Sale of Vacation Ownership Products

Revenues were reduced during the second quarter and first half of 2026 by $7 million and $11 million, respectively, due to changes in our estimates of variable consideration for performance obligations that were satisfied in prior periods.

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

The following table shows the composition of our receivables from contracts with customers and contract liabilities. We had no contract assets at either June 30, 2026 or December 31, 2025.

(1) Includes $105 million and $99 million of other refundable deposits at June 30, 2026 and December 31, 2025, respectively.

Revenue recognized during the second quarter and first half of 2026 that was included in our contract liabilities balance at December 31, 2025 was $94 million and $214 million, respectively.

Remaining Performance Obligations

Our recorded contract liabilities (excluding other refundable deposits) represent the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied (or partially unsatisfied) as of June 30, 2026. At June 30, 2026, approximately 90% of the recorded contract liabilities are expected to be recognized as revenue over the next two years.

Accounts and Contracts Receivable

Accounts and contracts receivable is composed of amounts due from customers, primarily owners’ associations, resort developers, owners and members, credit card receivables, interest receivables, amounts due from taxing authorities, indemnification assets, and other miscellaneous receivables. The following table shows the composition of our accounts and contracts receivable balances:

5. INCOME TAXES

Our provision for income taxes is calculated using an estimated annual effective tax rate (“AETR”), which is based upon projected annual income or loss, including anticipated losses in certain jurisdictions, non-deductible expenses under applicable federal and local tax laws, statutory rates, and planned tax strategies across the jurisdictions in which we operate. Certain items that do not relate directly to ordinary income are excluded from the AETR and are recognized in the period in which they occur.

Our effective tax rate was 32.4% and 26.8% for the three months ended June 30, 2026 and June 30, 2025, respectively, and 37.5% and 35.5% for the six months ended June 30, 2026 and June 30, 2025, respectively.

The effective tax rate for the three months ended June 30, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to projected losses in certain foreign jurisdictions for which no tax benefit was recognized as a result of valuation allowances with respect to such foreign jurisdictions, as well as discrete tax benefits related to uncertain tax positions and the effective settlement of a domestic tax audit, partially offset by penalties accrued for foreign tax matters.

The effective tax rate for the three months ended June 30, 2025 was generally consistent with the blended U.S. federal and state statutory tax rate, with no significant variances.

The effective tax rate for the six months ended June 30, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to projected losses in certain foreign jurisdictions for which no tax benefit was recognized as a result of valuation allowances with respect to such foreign jurisdictions, as well as discrete tax benefits related to uncertain tax positions, partially offset by a $6 million cumulative adjustment related to a foreign tax provision and penalties accrued for foreign tax matters.

The effective tax rate for the six months ended June 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to the effect of losses incurred in certain non-U.S. jurisdictions for which no tax benefit was recognized. Additionally, permanent differences between the book and tax treatment contributed to the variance from the statutory rate.

Our income tax returns remain subject to examination by the relevant tax authorities in various jurisdictions for tax years 2007 through 2025. The amount of the unrecognized tax benefits may change within the next twelve months as a result of audits, settlements with tax authorities, or the expiration of statutes of limitations.

During the third quarter of 2025, the One Big Beautiful Bill Act (Public Law 119-21) was signed into law, making several provisions of the Tax Cuts and Jobs Act permanent. Under ASC 740, “Income Taxes,” the effects of changes in tax laws are recognized in the period of enactment. The provisions effective during the first six months of 2026 did not have a material impact on our effective tax rate for the three months or six months ended June 30, 2026, but we continue to assess the potential impact of these legal changes, including provisions that become effective later in 2026, on our business and financial results.

6. VACATION OWNERSHIP NOTES RECEIVABLE

The following table shows the composition of our vacation ownership notes receivable balances, net of reserves. Originated vacation ownership notes receivable represent vacation ownership notes receivable originated by Legacy-ILG and Legacy-Welk subsequent to each respective acquisition date, and all Legacy-MVW vacation ownership notes receivable. Acquired vacation ownership notes receivable represent vacation ownership notes receivable acquired as part of the ILG Acquisition and the Welk Acquisition.

The following table shows future principal payments, net of reserves, and interest rates for our vacation ownership notes receivable at June 30, 2026.

Credit Quality Indicators - Vacation Ownership Notes Receivable

We use the origination of vacation ownership notes receivable and the FICO scores of the customer by brand as the primary credit quality indicators, as historical performance indicates that there is a relationship between the default behavior of borrowers by FICO score and the brand associated with the vacation ownership interest (“VOI”) they have acquired.

The weighted average FICO score within our consolidated vacation ownership notes receivable pool was 731 and 729, at June 30, 2026 and December 31, 2025, respectively, based upon the FICO score of the borrower at the time of origination.

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

The following tables detail the origination year of our vacation ownership notes receivable, before reserves, by brand and borrower FICO score at origination as of June 30, 2026, and gross write-offs by brand for the first half of 2026.

We reflect interest income associated with vacation ownership notes receivable on our Income Statements in the Financing revenues caption. The following table summarizes interest income associated with vacation ownership notes receivable.

Vacation Ownership Notes Receivable Reserve

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

For originated vacation ownership notes receivable, we record the difference between the vacation ownership note receivable and the variable consideration included in the transaction price for the sale of the related vacation ownership product as a reserve on our vacation ownership notes receivable. The following table summarizes the activity related to our originated vacation ownership notes receivable reserve during the first half of 2026.

For our acquired vacation ownership notes receivable, the remaining reserve was $6 million as of June 30, 2026, and we recorded $3 million of write-offs for the six months ended June 30, 2026.

Vacation Ownership Notes Receivable on Non-Accrual Status

For both non-securitized and securitized vacation ownership notes receivable, we estimated the average remaining default rates of 13.05% as of June 30, 2026 and 13.51% as of December 31, 2025. A 0.5 percentage point increase in the estimated default rate would have resulted in an increase in the related vacation ownership notes receivable reserve of $15 million as of both June 30, 2026 and December 31, 2025.

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

The following table shows the aging of the recorded investment in principal, before reserves, in vacation ownership notes receivable as of June 30, 2026 and December 31, 2025.

7. FINANCIAL INSTRUMENTS

The following table shows the carrying values and the estimated fair values of financial assets and liabilities that qualify as financial instruments, determined in accordance with the authoritative guidance for disclosures regarding the fair value of financial instruments. Considerable judgment is required in interpreting market data to develop estimates of fair value. The use of different market assumptions and/or estimation methodologies could have a material effect on the estimated fair value amounts. The table excludes Cash and cash equivalents, Restricted cash, Accounts and contracts receivable (excluding contracts receivable for financed VOI sales, net), deposits included in Other assets, Accounts payable, Advance deposits, Accrued liabilities, and derivative instruments, all of which had fair values approximating their carrying amounts due to the short maturities and liquidity of these instruments.

Vacation Ownership Notes Receivable

We estimate the fair value of our vacation ownership notes receivable that have been securitized using a discounted cash flow model. We believe this is comparable to the model that an independent third party would use in the current market. Our model uses default rates, prepayment rates, coupon rates, and loan terms for our securitized vacation ownership notes receivable portfolio as key drivers of risk and relative value to determine the fair value of the underlying vacation ownership notes receivable. We concluded that this fair value measurement should be categorized within Level 3.

Due to factors that impact the general marketability of our vacation ownership notes receivable that have not been securitized, as well as current market conditions, we bifurcate our non-securitized vacation ownership notes receivable at each balance sheet date into those eligible and not eligible for securitization using criteria applicable to current securitization transactions in the asset-backed securities (“ABS”) market. Generally, vacation ownership notes receivable are considered not eligible for securitization if any of the following attributes are present: (1) payments are greater than 30 days past due; (2) the first payment has not been received; or (3) the collateral is located in Asia or Europe. In some cases, eligibility may also be determined based on the credit score of the borrower, the remaining term of the loans and other similar factors that may reflect investor demand in a securitization transaction or the cost to effectively securitize the vacation ownership notes receivable.

The table above shows the bifurcation of our vacation ownership notes receivable that have not been securitized into those eligible and not eligible for securitization based upon the aforementioned eligibility criteria. We estimate the fair value of the portion of our vacation ownership notes receivable that have not been securitized that we believe will ultimately be securitized in the same manner as vacation ownership notes receivable that have been securitized. We value the remaining vacation ownership notes receivable that have not been securitized at their carrying value. We believe that the carrying value of these particular vacation ownership notes receivable approximates fair value because the stated, or otherwise imputed, interest rates of these loans are generally consistent with current market rates and the reserve for these vacation ownership notes receivable appropriately accounts for risks in default rates, prepayment rates, discount rates, and loan terms. We concluded that this fair value measurement should be categorized within Level 3.

Contracts Receivable for Financed VOI Sales

At the time at which we recognize revenue for our VOI sales, we temporarily record a contract receivable for financed VOI sales, until the time at which we originate a vacation ownership note receivable, which occurs at closing. We believe that the carrying value of the contracts receivable for financed VOI sales approximates fair value because the stated, or otherwise imputed, interest rates of these receivables are generally consistent with current market rates and the reserve for these contracts receivable for financed VOI sales appropriately accounts for risks in default rates. We concluded that this fair value measurement should be categorized within Level 3.

Other Assets

Other assets include $188 million and $168 million of company owned insurance policies (the “COLI policies”) acquired on the lives of certain participants in the Marriott Vacations Worldwide Deferred Compensation Plan (the “Deferred Compensation Plan”) at June 30, 2026 and December 31, 2025, respectively, that are held in a rabbi trust. The rabbi trust is considered a VIE, which we consolidate because we are the primary beneficiary as we direct the activities of the trust and are the beneficiary of the trust. The carrying value of the COLI policies is equal to their cash surrender value (Level 2 inputs).

Securitized Debt

We generate cash flow estimates by modeling all bond tranches for our active vacation ownership notes receivable securitization transactions, with consideration for the collateral specific to each tranche. The key drivers in our analysis include default rates, prepayment rates, bond interest rates, and other structural factors, which we use to estimate the projected cash flows. In order to estimate market credit spreads by rating, we obtain indicative credit spreads from investment banks that actively issue and facilitate the market for vacation ownership securities and determine an average credit spread by rating level of the different tranches. We then apply those estimated market spreads to swap rates in order to estimate an underlying discount rate for calculating the fair value of the active bonds payable. We concluded that this fair value measurement should be categorized within Level 3.

Term Loan

We estimate the fair value of our Term Loan (as defined in Footnote 12 “Debt”) using quotes from securities dealers as of the last trading day for the quarter; however, this loan has only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the Term Loan could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 3.

Revolving Corporate Credit Facility

We estimate that the gross carrying value of our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”) approximates fair value as the contractual interest rate is variable plus an applicable margin. We concluded that this fair value measurement should be categorized within Level 3.

Senior Notes

We estimate the fair value of our 2028 Notes, 2029 Notes, and 2033 Notes (each as defined in Footnote 12 “Debt”) using quoted market prices as of the last trading day for the quarter; however, these notes have only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which these notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.

Convertible Notes

We estimate the fair value of our convertible notes using quoted market prices as of the last trading day for the quarter; however, these notes have only a limited trading history and volume, and as such, this fair value estimate is not necessarily indicative of the value at which the convertible notes could be retired or transferred. We concluded that this fair value measurement should be categorized within Level 2.

8. EARNINGS PER SHARE

Basic earnings per share attributable to common stockholders is calculated by dividing net income attributable to common stockholders by the weighted average number of shares of common stock outstanding during the reporting period. Diluted earnings per share attributable to common stockholders is calculated to give effect to all potentially dilutive common shares that were outstanding during the reporting period. The dilutive effect of outstanding equity-based compensation awards is reflected in diluted earnings per share applicable to common stockholders by application of the treasury stock method.

The tables below illustrate the reconciliation of the earnings or loss and number of shares used in our calculation of basic and diluted earnings or loss per share attributable to common stockholders.

The computations of diluted earnings per share attributable to common stockholders above exclude approximately 873,000 and 645,000 shares of common stock, the maximum number of shares issuable as of June 30, 2026 and June 30, 2025, respectively, upon the vesting of certain performance-based and market-based awards, because the performance or market conditions required to be met for the shares subject to such awards to vest were not achieved by the end of the reporting period.

In accordance with the applicable accounting guidance for calculating earnings per share, for the second quarter of 2026, we excluded from our calculation of diluted earnings per share 635,060 shares underlying stock appreciation rights (“SARs”) that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $93.73 to $173.88, were greater than the average market price of our common stock for the applicable period.

For the first half of 2026, we excluded from our calculation of diluted earnings per share 763,659 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $71.17 to $173.88, were greater than the average market price of our common stock for the applicable period.

For the second quarter and first half of 2025, we excluded from our calculation of diluted earnings per share 788,607 shares underlying SARs that may settle in shares of common stock because the exercise prices of such SARs, which ranged from $71.17 to $173.88, were greater than the average market price of our common stock for the applicable period.

9. INVENTORY

The following table shows the composition of our inventory balances:

Product cost true-up activity relating to vacation ownership products increased carrying values of inventory by $17 million during the first half of 2026 and $28 million during the first half of 2025.

In addition to the above, at June 30, 2026 and December 31, 2025, we had $229 million and $224 million, respectively, of completed vacation ownership units which are classified as a component of Property and equipment, net until the time at which they are available and legally registered for sale as vacation ownership products.

We also had deposits on future purchases of inventory of $34 million at June 30, 2026, of which $25 million was included in Other assets and $9 million was included in Accounts and contracts receivable, net on our Balance Sheet, and $31 million at December 31, 2025, of which $26 million was included in Other assets and $5 million was included in Accounts and contracts receivable, net on our Balance Sheet.

10. CONTINGENCIES AND COMMITMENTS

Commitments and Letters of Credit

As of June 30, 2026, we had the following commitments outstanding:

• We have various agreements for cloud computing and outsourcing of development, maintenance and support related to information technology that we use in the normal course of business. We expect aggregate obligations under these contracts of $153 million, of which we expect $53 million, $45 million, $27 million, $11 million, $11 million and $6 million will be paid in the remainder of 2026, 2027, 2028, 2029, 2030, and thereafter, respectively.
• We have a commitment to purchase property and vacation ownership units located in Nashville, Tennessee, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. We expect to complete the acquisition of 168 vacation ownership units in 2027, and we expect to make payments when specific construction milestones are completed of $122 million in 2027.
• We have a remaining commitment of $37 million to purchase 60 vacation ownership units located in Khao Lak, Thailand, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. We expect to complete the acquisition of these vacation ownership units in 2027, and we expect to make remaining payments with respect to these units as follows: $4 million in 2027, and $33 million in 2028.
• In connection with our recent sale of an entity that owned and operated a hotel in Cancun, we entered into a commitment to purchase vacation ownership units located in Puerto Vallarta, Mexico, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. Presuming all construction milestones are achieved, we will acquire 64 vacation ownership units for $46 million in 2028. See Footnote 3 “Acquisitions and Dispositions” for further details on our sale of and entity that owned and operated a hotel in Cancun in the first quarter of 2026.
• We have a remaining commitment of $11 million to purchase 32 vacation ownership units located in Bali, Indonesia, contingent upon completion of construction to agreed-upon standards within specified timeframes, for use in our Vacation Ownership segment. Subsequent to the end of the second quarter of 2026, we completed the acquisition of these vacation ownership units and made the remaining payments of $11 million.
• We have a commitment to acquire real estate in Waikiki, Hawaii for use in our Vacation Ownership segment via our involvement with a VIE. Refer to Footnote 15 “Variable Interest Entities” for additional information and our activities relating to the VIE involved in this commitment.

As of June 30, 2026, we had $5 million of letters of credit outstanding under our Revolving Corporate Credit Facility (as defined in Footnote 12 “Debt”), of which $4 million were related to and in lieu of reserves required for certain of our outstanding securitization transactions. In addition, as of June 30, 2026, we had $34 million in letters of credit outstanding that were related to and in lieu of reserves required for certain other outstanding securitization transactions, which were not issued pursuant to, nor do they impact our borrowing capacity under, the Revolving Corporate Credit Facility.

Surety bonds issued as of June 30, 2026 totaled $140 million, the majority of which were requested by federal, state or local governments in connection with our operations.

Guarantees

We have a commitment to an owners’ association that we manage to pay for any shortfall between the actual expenses incurred by the owners’ association and the income received by the owners’ association, in lieu of our payment of maintenance fees for unsold inventory. The agreement will terminate on the earlier of: 1) sale of 95% of the total ownership interests in the owners’ association; or 2) written notification of termination by either party. At June 30, 2026, our expected commitment for the remainder of 2026 is $13 million, which will ultimately be recorded as a component of rental expense on our income statement.

Loss Contingencies

In the ordinary course of our business, various claims and lawsuits have been filed or are pending against us. A number of these lawsuits and claims may exist at any given time. We record and accrue for legal contingencies when we determine that it is probable that a liability has been incurred and the amount of the loss can be reasonably estimated. In making such determinations, we evaluate, among other things, the degree of probability of an unfavorable outcome and, when it is probable that a liability has been incurred, our ability to make a reasonable estimate of loss. We review these accruals each reporting period and make revisions based on changes in facts and circumstances.

We have accrued for certain pending claims and lawsuits, but the amount accrued is not material individually or in the aggregate. For matters not requiring accrual, we do not believe that the ultimate outcome of such matters, individually or in the aggregate, will materially harm our financial position, cash flows, or overall trends in results of operations based on information currently available. However, legal proceedings are inherently uncertain, and while we believe that our accruals, where required, are adequate and/or we have valid defenses to the claims asserted, unfavorable rulings could occur that could, individually or in the aggregate, have a material adverse effect on our business, financial condition, or operating results.

11. SECURITIZED DEBT

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

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

The following table shows anticipated future principal payments for our securitized debt as of June 30, 2026.

Vacation Ownership Notes Receivable Securitizations

Each of the securitized vacation ownership notes receivable transactions contains various triggers relating to the performance of the underlying vacation ownership notes receivable. If a pool of securitized vacation ownership notes receivable fails to perform within the pool’s established parameters (default or delinquency thresholds vary by transaction), transaction provisions effectively redirect the monthly excess spread we would otherwise receive from that pool (attributable to the interests we retained) to accelerate the principal payments to investors (taking into account the subordination of the different tranches to the extent there are multiple tranches) until the performance trigger is cured. During the second quarter of 2026, and as of June 30, 2026, we had 12 securitized vacation ownership notes receivable pools outstanding, none of which were out of compliance with their respective established parameters.

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

During the second quarter of 2026, we securitized a pool of $470 million of vacation ownership notes receivable. In connection with the securitization, $460 million in vacation ownership loan backed notes were issued by MVW 2026-1 LLC (the “2026-1 LLC”) in a private placement. Three classes of vacation ownership loan backed notes were issued by the 2026-1 LLC: $277 million of Class A Notes, $97 million of Class B Notes, and $86 million of Class C Notes. The Class A Notes have an interest rate of 4.67%, the Class B Notes have an interest rate of 4.97%, and the Class C Notes have an interest rate of 5.36%, for an overall weighted average interest rate of 4.86%. Proceeds from the transaction, net of fees, were used to repay outstanding credit facility obligations and for other general corporate purposes.

Warehouse Credit Facility

Our warehouse credit facility (the “Warehouse Credit Facility”), allows for the securitization of vacation ownership notes receivable on a revolving non-recourse basis, has a borrowing capacity of $500 million and, prior to its July 15, 2026 amendment (the “Warehouse Amendment”), had a facility expiration date of June 11, 2027. The Warehouse Amendment extended the revolving period from June 11, 2027 to June 12, 2028 and made certain other non-material changes. The credit spread for the Warehouse Credit Facility is 110 basis points over the Secured Overnight Financing Rate (“SOFR”).

12. DEBT

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

The following table shows scheduled principal payments for our debt, excluding finance leases, as of June 30, 2026.

Corporate Credit Facility

Our corporate credit facility (the “Corporate Credit Facility”) provides support for our business, including ongoing liquidity and letters of credit, and consists of an $800 million term loan facility (the “Term Loan”) which is scheduled to mature on April 1, 2031, and a revolving credit facility with a borrowing capacity of $800 million (the “Revolving Corporate Credit Facility”), which includes a letter of credit sub-facility of $150 million, that terminates on March 24, 2030.

During the second quarter of 2025, we entered into a $300 million interest rate swap pursuant to which we pay interest at a fixed rate of 3.344% and receive interest at a floating rate (SOFR) through May 2027 to hedge a portion of our interest rate risk on the Term Loan. This interest rate swap has been designated and qualifies as a cash flow hedge of interest rate risk and is recorded in Other Assets on our Balance Sheet as of June 30, 2026 and in Other Liabilities on our Balance Sheet as of December 31, 2025. We characterize payments we make or receive in connection with this derivative instrument as interest expense and a reclassification of accumulated other comprehensive income or loss for presentation purposes.

Senior Notes

Our senior notes include:

• $350 million aggregate principal amount of 4.750% Senior Unsecured Notes due 2028 issued in the fourth quarter of 2019 with a maturity date of January 15, 2028 (the “2028 Notes”).
• $500 million aggregate principal amount of 4.500% Senior Unsecured Notes due 2029 issued in the second quarter of 2021 with a maturity date of June 15, 2029 (the “2029 Notes”).
• $575 million aggregate principal amount of 6.500% Senior Unsecured Notes due 2033 issued in the third quarter of 2025 with a maturity date of October 1, 2033 (the “2033 Notes”).

Convertible Notes

2026 Convertible Notes Maturity

During 2021, we issued $575 million aggregate principal amount of convertible senior notes (the “2026 Convertible Notes”) that bore interest at a rate of 0.00%. The 2026 Convertible Notes matured at par on January 15, 2026, at which time none of the 2026 Convertible Notes were converted and all were settled in cash, and the deferred financing costs were fully amortized. Amortization of debt issuance costs related to the 2026 Convertible Notes was less than $1 million during the first half of 2026, and $1 million and $2 million for the second quarter and first half of 2025, respectively.

2026 Convertible Note Hedges and Warrants

In connection with the offering of the 2026 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (the “2026 Convertible Note Hedges”), covering shares of our common stock, and warrant transactions (the “2026 Warrants”), whereby we sold to the counterparties to the 2026 Convertible Note Hedges warrants to acquire shares of our common stock.

The 2026 Convertible Note Hedges expired upon the maturity of the 2026 Convertible Notes on January 15, 2026, and none were exercised. The 2026 Warrants expired subsequent to the end of the second quarter of 2026, and none were exercised.

2027 Convertible Notes

During 2022, we issued $575 million aggregate principal amount of convertible senior notes (the “2027 Convertible Notes”) that bear interest at a rate of 3.25%. The 2027 Convertible Notes mature on December 15, 2027, unless earlier repurchased or converted in accordance with their terms prior to that date.

The conversion rate of the 2027 Convertible Notes is subject to adjustment for certain events as described in the indenture governing the notes and was subject to adjustment as of June 30, 2026 to 5.3216 shares of common stock per $1,000 principal amount of 2027 Convertible Notes (equivalent to a conversion price of $187.91 per share of our common stock), as a result of the dividends we declared since issuance of the 2027 Convertible Notes that were greater than the quarterly dividend we paid when the 2027 Convertible notes were issued. Upon conversion, we will pay or deliver, as the case may be, cash, shares of our common stock, or a combination of cash and shares of our common stock, at our election. As of June 30, 2026, the effective interest rate was 3.88%.

The following table provides the components of interest expense related to the 2027 Convertible Notes.

2027 Convertible Note Hedges and Warrants

In connection with the offering of the 2027 Convertible Notes, we concurrently entered into the following privately-negotiated separate transactions: convertible note hedge transactions with respect to our common stock (the “2027 Convertible Note Hedges”), covering a total of 3.1 million shares of our common stock, and warrant transactions (the “2027 Warrants”), whereby we sold to the counterparties to the 2027 Convertible Note Hedges warrants to acquire 3.1 million shares of our common stock, in each case, as of June 30, 2026. The strike prices of the 2027 Convertible Note Hedges and the 2027 Warrants were subject to adjustment to $187.91 and $283.63, respectively, as of June 30, 2026, and no 2027 Convertible Note Hedges or 2027 Warrants have been exercised.

Security and Guarantees

Amounts borrowed under the Corporate Credit Facility, as well as obligations with respect to letters of credit issued pursuant to the Corporate Credit Facility, are secured by a perfected first priority security interest in substantially all of the assets of the borrowers under, and guarantors of, that facility (which include MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose entities), subject to certain exceptions. In addition, the Corporate Credit Facility, the 2027 Convertible Notes, the 2028 Notes, the 2029 Notes, and the 2033 Notes are guaranteed by MVWC and certain of our direct and indirect, existing and future, domestic subsidiaries, excluding certain bankruptcy remote special purpose entities.

13. STOCKHOLDERS’ EQUITY

Marriott Vacations Worldwide has 100,000,000 authorized shares of common stock, par value of $0.01 per share. At June 30, 2026, there were 75,919,908 shares of Marriott Vacations Worldwide common stock issued, of which 34,394,286 shares were outstanding and 41,525,622 shares were held as treasury stock. At December 31, 2025, there were 75,891,531 shares of Marriott Vacations Worldwide common stock issued, of which 34,124,033 shares were outstanding and 41,767,498 shares were held as treasury stock. Marriott Vacations Worldwide has 2,000,000 authorized shares of preferred stock, par value of $0.01 per share, none of which were issued or outstanding as of June 30, 2026 or December 31, 2025.

Share Repurchase Program

From time to time, with the approval of our Board of Directors, we may undertake programs to purchase shares of our common stock (each, a “Share Repurchase Program”). As of June 30, 2026, approximately $322 million remained available for share repurchases under the current Share Repurchase Program, which authorizes share repurchases through December 31, 2026.

Share repurchases may be made through open market purchases, privately negotiated transactions, block transactions, tender offers, or otherwise. The specific timing, amount and other terms of the repurchases will depend on market conditions, corporate and regulatory requirements, contractual restrictions, and other factors. In connection with the current Share Repurchase Program, we are authorized to adopt one or more plans pursuant to the provisions of Rule

10b5-1 under the Securities Exchange Act of 1934, as amended. The authorization for the current Share Repurchase Program may be suspended, terminated, increased or decreased by our Board of Directors at any time without prior notice. Acquired shares of our common stock are currently held as treasury shares and carried at cost in our Financial Statements.

The following table summarizes share repurchase activity under our Share Repurchase Program:

Dividends

We declared cash dividends to holders of our common stock during the first half of 2026 as follows. Any future dividend payments will be subject to the restrictions imposed under the agreements covering our debt and approval of our Board of Directors. There can be no assurance that we will pay dividends in the future.

Declaration Date Stockholder Record Date Distribution Date Dividend per Share

February 19, 2026 March 4, 2026 March 18, 2026 $0.80

May 14, 2026 May 27, 2026 June 10, 2026 $0.80

14. SHARE-BASED COMPENSATION

During the second quarter of 2026, our stockholders approved the Second Amended and Restated Marriott Vacations Worldwide Corporation 2020 Equity Incentive Plan (the “MVW Equity Plan”), which increased the aggregate number of authorized shares of our common stock that may be issued pursuant to grants under the plan by 2.5 million shares. The MVW Equity Plan is maintained for the benefit of our officers, directors, and employees. Under the MVW Equity Plan, we are authorized to award: (1) restricted stock and restricted stock units (“RSUs”) of our common stock, (2) stock appreciation rights (“SARs”) relating to our common stock, and (3) stock options to purchase our common stock. As of June 30, 2026, approximately 3 million shares were available for grants under the MVW Equity Plan.

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

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

Restricted Stock Units

We granted 610,856 service-based RSUs, which are subject to time-based vesting conditions, with a weighted average grant-date fair value of $61.82, to our employees and non-employee directors during the first half of 2026. During the first half of 2026, we also granted one-time performance-based RSUs (the “PSUs”), which are subject to performance-based vesting conditions, to certain executives. A maximum of 300,000 RSUs may be earned under the PSU awards granted during the first half of 2026. The PSUs vest over a three-year performance period beginning January 1, 2026 subject to continuous service, and are earned based on the achievement of the highest cumulative performance metric achieved during any four consecutive quarters relative to specified performance thresholds.

During the first quarter of 2026, we also granted one-time market-based RSUs (“MRSUs”) to certain executives. A maximum of 300,000 shares can be earned under the MRSUs. The MRSUs vest over a 3.5 year performance period beginning January 1, 2026, subject to continuous service, and are earned based on the Company’s stock price exceeding specified thresholds. The grant date fair value of $51.38 per share for the MRSUs was determined using a Monte Carlo simulation model, based on an expected volatility of 45.57%, a risk-free interest rate of 3.54% and a dividend yield of 4.56%. Compensation expense for the MRSUs is recognized straight line over the requisite service period.

The PSUs and MRSUs are required to be settled in shares, or cash if sufficient shares are not available under the MVW Equity Plan, and are classified as equity under ASC 718, Compensation—Stock Compensation.

Stock Appreciation Rights

We granted 474,423 SARs, with a weighted average grant-date fair value of $23.59 and a weighted average exercise price of $68.20, to members of management during the first half of 2026. We use the Black-Scholes model to estimate the fair value of the SARs granted. The expected stock price volatility was calculated based on the average of the historical and implied volatility of our stock price. The average expected term was calculated using the simplified method, as we have insufficient historical information to provide a basis for estimating average expected term. The risk-free interest rate was calculated based on U.S. Treasury zero-coupon issues with a remaining term equal to the expected life assumed at the date of grant. The dividend yield assumption listed below is based on the expectation of future payouts.

The following table outlines the assumptions used to estimate the fair value of grants during the first half of 2026:

15. VARIABLE INTEREST ENTITIES

Variable Interest Entities Related to Our Vacation Ownership Notes Receivable Securitizations

The following table shows consolidated assets, which are collateral for the obligations of the VIEs related to our vacation ownership notes receivable securitizations, and consolidated liabilities included on our Balance Sheet at June 30, 2026:

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the second quarter of 2026:

The following table shows the interest income and expense recognized as a result of our involvement with these VIEs during the first half of 2026:

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

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

Under the terms of our vacation ownership notes receivable securitizations and Warehouse Credit Facility, we have the right to substitute loans for, or repurchase, defaulted loans at our option, subject to certain limitations. Our maximum exposure to potential loss relating to the special purpose entities that purchase, sell, and own these vacation ownership notes receivable is the overcollateralization amount (the difference between the loan collateral balance and the balance of the outstanding vacation ownership notes receivable), plus cash reserves and any residual interest in future cash flows from collateral.

Other Variable Interest Entities

We have a commitment to purchase completed vacation ownership units located in Waikiki, Hawaii for $41 million in 2026. The property is held by a VIE for which we are not the primary beneficiary. We do not control the decisions that most significantly impact the economic performance of the entity as we cannot prevent the variable interest entity from selling the property at a higher price. Accordingly, we have not consolidated the VIE. As of June 30, 2026, our Balance Sheet reflected $1 million in Accounts and contracts receivable, net, including a note receivable of less than $1 million, and $4 million in Property and equipment, net. We believe that our maximum exposure to loss as a result of our involvement with this VIE is approximately $5 million as of June 30, 2026.

16. BUSINESS SEGMENTS

We define our reportable segments based on the way in which the chief operating decision maker (“CODM”), currently our chief executive officer, manages the operations of the Company for purposes of allocating resources and assessing performance. We operate in two operating and reportable business segments: Vacation Ownership and Exchange & Third-Party Management. These segments are managed independently due to the differing nature of their products and services.

Our CODM evaluates the performance of our segments based primarily on the results of the segment without allocating corporate expenses or income taxes. We do not allocate corporate interest expense or indirect general and administrative expenses to our segments. We include interest income specific to segment activities within the appropriate segment. We allocate depreciation and amortization, other gains and losses, equity in earnings or losses from our joint ventures, and noncontrolling interest to each of our segments as appropriate. Corporate and other represents that portion of our results that are not allocable to our segments, including those relating to consolidated owners’ associations and modernization, as our CODM does not use this information to make operating segment resource allocations.

Our CODM uses Adjusted Earnings before Interest Expense, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) to evaluate the profitability of our operating segments, and the components of net income attributable to common stockholders excluded from Adjusted EBITDA are not separately evaluated. Our CODM reviews budget-to-actual and/or forecast-to-actual variances on a monthly basis using Adjusted EBITDA to make decisions about capital allocation and resource distribution to the segments. Adjusted EBITDA is defined as net income attributable to common stockholders, before interest expense (excluding consumer financing interest expense), income taxes, depreciation and amortization, excluding share-based compensation expense and amortization of cloud computing software implementation costs, and adjusted for certain items that affect the comparability of our operating performance. We do not report asset information by segment because that information is not used to evaluate performance or allocate resources between segments.

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

Segment Revenues and Adjusted EBITDA

The table below presents the following for the periods presented: revenues, disaggregated by segment, reconciled to consolidated revenue; segment expenses, including significant expense categories and amounts that align with segment-level information regularly provided to our CODM; and segment Adjusted EBITDA reconciled to Net income attributable to common stockholders.

(1) Corporate and Other consists of results that are not allocable to our segments, including company-wide general and administrative expenses, and transaction and integration costs. In addition, Corporate and Other includes revenues and expenses from Consolidated Property Owners’ Associations. Our CODM does not use this information for operating segment resource allocations.

(2) Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.

(3) Other segment items include cost reimbursements, share-based compensation, amortization of cloud computing software implementation costs, and other.

17. MODERNIZATION

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. The Strategic Business Operations office was created 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.

The following table shows the composition of our Modernization expense.

The following table presents the activity for this accrual on our Balance Sheet related to our Modernization efforts.

During the third quarter of 2025, we entered into outsourced service arrangements and completed the transition of a portion of certain corporate overhead functions to outsourced service providers. The arrangements are for terms of five to six years, and are cancellable for convenience by us subject to a termination penalty. As of June 30, 2026, our aggregate expected obligation under these arrangements is $121 million, of which $21 million, $27 million, $26 million, $26 million, $18 million, and $3 million is expected to be paid in the remainder of 2026, 2027, 2028, 2029, 2030, and thereafter, respectively, and the total penalties for early termination are $27 million, if cancelled.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

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 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 the portion of our results that are not allocable to our segments, including those relating to consolidated property owners’ associations (“Consolidated Property Owners’ Associations”).

Performance Measures

Management uses the following key performance metrics to assess the Company’s operational efficiency and market competitiveness, identify trends, develop financial projections, and support strategic decision-making. Management continuously monitors and analyzes these metrics to help ensure that the Company remains responsive to changing market conditions and aligned with our long-term growth objectives. The definitions and methodologies of certain of these metrics may differ from those used by other companies, and as a result, these metrics may not be directly comparable to similarly titled measures reported by other companies.

• Contract sales reflects the pace of sales in our business and excludes contract sales from the sale of vacation ownership products for non-consolidated joint ventures.
• Volume per guest (“VPG”) is calculated as contract sales, excluding fractional sales, telesales, resales, and other sales that are not attributed to a sales tour (collectively, “Tours” as defined below) divided by the number of Tours conducted during the applicable period. We believe that VPG is a key driver of profitability as it reflects both the average contract price and the effectiveness of converting touring guests into purchasers.
• Tours is defined as the number of sales tours conducted during the applicable period, including virtual and offsite sales tours and excluding telesales.
• Development profit margin is calculated as Development profit divided by revenues from the sale of vacation ownership products. Development profit represents revenues from the sale of vacation ownership products, net of the cost of vacation ownership products and related marketing and sales costs. We believe that Development profit margin is a key indicator of the profitability of our development activities and the effectiveness of our associated marketing and sales efforts.
• Total active members represents the number of active members of the Interval Network as of the end of the applicable period. We consider this metric to be an important indicator of the size of the member base eligible to transact within the Interval Network.
• Average revenue per member is calculated by dividing membership fee revenue, transaction revenue, rental revenue, and other member revenue generated by the Interval Network by the monthly weighted average number of active members of the Interval Network during the applicable period. We believe this metric is a meaningful indicator of member engagement.
• Segment financial results attributable to common stockholders reflects revenues less expenses that are directly attributable to each respective reportable business segment (Vacation Ownership and Exchange & Third-Party Management). We believe this measure provides meaningful insight into the operating performance of our reportable business segments. See Footnote 16 “Business Segments” to our Financial Statements for further information about our reportable business segments.
• Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by total revenues less cost reimbursements revenues.
• Segment Adjusted EBITDA margin is calculated as Segment Adjusted EBITDA divided by the respective segment’s total revenues less cost reimbursements revenues.

NM = Not meaningful.

Management Priorities

During the second quarter of 2026, we continued to execute our previously described management priorities and made meaningful progress across our strategic, operational, and financial objectives. The following discussion provides an update on our progress.

Our management priorities for 2026 are as follows:

• Improve profitability and cash flow by driving higher free cash flow conversion through disciplined execution, optimizing working capital, managing capital spending, and improving Adjusted EBITDA performance.
• We improved net income and Adjusted EBITDA in the second quarter of 2026 as compared to the second quarter of 2025 and improved operating cash flow for the first half of 2026, shifting to cash provided by operating activities in 2026 from cash used in operating activities during the comparable period in 2025.
• Strengthen leadership and talent through onboarding new leadership with the external expertise to drive improvement in consistency and long-term growth execution. Retain key existing leadership and talent throughout the organization to facilitate continuity and retention of historical business knowledge.
• During the first half of 2026, we enhanced key leadership talent and capabilities and made targeted investments in our workforce. We believe these actions have strengthened our leadership bench, enhanced critical commercial capabilities across the organization, and supported the execution of our strategic and operational objectives. We will regularly evaluate our talent needs and organizational structure to help maintain the capabilities we believe are necessary to support long-term growth and value creation.
• Accelerate near-term, sustainable revenue growth by increasing contract sales through strengthened marketing and sales leadership, hiring proven frontline sales talent and critically improving our daily management discipline throughout our business. Current initiatives focus on expanding and diversifying marketing opportunities by improving lead generation, increasing marketing efficiency and enhancing our products and services.
• We have continued to onboard top-performing sales and marketing professionals while investing in innovation and industry-leading tools that we believe help our teams to operate more effectively and support long-term value creation.
• In the second quarter of 2026, we enhanced our Owner Benefit Levels, including by introducing new ownership tiers, providing exclusive access to deeper discounts for certain reservation types and additional onsite benefits when visiting the Marriott Vacation Clubs. We plan to continue to focus on creating more personalized, engaging and experience-driven vacations for our owners to elevate the owner experience.
• In the second quarter of 2026, we launched “Inner Circle,” a new owner-exclusive experiences platform offering access to private concerts, sporting events, culinary experiences and on-site events to owners of Marriott Vacation Club, Westin Vacation Club and Sheraton Vacation Club. Early owner participation and engagement levels have been favorable among those who have attended these events, providing evidence that these initiatives are resonating with our owner base.
• We expect the enhanced owner experience, new owner benefits and Inner Circle platforms to increase owner engagement and retention which we anticipate will generate increased referrals of potential new customers to support contract sales growth and higher VPG. We expect the financial benefits of these actions to grow in the second half of 2026 and continue into 2027 as we build a Tour pipeline that reflects these changes. We expect that marketing and sales expenses to decline as a percentage of Development revenue during the second half of 2026.
• As a result of these actions, Contract sales increased 22% and VPG increased 23% during the second quarter of 2026 over the comparable period in 2025 despite a 1% decline in Tours.
• Lower cost base by emphasizing operating discipline to improve cash flow through execution and cost management.
• We intend to continue to advance this priority through focused expense control, operational efficiencies, and disciplined management of working capital and capital expenditures. We believe these efforts contributed to a significant improvement in operating cash flow, which transitioned from cash used in operating activities during the comparable 2025 period to cash provided by operating activities in 2026.
• Protect and grow recurring, high margin revenue streams by maintaining stable performance in our financing and management and exchange businesses to promote earnings durability and cash flow generation.
• Our financing, management and exchange businesses continue to be high-margin, recurring revenue streams which contribute to earnings and cash flow generation, reinforcing the resilience of our business model and supporting our objective of delivering consistent financial performance across varying market conditions.
• Disciplined capital allocation to fund high return growth initiatives while prioritizing liquidity and balance sheet flexibility.
• We seek to balance investment in growth with maintaining liquidity and balance sheet flexibility. We are prioritizing initiatives that we believe have the greatest potential to drive long-term returns while maintaining the financial flexibility necessary to support our strategic objectives and navigate macroeconomic uncertainty.
• In July 2026, we amended certain agreements associated with our Warehouse Credit Facility to extend the revolving period from the second quarter of 2027 to the second quarter of 2028. The extension strengthens our liquidity profile and financial flexibility, while providing continued access to a key source of funding to support our strategic and operational objectives.
• Monetize non-core assets to generate proceeds and support our deleveraging and reinvestment priorities.
• While we continue to evaluate opportunities to monetize non-core assets as part of our capital allocation framework, recent increases in contract sales volume and improved sales trends have increased our inventory requirements to support anticipated future sales. As a result, we now expect to retain certain assets for operational use that we previously identified for potential disposition, reducing our near term estimated proceeds from non-core asset monetization but supporting future revenue generation and long-term value creation.
• Following the decision to retain certain assets for operational use, we now expect that we will generate approximately $200 million of gross cash proceeds from the disposition of non-core assets in 2026 and 2027. We realized proceeds of $50 million in the first quarter of 2026 from the disposition of an entity that owned and operated a hotel in Cancun, Mexico and we expect to realize an additional $50 million of gross proceeds from dispositions during the remainder of 2026.
• Optimize geographic mix by scaling back our operations in lower return areas to improve capital efficiency overall and future margins.
• As part of our previously announced Asia Pacific strategy, we reduced Tours to certain customers in select markets, aligned regional staffing levels with anticipated demand, and deferred the purchase of a future phase of our Khao Lak, Thailand resort development.
• During the second quarter of 2026, we decided to close our sales gallery in Dubai, United Arab Emirates. This decision reflected the anticipated impact of heightened geopolitical uncertainty in the region on anticipated operating performance and our commitment to deploying capital in a manner that supports long-term value creation.

Consolidated Results

† Prior year amounts have been reclassified to conform with our current year presentation.

Operating Statistics

Revenues

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 or loss attributable to common stockholders, before interest expense, net (excluding consumer financing interest expense), 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 expense, are excluded from Adjusted EBITDA for comparability purposes to address the considerable variability among companies in the utilization of productive assets.

For purposes of our EBITDA, Adjusted EBITDA, and Adjusted EBITDA margin calculations, we do not adjust for consumer financing interest expense 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. Adjusted EBITDA and Adjusted EBITDA margin also exclude depreciation and amortization, as well as amortization of cloud computing software implementation costs, because companies utilize productive assets of different ages and use different methods of both acquiring and depreciating or amortizing 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.

Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.

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.

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

† Prior year amounts have been reclassified to conform with our current year presentation.

Segment Adjusted EBITDA

(1) Includes $5 million of severance expense relating to changes in executive leadership that was recorded as General and administrative expense in the six months ended June 30, 2026.

The following tables present segment financial results attributable to common stockholders reconciled to segment Adjusted EBITDA.

Vacation Ownership

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

Exchange & Third-Party Management

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

† Prior year amounts have been reclassified to conform with our current year presentation.

Business Segments

Our business is grouped into two reportable business segments: Vacation Ownership and Exchange & Third-Party Management. See Footnote 16 “Business Segments” to our Financial Statements for further information.

Vacation Ownership

Sale of Vacation Ownership Products

(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 we expect to finance a vacation ownership purchase and for whom a credit score was available, generally U.S. and Canadian residents.

Second Quarter

The increase in Sale of vacation ownership products for the second quarter of 2026 was driven by higher contract sales, partially offset by lower revenue reportability.

• Owner contract sales increased 41% reflecting a 33% increase in VPG and a 7% increase in owner Tours. These results reflect changes in our second quarter sales strategy to focus on existing owners upon the launch of our recent owner engagement initiatives and greater incremental purchase activity by existing owners.
• First time buyer contract sales decreased 16% driven by lower VPG and Tours. We continue to believe there is a significant long-term opportunity to expand our first time buyer base through targeted marketing, enhanced lead generation efforts, and continued refinement of our sales and customer acquisition strategies.

The overall decline in Tours was largely attributable to change in strategy for our Asia-Pacific business as well as our strategy to improve Tour quality for first time buyers. Excluding Asia‑Pacific, Tours increased 3% year-over-year. VPG increased 23% year-over-year on a consolidated basis and, excluding Asia-Pacific, VPG increased nearly 22% year over year.

We expect the higher contract sales and VPG to continue throughout the remainder of the year, partially offset by an increase in our Sales reserve attributed to higher average transaction size and propensity.

First Half

The increase in Sale of vacation ownership products for the first half of 2026 was driven by higher contract sales, partially offset by lower revenue reportability.

• Owner contract sales increased 22% reflecting a 19% increase in VPG and higher Tours.
• First time buyer contract sales decreased 14% reflecting lower Tours and a lower VPG.

The decline in Tours was largely attributable to the change in strategy for our Asia-Pacific business as well as our strategy to improve Tour quality for first time buyers. Excluding Asia‑Pacific, Tours increased 1% year-over-year. VPG increased 13% year-over-year on a consolidated basis and, excluding Asia-Pacific, increased nearly 12% year over year.

Development Profit

Second Quarter and First Half

The change in Development profit was due to the following:

• higher Sale of vacation ownership products (discussed above);
• a decline in Cost of vacation ownership products as a percentage of revenue due to the sale of lower average cost inventory (including resulting from the impairments in inventory from the fourth quarter of 2025), partially offset by lower favorable product cost true up activity; and
• higher Marketing and sales costs due to higher salaries, commissions and incentive compensation, marketing costs and severance associated with restructuring our marketing and sales leadership changes.

Cost of vacation ownership products as a percentage of revenue is expected to increase during the remainder of 2026, although will ultimately be determined through pricing increases, upgrade volume, repurchase activity and change in mix of inventory being sold. In addition, we expect to further leverage our fixed Marketing and sales expenses as we continue to invest in initiatives that support sales growth, reflecting our expectation that the growth in contract sales achieved during the second quarter of 2026 will continue through year-end resulting in an increase in Development profit margin.

Resort Management and Other Services Revenues, Expenses and Profit

Rental Revenues, Expenses and Profit

(1) Transient keys rented exclude plus points and preview stays.

(2) Rental occupancy represents transient and preview keys divided by keys available to rent, which is total available keys excluding owner usage.

Second Quarter

Rental profit increased due to a $9 million increase in transient rental revenues, including plus points, partially offset by $6 million of higher unsold maintenance fees associated with developer-owned inventory and $3 million of higher marketing, variable and other costs.

Rental revenues and Rental expenses are both $5 million higher due to a reduction in costs in excess of rental revenues for developer-owned inventory which is registered and held for sale. which is reclassified to Rental revenues (net presentation).

We continue to expect a decline in rental profit in 2026 due to higher inventory and related unsold maintenance fees.

First Half

Rental profit declined due to $13 million of higher unsold maintenance fees associated with developer-owned inventory and $8 million of higher marketing, variable and other costs, partially offset by a $12 million increase in transient rental revenues, including plus points.

Rental revenues and Rental expenses are both $11 million higher due to a reduction in costs in excess of rental revenues for developer-owned inventory which is registered and held for sale, which is reclassified to Rental revenues (net presentation).

Financing Revenues, Expenses and Profit

Second Quarter and First Half

• Financing revenues reflect higher interest income as a result of a higher average notes receivable balance.
• Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.
• In addition, consumer financing interest expense increased by $2 million and $4 million in the second quarter and first half of 2026, respectively, due to a higher average securitized debt balance.

(Losses) Gains and Other (Expense) Income

First Half

During the first half of 2026, we benefited from a $2 million gain on the disposition of an entity that owned and operated a hotel in Cancun, Mexico, and a $4 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition.

During the first half of 2025, we benefited from $7 million of proceeds from service interruption insurance relating to the Maui wildfires, a $2 million reduction in certain pre-acquisition contingencies associated with the ILG Acquisition, and $1 million of other gains.

Exchange & Third-Party Management

† Prior year amounts have been reclassified to conform with our current year presentation.

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.

† Prior year amounts have been reclassified to conform with our current year presentation.

Modernization

Second Quarter and First Half

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. The Strategic Business Operations office was created 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.

The following table shows the composition of our modernization expenses during the second quarter and first half of 2026 and 2025, respectively:

We expect to incur less than $60 million of non-recurring expenses in the remainder of 2026 primarily related to technology, as we wind down consulting spend and expect no further advisory services costs.

(Losses) Gains and Other (Expense) Income

Second Quarter

In the second quarter of 2026, we recorded $2 million of foreign currency losses and a $2 million reduction in the receivable from Marriott International for indemnified tax matters, partially offset by $1 million of other gains.

In the second quarter of 2025, we recorded $18 million of foreign currency gains, $3 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters, $1 million of insurance proceeds and $1 million of other gains.

First Half

In the first half of 2026, we recorded $5 million of foreign currency losses and a $5 million reduction in the receivable from Marriott International for indemnified tax matters, partially offset by $1 million of other gains.

In the first half of 2025, we recorded $21 million of foreign currency gains, $3 million of tax related adjustments to the receivable from Marriott International for indemnified tax matters, $2 million of other gains, and $1 million of insurance proceeds.

Interest Expense

Second Quarter and First Half

The increase in Interest expense, net is primarily attributed to interest on our 6.500% Senior Unsecured Notes due 2033 issued in the third quarter of 2025 (the proceeds of which were used to repay our $575 million 0.000% 2026 Convertible Notes) for the second quarter and first half of 2026. This increase was partially offset by the change in presentation of interest on our Warehouse Credit Facility and by lower interest on our Corporate Credit Facility and 2026 Convertible Notes, which were repaid during the first half of 2026.

Commencing in the first quarter of 2026, interest expense associated with our Warehouse Credit Facility is included as a component of Consumer financing interest expense within Financing expense. For the three and six months ended June 30, 2025, interest expense associated with our Warehouse Credit Facility is included as a component of Interest expense, net. Interest expense on our Warehouse Credit Facility was $2 million and $5 million for the three and six months ended June 30, 2026, respectively, and $3 million and $7 million for the three and six months ended June 30, 2025, respectively.

Income Tax

Second Quarter

Our effective tax rate was 32.4% and 26.8% for the three months ended June 30, 2026 and June 30, 2025, respectively.

The effective tax rate for the three months ended June 30, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to projected losses in certain foreign jurisdictions for which no tax benefit was recognized as a result of valuation allowances with respect to such foreign jurisdictions, as well as discrete tax benefits related to uncertain tax positions and the effective settlement of a domestic tax audit, partially offset by penalties accrued for foreign tax matters.

The effective tax rate for the three months ended June 30, 2025 was generally consistent with the blended U.S. federal and state statutory tax rate, with no significant variances.

First Half

Our effective tax rate was 37.5% and 35.5% for the six months ended June 30, 2026 and June 30, 2025, respectively.

The effective tax rate for the six months ended June 30, 2026 differed from the blended U.S. federal and state statutory tax rate primarily due to projected losses in certain foreign jurisdictions for which no tax benefit was recognized as a result of valuation allowances with respect to such foreign jurisdictions, as well as discrete tax benefits related to uncertain tax positions, partially offset by a $6 million cumulative adjustment related to a foreign tax provision and penalties accrued for foreign tax matters.

The effective tax rate for the six months ended June 30, 2025 differed from the blended U.S. federal and state statutory tax rate primarily due to the effect of losses incurred in certain non-U.S. jurisdictions for which no tax benefit was recognized. Additionally, permanent differences between the book and tax treatment contributed to the variance from the statutory rate.

Consolidated Property Owners’ Associations

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

Liquidity and Capital Resources

Typically, our capital needs are supported by cash on hand, cash generated from operations, our ability to access funds under the Warehouse Credit Facility and the Revolving Corporate Credit Facility, our ability to raise capital through securitizations in the ABS market, and, to the extent necessary, our ability to issue new debt and refinance existing debt. We believe these sources of capital will be adequate to meet our short-term and long-term liquidity requirements, finance our long-term growth plans, satisfy debt service requirements, fulfill other cash requirements, and return capital to stockholders. We continuously monitor the capital markets to evaluate the effect that changes in market conditions may have on our ability to fund our liquidity needs.

At June 30, 2026, our gross corporate debt, net of cash and equivalents, to Adjusted EBITDA ratio was 4.0, which we believe is a manageable leverage level, and we remain focused on reducing this ratio over time.

During the first quarter of 2026, we used the proceeds from the 2033 Notes to repay our 2026 Convertible Notes upon maturity. We have no material principal payment obligations for the remainder of 2026. See Footnote 12 “Debt” to our Financial Statements for further information related to maturities of our debt.

Sources of Liquidity

Cash from Operations

Our primary sources of funds from operations are (1) cash sales and down payments on financed sales, (2) cash from our financing operations, including principal and interest payments received on outstanding vacation ownership notes receivable, (3) cash from fee-based membership, exchange and rental transactions, and (4) 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.

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 second quarter of 2026, and as of June 30, 2026, we had 12 term securitization transactions outstanding, none of which were out of compliance with their respective required parameters. Since 2000, we have issued approximately $11.2 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 June 30, 2026, we had $165 million of borrowings outstanding on our Warehouse Credit Facility. See Footnote 11 “Securitized Debt” to our Financial Statements for further information.

As of June 30, 2026, $67 million of gross vacation ownership notes receivable were eligible for securitization.

Revolving Corporate Credit Facility

Our Revolving Corporate Credit Facility, which expires on March 24, 2030, provides for up to $800 million of aggregate borrowings for general corporate needs, including working capital, capital expenditures, letters of credit, and acquisitions. At June 30, 2026, $145 million of borrowings and $5 million of letters of credit were outstanding under our Revolving Corporate Credit Facility. See Footnote 12 “Debt” to our Financial Statements for further information.

Disposition of Non-core Assets

We expect that we will generate approximately $200 million of gross cash proceeds from the disposition of non-core assets in 2026 and 2027. We realized proceeds of $50 million in the first quarter of 2026 from the disposition of an entity that owned and operated a hotel in Cancun, Mexico and we expect to realize an additional $50 million of gross proceeds from dispositions during the remainder of 2026.

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, timing and amount of voluntary repurchases of defaulted 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 variable compensation-related cash outflows associated with payment of annual bonuses and, subject to the continued issuance of quarterly dividends, the payment of two quarterly cash dividends declared in December and February.

Operations

In addition to net income and adjustments for non-cash items, the following are key drivers of our cash flow from operating activities:

Inventory Spending Less than (In Excess of) Cost of Sales

We plan to restrict our new inventory spending to capital efficient arrangements where our cash outlay coincides with the start of sales, as well as low-cost reacquired inventory. 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.

Vacation Ownership Notes Receivable Collections Less Than Originations

Vacation ownership notes receivable collections were less than originations in the first halves of 2026 and 2025 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:

See Footnote 13 “Stockholders' Equity” to our Financial Statements for further information related to our current share repurchase program.

Payment of Dividends to Common Stockholders

We distributed cash dividends to holders of our common stock during the first half of 2026 as follows:

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 June 30, 2026:

(1) Includes principal as well as interest payments and excludes unamortized debt discount and issuance costs.

(2) Payments based on estimated timing of cash flow associated with securitized notes receivable.

(3) 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, outsourced services, and arrangements related to information technology, including cloud computing. Amounts reflected on the consolidated balance sheet as accounts payable and accrued liabilities are excluded from the table above.

(4) 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 generally have minimal impact on our net income and cash flow. These purchase commitments are excluded from the table above.

Supplemental Guarantor Information

The 2028 Notes are guaranteed by MVWC, Marriott Ownership Resorts, Inc. (“MORI”), and certain other subsidiaries whose voting securities are wholly owned directly or indirectly by MORI (such subsidiaries collectively, the “Senior Notes Guarantors”). These guarantees are full and unconditional and joint and several. The guarantees of the Senior Notes Guarantors are subject to release in limited circumstances only upon the occurrence of certain customary conditions.

The following tables present consolidating financial information as of June 30, 2026 and December 31, 2025, and for the six months ended June 30, 2026 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

Condensed Consolidating Balance Sheet

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 2025 Annual Report. Since the date of our 2025 Annual Report, there have been no material changes to our critical accounting policies or the methodologies or assumptions we apply under them.