HGV

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with our unaudited condensed consolidated financial statements and related notes included elsewhere in this Quarterly Report on Form 10-Q and with our Annual Report on Form 10-K for the year ended December 31, 2025. Cautionary Note Regarding Forward-Looking Statements This Quarterly Report on Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements convey management’s expectations as to the future of HGV, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time HGV makes such statements. Forward-looking statements include all statements that are not historical facts and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “would,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “future,” “guidance,” “target,” or the negative version of these words or other comparable words, although not all forward-looking statements may contain such words. The forward-looking statements contained in this Quarterly Report on Form 10-Q include statements related to HGV’s revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are not historical facts. HGV cautions you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond HGV’s control, which may cause the actual results, performance or achievements to be materially different from the future results. Any one or more of these risks or uncertainties, could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics discussed under “—Operational Metrics” below, financial condition or credit rating. For additional information regarding factors that could cause HGV’s actual results to differ materially from those expressed or implied in the forward-looking statements in this Quarterly Report on Form 10-Q, please see the risk factors discussed in “Part I—Item 1A. Risk Factors” and the Summary of Risk Factors in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025, as supplemented and updated by the risk factors described from time to time in other periodic reports that we file with the SEC. There may be other risks and uncertainties that we are unable to predict at this time or that we currently do not expect to have a material adverse effect on our business. Except for HGV’s ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments, changes in management’s expectations, or otherwise. Terms Used in this Quarterly Report on Form 10-Q Except where the context requires otherwise, references in this Quarterly Report on Form 10-Q to “Hilton Grand Vacations,” “HGV,” “the Company,” “we,” “us” and “our” refer to Hilton Grand Vacations Inc., together with its consolidated subsidiaries. Except where the context requires otherwise, references to our “properties” or “resorts” refer to the timeshare properties that we manage or own. Of these resorts and units, a portion is directly owned by us or joint ventures in which we have an interest; and the remaining resorts and units are owned by our third-party owners. “VOI” refers to vacation ownership intervals and interests. “Developed” refers to VOI inventory that is sourced from projects developed by HGV. “Fee-for-service” refers to VOI inventory that we sell and manage on behalf of third-party developers. “Just-in-time” refers to VOI inventory that is primarily sourced in transactions that are designed to closely correlate the timing of the acquisition by us with our sale of that inventory to purchasers. “Points-based” refers to VOI sales that are backed by physical real estate that is or will be contributed to a trust. “Collections” refers to the acquired portfolio of resort properties included in Diamond's single- and multi-use trusts. Non-GAAP Financial Measures This Quarterly Report on Form 10-Q includes discussion of terms that are not recognized terms under U.S. Generally Accepted Accounting Principles (“U.S. GAAP”), and financial measures that are not calculated in accordance with U.S. GAAP, including earnings before interest expense (excluding interest expense relating to our non-recourse debt), taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA, Adjusted EBITDA Attributable to Stockholders, 31 Table of Contents fee-for-service commissions and brand fees, sales and marketing expense, net, sales revenue, real estate expense, and profits and profit margins for our real estate, financing, resort and club management, and rental and ancillary services. Real Estate Sales Operating Metrics This Quarterly Report on Form 10-Q includes discussion of key business and financial metrics, including contract sales, tour flow, and volume per guest (“VPG”). See “Key Business and Financial Metrics” and “Reconciliation of Non-GAAP Measures to GAAP Measures” for a discussion of the meanings of these terms, the Company’s reasons for providing the applicable non-GAAP financial measures, and reconciliations of non-GAAP financial measures to measures calculated in accordance with U.S. GAAP. Overview Our Business We are a global timeshare company engaged in developing, marketing, selling, managing and operating timeshare resorts, timeshare plans and ancillary reservation services, primarily under the Hilton Grand Vacations brands. Our operations primarily consist of: selling VOIs for us and third parties; financing and servicing loans provided to consumers for their VOI purchases; operating resorts and timeshare plans; and managing our exchange programs through which our members may receive HGV Max benefits. Together our timeshare plans and exchange programs are collectively referred to as “Clubs”. As of June 30, 2026, we had approximately 200 properties located in the United States (“U.S.”), Europe, Canada, the Caribbean, Mexico, and Japan. Our properties feature spacious, condominium-style accommodations with superior amenities and quality service. We have rebranded many of the properties acquired in the Diamond acquisition, and we expect to continue this process for the remaining planned Diamond properties. During 2025, we began rebranding certain properties acquired in the Bluegreen Acquisition to Hilton Grand Vacations brands and expect to continue this process for the majority of the Bluegreen properties. As of June 30, 2026, we had more than 720,000 members across our Club offerings. Based on the type of Club membership, members have the flexibility to exchange their VOIs for stays at Hilton Grand Vacations resorts, properties in the Hilton system of 27 industry-leading brands with over 9,200 properties, or affiliated properties, as well as numerous experiential vacation options, such as cruises and guided tours, or they have the option to exchange their VOI for various other timeshare resorts throughout the world through an external exchange program, including travel services options. Our Segments We operate our business across two segments: (1) Real estate sales and financing; and (2) Resort operations and club management. Real Estate Sales and Financing Traditionally, timeshare operators have funded 100% of the investment necessary to acquire land and construct timeshare properties. We source VOIs through developed properties and fee-for-service and just-in-time agreements with third-party developers and have focused our inventory strategy on developing an optimal inventory mix. The fee-for-service agreements enable us to generate fees from the sales and marketing of the VOIs and Club memberships and from the management of the timeshare properties without requiring us to fund acquisition and construction costs. The just-in-time agreements enable us to source VOI inventory in a manner that allows us to correlate the timing of acquisition of the inventory with the sale to purchasers. Sales of owned, including just-in-time, inventory generally result in greater Adjusted EBITDA contributions, while fee-for-service sales require less initial investment and allow us to accelerate our sales growth. Both sales of owned inventory and fee-for-service sales generate long-term, predictable fee streams, by adding to the Club membership base and properties under management, that generate strong returns on invested capital. For the six months ended June 30, 2026, sales from fee-for-service and just-in-time inventory were 15%, and 9% of contract sales. See “Key Business and Financial Metrics — Real Estate Sales Operating Metrics” for additional discussion of contract sales. We sell our vacation ownership products primarily through our distribution network of both-in-market and off-site sales centers. Our products are currently marketed for sale throughout the United States, Europe, Canada, the Caribbean, Mexico, and Asia. We operate sales distribution centers in major markets and popular leisure destinations with year-round demand and a history of being a friendly environment for vacation ownership. We have 100 sales distribution centers in various domestic and international locations. Our marketing and sales activities are based on targeted direct marketing and a highly personalized sales approach. We use targeted direct marketing to reach potential members who are identified as having the financial ability to pay for our products, are frequent leisure travelers, and have an affinity with our brands. 32 Table of Contents Our marketing and sales activities also include marketing relationships with nationally-recognized consumer brands such as Bass Pro, a fishing, marine, hunting, camping and sports gear retailer, and Choice Hotels. HGV is party to an exclusive marketing agreement with Bass Pro that provides HGV with the right to market and sell vacation packages at kiosks in Bass Pro’s and Cabela’s retail locations and through other means. As of June 30, 2026, HGV had sales and marketing operations at a total of 145 Bass Pro Shops and Cabela’s Stores, including 7 virtual kiosks. Additionally, the joint venture between HGV and Bass Pro includes four high-end wilderness resorts under the Big Cedar Lodge brand. We also have an exclusive strategic relationship with Choice Hotels that involves several areas of its business, including a sales and marketing alliance that enables us to leverage Choice Hotels’ brands, customer relationships and marketing channels to sell vacation packages. Tour flow quality impacts key metrics such as close rate and VPG, defined in “Key Business and Financial Metrics—Real Estate Sales Operating Metrics.” Additionally, the quality of tour flow impacts sales revenue and the collectability of our timeshare financing receivables. For the six months ended June 30, 2026 and 2025, 73% and 74% of our contract sales were to our existing owners. We provide financing for members purchasing our developed and acquired inventory and generate interest income on the loans. Our timeshare financing receivables are collateralized by the underlying VOIs and are generally structured as 10-year, fully-amortizing loans that bear a fixed interest rate typically ranging from 2.5% to 25% per annum. Financing propensity was 68% and 65% for the six months ended June 30, 2026 and 2025. We calculate financing propensity as contract sales volume of financed contracts originated in the period divided by contract sales volume originated in the period. The interest rate on our loans is determined by, among other factors, the amount of the down payment, the borrower’s credit profile and the loan term. The weighted-average FICO score for loans to U.S. and Canadian borrowers at the time of origination were as follows: Six Months Ended June 30, 2026 2025 Weighted-average FICO score(1) 747 751 (1) During the first quarter of 2026, we updated our credit quality indicator disclosures to the use of a single FICO score from average FICO score which is reflected in the table above. Prepayment is permitted without penalty. When a member defaults, we ultimately return their VOI to inventory for resale and that member no longer participates in our Clubs. Some of our timeshare financing receivables have been pledged as collateral in our securitization transactions, which have in the past and may in the future provide funding for our business activities. In these securitization transactions, special purpose entities are established to issue various classes of debt securities which are generally collateralized by a single pool of assets consisting of timeshare financing receivables that we service and related cash deposits. For additional information see Note 6: Timeshare Financing Receivables in our unaudited condensed consolidated financial statements. In addition, we earn fees from servicing our securitized timeshare financing receivables and the loans provided by third-party developers of our fee-for-service projects to purchasers of their VOIs. Resort Operations and Club Management We enter into management agreements with the HOAs of the timeshare resorts developed by us or a third party. Each of the HOAs is governed by a board of directors comprised of owner and developer representatives that are charged with ensuring the resorts are well-maintained and financially stable. Our services include day-to-day operations of the resorts, maintenance of the resorts, preparation of books and financial records including reports, budgets and projections, arranging for annual audits and maintenance fee billing and collections and employment training and personnel oversight. Our HOA management agreements provide for a cost-plus management fee, which means we generally earn a fee equal to 10% to 15% of the costs to operate the applicable resort. As a result, the fees we earn are highly predictable due to the relatively fixed nature of resort operating expenses and our management fees are unaffected by changes in rental rate or occupancy. We are also reimbursed for the costs incurred to perform our services, principally related to personnel providing on-site services. The original terms of our management agreements typically range from three to five years and the agreements are subject to periodic renewal for one to three-year periods. Many of these agreements renew automatically unless either party provides advance notice of termination before the expiration of the term. We also manage and operate the Clubs and exchange programs. When owners purchase a VOI, they are generally enrolled in a Club which allows the member to exchange their points for a number of vacation options. In addition to an annual membership fee, Club members pay incremental fees depending on exchanges they choose within the Club system. 33 Table of Contents We rent unsold VOI inventory, third-party inventory and inventory made available due to ownership exchanges through our Club programs. We earn a fee from rentals of third-party inventory. Additionally, we provide ancillary offerings including food and beverage, retail and spa offerings at these timeshare properties. Key Business and Financial Metrics Real Estate Sales Operating Metrics We measure our performance using the following key operating metrics: •Contract sales represent the total amount of VOI products (fee-for-service, just-in-time, developed, and points-based) under purchase agreements signed during the period where we have received a down payment of at least 10% of the contract price. Contract sales differ from revenues from the Sales of VOIs, net that we report in our unaudited condensed consolidated statements of income due to the requirements for revenue recognition, as well as adjustments for incentives. While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our unaudited condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S. GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of our results to the results of our competitors which may source their VOI products differently. We believe that the presentation of contract sales on a combined basis (fee-for-service, just-in-time, developed and points-based) is most appropriate for the purpose of the operating metric, additional information regarding the split of contract sales, is included in “—Real Estate Operating Metrics” below. •Tour flow represents the number of sales presentations given at our sales centers during the period. •VPG represents the sales attributable to tours at our sales locations and is calculated by dividing contract sales, excluding telesales, by tour flow. We consider VPG to be an important operating measure because it measures the effectiveness of our sales process, combining the average transaction price with the closing rate. EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income, before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization. Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) other gains and losses, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges. Adjusted EBITDA Attributable to Stockholders is Adjusted EBITDA, as previously defined, excluding amounts attributable to the noncontrolling interest in Bluegreen/Big Cedar Vacations LLC (“Big Cedar”), a joint venture in which HGV is deemed to hold a controlling financial interest based on its 51% equity interest, its active role as the day-to-day manager of its activities, and majority voting control of its management committee. EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may not be comparable to similarly titled measures of other companies. We believe that EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. 34 Table of Contents EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income, cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are: •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect changes in, or cash requirements for, our working capital needs; •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness; •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our tax expense or the cash requirements to pay our taxes; •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments; •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations; •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and •EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may be calculated differently from other companies in our industry limiting their usefulness as comparative measures. Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations. See below under “Reconciliation of Non-GAAP Measures to GAAP Measures” for reconciliation of our EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders to net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures. Non-GAAP Measures within Our Segments Within each of our two reportable segments, we present additional profit and profit margin information for certain key activities—real estate, financing, resort and club management, and rental and ancillary services. These non-GAAP measures are used by our management team to evaluate the operating performance of each of our key activities, and to make day-to-day operating decisions. We believe these additional measures are also important in helping investors understand the performance and efficiency with which we are able to convert revenues for each of these primary activities into operating profit, both in dollars and as margins, and are frequently used by securities analysts, investors and other interested parties as one of common performance measures to compare results or estimate valuations across companies in our industry. Specifically: •Sales revenue represents sales of VOIs, net, and Fee-for-service commissions earned from the sale of fee-for-service VOIs. Fee-for-service commissions represents fee-for-service commissions, package sales and other fees, which corresponds to the applicable line item from our unaudited condensed consolidated statements of income, adjusted by package sales and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Real estate expense represents costs of VOI sales and Sales and marketing expense, net. Sales and marketing expense, net represents sales and marketing expense, which corresponds to the applicable line item from our unaudited condensed consolidated statements of income, adjusted by package sales and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Both fee-for-service commissions and sales and marketing expense, net, represent non-GAAP measures. We present these items net because it provides a meaningful measure of our underlying real estate profit related to our primary real estate activities which focus on the sales and costs associated with our VOIs. •Real estate profit represents sales revenue less real estate expense. Real estate margin is calculated as a percentage by dividing real estate profit by sales revenue. We consider real estate profit margin to be an important non-GAAP operating measure because it measures the efficiency of our sales and marketing spending, management of inventory costs, and initiatives intended to improve profitability. •Financing profit represents financing revenue, net of financing expense, both of which correspond to the applicable line items from our unaudited condensed consolidated statements of income. Financing profit margin is calculated as a percentage by dividing financing profit by financing revenue. We consider this 35 Table of Contents to be an important non-GAAP operating measure because it measures the efficiency and profitability of our financing business in connection with our VOI sales. •Resort and club management profit represents resort and club management revenue, net of resort and club management expense, both of which correspond to the applicable line items from our unaudited condensed consolidated statements of income. Resort and club management profit margin is calculated as a percentage by dividing resort and club management profit by resort and club management revenue. We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our resort and club management business that support our VOI sales business. •Rental and ancillary services profit represents rental and ancillary services revenues, net of rental and ancillary services expenses, both of which correspond to the applicable line items from our unaudited condensed consolidated statements of income. Rental and ancillary services profit margin is calculated as a percentage by dividing rental and ancillary services profit by rental and ancillary services revenue. We consider this to be an important non-GAAP operating measure because it measures our ability to convert available inventory and unoccupied rooms into revenue and profit by transient rentals, as well as profitability of other services, such as food and beverage, retail, spa offerings and other guest services. Each of the foregoing four profit measures is not a recognized term under U.S. GAAP and should not be considered as an alternative to net income or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our calculation of such measures may not be comparable to similarly titled measures of other companies. Furthermore, these measures have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income or other methods of analyzing our results as reported under U.S. GAAP. Such limitations include the fact that these measures only include those revenues and expenses related to one of the four specified operating activities as opposed to on a consolidated basis, and other limitations that are similar to those discussed above under “EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders.” See below under “Reconciliation of Non-GAAP Measures to GAAP Measures” for reconciliation of these four profit measures to net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures. Real Estate Sales Operating Metrics Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions, except Tour flow and VPG) 2026 2025 $ % 2026 2025 $ % Contract sales $ 810 $ 834 $ (24) (2.9) $ 1,529 $ 1,555 $ (26) (1.7) Adjustments: Fee-for-service sales(1) (104) (142) 38 (26.8) (224) (253) 29 (11.5) Provision for financing receivables losses (122) (95) (27) 28.4 (211) (167) (44) 26.3 Reportability and other: Net (deferrals) of sales of VOIs under construction (2) (54) (82) 28 (34.1) (79) (208) 129 (62.0) Other(3) (23) (46) 23 (50.0) (53) (80) 27 (33.8) Sales of VOIs, net $ 507 $ 469 $ 38 8.1 $ 962 $ 847 $ 115 13.6 Tour flow 239,064 225,222 13,842 428,510 399,747 28,763 VPG $ 3,372 $ 3,690 $ (318) $ 3,551 $ 3,874 $ (323) (1) Represents contract sales from fee-for-service properties on which we earn Fee-for-service commissions and brand fees. (2) Represents the net recognition of revenues related to the Sales of VOIs under construction that are recognized when construction is complete. (3) Includes adjustments for revenue recognition, including sales incentives and amounts in rescission. Contract sales decreased $24 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to a 8.6% decrease in VPG offset by an increase in tour flow of 6.1%. Contract sales decreased $26 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to a 8.3% decrease in VPG offset by an increase in tour flow of 7.2%. Net Construction Deferral Activity In accordance with Accounting Standards Codification Topic 606, “Revenue from Contracts with Customers” (“ASC 606”), revenue and the related costs to fulfill and acquire the contract (“direct costs”) from sales of VOIs under construction are deferred until the point in time when construction activities are deemed to be completed. The 36 Table of Contents real estate sales and financing segment is impacted by construction related deferral and recognition activity. In periods where Sales of VOIs and related direct costs of projects under construction are deferred, margin percentages will generally contract as the indirect marketing and selling costs associated with these sales are recognized as incurred in the current period. In periods where previously deferred Sales of VOIs and related direct costs are recognized upon construction completion, margin percentages will generally expand as the indirect marketing and selling costs associated with these sales were recognized in prior periods. The following table represents deferrals and recognitions of Sales of VOI revenue and direct costs for properties under construction: Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ 2026 2025 $ Sales of VOIs (deferrals) $ (54) $ (82) $ 28 $ (116) $ (208) $ 92 Sales of VOIs recognitions — — — 37 — 37 Net Sales of VOIs (deferrals) recognitions (54) (82) 28 (79) (208) 129 Cost of VOI sales (deferrals) (17) (23) 6 (31) (60) 29 Cost of VOI sales recognitions — — — 12 — 12 Net Cost of VOI sales (deferrals) recognitions (17) (23) 6 (19) (60) 41 Sales and marketing expense (deferrals) (9) (14) 5 (20) (35) 15 Sales and marketing expense recognitions — — — 6 — 6 Net Sales and marketing expense (deferrals) recognitions (9) (14) 5 (14) (35) 21 Net construction (deferrals) recognitions $ (28) $ (45) $ 17 $ (46) $ (113) $ 67 37 Table of Contents Results of Operations Three and Six Months Ended June 30, 2026 Compared with the Three and Six Months Ended June 30, 2025 Segment Results The following tables present our revenues by segment. We do not include equity in earnings from unconsolidated affiliates in our measures of segment operating performance. Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Revenues: Real estate sales and financing $ 809 $ 760 $ 49 6.4 $ 1,563 $ 1,405 $ 158 11.2 Resort operations and club management 430 405 25 6.2 832 796 36 4.5 Total segment revenues 1,239 1,165 74 6.4 2,395 2,201 194 8.8 Cost reimbursements 150 128 22 17.2 299 261 38 14.6 Intersegment eliminations(1) (31) (27) (4) 14.8 (51) (48) (3) 6.3 Total revenues $ 1,358 $ 1,266 $ 92 7.3 $ 2,643 $ 2,414 $ 229 9.5 (1)See Note 17: Business Segments in our unaudited condensed consolidated financial statements for details on the intersegment eliminations. Real Estate Sales and Financing Segment Real Estate Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Sales of VOIs, net $ 507 $ 469 $ 38 8.1 $ 962 $ 847 $ 115 13.6 Fee-for-service commissions 64 84 (20) (23.8) 135 152 (17) (11.2) Sales revenue 571 553 18 3.3 1,097 999 98 9.8 Less: Cost of VOI sales 38 38 — — 83 63 20 31.7 Sales and marketing expense, net 388 398 (10) (2.5) 735 749 (14) (1.9) Real estate expense 426 436 (10) (2.3) 818 812 6 0.7 Real estate profit $ 145 $ 117 $ 28 23.9 $ 279 $ 187 $ 92 49.2 Real estate profit margin(1) 25.4 % 21.2 % 25.4 % 18.7 % (1)Excluding the package sales and other fees adjustment, Real estate profit margin was 21.8% and 18.5% for the three months ended June 30, 2026 and 2025, and 21.8% and 16.2% for the six months ended June 30, 2026 and 2025. Sales revenue increased $18 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to a net construction deferral of $54 million in 2026 compared to a net construction deferral of $82 million in 2025 and an increase in contract sales excluding fee-for-service of $14 million, partially offset by a decrease in fee-for-service commissions of $20 million. Sales revenue increased $98 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to a net construction deferral of $79 million in 2026 compared to a net construction deferral of $208 million in 2025, partially offset by decreases in fee-for-service commissions of $17 million and sales incentives of $14 million. Real estate expense decreased $10 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to net construction deferral activity of $26 million in 2026 compared to $37 million in 2025. Real estate expense increased $6 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to net construction deferral activity of $33 million in 2026 compared to $95 million in 2025, partially offset by decreases in costs of contract sales excluding fee-for-service of $30 million and selling expenses of $19 million. 38 Table of Contents Financing Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Interest income $ 137 $ 122 $ 15 12.3 $ 265 $ 245 $ 20 8.2 Other financing revenue 11 12 (1) (8.3) 24 22 2 9.1 Premium amortization of acquired timeshare financing receivables (4) (8) 4 (50.0) (7) (16) 9 (56.3) Financing revenue 144 126 18 14.3 282 251 31 12.4 Consumer financing interest expense 37 26 11 42.3 69 55 14 25.5 Other financing expense 19 26 (7) (26.9) 37 51 (14) (27.5) Amortization of acquired non-recourse debt discounts and premiums, net 2 2 — — 3 3 — — Financing expense 58 54 4 7.4 109 109 — — Financing profit $ 86 $ 72 $ 14 19.4 $ 173 $ 142 $ 31 21.8 Financing profit margin 59.7 % 57.1 % 61.3 % 56.6 % Financing revenue increased $18 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in the average outstanding balance of the timeshare financing receivables portfolio and a decrease in the premium amortization of acquired timeshare financing receivables of $4 million. Financing revenue increased $31 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in the average outstanding balance of the timeshare financing receivables portfolio and a decrease in the premium amortization of acquired timeshare financing receivables of $9 million. Financing expense increased $4 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in consumer financing interest expense of $11 million due to an increase in the average non-recourse debt balance partially offset by a decrease in the provision for credit losses of the acquired portfolio of $6 million. Financing expense remained consistent for the six months ended June 30, 2026, compared to the same period in 2025. Resort Operations and Club Management Segment Resort and Club Management Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Club management revenue $ 72 $ 70 $ 2 2.9 $ 142 $ 142 $ — — Resort management revenue 117 113 4 3.5 232 224 8 3.6 Resort and club management revenues 189 183 6 3.3 374 366 8 2.2 Club management expense 24 21 3 14.3 46 41 5 12.2 Resort management expense 37 35 2 5.7 74 69 5 7.2 Resort and club management expenses 61 56 5 8.9 120 110 10 9.1 Resort and club management profit $ 128 $ 127 $ 1 0.8 $ 254 $ 256 $ (2) (0.8) Resort and club management profit margin 67.7 % 69.4 % 67.9 % 69.9 % Resort and club management revenue increased $6 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to increases in club annual dues revenue of $2 million, management fees revenue of $2 million and license fee revenue of $1 million. 39 Table of Contents Resort and club management revenue increased $8 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to an increase in management fees revenue of $6 million and license fee revenue of $2 million. Resort and club management expenses increased $5 million for the three months ended June 30, 2026, compared to the same period in 2025, primarily due to employee-related expenses. Resort and club management expenses increased $10 million for the six months ended June 30, 2026, compared to the same period in 2025, primarily due to employee-related expenses. Rental and Ancillary Services Three Months Ended June 30, Variance(1) Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Rental revenues $ 194 $ 180 $ 14 7.8 $ 377 $ 354 $ 23 6.5 Ancillary services revenues 16 15 1 6.7 30 28 2 7.1 Rental and ancillary services revenues 210 195 15 7.7 407 382 25 6.5 Rental expenses 207 191 16 8.4 411 386 25 6.5 Ancillary services expense 13 12 1 8.3 25 23 2 8.7 Rental and ancillary services expenses 220 203 17 8.4 436 409 27 6.6 Rental and ancillary services profit $ (10) $ (8) $ (2) 25.0 $ (29) $ (27) $ (2) 7.4 Rental and ancillary services profit margin (4.8) % (4.1) % (7.1) % (7.1) % Rental and ancillary services revenue increased $15 million and $25 million for both the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily driven by higher transient revenues as a result of increased occupied room nights and average daily rates. Rental and ancillary services expenses increased $17 million and $27 million for the three and six months ended June 30, 2026, compared to the same periods in 2025, primarily due to increases in maintenance fees on unsold inventory and other rental expenses. Other Operating Expenses Three Months Ended June 30, Variance Six Months Ended June 30, Variance(1) ($ in millions) 2026 2025 $ % 2026 2025 $ % General and administrative $ 67 $ 58 $ 9 15.5 $ 116 $ 104 $ 12 11.5 Depreciation and amortization 71 59 12 20.3 142 126 16 12.7 License fees 58 52 6 11.5 111 101 10 9.9 Loss on sale and impairment 48 1 47 NM 48 1 47 NM (1) NM - fluctuation in terms of percentage change is not meaningful. For the three months ended June 30, 2026, operating expenses increased compared to the same period in 2025. Loss on sale and impairment increased $47 million primarily due to the disposition of our interests in certain properties. Depreciation and amortization expense increased by $12 million primarily due to amortization expense of software intangibles. General and administrative increased by $9 million primarily due to professional fees and employee-related expenses. License fees increased by $6 million primarily due to licensing fees paid to Hilton. For the six months ended June 30, 2026, operating expenses increased compared to the same period in 2025. Loss on sale and impairment increased $47 million primarily due to the disposition of our interests in certain properties. Depreciation and amortization expense increased by $16 million primarily due to amortization expense of software intangibles. General and administrative increased by $12 million primarily due to professional fees and employee-related expenses. License fees increased by $10 million primarily due to licensing fees paid to Hilton. 40 Table of Contents Acquisition and Integration-Related Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Acquisition and integration-related $ 14 $ 26 $ (12) (46.2) $ 26 $ 54 $ (28) (51.9) Acquisition and integration-related costs include direct expenses related to our recent acquisitions including integration costs, legal and other professional fees. Integration costs include technology-related costs, fees paid to management consultants, rebranding fees and employee-related costs such as severance and retention. For the three and six months ended June 30, 2026, acquisition and integration-related costs decreased by $12 million and $28 million compared to the same period in 2025, primarily due to decreases of $10 million and $20 million in employee-related expenses and professional service fees of $2 million and $7 million. Non-Operating Expenses Three Months Ended June 30, Variance (1) Six Months Ended June 30, Variance (1) ($ in millions) 2026 2025 $ % 2026 2025 $ % Interest expense $ 70 $ 79 $ (9) (11.4) $ 143 $ 156 $ (13) (8.3) Equity in earnings from unconsolidated affiliates (2) (6) 4 (66.7) (7) (11) 4 (36.4) Other (gain) loss, net — (4) 4 (100.0) 1 (10) 11 NM Income tax expense 8 15 (7) (46.7) 14 21 (7) (33.3) The changes in non-operating expenses for both the three and six months ended June 30, 2026, compared to the same periods in 2025, were primarily due to interest expense, other (gain) loss, net and income tax expense. The decrease in interest expense was primarily due to a decrease in the weighted average interest rate on our corporate debt. The change in other loss (gain), net is primarily due to revaluation of our foreign currency transactions. For the three months ended June 30, 2026, the decrease in income tax expense was primarily driven by the overall change in pretax earnings compared to the same period in 2025. For the six months ended June 30, 2026, the decrease in income tax expense was driven by discrete items, partially offset by the overall change in pretax earnings compared to the same period in 2025. Net income attributable to noncontrolling interest Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Net income attributable to noncontrolling interest $ 3 $ 3 $ — — $ 5 $ 8 $ (3) (37.5) We include in our unaudited condensed consolidated financial statements the results of operations and financial condition of Big Cedar, the joint venture with Bluegreen/Big Cedar Vacations, LLC in which HGV holds 51% equity interest. Net income attributable to noncontrolling interest is the portion of Big Cedar that is attributable to Big Cedar Vacations, LLC, which holds the remaining 49% equity interest. 41 Table of Contents Reconciliation of Non-GAAP Measures to GAAP Measures The following table reconciles net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures, to EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders: Three Months Ended June 30, Variance(1) Six Months Ended June 30, Variance(1) ($ in millions) 2026 2025 $ % 2026 2025 $ % Net income attributable to stockholders $ 12 $ 25 $ (13) (52.0) $ 78 $ 8 $ 70 NM Net income attributable to noncontrolling interest 3 3 — — 5 8 (3) (37.5) Net income 15 28 (13) (46.4) 83 16 67 NM Interest expense 70 79 (9) (11.4) 143 156 (13) (8.3) Income tax expense 8 15 (7) (46.7) 14 21 (7) (33.3) Depreciation and amortization 71 59 12 20.3 142 126 16 12.7 Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates — 1 (1) (100.0) — 1 (1) (100.0) EBITDA 164 182 (18) (9.9) 382 320 62 19.4 Other (gain) loss, net — (4) 4 (100.0) 1 (10) 11 NM Share-based compensation expense 25 23 2 8.7 36 35 1 2.9 Loss on sale and impairment expense 48 1 47 NM 48 1 47 NM Acquisition and integration-related 14 26 (12) (46.2) 26 54 (28) (51.9) Other adjustment items(2) 18 10 8 80.0 27 23 4 17.4 Adjusted EBITDA 269 238 31 13.0 520 423 97 22.9 Adjusted EBITDA attributable to noncontrolling interest 4 5 (1) (20.0) 6 10 (4) (40.0) Adjusted EBITDA attributable to stockholders $ 265 $ 233 $ 32 13.7 $ 514 $ 413 $ 101 24.5 (1)NM - fluctuation in terms of percentage change is not meaningful. (2)These amounts include costs associated with restructuring, one-time charges, other non-cash items, and amortization of fair value premiums and discounts resulting from purchase accounting. 42 Table of Contents The following table reconciles net income attributable to stockholders and net income, our most comparable U.S. GAAP financial measures, to EBITDA and the total of our real estate, financing, resort and club management, and rental and ancillary services profit measures. Three Months Ended June 30, Variance(1) Three Months Ended June 30, Variance(1) ($ in millions) 2026 2025 $ % 2026 2025 $ % Net income attributable to stockholders $ 12 $ 25 $ (13) (52.0) $ 78 $ 8 $ 70 NM Net income attributable to noncontrolling interest 3 3 — — 5 8 (3) (37.5) Net income 15 28 (13) (46.4) 83 16 67 NM Interest expense 70 79 (9) (11.4) 143 156 (13) (8.3) Income tax expense 8 15 (7) (46.7) 14 21 (7) (33.3) Depreciation and amortization 71 59 12 20.3 142 126 16 12.7 Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates — 1 (1) (100.0) — 1 (1) (100.0) EBITDA 164 182 (18) (9.9) 382 320 62 19.4 Other (gain) loss, net — (4) 4 (100.0) 1 (10) 11 NM Equity in earnings from unconsolidated affiliates(2) (2) (7) 5 (71.4) (7) (12) 5 (41.7) Loss on sale and impairment expense 48 1 47 NM 48 1 47 NM License fees 58 52 6 11.5 111 101 10 9.9 Acquisition and integration-related 14 26 (12) (46.2) 26 54 (28) (51.9) General and administrative 67 58 9 15.5 116 104 12 11.5 Profit $ 349 $ 308 $ 41 13.3 $ 677 $ 558 $ 119 21.3 Real estate profit $ 145 $ 117 $ 28 23.9 $ 279 $ 187 $ 92 49.2 Financing profit 86 72 14 19.4 173 142 31 21.8 Resort and club management profit 128 127 1 0.8 254 256 (2) (0.8) Rental and ancillary services profit (10) (8) (2) 25.0 (29) (27) (2) 7.4 Profit $ 349 $ 308 $ 41 13.3 $ 677 $ 558 $ 119 21.3 (1) NM - fluctuation in terms of percentage change is not meaningful. (2) Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $1 million for the three and six months ended June 30, 2025. 43 Table of Contents We evaluate our business segment operating performance using segment Adjusted EBITDA, as described in Note 17: Business Segments in our unaudited condensed consolidated financial statements. The following table reconciles our segment Adjusted EBITDA to Adjusted EBITDA to Adjusted EBITDA Attributable to Stockholders: Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Adjusted EBITDA: Real estate sales and financing(1) $ 211 $ 176 $ 35 19.9 $ 422 $ 309 $ 113 36.6 Resort operations and club management(1) 154 149 5 3.4 282 282 — — Adjustments: Adjusted EBITDA from unconsolidated affiliates 2 7 (5) (71.4) 7 12 (5) (41.7) License fees (58) (52) (6) 11.5 (111) (101) (10) 9.9 General and administrative(2) (40) (42) 2 (4.8) (80) (79) (1) 1.3 Adjusted EBITDA 269 238 31 13.0 520 423 97 22.9 Adjusted EBITDA attributable to noncontrolling interest 4 5 (1) (20.0) 6 10 (4) (40.0) Total Adjusted EBITDA attributable to stockholders $ 265 $ 233 $ 32 13.7 $ 514 $ 413 $ 101 24.5 (1)Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments. (2)Adjusts for segment related share-based compensation, depreciation and other adjustment items. The following table reconciles our Fee-for-service commissions, package sales and other fees, our most comparable U.S. GAAP financial measure, to Fee-for-service commissions, and Sales and marketing expense, our most comparable U.S. GAAP financial measure, to Sales and marketing expense, net. Fee-for-service commissions and Sales and marketing expense, net, are used in calculating our real estate profit and real estate profit margin. See “Real Estate Sales and Financing Segment—Real Estate” above. Three Months Ended June 30, Variance Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ % 2026 2025 $ % Fee-for-service commissions, package sales and other fees $ 158 $ 165 $ (7) (4.2) $ 319 $ 307 $ 12 3.9 Less: Package sales and other fees(1) (94) (81) (13) 16.0 (184) (155) (29) 18.7 Fee-for-service commissions $ 64 $ 84 $ (20) (23.8) $ 135 $ 152 $ (17) (11.2) Sales and marketing expense $ 482 $ 479 $ 3 0.6 $ 919 $ 904 $ 15 1.7 Less: Package sales and other fees(1) (94) (81) (13) 16.0 (184) (155) (29) 18.7 Sales and marketing expense, net $ 388 $ 398 $ (10) (2.5) $ 735 $ 749 $ (14) (1.9) (1) Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance. Liquidity and Capital Resources Overview Our cash management objectives are to maintain the availability of liquidity, minimize operational costs, make debt payments and fund future acquisitions and development projects. Our known short-term liquidity requirements primarily consist of funds necessary to pay for operating expenses and other expenditures, including payroll and related benefits, legal costs, operating costs associated with the operation of our resorts and sales centers, interest and scheduled principal payments on our outstanding indebtedness, inventory-related purchase commitments, capital expenditures for renovations and maintenance at our offices and sales centers, and share repurchases. Our long-term liquidity requirements primarily consist of funds necessary to pay for scheduled debt maturities, inventory-related purchase commitments, costs associated with potential acquisitions and development projects, including rebranding, and share repurchases. 44 Table of Contents We finance our short- and long-term liquidity needs primarily through cash and cash equivalents, cash generated from our operations, draws on our revolver credit facility, our non-recourse revolving timeshare credit facility (“Timeshare Facility”), and through periodic securitizations of our timeshare financing receivables. •As of June 30, 2026, we had total cash and cash equivalents of $272 million and restricted cash of $296 million. Restricted cash primarily consists of escrow deposits received on VOI sales and reserves related to non-recourse debt. •During the six months ended June 30, 2026, we repurchased 6 million shares for $300 million, excluding the excise tax, under our share repurchase programs. See Note 15: Earnings Per Share for additional information. •In April 2026, we completed a securitization of approximately $500 million of gross timeshare financing receivables. The proceeds were used to pay down existing debt and for other general corporate purposes. See Note 11: Debt and Non-Recourse Debt for additional information. •In June 2026, we completed a securitization of approximately $300 million of gross timeshare financing receivables. The proceeds were used to pay down existing debt and for other general corporate purposes. See Note 11: Debt and Non-Recourse Debt for additional information. •As of June 30, 2026, we had $463 million remaining borrowing capacity under the revolver facility. •As of June 30, 2026, we had an aggregate of $755 million remaining borrowing capacity under our Timeshare Facility. As of June 30, 2026, we had $1.3 billion of notes that were current on payments but not securitized. Of that figure, approximately $719 million could be monetized through either warehouse borrowing or securitization while another $372 million of mortgage notes we anticipate being eligible following certain customary milestones such as first payment, deeding and recording. We believe that our capital allocation strategy provides adequate funding for our operations, is flexible enough to fund our development pipeline, securitizes the optimal level of receivables, and provides the ability to be strategically opportunistic in the marketplace. We have made commitments with developers to purchase vacation ownership units at a future date to be marketed and sold under our Hilton Grand Vacations brand. As of June 30, 2026, our inventory-related purchase commitments totaled $212 million to be fulfilled over a period of 9 years. Sources and Uses of Our Cash The following table summarizes our net cash flows and key metrics related to our liquidity: Six Months Ended June 30, Variance ($ in millions) 2026 2025 $ Net cash provided by (used in): Operating activities $ 262 $ 99 $ 163 Investing activities (141) (66) (75) Financing activities (115) (213) 98 Operating Activities Cash flow provided by operating activities is primarily generated from (1) sales and financing of VOIs and (2) net cash generated from managing our resorts, Club operations and providing related rental and ancillary services. Cash flows provided by operating activities primarily include funding our working capital needs and purchase of VOI inventory, including the purchase and development of real estate for future conversion to inventory. Our cash flows from operations generally vary due to the following factors related to the sale of our VOIs; the degree to which our owners finance their purchase and our owners’ repayment of timeshare financing receivables; the timing of management and sales and marketing services provided; and cash outlays for VOI inventory acquisition and development. Additionally, cash flow from operations will also vary depending upon our sales mix of VOIs; over time, we generally receive more cash from the sale of an owned VOI as compared to that from a fee-for-service sale. The increase in net cash provided by operating activities for the six months ended June 30, 2026, compared to the same period in 2025, was primarily due to an increase of $67 million in net income, along with increases in loss on sale and impairment of $47 million, provision for loan losses of $31 million and depreciation and amortization of $16 million. 45 Table of Contents The following table summarizes our VOI inventory spending: Six Months Ended June 30, ($ in millions) 2026 2025 VOI spending - owned properties(1) $ 100 $ 128 Purchases and development of real estate for future conversion to inventory 29 61 Total VOI inventory spending $ 129 $ 189 (1)Relates to costs on properties classified as Inventory on our unaudited condensed consolidated balance sheets. Investing Activities Investing activities include cash paid for acquisitions, capital expenditures and software capitalization costs. Our capital expenditures include spending related to technology and buildings and leasehold improvements used to support sales and marketing locations, resort operations and corporate activities. We believe the renovations of our existing assets are necessary to stay competitive in the markets in which we operate. The increase in net cash used in investing activities for the six months ended June 30, 2026 compared to the same period in 2025, was primarily due to cash paid $100 million for the Elara Acquisition in 2026, partially offset by a decrease in capital expenditures for property and equipment (excluding inventory) of $20 million. Financing Activities Net cash used in financing activities for the six months ended June 30, 2026 was $115 million compared to $213 million for the same period in 2025. The change was primarily due to net proceeds from debt and non-recourse debt of $192 million in 2026 compared to net proceeds of $99 million in 2025. Share Repurchase Plans On July 29, 2025, our Board of Directors approved a share repurchase program authorizing us to repurchase up to an aggregate of $600 million of its outstanding shares of common stock over a two-year period (the “2025 Repurchase Plan”). As of June 30, 2026, we had $128 million of remaining availability under the 2025 Repurchase Plan. Contractual Obligations Our commitments primarily relate to agreements with developers to purchase or construct vacation ownership units, operating leases, marketing and license fee agreements and obligations associated with our debt, non-recourse debt and the related interest. As of June 30, 2026, we were committed to $9.8 billion in contractual obligations over 14 years, $587 million of which will be fulfilled in the remainder of 2026. The ultimate amount and timing of certain commitments is subject to change pursuant to the terms of the respective arrangements, which could also allow for cancellation in certain circumstances. See Note 18: Commitments and Contingencies and Note 11: Debt and Non-recourse Debt for additional information. We utilize surety bonds related to the sales of VOIs in order to meet regulatory requirements of certain states. The availability, terms and conditions and pricing of such bonding capacity are dependent on, among other things, continued financial strength and stability of the insurance company affiliates providing the bonding capacity, general availability of such capacity and our corporate credit rating. We have commitments from surety providers in the amount of $336 million as of June 30, 2026, that primarily consist of escrow and subsidy related bonds. Critical Accounting Policies and Estimates The preparation of our unaudited condensed consolidated financial statements in accordance with U.S. GAAP requires us to make estimates and assumptions that affect the 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 Annual Report on Form 10-K for the year ended December 31, 2025. There have been no changes in our critical accounting estimates and assumptions included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025 except as follows. Business Combinations We account for our business combinations in accordance with the acquisition method of accounting. We allocate the purchase price of a business acquisition to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. Any excess of the purchase consideration over the fair value of the identified assets and liabilities acquired is recognized as goodwill and if the fair value of assets acquired and liabilities assumed exceeds the purchase consideration a gain on bargain purchase is recognized. The fair value of net assets is the 46 Table of Contents fair value assigned to the assets acquired reduced by the fair value assigned to liabilities assumed and noncontrolling interest. In determining the fair values of assets acquired and liabilities assumed and noncontrolling interest, we use various recognized valuation methods including discounted cash flow models, and the income, cost and market approaches. We utilize independent valuation specialists under our supervision for certain of our assignments of fair value. We record the net assets and results of operations of an acquired entity in our condensed consolidated financial statements from the acquisition date through period-end. We expense acquisition-related expenses as incurred and include such expenses within Acquisition and integration-related expense on our condensed consolidated statements of income. See Note 3: Acquisition for additional information.