Marriott International(MAR) - 2025 Q2 - Quarterly Report

Part I. Financial Information This section provides Marriott's unaudited condensed consolidated financial statements and management's discussion for the period ended June 30, 2025 Financial Statements This section presents Marriott's unaudited condensed consolidated financial statements for the period ended June 30, 2025 Condensed Consolidated Statements of Income For Q2 2025, total revenues increased to $6.74 billion, while net income slightly decreased to $763 million Q2 & H1 2025 vs 2024 Income Statement Highlights (in millions, except EPS) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | Total Revenues | $6,744 | $6,439 | +4.7% | $13,007 | $12,416 | +4.8% | | Gross Fee Revenues | $1,400 | $1,343 | +4.2% | $2,675 | $2,553 | +4.8% | | Operating Income | $1,236 | $1,195 | +3.4% | $2,184 | $2,071 | +5.5% | | Net Income | $763 | $772 | -1.2% | $1,428 | $1,336 | +6.9% | | Diluted EPS | $2.78 | $2.69 | +3.3% | $5.17 | $4.62 | +11.9% | Condensed Consolidated Balance Sheets As of June 30, 2025, total assets increased to $27.34 billion, driven by accounts receivable and intangible assets Balance Sheet Summary (in millions) | Account | June 30, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and equivalents | $671 | $396 | | Total Assets | $27,342 | $26,182 | | Long-term debt | $14,546 | $13,138 | | Liability for guest loyalty program | $7,775 | $7,519 | | Total Liabilities | $28,342 | $27,829 | | Stockholders' deficit | $(2,964) | $(2,992) | Condensed Consolidated Statements of Cash Flows Net cash provided by operating activities decreased to $1.29 billion for the first six months of 2025 Six Months Ended June 30 Cash Flow Summary (in millions) | Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,290 | $1,551 | | Net cash used in investing activities | $(286) | $(225) | | Net cash used in financing activities | $(737) | $(1,322) | | Increase in Cash | $267 | $4 | - Major uses of cash in financing activities for H1 2025 included $1.5 billion for treasury stock purchases and $357 million for dividend payments[19] Notes to Condensed Consolidated Financial Statements The notes detail significant accounting policies, including the citizenM brand acquisition and debt issuance - In Q2 2025, Marriott agreed to acquire the citizenM brand and related intellectual property for $355 million, with potential earn-out payments up to $110 million[23] - Regarding the Starwood Data Security Incident, the U.S. Court of Appeals reversed a class certification, holding a class-action waiver enforceable[32][33] - In February 2025, the company issued $500 million of Series RR Notes and $1.5 billion of Series SS Notes, with net proceeds of approximately $1.96 billion used for general corporate purposes[41] Segment Profit (in millions) | Segment | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | U.S. & Canada | $786 | $787 | $1,430 | $1,412 | | EMEA | $157 | $153 | $231 | $234 | | Greater China | $53 | $47 | $98 | $98 | | APEC | $76 | $62 | $156 | $134 | | Total Reportable Segment Profit | $1,072 | $1,049 | $1,915 | $1,878 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's performance, highlighting a 1.5% increase in worldwide RevPAR for Q2 2025 Business and Overview This section details Marriott's asset-light business model and key performance indicators like RevPAR Systemwide Comparable RevPAR Growth (Constant $) | Region | Q2 2025 vs Q2 2024 | H1 2025 vs H1 2024 | | :--- | :--- | :--- | | U.S. & Canada | 0.0% | +1.6% | | International | +5.3% | +5.7% | | Worldwide | +1.5% | +2.8% | - The development pipeline contained over 590,000 rooms at the end of Q2 2025, with 40% under construction or in conversion[65] - The company expects full-year 2025 net rooms growth to approach 5%, including rooms from the citizenM brand acquisition[66] Consolidated Results Analysis of consolidated results shows a 4% increase in net fee revenues for Q2 2025, driven by franchise fees Fee Revenue Changes (Q2 2025 vs Q2 2024) | Fee Type | Change (in millions) | % Change | | :--- | :--- | :--- | | Base management fees | +$10 | +3% | | Franchise fees | +$42 | +5% | | Incentive management fees | +$5 | +3% | | Net fee revenues | +$55 | +4% | - General, administrative, and other expenses decreased in Q2 and H1 2025 primarily due to lower compensation costs[78] - Interest expense increased by $30 million (17%) in Q2 2025 and $59 million (18%) in H1 2025, mainly due to higher debt balances[79] Liquidity and Capital Resources The company maintains strong liquidity with a $4.5 billion credit facility and expects to continue returning cash to shareholders - The company's long-term debt had a weighted average interest rate of 4.5% and a weighted average maturity of approximately 5.6 years as of Q2 2025[84] - Capital expenditures and other investments are expected to total approximately $1.355 billion to $1.455 billion for the full year 2025, including the $355 million citizenM brand acquisition[92] - In Q2 2025, the company repurchased 2.8 million shares for $0.7 billion; year-to-date through July 30, 2025, 6.4 million shares were repurchased for $1.7 billion[93] Quantitative and Qualitative Disclosures About Market Risk The company states that its exposure to market risk has not materially changed since the end of the fiscal year 2024 - There have been no material changes in the company's exposure to market risk since December 31, 2024[98] Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of the end of the quarter - Based on an evaluation as of the end of Q2 2025, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[99] - No changes in internal control over financial reporting occurred during Q2 2025 that materially affected these controls[100] Part II. Other Information This section covers legal proceedings, risk factors, equity sales, and other disclosures Legal Proceedings This section refers to Note 6 for details on the Starwood Data Security Incident litigation and discloses an EPA letter - In Q2 2025, the company received a letter from the EPA regarding alleged violations of the Clean Air Act at a managed hotel, but does not expect the matter to be material[104] Risk Factors The company reports no material changes to the risk factors previously disclosed in its Annual Report on Form 10-K - There are no material changes to the risk factors discussed in the 2024 Form 10-K[106] Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity for the second quarter of 2025 Q2 2025 Share Repurchases (in millions, except per share amounts) | Period | Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1.1 | $223.08 | | May 2025 | 0.8 | $266.95 | | June 2025 | 0.9 | $262.69 | | Total Q2 | 2.8 | $248.54 | Other Information The company reports that no director or Section 16 officer adopted or terminated any Rule 10b5-1 trading plans during Q2 2025 - No director or Section 16 officer adopted or terminated any Rule 10b5-1 plans or other trading arrangements during Q2 2025[108] Exhibits This section lists the exhibits filed with the Form 10-Q, including certifications and various agreements