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| Share Name | Share Symbol | Market | Type |
|---|---|---|---|
| Hilton Grand Vacations Inc | NYSE:HGV | NYSE | Common Stock |
| Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| -0.30 | -0.78% | 38.04 | 38.21 | 37.50 | 37.50 | 1,134,717 | 01:00:00 |
From Jul 2024 to Jan 2025
Hilton Grand Vacations Inc. (NYSE: HGV) (“HGV” or “the Company”) today reports its second quarter 2024 results.
Second quarter of 2024 highlights1
“Our results were below expectations this quarter, as we experienced some sales challenges along with a pullback in consumer spending behavior late in the quarter,” said Mark Wang, CEO of Hilton Grand Vacations. “While we aren’t satisfied with our performance, we’ve identified and are addressing those challenges, and I remain confident in our business and our long-term path. Our integration remains on track, and our underlying business fundamentals are solid – with more members, more geographic diversity, and more free cash flow than we’ve ever had.”
1.The Company’s current period results and prior year results include impacts related to deferrals of revenues and direct expenses related to the Sales of VOIs under construction that are recognized when construction is complete. These impacts are reflected in the sub-bullets.
Overview
On Jan. 17, 2024, HGV completed the acquisition of Bluegreen Vacations Holding Corporation (“Bluegreen” or “Bluegreen Vacations”).
For the quarter ended June 30, 2024, diluted EPS was $0.02 compared to $0.71 for the quarter ended June 30, 2023. Net income attributable to stockholders and Adjusted EBITDA attributable to stockholders were $2 million and $262 million, respectively, for the quarter ended June 30, 2024, compared to net income attributable to stockholders and Adjusted EBITDA attributable to stockholders of $80 million and $248 million, respectively, for the quarter ended June 30, 2023. Total revenues for the quarter ended June 30, 2024, were $1,235 million compared to $1,007 million for the quarter ended June 30, 2023.
Net income attributable to stockholders and Adjusted EBITDA attributable to stockholders for the quarter ended June 30, 2024, included a net deferral of $8 million relating to the sales of intervals of a project under construction in Hawaii during the period. The Company anticipates recognizing revenues and related expenses for projects in Hawaii in 2024 when it expects to complete these projects and recognize the net deferral impacts.
Consolidated Segment Highlights – Second quarter of 2024
Real Estate Sales and Financing
For the quarter ended June 30, 2024, Real Estate Sales and Financing segment revenues were $740 million, an increase of $136 million compared to the quarter ended June 30, 2023. Real Estate Sales and Financing segment Adjusted EBITDA and Adjusted EBITDA profit margin were $193 million and 26.1%, respectively, for the quarter ended June 30, 2024, compared to $189 million and 31.3%, respectively, for the quarter ended June 30, 2023. Real Estate Sales and Financing segment revenues results in the second quarter of 2024 increased primarily due to a $93 million increase in sales revenue and a $26 million increase in financing revenue.
Real Estate Sales and Financing segment Adjusted EBITDA reflects a net construction deferral of $8 million for the quarter ended June 30, 2024, compared to $4 million net construction deferrals for the quarter ended June 30, 2023, both of which decreased reported Adjusted EBITDA attributable to stockholders.
Contract sales for the quarter ended June 30, 2024, increased $145 million to $757 million compared to the quarter ended June 30, 2023. For the quarter ended June 30, 2024, tours increased by 39.4% and VPG decreased by 10.9% compared to the quarter ended June 30, 2023. For the quarter ended June 30, 2024, fee-for-service contract sales represented 19.5% of contract sales compared to 29.5% for the quarter ended June 30, 2023.
Financing revenues for the quarter ended June 30, 2024, increased by $26 million compared to the quarter ended June 30, 2023. This was driven primarily by an increase in the weighted average interest rate of 50 basis points for the originated portfolio and an increase in the carrying balance of the timeshare financing receivables portfolio as of June 30, 2024, compared to June 30, 2023.
Resort Operations and Club Management
For the quarter ended June 30, 2024, Resort Operations and Club Management segment revenue was $386 million, an increase of $66 million compared to the quarter ended June 30, 2023. Resort Operations and Club Management segment Adjusted EBITDA and Adjusted EBITDA profit margin were $152 million and 39.4%, respectively, for the quarter ended June 30, 2024, compared to $123 million and 38.4%, respectively, for the quarter ended June 30, 2023, primarily due to an increase in management fees and higher average daily rates, partially offset by an increase in development and maintenance fees compared to the same period in 2023.
Inventory
The estimated value of the Company’s total contract sales pipeline is $12.8 billion at current pricing.
The total pipeline includes $8.7 billion of sales relating to inventory that is currently available for sale at open or soon-to-open projects. The remaining $4.1 billion of sales is related to inventory at new or existing projects that will become available for sale in the future upon registration, delivery or construction.
Owned inventory represents 90.0% of the Company’s total pipeline. Approximately 68.7% of the owned inventory pipeline is currently available for sale.
Fee-for-service inventory represents 10.0% of the Company’s total pipeline. Approximately 61.5% of the fee-for-service inventory pipeline is currently available for sale.
Balance Sheet and Liquidity
Total cash and cash equivalents were $328 million and total restricted cash was $273 million as of June 30, 2024.
As of June 30, 2024, the Company had $4,885 million of corporate debt, net outstanding with a weighted average interest rate of 6.850% and $1,725 million of non-recourse debt, net outstanding with a weighted average interest rate of 5.075%.
As of June 30, 2024, the Company’s liquidity position consisted of $328 million of unrestricted cash and $446 million remaining borrowing capacity under the revolver facility.
As of June 30, 2024, HGV has $750 million remaining borrowing capacity in total under the Timeshare Facility. Of this amount, HGV has $647 million of mortgage notes that are available to be securitized and another $324 million of mortgage notes that the Company expects will become eligible as soon as it meets typical milestones, including receipt of first payment, deeding or recording.
Free cash flow was $95 million for the quarter ended June 30, 2024, compared to $180 million for the same period in the prior year. Adjusted free cash flow was $370 million for the quarter ended June 30, 2024, compared to $(13) million for the same period in the prior year. Adjusted free cash flow for the quarter ended June 30, 2024, and 2023 includes add-backs of $62 million and $22 million, respectively for acquisition and integration related costs and $13 million related to litigation settlement payment for the quarter ended June 30, 2024.
As of June 30, 2024, the Company’s total net leverage on a trailing 12-month basis, inclusive of all anticipated cost synergies, was approximately 3.67x.
Total Construction Deferrals and/or Recognitions Included in Results Reported Under Accounting Standards Codification Topic 606 (“ASC 606”)
The Company’s Adjusted EBITDA as reported under ASC 606 includes construction-related recognitions and deferrals of revenues and related expenses as detailed in Table T-1 below. Under ASC 606, the Company defers revenues and related expenses pertaining to sales at projects that occur during periods when that project is under construction until the period when construction is completed.
T-1
NET CONSTRUCTION DEFERRAL ACTIVITY
(in millions)
2024
NET CONSTRUCTION DEFERRAL ACTIVITY
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
Sales of VOIs recognitions (deferrals)
$
2
$
(13
)
$
—
$
—
$
(11
)
Cost of VOI sales (deferrals)(1)
(1
)
(4
)
—
—
(5
)
Sales and marketing expense (deferrals)
—
(1
)
—
—
(1
)
Net construction recognitions (deferrals)(2)
$
3
$
(8
)
$
—
$
—
$
(5
)
Net (loss) income attributable to stockholders
$
(4
)
$
2
$
—
$
—
$
(2
)
Net income attributable to noncontrolling interest
2
2
—
—
4
Net (loss) income
(2
)
4
—
—
2
Interest expense
79
87
—
—
166
Income tax (benefit) expense
(11
)
3
—
—
(8
)
Depreciation and amortization
62
68
—
—
130
Interest expense and depreciation and amortization included in equity in earnings from unconsolidated affiliates
1
2
—
—
3
EBITDA
129
164
—
—
293
Other loss, net
5
3
—
—
8
Share-based compensation expense
9
18
—
—
27
Acquisition and integration-related expense
109
48
—
—
157
Impairment expense
2
—
—
—
2
Other adjustment items(3)
22
33
—
—
55
Adjusted EBITDA
276
266
—
—
542
Adjusted EBITDA attributable to noncontrolling interest
3
4
—
—
7
Adjusted EBITDA attributable to stockholders
$
273
$
262
$
—
$
—
$
535
T-1
NET CONSTRUCTION DEFERRAL ACTIVITY
(CONTINUED, in millions)
2023
NET CONSTRUCTION DEFERRAL ACTIVITY
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
Sales of VOIs recognitions (deferrals)
$
4
$
(6
)
$
(12
)
$
(21
)
$
(35
)
Cost of VOI sales recognitions (deferrals)(1)
1
(1
)
(3
)
(6
)
(9
)
Sales and marketing expense recognitions (deferrals)
1
(1
)
(2
)
(3
)
(5
)
Net construction recognitions (deferrals)(2)
$
2
$
(4
)
$
(7
)
$
(12
)
$
(21
)
Net income attributable to stockholders
$
73
$
80
$
92
$
68
$
313
Net income attributable to noncontrolling interest
—
—
—
—
—
Net income
73
80
92
68
313
Interest expense
44
44
45
45
178
Income tax expense
17
35
44
40
136
Depreciation and amortization
51
52
53
57
213
Interest expense and depreciation and amortization included in equity in earnings from unconsolidated affiliates
—
1
—
1
2
EBITDA
185
212
234
211
842
Other (gain) loss, net
(1
)
(3
)
1
1
(2
)
Share-based compensation expense
10
16
12
2
40
Acquisition and integration-related expense
17
13
12
26
68
Impairment expense
—
3
—
—
3
Other adjustment items(3)
7
7
10
30
54
Adjusted EBITDA
218
248
269
270
1,005
Adjusted EBITDA attributable to noncontrolling interest
—
—
—
—
—
Adjusted EBITDA attributable to stockholders
$
218
$
248
$
269
$
270
$
1,005
(1)
Includes anticipated Costs of VOI sales related to inventory associated with Sales of VOIs under construction that will be acquired once construction is complete.
(2)The table represents deferrals and recognitions of Sales of VOIs revenue and direct costs for properties under construction.
(3)Includes costs associated with restructuring, one-time charges and other non-cash items. This amount also includes the amortization of premiums and discounts resulting from purchase accounting.
Conference Call
Hilton Grand Vacations will host a conference call on Aug. 8, 2024, at 11 a.m. (ET) to discuss second quarter results.
To access the live teleconference, please dial 1-877-407-0784 in the U.S./Canada (or +1-201-689-8560 internationally) approximately 15 minutes prior to the teleconference’s start time. A live webcast will also be available by logging onto the HGV Investor Relations website at https://investors.hgv.com.
In the event of audio difficulties during the call on the toll-free number, participants are advised that accessing the call using the +1-201-689-8560 dial-in number may bypass the source of audio difficulties.
A replay will be available within 24 hours after the teleconference’s completion through Aug. 15, 2024. To access the replay, please dial 1-844-512-2921 in the U.S. (+1-412-317-6671 internationally) using ID#13743187. A webcast replay and transcript will also be available within 24 hours after the live event at https://investors.hgv.com.
Forward Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. 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 press release 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, including, related to the acquisition and integration of Bluegreen Vacations Holding Corporation (“Bluegreen”).
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, including those related to HGV's acquisition and integration of Bluegreen, could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics, financial condition or credit rating.
For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HGV’s most recent Annual Report on Form 10-K, which may be supplemented and updated by the risk factors in HGV’s quarterly reports, current reports and other filings HGV makes with the SEC.
HGV’s forward-looking statements speak only as of the date of this communication or as of the date they are made. HGV disclaims any intent or obligation to update any “forward-looking statement” made in this communication to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.
Non-GAAP Financial Measures
The Company refers to certain non-GAAP financial measures in this press release, including Adjusted Net Income or Loss, Adjusted Diluted EPS, EBITDA, Adjusted EBITDA, Adjusted EBITDA Attributable to Stockholders, EBITDA profit margin, Adjusted EBITDA profit margin, Free Cash Flow and Adjusted Free Cash Flow, profits and profit margins for HGV’s key activities - real estate, financing, resort and club management, and rental and ancillary services. Please see the tables in this press release and “Definitions” for additional information and reconciliations of such non-GAAP financial measures.
The Company believes 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 key 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.
The Company refers to Adjusted EBITDA guidance excluding deferrals and recognitions, which does not take into account any future deferrals of revenues and direct expenses related to the sales of VOIs under construction that are recognized, only on a non-GAAP basis, as the quantification of reconciling items to the most directly comparable U.S. GAAP financial measure is not readily available without unreasonable effort due to uncertainties associated with the timing and amount of such items. These items may create a material difference between the non-GAAP and comparable U.S. GAAP results. We define Adjusted EBITDA Attributable to Stockholders as Adjusted EBITDA excluding amounts attributable to the noncontrolling interest in HGV/Big Cedar Vacations in which HGV owns a 51% interest (“Big Cedar”).
About Hilton Grand Vacations Inc.
Hilton Grand Vacations Inc. (NYSE:HGV) is recognized as a leading global timeshare company and is the exclusive vacation ownership partner of Hilton. With headquarters in Orlando, Florida, Hilton Grand Vacations develops, markets, and operates a system of brand-name, high-quality vacation ownership resorts in select vacation destinations. Hilton Grand Vacations has a reputation for delivering a consistently exceptional standard of service, and unforgettable vacation experiences for guests and approximately 720,000 Club Members. Membership with the Company provides best-in-class programs, exclusive services and maximum flexibility for our Members around the world.
For more information, visit www.corporate.hgv.com. Follow us on Instagram, Facebook, LinkedIn, X (formerly Twitter), Pinterest and YouTube.
HILTON GRAND VACATIONS INC.
DEFINITIONS
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, 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 calculated as Adjusted EBITDA, as previously defined, excluding amounts attributable to the noncontrolling interest in Big Cedar.
EBITDA profit margin, presented herein, represents EBITDA, as previously defined, divided by total revenues. Adjusted EBITDA profit margin, presented herein, represents Adjusted EBITDA, as previously defined, divided by total revenues.
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.
HGV believes 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 and Adjusted EBITDA 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.
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:
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.
Adjusted Net Income, Adjusted Net Income Attributable to Stockholders and Adjusted Diluted EPS Attributable to Stockholders
Adjusted Net Income, presented herein, is calculated as net income further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges. Adjusted Net Income Attributable to Stockholders, presented herein, is calculated as Adjusted Net Income, as defined above, excluding amounts attributable to the noncontrolling interest in Big Cedar. Adjusted Diluted EPS, presented herein, is calculated as Adjusted Net Income Attributable to Stockholders, as defined above, divided by diluted weighted average shares outstanding.
Adjusted Net Income, Adjusted Net Income Attributable to Stockholders and Adjusted Diluted EPS are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definition may not be comparable to similarly titled measures of other companies.
Adjusted Net Income, Adjusted Net Income Attributable to Stockholders and Adjusted Diluted EPS are useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods.
Free Cash Flow and Adjusted Free Cash Flow
Free Cash Flow represents cash from operating activities less non-inventory capital spending.
Adjusted Free Cash Flow represents free cash flow further adjusted to exclude net non-recourse debt activities and other one-time adjustment items including, but not limited to, costs associated with acquisitions.
We consider Free Cash Flow and Adjusted Free Cash Flow to be liquidity measures not recognized under U.S. GAAP that provides useful information to both management and investors about the amount of cash generated by operating activities that can be used for investing and financing activities, including strategic opportunities and debt service. We do not believe these non-GAAP measures to be a representation of how we will use excess cash.
Non-GAAP Measures within Our Segments
Sales revenue represents sales of VOIs, net, and Fee-for-service commissions and brand fees earned from the sale of fee-for-service VOIs. Fee-for-service commissions and brand fees represents sales, marketing, brand and other fees, which corresponds to the applicable line item from our condensed consolidated statements of operations, adjusted by marketing revenue 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 condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Both fee-for-service commissions and brand fees 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 condensed consolidated statements of operations. Financing profit margin is calculated as a percentage by dividing financing profit by financing revenue. We consider this 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 condensed consolidated statements of operations. 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 condensed consolidated statements of operations. 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.
Real Estate Metrics
Contract sales represents 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 condensed consolidated statements of operations 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 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 HGV’s results the results of our competitors which may source their VOI products differently. HGV believes 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 Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our most recent Quarterly Report on form 10-Q for the period ended June 30, 2024.
Developed Inventory refers to VOI inventory that is sourced from projects developed by HGV.
Fee-for-Service Inventory refers to VOI inventory HGV sells and manages on behalf of third-party developers.
Just-in-Time Inventory refers to VOI inventory primarily sourced in transactions that are designed to closely correlate the timing of the acquisition with HGV’s sale of that inventory to purchasers.
Points-Based Inventory refers to VOI sales that are backed by physical real estate that is or will be contributed to a trust.
NOG or Net Owner Growth represents the year-over-year change in membership.
Tour flow represents the number of sales presentations given at HGV’s sales centers during the period.
Volume per guest (“VPG”) represents the sales attributable to tours at HGV’s sales locations and is calculated by dividing contract sales, excluding telesales, by tour flow. HGV considers VPG to be an important operating measure because it measures the effectiveness of HGV’s sales process, combining the average transaction price with closing rate.
HILTON GRAND VACATIONS INC.
FINANCIAL TABLES
CONDENSED CONSOLIDATED BALANCE SHEETS
T-2
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
T-3
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
T-4
FREE CASH FLOW RECONCILIATION
T-5
SEGMENT REVENUE RECONCILIATION
T-6
SEGMENT EBITDA, ADJUSTED EBITDA TO NET INCOME AND ADJUSTED EBITDA ATTRIBUTABLE TO STOCKHOLDERS
T-7
REAL ESTATE SALES PROFIT DETAIL SCHEDULE
T-8
CONTRACT SALES MIX BY TYPE SCHEDULE
T-9
FINANCING PROFIT DETAIL SCHEDULE
T-10
RESORT AND CLUB PROFIT DETAIL SCHEDULE
T-11
RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE
T-12
REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA
T-13
RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA
T-14
ADJUSTED NET INCOME ATTRIBUTABLE TO STOCKHOLDERS AND ADJUSTED DILUTED EARNINGS PER SHARE - DILUTED (Non-GAAP)
T-15
RECONCILIATION OF NON-GAAP PROFIT MEASURES TO GAAP MEASURE
T-16
T-2
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in millions, except share and per share data)
June 30, 2024
December 31, 2023
(unaudited)
ASSETS
Cash and cash equivalents
$
328
$
589
Restricted cash
273
296
Accounts receivable, net
524
507
Timeshare financing receivables, net
2,976
2,113
Inventory
1,929
1,400
Property and equipment, net
902
758
Operating lease right-of-use assets, net
84
61
Investments in unconsolidated affiliates
78
71
Goodwill
1,933
1,418
Intangible assets, net
1,887
1,158
Other assets
553
314
TOTAL ASSETS
$
11,467
$
8,685
LIABILITIES AND EQUITY
Accounts payable, accrued expenses and other
$
1,159
$
952
Advanced deposits
224
179
Debt, net
4,885
3,049
Non-recourse debt, net
1,725
1,466
Operating lease liabilities
101
78
Deferred revenue
321
215
Deferred income tax liabilities
972
631
Total liabilities
9,387
6,570
Equity:
Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2024 and December 31, 2023
—
—
Common stock, $0.01 par value; 3,000,000,000 authorized shares, 102,485,583 shares issued and outstanding as of June 30, 2024 and 105,961,160 shares issued and outstanding as of December 31, 2023
1
1
Additional paid-in capital
1,456
1,504
Accumulated retained earnings
456
593
Accumulated other comprehensive income
5
17
Total stockholders' equity
1,918
2,115
Noncontrolling interest
162
—
Total equity
2,080
2,115
TOTAL LIABILITIES AND EQUITY
$
11,467
$
8,685
T-3
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(in millions, except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Revenues
Sales of VOIs, net
$
471
$
355
$
909
$
673
Sales, marketing, brand and other fees
167
173
312
331
Financing
102
76
206
150
Resort and club management
171
133
337
264
Rental and ancillary services
195
173
376
331
Cost reimbursements
129
97
251
192
Total revenues
1,235
1,007
2,391
1,941
Expenses
Cost of VOI sales
65
48
113
98
Sales and marketing
453
336
854
637
Financing
44
24
83
48
Resort and club management
48
44
102
86
Rental and ancillary services
188
154
361
306
General and administrative
58
48
103
90
Acquisition and integration-related expense
48
13
157
30
Depreciation and amortization
68
52
130
103
License fee expense
40
34
75
64
Impairment expense
—
3
2
3
Cost reimbursements
129
97
251
192
Total operating expenses
1,141
853
2,231
1,657
Interest expense
(87
)
(44
)
(166
)
(88
)
Equity in earnings from unconsolidated affiliates
3
2
8
5
Other (loss) gain, net
(3
)
3
(8
)
4
Income (loss) before income taxes
7
115
(6
)
205
Income tax (expense) benefit
(3
)
(35
)
8
(52
)
Net income
4
80
2
153
Net income attributable to noncontrolling interest
2
—
4
—
Net income (loss) attributable to stockholders
$
2
$
80
$
(2
)
$
153
Earnings per share attributable to stockholders(1):
Basic
$
0.02
$
0.72
$
(0.02
)
$
1.37
Diluted
$
0.02
$
0.71
$
(0.02
)
$
1.35
(1)
Earnings per share is calculated using whole numbers.
T-4
HILTON GRAND VACATIONS INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Operating Activities
Net income
$
4
$
80
$
2
$
153
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization
68
52
130
103
Amortization of deferred financing costs, acquisition premiums and other
38
7
63
14
Provision for financing receivables losses
95
41
159
71
Impairment expense
—
3
2
3
Other loss (gain), net
3
(3
)
8
(4
)
Share-based compensation
18
16
27
26
Equity in earnings from unconsolidated affiliates
(3
)
(2
)
(8
)
(5
)
Return on investment in unconsolidated affiliates
—
6
—
6
Net changes in assets and liabilities, net of effects of acquisitions:
Accounts receivable, net
(9
)
18
15
26
Timeshare financing receivables, net
(118
)
(72
)
(196
)
(96
)
Inventory
(6
)
34
(31
)
(67
)
Purchases and development of real estate for future conversion to inventory
(17
)
(4
)
(50
)
(6
)
Other assets
91
110
(154
)
(134
)
Accounts payable, accrued expenses and other
(33
)
(52
)
55
32
Advanced deposits
5
11
5
35
Deferred revenue
(23
)
(51
)
86
63
Net cash provided by operating activities
113
194
113
220
Investing Activities
Acquisitions, net of cash, cash equivalents and restricted cash acquired
10
—
(1,444
)
—
Capital expenditures for property and equipment (excluding inventory)
(7
)
(4
)
(17
)
(9
)
Software capitalization costs
(11
)
(10
)
(20
)
(16
)
Other
(1
)
—
(1
)
—
Net cash used in investing activities
(9
)
(14
)
(1,482
)
(25
)
Financing Activities
Proceeds from debt
25
—
2,085
438
Proceeds from non-recourse debt
615
—
905
175
Repayment of debt
(289
)
(4
)
(397
)
(157
)
Repayment of non-recourse debt
(415
)
(215
)
(1,231
)
(397
)
Payment of debt issuance costs
(12
)
—
(51
)
—
Repurchase and retirement of common stock
(100
)
(121
)
(199
)
(206
)
Payment of withholding taxes on vesting of restricted stock units
—
—
(21
)
(14
)
Proceeds from employee stock plan purchases
5
4
5
4
Proceeds from stock option exercises
1
2
7
7
Other
(1
)
(1
)
(2
)
(2
)
Net cash (used in) provided by financing activities
(171
)
(335
)
1,101
(152
)
Effect of changes in exchange rates on cash, cash equivalents & restricted cash
(10
)
(9
)
(16
)
(10
)
Net (decrease) increase in cash, cash equivalents and restricted cash
(77
)
(164
)
(284
)
33
Cash, cash equivalents and restricted cash, beginning of period
678
752
885
555
Cash, cash equivalents and restricted cash, end of period
601
588
601
588
Less: Restricted cash
273
336
273
336
Cash and cash equivalents
$
328
$
252
$
328
$
252
T-5
HILTON GRAND VACATIONS INC.
FREE CASH FLOW RECONCILIATION
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net cash provided by operating activities
$
113
$
194
$
113
$
220
Capital expenditures for property and equipment
(7
)
(4
)
(17
)
(9
)
Software capitalization costs
(11
)
(10
)
(20
)
(16
)
Free Cash Flow
$
95
$
180
$
76
$
195
Non-recourse debt activity, net
200
(215
)
(326
)
(222
)
Acquisition and integration-related expense
48
13
157
30
Litigation settlement payment
13
—
63
—
Other adjustment items(1)
14
9
26
17
Adjusted Free Cash Flow
$
370
$
(13
)
$
(4
)
$
20
(1)
Includes capitalized acquisition and integration-related costs.
T-6
HILTON GRAND VACATIONS INC.
SEGMENT REVENUE RECONCILIATION
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Revenues:
Real estate sales and financing
$
740
$
604
$
1,427
$
1,154
Resort operations and club management
386
320
746
622
Total segment revenues
1,126
924
2,173
1,776
Cost reimbursements
129
97
251
192
Intersegment eliminations
(20
)
(14
)
(33
)
(27
)
Total revenues
$
1,235
$
1,007
$
2,391
$
1,941
T-7
HILTON GRAND VACATIONS INC.
SEGMENT EBITDA, ADJUSTED EBITDA TO NET INCOME AND
ADJUSTED EBITDA ATTRIBUTABLE TO STOCKHOLDERS
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net income (loss) attributable to stockholders
$
2
$
80
$
(2
)
$
153
Net income attributable to noncontrolling interest
2
—
4
—
Net income
4
80
2
153
Interest expense
87
44
166
88
Income tax expense (benefit)
3
35
(8
)
52
Depreciation and amortization
68
52
130
103
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates
2
1
3
1
EBITDA
164
212
293
397
Other loss (gain), net
3
(3
)
8
(4
)
Share-based compensation expense
18
16
27
26
Acquisition and integration-related expense
48
13
157
30
Impairment expense
—
3
2
3
Other adjustment items(1)
33
7
55
14
Adjusted EBITDA
266
248
542
466
Adjusted EBITDA attributable to noncontrolling interest
4
—
7
—
Adjusted EBITDA attributable to stockholders
$
262
$
248
$
535
$
466
Segment Adjusted EBITDA:
Real estate sales and financing(2)
$
193
$
189
$
399
$
358
Resort operations and club management(2)
152
123
286
232
Adjustments:
Adjusted EBITDA from unconsolidated affiliates
5
3
11
6
License fee expense
(40
)
(34
)
(75
)
(64
)
General and administrative(3)
(44
)
(33
)
(79
)
(66
)
Adjusted EBITDA
266
248
542
466
Adjusted EBITDA attributable to noncontrolling interest
4
—
7
—
Adjusted EBITDA attributable to stockholders
$
262
$
248
$
535
$
466
Adjusted EBITDA profit margin
21.5
%
24.6
%
22.7
%
24.0
%
EBITDA profit margin
13.3
%
21.1
%
12.3
%
20.5
%
(1)Includes costs associated with restructuring, one-time charges and other non-cash items. This amount also includes the amortization of premiums and discounts resulting from purchase accounting.
(2)Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.
(3)Excludes segment related share-based compensation, depreciation and other adjustment items.
T-8
HILTON GRAND VACATIONS INC.
REAL ESTATE SALES PROFIT DETAIL SCHEDULE
(in millions, except Tour Flow and VPG)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Tour flow
226,388
162,444
400,526
292,712
VPG
$
3,320
$
3,728
$
3,441
$
3,835
Owned contract sales mix
80.5
%
70.5
%
82.1
%
68.8
%
Fee-for-service contract sales mix
19.5
%
29.5
%
17.9
%
31.2
%
Contract sales
$
757
$
612
$
1,388
$
1,135
Adjustments:
Fee-for-service sales(1)
(148
)
(180
)
(248
)
(354
)
Provision for financing receivables losses
(94
)
(41
)
(158
)
(71
)
Reportability and other:
Net (deferral) of sales of VOIs under construction(2)
(13
)
(6
)
(11
)
(2
)
Fee-for-service sale upgrades, net
—
7
—
12
Other(3)
(31
)
(37
)
(62
)
(47
)
Sales of VOIs, net
$
471
$
355
$
909
$
673
Plus:
Fee-for-service commissions and brand fees
88
111
152
218
Sales revenue
559
466
1,061
891
Cost of VOI sales
65
48
113
98
Sales and marketing expense, net
374
274
694
524
Real estate expense
439
322
807
622
Real estate profit
$
120
$
144
$
254
$
269
Real estate profit margin(4)
21.5
%
30.9
%
23.9
%
30.2
%
Reconciliation of fee-for-service commissions:
Sales, marketing, brand and other fees
$
167
$
173
$
312
$
331
Less: Marketing revenue and other fees(5)
(79
)
(62
)
(160
)
(113
)
Fee-for-service commissions and brand fees
$
88
$
111
$
152
$
218
Reconciliation of sales and marketing expense:
Sales and marketing expense
$
453
$
336
$
854
$
637
Less: Marketing revenue and other fees(5)
(79
)
(62
)
(160
)
(113
)
Sales and marketing expense, net
$
374
$
274
$
694
$
524
(1)
Represents contract sales from fee-for-service properties on which we earn commissions and brand fees.
(2)Represents the net impact related to deferrals of revenues and direct expenses related to the Sales of VOIs under construction that are recognized when construction is complete.
(3)Includes adjustments for revenue recognition, including amounts in rescission and sales incentives.
(4)Excluding the marketing revenue and other fees adjustment, Real Estate profit margin was 18.8% and 27.3% for the three months ended June 30, 2024 and 2023, respectively. and 20.8% and 26.8%. for the six months ended June 30, 2024, and 2023, respectively.
(5)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.
T-9
HILTON GRAND VACATIONS INC.
CONTRACT SALES MIX BY TYPE SCHEDULE
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Just-In-Time Contract Sales Mix
20.9
%
13.6
%
22.6
%
15.1
%
Fee-For-Service Contract Sales Mix
19.5
%
29.5
%
17.9
%
31.2
%
Total Capital-Efficient Contract Sales Mix
40.4
%
43.1
%
40.5
%
46.3
%
T-10
HILTON GRAND VACATIONS INC.
FINANCING PROFIT DETAIL SCHEDULE
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Interest income
$
116
$
68
$
228
$
138
Other financing revenue
14
11
22
19
Premium amortization of acquired timeshare financing receivables
(28
)
(3
)
(44
)
(7
)
Financing revenue
102
76
206
150
Consumer financing interest expense
22
11
45
23
Other financing expense
20
13
34
26
Amortization of acquired non-recourse debt discounts and premiums, net
2
—
4
(1
)
Financing expense
44
24
83
48
Financing profit
$
58
$
52
$
123
$
102
Financing profit margin
56.9
%
68.4
%
59.7
%
68.0
%
T-11
HILTON GRAND VACATIONS INC.
RESORT AND CLUB PROFIT DETAIL SCHEDULE
(in millions, except for Members and Net Owner Growth)
Twelve Months Ended June 30,
2024
2023
Total members
720,069
522,156
Net Owner Growth (NOG)(1)
8,776
14,204
Net Owner Growth % (NOG)(1)
1.7
%
2.8
%
(1)NOG is a trailing-twelve-month concept for which the twelve months ended June 30, 2024 and ended June 30, 2023 includes member count for HGV Max and Legacy HGV-DRI members only on a consolidated basis.
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Club management revenue
$
67
$
53
$
130
$
104
Resort management revenue
104
80
207
160
Resort and club management revenues
171
133
337
264
Club management expense
21
15
41
30
Resort management expense
27
29
61
56
Resort and club management expenses
48
44
102
86
Resort and club management profit
$
123
$
89
$
235
$
178
Resort and club management profit margin
71.9
%
66.9
%
69.7
%
67.4
%
T-12
HILTON GRAND VACATIONS INC.
RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Rental revenues
$
181
$
162
$
350
$
309
Ancillary services revenues
14
11
26
22
Rental and ancillary services revenues
195
173
376
331
Rental expenses
177
144
340
287
Ancillary services expense
11
10
21
19
Rental and ancillary services expenses
188
154
361
306
Rental and ancillary services profit
$
7
$
19
$
15
$
25
Rental and ancillary services profit margin
3.6
%
11.0
%
4.0
%
7.6
%
T-13
HILTON GRAND VACATIONS INC.
REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Sales of VOIs, net
$
471
$
355
$
909
$
673
Sales, marketing, brand and other fees
167
173
312
331
Financing revenue
102
76
206
150
Real estate sales and financing segment revenues
740
604
1,427
1,154
Cost of VOI sales
(65
)
(48
)
(113
)
(98
)
Sales and marketing expense
(453
)
(336
)
(854
)
(637
)
Financing expense
(44
)
(24
)
(83
)
(48
)
Marketing package stays
(20
)
(14
)
(33
)
(27
)
Share-based compensation
3
3
6
6
Other adjustment items
32
4
49
8
Real estate sales and financing segment adjusted EBITDA
$
193
$
189
$
399
$
358
Real estate sales and financing segment adjusted EBITDA profit margin
26.1
%
31.3
%
28.0
%
31.0
%
T-14
HILTON GRAND VACATIONS INC.
RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Resort and club management revenues
$
171
$
133
$
337
$
264
Rental and ancillary services
195
173
376
331
Marketing package stays
20
14
33
27
Resort and club management segment revenue
386
320
746
622
Resort and club management expenses
(48
)
(44
)
(102
)
(86
)
Rental and ancillary services expenses
(188
)
(154
)
(361
)
(306
)
Share-based compensation
2
1
3
2
Resort and club segment adjusted EBITDA
$
152
$
123
$
286
$
232
Resort and club management segment adjusted EBITDA profit margin
39.4
%
38.4
%
38.3
%
37.3
%
T-15
HILTON GRAND VACATIONS INC.
ADJUSTED NET INCOME ATTRIBUTABLE TO STOCKHOLDERS AND
ADJUSTED DILUTED EARNINGS PER SHARE ATTRIBUTABLE TO STOCKHOLDERS (Non-GAAP)
(in millions except per share data)
Three Months Ended June 30,
Six Months Ended June 30,
2024
2023
2024
2023
Net income (loss) attributable to stockholders
$
2
$
80
$
(2
)
$
153
Net income attributable to noncontrolling interest
2
—
4
—
Net income
4
80
2
153
Income tax expense (benefit)
3
35
(8
)
52
Income (loss) before income taxes
7
115
(6
)
205
Certain items:
Other loss (gain), net
3
(3
)
8
(4
)
Impairment expense
—
3
2
3
Acquisition and integration-related expense
48
13
157
30
Other adjustment items(1)
33
7
55
14
Adjusted income before income taxes
91
135
216
248
Income tax (expense)
(24
)
(40
)
(48
)
(63
)
Adjusted net income
67
95
168
185
Net income attributable to noncontrolling interest
2
—
4
—
Adjusted net income attributable to stockholders
$
65
$
95
$
164
$
185
Weighted average shares outstanding
Diluted
104.3
112.2
104.3
113.3
Earnings per share attributable to stockholders(2):
Diluted
$
0.02
$
0.71
$
(0.02
)
$
1.35
Adjusted diluted
$
0.62
$
0.85
$
1.57
$
1.63
(1)
Includes costs associated with restructuring, one-time charges, the amortization of premiums and discounts resulting from purchase accounting and other non-cash items.
(2)Earnings per share amounts are calculated using whole numbers.
T-16
HILTON GRAND VACATIONS INC.
RECONCILIATION OF NON-GAAP PROFIT MEASURES TO GAAP MEASURE
(in millions)
Three Months Ended June 30,
Six Months Ended June 30,
($ in millions)
2024
2023
2024
2023
Net income (loss) attributable to stockholders
$
2
$
80
$
(2
)
$
153
Net income attributable to noncontrolling interest
2
—
4
—
Net income
4
80
2
153
Interest expense
87
44
166
88
Income tax (benefit) expense
3
35
(8
)
52
Depreciation and amortization
68
52
130
103
Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates
2
1
3
1
EBITDA
164
212
293
397
Other loss (gain), net
3
(3
)
8
(4
)
Equity in earnings from unconsolidated affiliates(1)
(5
)
(3
)
(11
)
(6
)
Impairment expense
—
3
2
3
License fee expense
40
34
75
64
Acquisition and integration-related expense
48
13
157
30
General and administrative
58
48
103
90
Profit
$
308
$
304
$
627
$
574
Real estate profit
$
120
$
144
$
254
$
269
Financing profit
58
52
123
102
Resort and club management profit
123
89
235
178
Rental and ancillary services profit
7
19
15
25
Profit
$
308
$
304
$
627
$
574
(1)
Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $2 million and $3 million, respectively, for the three and six months ended June 30, 2024 and $1 million for both the three and six months ended June 30, 2023.
View source version on businesswire.com: https://www.businesswire.com/news/home/20240807079846/en/
Investor Contact: Mark Melnyk 407-613-3327 mark.melnyk@hgv.com
Media Contact: Lauren George 407-613-8431 lauren.george@hgv.com
1 Year Hilton Grand Vacations Chart |
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