HGV Q1 2021 Earnings

Call Details

• Call Title: Hilton Grand Vacations Q1 2021 Earnings Call
• Date: April 29, 2021 at 3:00 PM UTC
• Management Team:
  • Mark Melnyk (Vice President of Investor Relations)
  • Mark Wang (Chief Executive Officer)
  • Dan Mathewes (Chief Financial Officer)

Call Summary

Financial Performance

• Total first quarter revenue was $267 million, up 15% sequentially from the fourth quarter.
• Q1 reported adjusted EBITDA was $60 million, and comparable adjusted EBITDA excluding a $4 million COVID-related government benefit was $56 million.
• Net income for the quarter was $11 million after excluding net deferrals, and net deferrals of $18 million impacted adjusted EBITDA and net income.
• Q1 real estate contract sales were $139 million, which represented 57% of the prior year, and tour flow was 42% of the prior year.
• Real estate VPG was up 33% year-over-year and improved sequentially by 8%, with close-rate contribution described as consistent with Q4.
• Real estate SG&A was $63 million for the quarter, producing real estate segment profit of $21 million.
• Financing segment profit was $24 million with margins of 65%, down from $31 million and 71% last year, and the gross receivables balance was $1.1 billion.
• Resort and club revenue was $45 million, up 2% year-over-year, with segment profit of $37 million and margins of 82% versus 73% last year.

Guidance

• The company expects owner arrivals to reach 2019 levels in the second half of 2021.
• Q2 is expected to be modestly better than Q1, with a ramp in Q3 and a sharper improvement in Q4, but the company does not expect to be fully back to 2019 run-rate by year-end.
• The company expects 2021 to be a recovery year with a return closer to 2019 levels in 2022 per prior proxy assumptions.
• VPG is expected to decelerate over the coming quarters as owner/new-buyer mix normalizes and difficult comparisons are lapped.
• On-the-book arrivals for the remainder of the year are nearly 50% above what was on the books at the same point in 2019, supporting rental and ancillary revenue expectations.
• The planned Diamond Resorts transaction is targeted to close this summer subject to regulatory approvals, financing and shareholder vote, and permanent financing is currently being arranged.