HGV Q1 2024 Earnings

Call Details

• Call Title: Hilton Grand Vacations Q1 2024 Earnings Call
• Date: May 9, 2024 at 3:00 PM UTC
• Management Team:
  • Mark Wang (Chief Executive Officer)
  • Dan Mathewes (President and Chief Financial Officer)
  • Mark Melnyk (Senior Vice President of Investor Relations)

Call Summary

Financial Performance

• Reported contract sales for the quarter were $631M on a partial-quarter basis including Blue Green results.
• Total revenue excluding cost reimbursements in the quarter was $1.03B on a non-GAAP basis.
• Adjusted EBITDA for the quarter was $270M, which Dan stated equals $270M excluding net deferrals and would be $270M after a $3M adjustment for $2M sales recognition and $1M expense recognition.
• Adjusted EBITDA margin was 26% excluding cost reimbursements, and CEO commented a 24% margin figure when including specific acquisition timing effects.
• Assuming a full quarter of Blue Green ownership, combined contract sales would have been $656M versus pro forma combined prior year sales of $692M.
• Reported VPG for the quarter was $3,600, and assuming a full quarter of Blue Green ownership combined VPG was $3,575, which was described as down about 5% year-over-year on a comparable basis.
• Reported tours were just over 174,000 and would be roughly 182,000 assuming a full quarter of Blue Green ownership, with owner tours growing mid-single-digits offset by declines in new-buyer tours.

Guidance

• The company reiterated full-year adjusted EBITDA guidance of $1.2B to $1.26B for 2024.
• Guidance assumes realization of $50M to $55M of Blue Green cost synergies within 2024 as part of a targeted $100M of run-rate cost synergies within 24 months.
• CFO expects adjusted EBITDA conversion rate to be slightly ahead of last year's 52% on a TTM basis, subject to timing of securitizations.
• Provision for bad debt is expected to migrate toward a mid-teens percentage of contract sales on a normalized basis.
• The company reaffirmed its long-term total net leverage target of 2.0x to 3.0x and reported total net leverage of 3.74x on a TTM basis at quarter end.
• Share repurchase program cadence guidance expects approximately $100M in repurchases per quarter going forward, conditional on available liquidity.