HGV Q2 2020 Earnings

Call Details

• Call Title: Hilton Grand Vacations Q2 2020 Earnings Call
• Date: July 31, 2020 at 4:00 AM UTC
• Management Team:
  • Mark Wang (Chief Executive Officer)
  • Dan Mathewes (Chief Financial Officer)
  • Mark Melnyk (Vice President of Investor Relations)

Call Summary

Financial Performance

• Total second quarter revenue declined to $127 million versus prior year due to resort closures related to COVID-19.
• Consolidated adjusted EBITDA was a loss of $16 million after excluding construction-related deferrals and recognitions.
• Net income was a loss of $45 million and diluted EPS was a loss of $0.53 versus net income of $57 million and EPS of $0.63 in Q2 2019.
• Real estate segment contract sales were $35 million, or 10% of prior year, and tours for the quarter were down 94% versus prior year.
• Overall VPG rose 41% to over $4,700 for the quarter, with June VPG growth of 37% and June contract sales down 79% driven by an 86% decline in tour volume.
• Finance business margin was $30 million, representing a 69.8% margin versus $31 million and 72.1% margin in the prior year, and gross receivables were just under $1.3B.

Guidance

• Company described a cautiously optimistic outlook while stating that timing of recovery remains uncertain and results could be choppy by market.
• Forward bookings were reported as down 9% year-over-year, while bookings for first quarter 2021 were reported as ahead of last year by management.
• Approximately three-quarters of resorts had reopened at the time of the call, and the company stated it was approaching breakeven on an EBITDA basis in June.
• Company disclosed that conversion metrics and VPG improvements are expected to normalize as tours and sales staff are added back and that process changes may sustain some efficiency gains.
• No formal numeric multi-quarter earnings or revenue guidance was provided on the call.
• Company emphasized forward indicators to watch including booking pace, cancellation rates, tour flow, and regional reopenings as drivers of future quarters.