HGV Q2 2022 Earnings

Call Details

• Call Title: Hilton Grand Vacations Q2 2022 Earnings Call
• Date: August 9, 2022 at 3:00 PM UTC
• Management Team:
  • Mark Wang (Chief Executive Officer)
  • Dan Mathewes (Chief Financial Officer)
  • Mark Melnyk (Senior Vice President of Investor Relations, G&A, and Productivity)

Call Summary

Financial Performance

• Total revenue in Q2 was $958 million excluding $10 million of sales deferrals related to the Maui project.
• Adjusted EBITDA for Q2 was $277 million, which was 51% ahead of pro forma 2019 levels and represented a 29% EBITDA margin.
• Contract sales were $617 million, which equaled 105% of 2019 pro forma combined sales for the comparable period.
• Real estate profit was $187 million in the quarter, delivering a 40% margin, the highest level produced in the real estate segment.
• BPG (buyer per guest) was nearly $4,500 for the quarter, with noted sequential normalization versus the Q1 record.
• Adjusted free cash flow was $103 million with inventory spending of $71 million, and EBITDA-to-free-cash-flow conversion was 37% in Q2 and 52% year-to-date.

Guidance

• Full-year adjusted EBITDA guidance range of $960 million to $990 million was maintained and management said it is comfortable with the upper half of the range.
• The company reiterated an expected full-year EBITDA-to-free-cash-flow conversion range of 50% to 60% and stated it expects to be well within that range for the year.
• Cost synergy target remains an annualized $150 million, with a current run rate of $140 million versus $120 million reported last quarter.
• The company expects margins in the second half to normalize from Q2 levels due to increased investment in new-buyer channels and a higher mix of new-buyer sales.
• Provision for bad debt is expected to normalize toward mid-to-high teens over time, with an anticipated ramp over the next 12 to 18 months.
• No change to previously raised guidance midpoint was announced, and the company stated modest upside to current guidance based on first-half beats.