Hilton Grand Vacations Inc. (NYSE:HGV) (“HGV” or “the Company”)
today reports its full year and fourth quarter 2020 results.
Fourth Quarter 2020 Results1
- Contract sales in the fourth quarter were $132 million.
- Net Owner Growth (NOG) for the 12 months ended Dec. 31, 2020,
was 0.7%.
- Total revenues for the fourth quarter were $212 million
compared to $468 million for the same period in 2019.
- Total revenues were affected by deferrals of $21 million and $35 million in the
current period and the same period in 2019, respectively.
- Net loss for the fourth quarter was ($154) million compared to
$72 million net income for the same period in 2019.
- Net (loss) income was affected by net deferrals of $11 million and $19 million for the
current period and the same period in 2019, respectively.
- Net loss for the fourth quarter was impacted by a non-cash
impairment expense of $209 million primarily due to the
commencement of a sale process for certain unused parcels of excess
land, and the associated mark-to-market impact.
- Diluted EPS for the fourth quarter was ($1.81) compared to
$0.83 for the same period in 2019.
- Diluted EPS was affected by net deferrals of $11 million and $19 million, or $0.13
and $0.22 per share in the current period and the same period in
2019, respectively.
- Net loss for the fourth quarter was impacted by a non-cash
impairment expense of $2.46 per share primarily due to the
commencement of a sale process for certain unused parcels of excess
land, and the associated mark-to-market impact.
- Adjusted EBITDA for the fourth quarter was $24 million compared
to $105 million for the same period in 2019.
- Adjusted EBITDA was affected by net deferrals of $11 million and $19 million in the
current period and the same period in 2019, respectively.
- In addition to the adverse impact from the closure of HGV sales
centers and resort operations, the COVID-19 pandemic had the
following impacts on total revenues, net loss, diluted EPS and
Adjusted EBITDA for the fourth quarter:
- $3 million or $0.04 per share benefit from an employee
retention credit granted primarily under the CARES Act, primarily
related to payments made to employees as a result of operational
closures caused by the COVID-19 pandemic.
“In 2020 we acted decisively to protect our business and
position HGV for long-term growth as the recovery progresses,” said
Mark Wang, president and CEO of Hilton Grand Vacations. “I’m
pleased that we were able to deliver our second consecutive quarter
of sequential revenue and profitability growth since re-starting
our operations this past summer, as well as positive adjusted free
cash flow for the full year. As a result, we entered 2021 with a
strong balance sheet and significant financial flexibility,
including over $700 million of available liquidity. Looking ahead,
we’re focused on ramping our Hawaii operations and re-opening our
remaining markets, along with opening new resorts in Maui,
Charleston, and Okinawa later this year. The health and safety of
our guests and employees remains our top priority. I want to thank
our team members for their tireless efforts to maintain a safe
environment and create memorable vacation experiences for our
guests.”
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.
COVID-19 Update
As disclosed in HGV’s press release dated March 16, 2020, the
Company withdrew its prior full-year 2020 Guidance due to the
increased uncertainty created by the impact of COVID-19.
The COVID-19 pandemic has created an unprecedented and
challenging environment. The Company’s current focus is on taking
critical actions that are aimed at keeping the Company in a sound
position from an operational, liquidity, credit access, and
compliance perspective for a strong recovery when the impact of
COVID-19 subsides. Management will continue to assess the evolving
COVID-19 pandemic, including the various government mandates and
orders that impact the re-opening of its properties and any new
recommended or required business practices, and will take
additional actions as appropriate.
As of December 2020, the Company has approximately 85% of its
resorts and sales centers open and operating. However, many of
HGV’s resorts and sales centers are operating in markets with
significant capacity constraints and subject to various safety
measures. As HGV responds to changes in tour flow, the Company
intends to adjust its sales operations accordingly while complying
with all applicable social distancing rules and its own safety
measures.
While HGV plans to continue to re-open its resorts and resume
business as conditions permit, the pandemic continues to be
unprecedented and rapidly changing, and has unknown duration and
severity. Further, various state and local government officials may
issue new or revised orders that are different than current ones
under which the Company is operating.
Accordingly, there remains significant uncertainty as to the
degree of impact and duration of the conditions stemming from the
ongoing pandemic on the Company’s revenues, net income (loss) and
other operating results, as well as its business and operations
generally.
Overview
For the quarter ended Dec. 31, 2020, diluted EPS was ($1.81)
compared to $0.83 for the quarter ended Dec. 31, 2019. Net loss and
Adjusted EBITDA were ($154) million and $24 million, respectively,
for the quarter ended Dec. 31, 2020, compared to net income and
Adjusted EBITDA of $72 million and $105 million, respectively, for
the quarter ended Dec. 31, 2019. Net loss for the fourth quarter
was impacted by a non-cash impairment expense of $2.46 per share
primarily due to the commencement of a sale process for certain
unused parcels of excess land, and the associated mark-to-market
impact. Total revenues for the quarter ended Dec. 31, 2020, were
$212 million compared to $468 million for the quarter ended Dec.
31, 2019.
Net loss and Adjusted EBITDA for the quarter ended Dec. 31,
2020, included a net deferral of $11 million relating to sales made
at Ocean Tower Phase II, Maui Bay Villas and The Beach Resort
Sesoko projects, which were under construction during the period.
The Company anticipates recognizing these revenues and related
expenses in 2021 when it expects to complete these projects and
recognize the net deferral impacts.
Segment Highlights – Fourth Quarter 2020
Real Estate Sales and Financing
For the quarter ended Dec. 31, 2020, Real Estate Sales and
Financing segment revenues were $116 million, a decrease of 62.9%
compared to the quarter ended Dec. 31, 2019. Real Estate Sales and
Financing segment Adjusted EBITDA and Adjusted EBITDA profit margin
were $17 million and 14.7%, respectively, for the quarter ended
Dec. 31, 2020, compared to $82 million and 26.2%, respectively, for
the quarter ended Dec. 31, 2019. Real Estate Sales and Financing
results in the fourth quarter of 2020 weakened due to a decrease in
contract sales related to the ongoing impact of the COVID-19
pandemic on travel demand, along with ongoing related travel
disruptions in several markets. As of Dec. 31, 2020, the Company
had reopened 85% of its resorts and sales centers.
Real Estate Sales and Financing segment Adjusted EBITDA reflect
the $11 million of net deferrals related to Ocean Tower Phase II,
Maui Bay Villas and The Beach Resort Sesoko projects for the
quarter ended Dec. 31, 2020, and $19 million net deferrals related
to The Central at 5th by Hilton Club and Ocean Tower Phase II
projects for the quarter ended Dec. 31, 2019.
Contract sales for the quarter ended Dec. 31, 2020, decreased
63.8% to $132 million compared to the quarter ended Dec. 31, 2019.
For the quarter ended Dec. 31, 2020, tours decreased 69.9% and VPG
increased 17.3% compared to the quarter ended Dec. 31, 2019. For
the quarter ended Dec. 31, 2020, fee-for-service contract sales
represented 44.7% of contract sales compared to 52.3% for the
quarter ended Dec. 31, 2019.
Financing revenues for the quarter ended Dec. 31, 2020 decreased
by $5 million compared to the quarter ended Dec. 31, 2019. This was
driven by an 15.7% decrease in the net timeshare financing
receivables portfolio offset by a 11 bps increase in the weighted
average interest rate the Company receives on the portfolio
compared to the same period in the prior year.
Resort Operations and Club
Management
For the quarter ended Dec. 31, 2020, Resort Operations and Club
Management segment revenue was $67 million, a decrease of 45.1%
compared to the quarter ended Dec. 31, 2019. Resort Operations and
Club Management segment Adjusted EBITDA and Adjusted EBITDA profit
margin were $36 million and 53.7%, respectively, for the quarter
ended Dec. 31, 2020, compared to $72 million and 59.0%,
respectively, for the quarter ended Dec. 31, 2019. Compared to the
prior-year period, Resort Operations and Club Management results in
the fourth quarter of 2020 decreased primarily due to a decrease in
rental and ancillary services revenue related to the ongoing impact
of the COVID-19 pandemic on travel demand, along with an associated
reduction in usage-related fees from Club Members.
Inventory
The estimated contract sales value of the Company’s total
pipeline is approximately $10 billion at current pricing.
The total pipeline includes approximately $4 billion of sales
relating to inventory that is currently available for sale at open
or soon-to-open projects. The remaining $6 billion of sales is
inventory at new or existing projects that will become available
for sale in the future upon registration, delivery or
construction.
Owned inventory represents 80% of the Company’s total pipeline.
Approximately 36% of the owned inventory pipeline is currently
available for sale.
Fee-for-service inventory represents 20% of the Company’s total
pipeline. Approximately 59% of the fee-for-service inventory
pipeline is currently available for sale.
With 32% of the pipeline consisting of just-in-time inventory
and 20% consisting of fee-for-service inventory, capital-efficient
inventory represents 52% of the Company’s total pipeline.
Balance Sheet and Liquidity
Total cash and cash equivalents were $526 million as of Dec. 31,
2020, including $98 million of restricted cash.
As of Dec. 31, 2020, the Company had $1.159 billion of corporate
debt, net outstanding with a weighted average interest rate of
3.36% and $766 million of non-recourse debt, net outstanding with a
weighted average interest rate of 3.17%.
As of Dec. 31, 2020, the Company’s liquidity position consisted
of $428 million of unrestricted cash and available capacity of $139
million on the revolving credit facility and $450 million on the
timeshare facility.
Free cash flow was $48 million for the year ended Dec. 31, 2020,
compared to $82 million for the same period in the prior year.
Adjusted free cash flow was $68 million for the year ended Dec. 31,
2020, compared to $71 million for the same period in the prior
year.
As of Dec. 31, 2020, the Company’s net leverage ratio for
covenant purposes was 3.40 and its interest coverage ratio for
covenant purposes was 5.13.
Total Construction Deferrals and/or Recognitions Included in
Results Reported Under Accounting Standards Codification Topic 606
(“ASC 606”)
The Company’s Adjusted EBITDA as reported under ASC 606 includes
construction-related recognitions and deferrals of revenues and
related expenses as detailed in Table T-1. Under ASC 606, the
Company defers revenues and related expenses pertaining to sales at
projects that occur during periods when that project is under
construction until the period when construction is completed.
T-1
Total Construction Recognitions
(Deferrals)
Three Months Ended December
31,
Years Ended December
31,
($ in millions)
2020
2019
2020
2019
Sales of VOIs (deferrals)
$
(21
)
$
(35
)
$
(85
)
$
(84
)
Sales of VOIs recognitions
—
—
—
—
Net Sales of VOIs (deferrals)
recognitions
(21
)
(35
)
(85
)
(84
)
Cost of VOI sales (deferrals)(2)
(6
)
(11
)
(23
)
(27
)
Cost of VOI sales recognitions
—
—
—
—
Net Cost of VOI sales (deferrals)
recognitions(2)
(6
)
(11
)
(23
)
(27
)
Sales and marketing expense
(deferrals)
(4
)
(5
)
(13
)
(12
)
Sales and marketing expense
recognitions
—
—
—
—
Net Sales and marketing expense
(deferrals) recognitions
(4
)
(5
)
(13
)
(12
)
Net construction (deferrals) recognitions
(1)
$
(11
)
$
(19
)
$
(49
)
$
(45
)
2020
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
Net income (loss)
$
8
$
(48
)
$
(7
)
$
(154
)
(201
)
Interest expense
10
12
10
11
43
Income tax expense (benefit)
1
(8
)
(5
)
(67
)
(79
)
Depreciation and amortization
12
11
11
11
45
Interest expense and depreciation and
amortization included in equity in earnings (losses) from
unconsolidated affiliates
1
—
1
—
2
EBITDA
32
(33
)
10
(199
)
(190
)
Other (gain) loss, net
(2
)
3
(1
)
(3
)
(3
)
Share-based compensation expense(3)
(2
)
6
6
5
15
Impairment expense
—
—
—
209
209
Other adjustment items(4)
5
5
4
12
26
Adjusted EBITDA
$
33
$
(19
)
$
19
$
24
$
57
NET CONSTRUCTION
DEFERRAL ACTIVITY
Sales of VOIs, net
$
(47
)
$
(4
)
$
(13
)
$
(21
)
$
(85
)
Cost of VOI sales(2)
(13
)
—
(4
)
(6
)
(23
)
Sales, marketing, general and
administrative expense
(7
)
(1
)
(1
)
(4
)
(13
)
Net construction deferrals
$
(27
)
$
(3
)
$
(8
)
$
(11
)
$
(49
)
____________ (1)
The table represents deferrals and
recognitions of Sales of VOI revenue and direct costs for
properties under construction for the three and twelve months ended
Dec. 31, 2020 and 2019.
(2)
Includes anticipated Costs of VOI sales
related to inventory associated with Sales of VOIs under
construction that will be acquired under a just-in-time arrangement
once construction is complete.
(3)
In the first quarter 2020, the company
determined that the performance conditions for its 2018, 2019, and
2020 Performance RSUs were improbable of achievement. Therefore, we
reversed $8 million of share-based compensation expense recognized
in prior years and ceased accruing expenses related to Performance
RSUs granted in 2018, 2019, and 2020. In December 2020, the
Compensation Committee of the Board of Directors (“Compensation
Committee”) approved an amendment to the 2018 Performance RSUs. As
a result of the amendment, HGV recognized compensation expense of
$2 million based on the number of Performance RSUs vested and the
performance conditions for the 2018 Performance RSU awards.
(4)
For the three and twelve months ended Dec.
31, 2020, these amounts include costs associated with
restructuring, one-time charges and other non-cash items.
2019
First Quarter
Second Quarter
Third Quarter
Fourth Quarter
Full Year
Net income
$
55
$
39
$
50
$
72
$
216
Interest expense
10
11
12
10
43
Income tax expense
20
15
20
2
57
Depreciation and amortization
8
12
12
12
44
Interest expense and depreciation and
amortization included in equity in earnings (losses) from
unconsolidated affiliates
1
1
—
1
3
EBITDA
94
78
94
97
363
Other (gain) loss, net
1
1
1
—
3
Share-based compensation expense
5
7
6
4
22
Other adjustment items (1)
2
4
10
4
20
Adjusted EBITDA
$
102
$
90
$
111
$
105
$
408
NET CONSTRUCTION
DEFERRAL ACTIVITY
Sales of VOIs, net
$
—
$
(34
)
$
(15
)
$
(35
)
$
(84
)
Cost of VOI sales(2)
—
(11
)
(5
)
(11
)
(27
)
Sales, marketing, general and
administrative expense
—
(5
)
(2
)
(5
)
(12
)
Net construction (deferrals)
recognitions
$
—
$
(18
)
$
(8
)
$
(19
)
$
(45
)
___________ (1)
For the three and twelve months ended Dec.
31, 2019, these amounts include costs associated with
restructuring, one-time charges and other non-cash items.
(2)
Includes anticipated Costs of VOI sales
related to inventory associated with Sales of VOIs under
construction that will be acquired under a just-in-time arrangement
once construction is complete.
Conference Call
Hilton Grand Vacations will host a conference call on March 1,
2021, at 11 a.m. (EST) to discuss fourth quarter and full year
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 beginning three hours after the
teleconference’s completion through March 8, 2021. To access the
replay, please dial 1-844-512-2921 in the U.S. (+1-412-317-6671
internationally) using ID# 13714031. A webcast replay and
transcript will 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 HGV’s future, 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, including those
related to HGV’s revenues, earnings, cash flow and operations, and
may be identified by terminology such as the words “outlook,”
“believe,” “expect,” “potential,” “goal,” “continues,” “may,”
“will,” “should,” “could,” “seeks,” “approximately,” “projects,”
predicts,” “intends,” “plans,” “estimates,” “anticipates” “future,”
“guidance,” “target,” or the negative version of these words or
other comparable words.
HGV cautions you that forward-looking statements involve known
and unknown risks, uncertainties and other factors, including those
that are beyond HGV’s control, that may cause its actual results,
performance or achievements to be materially different from the
future results. Factors that could cause HGV’s actual results to
differ materially from those contemplated by HGV’s forward-looking
statements include: the material impact of the COVID-19 pandemic on
HGV’s business, operating results, and financial condition; the
extent and duration of the impact of the COVID-19 pandemic on
global economic conditions; HGV’s ability to meet its liquidity
needs; risks related to HGV’s indebtedness; inherent business
risks, market trends and competition within the timeshare and
hospitality industries; HGV’s ability to successfully source
inventory and market, sell and finance VOIs; default rates on HGV’s
financing receivables; the reputation of and HGV’s ability to
access Hilton brands and programs, including the risk of a breach
or termination of its license agreement with Hilton; compliance
with and changes to United States and global laws and regulations,
including those related to anti-corruption and privacy; risks
related to HGV’s acquisitions, joint ventures, and other
partnerships; HGV’s dependence on third-party development
activities to secure just-in-time inventory; the performance of
HGV’s information technology systems and its ability to maintain
data security; regulatory proceedings or litigation; HGV’s ability
to attract and retain key executives and employees with skills and
capacity to meet its needs; and natural disasters or adverse
geo-political conditions. Any one or more of the foregoing factors
could adversely impact HGV’s operations, revenue, operating profit
margins, operating profits, financial condition and/or credit
rating.
For additional information regarding factors that could cause
HGV’s actual results to differ materially from those expressed or
implied in the forward-looking statements in this press release,
please see the risk factors discussed in “Part I—Item 1A. Risk
Factors” of HGV’s Annual Report on Form 10-K for the fiscal year
ended Dec. 31, 2020 as well as those described from time to time
other periodic reports that it files with the SEC. Except for HGV’s
ongoing obligations to disclose material information under the
federal securities laws, HGV undertakes no obligation to publicly
update or revise any forward-looking statement, whether as a result
of new information, future developments, changes in management’s
expectations, or otherwise.
Non-GAAP Financial Measures
The Company refers to certain non-GAAP financial measures in
this press release, including EBITDA, Adjusted EBITDA, EBITDA
profit margin, Adjusted EBITDA profit margin, free cash flow and
adjusted free cash flow. Please see the tables in this press
release and “Definitions” for additional information and
reconciliations of such non-GAAP financial measures.
About Hilton Grand Vacations Inc.
Hilton Grand Vacations Inc. (NYSE:HGV) is recognized as a
leading global timeshare company. 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. The Company also manages and operates
two innovative club membership programs: Hilton Grand Vacations
Club® and The Hilton Club®, providing exclusive exchange, leisure
travel and reservation services for more than 325,000 club members.
For more information, visit www.hiltongrandvacations.com.
HILTON GRAND VACATIONS INC.
DEFINITIONS
EBITDA and Adjusted EBITDA
EBITDA, presented herein, is a financial measure that is not
recognized under U.S. GAAP that reflects net income (loss), 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) asset dispositions; (ii) foreign currency
transactions; (iii) debt restructurings/retirements; (iv) non-cash
impairment losses; (v) reorganization costs, including severance
and relocation costs; (vi) share-based and certain other
compensation expenses; (vii) costs related to the spin-off; and
(viii) other items.
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 and Adjusted EBITDA 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 definitions
of EBITDA and Adjusted EBITDA may not be comparable to similarly
titled measures of other companies.
HGV believes that EBITDA and Adjusted EBITDA provide useful
information to investors about us and our financial condition and
results of operations for the following reasons: (i) EBITDA and
Adjusted EBITDA 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 and Adjusted
EBITDA have limitations as analytical tools and should not be
considered either in isolation or as a substitute for net income
(loss), cash flow or other methods of analyzing our results as
reported under U.S. GAAP. Some of these limitations are:
- EBITDA and Adjusted EBITDA do not reflect changes in, or cash
requirements for, our working capital needs;
- EBITDA and Adjusted EBITDA do not reflect our interest expense
(excluding interest expense on non-recourse debt), or the cash
requirements necessary to service interest or principal payments on
our indebtedness;
- EBITDA and Adjusted EBITDA do not reflect our tax expense or
the cash requirements to pay our taxes;
- EBITDA and Adjusted EBITDA do not reflect historical cash
expenditures or future requirements for capital expenditures or
contractual commitments;
- EBITDA and Adjusted EBITDA do not reflect the effect on
earnings or changes resulting from matters that we consider not to
be indicative of our future operations;
- EBITDA and Adjusted EBITDA do not reflect any cash requirements
for future replacements of assets that are being depreciated and
amortized; and
- EBITDA and Adjusted EBITDA may be calculated differently from
other companies in our industry limiting their usefulness as
comparative measures.
Because of these limitations, EBITDA and Adjusted EBITDA 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.
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 less
non-recourse debt activities, net.
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.
Real Estate Metrics
Contract sales represents the total amount of vacation
ownership interval (“VOI”) products (fee-for-service and developed)
under purchase agreements signed during the period where we have
received a down payment of at least 10 percent of the contract
price. Contract sales differ from revenues from the Sales of VOIs,
net that we report in our consolidated statements of operations due
to the requirements for revenue recognition, as well as adjustments
for incentives. We consider contract sales to be an important
operating measure because it reflects the pace of sales in our
business and is used to manage the performance of the sales
organization. While the presentation of contract sales on a
combined basis (fee-for-service and developed) is most appropriate
for the purpose of the operating metric, additional information
regarding the split of contract sales, included in “—Real Estate”
below, is useful for investors who are interested in the underlying
capital structures of the Company’s projects. See Note 2: Basis of
Presentation and Summary of Significant Accounting Policies in our
audited consolidated financial statements included in Item 8 in our
Annual Report on form 10-K for the year ended December 31, 2020,
for additional information on Sales of VOI, net.
Developed Inventory refers to VOI inventory that is
sourced from projects the Company develops.
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.
NOG or Net Owner Growth represents the year-over-year
change in membership.
Real estate profit represents sales revenue less the cost
of VOI sales and sales and marketing costs, net of marketing
revenue. Real estate profit margin is calculated by dividing real
estate profit by sales revenue. The Company considers this to be an
important operating measure because it measures the efficiency of
our sales and marketing spending and management of inventory
costs.
Sales revenue represents Sale of VOIs, net and
commissions and brand fees earned from the sale of fee-for-service
intervals.
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. The
Company 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 FLOWS RECONCILIATION
T-5
SEGMENT REVENUE RECONCILIATION
T-6
SEGMENT EBITDA AND ADJUSTED EBITDA TO NET
(LOSS) INCOME
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
T-2 HILTON GRAND VACATIONS
INC. CONDENSED CONSOLIDATED BALANCE SHEETS (in millions, except
share data)
December 31,
2020
2019
ASSETS
Cash and cash equivalents
$
428
$
67
Restricted cash
98
85
Accounts receivable, net
119
174
Timeshare financing receivables, net
974
1,156
Inventory
702
558
Property and equipment, net
501
778
Operating lease right-of-use assets,
net
52
60
Investments in unconsolidated
affiliates
51
44
Intangible assets, net
81
77
Land and infrastructure available for
sale
41
—
Other assets
87
80
TOTAL ASSETS
$
3,134
$
3,079
LIABILITIES AND EQUITY
Liabilities:
Accounts payable, accrued expenses and
other
$
252
$
298
Advanced deposits
117
115
Debt, net
1,159
828
Non-recourse debt, net
766
747
Operating lease liabilities
67
76
Deferred revenues
262
186
Deferred income tax liabilities
137
259
Total liabilities
2,760
2,509
Commitments and contingencies
Equity:
Preferred stock, $0.01 par value;
300,000,000 authorized shares, none issued or
outstanding as of December 31, 2020 and
2019
—
—
Common stock, $0.01 par value;
3,000,000,000 authorized shares,
85,205,012 and 85,535,501 shares issued
and outstanding as of December 31,
2020 and 2019, respectively
1
1
Additional paid-in capital
192
179
Accumulated retained earnings
181
390
Total equity
374
570
TOTAL LIABILITIES AND EQUITY
$
3,134
$
3,079
T-3 HILTON GRAND VACATIONS
INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (in millions,
except share data)
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Revenues
Sales of VOIs, net
$
28
$
126
$
108
$
509
Sales, marketing, brand and other fees
50
144
221
573
Financing
38
43
165
170
Resort and club management
44
61
166
191
Rental and ancillary services
20
54
97
227
Cost reimbursements
32
40
137
168
Total revenues
212
468
894
1,838
Expenses
Cost of VOI sales
7
35
28
127
Sales and marketing
84
175
381
719
Financing
14
14
53
53
Resort and club management
9
12
36
46
Rental and ancillary services
22
39
107
147
General and administrative
27
31
92
118
Depreciation and amortization
11
12
45
44
License fee expense
12
26
51
101
Impairment expense
209
—
209
—
Cost reimbursements
32
40
137
168
Total operating expenses
427
384
1,139
1,523
Interest expense
(11
)
(10
)
(43
)
(43
)
Equity in earnings from unconsolidated
affiliates
2
—
5
4
Other gain (loss), net
3
—
3
(3
)
(Loss) Income before income
taxes
(221
)
74
(280
)
273
Income tax benefit (expense)
67
(2
)
79
(57
)
Net (loss) income
$
(154
)
$
72
$
(201
)
$
216
(Loss) Earnings per share:
Basic
$
(1.81
)
$
0.83
$
(2.36
)
$
2.43
Diluted
$
(1.81
)
$
0.83
$
(2.36
)
$
2.42
T-4 HILTON GRAND VACATIONS
INC. CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (in
millions)
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Operating Activities
Net (loss) income
$
(154
)
$
72
$
(201
)
$
216
Adjustments to reconcile net (loss) income
to net cash provided by operating activities:
Depreciation and amortization
11
12
45
44
Amortization of deferred financing costs,
contract costs and other
5
5
18
17
Provision for financing receivables
losses
18
14
75
74
Impairment expense
209
—
209
—
Other (gain) loss, net
(1
)
—
(1
)
3
Share-based compensation
5
4
15
22
Deferred income tax (benefit) expense
(73
)
24
(123
)
3
Equity in earnings from unconsolidated
affiliates
(2
)
—
(5
)
(4
)
Net changes in assets and liabilities:
Accounts receivable, net
(9
)
(37
)
56
(20
)
Timeshare financing receivables, net
20
(32
)
107
(111
)
Inventory
(32
)
2
(91
)
(4
)
Purchases and development of real estate
for future conversion to inventory
(9
)
(61
)
(36
)
(168
)
Other assets
14
6
(11
)
(18
)
Accounts payable, accrued expenses and
other
(8
)
(37
)
(56
)
(17
)
Advanced deposits
(2
)
3
2
14
Deferred revenues
1
21
76
91
Other
—
1
—
1
Net cash (used in) provided by operating
activities
(7
)
(3
)
79
143
Investing Activities
Capital expenditures for property and
equipment
(2
)
(12
)
(8
)
(37
)
Software capitalization costs
(7
)
(7
)
(23
)
(24
)
Investments in unconsolidated
affiliates
—
—
(2
)
(2
)
Net cash used in investing activities
(9
)
(19
)
(33
)
(63
)
Financing Activities
Issuance of debt
—
30
495
485
Issuance of non-recourse debt
—
—
495
365
Repayment of debt
(103
)
(18
)
(165
)
(290
)
Repayment of non-recourse debt
(72
)
(49
)
(475
)
(376
)
Debt issuance costs
(1
)
—
(9
)
(6
)
Repurchase and retirement of common
stock
—
—
(10
)
(283
)
Payment of withholding taxes on vesting of
restricted stock units
(1
)
(1
)
(4
)
(4
)
Proceeds from employee stock plan
purchases
1
1
2
3
Proceeds from stock option exercises
1
—
1
—
Other financing activity
—
—
(2
)
(2
)
Net cash (used in) provided by financing
activities
(175
)
(37
)
328
(108
)
Net (decrease) increase in cash, cash
equivalents and restricted cash
(191
)
(59
)
374
(28
)
Cash, cash equivalents and restricted
cash, beginning of period
717
211
152
180
Cash, cash equivalents and restricted
cash, end of period
$
526
$
152
$
526
$
152
T-5 HILTON GRAND VACATIONS
INC. FREE CASH FLOW RECONCILIATION (in millions)
Three Months Ended
Years Ended
December 31,
December 31,
2020
2019
2020
2019
Net cash (used in) provided by
operating activities
$
(7
)
$
(3
)
$
79
$
143
Capital expenditures for property and
equipment
(2
)
(12
)
(8
)
(37
)
Software capitalization costs
(7
)
(7
)
(23
)
(24
)
Free Cash Flow
(16
)
(22
)
48
82
Non-recourse debt activity, net
(72
)
(49
)
20
(11
)
Adjusted Free Cash Flow
$
(88
)
$
(71
)
$
68
$
71
T-6 HILTON GRAND VACATIONS
INC. SEGMENT REVENUE RECONCILIATION (in millions)
Three Months Ended
Years Ended
December 31,
December 31,
2020
2019
2020
2019
Revenues:
Real estate sales and financing
$
116
$
313
$
494
$
1,252
Resort operations and club management
67
122
276
454
Total Segment revenues
183
435
770
1,706
Cost reimbursements
32
40
137
168
Intersegment eliminations
(3
)
(7
)
(13
)
(36
)
Total revenues
$
212
$
468
$
894
$
1,838
T-7 HILTON GRAND VACATIONS
INC. SEGMENT EBITDA AND ADJUSTED EBITDA TO NET (LOSS) INCOME (in
millions)
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Net (loss) income
$
(154
)
$
72
$
(201
)
$
216
Interest expense
11
10
43
43
Income tax (benefit) expense
(67
)
2
(79
)
57
Depreciation and amortization
11
12
45
44
Interest expense and depreciation and
amortization included in equity in earnings from unconsolidated
affiliates
—
1
2
3
EBITDA
(199
)
97
(190
)
363
Other (gain) loss, net
(3
)
—
(3
)
3
Share-based compensation expense(1)
5
4
15
22
Impairment expense
209
—
209
—
Other adjustment items(2)
12
4
26
20
Adjusted EBITDA
$
24
$
105
$
57
$
408
Segment Adjusted EBITDA:
Real estate sales and financing(3)
$
17
$
82
$
33
$
325
Resort operations and club
management(3)
36
72
136
265
Adjustments:
Adjusted EBITDA from unconsolidated
affiliates
2
1
7
7
License fee expense
(12
)
(26
)
(51
)
(101
)
General and administrative(4)
(19
)
(24
)
(68
)
(88
)
Adjusted EBITDA
$
24
$
105
$
57
$
408
Adjusted EBITDA profit margin
11.3
%
22.4
%
6.4
%
22.2
%
EBITDA profit margin
(93.9
)%
20.7
%
(21.3
)%
19.7
%
_________ (1)
In the first quarter 2020, we determined
that the performance conditions for our 2018, 2019, and 2020
Performance RSUs were improbable of achievement. Therefore, we
reversed $8 million of share-based compensation expense recognized
in prior years and ceased accruing expenses related to Performance
RSUs granted in 2018, 2019, and 2020. In December 2020, the
Compensation Committee approved an amendment to the 2018
Performance RSUs. As a result of the amendment, we recognized
compensation expense of $2 million based on the number of
Performance RSUs vested and the performance conditions for the 2018
Performance RSU awards.
(2)
For the three and twelve months ended
December 31, 2020 and 2019, this amount includes costs associated
with restructuring, one-time charges, and other non-cash items.
(3)
Includes intersegment transactions,
share-based compensation, depreciation and other adjustments
attributable to the segments.
(4)
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 December
31,
Years Ended December
31,
2020
2019
2020
2019
Tour flow
28,822
95,841
127,085
383,108
VPG
$
4,319
$
3,681
$
3,889
$
3,518
Owned contract sales mix
55.3
%
47.7
%
47.9
%
46.1
%
Fee-for-service contract sales mix
44.7
%
52.3
%
52.1
%
53.9
%
Contract sales
$
132
$
365
$
528
$
1,410
Adjustments:
Fee-for-service sales(1)
(59
)
(191
)
(275
)
(760
)
Provision for financing receivables
losses
(18
)
(14
)
(75
)
(74
)
Reportability and other:
Net deferral of sales of VOIs under
construction(2)
(21
)
(35
)
(85
)
(84
)
Fee-for-service sale upgrades, net
3
13
16
52
Other(3)
(9
)
(12
)
(1
)
(35
)
Sales of VOIs, net
$
28
$
126
$
108
$
509
Sales, marketing, brand and other fees
$
50
$
144
$
221
$
573
Less:
Marketing revenue and other fees
17
34
57
136
Commissions and brand fees
33
110
164
437
Sales of VOIs, net
28
126
108
509
Sales revenue
61
236
272
946
Less:
Cost of VOI sales
7
35
28
127
Sales and marketing expense, net(4)
66
134
313
549
Real estate (loss) profit
$
(12
)
$
67
$
(69
)
$
270
Real estate profit margin
(19.7
)%
28.4
%
(25.4
)%
28.5
%
___________ (1)
Represents contract sales from
fee-for-service properties on which the Company earns commissions
and brand fees.
(2)
Represents the net impact of deferred
revenues 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)
Includes revenue recognized through our
marketing programs for existing owners and prospective first-time
buyers and revenue associated with sales incentives and document
compliance.
T-9 HILTON GRAND VACATIONS
INC. CONTRACT SALES MIX BY TYPE SCHEDULE
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Just-in-time Contract Sales Mix
31
%
31
%
25
%
20
%
Fee-For-Service Contract Sales Mix
45
%
52
%
52
%
54
%
Total Capital-Efficient Contract Sales
Mix
76
%
83
%
77
%
74
%
T-10 HILTON GRAND VACATIONS
INC. FINANCING PROFIT DETAIL SCHEDULE (in millions)
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Interest income
$
33
$
38
$
141
$
147
Other financing revenue
5
$
5
24
23
Financing revenue
38
43
165
170
Consumer financing interest expense
8
$
7
31
29
Other financing expense
6
$
7
22
24
Financing expense
14
14
53
53
Financing profit
$
24
$
29
$
112
$
117
Financing profit margin
63.2
%
67.4
%
67.9
%
68.8
%
T-11 HILTON GRAND VACATIONS
INC. RESORT AND CLUB PROFIT DETAIL SCHEDULE (in millions, except
for Members and Net Owner Growth)
Years Ended December
31,
2020
2019
Total members
327,760
325,519
Net Owner Growth (NOG)
2,241
16,882
Net Owner Growth % (NOG%)
0.7
%
5.5
%
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Club management revenue
$
26
$
45
$
96
$
125
Resort management revenue
18
16
70
66
Resort and club management revenues
44
61
166
191
Club management expense
6
7
24
27
Resort management expense
3
5
12
19
Resort and club management expenses
9
12
36
46
Resort and club management
profit
$
35
$
49
$
130
$
145
Resort and club management profit
margin
79.5
%
80.3
%
78.3
%
75.9
%
T-12 HILTON GRAND VACATIONS
INC. RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE (in
millions)
Three Months Ended December
31,
Years Ended December
31,
2020
2019
2020
2019
Rental revenues
$
19
$
48
$
90
$
201
Ancillary services revenues
1
6
7
26
Rental and ancillary services revenues
20
54
97
227
Rental expenses
21
34
98
123
Ancillary services expense
1
5
9
24
Rental and ancillary services expenses
22
39
107
147
Rental and ancillary services (loss)
profit
$
(2
)
$
15
$
(10
)
$
80
Rental and ancillary services profit
margin
(10.0
)%
27.8
%
(10.3
)%
35.2
%
T-13 HILTON GRAND VACATIONS
INC. REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA (in
millions)
Three Months Ended December
31,
Years Ended
December 31,
2020
2019
2020
2019
Sales of VOIs, net
$
28
$
126
$
108
$
509
Sales, marketing, brand and other fees
50
144
221
573
Financing
38
43
165
170
Real estate sales and financing segment
revenues
116
313
494
1,252
Cost of VOI sales
(7
)
(35
)
(28
)
(127
)
Sales and marketing
(84
)
(175
)
(381
)
(719
)
Financing
(14
)
(14
)
(53
)
(53
)
Marketing package stays
(3
)
(7
)
(13
)
(36
)
Share-based compensation
2
1
6
5
Other adjustment items
7
(1
)
8
3
Real estate sales and financing segment
adjusted EBITDA
$
17
$
82
$
33
$
325
Real estate sales and financing segment
adjusted EBITDA profit margin
14.7
%
26.2
%
6.7
%
26.0
%
T-14 HILTON GRAND VACATIONS
INC. RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA (in
millions)
Three Months Ended December
31,
Years Ended
December 31,
2020
2019
2020
2019
Resort and club management
$
44
$
61
$
166
$
191
Rental and ancillary services
20
54
97
227
Marketing package stays
3
7
13
36
Resort and club management segment
revenue
67
122
276
454
Resort and club management
(9
)
(12
)
(36
)
(46
)
Rental and ancillary services
(22
)
(39
)
(107
)
(147
)
Share-based compensation
—
—
1
2
Other adjustment items
—
1
2
2
Resort and club segment adjusted
EBITDA
$
36
$
72
$
136
$
265
Resort and club management segment
adjusted EBITDA profit margin
53.7
%
59.0
%
49.3
%
58.4
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210301005454/en/
Investors: Mark Melnyk 407-613-3327 mark.melnyk@hgv.com
Media: Lauren George 407-613-8431 lauren.george@hgv.com
Hilton Grand Vacations (NYSE:HGV)
Historical Stock Chart
From Jun 2024 to Jul 2024
Hilton Grand Vacations (NYSE:HGV)
Historical Stock Chart
From Jul 2023 to Jul 2024