Hilton Grand Vacations Reports First Quarter 2024 Results

Hilton Grand Vacations Inc. (NYSE: HGV) (“HGV” or “the Company”) today reports its first quarter 2024 results.

First quarter of 2024 highlights1

Total contract sales were $631 million.
Member count was 718,000. Net Owner Growth (NOG) for the legacy HGV-DRI business for the 12 months ended March 31, 2024, was 2%.
Total revenues for the first quarter of 2024 were $1,156 million compared to $934 million for the same period in 2023.
- Total revenues were affected by a net recognition of $2 million in the current period compared to a net recognition of $4 million in the same period in 2023.
Net loss attributable to stockholders for the first quarter was $(4) million compared to $73 million net income attributable to stockholders for the same period in 2023.
- Adjusted net income attributable to stockholders for the first quarter was $99 million compared to $90 million for the same period in 2023.
- Net loss attributable to stockholders and adjusted net income attributable to stockholders were affected by a net recognition of $3 million in the current period compared to a net recognition of $2 million in the same period in 2023.
Diluted EPS for the first quarter was $(0.04) compared to $0.64 for the same period in 2023.
- Adjusted diluted EPS for the first quarter was $0.95 compared to $0.79 for the same period in 2023.
- Diluted EPS and adjusted diluted EPS were affected by a net recognition of $3 million in the current period compared to a net recognition of $2 million in the same period in 2023, or $0.03 and $0.02 per share in the current period and the same period in 2023, respectively.
Adjusted EBITDA attributable to stockholders for the first quarter was $273 million compared to $218 million for the same period in 2023.
- Adjusted EBITDA attributable to stockholders was affected by a net recognition of $3 million in the current period compared to a net recognition of $2 million in the same period in 2023.
During the first quarter, the Company repurchased 2.3 million shares of common stock for $99 million.
- Through April 30, 2024, the Company has repurchased approximately 1.1 million shares for $47 million and currently has $213 million of remaining availability under the 2023 Share Repurchase Plan.
The Company is reiterating its guidance for the full year 2024 Adjusted EBITDA excluding deferrals and recognitions to a range of $1.2 billion to $1.26 billion.

“We started the year on a positive note, and we’re very encouraged by the momentum we built as we progressed through the quarter,” said Mark Wang, CEO of Hilton Grand Vacations. “Our owner business continued to outperform, and our package activations returned to near-record levels, leaving us optimistic that consumers’ intention to travel remains strong. As we look out to the rest of the year, we’re focused on integrating Bluegreen Vacations and advancing our rebranding plans, while engaging with our new partners to explore new avenues for growth. In addition, our recently announced partnership with Great Wolf Lodge supports our commitment to expanding our lead channels and tour flow, while also providing our members with new compelling vacation options.”

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.

Overview

On January 17, 2024, HGV completed the acquisition of Bluegreen Vacations Holding Corporation (“Bluegreen” or “Bluegreen Vacations”).

For the quarter ended March 31, 2024, diluted EPS was $(0.04) compared to $0.64 for the quarter ended March 31, 2023. Net loss attributable to stockholders and Adjusted EBITDA attributable to stockholders were $(4) million and $273 million, respectively, for the quarter ended March 31, 2024, compared to net income attributable to stockholders and Adjusted EBITDA attributable to stockholders of $73 million and $218 million, respectively, for the quarter ended March 31, 2023. Total revenues for the quarter ended March 31, 2024, were $1,156 million compared to $934 million for the quarter ended March 31, 2023.

Net loss attributable to stockholders and Adjusted EBITDA attributable to stockholders for the quarter ended March 31, 2024, included a net recognition of $3 million relating to the sales of intervals of a project under construction in Japan during the period. The Company anticipates recognizing revenues and related expenses for projects in Hawaii in 2024 when it expects to complete these projects and recognize the net deferral impacts.

Consolidated Segment Highlights – First quarter of 2024

Real Estate Sales and Financing

For the quarter ended March 31, 2024, Real Estate Sales and Financing segment revenues were $687 million, an increase of $137 million compared to the quarter ended March 31, 2023. Real Estate Sales and Financing segment Adjusted EBITDA and Adjusted EBITDA profit margin were $206 million and 30.0%, respectively, for the quarter ended March 31, 2024, compared to $169 million and 30.7%, respectively, for the quarter ended March 31, 2023. Real Estate Sales and Financing segment revenues results in the first quarter of 2024 increased primarily due to a $77 million increase in sales revenue and a $30 million increase in financing revenue. The addition of Bluegreen Vacations contributed $98 million of Sales of VOI, net, and $36 million to segment Adjusted EBITDA for the quarter ended March 31, 2024.

Real Estate Sales and Financing segment Adjusted EBITDA reflects a $3 million of net recognition of sales for the Sesoko project for the quarter ended March 31, 2024, compared to $2 million of net recognition of sales and related expenses of VOIs associated with the project at the Maui Bay Villas Phase III for the quarter ended March 31, 2023, both of which decreased reported Adjusted EBITDA attributable to shareholders.

Contract sales for the quarter ended March 31, 2024, increased $108 million to $631 million, including $136 million contributed by Bluegreen Vacations, compared to the quarter ended March 31, 2023. For the quarter ended March 31, 2024, tours increased by 33.7% and VPG decreased by 9.5% compared to the quarter ended March 31, 2023. For the quarter ended March 31, 2023, fee-for-service contract sales represented 15.8% of contract sales compared to 33.3% for the quarter ended March 31, 2023.

Financing revenues for the quarter ended March 31, 2024, increased by $30 million compared to the quarter ended March 31, 2023. This was driven primarily by an increase in the weighted average interest rate of 25 basis points for the originated portfolio and an increase in the carrying balance of the timeshare financing receivables portfolio as of March 31, 2024, compared to March 31, 2023. The addition of the Bluegreen Vacations portfolio contributed $17 million to revenue and $9 million to financing profit during the first quarter of 2024.

Resort Operations and Club Management

For the quarter ended March 31, 2024, Resort Operations and Club Management segment revenue was $360 million, an increase of $58 million compared to the quarter ended March 31, 2023. Resort Operations and Club Management segment Adjusted EBITDA and Adjusted EBITDA profit margin were $134 million and 37.2%, respectively, for the quarter ended March 31, 2024, compared to $109 million and 36.1%, respectively, for the quarter ended March 31, 2023, primarily due to due to an increase in occupied room nights and higher daily rates compared to the same period in 2023. Bluegreen Vacations contributed $29 million to revenue and $10 million to the total increase in segment Adjusted EBITDA for the quarter ended March 31, 2024.

Inventory

The estimated value of the Company’s total contract sales pipeline is $12.7 billion at current pricing.

The total pipeline includes $8.4 billion of sales relating to inventory that is currently available for sale at open or soon-to-open projects. The remaining $4.3 billion of sales is related to inventory at new or existing projects that will become available for sale in the future upon registration, delivery, or construction.

Owned inventory represents 89.5% of the Company’s total pipeline. Approximately 67.5% of the owned inventory pipeline is currently available for sale.

Fee-for-service inventory represents 10.5% of the Company’s total pipeline. Approximately 53.9% of the fee-for-service inventory pipeline is currently available for sale.

With 20.7% of the pipeline consisting of just-in-time inventory and 10.5% consisting of fee-for-service inventory, capital-efficient inventory represents 31.2% of the Company’s total contract sales pipeline.

Balance Sheet and Liquidity

Total cash and cash equivalents were $355 million and total restricted cash was $323 million as of March 31, 2024.

As of March 31, 2024, the Company had $5,144 million of corporate debt, net outstanding with a weighted average interest rate of 6.963% and $1,534 million of non-recourse debt, net outstanding with a weighted average interest rate of 4.969%.

As of March 31, 2024, the Company’s liquidity position consisted of $355 million of unrestricted cash and $293 million remaining borrowing capacity under the revolver facility.

As of March 31, 2024, HGV has $460 million remaining borrowing capacity in total under the Timeshare Facility. Of this amount, HGV has $455 million of mortgage notes that are available to be securitized and another $321 million of mortgage notes that the Company expects will become eligible as soon as it meets typical milestones including receipt of first payment, deeding, or recording.

Free cash flow was $(19) million for the quarter ended March 31, 2024, compared to $15 million for the same period in the prior year. Adjusted free cash flow was $(374) million for the quarter ended March 31, 2024, compared to $33 million for the same period in the prior year. Adjusted free cash flow for the quarter ended March 31, 2024 and 2023 includes add-backs of $121 million and $25 million, respectively for acquisition and integration related costs.

As of March 31, 2024, the Company’s total net leverage on a trailing 12-month basis, inclusive of all anticipated cost synergies, was approximately 3.74x.

Subsequent Events

On April 25, 2024, HGV completed a $240 million securitization of legacy Bluegreen Vacations timeshare loans through Hilton Grand Vacations Trust 2024-1B with an overall weighted average interest rate of 6.42% and an overall advance rate of 90.5%. The proceeds will primarily be used to pay down debt and for other general corporate purposes.

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 below. 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

NET CONSTRUCTION DEFERRAL ACTIVITY

(in millions)

2024

NET CONSTRUCTION DEFERRAL ACTIVITY

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

Sales of VOIs recognitions (deferrals)

—

Cost of VOI sales recognitions (deferrals)(1)

)

—

)

Sales and marketing expense recognitions (deferrals)

—

Net construction recognitions (deferrals)(2)

—

Net loss attributable to stockholders

)

—

)

Noncontrolling interest

—

Net loss

)

—

)

Interest expense

—

Income tax benefit

(11

)

—

(11

)

Depreciation and amortization

—

Interest expense and depreciation and amortization included in equity in earnings from unconsolidated affiliates

—

EBITDA

129

—

129

Other loss, net

—

Share-based compensation expense

—

Acquisition and integration-related expense

109

—

109

Impairment expense

—

Other adjustment items(3)

—

Adjusted EBITDA

276

—

276

Adjusted EBITDA attributable to noncontrolling interest

—

Total Adjusted EBITDA attributable to stockholders

273

—

273

T-1

NET CONSTRUCTION DEFERRAL ACTIVITY

(CONTINUED, in millions)

2023

NET CONSTRUCTION DEFERRAL ACTIVITY

First

Quarter

Second

Quarter

Third

Quarter

Fourth

Quarter

Full

Year

Sales of VOIs (deferrals) recognitions

)

(12

)

(21

)

(35

)

Cost of VOI sales (deferrals) recognitions(1)

)

Sales and marketing expense (deferrals) recognitions

)

Net construction (deferrals) recognitions(2)

)

(12

)

(21

)

Net income

313

Interest expense

178

Income tax expense

136

Depreciation and amortization

213

Interest expense and depreciation and amortization included in equity in earnings from unconsolidated affiliates

—

EBITDA

185

212

234

211

842

Other (gain) loss, net

)

Share-based compensation expense

Acquisition and integration-related expense

Impairment expense

—

Other adjustment items(3)

Adjusted EBITDA

218

248

269

270

1,005

(1)

Includes anticipated Costs of VOI sales related to inventory associated with Sales of VOIs under construction that will be acquired once construction is complete.

(2)

The table represents deferrals and recognitions of Sales of VOIs revenue and direct costs for properties under construction.

(3)

Includes costs associated with restructuring, one-time charges and other non-cash items. This amount also includes the amortization of premiums resulting from purchase accounting.

Conference Call

Hilton Grand Vacations will host a conference call on May 9, 2024, at 11 a.m. (ET) to discuss first quarter 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 within 24 hours after the teleconference’s completion through May 16, 2024. To access the replay, please dial 1-844-512-2921 in the U.S. (+1-412-317-6671 internationally) using ID#13743185. A webcast replay and transcript will also 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 the future of HGV, 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, and may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “would,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “future,” “guidance,” “target,” or the negative version of these words or other comparable words, although not all forward-looking statements may contain such words. The forward-looking statements contained in this press release include statements related to HGV’s revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance and other anticipated future events and expectations that are not historical facts.

HGV cautions you that our forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond HGV’s control, which may cause the actual results, performance or achievements to be materially different from the future results. Any one or more of these risks or uncertainties could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics, financial condition or credit rating.

For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HGV’s most recent Annual Report on Form 10-K, which may be supplemented and updated by the risk factors in HGV’s quarterly reports, current reports and other filings HGV makes with the SEC.

HGV’s forward-looking statements speak only as of the date of this communication or as of the date they are made. HGV disclaims any intent or obligation to update any “forward-looking statement” made in this communication to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

Non-GAAP Financial Measures

The Company refers to certain non-GAAP financial measures in this press release, including Adjusted Net Income or Loss, Adjusted Diluted EPS, EBITDA, Adjusted EBITDA, Adjusted EBITDA Attributable to Stockholders, EBITDA profit margin, Adjusted EBITDA profit margin, Free Cash Flow and Adjusted Free Cash Flow, profits and profit margins for HGV’s key activities - real estate, financing, resort and club management, and rental and ancillary services. Please see the tables in this press release and “Definitions” for additional information and reconciliations of such non-GAAP financial measures.

The Company believes these additional measures are also important in helping investors understand the performance and efficiency with which we are able to convert revenues for each of these key activities into operating profit, both in dollars and as margins, and are frequently used by securities analysts, investors and other interested parties as one of common performance measures to compare results or estimate valuations across companies in our industry.

The Company refers to Adjusted EBITDA guidance excluding deferrals and recognitions, which does not take into account any future deferrals of revenues and direct expenses related to the sales of VOIs under construction that are recognized, only on a non-GAAP basis, as the quantification of reconciling items to the most directly comparable U.S. GAAP financial measure is not readily available without unreasonable effort due to uncertainties associated with the timing and amount of such items. These items may create a material difference between the non-GAAP and comparable U.S. GAAP results. We define Adjusted EBITDA Attributable to Stockholders as Adjusted EBITDA excluding amounts attributable to the noncontrolling interest in HGV/Big Cedar Vacations in which HGV owns a 51% interest.

About Hilton Grand Vacations Inc.

Hilton Grand Vacations Inc. (NYSE:HGV) is recognized as a leading global timeshare company and is the exclusive vacation ownership partner of Hilton. 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. Hilton Grand Vacations has a reputation for delivering a consistently exceptional standard of service, and unforgettable vacation experiences for guests and more than 700,000 Club Members. Membership with the Company provides best-in-class programs, exclusive services and maximum flexibility for our Members around the world.

For more information, visit www.corporate.hgv.com. Follow us on Instagram, Facebook, LinkedIn, X (formerly Twitter), Pinterest and YouTube.

HILTON GRAND VACATIONS INC.

DEFINITIONS

EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders

EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income, 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) other gains, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges.

Adjusted EBITDA Attributable to Stockholders is calculated as Adjusted EBITDA excluding amounts attributable to the noncontrolling interest in HGV/Big Cedar Vacations in which HGV owns a 51% interest.

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, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income 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, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders 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, cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:

EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect changes in, or cash requirements for, our working capital needs;
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders 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, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect our tax expense or the cash requirements to pay our taxes;
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and
EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.

Because of these limitations, EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders 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.

Adjusted Net Income or Loss and Adjusted Diluted EPS

Adjusted Net Income or Loss, presented herein, is calculated as net income further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges. Adjusted Diluted EPS, presented herein, is calculated as Adjusted Net Income, as defined above, divided by diluted weighted average shares outstanding.

Adjusted Net Income or Loss and Adjusted Diluted EPS 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 definition may not be comparable to similarly titled measures of other companies.

Adjusted Net Income or Loss and Adjusted Diluted EPS are useful to assist our investors in evaluating our ongoing operating performance for the current reporting period and, where provided, over different reporting periods.

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 further adjusted to exclude net non-recourse debt activities and other one-time adjustment items including, but not limited to, costs associated with acquisitions.

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.

Non-GAAP Measures within Our Segments

Sales revenue represents sales of VOIs, net, and Fee-for-service commissions and brand fees earned from the sale of fee-for-service VOIs. Fee-for-service commissions and brand fees represents sales, marketing, brand and other fees, which corresponds to the applicable line item from our condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Real estate expense represents costs of VOI sales and Sales and marketing expense, net. Sales and marketing expense, net represents sales and marketing expense, which corresponds to the applicable line item from our condensed consolidated statements of operations, adjusted by marketing revenue and other fees earned primarily from discounted marketing related packages which encompass a sales tour to prospective owners. Both fee-for-service commissions and brand fees and sales and marketing expense, net, represent non-GAAP measures. We present these items net because it provides a meaningful measure of our underlying real estate profit related to our primary real estate activities which focus on the sales and costs associated with our VOIs.

Real estate profit represents sales revenue less real estate expense. Real estate margin is calculated as a percentage by dividing real estate profit by sales revenue. We consider real estate profit margin to be an important non-GAAP operating measure because it measures the efficiency of our sales and marketing spending, management of inventory costs, and initiatives intended to improve profitability.

Financing profit represents financing revenue, net of financing expense, both of which correspond to the applicable line items from our condensed consolidated statements of operations. Financing profit margin is calculated as a percentage by dividing financing profit by financing revenue. We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our financing business in connection with our VOI sales.

Resort and club management profit represents resort and club management revenue, net of resort and club management expense, both of which correspond to the applicable line items from our condensed consolidated statements of operations. Resort and club management profit margin is calculated as a percentage by dividing resort and club management profit by resort and club management revenue. We consider this to be an important non-GAAP operating measure because it measures the efficiency and profitability of our resort and club management business that support our VOI sales business.

Rental and ancillary services profit represents rental and ancillary services revenues, net of rental and ancillary services expenses, both of which correspond to the applicable line items from our condensed consolidated statements of operations. Rental and ancillary services profit margin is calculated as a percentage by dividing rental and ancillary services profit by rental and ancillary services revenue. We consider this to be an important non-GAAP operating measure because it measures our ability to convert available inventory and unoccupied rooms into revenue and profit by transient rentals, as well as profitability of other services, such as food and beverage, retail, spa offerings and other guest services.

Real Estate Metrics

Contract sales represents the total amount of VOI products (fee-for-service, just-in-time, developed, and points-based) under purchase agreements signed during the period where we have received a down payment of at least 10% of the contract price. Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives. While we do not record the purchase price of sales of VOI products developed by fee-for-service partners as revenue in our condensed consolidated financial statements, rather recording the commission earned as revenue in accordance with U.S. GAAP, we believe contract sales to be an important operational metric, reflective of the overall volume and pace of sales in our business and believe it provides meaningful comparability of HGV’s results the results of our competitors which may source their VOI products differently. HGV believes that the presentation of contract sales on a combined basis (fee-for-service, just-in-time, developed, and points-based) is most appropriate for the purpose of the operating metric; additional information regarding the split of contract sales, is included in Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations in our most recent Quarterly Report on form 10-Q for the period ended March 31, 2024.

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.

Points-Based Inventory refers to VOI sales that are backed by physical real estate that is contributed to a trust.

NOG or Net Owner Growth represents the year-over-year change in membership.

Sales revenue represents Sale of VOIs, net and fee-for-service commissions and brand fees earned from the sale of fee-for-service VOIs.

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 FLOW RECONCILIATION

T-5

SEGMENT REVENUE RECONCILIATION

T-6

SEGMENT EBITDA, ADJUSTED EBITDA TO NET INCOME AND ADJUSTED EBITDA ATTRIBUTABLE TO STOCKHOLDERS

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

ADJUSTED NET INCOME ATTRIBUTABLE TO STOCKHOLDERS AND ADJUSTED DILUTED EARNINGS PER SHARE - DILUTED (Non-GAAP)

T-15

RECONCILIATION OF NON-GAAP PROFIT MEASURES TO GAAP MEASURE

T-16

T-2

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share and per share data)

March 31, 2024

December 31, 2023

(unaudited)

ASSETS

Cash and cash equivalents

355

589

Restricted cash

323

296

Accounts receivable, net

515

507

Timeshare financing receivables, net

3,030

2,113

Inventory

1,805

1,400

Property and equipment, net

953

758

Operating lease right-of-use assets, net

Investments in unconsolidated affiliates

Goodwill

1,943

1,418

Intangible assets, net

1,927

1,158

Other assets

650

314

TOTAL ASSETS

11,664

8,685

LIABILITIES AND EQUITY

Accounts payable, accrued expenses and other

1,176

952

Advanced deposits

181

179

Debt, net

5,144

3,049

Non-recourse debt, net

1,534

1,466

Operating lease liabilities

103

Deferred revenue

382

215

Deferred income tax liabilities

980

631

Total liabilities

9,500

6,570

Equity:

Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of March 31, 2024 and December 31, 2023

—

Common stock, $0.01 par value; 3,000,000,000 authorized shares, 104,760,243 shares issued and outstanding as of March 31, 2024 and 105,961,160 shares issued and outstanding as of December 31, 2023

Additional paid-in capital

1,467

1,504

Accumulated retained earnings

521

593

Accumulated other comprehensive income

Total stockholders equity

2,004

2,115

Noncontrolling interest

160

—

Total equity:

2,164

2,115

TOTAL LIABILITIES AND EQUITY

11,664

8,685

T-3

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except per share data)

Three Months Ended March 31,

2024

2023

Revenues

Sales of VOIs, net

438

318

Sales, marketing, brand and other fees

145

158

Financing

104

Resort and club management

166

131

Rental and ancillary services

181

158

Cost reimbursements

122

Total revenues

1,156

934

Expenses

Cost of VOI sales

Sales and marketing

401

301

Financing

Resort and club management

Rental and ancillary services

173

152

General and administrative

Acquisition and integration-related expense

109

Depreciation and amortization

License fee expense

Impairment expense

—

Cost reimbursements

122

Total operating expenses

1,090

804

Interest expense

(79

)

(44

)

Equity in earnings from unconsolidated affiliates

Other (loss) gain, net

)

(Loss) income before income taxes

(13

)

Income tax benefit (expense)

(17

)

Net (loss) income

)

Less: Income attributable to noncontrolling interest

—

Net (loss) income attributable to stockholders

)

(Loss) earnings per share(1):

Basic

(0.04

)

0.65

Diluted

(0.04

)

0.64

(1)

Earnings per share is calculated using whole numbers.

T-4

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

(in millions)

Three Months Ended March 31,

2024

2023

Operating Activities

Net (loss) income

)

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

Amortization of deferred financing costs, acquisition premiums and other

Provision for financing receivables losses

Impairment expense

—

Other loss (gain), net

)

Share-based compensation

Equity in earnings from unconsolidated affiliates

)

Net changes in assets and liabilities, net of effects of acquisitions:

Accounts receivable, net

Timeshare financing receivables, net

(78

)

(24

)

Inventory

(25

)

(101

)

Purchases and development of real estate for future conversion to inventory

(33

)

Other assets

(245

)

(244

)

Accounts payable, accrued expenses and other

Advanced deposits

—

Deferred revenue

109

114

Net cash provided by operating activities

—

Investing Activities

Acquisition of Diamond, net of cash and restricted cash acquired

(1,454

)

—

Capital expenditures for property and equipment (excluding inventory)

(10

)

Software capitalization costs

)

Net cash used in investing activities

(1,473

)

(11

)

Financing Activities

Proceeds from debt

2,060

438

Proceeds from non-recourse debt

290

175

Repayment of debt

(108

)

(153

)

Repayment of non-recourse debt

(816

)

(182

)

Debt issuance costs

(39

)

—

Repurchase and retirement of common stock

(99

)

(85

)

Payment of withholding taxes on vesting of restricted stock units

(21

)

(14

)

Proceeds from stock option exercises

Other

)

Net cash used in financing activities

1,272

183

Effect of changes in exchange rates on cash, cash equivalents and restricted cash

)

Net (decrease) increase in cash, cash equivalents and restricted cash

(207

)

197

Cash, cash equivalents and restricted cash, beginning of period

885

555

Cash, cash equivalents and restricted cash, end of period

678

752

Less: Restricted cash

323

363

Cash and cash equivalents

355

389

T-5

HILTON GRAND VACATIONS INC.

FREE CASH FLOW RECONCILIATION

(in millions)

Three Months Ended March 31,

2024

2023

Net cash provided by operating activities

—

Capital expenditures for property and equipment

(10

)

Software capitalization costs

)

Free Cash Flow

(19

)

Non-recourse debt activity, net

(526

)

Acquisition and integration-related expense

109

Litigation settlement payment

—

Other adjustment items(1)

Adjusted Free Cash Flow

(374

)

(1)

Includes capitalized acquisition and integration-related costs.

T-6

HILTON GRAND VACATIONS INC.

SEGMENT REVENUE RECONCILIATION

(in millions)

Three Months Ended March 31,

2024

2023

Revenues:

Real estate sales and financing

687

550

Resort operations and club management

360

302

Total segment revenues

1,047

852

Cost reimbursements

122

Intersegment eliminations

(13

)

(13

)

Total revenues

1,156

934

T-7

HILTON GRAND VACATIONS INC.

SEGMENT EBITDA, ADJUSTED EBITDA TO NET INCOME AND

ADJUSTED EBITDA ATTRIBUTABLE TO STOCKHOLDERS

(in millions)

Three Months Ended March 31,

2024

2023

Net (loss) income attributable to stockholders

)

Net income attributable to noncontrolling interest

—

Net (loss) income

)

Interest expense

Income tax (benefit) expense

(11

)

Depreciation and amortization

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates

—

EBITDA

129

185

Other loss (gain), net

)

Share-based compensation expense

Acquisition and integration-related expense

109

Impairment expense

—

Other adjustment items(1)

Adjusted EBITDA

276

218

Adjusted EBITDA attributable to noncontrolling interest

—

Total Adjusted EBITDA attributable to stockholders

273

218

Segment Adjusted EBITDA:

Real estate sales and financing(2)

206

169

Resort operations and club management(2)

134

109

Adjustments:

Adjusted EBITDA from unconsolidated affiliates

License fee expense

(35

)

(30

)

General and administrative(3)

(35

)

(33

)

Adjusted EBITDA

276

218

Adjusted EBITDA attributable to noncontrolling interest

—

Total Adjusted EBITDA attributable to stockholders

273

218

Adjusted EBITDA profit margin

23.9

23.3

EBITDA profit margin

11.2

19.8

(1)

Includes costs associated with restructuring, one-time charges and other non-cash items. This amount also includes the amortization of premiums resulting from purchase accounting.

(2)

Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.

(3)

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 March 31,

2024

2023

Tour flow

174,138

130,268

VPG

3,593

3,969

Owned contract sales mix

84.2

66.7

Fee-for-service contract sales mix

15.8

33.3

Contract sales

631

523

Adjustments:

Fee-for-service sales(1)

(100

)

(174

)

Provision for financing receivables losses

(64

)

(30

)

Reportability and other:

Net (deferral) recognition of sales of VOIs under construction(2)

Fee-for-service sale upgrades, net

—

Other(3)

(31

)

(10

)

Sales of VOIs, net

438

318

Plus:

Fee-for-service commissions and brand fees

107

Sales revenue

502

425

Cost of VOI sales

Sales and marketing expense, net

320

250

Real estate expense

368

300

Real estate profit

134

125

Real estate profit margin(4)

26.7

29.4

Reconciliation of fee-for-service commissions:

Sales, marketing, brand and other fees

145

158

Less: Marketing revenue and other fees(5)

(81

)

(51

)

Fee-for-service commissions and brand fees

107

Reconciliation of sales and marketing expense:

Sales and marketing expense

401

301

Less: Marketing revenue and other fees(5)

(81

)

(51

)

Sales and marketing expense, net

320

250

(1)

Represents contract sales from fee-for-service properties on which we earn commissions and brand fees.

(2)

Represents the net impact related to deferrals of revenues and direct expenses 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)

Excluding the marketing revenue and other fees adjustment, Real Estate profit margin was 23.0% and 26.3% for the three months ended March 31, 2024, and 2023, respectively.

(5)

Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

T-9

HILTON GRAND VACATIONS INC.

CONTRACT SALES MIX BY TYPE SCHEDULE

Three Months Ended March 31,

2024

2023

Just-In-Time Contract Sales Mix

24.7

16.8

Fee-For-Service Contract Sales Mix

16.0

33.2

Total Capital-Efficient Contract Sales Mix

40.7

50.0

T-10

HILTON GRAND VACATIONS INC.

FINANCING PROFIT DETAIL SCHEDULE

(in millions)

Three Months Ended March 31,

2024

2023

Interest income(1)

Other financing revenue

Financing revenue

104

Consumer financing interest expense(2)

Other financing expense

Financing expense

Financing profit

Financing profit margin

62.5

67.6

(1)

For the three months ended March 31, 2024, this amount includes $16 million of amortization of the premium related to the acquired timeshare financing receivables resulting from the Bluegreen Acquisition and Diamond Acquisition. For the three months ended March 31, 2023, this amount includes $4 million of amortization of the premium related to the acquired timeshare financing receivables resulting from the Diamond Acquisition.

(2)

For the three months ended March 31, 2024, this amount includes $2 million of amortization of the discount related to the acquired non-recourse debt resulting from the Bluegreen Acquisition. For the three months ended March 31, 2023, this amount includes $1 million of amortization of the premium related to the related to the acquired non-recourse debt resulting from the Diamond Acquisition.

T-11

HILTON GRAND VACATIONS INC.

RESORT AND CLUB PROFIT DETAIL SCHEDULE

(in millions, except for Members and Net Owner Growth)

Twelve Months Ended March 31,

2024

2023

Total members

717,831

518,925

Net Owner Growth (NOG)(1)

10,204

16,621

Net Owner Growth % (NOG)(1)

2.0

3.3

(1)

NOG is a trailing-twelve-month concept for which the twelve months ended March 31, 2024 and ended March 31,2024 includes member count for HGV Max and legacy HGV-DRI members only on a consolidated basis.

Three Months Ended March 31,

2024

2023

Club management revenue

Resort management revenue

103

Resort and club management revenues

166

131

Club management expense

Resort management expense

Resort and club management expenses

Resort and club management profit

112

Resort and club management profit margin

67.5

67.9

T-12

HILTON GRAND VACATIONS INC.

RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE

(in millions)

Three Months Ended March 31,

2024

2023

Rental revenues

169

147

Ancillary services revenues

Rental and ancillary services revenues

181

158

Rental expenses

163

143

Ancillary services expense

Rental and ancillary services expenses

173

152

Rental and ancillary services profit

Rental and ancillary services profit margin

4.4

3.8

T-13

HILTON GRAND VACATIONS INC.

REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA

(in millions)

Three Months Ended March 31,

2024

2023

Sales of VOIs, net

438

318

Sales, marketing, brand and other fees

145

158

Financing revenue

104

Real estate sales and financing segment revenues

687

550

Cost of VOI sales

(48

)

(50

)

Sales and marketing expense

(401

)

(301

)

Financing expense

(39

)

(24

)

Marketing package stays

(13

)

(13

)

Share-based compensation

Other adjustment items

Real estate sales and financing segment adjusted EBITDA

206

169

Real estate sales and financing segment adjusted EBITDA profit margin

30.0

30.7

T-14

HILTON GRAND VACATIONS INC.

RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA

(in millions)

Three Months Ended March 31,

2024

2023

Resort and club management revenues

166

131

Rental and ancillary services

181

158

Marketing package stays

Resort and club management segment revenue

360

302

Resort and club management expenses

(54

)

(42

)

Rental and ancillary services expenses

(173

)

(152

)

Share-based compensation

Resort and club segment adjusted EBITDA

134

109

Resort and club management segment adjusted EBITDA profit margin

37.2

36.1

T-15

HILTON GRAND VACATIONS INC.

ADJUSTED NET INCOME ATTRIBUTABLE TO STOCKHOLDERS AND

ADJUSTED DILUTED EARNINGS PER SHARE - DILUTED (Non-GAAP)

(in millions except per share data)

Three Months Ended March 31,

2024

2023

Net (loss) income attributable to stockholders

)

Net income attributable to noncontrolling interest

—

Net (loss) income

)

Income tax (benefit) expense

(11

)

(Loss) income before income taxes

(13

)

Certain items:

Other loss (gain), net

)

Impairment expense

—

Acquisition and integration-related expense

109

Other adjustment items(1)

Adjusted income before income taxes

125

113

Income tax expense

(24

)

(23

)

Adjusted net income

101

Net income attributable to noncontrolling interest

—

Adjusted net income attributable to stockholders

Weighted average shares outstanding

Diluted

105.1

114.4

Earnings per share(2):

Diluted

(0.04

)

0.64

Adjusted diluted

0.95

0.79

(1)

Includes costs associated with restructuring, one-time charges, the amortization of premiums resulting from purchase accounting and other non-cash items.

(2)

Earnings per share amounts are calculated using whole numbers.

T-16

HILTON GRAND VACATIONS INC.

RECONCILIATION OF NON-GAAP PROFIT MEASURES TO GAAP MEASURE

(in millions)

Three Months Ended March 31,

($ in millions)

2024

2023

Net (loss) income attributable to stockholders

)

Net income attributable to noncontrolling interest

—

Net (loss) income

)

Interest expense

Income tax (benefit) expense

(11

)

Depreciation and amortization

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates

—

EBITDA

129

185

Other loss (gain), net

)

Equity in earnings from unconsolidated affiliates(1)

)

Impairment expense

—

License fee expense

Acquisition and integration-related expense

109

General and administrative

Profit

319

270

Real estate profit

134

125

Financing profit

Resort and club management profit

112

Rental and ancillary services profit

Profit

319

270

(1)

Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $1 million for the three months ended March 31, 2024.

View source version on businesswire.com: https://www.businesswire.com/news/home/20240508381507/en/

Investor Contact: Mark Melnyk 407-613-3327 mark.melnyk@hgv.com

Media Contact: Lauren George 407-613-8431 lauren.george@hgv.com

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