HGV Hilton Grand Vacations Inc

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

Second quarter of 2024 highlights1

• Total contract sales were $757 million.
• Member count was 720,000. Net Owner Growth (NOG) for the legacy HGV-DRI business for the 12 months ended June 30, 2024, was 1.7%.
• Total revenues for the second quarter of 2024 were $1.235 billion compared to $1.007 billion for the same period in 2023.
  • Total revenues were affected by a net deferral of $13 million in the current period compared to a net deferral of $6 million in the same period in 2023.
• Net income attributable to stockholders for the second quarter was $2 million compared to $80 million net income attributable to stockholders for the same period in 2023.
  • Adjusted net income attributable to stockholders for the second quarter was $65 million compared to $95 million for the same period in 2023.
  • Net income attributable to stockholders and adjusted net income attributable to stockholders were affected by a net deferral of $8 million in the current period compared to a net deferral of $4 million in the same period in 2023.
• Diluted EPS for the second quarter was $0.02 compared to $0.71 for the same period in 2023.
  • Adjusted diluted EPS for the second quarter was $0.62 compared to $0.85 for the same period in 2023.
  • Diluted EPS and adjusted diluted EPS were affected by a net deferral of $8 million in the current period compared to a net deferral of $4 million in the same period in 2023, or $(0.08) and $(0.04) per share in the current period and the same period in 2023, respectively.
• Adjusted EBITDA attributable to stockholders for the second quarter was $262 million compared to $248 million for the same period in 2023.
  • Adjusted EBITDA attributable to stockholders was affected by a net deferral of $8 million in the current period compared to a net deferral of $4 million in the same period in 2023.
• During the second quarter, the Company repurchased 2.3 million shares of common stock for $100 million.
  • Through July 31, 2024, the Company has repurchased approximately 1.1 million shares for $46 million and currently has $114 million of remaining availability under the 2023 Share Repurchase Plan.
  • On Aug. 7, 2024, HGV’s Board of Directors approved a new share repurchase program authorizing the Company to repurchase up to an aggregate of $500 million of its outstanding shares of common stock over a two-year period (the “2024 Repurchase Plan”), which is in addition to the amount remaining under the 2023 Share Repurchase Plan.
• The Company is updating its guidance for the full year 2024 Adjusted EBITDA, excluding deferrals and recognitions, to a range of $1.075 billion to $1.135 billion, or a reduction of $125 million from its prior guidance range.

“Our results were below expectations this quarter, as we experienced some sales challenges along with a pullback in consumer spending behavior late in the quarter,” said Mark Wang, CEO of Hilton Grand Vacations. “While we aren’t satisfied with our performance, we’ve identified and are addressing those challenges, and I remain confident in our business and our long-term path. Our integration remains on track, and our underlying business fundamentals are solid – with more members, more geographic diversity, and more free cash flow than we’ve ever had.”

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.

Overview

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

For the quarter ended June 30, 2024, diluted EPS was $0.02 compared to $0.71 for the quarter ended June 30, 2023. Net income attributable to stockholders and Adjusted EBITDA attributable to stockholders were $2 million and $262 million, respectively, for the quarter ended June 30, 2024, compared to net income attributable to stockholders and Adjusted EBITDA attributable to stockholders of $80 million and $248 million, respectively, for the quarter ended June 30, 2023. Total revenues for the quarter ended June 30, 2024, were $1,235 million compared to $1,007 million for the quarter ended June 30, 2023.

Net income attributable to stockholders and Adjusted EBITDA attributable to stockholders for the quarter ended June 30, 2024, included a net deferral of $8 million relating to the sales of intervals of a project under construction in Hawaii 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 – Second quarter of 2024

Real Estate Sales and Financing

For the quarter ended June 30, 2024, Real Estate Sales and Financing segment revenues were $740 million, an increase of $136 million compared to the quarter ended June 30, 2023. Real Estate Sales and Financing segment Adjusted EBITDA and Adjusted EBITDA profit margin were $193 million and 26.1%, respectively, for the quarter ended June 30, 2024, compared to $189 million and 31.3%, respectively, for the quarter ended June 30, 2023. Real Estate Sales and Financing segment revenues results in the second quarter of 2024 increased primarily due to a $93 million increase in sales revenue and a $26 million increase in financing revenue.

Real Estate Sales and Financing segment Adjusted EBITDA reflects a net construction deferral of $8 million for the quarter ended June 30, 2024, compared to $4 million net construction deferrals for the quarter ended June 30, 2023, both of which decreased reported Adjusted EBITDA attributable to stockholders.

Contract sales for the quarter ended June 30, 2024, increased $145 million to $757 million compared to the quarter ended June 30, 2023. For the quarter ended June 30, 2024, tours increased by 39.4% and VPG decreased by 10.9% compared to the quarter ended June 30, 2023. For the quarter ended June 30, 2024, fee-for-service contract sales represented 19.5% of contract sales compared to 29.5% for the quarter ended June 30, 2023.

Financing revenues for the quarter ended June 30, 2024, increased by $26 million compared to the quarter ended June 30, 2023. This was driven primarily by an increase in the weighted average interest rate of 50 basis points for the originated portfolio and an increase in the carrying balance of the timeshare financing receivables portfolio as of June 30, 2024, compared to June 30, 2023.

Resort Operations and Club Management

For the quarter ended June 30, 2024, Resort Operations and Club Management segment revenue was $386 million, an increase of $66 million compared to the quarter ended June 30, 2023. Resort Operations and Club Management segment Adjusted EBITDA and Adjusted EBITDA profit margin were $152 million and 39.4%, respectively, for the quarter ended June 30, 2024, compared to $123 million and 38.4%, respectively, for the quarter ended June 30, 2023, primarily due to an increase in management fees and higher average daily rates, partially offset by an increase in development and maintenance fees compared to the same period in 2023.

Inventory

The estimated value of the Company’s total contract sales pipeline is $12.8 billion at current pricing.

The total pipeline includes $8.7 billion of sales relating to inventory that is currently available for sale at open or soon-to-open projects. The remaining $4.1 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 90.0% of the Company’s total pipeline. Approximately 68.7% of the owned inventory pipeline is currently available for sale.

Fee-for-service inventory represents 10.0% of the Company’s total pipeline. Approximately 61.5% of the fee-for-service inventory pipeline is currently available for sale.

Balance Sheet and Liquidity

Total cash and cash equivalents were $328 million and total restricted cash was $273 million as of June 30, 2024.

As of June 30, 2024, the Company had $4,885 million of corporate debt, net outstanding with a weighted average interest rate of 6.850% and $1,725 million of non-recourse debt, net outstanding with a weighted average interest rate of 5.075%.

As of June 30, 2024, the Company’s liquidity position consisted of $328 million of unrestricted cash and $446 million remaining borrowing capacity under the revolver facility.

As of June 30, 2024, HGV has $750 million remaining borrowing capacity in total under the Timeshare Facility. Of this amount, HGV has $647 million of mortgage notes that are available to be securitized and another $324 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 $95 million for the quarter ended June 30, 2024, compared to $180 million for the same period in the prior year. Adjusted free cash flow was $370 million for the quarter ended June 30, 2024, compared to $(13) million for the same period in the prior year. Adjusted free cash flow for the quarter ended June 30, 2024, and 2023 includes add-backs of $62 million and $22 million, respectively for acquisition and integration related costs and $13 million related to litigation settlement payment for the quarter ended June 30, 2024.

As of June 30, 2024, the Company’s total net leverage on a trailing 12-month basis, inclusive of all anticipated cost synergies, was approximately 3.67x.

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)

 

$

2

 

 

$

(13

)

 

$

—

 

$

—

 

$

(11

)

Cost of VOI sales (deferrals)(1)

 

 

(1

)

 

 

(4

)

 

 

—

 

 

—

 

 

(5

)

Sales and marketing expense (deferrals)

 

 

—

 

 

 

(1

)

 

 

—

 

 

—

 

 

(1

)

Net construction recognitions (deferrals)(2)

 

$

3

 

 

$

(8

)

 

$

—

 

$

—

 

$

(5

)

 

 

 

 

 

 

 

 

 

 

 

Net (loss) income attributable to stockholders

 

$

(4

)

 

$

2

 

 

$

—

 

$

—

 

$

(2

)

Net income attributable to noncontrolling interest

 

 

2

 

 

 

2

 

 

 

—

 

 

—

 

 

4

 

Net (loss) income

 

 

(2

)

 

 

4

 

 

 

—

 

 

—

 

 

2

 

Interest expense

 

 

79

 

 

 

87

 

 

 

—

 

 

—

 

 

166

 

Income tax (benefit) expense

 

 

(11

)

 

 

3

 

 

 

—

 

 

—

 

 

(8

)

Depreciation and amortization

 

 

62

 

 

 

68

 

 

 

—

 

 

—

 

 

130

 

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

 

 

1

 

 

 

2

 

 

 

—

 

 

—

 

 

3

 

EBITDA

 

 

129

 

 

 

164

 

 

 

—

 

 

—

 

 

293

 

Other loss, net

 

 

5

 

 

 

3

 

 

 

—

 

 

—

 

 

8

 

Share-based compensation expense

 

 

9

 

 

 

18

 

 

 

—

 

 

—

 

 

27

 

Acquisition and integration-related expense

 

 

109

 

 

 

48

 

 

 

—

 

 

—

 

 

157

 

Impairment expense

 

 

2

 

 

 

—

 

 

 

—

 

 

—

 

 

2

 

Other adjustment items(3)

 

 

22

 

 

 

33

 

 

 

—

 

 

—

 

 

55

 

Adjusted EBITDA

 

 

276

 

 

 

266

 

 

 

—

 

 

—

 

 

542

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

3

 

 

 

4

 

 

 

—

 

 

—

 

 

7

 

Adjusted EBITDA attributable to stockholders

 

$

273

 

 

$

262

 

 

$

—

 

$

—

 

$

535

 

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 recognitions (deferrals)

 

$

4

 

 

$

(6

)

 

$

(12

)

 

$

(21

)

 

$

(35

)

Cost of VOI sales recognitions (deferrals)(1)

 

 

1

 

 

 

(1

)

 

 

(3

)

 

 

(6

)

 

 

(9

)

Sales and marketing expense recognitions (deferrals)

 

 

1

 

 

 

(1

)

 

 

(2

)

 

 

(3

)

 

 

(5

)

Net construction recognitions (deferrals)(2)

 

$

2

 

 

$

(4

)

 

$

(7

)

 

$

(12

)

 

$

(21

)

 

 

 

 

 

 

 

 

 

 

 

Net income attributable to stockholders

 

$

73

 

 

$

80

 

 

$

92

 

 

$

68

 

 

$

313

 

Net income attributable to noncontrolling interest

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Net income

 

 

73

 

 

 

80

 

 

 

92

 

 

 

68

 

 

 

313

 

Interest expense

 

 

44

 

 

 

44

 

 

 

45

 

 

 

45

 

 

 

178

 

Income tax expense

 

 

17

 

 

 

35

 

 

 

44

 

 

 

40

 

 

 

136

 

Depreciation and amortization

 

 

51

 

 

 

52

 

 

 

53

 

 

 

57

 

 

 

213

 

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

 

 

—

 

 

 

1

 

 

 

—

 

 

 

1

 

 

 

2

 

EBITDA

 

 

185

 

 

 

212

 

 

 

234

 

 

 

211

 

 

 

842

 

Other (gain) loss, net

 

 

(1

)

 

 

(3

)

 

 

1

 

 

 

1

 

 

 

(2

)

Share-based compensation expense

 

 

10

 

 

 

16

 

 

 

12

 

 

 

2

 

 

 

40

 

Acquisition and integration-related expense

 

 

17

 

 

 

13

 

 

 

12

 

 

 

26

 

 

 

68

 

Impairment expense

 

 

—

 

 

 

3

 

 

 

—

 

 

 

—

 

 

 

3

 

Other adjustment items(3)

 

 

7

 

 

 

7

 

 

 

10

 

 

 

30

 

 

 

54

 

Adjusted EBITDA

 

 

218

 

 

 

248

 

 

 

269

 

 

 

270

 

 

 

1,005

 

Adjusted EBITDA attributable to noncontrolling interest

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

 

 

—

 

Adjusted EBITDA attributable to stockholders

 

$

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 and discounts resulting from purchase accounting.

Conference Call

Hilton Grand Vacations will host a conference call on Aug. 8, 2024, at 11 a.m. (ET) to discuss second 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 Aug. 15, 2024. To access the replay, please dial 1-844-512-2921 in the U.S. (+1-412-317-6671 internationally) using ID#13743187. 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, including, related to the acquisition and integration of Bluegreen Vacations Holding Corporation (“Bluegreen”).

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, including those related to HGV's acquisition and integration of Bluegreen, 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 (“Big Cedar”).

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 approximately 720,000 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, as previously defined, excluding amounts attributable to the noncontrolling interest in Big Cedar.

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, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders 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, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders 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, Adjusted Net Income Attributable to Stockholders and Adjusted Diluted EPS Attributable to Stockholders

Adjusted Net Income, 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 Net Income Attributable to Stockholders, presented herein, is calculated as Adjusted Net Income, as defined above, excluding amounts attributable to the noncontrolling interest in Big Cedar. Adjusted Diluted EPS, presented herein, is calculated as Adjusted Net Income Attributable to Stockholders, as defined above, divided by diluted weighted average shares outstanding.

Adjusted Net Income, Adjusted Net Income Attributable to Stockholders 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, Adjusted Net Income Attributable to Stockholders 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 June 30, 2024.

Developed Inventory refers to VOI inventory that is sourced from projects developed by HGV.

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 or will be contributed to a trust.

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

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. HGV 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)

 

 

June 30, 2024

 

December 31, 2023

 

(unaudited)

 

 

ASSETS

 

 

 

Cash and cash equivalents

$

328

 

$

589

Restricted cash

 

273

 

 

296

Accounts receivable, net

 

524

 

 

507

Timeshare financing receivables, net

 

2,976

 

 

2,113

Inventory

 

1,929

 

 

1,400

Property and equipment, net

 

902

 

 

758

Operating lease right-of-use assets, net

 

84

 

 

61

Investments in unconsolidated affiliates

 

78

 

 

71

Goodwill

 

1,933

 

 

1,418

Intangible assets, net

 

1,887

 

 

1,158

Other assets

 

553

 

 

314

TOTAL ASSETS

$

11,467

 

$

8,685

LIABILITIES AND EQUITY

 

 

 

Accounts payable, accrued expenses and other

$

1,159

 

$

952

Advanced deposits

 

224

 

 

179

Debt, net

 

4,885

 

 

3,049

Non-recourse debt, net

 

1,725

 

 

1,466

Operating lease liabilities

 

101

 

 

78

Deferred revenue

 

321

 

 

215

Deferred income tax liabilities

 

972

 

 

631

Total liabilities

 

9,387

 

 

6,570

 

 

 

 

Equity:

 

 

 

Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of June 30, 2024 and December 31, 2023

 

—

 

 

—

Common stock, $0.01 par value; 3,000,000,000 authorized shares, 102,485,583 shares issued and outstanding as of June 30, 2024 and 105,961,160 shares issued and outstanding as of December 31, 2023

 

1

 

 

1

Additional paid-in capital

 

1,456

 

 

1,504

Accumulated retained earnings

 

456

 

 

593

Accumulated other comprehensive income

 

5

 

 

17

Total stockholders' equity

 

1,918

 

 

2,115

Noncontrolling interest

 

162

 

 

—

Total equity

 

2,080

 

 

2,115

TOTAL LIABILITIES AND EQUITY

$

11,467

 

$

8,685

T-3

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

(in millions, except per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues

 

 

 

 

 

 

 

Sales of VOIs, net

$

471

 

 

$

355

 

 

$

909

 

 

$

673

 

Sales, marketing, brand and other fees

 

167

 

 

 

173

 

 

 

312

 

 

 

331

 

Financing

 

102

 

 

 

76

 

 

 

206

 

 

 

150

 

Resort and club management

 

171

 

 

 

133

 

 

 

337

 

 

 

264

 

Rental and ancillary services

 

195

 

 

 

173

 

 

 

376

 

 

 

331

 

Cost reimbursements

 

129

 

 

 

97

 

 

 

251

 

 

 

192

 

Total revenues

 

1,235

 

 

 

1,007

 

 

 

2,391

 

 

 

1,941

 

Expenses

 

 

 

 

 

 

 

Cost of VOI sales

 

65

 

 

 

48

 

 

 

113

 

 

 

98

 

Sales and marketing

 

453

 

 

 

336

 

 

 

854

 

 

 

637

 

Financing

 

44

 

 

 

24

 

 

 

83

 

 

 

48

 

Resort and club management

 

48

 

 

 

44

 

 

 

102

 

 

 

86

 

Rental and ancillary services

 

188

 

 

 

154

 

 

 

361

 

 

 

306

 

General and administrative

 

58

 

 

 

48

 

 

 

103

 

 

 

90

 

Acquisition and integration-related expense

 

48

 

 

 

13

 

 

 

157

 

 

 

30

 

Depreciation and amortization

 

68

 

 

 

52

 

 

 

130

 

 

 

103

 

License fee expense

 

40

 

 

 

34

 

 

 

75

 

 

 

64

 

Impairment expense

 

—

 

 

 

3

 

 

 

2

 

 

 

3

 

Cost reimbursements

 

129

 

 

 

97

 

 

 

251

 

 

 

192

 

Total operating expenses

 

1,141

 

 

 

853

 

 

 

2,231

 

 

 

1,657

 

Interest expense

 

(87

)

 

 

(44

)

 

 

(166

)

 

 

(88

)

Equity in earnings from unconsolidated affiliates

 

3

 

 

 

2

 

 

 

8

 

 

 

5

 

Other (loss) gain, net

 

(3

)

 

 

3

 

 

 

(8

)

 

 

4

 

Income (loss) before income taxes

 

7

 

 

 

115

 

 

 

(6

)

 

 

205

 

Income tax (expense) benefit

 

(3

)

 

 

(35

)

 

 

8

 

 

 

(52

)

Net income

 

4

 

 

 

80

 

 

 

2

 

 

 

153

 

Net income attributable to noncontrolling interest

 

2

 

 

 

—

 

 

 

4

 

 

 

—

 

Net income (loss) attributable to stockholders

$

2

 

 

$

80

 

 

$

(2

)

 

$

153

 

Earnings per share attributable to stockholders(1):

 

 

 

 

 

 

 

Basic

$

0.02

 

 

$

0.72

 

 

$

(0.02

)

 

$

1.37

 

Diluted

$

0.02

 

 

$

0.71

 

 

$

(0.02

)

 

$

1.35

 

(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 June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Operating Activities

 

 

 

 

 

 

 

Net income

$

4

 

 

$

80

 

 

$

2

 

 

$

153

 

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

 

 

 

 

 

 

 

Depreciation and amortization

 

68

 

 

 

52

 

 

 

130

 

 

 

103

 

Amortization of deferred financing costs, acquisition premiums and other

 

38

 

 

 

7

 

 

 

63

 

 

 

14

 

Provision for financing receivables losses

 

95

 

 

 

41

 

 

 

159

 

 

 

71

 

Impairment expense

 

—

 

 

 

3

 

 

 

2

 

 

 

3

 

Other loss (gain), net

 

3

 

 

 

(3

)

 

 

8

 

 

 

(4

)

Share-based compensation

 

18

 

 

 

16

 

 

 

27

 

 

 

26

 

Equity in earnings from unconsolidated affiliates

 

(3

)

 

 

(2

)

 

 

(8

)

 

 

(5

)

Return on investment in unconsolidated affiliates

 

—

 

 

 

6

 

 

 

—

 

 

 

6

 

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

 

 

 

 

 

 

 

Accounts receivable, net

 

(9

)

 

 

18

 

 

 

15

 

 

 

26

 

Timeshare financing receivables, net

 

(118

)

 

 

(72

)

 

 

(196

)

 

 

(96

)

Inventory

 

(6

)

 

 

34

 

 

 

(31

)

 

 

(67

)

Purchases and development of real estate for future conversion to inventory

 

(17

)

 

 

(4

)

 

 

(50

)

 

 

(6

)

Other assets

 

91

 

 

 

110

 

 

 

(154

)

 

 

(134

)

Accounts payable, accrued expenses and other

 

(33

)

 

 

(52

)

 

 

55

 

 

 

32

 

Advanced deposits

 

5

 

 

 

11

 

 

 

5

 

 

 

35

 

Deferred revenue

 

(23

)

 

 

(51

)

 

 

86

 

 

 

63

 

Net cash provided by operating activities

 

113

 

 

 

194

 

 

 

113

 

 

 

220

 

Investing Activities

 

 

 

 

 

 

 

Acquisitions, net of cash, cash equivalents and restricted cash acquired

 

10

 

 

 

—

 

 

 

(1,444

)

 

 

—

 

Capital expenditures for property and equipment (excluding inventory)

 

(7

)

 

 

(4

)

 

 

(17

)

 

 

(9

)

Software capitalization costs

 

(11

)

 

 

(10

)

 

 

(20

)

 

 

(16

)

Other

 

(1

)

 

 

—

 

 

 

(1

)

 

 

—

 

Net cash used in investing activities

 

(9

)

 

 

(14

)

 

 

(1,482

)

 

 

(25

)

Financing Activities

 

 

 

 

 

 

 

Proceeds from debt

 

25

 

 

 

—

 

 

 

2,085

 

 

 

438

 

Proceeds from non-recourse debt

 

615

 

 

 

—

 

 

 

905

 

 

 

175

 

Repayment of debt

 

(289

)

 

 

(4

)

 

 

(397

)

 

 

(157

)

Repayment of non-recourse debt

 

(415

)

 

 

(215

)

 

 

(1,231

)

 

 

(397

)

Payment of debt issuance costs

 

(12

)

 

 

—

 

 

 

(51

)

 

 

—

 

Repurchase and retirement of common stock

 

(100

)

 

 

(121

)

 

 

(199

)

 

 

(206

)

Payment of withholding taxes on vesting of restricted stock units

 

—

 

 

 

—

 

 

 

(21

)

 

 

(14

)

Proceeds from employee stock plan purchases

 

5

 

 

 

4

 

 

 

5

 

 

 

4

 

Proceeds from stock option exercises

 

1

 

 

 

2

 

 

 

7

 

 

 

7

 

Other

 

(1

)

 

 

(1

)

 

 

(2

)

 

 

(2

)

Net cash (used in) provided by financing activities

 

(171

)

 

 

(335

)

 

 

1,101

 

 

 

(152

)

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

 

(10

)

 

 

(9

)

 

 

(16

)

 

 

(10

)

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

 

(77

)

 

 

(164

)

 

 

(284

)

 

 

33

 

Cash, cash equivalents and restricted cash, beginning of period

 

678

 

 

 

752

 

 

 

885

 

 

 

555

 

Cash, cash equivalents and restricted cash, end of period

 

601

 

 

 

588

 

 

 

601

 

 

 

588

 

Less: Restricted cash

 

273

 

 

 

336

 

 

 

273

 

 

 

336

 

Cash and cash equivalents

$

328

 

 

$

252

 

 

$

328

 

 

$

252

 

T-5

HILTON GRAND VACATIONS INC.

FREE CASH FLOW RECONCILIATION

(in millions)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net cash provided by operating activities

 

$

113

 

 

$

194

 

 

$

113

 

 

$

220

 

Capital expenditures for property and equipment

 

 

(7

)

 

 

(4

)

 

 

(17

)

 

 

(9

)

Software capitalization costs

 

 

(11

)

 

 

(10

)

 

 

(20

)

 

 

(16

)

Free Cash Flow

 

$

95

 

 

$

180

 

 

$

76

 

 

$

195

 

Non-recourse debt activity, net

 

 

200

 

 

 

(215

)

 

 

(326

)

 

 

(222

)

Acquisition and integration-related expense

 

 

48

 

 

 

13

 

 

 

157

 

 

 

30

 

Litigation settlement payment

 

 

13

 

 

 

—

 

 

 

63

 

 

 

—

 

Other adjustment items(1)

 

 

14

 

 

 

9

 

 

 

26

 

 

 

17

 

Adjusted Free Cash Flow

 

$

370

 

 

$

(13

)

 

$

(4

)

 

$

20

 

(1)

Includes capitalized acquisition and integration-related costs.

T-6

HILTON GRAND VACATIONS INC.

SEGMENT REVENUE RECONCILIATION

(in millions)

 

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues:

 

 

 

 

 

 

 

 

Real estate sales and financing

 

$

740

 

 

$

604

 

 

$

1,427

 

 

$

1,154

 

Resort operations and club management

 

 

386

 

 

 

320

 

 

 

746

 

 

 

622

 

Total segment revenues

 

 

1,126

 

 

 

924

 

 

 

2,173

 

 

 

1,776

 

Cost reimbursements

 

 

129

 

 

 

97

 

 

 

251

 

 

 

192

 

Intersegment eliminations

 

 

(20

)

 

 

(14

)

 

 

(33

)

 

 

(27

)

Total revenues

 

$

1,235

 

 

$

1,007

 

 

$

2,391

 

 

$

1,941

 

T-7

HILTON GRAND VACATIONS INC.

SEGMENT EBITDA, ADJUSTED EBITDA TO NET INCOME AND

ADJUSTED EBITDA ATTRIBUTABLE TO STOCKHOLDERS

(in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income (loss) attributable to stockholders

$

2

 

 

$

80

 

 

$

(2

)

 

$

153

 

Net income attributable to noncontrolling interest

 

2

 

 

 

—

 

 

 

4

 

 

 

—

 

Net income

 

4

 

 

 

80

 

 

 

2

 

 

 

153

 

Interest expense

 

87

 

 

 

44

 

 

 

166

 

 

 

88

 

Income tax expense (benefit)

 

3

 

 

 

35

 

 

 

(8

)

 

 

52

 

Depreciation and amortization

 

68

 

 

 

52

 

 

 

130

 

 

 

103

 

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

 

2

 

 

 

1

 

 

 

3

 

 

 

1

 

EBITDA

 

164

 

 

 

212

 

 

 

293

 

 

 

397

 

Other loss (gain), net

 

3

 

 

 

(3

)

 

 

8

 

 

 

(4

)

Share-based compensation expense

 

18

 

 

 

16

 

 

 

27

 

 

 

26

 

Acquisition and integration-related expense

 

48

 

 

 

13

 

 

 

157

 

 

 

30

 

Impairment expense

 

—

 

 

 

3

 

 

 

2

 

 

 

3

 

Other adjustment items(1)

 

33

 

 

 

7

 

 

 

55

 

 

 

14

 

Adjusted EBITDA

 

266

 

 

 

248

 

 

 

542

 

 

 

466

 

Adjusted EBITDA attributable to noncontrolling interest

 

4

 

 

 

—

 

 

 

7

 

 

 

—

 

Adjusted EBITDA attributable to stockholders

$

262

 

 

$

248

 

 

$

535

 

 

$

466

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA:

 

 

 

 

 

 

 

Real estate sales and financing(2)

$

193

 

 

$

189

 

 

$

399

 

 

$

358

 

Resort operations and club management(2)

 

152

 

 

 

123

 

 

 

286

 

 

 

232

 

Adjustments:

 

 

 

 

 

 

 

Adjusted EBITDA from unconsolidated affiliates

 

5

 

 

 

3

 

 

 

11

 

 

 

6

 

License fee expense

 

(40

)

 

 

(34

)

 

 

(75

)

 

 

(64

)

General and administrative(3)

 

(44

)

 

 

(33

)

 

 

(79

)

 

 

(66

)

Adjusted EBITDA

 

266

 

 

 

248

 

 

 

542

 

 

 

466

 

Adjusted EBITDA attributable to noncontrolling interest

 

4

 

 

 

—

 

 

 

7

 

 

 

—

 

Adjusted EBITDA attributable to stockholders

$

262

 

 

$

248

 

 

$

535

 

 

$

466

 

Adjusted EBITDA profit margin

 

21.5

%

 

 

24.6

%

 

 

22.7

%

 

 

24.0

%

EBITDA profit margin

 

13.3

%

 

 

21.1

%

 

 

12.3

%

 

 

20.5

%

(1)

Includes costs associated with restructuring, one-time charges and other non-cash items. This amount also includes the amortization of premiums and discounts 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 June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Tour flow

 

226,388

 

 

 

162,444

 

 

 

400,526

 

 

 

292,712

 

VPG

$

3,320

 

 

$

3,728

 

 

$

3,441

 

 

$

3,835

 

Owned contract sales mix

 

80.5

%

 

 

70.5

%

 

 

82.1

%

 

 

68.8

%

Fee-for-service contract sales mix

 

19.5

%

 

 

29.5

%

 

 

17.9

%

 

 

31.2

%

 

 

 

 

 

 

 

 

Contract sales

$

757

 

 

$

612

 

 

$

1,388

 

 

$

1,135

 

Adjustments:

 

 

 

 

 

 

 

Fee-for-service sales(1)

 

(148

)

 

 

(180

)

 

 

(248

)

 

 

(354

)

Provision for financing receivables losses

 

(94

)

 

 

(41

)

 

 

(158

)

 

 

(71

)

Reportability and other:

 

 

 

 

 

 

 

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

 

(13

)

 

 

(6

)

 

 

(11

)

 

 

(2

)

Fee-for-service sale upgrades, net

 

—

 

 

 

7

 

 

 

—

 

 

 

12

 

Other(3)

 

(31

)

 

 

(37

)

 

 

(62

)

 

 

(47

)

Sales of VOIs, net

$

471

 

 

$

355

 

 

$

909

 

 

$

673

 

Plus:

 

 

 

 

 

 

 

Fee-for-service commissions and brand fees

 

88

 

 

 

111

 

 

 

152

 

 

 

218

 

Sales revenue

 

559

 

 

 

466

 

 

 

1,061

 

 

 

891

 

 

 

 

 

 

 

 

 

Cost of VOI sales

 

65

 

 

 

48

 

 

 

113

 

 

 

98

 

Sales and marketing expense, net

 

374

 

 

 

274

 

 

 

694

 

 

 

524

 

Real estate expense

 

439

 

 

 

322

 

 

 

807

 

 

 

622

 

Real estate profit

$

120

 

 

$

144

 

 

$

254

 

 

$

269

 

Real estate profit margin(4)

 

21.5

%

 

 

30.9

%

 

 

23.9

%

 

 

30.2

%

 

 

 

 

 

 

 

 

Reconciliation of fee-for-service commissions:

 

 

 

 

 

 

 

Sales, marketing, brand and other fees

$

167

 

 

$

173

 

 

$

312

 

 

$

331

 

Less: Marketing revenue and other fees(5)

 

(79

)

 

 

(62

)

 

 

(160

)

 

 

(113

)

Fee-for-service commissions and brand fees

$

88

 

 

$

111

 

 

$

152

 

 

$

218

 

 

 

 

 

 

 

 

 

Reconciliation of sales and marketing expense:

 

 

 

 

 

 

 

Sales and marketing expense

$

453

 

 

$

336

 

 

$

854

 

 

$

637

 

Less: Marketing revenue and other fees(5)

 

(79

)

 

 

(62

)

 

 

(160

)

 

 

(113

)

Sales and marketing expense, net

$

374

 

 

$

274

 

 

$

694

 

 

$

524

 

(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 18.8% and 27.3% for the three months ended June 30, 2024 and 2023, respectively. and 20.8% and 26.8%. for the six months ended June 30, 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 June 30,

 

Six Months Ended June 30,

 

2024

 

2023

 

2024

 

2023

Just-In-Time Contract Sales Mix

20.9

%

 

13.6

%

 

22.6

%

 

15.1

%

Fee-For-Service Contract Sales Mix

19.5

%

 

29.5

%

 

17.9

%

 

31.2

%

Total Capital-Efficient Contract Sales Mix

40.4

%

 

43.1

%

 

40.5

%

 

46.3

%

T-10

HILTON GRAND VACATIONS INC.

FINANCING PROFIT DETAIL SCHEDULE

(in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Interest income

$

116

 

 

$

68

 

 

$

228

 

 

$

138

 

Other financing revenue

 

14

 

 

 

11

 

 

 

22

 

 

 

19

 

Premium amortization of acquired timeshare financing receivables

 

(28

)

 

 

(3

)

 

 

(44

)

 

 

(7

)

Financing revenue

 

102

 

 

 

76

 

 

 

206

 

 

 

150

 

Consumer financing interest expense

 

22

 

 

 

11

 

 

 

45

 

 

 

23

 

Other financing expense

 

20

 

 

 

13

 

 

 

34

 

 

 

26

 

Amortization of acquired non-recourse debt discounts and premiums, net

 

2

 

 

 

—

 

 

 

4

 

 

 

(1

)

Financing expense

 

44

 

 

 

24

 

 

 

83

 

 

 

48

 

Financing profit

$

58

 

 

$

52

 

 

$

123

 

 

$

102

 

Financing profit margin

 

56.9

%

 

 

68.4

%

 

 

59.7

%

 

 

68.0

%

T-11

HILTON GRAND VACATIONS INC.

RESORT AND CLUB PROFIT DETAIL SCHEDULE

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

 

 

Twelve Months Ended June 30,

 

2024

 

2023

Total members

720,069

 

 

522,156

 

Net Owner Growth (NOG)(1)

8,776

 

 

14,204

 

Net Owner Growth % (NOG)(1)

1.7

%

 

2.8

%

(1)

NOG is a trailing-twelve-month concept for which the twelve months ended June 30, 2024 and ended June 30, 2023 includes member count for HGV Max and Legacy HGV-DRI members only on a consolidated basis.

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Club management revenue

$

67

 

 

$

53

 

 

$

130

 

 

$

104

 

Resort management revenue

 

104

 

 

 

80

 

 

 

207

 

 

 

160

 

Resort and club management revenues

 

171

 

 

 

133

 

 

 

337

 

 

 

264

 

Club management expense

 

21

 

 

 

15

 

 

 

41

 

 

 

30

 

Resort management expense

 

27

 

 

 

29

 

 

 

61

 

 

 

56

 

Resort and club management expenses

 

48

 

 

 

44

 

 

 

102

 

 

 

86

 

Resort and club management profit

$

123

 

 

$

89

 

 

$

235

 

 

$

178

 

Resort and club management profit margin

 

71.9

%

 

 

66.9

%

 

 

69.7

%

 

 

67.4

%

T-12

HILTON GRAND VACATIONS INC.

RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE

(in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Rental revenues

$

181

 

 

$

162

 

 

$

350

 

 

$

309

 

Ancillary services revenues

 

14

 

 

 

11

 

 

 

26

 

 

 

22

 

Rental and ancillary services revenues

 

195

 

 

 

173

 

 

 

376

 

 

 

331

 

Rental expenses

 

177

 

 

 

144

 

 

 

340

 

 

 

287

 

Ancillary services expense

 

11

 

 

 

10

 

 

 

21

 

 

 

19

 

Rental and ancillary services expenses

 

188

 

 

 

154

 

 

 

361

 

 

 

306

 

Rental and ancillary services profit

$

7

 

 

$

19

 

 

$

15

 

 

$

25

 

Rental and ancillary services profit margin

 

3.6

%

 

 

11.0

%

 

 

4.0

%

 

 

7.6

%

T-13

HILTON GRAND VACATIONS INC.

REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA

(in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Sales of VOIs, net

$

471

 

 

$

355

 

 

$

909

 

 

$

673

 

Sales, marketing, brand and other fees

 

167

 

 

 

173

 

 

 

312

 

 

 

331

 

Financing revenue

 

102

 

 

 

76

 

 

 

206

 

 

 

150

 

Real estate sales and financing segment revenues

 

740

 

 

 

604

 

 

 

1,427

 

 

 

1,154

 

Cost of VOI sales

 

(65

)

 

 

(48

)

 

 

(113

)

 

 

(98

)

Sales and marketing expense

 

(453

)

 

 

(336

)

 

 

(854

)

 

 

(637

)

Financing expense

 

(44

)

 

 

(24

)

 

 

(83

)

 

 

(48

)

Marketing package stays

 

(20

)

 

 

(14

)

 

 

(33

)

 

 

(27

)

Share-based compensation

 

3

 

 

 

3

 

 

 

6

 

 

 

6

 

Other adjustment items

 

32

 

 

 

4

 

 

 

49

 

 

 

8

 

Real estate sales and financing segment adjusted EBITDA

$

193

 

 

$

189

 

 

$

399

 

 

$

358

 

Real estate sales and financing segment adjusted EBITDA profit margin

 

26.1

%

 

 

31.3

%

 

 

28.0

%

 

 

31.0

%

T-14

HILTON GRAND VACATIONS INC.

RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA

(in millions)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Resort and club management revenues

$

171

 

 

$

133

 

 

$

337

 

 

$

264

 

Rental and ancillary services

 

195

 

 

 

173

 

 

 

376

 

 

 

331

 

Marketing package stays

 

20

 

 

 

14

 

 

 

33

 

 

 

27

 

Resort and club management segment revenue

 

386

 

 

 

320

 

 

 

746

 

 

 

622

 

Resort and club management expenses

 

(48

)

 

 

(44

)

 

 

(102

)

 

 

(86

)

Rental and ancillary services expenses

 

(188

)

 

 

(154

)

 

 

(361

)

 

 

(306

)

Share-based compensation

 

2

 

 

 

1

 

 

 

3

 

 

 

2

 

Resort and club segment adjusted EBITDA

$

152

 

 

$

123

 

 

$

286

 

 

$

232

 

Resort and club management segment adjusted EBITDA profit margin

 

39.4

%

 

 

38.4

%

 

 

38.3

%

 

 

37.3

%

T-15

HILTON GRAND VACATIONS INC.

ADJUSTED NET INCOME ATTRIBUTABLE TO STOCKHOLDERS AND

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

(in millions except per share data)

 

 

Three Months Ended June 30,

 

Six Months Ended June 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income (loss) attributable to stockholders

$

2

 

 

$

80

 

 

$

(2

)

 

$

153

 

Net income attributable to noncontrolling interest

 

2

 

 

 

—

 

 

 

4

 

 

 

—

 

Net income

 

4

 

 

 

80

 

 

 

2

 

 

 

153

 

Income tax expense (benefit)

 

3

 

 

 

35

 

 

 

(8

)

 

 

52

 

Income (loss) before income taxes

 

7

 

 

 

115

 

 

 

(6

)

 

 

205

 

Certain items:

 

 

 

 

 

 

 

Other loss (gain), net

 

3

 

 

 

(3

)

 

 

8

 

 

 

(4

)

Impairment expense

 

—

 

 

 

3

 

 

 

2

 

 

 

3

 

Acquisition and integration-related expense

 

48

 

 

 

13

 

 

 

157

 

 

 

30

 

Other adjustment items(1)

 

33

 

 

 

7

 

 

 

55

 

 

 

14

 

Adjusted income before income taxes

 

91

 

 

 

135

 

 

 

216

 

 

 

248

 

Income tax (expense)

 

(24

)

 

 

(40

)

 

 

(48

)

 

 

(63

)

Adjusted net income

 

67

 

 

 

95

 

 

 

168

 

 

 

185

 

Net income attributable to noncontrolling interest

 

2

 

 

 

—

 

 

 

4

 

 

 

—

 

Adjusted net income attributable to stockholders

$

65

 

 

$

95

 

 

$

164

 

 

$

185

 

 

 

 

 

 

 

 

 

Weighted average shares outstanding

 

 

 

 

 

 

 

Diluted

 

104.3

 

 

 

112.2

 

 

 

104.3

 

 

 

113.3

 

Earnings per share attributable to stockholders(2):

 

 

 

 

 

 

 

Diluted

$

0.02

 

 

$

0.71

 

 

$

(0.02

)

 

$

1.35

 

Adjusted diluted

$

0.62

 

 

$

0.85

 

 

$

1.57

 

 

$

1.63

 

(1)

Includes costs associated with restructuring, one-time charges, the amortization of premiums and discounts 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 June 30,

 

Six Months Ended June 30,

($ in millions)

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Net income (loss) attributable to stockholders

$

2

 

 

$

80

 

 

$

(2

)

 

$

153

 

Net income attributable to noncontrolling interest

 

2

 

 

 

—

 

 

 

4

 

 

 

—

 

Net income

 

4

 

 

 

80

 

 

 

2

 

 

 

153

 

Interest expense

 

87

 

 

 

44

 

 

 

166

 

 

 

88

 

Income tax (benefit) expense

 

3

 

 

 

35

 

 

 

(8

)

 

 

52

 

Depreciation and amortization

 

68

 

 

 

52

 

 

 

130

 

 

 

103

 

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

 

2

 

 

 

1

 

 

 

3

 

 

 

1

 

EBITDA

 

164

 

 

 

212

 

 

 

293

 

 

 

397

 

Other loss (gain), net

 

3

 

 

 

(3

)

 

 

8

 

 

 

(4

)

Equity in earnings from unconsolidated affiliates(1)

 

(5

)

 

 

(3

)

 

 

(11

)

 

 

(6

)

Impairment expense

 

—

 

 

 

3

 

 

 

2

 

 

 

3

 

License fee expense

 

40

 

 

 

34

 

 

 

75

 

 

 

64

 

Acquisition and integration-related expense

 

48

 

 

 

13

 

 

 

157

 

 

 

30

 

General and administrative

 

58

 

 

 

48

 

 

 

103

 

 

 

90

 

Profit

$

308

 

 

$

304

 

 

$

627

 

 

$

574

 

 

 

 

 

 

 

 

 

Real estate profit

$

120

 

 

$

144

 

 

$

254

 

 

$

269

 

Financing profit

 

58

 

 

 

52

 

 

 

123

 

 

 

102

 

Resort and club management profit

 

123

 

 

 

89

 

 

 

235

 

 

 

178

 

Rental and ancillary services profit

 

7

 

 

 

19

 

 

 

15

 

 

 

25

 

Profit

$

308

 

 

$

304

 

 

$

627

 

 

$

574

 

(1)

Excludes impact of interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates of $2 million and $3 million, respectively, for the three and six months ended June 30, 2024 and $1 million for both the three and six months ended June 30, 2023.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240807079846/en/

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

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