Annual and Quarter 4 HGV Investors Report

[dayooper]

2024 Q4/annual Earnings Report

Previous Investor Calls/Reports

2024 Q3 Earnings Call
2024 Q2 Earnings Call
2024 Q1 Investor Call
2023 Q4/Annual Earnings Call
2023 Q3 Earnings Call
2023 Q2 Earnings Call
2023 Q1 Earnings Call
2022 Q3 Earnings Call
2022 Q1 Earnings Call
2021 Q3 Earnings Call

My Commentary

It looks like they did not have a great year. Missing their expected target was rare for HGV. Even in down years, they usually or exceed expectations. Interestingly enough, when they announced earnings, their stock rose. Not sure how I feel about this report. They missed their mark by $200 million, but had a decent quarter. Sales were up from 4th quarter last year. They seem to be holding steady with their packages and membership. Max membership rose and they attribute that to the Bluegreen sales start. Interestingly enough, they are still partnering with Choice Hotels to bring in potential clients. BlueGreen was partnered with them prior to the HGV purchase. They list Bass Pro Shops and Great Wolf Loge as other partners they recruit new owners from.

I cheated on this one. Most of this report was financial (not much news on the resorts, systems etc) and out of my league. I did some research and used Yahoo for the highlights and Investor.com for the opinion. The full transcript is in the Investor.com site. I don't if know the investor.com a reputable source or not so read at your own risk. The highlights from Yahoo are taken directly from HGV's release. I have linked those at the bottom. So with out further adieu:

Yahoo Finance on HGV Q4/Annual Earnings Report

• Contract Sales: $837 million for the fourth quarter, driven by strong VPG performance.
• Adjusted EBITDA: $289 million with margins excluding reimbursements of 23%.
• VPG (Volume Per Guest): $4,026, over 20% ahead of pro forma 2019 levels.
• Occupancy Rate: 82% for the quarter.
• Member Count: 724,000 at the end of the quarter.
• Adjusted Free Cash Flow: Record $837 million for the year.
• Shareholder Returns: $432 million returned to shareholders, reducing diluted share count by 10%.
• Revenue Excluding Cost Reimbursements: $1.2 billion for the quarter.
• Real Estate Sales and Marketing Expense: $387 million, or 46% of contract sales.
• Financing Business Revenue: $153 million with segment profit margins of 61%.
• Rental and Ancillary Revenues: $174 million with a segment loss of $11 million.
• Non-Recourse Debt Balance: Approximately $2.3 billion at quarter end.
• Net Leverage: 3.77 times on a TTM basis.

Positive Points​

• Hilton Grand Vacations Inc successfully closed the Bluegreen acquisition, adding nearly 200,000 members and expanding its portfolio to over 200 properties.
• The company made substantial progress towards achieving $100 million in cost synergies, enhancing sales and marketing execution.
• HGV launched HGV Max to Bluegreen members, providing access to more properties and destinations, which led to growth in transactions and contract sales.
• Record free cash flow generation was achieved, with over $432 million returned to shareholders.
• Strong performance in the APAC region, particularly in Hawaii, with high demand for new properties like Ka Haku in Waikiki.

Negative Points​

• The consumer environment remains challenging due to inflation and elevated interest rates impacting spending and sentiment.
• Back-to-back hurricanes in the southern US affected tour growth, causing nearly $23 million in lost contract sales and $11 million in EBITDA.
• The addition of Bluegreen's rental business has negatively impacted rental segment profitability, particularly in seasonally slower quarters.
• The financing optimization program will increase consumer finance interest expenses by $25 million, impacting adjusted EBITDA.
• The company faces a $30 million EBITDA headwind in 2025 due to changes in license fee rates for Diamond and Bluegreen sales.

Transcript and commentary on 2024 Q4/Annual Earnings Report


Hilton Grand Vacations Inc reported its fourth quarter 2024 earnings, revealing a significant miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company’s EPS came in at $0.49, falling short of the expected $0.81. Revenue also missed the mark, totaling $1.28 billion against a forecast of $1.3 billion. Despite the earnings miss, the stock price surged by 7.1% in pre-market trading, reflecting investor optimism about the company’s strategic initiatives and future outlook.

Key Takeaways​

• Hilton Grand Vacations missed EPS and revenue forecasts for Q4 2024.
• The stock rose 7.1% in pre-market trading despite the earnings miss.
• The company reported a 9% year-over-year growth in contract sales.
• Hilton Grand Vacations launched the HGV Max program, expanding its customer base.
• Strategic partnerships with Bass Pro and Choice Hotels (NYSE:CHH) are set to expand in 2025.

Earnings vs. Forecast​

Hilton Grand Vacations reported an EPS of $0.49, missing the forecasted $0.81 by approximately 39.5%. Revenue was also below expectations, coming in at $1.28 billion compared to the projected $1.3 billion. This marks a notable deviation from the company’s historical performance, where it typically meets or exceeds market expectations.

Market Reaction​

Despite the earnings miss, Hilton Grand Vacations’ stock experienced a 7.1% increase in pre-market trading, reaching $43.39. This upward movement can be attributed to investor confidence in the company’s strategic initiatives, such as the launch of HGV Max and expanding partnerships. The stock’s current price remains within its 52-week range, which has seen a high of $48.65 and a low of $33.21.

Outlook & Guidance​

Looking forward, Hilton Grand Vacations has set ambitious goals for 2025, including adjusted EBITDA guidance between $11.25 billion and $11.65 billion. InvestingPro forecasts indicate strong sales growth potential, with analysts projecting 39% revenue growth for fiscal year 2024. The company’s management has been actively buying back shares, demonstrating confidence in future performance. The company anticipates low to mid-single-digit growth in tours and a mid-single-digit increase in VPG (Volume Per Guest). Additionally, $600 million is earmarked for share repurchases, and efforts to optimize financing are expected to increase non-recourse borrowing to 65-70%.

Executive Commentary​

CEO Mark Wang emphasized the company’s ongoing integration efforts and commitment to shareholder returns. "We’re in the middle innings of our integration work with solid line of sight on the remaining milestones," Wang stated. He also highlighted the strength of leisure travel and the company’s strategic focus: "Our priority is to return cash to our shareholders."

Risks and Challenges​

• Macroeconomic pressures such as inflation and interest rates could impact consumer spending.
• The integration of Bluegreen poses operational challenges and risks.
• Market competition remains fierce, requiring continuous innovation and adaptation.
• Dependence on leisure travel trends, which could fluctuate with economic conditions.
• Potential geopolitical tensions affecting the APAC region, a key market for the company.

HGV Earnings Release
HGV Annual Financial Presentation
HGV Investor Relations

 

[mountainboy]

2024 Q4/annual Earnings Report

Previous Investor Calls/Reports

2024 Q3 Earnings Call
2024 Q2 Earnings Call
2024 Q1 Investor Call
2023 Q4/Annual Earnings Call
2023 Q3 Earnings Call
2023 Q2 Earnings Call
2023 Q1 Earnings Call
2022 Q3 Earnings Call
2022 Q1 Earnings Call
2021 Q3 Earnings Call

My Commentary

It looks like they did not have a great year. Missing their expected target was rare for HGV. Even in down years, they usually or exceed expectations. Interestingly enough, when they announced earnings, their stock rose. Not sure how I feel about this report. They missed their mark by $200 million, but had a decent quarter. Sales were up from 4th quarter last year. They seem to be holding steady with their packages and membership. Max membership rose and they attribute that to the Bluegreen sales start. Interestingly enough, they are still partnering with Choice Hotels to bring in potential clients. BlueGreen was partnered with them prior to the HGV purchase. They list Bass Pro Shops and Great Wolf Loge as other partners they recruit new owners from.

I cheated on this one. Most of this report was financial (not much news on the resorts, systems etc) and out of my league. I did some research and used Yahoo for the highlights and Investor.com for the opinion. The full transcript is in the Investor.com site. I don't if know the investor.com a reputable source or not so read at your own risk. The highlights from Yahoo are taken directly from HGV's release. I have linked those at the bottom. So with out further adieu:

Yahoo Finance on HGV Q4/Annual Earnings Report

• Contract Sales: $837 million for the fourth quarter, driven by strong VPG performance.
• Adjusted EBITDA: $289 million with margins excluding reimbursements of 23%.
• VPG (Volume Per Guest): $4,026, over 20% ahead of pro forma 2019 levels.
• Occupancy Rate: 82% for the quarter.
• Member Count: 724,000 at the end of the quarter.
• Adjusted Free Cash Flow: Record $837 million for the year.
• Shareholder Returns: $432 million returned to shareholders, reducing diluted share count by 10%.
• Revenue Excluding Cost Reimbursements: $1.2 billion for the quarter.
• Real Estate Sales and Marketing Expense: $387 million, or 46% of contract sales.
• Financing Business Revenue: $153 million with segment profit margins of 61%.
• Rental and Ancillary Revenues: $174 million with a segment loss of $11 million.
• Non-Recourse Debt Balance: Approximately $2.3 billion at quarter end.
• Net Leverage: 3.77 times on a TTM basis.

Positive Points​

• Hilton Grand Vacations Inc successfully closed the Bluegreen acquisition, adding nearly 200,000 members and expanding its portfolio to over 200 properties.
• The company made substantial progress towards achieving $100 million in cost synergies, enhancing sales and marketing execution.
• HGV launched HGV Max to Bluegreen members, providing access to more properties and destinations, which led to growth in transactions and contract sales.
• Record free cash flow generation was achieved, with over $432 million returned to shareholders.
• Strong performance in the APAC region, particularly in Hawaii, with high demand for new properties like Ka Haku in Waikiki.

Negative Points​

• The consumer environment remains challenging due to inflation and elevated interest rates impacting spending and sentiment.
• Back-to-back hurricanes in the southern US affected tour growth, causing nearly $23 million in lost contract sales and $11 million in EBITDA.
• The addition of Bluegreen's rental business has negatively impacted rental segment profitability, particularly in seasonally slower quarters.
• The financing optimization program will increase consumer finance interest expenses by $25 million, impacting adjusted EBITDA.
• The company faces a $30 million EBITDA headwind in 2025 due to changes in license fee rates for Diamond and Bluegreen sales.

Transcript and commentary on 2024 Q4/Annual Earnings Report


Hilton Grand Vacations Inc reported its fourth quarter 2024 earnings, revealing a significant miss on both earnings per share (EPS) and revenue compared to analyst forecasts. The company’s EPS came in at $0.49, falling short of the expected $0.81. Revenue also missed the mark, totaling $1.28 billion against a forecast of $1.3 billion. Despite the earnings miss, the stock price surged by 7.1% in pre-market trading, reflecting investor optimism about the company’s strategic initiatives and future outlook.

Key Takeaways​

• Hilton Grand Vacations missed EPS and revenue forecasts for Q4 2024.
• The stock rose 7.1% in pre-market trading despite the earnings miss.
• The company reported a 9% year-over-year growth in contract sales.
• Hilton Grand Vacations launched the HGV Max program, expanding its customer base.
• Strategic partnerships with Bass Pro and Choice Hotels (NYSE:CHH) are set to expand in 2025.

Earnings vs. Forecast​

Hilton Grand Vacations reported an EPS of $0.49, missing the forecasted $0.81 by approximately 39.5%. Revenue was also below expectations, coming in at $1.28 billion compared to the projected $1.3 billion. This marks a notable deviation from the company’s historical performance, where it typically meets or exceeds market expectations.

Market Reaction​

Despite the earnings miss, Hilton Grand Vacations’ stock experienced a 7.1% increase in pre-market trading, reaching $43.39. This upward movement can be attributed to investor confidence in the company’s strategic initiatives, such as the launch of HGV Max and expanding partnerships. The stock’s current price remains within its 52-week range, which has seen a high of $48.65 and a low of $33.21.

Outlook & Guidance​

Looking forward, Hilton Grand Vacations has set ambitious goals for 2025, including adjusted EBITDA guidance between $11.25 billion and $11.65 billion. InvestingPro forecasts indicate strong sales growth potential, with analysts projecting 39% revenue growth for fiscal year 2024. The company’s management has been actively buying back shares, demonstrating confidence in future performance. The company anticipates low to mid-single-digit growth in tours and a mid-single-digit increase in VPG (Volume Per Guest). Additionally, $600 million is earmarked for share repurchases, and efforts to optimize financing are expected to increase non-recourse borrowing to 65-70%.

Executive Commentary​

CEO Mark Wang emphasized the company’s ongoing integration efforts and commitment to shareholder returns. "We’re in the middle innings of our integration work with solid line of sight on the remaining milestones," Wang stated. He also highlighted the strength of leisure travel and the company’s strategic focus: "Our priority is to return cash to our shareholders."

Risks and Challenges​

• Macroeconomic pressures such as inflation and interest rates could impact consumer spending.
• The integration of Bluegreen poses operational challenges and risks.
• Market competition remains fierce, requiring continuous innovation and adaptation.
• Dependence on leisure travel trends, which could fluctuate with economic conditions.
• Potential geopolitical tensions affecting the APAC region, a key market for the company.

HGV Earnings Release
HGV Annual Financial Presentation
HGV Investor Relations

Diamond, Bluegreen & now Choice?
(Choice = usually budget places like Rodeway Inn, Sleep Inn, Quality Inn, Comfort Inn etc)
Dare I say, poor 'Choice', pun intended...

 

[dayooper]

Diamond, Bluegreen & now Choice?
(Choice = usually budget places like Rodeway Inn, Sleep Inn, Quality Inn, Comfort Inn etc)
Dare I say, poor 'Choice', pun intended...

BlueGreen had a marketing deal where they could book packages at Choice Hotels. If the goal is to start the ownership process earlier (it's why HGV bought out BlueGreen), than starting off in a lower end hotel makes sense. It's why the marketing agreement with Great Wolf Lodge is in place. Get young families hooked at an earlier time. DRI and BlueGreen purchases (and GWL marketing agreement) weren't made for us Legacy HGVC owners to be able to book more places. It was to market to a whole new group of owners. It's actually a good idea, the question is did they pay too much for the systems.

 

[mountainboy]

TS = Aspirational purchases...
Selling a dream...

(Unfortunately many of these buyers would be the least likely to be able to afford these discretionary purchases, with tons of fees/financing & most likely to buy impulsively)...

 

[dioxide45]

TS = Aspirational purchases...
Selling a dream...

(Unfortunately many of these buyers would be the least likely to be able to afford these discretionary purchases, with tons of fees/financing & most likely to buy impulsively)...

That’s how the whole timeshare sales model works.