HGVC 2023 Q3 Earnings Report and Investor Call Transcript

[dayooper]

Moderator added Previous Earnings Calls:
2023 Q2 Earnings Call
2023 Q1 Earnings Call
2022 Q3 Earnings Call
2022 Q1 Earnings Call
2021 Q3 Earnings Call

Still waiting for the transcript from the investor call, but here’s the highlights from Business Insider:

ORLANDO, Fla.--(BUSINESS WIRE)--Hilton Grand Vacations Inc. (NYSE: HGV) (“HGV” or “the Company”) today reports its third quarter 2023 results.

Third quarter of 2023 highlights1

• Total contract sales were $603 million.
• Member count was 526,000. Consolidated Net Owner Growth (NOG) for the 12 months ended Sept. 30, 2023, was 2.1%.
• Total revenues for the third quarter were $1,018 million compared to $1,116 million for the same period in 2022.
  • Total revenues were affected by a net deferral of $12 million in the current period compared to a net recognition of $86 million in the same period in 2022.
• Net income for the third quarter was $92 million compared to $150 million for the same period in 2022.
  • Adjusted net income for the third quarter was $109 million compared to $168 million for the same period in 2022.
  • Net income and adjusted net income were affected by a net deferral of $7 million in the current period compared to a net recognition of $43 million in the same period in 2022.
• Diluted EPS for the third quarter was $0.83 compared to $1.24 for the same period in 2022.
  • Adjusted diluted EPS for the third quarter was $0.98 compared to $1.40 for the same period in 2022.
  • Diluted EPS and adjusted diluted EPS were affected by a net deferral of $7 million in the current period compared to a net recognition of $43 million in the same period in 2022, or $(0.06) and $0.36 per share in the current period and the same period in 2022, respectively.
• Adjusted EBITDA for the third quarter was $269 million compared to $338 million for the same period in 2022.
  • Adjusted EBITDA was affected by a net deferral of $7 million in the current period compared to a net recognition of $43 million in the same period in 2022.
  • Adjusted EBITDA was affected by approximately $10 million due to the impact of the Maui wildfires.
• During the third quarter, the Company repurchased 1.5 million shares of common stock for $64 million.
  • Through Oct. 30, 2023, the Company has repurchased approximately 690,000 shares for $26 million and currently has $432 million of remaining availability under the 2023 Share Repurchase Plan.
• The Company is updating its guidance for the full year 2023 Adjusted EBITDA excluding deferrals and recognitions to a range of $1,000 million to $1,020 million, from the prior $1,090 million to $1,120 million, which includes a reduction of approximately $17 million to $20 million due to the impact of the Maui wildfires in Q3 and Q4.

“I’m proud of the team’s resilience as we navigated several unique challenges this quarter, including the devastating wildfires in Maui and a modestly softer consumer macroeconomic environment,” said Mark Wang, president and CEO of Hilton Grand Vacations. “We started the quarter with a strong July, although growth decelerated as we moved through the quarter – particularly in August. Accordingly, we’re updating our full-year outlook to reflect a more moderate improvement in contract sales for the remainder of the year, along with the ongoing impact of limited Maui operations. We remain confident in our long-term strategy of driving tour flow and net owner growth to embed future value into the business and generate sustainable free cash flow.”

Hilton Grand Vacations Reports Third Quarter 2023 Results

Hilton Grand Vacations Reports Third Quarter 2023 Results

www.businesswire.com

HGVC was down compared to this time last year. Could we be seeing the Max influence waning a bit?

 

[dioxide45]

HGVC was down compared to this time last year. Could we be seeing the Max influence waning a bit?

I think timeshare sales overall are struggling a bit. Marriott didn't report great numbers on sales either. Timeshare sales are down, though Marriott did take a big hit in Maui with multiple sales centers being closed. Domestic travel is waning and that is causing timeshare sales to slump.

 

[dayooper]

I think timeshare sales overall are struggling a bit. Marriott didn't report great numbers on sales either. Timeshare sales are down, though Marriott did take a big hit in Maui with multiple sales centers being closed. Domestic travel is waning and that is causing timeshare sales to slump.

Yeah, MVC was down a bit last quarter. HGV was still gaining and it looks like it was gaining until August. I do believe domestic travel is being impacted on the cost of traveling right now. Airfare is outrageous. It would have cost us $1200 for 2 round trip tickets to Vegas from Detroit last March. We drove to Chicago instead.

 

[escanoe]

HGVC was down compared to this time last year. Could we be seeing the Max influence waning a bit?

Buying Bluegreen will give them a whole batch of new potential victims for which to market Max.

 

[PigsDad]

Revenue down. Earnings down. Sounds like a great time to buy another company!



Kurt

 

[brp]

Revenue down. Earnings down. Sounds like a great time to buy another company!

Well, couples who are having marital problems often have kids as a way to solve the problems.....

On the plus side, should cut down even more on ROFR.

Cheers.

 

[GT75]

On the plus side, should cut down even more on ROFR.

How can it cut anymore since it already is $0 except for SC properties (which is controlled by Strand)?

 

[GT75]

Well, couples who are having marital problems often have kids as a way to solve the problems.....

I was actually thinking the same thing. "Let's talk about the purchase of BG during the investor phone call because we don't want to talk about our problems." I am still waiting to hear the report on the investor phone call.

 

[dayooper]

Moderator added Previous Earnings Calls:
2023 Q2 Earnings Call
2023 Q1 Earnings Call
2022 Q3 Earnings Call
2022 Q1 Earnings Call
2021 Q3 Earnings Call

Here is the transcript from yesterdays call.

Hilton Grand Vacations Inc. (HGV) Q3 2023 Earnings Call Transcript

Hilton Grand Vacations Inc. (NYSE:NYSE:HGV) Q3 2023 Earnings Conference Call November 6, 2023 11:00 AM ETCompany ParticipantsMark Melnyk - Senior Vice...

seekingalpha.com

They try to spin the down turn the best they can, but they are still lower than this time last year. They do acknowledge that macro economics are effecting their bottom line. I won’t rehash what’s above so here’s the highlights:

• 81% occupancy in the 3rd quarter
  BlueGreen brings 50 new resorts and 200,000 members
• Would take at least a decade to create the inventory in an organic way (building new properties)
• Gives sales more places to sell in attractive locations
• Quote Mark Wang: … engage additional new buyers with attractive price points at an earlier stage in their lives, providing additional opportunities for upgrades and improving lifetime value
• They feel like they are very good at creating synergies and can save $100 million by combining their operations like they did with the DRI merger.
• They like the easy turnover of the trust system
• Excited about The Bass Pro Shops partnership. Feels it will fit right in with what they already have (Ultimate Access)
• Paid $1.5 billion in cash to purchase BG
• The structure of the board will not change, no new seats added
• Even though sales revenue was down, buyer sales is up
• Club rental revenue was up
• Tours were up even though they lost 2000 tours in Maui.

In all, they are placing an ownership path that starts earlier and cheaper. They can get new owners with the lower price point and keep them longer as they continue to upgrade their ownership. I wonder if they will go for a higher end system to complete their path. @CalGalTraveler mentioned, would something like Ritz Carlton be in the works?

HGV is doing fine. They were down (3%) in revenue, but that‘s inline with the rest of the sector. Will I see anything tangible with this acquisition? Nope, but a strong company keeps what I like about the system in place and makes my ownership in the HGVC system better.

Edit: Hilton Hotels approved the transaction Sunday. It’s a done deal.

 

[GT75]

HGV is doing fine.

Thanks for the update.

 

[GT75]

A couple of additional comments:

• Per Mark Wang, "HGV Max has continued to resonate with our owners and our Max membership growth has exceeded our overall member growth as we attract more owners to upgrade into the program and deepen our member engagement."
• Owners are coming back pretty well but the Japanese, in general, are still down 65-70% from prepandemic.
• There is a softening in Orlando. I think that Mark Wang was referring to sales/maybe tours.
• Per Mark Wang referring to BG, "We've been impressed with the consistent high-quality nature of the resorts and we believe they'll be readily able to convert over to HGV brands."
• Per Mark Wang referring to BG, "Nearly 90% of their members live within a 4-hour drive of a Bluegreen resort which complements our portfolio with additional Drive-to properties."

 

[bnoble]

There is a softening in Orlando. I think that Mark Wang was referring to sales/maybe tours.

I would bet tours and sales both. Orlando tourism has softened generally--Universal reported declines in revenue in the most recent quarter, and Disney is expected to do the same later today.

 

[Eric B]

@CalGalTraveler mentioned, would something like Ritz Carlton be in the works?

Based on the brand chart posted in the thread on BG acquisition at https://tugbbs.com/forums/threads/hgv-agrees-to-purchase-bluegreen-vacations.358096/page-8, HGVC equates the Hilton Club properties with the Waldorf Astoria, Conrad, and LXR Hilton hotels and the luxury end of the MVW resorts. I’m not sure I fully agree with that as some of the NYC studio units in the NYC ones don’t remind me of the Ritz Carlton or St Regis resorts I’ve been to. The 1 BR Penthouse duplex at The Quin is a lot more like it and they have separated the penthouses as a separate resort there. I think they believe they have that segment covered.

 

[SmithOp]

A couple of additional comments:

• Per Mark Wang, "HGV Max has continued to resonate with our owners and our Max membership growth has exceeded our overall member growth as we attract more owners to upgrade into the program and deepen our member engagement."

Typical corporate doublespeak when all new members are automatically Max. It would be nice to cite numbers of how many legacy owners upgraded to Max. "Exceeded" could be just a handful.

 

[Mowogo]

Typical corporate doublespeak when all new members are automatically Max. It would be nice to cite numbers of how many legacy owners upgraded to Max. "Exceeded" could be just a handful.

And the that could be more from general upgrades and maybe having some better success than anything directly attributable to Max.

 

[GT75]

It would be nice to cite numbers of how many legacy owners upgraded to Max. "Exceeded" could be just a handful.

I don't think that they stated this time how many Max members were added or the total this time around. Previously, I thought that they did.

This is from the previous investor's call

• Total of 522,000 members with 100,000 of them being Max