HGVC 2024 1st Quarter Investor Call report

[dayooper]

HGV Investor Call 5-9-2024

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

On the Call -

Mark Melnyk - Senior Vice President of IR
Mark Wang - Chief Executive Officer
Dan Mathewes - President and Chief Financial Officer

• Tours - Jan was low, but by March, they saw a low single digit positive growth from last quarter. Sold more packages since mid ‘22
• Max Membership - Over ⅓ of members are Max (not including BlueGreen) 2 years after launch.
• Bluegreen
  • Still in the planning stage, but will start the integration later this year. Foundation for synergies and integration was laid by the DRI purchase.
  • Biggest issue is technology and legal aspects.
• Diamond Integration -
  • Through the end of the first quarter, they have rebranded 36 properties representing over 9,600 or 2/3 of the total keys.
  • They expect that they will rebrand 12 properties this year for an additional 2,500 keys, bringing us to over 70% of the total by year end.
  • The remainder of the properties will be completed between 2025 and ‘26.
• BG Integration -
  • The rebranding of the sales centers will come first, followed by the properties over the next number of years.
  • They have more than 10 resorts planned for rebranding this year.
  • HGV Max will take time to roll out the BlueGreen as well.
  • Mark Wang thinks the one missing element for Bluegreen, I always felt was Hawaii.
  • That won't occur until we get HEV Max rolled out and it won't occur until the latter part of this year.
  • Bluegreen hasn't upgraded the same degree as the rest of the -- or the broader industry. He thinks Hawaii, along with HEV and Hilton benefits will help encourage.

Financials - All of these are assuming HGV owned BlueGreen the entire quarter (the deal closed on Jan 17).

• Combined contract sales, using that full quarter basis were $656 million with steady tour growth.
• BlueGreen contributed $161 million to the $656 million of total sales.
• New legacy owners comprised 27% of sales.
• Both HGV and Bluegreen demonstrated very similar growth trends for tours and VPG, and were largely in line with our expectations.
• Combined, VPG (Volume per Guest) for the full quarter was $3,575, down about 5% driven by lower close rates.
• Close rates in our legacy business improved from the fourth quarter.
• Occupancy in the quarter was flat at 79%, although last year's numbers included the full complement of Maui rooms.
• Total revenue excluding cost reimbursements in the first quarter was $1.03 billion
• Adjusted EBITDA was $270 million with margins of 26%.
• EBITDA included $11 million of Bluegreen cost synergies recognized during the quarter for a run rate of $53 million annualized.
• On track to achieving a targeted $100 million of cost synergies within 24 months.

Maui -

• None of the Maui properties sustained any damage in the wild fires last year.
• Maui Bayville property (HGVC Resort) is up on the space and is operating normal and trends are continuing to improve.
• The Kano Poly beach property (HVC Resort), which is on the west side near the epicenter of the worst damage. Operations are still impacted. They still have some team members, FEMA and aid workers staying within the property.
• Said Maui would've been around $90 million in sales in ‘23 (down almost 15% versus prior year in Q1 and expect roughly the same in Q2.

My Take -
The company seems to be holding steady. It’s still a tough market, but their sales seem to be OK. Their EBITDA seems similar to last quarter and 1st quarter of 2023. In all, they seem financially stable. Maui still not completely up and running.

They are moving quite a bit faster with the BlueGreen rebranding than DRI. Over 10 resorts and all current 18 sales centers rebranded by the end of the year.
What is HEV Max? It was mentioned when talking about BlueGreen. Is this what membership you will get if you purchase through the former BlueGreen? Just more alphabet soup for sales to confuse with. Or is it just a misinterpretation from the transcription software?

On a side note, sorry if this isn’t very good. This has been one of the most hectic, time consuming, energy draining springs in my 25 years of teaching. So many changes to my job (many I didn't ask for). I don’t have the energy like I usually have. I have included a link to the transcript so you can read at your leisure.

https://seekingalpha.com/article/4691575-hilton-grand-vacations-inc-hgv-q1-2024-earnings-call-transcript

 

[GT75]

Thanks @dayooper

 

[CalGalTraveler]

Thanks @dayooper for the info. This is great.

BTW...hang in there teaching.

 

[free2travel]

Kano Poly

Considering that, I would say "HEV" is a transcription error. I have heard of Polly Want a Cracker and Cal-Poly but not Kano Poly. What was the name of Steve's Hawaiian co-worker on Hawaii 5-0? Kono?
Well done. In this one "VPG (Volume per Guest) for the full quarter was $3,575, down about 5% driven by lower close rates.", are they bundling all the standard revenues from guests with the revenue from closing a new sale? Those are such different things.

 

[dayooper]

Considering that, I would say "HEV" is a transcription error. I have heard of Polly Want a Cracker and Cal-Poly but not Kano Poly. What was the name of Steve's Hawaiian co-worker on Hawaii 5-0? Kono?
Well done. In this one "VPG (Volume per Guest) for the full quarter was $3,575, down about 5% driven by lower close rates.", are they bundling all the standard revenues from guests with the revenue from closing a new sale? Those are such different things.

The way they have said it in the past, it’s combined. Could be different as it wasn’t said in the transcript.

 

[bizaro86]

Considering that, I would say "HEV" is a transcription error. I have heard of Polly Want a Cracker and Cal-Poly but not Kano Poly. What was the name of Steve's Hawaiian co-worker on Hawaii 5-0? Kono?
Well done. In this one "VPG (Volume per Guest) for the full quarter was $3,575, down about 5% driven by lower close rates.", are they bundling all the standard revenues from guests with the revenue from closing a new sale? Those are such different things.

Kano Poly is a transcription error for Kaanapali.

They're talking about the former Diamond property Kaanapali Beach Club, which is on the west side near where the fires were.

 

[Panina]

Thanks @dayooper for the update. Did they mention which 10 resorts they are rebranding this year?

 

[GT75]

Did they mention which 10 resorts they are rebranding this year?

No, they didn't.

 

[GT75]

HGV Max will take time to roll out the BlueGreen as well.

It was stated that they expect this to be in the forth quarter (probably a little earlier but could be a little later also) this year.

 

[GT75]

Max Membership - Over ⅓ of members are Max (not including BlueGreen) 2 years after launch

It was stated that the Max membership was at 160K (the 1/3 members in Max was not including BG). Total membership count with BG is at 718K.

From the previous call 529K HGV total members (that would have been prior to BG).

 

[dioxide45]

Considering that, I would say "HEV" is a transcription error. I have heard of Polly Want a Cracker and Cal-Poly but not Kano Poly. What was the name of Steve's Hawaiian co-worker on Hawaii 5-0? Kono?
Well done. In this one "VPG (Volume per Guest) for the full quarter was $3,575, down about 5% driven by lower close rates.", are they bundling all the standard revenues from guests with the revenue from closing a new sale? Those are such different things.

I understand that VPG is a sales metric. I believe it is net sales divided by total tours (tour guests). I don't think they include other revenue like resort food & beverage. It should account for all the free gifts they hand out to get people through the sales floor.

 

[dioxide45]

What is HEV Max? It was mentioned when talking about BlueGreen. Is this what membership you will get if you purchase through the former BlueGreen? Just more alphabet soup for sales to confuse with. Or is it just a misinterpretation from the transcription software?

I wonder how the transcript is created. Listening to the webcast, I think they are actually saying HGV, but perhaps whatever automated system is doing the speech to text, it is thinking they are saying HEV.

 

[free2travel]

net sales divided by total tours (tour guests)

That makes sense. Tour guests, not staying guests, and focus solely on sales results, sales revenue.

 

[Nowaker]

Maui Bayville

Maui Bay Villas