Hilton Grand Vacations Inc (HGV) Q2 2024 Earnings Call Highlights: Strong Cash Flow Amidst ...

GuruFocus News
5 min read

In This Article:

  • Contract Sales: $757 million for the quarter.

  • EBITDA: $270 million with margins of 22%.

  • Adjusted Free Cash Flow: $370 million.

  • Revenue (excluding cost reimbursements): $1.1 billion.

  • VPG (Volume Per Guest): $3,320, 10% ahead of 2019 levels.

  • Occupancy Rate: 83% for the quarter.

  • Owner Count: Over 720,000 owners.

  • Share Repurchase: 2.3 million shares for $100 million during the quarter.

  • Debt Balance: Corporate debt of $4.9 billion and non-recourse debt of $1.7 billion.

  • Adjusted EBITDA Guidance: Lowered to a range of $1.075 billion to $1.135 billion.

Release Date: August 08, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Hilton Grand Vacations Inc (NYSE:HGV) reported contract sales of $757 million and adjusted EBITDA of $270 million, demonstrating strong financial performance despite challenges.

  • The company has successfully integrated Bluegreen into its operations, achieving $71 million in annualized cost synergies, on track for a $100 million target.

  • HGV's financing team effectively managed the higher rate environment, meeting strong ABS investor demand with well-subscribed note offerings.

  • The company produced $370 million in adjusted free cash flow, maintaining a strong cash flow conversion rate and repurchasing 2.3 million shares for $100 million.

  • HGV continues to expand its product offerings and geographic diversity, enhancing its market position and member base, with over 720,000 owners and a 1.7% net owner growth rate.

Negative Points

  • HGV experienced a broad-based pullback in consumer spending behavior, particularly affecting new buyer segments, leading to a reduction in guidance for the year.

  • The company faced execution challenges during the quarter, partly due to the integration process with Bluegreen, which disrupted sales and marketing operations.

  • There was a year-over-year decline in both tours and VPG, with new buyer tours remaining lower as the company rebuilds its tour pipeline.

  • The provision for bad debt increased to over 15% of owned contract sales, reflecting higher losses from some Bluegreen-originated loans.

  • HGV's restructuring efforts caused significant disruption, impacting staffing levels and limiting tour slot availability, which affected sales performance.

Q & A Highlights

Q: With respect to the guidance adjustment and isolating the discussion around execution issues, can you talk more about your comfort that you've got your arms around that? Also, can you provide an update on Maui? A: We expect continued macro pressure on consumer spending in the back half of the year, which is reflected in our lowered guidance. The pullback in guidance is primarily due to lower contract sales, particularly in the new buyer segment. Regarding Maui, both our resorts are fully operational, but new buyer tour generation locations remain shut down. The Maui Bay Village project is performing well and selling throughout our network. - Mark Wang, CEO

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