Wall Street expects a year-over-year increase in earnings on higher revenues when Hilton Grand Vacations (HGV) reports results for the quarter ended June 2025. While this widely-known consensus outlook is important in gauging the company's earnings picture, a powerful factor that could impact its near-term stock price is how the actual results compare to these estimates.The earnings report, which is expected to be released on July 31, might help the stock move higher if these key numbers are better than exp ...

Core Insights - The logistics sector has seen significant engagement from investors, particularly in the ASEAN and US markets, highlighting its growth potential [1] - The popularity of insurance companies in the Philippines since 2014 indicates a shift in investment strategies among local investors [1] - The diversification of investment portfolios across various industries and market capitalizations is becoming a common practice among investors [1] Investment Trends - There is a notable trend of investing in blue-chip companies initially, which has evolved into a broader investment strategy across different sectors [1] - The entry into the US market has been facilitated by platforms like Seeking Alpha, which provide valuable analyses for comparison with local markets [1] - The focus on specific sectors such as banking, telecommunications, retail, hotels, and logistics reflects targeted investment strategies [1]

Core Viewpoint - Hilton Grand Vacations (NYSE: HGV) has underperformed in the past year, with a loss of approximately 7% in value due to rising credit losses in its timeshare loan portfolio [1] Company Performance - The company has faced increasing credit losses on its timeshare loan portfolio, which has contributed to its poor stock performance [1] Analyst Perspective - The analysis is based on over fifteen years of experience in making contrarian bets and focusing on stock-specific turnaround stories to achieve favorable risk/reward profiles [1]

Sales and Revenue Performance - For the three months ended March 31, 2025, sales from fee-for-service and just-in-time inventory accounted for 15% and 10% of contract sales, respectively [123]. - The estimated contract sales value related to inventory currently available for sale is $13.2 billion, with capital efficient arrangements representing approximately 28% of that supply [123]. - For the three months ended March 31, 2025, 75% of contract sales were to existing owners, slightly down from 76% in the same period of 2024 [126]. - Real estate sales and financing revenues decreased by 6.1% from $687 million in Q1 2024 to $645 million in Q1 2025 [148]. - Resort operations and club management revenues increased by 8.6% from $360 million in Q1 2024 to $391 million in Q1 2025 [148]. - Total revenues for the company decreased by 0.7% from $1,156 million in Q1 2024 to $1,148 million in Q1 2025 [148]. - Sales of VOIs (Vacation Ownership Interests) decreased by $60 million or 13.7%, from $438 million in 2024 to $378 million in 2025 [161]. - Contract sales increased by $90 million or 14.3%, from $631 million in 2024 to $721 million in 2025, primarily due to a 14.4% increase in VPG (Volume Per Guest) [160]. Financial Metrics and Losses - Net loss attributable to stockholders increased from $4 million in Q1 2024 to $17 million in Q1 2025, a change of $13 million [148]. - Adjusted EBITDA attributable to stockholders decreased by 34.1% from $273 million in Q1 2024 to $180 million in Q1 2025 [148]. - The company reported a net loss of $12 million for Q1 2025 compared to a net loss of $2 million in Q1 2024 [148]. - Total segment revenues decreased by 1.1% from $1,047 million in Q1 2024 to $1,036 million in Q1 2025 [148]. - Adjusted EBITDA for the three months ended March 31, 2025, was $185 million, a decrease of $91 million or 33.0% compared to $276 million in 2024 [149]. - Net loss attributable to stockholders was $17 million for the three months ended March 31, 2025, compared to a net loss of $4 million in 2024, representing a $13 million increase in loss [153]. Expenses and Cost Management - Sales and marketing expense increased by $24 million or 6.0%, from $401 million in 2024 to $425 million in 2025 [156]. - Real estate profit decreased by $64 million or 47.8%, from $134 million in 2024 to $70 million in 2025, primarily due to decreased sales of VOIs [161]. - The provision for financing receivables losses increased by $8 million or 12.5%, from $64 million in 2024 to $72 million in 2025 [160]. - Fee-for-service commissions increased by $4 million or 6.3%, from $64 million in 2024 to $68 million in 2025 [161]. - The real estate profit margin decreased from 26.7% in 2024 to 15.7% in 2025, reflecting the impact of decreased sales and increased expenses [161]. - Share-based compensation expense increased by 33.3% from $9 million in Q1 2024 to $12 million in Q1 2025 [148]. - Acquisition and integration-related expenses decreased significantly by 74.3% from $109 million in Q1 2024 to $28 million in Q1 2025 [148]. Financing and Cash Flow - Financing propensity for the three months ended March 31, 2025, was 64%, compared to 65% for the same period in 2024 [127]. - The weighted-average FICO score for loans to U.S. and Canadian borrowers at the time of origination was 736 for 2025, down from 744 in 2024 [128]. - Financing profit increased by $5 million to $70 million for the three months ended March 31, 2025, compared to $65 million in 2024, driven by a $21 million increase in financing revenue [164][165]. - Financing revenue rose by $21 million to $125 million, primarily due to an increase in the weighted average outstanding balance of timeshare financing receivables and a decrease in premium amortization of $8 million [165]. - Financing expenses increased by $16 million to $55 million, mainly due to a $9 million rise in portfolio management expenses and a $6 million increase in consumer financing interest expense [166]. - Net cash provided by operating activities was $38 million for the three months ended March 31, 2025, compared to no cash provided in the same period in 2024 [180]. - Net cash used in investing activities was $32 million, significantly lower than $1,473 million in 2024, mainly due to the prior year's Bluegreen Acquisition [184]. - Net cash used in financing activities was $201 million, a decrease from $1,272 million in 2024, primarily due to reduced net proceeds from debt and increased share repurchases [185]. Company Operations and Market Presence - As of March 31, 2025, the company had approximately 725,000 members across its Club offerings, providing access to around 8,400 properties in the Hilton system [117]. - The company completed the acquisition of Bluegreen Vacations Holding Corporation on January 17, 2024, expanding its market presence [114]. - The company operates approximately 100 sales distribution centers in various domestic and international locations [124]. - The management fees earned from resort operations are highly predictable, typically ranging from 10% to 15% of the costs to operate the applicable resort [132]. - The company has signed a 10-year exclusive marketing agreement with Bass Pro, effective from the Bluegreen Acquisition Date, to market vacation packages [125]. - General and administrative expenses remained stable at $46 million, while depreciation and amortization rose by $5 million to $67 million, attributed to assets acquired in the Bluegreen Acquisition [171][172]. - The company has approximately $9,356 million in contractual obligations over 16 years, with $734 million due in the remainder of 2025 [186]. - The company has commitments from surety providers amounting to $669 million as of March 31, 2025, primarily consisting of escrow, subsidy, and construction-related bonds [187]. - The company is exposed to market risks from changes in interest rates and currency exchange rates, with no material change in exposure reported since the previous year [189].

Financial Data and Key Metrics Changes - Reported contract sales increased by 10% to $721 million, and adjusted EBITDA was $248 million with margins excluding reimbursements at 22% [13][23] - Total revenue excluding cost reimbursements grew by 11% to $1.1 billion [23] - Adjusted free cash flow for the quarter was $185 million, with a cash flow conversion rate of 75% [29][30] Business Line Data and Key Metrics Changes - Contract sales in the real estate business were $721 million, up 10% year-over-year, with VPG growing 15% to over $4,100 [24] - Rental and ancillary revenues reached $187 million, with a segment loss of $19 million due to elevated expenses [28] - Financing business revenue was $125 million, with segment profit at $70 million and margins of 56% [25] Market Data and Key Metrics Changes - Occupancy rate remained flat at 77%, with consolidated arrivals in the second quarter ahead of the prior year [14] - The marketing package pipeline was robust with over 725,000 packages, indicating solid booking growth [14] - Member count was 725,000 at the end of the quarter, with a net owner growth (NOG) of just under 1% [15][28] Company Strategy and Development Direction - The company is focused on enhancing lead generation, execution, and product enhancements to support EBITDA and cash flow goals [17][18] - Integration with Bluegreen is progressing well, achieving $89 million in cost synergies, with a target of $100 million by year-end [19] - The company maintains a disciplined approach to process and execution while adapting to macroeconomic volatility [10][20] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased macroeconomic volatility but emphasized the company's strong fundamentals and proactive initiatives [10][12] - The company is maintaining its EBITDA guidance for the year, expecting to navigate through potential uncertainties effectively [12][31] - Management expressed confidence in the demand for experiences over goods, which may continue to grow despite economic challenges [86] Other Important Information - The company repurchased $150 million worth of stock during the quarter, with a commitment to continue capital returns [30] - The liquidity position included $259 million in unrestricted cash and $870 million available under the revolving credit facility [32] Q&A Session Summary Question: Consumer behavior and forward bookings - Management noted no material changes in forward bookings, attributing stability to the prepaid nature of owner and package sales [35][37] Question: New owner mix versus owned mix - Management indicated that the mix is controllable and expects continued strong performance despite seasonal shifts [39][40] Question: Balance sheet optimization - Management clarified that a portion of unsecuritized receivables is not immediately securitizable but has a path for future securitization [46][50] Question: VPG performance and Bluegreen customer upgrades - Management reported strong VPG growth across all segments, particularly among Bluegreen owners, with significant outperformance [53] Question: KPIs and growth expectations - Management expects mid to higher single-digit VPG growth for the remainder of the year, despite some challenges in tour flow [60] Question: Strategic initiatives for financing and engagement - Management is standardizing financing programs and enhancing value propositions to drive engagement and performance [64][68]

Financial Data and Key Metrics Changes - Reported contract sales increased by 10% to $721 million, and adjusted EBITDA was $248 million with margins excluding reimbursements of 22% [12][20][22] - Total revenue excluding cost reimbursements grew by 11% to $1.1 billion [22] - Adjusted free cash flow in the quarter was $185 million, with a cash flow conversion rate of 75% [29] Business Line Data and Key Metrics Changes - Real estate contract sales were $721 million, up 10% year-over-year, with VPG growing 15% to over $4,100 [12][23] - Rental business revenues were $187 million, with a segment loss of $19 million due to elevated expenses [28] - Financing business revenue was $125 million, with segment profit of $70 million and margins of 56% [25] Market Data and Key Metrics Changes - Occupancy rate remained flat at 77%, with consolidated arrivals in the second quarter ahead of the prior year [13] - The marketing package pipeline was robust at over 725,000 packages, with confirmed travel dates increasing from the fourth quarter [13][14] - Member count was 725,000 at the end of the quarter, with NOG just under 1% [14][28] Company Strategy and Development Direction - The company is focused on enhancing lead generation, execution, and product enhancements to support EBITDA and cash flow goals [16][18] - Integration with Bluegreen is progressing, with $89 million in cost synergies achieved and a target of $100 million for the year [18] - The company maintains a disciplined approach to process and execution while adapting to macroeconomic volatility [10][19] Management's Comments on Operating Environment and Future Outlook - Management acknowledged increased macroeconomic volatility but noted that they have not seen material shifts in forward demand indicators [8][14] - The company is maintaining its adjusted EBITDA guidance for 2025 in the range of $1.125 billion to $1.165 billion [30] - Management expressed confidence in the business model's resilience, citing a diversified portfolio and a dedicated member base [10][11] Other Important Information - The company repurchased $150 million worth of stock during the quarter and remains committed to capital returns [29] - The liquidity position included $259 million of unrestricted cash and $870 million available under the revolving credit facility [32] Q&A Session Summary Question: Consumer behavior and forward bookings - Management noted that they have not seen changes in preview package sales or forward bookings, attributing this to their unique demand creation model [34][36] Question: New owner mix versus owned mix - Management clarified that the new buyer mix is closer to 25% to 30%, and they expect to maintain strong VPGs despite seasonal shifts [38][40] Question: Balance sheet optimization - Management discussed the current unsecuritized receivables and plans to term out their warehouse facility through ABS markets [44][46] Question: VPG performance and Bluegreen customer upgrades - Management reported strong VPG growth across all segments, particularly among Bluegreen owners, with over 40% growth in VPG for that group [52][54] Question: Economic downside scenarios - Management expressed confidence in their value proposition and ability to create demand, despite potential economic challenges [85][88]

Core Insights - Hilton Grand Vacations (HGV) reported revenue of $1.15 billion for the quarter ended March 2025, a decrease of 0.7% year-over-year, with EPS at $0.09 compared to $0.95 in the same quarter last year [1] - The revenue fell short of the Zacks Consensus Estimate of $1.24 billion, resulting in a surprise of -7.47%, while the EPS surprise was -81.63% against a consensus estimate of $0.49 [1] Revenue Breakdown - Resort and club management revenues were $183 million, exceeding the estimated $173.93 million [4] - Cost reimbursements generated $133 million, slightly above the average estimate of $129.67 million, reflecting a year-over-year increase of 9% [4] - Rental and ancillary services revenues reached $187 million, compared to the estimated $186.37 million, marking a year-over-year growth of 3.3% [4] - Sales, marketing, brand, and other fees totaled $142 million, in line with the estimate of $142.07 million, but showed a decline of 2.1% year-over-year [4] - Financing revenues were $125 million, surpassing the estimate of $123.54 million, with a significant year-over-year increase of 20.2% [4] - Sales of VOIs, net, amounted to $378 million, falling short of the estimated $476.78 million, representing a year-over-year decline of 13.7% [4] Stock Performance - Shares of Hilton Grand Vacations have decreased by 11.2% over the past month, contrasting with the Zacks S&P 500 composite's decline of only 0.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), suggesting it may perform in line with the broader market in the near term [3]

Company Performance - Hilton Grand Vacations (HGV) reported quarterly earnings of $0.09 per share, missing the Zacks Consensus Estimate of $0.49 per share, and down from $0.95 per share a year ago, representing an earnings surprise of -81.63% [1] - The company posted revenues of $1.15 billion for the quarter ended March 2025, missing the Zacks Consensus Estimate by 7.47%, and down from $1.16 billion year-over-year [2] - Over the last four quarters, Hilton Grand Vacations has not surpassed consensus EPS estimates and has topped consensus revenue estimates only once [2] Stock Performance - Hilton Grand Vacations shares have declined approximately 13.7% since the beginning of the year, compared to a decline of -5.3% for the S&P 500 [3] - The current consensus EPS estimate for the upcoming quarter is $0.86 on revenues of $1.35 billion, and for the current fiscal year, it is $3.42 on revenues of $5.4 billion [7] Industry Outlook - The Hotels and Motels industry, to which Hilton Grand Vacations belongs, is currently ranked in the top 32% of over 250 Zacks industries, indicating a favorable outlook compared to the bottom 50% [8] - Empirical research shows a strong correlation between near-term stock movements and trends in earnings estimate revisions, suggesting that tracking these revisions can be beneficial for investors [5]

Financial Performance - Total revenues for Q1 2025 were $1.148 billion, slightly down from $1.156 billion in Q1 2024, impacted by a net deferral of $126 million[4]. - Net loss attributable to stockholders for Q1 2025 was $(17) million, compared to $(4) million in Q1 2024, with adjusted net income at $9 million versus $99 million in the prior year[4]. - Diluted EPS for Q1 2025 was $(0.17), compared to $(0.04) for Q1 2024, while adjusted diluted EPS was $0.09 compared to $0.95 in the same period last year[4]. - Adjusted EBITDA attributable to stockholders for Q1 2025 was $180 million, down from $273 million in Q1 2024, affected by a net deferral of $68 million[4]. - Free cash flow for Q1 2025 was $6 million, compared to $(19) million for the same period in the prior year, while adjusted free cash flow was $185 million compared to $(374) million in Q1 2024[20]. - Adjusted EBITDA for Q1 2025 was $185 million, down 33% from $276 million in Q1 2024, resulting in an adjusted EBITDA profit margin of 16.1%[74]. - The adjusted net income attributable to stockholders dropped to $9 million in Q1 2025 from $99 million in Q1 2024, a decrease of 90.91%[90]. Sales and Revenue Metrics - Total contract sales for Q1 2025 were $721 million, a 14% increase compared to Q1 2024, or 10% on a pro forma basis[4]. - Sales of VOIs, net for Q1 2025 were $378 million, a decrease of 13.7% compared to $438 million in Q1 2024[68]. - Real estate sales and financing revenue decreased to $645 million in Q1 2025 from $687 million in Q1 2024, reflecting a decline of 6.1%[73]. - The total revenues from rental and ancillary services rose to $187 million in Q1 2025, compared to $181 million in Q1 2024, marking a 3.31% increase[85]. - Rental revenues for Q1 2025 increased to $174 million from $169 million in Q1 2024, representing a growth of 2.96%[85]. Cash and Liquidity - Total cash and cash equivalents as of March 31, 2025, were $259 million, with total restricted cash at $311 million[17]. - Cash and cash equivalents decreased to $259 million as of March 31, 2025, down from $328 million at the end of 2024[67]. - Net cash provided by operating activities for Q1 2025 was $38 million, compared to $0 million in Q1 2024[69]. Operational Metrics - The estimated value of the total contract sales pipeline is $13.2 billion, with $10.3 billion related to inventory currently available for sale[14]. - Tour flow increased to 174,525 in Q1 2025, compared to 174,138 in Q1 2024, indicating a growth in customer engagement[76]. - Volume per guest (VPG) is an important operating measure, calculated by dividing contract sales by tour flow, indicating sales process effectiveness[62]. - Consolidated net owner growth (NOG) for the twelve months ended March 31, 2025, was 0.9%, down from 2.0% in the previous year[82]. Guidance and Future Outlook - The company is reiterating its full-year 2025 Adjusted EBITDA guidance of $1.125 billion to $1.165 billion, excluding deferrals and recognitions[4]. - The company anticipates future growth driven by new product developments and market expansions, although specific figures were not disclosed[32]. - Forward-looking statements indicate expectations for revenue and earnings growth, contingent on market conditions and operational performance[32]. Expenses and Costs - Interest expense for the year totaled $329 million, with quarterly expenses of $79 million, $87 million, $84 million, and $79 million[28]. - Acquisition and integration-related expenses for the year amounted to $237 million, with quarterly expenses of $109 million, $48 million, $36 million, and $44 million[28]. - The total cost of VOI sales decreased to $25 million in Q1 2025 from $48 million in Q1 2024, a reduction of 47.92%[87]. - Acquisition and integration-related expenses were $28 million in Q1 2025, significantly lower than $109 million in Q1 2024[90]. Membership and Customer Base - The company reported a total of 725,000 Club Members, indicating a strong customer base for its vacation ownership offerings[39].

Industry Overview - Tourism spending is rebounding with resilience despite global inflationary pressures, leading to a resurgence in tourist accommodations such as timeshares [1] - Hilton Grand Vacations, Inc. is identified as a prominent player in the market, capitalizing on its value proposition [1] Company Insights - The company is positioned well to benefit from the ongoing recovery in tourism, indicating potential growth opportunities [1]