Hilton Grand Vacations (HGV) - 2025 Q2 - Quarterly Report

PART I - FINANCIAL INFORMATION This part encompasses the company's unaudited condensed consolidated financial statements and related notes, providing a comprehensive view of its financial performance and position Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements of Hilton Grand Vacations Inc. for the periods ended June 30, 2025, and December 31, 2024, including balance sheets, statements of income, comprehensive income, cash flows, and equity, along with detailed notes explaining the company's business, accounting policies, acquisition details, revenue recognition, receivables, debt, equity, and commitments Condensed Consolidated Balance Sheets This section provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of June 30, 2025, and December 31, 2024 Condensed Consolidated Balance Sheet Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Cash and cash equivalents | $269 | $328 | | Restricted cash | $323 | $438 | | Timeshare financing receivables, net | $2,979 | $3,006 | | Inventory | $2,406 | $2,244 | | Goodwill | $1,985 | $1,985 | | Intangible assets, net | $1,760 | $1,787 | | TOTAL ASSETS | $11,738 | $11,442 | | Debt, net | $4,574 | $4,601 | | Non-recourse debt, net | $2,499 | $2,318 | | Total liabilities | $10,098 | $9,547 | | Total equity | $1,640 | $1,895 | Condensed Consolidated Statements of Income (Unaudited) This section presents the company's financial performance over specific periods, detailing revenues, expenses, and net income Condensed Consolidated Statements of Income Highlights (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $1,266 | $1,235 | $2,414 | $2,391 | | Total operating expenses | $1,154 | $1,141 | $2,242 | $2,231 | | Net income | $28 | $4 | $16 | $2 | | Net income (loss) attributable to stockholders | $25 | $2 | $8 | $(2) | | Basic EPS | $0.26 | $0.02 | $0.09 | $(0.02) | | Diluted EPS | $0.25 | $0.02 | $0.08 | $(0.02) | Condensed Consolidated Statements of Comprehensive Income (Loss) (Unaudited) This section outlines the changes in equity from non-owner sources, including net income and other comprehensive income or loss Condensed Consolidated Statements of Comprehensive Income (Loss) Highlights (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $28 | $4 | $16 | $2 | | Other comprehensive income (loss), net of tax | $2 | $(10) | $(5) | $(12) | | Comprehensive income (loss) attributable to stockholders | $27 | $(8) | $3 | $(14) | Condensed Consolidated Statements of Cash Flows (Unaudited) This section details the cash inflows and outflows from operating, investing, and financing activities over specific periods Condensed Consolidated Statements of Cash Flows Highlights (in millions) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $99 | $113 | | Net cash used in investing activities | $(66) | $(1,482) | | Net cash (used in) provided by financing activities | $(213) | $1,101 | | Net decrease in cash, cash equivalents and restricted cash | $(174) | $(284) | | Cash and cash equivalents, end of period | $269 | $328 | Condensed Consolidated Statements of Equity (Unaudited) This section presents the changes in the company's equity accounts, including common stock and total stockholders' equity, over specific periods Condensed Consolidated Statements of Equity Highlights (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------------- | :------------ | :------------------ | | Common Stock (shares) | 89 | 97 | | Total Stockholders' Equity | $1,489 | $1,752 | | Total Equity | $1,640 | $1,895 | - Repurchase and retirement of common stock for the six months ended June 30, 2025, totaled $303 million (8 million shares)[13] NOTE 1: Organization and Basis of Presentation This note describes the company's business, its global operations, and the significant acquisition of Bluegreen Vacations Holding Corporation - Hilton Grand Vacations Inc. is a global timeshare company engaged in developing, marketing, selling, managing, and operating timeshare resorts and plans, primarily under the Hilton Grand Vacations brand[17] - The company completed the acquisition of Bluegreen Vacations Holding Corporation on January 17, 2024[17] - As of June 30, 2025, the company had over 200 properties across the U.S., Europe, Canada, the Caribbean, Mexico, and Asia, with significant concentrations in key tourist destinations[19] NOTE 2: Summary of Significant Accounting Policies This note outlines the key accounting principles and standards applied in preparing the financial statements, including recent accounting pronouncements - ASU 2023-09 (Income Taxes) is effective for fiscal years beginning after December 15, 2024, and is expected to impact disclosures only[24][25] - ASU 2024-03 (Expense Disaggregation Disclosures) is effective for fiscal years beginning after December 15, 2026, and is expected to impact disclosures only[26] NOTE 3: Bluegreen Acquisition This note provides details on the acquisition of Bluegreen Vacations Holding Corporation, including the transaction value and pro forma financial impacts - The Bluegreen Acquisition was completed on January 17, 2024, for approximately $1.6 billion in an all-cash transaction[27] Unaudited Pro Forma Results of Operations (Six Months Ended June 30, 2024) | Metric | 2024 (in millions) | | :------- | :----------------- | | Revenue | $2,438 | | Net loss | $(1) | NOTE 4: Revenue from Contracts with Customers This note disaggregates revenue by segment and details receivables and contract liabilities arising from customer contracts Disaggregated Revenues by Segment (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Real Estate Sales and Financing | $760 | $740 | $1,405 | $1,427 | | Resort Operations and Club Management | $378 | $366 | $748 | $713 | Receivables from Contracts with Customers (in millions) | Metric | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Accounts receivable, net | $265 | $219 | | Timeshare financing receivables, net | $2,979 | $3,006 | | Total | $3,244 | $3,225 | Contract Liabilities Composition (in millions) | Contract Liability | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Advanced deposits | $235 | $226 | | Deferred sales of VOIs of projects under construction | $300 | $92 | | Club activation fees and annual dues | $147 | $79 | | Bonus point incentive liability | $94 | $86 | NOTE 5: Accounts Receivable This note provides a detailed breakdown of accounts receivable by category and the changes in the allowance for credit losses Accounts Receivable, Net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :------------------ | | Fee-for-service commissions | $40 | $48 | | Real estate and financing | $41 | $34 | | Resort and club operations | $184 | $137 | | Tax receivables | $171 | $89 | | Other receivables | $8 | $7 | | Total | $444 | $315 | Changes in Allowance for Credit Losses (Six Months Ended June 30, 2025, in millions) | Category | Fee-for-service commissions | Real estate and financing | Resort and club operations | Total | | :------------------------------------ | :-------------------------- | :------------------------ | :------------------------- | :---- | | Balance as of December 31, 2024 | $24 | $49 | $1 | $74 | | Current period provision for expected credit losses | $4 | $23 | $13 | $40 | | Write-offs charged against the allowance | $(5) | $(10) | — | $(15) | | Balance as of June 30, 2025 | $23 | $62 | $14 | $99 | NOTE 6: Timeshare Financing Receivables This note details the composition of timeshare financing receivables, including originated and acquired portfolios, and the allowance for losses Timeshare Financing Receivables, Net (in millions) | Portfolio | June 30, 2025 | December 31, 2024 | | :---------- | :------------ | :------------------ | | Originated | $2,307 | $2,128 | | Acquired | $672 | $878 | | Total | $2,979 | $3,006 | - In June 2025, the company completed a securitization of approximately $300 million of gross timeshare financing receivables, issuing $166 million 4.88% notes, $87 million 5.18% notes, and $47 million 5.52% notes due May 2042, accounted for as a secured borrowing[42] Allowance for Financing Receivables Losses (in millions) | Portfolio | Balance as of Dec 31, 2024 | Provision for losses | Write-offs | Inventory recoveries | Upgrades | Balance as of Jun 30, 2025 | | :---------- | :------------------------- | :------------------- | :--------- | :------------------- | :------- | :------------------------- | | Originated | $804 | $167 | $(84) | — | $17 | $904 | | Acquired | $268 | $13 | $(132) | $57 | $(17) | $189 | - As of June 30, 2025, originated timeshare financing receivables had a weighted-average interest rate of 15.0% and a weighted-average remaining term of 8.7 years; acquired timeshare financing receivables had a weighted-average interest rate of 15.0% and a weighted-average remaining term of 6.4 years[45] NOTE 7: Inventory This note outlines the composition of the company's inventory, including unsold VOIs and construction in process, and details cost of sales true-up adjustments Inventory Composition (in millions) | Category | June 30, 2025 | December 31, 2024 | | :------------------------ | :------------ | :------------------ | | Completed unsold VOIs | $2,012 | $1,898 | | Construction in process | $393 | $345 | | Land, infrastructure and other | $1 | $1 | | Total | $2,406 | $2,244 | Cost of Sales True-up (in millions) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Cost of sales true-up | $9 | $(4) | $26 | $11 | NOTE 8: Consolidated Variable Interest Entities This note describes the company's consolidated Variable Interest Entities (VIEs) and their associated assets and liabilities - As of June 30, 2025, the company consolidated 17 Variable Interest Entities (VIEs), primarily for purchasing timeshare financing receivables and issuing debt[61] Assets and Liabilities of Consolidated VIEs (in millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Restricted cash | $84 | $193 | | Timeshare financing receivables, net | $2,302 | $1,975 | | Non-recourse debt, net | $2,475 | $2,285 | NOTE 9: Investments in Unconsolidated Affiliates This note details the company's investments in unconsolidated affiliates, including exposure to loss and distributions received - The company holds ownership interests in BRE Ace LLC and 1776 Holding LLC, which are unconsolidated VIEs[64] - Maximum exposure to loss from these investments is primarily limited to the carrying amount of investments ($74 million as of June 30, 2025) and receivables for commissions[64] - During the six months ended June 30, 2025, a cash distribution of $5 million was received from BRE Ace LLC[65] NOTE 10: Intangible Assets This note provides a breakdown of the company's intangible assets, including trade names, management contracts, and capitalized software, along with amortization expense Intangible Assets, Net Carrying Amount (in millions) | Category | June 30, 2025 | December 31, 2024 | | :-------------------------- | :------------ | :------------------ | | Trade name | $23 | $26 | | Management contracts | $1,324 | $1,340 | | Club member relationships | $89 | $98 | | Capitalized software | $143 | $135 | | Marketing agreements | $138 | $143 | | Other contract-related intangible assets | $43 | $45 | | Total | $1,760 | $1,787 | - Amortization expense on intangible assets was $52 million and $102 million for the three and six months ended June 30, 2025, respectively[67] NOTE 11: Debt and Non-Recourse Debt This note details the company's outstanding debt and non-recourse debt, including interest rates, recent amendments, and contractual maturities Outstanding Debt, Net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Total debt, gross | $4,640 | $4,672 | | Less: unamortized deferred financing costs and discounts | $(66) | $(71) | | Total debt, net | $4,574 | $4,601 | | Weighted-average interest rate (Debt) | 5.991% | 6.140% | - On January 31, 2025, the company amended its Revolver Credit Facility and Term Loan B facilities, reducing pricing spreads and extending the Revolver maturity to January 2030[70] Outstanding Non-Recourse Debt, Net (in millions) | Category | June 30, 2025 | December 31, 2024 | | :--------------------------------------- | :------------ | :------------------ | | Total non-recourse debt, gross | $2,529 | $2,350 | | Less: unamortized deferred financing costs and discount | $(30) | $(32) | | Total non-recourse debt, net | $2,499 | $2,318 | | Weighted-average interest rate (Non-recourse Debt) | 5.258% | 5.235% | - In June 2025, the company completed a securitization of approximately $300 million of gross timeshare financing receivables, issuing notes due May 2042, with proceeds used to pay down existing debt and for general corporate purposes[77] Contractual Maturities of Debt and Non-Recourse Debt as of June 30, 2025 (in millions) | Year | Debt | Non-recourse Debt | Total | | :------------------------ | :--- | :---------------- | :---- | | 2025 (remaining six months) | $16 | $239 | $255 | | 2026 | $27 | $393 | $420 | | 2027 | $26 | $1,049 | $1,075| | 2028 | $1,243 | $251 | $1,494| | 2029 | $870 | $200 | $1,070| | Thereafter | $2,458 | $397 | $2,855| | Total | $4,640 | $2,529 | $7,169| NOTE 12: Fair Value Measurements This note provides fair value measurements for financial assets and liabilities, explaining the methodologies used for their determination Fair Values of Financial Assets and Liabilities (in millions) | Category | Carrying Amount (June 30, 2025) | Fair Value (June 30, 2025) | | :-------------------------------- | :------------------------------ | :------------------------- | | Timeshare financing receivables, net | $2,979 | $3,271 | | Debt, net | $4,574 | $4,594 | | Non-recourse debt, net | $2,499 | $2,528 | - Fair values for timeshare financing receivables are determined using a discounted cash flow model incorporating default rates, coupon rates, credit quality, and loan terms[83] NOTE 13: Income Taxes This note presents the company's effective tax rates and discusses factors influencing changes, including recent legislative impacts Effective Tax Rate | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | 38% | 60% | | Six Months Ended June 30, | 72% | 80% | - The effective tax rate decrease quarter-over-quarter is primarily due to overall change in earnings, while the year-over-year decrease is due to discrete items partially offset by jurisdictional mix and overall change in earnings[85] - The company is evaluating the impact of the recently enacted 'One Big Beautiful Bill Act' (July 4, 2025), which includes provisions for accelerated tax deductions[86] NOTE 14: Share-Based Compensation This note details the share-based compensation expense recognized and the unrecognized compensation cost for unvested awards Share-Based Compensation Expense (in millions) | Period | 2025 | 2024 | | :-------------------------- | :--- | :--- | | Three Months Ended June 30, | $22 | $17 | | Six Months Ended June 30, | $34 | $26 | - As of June 30, 2025, unrecognized compensation cost for unvested awards was approximately $75 million, expected to be recognized over a weighted average period of 1.9 years[89] - During the six months ended June 30, 2025, 969,592 Service RSUs and 449,308 Performance RSUs were issued[90][92] NOTE 15: Earnings Per Share This note provides basic and diluted earnings per share figures, along with weighted-average shares outstanding and share repurchase activity Earnings Per Share Attributable to Stockholders | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $0.26 | $0.02 | $0.09 | $(0.02) | | Diluted EPS | $0.25 | $0.02 | $0.08 | $(0.02) | | Weighted average shares outstanding (Basic) | 91.2 million | 103.4 million | 93.3 million | 104.3 million | Share Repurchase Activity (in millions) | Period | Shares Repurchased | Cost | | :-------------------- | :----------------- | :--- | | As of December 31, 2024 | 41 | $1,549 | | Repurchases (6M 2025) | 8 | $300 | | As of June 30, 2025 | 49 | $1,849 | - As of July 24, 2025, $98 million remained available under the 2024 Repurchase Plan[96] NOTE 16: Related Party Transactions This note discloses transactions with related parties, including equity in earnings from unconsolidated affiliates and commissions Related Party Transactions (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Equity in earnings from unconsolidated affiliates | $6 | $3 | $11 | $8 | | Commissions and other fees | $39 | $44 | $78 | $80 | NOTE 17: Business Segments This note provides financial information by reportable segment, including revenues, Adjusted EBITDA, and total assets, for performance evaluation - The company operates in two reportable segments: Real estate sales and financing, and Resort operations and club management, with performance evaluated based on Adjusted EBITDA[99][101] Segment Revenues (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Real estate sales and financing | $760 | $740 | $1,405 | $1,427 | | Resort operations and club management | $405 | $386 | $796 | $746 | | Total segment revenues | $1,165 | $1,126 | $2,201 | $2,173 | Segment Adjusted EBITDA (in millions) | Segment | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Real estate sales and financing | $176 | $193 | $309 | $399 | | Resort operations and club management | $149 | $152 | $282 | $286 | | Segment Adjusted EBITDA | $325 | $345 | $591 | $685 | Total Segment Assets (in millions) | Segment | June 30, 2025 | December 31, 2024 | | :------------------------------------ | :------------ | :------------------ | | Real estate sales and financing | $7,497 | $7,349 | | Resort operations and club management | $3,387 | $3,163 | | Total segment assets | $10,884 | $10,512 | NOTE 18: Commitments and Contingencies This note outlines the company's contractual obligations, including marketing agreements, inventory purchase obligations, and legal matters - The company has a 10-year exclusive marketing agreement with Bass Pro Shops, effective January 17, 2024, to market and sell vacation packages at 140 Bass Pro Shops and Cabela's Stores[106][107][108] Remaining Contractual Obligations as of June 30, 2025 (in millions) | Category | 2025 (remaining) | 2026 | 2027 | 2028 | 2029 | Thereafter | Total | | :-------------------------- | :--------------- | :--- | :--- | :--- | :--- | :--------- | :---- | | Marketing and license fee agreements | $26 | $37 | $38 | $38 | $38 | $134 | $311 | | Inventory purchase obligations | $15 | $37 | $8 | $53 | $44 | $99 | $256 | | Other commitments | $8 | $7 | $1 | $2 | $2 | — | $20 | | Total | $49 | $81 | $47 | $93 | $84 | $233 | $587 | - Accrued liabilities for legal matters were approximately $10 million as of June 30, 2025, up from $7 million at December 31, 2024[111] - The company has commitments from surety providers totaling $538 million as of June 30, 2025[116] NOTE 19: Subsequent Events This note discloses significant events occurring after the reporting period, including a securitization and a new share repurchase program - On July 11, 2025, the company completed a term securitization of approximately ¥9.5 billion of timeshare loans through Hilton Grand Vacations Japan Trust 2025-1[117] - On July 29, 2025, the Board approved a new share repurchase program authorizing up to an additional $600 million of common stock repurchases over two years[118] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations This section provides management's perspective on the company's financial condition and results of operations, including an overview of its business, key operational and non-GAAP financial metrics, a detailed analysis of segment performance, and a discussion of liquidity and capital resources. It highlights the impact of the Bluegreen acquisition and strategic initiatives Cautionary Note Regarding Forward-Looking Statements This note advises that the report contains forward-looking statements subject to risks and uncertainties that could cause actual results to differ materially - The report contains forward-looking statements that involve known and unknown risks, uncertainties, and other factors beyond the company's control, which may cause actual results to differ materially[122] Terms Used in this Quarterly Report on Form 10-Q This note defines key terminology used throughout the quarterly report to ensure clarity and consistent understanding - Key terms defined include 'Developed' (VOI inventory from HGV projects), 'Fee for service' (VOI inventory sold and managed for third parties), 'Just-in-time' (VOI inventory acquired to correlate with sales), 'Points-based' (VOI sales backed by real estate in a trust), 'VOI' (vacation ownership intervals and interests), and 'Collections' (acquired resort properties in Diamond's trusts)[125][126] Non-GAAP Financial Measures This note identifies and explains the non-GAAP financial measures used by management to evaluate performance and provide additional insights - The report discusses non-GAAP financial measures such as EBITDA, Adjusted EBITDA, Adjusted EBITDA Attributable to Stockholders, fee-for-service commissions, sales and marketing expense, net, sales revenue, real estate expense, and profits and profit margins for real estate, financing, resort and club management, and rental and ancillary services[127][128] Operational Metrics This note highlights the key operational metrics used to assess the company's business performance - Key business operational metrics include contract sales, tour flow, and volume per guest (VPG)[129] Overview of Business This section provides a general description of Hilton Grand Vacations' business model, global presence, and operational segments - Hilton Grand Vacations is a global timeshare company, which completed the acquisition of Bluegreen Vacations Holding Corporation on January 17, 2024[130] - As of June 30, 2025, the company manages over 200 properties globally and serves approximately 725,000 members across its Club offerings[132][133] - The business operates in two segments: Real estate sales and financing, and Resort operations and club management[134] Real Estate Sales and Financing This subsection details the company's strategies for sourcing vacation ownership intervals (VOIs) and its marketing and sales activities - The company sources VOIs through developed properties and fee-for-service and just-in-time agreements, with capital efficient arrangements representing approximately 28% of the $13.3 billion estimated contract sales value of available inventory[138][139] - Marketing and sales activities include targeted direct marketing and strategic relationships with brands like Bass Pro Shops and Choice Hotels, with 140 Bass Pro Shops and Cabela's Stores having HGV sales and marketing operations as of June 30, 2025[140][141] - Financing propensity was 65% for both the six months ended June 30, 2025 and 2024, with the weighted-average FICO score for loans to U.S. and Canadian borrowers at origination being 737 in 2025 and 738 in 2024[143][144] Resort Operations and Club Management This subsection describes the company's resort management services, club programs, and rental and ancillary revenue streams - The company manages timeshare resorts under cost-plus management fee agreements (10% to 15% of operating costs) and operates Club and exchange programs, generating predictable fee streams[147][148] - Rental revenue is generated from unsold VOI inventory, third-party inventory, and inventory from ownership exchanges, alongside ancillary offerings like food and beverage, retail, and spa services[149] Key Business and Financial Metrics This section defines and explains the critical operational and non-GAAP financial metrics used to measure the company's performance Real Estate Sales Operating Metrics This subsection defines key metrics for real estate sales, including contract sales, tour flow, and volume per guest (VPG) - Key operating metrics include Contract sales (total VOI products under purchase agreements with at least 10% down payment), Tour flow (number of sales presentations), and VPG (sales attributable to tours, excluding telesales, divided by tour flow)[150] EBITDA, Adjusted EBITDA and Adjusted EBITDA Attributable to Stockholders This subsection clarifies the definitions and utility of non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable to Stockholders - EBITDA, Adjusted EBITDA, and Adjusted EBITDA Attributable to Stockholders are non-GAAP measures used by management and investors to evaluate operating performance and compare results across the industry, despite inherent limitations[151][152][153][155][156] Non-GAAP Measures within Our Segments This subsection defines segment-specific non-GAAP profit measures and their corresponding margins - Segment-specific non-GAAP profit measures include Real estate profit (sales revenue less real estate expense), Financing profit (financing revenue net of financing expense), Resort and club management profit (revenue net of expense), and Rental and ancillary services profit (revenues net of expenses), each with corresponding margins[161] Results of Operations This section provides a detailed analysis of the company's financial performance, breaking down revenues, expenses, and profits by segment Segment Results This subsection presents the financial performance of the company's operating segments, including total revenues and Adjusted EBITDA Total Segment Revenues (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Real estate sales and financing | $760 | $740 | $1,405 | $1,427 | | Resort operations and club management | $405 | $386 | $796 | $746 | | Total segment revenues | $1,165 | $1,126 | $2,201 | $2,173 | Adjusted EBITDA and Attributable to Stockholders (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Adjusted EBITDA | $238 | $266 | $423 | $542 | | Adjusted EBITDA attributable to stockholders | $233 | $262 | $413 | $535 | - Real estate sales and financing Adjusted EBITDA decreased by $17 million (3M) and $90 million (6M) primarily due to increased sales and marketing expense and decreased Sales of VOI, net, partially offset by increased financing profit[164][165] - Resort operations and club management segment Adjusted EBITDA remained consistent for both the three and six months ended June 30, 2025, compared to the same periods in 2024[166] Reconciliation of Non-GAAP Profit Measures to GAAP Measure This subsection provides a reconciliation of various non-GAAP profit measures to their most directly comparable GAAP equivalents Non-GAAP Profit Measures (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Real estate profit | $117 | $120 | $187 | $254 | | Financing profit | $72 | $58 | $142 | $123 | | Resort and club management profit | $127 | $123 | $256 | $235 | | Rental and ancillary services profit | $(8) | $7 | $(27) | $15 | | Total Profit | $308 | $308 | $558 | $627 | Reconciliation of Non-GAAP Real Estate Measures to GAAP Measures This subsection reconciles non-GAAP real estate measures, such as fee-for-service commissions and net sales and marketing expense, to GAAP Non-GAAP Real Estate Measures (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Fee-for-service commissions | $84 | $88 | $152 | $152 | | Sales and marketing expense, net | $398 | $374 | $749 | $694 | Real Estate Sales and Financing Segment This subsection analyzes the performance of the Real Estate Sales and Financing segment, including net sales of VOIs, operating metrics, and profit margins Net Sales of VOIs (Deferrals) Recognitions (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net Sales of VOIs (deferrals) recognitions | $(82) | $(13) | $(208) | $(11) | Real Estate Sales Operating Metrics | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Contract sales | $834 million | $757 million | $1,555 million | $1,388 million | | Tour flow | 225,222 | 226,388 | 399,747 | 400,526 | | VPG | $3,690 | $3,320 | $3,874 | $3,441 | - Contract sales increased by $77 million (10.2%) for the three months and $167 million (12.0%) for the six months ended June 30, 2025, primarily due to an increase in VPG and new inventory[175][176] Real Estate and Financing Profit (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Sales of VOIs, net | $469 | $471 | $847 | $909 | | Real estate profit | $117 | $120 | $187 | $254 | | Real estate profit margin | 21.2% | 21.5% | 18.7% | 23.9% | | Financing profit | $72 | $58 | $142 | $123 | | Financing profit margin | 57.1% | 56.9% | 56.6% | 59.7% | Resort Operations and Club Management Segment This subsection analyzes the performance of the Resort Operations and Club Management segment, including profit and profit margins for resort and club management, and rental and ancillary services Resort and Club Management Profit (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Resort and club management profit | $127 | $123 | $256 | $235 | | Resort and club management profit margin | 69.4% | 71.9% | 69.9% | 69.7% | Rental and Ancillary Services Profit (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Rental and ancillary services profit | $(8) | $7 | $(27) | $15 | | Rental and ancillary services profit margin | (4.1)% | 3.6% | (7.1)% | 4.0% | - Rental and ancillary services profit decreased by $15 million (3M) and $42 million (6M) primarily due to an increase in expenses, particularly maintenance fees[191][192] Other Operating Expenses This subsection details changes in various operating expenses, including general and administrative, depreciation, amortization, and license fees Selected Other Operating Expenses (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | General and administrative | $58 | $58 | $104 | $103 | | Depreciation and amortization | $59 | $68 | $126 | $130 | | License fee expense | $52 | $40 | $101 | $75 | | Impairment expense | $1 | — | $1 | $2 | - License fee expense increased by $12 million (3M) and $26 million (6M) primarily due to licensing fees paid to Hilton[193] Acquisition and Integration-Related Expense This subsection reports on the costs associated with acquisitions and integration activities, highlighting changes over time Acquisition and Integration-Related Expense (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Acquisition and integration-related expense | $26 | $48 | $54 | $157 | - Acquisition and integration-related costs decreased by $22 million (3M) and $103 million (6M) primarily due to the Bluegreen Acquisition occurring in the first quarter of 2024[194] Non-Operating Expenses This subsection details non-operating expenses, including interest expense and income tax expense, and explains their fluctuations Selected Non-Operating Expenses (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Interest expense | $79 | $87 | $156 | $166 | | Income tax expense (benefit) | $15 | $3 | $21 | $(8) | - Interest expense decreased due to a lower overall debt balance and weighted average interest rate, while income tax expense increased primarily due to the overall change in pretax earnings[195] Net income attributable to noncontrolling interest This subsection reports the portion of net income attributable to noncontrolling interests Net Income Attributable to Noncontrolling Interest (in millions) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income attributable to noncontrolling interest | $3 | $2 | $8 | $4 | - The increase in net income attributable to noncontrolling interest reflects the portion of Big Cedar's results attributable to Big Cedar Vacations, LLC[196] Liquidity and Capital Resources This section discusses the company's ability to generate and manage cash, outlining its objectives, needs, and funding sources Overview This subsection provides a general overview of the company's cash management objectives, short-term and long-term liquidity needs, and primary funding sources - Cash management objectives include maintaining liquidity, minimizing operational costs, making debt payments, and funding future acquisitions and development projects[197] - Short-term liquidity needs cover operating expenses, legal costs, resort/sales center costs, interest/principal payments, inventory commitments, and capital expenditures[197] - Long-term liquidity needs include scheduled debt maturities, inventory purchase commitments, and costs for potential acquisitions and development projects[197] - Funding sources primarily include cash, operating cash flow, draws on the revolver credit facility, non-recourse revolving timeshare credit facility, and timeshare financing receivable securitizations[198] Sources and Uses of Our Cash This subsection summarizes the net cash flows from operating, investing, and financing activities, along with available liquidity Net Cash Flows (Six Months Ended June 30, in millions) | Activity | 2025 | 2024 | Variance | | :------------------------ | :--- | :--- | :------- | | Operating activities | $99 | $113 | $(14) | | Investing activities | $(66) | $(1,482) | $1,416 | | Financing activities | $(213) | $1,101 | $(1,314) | - As of June 30, 2025, the company had $269 million in cash and cash equivalents, $323 million in restricted cash, $794 million remaining borrowing capacity under the revolver facility, and $120 million under the Timeshare Facility[201] - During the six months ended June 30, 2025, the company repurchased 8 million shares for $300 million and completed a $300 million timeshare financing receivable securitization[201] Operating Activities This subsection analyzes the net cash provided by operating activities and the factors influencing its changes - Net cash provided by operating activities decreased by $14 million for the six months ended June 30, 2025, primarily due to decreased depreciation and amortization and increased inventory purchases, partially offset by increased provision for financing receivable losses and share-based compensation[203] VOI Inventory Spending (Six Months Ended June 30, in millions) | Category | 2025 | 2024 | | :---------------------------------------------------- | :--- | :--- | | VOI spending - owned properties | $128 | $141 | | Purchases and development of real estate for future conversion to inventory | $61 | $50 | | Total VOI inventory spending | $189 | $191 | Investing Activities This subsection details the net cash used in investing activities and the primary drivers of its changes - Net cash used in investing activities decreased significantly to $66 million for the six months ended June 30, 2025, from $1,482 million in the prior year, primarily due to the Bluegreen Acquisition in 2024[206] Financing Activities This subsection analyzes the net cash flows from financing activities, including debt proceeds and share repurchases - Net cash used in financing activities was $213 million for the six months ended June 30, 2025, a change from $1,101 million provided in 2024, primarily due to lower net proceeds from debt and non-recourse debt and increased share repurchases[207] Contractual Obligations This subsection summarizes the company's total contractual obligations and surety bond commitments - As of June 30, 2025, total contractual obligations were approximately $9,415 million over 16 years, with $496 million due in the remainder of 2025[208] - The company has $538 million in surety bond commitments as of June 30, 2025[209] Subsequent Events This subsection reports on significant events that occurred after the reporting period, impacting the company's financial position or operations - On July 11, 2025, the company completed a term securitization of approximately ¥9.5 billion of timeshare loans through Hilton Grand Vacations Japan Trust 2025-1[210] - On July 29, 2025, the Board approved a new share repurchase program authorizing up to an additional $600 million of common stock repurchases over two years[211] Critical Accounting Policies and Estimates This note refers to the annual report for a discussion of the company's critical accounting policies and estimates - Critical accounting policies and estimates are discussed in the Annual Report on Form 10-K for the year ended December 31, 2024[212] Item 3. Quantitative and Qualitative Disclosures About Market Risk This section addresses the company's exposure to market risks, specifically from changes in interest rates and currency exchange rates, and confirms that there have been no material changes to these risks since the last annual report - The company is exposed to market risk from changes in interest rates and currency exchange rates[213] - There have been no material changes to the company's market risk exposure from what was previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[213] Item 4. Controls and Procedures This section details management's evaluation of the effectiveness of the company's disclosure controls and procedures, concluding they were effective as of June 30, 2025. It also notes changes in internal control related to the Bluegreen acquisition integration - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025, providing reasonable assurance that required information is recorded, processed, summarized, and reported timely[215] - Changes in internal controls over financial reporting were made to integrate the Bluegreen acquisition, with no other material changes during the period[216] PART II - OTHER INFORMATION This part contains additional disclosures beyond the financial statements, covering legal proceedings, risk factors, equity sales, and other pertinent information Item 1. Legal Proceedings This section refers to Note 18 of the condensed consolidated financial statements for detailed information regarding legal proceedings and related contingencies - Information regarding legal proceedings is found in Note 18: Commitments and Contingencies[217] Item 1A. Risk Factors This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K, emphasizing the importance of reviewing these factors for understanding potential impacts on the company's future performance - As of June 30, 2025, there have been no material changes from the risk factors previously disclosed in Item 1A of Part I of the Annual Report on Form 10-K for the year ended December 31, 2024[218] - Investors should read these risk factors in conjunction with the condensed consolidated financial statements and management's discussion and analysis[218] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activity under the 2024 Repurchase Plan, including the number of shares purchased, the average price paid, and the remaining authorization - On August 7, 2024, the Board of Directors approved a share repurchase program authorizing up to $500 million of common stock repurchases over a two-year period (the '2024 Repurchase Plan')[220] Issuer Purchases of Equity Securities (Three Months Ended June 30, 2025) | Period | Total Number of Shares Purchased | Average Price Paid Per Share | | :------------------------ | :------------------------------- | :--------------------------- | | April 1 - April 30, 2025 | 1,786,389 | $33.59 | | May 1 - May 31, 2025 | 1,329,448 | $39.39 | | June 1 - June 30, 2025 | 955,270 | $39.46 | | Total | 4,071,107 | $36.86 | - From July 1, 2025, through July 24, 2025, approximately 0.6 million shares were repurchased for $29 million, leaving $98 million of remaining availability under the 2024 Repurchase Plan[221] Item 3. Defaults Upon Senior Securities This section states that there were no defaults upon senior securities during the reporting period - There were no defaults upon senior securities[222] Item 4. Mine Safety Disclosures This section indicates that mine safety disclosures are not applicable to the company - Mine Safety Disclosures are not applicable[223] Item 5. Other Information This section states that there is no other information to report - No other information to report[224] Item 6. Exhibits This section lists all exhibits filed as part of the Quarterly Report on Form 10-Q, including corporate documents, credit agreements, and certifications - Exhibits include Amended and Restated Certificate of Incorporation, Amended and Restated Bylaws, Certificate of Designation of Series A Junior Participating Pr