Hilton Grand Vacations (HGV) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Reported contract sales were $777 million, and adjusted EBITDA was$276 million, with margins of 22%, in line with expectations [12][30] - Total revenue, excluding cost reimbursements, was $1.13 billion, with adjusted EBITDA margins of 25$18 million of Bluegreen cost synergies recognized during the quarter, on target with a plan for $100 million of cost synergies within 24 months [30] Business Line Data and Key Metrics Changes - Contract sales in the Real Estate segment were$777 million, with Bluegreen contributing $195 million [31] - Tours for the quarter were nearly 228,000, down approximately 2$3,392, demonstrating a 9% increase over 2019 levels [33] Market Data and Key Metrics Changes - Occupancy in the quarter was up about 2 points to 83%, reflecting gains in some mainland markets [15] - Consolidated arrivals for the fourth quarter are ahead of last year, with strong rental demand [15] - The company ended the quarter with 722,000 members and NOG of 1.2% [16] Company Strategy and Development Direction - The company is focused on executing cost synergies from the Bluegreen acquisition and has made organizational changes to improve sales and marketing execution [8][10] - The introduction of HGV Max to Bluegreen members is anticipated to attract new buyers and motivate existing owners to upgrade [10][24] - The company is also progressing with rebranding efforts, aiming to have 80% of Diamond's targeted keys rebranded by year-end [22] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about operational improvements despite near-term challenges from hurricanes and staffing levels [11][27] - The macro environment presents headwinds for some consumers, but the company is confident in its strategy and execution [11][27] - Management expects a larger impact from hurricanes in the fourth quarter, adjusting guidance to the lower end of the range [44] Other Important Information - The company repurchased 2.8 million shares for $108 million during the quarter, with a commitment to return excess cash to shareholders [43] - The company has a liquidity position of$297 million in unrestricted cash and $308 million available under its revolving credit facility [45] Q&A Session Summary Question: Is the BVH sales integration fully resolved? - Management indicated that the integration is progressing well, with cost savings on track and a new management structure in place [49][51] Question: Is the guidance adjustment solely due to hurricane impacts? - The majority of the adjustment is due to hurricanes, with additional impacts from a hotel workers' strike in Hawaii and delays in launching HGV Max [53] Question: How are local market trends performing? - Local marketing saw a drop-off due to staffing issues, but improvements are expected as staffing levels are being addressed [55][56] Question: How are the largest markets performing? - Las Vegas continues to perform well, while Orlando has seen softening in arrivals and rental rates. Hawaii is recovering but faced challenges from a recent strike [69][71] Question: What is the outlook for new buyers post-election? - Management noted that consumer spending on travel remains strong, with a focus on higher net worth customers to improve VPG [75][76] Question: What is the status of the sales force? - Leadership is in place, and staffing levels are improving, with expectations to be fully staffed by the end of the year [80][84]