Hilton Grand Vacations (HGV) - 2025 Q1 - Earnings Call Transcript

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$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]