• Contract Sales: $777 million, with Bluegreen contributing $195 million.
• Adjusted EBITDA: $276 million, with margins of 25% excluding reimbursements.
• VPG (Volume Per Guest): $3,392, showing sequential growth.
• Occupancy Rate: Increased by 2 points to 83%.
• Member Count: 722,000 members, with 181,000 HGV Max members.
• Cash Flow: On track to produce a record amount of cash flow for the year.
• Share Repurchases: 2.8 million shares repurchased for $108 million in the quarter.
• Total Revenue (Excluding Cost Reimbursements): $1.13 billion.
• Real Estate Sales and Marketing Expense: $384 million, or 49% of contract sales.
• Financing Revenue: $105 million, with segment profit margins of 57%.
• Provision for Bad Debt: 17.7% of contract sales.
• Rental and Ancillary Revenues: $183 million, with segment profit of $5 million.
• Debt Balance: Corporate debt of $5 billion and nonrecourse debt of $1.6 billion.
• Net Leverage: Total net leverage on a TTM basis was four times.

• Warning! GuruFocus has detected 4 Warning Signs with HGV.

Release Date: November 07, 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 $777 million and adjusted EBITDA of $276 million, with margins of 22%, aligning with expectations.
• The company is ahead of schedule on cost synergies from the Bluegreen acquisition, with a run rate of $72 million annualized towards a target of $100 million.
• Occupancy rates improved by 2 points to 83%, with strong rental demand and a growing marketing package pipeline.
• The introduction of HGV Max to Bluegreen members is expected to attract new buyers and motivate existing owners to upgrade their membership.
• Hilton Grand Vacations Inc (NYSE:HGV) is on track to produce a record amount of cash flow and return a record amount of cash to shareholders through repurchases.

Negative Points

• The company experienced tour volume impacts due to hurricanes, with expectations of further impact in the fourth quarter.
• There are ongoing challenges in reaching optimum staffing levels in sales and marketing teams.
• The macroeconomic environment presents headwinds for some consumers, affecting tour flow and sales.
• The launch of HGV Max for Bluegreen was delayed, impacting expected performance.
• Orlando market showed softening in arrivals and rental rates, impacting overall performance.

Q & A Highlights

Q: On the issue of the EVH sales integration, is it fully resolved, or is it still a work in progress? A: Mark Wang, CEO: The integration is progressing well, particularly around cost savings, with a run rate of about $70 million. The reorganization has been successful, and we're seeing positive traction, especially in October's VPG results despite hurricane impacts.

Q: Is the guidance range lowered solely due to hurricane impacts, or are there other factors? A: Daniel Mathewes, CFO: The majority is due to hurricanes, but also includes impacts from the hotel workers' strike in Hawaii and a slight delay in launching HGV Max for Bluegreen.

Q: How are local market trends affecting your business? A: Mark Wang, CEO: We had a drop-off in local marketing due to prioritizing direct marketing tours over local ones because of staffing issues. We've added 10 new recruiters and expect to be fully staffed by year-end, which should improve local marketing tours.

Q: Can you summarize the performance of your largest markets like Hawaii, Las Vegas, and Orlando? A: Mark Wang, CEO: Las Vegas is performing well, while Orlando has seen softening in arrivals and rental rates. Hawaii was impacted by the Japanese traveler return rate and a hotel workers' strike, but the strike has been resolved.

Q: What are your expectations for new owners, especially post-election? A: Mark Wang, CEO: Post-election, we expect more stability. Consumers are still spending on travel, and our indicators remain strong. We're focusing on higher net worth customers, which should benefit our VPG.

Q: Is the sales leadership you want in place, and what steps are needed for sales force integration? A: Mark Wang, CEO: Leadership is in place, and we've hired 1,200 new sales reps. We expect to be fully staffed by year-end, which will improve our sales and marketing execution.

Q: Did you see a step down in sales and marketing between Q2 and Q3? A: Mark Wang, CEO: We saw a step up in Q3, and expect continued improvement in execution as new leaders and staff acclimate and turnover stabilizes.

Q: How do Hilton's new brand acquisitions impact HGV? A: Mark Wang, CEO: Hilton's growth, including the Graduate brand acquisition, is positive for HGV. We have access to data from guests at these properties, which benefits our marketing efforts.

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