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HG

Hilton Grand Vacations Inc. (HGV)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 was operationally solid (contract sales +14% YoY to $721M; VPG +14.4% YoY), but reported GAAP/adjusted earnings were pressured by a large ASC 606 construction deferral; adjusted diluted EPS was $0.09 and adjusted EBITDA attributable to stockholders was $180M .
  • Versus S&P Global consensus, HGV materially missed: EPS $0.09 vs $0.44*, revenue ex cost reimbursements $1.015B vs $1.251B*, EBITDA $155M vs $236M*; the deferral reduced EPS by ~$0.71/share and adjusted EBITDA by $68M, explaining most of the gap .
  • Guidance maintained: FY2025 adjusted EBITDA (excluding deferrals/recognitions) $1.125B–$1.165B; reiterated focus on financing optimization and share repurchases (~$150M per quarter) supported by strong liquidity and securitization capacity .
  • Management highlighted demand resilience (flat occupancy at 77%), strong owner channel, Bluegreen synergies ($89M run-rate) and proactive efficiency/financing initiatives; Hawaii (Maui) recovered to pre-fire levels, and Ka Haku/HGV Max traction continue to be catalysts .

What Went Well and What Went Wrong

  • What Went Well

    • Contract sales rose to $721M (+14% YoY; +10% pro forma) with VPG up 14.4–15% YoY, driven by owner strength, Ka Haku and HGV Max roll-out to Bluegreen members .
    • Financing revenue increased by $21M YoY; adjusted free cash flow was $185M (75% conversion) aided by securitization progress (≈70% receivables securitized) .
    • CEO tone on demand: “We carried good momentum into April…our leading demand indicators remain steady,” citing proactive programs to “improve our efficiency, strengthen our value proposition, and improve member engagement” .

  • What Went Wrong

    • Large ASC 606 net construction deferral ($68M) depressed reported results: adjusted EPS $0.09 and adjusted EBITDA attributable $180M, with adjusted EBITDA margin down to 16.1% .
    • Real Estate profit margin fell to 15.7% (from 26.7% YoY), impacted by deferrals, higher product cost (+100 bps) and sales/marketing spend; rental/ancillary posted a $19M loss .
    • Macro uncertainty and tariff headlines prompted caution; some Bluegreen sales centers remain impacted by prior hurricanes, slowing tour flow reopening cadence .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Total Revenues ($USD Billions)$1.306 $1.284 $1.148
Adjusted EBITDA Attributable to Stockholders ($USD Millions)$303 $240 $180
Adjusted EBITDA Profit Margin (%)23.5% 19.1% 16.1%
Diluted EPS ($)$0.28 $0.19 $(0.17)
Adjusted Diluted EPS ($)$0.67 $0.49 $0.09
Net Income (Loss) Attributable to Stockholders ($USD Millions)$29 $20 $(17)

Segment breakdown

SegmentQ3 2024 Revenue ($MM)Q3 2024 Adj. EBITDA ($MM)Q4 2024 Revenue ($MM)Q4 2024 Adj. EBITDA ($MM)Q1 2025 Revenue ($MM)Q1 2025 Adj. EBITDA ($MM)
Real Estate Sales & Financing814 233 769 170 645 133
Resort Operations & Club Mgmt383 156 399 162 391 133

Key KPIs

KPIQ3 2024Q4 2024Q1 2025
Contract Sales ($USD Millions)$777 $837 $721
Tour Flow (count)227,790 206,865 174,525
VPG ($)$3,392 $4,026 $4,111
Owned Mix (%)82.1% 81.7% 84.6%
Fee‑for‑Service Mix (%)17.9% 18.3% 15.4%
Member Count (TTM)721,504 723,968 724,617
NOG % (TTM)1.2% 1.1% 0.9%
Occupancyn/an/a77%
Rental & Ancillary Profit ($MM)$5 $(11) $(19)

Estimate comparison (S&P Global)

MetricQ1 2025 ConsensusQ1 2025 ActualSurprise
Primary EPS ($)0.44*0.09*—0.35 (miss)*
Revenue ex Cost Reimbursements ($USD Billions)1.251*1.015*—0.236 (miss)*
EBITDA ($USD Millions)236.4*155.0*—81.4 (miss)*
# of Estimates (Revenue / EPS)6* / 3*——*

Values retrieved from S&P Global.*

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Adjusted EBITDA (ex deferrals/recognitions)FY 2025$1.125B–$1.165B $1.125B–$1.165B Maintained
Average Share RepurchasesFY 2025~$150M per quarter target “Remain committed to…$150M per quarter” Maintained
Consumer Financing Interest Expense (incremental from financing optimization)FY 2025~$25M incremental (embedded in outlook) Not updated in Q1; strategy reiterated Maintained context

Earnings Call Themes & Trends

TopicQ3 2024 (prior)Q4 2024 (prior)Q1 2025 (current)Trend
Macro visibility / tariffsFocus on execution; integration prep FY25 outlook introduced Volatility acknowledged; limited direct tariff exposure, initiatives to “insulate” results Heightened caution; proactive actions
Tour efficiency & scoringRegionalization/staffing changes early benefits Efficiency work ongoing Tightened qualifications, refined scoring; pre‑tour qualifying Executing and expanding
Owner vs new buyer mixFee-for-service mix down; owner strength Owner demand strong Owner channel up 21%; new buyer ~25% mix; VPG +15% Owner-driven VPG outperformance
HGV Max & Bluegreen synergiesIntroduction to Bluegreen upcoming Run-rate synergy pathway 215k Max members; +13k Bluegreen adds; $89M synergies toward $100M target Scaling synergies
Financing optimizationLeverage and ABS readiness Refinanced revolver/TLBs; maturities 2028–2032 ~70% securitized; plan summer ABS, strong warehouse capacity Optimization advancing
Regional trendsStronger mix, owner-led Continued Hawaii construction deferrals Hawaii strong (Maui +40%); NY/DC/Orlando robust Broad-based strength
Rental & ancillaryProfit compressing Loss from fees/point conversions Loss ($19M); monitoring Expense pressure persists

Management Commentary

  • “We delivered solid results…producing strong growth in transactions, VPG and contract sales…continued traction from our launch of HGV Max to our Bluegreen members along with sales of our new Ka Haku project” — Mark Wang, CEO .
  • “We’re taking deliberate actions…to insulate our business from…volatility…initiatives aimed at further improving our efficiency, strengthening our value proposition, and improving our member engagement” — Mark Wang .
  • “Reported results…included $126 million of sales deferrals…Adjusting…would increase…adjusted EBITDA…by $68 million to $248 million” — Daniel Mathewes, CFO .
  • “Approximately 70% of our current receivables [are] securitized…we anticipate being in the ABS markets this coming summer” — Daniel Mathewes .
  • “We’re now over 215,000 Max members…Bluegreen contributing nearly 13,000…in only a handful of months since the launch” — Mark Wang .

Q&A Highlights

  • Demand visibility: booking windows and prepaid owner/package pipeline provide superior line-of-sight; occupancy flat at 77% and dated packages +22% QoQ; no material shift yet in forward indicators .
  • Mix/VPG: owner VPG strength (close rate +~500 bps); new buyer mix ~25–30%; average transaction price up ~5% for new buyers .
  • Securitization strategy: majority of unsecuritized notes to be monetized; small “scratch-and-dent” portion not immediately securitizable; warehouse to be termed out via ABS at ~5–5.5% if markets allow .
  • Geography: broad-based strength; Hawaii (Maui) +40%, Oahu/Japan strong; East Coast and Orlando strong; mid/smaller markets performing .
  • Downside playbook: packaged value proposition remains compelling; high recurring EBITDA share; loyal member base; focus on creating demand and tightening qualifications .

Estimates Context

  • Q1 2025 missed consensus materially on EPS, revenue (ex cost reimbursements), and EBITDA as ASC 606 net deferral ($68M) reduced reported adjusted EBITDA and EPS (~$0.71/share impact) and real estate margins compressed; excluding the deferral, adjusted EBITDA would have been ~$248M, closer to consensus directionally .
  • Given stable demand indicators and maintained FY2025 adjusted EBITDA guidance (ex deferrals/recognitions), estimate models likely need to distinguish between GAAP/ASC 606 timing impacts and underlying cash/operational metrics, and re-assess margin cadence in real estate and rental segments .
    Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Large ASC 606 deferral drove headline misses; underlying cash/operations were stronger (VPG +15% pro forma; adjusted FCF $185M at 75% conversion) — focus on ex‑deferral results and cash conversion in modelling .
  • Owner-led demand, HGV Max upgrades, and Ka Haku sales are powerful drivers; expect continued owner channel strength with tour efficiency programs supporting VPG and transactions .
  • Financing optimization is a key catalyst: ~70% securitized, strong warehouse capacity, summer ABS issuance likely; supports sustained ~$150M/quarter buybacks and liquidity .
  • Segment mix matters: resort & club steady (71% profit margin), real estate margin under pressure from product cost/marketing; rental/ancillary loss needs monitoring and cost discipline .
  • Geographic breadth (notably Hawaii recovery) and partner ecosystems (Hilton/Bass Pro/Choice) underpin lead generation and resilience; macro volatility acknowledged but proactive controls in place .
  • Near-term trading: narrative likely improves as construction completes (deferral unwinds) and ABS execution confirms liquidity; watch Bluegreen synergy run-rate progression to $100M and owner/new buyer mix normalization .
  • Medium-term thesis: maintained FY2025 adj. EBITDA guidance, strong cash generation, and capital returns trajectory with optionality from securitization strategy and product enhancements .