Hilton Grand Vacations Inc. Q4 FY2024 earnings call

• Closed Bluegreen acquisition and completed significant integration work, adding nearly 200,000 members and expanding portfolio to over 200 properties.
• Achieved $100 million in cost synergies and made organizational changes to improve sales and marketing execution.
• Launched HGV Max to Bluegreen members, with strong initial reception and over 5,000 new members added post-launch.
• Rebranded Bluegreen sales centers and has a detailed rebranding plan for approximately 30 Bluegreen properties.
• Partnered with Bass Pro, Great Wolf, and Choice Hotels, with initiatives to expand reach and enhance owner experience.

Real Estate: Contract sales were $837 million for the quarter, up 9% year-over-year on a pro forma basis, with Bluegreen contributing $208 million of sales and new buyers comprising 25% of total contract sales. VPG for the quarter rose 13% to 4,026, over 20% ahead of pro forma 2019 level. Real estate profit was $167 million with margins of 26%. Financing Business: Fourth quarter revenues was $153 million and segment profit was $93 million with margins of 61%. Resort and Club Business: Consolidated member count was approximately 724,000, NOG was 1.1% at the end of the quarter. Revenue was $206 million for the quarter and segment profit was $147 million with margins of 71%. Rental and ancillary revenues were $174 million in the quarter with segment loss of $11 million.

• 2025 adjusted EBITDA guidance in the range of $11.25 to $11.65 billion, with $25 million increase in consumer financing interest expense due to financing optimization program and a license fee headwind.
• Expect cash conversion rate for 2025 to be in the range of 65% to 75% due to financing optimization benefits.
• Increased share repurchase goal to $600 million, with an average of $150 million per quarter.

Q: How should we think about some of the puts and takes as far as growth rates between balancing off work flow and VPG as it relates to your 2025 outlook?

A: Expect tours in low to mid-single digit, VPG in same range, revenue to outpace EBITDA this year with solid growth in underlying business including strong free cash flow generation.

Q: How should we describe the financing optimization program?

A: It's about ramping up securitizations to get more cash infusion for share repurchases, with the program ramping over 18 months to reach full run rate.

Q: What's the outlook for loan loss provision in 2025?

A: Expect a bit of a headwind in Q1, but annualized basis to stabilize in mid-teens.

Q: How long will it take to get Bluegreen members through the HGV Max rollout?

A: Will take a good 18 to 24 months to get in front of all members as it's introduced in sales centers and involves sales presentations.

Q: What's the geographic distribution outlook?

A: Have expanded geographically with 44 new regional markets, and see opportunities for growth in markets like Nashville, Texas, and Japan through incremental and capital-efficient deals.

Q: Any impact of improved efficiency on financing business?

A: Not seen material change in propensity to finance, but seeing higher quality customers.

Q: Any softness in sales beginning in February?

A: Haven't seen anything similar, with momentum from fourth quarter rolling through January and continuing.