Hilton Grand Vacations Reports Record Third Quarter 2022 Results

Hilton Grand Vacations Inc. (NYSE: HGV) (“HGV” or “the Company”) today reports its third quarter of 2022 results.

Third quarter highlights1

  • Total contract sales were $621 million.
  • Member count was 515,000. Net Owner Growth (NOG) for the Legacy-HGV business for the 12 months ended Sept. 30, 2022, was 3.8%, and Diamond added over 1,900 net new members in the quarter.
  • Total revenues for the third quarter were $1,116 million compared to $928 million for the same period in 2021.
    • Total revenues were affected by a net recognition of $86 million in the current period compared to a recognition of $241 million in the same period in 2021.
  • Net income for the third quarter was $150 million compared to $99 million net income for the same period in 2021.
    • Net income and adjusted net income were affected by a net recognition of $43 million in the current period compared to a net recognition of $133 million in the same period in 2021.
  • Adjusted EBITDA for the third quarter was $338 million compared to $340 million for the same period in 2021.
    • Adjusted EBITDA was affected by a net recognition of $43 million in the current period compared to a net recognition of $133 million in the same period in 2021.
  • During the quarter, the Company repurchased 2.3 million shares of common stock for $89 million. Through Nov. 9, the Company has repurchased an additional 1.1 million shares for $38 million, and currently has $290 million remaining of the $500 million repurchase plan approved by the Board in May 2022.
  • The Company has achieved a targeted $150 million of run-rate cost synergies in only 14 months following the completion of the Diamond Acquisition versus its initial goal of $125 million within 24 months laid out at acquisition close.

Full Year 2022 Outlook

  • The Company is raising its 2022 guidance for Adjusted EBITDA excluding deferrals and recognitions to be in a range of $1,025 million to $1,045 million.

“We delivered another solid quarter of performance, underpinned by the strengths of our business and the continued momentum in leisure travel,” said Mark Wang, president and CEO of Hilton Grand Vacations. “Our direct-sales model enables us to engage prospective owners through every environment, and we’ve received a great response from our members as we continue to roll out our HGV Max membership program, new properties, and experiential offerings. We produced record EBITDA and achieved our cost synergy target well ahead of schedule, generating strong free cash flow to support growth and a significant amount of capital returned to shareholders during the quarter.”

1.  

The Company’s current period results and prior year results include impacts related to deferrals of revenues and direct expenses related to the Sales of VOIs under construction that are recognized when construction is complete. These impacts are reflected in the sub-bullets.

Diamond Acquisition

On Aug. 2, 2021 (The “Acquisition Date”), HGV completed the acquisition of Dakota Holdings, Inc., the parent of Diamond Resorts International (“Diamond”) (the “Diamond Acquisition”). HGV completed the acquisition by exchanging 100% of the outstanding equity interests of Diamond for shares of HGV common stock. Pre-existing HGV shareholders owned approximately 72% of the combined company after giving effect of the Diamond Acquisition, with certain funds controlled by Apollo Global Management Inc. (the “Apollo Funds” or, “Apollo”) and other minority shareholders, who previously owned 100% of Diamond, holding approximately 28% at the time the Diamond Acquisition was completed.

Diamond also operates in the hospitality and VOI industry, with a worldwide resort network of global vacation destinations. Diamond’s portfolio consists of resort properties that the Company manages, which are included in one of Diamond’s single- and multi-use trusts (collectively, the “Diamond Collections” or “Collections”), or are Diamond-branded resorts in which the Company owns inventory. It also includes affiliated resorts and hotels, which the Company does not manage, and which do not carry the Diamond brand but are a part of Diamond’s network and, through THE Club® and other Club offerings (the “Diamond Clubs”), are available for its members to use as vacation destinations.

The financial results in this report include Diamond’s results of operations beginning on the Acquisition Date. The Company refers to Diamond’s business and operations that were acquired as “Legacy-Diamond” or “Diamond,” and HGV’s operations as “Legacy-HGV,” which is inclusive of operations that existed both prior to and following the Diamond Acquisition.

Overview

For the quarter ended Sept. 30, 2022, diluted EPS was $1.24 compared to $0.90 for the quarter ended Sept. 30, 2021. Net income and Adjusted EBITDA were $150 million and $338 million, respectively, for the quarter ended Sept. 30, 2022, compared to net income and Adjusted EBITDA of $99 million and $340 million, respectively, for the quarter ended Sept. 30, 2021. Total revenues for the quarter ended Sept. 30, 2022, were $1,116 million compared to $928 million for the quarter ended Sept. 30, 2021.

Net income and Adjusted EBITDA for the quarter ended Sept. 30, 2022, included a net recognition of $43 million relating to the opening of Maui Bay Villas Phase IB.

Consolidated Segment Highlights – Third Quarter of 2022

Real Estate Sales and Financing

For the quarter ended Sept. 30, 2022, Real Estate Sales and Financing segment revenues were $745 million, an increase of $86 million compared to the quarter ended Sept. 30, 2021. Real Estate Sales and Financing segment Adjusted EBITDA and Adjusted EBITDA profit margin were $295 million and 39.6%, respectively, for the quarter ended Sept. 30, 2022, compared to $280 million and 42.5%, respectively, for the quarter ended Sept. 30, 2021. Results in the third quarter of 2022 improved due to an increase in tour flow related to an improvement in travel demand versus the prior year along with lower provision and reportability adjustments.

Real Estate Sales and Financing segment Adjusted EBITDA reflects an increase of $43 million due to the net recognition of sales and related expenses of VOIs associated with Maui Bay Villas Phase IB project for the quarter ended Sept. 30, 2022. This compared to $133 million of net recognition of sales related to the Central at 5th, Ocean Tower Phase II, Maui Bay Villas Phase I and The Beach Resort Sesoko Phase I projects for the quarter ended Sept. 30, 2021.

Contract sales for the quarter ended Sept. 30, 2022, increased $188 million to $621 million compared to the quarter ended Sept. 30, 2021. For the quarter ended Sept. 30, 2022, tours increased by 46.1% and VPG decreased by 0.6% compared to the quarter ended Sept. 30, 2021. For the quarter ended Sept. 30, 2022, fee-for-service contract sales represented 28.2% of contract sales compared to 28.6% for the quarter ended Sept. 30, 2021.

Financing revenues for the quarter ended Sept. 30, 2022, increased by $15 million compared to the quarter ended Sept. 30, 2021. This was driven primarily by the increase related to interest income on the timeshare financing receivables. The Company experienced an increase in the timeshare financing receivables balance along with an increase in the weighted average interest rate for the originated portfolio of 110 basis points as of Sept. 30, 2022, compared to Sept. 30, 2021.

Resort Operations and Club Management

For the quarter ended Sept. 30, 2022, Resort Operations and Club Management segment revenue was $299 million, an increase of $83 million compared to the quarter ended Sept. 30, 2021. Resort Operations and Club Management segment Adjusted EBITDA and Adjusted EBITDA profit margin were $112 million and 37.5%, respectively, for the quarter ended Sept. 30, 2022, compared to $109 million and 50.5%, respectively, for the quarter ended Sept. 30, 2021. Compared to the prior-year period, results in the third quarter of 2022 increased due to the addition of Diamond’s resort network and member base, along with an increase in the number of transactions compared to the same period in 2021, which more than offset the increases in segment operating expenses.

Inventory

The estimated value of the Company’s total contract sales pipeline is approximately $12 billion at current pricing.

The total pipeline includes approximately $6 billion of sales relating to inventory that is currently available for sale at open or soon-to-open projects. The remaining approximately $6 billion of sales is related to inventory at new or existing projects that will become available for sale in the future upon registration, delivery or construction.

Owned inventory represents 84% of the Company’s total pipeline. Approximately 55% of the owned inventory pipeline is currently available for sale.

Fee-for-service inventory represents 16% of the Company’s total pipeline. Approximately 56% of the fee-for-service inventory pipeline is currently available for sale.

With 24% of the pipeline consisting of just-in-time inventory and 16% consisting of fee-for-service inventory, capital-efficient inventory represents 40% of the Company’s total contract sales pipeline.

Balance Sheet and Liquidity

Total cash and cash equivalents were $744 million as of Sept. 30, 2022, including $319 million of restricted cash.

As of Sept. 30, 2022, the Company had $2,612 million of corporate debt, net outstanding with a weighted average interest rate of 5.25% and $1,161 million of non-recourse debt, net outstanding with a weighted average interest rate of 3.66%.

As of Sept. 30, 2022, the Company’s liquidity position consisted of $425 million of unrestricted cash and $999 million remaining borrowing capacity under the revolver facility.

As of Sept. 30, 2022, HGV has $750 million remaining borrowing capacity in total under the Timeshare Facility. Of this amount, HGV has $178 million of mortgage notes that are available to be securitized and another $324 million of mortgage notes that the Company expects will become eligible as soon as they meet typical milestones including receipt of first payment, deeding, or recording.

Free cash flow was $217 million for the quarter ended Sept. 30, 2022, compared to $68 million for the same period in the prior year. Adjusted free cash flow was $393 million for the quarter ended Sept. 30, 2022, compared to $33 million for the same period in the prior year. Adjusted free cash flow for the quarter ended Sept. 30, 2022, includes add-backs of $19 million related to the Diamond Acquisition.

As of Sept. 30, 2022, the Company’s total net leverage on a pro-forma trailing 12-month basis was approximately 2.08x, not giving effect to anticipated synergies. Inclusive of anticipated synergies, HGV was at 2.05x total net leverage on a pro-forma trailing 12-month basis.

Total Construction Deferrals and/or Recognitions Included in Results Reported Under Accounting Standards Codification Topic 606 (“ASC 606”)

The Company’s Adjusted EBITDA as reported under ASC 606 includes construction-related recognitions and deferrals of revenues and related expenses as detailed in Table T-1. Under ASC 606, the Company defers revenues and related expenses pertaining to sales at projects that occur during periods when that project is under construction until the period when construction is completed.

 

T-1

NET CONSTRUCTION DEFERRAL ACTIVITY

(in millions)

 

 

 

2022

NET CONSTRUCTION DEFERRAL ACTIVITY

 

First

Quarter

 

Second

Quarter

 

Third

Quarter

 

Fourth

Quarter

 

Full

Year

Sales of VOIs (deferrals) recognitions

 

$

(42

)

 

$

(10

)

 

$

86

 

 

$

 

$

34

 

Cost of VOI sales (deferrals) recognitions(1)

 

 

(13

)

 

 

(5

)

 

 

30

 

 

 

 

 

12

 

Sales and marketing expense (deferrals) recognitions

 

 

(7

)

 

 

(1

)

 

 

13

 

 

 

 

 

5

 

Net construction (deferrals) recognitions(2)

 

$

(22

)

 

$

(4

)

 

$

43

 

 

$

 

$

17

 

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

51

 

 

$

73

 

 

$

150

 

 

$

 

$

274

 

Interest expense

 

 

33

 

 

 

35

 

 

 

37

 

 

 

 

 

105

 

Income tax expense

 

 

20

 

 

 

41

 

 

 

54

 

 

 

 

 

115

 

Depreciation and amortization

 

 

60

 

 

 

64

 

 

 

57

 

 

 

 

 

181

 

Interest expense and depreciation and amortization included in equity in earnings from unconsolidated affiliates

 

 

 

 

 

 

 

 

2

 

 

 

 

 

2

 

EBITDA

 

 

164

 

 

 

213

 

 

 

300

 

 

 

 

 

677

 

Other loss (gain), net

 

 

(1

)

 

 

2

 

 

 

(2

)

 

 

 

 

(1

)

Share-based compensation expense

 

 

11

 

 

 

15

 

 

 

14

 

 

 

 

 

40

 

Acquisition and integration-related expense

 

 

13

 

 

 

17

 

 

 

19

 

 

 

 

 

49

 

Impairment expense (reversal)

 

 

3

 

 

 

(3

)

 

 

 

 

 

 

 

 

Other adjustment items(3)

 

 

12

 

 

 

29

 

 

 

7

 

 

 

 

 

48

 

Adjusted EBITDA

 

$

202

 

 

$

273

 

 

$

338

 

 

$

 

$

813

 

 

T-1

NET CONSTRUCTION DEFERRAL ACTIVITY

(CONTINUED, in millions)

 

 

 

2021

NET CONSTRUCTION DEFERRAL ACTIVITY

 

First

Quarter

 

Second

Quarter

 

Third

Quarter

 

Fourth

Quarter

 

Full

Year

Sales of VOIs (deferrals) recognitions

 

$

(32

)

 

$

(42

)

 

$

241

 

$

(34

)

 

$

133

Cost of VOI sales (deferrals) recognitions(1)

 

 

(10

)

 

 

(13

)

 

 

73

 

 

(12

)

 

 

38

Sales and marketing expense (deferrals) recognitions

 

 

(4

)

 

 

(7

)

 

 

35

 

 

(5

)

 

 

19

Net construction (deferrals) recognitions(2)

 

$

(18

)

 

$

(22

)

 

$

133

 

$

(17

)

 

$

76

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

(7

)

 

$

9

 

 

$

99

 

$

75

 

 

$

176

Interest expense

 

 

15

 

 

 

17

 

 

 

42

 

 

31

 

 

 

105

Income tax (benefit) expense

 

 

(6

)

 

 

3

 

 

 

49

 

 

47

 

 

 

93

Depreciation and amortization

 

 

11

 

 

 

12

 

 

 

48

 

 

55

 

 

 

126

Interest expense and depreciation and amortization included in equity in earnings from unconsolidated affiliates

 

 

1

 

 

 

 

 

 

 

 

 

 

 

1

EBITDA

 

 

14

 

 

 

41

 

 

 

238

 

 

208

 

 

 

501

Other loss, net

 

 

1

 

 

 

1

 

 

 

20

 

 

4

 

 

 

26

Share-based compensation expense

 

 

4

 

 

 

14

 

 

 

14

 

 

16

 

 

 

48

Acquisition and integration-related expense

 

 

15

 

 

 

14

 

 

 

54

 

 

23

 

 

 

106

Impairment expense

 

 

1

 

 

 

 

 

 

1

 

 

 

 

 

2

Other adjustment items(3)

 

 

7

 

 

 

 

 

 

13

 

 

13

 

 

 

33

Adjusted EBITDA

 

$

42

 

 

$

70

 

 

$

340

 

$

264

 

 

$

716

(1)  

Includes anticipated Costs of VOI sales related to inventory associated with Sales of VOIs under construction that will be acquired once construction is complete.

(2)  

The table represents deferrals and recognitions of Sales of VOIs revenue and direct costs for properties under construction.

(3)  

Includes costs associated with restructuring, one-time charges and other non-cash items. This amount also includes the amortization of premiums resulting from purchase accounting.

Conference Call

Hilton Grand Vacations will host a conference call on Nov. 9, 2022, at 11 a.m. (ET) to discuss third quarter results.

To access the live teleconference, please dial 1-877-407-0784 in the U.S./Canada (or +1-201-689-8560 internationally) approximately 15 minutes prior to the teleconference’s start time. A live webcast will also be available by logging onto the HGV Investor Relations website at https://investors.hgv.com.

In the event of audio difficulties during the call on the toll-free number, participants are advised that accessing the call using the +1-201-689-8560 dial-in number may bypass the source of audio difficulties.

A replay will be available within 24 hours after the teleconference’s completion through Nov. 16, 2022. To access the replay, please dial 1-844-512-2921 in the U.S. (+1-412-317-6671 internationally) using ID#13726011. A webcast replay and transcript will also be available within 24 hours after the live event at https://investors.hgv.com.

Forward Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements convey management’s expectations as to the future of HGV, and are based on management’s beliefs, expectations, assumptions and such plans, estimates, projections and other information available to management at the time HGV makes such statements. Forward-looking statements include all statements that are not historical facts, may be identified by terminology such as the words “outlook,” “believe,” “expect,” “potential,” “goal,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “approximately,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates,” “future,” “guidance,” “target,” or the negative version of these words or other comparable words, although not all forward-looking statements may contain such words. The forward-looking statements contained in this press release include statements related to HGV’s revenues, earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance and other anticipated future events and expectations that are not historical facts.

HGV cautions you that forward-looking statements involve known and unknown risks, uncertainties and other factors, including those that are beyond HGV’s control, that may cause its actual results, performance or achievements to be materially different from the future results. Any one or more of these risks or uncertainties could adversely impact HGV’s operations, revenue, operating profits and margins, key business operational metrics, financial condition and/or credit rating.

For a more detailed discussion of these factors, see the information under the captions “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in HGV’s most recent Annual Report on Form 10-K filed with the SEC on March 1, 2022, as supplemented and updated by the risk factors in HGV’s Quarterly Report on Form 10-Q for the quarters and ending subsequent to the filing of HGV’s Annual Report on Form 10-K, which may be further updated from time to time in HGV’s quarterly reports, current reports and other filings HGV makes with the SEC.

HGV’s forward-looking statements speak only as of the date of this communication or as of the date they are made. HGV disclaims any intent or obligation to update any “forward-looking statement” made in this communication to reflect changed assumptions, the occurrence of unanticipated events or changes to future operating results over time.

Non-GAAP Financial Measures

The Company refers to certain non-GAAP financial measures in this press release, including EBITDA, Adjusted EBITDA, EBITDA profit margin, Adjusted EBITDA profit margin, Free Cash Flow and Adjusted Free Cash Flow. Please see the tables in this press release and “Definitions” for additional information and reconciliations of such non-GAAP financial measures.

The Company refers to Deferral Adjusted EBITDA guidance, which does not take into account any future deferrals of revenues and direct expenses related to the sales of VOIs under construction that are recognized, only on a non-GAAP basis, as the quantification of reconciling items to the most directly comparable U.S. GAAP financial measure is not readily available without unreasonable effort due to uncertainties associated with the timing and amount of such items. These items may create a material difference between the non-GAAP and comparable U.S. GAAP results.

About Hilton Grand Vacations Inc.

Hilton Grand Vacations Inc. (NYSE:HGV) is recognized as a leading global timeshare company. With headquarters in Orlando, Florida, Hilton Grand Vacations develops, markets and operates a system of brand-name, high-quality vacation ownership resorts in select vacation destinations. As one of Hilton’s 18 premier brands, Hilton Grand Vacations has a reputation for delivering a consistently exceptional standard of service, and unforgettable vacation experiences for guests and more than 725,000 owners. Membership with the Company provides best-in-class programs, exclusive services and maximum flexibility for our Members around the world. For more information, visit www.hiltongrandvacations.com.

HILTON GRAND VACATIONS INC.

DEFINITIONS

EBITDA and Adjusted EBITDA

EBITDA, presented herein, is a financial measure that is not recognized under U.S. GAAP that reflects net income (loss), before interest expense (excluding non-recourse debt), a provision for income taxes and depreciation and amortization.

Adjusted EBITDA, presented herein, is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including, but not limited to, gains, losses and expenses in connection with: (i) other gains, including asset dispositions and foreign currency transactions; (ii) debt restructurings/retirements; (iii) non-cash impairment losses; (iv) share-based and other compensation expenses; and (v) other items, including but not limited to costs associated with acquisitions, restructuring, amortization of premiums and discounts resulting from purchase accounting, and other non-cash and one-time charges.

EBITDA profit margin, presented herein, represents EBITDA, as previously defined, divided by total revenues. Adjusted EBITDA profit margin, presented herein, represents Adjusted EBITDA, as previously defined, divided by total revenues.

EBITDA and Adjusted EBITDA are not recognized terms under U.S. GAAP and should not be considered as alternatives to net income (loss) or other measures of financial performance or liquidity derived in accordance with U.S. GAAP. In addition, our definitions of EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures of other companies.

HGV believes that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) EBITDA and Adjusted EBITDA are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions; and (ii) EBITDA and Adjusted EBITDA are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. EBITDA and Adjusted EBITDA have limitations as analytical tools and should not be considered either in isolation or as a substitute for net income (loss), cash flow or other methods of analyzing our results as reported under U.S. GAAP. Some of these limitations are:

  • EBITDA and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
  • EBITDA and Adjusted EBITDA do not reflect our interest expense (excluding interest expense on non-recourse debt), or the cash requirements necessary to service interest or principal payments on our indebtedness;
  • EBITDA and Adjusted EBITDA do not reflect our tax expense or the cash requirements to pay our taxes;
  • EBITDA and Adjusted EBITDA do not reflect historical cash expenditures or future requirements for capital expenditures or contractual commitments;
  • EBITDA and Adjusted EBITDA do not reflect the effect on earnings or changes resulting from matters that we consider not to be indicative of our future operations;
  • EBITDA and Adjusted EBITDA do not reflect any cash requirements for future replacements of assets that are being depreciated and amortized; and
  • EBITDA and Adjusted EBITDA may be calculated differently from other companies in our industry limiting their usefulness as comparative measures.

Because of these limitations, EBITDA and Adjusted EBITDA should not be considered as discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations.

Free Cash Flow and Adjusted Free Cash Flow

Free Cash Flow represents cash from operating activities less non-inventory capital spending.

Adjusted Free Cash Flow represents free cash flow further adjusted to exclude net non-recourse debt activities and other one-time adjustment items including, but not limited to, costs associated with acquisitions.

We consider Free Cash Flow and Adjusted Free Cash Flow to be liquidity measures not recognized under U.S. GAAP that provides useful information to both management and investors about the amount of cash generated by operating activities that can be used for investing and financing activities, including strategic opportunities and debt service. We do not believe these non-GAAP measures to be a representation of how we will use excess cash.

Real Estate Metrics

Contract sales represents the total amount of VOI products (fee-for-service, just-in-time, developed, and points-based) under purchase agreements signed during the period where we have received a down payment of at least 10 percent of the contract price. Contract sales differ from revenues from the Sales of VOIs, net that we report in our condensed consolidated statements of operations due to the requirements for revenue recognition, as well as adjustments for incentives. We consider contract sales to be an important operating measure because it reflects the pace of sales in our business and is used to manage the performance of the sales organization. While the presentation of contract sales on a combined basis (fee-for-service, just-in-time, developed, and points-based) is most appropriate for the purpose of the operating metric, additional information regarding the split of contract sales, included in “—Real Estate” below, is useful for investors who are interested in the underlying capital structures of the Company’s projects. See Note 2: Summary of Significant Accounting Policies in our consolidated financial statements included in Item 8 in our Annual Report on form 10-K for the year ended December 31, 2021, for additional information on Sales of VOIs, net.

Developed Inventory refers to VOI inventory that is sourced from projects the Company develops.

Fee-for-Service Inventory refers to VOI inventory HGV sells and manages on behalf of third-party developers.

Just-in-Time Inventory refers to VOI inventory primarily sourced in transactions that are designed to closely correlate the timing of the acquisition with HGV’s sale of that inventory to purchasers.

Points-Based Inventory refers to VOI sales that are backed by physical real estate that is contributed to a trust.

NOG or Net Owner Growth represents the year-over-year change in membership.

Real estate profit represents sales revenue less the cost of VOI sales and sales and marketing costs, net of marketing revenue. Real estate profit margin is calculated by dividing real estate profit by sales revenue. The Company considers this to be an important operating measure because it measures the efficiency of our sales and marketing spending and management of inventory costs.

Sales revenue represents Sale of VOIs, net and fee-for-service commissions and brand fees earned from the sale of fee-for-service intervals.

Fee-for-service commissions and brand fees, net represents commissions and brand fees earned from the sale of fee-for-service intervals net of related reserves.

Tour flow represents the number of sales presentations given at HGV’s sales centers during the period.

Volume per guest (“VPG”) represents the sales attributable to tours at HGV’s sales locations and is calculated by dividing contract sales, excluding telesales, by tour flow. The Company considers VPG to be an important operating measure because it measures the effectiveness of HGV’s sales process, combining the average transaction price with closing rate.

 

HILTON GRAND VACATIONS INC.

 

FINANCIAL TABLES

 

CONDENSED CONSOLIDATED BALANCE SHEETS

T-2

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

T-3

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

T-4

FREE CASH FLOWS RECONCILIATION

T-5

SEGMENT REVENUE RECONCILIATION

T-6

SEGMENT EBITDA AND ADJUSTED EBITDA TO NET INCOME

T-7

REAL ESTATE SALES PROFIT DETAIL SCHEDULE

T-8

CONTRACT SALES MIX BY TYPE SCHEDULE

T-9

FINANCING PROFIT DETAIL SCHEDULE

T-10

RESORT AND CLUB PROFIT DETAIL SCHEDULE

T-11

RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE

T-12

REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA

T-13

RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA

T-14

 

T-2

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in millions, except share data)

 

 

September 30,

2022

 

December 31,

2021

 

(unaudited)

 

 

ASSETS

 

 

 

Cash and cash equivalents

$

425

 

$

432

Restricted cash

 

319

 

 

263

Accounts receivable, net

 

398

 

 

302

Timeshare financing receivables, net

 

1,743

 

 

1,747

Inventory

 

1,145

 

 

1,240

Property and equipment, net

 

776

 

 

756

Operating lease right-of-use assets, net

 

56

 

 

70

Investments in unconsolidated affiliates

 

69

 

 

59

Goodwill

 

1,416

 

 

1,377

Intangible assets, net

 

1,318

 

 

1,441

Land and infrastructure held for sale

 

 

 

41

Other assets

 

381

 

 

280

TOTAL ASSETS

$

8,046

 

$

8,008

LIABILITIES AND EQUITY

 

 

 

Accounts payable, accrued expenses and other

$

978

 

$

673

Advanced deposits

 

138

 

 

112

Debt, net

 

2,612

 

 

2,913

Non-recourse debt, net

 

1,161

 

 

1,328

Operating lease liabilities

 

74

 

 

87

Deferred revenues

 

223

 

 

237

Deferred income tax liabilities

 

703

 

 

670

Total liabilities

 

5,889

 

 

6,020

 

 

 

 

Equity:

 

 

 

Preferred stock, $0.01 par value; 300,000,000 authorized shares, none issued or outstanding as of September 30, 2022 and December 31, 2021

 

 

 

Common stock, $0.01 par value; 3,000,000,000 authorized shares, 116,387,235 shares issued and outstanding as of September 30, 2022 and 119,904,001 shares issued and outstanding as of December 31, 2021

 

1

 

 

1

Additional paid-in capital

 

1,607

 

 

1,630

Accumulated retained earnings

 

517

 

 

357

Accumulated other comprehensive income

 

32

 

 

Total equity

 

2,157

 

 

1,988

TOTAL LIABILITIES AND EQUITY

$

8,046

 

$

8,008

 

T-3

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share and share data)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Revenues

 

 

 

 

 

 

 

Sales of VOIs, net

$

500

 

 

$

488

 

 

$

1,130

 

 

$

597

 

Sales, marketing, brand and other fees

 

177

 

 

 

118

 

 

 

457

 

 

 

252

 

Financing

 

68

 

 

 

53

 

 

 

196

 

 

 

127

 

Resort and club management

 

130

 

 

 

99

 

 

 

379

 

 

 

192

 

Rental and ancillary services

 

159

 

 

 

112

 

 

 

466

 

 

 

198

 

Cost reimbursements

 

82

 

 

 

58

 

 

 

215

 

 

 

131

 

Total revenues

$

1,116

 

 

$

928

 

 

$

2,843

 

 

$

1,497

 

Expenses

 

 

 

 

 

 

 

Cost of VOI sales

 

102

 

 

 

130

 

 

 

207

 

 

 

154

 

Sales and marketing

 

322

 

 

 

234

 

 

 

849

 

 

 

432

 

Financing

 

25

 

 

 

19

 

 

 

66

 

 

 

43

 

Resort and club management

 

45

 

 

 

26

 

 

 

118

 

 

 

45

 

Rental and ancillary services

 

144

 

 

 

84

 

 

 

426

 

 

 

151

 

General and administrative

 

50

 

 

 

41

 

 

 

158

 

 

 

92

 

Acquisition and integration-related expense

 

19

 

 

 

54

 

 

 

49

 

 

 

83

 

Depreciation and amortization

 

57

 

 

 

48

 

 

 

181

 

 

 

71

 

License fee expense

 

33

 

 

 

24

 

 

 

90

 

 

 

57

 

Impairment expense

 

 

 

 

1

 

 

 

 

 

 

2

 

Cost reimbursements

 

82

 

 

 

58

 

 

 

215

 

 

 

131

 

Total operating expenses

 

879

 

 

 

719

 

 

 

2,359

 

 

 

1,261

 

Interest expense

 

(37

)

 

 

(42

)

 

 

(105

)

 

 

(74

)

Equity in earnings from unconsolidated affiliates

 

2

 

 

 

1

 

 

 

9

 

 

 

7

 

Other gain (loss), net

 

2

 

 

 

(20

)

 

 

1

 

 

 

(22

)

Income before income taxes

 

204

 

 

 

148

 

 

 

389

 

 

 

147

 

Income tax expense

 

(54

)

 

 

(49

)

 

 

(115

)

 

 

(46

)

Net income

$

150

 

 

$

99

 

 

$

274

 

 

$

101

 

Earnings per share(1):

 

 

 

 

 

 

 

Basic

$

1.25

 

 

$

0.92

 

 

$

2.26

 

 

$

1.08

 

Diluted

$

1.24

 

 

$

0.90

 

 

$

2.23

 

 

$

1.07

 

Weighted average shares outstanding(2)

 

 

 

 

 

 

 

Basic

 

119,565

 

 

 

107,688

 

 

 

121,309

 

 

 

92,945

 

Diluted

 

121,064

 

 

 

109,139

 

 

 

122,942

 

 

 

94,163

 

(1) Earnings per share is calculated based on unrounded dollars.

(2) Presented in thousands.

 

T-4

HILTON GRAND VACATIONS INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in millions)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2022

 

2021

 

2022

 

2021

Operating Activities

 

 

 

 

 

 

 

Net income

$

150

 

 

$

99

 

 

$

274

 

 

$

101

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

 

 

 

 

Depreciation and amortization

 

57

 

 

 

48

 

 

 

181

 

 

 

71

 

Amortization of deferred financing costs, acquisition premiums and other

 

9

 

 

 

9

 

 

 

34

 

 

 

19

 

Provision for financing receivables losses

 

32

 

 

 

49

 

 

 

103

 

 

 

77

 

Impairment expense

 

 

 

 

1

 

 

 

 

 

 

2

 

Other loss, net

 

(1

)

 

 

5

 

 

 

1

 

 

 

7

 

Share-based compensation

 

14

 

 

 

14

 

 

 

40

 

 

 

32

 

Deferred income tax (benefit) expense

 

(1

)

 

 

 

 

 

(1

)

 

 

9

 

Equity in earnings from unconsolidated affiliates

 

(2

)

 

 

(1

)

 

 

(9

)

 

 

(7

)

Return on investment in unconsolidated affiliates

 

 

 

 

2

 

 

 

 

 

 

2

 

Net changes in assets and liabilities:

 

 

 

 

 

 

 

Accounts receivable, net

 

9

 

 

 

(1

)

 

 

(64

)

 

 

(102

)

Timeshare financing receivables, net

 

(89

)

 

 

(54

)

 

 

(141

)

 

 

(36

)

Inventory

 

81

 

 

 

18

 

 

 

101

 

 

 

(11

)

Purchases and development of real estate for future conversion to inventory

 

(3

)

 

 

(8

)

 

 

(4

)

 

 

(25

)

Other assets

 

138

 

 

 

97

 

 

 

(21

)

 

 

62

 

Accounts payable, accrued expenses and other

 

(33

)

 

 

(54

)

 

 

257

 

 

 

5

 

Advanced deposits

 

8

 

 

 

(5

)

 

 

25

 

 

 

(5

)

Deferred revenues

 

(136

)

 

 

(275

)

 

 

(13

)

 

 

(165

)

Net cash provided by (used in) operating activities

 

233

 

 

 

(56

)

 

 

763

 

 

 

36

 

Investing Activities

 

 

 

 

 

 

 

Acquisition of Diamond, net of cash and restricted cash acquired

 

 

 

 

(1,585

)

 

 

 

 

 

(1,585

)

Capital expenditures for property and equipment

 

(6

)

 

 

(7

)

 

 

(25

)

 

 

(11

)

Software capitalization costs

 

(10

)

 

 

(5

)

 

 

(26

)

 

 

(14

)

Net cash used in investing activities

 

(16

)

 

 

(1,597

)

 

 

(51

)

 

 

(1,610

)

Financing Activities

 

 

 

 

 

 

 

Issuance of debt

 

 

 

 

1,300

 

 

 

 

 

 

2,650

 

Issuance of non-recourse debt

 

269

 

 

 

96

 

 

 

671

 

 

 

96

 

Repayment of debt

 

(178

)

 

 

(788

)

 

 

(310

)

 

 

(843

)

Repayment of non-recourse debt

 

(127

)

 

 

(116

)

 

 

(824

)

 

 

(234

)

Debt issuance costs and discounts

 

(5

)

 

 

(58

)

 

 

(12

)

 

 

(61

)

Repurchase and retirement of common stock

 

(84

)

 

 

 

 

 

(162

)

 

 

 

Payment of withholding taxes on vesting of restricted stock units

 

 

 

 

 

 

 

(8

)

 

 

(5

)

Proceeds from employee stock plan purchases

 

 

 

 

 

 

 

2

 

 

 

1

 

Proceeds from stock option exercises

 

 

 

 

4

 

 

 

1

 

 

 

10

 

Other financing activity

 

(1

)

 

 

(1

)

 

 

(2

)

 

 

(2

)

Net cash (used in) provided by financing activities

 

(126

)

 

 

437

 

 

 

(644

)

 

 

1,612

 

Effect of changes in exchange rates on cash, cash equivalents & restricted cash

 

(13

)

 

 

 

 

 

(19

)

 

 

 

Net increase (decrease) in cash, cash equivalents and restricted cash

 

78

 

 

 

(1,216

)

 

 

49

 

 

 

38

 

Cash, cash equivalents and restricted cash, beginning of period

 

666

 

 

 

1,780

 

 

 

695

 

 

 

526

 

Cash, cash equivalents and restricted cash, end of period

$

744

 

 

$

564

 

 

$

744

 

 

$

564

 

 

T-5

HILTON GRAND VACATIONS INC.

FREE CASH FLOW RECONCILIATION

(in millions)

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

Net cash provided by (used in) operating activities

 

$

233

 

 

$

(56

)

 

$

763

 

 

$

36

 

Capital expenditures for property and equipment

 

 

(6

)

 

 

(7

)

 

 

(25

)

 

 

(11

)

Software capitalization costs

 

 

(10

)

 

 

(5

)

 

 

(26

)

 

 

(14

)

Free Cash Flow

 

$

217

 

 

$

(68

)

 

$

712

 

 

$

11

 

Non-recourse debt activity, net

 

 

142

 

 

 

(20

)

 

 

(153

)

 

 

(138

)

Acquisition and integration-related expense

 

 

19

 

 

 

54

 

 

 

49

 

 

 

83

 

Other adjustment items(1)

 

 

15

 

 

 

1

 

 

 

48

 

 

 

1

 

Adjusted Free Cash Flow

 

$

393

 

 

$

(33

)

 

$

656

 

 

$

(43

)

(1) Includes capitalized acquisition and integration-related costs for the three and nine months ended September 30, 2022.

 

T-6

HILTON GRAND VACATIONS INC.

SEGMENT REVENUE RECONCILIATION

(in millions)

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Revenues:

 

 

 

 

 

 

 

 

Real estate sales and financing

 

$

745

 

 

$

659

 

 

$

1,783

 

 

$

976

 

Resort operations and club management

 

 

299

 

 

 

216

 

 

 

870

 

 

 

403

 

Total segment revenues

 

 

1,044

 

 

 

875

 

 

 

2,653

 

 

 

1,379

 

Cost reimbursements

 

 

82

 

 

 

58

 

 

 

215

 

 

 

131

 

Intersegment eliminations

 

 

(10

)

 

 

(5

)

 

 

(25

)

 

 

(13

)

Total revenues

 

$

1,116

 

 

$

928

 

 

$

2,843

 

 

$

1,497

 

 

T-7

HILTON GRAND VACATIONS INC.

SEGMENT EBITDA AND ADJUSTED EBITDA TO NET INCOME

(in millions)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

 

2022

 

 

 

2021

 

 

 

2022

 

 

 

2021

 

 

Net income

$

150

 

 

$

99

 

 

$

274

 

 

$

101

 

 

Interest expense

 

37

 

 

 

42

 

 

 

105

 

 

 

74

 

 

Income tax expense

 

54

 

 

 

49

 

 

 

115

 

 

 

46

 

 

Depreciation and amortization

 

57

 

 

 

48

 

 

 

181

 

 

 

71

 

 

Interest expense, depreciation and amortization included in equity in earnings from unconsolidated affiliates

 

2

 

 

 

 

 

 

2

 

 

 

1

 

 

EBITDA

 

300

 

 

 

238

 

 

 

677

 

 

 

293

 

 

Other gain (loss), net

 

(2

)

 

 

20

 

 

 

(1

)

 

 

22

 

 

Share-based compensation expense

 

14

 

 

 

14

 

 

 

40

 

 

 

32

 

 

Acquisition and integration-related expense

 

19

 

 

 

54

 

 

 

49

 

 

 

83

 

 

Impairment expense

 

 

 

 

1

 

 

 

 

 

 

2

 

 

Other adjustment items(1)

 

7

 

 

 

13

 

 

 

48

 

 

 

20

 

 

Adjusted EBITDA

$

338

 

 

$

340

 

 

$

813

 

 

$

452

 

 

 

 

 

 

 

 

 

 

 

Segment Adjusted EBITDA:

 

 

 

 

 

 

 

 

Real estate sales and financing(2)

$

295

 

 

$

280

 

 

$

666

 

 

$

352

 

 

Resort operations and club

management(2)

 

112

 

 

 

109

 

 

 

332

 

 

 

212

 

 

Adjustments:

 

 

 

 

 

 

 

 

Adjusted EBITDA from

unconsolidated affiliates

 

5

 

 

 

1

 

 

 

12

 

 

 

8

 

 

License fee expense

 

(33

)

 

 

(24

)

 

 

(90

)

 

 

(57

)

 

General and administrative(3)

 

(41

)

 

 

(26

)

 

 

(107

)

 

 

(63

)

 

Adjusted EBITDA

$

338

 

 

$

340

 

 

$

813

 

 

$

452

 

 

Adjusted EBITDA profit margin

 

30.3

%

 

 

36.6

%

 

 

28.6

%

 

 

30.2

%

 

EBITDA profit margin

 

26.9

%

 

 

25.6

%

 

 

23.8

%

 

 

19.6

%

 

(1)  

Includes costs associated with restructuring, one-time charges and other non-cash items. For the three and nine months ended September 30, 2022, this amount also includes the amortization of premiums resulting from the Diamond Acquisition.

(2)  

Includes intersegment transactions, share-based compensation, depreciation and other adjustments attributable to the segments.

(3)  

Excludes segment related share-based compensation, depreciation and other adjustment items.

 

T-8

HILTON GRAND VACATIONS INC.

REAL ESTATE SALES PROFIT DETAIL SCHEDULE

(in millions, except Tour Flow and VPG)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

Tour flow

 

142,647

 

 

 

97,628

 

 

 

375,507

 

 

 

181,921

 

 

VPG

 

4,229

 

 

 

4,255

 

 

 

4,463

 

 

 

4,356

 

 

Owned contract sales mix

 

71.8

%

 

 

71.4

%

 

 

72.1

%

 

 

65.2

%

 

Fee-for-service contract sales mix

 

28.2

%

 

 

28.6

%

 

 

27.9

%

 

 

34.8

%

 

 

 

 

 

 

 

 

 

 

Contract sales

$

621

 

 

$

433

 

 

$

1,747

 

 

$

831

 

 

Adjustments:

 

 

 

 

 

 

 

 

Fee-for-service sales(1)

 

(175

)

 

 

(124

)

 

 

(488

)

 

 

(289

)

 

Provision for financing receivables losses

 

(32

)

 

 

(50

)

 

 

(103

)

 

 

(78

)

 

Reportability and other:

 

 

 

 

 

 

 

 

Net recognition of sales of VOIs under construction(2)

 

86

 

 

 

241

 

 

 

34

 

 

 

167

 

 

Fee-for-service sale upgrades, net

 

5

 

 

 

3

 

 

 

14

 

 

 

8

 

 

Other(3)

 

(5

)

 

 

(15

)

 

 

(74

)

 

 

(42

)

 

Sales of VOIs, net

$

500

 

 

$

488

 

 

$

1,130

 

 

$

597

 

 

Plus:

 

 

 

 

 

 

 

 

Fee-for-service commissions and brand fees, net

 

125

 

 

 

73

 

 

 

293

 

 

 

162

 

 

Sales revenue

 

625

 

 

 

561

 

 

 

1,423

 

 

 

759

 

 

Less:

 

 

 

 

 

 

 

 

Cost of VOI sales

 

102

 

 

 

130

 

 

 

207

 

 

 

154

 

 

Sales and marketing expense, net(4)

 

246

 

 

 

174

 

 

 

644

 

 

 

316

 

 

Real estate profit

$

277

 

 

$

257

 

 

$

572

 

 

$

289

 

 

Real estate profit margin

 

44.3

%

 

 

45.8

%

 

 

40.2

%

 

 

38.1

%

 

 

 

 

 

 

 

 

 

 

Reconciliation of fee-for-service commissions:

 

 

 

 

 

 

 

 

Sales, marketing, brand and other fees

 

177

 

 

 

118

 

 

 

457

 

 

 

252

 

 

Less:

 

 

 

 

 

 

 

 

Marketing revenue and other fees

 

52

 

 

 

45

 

 

 

164

 

 

 

90

 

 

Fee-for-service commissions and brand fees, net

$

125

 

 

$

73

 

 

$

293

 

 

$

162

 

 

(1)

 

Represents contract sales from fee-for-service properties on which we earn commissions and brand fees.

(2)

 

Represents the net recognition of revenues related to the Sales of VOIs under construction that are recognized when construction is complete.

(3)

 

Includes adjustments for revenue recognition, including amounts in rescission and sales incentives.

(4)

 

Includes revenue recognized through our marketing programs for existing owners and prospective first-time buyers and revenue associated with sales incentives, title service and document compliance.

 

T-9

HILTON GRAND VACATIONS INC.

CONTRACT SALES MIX BY TYPE SCHEDULE

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

Just-In-Time Contract Sales Mix

 

18

%

 

19

%

 

14

%

 

22

%

Fee-For-Service Contract Sales Mix

 

28

%

 

29

%

 

28

%

 

35

%

Total Capital-Efficient Contract Sales Mix(1)

 

46

%

 

48

%

 

42

%

 

57

%

(1) Diamond contract sales are related to developed properties and therefore are not included in capital efficient contract sales.

 

T-10

HILTON GRAND VACATIONS INC.

FINANCING PROFIT DETAIL SCHEDULE

(in millions)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

Interest income(1)

$

61

 

 

$

46

 

 

$

170

 

 

$

108

 

 

Other financing revenue

 

7

 

 

 

7

 

 

 

26

 

 

 

19

 

 

Financing revenue

 

68

 

 

 

53

 

 

 

196

 

 

 

127

 

 

Consumer financing interest expense(2)

 

11

 

 

 

8

 

 

 

26

 

 

 

22

 

 

Other financing expense

 

14

 

 

 

11

 

 

 

40

 

 

 

21

 

 

Financing expense

 

25

 

 

 

19

 

 

 

66

 

 

 

43

 

 

Financing profit

$

43

 

 

$

34

 

 

$

130

 

 

$

84

 

 

Financing profit margin

 

63.2

%

 

 

64.2

%

 

 

66.3

%

 

 

66.1

%

 

(1)

For the three and nine months ended September 30, 2022, this amount includes $7 million and $27 million, respectively, of amortization of the premium related to the acquired timeshare financing receivables resulting from the Diamond Acquisition.

(2)  

For the three and nine months ended September 30, 2022, this amount includes $2 million and $8 million, respectively, of amortization of the premium related to the acquired non-recourse debt resulting from the Diamond Acquisition.

 

T-11

HILTON GRAND VACATIONS INC.

RESORT AND CLUB PROFIT DETAIL SCHEDULE

(in millions, except for Members and Net Owner Growth)

 

Twelve Months Ended September

30,

 

2022

 

2021

Total members

514,942

 

 

462,962

 

Legacy-HGV Net Owner Growth (NOG)(1)

12,433

 

 

3,927

 

Legacy-HGV Net Owner Growth % (NOG)(1)

3.8

%

 

1.2

%

(1) NOG is a twelve-trailing-month concept and thus not calculated for Diamond under HGV’s ownership.

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

Club management revenue

$

48

 

 

$

42

 

 

$

150

 

 

$

98

 

 

Resort management revenue

 

82

 

 

 

57

 

 

 

229

 

 

 

94

 

 

Resort and club management revenues

 

130

 

 

 

99

 

 

 

379

 

 

 

192

 

 

Club management expense

 

11

 

 

 

8

 

 

 

31

 

 

 

18

 

 

Resort management expense

 

34

 

 

 

18

 

 

 

87

 

 

 

27

 

 

Resort and club management expenses

 

45

 

 

 

26

 

 

 

118

 

 

 

45

 

 

Resort and club management profit

$

85

 

 

$

73

 

 

$

261

 

 

$

147

 

 

Resort and club management profit margin

 

65.4

%

 

 

73.7

%

 

 

68.9

%

 

 

76.6

%

 

 

T-12

HILTON GRAND VACATIONS INC.

RENTAL AND ANCILLARY PROFIT DETAIL SCHEDULE

(in millions)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

Rental revenues

$

157

 

 

$

104

 

 

$

436

 

 

$

184

 

 

Ancillary services revenues

 

2

 

 

 

8

 

 

 

30

 

 

 

14

 

 

Rental and ancillary services revenues

 

159

 

 

 

112

 

 

 

466

 

 

 

198

 

 

Rental expenses

 

141

 

 

 

77

 

 

 

401

 

 

 

138

 

 

Ancillary services expense

 

3

 

 

 

7

 

 

 

25

 

 

 

13

 

 

Rental and ancillary services expenses

 

144

 

 

 

84

 

 

 

426

 

 

 

151

 

 

Rental and ancillary services profit

$

15

 

 

$

28

 

 

$

40

 

 

$

47

 

 

Rental and ancillary services profit margin

 

9.4

%

 

 

25.0

%

 

 

8.6

%

 

 

23.7

%

 

 

T-13

HILTON GRAND VACATIONS INC.

REAL ESTATE SALES AND FINANCING SEGMENT ADJUSTED EBITDA

(in millions)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

Sales of VOIs, net

$

500

 

 

$

488

 

 

$

1,130

 

 

$

597

 

 

Sales, marketing, brand and other fees

 

177

 

 

 

118

 

 

 

457

 

 

 

252

 

 

Financing revenue

 

68

 

 

 

53

 

 

 

196

 

 

 

127

 

 

Real estate sales and financing segment revenues

 

745

 

 

 

659

 

 

 

1,783

 

 

 

976

 

 

Cost of VOI sales

 

(102

)

 

 

(130

)

 

 

(207

)

 

 

(154

)

 

Sales and marketing expense, net

 

(322

)

 

 

(234

)

 

 

(849

)

 

 

(432

)

 

Financing expense

 

(25

)

 

 

(19

)

 

 

(66

)

 

 

(43

)

 

Marketing package stays

 

(10

)

 

 

(5

)

 

 

(25

)

 

 

(13

)

 

Share-based compensation

 

3

 

 

 

3

 

 

 

9

 

 

 

7

 

 

Other adjustment items

 

6

 

 

 

6

 

 

 

21

 

 

 

11

 

 

Real estate sales and financing segment adjusted EBITDA

$

295

 

 

$

280

 

 

$

666

 

 

$

352

 

 

Real estate sales and financing segment adjusted EBITDA profit margin

 

39.6

%

 

 

42.5

%

 

 

37.4

%

 

 

36.1

%

 

T-14

HILTON GRAND VACATIONS INC.

RESORT AND CLUB MANAGEMENT SEGMENT ADJUSTED EBITDA

(in millions)

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2022

 

2021

 

2022

 

2021

 

Resort and club management revenues

$

130

 

 

$

99

 

 

$

379

 

 

$

192

 

 

Rental and ancillary services

 

159

 

 

 

112

 

 

 

466

 

 

 

198

 

 

Marketing package stays

 

10

 

 

 

5

 

 

 

25

 

 

 

13

 

 

Resort and club management segment revenue

 

299

 

 

 

216

 

 

 

870

 

 

 

403

 

 

Resort and club management expenses

 

(45

)

 

 

(26

)

 

 

(118

)

 

 

(45

)

 

Rental and ancillary services expenses

 

(144

)

 

 

(84

)

 

 

(426

)

 

 

(151

)

 

Share-based compensation

 

2

 

 

 

1

 

 

 

5

 

 

 

3

 

 

Other adjustment items

 

 

 

 

2

 

 

 

1

 

 

 

2

 

 

Resort and club segment adjusted EBITDA

$

112

 

 

$

109

 

 

$

332

 

 

$

212

 

 

Resort and club management segment adjusted EBITDA profit margin

 

37.5

%

 

 

50.5

%

 

 

38.2

%

 

 

52.6

%

 

 

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