Hilton Grand Vacations reports third-quarter 2019 results

Hilton Grand Vacations Inc. (NYSE:HGV) (“HGV” or “the Company”) today reports its third-quarter 2019 results. Highlights include:

KEY HIGHLIGHTS

Third Quarter 2019 Results1

  • Total revenues for the third quarter were $466 million compared to $427 million for the same period in 2018.
    • Total revenues were affected by a deferral of $15 million in the current period and a deferral of $45 million in the same period in 2018.
  • Net income for the third quarter was $50 million compared to $41 million for the same period in 2018.
    • Net income was affected by a net deferral of $8 million in the current period and a net deferral of $25 million in the same period in 2018.
  • Diluted EPS for the third quarter was $0.59 compared to $0.42 for the same period in 2018.
    • Diluted EPS was affected by a net deferral of $8 million or $0.09 per share in the current period and a net deferral of $25 million or $0.26 per share in the same period in 2018.
  • The adjusted EBITDA third quarter was $111 million compared to $80 million for the same period in 2018.
    • Adjusted EBITDA was affected by a net deferral of $8 million in the current period and a net deferral of $25 million in the same period in 2018.
  • Tours were up 8.5% compared to the same period in 2018.
  • Contract sales in the third quarter were $360 million, a decrease of 1.1% from the same period in 2018.
  • Net Owner Growth (NOG) for the 12 months ended Sept. 30, 2019, was 5.6%.

“We saw strong Adjusted EBITDA growth and healthy NOG this quarter, driven by record owner engagement,” said Mark Wang, president and CEO of Hilton Grand Vacations. “We are starting to realize the benefits of the operational and cost improvements that we announced last quarter. Overall, I am encouraged by our progress and believe we are well positioned for growth as we exit this year and prepare for the launch of our highly anticipated new inventory beginning in 2020.”

Full Year 2019 Outlook1

  • Net income is now projected to be between $175 million and $190 million, reflecting restructuring costs, a slightly higher net deferral, and a slightly higher tax rate.
    • Net income is now expected to be affected by a net deferral
  • Diluted EPS is now projected to be between $1.97 and $2.13.
    • Diluted EPS is now expected to be affected by a net deferral of $39 million or $0.44 per share.
  • Adjusted EBITDA is projected to be between $376 million and $396 million.
    • Adjusted EBITDA is now expected to be affected by a net deferral of $39 million.
    • Given our third-quarter results, we now expect to be at the high end of this range.
  • Full-year 2019 contract sales are expected to be flat to down 3.0%.
    • Given our third-quarter results, we now expect to be at the high end of this range.
  • Adjusted free cash flow is projected to be between $50 and $110 million.
  • The revised 2019 outlook does not reflect any additional share repurchases.

Overview1

For the quarter ended Sept. 30, 2019, diluted EPS was $0.59 compared to $0.42 for the quarter ended Sept. 30, 2018. Net income and Adjusted EBITDA were $50 million and $111 million respectively, for the quarter ended Sept. 30, 2019, compared to $41 million and $80 million, respectively, for the quarter ended Sept. 30, 2018. Total revenues for the quarter ended Sept. 30, 2019, were $466 million compared to $427 million for the quarter ended Sept. 30, 2018.

Net income and Adjusted EBITDA for the quarter ended Sept. 30, 2019, include a net deferral of $8 million relating to sales made at The Central at 5th by Hilton Club project, which was under construction during the period. The company anticipates recognizing these revenues and related expenses in the second quarter of 2020 when it expects to complete this project.

Net income and Adjusted EBITDA for the quarter ended Sept. 30, 2018, include a net deferral of $25 million relating to sales made at the Ocean Tower by Hilton Grand Vacations Club project, which was still under construction during the period. The revenues net of related expenses for the Ocean Tower project were subsequently recognized in the fourth quarter of 2018.

[1] The company’s current year results, prior year results and outlook 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.

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