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Press Release

Hilton Grand Vacations Reports Full Year and Fourth Quarter 2019 Results

Lauren George

ORLANDO, Fla. (Feb. 27, 2020) – Hilton Grand Vacations Inc. (NYSE:HGV) (“HGV” or “the Company”) today reports its full year and fourth quarter 2019 results. Highlights include:

KEY HIGHLIGHTS

Fourth Quarter 2019 Results

  • Total revenues for the fourth quarter were $468 million compared to $642 million for the same period in 2018.
    • Total revenues were affected by a deferral of $35 million in the current period compared to a recognition of $153 million in the same period in 2018.
  • Net income for the fourth quarter was $72 million compared to $120 million for the same period in 2018.
    • Net income was affected by a net deferral of $19 million in the current year compared to a net recognition of $81 million in the same period in 2018.
  • Diluted EPS for the fourth quarter was $0.83 compared to $1.24 for the same period in 2018.
    • Diluted EPS was affected by a net deferral of $19 million or $0.22 per share in the current year compared to a net recognition of $81 million or $0.84 per share in the same period in 2018.
  • Adjusted EBITDA for the fourth quarter was $105 million compared to $186 million for the same period in 2018.
    • Adjusted EBITDA was affected by a net deferral of $19 million in the current period compared to a net recognition of $81 million in the same period in 2018.
  • Tours were up 5.2% compared to 2018.
  • Contract sales in the fourth quarter were $365 million, an increase of 1.4% from the same period in 2018.
  • Net Owner Growth (NOG) for the 12 months ended Dec. 31, 2019, was 5.5%.

“We had solid execution in the fourth quarter, returning to contract sales growth through an improvement in tours and a gain in our close rate,” said Mark Wang, president and CEO of Hilton Grand Vacations. “This topline growth combined with our efficiency initiatives allowed us to produce solid Adjusted EBITDA growth for the quarter. We have the right brand and the right team in place to execute as we move through this year and ramp up sales of our new inventory.”

Full Year 2020 Outlook1

  • Net income is projected to be between $198 and $208 million.
    • Net income is expected to be affected by a net deferral of $55 to $60 million.
  • Diluted EPS is projected to be between $2.28 and $2.39.
    • Diluted EPS is expected to be affected by a net deferral of $55 to $60 million or $0.63 to $0.69 per share.
  • Adjusted EBITDA is projected to be between $400 and $415 million.
    • Adjusted EBITDA is expected to be affected by a net deferral of $55 to $60 million.
  • Contract sales growth is expected to be 3% to 7%.
  • Adjusted free cash flow is projected to be between $50 and $110 million.
  • The 2020 outlook does not reflect any additional share repurchases.

Overview – Fourth Quarter 2019

For the quarter ended Dec. 31, 2019, diluted EPS was $0.83 compared to $1.24 for the quarter ended Dec. 31, 2018. Net income and Adjusted EBITDA were $72 million and $105 million, respectively, for the quarter ended Dec. 31, 2019, compared to $120 million and $186 million, respectively, for the quarter ended Dec. 31, 2018. Total revenues for the quarter ended Dec. 31, 2019, were $468 million compared to $642 million for the quarter ended Dec. 31, 2018.

Net income and Adjusted EBITDA for the quarter ended Dec. 31, 2019, included a net deferral of $19 million relating to sales made at The Central at 5th by Hilton Club and Ocean Tower at Hilton Grand Vacations Club Phase II projects, which were under construction during the period. The company anticipates recognizing these revenues and related expenses in late 2020 and the first quarter of 2021, respectively, when it expects to complete these projects and recognize the deferrals.

Net income and Adjusted EBITDA for the quarter ended Dec. 31, 2018, included an $81 million net benefit from recognitions related to sales at the Ocean Tower Phase I project that occurred during the first nine months of 2018 that were deferred until the fourth quarter of 2018 when construction of that phase of the project was completed and the deferrals were recognized.

Segment Highlights – Fourth Quarter 2019

Real Estate Sales and Financing

For the quarter ended Dec. 31, 2019, Real Estate Sales and Financing segment revenues were $313 million, a decrease of 36.8% compared to the quarter ended Dec. 31, 2018. Real Estate Sales and Financing segment Adjusted EBITDA and Adjusted EBITDA margin as a percentage of Real Estate Sales and Financing segment revenues were $82 million and 26.2%, respectively, for the quarter ended Dec. 31, 2019, compared to $173 million and 34.9%, respectively, for the quarter ended Dec. 31, 2018. Real Estate Sales and Financing results in fourth quarter 2019 weakened due to higher construction-related deferrals versus the prior year, offset by a modest increase in contract sales and lower revenue from the Company’s fee-for-service contracts.

Real Estate Sales and Financing segment Adjusted EBITDA reflect the $19 million of net deferrals related to The Central at 5th and Ocean Tower Phase II projects for the quarter ended Dec. 31, 2019, and $81 million of net recognitions related to the Ocean Tower Phase I project for the quarter ended Dec. 31, 2018, as previously discussed.

Contract sales for the quarter ended Dec. 31, 2019, increased 1.4% to $365 million compared to the quarter ended Dec. 31, 2018. For the quarter ended Dec. 31, 2019, tours increased 5.2% and VPG decreased 2.5% compared to the quarter ended Dec. 31, 2018. For the quarter ended Dec. 31, 2019, fee-for-service contract sales represented 52.3% of contract sales compared to 56.1% for the quarter ended Dec. 31, 2018.

Financing revenues were $43 million for the quarter ended Dec. 31, 2019, an increase of 4.9% compared to the quarter ended Dec. 31, 2018. This reflects a 2.7% increase in interest income, which was driven by an increase in the net timeshare financing receivables portfolio and a 6 bps increase in the weighted average interest rate the Company receives on the portfolio. It also reflects a $1 million increase in other financing revenue related to growth in servicing revenues related to the Company’s third-party loan portfolios.

Resort Operations and Club Management

For the quarter ended Dec. 31, 2019, Resort Operations and Club Management segment revenue was $122 million, an increase of 3.4% compared to the quarter ended Dec. 31, 2018. Resort Operations and Club Management segment Adjusted EBITDA and Adjusted EBITDA margin as a percentage of Resort Operations and Club Management segment revenue was $72 million and 59%, respectively, for the quarter ended Dec. 31, 2019, compared to $66 million and 55.9%, respectively, for the quarter ended Dec. 31, 2018. Compared to the prior-year period, Resort Operations and Club Management results in the fourth quarter of 2019 benefited from the additional club dues and transaction fees from nearly 17,000 net new members added over the previous 12-month period.

Overview – Full Year 2019

For the year ended Dec. 31, 2019, diluted EPS was $2.42 compared to $3.05 for the year ended Dec. 31, 2018. Net income and Adjusted EBITDA were $216 million and $408 million respectively, for the year ended Dec. 31, 2019, compared to $298 million and $503 million, respectively, for the year ended Dec. 31, 2018. Total revenues for the year ended Dec. 31, 2019, were $1.8 billion compared to $2 billion for the year ended Dec. 31, 2018.

Net income and Adjusted EBITDA for the year ended Dec. 31, 2019, include a net deferral of $45 million relating to sales made at The Central at 5th and Ocean Tower Phase II projects, which were under construction during the period. The company anticipates recognizing these revenues and related expenses in late 2020 and 2021, respectively, when it expects to complete these projects and recognize the deferrals.

Net income and Adjusted EBITDA for the year ended Dec. 31, 2018, included a $79 million net recognition of sales at The Residences by Hilton Club property that was deferred until the second quarter of 2018 when construction of that project was completed and the deferrals were recognized.

 

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Hilton Grand Vacations

Lauren George

Director, Corporate Communications
Hilton Grand Vacations
P: 1-407-613-8431 
E: [email protected]

 

 

Mark Melnyk

Vice President, Investor Relations
Hilton Grand Vacations
P: 1-407-613-3327 
E: [email protected]