ORLANDO, Fla.--(BUSINESS WIRE)--
Hilton
Grand Vacations Inc. (NYSE:HGV) (“HGV” or the “Company”) today
reported its first-quarter 2017 results. Highlights include:
-
EPS was $0.51 for the first quarter, a 6.3 percent increase from the
same period in 2016.
-
Net income for the first quarter was $50 million, a 4.2 percent
increase from the same period in 2016.
-
Adjusted EBITDA for the first quarter declined 2.1 percent from the
same period in 2016 to $94 million.
-
Contract sales for the first quarter increased 9.5 percent from the
same period in 2016.
-
Net Owner Growth for the 12 months ending March 31, 2017 was 7.2
percent.
-
During the first quarter the Company completed a securitization
transaction for gross proceeds of $350 million.
-
During the first quarter the Company completed its separation from
Hilton and began trading on the New York Stock Exchange under the
ticker “HGV.”
Overview
For the three months ended March 31, 2017, EPS was $0.51 compared to
$0.48 for the three months ended March 31, 2016. Net income was $50
million for the three months ended March 31, 2017, compared to $48
million for the three months ended March 31, 2016, and Adjusted EBITDA
was $94 million for the three months ended March 31, 2017, compared to
$96 million for the three months ended March 31, 2016.
(Please note that during the three months ended March 31, 2017, HGV
revised its Adjusted EBITDA calculation to exclude the adjustment of
interest expense related to non-recourse debt in order to conform to
timeshare industry convention - see Definitions section for more
details.)
President and Chief Executive Officer of Hilton Grand Vacations Mark
Wang said, “Our first quarter results were driven by strong net owner
growth, increased contract sales and our ability to efficiently maximize
capital. As we continue to expand our member base and enhance member
experience, while furthering additional strategic initiatives, we will
continue exploring new capital deployment strategies with the goal of
generating growth and maximizing shareholder value.”
Segment Highlights – First Quarter
Real Estate Sales and Financing
Real estate sales and financing segment revenue was $283 million in the
first quarter of 2017, an increase of 6.4 percent compared to the same
period in 2016. Real estate and financing segment Adjusted EBITDA was
$83 million in the first quarter of 2017, compared to $81 million in the
same period in 2016. Real estate and financing segment Adjusted EBITDA
margin as a percentage of real estate and financing segment revenues was
29.3 percent in the first quarter of 2017 compared to 30.5 percent for
the same period in 2016.
Contract sales were $287 million in the first quarter of 2017, an
increase of 9.5 percent compared to the same period in 2016.
Fee-for-service contract sales represented 60.3 percent of total
contract sales in the first quarter of 2017, compared to 61.1 percent in
the same period in 2016. Tours increased 2.0 percent to 72,405 in the
first quarter compared to the same period in 2016. VPG for the first
quarter of 2017 was $3,737, an increase of 8.1 percent compared to the
same period in 2016.
Financing revenues were $35 million in the first quarter of 2017, an
increase of 9.4 percent compared to the same period in 2016.
The weighted average FICO score of new loans made to U.S. and Canadian
borrowers at the time of origination was 743 for the three months ended
March 31, 2017, compared to 741 for the three months ended March 31,
2016. In the first quarter of 2017, 65 percent of HGV’s sales were to
customers who financed part of their purchase.
As of March 31, 2017, gross timeshare financing receivables were $1.1
billion with a weighted average interest rate of 12 percent and a
weighted average remaining term of 7.6 years. As of March 31, 2017, 2.2
percent of HGV’s financing receivables were over 30 days past due and
not in default.
Resort Operations and Club Management
Resort operations and club management segment revenue was $88 million in
the first quarter of 2017, an increase of 8.6 percent compared to the
same period in 2016. Resort operations and club management segment
Adjusted EBITDA was $51 million in the first quarter of 2017, compared
to $46 million in the same period in 2016. Resort operations and club
management segment Adjusted EBITDA margin as a percentage of resort
operations and club management segment revenues was 58.0 percent in the
first quarter of 2017, compared to 56.8 percent for the same period in
2016.
Inventory
At March 31, 2017, the estimated contract sales value of HGV’s pipeline
of available inventory was approximately $6.3 billion at current
pricing, or approximately 5.3 years of sales at the current trailing
12-month sales pace. At March 31, 2017, the estimated contract sales
value of HGV’s pipeline of available owned inventory was approximately
$3.2 billion or approximately 2.7 years of sales. At March 31, 2017, the
estimated contract sales value of HGV’s pipeline of available
fee-for-service inventory was approximately $3.1 billion or
approximately 2.6 years of sales.
Of the current pipeline of available inventory, 39 percent is considered
just-in-time and 50 percent is considered fee-for-service. As such, the
Company considers 89 percent of the pipeline of available inventory as
of March 31, 2017, to be from capital-efficient sources.
(Please note that during the three months ended March 31, 2017, HGV
revised its inventory classification system and now reports its pipeline
on a future contract sales basis. Previously, inventory was reported on
a number of intervals basis. As such, current pipeline pace of sales
information may not be directly comparable to previously reported
information.)
Balance Sheet and Liquidity
As of March 31, 2017, Hilton Grand Vacations had $488 million of
corporate debt with a weighted average interest rate of 5.0 percent and
$695 million of non-recourse debt outstanding with a weighted average
interest rate of 2.4 percent.
During the quarter, the Company completed a securitization transaction
of approximately $357 million of gross timeshare receivables and issued
approximately $291 million of 2.66 percent notes and $59 million of 2.96
percent. Proceeds of the offering were used to reduce outstanding
balances on our non-recourse timeshare facility.
Total cash was $274 million as of March 31, 2017, including $78 million
of restricted cash.
Free cash flow, which the Company defines as cash from operating
activities, less non-inventory capital spending, was $125 million for
the three months ending March 31, 2017, compared to $28 million for the
three months ending March 31, 2016.
Outlook
Full-Year 2017
-
Net income is projected to be between $170 million and $186 million.
-
EPS is projected to be between $1.72 and $1.88.
-
Adjusted EBITDA is projected to be between $372 million and $397
million.
-
Full-year contract sales are expected to increase between 5.0 percent
and 7.0 percent.
-
Fee-for-service contract sales are expected to be between 52 percent
and 57 percent of full-year contract sales.
-
Free cash flow is projected to be between $140 million and $160
million.
(Please note that during the three months ended March 31, 2017, HGV
revised its Adjusted EBITDA calculation to exclude the adjustment of
interest expense related to non-recourse debt in order to conform to
timeshare industry convention.Guidance ranges have been updated
accordingly.)
Spin-Off Transactions and Other Events
On January 3, 2017, Hilton Worldwide Holdings, Inc. (“Hilton”) executed
a tax-free spin-off of Hilton Grand Vacations. The spin-off was
completed by way of a pro-rata distribution of HGV common stock to
Hilton stockholders of record as of 5 p.m. EST on December 15, 2016, the
spin-off record date. Each Hilton stockholder received one share of HGV
common stock for every 10 shares of Hilton common stock held by such
stockholder on the record date. On January 3, 2017, Hilton Grand
Vacations became a separate, publicly traded company, and Hilton did not
retain any ownership interest in HGV. On June 2, 2016 HGV filed a
Registration Statement on Form 10 describing the transaction with the
U.S. Securities and Exchange Commission (the “SEC”) and was declared
effective on December 2, 2016 (as amended through the time of such
effectiveness, the “Registration Statement on Form 10”). In connection
with the completion of the spin-off, HGV entered into agreements with
Hilton and other third parties, including a license agreement to use the
HGV brand that did not exist historically.
On March 15, 2017, Blackstone completed the previously announced sale of
24.8 million shares of HGV common stock to HNA Tourism Group, Ltd.,
representing approximately 25 percent of the outstanding shares of HGV’s
common stock.
Conference Call
Hilton Grand Vacations will host a conference call on May 4, 2017, at 11
a.m. EDT to discuss first-quarter 2017 results. Participants may listen
to the live webcast by logging onto the Hilton Grand Vacations’ Investor
Relations website at http://investors.hgv.com/events-and-presentations.
A replay and transcript of the webcast will be available on HGV’s
Investor Relations website within 24 hours after the live event.
Alternatively, participants may listen to the live call by dialing
1-866-490-1886 in the U.S. or 1-719-785-1747 internationally. Please use
conference ID 5550864. Participants are encouraged to dial into the call
or link to the webcast at least 20 minutes prior to the scheduled start
time. A telephone replay will be available for seven days following the
call. To access the telephone replay, dial 1-888-203-1112 or
1-719-457-0820 and use conference ID 5550864.
Forward-Looking Statements
This document 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. These statements
include, but are not limited to, statements related to our expectations
regarding the performance of our business, our financial results, our
liquidity and capital resources and other non-historical statements. You
can identify these forward-looking statements by the use of words such
as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,”
“will,” “should,” “could,” “seeks,” “approximately,” “projects,”
“predicts,” “intends,” “plans,” “estimates,” “anticipates” or the
negative version of these words or other comparable words.
Such forward-looking statements are subject to various risks and
uncertainties, including, among others, risks inherent to the timeshare
industry, market trends and developments, macroeconomic factors beyond
our control, competition for timeshare sales, risks related to doing
business with third-party developers, performance of our information
technology systems, risks of doing business outside of the U.S. and our
indebtedness. Additional factors that could cause our results to differ
materially from those described in the forward-looking statements can be
found under the sections entitled “Risk Factors” and “Management’s
Discussion and Analysis of Financial Condition and Results of
Operations” in our Annual Report on Form 10-K for the fiscal year ended
December 31, 2016, filed with the SEC, as such disclosures may be
updated from time to time in our periodic filings with the SEC,
including in our Quarterly Report on Form 10-Q for the period ended
March 31, 2017, which is expected to be filed on or about the date of
the press release. These documents are accessible on the SEC’s website
at www.sec.gov.
Accordingly, there are or will be important factors that could cause
actual outcomes or results to differ materially from those indicated in
these statements. These factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary statements
that are included in this release and in our filings with the SEC. The
Company undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise, except as required by law.
Non-GAAP Financial Measures
The Company refers to certain non-GAAP financial measures in this press
release, including EBITDA, Adjusted EBITDA, Adjusted EBITDA margins and
Free Cash Flow. Please see the schedules in this press release and
“Definitions” for additional information and reconciliations of such
non-GAAP financial measures.
About Hilton Grand Vacations Inc.
Hilton Grand Vacations Inc. (NYSE:HGV) is recognized as a leading global
timeshare company. With headquarters in Orlando, Fla., Hilton Grand
Vacations develops, markets and operates a system of brand-name,
high-quality vacation ownership resorts in select vacation destinations.
The Company also manages and operates two innovative club membership
programs: Hilton Grand Vacations Club® and The Hilton Club®, providing
exclusive exchange, leisure travel and reservation services for more
than 270,000 Club Members. For more information, visit www.hgv.com
and www.hiltongrandvacations.com.
|
| |
| |
| HILTON GRAND VACATIONS INC. |
| CONDENSED CONSOLIDATED BALANCE SHEETS |
| (in millions, except share data) |
| | | |
|
| | March 31, | | December 31, |
| | 2017 | | 2016 |
| | (Unaudited) | | |
| ASSETS | | | | |
|
Cash and cash equivalents
| |
$
|
196
| | |
$
|
48
|
|
Restricted cash
| |
78
| | |
103
|
|
Accounts receivable, net
| |
115
| | |
123
|
|
Timeshare financing receivables, net
| |
1,017
| | |
1,025
|
|
Inventory
| |
507
| | |
513
|
|
Property and equipment, net
| |
254
| | |
256
|
|
Intangible assets, net
| |
69
| | |
70
|
|
Other assets
| |
71
|
| |
42
|
| TOTAL ASSETS | |
$
|
2,307
|
| |
$
|
2,180
|
| LIABILITIES AND EQUITY | | | | |
|
Accounts payable, accrued expenses and other
| |
$
|
264
| | |
$
|
231
|
|
Advanced deposits
| |
107
| | |
103
|
|
Debt
| |
488
| | |
490
|
|
Non-recourse debt
| |
695
| | |
694
|
|
Deferred revenues
| |
142
| | |
106
|
|
Deferred income tax liabilities
| |
385
|
| |
389
|
|
Total liabilities
| |
2,081
| | |
2,013
|
|
Commitments and contingencies
| | | | |
| Equity: | | | | |
Preferred stock, $0.01 par value; 300,000,000 authorized shares,
none issued or outstanding as of March 31, 2017 and December 31,
2016
| |
—
| | |
—
|
Common stock, $0.01 par value; 3,000,000,000 authorized shares,
99,038,837 issued and outstanding as of March 31, 2017 and
98,802,597 issued and outstanding as of December 31, 2016
| |
1
| | |
1
|
|
Additional paid-in capital
| |
147
| | |
138
|
|
Accumulated retained earnings
| |
78
|
| |
28
|
| Total equity | |
226
|
| |
167
|
| TOTAL LIABILITIES AND EQUITY | |
$
|
2,307
|
| |
$
|
2,180
|
|
| |
| HILTON GRAND VACATIONS INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED) |
| (in millions, except per share amounts) |
| |
|
| | Three Months Ended March 31, |
| | 2017 |
| 2016 |
| Revenues | | | | |
|
Sales of VOIs, net
| |
$
|
118
| | |
$
|
115
| |
|
Sales, marketing, brand and other fees
| |
130
| | |
118
| |
|
Financing
| |
35
| | |
32
| |
|
Resort and club management
| |
36
| | |
31
| |
|
Rental and ancillary services
| |
46
| | |
45
| |
|
Cost reimbursements
| |
34
|
| |
29
|
|
|
Total revenues
| |
399
|
| |
370
|
|
| | | |
|
| Expenses | | | | |
|
Cost of VOI sales
| |
33
| | |
38
| |
|
Sales and marketing
| |
152
| | |
135
| |
|
Financing
| |
10
| | |
8
| |
|
Resort and club management
| |
10
| | |
8
| |
|
Rental and ancillary services
| |
27
| | |
26
| |
|
General and administrative
| |
23
| | |
16
| |
|
Depreciation and amortization
| |
7
| | |
5
| |
|
License fee expense
| |
20
| | |
19
| |
|
Cost reimbursements
| |
34
|
| |
29
|
|
|
Total operating expenses
| |
316
| | |
284
| |
|
Allocated Parent interest expense
| |
—
| | |
(6
|
)
|
|
Interest expense
| |
(7
|
)
| |
—
|
|
| Income before income taxes | |
76
| | |
80
| |
|
Income tax expense
| |
(26
|
)
| |
(32
|
)
|
| Net income | |
$
|
50
|
| |
$
|
48
|
|
| | | |
|
| Earnings per share:(1) | | | | |
|
Basic and diluted
| |
$
|
0.51
|
| |
$
|
0.48
|
|
|
| |
| (1) | |
For the three months ended March 31, 2016, basic and diluted
earnings per share was calculated based on shares distributed to
Hilton Grand Vacations' stockholders on January 3, 2017.
|
|
| |
| HILTON GRAND VACATIONS INC. |
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) |
| (in millions) |
| |
|
| | Three Months Ended March 31, |
| | 2017 |
| 2016 |
| Operating Activities | | | | |
|
Net income
| |
$
|
50
| | |
$
|
48
| |
|
Adjustments to reconcile net income to net cash provided by
operating activities:
| | | | |
|
Depreciation and amortization
| |
7
| | |
5
| |
|
Amortization of deferred financing costs and other
| |
1
| | |
1
| |
|
Provision for loan losses
| |
11
| | |
10
| |
|
Share-based compensation
| |
3
| | |
—
| |
|
Deferred income taxes
| |
6
| | |
5
| |
|
Net changes in assets and liabilities:
| | | | |
|
Accounts receivables, net
| |
8
| | |
(8
|
)
|
|
Timeshare financing receivables, net
| |
(4
|
)
| |
(9
|
)
|
|
Inventory
| |
6
| | |
(4
|
)
|
|
Other assets
| |
(29
|
)
| |
(22
|
)
|
|
Accounts payable, accrued expenses and other
| |
36
| | |
(19
|
)
|
|
Advanced deposits
| |
4
| | |
2
| |
|
Deferred revenues
| |
36
| | |
22
| |
|
Other
| |
—
|
| |
5
|
|
|
Net cash provided by operating activities
| |
135
|
| |
36
|
|
| | | |
|
| Investing Activities | | | | |
|
Capital expenditures for property and equipment
| |
(8
|
)
| |
(9
|
)
|
|
Software capitalization costs
| |
(2
|
)
| |
(1
|
)
|
|
Net cash used in investing activities
| |
(10
|
)
| |
(10
|
)
|
| | | |
|
| Financing Activities | | | | |
|
Issuance of non-recourse debt
| |
350
| | |
—
| |
|
Repayment of non-recourse debt
| |
(344
|
)
| |
(29
|
)
|
|
Repayment of debt
| |
(3
|
)
| |
—
| |
|
Debt issuance costs
| |
(5
|
)
| |
—
| |
|
Net transfers from Parent
| |
—
|
| |
8
|
|
|
Net cash used in financing activities
| |
(2
|
)
| |
(21
|
)
|
| | | |
|
| Net increase in cash, cash equivalents and restricted cash | |
123
| | |
5
| |
| Cash, cash equivalents and restricted cash, beginning of period | |
151
|
| |
79
|
|
| Cash, cash equivalents and restricted cash, end of period | |
$
|
274
|
| |
$
|
84
|
|
| | | |
|
| Supplemental Disclosures | | | | |
|
Non-cash financing activity
| | | | |
|
Transfer of inventory from Parent
| |
$
|
—
|
| |
$
|
15
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| FREE CASH FLOWS RECONCILIATION |
| (in millions) |
| |
|
| | Three Months Ended March 31, |
| | 2017 |
| 2016 |
| | | |
|
| Cash Flow from operations (1) | |
$
|
135
| | |
$
|
38
| |
|
Capital expenditures for property and equipment
| |
(8
|
)
| |
(9
|
)
|
|
Software capitalization costs
| |
(2
|
)
| |
(1
|
)
|
| Free Cash Flow | |
$
|
125
|
| |
$
|
28
|
|
|
|
| (1) For the three months ended March 31, 2016, amount
includes share-based compensation expense which, prior to the
spin-off, was included as a component of financing activities on the
condensed consolidated statements of cash flows.
|
|
| |
| HILTON GRAND VACATIONS INC. |
| SEGMENT REVENUE RECONCILIATION |
| (in millions) |
| |
|
| | Three Months Ended March 31, |
| | 2017 |
| 2016 |
| Revenues: | | | | |
|
Real estate sales and financing
| |
$
|
283
| | |
$
|
266
| |
|
Resort operations and club management
| |
88
|
| |
81
|
|
Segment revenues
| |
371
| | |
347
| |
| | | |
|
|
Cost reimbursements
| |
34
| | |
29
| |
|
Intersegment eliminations
| |
(6
|
)
| |
(6
|
)
|
| Total revenues | |
$
|
399
|
| |
$
|
370
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| SEGMENT EBITDA TO NET INCOME |
| ($ in millions) |
| |
|
| | Three Months Ended March 31, |
| | 2017 |
| 2016 |
| Net Income | |
$
|
50
| | |
$
|
48
| |
|
Interest expense
| |
7
| | |
—
| |
|
Allocated Parent interest expense
| |
—
| | |
6
| |
|
Income tax expense
| |
26
| | |
32
| |
|
Depreciation and amortization
| |
7
|
| |
5
|
|
| EBITDA (1) | |
90
| | |
91
| |
|
Share-based compensation expense
| |
3
| | |
2
| |
|
Other adjustment items (2) | |
1
|
| |
3
|
|
| Adjusted EBITDA (1) | |
$
|
94
|
| |
$
|
96
|
|
| | | |
|
| Adjusted EBITDA: | | | | |
|
Real estate sales and financing (3) | |
$
|
83
| | |
$
|
81
| |
|
Resort operations and club management (3) | |
51
|
| |
46
|
|
|
Segment Adjusted EBITDA
| |
134
| | |
127
| |
|
Less:
| | | | |
|
License fee expense
| |
20
| | |
19
| |
|
General and administrative (4) | |
20
|
| |
12
|
|
| Adjusted EBITDA (1) | |
$
|
94
|
| |
$
|
96
|
|
| | | |
|
|
Adjusted EBITDA margin %
| |
23.6
|
%
| |
25.9
|
%
|
|
EBITDA margin %
| |
22.6
|
%
| |
24.6
|
%
|
|
|
| (1) Reflects revised definition of EBITDA.
|
| (2) For the three months ended March 31, 2017, amount
represents $1 million of costs associated with the spin-off
transaction.
|
| (3) Includes intersegment eliminations and other
adjustments.
|
| (4) Excludes share-based compensation and other
adjustment items.
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| REAL ESTATE SALES MARGIN DETAIL SCHEDULE |
| ($ in millions, except Tour Flow and VPG) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2017 |
| 2016 |
| | | | |
|
|
Contract sales
| | |
$
|
287
| | |
$
|
262
| |
|
Tour flow
| | | |
72,405
| | | |
70,988
| |
|
VPG
| | |
$
|
3,737
| | |
$
|
3,457
| |
| | | | |
|
|
Owned contract sales mix
| | | |
39.7
|
%
| | |
38.9
|
%
|
|
Fee-for-service contract sales mix
| | | |
60.3
|
%
| | |
61.1
|
%
|
| | | | |
|
|
Sales of VOIs, net
| | |
$
|
118
| | |
$
|
115
| |
|
Adjustments:
| | | | | |
|
Fee-for-service sales(1) | | | |
173
| | | |
160
| |
|
Loan loss provision
| | | |
11
| | | |
10
| |
|
Reportability and other(2) | | |
|
(15
|
)
| |
|
(23
|
)
|
|
Contract sales
| | |
$
|
287
|
| |
$
|
262
|
|
| | | | |
|
|
Sales of VOIs, net
| | |
$
|
118
| | |
$
|
115
| |
|
Sales, marketing, brand and other fees
| | | |
130
| | | |
118
| |
|
Less:
| | | | | |
|
Marketing revenue and other fees
| | |
|
32
|
| |
|
27
|
|
|
Sales revenue
| | |
|
216
|
| |
|
206
|
|
|
Less:
| | | | | |
|
Cost of VOI sales
| | | |
33
| | | |
38
| |
|
Sales and marketing expense, net(3) | | |
|
122
|
| |
|
107
|
|
|
Real estate margin
| | |
$
|
61
|
| |
$
|
61
|
|
|
Real estate margin percentage
| | | |
28.2
|
%
| | |
29.6
|
%
|
| | | | | | |
|
| (1) Represents contract sales from fee-for-service
properties on which we earn commissions and brand fees.
|
(2) Includes adjustments for revenue recognition,
including percentage-of-completion deferrals and amount in
rescission, and sales incentives, as well as adjustments related
to granting credit to customers for their existing ownership when
upgrading into fee-for-service projects.
|
| (3) Includes revenue recognized through our marketing
programs for existing owners and prospective first-time buyers.
|
|
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| FINANCING MARGIN DETAIL SCHEDULE |
| ($ in millions) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2017 |
| 2016 |
|
Interest income
| | |
$
|
32
| | |
$
|
30
| |
|
Other financing revenue
| | |
|
3
|
| |
|
2
|
|
|
Financing revenue
| | |
|
35
|
| |
|
32
|
|
| | | | |
|
|
Consumer financing interest expense
| | | |
4
| | | |
3
| |
|
Other financing expense
| | |
|
6
|
| |
|
5
|
|
|
Financing expense
| | |
|
10
|
| |
|
8
|
|
| Financing margin | | |
$
|
25
|
| |
$
|
24
|
|
|
Financing margin percentage
| | | |
71.4
|
%
| | |
75.0
|
%
|
| | | | | | |
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| RESORT AND CLUB MARGIN DETAIL SCHEDULE |
| ($ in millions, except for Members and Net Owner Growth) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2017 |
| 2016 |
|
Members
| | | |
272,869
| | | |
254,590
| |
|
Net Owner Growth (NOG) (1) | | | |
18,279
| | | |
19,782
| |
|
Net Owner Growth % (NOG%)
| | | |
7.2
|
%
| | |
8.4
|
%
|
| | | | |
|
|
Club management revenue
| | |
$
|
21
| | |
$
|
18
| |
|
Resort management revenue
| | |
|
15
|
| |
|
13
|
|
|
Resort and club management revenues
| | |
|
36
|
| |
|
31
|
|
| | | | |
|
|
Club management expense
| | | |
5
| | | |
5
| |
|
Resort management expense
| | |
|
5
|
| |
|
3
|
|
|
Resort and club management expenses
| | |
|
10
|
| |
|
8
|
|
| Resort and club management margin | | |
$
|
26
|
| |
$
|
23
|
|
|
Resort and club management margin percentage
| | | |
72.2
|
%
| | |
74.2
|
%
|
| | | | | | | | |
|
| (1) Net Owner Growth over the last twelve months.
|
|
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| RENTAL AND ANCILLARY MARGIN DETAIL SCHEDULE |
| ($ in millions) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2017 |
| 2016 |
|
Rental revenues
| | |
$
|
41
| | |
$
|
39
| |
|
Ancillary services revenues
| | |
|
5
|
| |
|
6
|
|
|
Rental and ancillary services revenues
| | |
|
46
|
| |
|
45
|
|
| | | | |
|
|
Rental expenses
| | | |
23
| | | |
21
| |
|
Ancillary services expense
| | |
|
4
|
| |
|
5
|
|
|
Rental and ancillary services expenses
| | |
|
27
|
| |
|
26
|
|
| Rental and ancillary services margin | | |
$
|
19
|
| |
$
|
19
|
|
|
Rental and ancillary services margin percentage
| | | |
41.3
|
%
| | |
42.2
|
%
|
| | | | | | | | |
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| REAL ESTATE AND FINANCING SEGMENT ADJUSTED EBITDA |
| ($ in millions) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2017 |
| 2016 |
|
Sales of VOIs, net
| | |
$
|
118
| | |
$
|
115
| |
|
Sales, marketing, brand and other fees
| | | |
130
| | | |
118
| |
|
Financing
| | | |
35
| | | |
32
| |
|
HOA services
| | |
|
—
|
| |
|
1
|
|
| Real estate sales and financing segment revenues | | | |
283
| | | |
266
| |
| | | | |
|
|
Cost of VOI sales
| | | |
(33
|
)
| | |
(38
|
)
|
|
Sales and marketing
| | | |
(152
|
)
| | |
(135
|
)
|
|
Financing
| | | |
(10
|
)
| | |
(8
|
)
|
|
Marketing package sales
| | | |
(6
|
)
| | |
(5
|
)
|
|
Share-based compensation
| | |
|
1
|
| |
|
1
|
|
| Real estate sales and financing segment adjusted EBITDA (1) | | |
$
|
83
|
| |
$
|
81
|
|
|
Real estate sales and financing segment adjusted EBITDA margin
| | | |
29.3
|
%
| | |
30.5
|
%
|
| | | | | | | | |
|
| (1) Reflects revised definition of EBITDA.
|
|
|
|
|
| |
| HILTON GRAND VACATIONS INC. |
| RESORT AND CLUB SEGMENT ADJUSTED EBITDA |
| ($ in millions) |
| | |
|
| | | Three Months Ended March 31, |
| | | 2017 |
| 2016 |
|
Rental and ancillary services
| | |
$
|
46
| | |
$
|
45
| |
|
Resort and club management
| | | |
36
| | | |
31
| |
|
Marketing package sales
| | |
|
6
|
| |
|
5
|
|
| Resort and club management segment revenue | | | |
88
| | | |
81
| |
| | | | |
|
|
Club and resort management
| | | |
(10
|
)
| | |
(8
|
)
|
|
Rental and ancillary services
| | | |
(27
|
)
| | |
(26
|
)
|
|
HOA services
| | |
|
—
|
| |
|
(1
|
)
|
| Resort and club segment adjusted EBITDA (1) | | |
$
|
51
|
| |
$
|
46
|
|
|
Resort and club segment adjusted EBITDA margin
| | | |
58.0
|
%
| | |
56.8
|
%
|
| | | | | | | | |
|
| (1) Reflects revised definition of EBITDA.
|
|
|
|
|
| |
| |
| HILTON GRAND VACATIONS INC. |
| FORWARD-YEAR ADJUSTED EBITDA RECONCILIATION |
| ($ in millions) |
| | | | |
|
| | | 2017 | | 2017 |
| | | Low Case | | High Case |
|
Contract Sales
| | |
5
|
%
| |
7
|
%
|
|
Fee-for-service as % of contract sales
| | |
52
|
%
| |
57
|
%
|
| | | | |
|
|
Net Income
| | |
$
|
170
| | |
$
|
186
| |
|
Interest expense
| | |
27
| | |
27
| |
|
Income tax expense
| | |
121
| | |
132
| |
|
Depreciation and amortization
| | |
27
|
| |
27
|
|
|
EBITDA (1) | | |
$
|
345
| | |
$
|
372
| |
|
Add:
| | | | | |
|
Share-based compensation expense
| | |
16
| | |
14
| |
|
Other adjustment items
| | |
11
|
| |
11
|
|
|
Adjusted EBITDA (1) | | |
$
|
372
|
| |
$
|
397
|
|
| | | | |
|
|
Earnings per share:
| | | | | |
|
Basic and diluted
| | |
$
|
1.72
| | |
$
|
1.88
| |
| | | | |
|
|
Cash flow from operating activities (2) | | |
$
|
190
| | |
$
|
205
| |
|
Non-inventory capex
| | |
(50
|
)
| |
(45
|
)
|
|
Free Cash Flow
| | |
$
|
140
|
| |
$
|
160
|
|
| | | | | | | | |
|
| (1) Reflects revised definition of EBITDA.
|
| (2) Includes share-based compensation.
|
|
|
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, a provision for income taxes and depreciation and amortization.
During the first quarter of 2017, we revised our definition of EBITDA to
exclude the adjustment of interest expense relating to our non-recourse
debt as a reconciling item to arrive at net income (loss) in order to
conform to the presentation of the timeshare industry following the
consummation of the spin-off from Hilton. The revised definition was
applied to prior period(s) to conform with current presentation.
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) asset dispositions; (ii) foreign currency transactions;
(iii) debt restructurings/retirements; (iv) non-cash impairment losses;
(v) reorganization costs, including severance and relocation costs;
(vi) share-based and certain other compensation expenses; (vii) costs
related to the spin-off; and (viii) other items.
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.
We believe 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;
|
|
|
|
|
|
|
(i)
|
|
although depreciation and amortization are non-cash charges, the
assets being depreciated and amortized will often have to be
replaced in the future, and EBITDA and Adjusted EBITDA do not
reflect any cash requirements for such replacements; and
|
| | | | | |
(ii)
| |
other companies in our industry may calculate EBITDA and Adjusted
EBITDA differently, 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.
Real Estate Metrics
Capital efficiency ratio represents the ratio of cost of VOI
sales to VOI inventory spend, including fee-for-service upgrades. HGV
considers this to be an important operating measure because capital
efficiency allows HGV to reduce inventory investment requirements while
continuing to generate growth in revenues and cash flows.
Contract sales represents the total amount of VOI products under
purchase agreements signed during the period where HGV has received a
down payment of at least 10 percent of the contract price. Contract
sales is not a recognized term under U.S. GAAP and should not be
considered in isolation or as an alternative to Sales of VOIs, net or
any other comparable operating measure derived in accordance with U.S.
GAAP. Contract sales differ from revenues from the Sales of VOIs, net
that HGV reports in its consolidated statements of operations due to the
requirements for revenue recognition as described in Note 2: Basis of
Presentation and Summary of Significant Accounting Policies in the
Company’s audited consolidated financial statements, as well as
adjustments for incentives and other administrative fee revenues. HGV
considers contract sales to be an important operating measure because it
reflects the pace of sales in HGV’s business.
Developed Inventory refers to VOI inventory source 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.
Net Owner Growth represents the year-over-year change in
membership.
Real estate margin represents sales revenue less the cost of VOI
sales and sales and marketing costs, net of marketing revenue. Real
estate margin percentage is calculated by dividing real estate margin by
sales revenue. HGV considers this to be an important operating measure
because it measures the efficiency of the Company’s sales and marketing
spending and management of inventory costs.
Sales revenue represents sale of VOIs, net and commissions and
brand fees earned from the sale of fee-for-service intervals.
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.
Free cash flow represents cash from operating activities adjusted
for share based compensation, less non-inventory capital spending.
Resort and Club Management and Rental Metrics
Transient rate represents the total rental room revenue for
transient guests divided by total number of transient room nights sold
in a given period and excludes room rentals associated with marketing
programs, owner usage and the redemption of Club Bonus Points.
View source version on businesswire.com: http://www.businesswire.com/news/home/20170503006728/en/
Hilton Grand Vacations Inc.
Investor Contact:
Robert LaFleur,
407-613-3327
RLafleur@hgvc.com
or
Media
Contact:
Erin Pagán, 407-613-3771
EPagan@hgvc.com
Source: Hilton Grand Vacations Inc.