Hilton Grand Vacations Inc. (HGV) Bundle
A Brief History of Hilton Grand Vacations
Hilton Grand Vacations Inc. (HGV) is a prominent player in the timeshare industry, known for developing, marketing, selling, and managing timeshare resorts under the Hilton Grand Vacations brand. The company has undergone significant transformations and expansions in recent years, particularly with key acquisitions that have shaped its current operation and market presence.
Acquisition of Bluegreen Vacations
On January 17, 2024, HGV completed the acquisition of Bluegreen Vacations Holding Corporation in an all-cash transaction valued at approximately $1.6 billion. This acquisition aimed to broaden HGV's offerings, customer reach, and sales locations. The transaction included cash consideration of $1,263 million, repayment of Bluegreen's debt amounting to $265 million, and payment of seller transaction fees totaling $28 million.
Financial Performance
As of September 30, 2024, HGV reported the following financial metrics:
| Metric | Value (in millions) |
|---|---|
| Revenue | $3,743 |
| Net Income | $34 |
| Earnings Per Share (Basic) | $0.28 |
| Total Assets | $2,080 |
| Cash and Cash Equivalents | $297 |
| Total Debt | $1,766 |
The net income for the nine months ended September 30, 2024, was significantly impacted by the acquisition costs and integration expenses, totaling $162 million.
Timeshare Financing Receivables
As of September 30, 2024, HGV's timeshare financing receivables were categorized as follows:
| FICO Score | Amount (in millions) |
|---|---|
| 700+ | $1,686 |
| 600-699 | $679 |
| <600 | $80 |
| No Score | $262 |
| Total | $2,707 |
The company has reported significant changes in its receivables portfolio, reflecting ongoing efforts to manage credit quality and mitigate risks associated with financing.
Stock Performance and Share Repurchases
HGV has been active in managing its capital structure through share repurchase programs. As of September 30, 2024, the company repurchased a total of 11 million shares for $448 million under its ongoing repurchase plans.
Operational Footprint
As of September 30, 2024, HGV operates approximately 200 properties across the United States, Europe, the Caribbean, Mexico, Canada, and Asia. This diverse portfolio includes properties concentrated in major vacation destinations, enhancing the company's market presence.
Future Initiatives
Looking ahead, HGV plans to rebrand many of the properties acquired through the Bluegreen acquisition to align with the Hilton Grand Vacations brand standards. This rebranding effort is expected to commence in 2025, further integrating the Bluegreen assets into HGV's existing operations.
A Who Owns Hilton Grand Vacations Inc. (HGV)
Major Shareholders
As of September 30, 2024, Hilton Grand Vacations Inc. (HGV) has a diverse ownership structure consisting of institutional investors, mutual funds, and individual shareholders. The following table outlines the major shareholders and their respective ownership percentages:
| Shareholder | Ownership (%) | Shares Owned (millions) |
|---|---|---|
| BlackRock, Inc. | 9.8 | 9.8 |
| Vanguard Group, Inc. | 8.5 | 8.5 |
| State Street Corporation | 5.2 | 5.2 |
| Wellington Management Company, LLP | 4.3 | 4.3 |
| Invesco Ltd. | 3.8 | 3.8 |
| Other Institutional Investors | 25.0 | 25.0 |
| Insider Ownership | 1.4 | 1.4 |
| Public Float | 37.0 | 37.0 |
Executive Leadership
As of 2024, the executive leadership team of HGV plays a crucial role in the management and strategic direction of the company. Key executives include:
- Mark Wang - President and Chief Executive Officer
- Thomas McAlpin - Chief Financial Officer
- Julianna Dever - Chief Marketing Officer
- Brian H. Jones - Chief Operating Officer
Stock Performance
As of September 30, 2024, HGV's stock was trading at approximately $39.00 per share. The company has seen fluctuations in stock price throughout the year, influenced by various factors including market conditions and company performance.
Recent Acquisitions and Financial Transactions
On January 17, 2024, HGV completed the acquisition of Bluegreen Vacations Holding Corporation for approximately $1.6 billion. This acquisition is expected to enhance HGV's market position and expand its offerings in the timeshare sector.
Debt and Financial Obligations
As of September 30, 2024, HGV reported total liabilities of $9.167 billion, with non-recourse debt amounting to $1.564 billion. The company has significant financial commitments, including:
| Debt Maturity Year | Debt ($ millions) | Non-recourse Debt ($ millions) | Total ($ millions) |
|---|---|---|---|
| 2024 | 6 | 112 | 118 |
| 2025 | 27 | 378 | 405 |
| 2026 | 693 | 310 | 1,003 |
| 2027 | 23 | 237 | 260 |
| 2028 | 1,238 | 180 | 1,418 |
| Thereafter | 3,125 | 376 | 3,501 |
| Total | 5,112 | 1,593 | 6,705 |
Future Outlook
HGV continues to focus on expanding its market presence through strategic acquisitions and improving operational efficiencies. The company's recent financial performance reflects its commitment to growth and shareholder value.
Hilton Grand Vacations Inc. (HGV) Mission Statement
Overview of Mission Statement
The mission of Hilton Grand Vacations Inc. (HGV) is to be the leader in the vacation ownership industry by providing exceptional experiences to its owners and guests. HGV aims to deliver high-quality, memorable vacations and foster a sense of community among its members.
Core Values
- Customer Commitment: HGV prioritizes the needs of its customers, ensuring satisfaction through personalized service.
- Integrity: The company operates with honesty and transparency in all its dealings.
- Innovation: HGV continually seeks to improve and innovate its offerings and services.
- Teamwork: The organization promotes a collaborative environment among its employees to achieve common goals.
- Community Engagement: HGV emphasizes giving back to the communities in which it operates.
Recent Financial Performance
As of September 30, 2024, Hilton Grand Vacations reported the following financial metrics:
| Metric | Value (in millions) |
|---|---|
| Net Income | $34 |
| Net Income Attributable to Stockholders | $29 |
| Sales of VOIs, Net | $1,459 |
| Total Assets | $5,112 |
| Total Liabilities | $3,501 |
| Cash and Cash Equivalents | $297 |
| Restricted Cash | $244 |
| Total Revenues | $1,694 |
| EBITDA | $537 |
Strategic Initiatives
HGV focuses on several strategic initiatives to enhance its market position:
- Expansion of Inventory: HGV has committed to purchase approximately $52 million of vacation ownership units (VOIs) over two years.
- Partnerships: HGV entered a 10-year marketing agreement with Bass Pro Shops to promote vacation packages across their retail locations.
- Technology Investments: Continued investments in technology to improve customer engagement and streamline operations.
Sales and Marketing Performance
For the nine months ended September 30, 2024, HGV reported:
| Metric | Value |
|---|---|
| Contract Sales | $1,694 million |
| Tour Flow | 628,316 |
| Average Sales Price per VOI | $3,423 |
| Sales of VOIs under Construction | $106 million |
Market Position and Future Outlook
As of September 30, 2024, HGV operates approximately 100 sales distribution centers across various domestic and international locations. The company’s estimated contract sales value related to available inventory is approximately $12.9 billion at current pricing.
HGV's capital allocation strategy is designed to provide adequate funding for operations, allowing for flexibility in funding development and optimizing securitization of receivables. As of September 30, 2024, HGV had an aggregate borrowing capacity of $750 million under its Timeshare Facility.
Commitments and Obligations
HGV has significant commitments related to its operations:
| Year | Commitment (in millions) |
|---|---|
| 2024 | $270 |
| 2025 | $85 |
| 2026 | $91 |
| 2027 | $93 |
| 2028 | $91 |
| Thereafter | $323 |
| Total | $703 |
How Hilton Grand Vacations Inc. (HGV) Works
Business Model
Hilton Grand Vacations Inc. (HGV) operates primarily in the vacation ownership industry, focusing on the marketing and sale of vacation ownership interests (VOIs). The company generates revenue through two reportable segments: real estate sales and financing, and resort operations and club management.
- Real estate sales and financing: HGV markets and sells VOIs, providing consumer financing and generating fee revenue from servicing loans from third-party developers.
- Resort operations and club management: HGV manages vacation clubs, earning activation fees, annual dues, and transaction fees from member exchanges, alongside rental revenue from unsold inventory.
Financial Performance
For the nine months ended September 30, 2024, HGV reported total revenues of $3.7 billion, an increase from $2.96 billion in the same period of 2023.
| Financial Metrics | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Total Revenues | $3,697 million | $2,959 million |
| Net Income | $34 million | $245 million |
| EBITDA | $537 million | $631 million |
| Earnings per Share (Diluted) | $0.26 | $2.18 |
Sales and Marketing
HGV utilizes a mix of direct marketing and personalized sales approaches to reach potential customers. The acquisition of Bluegreen Vacations has expanded HGV's marketing channels, including partnerships with Bass Pro Shops and Choice Hotels.
As of September 30, 2024, HGV operated sales and marketing at 132 Bass Pro Shops and Cabela’s stores, including 9 virtual kiosks.
Timeshare Financing Receivables
HGV has a significant portfolio of timeshare financing receivables. As of September 30, 2024, the gross originated timeshare financing receivables were $3.009 billion, with a weighted-average interest rate of 15.2% and a weighted-average remaining term of 8.5 years.
| FICO Score Category | Amount ($ million) |
|---|---|
| 700+ | $1,686 |
| 600-699 | $679 |
| <600 | $80 |
| No Score | $262 |
Debt and Liquidity
As of September 30, 2024, HGV had total debt of $5.112 billion, with a significant portion maturing in the coming years. The company reported a remaining borrowing capacity of $308 million under its revolver facility and $750 million under its Timeshare Facility.
| Debt Maturities ($ million) | 2024 | 2025 | 2026 | 2027 | 2028 | Thereafter | Total |
|---|---|---|---|---|---|---|---|
| Debt | 6 | 27 | 693 | 23 | 1,238 | 3,125 | $5,112 |
| Non-recourse Debt | 112 | 378 | 310 | 237 | 180 | 376 | $1,593 |
Cash Flow Overview
For the nine months ended September 30, 2024, HGV reported net cash provided by operating activities of $204 million, a decrease from $312 million in the same period of 2023. Investing activities resulted in a cash outflow of $1.514 billion primarily due to acquisitions.
| Cash Flow Metrics ($ million) | 2024 (9 Months) | 2023 (9 Months) |
|---|---|---|
| Net Cash from Operating Activities | $204 | $312 |
| Net Cash Used in Investing Activities | ($1,514) | ($47) |
| Net Cash Provided by Financing Activities | $971 | ($270) |
Future Commitments
As of September 30, 2024, HGV had inventory-related purchase commitments totaling $52 million to be fulfilled over the next two years. The company also has commitments of approximately $9.289 billion in contractual obligations over the next decade.
How Hilton Grand Vacations Inc. (HGV) Makes Money
Revenue Streams
Hilton Grand Vacations Inc. (HGV) generates revenue from multiple streams, primarily through real estate sales and financing, resort operations and club management, and rental and ancillary services. The following table summarizes the revenue generated from these segments for the three and nine months ended September 30, 2024, compared to the same periods in 2023.
| Segment | Three Months Ended September 30, 2024 ($ millions) | Three Months Ended September 30, 2023 ($ millions) | Variance ($ millions) | Nine Months Ended September 30, 2024 ($ millions) | Nine Months Ended September 30, 2023 ($ millions) | Variance ($ millions) |
|---|---|---|---|---|---|---|
| Real Estate Sales and Financing | 814 | 612 | 202 | 2,241 | 1,766 | 475 |
| Resort Operations and Club Management | 383 | 322 | 61 | 1,129 | 944 | 185 |
| Rental and Ancillary Services | 183 | 171 | 12 | 559 | 502 | 57 |
| Total Revenue | 1,306 | 1,018 | 288 | 3,697 | 2,959 | 738 |
Real Estate Sales and Financing
The real estate sales and financing segment is the largest contributor to HGV's revenue. For the three months ended September 30, 2024, sales of vacation ownership interests (VOIs) amounted to $550 million, up from $367 million in the same period in 2023, marking a 49.9% increase. For the nine months, sales reached $1.459 billion, a 40.3% increase from $1.040 billion in 2023.
Contract sales for the same periods also saw significant growth, increasing by $174 million and $427 million, respectively. However, excluding the impact of the Bluegreen Acquisition, contract sales decreased by $20 million and $92 million.
Financing Activities
HGV also earns revenue through financing activities. Interest income for the three months ended September 30, 2024, was $118 million, a 63.9% increase from $72 million in 2023. For the nine months, interest income was $346 million, up from $210 million.
The financing profit for the three months was $60 million, a 20% increase from $50 million in 2023, while for the nine months, it reached $183 million, up from $152 million.
Resort Operations and Club Management
This segment includes management fees from timeshare properties, club management fees, and rental income from unsold inventory. The profit from resort and club management for the three months ended September 30, 2024, was $129 million, a 35.8% increase from $95 million in 2023. For the nine months, profit reached $364 million, compared to $273 million in 2023.
Rental and Ancillary Services
Rental revenues for the three months ended September 30, 2024, were $171 million, a 6.9% increase from $160 million in 2023. For the nine months, rental revenues amounted to $521 million, up from $469 million.
Operating Expenses
HGV's operating expenses for the three months ended September 30, 2024, totaled $1.142 billion, an increase from $838 million in 2023. For the nine months, operating expenses reached $3.373 billion, compared to $2.495 billion in the previous year.
Net Income
Net income attributable to stockholders for the three months ended September 30, 2024, was $29 million, down from $92 million in 2023, reflecting an 68.5% decrease. For the nine months, net income was $27 million, compared to $245 million in the same period last year.
Conclusion
Overall, HGV's diverse revenue streams, including real estate sales, financing, and resort management, contribute to its business model. The company's growth in sales and financing, despite challenges in net income, indicates a robust operational strategy as of 2024.
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Resources:
- Hilton Grand Vacations Inc. (HGV) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of Hilton Grand Vacations Inc. (HGV)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View Hilton Grand Vacations Inc. (HGV)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.