Hilton Grand Vacations Inc. Q4 FY2025 earnings call

• 2025 was a year of meaningful progress with contract sales growth, investments in lead generation, growth in HGV Max memberships, optimization of financing business, and reaching $100 million in cost synergy target. - Strategic priorities include cost-efficient new member growth, enhancing lifetime value of member base, product evolution and innovation, and driving operational excellence. - In 2025, achieved strong tour growth, surpassed 2019 tour flow levels, HEV Max exceeded expectations, HCV Ultimate Access had successful year, and rebranding of locations was underway.

Contract sales grew 10% for the full year. Real estate contract sales grew 2% to $852 million in the quarter, with tours up 9% to 225,000. Financing business had fourth quarter revenues of $134 million and profit of $81 million with margins of 60%. Resort and club business had consolidated member count over 720,000, revenue grew 6% to $219 million for the quarter, and segment profit was $160 million with margins of 73%.

• 2026 guidance for adjusted EBITDA before deferrals is between 1.185 and 1.225 billion dollars. - Headwinds include annualization of license fee rate steps and finance business optimization. - Low single digit contract sales growth expected, with EBITDA expected to improve sequentially throughout the year. - Adjusted free cash flow conversion rate expected to be in the lower half of 55% to 65% range in 2026.

Q: Patrick Scholes from Truist Securities asked about quarterly cadence expectations for tour growth and VPG.

A: Mark and Dan discussed that Q1 has high single-digit growth on Torflow side mitigated by high single-digit decline on VPG side, with EBITDA expected to improve sequentially throughout the year.

Q: Patrick Scholes follow-up asked about 4Q loan loss provision.

A: Dan explained it was due to purchase accounting with Blue-Green acquisition, where relieving reserve on original loan and reserving new loan led to uptick, but portfolio performing well and expected to return to mid-teens provision rate in 2026.

Q: Ben Chaiken from Mizuho asked about inventory optimization.

A: Mark said they're analyzing portfolio to optimize for members and shareholders, with some acquired properties not aligning with long-term vision, and will provide update when final plan is made.

Q: Ben Chaiken follow-up asked about buyback philosophy.

A: Mark said buybacks are primary use of capital, with $150 million per quarter as they don't want to increase leverage.

Q: Steven Grambling from Morgan Stanley asked about owner growth.

A: Mark said there's pressure from some long-term members, but HGV Max has grown significantly with new buyers, and focus is on driving new buyers.

Q: David Katz from Jefferies asked about Salesforce.

A: Mark said they have a great sales force with strong leadership, still evolving with expansion into more markets.