Hilton Grand Vacations Inc

Good morning and welcome to Hilton Grand Vacations first quarter 2023 earnings conference call. A telephone replay will be available for seven days following the call. The dialing number is 844-512-2921 and enter pin number 1373-5179. At this time, all participants have been placed in a listen only mode and the floor will be open for your questions following the presentation. If you would like to ask a question, please press star one on your touchtone phone to enter the queue. If at any point your question has been answered, you may remove yourself from the queue by pressing star two. If you would require operator assistance, please press star zero. If using a speakerphone, please lift your handset to allow the signal to reach our equipment. Please limit yourself to one question and one follow-up to allow the opportunity for everyone to ask questions. You may then re-enter the queue to ask additional questions. I would now like to turn the call over to Mark Melnick, Senior Vice President of IR and GNA. Please go ahead, sir.

Thank you, Operator, and welcome to the Hilton Grand Vacations first quarter 2023 earnings call. As a reminder, our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements. These statements are effective only as of today. We undertake no obligation to publicly update or revise these statements. For discussion of some of the factors that could cause actual results to differ, please see the risk factors section of our SEC filings. We'll also be referring to certain non-GAAP financial measures. You can find definitions and components of such non-GAAP numbers, as well as reconciliations of non-GAAP and GAAP financial measures discussed today in our earnings press release and on our website at investors.hgv.com. Our reported results for all periods reflect accounting rules under ASC 606, which we adopted in 2018. Under ASC 606, we're required to defer certain revenues and expenses related to sales made in the period when a project is under construction, and then hold off on recognizing those revenues and expenses until a period when construction is completed. To help you make more meaningful period-to-period comparisons, you can find details of our current and historical deferrals and recognitions in Table T1 of our earnings release. For ease of comparability and to simplify our discussion today, our comments on adjusted EBITDA and our real estate results will refer to results excluding the net impact of construction-related deferrals and recognitions for all reporting periods. The complete accounting of our historical deferral and recognition activity can be found in Excel format on the Financial Reporting section of our Investor Relations website. In a moment, Mark Wang, our President and Chief Executive Officer, will provide highlights from the quarter in addition to an update of our current operations and company strategy. After Mark's comments, our Chief Financial Officer, Dan Matthews, will go through the financial details for the quarter. Mark and Dan will then make themselves available for your questions. With that, let me turn the call over to our president and CEO, Mark Wang. Mark?

Morning, everyone, and welcome to our first quarter earnings call. Today, we announced another quarter of strong results, and I'm pleased with our performance, particularly in light of the difficult comparisons with last year. Contract sales grew to $523 million, and EVA was $216 million, with margins at 23%. The key indicators of our business continue to demonstrate the resilience of travel-related spending. Arrivals on the books are ahead of last year and point to further occupancy strength going forward. Year-over-year tour flow growth was the highest since the first quarter of last year, with the number of tours nearly returning to 2019's level. We sold more preview packages this quarter than we ever have. And at the same time, we also activated more packages than ever before. And our new buyer channel growth has continued to outperform our owner channel, which is consistent with our strategic focus on long-term value of the business. Early in the pandemic, we focused on servicing our owner base and maintaining their strong commitment to traveling with HGV. But our focus continues to be on restoring our historical mix by growing tours and new buyer sales, driving the long-term health of the business, and embedding future value. While we're seeing positive trends among our consumer base, we're also continuing to monitor the macroeconomic environment closely. For some time, we've been guiding to an expected moderation of some of our KPIs, as they return to more historical levels. This is the natural result of growing our tour volumes and seeing a wider variety of customers with more typical spending patterns. It's also the result of our focus on new buyers, which creates a mixed effect since they carry lower initial KPIs than owners. So, while we anticipated this moderation in our KPIs against the record highs of the past year, The positive leading indicators I mentioned before give us confidence that we're able to navigate through any macro headwinds. Before we get into the details of the quarter, let's start with an update on the integration and initiatives. It's been a year since we officially launched sales of HCV Max, and we've welcomed over 90,000 members into the program in that time. outperforming our expectations we had a great response and we're pleased with how well the product is resonating with existing owners and legacy dri members showcasing the broad appeal of hgv max and this year will continue to evolve the program by activating additional features and adding new benefits turning to our experiential platform hgv ultimate access we continue to expand the Poplar program on the heels of a very successful launch year. This year, we expect to host nearly 100,000 members at Ultimate Access events, demonstrating considerable growth versus the prior year. We're excited about the opportunity in front of us with Ultimate Access, and I'm really proud of the team and the work they've done to build the platform. And we're thrilled to have such a great set of brand ambassadors to provide our members with unique culinary, concert, and event experiences. Turning to our diamond property rebranding, we're making good progress and remain on schedule. Through the first quarter, we've rebranded 22 resorts to Hilton Vacation Club, representing over 6,500 keys, over 40% of the acquired portfolio. We've completed two conversions so far this year and we'll add another 11 properties by year end, bringing us to 33 resorts since acquisitions closed. On the rental side, those Hilton Vacation Club properties are benefiting from the improved economics of being part of the Hilton network. In the first quarter alone, we booked over 60,000 room nights at our rebranded resorts through Hilton.com with higher ADRs and lower costs than before. And we've also seen strong demand for those rebranded properties from our members and marketing guests, with nearly 80,000 preview packages sold that will generate marketing to our flow at those properties in the months ahead. To more effectively engage those marketing guests, we're continuing to enhance our use of data and analytics. The scoring models we've been using at HEV continue to help us better segment our marketing prospects. We've recently rolled that predictive modeling to legacy diamond as well and expect to experience a similar positive result that should support sustainable improvements to close rates in VPG. Now let me take you through a more detailed look at our performance in the first quarter. Contract sales growth was driven by strong improvement in tour flow, which more than offset the expected VPG declines. Tours were up 32%, despite lapping a difficult comparison in the prior year. Both owner tours and new buyer tours showed great growth in the quarter, but new buyer tours were particularly strong, growing over 40% from the prior year and representing the highest mix since the pandemic began in the first quarter of 2020. In addition, our tour flow enabled us to drive robust transaction growth in the quarter. BPG for the quarter was nearly $4,000, with both owner and new buyer declining against record BPGs from last year. Turning to our forward indicators, as I mentioned in my opening remarks, we're seeing continued positive trends. Occupancy in the quarter was 79%, up 400 basis points versus last year, and the strongest first quarter since 2019. And our forward booking suggests continued strength in occupancy through the rest of the year. Our marketing pipeline grew to over 550,000 packages, despite the significant amount of conversions during the quarter, indicating that consumers' intention to travel remains strong. And our mix of activated packages is now nearly a quarter of our pipeline, the highest since 2017, after total activated packages grew 65% versus the prior year. So we're happy with the investments we made in our marketing channels that are helping provide additional visibility and confidence in our tour flow for the year. Turning to our non-real estate segments, higher spending activity among our members and rental guests drove solid top-line growth in our club, resort, rental, and ancillary segments. We ended the quarter with 519,000 members and a NOG of 3.3% on a combined basis. Our financing business also continues to perform well, despite the recent shift toward higher cash purchases and prepayments. And from a credit perspective, our portfolio continues to exceed expectations. As we look at the remainder of the year, we're optimistic about the path ahead. We're monitoring the strength of the consumer closely, and we continue to see strong desire to travel as evidenced by our preview package pipeline and forward booking activity. HCV Max provides a tremendous value proposition that's really resonating with our consumers, and we're activating more features and adding new benefits. When you combine the strength of our offerings with the new technology tools we're applying to our marketing, we expect to generate additional tour and add NuMax members. And these efforts have set the stage for sustainable efficiency improvements, driving additional free cash flow and long-term value creation for our shareholders, in addition to capital returns. With that, I'll turn it over to Dan to walk you through the numbers. Dan?