Hilton Grand Vacations Inc

Good morning and welcome to the Hilton Grand Vacations first quarter 2025 earnings conference call. A telephone replay will be available for seven days following the call. The dial-in number is 844-512-2921 and enter PIN 13751066. 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 1 on your touch-tone phone to enter the queue. If at any point your question has been answered, you may remove your question from the queue by pressing star 2. If you should require operator assistance, please press star 0. If you are 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 Investor Relations. Please go ahead, sir.

Thank you, operator, and welcome to the Hilton Grand Vacation's first quarter 2025 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. The statements are effective only as of today. We undertake no obligation to publicly update or revise the statements. For a 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 the period when construction is completed. For ease of comparability and a simplified discussion today, our comments on adjusted EBITDA and our real estate results were reported results excluding the net impact of construction-related deferrals and recognitions for all reporting periods. 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. And a complete accounting of our historical deferral and recognition activity can also be found in Excel format on the financial reporting section of our Investor Relations website. With that, let me turn the call over to our CEO, Mark Wang.

Mark? Good morning, everyone, and welcome to our first quarter earnings call. I'm happy to report another solid quarter of results today driven by the team's hard work in addition to the structural process improvements we carried out over the past several quarters. Those efforts have yielded positive results producing an acceleration in transactions, BPG growth, and sales growth in the quarter. I'm also pleased that we carried that momentum through April. On-the-book arrival trends and cancellation rates are generally consistent with the past several quarters, and vacation package sales have remained strong. But while we've generated positive performance thanks in large part to our initiatives, we also recognize that the macroeconomic environment has recently become more volatile and unpredictable. And although we have limited exposure to many of the recent policy announcements, such as tariffs, they have potential to create additional consumer uncertainty to which we're not immune. So, while it's still too early to know the impact of these policies and when that impact may be felt, we're taking deliberate actions in areas that we can control in order to insulate our business from this macroeconomic volatility. To that end, along with maintaining our disciplined approach to process and execution, We've redoubled our efforts on implementing additional programs that are visible, impactful, and readily achievable this year. While these actions are designed to produce results in the near term, they'll also serve as ongoing drivers that will benefit our business over the long term. In addition, our business model has several fundamental advantages that provide a buffer against macro volatility. Our direct marketing approach means that we create our own demand. We have the most diversified business in the industry with a variety of brands, price points, product types, and vacation destinations in both fly-to and drive-to markets. We have a dedicated member base who have prepaid their vacations, having paid their annual dues for the year, making them more likely to travel. In addition, we have a natural hedge from our highly variable cost structure, and we've demonstrated the ability to make further adjustments to our cost structure if the environment demands it. More than half of our EBITDA is contractually reoccurring in nature, and we convert 55 to 65 percent of our EBITDA into free cash flow, providing additional financial flexibility. These traits reinforce the strongest value proposition we've ever had with the benefit of HEV Max and the quality and scale of our portfolio backed by the power of the Hilton brand. So I'm pleased with our results for the quarter and with the momentum that we've carried into Q2. We're maintaining our EBITDA guidance for the year, which Dan will take you through shortly. While it's certainly harder today to predict the future than it has been in the past, our focus is on being proactive with the initiatives we've identified and continuing to control what we can control to navigate to any potential uncertainty. Looking at our results for the quarter, reported contract sales were up 10% to $721 million and adjusted EBITDA was $248 million with margins excluding reimbursements of 22%. As we've seen in prior quarters, tour growth was impacted due to our efficiency programs as we continue to utilize our scoring models to maximize the quality of the tours we bring in. Notably, our efficiency efforts are helping to drive improved close rates, transactions, and VPG. VPG grew 15% to more than $4,100, with growth in both our owners and new buyer channels. Owner VPGs were particularly strong in the quarter, as they also benefited from the continued success of Kahaku sales and the launch of HEV Max to BlueGreen members. Looking at our demand indicators, Occupancy in the quarter, which includes blue-green in both periods, was flat at 77%. Consolidated arrivals in the second quarter remain ahead of prior year, and they're in line with the prior year when looking at the next six months. And our rental channels continue to indicate solid booking growth over the next several quarters, reflecting continued demand from independent leisure travelers. Our industry-leading marketing package pipeline remains robust at over 725,000 packages, and our package sales trends have remained healthy. In addition, the portion of our pipeline with confirmed travel dates was up nicely from the fourth quarter to its highest level in a year. So, as I mentioned earlier, while we're cognizant of the broader environment and news flow, We haven't yet seen any material shifts in our forward demand indicators. Turning to our other business units, our member count was 725,000 at the end of the quarter, with NOG of just under 1%. HEV MAX growth continues to outperform as members appreciate the benefits that MAX membership brings. and our research shows that our max members have our highest satisfaction scores across every ownership tenure we're now over 215 000 max members with blue green contributing nearly 13 000 members to that total and only a handful of months since the launch our rental business has continued to show consistent top line growth And while trends have remained consistent, we're monitoring them closely for any signs of deterioration. And our financing business optimization continues to benefit our cash flow, enabling us to repurchase $150 million worth of stock during the quarter. Turning next to our update on our initiatives and integration progress, over the last few quarters, we've spoken about several key efforts. mainly optimizing our staffing levels in our sales centers and evolving our scoring models to help identify and prioritize tours with a higher likelihood of closing. When combined with our introduction of HEV Max into the Blue-Green System and the launch of Kahaku, these programs have helped produce positive results since implementation, supporting strong transaction, BPG growth, and contract sales. Building upon that success, we're implementing additional initiatives that we've bucketed into three main categories. The first is enhanced lead generation. This includes directing more resources toward package sales and activations, along with introducing new marketing campaigns, particularly for owners and guests that have previously toured with us before. And we're also accelerating our digital marketing integration efforts with our partners. The second bucket is execution-related. This includes further refinement of our scoring models along with new pre-tour qualifying to ensure that we're touring our highest propensity guests. In addition, we'll be offering more flexible financing options to allow members to enter and stay within the HEV system. And the last bucket is product enhancements. which includes the previously mentioned enhancements to our max product slated for later this year. And we're adding additional features aimed at driving incremental engagement and encouraging additional member stays at our property. Collectively, we believe these initiatives can support our EBITDA and cash flow goals regardless of their macro environment. And over the long term, they'll continue to generate a positive impact by improving the efficiency of the business strengthening our value proposition, and improving member engagement. Turning to the Blue-Green integration, we've reached $89 million of cost synergies and are confident in achieving our target of $100 million this year. And we're just ahead of launching Blue-Green property rebrand program with the expectation that we'll complete 10 to 12 rebrands in each of the next three years. On the partnership front, we added nine new Great Wolf locations and rebranded 79 Bass Pro locations, and we opened a number of sales centers dedicated to servicing our choice customers. So, to sum up, we've had another strong quarter, and that momentum has continued into Q2. The combination of our new offerings and our efficiency initiatives enabled us to drive an acceleration in transactions, BPG growth, and contract sales. While market volatility and uncertainty have increased in recent weeks, we continue to take a proactive approach with additional initiatives to ensure we sustain our momentum. We're focused on controlling the things that we can control but will continue to adapt as needed to protect and grow the long-term value of the business. So with that, I'd like to extend a warm welcome back to Dan, who will take you through the numbers. Dan?