Hilton Grand Vacations Inc

Good morning and welcome to Hilton Grand Vacation's third 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 number 13751068. 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 touch-tone phone to enter the queue. If at any point your question... 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.

Welcome to the Hilton Grand Vacations third quarter 2025 earnings call. As a reminder, our discussion this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements, and these statements are effective only as of today. We undertake no obligation to publicly update or revise these 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 in the simplified discussion today, our comments on adjusted EVA DOT and our real estate results will refer to results excluding the net impact of construction-related referrals 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 on Table T1 of our earnings release. And the complete accounting of our historical deferral and recognition activity can also be found in Excel format on the financial reporting section on 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 third quarter earnings call. We had strong operational and financial execution this quarter, with 17% growth in our contract sales driving material improvements in our real estate business profitability versus the prior year. Those results enabled a near double-digit growth in our EBITDA for the period, along with maintaining our commitment to returning substantial cash back to shareholders. I was particularly pleased with how broad-based our sales performance was. We grew our tour flow and VPG in both owner and new buyer channels. All of our domestic geographic regions produced double-digit gains in VPG. And we delivered mid-teens contract sales growth at both our legacy and blue-green businesses. Our teams have been working hard on executing against our strategic initiatives to grow our lead flow, improve our execution, and enhance our value proposition. And those efforts are continuing to produce results. The consumer environment has remained stable overall and travel demand continues to be healthy when looking at forward indicators and member surveys. While recent events have highlighted the continued volatility in the policy landscape, our focus on our strategic priorities has not changed. We're controlling the things we can control by executing against identified initiatives and highlighting our value proposition in the short term while continuing to invest in building our capabilities for the long term. We still have work to do around growing our new buyer mix and improving our cost efficiencies, but our results reinforce my confidence that we're making progress toward achieving those objectives and that the investments we're making today will drive sustainable value creation in the business. Looking ahead, we're carrying good momentum into the year end, and we're reiterating our existing EBITDA guidance for the year, along with our expectation of achieving high single-digit contract sales growth. Turning to the results for the quarter, recorded contract sales were up 17% to $907 million, which was a record for the business on a pro forma basis. Adjusted EBITDA was $302 million, with margins excluding reimbursements of 24%. And as I mentioned, I'm encouraged by the composition of our sales in the quarter. Consolidated tour growth of 2% continued the consistent trend of improvement we've seen this year, with both owner and new buyer channels contributing to the growth. We grew new buyer tours at our legacy and blue-green businesses, and we achieved that growth while executing on our tour efficiency initiatives and improving the overall quality of the tour pipeline. VPG was up 15% against the prior year, with our performance also reflecting broad strength. Both owners and new buyers contributed to the growth. The gains were also relatively well balanced between our legacy and blue-green businesses, And geographically, we saw double-digit growth across every one of our mainland regions. Looking at our forward demand indicators, which also remain healthy, occupancy in the quarter was equal to the prior year at 83 percent. Consolidated arrivals in the fourth quarter are ahead of prior year. And our marketing and rental arrivals continue to be our strongest channels. Our package sales initiatives also continue to be successful with another quarter of double-digit package sales growth and a pipeline that remains near 750,000 packages. Moving on to our other business units, our member count was nearly 722,000 at the end of the quarter and reflected the increased rate of recapture we discussed last quarter which will support both embedded value creation and improved long-term cash flow generation. Our HEV MAX members are our most engaged and active members, and we're maintaining a very steady pace of MAX additions with both new buyers and owner upgrades. We added 70,000 members to HEV MAX over the past 12 months, and in doing so, we achieved an important milestone, surpassing a quarter million HEV MAX members including nearly 30,000 Legacy Blue-Green members now enrolled in the program. So we continue to see robust demand for the MAX program and the compelling value proposition it offers. In our rental business, continued travel demand supported growth in much of our portfolio. While the Las Vegas FIT rental market remained slow due to visitations and competitive dynamics, Our Vegas sales teams did a tremendous job in our sales centers during the quarter, driving near double-digit contract sales growth despite market challenges. And in our financing business, we continue to execute on our business optimization program that will enhance our cash flow over the long term. During the quarter, we repurchased 3.3 million shares of stock for $150 million. We're on track to hit our goal of returning $600 million to shareholders through our repurchase this year, and we remain committed to returning excess capital to shareholders. Turning next to an update on our initiatives and integration, we continue to make progress with our lead generation initiatives that drive package sales and activations. The packages we sold in the first six months of the year are starting to convert into tours, and were a key contributor to our return to positive new buyer tours growth this past quarter. We also generated double-digit growth in the number of packages sold in Q3, exceeding our internal forecast for the second quarter in a row. Those packages will in turn help us to build out our tour pipeline into 2026. So, while stronger than expected performance resulted in proportionately elevated marketing spend in the period and weighed on our flow through. We view this investment as an important driver of future growth. As those packages convert into tours and ultimately into contract sales, we'll see the benefit of new buyers entering the system and adding additional lifetime value. Regarding our product enhancement initiatives, HGV and HVC resorts began receiving max members from Blue Green this month, with those members now able to easily use their points for stays at our resorts across all of our brands. And we plan to launch additional Hilton benefits for our newest MAX members from Bluegreen, along with access to travel concierge service to help with the planning and making the most out of their next getaway. Turning to the Bluegreen integration, we continue to make good progress. We reached 94 million in our run rate cost synergies this quarter, and remain on track with the targeted $100 million in savings. We fully rebranded our blue-green sales centers and rolled out our Envision sales technology in each of them. And with the recent completion of our Bass Pro kiosk rebrands, we have great brand synergy across our marketing channels, highlighting Hilton Grand Vacation's quality of product and service backed by the Hilton brand. On the property front, we've rebranded our first seven blue-green properties with the goal of having our targeted rebrands completed over the next three years. Our technology teams also continue to make great progress on our digital transformation path, rolling out additional tools to our teams while also introducing new enhancements to improve our member experience. This quarter, we've upgraded our proprietary MyExplorer chat box to provide our members a personalized AI-powered tool tailored to their membership profile to help them with their booking and vacation needs. From a partnership perspective, we've been focused on executing and deepening our existing relationships. Through strategic alliances with Hilton, Bass Pro-Choice, and Gray Wolf, we reach a broad, diverse, and growing audience. and we're constantly working with those partners to test new marketing programs and increase the efficiency of our funnel to convert leads to new member transactions and drive lifetime value. So, to sum it up, I'm proud of our performance this quarter, and I'm especially pleased with how broad-based our performance was across our KPIs, channels, and geographies. Our teams have done a great job executing against the initiatives we laid out, and their hard work is producing results. We're focused on further improving our cost structure and flow through, along with driving additional new buyer growth. And I believe that the investments we're making in the business are setting us up for long-term value creation. So with that, I'll turn it over to Dan for more details on the numbers.