Hilton Grand Vacations Inc

Good morning and welcome to the Hilton Grand Vacations fourth quarter 2025 earnings conference call. At this time, all participants have been placed in a listen-only mode and the floor will be opened for your questions following the presentation. If you would like to ask a question, please press star 1 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 2. If you should 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 Investor Relations. Please go ahead, sir.

Thank you, operator, and welcome to Hilton Grand Vacation's fourth quarter 2025 earnings call. Our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements, and the 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 ICC filings. Our reported results for all periods reflect accounting rules under ASC 606, which we adopted in 2018. Under AAC 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 to the period when the project's construction is completed. The aggregate of these potentially overlapping deferrals and recognitions from various projects in any given period are known as net deferrals. Please note that in our prepared remarks today, we'll only be referring to metrics that remove the impact of net deferrals, which more accurately reflects the cash flow dynamics of our financial performance during the period. To simplify our discussion today, we've uploaded slides to our investor relations site showing these metrics, which we'll be referring to on today's call. I'd urge you to view these slides on our website on investors.hgb.com. On slide two of these materials, you can see the deferral adjusted metrics that we'll be referring to. Reported results for the quarter do not reflect $61 million of contract sales deferrals under ASC 606, which had the effect of reducing reported gap revenue. and related to pre-sales of our Kahaku and Kyoto projects. Also shown on slide two, we recorded deferred $29 million of direct expenses associated with these revenues. Adjusting for both of these items would increase the adjusted EBITDA to shareholders reported in our press release by a net $32 million to $324 million. With that, let me turn the call over to our CEO, Mark Wayne. Mark?

Good morning, everyone, and welcome to our fourth quarter earnings call. Before we begin, I'd like to take a moment to thank our team members around the world for their hard work and dedication over the past year to create memorable vacation experiences for our members and guests. 2025 was a year of meaningful progress for HEV. We consistently delivered against our strategic initiatives during the year, driving material growth and package sales, significantly improving our execution, and further enhancing our HEV MAX offering. As a result, we grew contract sales 10%, representing the highest growth since 2022, with EBITDA above the midpoint of our guidance. We also made investments in our lead generation capabilities, opening 41 new marketing sites with our partners at Hilton, Bass Pro, and Gray Wolf to support our future tour flow. We grew HGV Max memberships by 35% through the recent introduction of Max to our blue-green members, along with the continued demand from new buyers and upgrades in our legacy member base. Optimized our financing business to structurally improve our industry-leading cash flow generation, including opening a new low-cost financing market in Japan, the first of its kind for any U.S. timeshare operator. and it enabled us to return $600 million of capital to our shareholders, achieving the target we laid out. Over the past two years, we returned over $1 billion to investors through share repurchases, and we remain committed to capital returns as the primary use of our free cash flow. Our strong 2025 results not only demonstrate the progress we made in integrating our business, but they also underscore the advantages of our business model backed by the strength of the Hilton brand with nearly 60% recurring segment EBITDA, a highly engaged base of over 720,000 members, including 266,000 max members with substantial embedded value and an established differentiated experience platform in our HCV ultimate access. As we look forward to the year ahead, we continue to see a stable consumer environment overall, one where travel remains a top priority within consumer discretionary spending. With that consistent backdrop and much of the integration work behind us, we're carrying significant momentum into 26, putting us further down the path to achieve our long-term algorithm of resilient, profitable growth and material recurring cash flow generation to enhance our shareholder value. Our guidance today represents another step toward that goal, reflecting low single-digit contract sales with mid single-digit EBITDA growth along with strong cash flow conversion, which Dan will get into shortly. Next, I'd like to provide an update on our strategic priorities and the progress we've made on our integration work. Our strong results were achieved through disciplined execution against our four strategic priorities which continue to guide the organization as we've moved into the new year. First, attracting new customers in a cost-efficient manner. Second, enhancing the lifetime value of our member base. Third, product evolution and innovation. And finally, driving operational excellence. Starting with the first priority of cost-efficient new member growth, we drove strong tour growth in the fourth quarter. while expanding margins and maintaining our sales and marketing cost ratios. Consolidated tours grew nearly 9%, supported by strong package sales over the last several quarters, along with strong local arrivals. Importantly, we surpassed our pro forma consolidated 2019 tour flow levels, which is a nice milestone. We continue to focus on tour quality as we leverage the strength of the Hilton brand across our portfolio, added new lead gen partners like Bass Pro, and executed against our acquisition, integration, and efficiency initiatives. We also sharpened our data analytics and processes with a focus on optimizing cost per tour by customer segment and channel to maximize flow through. And we continue to expect to drive new buyer growth in 26, which is embedded in our guidance. That new member focus ties directly into our second strategic priority, which is to grow the lifetime value of our member base. The introduction of HEV Max has exceeded our expectations with sustained adoption that has driven a greater than 20% increase in lifetime value of a Max member versus a non-Max member. In the fourth quarter, we saw material growth from blue-green new buyers and owner upgrades, and importantly, four years after our initial launch, We've also continued to see our Legacy Club members upgrade into MAX as well. We expect that demand to continue as we introduce new guests to our offerings and further enhance the value proposition of MAX membership. In addition, we strengthened our customer service and rolled out new AI-based tools to drive engagement and help members make the most of their ownership and vacation experiences. Our third strategic priority is product evolution and innovation to position our brand for sustainable growth. One area where we're continuing to evolve is our scaled, differentiated experience platform, HCV Ultimate Access. 2025 was our biggest and most successful year of Ultimate Access. We hosted over 137,000 attendees, a more than 15% increase in participation from the prior year. In 2026, you'll see us introduce several innovations across new categories of events, enhance booking options, and new pricing tiers to broaden accessibility to the ultimate access platform. In addition, we'll continue to enhance our HEV offerings with new features and benefits throughout the year. The final strategic priority is driving operational excellence, which is at the core of everything we do at HEV. This focus was a driver of our performance in the fourth quarter and building upon that success to drive incremental operational and asset efficiencies will be a key focal point in 26 and beyond. Operational excellence also extends to our integration efforts. I'm happy to say we reached our $100 million in cost synergy target during the fourth quarter, several months ahead of schedule. It's a great achievement for our teams and I'm proud of their hard work to hit that goal. And we remain committed to managing costs and further improving our efficiencies from here. Branding front, we've now rebranded our targeted Bass Pro locations, including more than 125 this past year. In addition, we're well underway with the rebranding process for our Blue-Green Resorts with eight properties completed in 25. We're on track to have roughly 10 additional rebrands completed this year and the remaining 10 in 27. So, in summary, I'm happy with our performance this past year. We continue to demonstrate the strength of our differentiated model and we made a lot of progress on the path towards our long term algorithm. Our teams are all executing well in the field. We continue to innovate and evolve our offerings, which is showing in our results. As I look forward to the year ahead, our focus is on growth, innovation, and efficiency to drive additional progress this year. So with that, I'll turn it to Dan for more details on the numbers.