Hilton Grand Vacations Reports First Quarter 2020 Results

ORLANDO, Fla. (April 30, 2020) – Hilton Grand Vacations Inc. (NYSE:HGV) (“HGV” or “the Company”) today reports its first quarter 2020 results.

“The COVID-19 pandemic has had unprecedented impacts on our business, and we continue to take decisive action to navigate the current environment and mitigate the challenges it presents,” said Mark Wang, president and CEO of Hilton Grand Vacations. “We have a strong balance sheet, and we have made critical decisions to defend our cash flow and enhance our financial flexibility, including adjustments to our cost structure and spending plans. I remain confident in the resilience of our business model and look forward to welcoming back our owners and guests as the pandemic subsides.”

KEY HIGHLIGHTS

First Quarter 2020 Results

• Total revenues for the first quarter were $351 million compared to $450 million for the same period in 2019.
  • Total revenues were affected by a deferral of $47 million in the current period. There were no deferrals or recognitions in the same period in 2019.
• Net income for the first quarter was $8 million compared to $55 million for the same period in 2019.
  • Net income was affected by a net deferral of $27 million in the current period. There were no deferrals or recognitions in the same period in 2019.
• Diluted EPS for the first quarter was $0.09 compared to $0.58 for the same period in 2019.
  • Diluted EPS was affected by a net deferral of $27 million or $0.31 per share in the current period. There were no deferrals or recognitions in the same period in 2019.
• Adjusted EBITDA for the first quarter was $33 million compared to $102 million for the same period in 2019.
  • Adjusted EBITDA was affected by a net deferral of $27 million in the current period. There were no deferrals or recognitions in the same period in 2019.
• In addition to the adverse impact from the closure of our sales centers and resort operations, the COVID-19 pandemic had the following impacts on total revenues, net income, diluted EPS and Adjusted EBITDA:
  • $37 million provision for financing receivables of which $23 million or $0.26 per share is related to changes in estimates primarily driven by economic factors surrounding the COVID-19 pandemic.
  • $11 million or $0.12 per share of one-time payroll related expenses incurred primarily related to payments made to team members as a result of operational closures caused by the COVID-19 pandemic.
  • $2 million or $0.03 per share related to the refunding of club transaction fees to accommodate guests impacted by the COVID-19 pandemic.
• Contract sales in the first quarter were $244 million, a decrease of 24% from the same period in 2019.
• Net Owner Growth (NOG) for the 12 months ended March. 31, 2020, was 5.3%.

COVID-19 Update

As disclosed in our press release dated March 16, 2020, the Company has withdrawn its prior Full Year 2020 Guidance due to the increased uncertainty created by the impact of COVID-19.

The Company continues to be impacted by the pandemic and the various government mandates in nearly all of the locations in which it operates. It is unknown how long these adverse conditions and restrictions will continue. To optimize HGV’s liquidity and access to capital in light of the adverse impact of the pandemic, particularly as substantially most of the Company’s properties have temporarily suspended operations and substantially all of its sales, operations and other activities have been suspended, the Company has taken significant steps in an effort to decrease its expenses. These efforts include the recently announced furlough of over 6,100 of its team members, and the temporary reductions of all team members’ base salaries and directors’ annual cash retainers, among other actions.

The Company will share additional details during its conference call scheduled for later today.

Overview – First Quarter 2020

For the quarter ended March 31, 2020, diluted EPS was $0.09 compared to $0.58 for the quarter ended March 31, 2019. Net income and Adjusted EBITDA were $8 million and $33 million, respectively, for the quarter ended March 31, 2020, compared to $55 million and $102 million, respectively, for the quarter ended March 31, 2019. Total revenues for the quarter ended March 31, 2020, were $351 million compared to $450 million for the quarter ended March 31, 2019.

Net income and Adjusted EBITDA for the quarter ended March 31, 2020, included a net deferral of $27 million relating to sales made at The Central at 5^th by Hilton Club and Ocean Tower at Hilton Grand Vacations Club Phase II projects, which were under construction during the period. The Company anticipates recognizing these revenues and related expenses in 2021 when it expects to complete these projects and recognize the deferrals.