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    HGV
    Earnings call· Dec 2025(Q4 FY25)

    Hilton Grand Vacations Q4 FY25 earnings call HGV

    Feb 26, 2026 Source

    Executive summary

    Hilton Grand Vacations Q4 FY25 — Strong Contract Sales and Cost Synergy Achievement

    Hilton Grand Vacations delivered a strong Q4 FY25, marked by robust contract sales growth and the early achievement of its $100 million cost synergy target. The company is carrying significant momentum into 2026, focusing on growth, innovation, and efficiency, despite anticipating some near-term headwinds from license fee step-ups and finance optimization. Management remains committed to capital returns, leveraging strong free cash flow generation to enhance shareholder value.

    Highlights

    5

    • Contract sales grew 10% for the full year 2025, representing the highest growth since 2022.

    • Achieved $100 million in cost synergies from the Bluegreen acquisition several months ahead of schedule.

    • Adjusted EBITDA grew 12% to $324 million in Q4 FY25, with margins up 250 bps to 26%.

    • Returned $600 million of capital to shareholders in 2025, repurchasing nearly 15 million shares.

    • HGV Max memberships grew by 35%, exceeding expectations and driving a >20% increase in lifetime value for Max members.

    Concerns

    5

    • Q1 FY26 contract sales and EBITDA are expected to be flat to slightly down due to tough prior-year comps and expense headwinds.

    • Full-year 2026 VPG is expected to be down slightly due to lapping elevated growth rates from 2025.

    • License fees step-ups will create a $15 million to $20 million headwind in 2026.

    • Finance business optimization will negatively impact 2026 by approximately $10 million to $15 million.

    • Net owner growth turned slightly negative due to older acquired portfolios, though new buyer growth remains strong.

    Guidance & targets

    9
    CategoryTargetConfidence
    Adjusted EBITDA (before deferrals)
    $1.185 billion to $1.225 billion
    high materiality
    High
    Contract sales growth
    low single-digit
    high materiality
    High
    EBITDA growth
    mid-single-digit
    high materiality
    High
    Adjusted free cash flow conversion rate
    lower half of 55% to 65%
    medium materiality
    High
    Share repurchases
    approximately $150 million per quarter
    high materiality
    High
    Q1 FY26 Contract Sales
    flat to slightly down
    medium materiality
    High
    Q1 FY26 EBITDA
    flat to slightly down
    medium materiality
    High
    VPG (Full Year)
    down slightly
    medium materiality
    High
    EBITDA cadence
    improve sequentially in each successive quarters
    low materiality
    High

    Segment performance

    5
    SegmentRevenueYoYQoQMargin
    Real Estate
    Contract sales grew 2% in Q4, driven by 9% tour growth. VPG declined against prior year due to difficult comparison from HGV Max launch and Ka Haku project. Profit margin was 28%, up 150 bps YoY, the highest since 2023.
    Contract sales: $852 millionContract sales growth: 2% YoYTours: 225,000Tours growth: 9% YoYVPG: ~$3,800New buyers mix of contract sales: 24%Cost of product: 12% of net VOI salesCost of product change: down 290 bps YoYSales and marketing expense: 46% of contract salesProfit margin: 28%
    		———$177 million profit
    Financing
    Profit margin was 60%, or 63% excluding amortization. The portfolio remains in good shape with improving default rates and delinquencies. Provision was above long-term target due to Q4 owner upgrade trends, particularly in Bluegreen.
    Profit margin: 60%Profit margin (ex-amortization): 63%Weighted average interest rate for originated loans: 14.6%Combined gross receivables: $4.3 billionAllowance for bad debt: $1.2 billionAllowance for bad debt % of portfolio: 28.6%Annualized default rate: 9.86%Annualized default rate change: 24 bps improvement QoQ31-60 day delinquencies (legacy HGV & DRI): level with prior year31-60 day delinquencies (Bluegreen): 28 bps lower than prior yearProvision: 18.1% of contract sales
    		$134 million——$81 million profit
    Resort and Club
    Revenue grew 6% and profit margin was 73%, reflecting consistency.
    Consolidated member count: >720,000Profit margin: 73%
    		$219 million6%—$160 million profit
    Rental and Ancillary
    Revenue growth driven by higher available room nights and increased overall portfolio RevPAR. Developer maintenance fees remain the largest driver of profitability trends.
    Revenue growth: 2% YoY
    		$178 million2%—$8 million loss
    Corporate G&A
    Down slightly from prior year.
    % of pre-reimbursement revenue: 3%
    		———$42 million

    Operational metrics

    26
    Net deferrals impact on GAAP revenue
    $61 million
    Q4 FY25

    Reduced reported GAAP revenue.

    Net deferrals impact on direct expenses
    $29 million
    Q4 FY25

    Deferred direct expenses associated with deferred revenues.

    Adjusted EBITDA to shareholders (net deferral adjusted)
    $324 millionup $32 million from reported
    Q4 FY25

    This is the figure after adjusting for net deferrals, which is what management refers to.

    Adjusted EBITDA
    $1.15 billionup 4% YoY
    FY25

    Grew 4% over prior year, in the upper half of guidance range.

    Run rate cost synergies from Bluegreen acquisition
    $100 millionachieved ahead of schedule
    Q4 FY25

    Achieved several months ahead of schedule.

    Current receivables securitized
    73%vs 55% prior to program inception
    FY25 end

    Achieved target range as part of finance business optimization.

    Capital returned to shareholders
    $600 million79% of adjusted free cash flow
    FY25

    Achieved target for 2025.

    Shares repurchased
    15 millionreduced float by over 20%
    FY25

    Part of capital return program.

    Shares repurchased
    3.5 millionfor $150 million
    Q4 FY25

    To achieve targeted $600 million for FY25.

    Shares repurchased
    1.9 millionfor $89 million
    Jan 1 - Feb 9, 2026

    Additional repurchases in early 2026.

    Remaining share repurchase authorization
    $339 million
    Feb 19, 2026

    Under current share repurchase plan.

    Adjusted EBITDA conversion rate
    128%
    Q4 FY25

    Strong conversion rate.

    Adjusted EBITDA conversion rate
    66%above target long-term rate of 55% to 65%
    FY25

    Above target due to financing optimization launch.

    Corporate debt balance
    $4.5 billion
    Q4 FY25 end

    Part of total debt.

    Nonrecourse debt balance
    $2.7 billion
    Q4 FY25 end

    Part of total debt.

    Remaining warehouse facility capacity
    $235 million
    Q4 FY25 end

    Available capacity.

    Notes current on payments but unsecuritized
    $943 million
    Q4 FY25 end

    Potential for future monetization.

    Total net leverage
    3.78x
    Q4 FY25 end

    Leverage ratio.

    License fees headwind
    $15 million to $20 million
    FY26

    Expected expense headwind for 2026.

    Finance business optimization headwind
    $10 million to $15 million
    FY26

    Expected negative impact for 2026.

    Inventory spending
    $103 million
    Q4 FY25

    Included in adjusted free cash flow calculation.

    Liquidity position
    over $1 billion
    Q4 FY25 end

    Strong liquidity.

    HGV Max memberships
    266,000up 35% YoY
    Q4 FY25

    Exceeded expectations with sustained adoption.

    Ultimate Access attendees
    137,000more than 15% increase YoY
    FY25

    Biggest and most successful year for Ultimate Access.

    New marketing sites opened
    41
    FY25

    To support future tour flow.

    Bluegreen Resorts rebranded
    8 properties
    FY25

    Part of the rebranding process for acquired resorts.

    Deals & partnerships

    2
    Bass ProRebranding of targeted locations

    More than 125 Bass Pro locations rebranded in 2025.

    BluegreenRebranding of acquired Bluegreen ResortsFY25-FY27

    8 properties completed in 2025, 10 additional expected in 2026, remaining 10 in 2027.

    Risks & headwinds

    6
    Increased license feesFY26, majority in first 3 quarters

    $15 million to $20 million for FY26

    Negative impact from finance business optimizationFY26, majority in first half

    $10 million to $15 million for FY26

    VPG declineFY26

    down slightly for FY26

    Mitigation: Strong tour flow growth

    Burden of developer maintenance feesongoing

    largest driver of rental ancillary business segment profitability trends

    Mitigation: Reducing inventory balance through organic and inorganic means

    Net owner growth turning slightly negativeQ4 FY25

    first time

    Mitigation: Focus on driving new buyers; appropriate exit for long-term owners in acquired portfolios

    Material deterioration in the macro environmentFY26

    discussed_not_quantified

    What to watch in Q1 FY26

    5

    Q1 FY26 Contract Sales and EBITDA

    Q1 FY26
    Currentflat to slightly down expected
    Targetperformance relative to guidance

    Why it matters

    This will indicate the immediate impact of tough comps and expense headwinds on the company's financial performance.

    our current expectation is that contract sales and EBITDA in the first quarter will be flat to slightly down as we lap the near-record VPGs in Q1 of the prior year that were driven by the strong initial launch periods for HGV Max and Ka Haku, along with the anticipated expense headwinds associated with the expected step-up in rates for our license fees as well as consumer finance interest expense as we analyze the ramp of our finance optimization program.

    Q&A highlights

    6

    Asked for more specific quarterly expectations for 2026, especially for tour growth and VPG, beyond the Q1 guidance.

    Management reiterated Q1 expectations of high single-digit tour growth and high single-digit VPG decline, leading to slightly down EBITDA. They expect sequential EBITDA improvement throughout the year as package pipeline plays out, comps ease, and expense headwinds (license fees, finance optimization) subside by mid-year/Q3.

    “As we look on the cost side, there are some pressures. I mentioned the license fee pressure as well as the financing business optimization. The one thing I'd also point out is from a provision perspective, we look to return to that mid-teens level for the full year of 2026. And if you look at year-over-year, Q1 was favorable to that last year. So there's a little pressure on that side. Those components really yield to that slightly down EBITDA in Q1.”

    asked by Patrick Scholes · answered by Daniel Mathewes

    2 min read7 chapters

    Detailed Narrative

    01

    Strategic Priorities and Integration Progress

    HGV consistently delivered on its strategic initiatives in 2025, driving growth in package sales, improving execution, and enhancing HGV Max. The company achieved its $100 million cost synergy target from the Bluegreen acquisition several months ahead of schedule, demonstrating effective integration. This progress positions HGV to achieve its long-term algorithm of resilient, profitable growth and recurring cash flow.

    02

    Cost-Efficient New Member Growth

    The company focused on attracting new customers efficiently, opening 41 new marketing sites with partners like Hilton, Bass Pro, and Great Wolf. Consolidated tours grew nearly 9% in Q4 FY25, surpassing pro forma 2019 levels. HGV also sharpened data analytics to optimize cost per tour and expects to drive new buyer growth in 2026.

    03

    Enhancing Lifetime Value of Member Base

    HGV Max memberships grew 35%, exceeding expectations, driven by Bluegreen new buyers, owner upgrades, and legacy club members. Max members show a greater than 20% increase in lifetime value compared to non-Max members. The company also rolled out new AI-based tools to improve customer service and engagement.

    04

    Product Evolution and Innovation

    HGV Ultimate Access had its biggest year in 2025, hosting over 137,000 attendees, a 15% increase. In 2026, innovations will include new event categories, enhanced booking options, and new pricing tiers to broaden accessibility. HGV offerings will also be enhanced with new features and benefits.

    05

    Financing Business Optimization

    HGV optimized its financing business, ending 2025 with 73% of current receivables securitized, within the 70%-80% target range. This included opening a new low-cost financing market in Japan, a first for a U.S. timeshare operator. Underwriting processes were strengthened mid-2025, focusing on equity at the point of sale, which is expected to further improve loan portfolio performance in 2026.

    06

    Inventory Management and Asset Optimization

    Inventory management is a priority for 2026, with a focus on reducing developer maintenance fees by working down inventory through organic and inorganic means. The company is conducting a thorough analysis of its acquired properties to optimize the portfolio, acknowledging that some acquired inventory does not align with its long-term vision.

    07

    Capital Allocation and Share Repurchases

    HGV generated $756 million in adjusted free cash flow in 2025, returning $600 million (79%) to shareholders through share repurchases. Over the past two years, more than $1 billion has been returned. The company plans to continue repurchases at approximately $150 million per quarter in 2026, aiming to maintain its leverage ratio.

    AI-generated summary of the company’s earnings call. Not investment advice.