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 touchtone 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 Please go ahead, sir.

Thank you, Operator, and welcome to the Hilton Grand Vacations first quarter 2020. As a reminder, our discussions this morning will include forward-looking statements for ease of comfort. We can find details of our Cable T1.

BPG growth and on-the-book arrival trends. So, while it's still, too, we're taking deliberate actions on fundamental advantages that provide a buffer against 65% and the quality in order today to produce on being proactive with the initiatives we've identified. The invested EBITDA was $200 reimbursements of $20,000, for $4,100, with growth in both as they also benefited from the continued success of Kahaku sales and the launch of HEV Max to blue. The intensity in the quarter consolidated arrivals in the second quarter remain ahead of the prior year, and they're in line with the prior year when looking at the next six. Reflecting continued demand from independent pipeline remains robust at over 725,000 packages trends have remained healthy. Travel dates with NOG of just under 1%. The benefits that research shows that our max member scores across the members to the handful of months since trends have remained consistent, we're monitoring them closely for any signs of definancing business optimization continues to benefit our cash flow, enabling us to repurchase $150 million worth of stock during the last few quarters scoring models to help identify the closing. When combined with our introduction of HEV Max into the blue-green system and the launch of Kahaku, resources toward packaging campaigns, also accelerating our digital marketing integration efforts with our partners. This includes further refinement of our scoring models, along with new pre-tour qualifying as propensity guests, 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 a previously mentioned enhancements to our max products slated for later this year and we're adding additional features aimed at driving incremental engagement and encouraging additional member stays at our property in our value proposition blue green property rebrand program 10 to 12 rebrands in each of the next three added nine new offerings in our efficiency initiatives and transactions, market volatility, and uncertainty have increased in recent weeks and sustain our momentum. We're focused on controlling the things that we can control the long-term value of the business. I'd like to extend a warm welcome back to Dan, who will take you through the numbers. Thank you, Mark, and good morning, everyone.

Before we start, we're included 126, the adjusted EBITDA, $68 million to excluding net deferrals, which more accurately reflects the cash focus on tour efficiency, combined with the continuation of HCV Maxx. These items help drive a 15% increase in pro forma VPGs, resulting in contract sales growing 10% year-over-year on a pro forma basis. In addition to strong operating performance, we've made significant strides in advancing the optimization of our financing business with approximately 70% of our current receivables securitized at the end of the quarter. This is within our target of securitizing 70 to 80 percent of current receivables on a steady-state basis. The higher securitized position helped drive our adjusted free cash flow conversion rate of 75 percent of our adjusted EBITDA for Q1 2025. We anticipate being in the ABS market this coming summer as we seek to term out our receivables securitized through the warehouse at quarter. Early in the quarter, we also successfully recast our $1 billion revolver and repriced all of our outstanding term loans, resulting in reduced pricing spreads. And securities for these facilities and our senior notes have now been... Turning to our results for the quarter, total revenue, excluding cost reimbursements in the quarter, grew 11% to $1.1 billion, and adjusted EBITDA was $248 million, with margins excluding EBITDA, including approximately $23 million of blue-green cost energies recognized during the quarter, or a run rate of $91 million annualized, leaving us well on track to achieve our target of $100 million in cost energies by the end of 2025. Within our real estate business, contract sales were $721 million, up 10% on a pro forma year-over-year basis, 25% the launch of HCD Max, or Blue Green numbers, along with the launch of Kahaku last fall. We're down 4% to $175,000, primarily reflecting the tour efficiency initiatives that Mark mentioned earlier, along with ongoing sales center closures related to the hurricanes this year. These initiatives improved close rates and were reflected in BPG, which grew from 15% to more than $4,100. We saw growth in both our owner and new buyer channels, with particular strength of 21%. That growth was driven by a combination of our recent initiatives, along with the continued contribution from HCV Maxx and Kahaku. Cost of product was 12% of net VOI sales for the quarter, up 100 basis points from the prior year, and our provision for bad debt was roughly in line with the prior year at 12% of owned contract sales. $38 million with margins of 20% to half of that coming from the uptick in sales and marketing costs. It is important to highlight that the provision statistics do not include $7 million of additional reserves related to our acquired portfolios rather than our underwritten portfolios. It is booked in our financing expense and accounted for the majority of the year-over-year decrease in our financing business margin in the quarter. Looking at our portfolio metrics, our originated weighted average interest rate was 15%. Combined gross receivables for the quarter were $4 billion or $3 billion net of allowance. Our total allowance for bad debt was $1.1 billion on that $4 billion receivables balance or 27% of the portfolio. Our annualized default rate for our consolidated put a slight decrease from the fourth quarter's Our originated portfolio delinquencies continue to outperform a much more seasonal acquired portfolio, which is a testament to the strength of the HEV brand, increased value proposition from HEV max, and continued rollout of the best-in-class sales and underwriting practices. We continue to believe that we are adequately reserved when considering the recent volatility and credit in equity markets. Notably, delinquency rates for HEV and legacy DRI portfolios are running below last year. And while we expect the provision rate to build throughout the year given the current operating environment and seasonal trends, we still expect all-in provision to be in the mid-teens for the full. We also monitor our 31-60-day delinquency trends very closely as an early indicator, and we haven't seen any signs of increased stress within our portfolio in recent weeks, but continue to monitor the situation closely. Resort and club business, our consolidated member count was approximately $725,000, and our NOG was just under 1% at the end of the quarter. Revenues grew 10% to $183 million for the quarter, owing to our increased member count and solid member activity during the quarter, and with margins of $70 million. And ancillary revenues were $187 million in the quarter, with segment loss of $19 million. Revenue growth was driven by increased occupancy, resulting in slight improvement in our REVPAR. The fourth quarter, our expenses remained elevated due to higher developer maintenance fees, along with higher expenses from point conversions for states at Great Wolf, as we continue to see great traction with our... Bridging the gap between segment adjusted EBITDA and total adjusted EBITDA, JV EBITDA was $5 million, corporate G&A was $37 million, license fees were $49 million, and EBITDA attributable to non-controlling interest was $5 million. $185 million, which included the timing of non-recourse activity under our financing business optimization rate of adjusted EBITDA into adjusted free cash flow, will be in the range of 60%. The company repurchased 3.9 million shares of common stock for $150 million. From April 1st through April 24th, we repurchased an additional 1.8 million shares for $60 million. Year-to-date 2025, we have repurchased 5.7 million, or 6% of our shares outstanding, for $210 million, or an average of approximately $37. We remain committed to capital returns as a primary use of our free cash flow and believe our shares continue to represent a compelling value at current prices. We believe that our strong balance sheet provides us with the financial flexibility necessary to allow us to navigate the current macroeconomic volatility. Accordingly, we remain committed to our target of repurchasing, on average, of $150 million per quarter, assuming the current macro environment. We have $218 million of remaining availability under our outlook. We are maintaining our 2025 adjusted EBITDA guidance to be in the range of $1.125 billion to $1.165 billion, which assumes the environment remains consistent with what we see today. As Mark mentioned, we had a solid quarter that was in line with our expectations, and that momentum carried into April. That said, while our direct exposure to tariffs is minimal, the volatility of the past few weeks has nevertheless made the consumer environment more uncertain, and it's something that we continue to monitor very closely. Moving on to our liquidity, as of March 31st, our liquidity position consisted of $259 million million of unrestricted cash and $870 million of availability under a revolving credit facility. Our debt balance at quarter end was comprised of corporate debt of $4.5 billion and a non-recourse debt balance of approximately $2.4 billion and $100 million of remaining capacity in our warehouse facility. We also had $951 million of notes of that figure. Approximately $519 million could be monetized by being eligible following certain customary milestones, such as first payment, deeding, and recording. Despite market volatility, ABS markets remain open and functioning. The $850 million warehouse gives us confidence to discuss finance optimization strategies. Thanks to our credit metrics, at the end of Q1, inclusive of all anticipated cost synergies, the company's total net leverage on a TTM basis was 3.9 times. We will turn the call over now to the operator and look forward to your questions. Thank you. We'll now be conducting

a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up the handset before pressing the

star keys. One moment, please, while we pull for questions. Thank you. Our first question is from Brant Montour with Barclays.

Brant Montour Good morning, everybody. Thanks for taking you my question um so so maybe mark if we could just start talking about the consumer um you know the uh the commentary i don't want to put words in your mouth the commentary seems like you're not seeing any changes across preview package sales as well as forward bookings for for rentals things that we would think would you'd start to see a little bit of choppiness you know we've heard from most other uh most other leisure facing businesses that that there's that there's some leisure choppiness and forward bookings. Can you just maybe talk about why you think you're sort of define that trend? Is it the geographical exposure? Is it the consumer? What do you think it is?

Yeah, no, good question. And I think, you know, from a leading indicator standpoint, we do have a distinction. I think it's underappreciated. When you think about it, brand um 50 of our another 15 to 20 percent is our marketing packages and so that's a population we have data and we understand how from a rental perspective your booking window is around 40 days for an owner it's 177 last year was 178 days so it's come down one day so no material change at for marketing, it's 95 days out, right? So we have a distinct advantage of understanding who is going to be arriving at our properties well before your traditional leisure travel that's booked on Hilton.com or through an OTA, which typically averages 40 days. So the other thing is, you know, our owners have paid, right? They've prepaid for this. And our package pipeline, those customers are prepaid too. So I think those give us line of sight and a distinct advantage over, you know, traditional demand that would come in through Neurology. That's really helpful. Thanks for

that. The second question I have is around new owner mix versus owned mix. You know, you guys did, I think, 85% owned mix in the first quarter. The full year, I believe, runs a little bit below that. And the summertime, I think, is seasonally a little bit higher for new owner sales. And so, you know, as we look at the first quarter's VPG, which was, you know, a monster result, you know, for you guys, does that, you know, do you, is it harder to maintain the strong VPGs as Do you move into a more new owner sales intensive season, that being the summer, or is that sort of a lever that's in your control and that's something you plan to pull?

Yeah, look, it is a lever that we can control, but first of all, I'd say that the number is closer to – for new buyers, it's closer. The other thing that's, in a way, skewing that number is the outperformance on the owner side is really material. Now, we had BPG growth both from owners and new buyers, right? From a new buyer standpoint, that BPG growth was really driven by average transaction price From an owner perspective, if you look at the owner's side, we saw great, almost 500 BIFs of improvement in close rates. So part of the, you know, the mix there is driven by outsized owners and then still ramping up on new buyers. So we were really pleased to see the results. The teams did a great job executing. I think we're up 15% or just under 15% of BPG. So, you know, as we go through the balance of the year, the mix is going to be somewhat similar. So, you know, our expectations are that, you know, we'll continue to see strong performance and strong execution. You know, that being said, I think we've made plenty of disclosures out there that, you know, the narrative out there hasn't been positive around the consumer and its confidence. But, again, we haven't yet seen it.

Great. Thanks for all the color. Nice quarter. Our next question is from Ben Chaykin with Mizuho Securities.

Hey, thanks for taking my questions, Dan. Nice to have you back. Regarding the balance sheet optimization, you gave some color on the prepared remarks and also in the press release regarding the 951 of notes that were current on payments, and there's the 519 that could be monetized, and then there's the 210 of additional notes. That still leaves kind of a balance of, you know, something around 200. I guess for a three-part question, number one, where does that remaining 220 or so sit? But part two, do you view all of the 951 as receivables you could securitize in the near Or is there a portion you would leave in the balance sheet for some reason or another? And then part three, I think the warehouse is full, is the plan to securitize those, work in the warehouse down, and then use that 850 capacity to take down the 950? Hopefully, that all makes sense. I can circle back if those two convoluted.

It's good to be back. With regards to your questions, I don't know where to begin. I think the last one you effectively answered, but let's jump back to the $200 million. The $200 million is a part of the current unsecuritized receivables. It really pertains to loans that either have no FICO scores for one reason or another, or they're loan balance heavy for another reason, i.e. just, for lack of a better term, they're not immediately securitizable. That doesn't mean there's not a path. There is a path. This is more of your scratch and dent of nature, so there is a path to do that. We wouldn't focus on that. We haven't focused that in the past, just given the advance rate that's typically associated with the scratch and dent issuance, so that's out there. The other thing to take into consideration is all these metrics are a point in time, right? So to your point, the warehouse is drawn effectively, not completely drawn at this point in time, but majority drawn. What we will look to do is to term that out by going to the ABS markets, most likely as we approach the summer months. As you've seen, while the markets have been very choppy, the ABS markets are definitely open. A competitor went to the market recently and was successful. We anticipate going to the market in the short term. We would, just given today, again, I pause because there's a lot of noise out there, but if we were to go out today, I would anticipate pricing in the range of five to five and a Obviously, that'll move with the macro, but that's where we would see it today. Let's see. I think I answered two of your three. Which one did I not answer completely?

Just overall, as you think about the total balance of the 951, is there any – can we think about that as being all securitizable in the near to medium term, or is there a portion that you would want to leave on the balance sheet for some reason or another?

uh the vast majority would be secure uh the vast majority we would look to securitize but again this is getting back to the point in time concept because there's a certain amount that we would retain to make sure that we have uh notes available for replacements in the existing deals etc so there's some level that we wouldn't actively okay that's very helpful and then um on vpg

definitely stronger than expected. It sounds like partially Blue Green HCV Max success, which makes sense. Are there any statistics you can share or anecdotal comments regarding the success of upgrading Blue Green customers? I know you gave the overall close rate customer, just the overall close rate on existing owners a moment ago, which was very helpful. I don't know if maybe you have that for Blue Green customers, if you feel comfortable sharing that. And then is there any Blue Green sales centers that you're still maybe upgrading or rebranding? Thanks. Yeah, no, good question. So

what I would say, BPGs were strong across the legacy business. And in particular, if you look at BPG growth in the legacy, HEV, DRI world, owners and new buyers were up 8%. You can see that blue-green owners really outperformed, and the growth there, it was, you know, over 40% growth in BPG, so two times of what we saw in overall owner BPG. So, good performance across the entire company and entire brands, but really strong outperformance on the blue-green side.

Thanks a lot. Appreciate it.

Our next question is from Patrick Scholls with Truist Securities.

Great. Thank you. Good morning. Mark, on the previous earnings calls, you had given some outlines on several KPIs, specifically from my notes.

Last time you had talked about low to mid-single-digit, low to BG for the year, low to mid-single-digit,

Yeah, Patrick, you broke up a little bit there, but I think I caught the essence of the question. And so, you know, when you think about, you know, the cadence for the rest of the year, you know, we came out, we were down on tour flow for Q1. But we still expect to have tour flow growth for the remainder of the year. Part of the contraction on the tour flow side was really related to a number of the initiatives we're doing around improving the quality of the tours. And so we're using and continue to tighten up our qualifications, focusing on higher quality customers. And we find our modeling, we're trying to identify higher propensity buyers and those that have the ability to pay. So that's part of it. The other part of it is, you know, unfortunately, a number of the blue-green sales centers that were impacted by the hurricane are going to take longer to reopen than we initially expected. And so, and there's a lot of work that's going on with the teams around that to get those properties reopened. But you're dealing with insurance companies, and so, you know, some of that timing is not necessarily in our control. What I'd say around the BPG front is, you know, we performed much better than we expected, you know, in the first quarter. Now, you know, we've talked a lot about, you know, acknowledging there's a lot of noise around the consumer out there.

Our next question is from Stephen Grambling with Morgan Stanley.

Hey, thanks. Welcome back, Dan. Just to dig into a couple things in the opening remarks from you, Mark, I think you gave a couple of these strategic initiatives. And two of them, one was more flexible financing. One, I think you said, new features to drive engagement. I was hoping you could just maybe expand on each of those, on the flexible financing. Is that effectively improving the rate? Is it improving the amount down? And then on the features to drive engagement, maybe if you can just elaborate on maybe the cadence of what you're doing and then the cadence of when we'll start to see that.

Essentially, what we're doing is their financing program, our legacy business had their financing program. And one of the things that I have to say, you know, over the years, it's gotten around, you know, our financing grids. And so one of the things we've tried to do is just simplify it and create a financing grid that I think was attractive to, you know, to new customers coming in and really focus on generating additional cash. And so that's a big driver of it. And then incentivizing our customers around what product type. You know, we've got a lot of inventory. We're in a really good inventory position and obviously looking to move as much and balance out our inventory and utilizing our finance grid to focus, you know, buyers into certain types of inventory. As far as initiatives go, you know, it has been really focused around, you know, the tour quality. and also the value proposition and so the tour quality i think i talked about just a few minutes ago on the value proposition you know it's it's around what we can do to deliver uh you know even a better value proposition than we have today and so there's really no silver bullet here it's really a stacking of a number of initiatives that we're focused on and part of it is also driving and to drive additional revenue going forward. You know, we're demand shock out there. I think, you know, our new buyers, as well as...

Mark, and I think I'd just add to that. I mean, Stephen, to Mark's point on the financing front, it is really about making the messaging and the conversation a lot less... We're also unifying the underwriting, to Mark's point, last year. Blue-Green, which was offering the ability to upgrade with no additional cash down. see diamond portfolio where we require additional skin in the game to you know make people make sure people are motivated to us one stay engaged with their mortgage but two and more importantly stay engaged with the product itself so the combination of those two we're very optimistic will help drive portfolio performance as we go throughout this year and into future

years great thank you our next question is from Lizzie Dove with Goldman Sachs

Hi there. Thanks for taking the question. Just to kind of zoom in a bit on the consumer, I'm curious if you've seen any kind of divergence between, you know, different geographies within the U.S., a particular strength in areas versus others, or any signs of a kind of trade down between different products. Just any other color there would be helpful.

You know, it's interesting because in today's call, I was really looking at market results, right, performance in a number of markets, and it's not really geographically, you know, focused. And when I look at, for instance, Hawaii, the Hawaii teams, again, delivered very strong. Maui grew 40%. We are now back to pre-fire numbers in Maui. We saw our Oahu domestic and Japan teams outperform, as well as our Big Island teams in Waikoloa. So very strong there. New York was extremely strong, and D.C. In fact, our East teams did a fantastic job. And Orlando was a really good story for us, improved execution. And then when you look at kind of the mid to smaller markets, our JV with Bass Pro up in Big Cedar did well. The Carolinas were strong. Arizona was strong. And Texas was strong. So I'd say around the consumer. And, you know, we were, you know, we actually started signaling this the middle of last year. You know, mainly around the bottom third of our new buyer wealth cohorts. You know, that hasn't. So our focus, why continue to focus on those customers when they are having a tough time dealing with this cumulative inflation that's going on over the last couple of years and the uncertainty out there? So our focus has really been what can we control? We can tighten up our qualifications, right? And so that's what we've been doing. And at the end of the day, you know, it was really great to see how well our owners and members continue to perform. And it was nice to see VPG growth from our new buyers. You know, it wasn't, you know, double-digit growth for new buyers, but we did see a little growth. So I think all the work we're doing around our initiatives is starting to pay off.

Got it.

Thank you. Our next question is from Chris Barronka with Deutsche Bank.

Hey, good morning, guys. Thanks for taking the question. Yeah, Mark, just for a moment, returning to kind of a downside scenario in the economy that we're still thinking about. I know in prior cycles, none of which are exactly alike, but, you know, there was some discounting by the resort sector and you know i think i think there's a perception that if that happens you know it it upends your value proposition a little bit in terms of you know getting folks on tour so any any thoughts there any you know contingency plans anything you're seeing in any markets yet that

that you know gives you pause for concern on that no um and i actually think our package of value proposition, because remember, the way our model works, we're subsidizing these guests to come visit our properties and go through a sales presentation, and in this environment, this value proposition even stands out even greater, right, especially in a, and so I would say, you know, we continue to, you know, continue to see really strong execution there. In fact, our dated packages, and dated means those that have agreed to a date and are planning the travel, actually went up 22% from Q4 to Q1. Now, as far as, you know, a downturn scenario, I think we've got, we're in a really good position, right? Today, our business is in better position than it was before because of some of the built-in advantages. 50% of our EBITDA is recurring. We have a strong balance sheet, you know, great brand, strong value proposition. Our partners, you know, having a partner like Hilton, a partner like Bass Pro, Choice, you know, it's helped us build the largest pipeline of potential new buyers in the industry, right? And then you think about how loyal our members are. We have tens of thousands of our owners who've been staying with us for multiple decades, and 70% of them have paid off their mortgage. 90% live within a four-hour drive to one of our resorts. So I think we're prepared for a wide range of outcomes. But at the end of the day, the one benefit we have in our business, and we talked about it before, is we go out and create the demand. We're not waiting for people to show up. We are out there reaching out, connecting, creating relationships with customers to drive that demand going forward. So, look, it's hard to tell right now. And I'd say it's just too early to understand the full impact of what could occur with, you know, the policy changes out there. But, you know, I'm a big believer that you know the shift to moving to experiences away from goods is going to continue and it could even accelerate in an environment like this so as you can tell I'm very optimistic that being said you know anything that happened there's a lot of zigzagging going on right now and you know the policy talks right now and you know quite frankly you know every day I wake up I'm I kind of wonder what what's the news gonna be like today but you know all we can do is focus on what we can control and that's that's what we're

doing and Chris I think the only thing I'd add to that I mean mark obviously covered a lot of value additions that we've had to well we offer our product offering over the past few years but even if you go back to 2019 before hotels had these substantial increases in ADRs we had a great value proposition back then. And when you think about the average transaction price from the financial... Okay.

Yeah, fair enough. Thanks, guys. Appreciate it.

Thank you. There are no further questions at this time. Before we end, I would like to turn the call back over to Mark Wang for any

closing comments. Standing vacation experiences. And I also want to thank our owners who make vacation a priority and entrust us with creating those memorable experiences for themselves and their families. Have a great day. Thank you.

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.