Hilton Grand Vacations Q4 Misses EPS Estimates, Boosts Share Repurchase

Hilton Grand Vacations Inc (HGV) reported its fourth-quarter earnings on February 27, 2025, with mixed results that included a miss on earnings per share (EPS) estimates but a boost in share repurchase plans. The company's stock traded higher by 2.44% to $41.50 in the premarket session following the announcement.

Q4 Performance Overview

Hilton Grand Vacations reported total contract sales of $837 million in the fourth quarter, reflecting a significant increase of $265 million compared to the same period in 2023. This growth was driven by a 36.1% increase in tours and a 7.9% rise in volume per guest (VPG). However, the company's diluted EPS for the quarter was $0.19, falling short of the estimated EPS of $0.70. This decline in EPS from $0.62 in the same period in 2023 was primarily due to a net deferral of $49 million related to construction projects, which impacted both net income and adjusted EBITDA.



Strategic Initiatives and Synergies

Hilton Grand Vacations has implemented several strategic initiatives to improve its cost base and organizational structure, which have had a positive impact on its financial performance. Some of these initiatives include:

1. Acquisition of Bluegreen Vacations: In 2021, Hilton Grand Vacations acquired Bluegreen Vacations, which allowed the company to expand its customer base and increase its market share. This acquisition also provided opportunities for cost synergies and operational efficiencies. As a result of this acquisition, Hilton Grand Vacations expects to achieve cost synergies of $150 million within the 24-month period following the close of the transaction, up from the prior target of greater than $125 million of cost synergies within 24 months of close.
2. Optimization of Financing Business: Hilton Grand Vacations has been optimizing its financing business to generate increased cash flow. This optimization program has allowed the company to increase its average quarterly share repurchase goal to $150 million per quarter, from the current $100 million per quarter.
3. Improvements in Cost Base and Organizational Structure: Over the past year, Hilton Grand Vacations has made meaningful improvements to its cost base and organizational structure. These improvements have helped the company to produce record free cash flow and return over $430 million to shareholders.



Outlook and Share Repurchase

The company expects full-year 2025 Adjusted EBITDA attributable to stockholders, excluding deferrals and recognitions, to be in a range of $1.125 billion to $1.165 billion. Hilton Grand Vacations intends to increase its average quarterly share repurchase goal to $150 million per quarter, from the current $100 million per quarter, to take advantage of the increased cash generated from its Financing Business Optimization program.

Conclusion

Hilton Grand Vacations' Q4 performance in 2024 showed strong revenue growth but a decline in profitability due to construction deferrals and increased expenses. Despite the EPS miss, the company's strategic initiatives, such as the acquisition of Bluegreen Vacations and the optimization of its financing business, have had a positive impact on its financial performance. Investors should monitor the company's ability to leverage these initiatives to drive future growth and enhance shareholder value.