Hilton Grand Vacations Inc.
However, the company lowered its full-year profit forecast after contract sales declined.
Hilton Grand Vacations Beats Earnings Estimates
Hilton Grand Vacations reported adjusted earnings of $4.03 per share, beating analysts' consensus estimate of $1.06 by 280.19%. Earnings surged 571.67% from 60 cents per share a year earlier.
Revenue jumped 50.85% year over year to $1.961 billion from $1.300 billion, exceeding Wall Street's estimate of $1.404 billion by 39.67%, according to Benzinga Pro.
However, the results benefited significantly from the recognition of previously deferred revenue and expenses related to a completed construction project in Hawaii.
The company recognized $536 million in previously deferred construction-related revenue from a completed project in Hawaii, boosting net income and adjusted EBITDA by $296 million, or $3.76 per share.
Net income attributable to stockholders climbed to $291 million, or $3.70 per diluted share, from $25 million, or 28 cents per share, a year earlier.
Adjusted net income attributable to stockholders reached $317 million, while adjusted EBITDA attributable to stockholders increased to $609 million from $245 million.
Contract Sales Decline Despite Revenue Growth
Total contract sales fell 11% year over year to $807 million, down $100 million from the prior-year quarter.
Sales volume per guest declined 12.5%, while tour flow, or the number of sales presentations, increased 1.7%.
Real Estate Sales and Financing segment revenue rose $629 million to $1.418 billion. Segment adjusted EBITDA increased to $557 million from $184 million, with its margin expanding to 39.3% from 23.3%.
Resort Operations and Club Management revenue increased to $416 million from $406 million. However, segment adjusted EBITDA slipped to $158 million from $159 million.
The provision for financing receivable losses was 12.5% of owned contract sales, primarily reflecting changes to the company's methodology for estimating financing receivable losses.
The revised methodology also resulted in a $55 million reduction in the allowance for originated timeshare financing receivables.
Hilton Grand Vacations Cuts 2026 Profit Outlook
Hilton Grand Vacations lowered its full-year 2026 adjusted EBITDA outlook, excluding construction-related deferrals and recognitions, to $1.165 billion-$1.180 billion from its previous range of $1.225 billion-$1.265 billion.
CEO Mark Wang acknowledged that the company's sales improvement initiatives were taking longer than expected to deliver results.
"The underlying business model, recurring revenue streams, and cash flow generation of our business remained resilient in the third quarter, but our sales results fell short of our expectations as the initiatives we put in place over the summer to improve execution are taking longer to ramp than we anticipated," Wang said.
The company said it is accelerating efforts to improve sales conversion rates and restore consistent, profitable growth.
Hilton Grand Vacations also promoted Mike Riley to executive vice president and chief sales and marketing officer.
Cash Flow, Debt And Share Buybacks
Free cash flow improved to $52 million from negative $4 million a year earlier. Adjusted free cash flow rose to $63 million from $23 million.
As of Sept. 30, the company held $227 million in cash and cash equivalents and $275 million in restricted cash.
Net corporate debt stood at $4.9 billion, carrying a weighted average interest rate of 5.751%. The company also reported $2.9 billion in net nonrecourse debt.
Total net leverage was approximately 3.9 times on a trailing 12-month basis.
Hilton Grand Vacations repurchased 2.4 million shares for $110 million during the quarter.
As of Oct. 22, the company had $617 million remaining under its share repurchase plans.
HGV Price Action: Hilton Grand Vacations shares were up 1.17% at $35.95 during premarket trading on Thursday, according to Benzinga Pro data.
