Hilton Grand Vacations Acquires Bluegreen Vacations For $1.5B, Q3 Earnings Hit By Maui Wildfires

Hilton Grand Vacations Inc HGV reported a third-quarter FY23 sales decline of 8.8% year-on-year to $1.02 billion, missing the analyst consensus estimate of $1.05 billion.

Revenues were affected by a net deferral of $12 million in the current period compared to a net recognition of $86 million in the same period in 2022.

Real estate sales and financing segment revenues totaled $612 million, a decrease of $133 million from last year. Total contract sales in Q3 decreased $18 million to $603 million.

Consolidated Net Owner Growth (NOG) for the 12 months ended Sept. 30, 2023, was 2.1%.

The operating expenses decreased 4.6% Y/Y to $838 million. Adjusted EPS of $0.98 beat the consensus of $0.97.

Adjusted EBITDA for the quarter fell 20.4% to $269 million, with an adjusted EBITDA margin contracting Y/Y from 30.3% to 26.4%.

The company held $535 million in cash and equivalents as of Sept. 30, 2023. The operating cash flow was $92 million, with a free cash flow of $70 million.

In Q3, the company repurchased approximately 690,000 shares for $26 million and currently has $432 million of remaining availability under the 2023 share repurchase plan.

Acquisition: Hilton Grand Vacations has entered into a definitive agreement to acquire Bluegreen Vacations Holding Corporation BVH for $75 per share in an all-cash transaction, representing a total consideration of approximately $1.5 billion, inclusive of net debt. The $75 per share price represents a premium of 111% over BVH's last closing price of $35.52.

"We started the quarter with a strong July, although growth decelerated as we moved through the quarter – particularly in August. Accordingly, we're updating our full-year outlook to reflect a more moderate improvement in contract sales for the remainder of the year, along with the ongoing impact of limited Maui operations," said Mark Wang, president and CEO of Hilton Grand Vacations.

Outlook: Hilton Grand Vacations lowered its FY23 adjusted EBITDA outlook from $1.09 billion - $1.12 billion to $1 billion - $1.02 billion.

Price Action: HGV shares traded lower by 8.07% at $34.24, while BVH shares are up 105.6% to $73.06 on the last check Monday.