EX-99.1 2 d720479dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

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INVESTOR PRESENTATION
M A R C H 2 0 1 9


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1
Cautionary Note Regarding Forward-Looking Statements DISCLAIMER expectations This presentation as to contains the future forward-looking of HGV, and are statements based on within management’s the meaning beliefs, of Section expectations, 27A of the assumptions Securities Act and of such 1933, plans, as amended estimates, and projections Section 21E and of other the information Securities Exchange available to Act management of 1934, as amended. at the time Forward-looking HGV makes such statements statements. convey Forward-looking management’s “intends,” statements “plans,” include “estimates,” all statements “anticipates” that are not “future,” historical “guidance,” facts and “target,” may be or identified the negative by terminology version of these such as words the words or other “outlook,” comparable “believe,” words. “expect,” The forward-looking “potential,” “goal,” statements “continues,” contained “may,” in “will,” this presentation “should,” “could,” include “seeks,” statements “approximately,” related to HGV’s “projects,” revenues, predicts,” earnings, taxes, cash flow and related financial and operating measures, and expectations with respect to future operating, financial and business performance, and other anticipated future events and expectations that are not historical facts. performance HGV cautions or you achievements that its forward-looking expressed or statements implied by involve its forward-looking known and unknown statements. risks, HGV’s uncertainties forward-looking and other statements factors, which are not may guarantees cause the of actual future results, performance, performance and you or should achievements not place of undue HGV to reliance be materially on such different statements from the in this future presentation. results, business Factors that due could to cause the real-time HGV’s actual nature results of industry to differ sales materially practices, from and those the intense contemplated competition by its associated forward-looking with the statements industry; include HGV’s ability risks associated successfully with: market the inherent and sell business, VOIs; HGV’s financial development and operating and other risks activities of the timeshare to source industry, inventory including for VOI sales; limited significant underwriting increases standards in defaults and trends on in HGV’s the tourism vacation and ownership hospitality mortgage industry, receivables; which may impact the ability the of purchasing managed and homeowner vacationing associations decisions to of collect consumers; sufficient actions maintenance of HGV or fees; the occurrence general volatility of other in the events economy that could and/or cause the financial a breach and under credit or termination markets; adverse of the HGV’s economic license or market agreement conditions with Hilton including that our could ability affect to manage or terminate the outcome our access and to timing the Hilton of such brands operations and programs, and compliance or actions with of anti-corruption, Hilton that affect data the privacy reputation and of other the licensed applicable marks laws or and Hilton’s regulations programs; affecting economic our international and operational operations; uncertainties the effects related of foreign to HGV’s currency expanding exchange; global operations, changes in tax rates of material and exposure fee-for-service to additional agreements; tax liabilities; our dependence the impact on of third-party future changes development in legislation, activities regulations to secure or just-in-time accounting inventory; pronouncements; HGV’s use HGV’s of social acquisitions, media platforms; joint ventures, cyber-attacks, and strategic security alliances vulnerabilities, that that may and not information result in technology expected benefits, system including failures resulting the termination in disclosure claims against of personal HGV that data, may company result in data adverse loss, outcomes, system outages including or disruptions regulatory proceedings of online services, or litigation; which HGV’s could lead credit to facilities, reducedindenture revenue, increased and other debt costs, agreements liability claims, and harm instruments, to user engagement, including variable and interest harm to rates, HGV’s operating reputation and or financial competitive restrictions, position; our the ability impact to of natural make scheduled disasters payments, that may disrupt and our HGV’s ability operations to refinance in key our vacation debt on acceptable destinations. terms; Any one the continued or more of service the foregoing and availability factors could of key adversely executives impact and employees; HGV’s operations, and catastrophic revenue, operating events or margins, geo-political financial conditions condition including and/or war, credit terrorist rating. activity, political strife or HGV’s For additional Annual information Report on Form regarding 10-K factors for the that fiscal could year cause ended HGV’s December actual 31, results 2018 to and differ those materially described from from those time expressed to time other or implied periodic in reports the forward-looking that we file with statements the U.S. in Securities this presentation, and Exchange please Commission. see the risk There factors may discussed be other in risks “Part and I—Item uncertainties 1A. Risk Factors” that we are of unable update to or predict review any at this forward-looking time or that we statement, currently do whether not expect as a result to have of a new material information, adverse future effect developments, on our business. changes Except in for management’s HGV’s ongoing expectations, obligations or to otherwise. disclose material information under the federal securities laws, we undertake no obligation to publicly Non-GAAP Financial Measures This estate presentation margin, tour includes flow, volume discussion per guest of terms (“VPG”), that are earnings not recognized before interest terms expense under U. (excluding S. Generally interest Accepted expense Accounting relating Principles to our non-recourse (“GAAP”), and debt), financial income measures tax expense, that depreciation are not calculated and amortization in accordance (“EBITDA”), with GAAP, Adjusted including EBITDA, contract Adjusted sales, sales EBITDA revenue, Margin, real Net Debt and Net Debt / Adj. EBITDA, Free Cash Flow and Return on Invested Capital (“ROIC”). These non-GAAP financial measures should be considered only as supplemental to, and not as superior to, financial measures prepared in accordance with GAAP. We derived the non-GAAP financial measures from the following sources: • Audited our former consolidated parent, Hilton statements Worldwide of operations (“Hilton”), on for January the years 3, ended 2017, our December consolidated 31, 2018, financial 2017, statements 2016, 2015, were 2014 derived and 2013 from and the financial from our results audited of consolidated our former parent balance and sheets included as of certain December indirect 31, general 2018, 2017, and administrative 2016 and 2015 costs allocated – Prior to to us our for spin-off certain from functions on which expenses and support have services been allocated primarily on for the periods basis prior of financial to our spin-off and operating to be a metrics reasonable that reflection Hilton has of historically the utilization used of to services allocate provided resources to and or the evaluate benefit performance received by us against during its the strategic periods objectives. presented; Both we and Hilton, as our former parent, consider the basis • Unaudited Hilton, as our consolidated former parent, statement and were of operations reviewed by for our the independent years ended registered December public 31, 2012 accounting and 2011 firm and in from connection our unaudited with the consolidated spin-off transaction; balance and sheet as of December 31, 2014, 2013, 2012 and 2011 – These financial statements also contained allocations from • All financial statements for all periods prior to the year ended December 31, 2011 were derived from Hilton’s financial statements, do not reflect allocations from Hilton and were unaudited. We securities believe analyst such non-GAAP and investors financial as a common measures financial provide measure useful information for comparison to our purposes investors in about our industry. us and our See financial “Management’s condition Discussion and results and of operations Analysis of since Financial many Condition of these measures and Results are of used Operations—Key by our management Business to evaluate and Financial our operating Metrics and performance Terms Used and by by Management” for providing non-GAAP and “—Results financial of Operations” measures. sections Full reconciliations of our SEC of filings, non-GAAP including, financial but not measures limited to to our the most most recent directly Annual comparable report GAAP on Form financial 10-K and measures quarterly for reports the historical on Form periods 10-Q, and for a for more 2018 detailed and 2019 discussion full year of estimates the meanings discussed of these in this terms presentation and our reasons appear in the appendix of this presentation. For years 2020 and beyond, refer to “Forward Looking Non-GAAP Financial Measures” below. Forward-Looking Non-GAAP Financial Measures basis In addition for the to same certain reasons non-GAAP that we financial provide measures them to investors for historical on periods a historical noted basis. above, For this years presentation 2020 and beyond, contains we certain are unable forward-looking to provide non-GAAP a reconciliation financial of these measures. forward-looking We provide non-GAAP these forward-looking financial measures non-GAAP to the financial most directly measures comparable to investors forward-looking on a prospective dispositions; GAAP financial foreign measures currency without transactions; unreasonable debt restructurings/retirements; effort due to variability and non-cash difficulty in impairment making accurate losses; projections reorganization for items costs, that including would severance be required and to be relocation included costs; in the share-based GAAP financial and measures, certain other such compensation as: income tax expenses; expense and (benefit); other items. interest We expense; believe asset such reconciliations would imply a degree of precision that would be confusing or misleading to investors. Disclaimer This not constitute presentation any and offer the to sell information or issue, contained or the solicitation herein are of solely an offer for to information subscribe for, purposes buy or only. otherwise This presentation acquire any securities does not constitute of Hilton Grand a recommendation Vacations Inc. regarding This presentation securities is of not Hilton directed Grand to, Vacations or intended Inc. for This distribution presentation to or or use any by, related any person oral presentation or entity that does is a citizen or resident located in any jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation or which would require registration or qualification under the applicable laws of such jurisdiction. required We undertake by law. no obligation to publicly update or review any forward-looking statement or information to conform to actual results, whether as a result of new information, future developments, changes in the Company’s expectations, or otherwise, except as All information in this presentation is as of December 31, 2018. © 2019 Hilton Grand Vacations Inc. Proprietary


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WHO WE ARE
1 2 3 4
We have a winning Resilient and We manage for Our dynamic net owner growth proven business strong returns capital allocation driven demand model throughout through our unique strategy to strategy in a great economic cycles capital efficient maximize returns is industry that isn’t tied to inventory strategy supported by broader lodging strong financial fundamentals performance
© 2019 Hilton Grand Vacations Inc. Proprietary


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NET OWNER GROWTH (NOG) DRIVEN STRATEGY
H I L T O N W A I K O L O A V I L L A G E © 2019 Hilton Grand Vacations Inc. Proprietary


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4
NOG IS A SIMPLE YET POWERFUL DRIVER OF OUR STRATEGY TO CREATE LONG-TERM SHAREHOLDER VALUE
ADD RETAIN Net new existing Owner owners owners GROWTH
Create Deliver exceptional NOG is the y-o-y % demand vacation experiences change in members
Each new owner is a NOG increases the total We realize substantial We replenish and expand source of highly embedded value in the value in near-term due to embedded value by predictable recurring business year after year faster upgrade cycles constantly adding new
EBITDA owners
© 2019 Hilton Grand Vacations Inc. Proprietary


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5
OUR NOG STRATEGY EMBEDS SUBSTANTIAL VALUE IN OUR OWNER BASE FROM THREE HIGHLY PREDICTABLE AND/OR CONTRACTUAL SOURCES
FINANCING – 69% MARGIN1
ï,§ Profits from existing loans and future owner upgradesï,§ 66% of buyers finance their purchasesï,§ Typically 10-year fixed-rate secured loans with average coupon rates of approximately 12%
CLUB AND RESORT MANAGEMENT – 73% MARGIN1
+$1.1Bï,§ Profits from current owners
ï,§ 2018 average Club and Resort Management revenue per member was $556
+$1.5B REAL ESTATE – 34% MARGIN1
ï,§ Profits from current owners’ future upgrades
+$1.0Bï,§ For each $1 of initial purchase, on average owners will purchase another $1.15 in additional upgrades over 20 years
Total: $3.6B
THE EMBEDDED VALUE OF OUR OWNER BASE HAS EOY 2018 INCREASED BY ~3X (11% CAGR) SINCE 2007
Note: Ten year cumulative margin, not discounted
Note: Embedded value considers total expected nominal margin over 10 year period, not discounted; Does not account for license fees, taxes, perpetuity of club dues, assumes current cost of securitization; 1.) % represents 2018 margin for line of business. Source: HGV internal data
© 2019 Hilton Grand Vacations Inc. Proprietary
G R A N D I S L A N D E R


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WE MONETIZE EMBEDDED VALUE IN THE NEAR TERM, THEN EMBED EVEN MORE FUTURE VALUE BY ADDING NEW OWNERS
Embedded value of owner base ($M)
(Rounded to nearest $100M)
700 3,800 3,600
1,100 Finance
1,000
(500)
1,200 Club and
1,100
Resort
Real
1,500 1,500 Estate
2018 Embedded value Embedded value NOG Embedded 2019E Embedded value realized in 2019E value added in 2019E
© 2019 Hilton Grand Vacations Inc. Proprietary


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UPGRADES HAVE ACCELERATED – OWNERS ARE UPGRADING FASTER AND MORE OFTEN
% of owners with additional purchase Over 30% of our new
50% owners make an additional purchase in 3 years
40% 30% 20% 10%
0%
5 10 15 20 25
1 Years of ownership
Existing owners are upgrading 5x quicker than the 90s
Year first
2015—2018 2011—2014 2007—2010 2003—2006 1999—2002 1995—1998 purchased
1. For those who purchased 1994 – 1996, it took ~15 years for 30% to upgrade, for those who purchased 2012 – 2017, it took ~3 years for 30% to upgrade; Source: Company financials.
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OUR NOG STRATEGY HAS DRIVEN INDUSTRY LEADING EBITDA GROWTH
Adjusted EBITDA ($M)
NOG Revenue
ASC 605
CAGR CAGR (‘08-‘18) (‘08-‘18)
500
CAGR
+11% 435 8% 7% 400 390 395 338 360 300
299 5%2 4%2
260 2016 – 2017 flat due to 200 G&A buildout 213
100 1% -1%
0
2011 2012 2013 2014 2015 2016 2017 20181 0% 2%
1. ASC606 Adjusted EBITDA is $503M 2. For growth calculations, 2008 figures reflect only Marriott Vacations Worldwide business compared to 2018 which includes the acquisition of Interval Leisure Group on Sept 1, 2018.
Source: 10Ks, Internal HGV data
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HILTON IS THE WORLD’S MOST VALUABLE HOTEL BRAND 1 AND WE
LEVERAGE KEY MARKETING BENEFITS FROM OUR RELATIONSHIP
“Why did you consider purchasing a “Why did you purchase a timeshare T h e H i l t o n b r a n d i s a timeshare with HGV?” with HGV?” s i g n i f i c a n t i n f l u e n c e r 1. “I was offered a tour package” 1. “I liked the amenities” TRUST w h e n c o n s i d e r i n g a n d 2. “The properties were in places I p u r c h a s i n g H G V 2. “I trusted the brand” wanted to visit” v a c a t i o n o w n e r s h i p
3. “I trusted the brand” 3. “It had great destinations”
W e s o u r c e t o u r s f r o m ACCESS t h e f a s t e s t o r g a n i c g r o w t h l o y a l t y p r o g r a m i n t h e w o r l d 20% 7% 14% Annual growth Annual growth Annual growth
H i l t o n h a s a w i d e ~250M ~5.7K ~85M d i g i t a l r e a c h , Unique website visits/yr.
DATA e x p a n s i v e f o o t p r i n t , Locations around the Hilton Honors members One of highest-rated a n d l a r g e a n d g r o w i n g world across 113 growing to 100M by hospitality apps, with one 2 2 h o n o r s d a t a b a s e countries summer of 2019 download every 8 seconds
1. Brand Finance Hotels 50 2018 report 2.. Hilton 2018 Fact Sheet
© 2019 Hilton Grand Vacations Inc. Proprietary


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DESPITE HALF OUR SALES COMING FROM NEW CUSTOMERS, WE STILL HAVE THE HIGHEST VPG IN THE INDUSTRY
2018 Volume Per Guest
$3,743
48% OF SALES TO NEW CUSTOMERS
$3,666 APPROX.
$4,300
35% OF SALES TO NEW CUSTOMERS
$2,642
48% OF SALES TO NEW
CUSTOMERS Effective VPG if we sold 35% of sales to new $2,392 customers
38% OF SALES TO NEW CUSTOMERS
Source: 2018 10K filings and 8-K Earnings Release
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OUR OWNER BASE IS GLOBALLY DIVERSE AND GROWING
350
5%
OTHER INT’L
OWNERS
300 (PRIMARILY WESTERN EUROPE AND CANADA)
250 20%
(000s) JAPANESE OWNERS
8% NOG CAGR
Owners 200
150 75%
U.S. OWNERS
8% NOG CAGR
100
2012 2013 2014 2015 2016 2017 2018
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STRONG US OWNER BASE AND UNIQUE STRENGTH IN JAPAN
75% 20%
U.S. OWNERS JAPAN
56 92%
AVG. OWNER AGE2 HOMEOWNERS2
61K+ ~JP¥13M
OWNERS AVERAGE INCOME4 22% 64% ($117K USD) OF NEW OWNERS COLLEGE
ARE MILLENNIALS2 EDUCATED2
~$150K 749 16 69%
AVERAGE INCOME3 FICO LEISURE DAYS
PER YEAR4 COLLEGE EDUCATED4
20% of US millennials plan to spend more on travel in coming year1 600 in-market team members. Established marketing channels host 130+ events per year4
1. Source: BCG Bernstein Consumer Summit Survey, 2017, N=4,045 2. Merkle data, 2018; 3. 2018 HGV US timeshare survey, current HGV owners, n=204; average income is calculated using midpoint of range options provided in survey.
4. 2016 HGV Japan timeshare survey, current HGV owners, n=63; average income calculated using midpoint of range options provided in survey.
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AND WE’VE ONLY SCRATCHED THE SURFACE
APPROX.
APPROX. APPROX. ~49M 49M 0.5%
128M 107M $75K+
Household $75K+ penetration in households in from age Household income targeted US America 25-74 income APPROX. market1
225K
HGV owners in the US
Source: 2017 US census data
1. Assumes one HGV owner per household
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RESILIENCY AND STRENGTH THROUGH MULTIPLE CYCLES
O C E A N T O W E R B Y H I L T O N G R A N D V A C A T I O N S , W A I K O L O A , H A W A I I © 2019 Hilton Grand Vacations Inc. Proprietary


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TOURS HAVE GROWN CONSISTENTLY AND CONVERSION RATES HAVE REMAINED IN A TIGHT RANGE EVEN IN RECESSIONARY TIMES
Conversion rate (%) Tours (K)
400 15
300
10
200
5 100
0 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
2001 Great
Tours Conversion rate recession recession
Source: HGV internal data
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OUR LAST MAJOR INVENTORY INVESTMENT PERIOD WAS 2007-2008 WHEN WE INVESTED $810 MILLION IN FOUR PROJECTS
WE OPENED FOUR PROPERTIES
Annual inventory spend ($M) DURING THE GREAT RECESSION
600
GRAND WAIKIKIAN (opened 2008) Honolulu, Hawaiiï,§ 80% Sold by 2012
400
WEST 57TH ST. (opened 2009)
New York, New York 200ï,§ 80% Sold by 2011
PARC SOLIEL (opened 2009)
Orlando, Florida
0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018ï,§ 80% Sold by 2012
$810M KINGS LAND (opened 2008)
Transferred from Hilton total Inventory spend Waikoloa, Hawaii during spin
ï,§ 80% Sold by 2010
Tourism Resilient in Major Markets – 2009 Change in Visitation Orlando - 4.7%                Oahu                —2.0% NYC                —2.8% Big Island —6.8%
Source: HGV Internal Data
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WE’VE MORE THAN DOUBLED OUR SALES AND MARKET SHARE SINCE 2007
5% 13%
Net sales through recession
HGV market share (2007-2017)
Trailing 12-month sales, relative to 2007 HGV has captured more than 20% of the entire growth of the timeshare industry since 2009
250%
HGV
200%
150% -3% HGV declined 3% Market yet to fully recover
Wyndham
100%
Industry
Marriott
50%
0%
2008 2010 2012 2014 2016
-35% Market declined 35%
Source: Company financials. Publicly available 10K filings.
© 2019 Hilton Grand Vacations Inc. Proprietary


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TODAY WE ARE EVEN BETTER POSITIONED FOR A POTENTIAL SLOWDOWN THAN WE WERE IN 2008
4.1%
Sold packages Hilton Honors members Owners who have not Default rate1 upgraded
372K 85M 185K 5.7%
4.7% 106K
122K
23M
2008 2018 2008 2018 2008 2018 2008 2018
In addition, 2018 owner base is % of gross sales2 globally diversified financed down 5ppt
1. Default rate as % of beginning portfolio balance;
2. % of Gross sales financed excluding 90 day loans.
© 2019 Hilton Grand Vacations Inc. Proprietary


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WHILE THERE ARE SOME SIMILARITIES, THE TIMESHARE BUSINESS MODEL IS FUNDAMENTALLY DIFFERENT FROM TRADITIONAL HOTELS
There are some high level similarities …but many key fundamentals are very different from between timeshare and hotels… the traditional hotel model
• Top timeshare companies are • Very limited exposure to volatility in asset values—focus on selling partnered with leading global out projects vs. long-term asset speculation brands
• Minimal focus on rental income as available inventory primarily
• Deliver an exceptional guest used to support sales with tour guests, then rental experience on and off property
• Low observed price elasticity of demand vs. traditional lodging
• Offer range of product and amenity levels across footprint • Limited-to-no ongoing property-level capex by timeshare developer
– fully funded by owners each year as part of maintenance fees
• Dedicated focus on leisure travelers - insulated from exposure to highly cyclical business travel
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CAPITAL EFFICIENT INVENTORY
STRATEGY
© 2019 Hilton Grand Vacations Inc. Proprietary


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DIVERSIFIED, CAPITAL -EFFICIENT INVENTORY SOURCING STRATEGY
Capital efficient Traditional development deals development deals
Fee for service Development deals
Asset always sits on partner’s balance Asset sits on balance sheet from beginning sheet of project
Just-in-time Inventory reacquisition
Asset sits on partner’s balance sheet until Reacquire inventory from owners when it is ready to be sold they are ready to sell
Curate Maximize Efficiently Grow EBITDA with Inventory growth deploy capital strong returns
Able to select inventory Having broad range of deal structures Using capital efficient deals Allows us to grow in strategic markets with gives us flex to entertain more deals, allows us to support more EBITDA while variety of deal types more developers, and more markets to growth with less deployed maintaining strong maximize NOG growth and contract sales capital at any one time returns
© 2019 Hilton Grand Vacations Inc. Proprietary


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OUR THREE DEAL STRUCTURES EACH OFFER ATTRACTIVE RETURNS BUT SCALE AND TIMING OF RETURNS AND CASH FLOWS WILL VARY
Cumulative Adj. EBITDA ($M) Cumulative Cash Flow ($M) Cash generated ($M) & ROIC (%)
$80 $60
$70
$40 $57 M
$60
$50 M
$50 $20 $40 $0 $30
Cash invested in project1 : $26 M
$20 -$20 Developed: ~$60M
JIT: ~$70M
$10 FFS: ~$3M
-$40 $0
-$10 -$60
1 3 5 7 9 11 13 15 17 19 21 23 25 1 3 5 7 9 11 13 15 17 19 21 23 25 Developed JIT FFS
Project life Project life
15%—22% 18% - 30% 30%+ ROIC
Illustrative $200M contract sales project Developed
Just in time Fee for service
1. Represent year of initial investment. Note: Includes fully loaded project costs, all cash flow after tax Source: HGV Internal Data,
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BY OPTIMIZING MIX OF OWNED AND CAPITAL EFFICIENT DEALS WE CAN MAXIMIZE ADJUSTED EBITDA GROWTH AND STILL DRIVE ROIC
Note: based on actual committed pipeline and feasibility projects
Adjusted EBITDA ($M) ROIC (%)
600 40
35
500
30
25 400
20
300 15
2016 2017 2018 2019 2020 2021 2016 2017 2018 2019 2020 2021
2018 Outlook 2016 Investor Day Scenario
1. Implied performance based on 2016 Investor Day presentation. HGV Internal Data
2. Forecasted implied performance based on 2018 Outlook presented is not intended to predict future events, but to present a multi-year target for key metrics based on estimated growth rate ranges. The Company is unable to provide a reconciliation of 2020 – 2021 non-GAAP measures to the closest GAAP equivalent without unreasonable effort because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments [such as income tax expense (benefit), interest expense, asset dispositions; foreign currency transactions; debt restructurings/retirements; non-cash impairment losses; reorganization costs, including severance and relocation costs; share-based and certain other compensation expenses; and other items] that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted.
Actual results may differ materially.
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OUR INVENTORY SPENDING COMMITMENTS ARE IN PROVEN SEQUEL MARKETS OR STRATEGICALLY IMPORTANT NEW MARKETS
Inventory spending ($ millions) Capital committed to strategic projects guidance1 opening within 4 years
Project Sales Start Opening Japan (Odawara – Bay Forest) In Sales 2018
497
Hawaii (Ocean Tower) In Sales 2018 375-425 375-425 New York (Quin) 2019 H2 2018 315-365 50 50 New York (Just-in-time project) 2019 H1 2019 Barbados (The Crane) In Sales 2019
50
Chicago (Magnificent Mile) 2019 H2 2019 Los Cabos 2019 H2 2019 375 375 Myrtle Beach (Ocean Enclave) In Sales 2019 315 Hilton Head (Ocean Oak) In Sales 2019 Charleston (Liberty Place) 2019 H1 2020 Japan (Sesoko) 2021 H2 2021 Hawaii (Maui) 2020 H1 2021
2018 2019 2020 2021
Hawaii (Waikiki) 2020 H2 2022
1. Excludes expense related to granting credit to customers for their existing ownership when upgrading into fee-for-service projects of $34 million recorded in Costs of VOI sales for the year ended December 31, 2018 and a similar level for years 2019 through 2021.
Source: Company financials
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DYNAMIC CAPITAL ALLOCATION STRATEGY SUPPORTED BY STRONG FINANCIAL PERFORMANCE
H I L T O N H A W A I I A N V I L L A G E , O A H U , H A W A I I © 2019 Hilton Grand Vacations Inc. Proprietary


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WE WILL TAKE A DYNAMIC APPROACH TO ALLOCATING CAPITAL AND MAXIMIZING RETURNS
INVEST IN INVENTORY /
PRODUCT FOR PROFITABLE GROWTH
Average of $375—$425M in investments per year over the next 3 years
SHARE REPURCHASES
STRATEGIC M&A AND DIVIDENDS
Authorization to repurchase Maintain flexibility should $200M of outstanding shares compelling opportunity arise
Balance sheet
ï,§ Preserve liquidity and ï,§ Increase flexibility to be ï,§ Maintain current credit maintain conservative opportunistic and growth- rating and target 1.5x –capital structure focused through cycles 2.0x leverage1
1. Excludes non-recourse debt
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STRONG FUNDAMENTAL BUSINESS DRIVERS
Tours (‘000)
Members (‘000)
+8% +8%
331 358 288 309 288 306 250 269 262 230
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Contract Sales ($M) Default Rate
+12% 71% 12% 4 .
67% 4 . 1,410 22% 3 .
1,275 3 . 84% 905 1,068 1,172 2 .
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Note: CAGR shown for multi-year periods; y-o-y % growth shown for YTD comparisons.
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TRANSLATE INTO HEALTHY REVENUE AND MARGIN GROWTH
Total Revenue ($M) Real Estate Margin ($M) Financing Margin ($M)
+10% +8% +6%
1,904 307 329 95 102 104 109 1,475 1,583 1,711 244 271 286 88 1,317
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
Resort & Club Margin ($M) Rental & Ancillary Margin ($M)
Adjusted EBITDA ($M)
+11%
+7% +16%
435 115 125 85 390 395 93 107 338 360 83 60 57
47 51
2014 2015 2016 2017 2018 2014 2015 2016 2017 2018 2014 2015 2016 2017 2018
All figures ASC 605 Note: CAGR shown for multi-year periods; y-o-y % growth shown for YTD comparisons.
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NEARLY 70% OF OUR ADJUSTED EBITDA 1,2 COMES FROM RECURRING SOURCES OR HIGHLY PREDICTABLE OWNER UPGRADES
Segment adjusted EBITDA
Segment adjusted EBITDA ($M)
10% -15% Real estate EBITDA from 1,000 new owners
15%—20% Rental & ancillary EBITDA Real estate and transaction 32%—37% EBITDA from existing owners1
500
35%—40% EBITDA from recurring revenue streams2
2019 20203 20213 20223 20233
1.) Highly predictable EBITDA from upgrades and transaction fees; 2.) Contractually recurring revenue streams of financing and resort management & operations; 3.) Information presented is not intended to predict future events, but to provide an illustrative example of the consistency of certain contributions to our Adjusted EBITDA over multiple periods The Company is unable to provide a reconciliation of 2020 – 2023 non-GAAP measures to the closest GAAP equivalent without unreasonable effort because the Company is unable to predict with reasonable certainty the totality or ultimate outcome or occurrence of these adjustments or other potential adjustments such as income tax expense (benefit), interest expense, asset dispositions; foreign currency transactions; debt restructurings/retirements; non-cash impairment losses; reorganization costs, including severance and relocation costs; share-based and certain other compensation expenses; and other items that may arise in the future during the outlook period, which can be dependent on future events that may not be reliably predicted. Actual results may differ materially.
Note: %‘s based on 2023 EBITDA margin projections, recurring revenue includes financing, club & resort mgmt., and rental and ancillary, not adjusted for G&A and licensing fee.
Source: HGV Internal Data
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2019 GUIDANCE
Guidance Metrics 2019
Net income $260M—$275M Earnings per share—diluted $2.74—$2.89 Adjusted EBITDA $450M—$470M Net cash flow provided by operating activities $75M—$115M Adjusted free cash flow $60M—$120M Contract sales growth 9%—11% FFS as % of contract sales 48%—54% Construction deferral impact (full year) None expected
Source: HGV Internal Data
All figures ASC 606 © 2019 Hilton Grand Vacations Inc. Proprietary


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APPENDIX
H I L T O N H A W A I I A N V I L L A G E , O A H U , H A W A I I © 2019 Hilton Grand Vacations Inc. Proprietary


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OUTLOOK ADJUSTED EBITDA AND FCF RECONCILIATION
2019E
Low Case High Case
($ millions)
Net income $260 $275 Income tax expense 97 103 Interest expense 30 27 Depreciation and amortization 42 39 Interest expense and depreciation and amortization from unconsolidated affiliates 1 2
EBITDA $430 $446
Share based comp 18 20 Other items1 2 4
Adjusted EBITDA $450 $470
ADJUSTED FREE CASH FLOW
Cash flow provided by operating activities 75 115 Non-inventory capex (60) (50)
Free cash flow $15 $65
Net proceeds from securitization activity 45 55
Adjusted free cash flow $60 $120
1.) Represents adjustments for one-time public company costs.
© 2019 Hilton Grand Vacations Inc. Proprietary


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HISTORICAL ADJUSTED EBITDA AND FCF RECONCILIATION
For the year ending 12/31
(in millions) 20111 20121 20131 20141 20151 20161 20171 20181 Total revenues $1,007 $1,172 $1,224 $1,317 $1,475 $1,583 $1,711 $1,904 Net income 73 118 128 167 174 168 327 247 Interest expense 53 45 48 36 29 29 27 30 Income tax expense (benefit) 53 82 90 113 118 125 (16) 88 Depreciation and amortization 31 11 16 18 22 24 29 38 Interest expense, D&A included in equity in earnings from unconsolidated affiliate — — — 3 4 EBITDA2 $210 $256 $282 $334 $343 $346 $370 $407 Gain on debt extinguishment — (22) — —Other (gain)/loss (1) 3 5 (3)—1—1 Share-based compensation expense—1 22 4 13 8 15 16 Other adjustment items 4—12 3 4 35 10 11 Adjusted EBITDA2 $213 $260 $299 $338 $360 $390 $395 $435 Cash flow provided by (used in) operations3 ——214 165 190 356 (159) Non-inventory capital expenditures ——(17) (18) (34) (47) (63) Free cash flow ——$197 $147 $156 $309 (222)
NET CONSTRUCTION DEFERRAL ACTIVITY
Sales of VOI, net $(5) $(5) $(5) $133 Cost of VOI sales (1) (1) (2) 36 Sales, marketing, general and administrative expense (1) 1—18 Net construction recognitions (deferrals) included in net income/ EBITDA/Adjusted EBITDA $(3) $(5) $(3) $79
1. All figures ASC 605
2. During the first quarter of 2017, we revised our definition of EBITDA to exclude the adjustment of interest expense relating to our non-recourse debt as a reconciling item to arrive at net income (loss) in order to conform to the presentation of the timeshare industry following the consummation of the spin-off form Hilton
3. For the years ended December 31, 2014, 2015, 2016, amounts include share-based compensation expense which, prior to the spin-off, were included as a component of financing activities on the condensed consolidated statements of cash flows Disclaimer: Past performance does not necessarily predict future results
© 2019 Hilton Grand Vacations Inc. Proprietary