Hilton Grand Vacations (HGV) issues More Debt

Hilton Grand Vacations Inc. (NYSE:HGV) saw its stock move -1.3% following the announcement of the pricing of $900 million aggregate principal amount of new 6.625% senior secured notes due 2032. The stock is now trading at a price of $40.88 per share.

According to the press release, the offering of senior secured notes is part of the financing for the company's proposed acquisition of Bluegreen Vacations Holding Corporation (BVH). Mark Melnyk, Investor Contact at HGV, stated, "The offering is expected to close on January 17, 2024, subject to customary closing conditions. Upon the closing of the acquisition, HGV intends to use the net proceeds from the offering to finance the consummation of the acquisition, repay certain outstanding indebtedness, and pay related fees, costs, premiums, and expenses in connection with these transactions."

The press release further outlines the details of the offering, including the exemption from the registration requirements of the Securities Act of 1933, as amended, and the intended use of the net proceeds. It also emphasizes that the notes and related guarantees have not been registered under the securities laws of any jurisdiction and may not be offered or sold in the United States absent registration or an applicable exemption.

Additionally, it states, "This press release does not constitute an offer to sell or the solicitation of an offer to buy the notes and related guarantees and shall not constitute an offer, solicitation or sale of any securities in any jurisdiction in which such offer, solicitation or sale would be unlawful."

The company's full 8-K submission is available here.

2018 2019 2020 2021 2022 2023
Revenue (MM) $1,999 $1,838 $894 $245 $3,835 $3,951
Revenue Growth n/a -8.05% -51.36% -72.6% 1465.31% 3.02%
Operating Margins 20% 15% -31% 110% 13% 11%
Net Margins 15% 12% -22% 72% 9% 8%
Net Income (MM) $298 $216 -$201 $176 $352 $323
Net Interest Expense (MM) $30 $43 $43 $105 $142 $170
Depreciation & Amort. (MM) $33 $44 $45 $126 $244 $219
Earnings Per Share $3.05 $2.42 -$2.36 $1.75 $2.93 $2.85
EPS Growth n/a -20.66% -197.52% 174.15% 67.43% -2.73%
Diluted Shares (MM) 98 89 85 101 120 111
Free Cash Flow (MM) -$208 $106 $71 $150 $689 $245
Capital Expenditures (MM) $44 $37 $8 $18 $58 $51
Current Ratio 1.0 1.0 1.0 1.0 1.0 1.0
Total Debt (MM) $604 $828 $1,159 $2,913 $2,651 $2,730
Net Debt / EBITDA 1.14 2.4 -3.11 6.28 3.35 3.84

Hilton Grand Vacations has growing revenues and increasing reinvestment in the business, decent operating margins with a negative growth trend, and irregular cash flows. However, the firm has a highly leveraged balance sheet. Finally, we note that Hilton Grand Vacations has flat EPS growth.

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