HGV Lowers 2026 EBITDA Outlook After Q3 Recognition

Hilton Grand Vacations Inc. reduced its 2026 outlook for adjusted EBITDA attributable to stockholders excluding net construction deferrals, even as the recognition of revenue and expenses from its Ka Haku property significantly increased reported third-quarter results.

The vacation-ownership company now expects the non-GAAP earnings measure to be between $1.165 billion and $1.180 billion, with a midpoint of about $1.173 billion. Its previous guidance called for $1.225 billion to $1.265 billion, with a midpoint near $1.245 billion.

For the three months ended September 30, Hilton Grand Vacations reported net income attributable to stockholders of $291 million. Adjusted EBITDA attributable to stockholders was $609 million, compared with $313 million after excluding net construction-recognition activity.

The difference largely reflected recognition associated with the receipt of a certificate of occupancy for Ka Haku. Reported third-quarter revenue was $1.961 billion, including $536 million of net construction-recognition activity. Excluding that effect, revenue was $1.425 billion.

Net sales of vacation-ownership interests were $1.124 billion on a reported basis and $588 million after adjusting for the construction recognition. The related accounting also affected cost of VOI sales and net sales and marketing expense, contributing to the gap between reported and adjusted operating measures.

Cash flow and capital allocation

Adjusted free cash flow totaled $63 million in the quarter, representing conversion of 20% from the $313 million of adjusted EBITDA attributable to stockholders excluding net deferrals. The reconciliation began with $87 million of net cash provided by operating activities. After $14 million of property and equipment spending and $21 million of software capitalization costs, free cash flow was $52 million. Adjustments for non-recourse debt activity, acquisition and integration expenses, and other items brought adjusted free cash flow to $63 million.

For the first nine months of 2026, net income attributable to stockholders was $369 million, while adjusted EBITDA attributable to stockholders reached $1.123 billion. Excluding $250 million of net construction-recognition activity, adjusted EBITDA attributable to stockholders was $873 million.

Nine-month reported revenue was $4.604 billion. On a net-recognition-adjusted basis, revenue was $4.147 billion, while net VOI sales were $1.629 billion versus $2.086 billion as reported.

Adjusted free cash flow for the nine-month period was $206 million, equal to 24% of adjusted EBITDA attributable to stockholders excluding net deferrals. Net cash provided by operating activities was $349 million, and free cash flow before specified adjustments was $273 million.

The company indicated that improved conversion of adjusted EBITDA to adjusted free cash flow has supported increased capital returns. Its presentation showed approximately $600 million of share repurchases for 2026 and identified a long-term free-cash-flow conversion target of 55% to 65%, alongside a target of returning roughly 75% to 90% of free cash flow through share repurchases.

The company cautioned that adjusted EBITDA and adjusted free cash flow are non-GAAP measures. They exclude or adjust for items including acquisition and integration costs, share-based compensation, impairments, purchase-accounting effects and non-recourse debt activity. These measures also do not fully reflect working-capital requirements, taxes, corporate interest obligations or future capital spending, and may not be directly comparable with similarly named measures used by other companies.