Good morning, and welcome to the Hilton Grand Vacations Second Quarter 2024 Earnings Conference Call. [Operator Instructions]. I would now like to turn the call over to Mark Melnyk, Senior Vice President of Investor Relations. Please go ahead, sir.

Thank you, operator, and welcome to the Hilton Grand Vacations second quarter 2024 earnings call. As a reminder, our discussions this morning will include forward-looking statements. Actual results could differ materially from those indicated by these forward-looking statements, any statements are effective only as of today. We undertake no obligation to publicly update or revise these statements. For a discussion of some of the factors that could cause actual results to differ, please see the risk factors section of our SEC filing. We'll also be referring to certain non-GAAP financial measures. You can find definitions and components of such non-GAAP numbers as well as reconciliations of non-GAAP and GAAP financial measures discussed today in our earnings press release and on our website at investors.hgv.com. Our reported results for all periods reflect accounting rules under ASC 606, which we adopted in 2018. Under ASC 606 required to defer certain revenues and expenses related to sales made in the period when a project is under construction and then hold off on recognizing those revenues and expenses until the period when construction is completed. For ease of comparability and to simplify our discussion today, our comments on adjusted EBITDA and real estate results will refer to results excluding the net impact of construction-related deferrals and recognitions for all reporting periods. To help you make more meaningful period-to-period comparisons, you can find details of our current and historical deferrals and recognitions on table T-1 of our earnings release and a complete accounting of our historical deferral and recognition activity, can also be found in Excel format on the financial reporting section of our Investor Relations website. In a moment, our Chief Executive Officer, Mark Wang, will provide highlights from the quarter in addition to an update of our current operations and company strategy. After Mark's comments, our President and Chief Financial Officer. Dan Mathewes will go through the financial details for the quarter. Mark and Dan will then make themselves available for your questions. With that, let me turn the call over to our CEO, Mark Wang. Mark?

Good morning, everyone, and welcome to our second quarter earnings call. Reported contract sales in the quarter were $757 million, and EBITDA was $270 million with margins of 22%, which were below our expectations. We had a solid start to the quarter carrying and momentum we've built as we exited Q1 and saw trends in both April and May improve from the first quarter. As we moved into June. However, we experienced a broad-based pullback in consumer spending behavior. This shift was evident across all our brands and customer segments, but it was particularly acute in our new buyer segment. We've noted on several prior calls or perception of increased consumer hesitancy which continues to influence purchase decisions and there's no question this played a role in our results. In addition, however, we also faced some execution challenges during the quarter. As part of the integration process with Bluegreen, we just completed an extensive restructuring of our sales and marketing organization to increase the flexibility with our new scale and improve our execution in two key areas, regionalization and staffing. Regarding the first area, while we'll continue using HGVs, more centralized marketing approach to large destination markets posting multiple HGV properties, we've also moved to empower those smaller regional markets with additional tools and resources to optimize their sales and marketing efforts at the local level, which we believe will generate both additional tours and improved VPGs. In addition, over the past year, we've been keenly focused on driving new buyer tour flow, which creates significant lifetime embedded value for HGV, as part of our recent organizational design efforts, we've also reevaluated optimal staffing levels to allocate additional resources to our new buyer sales lines, which should enable them to more effectively handle the current and future tour volumes. So…

Thank you, Mark, and good morning, everyone. Before we start note that our reported results for this quarter included $13 million of sales deferrals, which reduced reported GAAP revenues and were related decreased sales of our newest phases of our Maui Bay Villas and Ocean Tower projects. We also recorded $5 million of associated direct expense deferrals. Adjusting for those two items would increase EBITDA reported in our press release by $8 million to $217 million. In my prepared remarks, I only refer to metrics excluding net deferrals, which more accurately reflects cash flow dynamics of our financial performance during the period. I'd also note that our results today also include a full quarter of financial results for Bluegreen, which we closed on January 17. Turning to our results for the quarter, total revenue, excluding cost reimbursements in the quarter was $1.1 billion and adjusted EBITDA was $270 million, with margins of 24% excluding reimbursements. EBITDA included $14 million of Bluegreen cost synergies recognized during the quarter for a run rate of $71 million annualized on target with our plan for $100 million of cost synergies within 24 months. Turning to our segments, within real estate, contract sales were $757 million for the quarter with Bluegreen contributing $189 million of sales in the quarter. New buyer comprised 31% of contract sales in the quarter, improving over 300 basis points from the first quarter level. Tours for the quarter were over 226,000, which was slightly below the prior year's pro forma level and Bluegreen contributed just under 66,000 tours for the quarter. Our owner tours and low single-digit growth in the quarter and remain at levels over 15% ahead of 2019, demonstrating the continued resilience of our owner channels that want to explore our expanded resort network and benefits of HGV…

[Operator Instructions]. Our first question comes from the line of David Katz with Jefferies.

Hi, good morning, everybody. Thanks for taking my questions. Two from me, please. I mean, with respect to the guidance adjustment and isolating the discussion around execution issues. Can you just talk a bit more about your comfort that you've sort of got your arms around that? The question will all have is have you have you taken out or not. Right? And how do we get comfortable that there isn't more? And the follow-up is I'm not sure if you sort of update or touched on Maui and I would love a little more sort of update on what you're seeing and sort of feeling. Yeah, thank you.

Yeah, David, this is mark. So look, I think, obviously, we've spent a lot of time going through the from a bottom up on the components that are going to drive the rest of the year's performance. And we expect when you think about guidance, should we expect a continued macro pressure on the consumer in the back half of the year, as you know, where we're competing for their discretionary dollars. And given the outlook and the second quarter's performance. The pullback in the guidance really reflects lower contract sales versus what our expectations were, right. And so when you look at the guidance, what's really been pressuring us has been our new buyer close in for the top two thirds of. And we look at we look at the data constantly up when you look at it, top two-thirds of our new buyers that VPG has stabilized, right. And I'm talking about looking at it from a net worth cohort from. But the bottom third continues to underperform, and we've seen more variance than we've seen in quite a while between the top two-thirds in the bottom third. So we expect pressure on new buyer close rates as far as tour flow goes we're expecting flat new buyer tour flow as we continue to ramp up our direct marketing, our direct marketing, we're going to see growth in the back half of the year, but it will be offset by some softness in our local marketing. From an owner perspective, the business again is intact. It's performing well in it. When we look at owners on the books, we feel pretty good about the arrivals there. Now we're seeing a normalization in owner conversion rates versus our prior expectations, and it's still above 2019. So still outperforming what we saw in the past since our owners or are intact and doing well. But ultimately, we see pressure on contract sales on the new buyer side. Well, Dan, if you want to cover off on any additional components around the bad debt piece of it.

No, David, it's a great question. Especially the logical one being is have we de-risk the guide to the extent that we need to. And I think just from a modeling perspective, the way to think about it when we were looking at it and the pull back was majority driven by VPG. And as you know, that has a high level of flow through to the bottom line. Tours from our previous expectations did have a minimal impact. And then to the fact that we're calling about contract sales, that will obviously have an impact to revenues associated with financing. Bad debt is a piece of it as we talked about, we've seen some increase in defaults, delinquency rates, most notably on the broking side, and it's up that provision accordingly. I would say that is still consistent where we ultimately always thought we were going to end up in that mid 10s range, but obviously accelerated. We previously thought that we'd probably exit this year and go into next year. In that mid-teen range and we're there today. So a bit of a pull forward on that front. But it's and there's a little bit of savings on CMP, but just generally speaking, if you were to look at the pull down in guide, it's effectively 80% associated with contract sales, most notably on the VPG side and 20% associated with bad debt with some offset from a lower cost of product. But we clearly tried to de-risk this guide based on everything we are seeing as of today.

And then Dan, on the valley of update. So first of all, it's hard to believe it's that today is the one year anniversary, the tragic wildfire Valley. And so still a lot of recovery happening there. On deposit note, both our resorts are fully operational. Now that being said, a lot of our new buyer tour generation were locations that were for all intents and purposes are shut down and those won't be reopening anytime soon. So but the other business has come back. It's still lagging where we thought it would be pre-fire, but part of it is in our sails from a sales marketing standpoint, some of the pressures really related to rehiring staff housing values is challenge, especially for our property that's in West Valley near [indiscernible] But I would say on the other side of the island in Kihei. Valley Bay Village, where we're building new product there, that project is performing well and not only in Maui, but also selling well throughout our network.

Our next question comes from the line of Patrick Scholes with Truist.

Please proceed with your question by Good morning, everyone. On a number of questions here. I'll actually start out with potentially a positive one then move into some other questions. Mark, what are your thoughts on with the Japanese yen now strengthening? When might you expect to see that show up in increased demand to your Huawei product and or certainly the yen having gone the other way for a year or so was a big headwind, but really has. And directionally, what's your thoughts on that and the possible impact? Thank you.

Yeah. Well, first of all, it's nice to see it's nice to see the yen strengthening variety and it's pent-up. It's been quite a of a quite a challenging period from a from a currency standpoint for our Japanese members and for the Japanese tourism overall for Hawaii. Now the good news is our members. The timing was really good for us when we opened our property into Selco in Japan and owners are traveling there and using property. We have very, very high occupancies there. But I said the be there will be a lag effect as far as the euro, the yen strengthening and But hopefully, where we're really off on the Japanese business is the new buyer Japanese business from the talk tourism that's coming into Hawaii. Our owners have come back and they've actually come back faster than the general population that's coming back to why? And that's really because of the commitment level they've made and being another with us. But overall, we're hoping that this improvement and will strengthen that. It's part of the business.

Okay. We will see. My next question. You had said that you had talked about a sales reorganization. Can you give us more color on that? What exactly is that about? And where within sales north that's more of the middle senior level? Or is that specifically in some of your acquisitions, which tends to happen when you purchased companies from more color, please. Thank you.

Yes, sure. No, we there -- quite a bit of disruption in the quarter as we were in those, we're integrating blue rain and but a very positive outcome of that is we spent a significant amount of time in the quarter restructuring our sales and marketing organization and it really restructured for the next wave of growth. And importantly, with the acquisition of where they were a much larger company with a much broader sales marketing footprint, just to give you a little historical data here. If you look at us historically, we were very centralized. When '19 we were doing $1.5 billion of contract sales, 20% of that was outside of our five core markets. So it was really five distribution, smaller distribution centers out of our five core markets. Today, we're $3 billion in contract sales with 40% of our volume outside of that of what we would call big destination markets. So those destination markets have grown up by 60%, I mean the 40% represents a move from five our sales centers to have 44 sales centers on a regional basis. So our footprint in the makeup of our business has changed materially and to support that debt, larger destination market and to support those smaller regions, we went from two regions to five regions in multiple subregions. We strengthen our mid-level leadership to really increased focus and execution and to create better oversight for the sales and marketing activities out there. We also named a new Chief Sales and Marketing Officer, Dusty Tonkin, who was leading Bluegreen's operations. And dusty has a great a great background, great experience running large organizations. And so all in all, a big move, it did create quite a bit of disruption as you can imagine we rolled out a new structure in the middle of June, but I'm happy to say that the work has been done. And I think and I'm very confident as Dusty is our new leader, and I'm very confident this new structure will improve our execution going forward.

Okay, thank you. I ask one more question here before I get back in the queue on question. First one is for Dan, you're taking your percentage up on the loan loss provision and maybe this is getting into the weeds and policies making but I think it's important. Why do you have to take that percentage up going forward as opposed to doing what your competitor did this quarter and a couple of quarters ago as opposed to increasing your sales reserve or taking a charge or however you want to call it. What's the decision making thoughts around all of that? I hope that makes sense. Thank you.

Yeah. No, that all makes sense. I mean, I think as well, when we're talking about the bad debt provision, I mean, we could go into a lot of variables. I'll tried it. I tried to keep it as simple as I can. First and foremost, what I would tell you is we have not fully integrated grouping the equilibrium is operating as a separate entity, the Bluegreen credit processes not fully integrated into the legacy HGV first diamond process yet we're also still in the realm of purchase accounting, but to put things in perspective just as a level set. When you look at when we acquired Diamond, they had a reserve on their books that gave, but that was roughly 30% of their portfolio once we completed our due diligence, acquired them and then applied fair value to their portfolio. That reserve went from 30% to 37%, similar on Bluegreen their reserve was a post their last audit, which was before we acquired them, which, as you recall was early January, their reserve was roughly was just under 30% is about 28%, 29% and doing the same exercise that we did with Diamond. The reserve is now that acquired portfolios right at 36%. So very consistent with Diamond so you have that component. The other thing I would tell you is when you look at how we run our bad debt provision and I don't have insight to any of our competitors. But our bad debt is based off of a very robust static pool model that utilizes in excess of 15 years of historical loss data that takes in consideration by loan FibreCo levels and even country of origin. And those loss models are updated on a monthly basis. And any changes that occur this month are…

I appreciate, from having gotten into the weeds on such things. I appreciate it. We can at a high level, and I'm going to jump back in the queue with some more questions. Thank you.

Our next question comes from the line of Brandt Montour with Barclays.

Good morning, everybody. Thanks for taking my question. So Mark, if we could just go back to the beginning of the year when you when you were exiting '23 the tone and the message was that the new that you guys had sort of overwhelmed the sales, our resources and manpower at these smaller sales centers that were concentrated in the legacy diamond footprint. And so we could sort of bridge that adjustment you made it sort of year and going into '24 with this adjustment now it seems like, it's sort of an extension of the same problem, maybe compounded by a deterioration in the lower third in terms of purchasing propensity. Is that how you would characterize it or is it sort of a different element of the resources and understaffing of those of those of those sales centers?

Yes, Brandt, I think that characterizes that pretty well. I think in a week. As you know, as I mentioned from a previous answer, we had we went through this of this rework, right? And that performance was in fact it by this integration work and we work through the quarter. We completed the redesign, we rolled it back out in June. And this process, unfortunately distracted a lot of our leadership teams until the final structure is all about as you can appreciate a lot of people on pins and needles trying to figure out whether they're going to be on the team or what position they're going to play and where they're going to be living in here so on. So you have that. And then from a staffing standpoint, it's kind of a knock-on effect from the disruption because it did lag in some of the hiring of sales and marketing staff, which then had a knock-on effect and eliminating limiting tour slot availability. And so really this disruption is we've identified what the issues are. And quite frankly, we're just behind on staffing. We're behind on hiring behind on recruiting, but we have now got the organization and the structure to go fix those things. And then on top of that is just coming out of last year, we did see stabilization in US from a customer standpoint of four new buyers other than the bottom third, but the bottom third of the new buyers is just falling apart for us. And we've seen a lot of pressure there, and we're seeing more of the variability in that performance on the bond side than we've seen in a long time. Now good news is we saw some stabilization. And as it relates to July, performance at VPG contract trends stabilize in July, more in line with what we saw in April and May. So I think once we've got this, this reorg passed us. It helps stabilize some of what we're seeing from just the disruption standpoint. But there is pressure on the consumer pressure to make commitments at the level of discretionary spend that are required to be part of our club and talking to the sales teams are just sick, no increased customer hesitancy. I think people are taking a more wait-and-see approach, but that being said, we continue to have to work hard, and I think we've identified some of the issues and we're going to improve them. But with the current macro situation, we're we just felt it was important to bring back. I'll bring our guidance down for the rest of the year.

Okay. Thanks for that. And that's actually a good segue into my next question, which was just really a follow on to David's question earlier. When you look at the second half guidance for VPGs, but what I'm really trying to get to is close rates. Are you assuming something similar to what you saw in that July level? Or did you bake into that back half VPG. something more conservative?

With regards to the guide on the back half of the year takes into consideration the VPGs that we had been experiencing. It didn't assume some uptick and on an outperformance it didn't, but let me say it a different way. It does nullify what we saw happen in Q2. So it does take risk into consideration.

Our next question comes from the line of Ben Chaiken with Credit Suisse.

Hey, thanks for taking my questions. I'm sorry, there's a lot going on this morning. So I just want to clarify something for the guidance cut. Did you provide a mix between macro and execution issues? And then on the execution side, I guess I don't totally follow the sales and marketing adjustment commentary is the point simply that you're a bigger company today and need to align the sales force accordingly to maximize efficiency? And then just one follow-up.

Yeah, with regards to the guidance that we did not break it down between macro, and I think we've referenced it as disruption on the sales force and ultimately, there's macro pressures and it's clearly difficult to estimate specific amounts that are built in just because of macro. And ultimately, I think you probably heard us say just from a breakdown, it's driven primarily by VPGs that has a high flow through to your bottom line and to a lesser extent, bad debt with a little bit of offset on COP. So just the breakdown that we want to talk about is really the 80-20 split between contract sales, notably the VPG and the 20% being at that flow offset on COP.

Yeah, there have been on the execution side we restructured your number one to prepare ourselves for the next wave of growth, but importantly and to really improve the overall execution when you look at our business, again, I talked about our big destination markets. They're outperforming the regional markets. And again, we went from five regional markets, five regional sales center markets in 19 to 44 today, right? And I think we've learned over the last couple of years and also looking at Bluegreen's model that we needed to reinforce critical mid-level leadership areas. We needed more dedication and greater oversight on these smaller sales centers. And we also made the decision to realign all of our sales organizations under one leader. So on in the execution part of the execution problem was disruption because of all the noise around the restructuring arm. But part of it was also around just lagging in certain key areas that are important for our sales organization. Our marketing organization performed well and that's around staffing levels. We got out of we got out of sequence on our on our ratios and we lost efficiency. And so those are things that we identified and we're working on. And I think some of that the miss there and the missteps that occurred there will not occur with this new structure because now we have the proper oversight.

Okay. I guess related -- sorry, with this restructuring plan and the rollout was choppy or is this something you noticed intra-quarter and then needed to kind of scramble and reactive. And I'm sorry, --

This was a let's put a number of people in a room for 90 days and figure this thing out. And so it was planned and we spent a lot of time there was a lot of thoughtful work that went into this. So there were a lot of leaders that were not focused necessarily on the execution, why we're going through this because it took a lot of discussion and a lot of work to do to get to the optimal design. So I would say, again, the again, April, May were decent June just kind of fell apart. And but the rework was announced I think on June 11 and again, that shift that we saw a bounce back in July. So actually July from a sequential standpoint was as good a month as we've had so we feel good about that now that being said, we're still being pressured on the new buyer side with particularly the lower well cohorts out there.

And look, just to add something to that or just some additional color. I think it's also worth contrasting methodologies compared to Diamond. When we acquired Diamond and we closed on Diamond, we did a restructuring literally on day one, we had the sales leaders picked out. We had the headcount picked out. Everyone knew where they stood on day one with the acquisition of Bluegreen to Mark's earlier point, there was a team that builds over a sense of I sat in a room for 90 days to identify the right talent and the right leaders for the right region now what that does is it's a bit of a distraction, as Mark alluded to, but ultimately you should end up in a better run business because you've identified clearly the right time to run at the consolidated entity. So I don't know if I would call it choppy. I would say, hey, this was a more thoughtful process. But when you run thoughtful processes. Sometimes you have a bit of disruption as you complete those.

And then really quick follow-up. So it sounds like you've got some new leadership and some new middle managers. If I interpret you correctly, what does the ramp up of those positions will look like? Is this something that's going to percolate through the rest of the year or into '25 or any color?

So everybody has been named it. We do have some people are still, dealing with U-Haul, getting stuff moved, but there's a relocation that's involved here, but most of the people that have been identified and put in their new positions are in place. There's still a little disruption with their family moves and stuff like that. But for the most part, that's all behind us.

Our next question comes from the line of Chris Woronka with Deutsche Bank.

Hey, guys, good morning. Thanks for taking the questions. I was hoping maybe we could spend a minute talking about kind of buyer behavior on the financing side and obviously generally more a question about first-time buyers. And so are you seeing any change there? I mean, are you are you trying to alter your strategy or are you offering lower positive initial deposits or anything like that trying to figure out now? Is this just trying to get them over the finish line or are they? No, I'm not getting not getting anywhere close to the finish line and financing incentive dollar no matter at that point.

No, great question Chris from time to time. And it's not I would say it's fairly routine where we'll run various promote promotions to see if it moves the needles, sometimes it helps. Sometimes it depends on which sales distribution center you're looking at it one promotion works or one doesn't. I'd say when it comes to the new buyer, that the financing element as work in some cases and hasn't and in others, it's not a definitive answer that when it comes to deposits really do not drive a lower deposit required because we definitely want our owners to have a level of equity that's meaningful as they take over as a step into ownership. It also has implications for rev rec because our internal policies we deferred rev rec until 10% is down. So we always look for that bare minimum and when it comes to upgrade, there's different metrics will run as well just from a potential where existing owners might not have to put additional equity down depending on how much equity they built, et cetera. So I don't think that is the definitive solution to uptick new buyer close rate. But from time to time, we run them and they can be helped.

Okay. That's helpful. Thanks. Thanks, Dan. And then just as a I guess, as a follow-up, do you think is you evaluate all these changes you've made in the sales centers kind of post Bluegreen. And yes, obviously, there's a little bit more you want to do, but does it make you think you need a new product for this current environment? We are whether it's kind of a something that fits into a smaller budget or implicitly kind of a shorter vacation, which we hear from other travel companies is something like that on the table if we're going to be in this environment for a while?

Well, actually, Ben, I think the acquisitions that we made actually really puts us in a great position. We've widened our product offering at or. Chris, I apologize, Chris. We've diversified our product, right? And we've widened our scale and on. And so I think we're in a really good place from a inventory standpoint in our brand offering. So and we got a broader customer base. And importantly, we've diversified our lead flow and with some of these world-class partners out there. I do want to make a comment on that on the new buyer side that you know to new buyers at the top, a third of our cohort is still performing well and the middle is performing. Okay. And if you look back, we've been taking good pricing on this where our average transaction price for a new buyer today is 19% higher than it was in 2019. So it's not like the new buyers falling apart. And as the top cohort is still intact, it's really the biggest challenge is been that bottom third. And when you when the bottom third falls apart, it makes it challenging. And so we are looking at ways to adjust our product to meet that bottom. Third, that right now, we believe once we get the blue green system in our overall system when we roll out Max, that will make a big difference because there is some hesitancy on the blue-green business right now as they're waiting for communication from us on what this means, what this whole acquisition of Bluegreen means. At this point, of course, we're communicating to them but there's a process that we have to go through and that introduction will probably not be made until we get toward the end of the year as we've got a number of legal steps that we have to walk through. And we have a number of other considerations that you have to walk through to make this a successful rollout.

Our next question is a follow-up question from Patrick Scholes with Truist.

Okay, thank you. I do have a number of follow-up questions here to talk, Mark and Dan, a little bit more about some of the demand in local markets or if you're seeing is some of this related to local market softness? And if so, how does the reorganization address that? Thank you.

Yeah. No, that's a really good question, Patrick. So it's we've talked a lot about our owner business our on our pipeline and what we see on the books. We talk about our direct marketing pipeline and our direct marketing pipeline is related to new buyers for 40% of our tour flow for new buyers is actually comes through local marketing. And we have a we have seen a pullback there and I think it's less about the current macro and more about them, some of the execution challenges we've had. And this is an area that we can do better and we're very focused on right now. And just to give you a definition of what local marketing is. It's our guests that are rental guests staying on the property. It's guests that are frequenting, the markets that we're in. And this is an area that we saw softness in the first half. We've identified it. And as I talked about, we've been lagging on some of our hiring, but that all of those hiring agendas are in place. And so we believe we'll get that turned around as we move into the back half of the year. But it will take a little bit of time.

Okay, thank you. Just three more questions here. First one from a high level, have you any initial indication what maintenance fee growth might be for next year? And the reason I bring this up, your competitor had a very large maintenance fee increase up for this year and in our normal 15%-ish and some resorts over 20%. And I've sort of come to of the belief that when you put a very large surprise, the maintenance increase isn't going to cause a certain comfort customers to quit your product and now result in loan losses and shocks and surprises. Any initial indication what yours might be? Would you expect it sort of just been normal mid-single digits next year?

And so we're expecting we're expecting normal mid-single digits. And you know that I'm not sure what the competitors are doing, but weak consistently utilized even during the pandemic, we in the during COVID, we continued to move our maintenance fees up kind of that mid-single digit. So there's no catch-up requirement now. So we're not going to be surprising. Anybody with the with anything and more than a mid-single digit increase this coming year.

Okay, good. Then two more questions here. You talked about the bottom third really not doing well. Does this unfortunately imply that you're underwriting for Bluegreen is tracking behind initially at this point. And related to that, where do you stand with your synergies versus your targets for that acquisition? Thank you.

So I'll take the front end and then I'll let Dan talk to you about the synergies. So look, we're looking at our KPI's and VPGs across all the brands and HGV and Diamond legacy and everything is moved down on a similar basis. So there's really no discernible difference or declines across any of the businesses. I would say that there is some pressure on the Bluegreen customer. I think I just mentioned that a few minutes ago around just kind of waiting and seeing what HGV is going to roll out, that's going to benefit the Bluegreen members and that the that we'll be announcing later this year. As far as synergies, Dan maybe you could take us through where we're at on that.

Yeah, no, absolutely. When it comes to the cost synergies, we are right on track from our original expectations. We are at a run rate of 71-ish -- $70 million-plus on run rate from a cost synergies as of today. That includes the primary item that you take when you think of cost synergies, a headcount reduction, et cetera. So for the balance of the year, I don't expect that run rate to materially change will be driving towards that $100 million more in 2025 when you consolidate such items and health benefits to you start realizing the savings from consolidations of office space, things like that, but that's more of a '25 issue from a revenue synergies perspective, keep in mind, we have yet to even start rebranding any sales centers or resorts at this point, which is in line with our original expectations. So although it's not a bit, it's zero, it's in line with expectations. And so I think we're on track and actually in a good place from a synergy perspective on as of June 30.

And then as of today, whether Patrick, I'd just add on that first. We feel really good about both deals that we did and the long-term benefit that it's going to provide the company with. We've talked about our ability to leverage our brand across all of these nonbranded resorts. And when you think about I talked about the just the scale of our distribution network, how much larger it's become and importantly, how much we've diversified our lead source, especially with the Bluegreen acquisition and Bass Pro and the partners there. We feel great about these acquisitions. We've tripled our resort size. We've got all this built-in demand. We've got 700,000 members over 700,000 direct marketing packages. We've increased our recurring EBITDA from 42% to 57% today. And as you know, our free cash flow conversions moved from 15% above 50% today. So ultimately, we feel really good that that this really supports a great return of capital to billion of this additional cash flow is going to we returned a lot more capital to our shareholders throughout the cycle.

Okay. Thank you. And then one last question here and I'll preface this with. It's a question I don't think I've ever quite asked before on an earnings call, but I have received a number of in [indiscernible] regarding this topic this morning, and this really is around I'm questioning the qualifications and experience of the new Board member announcements this morning. How would you respond to those concerns? Or alternatively, was that person join your Board really and not in your control? Thank you.

If I well you know, at the end of the day, Apollo has the rights to have two board seats and we believe and we did a background check and we believe that the new Board member. There was a we just announced this morning is more than qualified. She's been a He's a strong leader within Apollo. But importantly, she was very active in the diamond deal understands our business. She had our first Board meeting with her yesterday she was in our first bar and her first Board meeting with us yesterday, and she was very thoughtful in our approach and quite frankly, very up to speed on the business. So we think I think we take the follow-up made a really good choice.

I can only I can only echo those sentiments. I mean, I think just to add a little bit more on, she has been involved. We have known her since 2011 back going back to 2019. So she has been involved in the industry for a number of years. She's very much engaged on. So we're excited that she's on the board.

Okay. Thank you. That's good to hear. I think that'll alleviate some of the folks who had reached out to me if this morning with those concerns. Thank you.

Thank you. Before we end. I will turn the call back over to Mark Wang for any closing remarks. Mr. Wang.

All right. Well, thank you. Before we wrap up, I'd be remiss not to acknowledge it today is the one year anniversary of the tragic wildfires and Valley. As we mark this a sombre occasion, I'd like to thank all of our team members for their hard work and service to the community to our guest and to one another. They show tremendous courage and resolve as we work through the initial tragedy. But we know that it will take time for West Valley to fully recover, and we will be there to support our teams and local communities for the long term. Again, thank you for joining us today. And we look forward to speaking to you soon. Thank you.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation. And have a wonderful day.