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Hilton Worldwide Holdings Inc. (“Hilton” or the “Company”) (NYSE: HLT) today reported its second quarter 2019 results. Highlights include:

  • Diluted EPS was $0.89 for the second quarter, a 25 percent increase from the same period in 2018, and diluted EPS, adjusted for special items, was $1.06, a 23 percent increase from the same period in 2018
  • Net income for the second quarter was $261 million, a 20 percent increase from the same period in 2018, exceeding the high end of guidance
  • Adjusted EBITDA for the second quarter was $618 million, an 11 percent increase from the same period in 2018, exceeding the high end of guidance
  • System-wide comparable RevPAR increased 1.4 percent on a currency neutral basis for the second quarter from the same period in 2018
  • Approved 28,100 new rooms for development during the second quarter, growing Hilton’s development pipeline to approximately 373,000 rooms as of June 30, 2019
  • Opened 17,100 rooms in the second quarter, contributing to 15,700 net additional rooms, on track to deliver approximately 6.5 percent net unit growth for the full year
  • Repurchased 4.2 million shares of Hilton common stock during the second quarter, bringing total capital return, including dividends, to approximately $426 million for the quarter and $766 million year to date through June
  • Issued $1.0 billion aggregate principal amount of 4.875% Senior Notes due 2030 and repaid $500 million on the Term Loans, bringing the outstanding balance down to $2.6 billion
  • Refinanced and extended the senior secured credit facilities, upsizing the Revolving Credit Facility to $1.75 billion and lengthening Hilton’s weighted average maturity to over seven years
  • Full year system-wide comparable RevPAR is expected to increase between 1.0 percent and 2.0 percent on a currency neutral basis; full year net income is projected to be between $887 million and $909 million; full year Adjusted EBITDA is projected to be between $2,280 million and $2,310 million
  • Full year 2019 capital return is projected to be between $1.5 billion and $1.8 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, “We are pleased with our strong second quarter results, which exceeded the high end of guidance for Adjusted EBITDA and diluted EPS, adjusted for special items, driven by our resilient business model and strong net unit growth. We continued to experience meaningful market share gains during the quarter with increases across all brands and regions, further growing our industry-leading RevPAR index premium. As we look to the remainder of the year, we think we are well-positioned to continue driving growth ahead of the industry.”

For the three and six months ended June 30, 2019, system-wide comparable RevPAR grew 1.4 percent and 1.6 percent, respectively, driven by increases in both ADR and occupancy. Management and franchise fee revenues increased 8 percent and 10 percent during the three and six months ended June 30, 2019, respectively, as a result of RevPAR growth at comparable managed and franchised hotels of 1.3 percent and 1.6 percent, respectively, increased licensing and other fees and the addition of new properties to Hilton’s portfolio.

For the three months ended June 30, 2019, diluted EPS was $0.89 and diluted EPS, adjusted for special items, was $1.06 compared to $0.71 and $0.86, respectively, for the three months ended June 30, 2018. Net income and Adjusted EBITDA were $261 million and $618 million, respectively, for the three months ended June 30, 2019, compared to $217 million and $555 million, respectively, for the three months ended June 30, 2018.

For the six months ended June 30, 2019, diluted EPS was $1.42 and diluted EPS, adjusted for special items, was $1.85 compared to $1.21 and $1.55, respectively, for the six months ended June 30, 2018. Net income and Adjusted EBITDA were $420 million and $1,117 million, respectively, for the six months ended June 30, 2019, compared to $380 million and $1,000 million, respectively, for the six months ended June 30, 2018.

Development

In the second quarter of 2019, Hilton opened 123 new hotels totaling 17,100 rooms and achieved net unit growth of 15,700 rooms, contributing to a 7 percent net unit growth from June 30, 2018.

As of June 30, 2019, Hilton’s development pipeline totaled nearly 2,490 hotels consisting of approximately 373,000 rooms throughout 109 countries and territories, including 37 countries and territories where Hilton does not currently have any open hotels. Additionally, 201,000 rooms in the development pipeline were located outside the U.S., and 192,000 rooms, or more than half, were under construction.

Hilton continues to expand its luxury brand presence, with the recent openings of the Waldorf Astoria Dubai International Finance Centre and the Waldorf Astoria Maldives Ithaafushi, and remains on track to grow its luxury portfolio by 17 percent in 2019.

Balance Sheet and Liquidity

In June 2019, Hilton issued $1.0 billion aggregate principal amount of 4.875% Senior Notes due 2030 and used a portion of the net proceeds from the issuance to repay $500 million outstanding under its senior secured term loan facility (“Term Loans”), resulting in a remaining balance of $2.6 billion. Additionally, Hilton amended its senior secured revolving credit facility (“Revolving Credit Facility”) to increase the borrowing capacity to $1.75 billion and extend the maturity date to 2024, and extended the maturity of the remaining outstanding Term Loans to 2026.

As of June 30, 2019, Hilton had $7.9 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4.52 percent. Excluding finance lease liabilities and other debt of Hilton’s consolidated variable interest entities, Hilton had $7.6 billion of long-term debt outstanding with a weighted average interest rate of 4.48 percent.

Total cash and cash equivalents were $718 million as of June 30, 2019, including $83 million of restricted cash and cash equivalents. No amounts were outstanding under the $1.75 billion Revolving Credit Facility as of June 30, 2019.

During the second quarter of 2019, Hilton repurchased 4.2 million shares of its common stock at a cost of approximately $383 million and an average price per share of $91.65. During the six months ended June 30, 2019, Hilton repurchased 8.1 million shares of its common stock at a cost of approximately $679 million and an average price per share of $84.44. From the inception of Hilton’s stock repurchase program in March 2017, Hilton has repurchased approximately 46.1 million shares of its common stock for approximately $3.4 billion at an average price per share of $73.47. The amount remaining under Hilton’s stock repurchase program is approximately $1.3 billion.

In June 2019, Hilton paid a quarterly cash dividend of $0.15 per share on shares of its common stock, for a total of $43 million, bringing year to date dividends to $87 million. In July 2019, Hilton’s board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on or before September 27, 2019 to holders of record of its common stock as of the close of business on August 9, 2019.