Global Travel Media » Blog Archive » Hilton Reports Third Quarter Results, Raises Full Year Outlook

Home » Financial » Currently Reading:

Hilton Reports Third Quarter Results, Raises Full Year Outlook

October 30, 2017 Financial No Comments Email Email

Hilton Worldwide Holdings Inc. (“Hilton” or the “Company”) (NYSE: HLT) today reported its third quarter 2017 results. All results herein present the performance of Hilton giving effect to the spin-offs of Park Hotels & Resorts Inc. (“Park”) and Hilton Grand Vacations Inc. (“HGV”) on January 3, 2017 (the “spin-offs”), with the historical financial results of Park and HGV reflected as discontinued operations. Additionally, all share and share-related information presented herein for periods prior to January 3, 2017 have been retrospectively adjusted to reflect the 1-for-3 reverse stock split of Hilton’s outstanding common stock that occurred on January 3, 2017 (the “Reverse Stock Split”). Highlights include:

  • Diluted EPS for the third quarter was $0.55 and diluted EPS, adjusted for special items, was $0.56, an increase of 37 percent from the third quarter of 2016 on a pro forma basis
  • Net income for the third quarter was $181 million
  • Adjusted EBITDA for the third quarter was $524 million, an increase of 11 percent from pro forma Adjusted EBITDA for the third quarter of 2016
  • Adjusted EBITDA margin was 56.9 percent, an increase of 170 basis points from pro forma Adjusted EBITDA margin for the third quarter of 2016
  • System-wide comparable RevPAR increased 1.3 percent on a currency neutral basis for the third quarter compared to the prior year
  • Added 12,000 net rooms in the third quarter
  • Approved 23,400 new rooms for development during the third quarter, growing Hilton’s development pipeline to a record 335,000 rooms, representing 13 percent growth from September 30, 2016
  • Repurchased 4.3 million shares of Hilton common stock for an aggregate cost of $273 million during the third quarter, bringing total capital return year to date, including dividends, to approximately $840 million
  • Raised Adjusted EBITDA guidance for full year 2017 to between $1,920 million and $1,940 million, an increase of $30 million at the midpoint
  • Full year 2018 system-wide RevPAR is expected to increase between 1.0 percent and 3.0 percent on a comparable and currency neutral basis compared to 2017; net unit growth is expected to be approximately 6.5 percent

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, “We had another strong quarter, exceeding the high end of our guidance for Adjusted EBITDA and diluted EPS, adjusted for special items, and, as a result, we are increasing our full year outlook. We approved nearly 24,000 rooms in the quarter, with approvals for the full year expected to exceed last year’s record level. Our development pipeline now spans 13 more countries than our pipeline did a year ago, with 104 countries and territories represented. Looking forward to 2018, we expect stable to moderately improving fundamentals to drive RevPAR growth of 1.0 percent to 3.0 percent and net unit growth of approximately 6.5 percent for the year.”

For the three and nine months ended September 30, 2017, system-wide comparable RevPAR grew 1.3 percent and 2.1 percent, respectively, driven by increases in both ADR and occupancy. In particular, strength at Hilton’s international hotels benefited results. Management fee and franchise fee revenues increased in both periods as a result of increases in RevPAR of 1.1 percent and 2.0 percent, respectively, at comparable managed and franchised hotels, as well as from the addition of new managed and franchised properties to Hilton’s portfolio.

2017 vs. 2016 Pro Forma Results

For the three months ended September 30, 2017, diluted earnings per share (“EPS”) from continuing operations was $0.55 compared to $0.37 on a pro forma basis for the three months ended September 30, 2016. Diluted EPS, adjusted for special items, was $0.56 for the three months ended September 30, 2017 compared to $0.41 on a pro forma basis for the three months ended September 30, 2016. Income from continuing operations, net of taxes was $181 million for the three months ended September 30, 2017 compared to $122 million on a pro forma basis for the three months ended September 30, 2016. Adjusted EBITDA increased 11 percent to $524 million for the three months ended September 30, 2017 compared to $470 million on a pro forma basis for the three months ended September 30, 2016. Management and franchise fees increased 11 percent compared to the pro forma three months ended September 30, 2016.

For the nine months ended September 30, 2017, diluted EPS from continuing operations was $1.28 compared to $1.45 on a pro forma basis for the nine months ended September 30, 2016. Diluted EPS, adjusted for special items, was $1.46 for the nine months ended September 30, 2017 compared to $1.05 on a pro forma basis for the nine months ended September 30, 2016. Income from continuing operations, net of taxes was $423 million for the nine months ended September 30, 2017 compared to $482 million on a pro forma basis for the nine months ended September 30, 2016. Adjusted EBITDA increased 12 percent to $1,467 million for the nine months ended September 30, 2017 compared to $1,309 million on a pro forma basis for the nine months ended September 30, 2016. Management and franchise fees increased 10 percent compared to the pro forma nine months ended September 30, 2016.

2017 vs. 2016 Actual Results

For the three months ended September 30, 2017, diluted EPS from continuing operations was $0.55 compared to $0.27 for the three months ended September 30, 2016. Diluted EPS, adjusted for special items, was $0.56 for the three months ended September 30, 2017 compared to $0.30 for the three months ended September 30, 2016. Income from continuing operations, net of taxes was $181 million for the three months ended September 30, 2017 compared to $89 million for the three months ended September 30, 2016. Adjusted EBITDA was $524 million for the three months ended September 30, 2017 compared to $415 million for the three months ended September 30, 2016.

For the nine months ended September 30, 2017, diluted EPS from continuing operations was $1.28 compared to $1.14 for the nine months ended September 30, 2016. Diluted EPS, adjusted for special items, was $1.46 for the nine months ended September 30, 2017 compared to $0.74 for the nine months ended September 30, 2016. Income from continuing operations, net of taxes was $423 million for the nine months ended September 30, 2017 compared to $380 million for the nine months ended September 30, 2016. Adjusted EBITDA was $1,467 million for the nine months ended September 30, 2017 compared to $1,142 million for the nine months ended September 30, 2016.

Development

In the third quarter of 2017, Hilton opened 99 hotels consisting of 14,500 rooms, achieving net unit growth of 12,000 rooms.

As of September 30, 2017, Hilton’s development pipeline totaled over 335,000 rooms at 2,191 hotels throughout 104 countries and territories, including 37 countries and territories where Hilton does not currently have any open hotels. Nearly 172,000 rooms in the pipeline, or more than half, were located outside the U.S. Additionally, over 171,000 rooms in the pipeline, or more than half, were under construction.

Hilton continues to grow its newest brands with 18 percent of room openings for the year through September 2017 under the Curio, Tapestry, Home2 Suites and Tru brands.

Balance Sheet and Liquidity

As of September 30, 2017, Hilton had $6.7 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4.1 percent.

Total cash and cash equivalents were $796 million as of September 30, 2017, including $126 million of restricted cash and cash equivalents. No borrowings were outstanding under the $1.0 billion revolving credit facility as of September 30, 2017.

During the third quarter of 2017, Hilton repurchased 4.3 million shares of common stock at a cost of approximately $273 million and an average price per share of $63.23. From March 2017, when Hilton’s share repurchase program began, through October 2017, Hilton has repurchased 11.0 million shares for approximately $693 million at an average price per share of $63.17.

In September 2017, Hilton paid a quarterly cash dividend of $0.15 per share on shares of its common stock, for a total of $48 million. In October 2017, 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 December 29, 2017 to holders of record of its common stock as of the close of business on November 17, 2017.

Outlook

Share-based metrics in Hilton’s outlook do not include the effect of potential share repurchases.

Full Year 2017

  • System-wide RevPAR is expected to increase between 1.0 percent and 3.0 percent on a comparable and currency neutral basis compared to 2016.
  • Diluted EPS, before special items, is projected to be between $1.68 and $1.72.
  • Diluted EPS, adjusted for special items, is projected to be between $1.87 and $1.91.
  • Net income is projected to be between $556 million and $568 million.
  • Adjusted EBITDA is projected to be between $1,920 million and $1,940 million.
  • Management and franchise fee revenue is projected to increase between 8 percent and 10 percent compared to 2016 on a pro forma basis.
  • Capital expenditures, excluding amounts reimbursed by hotel owners, are expected to be between $150 million and $200 million.
  • Cash available for capital return is projected to be between $1.0 billion and $1.1 billion.
  • General and administrative expenses are projected to be between $430 million and $440 million, including approximately $30 million of transaction-related costs.
  • Net unit growth is expected to be approximately 50,000 rooms to 55,000 rooms.

Fourth Quarter 2017

  • System-wide RevPAR is expected to increase between 1.0 percent and 3.0 percent on a comparable and currency neutral basis compared to the fourth quarter of 2016.
  • Diluted EPS, before special items, is projected to be between $0.41 and $0.45.
  • Diluted EPS, adjusted for special items, is projected to be between $0.41 and $0.45.
  • Net income is projected to be between $133 million and $145 million.
  • Adjusted EBITDA is projected to be between $453 million and $473 million.
  • Management and franchise fee revenue is projected to increase between 8 percent and 10 percent compared to the fourth quarter of 2016 on a pro forma basis.

Full Year 2018

For 2018, system-wide RevPAR is expected to increase between 1.0 percent and 3.0 percent on a comparable and currency neutral basis compared to 2017. Given Hilton’s strong development pipeline, unit growth should continue to accelerate in 2018 as its global system of rooms is expected to expand by approximately 6.5 percent on a net basis.

Conference Call

Hilton will host a conference call to discuss third quarter 2017 results on October 26, 2017 at 10:00 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website at http://ir.hilton.com/events-and-presentations. A replay and transcript of the webcast will be available within 24 hours after the live event at http://ir.hilton.com/financial-reporting/quarterly-results/2017.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States or 1-412-317-6061 internationally. Please use the conference ID 4957281. Participants are encouraged to dial into the call or link to the webcast at least fifteen minutes prior to the scheduled start time. A telephone replay will be available for seven days following the call. To access the telephone replay, dial 1-877-344-7529 in the United States or 1-412-317-0088 internationally using the conference ID 10112571.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the expectations regarding the performance of Hilton’s business, financial results, liquidity and capital resources and other non-historical statements, including the statements in the “Outlook” section of this press release. In some cases, you can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “could,” “seeks,” “projects,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond Hilton’s control, competition for hotel guests, management and franchise agreements, risks related to doing business with third-party hotel owners, performance of Hilton’s information technology systems, growth of reservation channels outside of Hilton’s system, risks of doing business outside of the United States of America (“U.S.”), and Hilton’s indebtedness. Additional factors that could cause Hilton’s results to differ materially from those described in the forward-looking statements can be found under the section entitled “Part I—Item 1A. Risk Factors” of the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”), as such factors may be updated from time to time in Hilton’s periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton’s filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”) in this press release, including: net income, adjusted for special items; diluted EPS, adjusted for special items; Adjusted EBITDA; Adjusted EBITDA margin; net debt; net debt to Adjusted EBITDA ratio; and trailing twelve month financial information. See the schedules to this press release including the “Definitions” section for additional information and reconciliations of such non-GAAP financial measures.

Pro Forma Financial Information

This press release includes pro forma financial information for Hilton adjusted to reflect the spin-offs, including: unaudited pro forma condensed consolidated statements of operations; pro forma net income and diluted EPS, adjusted for special items; pro forma Adjusted EBITDA; pro forma Adjusted EBITDA margin; and pro forma net debt to Adjusted EBITDA ratio. The unaudited pro forma financial information has been prepared to reflect the spin-offs as if they had occurred on January 1, 2016. See “Definitions—Pro Forma Adjustments” for additional details. The unaudited pro forma financial information is provided for informational purposes only and is not necessarily indicative of what Hilton’s results of operations would actually have been had the spin-offs occurred on the date indicated or what Hilton’s results of operations will be after giving effect to the completion of the spin-offs.

In addition to the pro forma financial information herein, refer to Hilton’s Current Report on Form 8-K filed with the SEC on January 4, 2017 for additional information.

Comment on this Article:







Time limit is exhausted. Please reload CAPTCHA.

Platinium Partnership

ADVERTISEMENTS

Elite Partnership Sponsors

ADVERTISEMENTS

Premier Partnership Sponsors

ADVERTISEMENTS

Official Media Event Partner

ADVERTISEMENTS

Global Travel media endorses the following travel publication

ADVERTISEMENTS

GLOBAL TRAVEL MEDIA VIDEOS

ADVERTISEMENTS