Hilton Reports First Quarter Results, Raises Full Year Outlook

MCLEAN, Va. - May 02, 2017 - (BUSINESS WIRE) - Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its first quarter 2017 results. The Company completed the spin-offs of Park Hotels & Resorts Inc. ("Park") and Hilton Grand Vacations Inc. ("HGV") on January 3, 2017 (the "spin-offs"). All results herein present the performance of Hilton giving effect to 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 have been retroactively 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 from continuing operations for the first quarter was $0.22 and diluted EPS, adjusted for special items, was $0.38
  • Net income for the first quarter was $75 million
  • Adjusted EBITDA for the first quarter was $424 million, an increase of 16 percent from pro forma Adjusted EBITDA for the first quarter of 2016
  • Adjusted EBITDA margin was 55.4 percent, an increase of 550 basis points from pro forma Adjusted EBITDA margin for the first quarter of 2016
  • System-wide comparable RevPAR increased 3.0 percent on a currency neutral basis for the first quarter compared to the prior year, achieving high end of guidance
  • Added 7,800 net rooms in the first quarter, representing 20 percent growth from the same period in 2016
  • Approved 27,000 new rooms for development during the first quarter, growing Hilton's development pipeline to a record 325,000 rooms, representing 16 percent growth from March 31, 2016
  • Initiated a stock repurchase program in March and repurchased 1.2 million shares of Hilton common stock for an aggregate cost of $70 million during the first quarter, and 2.1 million shares at an aggregate cost of $123 million through April 2017
  • Executed financing transactions during the first quarter that collectively lowered weighted average cost of debt by 25 basis points, reduced interest rate risk and extended weighted average debt maturities by nearly 1.5 years
  • Raised Adjusted EBITDA guidance for full year 2017 to between $1,860 million and $1,900 million, an increase of $20 million at the midpoint

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We are extremely pleased with our first quarter as a simplified, fee-driven business following completion of the spin-offs of Park and HGV. We exceeded the high end of our Adjusted EBITDA and diluted EPS, adjusted for special items, guidance in the quarter and, as a result, we are raising these guidance ranges for the full year. Strong development momentum continued into 2017, and we expect another record year for construction starts, openings and net unit growth. We opened nearly 10,000 rooms in the quarter and approved nearly 27,000 rooms for development, a third of which are for our newest brands."

As a result of the January 2017 spin-offs of Park and HGV, Hilton stockholders of record as of the close of business on December 15, 2016 received one share of Park common stock for every five shares of Hilton common stock and one share of HGV common stock for every ten shares of Hilton common stock.

In March 2017, HNA Tourism Group Co., Ltd. and certain of its affiliates acquired 82.5 million shares of Hilton common stock, or a 25 percent equity interest, from affiliates of The Blackstone Group L.P., establishing a long-term strategic investment in Hilton.

For the first quarter of 2017, system-wide comparable RevPAR grew 3.0 percent primarily from increased occupancy. Management fee and franchise fee revenues increased as a result of increases in RevPAR of 2.7 percent and 2.9 percent, respectively, at comparable managed and franchised hotels, as well as from the addition of new managed and franchised properties to Hilton's portfolio.

Q1 2017 vs. Q1 2016 Pro Forma Results

For the three months ended March 31, 2017, diluted earnings per share ("EPS") from continuing operations was $0.22 compared to $0.68 on a pro forma basis for the three months ended March 31, 2016, and diluted EPS, adjusted for special items, was $0.38 for the three months ended March 31, 2017 compared to $0.24 on a pro forma basis for the three months ended March 31, 2016. Income from continuing operations, net of taxes was $75 million for the three months ended March 31, 2017 compared to $223 million on a pro forma basis for the three months ended March 31, 2016. Adjusted EBITDA increased 16 percent to $424 million for the three months ended March 31, 2017 compared to $367 million on a pro forma basis for the three months ended March 31, 2016. Management and franchise fees increased five percent and eight percent, respectively, compared to the pro forma three months ended March 31, 2016.

Q1 2017 vs. Q1 2016 Actual Results

For the three months ended March 31, 2017, diluted EPS from continuing operations was $0.22 compared to $0.58 for the three months ended March 31, 2016, and diluted EPS, adjusted for special items, was $0.38 for the three months ended March 31, 2017 compared to $0.15 for the three months ended March 31, 2016. Income from continuing operations, net of taxes was $75 million for the three months ended March 31, 2017 compared to $191 million for the three months ended March 31, 2016. Adjusted EBITDA was $424 million for the three months ended March 31, 2017 compared to $315 million for the three months ended March 31, 2016.

Development

Hilton opened 70 hotels consisting of 9,900 rooms in the first quarter of 2017. Hilton achieved net unit growth of 7,800 rooms during the first quarter of 2017, which is 20 percent higher than in the first quarter of 2016.

As of March 31, 2017, Hilton's development pipeline totaled approximately 325,000 rooms at 2,084 hotels throughout 99 countries and territories, including 34 countries and territories where Hilton does not currently have any open hotels. Approximately 166,000 rooms, or more than half of the pipeline, were located outside of the United States. Additionally, approximately 168,000 rooms in Hilton's pipeline were under construction, with construction starts in the first quarter of 2017 up nearly 50 percent from the same period in 2016.

In January 2017, Hilton launched its 14th brand, Tapestry Collection by Hilton, with the first property expected to open in the second quarter of 2017. Tru by Hilton, launched in 2016, had nearly 425 hotels in the pipeline or in various stages of approval as of April 17, 2017, and the first Tru opened in Oklahoma City in April.

Balance Sheet and Liquidity

During the first quarter of 2017, Hilton:

  • issued $900 million aggregate principal amount of 4.625% Senior Notes due 2025 and $600 million aggregate principal amount of 4.875% Senior Notes due 2027 and used the net proceeds along with available cash to repay $1.5 billion aggregate principal amount of 5.625% Senior Notes due 2021; and
  • amended $750 million of its outstanding senior secured term loan facility (the "Term Loans") to extend the maturity date, such that the entire outstanding balance of the Term Loans of $3,959 million matures in October 2023, and amended the entire outstanding balance to provide for a reduced interest rate.

As of March 31, 2017, Hilton had $6.7 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4.0 percent, a decrease of 25 basis points from December 31, 2016.

As a result of the financing transactions, Hilton extended its weighted average debt maturities by nearly 1.5 years, with no material maturities until 2023.

Total cash and cash equivalents were $986 million as of March 31, 2017, including $124 million of restricted cash and cash equivalents. No borrowings were outstanding under the $1.0 billion revolving credit facility as of March 31, 2017.

In February 2017, Hilton's board of directors authorized a stock repurchase program of up to $1 billion of the Company's common stock. During the first quarter of 2017, Hilton repurchased 1.2 million shares of common stock at a cost of approximately $70 million at an average price per share of $57.67. Through April 2017, Hilton repurchased 2.1 million shares for approximately $123 million at an average price per share of $57.62.

In March 2017, Hilton paid a quarterly cash dividend of $0.15 per share on shares of its common stock, for a total of $50 million. In May 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 June 2, 2017 to holders of record of its common stock as of the close of business on May 12, 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 from continuing operations, before special items, is projected to be between $1.58 and $1.65.
  • Diluted EPS, adjusted for special items, is projected to be between $1.73 and $1.81.
  • Net income is projected to be between $529 million and $554 million.
  • Adjusted EBITDA is projected to be between $1,860 million and $1,900 million.
  • Management and franchise fee revenue is projected to increase between 7 percent and 9 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 $900 million and $1 billion.
  • General and administrative expenses are projected to be flat compared to 2016.
  • Net unit growth is expected to be approximately 50,000 rooms to 55,000 rooms.

Second 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 second quarter of 2016.
  • Diluted EPS from continuing operations, before special items, is projected to be between $0.47 and $0.51.
  • Diluted EPS, adjusted for special items, is projected to be between $0.47 and $0.51.
  • Net income is projected to be between $156 million and $173 million.
  • Adjusted EBITDA is projected to be between $490 million and $510 million.
  • Management and franchise fee revenue is projected to increase between 7 percent and 9 percent compared to the second quarter of 2016 on a pro forma basis.

Conference Call

Hilton will host a conference call to discuss first quarter 2017 results on May 2, 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 6667123. 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 10104292.

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, the spin-offs 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 an unaudited pro forma condensed consolidated statement 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 for Hilton adjusted to reflect the spin-offs. 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.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company, with a portfolio of 14 world-class brands comprising nearly 5,000 properties with more than 812,000 rooms in 103 countries and territories. Hilton is dedicated to fulfilling its mission to be the world's most hospitable company by delivering exceptional experiences – every hotel, every guest, every time. The Company's portfolio includes Hilton Hotels & Resorts, Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts, Canopy by Hilton, Curio - A Collection by Hilton, DoubleTree by Hilton, Tapestry Collection by Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by Hilton and Hilton Grand Vacations. The Company also manages an award-winning guest loyalty program, Hilton Honors. Hilton Honors members who book directly through preferred Hilton channels have access to instant benefits, including a flexible payment slider that allows members to choose exactly how many Points to combine with money, an exclusive member discount that can't be found anywhere else and free standard Wi-Fi. Visit newsroom.hilton.com for more information and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedIn.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.

For full Spreadsheet information go to: [http://www.businesswire.com/news/home/20170502005490/en/Hilton-Reports-Quarter-Results-Raises-Full-Year].

Contacts:

Jill Slattery
Investor Relations
+1 703 883 6043

Aaron Radelet
Media Relations
+1 703 883 5804

SOURCE Hilton

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