Hilton Reports First Quarter Results, Expands Brand Portfolio

MCLEAN, Va.–(BUSINESS WIRE)–Hilton Worldwide Holdings Inc. (“Hilton” or the “Company”) (NYSE: HLT)
today reported its first quarter 2019 results. Highlights include:

• Diluted EPS was $0.54 for the first quarter, a 6 percent increase
  from the same period in 2018, and diluted EPS, adjusted for special
  items, was $0.80, a 16 percent increase from the same period in 2018
• Net income for the first quarter was $159 million, a 2 percent
  decrease from the same period in 2018
• Adjusted EBITDA for the first quarter was $499 million, an increase
  of 12 percent from the same period in 2018 and exceeding the high end
  of guidance
• System-wide comparable RevPAR increased 1.8 percent on a currency
  neutral basis for the first quarter from the same period in 2018
• Approved 29,300 new rooms for development during the first quarter,
  growing Hilton’s development pipeline to over 371,000 rooms as of
  March 31, 2019
• Opened 12,100 rooms in the first quarter, contributing to 10,000
  net additional rooms, on track to deliver approximately 6.5 percent
  net unit growth for the full year
• Launched a new meetings-and-events-focused brand, Signia Hilton
• In February 2019, Hilton’s board of directors authorized an
  additional $1.5 billion for share repurchases under its stock
  repurchase program
• Repurchased 3.9 million shares of Hilton common stock during the
  first quarter, bringing total capital return, including dividends, to
  approximately $340 million for the quarter
• Full year 2019 system-wide RevPAR is expected to increase between
  1.0 percent and 3.0 percent on a comparable and currency neutral basis
  compared to 2018; full year net income is projected to be between $881
  million and $910 million; full year Adjusted EBITDA is projected to be
  between $2,265 million and $2,305 million
• Full year 2019 capital return is projected to be between $1.3
  billion and $1.8 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton,
said, “We are happy to report a good start to the year with first
quarter results that exceeded the high end of guidance for Adjusted
EBITDA and diluted EPS, adjusted for special items. We continued to
drive impressive market share gains across all brand segments and
regions during the first quarter, further increasing our
industry-leading RevPAR index premium. We were also excited to launch
our newest brand, Signia Hilton. We expect this dynamic and innovative
brand to change the meetings and events space and enable us to better
serve our guests and owners.”

For the three months ended March 31, 2019, system-wide comparable RevPAR
grew 1.8 percent, driven by increases in both ADR and occupancy.
Management and franchise fee revenues increased 12 percent during the
three months ended March 31, 2019 as a result of RevPAR growth of 1.7
percent at comparable managed and franchised hotels, increased licensing
and other fees and the addition of new properties to Hilton’s portfolio.

For the three months ended March 31, 2019, diluted EPS was $0.54 and
diluted EPS, adjusted for special items, was $0.80 compared to $0.51 and
$0.69, respectively, for the three months ended March 31, 2018. Net
income and Adjusted EBITDA were $159 million and $499 million,
respectively, for the three months ended March 31, 2019, compared to
$163 million and $445 million, respectively, for the three months ended
March 31, 2018.

Development

In the first quarter of 2019, Hilton opened 85 new hotels totaling
12,100 rooms and achieved net unit growth of 10,000 rooms, a 41 percent
increase from the same period in 2018.

As of March 31, 2019, Hilton’s development pipeline totaled nearly 2,480
hotels consisting of over 371,000 rooms throughout 108 countries and
territories, including 37 countries and territories where Hilton does
not currently have any open hotels. Additionally, 200,000 rooms in the
development pipeline were located outside the U.S., and 193,000 rooms,
or more than half, were under construction.

During the quarter, Hilton added several notable properties to its
system, including further expansion of its luxury and lifestyle
portfolio with the openings of the Conrad Washington, DC, Conrad
Hangzhou in China and Canopy by Hilton Minneapolis Mill District.

In February 2019, Hilton launched its newest brand, Signia Hilton, a
dynamic, meetings-and-events-focused brand. Signia will further
reinforce Hilton’s commitment to innovation that meets the evolving
needs of today’s travelers and will bring premium experiences to top
urban and resort destinations around the world. The brand will debut
with the openings of the Signia Hilton Orlando Bonnet Creek, Signia
Hilton Atlanta and Signia Hilton Indianapolis.

Balance Sheet and Liquidity

As of March 31, 2019, Hilton had $7.4 billion of long-term debt
outstanding, excluding deferred financing costs and discount, with a
weighted average interest rate of 4.46 percent. Excluding finance lease
liabilities and other debt of Hilton’s consolidated variable interest
entities, Hilton had $7.2 billion of long-term debt outstanding with a
weighted average interest rate of 4.41 percent.

Total cash and cash equivalents were $461 million as of March 31, 2019,
including $79 million of restricted cash and cash equivalents. As of
March 31, 2019, Hilton had $50 million outstanding under its senior
secured revolving credit facility and a borrowing capacity of $891
million, which includes outstanding letters of credit.

In February 2019, Hilton’s board of directors authorized an additional
$1.5 billion for share repurchases under its stock repurchase program.
During the first quarter of 2019, Hilton repurchased 3.9 million shares
of its common stock at a cost of approximately $296 million and an
average price per share of $76.65. From the inception of Hilton’s stock
repurchase program in March 2017, Hilton has repurchased approximately
41.7 million shares of its common stock for approximately $3.0 billion
at an average price per share of $71.30. The amount remaining under
Hilton’s stock repurchase program is approximately $1.7 billion.

In March 2019, Hilton paid a quarterly cash dividend of $0.15 per share
on shares of its common stock, for a total of $44 million. In April
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 June
28, 2019 to holders of record of its common stock as of the close of
business on May 17, 2019.

Adoption of New Accounting Standard

On January 1, 2019, the Company adopted Accounting Standards Update
(“ASU”) No. 2016-02 Leases (Topic 842) (“ASU 2016-02”),
which supersedes existing guidance on accounting for leases in Leases
(Topic 840) and generally requires all leases, including operating
leases, to be recognized in the balance sheet of lessees as right-of-use
assets and lease liabilities. As permitted, the Company has applied this
ASU at the adoption date; therefore, the presentation of financial
information for all periods prior to January 1, 2019 remains unchanged
and in accordance with Leases (Topic 840). The provisions of ASU
2016-02 did not affect the Company’s cash flow or cash available for
capital return, and did not have a material impact on the Company’s
consolidated statement of operations. Refer to Hilton’s Quarterly Report
on Form 10-Q for the quarterly period ended March 31, 2019, which is
expected to be filed on or about the date of this press release, for
additional information on the effect of this ASU.

Outlook

Share-based metrics in Hilton’s outlook include actual share repurchases
to date, but do not include the effect of potential share repurchases
hereafter.

Full Year 2019

• System-wide RevPAR is expected to increase between 1.0 percent and 3.0
  percent on a comparable and currency neutral basis compared to 2018.
• Diluted EPS, before special items, is projected to be between $2.98
  and $3.07.
• Diluted EPS, adjusted for special items, is projected to be between
  $3.74 and $3.84.
• Net income is projected to be between $881 million and $910 million.
• Adjusted EBITDA is projected to be between $2,265 million and $2,305
  million.
• Management and franchise fee revenue is projected to increase between
  7 percent and 9 percent compared to 2018.
• Contract acquisition costs and capital expenditures, excluding amounts
  indirectly reimbursed by hotel owners, are expected to be between $175
  million and $200 million.
• Capital return is projected to be between $1.3 billion and $1.8
  billion.
• General and administrative expenses are projected to be between $430
  million and $450 million.
• Net unit growth is expected to be approximately 6.5 percent.

Second Quarter 2019

• System-wide RevPAR is expected to increase between 1.0 percent and 2.0
  percent on a comparable and currency neutral basis compared to the
  second quarter of 2018.
• Diluted EPS, before special items, is projected to be between $0.81
  and $0.86.
• Diluted EPS, adjusted for special items, is projected to be between
  $0.98 and $1.03.
• Net income is projected to be between $238 million and $253 million.
• Adjusted EBITDA is projected to be between $590 million and $610
  million.
• Management and franchise fee revenue is projected to increase between
  6 percent and 8 percent compared to the second quarter of 2018.

Conference Call

Hilton will host a conference call to discuss first quarter 2019 results
on May 1, 2019 at 10:00 a.m. Eastern Time. Participants may listen to
the live webcast by logging on to the Hilton Investor Relations website
at https://ir.hilton.com/events-and-presentations.
A replay and transcript of the webcast will be available within 24 hours
after the live event at https://ir.hilton.com/financial-reporting/quarterly-results/2019.

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 3985417. 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 10130262.

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, these forward-looking statements can be
identified 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 and management and franchise contracts,
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 Hilton’s Annual Report on Form 10-K for the fiscal year ended
December 31, 2018, 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; and net debt to Adjusted EBITDA ratio. See the
schedules to this press release, including the “Definitions” section,
for additional information and reconciliations of such non-GAAP
financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company, with a
portfolio of 17 world-class brands comprising more than 5,700 properties
with over 923,000 rooms, in 113 countries and territories. Dedicated to
fulfilling its mission to be the world’s most hospitable company, Hilton
earned a spot on the 2018 world’s best workplaces list and has welcomed
more than 3 billion guests during its 100-year history. Through the
award-winning guest loyalty program, Hilton Honors, more than 89 million
members who book directly with Hilton can earn Points for hotel stays
and experiences money can’t buy, plus enjoy instant benefits including
digital check-in with room selection, Digital Key and Connected Room.
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.

Contacts

Investor Contact
Jill Slattery
+1 703 883 6043

Media Contact
Nigel Glennie
+1 703 883 5262

Read full story here