Hilton Reports Second Quarter Results; Exceeds Net Income and Adjusted EBITDA Expectations

MCLEAN, Va.–(BUSINESS WIRE)–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.

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”). 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). For additional information on the effect of this ASU, refer to Hilton’s Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2019, which is expected to be filed on or about the date of this press release.

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 comparable RevPAR is expected to increase between 1.0 percent and 2.0 percent on a currency neutral basis compared to 2018.
• Diluted EPS, before special items, is projected to be between $3.02 and $3.09.
• Diluted EPS, adjusted for special items, is projected to be between $3.78 and $3.85.
• Net income is projected to be between $887 million and $909 million.
• Adjusted EBITDA is projected to be between $2,280 million and $2,310 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 $1.5 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.

Third Quarter 2019

• System-wide comparable RevPAR is expected to increase between 1.0 percent and 2.0 percent on a currency neutral basis compared to the third quarter of 2018.
• Diluted EPS, before special items, is projected to be between $0.82 and $0.87.
• Diluted EPS, adjusted for special items, is projected to be between $0.98 and $1.03.
• Net income is projected to be between $239 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 third quarter of 2018.

Conference Call

Hilton will host a conference call to discuss second quarter 2019 results on July 24, 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 (“U.S”) or 1-412-317-6061 internationally using the conference ID 0505153. 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 U.S. or 1-412-317-0088 internationally using the conference ID 10132755.

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 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 nearly 5,900 properties with more than 939,000 rooms, in 114 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 94 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

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