Le Lézard
Classified in: Business
Subjects: EARNINGS, Photo/Multimedia, Conference Call, Webcast

Hilton Reports First Quarter Results


Hilton Worldwide Holdings Inc. ("Hilton," "the Company," "we," "us" or "our") (NYSE: HLT) today reported its first quarter 2024 results. Highlights include:

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We are pleased to report a strong first quarter with bottom line results meaningfully exceeding our expectations, further demonstrating the power of our resilient, fee-based business model and strong development story. During the first quarter, system-wide RevPAR increased 2.0 percent as renovations, inclement weather and unfavorable holiday shifts weighed on performance more than anticipated. On the development side, we continued to see great momentum across signings, starts and openings. As a result of our record pipeline and the growth pace we've seen to-date, we expect net unit growth of 6.0 percent to 6.5 percent for the full year, excluding the planned acquisition of the Graduate Hotels brand."

For the three months ended March 31, 2024, system-wide comparable RevPAR increased 2.0 percent compared to the same period in 2023 due to increases in both occupancy and ADR, and management and franchise fee revenues increased 14.4 percent compared to the same period in 2023.

For the three months ended March 31, 2024, diluted EPS was $1.04 and diluted EPS, adjusted for special items, was $1.53 compared to $0.77 and $1.24, respectively, for the three months ended March 31, 2023. Net income and Adjusted EBITDA were $268 million and $750 million, respectively, for the three months ended March 31, 2024, compared to $209 million and $641 million, respectively, for the three months ended March 31, 2023.

Development

In the first quarter of 2024, Hilton opened 106 hotels, totaling 16,800 rooms, resulting in 14,200 net room additions. During the quarter, Hilton celebrated a number of significant luxury and lifestyle openings including: the grand opening of the Conrad Orlando in Florida, the debut of LXR Hotels & Resorts in Hawaii and the introduction of the Waldorf Astoria and Canopy by Hilton brands to the Seychelles. Furthermore, Hilton debuted the Curio Collection by Hilton brand in Kenya and Motto by Hilton brand in Peru and entered into partnerships with AutoCamp and Small Luxury Hotels of the World ("SLH"), which will provide new elevated lodging experiences to Hilton guests. Hilton also announced the Waldorf Astoria Residences Dubai Downtown, which will be the Company's first standalone residential property outside of the United States. Additionally, during the quarter, Hampton by Hilton celebrated the opening of its 3,000th hotel globally, kicking off a year of milestones and achievements for the brand including its 40th anniversary, entry into its 40th country and its expected groundbreaking entry into its fifth continent, Africa, later this year.

Hilton added 29,800 rooms to the development pipeline during the first quarter, and, as of March 31, 2024, Hilton's development pipeline totaled approximately 3,380 hotels representing 472,300 rooms throughout 119 countries and territories, including 31 countries and territories where Hilton had no existing hotels. Additionally, of the rooms in the development pipeline, 229,700 were under construction and 267,900 were located outside of the U.S.

Balance Sheet and Liquidity

As of March 31, 2024, Hilton had $10.3 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discounts, with a weighted average interest rate of 4.89 percent. Excluding all finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $10.1 billion of long-term debt outstanding with a weighted average interest rate of 4.88 percent and no scheduled maturities until May 2025. As of March 31, 2024, no debt amounts were outstanding under Hilton's $2.0 billion senior secured revolving credit facility (the "Revolving Credit Facility"), which had an available borrowing capacity of $1,913 million after considering $87 million of outstanding letters of credit. Total cash and cash equivalents were $1,420 million as of March 31, 2024, including $74 million of restricted cash and cash equivalents.

In March 2024, Hilton issued $550 million aggregate principal amount of 5.875% Senior Notes due 2029 and $450 million aggregate principal amount of 6.125% Senior Notes due 2032 and used a portion of the net proceeds from the issuances to repay $200 million borrowed under the Revolving Credit Facility earlier in the first quarter. The remaining proceeds will be used for general corporate purposes, which may include investments and acquisitions.

In March 2024, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, bringing total dividend payments for the quarter to $39 million. In April 2024, Hilton's board of directors authorized a regular quarterly cash dividend of $0.15 per share of common stock to be paid on June 28, 2024 to holders of record of its common stock as of the close of business on May 17, 2024.

During the three months ended March 31, 2024, Hilton repurchased 3.4 million shares of its common stock at an average price per share of $196.17, for a total of $662 million, returning $701 million of capital to shareholders during the quarter including dividends. The number of shares outstanding as of April 19, 2024 was 250.0 million.

Outlook

Share-based metrics in Hilton's outlook include actual share repurchases through the first quarter, but do not include the effect of potential share repurchases thereafter. Additionally, Hilton's outlook does not include the effect of the planned acquisition of Graduate Hotels.

Full Year 2024

Second Quarter 2024

Conference Call

Hilton will host a conference call to discuss first quarter of 2024 results on April 24, 2024 at 9:00 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.

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 7619875. 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 2963787.

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 our expectations regarding the performance of our business, future financial results, liquidity and capital resources and other non-historical statements. In some cases, you can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "forecasts," "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 our control, such as inflation, changes in interest rates, challenges due to labor shortages or disputes and supply chain disruptions; competition for hotel guests and management and franchise contracts; risks related to doing business with third-party hotel owners; performance of our information technology systems; growth of reservation channels outside of our system; risks of doing business outside of the U.S.; risks associated with conflicts in Eastern Europe and the Middle East and other geopolitical events; and our 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, 2023, which is filed with the Securities and Exchange Commission (the "SEC") and is 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 our filings with the SEC. We undertake 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.

Definitions

See the "Definitions" section for the definition of certain terms used within this press release, including within the schedules.

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; EBITDA; 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, as well as the most comparable GAAP financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 23 world-class brands comprising more than 7,600 properties and nearly 1.2 million rooms, in 126 countries and territories. Dedicated to fulfilling its founding vision to fill the earth with the light and warmth of hospitality, Hilton has welcomed over 3 billion guests in its more than 100-year history, was named the No.1 World's Best Workplace by Great Place to Work and Fortune and has been recognized as a global leader on the Dow Jones Sustainability Indices for seven consecutive years. Hilton has introduced industry-leading technology enhancements to improve the guest experience, including Digital Key Share, automated complimentary room upgrades and the ability to book confirmed connecting rooms. Through the award-winning guest loyalty program Hilton Honors, the nearly 190 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy. With the free Hilton Honors app, guests can book their stay, select their room, check in, unlock their door with a Digital Key and check out, all from their smartphone. Visit stories.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.

 

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS

 

Condensed Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

Property Summary

Capital Expenditures and Contract Acquisition Costs

Reconciliations of Non-GAAP Financial Measures

Definitions

 

HILTON WORLDWIDE HOLDINGS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

March 31,

 

 

2024

 

 

 

2023

 

Revenues

 

 

 

Franchise and licensing fees

$

571

 

 

$

508

 

Base and other management fees

 

106

 

 

 

80

 

Incentive management fees

 

70

 

 

 

65

 

Owned and leased hotels

 

255

 

 

 

248

 

Other revenues

 

50

 

 

 

35

 

 

 

1,052

 

 

 

936

 

Other revenues from managed and franchised properties

 

1,521

 

 

 

1,357

 

Total revenues

 

2,573

 

 

 

2,293

 

 

 

 

 

Expenses

 

 

 

Owned and leased hotels

 

247

 

 

 

251

 

Depreciation and amortization

 

36

 

 

 

37

 

General and administrative

 

104

 

 

 

91

 

Other expenses

 

30

 

 

 

21

 

 

 

417

 

 

 

400

 

Other expenses from managed and franchised properties

 

1,630

 

 

 

1,395

 

Total expenses

 

2,047

 

 

 

1,795

 

 

 

 

 

Gain on sales of assets, net

 

7

 

 

 

?

 

 

 

 

 

Operating income

 

533

 

 

 

498

 

 

 

 

 

Interest expense

 

(131

)

 

 

(116

)

Loss on foreign currency transactions

 

(1

)

 

 

?

 

Loss on investments in unconsolidated affiliate

 

?

 

 

 

(92

)

Other non-operating income (loss), net

 

(36

)

 

 

12

 

 

 

 

 

Income before income taxes

 

365

 

 

 

302

 

 

 

 

 

Income tax expense

 

(97

)

 

 

(93

)

 

 

 

 

Net income

 

268

 

 

 

209

 

Net income attributable to noncontrolling interests

 

(3

)

 

 

(3

)

Net income attributable to Hilton stockholders

$

265

 

 

$

206

 

 

 

 

 

Weighted average shares outstanding:

 

 

 

Basic

 

252

 

 

 

266

 

Diluted

 

255

 

 

 

269

 

 

 

 

 

Earnings per share:

 

 

 

Basic

$

1.05

 

 

$

0.77

 

Diluted

$

1.04

 

 

$

0.77

 

 

 

 

 

Cash dividends declared per share

$

0.15

 

 

$

0.15

 

 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION, BRAND AND SEGMENT

(unaudited)

 

 

Three Months Ended March 31,

 

Occupancy

 

ADR

 

RevPAR

 

2024

 

vs. 2023

 

2024

 

vs. 2023

 

2024

 

vs. 2023

 

 

 

 

 

 

 

 

 

 

 

 

 

System-wide

67.2

%

 

0.2

%

pts.

 

$

154.91

 

1.7

%

 

$

104.16

 

2.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

Region

 

 

 

 

 

 

 

 

 

 

 

 

U.S.

67.7

%

 

(0.6

)%

pts.

 

$

161.67

 

 

0.5

%

 

$

109.53

 

 

(0.4

)%

Americas (excluding U.S.)

65.8

 

 

1.4

 

 

 

 

157.60

 

 

5.0

 

 

 

103.67

 

 

7.3

 

Europe

64.9

 

 

3.1

 

 

 

 

141.99

 

 

4.5

 

 

 

92.14

 

 

9.7

 

Middle East & Africa

73.6

 

 

2.4

 

 

 

 

193.22

 

 

11.0

 

 

 

142.23

 

 

14.8

 

Asia Pacific

65.2

 

 

1.3

 

 

 

 

114.90

 

 

5.7

 

 

 

74.95

 

 

7.9

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Brand

 

 

 

 

 

 

 

 

 

 

 

 

Waldorf Astoria Hotels & Resorts

63.9

%

 

3.2

%

pts.

 

$

556.56

 

 

(2.1

)%

 

$

355.44

 

 

3.0

%

Conrad Hotels & Resorts

71.4

 

 

4.8

 

 

 

 

286.62

 

 

6.9

 

 

 

204.67

 

 

14.6

 

LXR Hotels & Resorts

56.5

 

 

5.1

 

 

 

 

636.76

 

 

(1.0

)

 

 

359.54

 

 

8.8

 

Canopy by Hilton

66.7

 

 

2.0

 

 

 

 

213.41

 

 

0.1

 

 

 

142.28

 

 

3.2

 

Hilton Hotels & Resorts

66.3

 

 

1.9

 

 

 

 

189.18

 

 

3.4

 

 

 

125.40

 

 

6.4

 

Curio Collection by Hilton

66.3

 

 

3.3

 

 

 

 

233.92

 

 

(0.1

)

 

 

155.01

 

 

5.1

 

DoubleTree by Hilton

64.1

 

 

1.2

 

 

 

 

138.10

 

 

1.1

 

 

 

88.48

 

 

3.1

 

Tapestry Collection by Hilton

61.8

 

 

1.4

 

 

 

 

170.63

 

 

0.1

 

 

 

105.48

 

 

2.4

 

Embassy Suites by Hilton

70.9

 

 

1.4

 

 

 

 

180.04

 

 

0.2

 

 

 

127.65

 

 

2.2

 

Motto by Hilton

76.8

 

 

5.5

 

 

 

 

167.64

 

 

(3.5

)

 

 

128.69

 

 

4.0

 

Hilton Garden Inn

66.2

 

 

(0.3

)

 

 

 

138.08

 

 

(0.3

)

 

 

91.39

 

 

(0.7

)

Hampton by Hilton

66.1

 

 

(1.6

)

 

 

 

123.94

 

 

0.7

 

 

 

81.93

 

 

(1.7

)

Tru by Hilton

66.6

 

 

(0.6

)

 

 

 

123.13

 

 

(0.3

)

 

 

81.97

 

 

(1.2

)

Homewood Suites by Hilton

75.5

 

 

(1.0

)

 

 

 

151.57

 

 

0.4

 

 

 

114.37

 

 

(1.0

)

Home2 Suites by Hilton

74.2

 

 

(0.9

)

 

 

 

135.01

 

 

0.1

 

 

 

100.22

 

 

(1.1

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Segment

 

 

 

 

 

 

 

 

 

 

 

 

Management and franchise

67.2

%

 

0.1

%

pts.

 

$

154.36

 

 

1.6

%

 

$

103.78

 

 

1.8

%

Ownership(1)

67.5

 

 

3.7

 

 

 

 

198.05

 

 

7.7

 

 

 

133.64

 

 

14.0

 

____________

(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of March 31, 2024

 

 

Owned / Leased(1)

 

Managed

 

Franchised / Licensed

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Waldorf Astoria Hotels & Resorts

2

 

463

 

34

 

9,432

 

?

 

?

 

36

 

9,895

Conrad Hotels & Resorts

2

 

779

 

43

 

14,207

 

4

 

2,496

 

49

 

17,482

LXR Hotels & Resorts

?

 

?

 

5

 

935

 

9

 

1,301

 

14

 

2,236

Signia by Hilton

?

 

?

 

3

 

2,526

 

?

 

?

 

3

 

2,526

Canopy by Hilton

?

 

?

 

9

 

1,328

 

32

 

5,732

 

41

 

7,060

Hilton Hotels & Resorts

47

 

16,250

 

291

 

125,754

 

272

 

83,807

 

610

 

225,811

Curio Collection by Hilton

?

 

?

 

30

 

7,856

 

135

 

23,618

 

165

 

31,474

DoubleTree by Hilton

?

 

?

 

162

 

44,702

 

522

 

111,560

 

684

 

156,262

Tapestry Collection by Hilton

?

 

?

 

5

 

694

 

123

 

14,488

 

128

 

15,182

Embassy Suites by Hilton

?

 

?

 

39

 

10,447

 

228

 

51,314

 

267

 

61,761

Tempo by Hilton

?

 

?

 

1

 

661

 

1

 

306

 

2

 

967

Motto by Hilton

?

 

?

 

?

 

?

 

7

 

1,552

 

7

 

1,552

Hilton Garden Inn

?

 

?

 

118

 

23,247

 

898

 

126,653

 

1,016

 

149,900

Hampton by Hilton

?

 

?

 

53

 

8,501

 

2,952

 

323,996

 

3,005

 

332,497

Tru by Hilton

?

 

?

 

?

 

?

 

258

 

25,215

 

258

 

25,215

Spark by Hilton

?

 

?

 

?

 

?

 

19

 

1,936

 

19

 

1,936

Homewood Suites by Hilton

?

 

?

 

11

 

1,405

 

529

 

60,466

 

540

 

61,871

Home2 Suites by Hilton

?

 

?

 

2

 

210

 

667

 

72,246

 

669

 

72,456

Other(2)

?

 

?

 

3

 

1,414

 

16

 

3,503

 

19

 

4,917

Total hotels

51

 

17,492

 

809

 

253,319

 

6,672

 

910,189

 

7,532

 

1,181,000

Hilton Grand Vacations(3)

?

 

?

 

?

 

?

 

94

 

16,329

 

94

 

16,329

Total system

51

 

17,492

 

809

 

253,319

 

6,766

 

926,518

 

7,626

 

1,197,329

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Owned / Leased(1)

 

Managed

 

Franchised / Licensed

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

U.S.

?

 

?

 

196

 

85,661

 

5,446

 

708,165

 

5,642

 

793,826

Americas (excluding U.S.)

1

 

405

 

74

 

18,366

 

325

 

49,978

 

400

 

68,749

Europe

39

 

11,604

 

106

 

27,159

 

409

 

69,663

 

554

 

108,426

Middle East & Africa

5

 

2,320

 

108

 

30,622

 

24

 

5,309

 

137

 

38,251

Asia Pacific

6

 

3,163

 

325

 

91,511

 

468

 

77,074

 

799

 

171,748

Total hotels

51

 

17,492

 

809

 

253,319

 

6,672

 

910,189

 

7,532

 

1,181,000

Hilton Grand Vacations(3)

?

 

?

 

?

 

?

 

94

 

16,329

 

94

 

16,329

Total system

51

 

17,492

 

809

 

253,319

 

6,766

 

926,518

 

7,626

 

1,197,329

____________

(1)

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

(2)

Includes other hotels in our system that are not distinguished by a specific Hilton brand.

(3)

Includes properties under our timeshare brands including Hilton Club, Hilton Grand Vacations Club and Hilton Vacation Club.

 

HILTON WORLDWIDE HOLDINGS INC.

CAPITAL EXPENDITURES AND CONTRACT ACQUISITION COSTS

(dollars in millions)

(unaudited)

 

 

Three Months Ended

 

 

 

March 31,

 

Increase / (Decrease)

 

 

2024

 

 

 

2023

 

 

$

 

%

Capital expenditures for property and equipment(1)

$

16

 

$

44

 

(28

)

 

(63.6

)

Capitalized software costs(2)

 

18

 

 

 

19

 

 

(1

)

 

(5.3

)

Total capital expenditures

 

34

 

 

 

63

 

 

(29

)

 

(46.0

)

Contract acquisition costs, net of refunds(3)

 

37

 

 

 

105

 

 

(68

)

 

(64.8

)

Total capital expenditures and contract acquisition costs

$

71

 

 

$

168

 

 

(97

)

 

(57.7

)

____________

(1)

Represents expenditures for hotels, corporate and other property and equipment, which include amounts reimbursed by third parties of $8 million and $2 million for the three months ended March 31, 2024 and 2023, respectively. Excludes expenditures for FF&E replacement reserves of $11 million and $8 million for the three months ended March 31, 2024 and 2023, respectively. The decreases during the periods were primarily due to the timing of certain corporate and hotel capital expenditure projects.

(2)

Includes $17 million and $18 million of expenditures that were reimbursed to us by third parties for the three months ended March 31, 2024 and 2023, respectively.

(3)

The decrease during the period was primarily due to the timing of certain strategic hotel developments supporting Hilton's growth resulting in higher contract acquisition costs during the three months ended March 31, 2023.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(in millions, except per share data)

(unaudited)

 

 

Three Months Ended

 

March 31,

 

 

2024

 

 

 

2023

 

Net income attributable to Hilton stockholders, as reported

$

265

 

 

$

206

 

Diluted EPS, as reported

$

1.04

 

 

$

0.77

 

Special items:

 

 

 

Net other expenses from managed and franchised properties

$

109

 

 

$

38

 

Purchase accounting amortization(1)

 

1

 

 

 

11

 

Loss on investments in unconsolidated affiliate(2)

 

?

 

 

 

92

 

Loss on debt guarantees(3)

 

47

 

 

 

?

 

FF&E replacement reserves

 

11

 

 

 

8

 

Gain on sales of assets, net

 

(7

)

 

 

?

 

Other adjustments(4)

 

4

 

 

 

5

 

Total special items before taxes

 

165

 

 

 

154

 

Income tax expense on special items

 

(40

)

 

 

(27

)

Total special items after taxes

$

125

 

 

$

127

 

 

 

 

 

Net income, adjusted for special items

$

390

 

 

$

333

 

Diluted EPS, adjusted for special items

$

1.53

 

 

$

1.24

 

____________

(1)

Amounts represent the amortization expense related to finite-lived intangible assets that were recorded at fair value in 2007 when the Company became a wholly owned subsidiary of affiliates of Blackstone Inc. The majority of the related assets were fully amortized as of December 31, 2023, some of which became fully amortized during the three months ended December 31, 2023.

(2)

Amount for the three months ended March 31, 2023 includes losses recognized related to equity and debt financing that Hilton had previously provided to an unconsolidated affiliate with underlying investments in certain hotels that Hilton currently manages or franchises.

(3)

Amount includes losses on debt guarantees for certain hotels that Hilton manages, which were recognized in other non-operating loss, net.

(4)

Amount for the three months ended March 31, 2024 primarily relates to transaction costs incurred for acquisitions, which were recognized in general and administrative expenses. Amounts for both periods include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate," which were recognized in other non-operating income (loss), net.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME MARGIN AND

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(dollars in millions)

(unaudited)

 

 

Three Months Ended

 

March 31,

 

 

2024

 

 

 

2023

 

Net income

$

268

 

 

$

209

Interest expense

 

131

 

 

 

116

 

Income tax expense

 

97

 

 

 

93

 

Depreciation and amortization expenses

 

36

 

 

 

37

 

EBITDA

 

532

 

 

 

455

 

Gain on sales of assets, net

 

(7

)

 

 

?

 

Loss on foreign currency transactions

 

1

 

 

 

?

 

Loss on investments in unconsolidated affiliate(1)

 

?

 

 

 

92

 

Loss on debt guarantees(2)

 

47

 

 

 

?

 

FF&E replacement reserves

 

11

 

 

 

8

 

Share-based compensation expense

 

41

 

 

 

33

 

Amortization of contract acquisition costs

 

12

 

 

 

10

 

Net other expenses from managed and franchised properties

 

109

 

 

 

38

 

Other adjustments(3)

 

4

 

 

 

5

 

Adjusted EBITDA

$

750

 

 

$

641

 

____________

(1)

Amount includes losses recognized related to equity and debt financing that Hilton had previously provided to an unconsolidated affiliate with underlying investments in certain hotels that Hilton manages or franchises.

(2)

Amount includes losses on debt guarantees for certain hotels that Hilton manages, which were recognized in other non-operating loss, net.

(3)

Amount for the three months ended March 31, 2024 primarily relates to transaction costs incurred for acquisitions. Amounts for both periods include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate," severance and other items.

 

Three Months Ended

 

March 31,

 

 

2024

 

 

 

2023

 

Total revenues, as reported

$

2,573

 

 

$

2,293

 

Add: amortization of contract acquisition costs

 

12

 

 

 

10

 

Less: other revenues from managed and franchised properties

 

(1,521

)

 

 

(1,357

)

Total revenues, as adjusted

$

1,064

 

 

$

946

 

 

 

 

 

Net income

$

268

 

 

$

209

 

Net income margin

 

10.4

%

 

 

9.1

%

 

 

 

 

Adjusted EBITDA

$

750

 

 

$

641

 

Adjusted EBITDA margin

 

70.4

%

 

 

67.8

%

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

LONG-TERM DEBT TO NET INCOME RATIO AND

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(dollars in millions)

(unaudited)

 

 

March 31,

 

December 31,

 

 

2024

 

 

 

2023

 

Long-term debt, including current maturities

$

10,173

 

 

$

9,196

 

Add: unamortized deferred financing costs and discounts

 

83

 

 

 

71

 

Long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discounts

 

10,256

 

 

 

9,267

 

Less: cash and cash equivalents

 

(1,346

)

 

 

(800

)

Less: restricted cash and cash equivalents

 

(74

)

 

 

(75

)

Net debt

$

8,836

 

 

$

8,392

 

 

Three Months Ended

 

Year Ended

 

TTM Ended

 

March 31,

 

December 31,

 

March 31,

 

 

2024

 

 

 

2023

 

 

 

2023

 

 

 

2024

 

Net income

$

268

 

 

$

209

 

$

1,151

 

$

1,210

 

Interest expense

 

131

 

 

 

116

 

 

 

464

 

 

 

479

 

Income tax expense

 

97

 

 

 

93

 

 

 

541

 

 

 

545

 

Depreciation and amortization expenses

 

36

 

 

 

37

 

 

 

147

 

 

 

146

 

EBITDA

 

532

 

 

 

455

 

 

 

2,303

 

 

 

2,380

 

Gain on sales of assets, net

 

(7

)

 

 

?

 

 

 

?

 

 

 

(7

)

Loss on foreign currency transactions

 

1

 

 

 

?

 

 

 

16

 

 

 

17

 

Loss on investments in unconsolidated affiliate(1)

 

?

 

 

 

92

 

 

 

92

 

 

 

?

 

Loss on debt guarantees(2)

 

47

 

 

 

?

 

 

 

?

 

 

 

47

 

FF&E replacement reserves

 

11

 

 

 

8

 

 

 

63

 

 

 

66

 

Share-based compensation expense

 

41

 

 

 

33

 

 

 

169

 

 

 

177

 

Impairment losses(3)

 

?

 

 

 

?

 

 

 

38

 

 

 

38

 

Amortization of contract acquisition costs

 

12

 

 

 

10

 

 

 

43

 

 

 

45

 

Net other expenses from managed and franchised properties

 

109

 

 

 

38

 

 

 

337

 

 

 

408

 

Other adjustments(4)

 

4

 

 

 

5

 

 

 

28

 

 

 

27

 

Adjusted EBITDA

$

750

 

 

$

641

 

 

$

3,089

 

 

$

3,198

 

 

 

 

 

 

 

 

 

Long-term debt

 

 

 

 

 

 

$

10,173

 

Long-term debt to net income ratio

 

 

 

 

 

 

 

8.4

 

 

 

 

 

 

 

 

 

Net debt

 

 

 

 

 

 

$

8,836

 

Net debt to Adjusted EBITDA ratio

 

 

 

 

 

 

 

2.8

 

____________

(1)

Amount includes losses recognized related to equity and debt financing that Hilton had previously provided to an unconsolidated affiliate with underlying investments in certain hotels that Hilton manages or franchises.

(2)

Amount includes losses on debt guarantees for certain hotels that Hilton manages, which were recognized in other non-operating loss, net.

(3)

Amounts for the year ended December 31, 2023 are related to certain hotel properties under operating leases and are for the impairment of a lease intangible asset, operating lease ROU assets and property and equipment.

(4)

Amount for the three months ended March 31, 2024 primarily relates to transaction costs incurred for acquisitions. Amounts for all periods include net losses (gains) related to certain of Hilton's investments in unconsolidated affiliates, other than the loss included separately in "loss on investments in unconsolidated affiliate," severance and other items. Amount for the year ended December 31, 2023 also includes expenses recognized in connection with the amendment of our Term Loans.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS(1)

(in millions, except per share data)

(unaudited)

 

 

Three Months Ending

 

June 30, 2024

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

441

 

 

$

455

 

Diluted EPS(2)

$

1.74

 

 

$

1.80

 

Special items(3):

 

 

 

FF&E replacement reserves

$

18

 

 

$

18

 

Purchase accounting amortization

 

1

 

 

 

1

 

Total special items before taxes

 

19

 

 

 

19

 

Income tax expense on special items

 

(3

)

 

 

(3

)

Total special items after taxes

$

16

 

 

$

16

 

 

 

 

 

Net income, adjusted for special items

$

457

 

 

$

471

 

Diluted EPS, adjusted for special items(2)

$

1.80

 

 

$

1.86

 

 

Year Ending

 

December 31, 2024

 

Low Case

 

High Case

Net income attributable to Hilton stockholders

$

1,577

 

 

$

1,612

 

Diluted EPS(2)

$

6.21

 

 

$

6.35

 

Special items(3):

 

 

 

Net other expenses from managed and franchised properties

$

109

 

 

$

109

 

Purchase accounting amortization

 

5

 

 

 

5

 

Loss on debt guarantees

 

47

 

 

 

47

 

FF&E replacement reserves

 

65

 

 

 

65

 

Gain on sales of assets, net

 

(7

)

 

 

(7

)

Other adjustments

 

4

 

 

 

4

 

Total special items before taxes

 

223

 

 

 

223

 

Income tax expense on special items

 

(50

)

 

 

(50

)

Total special items after taxes

$

173

 

 

$

173

 

 

 

 

 

Net income, adjusted for special items

$

1,750

 

 

$

1,785

 

Diluted EPS, adjusted for special items(2)

$

6.89

 

 

$

7.03

 

____________

(1)

Outlook does not include the effect of the planned acquisition of Graduate Hotels.

(2)

Does not include the effect of potential share repurchases.

(3)

See "?Net Income and Diluted EPS, Adjusted for Special Items" for details of these special items.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: ADJUSTED EBITDA(1)

(in millions)

(unaudited)

 

 

Three Months Ending

 

June 30, 2024

 

Low Case

 

High Case

Net income

$

443

 

$

457

Interest expense

 

141

 

 

 

141

 

Income tax expense

 

191

 

 

 

197

 

Depreciation and amortization expenses

 

30

 

 

 

30

 

EBITDA

 

805

 

 

 

825

 

FF&E replacement reserves

 

18

 

 

 

18

 

Share-based compensation expense

 

53

 

 

 

53

 

Amortization of contract acquisition costs

 

12

 

 

 

12

 

Other adjustments(2)

 

2

 

 

 

2

 

Adjusted EBITDA

$

890

 

 

$

910

 

 

Year Ending

 

December 31, 2024

 

Low Case

 

High Case

Net income

$

1,586

 

 

$

1,621

 

Interest expense

 

554

 

 

 

554

 

Income tax expense

 

663

 

 

 

678

 

Depreciation and amortization expenses

 

125

 

 

 

125

 

EBITDA

 

2,928

 

 

 

2,978

 

Gain on sales of assets, net

 

(7

)

 

 

(7

)

Loss on foreign currency transactions

 

1

 

 

 

1

 

Loss on debt guarantees

 

47

 

 

 

47

 

FF&E replacement reserves

 

65

 

 

 

65

 

Share-based compensation expense

 

172

 

 

 

172

 

Amortization of contract acquisition costs

 

51

 

 

 

51

 

Net other expenses from managed and franchised properties

 

109

 

 

 

109

 

Other adjustments(2)

 

9

 

 

 

9

 

Adjusted EBITDA

$

3,375

 

 

$

3,425

 

____________

(1)

Outlook does not include the effect of the planned acquisition of Graduate Hotels.

(2)

See "?Net Income Margin and Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.

HILTON WORLDWIDE HOLDINGS INC.

DEFINITIONS

Trailing Twelve Month Financial Information

This press release includes certain unaudited financial information for the trailing twelve months ("TTM") ended March 31, 2024, which is calculated as the three months ended March 31, 2024 plus the year ended December 31, 2023 less the three months ended March 31, 2023. This presentation is not in accordance with GAAP. However, the Company believes that this presentation provides useful information to investors regarding its recent financial performance, and it views this presentation of the four most recently completed fiscal quarters as a key measurement period for investors to assess its historical results. In addition, the Company's management uses TTM information to evaluate the Company's financial performance for ongoing planning purposes.

Net Income (Loss), Adjusted for Special Items, and Diluted EPS, Adjusted for Special Items

Net income (loss), adjusted for special items, and diluted earnings (loss) per share ("EPS"), adjusted for special items, are not recognized terms under GAAP and should not be considered as alternatives to net income (loss), diluted EPS or other measures of financial performance or liquidity derived in accordance with GAAP. In addition, the Company's definition of net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, may not be comparable to similarly titled measures of other companies.

Net income (loss), adjusted for special items, and diluted EPS, adjusted for special items, are included to assist investors in performing meaningful comparisons of past, present and future operating results and as a means of highlighting the results of the Company's ongoing operations.

EBITDA, Adjusted EBITDA, Net Income (Loss) Margin and Adjusted EBITDA Margin

EBITDA reflects net income (loss), excluding interest expense, a provision for income tax benefit (expense) and depreciation and amortization expenses. Adjusted EBITDA is calculated as EBITDA, as previously defined, further adjusted to exclude certain items, including gains, losses, revenues and expenses in connection with: (i) asset dispositions for both consolidated and unconsolidated investments; (ii) foreign currency transactions; (iii) debt restructurings and retirements; (iv) furniture, fixtures and equipment ("FF&E") replacement reserves required under certain lease agreements; (v) share-based compensation; (vi) reorganization, severance, relocation and other expenses; (vii) non-cash impairment; (viii) amortization of contract acquisition costs; (ix) the net effect of our cost reimbursement revenues and expenses included in other revenues and other expenses from managed and franchised properties; and (x) other items.

Net income (loss) margin represents net income (loss) as a percentage of total revenues. Adjusted EBITDA margin represents Adjusted EBITDA as a percentage of total revenues, adjusted to exclude the amortization of contract acquisition costs and other revenues from managed and franchised properties.

We believe that EBITDA and Adjusted EBITDA provide useful information to investors about us and our financial condition and results of operations for the following reasons: (i) these measures are among the measures used by our management team to evaluate our operating performance and make day-to-day operating decisions and (ii) these measures are frequently used by securities analysts, investors and other interested parties as a common performance measure to compare results or estimate valuations across companies in our industry. Additionally, these measures exclude certain items that can vary widely across different industries and among competitors within our industry. For instance, interest expense and income taxes are dependent on company specifics, including, among other things, capital structure and operating jurisdictions, respectively, and, therefore, could vary significantly across companies. Depreciation and amortization expenses, as well as amortization of contract acquisition costs, are dependent upon company policies, including the method of acquiring and depreciating assets and the useful lives that are assigned to those depreciating or amortizing assets for accounting purposes. For Adjusted EBITDA, we also exclude items such as: (i) FF&E replacement reserves for leased hotels to be consistent with the treatment of capital expenditures for property and equipment, where depreciation of such capitalized assets is reported within depreciation and amortization expenses; (ii) share-based compensation, as this could vary widely among companies due to the different plans in place and the usage of them; and (iii) other items that are not reflective of our operating performance, such as amounts related to debt restructurings and debt retirements and reorganization and related severance costs, to enhance period-over-period comparisons of our ongoing operations. Further, Adjusted EBITDA excludes the net effect of our cost reimbursement revenues and expenses, as we contractually do not operate the related programs to generate a profit over the terms of the respective contracts. The direct reimbursements from hotel owners are typically reimbursed as the costs are incurred and have no net effect on net income (loss). The fees we recognize related to the indirect reimbursements may be recognized before or after the related expenses are incurred, causing timing differences between the costs incurred and the related reimbursement from hotel owners, with the net effect impacting net income (loss) in the reporting period. However, the expenses incurred related to the indirect reimbursements are expected to equal the revenues earned from the indirect reimbursements over time, and, therefore, the net effect of our cost reimbursement revenues and expenses is not used by our management team to evaluate our operating performance or make day-to-day operating decisions.

EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not recognized terms under GAAP and should not be considered as alternatives, either in isolation or as a substitute, for net income (loss), net income (loss) margin or other measures of financial performance or liquidity, including cash flows, derived in accordance with GAAP. Further, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, may not be comparable to similarly titled measures of other companies and should not be considered as other methods of analyzing the Company's results as reported under GAAP.

Net Debt, Long-Term Debt to Net Income Ratio and Net Debt to Adjusted EBITDA Ratio

Long-term debt to net income ratio is calculated as the ratio of Hilton's long-term debt, including current maturities, to net income. Net debt is calculated as: long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discounts; reduced by: (i) cash and cash equivalents and (ii) restricted cash and cash equivalents. Net debt to Adjusted EBITDA ratio is calculated as the ratio of Hilton's net debt to Adjusted EBITDA. Net debt and net debt to Adjusted EBITDA ratio, presented herein, are non-GAAP financial measures that the Company uses to evaluate its financial leverage.

Net debt should not be considered as a substitute to debt presented in accordance with GAAP, and net debt to Adjusted EBITDA ratio should not be considered as an alternative to measures of financial condition derived in accordance with GAAP. Net debt and net debt to Adjusted EBITDA ratio may not be comparable to similarly titled measures of other companies. The Company believes net debt and net debt to Adjusted EBITDA ratio provide useful information about its indebtedness to investors as they are frequently used by securities analysts, investors and other interested parties to compare the indebtedness between companies.

Comparable Hotels

We define our comparable hotels as those that: (i) were active and operating in our system for at least one full calendar year as of the end of the current period, and open January 1st of the previous year; (ii) have not undergone a change in brand or ownership type during the current or comparable periods reported; and (iii) have not undergone large-scale capital projects, sustained substantial property damage, encountered business interruption or for which comparable results were not available. Of the 7,532 hotels in our system as of March 31, 2024, 6,347 hotels were classified as comparable hotels. Our 1,185 non-comparable hotels as of March 31, 2024 included 421 hotels, or less than six percent of the total hotels in our system, that were removed from the comparable group during the last twelve months because they underwent large-scale capital projects, sustained substantial property damage, encountered business interruption or comparable results were otherwise not available.

Occupancy

Occupancy represents the total number of room nights sold divided by the total number of room nights available at a hotel or group of hotels for a given period. Occupancy measures the utilization of available capacity at a hotel or group of hotels. Management uses occupancy to gauge demand at a specific hotel or group of hotels in a given period. Occupancy levels also help management determine achievable Average Daily Rate ("ADR") pricing levels as demand for hotel rooms increases or decreases.

ADR

ADR represents hotel room revenue divided by the total number of room nights sold for a given period. ADR measures the average room price attained by a hotel, and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. ADR is a commonly used performance measure in the industry, and we use ADR to assess pricing levels that we are able to generate by type of customer, as changes in rates charged to customers have different effects on overall revenues and incremental profitability than changes in occupancy, as described above.

Revenue per Available Room ("RevPAR")

RevPAR is calculated by dividing hotel room revenue by the total number of room nights available to guests for a given period. We consider RevPAR to be a meaningful indicator of our performance as it provides a metric correlated to two primary and key drivers of operations at a hotel or group of hotels, as previously described: occupancy and ADR. RevPAR is also a useful indicator in measuring performance over comparable periods for comparable hotels.

References to occupancy, ADR and RevPAR are presented on a comparable basis, based on the comparable hotels as of March 31, 2024, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three months ended March 31, 2024 and 2023 use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its unaudited condensed consolidated financial statements for the three months ended March 31, 2024.


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