Hilton Worldwide Holdings Inc. ("Hilton" or the "Company")
(NYSE: HLT) today reported its third quarter 2022 results.
Highlights include:
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- Diluted EPS was $1.26 for the third quarter, and diluted
EPS, adjusted for special items, was $1.31
- Net income was $346 million for the third quarter, exceeding
the high end of guidance
- Adjusted EBITDA was $732 million for the third quarter,
exceeding the high end of guidance
- System-wide comparable RevPAR increased 29.9 percent, on a
currency neutral basis, for the third quarter compared to the same
period in 2021
- System-wide comparable RevPAR increased 5.0 percent, on a
currency neutral basis, for the third quarter compared to the same
period in 2019
- Approved 19,900 new rooms for development during the third
quarter, bringing Hilton's development pipeline to 416,000 rooms as
of September 30, 2022
- Added 12,900 rooms to Hilton's system in the third quarter,
contributing to 12,100 net additional rooms in Hilton's system
during the period
- Repurchased 4.0 million shares of Hilton common stock during
the third quarter, bringing total capital return, including
dividends, to $538 million for the quarter and $1,324 million year
to date through October
- Full year 2022 system-wide comparable RevPAR is expected to
increase between 40 percent and 43 percent, on a currency neutral
basis, compared to 2021; full year net income is projected to be
between $1,219 million and $1,240 million; full year Adjusted
EBITDA is projected to be between $2,500 million and $2,530
million
- Full year 2022 capital return is projected to be between
$1.5 billion and $1.9 billion
Overview
Christopher J. Nassetta, President & Chief Executive Officer
of Hilton, said, "The third quarter marked an important milestone
in our recovery as system-wide RevPAR exceeded the same period in
2019 for the first time since the pandemic began. Our diluted EPS,
adjusted for special items and Adjusted EBITDA exceeded the high
end of our guidance. Improved performance reflected the continued
strength in leisure travel, as well as recovering business
transient and group demand. We expect these strong trends to
continue throughout the fourth quarter with system-wide RevPAR once
again exceeding prior peaks."
For the three months ended September 30, 2022, system-wide
comparable RevPAR increased 29.9 percent compared to the same
period in 2021, due to increases in both occupancy and ADR, and fee
revenues increased 33 percent. For comparison to pre-pandemic
results, system-wide comparable RevPAR for the three months ended
September 30, 2022 was up 5.0 percent compared to the same period
in 2019.
For the nine months ended September 30, 2022, system-wide
comparable RevPAR increased 49.6 percent compared to the same
period in 2021, due to increases in both occupancy and ADR, and fee
revenues increased 51 percent. For comparison to pre-pandemic
results, system-wide comparable RevPAR for the nine months ended
September 30, 2022 was down 4.0 percent compared to the same period
in 2019.
For the three months ended September 30, 2022, diluted EPS was
$1.26 and diluted EPS, adjusted for special items, was $1.31
compared to $0.86 and $0.78, respectively, for the three months
ended September 30, 2021. Net income and Adjusted EBITDA were $346
million and $732 million, respectively, for the three months ended
September 30, 2022, compared to $240 million and $519 million,
respectively, for the three months ended September 30, 2021.
For the nine months ended September 30, 2022, diluted EPS was
$3.32 and diluted EPS, adjusted for special items, was $3.31
compared to $0.94 and $1.36, respectively, for the nine months
ended September 30, 2021. Net income and Adjusted EBITDA were $924
million and $1,859 million, respectively, for the nine months ended
September 30, 2022, compared to $259 million and $1,117 million,
respectively, for the nine months ended September 30, 2021.
Development
In the third quarter of 2022, Hilton opened 80 new hotels
contributing 12,900 additional rooms to Hilton's system and
achieved net unit growth of 12,100 rooms. During the quarter,
Hilton opened the 25,000th room under the Curio Collection by
Hilton brand and the 600th Hilton Hotels & Resorts property.
Further, Hilton continued to expand its luxury portfolio with the
opening of the Waldorf Astoria Kuwait, the brand's first property
in the country.
As of September 30, 2022, Hilton's development pipeline totaled
more than 2,810 hotels representing nearly 416,000 rooms throughout
112 countries and territories, including 29 countries and
territories where Hilton does not currently have any existing
hotels. Additionally, of the rooms in the development pipeline,
204,200 of the rooms were under construction and 242,600 of the
rooms were located outside the U.S.
Balance Sheet and
Liquidity
As of September 30, 2022, Hilton had $8.8 billion of long-term
debt outstanding, excluding the deduction for deferred financing
costs and discount, with a weighted average interest rate of 4.29
percent. Further excluding finance lease liabilities and other debt
of Hilton's consolidated variable interest entities, Hilton had
$8.6 billion of long-term debt outstanding with a weighted average
interest rate of 4.28 percent and no scheduled maturities until
2025. No debt amounts were outstanding under Hilton's $1.75 billion
senior secured revolving credit facility as of September 30, 2022,
which had an available borrowing capacity of $1,690 million after
considering $60 million of outstanding letters of credit. Total
cash and cash equivalents were $1,362 million as of September 30,
2022, including $80 million of restricted cash and cash
equivalents.
During the third quarter of 2022, Hilton repurchased 4.0 million
shares of its common stock at a cost of $497 million and an average
price per share of $124.85. During the nine months ended September
30, 2022, Hilton repurchased 8.5 million shares of its common stock
at a cost of $1,107 million and an average price per share of
$130.47. Year-to-date through October 2022, Hilton repurchased 9.6
million shares of its common stock for $1,242 million and the
amount remaining under Hilton's stock repurchase program was $994
million.
In September 2022, Hilton paid a quarterly cash dividend of
$0.15 per share of common stock, for a total of $41 million. In
October 2022, 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 30, 2022 to holders of record of its
common stock as of the close of business on November 10, 2022.
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 2022
- System-wide comparable RevPAR, on a currency neutral basis, is
expected to increase between 40 percent and 43 percent compared to
2021, and to be down between 1 percent and 3 percent from
2019.
- Diluted EPS is projected to be between $4.40 and $4.48.
- Diluted EPS, adjusted for special items, is projected to be
between $4.46 and $4.54.
- Net income is projected to be between $1,219 million and $1,240
million.
- Adjusted EBITDA is projected to be between $2,500 million and
$2,530 million.
- Contract acquisition costs and capital expenditures, excluding
amounts indirectly reimbursed by hotel owners, are expected to be
between $250 million and $275 million.
- Capital return is projected to be between $1.5 billion and $1.9
billion.
- General and administrative expenses are projected to be between
$380 million and $400 million.
- Net unit growth is expected to be approximately 5.0
percent.
Fourth Quarter 2022
- System-wide comparable RevPAR, on a currency neutral basis, is
expected to increase between 19 percent and 23 percent compared to
the fourth quarter of 2021, and to increase between 2 percent and 6
percent from the fourth quarter of 2019.
- Diluted EPS is projected to be between $1.08 and $1.15.
- Diluted EPS, adjusted for special items, is projected to be
between $1.15 and $1.23.
- Net income is projected to be between $295 million and $316
million.
- Adjusted EBITDA is projected to be between $641 million and
$671 million.
Conference Call
Hilton will host a conference call to discuss third quarter 2022
results on October 26, 2022 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.
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 1181552.
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
1320953.
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 recovery of
the travel and hospitality industry from the coronavirus
("COVID-19") pandemic (the "pandemic"), the performance of Hilton's
business, financial results, liquidity and capital resources and
other non-historical statements. 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, such as inflation, changes in interest rates and
challenges due to labor shortages and supply chain disruptions,
risks related to the impact of the pandemic, including as a result
of new strains or variants of the virus and uncertainty of the
acceptance and continued effectiveness of the COVID-19 vaccines,
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., risks associated with the
Russian invasion of Ukraine 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, 2021 and "Part II —Item 1A. Risk Factors" of Hilton's
Quarterly Report on Form 10-Q for the quarterly period ended March
31, 2022, filed with the Securities and Exchange Commission (the
"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.
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 (loss),
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.
About Hilton
Hilton (NYSE: HLT) is a leading global hospitality company with
a portfolio of 18 world-class brands comprising more than 7,000
properties and more than 1.1 million rooms, in 123 countries and
territories. Dedicated to fulfilling its founding vision to fill
the earth with the light and warmth of hospitality, Hilton has
welcomed more than 3 billion guests in its more than 100-year
history, earned a top spot on Fortune's 100 Best Companies to Work
For list and been recognized as a global leader on the Dow Jones
Sustainability Indices for five consecutive years. Hilton has
introduced several 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 146 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
(unaudited, in millions,
except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Revenues
Franchise and licensing fees
$
573
$
451
$
1,531
$
1,062
Base and other management fees
76
49
206
116
Incentive management fees
52
26
132
60
Owned and leased hotels
295
199
727
376
Other revenues
28
18
71
56
1,024
743
2,667
1,670
Other revenues from managed and franchised
properties
1,344
1,006
3,662
2,282
Total revenues
2,368
1,749
6,329
3,952
Expenses
Owned and leased hotels
263
200
705
452
Depreciation and amortization
39
46
123
143
General and administrative
93
107
287
302
Other expenses
13
12
35
31
408
365
1,150
928
Other expenses from managed and franchised
properties
1,337
944
3,589
2,339
Total expenses
1,745
1,309
4,739
3,267
Loss on sale of assets, net
—
(8
)
—
(8
)
Operating income
623
432
1,590
677
Interest expense
(106
)
(98
)
(295
)
(302
)
Gain on foreign currency transactions
—
—
4
1
Loss on debt extinguishment
—
—
—
(69
)
Other non-operating income, net
10
6
32
16
Income before income taxes
527
340
1,331
323
Income tax expense
(181
)
(100
)
(407
)
(64
)
Net income
346
240
924
259
Net loss attributable to noncontrolling
interests
1
1
3
4
Net income attributable to Hilton
stockholders
$
347
$
241
$
927
$
263
Weighted average shares
outstanding:
Basic
273
279
277
278
Diluted
275
281
279
281
Earnings per share:
Basic
$
1.27
$
0.86
$
3.35
$
0.94
Diluted
$
1.26
$
0.86
$
3.32
$
0.94
Cash dividends declared per
share
$
0.15
$
—
$
0.30
$
—
HILTON WORLDWIDE HOLDINGS
INC.
COMPARABLE AND CURRENCY
NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY REGION, BRAND AND
SEGMENT
(unaudited)
Three Months Ended September
30,
Occupancy
ADR
RevPAR
2022
vs. 2021
2022
vs. 2021
2022
vs. 2021
Region
U.S.
74.5
%
6.0
% pts.
$
163.32
12.1
%
$
121.71
22.0
%
Americas (excluding U.S.)
71.4
17.6
147.08
31.2
104.99
74.2
Europe
77.4
18.5
159.10
45.9
123.15
91.7
Middle East & Africa
63.9
11.7
128.39
18.7
82.10
45.2
Asia Pacific
63.6
13.7
104.50
14.9
66.46
46.3
Brand
Waldorf Astoria Hotels & Resorts
55.3
%
9.7
% pts.
$
422.47
6.1
%
$
233.50
28.6
%
Conrad Hotels & Resorts
63.3
17.0
268.59
40.8
169.98
92.6
Canopy by Hilton
66.2
9.9
192.83
16.7
127.68
37.0
Hilton Hotels & Resorts
69.3
17.8
184.48
18.5
127.83
59.4
Curio Collection by Hilton
66.7
11.0
228.11
15.4
152.24
38.2
DoubleTree by Hilton
69.5
11.4
141.53
14.0
98.37
36.4
Tapestry Collection by Hilton
70.6
8.3
175.99
11.0
124.26
25.8
Embassy Suites by Hilton
73.3
10.5
178.81
11.7
131.05
30.5
Hilton Garden Inn
73.4
7.3
144.89
12.8
106.34
25.3
Hampton by Hilton
75.3
4.2
135.64
9.3
102.10
15.8
Tru by Hilton
75.1
3.0
131.31
7.7
98.67
12.2
Homewood Suites by Hilton
82.0
1.9
157.42
15.4
129.01
18.1
Home2 Suites by Hilton
81.3
0.3
139.68
12.0
113.62
12.4
Segment
Management and franchise
73.2
%
8.4
% pts.
$
154.97
14.1
%
$
113.46
28.8
%
Ownership(1)
70.4
27.6
209.81
31.8
147.62
116.6
System-wide
73.2
%
8.7
% pts.
$
155.86
14.5
%
$
114.04
29.9
%
HILTON WORLDWIDE HOLDINGS
INC.
COMPARABLE AND CURRENCY
NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS (continued)
BY REGION, BRAND AND
SEGMENT
(unaudited)
Nine Months Ended September
30,
Occupancy
ADR
RevPAR
2022
vs. 2021
2022
vs. 2021
2022
vs. 2021
Region
U.S.
70.5
%
10.3
% pts.
$
157.50
22.1
%
$
111.09
42.9
%
Americas (excluding U.S.)
63.0
23.1
138.05
31.4
87.04
107.7
Europe
65.9
29.4
147.18
51.5
97.02
173.2
Middle East & Africa
63.9
17.2
146.86
28.3
93.83
75.5
Asia Pacific
52.3
2.5
102.22
11.3
53.46
16.8
Brand
Waldorf Astoria Hotels & Resorts
53.5
%
16.7
% pts.
$
489.29
12.0
%
$
261.90
62.8
%
Conrad Hotels & Resorts
55.5
16.8
259.54
40.7
144.01
101.9
Canopy by Hilton
61.8
17.8
193.99
23.7
119.91
73.8
Hilton Hotels & Resorts
61.4
20.0
181.23
26.9
111.32
88.3
Curio Collection by Hilton
62.1
16.1
227.21
21.0
141.13
63.2
DoubleTree by Hilton
63.5
15.2
137.07
21.3
87.00
59.4
Tapestry Collection by Hilton
64.7
15.4
166.75
18.8
107.91
55.9
Embassy Suites by Hilton
68.9
13.9
174.14
22.0
119.98
53.0
Hilton Garden Inn
68.3
11.0
138.51
21.8
94.57
45.2
Hampton by Hilton
69.8
7.2
130.08
17.7
90.77
31.1
Tru by Hilton
71.0
7.6
124.70
17.9
88.55
32.0
Homewood Suites by Hilton
79.3
5.7
149.64
22.2
118.68
31.6
Home2 Suites by Hilton
78.9
4.5
134.41
18.9
106.08
26.1
Segment
Management and franchise
67.8
%
11.6
% pts.
$
150.10
22.8
%
$
101.76
48.1
%
Ownership(1)
57.7
31.4
202.64
36.1
116.89
199.0
System-wide
67.6
%
11.9
% pts.
$
150.86
23.2
%
$
102.02
49.6
%
____________
(1) Includes hotels owned or leased by
entities in which Hilton owns a noncontrolling financial
interest.
HILTON WORLDWIDE HOLDINGS
INC.
PROPERTY SUMMARY
As of September 30,
2022
Owned / Leased(1)
Managed
Franchised
Total
Properties
Rooms
Properties
Rooms
Properties
Rooms
Properties
Rooms
Waldorf Astoria Hotels &
Resorts
U.S.
—
—
12
4,488
—
—
12
4,488
Americas (excluding U.S.)
—
—
2
252
—
—
2
252
Europe
2
463
4
898
—
—
6
1,361
Middle East & Africa
—
—
6
1,432
—
—
6
1,432
Asia Pacific
—
—
6
1,259
—
—
6
1,259
LXR Hotels & Resorts
U.S.
—
—
—
—
3
522
3
522
Americas (excluding U.S.)
—
—
—
—
1
76
1
76
Europe
—
—
1
70
1
307
2
377
Middle East & Africa
—
—
1
41
1
234
2
275
Asia Pacific
—
—
—
—
1
114
1
114
Conrad Hotels & Resorts
U.S.
—
—
6
2,227
2
1,730
8
3,957
Americas (excluding U.S.)
—
—
3
787
—
—
3
787
Europe
—
—
4
1,155
1
107
5
1,262
Middle East & Africa
1
614
3
1,569
—
—
4
2,183
Asia Pacific
1
164
22
7,077
1
659
24
7,900
Canopy by Hilton
U.S.
—
—
—
—
25
4,296
25
4,296
Americas (excluding U.S.)
—
—
2
272
—
—
2
272
Europe
—
—
1
123
4
917
5
1,040
Middle East & Africa
—
—
1
200
—
—
1
200
Asia Pacific
—
—
4
614
—
—
4
614
Signia by Hilton
U.S.
—
—
2
1,814
—
—
2
1,814
Hilton Hotels & Resorts
U.S.
—
—
59
44,175
184
57,844
243
102,019
Americas (excluding U.S.)
1
405
29
11,298
26
7,826
56
19,529
Europe
39
11,514
45
15,135
43
11,280
127
37,929
Middle East & Africa
5
1,992
38
13,501
3
1,565
46
17,058
Asia Pacific
5
2,999
115
40,075
9
3,557
129
46,631
Curio Collection by Hilton
U.S.
—
—
10
3,990
62
13,582
72
17,572
Americas (excluding U.S.)
—
—
2
99
16
2,171
18
2,270
Europe
—
—
6
516
25
3,269
31
3,785
Middle East & Africa
—
—
4
741
2
557
6
1,298
Asia Pacific
—
—
4
773
2
248
6
1,021
DoubleTree by Hilton
U.S.
—
—
32
10,585
346
78,794
378
89,379
Americas (excluding U.S.)
—
—
3
587
36
7,238
39
7,825
Europe
—
—
14
3,580
109
18,635
123
22,215
Middle East & Africa
—
—
18
4,711
6
825
24
5,536
Asia Pacific
—
—
79
21,187
6
1,568
85
22,755
HILTON WORLDWIDE HOLDINGS
INC.
PROPERTY SUMMARY
(continued)
As of September 30,
2022
Owned / Leased(1)
Managed
Franchised
Total
Properties
Rooms
Properties
Rooms
Properties
Rooms
Properties
Rooms
Tapestry Collection by Hilton
U.S.
—
—
—
—
74
8,839
74
8,839
Americas (excluding U.S.)
—
—
1
138
7
740
8
878
Europe
—
—
—
—
6
360
6
360
Asia Pacific
—
—
1
266
1
175
2
441
Embassy Suites by Hilton
U.S.
—
—
38
10,121
215
48,458
253
58,579
Americas (excluding U.S.)
—
—
2
354
6
1,649
8
2,003
Motto by Hilton
U.S.
—
—
—
—
3
871
3
871
Hilton Garden Inn
U.S.
—
—
5
527
736
101,752
741
102,279
Americas (excluding U.S.)
—
—
13
1,992
51
7,664
64
9,656
Europe
—
—
19
3,696
61
9,849
80
13,545
Middle East & Africa
—
—
17
3,555
3
474
20
4,029
Asia Pacific
—
—
52
11,401
3
495
55
11,896
Hampton by Hilton
U.S.
—
—
24
3,115
2,299
227,371
2,323
230,486
Americas (excluding U.S.)
—
—
12
1,537
115
13,932
127
15,469
Europe
—
—
16
2,697
108
16,765
124
19,462
Middle East & Africa
—
—
4
1,238
—
—
4
1,238
Asia Pacific
—
—
—
—
261
42,027
261
42,027
Tru by Hilton
U.S.
—
—
—
—
224
21,855
224
21,855
Americas (excluding U.S.)
—
—
—
—
3
333
3
333
Homewood Suites by Hilton
U.S.
—
—
9
1,131
497
56,875
506
58,006
Americas (excluding U.S.)
—
—
3
406
24
2,688
27
3,094
Home2 Suites by Hilton
U.S.
—
—
2
210
536
56,235
538
56,445
Americas (excluding U.S.)
—
—
—
—
7
753
7
753
Asia Pacific
—
—
—
—
15
2,198
15
2,198
Other
—
—
3
1,343
5
1,217
8
2,560
Total hotels
54
18,151
759
238,958
6,175
841,496
6,988
1,098,605
Hilton Grand Vacations
—
—
—
—
73
12,542
73
12,542
Total system
54
18,151
759
238,958
6,248
854,038
7,061
1,111,147
____________
(1) Includes hotels owned or leased by
entities in which Hilton owns a noncontrolling financial
interest.
HILTON WORLDWIDE HOLDINGS
INC.
CAPITAL EXPENDITURES AND
CONTRACT ACQUISITION COSTS
(unaudited, dollars in
millions)
Three Months Ended
September 30,
Increase / (Decrease)
2022
2021
$
%
Capital expenditures for property and
equipment(1)
$
8
$
8
—
—
Capitalized software costs(2)
18
12
6
50.0
Total capital expenditures
26
20
6
30.0
Contract acquisition costs
20
45
(25
)
(55.6
)
Total capital expenditures and contract
acquisition costs
$
46
$
65
(19
)
(29.2
)
Nine Months Ended
September 30,
Increase / (Decrease)
2022
2021
$
%
Capital expenditures for property and
equipment(1)
$
19
$
17
2
11.8
Capitalized software costs(2)
43
28
15
53.6
Total capital expenditures
62
45
17
37.8
Contract acquisition costs
61
160
(99
)
(61.9
)
Total capital expenditures and contract
acquisition costs
$
123
$
205
(82
)
(40.0
)
____________ (1)
Represents expenditures for hotels,
corporate and other property and equipment, which include amounts
indirectly reimbursed by hotel owners of less than $1 million and
$2 million for the three months ended September 30, 2022 and 2021,
respectively, and $2 million and $3 million for the nine months
ended September 30, 2022 and 2021, respectively. Excludes
expenditures for FF&E replacement reserves of $13 million and
$15 million for the three months ended September 30, 2022 and 2021,
respectively, and $40 million and $30 million for the nine months
ended September 30, 2022 and 2021, respectively.
(2)
Includes $17 million and $11 million of
expenditures that were indirectly reimbursed by hotel owners for
the three months ended September 30, 2022 and 2021, respectively,
and $40 million and $25 million for the nine months ended September
30, 2022 and 2021, respectively.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
NET INCOME AND DILUTED EPS,
ADJUSTED FOR SPECIAL ITEMS
(unaudited, in millions,
except per share data)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income attributable to Hilton
stockholders, as reported
$
347
$
241
$
927
$
263
Diluted EPS, as reported
$
1.26
$
0.86
$
3.32
$
0.94
Special items:
Net other expenses (revenues) from managed
and franchised properties
$
(7
)
$
(62
)
$
(73
)
$
57
Purchase accounting amortization(1)
11
11
34
35
FF&E replacement reserves
13
15
40
30
Asset dispositions(2)
—
8
—
8
Loss on debt extinguishment(3)
—
—
—
69
Tax-related adjustment(4)
—
(8
)
—
(38
)
Other adjustment items(5)
1
9
(9
)
10
Total special items before taxes
18
(27
)
(8
)
171
Income tax benefit (expense) on special
items
(4
)
5
4
(52
)
Total special items after taxes
$
14
$
(22
)
$
(4
)
$
119
Net income, adjusted for special items
$
361
$
219
$
923
$
382
Diluted EPS, adjusted for special
items
$
1.31
$
0.78
$
3.31
$
1.36
____________ (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 that were remaining as of September 30, 2022 will be
fully amortized during 2023.
(2)
Amounts relate to the loss on the sale of
one of the Company's owned hotels, which was recognized in loss on
sale of assets, net.
(3)
The amount relates to the redemption of
senior unsecured notes and includes a redemption premium of $55
million and the accelerated recognition of unamortized deferred
financing costs related to those senior unsecured notes of $14
million.
(4)
Amounts include income tax benefits
recognized related to changes in effective tax rates, which did not
have an effect on cash paid for taxes in the periods.
(5)
The amount for the nine months ended
September 30, 2022 primarily includes a gain related to certain of
Hilton's investments in unconsolidated affiliates, which was
recognized in other non-operating income, net. Amounts for the
three and nine months ended September 30, 2021 include costs
recognized for certain legal settlements, which were recognized in
general and administrative expenses.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
ADJUSTED EBITDA AND ADJUSTED
EBITDA MARGIN
(unaudited, dollars in
millions)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Net income
$
346
$
240
$
924
$
259
Interest expense
106
98
295
302
Income tax expense
181
100
407
64
Depreciation and amortization expenses
39
46
123
143
EBITDA
672
484
1,749
768
Loss on sale of assets, net
—
8
—
8
Gain on foreign currency transactions
—
—
(4
)
(1
)
Loss on debt extinguishment
—
—
—
69
FF&E replacement reserves
13
15
40
30
Share-based compensation expense
42
52
126
144
Amortization of contract acquisition
costs
10
9
28
23
Net other expenses (revenues) from managed
and franchised properties
(7
)
(62
)
(73
)
57
Other adjustments(1)
2
13
(7
)
19
Adjusted EBITDA
$
732
$
519
$
1,859
$
1,117
____________ (1)
Amount for the nine months ended September
30, 2022 primarily includes a gain related to certain of Hilton's
investments in unconsolidated affiliates. Amounts for the three and
nine months ended September 30, 2021 include costs recognized for
certain legal settlements. All periods include severance and other
items.
Three Months Ended
Nine Months Ended
September 30,
September 30,
2022
2021
2022
2021
Total revenues, as reported
$
2,368
$
1,749
$
6,329
$
3,952
Add: amortization of contract acquisition
costs
10
9
28
23
Less: other revenues from managed and
franchised properties
(1,344
)
(1,006
)
(3,662
)
(2,282
)
Total revenues, as adjusted
$
1,034
$
752
$
2,695
$
1,693
Adjusted EBITDA
$
732
$
519
$
1,859
$
1,117
Adjusted EBITDA margin
70.8
%
69.0
%
69.0
%
66.0
%
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
NET DEBT AND NET DEBT TO
ADJUSTED EBITDA RATIO
(unaudited, dollars in
millions)
September 30,
December 31,
2022
2021
Long-term debt, including current
maturities
$
8,731
$
8,766
Add: unamortized deferred financing costs
and discount
77
87
Long-term debt, including current
maturities and excluding the deduction for unamortized deferred
financing costs and discount
8,808
8,853
Less: cash and cash equivalents
(1,282
)
(1,427
)
Less: restricted cash and cash
equivalents
(80
)
(85
)
Net debt
$
7,446
$
7,341
Nine Months Ended
Year Ended
TTM Ended
September 30,
December 31,
September 30,
2022
2021
2021
2022
Net income
$
924
$
259
$
407
$
1,072
Interest expense
295
302
397
390
Income tax expense
407
64
153
496
Depreciation and amortization expenses
123
143
188
168
EBITDA
1,749
768
1,145
2,126
Loss on sales of assets, net
—
8
7
(1
)
Loss (gain) on foreign currency
transactions
(4
)
(1
)
7
4
Loss on debt extinguishment
—
69
69
—
FF&E replacement reserves
40
30
48
58
Share-based compensation expense
126
144
193
175
Amortization of contract acquisition
costs
28
23
32
37
Net other expenses (revenues) from managed
and franchised properties
(73
)
57
110
(20
)
Other adjustments(1)
(7
)
19
18
(8
)
Adjusted EBITDA
$
1,859
$
1,117
$
1,629
$
2,371
Net debt
$
7,446
Net debt to Adjusted EBITDA ratio
3.1
____________ (1)
Amounts for all periods include severance
and other items. Amount for the nine months ended September 30,
2022 also includes a gain related to certain of Hilton's
investments in unconsolidated affiliates. Amounts for the nine
months ended September 30, 2021 and year ended December 31, 2021
also include costs recognized for certain legal settlements.
HILTON WORLDWIDE HOLDINGS
INC.
RECONCILIATIONS OF NON-GAAP
FINANCIAL MEASURES
OUTLOOK: NET INCOME AND
DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS
(unaudited, in millions,
except per share data)
Three Months Ending
December 31, 2022
Low Case
High Case
Net income attributable to Hilton
stockholders
$
295
$
316
Diluted EPS(1)
$
1.08
$
1.15
Special items(2):
Purchase accounting amortization
$
11
$
11
FF&E replacement reserves
15
15
Total special items before taxes
26
26
Income tax expense on special items
(6
)
(6
)
Total special items after taxes
$
20
$
20
Net income, adjusted for special items
$
315
$
336
Diluted EPS, adjusted for special
items(1)
$
1.15
$
1.23
Year Ending
December 31, 2022
Low Case
High Case
Net income attributable to Hilton
stockholders
$
1,222
$
1,243
Diluted EPS(1)
$
4.40
$
4.48
Special items(2):
Net other revenues from managed and
franchised properties
$
(73
)
$
(73
)
Purchase accounting amortization
45
45
FF&E replacement reserves
55
55
Other adjustment items
(9
)
(9
)
Total special items before taxes
18
18
Income tax expense on special items
(2
)
(2
)
Total special items after taxes
$
16
$
16
Net income, adjusted for special items
$
1,238
$
1,259
Diluted EPS, adjusted for special
items(1)
$
4.46
$
4.54
____________
(1) Does not include the effect of
potential share repurchases.
(2) 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
(unaudited, in
millions)
Three Months Ending
December 31, 2022
Low Case
High Case
Net income
$
295
$
316
Interest expense
116
116
Income tax expense
126
135
Depreciation and amortization expenses
40
40
EBITDA
577
607
FF&E replacement reserves
15
15
Share-based compensation expense
32
32
Amortization of contract acquisition
costs
12
12
Other adjustments(1)
5
5
Adjusted EBITDA
$
641
$
671
Year Ending
December 31, 2022
Low Case
High Case
Net income
$
1,219
$
1,240
Interest expense
411
411
Income tax expense
533
542
Depreciation and amortization expenses
163
163
EBITDA
2,326
2,356
Gain on foreign currency transactions
(4
)
(4
)
FF&E replacement reserves
55
55
Share-based compensation expense
158
158
Amortization of contract acquisition
costs
40
40
Net other revenues from managed and
franchised properties
(73
)
(73
)
Other adjustments(1)
(2
)
(2
)
Adjusted EBITDA
$
2,500
$
2,530
____________
(1) Includes adjustments for severance and
other items. See "—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 September
30, 2022, which is calculated as the nine months ended September
30, 2022 plus the year ended December 31, 2021 less the nine months
ended September 30, 2021. 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.
The pandemic had an adverse impact on certain of the Company's
results for the TTM period ended September 30, 2022 when compared
to periods prior to the onset of the pandemic. While the Company
has experienced strong signs of economic recovery since early 2021,
this TTM period, as well as upcoming periods, are not considered
comparable, and no periods affected by the pandemic are expected to
be comparable to future periods. As such, TTM information may not
be useful for projecting future operating results.
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) 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 and Adjusted
EBITDA Margin
EBITDA, presented herein, reflects net income (loss), excluding
interest expense, a provision for income tax benefit (expense) and
depreciation and amortization expenses. Adjusted EBITDA, presented
herein, 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 reimbursable
costs included in other revenues and other expenses from managed
and franchised properties; and (x) other items.
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.
The Company believes that EBITDA, Adjusted EBITDA and Adjusted
EBITDA margin provide useful information to investors about the
Company's financial condition and results of operations for the
following reasons: (i) these measures are among the measures used
by the Company's management team to evaluate its 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 the industry.
Additionally, these measures exclude certain items that can vary
widely across different industries and among competitors within the
Company's 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 used for accounting purposes. For Adjusted EBITDA,
the Company also excludes 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; (iii) the net effect of the Company's cost
reimbursement revenues and reimbursed expenses, as the Company
contractually does not operate the related programs to generate a
profit over the terms of the respective contracts; and (iv) other
items, such as amounts related to debt restructurings and debt
retirements and reorganization and related severance costs, that
are not core to the Company's operations and are not reflective of
the Company's operating performance.
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) 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 and Net Debt to Adjusted EBITDA
Ratio
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 is calculated as:
long-term debt, including current maturities and excluding the
deduction for unamortized deferred financing costs and discount;
reduced by: (i) cash and cash equivalents and (ii) restricted cash
and cash equivalents. Beginning as of March 31, 2022, the Company
has modified its definition of net debt to no longer include
Hilton's share of unconsolidated affiliate debt. Since this debt is
not consolidated by the Company, the modified definition more
accurately reflects how the Company and the Company's investors
evaluate Hilton's financial leverage, as well as its
indebtedness.
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
The Company defines comparable hotels as those that: (i) were
active and operating in the Company's 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 sustained substantial property damage,
business interruption, undergone large-scale capital projects or
for which comparable results were not available. Of the 6,988
hotels in the Company's system as of September 30, 2022, 5,847
hotels were classified as comparable hotels. The 1,141
non-comparable hotels included 260 hotels, or less than four
percent of the total hotels in the Company's system, that were
removed from the comparable group during the last twelve months
because they have sustained substantial property damage, business
interruption, undergone large-scale capital projects or comparable
results were otherwise not available.
When considering business interruption in the context of the
Company's definition of comparable hotels, no hotel that had
completely or partially suspended operations on a temporary basis
at any time as a result of the pandemic was excluded from the
definition of comparable hotels on that basis alone. Despite these
temporary suspensions of hotel operations, the Company believes
that including these hotels within the hotel operating statistics
of occupancy, average daily rate ("ADR") and revenue per available
room ("RevPAR"), if they would have otherwise been included,
reflects the underlying results of the business for the three and
nine months ended September 30, 2022 and 2021.
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 the hotels' available capacity. 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 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 management uses ADR
to assess pricing levels that the Company is 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.
RevPAR
RevPAR is calculated by dividing hotel room revenue by the total
number of room nights available to guests for a given period.
Management considers RevPAR to be a meaningful indicator of the
Company's 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 throughout this press
release are presented on a comparable basis, based on the
comparable hotels as of September 30, 2022, 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 and nine months ended September 30, 2022
and 2021 or 2019, 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 and nine months ended September 30, 2022, respectively.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20221026005058/en/
Investor Contact Jill Slattery +1 703 883 5476
Media Contact Kent Landers +1 703 883 3246
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