Hilton Worldwide Holdings Inc. ("Hilton," "Hilton Worldwide" or
the "Company") (NYSE: HLT) today reported its first quarter 2016
results. Highlights include:
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- EPS, adjusted for special items, for
the first quarter was $0.17, a 42 percent increase from the same
period in 2015; without adjustments, EPS was $0.31
- Net income attributable to Hilton
stockholders for the first quarter was $309 million, an increase of
$159 million from the same period in 2015
- Adjusted EBITDA for the first
quarter increased 9 percent from the same period in 2015 to $653
million, and Adjusted EBITDA margin increased 260 basis
points
- System-wide comparable RevPAR
increased 2.1 percent for the first quarter on a currency neutral
basis from the same period in 2015
- Management and franchise fees for
the first quarter increased 5 percent from the same period in 2015
to $409 million
- Net unit growth was 6,500 rooms in
the first quarter, a 16 percent increase from the same period in
2015
- Approved 26,000 new rooms for
development during the first quarter, a 14 percent increase from
the same period in 2015, growing Hilton's development pipeline to
1,729 hotels, consisting of 281,000 rooms
- As previously disclosed,
registration statements for planned spin-offs of real estate and
timeshare businesses expected to be filed during the second
quarter
- Announced CEO and CFO appointments
for planned REIT in separate press release this morning
Overview
For the three months ended March 31, 2016, EPS was $0.31
compared to $0.15 for the three months ended March 31, 2015, and
EPS, adjusted for special items, was $0.17 for the three months
ended March 31, 2016 compared to $0.12 for the three months ended
March 31, 2015. Special items in the first quarter of 2016 were
primarily related to a $153 million net change in unrecognized tax
benefits. Adjusted EBITDA increased 9 percent to $653 million for
the three months ended March 31, 2016, compared to $599 million for
the three months ended March 31, 2015, and net income attributable
to Hilton stockholders was $309 million for the three months ended
March 31, 2016 compared to $150 million for the three months ended
March 31, 2015.
Christopher J. Nassetta, President & Chief Executive Officer
of Hilton Worldwide, said, "We are pleased with our start to the
year with Adjusted EBITDA exceeding the high end of guidance. We
continue to organically expand the global presence of our 13
distinct, market-leading brands, with over 9,200 new rooms opening
in the quarter, including openings in two new countries, resulting
in net unit growth that was 16 percent higher than the first
quarter of last year. Construction started on the first Tru by
Hilton in the quarter and we now have 48 in the pipeline and 170
more committed or in progress, representing the fastest growth of a
new brand in Company history."
Segment Highlights
Management and Franchise
Management and franchise fees were $409 million in the first
quarter of 2016, an increase of 5 percent compared to the same
period in 2015. RevPAR at comparable managed and franchised hotels
in the first quarter of 2016 increased 1.9 percent on a currency
neutral basis (a 0.9 percent increase in actual dollars) compared
to the same period in 2015. The increase in RevPAR at comparable
managed and franchised hotels and addition of new units have
yielded continued fee growth during the first quarter of 2016.
Ownership
Revenues from the ownership segment were $974 million in the
first quarter of 2016, and ownership segment Adjusted EBITDA was
$207 million, an increase of 13 percent(1) from the same period in
2015. Adjusted EBITDA margin(1)(2) increased 187 basis points.
RevPAR at comparable hotels in the ownership segment increased 3.1
percent on a currency neutral basis (a 1.4 percent increase in
actual dollars) in the first quarter of 2016 compared to the same
period in 2015.
____________ (1)
Excluding $7 million of Adjusted EBITDA in
the first quarter of 2015 related to the Hilton Sydney.
(2)
Calculated as ownership segment Adjusted
EBITDA divided by ownership segment revenues. Excluding $20 million
of revenues in the first quarter of 2015 related to the Hilton
Sydney.
Timeshare
Timeshare segment revenues for the first quarter of 2016 were
$326 million and timeshare Adjusted EBITDA was $95 million, an
increase of 28 percent, compared to the same period in 2015. Sales
revenue on owned inventory increased $23 million during the first
quarter of 2016 from the same period in 2015, while commissions
recognized from the sale of third-party developed timeshare
intervals decreased $25 million during the first quarter of 2016
from the same period in 2015, resulting from a successful launch of
a new third-party developed product in December 2014.
During the three months ended March 31, 2016, 64 percent of
intervals sold were developed by third parties. Hilton Worldwide's
overall supply of timeshare intervals as of March 31, 2016 was
approximately 130,000 intervals, or over six years of sales at
current pace, of which 110,000, or 85 percent, were developed by
third parties.
Development
Hilton Worldwide opened 67 hotels consisting of over 9,200
rooms, of which nearly 25 percent were conversions from non-Hilton
brands, and achieved net unit growth of 6,500 rooms during the
first quarter of 2016. During the first quarter of 2016, Hilton
Worldwide grew its global footprint to 102 countries and
territories with the openings of the Hilton Garden Inn Tanger City
Center in Tangier, Morocco and the DoubleTree by Hilton Yerevan
City Centre in Yerevan, Armenia.
As of March 31, 2016, Hilton Worldwide had the largest
rooms pipeline in the lodging industry(3), with approximately
281,000 rooms at 1,729 hotels throughout 81 countries and
territories, including 25 countries and territories where Hilton
Worldwide does not currently have any open hotels. Over 145,000
rooms, or more than half of the pipeline, were located outside of
the United States. Additionally, over 139,000 rooms, or
approximately half of the pipeline, were under construction. At
over 19 percent, Hilton Worldwide also has the largest share of
rooms under construction globally(3). Including all agreements
approved but not signed, Hilton Worldwide's pipeline totaled nearly
300,000 rooms, which will be almost entirely funded by third-party
owner investment.
____________ (3)
Source: STR Global New Development
Pipeline (March 2016).
Balance Sheet and
Liquidity
Total cash and cash equivalents were $973 million as of
March 31, 2016, including $281 million of restricted cash and
cash equivalents. As of March 31, 2016, Hilton had $10.0
billion of long-term debt with a weighted average interest rate of
4.3 percent. No borrowings were outstanding under the $1.0 billion
revolving credit facility as of March 31, 2016.
In March 2016, Hilton Worldwide paid a quarterly cash dividend
of $0.07 per share on shares of its common stock, for a total of
$69 million. Hilton Worldwide announced a regular quarterly cash
dividend of $0.07 per share of common stock to be paid on or before
June 17, 2016 to stockholders of record of its common stock as of
the close of business on May 20, 2016.
Outlook
Hilton Worldwide will disclose financial and other details of
the planned spin-offs of the real estate and timeshare businesses
in filings with the Securities and Exchange Commission ("SEC"),
which are expected to be filed during the second quarter. The
transactions are subject to execution of intercompany agreements,
arrangement of adequate financing facilities, the effectiveness of
the registration statements, final approval by Hilton's Board of
Directors and other customary conditions. The spin-off transactions
will not require a shareholder vote. The spin-offs are expected to
be completed by year end but there can be no assurance regarding
the ultimate timing of the spin-offs or that either or both of the
spin-offs will ultimately occur. The following outlook does
not include the effects of the spin-offs, including potential
transaction costs.
Full Year 2016
- System-wide RevPAR is expected to
increase between 3.0 percent and 5.0 percent on a comparable and
currency neutral basis, with ownership segment RevPAR expected to
increase between 3.0 percent and 5.0 percent on a comparable and
currency neutral basis, as compared to 2015.
- Adjusted EBITDA is projected to be
between $3,020 million and $3,100 million.
- Management and franchise fees are
projected to increase approximately 7 percent to 9 percent.
- Timeshare segment Adjusted EBITDA is
projected to be between $370 million and $390 million.
- Corporate expense and other is
projected to be between $240 million and $250 million.
- Diluted EPS, adjusted for special
items, is projected to be between $0.92 and $0.98.
- Capital expenditures, excluding
timeshare inventory, are expected to be between $400 million and
$450 million.
- Net unit growth is expected to be
approximately 45,000 rooms to 50,000 rooms.
- Cash available for debt reduction and
capital return is expected to be between $800 million and $1
billion.
Second Quarter 2016
- System-wide RevPAR is expected to
increase between 3.0 percent and 5.0 percent on a comparable and
currency neutral basis compared to the second quarter of 2015.
- Adjusted EBITDA is expected to be
between $790 million and $810 million.
- Management and franchise fees are
expected to increase approximately 7 percent to 9 percent.
- Diluted EPS, adjusted for special
items, is projected to be between $0.25 and $0.27.
Conference Call
Hilton Worldwide will host a conference call to discuss first
quarter 2016 results on April 27, 2016 at 10:00 a.m. Eastern Time.
Participants may listen to the live webcast by logging onto the
Hilton Worldwide Investor Relations website at http://ir.hiltonworldwide.com/events-and-presentations.
A replay and transcript of the webcast will be available within 24
hours after the live event at http://ir.hiltonworldwide.com/financial-reporting/quarterly-results.
Alternatively, participants may listen to the live call by
dialing 1-888-317-6003 in the United States or 1-412-317-6061
internationally. Please use the conference ID 5025845. 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
or 1-412-317-0088 using the replay access code
10083376.
Forward-Looking
Statements
This press release contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as
amended. These statements include, but are not limited to,
statements related to the expectations regarding the performance of
Hilton's business, financial results, liquidity and capital
resources, the planned spin-offs and other non-historical
statements, including the statements in the "Outlook" section of
this press release. You can identify these forward-looking
statements by the use of words such as "outlook," "believes,"
"expects," "potential," "continues," "may," "will," "should,"
"could," "seeks," "projects," "predicts," "intends," "plans,"
"estimates," "anticipates" or the negative version of these words
or other comparable words. Such forward-looking statements are
subject to various risks and uncertainties, including, among
others, risks inherent to the hospitality industry, macroeconomic
factors beyond Hilton's control, competition for hotel guests,
management and franchise agreements and timeshare sales, risks
related to doing business with third-party hotel owners, Hilton's
significant investments in owned and leased real estate,
performance of Hilton's information technology systems, growth of
reservation channels outside of Hilton's system, risks of doing
business outside of the United States, risks related to Hilton's
proposed spin-offs and Hilton's indebtedness. Additional factors
that could cause Hilton's results to differ materially from those
described in the forward-looking statements can be found under the
section entitled "Part I—Item 1A. Risk Factors" of the Annual
Report on Form 10-K for the fiscal year ended December 31, 2015,
filed with 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 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 non-GAAP financial measures in
this press release, including net income and EPS, adjusted for
special items, Adjusted EBITDA and Adjusted EBITDA margin, Net debt
and Net debt to Adjusted EBITDA ratio. Please see the schedules to
this press release including the "Definitions" section for
additional information and reconciliations of such non-GAAP
financial measures.
About Hilton Worldwide
Hilton Worldwide (NYSE: HLT) is a leading global hospitality
company, comprised of more than 4,660 managed, franchised, owned
and leased hotels and timeshare properties, with nearly 765,000
rooms in 102 countries and territories. For 96 years, Hilton
Worldwide has been dedicated to continuing its tradition of
providing exceptional guest experiences. The Company’s portfolio of
13 world-class global brands includes Hilton Hotels & Resorts,
Waldorf Astoria Hotels & Resorts, Conrad Hotels & Resorts,
Canopy by Hilton, Curio - A Collection by Hilton, DoubleTree by
Hilton, Embassy Suites by Hilton, Hilton Garden Inn, Hampton by
Hilton, Tru by Hilton, Homewood Suites by Hilton, Home2 Suites by
Hilton and Hilton Grand Vacations. The Company also manages an
award-winning customer loyalty program, Hilton HHonors®. Hilton
HHonors members who book directly through preferred Hilton channels
have access to benefits including free standard Wi-Fi, as well as
digital amenities that are available exclusively through the
industry-leading Hilton HHonors app, where HHonors members can
check-in, choose their room and access their room using a Digital
Key. Visit news.hiltonworldwide.com for more information and
connect with Hilton Worldwide at www.facebook.com/hiltonworldwide,
www.twitter.com/hiltonworldwide, www.youtube.com/hiltonworldwide,
www.flickr.com/hiltonworldwide,
www.linkedin.com/company/hilton-worldwide and
www.instagram.com/hiltonworldwide.
HILTON WORLDWIDE HOLDINGS INC. EARNINGS RELEASE
SCHEDULES TABLE OF CONTENTS
Condensed Consolidated Statements of
Operations
Segment Adjusted EBITDA
Comparable and Currency Neutral
System-wide Hotel Operating Statistics
Management and Franchise Fees and Other
Revenues
Timeshare Revenues and Operating
Expenses
Hotel and Timeshare Property Summary
Capital Expenditures
Non-GAAP Financial Measures
Reconciliations
Definitions
HILTON WORLDWIDE HOLDINGS INC. CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS (in millions, except
per share data) (unaudited) Three Months
Ended March 31, 2016 2015
Revenues Owned and leased hotels $ 967 $ 957 Management and
franchise fees and other 386 371 Timeshare 326 321
1,679 1,649 Other revenues from managed and franchised properties
1,071 950 Total revenues 2,750 2,599
Expenses Owned and leased hotels 756 768 Timeshare 217 234
Depreciation and amortization 169 175 Impairment loss 15 — General,
administrative and other 113 127 1,270 1,304 Other
expenses from managed and franchised properties 1,071 950
Total expenses 2,341 2,254 Gain on sales of assets,
net — 145
Operating income 409 490 Interest
income 3 6 Interest expense (139 ) (144 ) Equity in earnings from
unconsolidated affiliates 3 4 Loss on foreign currency transactions
(12 ) (18 ) Other loss, net — (25 )
Income before
income taxes 264 313 Income tax benefit (expense) 46
(163 )
Net income 310 150
Net income
attributable to noncontrolling interests (1 ) —
Net
income attributable to Hilton stockholders $ 309 $ 150
Weighted average shares outstanding Basic 987
986 Diluted 989 988
Earnings
per share Basic $ 0.31 $ 0.15 Diluted $ 0.31
$ 0.15
Cash dividends declared per
share $ 0.07 $ —
HILTON WORLDWIDE HOLDINGS INC. SEGMENT
ADJUSTED EBITDA (unaudited, in millions) Three
Months Ended March 31, 2016 2015
Management and franchise $ 409 $ 391 Ownership(1) 207 190 Timeshare
95 74 Corporate and other (58 ) (56 )
Adjusted
EBITDA(2)(3) $ 653 $ 599 ____________ (1)
Includes unconsolidated affiliate Adjusted
EBITDA.
(2)
See "Non-GAAP Financial Measures
Reconciliations—Adjusted EBITDA and Adjusted EBITDA Margin" for a
reconciliation of net income attributable to Hilton stockholders to
Adjusted EBITDA.
(3)
Adjusted EBITDA included the following
intercompany charges that were eliminated in the condensed
consolidated financial statements:
Three Months Ended
March 31,
2016
2015
(in millions)
Rental and other fees(a)
$
6
$
6
Management, royalty and intellectual
property fees(b)
33
30
Licensing fee(c)
10
9
Laundry services(d)
2
2
Other(e)
1
1
Intersegment fees elimination
$
52
$
48
____________ (a)
Represents charges to the timeshare
segment by the ownership segment.
(b)
Represents fees charged to consolidated
owned and leased properties by the management and franchise
segment.
(c)
Represents fees charged to the timeshare
segment by the management and franchise segment.
(d)
Represents charges to consolidated owned
and leased properties for services provided by Hilton Worldwide's
wholly owned laundry business. Revenues from the laundry business
are included in other revenues.
(e)
Represents other intercompany charges,
which are a benefit to the ownership segment and a cost to
corporate and other.
HILTON WORLDWIDE HOLDINGS INC. COMPARABLE AND
CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS BY
REGION (unaudited) Three Months Ended March
31, Occupancy ADR RevPAR
2016 vs. 2015 2016 vs.
2015 2016 vs. 2015 Americas 71.2 % (0.5 )%
pts. $ 140.75 2.7 % $ 100.24 1.9 % Europe 64.7 (0.2 ) 137.02 3.1
88.64 2.9 Middle East & Africa 64.2 (2.2 ) 169.03 (1.4 ) 108.46
(4.7 ) Asia Pacific 66.9 3.8 148.30 1.1 99.24 7.1 System-wide 70.2
(0.3 ) 141.62 2.5 99.42 2.1
HILTON WORLDWIDE HOLDINGS
INC. COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL
OPERATING STATISTICS BY BRAND (unaudited)
Three Months Ended March 31, Occupancy
ADR RevPAR 2016 vs. 2015
2016 vs. 2015 2016 vs.
2015 Waldorf Astoria Hotels & Resorts 67.0 % (0.9 )% pts. $
327.73 3.7 % $ 219.63 2.3 % Conrad Hotels & Resorts 64.1 2.4
264.81 (4.4 ) 169.65 (0.7 ) Hilton Hotels & Resorts 70.1 (0.7 )
164.53 3.3 115.36 2.3 Curio - A Collection by Hilton 76.4 (1.5 )
271.56 1.4 207.43 (0.6 ) DoubleTree by Hilton 69.9 0.8 132.51 2.7
92.60 4.0 Embassy Suites by Hilton 76.3 (0.1 ) 159.84 3.1 121.92
3.0 Hilton Garden Inn 70.9 (0.3 ) 127.98 2.2 90.74 1.8 Hampton by
Hilton 68.0 (0.6 ) 116.69 1.7 79.30 0.8 Homewood Suites by Hilton
74.4 (0.1 ) 132.59 2.2 98.67 1.2 Home2 Suites by Hilton 74.2 3.6
109.32 1.0 81.15 6.2 System-wide 70.2 (0.3 ) 141.62 2.5 99.42 2.1
HILTON WORLDWIDE HOLDINGS INC. COMPARABLE AND
CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS BY
SEGMENT (unaudited) Three Months Ended March
31, Occupancy ADR RevPAR
2016 vs. 2015 2016 vs.
2015 2016 vs. 2015
Ownership(1) 73.5 % (0.7 )% pts. $ 182.31 4.0 % $
134.01 3.1 % U.S. 78.5 (0.3 ) 197.50 4.8 154.97 4.3 International
(non-U.S.) 67.9 (1.1 ) 162.37 2.8 110.20 1.1
Management
and franchise 69.9 (0.2 ) 137.69 2.3 96.24 1.9 U.S. 71.0 (0.6 )
137.88 2.4 97.88 1.6 International (non-U.S.) 65.5 1.0 136.89 2.0
89.67 3.6
System-wide 70.2 (0.3 ) 141.62 2.5 99.42
2.1 U.S. 71.4 (0.5 ) 141.64 2.6 101.16 1.8 International (non-U.S.)
65.9 0.6 141.53 2.1 93.31 3.0 ____________ (1)
Includes owned and leased hotels, as well
as hotels owned or leased by entities in which Hilton owns a
noncontrolling interest.
HILTON WORLDWIDE HOLDINGS INC. MANAGEMENT
AND FRANCHISE FEES AND OTHER REVENUES (unaudited, dollars in
millions) Three Months Ended March 31,
Increase / (Decrease) 2016 2015
$ % Management fees: Base fees(1) $ 85 $ 81 4
4.9 Incentive fees(2) 42 37 5 13.5 Total base
and incentive fees 127 118 9 7.6 Other management fees(3) 9
8 1 12.5 Total management fees 136 126 10 7.9
Franchise fees(4) 273 265 8 3.0 Total
management and franchise fees 409 391 18 4.6 Other revenues(5) 22
21 1 4.8 Intersegment fees elimination(1)(2)(4)(5) (45 ) (41 ) (4 )
9.8
Management and franchise fees and other revenues $ 386
$ 371 15 4.0 ____________ (1)
Includes management, royalty and
intellectual property fees of $27 million and $26 million for the
three months ended March 31, 2016 and 2015, respectively. These
fees are charged to consolidated owned and leased properties and
were eliminated in the condensed consolidated financial
statements.
(2)
Includes management, royalty and
intellectual property fees of $6 million and $4 million for the
three months ended March 31, 2016 and 2015, respectively. These
fees are charged to consolidated owned and leased properties and
were eliminated in the condensed consolidated financial
statements.
(3)
Includes timeshare homeowners'
association, early termination, product improvement plan and other
fees.
(4)
Includes a licensing fee earned from the
timeshare segment of $10 million and $9 million for the three
months ended March 31, 2016 and 2015, respectively.
(5)
Includes charges to consolidated owned and
leased properties for services provided by a wholly owned laundry
business of $2 million for each of the three months ended March 31,
2016 and 2015.
HILTON WORLDWIDE HOLDINGS INC. TIMESHARE
REVENUES AND OPERATING EXPENSES (unaudited, dollars in
millions) Three Months Ended March 31,
Increase / (Decrease) 2016 2015
$ % Revenues Timeshare sales $ 235 $
237 (2 ) (0.8 ) Resort operations 55 50 5 10.0 Financing and other
36 34 2 5.9 $ 326 $ 321 5
1.6
Operating Expenses Timeshare sales $ 170 $ 188
(18 ) (9.6 ) Resort operations 30 31 (1 ) (3.2 ) Financing and
other 17 15 2 13.3 $ 217 $ 234
(17 ) (7.3 )
HILTON WORLDWIDE
HOLDINGS INC. HOTEL AND TIMESHARE PROPERTY SUMMARY As
of March 31, 2016 Owned / Leased(1)
Managed Franchised Total Properties
Rooms Properties Rooms
Properties Rooms Properties
Rooms Waldorf Astoria Hotels & Resorts U.S. 4
1,148 8 5,535 — — 12 6,683 Americas (excluding U.S.) — — 1 153 1
984 2 1,137 Europe 2 463 4 898 — — 6 1,361 Middle East & Africa
— — 3 703 — — 3 703 Asia Pacific — — 2 431 — — 2 431
Conrad
Hotels & Resorts U.S. — — 3 1,029 — — 3 1,029 Americas
(excluding U.S.) — — — — 1 294 1 294 Europe 1 191 2 707 1 256 4
1,154 Middle East & Africa 1 614 2 641 — — 3 1,255 Asia Pacific
— — 12 3,727 1 636 13 4,363
Hilton Hotels & Resorts U.S.
25 23,090 38 23,723 176 53,350 239 100,163 Americas (excluding
U.S.) 3 1,668 22 7,428 19 6,015 44 15,111 Europe 69 17,925 47
15,197 37 9,190 153 42,312 Middle East & Africa 6 2,276 45
13,966 1 410 52 16,652 Asia Pacific 7 3,391 69 26,043 8 2,948 84
32,382
Curio - A Collection by Hilton U.S. 1 224 1 998 15
3,179 17 4,401 Americas (excluding U.S.) — — — — 3 525 3 525 Europe
— — — — 1 278 1 278
DoubleTree by Hilton U.S. 11 4,264 27
7,946 277 66,409 315 78,619 Americas (excluding U.S.) — — 4 785 17
3,275 21 4,060 Europe — — 11 3,456 59 10,203 70 13,659 Middle East
& Africa — — 9 1,874 4 488 13 2,362 Asia Pacific — — 40 11,469
2 965 42 12,434
Embassy Suites by Hilton U.S. 10 2,523 34
9,154 176 40,265 220 51,942 Americas (excluding U.S.) — — 3 623 5
1,282 8 1,905
Hilton Garden Inn U.S. 2 290 4 430 577 79,026
583 79,746 Americas (excluding U.S.) — — 8 1,071 28 4,491 36 5,562
Europe — — 18 3,306 27 4,453 45 7,759 Middle East & Africa — —
6 1,337 — — 6 1,337 Asia Pacific — — 8 1,329 — — 8 1,329
Hampton
by Hilton U.S. 1 130 50 6,178 1,938 188,129 1,989 194,437
Americas (excluding U.S.) — — 11 1,416 79 9,382 90 10,798 Europe —
— 10 1,537 31 4,716 41 6,253 Asia Pacific — — — — 3 597 3 597
Homewood Suites by Hilton U.S. — — 25 2,687 352 39,615 377
42,302 Americas (excluding U.S.) — — 2 224 15 1,699 17 1,923
Home2 Suites by Hilton U.S. — — — — 80 8,326 80 8,326
Americas (excluding U.S.) — — 1 97 2 227 3 324
Other 1
129 2 857 3 452 6
1,438 Lodging 144 58,326 532 156,955 3,939 542,065 4,615 757,346
Hilton Grand Vacations — — 46 7,402
— — 46 7,402 Total 144 58,326
578 164,357 3,939 542,065 4,661
764,748 ____________ (1)
Includes hotels owned or leased by
entities in which Hilton owns a noncontrolling interest.
HILTON WORLDWIDE HOLDINGS INC. CAPITAL
EXPENDITURES (unaudited, dollars in millions)
Three Months Ended March 31, Increase /
(Decrease) 2016 2015 $
% Hotel property and equipment $ 77 $ 82 (5 ) (6.1 )
Timeshare property and equipment 3 2 1 50.0 Corporate and other
property and equipment 4 4 — — Total capital
expenditures for property and equipment 84 88 (4 ) (4.5 ) Software
capitalization costs 11 8 3 37.5 Contract acquisition costs 9 11 (2
) (18.2 ) Expenditures for timeshare inventory net of costs of
sales(1) 3 15 (12 ) (80.0 )
Total capital
expenditures $ 107 $ 122 (15 ) (12.3 )
____________ (1)
Timeshare capital expenditures for
inventory additions were $32 million and $41 million for the three
months ended March 31, 2016 and 2015, respectively, and timeshare
costs of sales were $29 million and $26 million, respectively.
HILTON WORLDWIDE HOLDINGS INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS
NET INCOME AND EPS, ADJUSTED FOR
SPECIAL ITEMS
(unaudited, in millions, except per
share data)
Three Months Ended March 31,
2016 2015 Net income attributable to Hilton
stockholders, as reported $ 309 $ 150 Diluted EPS, as reported $
0.31 $ 0.15 Special items: Impairment loss 15 — Costs incurred for
planned spin-offs(1) 9 — Share-based compensation expense(2) — 2
Asset acquisitions and dispositions(3) 1 (94 ) Tax-related
adjustments(4) (153 ) 4 Total special items
before tax (128 ) (88 ) Income tax benefit (expense) on special
items (10 ) 53 Total special items after tax $
(138 ) $ (35 )
Net income, adjusted for special items
$ 171 $ 115
Diluted EPS, adjusted for special
items $ 0.17 $ 0.12 ____________
(1)
This amount includes expense that was
recognized in general, administrative and other expenses related to
the planned spin-offs of the real estate and timeshare businesses
expected later this year.
(2)
This amount includes expense that was
recognized in general, administrative and other expenses related to
the share-based compensation prior to and in connection with the
initial public offering. Amounts exclude share-based compensation
expense related to awards issued under the Hilton Worldwide
Holdings Inc. 2013 Omnibus Incentive Plan.
(3)
The amount for the three months ended
March 31, 2016 relates to severance costs from the sale of the
Waldorf Astoria New York. The amount for the three months ended
March 31, 2015 relates primarily to the net gain on the sale of the
Waldorf Astoria New York, as well as amounts recognized related to
the sale of the Waldorf Astoria New York and properties acquired
from the proceeds of that sale. The amounts are detailed as
follows:
Three Months Ended
March 31, 2015
Gain on sale of the Waldorf Astoria New
York, net of transaction costs
$
(145
)
Severance costs
13
Acquisition-related transaction costs
19
Reduction of unamortized management
contract intangible asset related to properties that were managed
by Hilton prior to acquisition
13
Reduction of remaining deferred issuance
costs related to the mortgage loan secured by the Waldorf Astoria
New York
6
$
(94
)
(4)
The amount for the three months ended
March 31, 2016 relates to the net change in unrecognized tax
benefits. On March 31, 2015, a foreign jurisdiction where the
Company had deferred tax assets reduced the statutory rate
resulting in a reduction to the deferred tax asset and a
corresponding recognition of income tax expense of $6 million,
including $2 million attributable to noncontrolling interests.
HILTON WORLDWIDE HOLDINGS INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS
ADJUSTED EBITDA AND ADJUSTED EBITDA
MARGIN
(unaudited, dollars in
millions)
Three Months Ended March 31,
2016 2015 Net income attributable to Hilton
stockholders $ 309 $ 150 Interest expense 139 144 Income tax
expense (benefit) (46 ) 163 Depreciation and amortization 169 175
Interest expense, income tax and depreciation and amortization
included in equity in earnings from unconsolidated affiliates
8 7
EBITDA 579 639 Net income
attributable to noncontrolling interests 1 — Gain on sales of
assets, net — (145 ) Loss on foreign currency transactions 12 18
FF&E replacement reserve 13 13 Share-based compensation expense
18 30 Impairment loss 15 — Other loss, net(1) — 25 Other adjustment
items(2) 15 19
Adjusted EBITDA $
653 $ 599 ____________
(1)
Represents costs related to the
acquisitions of property and equipment and a loss related to a
disposition of property and equipment.
(2)
Represents adjustments for reorganization
costs, severance and other items.
Three Months Ended March 31,
2016 2015 Total revenues, as reported $ 2,750
$ 2,599 Less: other revenues from managed and franchised properties
(1,071 ) (950 ) Total revenues, excluding other
revenues from managed and franchised properties $ 1,679 $
1,649 Adjusted EBITDA $ 653 $ 599
Adjusted
EBITDA margin 38.9 % 36.3 %
HILTON WORLDWIDE HOLDINGS INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS
NET DEBT AND NET DEBT TO ADJUSTED
EBITDA RATIO
(unaudited, in millions)
March 31, December 31,
2016 2015 Long-term debt, including current
maturities $ 9,975 $ 9,951 Add: unamortized deferred financing
costs 84 90 Long-term debt, including
current maturities and excluding unamortized deferred financing
costs 10,059 10,041 Add: Hilton's share of unconsolidated affiliate
debt, excluding unamortized deferred financing costs 226 229 Less:
cash and cash equivalents (692 ) (609 ) Less: restricted cash and
cash equivalents (281 ) (247 )
Net debt $
9,312 $ 9,414
Three Months Ended
Year Ended TTM(1) March 31, December
31, March 31, 2016 2015 2015
2016 Net income attributable to Hilton stockholders $ 309 $
150 $ 1,404 $ 1,563 Interest expense 139 144 575 570 Income tax
expense (benefit) (46 ) 163 80 (129 ) Depreciation and amortization
169 175 692 686 Interest expense, income tax and depreciation and
amortization included in equity in earnings from unconsolidated
affiliates 8 7 32
33 EBITDA 579 639 2,783 2,723 Net income attributable to
noncontrolling interests 1 — 12 13 Gain on sales of assets, net —
(145 ) (306 ) (161 ) Loss on foreign currency transactions 12 18 41
35 FF&E replacement reserve 13 13 48 48 Share-based
compensation expense 18 30 162 150 Impairment loss 15 — 9 24 Other
loss (gain), net(2) — 25 1 (24 ) Other adjustment items(3)
15 19 129 125
Adjusted EBITDA $ 653 $ 599 $ 2,879 $ 2,933
Net debt $ 9,312
Net debt to Adjusted
EBITDA ratio 3.2 ____________
(1)
Trailing twelve months ("TTM") March 31,
2016 is calculated as three months ended March 31, 2016 plus year
ended December 31, 2015 less three months ended March 31, 2015.
(2)
Represents gains and losses on the
acquisitions and dispositions of property and equipment and lease
restructuring transactions.
(3)
Represents adjustments for reorganization
costs, severance, offering costs and other items.
HILTON WORLDWIDE HOLDINGS INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS
OUTLOOK: ADJUSTED EBITDA
FORECASTED 2016
(unaudited, in millions)
Three Months Ending June 30, 2016 Low
Case High Case Net income attributable to
Hilton stockholders $ 251 $ 263 Interest expense 141 141 Income
tax expense 168 176 Depreciation and amortization 173 173 Interest
expense, income tax and depreciation and amortization included in
equity in earnings from unconsolidated affiliates 8 8
EBITDA 741 761 Net income attributable to noncontrolling
interests 4 4 FF&E replacement reserve 14 14 Share-based
compensation expense 28 28 Other adjustment items(1) 3
3
Adjusted EBITDA $ 790 $ 810
Year
Ending December 31, 2016 Low Case High
Case Net income attributable to Hilton stockholders $
1,058 $ 1,113 Interest expense 563 563 Income tax expense 456 491
Depreciation and amortization 690 690 Interest expense, income tax
and depreciation and amortization included in equity in earnings
from unconsolidated affiliates 31 31
EBITDA
2,798 2,888 Net income attributable to noncontrolling interests 13
13 Loss on foreign currency transactions 12 12 FF&E replacement
reserve 52 52 Share-based compensation expense 95 95 Impairment
loss 15 15 Other adjustment items(1) 35 25
Adjusted EBITDA $ 3,020 $ 3,100 ____________
(1)
Represents adjustments for reorganization
costs, severance and other items.
HILTON WORLDWIDE HOLDINGS INC.
NON-GAAP FINANCIAL MEASURES
RECONCILIATIONS
OUTLOOK: NET INCOME AND DILUTED EPS,
ADJUSTED FOR SPECIAL ITEMS
FORECASTED 2016
(unaudited, in millions, except per
share data)
Three Months Ending June 30, 2016 Low
Case High Case Net income attributable to Hilton
stockholders, before special items $ 251 $ 263 Diluted EPS, before
special items $ 0.25 $ 0.27
Net income, adjusted for
special items $ 251 $ 263
Diluted EPS,
adjusted for special items $ 0.25 $ 0.27
Year Ending December 31, 2016 Low Case High
Case Net income attributable to Hilton stockholders, before
special items $ 1,058 $ 1,113 Diluted EPS, before special items $
1.06 $ 1.12 Special items: Impairment loss 15 15 Costs incurred for
planned spin-offs(1) 9 9 Asset disposition(2) 1 1 Tax-related
adjustment(3) (153 ) (153 ) Total special items
before tax (128 ) (128 ) Income tax expense on special items
(10 ) (10 ) Total special items after tax $ (138 ) $ (138 )
Net income, adjusted for special items $ 920 $
975
Diluted EPS, adjusted for special items $ 0.92
$ 0.98 ____________
(1)
This amount includes expense that was
recognized in general, administrative and other expenses related to
the planned spin-offs of the real estate and timeshare businesses
expected later this year.
(2)
This amount relates to severance costs
from the sale of the Waldorf Astoria New York.
(3)
This amount relates to the net change in
unrecognized tax benefits.
HILTON WORLDWIDE HOLDINGS
INC.DEFINITIONS
EBITDA, Adjusted EBITDA and Adjusted
EBITDA Margin
Earnings before interest expense, taxes and depreciation and
amortization ("EBITDA"), presented herein, is a financial measure
not recognized under United States ("U.S.") generally accepted
accounting principles ("GAAP") that reflects net income
attributable to Hilton stockholders, excluding interest expense, a
provision for income taxes and depreciation and amortization. The
Company considers EBITDA to be a useful measure of operating
performance, due to the significance of the Company's long-lived
assets and level of indebtedness.
Adjusted EBITDA, presented herein, is calculated as EBITDA, as
previously defined, further adjusted to exclude certain items,
including, but not limited to, gains, losses and expenses in
connection with: (i) asset dispositions for both consolidated and
unconsolidated investments; (ii) foreign currency transactions;
(iii) debt restructurings/retirements; (iv) non-cash impairment
losses; (v) furniture, fixtures and equipment ("FF&E")
replacement reserves required under certain lease agreements; (vi)
reorganization costs; (vii) share-based compensation expense;
(viii) severance, relocation and other expenses; and (ix) other
items.
Adjusted EBITDA margin represents Adjusted EBITDA as a
percentage of total revenues, excluding other revenues from managed
and franchised properties.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin are not
recognized terms under U.S. GAAP and should not be considered as
alternatives to net income (loss) or other measures of financial
performance or liquidity derived in accordance with U.S. GAAP. In
addition, the Company's definitions of EBITDA, Adjusted EBITDA and
Adjusted EBITDA margin may not be comparable to similarly titled
measures of other companies.
The Company believes that EBITDA, Adjusted EBITDA and Adjusted
EBITDA margin provide useful information to investors about the
Company and its financial condition and results of operations for
the following reasons: (i) EBITDA, Adjusted EBITDA and Adjusted
EBITDA margin 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) EBITDA, Adjusted EBITDA
and Adjusted EBITDA margin 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.
EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have
limitations as analytical tools and should not be considered either
in isolation or as a substitute for net income (loss), cash flow or
other methods of analyzing results as reported under U.S. GAAP.
Net Income and EPS, Adjusted for Special
Items
Net income and EPS, adjusted for special items, are not
recognized terms under U.S. GAAP and should not be considered as
alternatives to net income (loss) or other measures of financial
performance or liquidity derived in accordance with U.S. GAAP. In
addition, the Company's definition of Net income and EPS, adjusted
for special items, may not be comparable to similarly titled
measures of other companies.
Net income and 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.
Net Debt
Net debt, presented herein, is a non-GAAP financial measure that
the Company uses to evaluate its financial leverage. Net debt
is calculated as (i) long-term debt, including current maturities
and excluding unamortized deferred financing costs; (ii) the
Company's share of investments in affiliate debt, excluding
unamortized deferred financing costs; reduced by (a) cash and cash
equivalents; and (b) restricted cash and cash equivalents.
The Company believes Net debt provides useful information about
its indebtedness to investors as it is frequently used by
securities analysts, investors and other interested parties to
compare the indebtedness of companies. Net debt should not be
considered as a substitute to debt presented in accordance with
U.S. GAAP. Net debt may not be comparable to a similarly titled
measure of other companies.
Net Debt to Adjusted EBITDA
Ratio
Net debt to Adjusted EBITDA ratio, presented herein, is a
non-GAAP financial measure and is included as it is frequently used
by securities analysts, investors and other interested parties to
compare the financial condition of companies. Net debt to Adjusted
EBITDA ratio should not be considered as an alternative to measures
of financial condition derived in accordance with U.S. GAAP and it
may not be comparable to a similarly titled measure of other
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 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 are not available.
Of the 4,615 hotels in the Company's system as of March 31,
2016, 3,851 were classified as comparable hotels. The 764
non-comparable hotels included 169 properties, or approximately
four percent of the total hotels in the system, that were removed
from the comparable group during the last twelve months because
they sustained substantial property damage, business interruption,
underwent large-scale capital projects or comparable results were
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. 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 Average Daily Rate
levels as demand for hotel rooms increases or decreases.
Average Daily Rate ("ADR")
ADR represents hotel room revenue divided by total number of
room nights sold in a given period. ADR measures 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 have a different effect on overall
revenues and incremental profitability than changes in occupancy,
as described above.
Revenue per Available Room
("RevPAR")
The Company calculates RevPAR by dividing hotel room revenue by
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: occupancy
and ADR. RevPAR is also a useful indicator in measuring performance
over comparable periods for comparable hotels.
References to RevPAR, ADR and occupancy throughout this press
release are presented on a comparable basis and references to
RevPAR and ADR are presented on a currency neutral basis (all
periods use the same exchange rates), unless otherwise noted.
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version on businesswire.com: http://www.businesswire.com/news/home/20160427005468/en/
Investor ContactChristian Charnaux+1 703 883
5205orMedia ContactChris Brooks+1 703 883 5808
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