Hilton Reports Fourth Quarter and Full Year Results - Yahoo Finance

Hilton Worldwide Holdings Inc. ("Hilton" or the "Company") (NYSE: HLT) today reported its fourth quarter and full year 2019 results. Highlights include:

This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200211005182/en/

Hilton Reports Fourth Quarter and Full Year 2019 Results. (Graphic: Business Wire)

• Diluted EPS was $0.61 for the fourth quarter and $3.04 for the full year, and diluted EPS, adjusted for special items, was $1.00 for the fourth quarter and $3.90 for the full year
• Net income was $176 million for the fourth quarter and $886 million for the full year
• Adjusted EBITDA was $586 million for the fourth quarter and $2,308 million for the full year
• System-wide comparable RevPAR decreased 1.0 percent and increased 0.8 percent on a currency neutral basis for the fourth quarter and full year, respectively, from the same periods in 2018
• Approved 33,700 new rooms for development during the fourth quarter, growing Hilton's development pipeline to 387,000 rooms as of December 31, 2019, representing 6 percent growth from December 31, 2018
• Opened 18,500 rooms in the fourth quarter, contributing to 58,300 net additional rooms for the full year, which represented approximately 6.6 percent net unit growth from December 31, 2018
• Repurchased 16.9 million shares of Hilton common stock during 2019, bringing total capital return, including dividends, to more than $1.7 billion for the full year
• Launched new lifestyle brand, Tempo by Hilton, in January 2020

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We delivered strong bottom-line results for the fourth quarter and full year. Adjusted EBITDA and diluted EPS, adjusted for special items, exceeded the high end of our guidance as a result of our resilient business model and strong net unit growth. We carry positive momentum into 2020 with expectations of continued strong net unit growth. We are also thrilled with the introduction of Tempo by Hilton, our new lifestyle brand that will provide another platform for growth in the future."

For the three months ended December 31, 2019, system-wide comparable RevPAR decreased 1.0 percent as a result of a decrease in ADR. For the year ended December 31, 2019, system-wide comparable RevPAR grew 0.8 percent primarily driven by an increase in occupancy. Management and franchise fee revenues increased 5 percent and 8 percent during the three months and year ended December 31, 2019, respectively, primarily as a result of the addition of new properties to Hilton's management and franchise segment and an increase in licensing and other fees. Additionally, management and franchise fees increased for the year ended December 31, 2019 as a result of an increase in RevPAR at comparable managed and franchised hotels.

For the three months ended December 31, 2019, diluted EPS was $0.61 and diluted EPS, adjusted for special items, was $1.00 compared to $0.75 and $0.94, respectively, for the three months ended December 31, 2018. Net income and Adjusted EBITDA were $176 million and $586 million, respectively, for the three months ended December 31, 2019, compared to $225 million and $544 million, respectively, for the three months ended December 31, 2018.

For the year ended December 31, 2019, diluted EPS was $3.04 and diluted EPS, adjusted for special items, was $3.90 compared to $2.50 and $3.42, respectively, for the year ended December 31, 2018. Net income and Adjusted EBITDA were $886 million and $2,308 million, respectively, for the year ended December 31, 2019, compared to $769 million and $2,101 million, respectively, for the year ended December 31, 2018. During the year ended December 31, 2019, the Company completed the sale of the Hilton Odawara Resort & Spa (the "Hilton Odawara") and subsequently entered into a 30-year management contract with the purchaser of the hotel. As a result of the sale, the Company recognized a pre-tax gain of $81 million.

Development

In the fourth quarter of 2019, Hilton opened 143 new hotels totaling 18,500 rooms and achieved net unit growth of nearly 17,000 rooms. During the quarter, Hilton added several notable properties to its system, including the Conrad Hangzhou Tonglu, China and the Zemi Beach House, LXR in Anguilla. During the full year 2019, Hilton opened nearly 470 new hotels totaling 65,100 rooms and achieved net unit growth of 58,300 rooms, which was a 6.6 percent increase from December 31, 2018. During the year, Hilton expanded to six new countries and territories and opened its 6,000th hotel.

As of December 31, 2019, Hilton's development pipeline totaled more than 2,570 hotels consisting of over 387,000 rooms throughout 116 countries and territories, including 35 countries and territories where Hilton does not currently have any open hotels. Additionally, of the rooms in the development pipeline, 215,000 rooms were located outside the U.S., and 193,000 rooms were under construction.

In January 2020, Hilton launched Tempo by Hilton, an approachable lifestyle hotel brand dedicated to exceeding the expectations of an emerging, and discerning, class of traveler: the modern achiever.

Balance Sheet and Liquidity

As of December 31, 2019, Hilton had $8.1 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4.40 percent. Excluding finance lease liabilities and other debt of Hilton's consolidated variable interest entities, Hilton had $7.8 billion of long-term debt outstanding with a weighted average interest rate of 4.36 percent.

Total cash and cash equivalents were $630 million as of December 31, 2019, including $92 million of restricted cash and cash equivalents. As of December 31, 2019, Hilton had $195 million outstanding under its $1.75 billion senior secured revolving credit facility and a borrowing capacity of $1.50 billion.

During the fourth quarter of 2019, Hilton repurchased 4.3 million shares of its common stock at a cost of approximately $443 million and an average price per share of $101.01. During 2019, Hilton repurchased 16.9 million shares of its common stock at a cost of approximately $1.5 billion and an average price per share of $91.47. Since the inception of Hilton's stock repurchase program in March 2017, Hilton has repurchased approximately 55.5 million shares of its common stock for approximately $4.3 billion at an average price per share of $77.91. The amount remaining under Hilton's current stock repurchase program is approximately $346 million.

In December 2019, Hilton paid a quarterly cash dividend of $0.15 per share on shares of its common stock, for a total of $42 million, bringing full year dividends to $172 million. In February 2020, 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 March 31, 2020 to holders of record of its common stock as of the close of business on February 28, 2020.

Adoption of New Accounting Standard

On January 1, 2019, the Company adopted Accounting Standards Update ("ASU") No. 2016-02, Leases (Topic 842). As permitted, the Company has applied this ASU at the adoption date; therefore, the presentation of financial information for all periods prior to January 1, 2019 remains unchanged and in accordance with Leases (Topic 840). For additional information on the effect of this ASU, refer to Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which is expected to be filed on or about the date of this press release.

Outlook

Hilton's outlook excludes any potential impact of the coronavirus; additional information will be provided on Hilton's conference call referenced below. 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 2020

• System-wide comparable RevPAR is expected to be flat to 1.0 percent growth on a currency neutral basis compared to 2019.
• Diluted EPS, before special items, is projected to be between $3.45 and $3.58.
• Diluted EPS, adjusted for special items, is projected to be between $4.08 and $4.21.
• Net income is projected to be between $979 million and $1,015 million.
• Adjusted EBITDA is projected to be between $2,420 million and $2,470 million.
• Management and franchise fee revenue is projected to increase between 5 percent and 7 percent compared to 2019.
• Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by hotel owners, are expected to be between $175 million and $200 million.
• Capital return is projected to be between $1.6 billion and $2.0 billion.
• General and administrative expenses are projected to be between $390 million and $410 million.
• Net unit growth is expected to be between 6.0 percent and 7.0 percent.

First Quarter 2020

• System-wide comparable RevPAR is expected to be roughly flat on a currency neutral basis compared to the first quarter of 2019.
• Diluted EPS, before special items, is projected to be between $0.67 and $0.73.
• Diluted EPS, adjusted for special items, is projected to be between $0.85 and $0.91.
• Net income is projected to be between $192 million and $207 million.
• Adjusted EBITDA is projected to be between $520 million and $540 million.
• Management and franchise fee revenue is projected to increase between 3 percent and 5 percent compared to the first quarter of 2019.

Conference Call

Hilton will host a conference call to discuss fourth quarter and full year 2019 results on February 11, 2020 at 10:00 a.m. Eastern Time. Participants may listen to the live webcast by logging on to the Hilton Investor Relations website at https://ir.hilton.com/events-and-presentations. A replay and transcript of the webcast will be available within 24 hours after the live event at https://ir.hilton.com/financial-reporting/quarterly-results/2019.

Alternatively, participants may listen to the live call by dialing 1-888-317-6003 in the United States ("U.S.") or 1-412-317-6061 internationally using the conference ID 9208816. 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 10138125.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These statements include, but are not limited to, statements related to the expectations regarding the performance of Hilton's business, financial results, liquidity and capital resources and other non-historical statements, including the statements in the "Outlook" section of this press release. In some cases, these forward-looking statements can be identified by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "could," "seeks," "projects," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties, including, among others, risks inherent to the hospitality industry, macroeconomic factors beyond Hilton's control, competition for hotel guests and management and franchise contracts, risks related to doing business with third-party hotel owners, performance of Hilton's information technology systems, growth of reservation channels outside of Hilton's system, risks of doing business outside of the U.S. and Hilton's indebtedness. Additional factors that could cause Hilton's results to differ materially from those described in the forward-looking statements can be found under the section entitled "Part I—Item 1A. Risk Factors" of Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2018, filed with the Securities and Exchange Commission (the "SEC"), as such factors may be updated from time to time in Hilton's periodic filings with the SEC, including in Hilton's Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which is expected to be filed on or about the date of this press release, which are accessible on the SEC's website at www.sec.gov. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this press release and in Hilton's filings with the SEC. The Company undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise, except as required by law.

Non-GAAP Financial Measures

The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles ("GAAP") in this press release, including: net income, adjusted for special items; diluted EPS, adjusted for special items; Adjusted EBITDA; Adjusted EBITDA margin; net debt; and net debt to Adjusted EBITDA ratio. See the schedules to this press release, including the "Definitions" section, for additional information and reconciliations of such non-GAAP financial measures.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company, with a portfolio of 18 world-class brands comprising more than 6,100 properties with more than 971,000 rooms, in 119 countries and territories. Dedicated to fulfilling its mission to be the world's most hospitable company, Hilton welcomed more than 3 billion guests in its 100-year history, earned a top spot on the 2019 World's Best Workplaces list and was named the 2019 Global Industry Leader on the Dow Jones Sustainability Indices. Through the award-winning guest loyalty program Hilton Honors, more than 103 million members who book directly with Hilton can earn Points for hotel stays and experiences money can't buy, plus enjoy instant benefits, including digital check-in with room selection, Digital Key and Connected Room. Visit newsroom.hilton.com for more information, and connect with Hilton on facebook.com/hiltonnewsroom, twitter.com/hiltonnewsroom, linkedin.com/company/hilton, instagram.com/hiltonnewsroom and youtube.com/hiltonnewsroom.

HILTON WORLDWIDE HOLDINGS INC.

EARNINGS RELEASE SCHEDULES

TABLE OF CONTENTS

Consolidated Statements of Operations

Comparable and Currency Neutral System-Wide Hotel Operating Statistics

Property Summary

Capital Expenditures and Contract Acquisition Costs

Non-GAAP Financial Measures Reconciliations

Definitions

HILTON WORLDWIDE HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited, in millions, except per share data)
		Three Months Ended						Year Ended
		December 31,						December 31,
		2019			2018			2019			2018
Revenues
Franchise and licensing fees		$	412		$	388		$	1,681		$	1,530
Base and other management fees			83			80			332			321
Incentive management fees			63			64			230			235
Owned and leased hotels			362			385			1,422			1,484
Other revenues			26			26			101			98
			946			943			3,766			3,668
Other revenues from managed and franchised properties			1,423			1,345			5,686			5,238
Total revenues			2,369			2,288			9,452			8,906
Expenses
Owned and leased hotels			312			329			1,254			1,332
Depreciation and amortization			90			83			346			325
General and administrative			114			115			441			443
Other expenses			26			15			72			51
			542			542			2,113			2,151
Other expenses from managed and franchised properties			1,479			1,384			5,763			5,323
Total expenses			2,021			1,926			7,876			7,474
Gain on sale of assets, net		—			—				81		—
Operating income			348			362			1,657			1,432
Interest expense			(110)			(94)			(414)			(371)
Loss on foreign currency transactions			(6)			(4)			(2)			(11)
Other non-operating income, net			11			2			3			28
Income before income taxes			243			266			1,244			1,078
Income tax expense			(67)			(41)			(358)			(309)
Net income			176			225			886			769
Net income attributable to noncontrolling interests			(1)			(1)			(5)			(5)
Net income attributable to Hilton stockholders		$	175		$	224		$	881		$	764
Weighted average shares outstanding:
Basic			281			296			287			302
Diluted			284			298			290			305
Earnings per share:
Basic		$	0.62		$	0.76		$	3.07		$	2.53
Diluted		$	0.61		$	0.75		$	3.04		$	2.50
Cash dividends declared per share		$	0.15		$	0.15		$	0.60		$	0.60

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY REGION
(unaudited)
				Three Months Ended December 31,
				Occupancy				ADR					RevPAR
				2019		vs. 2018		2019			vs. 2018		2019			vs. 2018
U.S.				71.9%		(0.1)% pts.		$	144.72		(0.7)%		$	104.07		(0.8)%
Americas (excluding U.S.)				67.0		(0.9)			116.48		(2.0)			78.01		(3.2)
Europe				76.3		1.3			137.34		(0.3)			104.82		1.4
Middle East & Africa				75.7		1.1			140.51		(5.7)			106.41		(4.3)
Asia Pacific				72.8		—			122.87		(3.9)			89.51		(3.8)
System-wide				72.2		—			140.98		(1.0)			101.86		(1.0)
				Year Ended December 31,
				Occupancy				ADR					RevPAR
				2019		vs. 2018		2019			vs. 2018		2019			vs. 2018
U.S.				76.2%		0.3% pts.		$	148.70		0.3%		$	113.36		0.7%
Americas (excluding U.S.)				70.5		0.3			122.13		0.6			86.15		1.0
Europe				77.5		1.2			139.97		1.4			108.46		3.0
Middle East & Africa				73.8		1.9			144.66		(5.5)			106.70		(3.0)
Asia Pacific				72.4		0.6			123.72		(1.8)			89.58		(0.9)
System-wide				75.7		0.5			144.79		0.1			109.65		0.8

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY BRAND
(unaudited)
		Three Months Ended December 31,
		Occupancy				ADR					RevPAR
		2019		vs. 2018		2019			vs. 2018		2019			vs. 2018
Waldorf Astoria Hotels & Resorts		72.6%		1.1% pts.		$	366.03		2.2%		$	265.81		3.8%
Conrad Hotels & Resorts		74.1		(1.3)			264.15		(5.0)			195.86		(6.7)
Hilton Hotels & Resorts		74.3		0.1			168.37		(0.7)			125.06		(0.5)
Curio Collection by Hilton		70.1		(0.2)			200.97		(1.1)			140.87		(1.4)
DoubleTree by Hilton		71.4		(0.1)			128.76		(1.4)			91.98		(1.5)
Embassy Suites by Hilton		74.3		(0.3)			157.23		(0.2)			116.86		(0.5)
Hilton Garden Inn		71.9		0.2			128.27		(1.6)			92.24		(1.4)
Hampton by Hilton		69.7		(0.1)			116.82		(1.2)			81.40		(1.4)
Tru by Hilton		69.1		4.5			99.19		1.6			68.59		8.7
Homewood Suites by Hilton		76.4		0.2			135.32		(1.2)			103.32		(0.9)
Home2 Suites by Hilton		73.5		1.5			113.13		(0.8)			83.10		1.2
System-wide		72.2		—			140.98		(1.0)			101.86		(1.0)
		Year Ended December 31,
		Occupancy				ADR					RevPAR
		2019		vs. 2018		2019			vs. 2018		2019			vs. 2018
Waldorf Astoria Hotels & Resorts		71.6%		0.9% pts.		$	373.01		2.3%		$	266.90		3.6%
Conrad Hotels & Resorts		75.3		2.0			267.26		(1.5)			201.13		1.2
Hilton Hotels & Resorts		76.5		0.4			172.01		0.6			131.67		1.1
Curio Collection by Hilton		72.1		(0.7)			208.19		1.7			150.03		0.6
DoubleTree by Hilton		74.4		0.2			131.32		(0.5)			97.73		(0.2)
Embassy Suites by Hilton		78.3		0.4			163.57		0.6			128.13		1.2
Hilton Garden Inn		75.8		0.5			131.76		(0.3)			99.89		0.4
Hampton by Hilton		74.0		0.4			121.82		(0.1)			90.21		0.4
Tru by Hilton		70.9		3.7			106.29		2.7			75.35		8.3
Homewood Suites by Hilton		80.5		0.4			140.29		—			112.87		0.5
Home2 Suites by Hilton		78.6		2.7			117.08		0.4			92.03		3.9
System-wide		75.7		0.5			144.79		0.1			109.65		0.8

HILTON WORLDWIDE HOLDINGS INC.
COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS
BY SEGMENT
(unaudited)
				Three Months Ended December 31,
				Occupancy				ADR					RevPAR
				2019		vs. 2018		2019			vs. 2018		2019			vs. 2018
Management and franchise				72.1%		—% pts.		$	139.77		(1.1)%		$	100.82		(1.0)%
Ownership(1)				77.6		(0.1)			190.66		0.2			147.87		—
System-wide				72.2		—			140.98		(1.0)			101.86		(1.0)
				Year Ended December 31,
				Occupancy				ADR					RevPAR
				2019		vs. 2018		2019			vs. 2018		2019			vs. 2018
Management and franchise				75.7%		0.5% pts.		$	143.75		0.1%		$	108.78		0.7%
Ownership(1)				78.3		0.2			189.40		2.5			148.36		2.8
System-wide				75.7		0.5			144.79		0.1			109.65		0.8

____________
(1)		Includes owned and leased hotels, as well as hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

...

HILTON WORLDWIDE HOLDINGS INC.
PROPERTY SUMMARY
As of December 31, 2019
		Owned / Leased(1)				Managed				Franchised				Total
		Properties		Rooms		Properties		Rooms		Properties		Rooms		Properties		Rooms
Waldorf Astoria Hotels & Resorts
U.S.		—		—		14		5,965		—		—		14		5,965
Americas (excluding U.S.)		—		—		2		257		—		—		2		257
Europe		2		463		4		898		—		—		6		1,361
Middle East & Africa		—		—		5		1,224		—		—		5		1,224
Asia Pacific		—		—		5		1,014		—		—		5		1,014
LXR Hotels & Resorts
Americas (excluding U.S.)		—		—		—		—		1		76		1		76
Europe		—		—		1		307		—		—		1		307
Middle East & Africa		—		—		—		—		1		234		1		234
Conrad Hotels & Resorts
U.S.		—		—		6		2,211		1		228		7		2,439
Americas (excluding U.S.)		—		—		2		402		—		—		2		402
Europe		—		—		4		1,155		—		—		4		1,155
Middle East & Africa		1		614		2		993		—		—		3		1,607
Asia Pacific		1		164		21		6,129		1		654		23		6,947
Canopy by Hilton
U.S.		—		—		—		—		8		1,312		8		1,312
Europe		—		—		—		—		2		263		2		263
Middle East & Africa		—		—		1		200		—		—		1		200
Asia Pacific		—		—		2		329		—		—		2		329
Hilton Hotels & Resorts
U.S.		—		—		64		47,088		178		54,792		242		101,880
Americas (excluding U.S.)		1		405		26		9,455		21		7,096		48		16,956
Europe		50		13,919		43		14,246		42		11,355		135		39,520
Middle East & Africa		5		1,998		42		13,482		3		1,609		50		17,089
Asia Pacific		5		2,994		97		35,341		7		2,599		109		40,934
Curio Collection by Hilton
U.S.		—		—		6		2,485		44		8,805		50		11,290
Americas (excluding U.S.)		—		—		2		99		9		1,213		11		1,312
Europe		—		—		5		520		15		1,694		20		2,214
Middle East & Africa		—		—		3		445		1		356		4		801
Asia Pacific		—		—		4		773		2		248		6		1,021
DoubleTree by Hilton

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