10-QPeriod: Q1 FY2019

Hilton Worldwide Holdings Inc. Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 1, 2019For Securities:HLT

Summary

Hilton Worldwide Holdings Inc. reported its first-quarter 2019 financial results, showing a slight decrease in net income attributable to stockholders to $158 million, down from $161 million in the prior year's comparable quarter. Diluted Earnings Per Share (EPS) remained steady at $0.54. Total revenues saw a healthy increase of 6.3% to $2.204 billion, primarily driven by growth in the management and franchise segment. This segment benefited from new property additions and improved RevPAR (Revenue Per Available Room) at comparable hotels. The ownership segment, however, experienced a revenue decline, partly attributed to foreign currency fluctuations. The company also highlighted a significant increase in net cash provided by operating activities, up 49.8% to $364 million, demonstrating strong operational cash generation. This was supported by improved operating results and robust share buyback programs, with $296 million in repurchases during the quarter, reflecting a commitment to returning capital to shareholders. Hilton continued to expand its global footprint, with a development pipeline of nearly 2,480 hotels. Key financial developments include the adoption of new lease accounting standards (ASC 842), which resulted in the recognition of significant operating lease right-of-use assets and liabilities on the balance sheet. Management emphasized a focus on growth through its fee-based management and franchise model, which requires minimal capital investment. The company also maintained a strong liquidity position with $461 million in cash and cash equivalents.

Financial Highlights

50 data points
Beta

Revenue

$2.20B

Net Income

$158.00M

7.2% Net Margin

EPS (Diluted)

$0.54

Total Assets

$14.85B

Cash & Equivalents

$382.00M

Free Cash Flow

$341.00M

Financial Statements
Beta
Revenue$2.20B
Operating Expenses$1.89B
Operating Income$312.00M
Interest Expense$98.00M
Net Income$158.00M
EPS (Basic)$0.54
EPS (Diluted)$0.54
Shares Outstanding (Basic)293.00M
Shares Outstanding (Diluted)295.00M

Key Highlights

  • 1Total revenues increased by 6.3% to $2.204 billion, driven by strong performance in the management and franchise segment.
  • 2Net income attributable to Hilton stockholders decreased slightly to $158 million from $161 million in Q1 2018, with Diluted EPS remaining at $0.54.
  • 3Net cash provided by operating activities increased significantly by 49.8% to $364 million, reflecting improved operational performance and cash generation.
  • 4The company repurchased $296 million of its common stock during the quarter, indicating a commitment to shareholder returns.
  • 5Hilton adopted new lease accounting standards (ASC 842), resulting in the recognition of substantial operating lease right-of-use assets and liabilities.
  • 6System-wide RevPAR increased by 1.8%, with notable growth in the Americas (excluding U.S.) and Europe, driven primarily by ADR increases.
  • 7The development pipeline remains robust with nearly 2,480 hotels approved for development, indicating future growth potential.

Frequently Asked Questions

Hilton's revenue growth was primarily driven by its management and franchise segment. This segment benefited from the addition of new managed and franchised properties and an increase in Revenue per Available Room (RevPAR) at comparable hotels. The company's strategy focuses on expanding its fee-based business model, which involves less capital investment.

Hilton adopted new lease accounting standards (ASC 842) on January 1, 2019. This resulted in the recognition of operating lease right-of-use assets ($916 million) and operating lease liabilities ($1,103 million) on the balance sheet. The adoption also involved a cumulative adjustment to retained earnings but did not materially impact the current period's operational results or cash flows beyond the standard's accounting treatment.

Hilton demonstrated a strong commitment to capital allocation through significant share repurchases, with $296 million in common stock repurchases during the first quarter of 2019, following an additional $1.5 billion authorization in February 2019. The company also continues to pay a consistent dividend of $0.15 per share. This approach aims to return value to shareholders while investing in strategic growth.

Hilton monitors key performance indicators such as Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR). System-wide, RevPAR increased by 1.8% in Q1 2019, primarily driven by ADR growth of 1.1%. The Americas (excluding U.S.) and Europe showed particularly strong RevPAR growth. The U.S. saw RevPAR growth driven by ADR, mainly due to strong group performance.