10-QPeriod: Q2 FY2019

Hilton Worldwide Holdings Inc. Quarterly Report for Q2 Ended Jun 30, 2019

Filed July 24, 2019For Securities:HLT

Summary

Hilton Worldwide Holdings Inc. (HLT) reported its second-quarter 2019 results, showcasing solid revenue growth driven by both its management and franchise operations and its owned and leased hotel segment. Total revenues increased by 8.4% year-over-year to $2.5 billion for the quarter. The company demonstrated strong performance in its core business, with system-wide RevPAR (Revenue per Available Room) growing by 1.4% due to an increase in Average Daily Rate (ADR). Diluted Earnings Per Share (EPS) rose to $0.89 from $0.71 in the prior year's second quarter, indicating improved profitability. The company also continued its strategic capital allocation, with significant share repurchases totaling $679 million in the first half of the year, alongside amendments to its credit facilities to extend maturities and increase borrowing capacity. Despite facing some currency headwinds impacting owned and leased hotel revenues, Hilton's diversified business model and strong brand portfolio positioned it well for continued growth and value creation for shareholders.

Financial Highlights

50 data points
Beta

Revenue

$2.48B

Net Income

$260.00M

10.5% Net Margin

EPS (Diluted)

$0.89

Total Assets

$15.14B

Cash & Equivalents

$635.00M

Free Cash Flow

$263.00M

Financial Statements
Beta
Revenue$2.48B
Operating Expenses$2.01B
Operating Income$478.00M
Interest Expense$101.00M
Net Income$260.00M
EPS (Basic)$0.90
EPS (Diluted)$0.89
Shares Outstanding (Basic)290.00M
Shares Outstanding (Diluted)292.00M

Key Highlights

  • 1Total revenues increased by 8.4% to $2.5 billion in Q2 2019 compared to Q2 2018.
  • 2Diluted EPS grew to $0.89 in Q2 2019, up from $0.71 in Q2 2018.
  • 3System-wide RevPAR increased by 1.4% driven by a 0.7% rise in ADR.
  • 4The management and franchise segment saw revenue and operating income growth of 7.8% and 9.4% respectively for the six months ended June 30, 2019.
  • 5The company repurchased approximately $679 million of common stock in the first half of 2019.
  • 6Debt facilities were amended to extend maturities and increase borrowing capacity, enhancing financial flexibility.

Frequently Asked Questions

Revenue growth in the second quarter of 2019 was primarily driven by increases in Franchise and licensing fees, reflecting an increase in RevPAR at comparable franchised hotels, as well as growth in management fees due to improved RevPAR at comparable managed hotels. The net addition of managed and franchised properties to the system also contributed to this growth.

Hilton's profitability improved in the second quarter of 2019. Net income attributable to Hilton stockholders increased to $260 million, leading to a rise in diluted Earnings Per Share (EPS) to $0.89 from $0.71 in the prior year's second quarter. This improvement was supported by revenue growth and effectively managed operating expenses.

Hilton is actively managing its capital through share repurchases, having bought back approximately $679 million of common stock in the first half of 2019, with $1.4 billion remaining under its repurchase program. The company also enhanced its financial flexibility by amending its credit facilities to extend maturities and increase borrowing capacity, ensuring adequate liquidity for future operations and strategic initiatives.

Yes, foreign currency fluctuations had a notable impact, particularly on the owned and leased hotel segment. Revenues from owned and leased hotels decreased due to unfavorable currency exchange rates, which reduced revenues by $20 million in the second quarter and $42 million in the first half of 2019. Similarly, expenses for owned and leased hotels were reduced by currency fluctuations.