Hilton Worldwide Holdings Inc. (NYSE: HLT) today reported its second quarter 2021 results. The following results reflect the material impact that the novel coronavirus pandemic has had on Hilton's business. Highlights include:

  • Diluted EPS was $0.46 for the second quarter, and diluted EPS, adjusted for special items, was $0.56
  • Net income was $128 million for the second quarter
  • Adjusted EBITDA was $400 million for the second quarter
  • System-wide comparable RevPAR increased 233.8 percent on a currency neutral basis for the second quarter from the same period in 2020
  • Approved 25,900 new rooms for development during the second quarter, bringing Hilton's development pipeline to 401,000 rooms as of June 30, 2021
  • Added 19,800 rooms to Hilton's system in the second quarter, contributing to 17,800 net additional rooms during the period and approximately 7.0 percent annualized net unit growth from June 30, 2020
  • Fully repaid the $1,190 million outstanding debt balance on the Revolving Credit Facility during the second quarter
  • As of July 21, 2021, 99 percent of Hilton's system-wide hotels were open
  • Full year 2021 net unit growth is expected to be between 5.0 percent and 5.5 percent

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "We are excited about our strong second quarter performance, which reflects our ongoing recovery from the negative effects of the COVID-19 pandemic. The broader distribution of vaccinations and the easing of travel and other restrictions have allowed for renewed interest in travel and tourism, with families embarking on long-delayed trips, and businesses scheduling in-person meetings again. While the pace of recovery varies by region, particularly with the uncertainty surrounding coronavirus variants, we expect continued strength in leisure demand and further upticks in business travel to drive continued resurgence in the back half of the year. We are also increasingly optimistic on our development, with net unit growth for the full year expected to be between 5.0 percent and 5.5 percent."

The negative impact of the COVID-19 pandemic affected the Asia Pacific region beginning in January 2020, before spanning to the Americas and Europe, Middle East and Africa regions in mid-March 2020. Therefore, the results for the six months ended June 30, 2021 and 2020 for these regions are less comparable than the Asia Pacific region and reflect less improvement, if any, in RevPAR between the two periods, as those regions were not affected for the entirety of the six months ended June 30, 2020. The operations of approximately 300 hotels, primarily located in the U.S. and Europe, were suspended for some period of time during the six months ended June 30, 2021, as compared to approximately 1,205 hotels during the six months ended June 30, 2020. As of June 30, 2021, all but approximately 100 of Hilton's system-wide hotels were open.

For the three months ended June 30, 2021, system-wide comparable RevPAR increased 233.8 percent, compared to the same period in 2020, due to increases in both occupancy and ADR, and fee revenues increased 220 percent. For the six months ended June 30, 2021, system-wide comparable RevPAR increased 23.2 percent, compared to the same period in 2020, due to an increase in occupancy, partially offset by a decrease in ADR, and fee revenues increased 28 percent. These increases reflect the global recovery from the COVID-19 pandemic and the related upward trend in travel and tourism during 2021, particularly during the three months ended June 30, 2021.

For the three months ended June 30, 2021, diluted EPS was $0.46 and diluted EPS, adjusted for special items, was $0.56 compared to $(1.55) and $(0.61), respectively, for the three months ended June 30, 2020. Net income (loss) and Adjusted EBITDA were $128 million and $400 million, respectively, for the three months ended June 30, 2021, compared to $(432) million and $51 million, respectively, for the three months ended June 30, 2020.

For the six months ended June 30, 2021, diluted EPS was $0.08 and diluted EPS, adjusted for special items, was $0.58 compared to $(1.49) and $0.13, respectively, for the six months ended June 30, 2020. Net income (loss) and Adjusted EBITDA were $19 million and $598 million, respectively, for the six months ended June 30, 2021, compared to $(414) million and $414 million, respectively, for the six months ended June 30, 2020.

Development

In the second quarter of 2021, Hilton opened 119 new hotels totaling over 19,800 rooms and achieved net unit growth of 17,800 rooms. In June 2021, the Resorts World Las Vegas opened, Hilton's largest multi-brand property, which includes three premium brands, Hilton Hotels & Resorts, Conrad Hotels & Resorts and LXR Hotels & Resorts. Also during the quarter, Hilton celebrated Tru by Hilton's 5-year anniversary with the opening of the brand's 200th hotel. Hilton had a record amount of conversion signings during the quarter and, in July 2021, opened its first hotel under the Signia by Hilton brand, the Signia by Hilton Orlando Bonnet Creek, re-branded from a Hilton Hotels & Resorts property.

As of June 30, 2021, Hilton's development pipeline totaled nearly 2,590 hotels representing 401,000 rooms throughout 115 countries and territories, including 30 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, 247,000 rooms were located outside the U.S., and 203,000 rooms were under construction.

Balance Sheet and Liquidity

As of June 30, 2021, Hilton had $8.9 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 4.00 percent. 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 3.95 percent and no scheduled maturities until 2025. During the three months ended June 30, 2021, Hilton fully repaid the $1,190 million outstanding debt balance on its $1.75 billion senior secured revolving credit facility (the "Revolving Credit Facility"), resulting in an available borrowing capacity of $1,690 million as of June 30, 2021, after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1,127 million as of June 30, 2021, including $83 million of restricted cash and cash equivalents.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 18 world-class brands comprising more than 6,600 properties and more than 1 million rooms in 119 countries and territories.

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

Six Months Ended

 

June 30,

June 30,

 

2021

2020

2021

 

2020

Revenues

                       

Franchise and licensing fees

 

$

369

 

$

132

 

$

611

 

$

471

Base and other management fees

 

42

 

8

 

67

 

68

Incentive management fees

 

21

 

(5

)

 

34

 

18

Owned and leased hotels

 

121

 

31

 

177

 

241

Other revenues

 

21

 

10

 

38

 

33

 

574

 

176

 

927

 

831

Other revenues from managed and franchised properties

 

755

 

388

 

1,276

 

1,653

Total revenues

 

1,329

 

564

 

2,203

 

2,484

                       

Expenses

                       

Owned and leased hotels

 

142

 

95

 

252

 

334

Depreciation and amortization

 

46

 

88

 

97

 

179

General and administrative

 

98

 

63

 

195

 

123

Reorganization costs

 

 

38

 

 

38

Impairment losses

 

 

15

 

 

127

Other expenses

 

9

 

13

 

19

 

27

 

295

 

312

 

563

 

828

Other expenses from managed and franchised properties

 

810

 

554

 

1,395

 

1,890

Total expenses

 

1,105

 

866

 

1,958

 

2,718

                       

Operating income (loss)

 

224

 

(302

)

 

245

 

(234

)

                       

Interest expense

 

(101

)

 

(106

)

 

(204

)

 

(200

)

Gain (loss) on foreign currency transactions

 

(1

)

 

(13

)

 

1

 

(4

)

Loss on debt extinguishment

 

 

 

(69

)

 

Other non-operating income (loss), net

 

5

 

(23

)

 

10

 

(23

)

                       

Income (loss) before income taxes

 

127

 

(444

)

 

(17

)

 

(461

)

                       

Income tax benefit

 

1

 

12

 

36

 

47

                       

Net income (loss)

 

128

 

(432

)

 

19

 

(414

)

Net loss attributable to noncontrolling interests

 

2

 

2

 

3

 

2

Net income (loss) attributable to Hilton stockholders

 

$

130

 

$

(430

)

 

$

22

 

$

(412

)

                       

Weighted average shares outstanding:

                       

Basic

 

279

 

277

 

278

 

277

Diluted(1)

 

281

 

277

 

281

 

277

                       

Earnings (loss) per share:

                       

Basic

 

$

0.47

 

$

(1.55

)

 

$

0.08

 

$

(1.49

)

Diluted(1)

 

$

0.46

 

$

(1.55

)

 

$

0.08

 

$

(1.49

)

                       

Cash dividends declared per share

 

$

 

$

 

$

 

$

0.15

____________

(1)

 

The weighted average shares outstanding used in the calculation of diluted loss per share for the three and six months ended June 30, 2020 were revised from the previously reported amounts. Refer to “Reconciliations of Non-GAAP Financial Measures – Net Income and Diluted EPS, Adjusted for Special Items” for additional information.

 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION

(unaudited)

 
 

Three Months Ended June 30,

 

Occupancy

ADR

RevPAR

 

2021

vs. 2020

2021

vs. 2020

2021

vs. 2020

U.S.

 

63.7

%

 

39.2

%

pts.  

$

129.30

 

28.1

%

 

$

82.32

 

233.6

%

Americas (excluding U.S.)

 

37.3

 

27.5

 

108.05

 

28.7

 

40.34

 

389.9

Europe

 

31.9

 

25.1

 

105.83

 

22.6

 

33.80

 

470.2

Middle East & Africa

 

48.8

 

32.7

 

131.06

 

28.1

 

64.00

 

286.6

Asia Pacific

 

56.1

 

27.2

 

98.71

 

25.4

 

55.39

 

143.1

System-wide

 

58.5

 

36.1

 

124.75

 

28.0

 

73.03

 

233.8

     
 

Six Months Ended June 30,

 

Occupancy

ADR

RevPAR

 

2021

vs. 2020

2021

vs. 2020

2021

vs. 2020

U.S.

 

55.7

%

 

14.7

%

pts.

 

$

119.91

 

(6.6

)%

 

$

66.83

 

26.9

%

Americas (excluding U.S.)

 

33.8

 

3.1

 

102.34

 

(13.3

)

 

34.60

 

(4.7

)

Europe

 

25.7

 

(3.8

)

 

96.81

 

(20.1

)

 

24.87

 

(30.5

)

Middle East & Africa

 

45.7

 

8.5

 

128.18

 

1.0

 

58.59

 

24.0

Asia Pacific

 

49.9

 

16.8

 

98.26

 

(5.1

)

 

49.08

 

43.3

System-wide

 

51.3

 

12.6

 

116.51

 

(7.1

)

 

59.75

 

23.2

 

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY BRAND

(unaudited)

 
 

Three Months Ended June 30,

 

Occupancy

ADR

RevPAR

 

2021

vs. 2020

2021

vs. 2020

2021

vs. 2020

Waldorf Astoria Hotels & Resorts

 

47.0

%

 

35.2

%

pts.

 

$

499.78

 

126.2

%

 

$

234.79

 

802.9

%

Conrad Hotels & Resorts

 

40.9

 

22.7

 

202.85

 

41.7

 

82.88

 

219.0

Canopy by Hilton

 

44.7

 

31.2

 

146.28

 

43.0

 

65.35

 

373.8

Hilton Hotels & Resorts

 

43.6

 

30.3

 

145.69

 

30.8

 

63.54

 

327.1

Curio Collection by Hilton

 

48.8

 

33.6

 

190.58

 

52.3

 

93.02

 

389.1

DoubleTree by Hilton

 

50.7

 

33.7

 

113.09

 

24.0

 

57.29

 

269.4

Tapestry Collection by Hilton

 

52.1

 

31.6

 

136.53

 

34.9

 

71.17

 

243.4

Embassy Suites by Hilton

 

58.4

 

41.5

 

144.06

 

27.1

 

84.17

 

338.9

Hilton Garden Inn

 

60.2

 

38.5

 

113.90

 

25.6

 

68.61

 

247.6

Hampton by Hilton

 

66.5

 

39.2

 

112.20

 

23.6

 

74.67

 

200.8

Tru by Hilton

 

69.5

 

40.9

 

105.41

 

30.6

 

73.25

 

216.9

Homewood Suites by Hilton

 

76.4

 

36.2

 

122.02

 

17.1

 

93.26

 

122.4

Home2 Suites by Hilton

 

78.5

 

39.4

 

112.99

 

20.6

 

88.67

 

142.1

System-wide

 

58.5

 

36.1

 

124.75

 

28.0

 

73.03

 

233.8

 

Six Months Ended June 30,

 

Occupancy

ADR

RevPAR

 

2021

vs. 2020

2021

vs. 2020

2021

vs. 2020

Waldorf Astoria Hotels & Resorts

 

39.5

%

 

6.9

%

pts.

 

$

529.52

 

28.2

%

 

$

209.31

 

55.5

%

Conrad Hotels & Resorts

 

36.1

 

5.1

 

195.62

 

(9.4

)

 

70.57

 

5.3

Canopy by Hilton

 

37.3

 

10.9

 

134.57

 

(9.8

)

 

50.13

 

27.6

Hilton Hotels & Resorts

 

37.0

 

3.8

 

137.66

 

(12.3

)

 

50.87

 

(2.2

)

Curio Collection by Hilton

 

42.2

 

9.3

 

183.45

 

3.8

 

77.33

 

32.9

DoubleTree by Hilton

 

43.4

 

9.0

 

106.29

 

(10.7

)

 

46.18

 

12.8

Tapestry Collection by Hilton

 

44.8

 

11.1

 

126.53

 

1.3

 

56.73

 

34.8

Embassy Suites by Hilton

 

50.9

 

12.9

 

133.88

 

(9.2

)

 

68.13

 

21.5

Hilton Garden Inn

 

53.1

 

14.4

 

104.77

 

(7.8

)

 

55.65

 

26.6

Hampton by Hilton

 

58.4

 

17.4

 

103.78

 

(1.5

)

 

60.60

 

40.4

Tru by Hilton

 

61.5

 

23.1

 

96.09

 

6.1

 

59.12

 

69.8

Homewood Suites by Hilton

 

70.4

 

17.6

 

114.68

 

(5.9

)

 

80.68

 

25.5

Home2 Suites by Hilton

 

71.6

 

21.5

 

105.64

 

0.6

 

75.59

 

44.0

System-wide

 

51.3

 

12.6

 

116.51

 

(7.1

)

 

59.75

 

23.2

     

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY SEGMENT

(unaudited)

     
 

Three Months Ended June 30,

 

Occupancy

ADR

RevPAR

 

2021

vs. 2020

2021

vs. 2020

2021

vs. 2020

Management and franchise

 

59.1

%

 

36.3

%

pts.  

$

124.59

 

28.0

%

 

$

73.58

 

232.6

%

Ownership(1)

 

26.3

 

21.1

 

147.05

 

12.6

 

38.61

 

473.9

System-wide

 

58.5

 

36.1

 

124.75

 

28.0

 

73.03

 

233.8

                           
 

Six Months Ended June 30,

 

Occupancy

 

ADR

 

RevPAR

 

2021

 

vs. 2020

 

2021

 

vs. 2020

 

2021

 

vs. 2020

Management and franchise

 

51.8

%

 

12.9

%

pts.

 

$

116.35

 

(6.8

)%

 

$

60.24

 

24.3

%

Ownership(1)

 

20.4

 

(7.9

)

 

142.75

 

(19.4

)

 

29.17

 

(42.0

)

System-wide

 

51.3

 

12.6

 

116.51

 

(7.1

)

 

59.75

 

23.2

____________
(1)  

Includes leased hotels, as well as hotels leased by entities in which Hilton owns a noncontrolling financial interest.

                 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of June 30, 2021

                 
 

Owned / Leased(1)

 

Managed

 

Franchised

 

Total

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

 

Properties

 

Rooms

Waldorf Astoria Hotels & Resorts

               

U.S.

 

 

 

13

 

5,266

 

2

 

1,047

 

15

 

6,313

Americas (excluding U.S.)

 

 

 

2

 

261

 

 

 

2

 

261

Europe

 

2

 

463

 

4

 

898

 

 

 

6

 

1,361

Middle East & Africa

 

 

 

5

 

1,224

 

 

 

5

 

1,224

Asia Pacific

 

 

 

6

 

1,259

 

 

 

6

 

1,259

LXR Hotels & Resorts

               

U.S.

 

 

 

 

 

2

 

306

 

2

 

306

Americas (excluding U.S.)

 

 

 

 

 

1

 

76

 

1

 

76

Europe

 

 

 

2

 

383

 

 

 

2

 

383

Middle East & Africa

 

 

 

 

 

1

 

234

 

1

 

234

Conrad Hotels & Resorts

               

U.S.

 

 

 

6

 

2,211

 

2

 

1,716

 

8

 

3,927

Americas (excluding U.S.)

 

 

 

2

 

438

 

 

 

2

 

438

Europe

 

 

 

4

 

1,155

 

 

 

4

 

1,155

Middle East & Africa

 

1

 

614

 

3

 

1,569

 

 

 

4

 

2,183

Asia Pacific

 

1

 

164

 

20

 

6,057

 

1

 

659

 

22

 

6,880

Canopy by Hilton

               

U.S.

 

 

 

 

 

22

 

3,693

 

22

 

3,693

Americas (excluding U.S.)

 

 

 

2

 

272

 

 

 

2

 

272

Europe

 

 

 

1

 

123

 

2

 

263

 

3

 

386

Middle East & Africa

 

 

 

1

 

200

 

 

 

1

 

200

Asia Pacific

 

 

 

3

 

489

 

 

 

3

 

489

Hilton Hotels & Resorts

               

U.S.

 

 

 

62

 

45,716

 

184

 

58,099

 

246

 

103,815

Americas (excluding U.S.)

 

1

 

405

 

25

 

9,323

 

26

 

7,826

 

52

 

17,554

Europe

 

45

 

12,542

 

45

 

15,241

 

39

 

10,560

 

129

 

38,343

Middle East & Africa

 

5

 

1,998

 

38

 

12,809

 

2

 

1,415

 

45

 

16,222

Asia Pacific

 

5

 

2,999

 

107

 

37,700

 

6

 

2,649

 

118

 

43,348

Curio Collection by Hilton

               

U.S.

 

 

 

5

 

2,633

 

52

 

11,114

 

57

 

13,747

Americas (excluding U.S.)

 

 

 

2

 

99

 

10

 

1,224

 

12

 

1,323

Europe

 

 

 

5

 

461

 

19

 

2,728

 

24

 

3,189

Middle East & Africa

 

 

 

4

 

685

 

1

 

356

 

5

 

1,041

Asia Pacific

 

 

 

4

 

773

 

2

 

248

 

6

 

1,021

DoubleTree by Hilton

               

U.S.

 

 

 

31

 

10,382

 

340

 

78,130

 

371

 

88,512

Americas (excluding U.S.)

 

 

 

3

 

587

 

35

 

6,833

 

38

 

7,420

Europe

 

 

 

13

 

3,425

 

105

 

17,638

 

118

 

21,063

Middle East & Africa

 

 

 

14

 

3,853

 

5

 

568

 

19

 

4,421

Asia Pacific

 

 

 

72

 

19,559

 

5

 

1,395

 

77

 

20,954

Tapestry Collection by Hilton

               

U.S.

 

 

 

 

 

59

 

7,247

 

59

 

7,247

Americas (excluding U.S.)

 

 

 

 

 

4

 

354

 

4

 

354

Europe

 

 

 

 

 

1

 

46

 

1

 

46

Asia Pacific

 

 

 

1

 

266

 

1

 

175

 

2

 

441

____________
(1)  

Includes hotels owned or leased by entities in which Hilton owns a noncontrolling financial interest.

 

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY (continued)

As of June 30, 2021

 
 

Owned / Leased(1)

Managed

Franchised

Total

 

Properties

Rooms

Properties

Rooms

Properties

Rooms

Properties

Rooms

Embassy Suites by Hilton

 

U.S.

 

42

11,109

210

47,073

252

58,182

Americas (excluding U.S.)

 

3

667

5

1,336

8

2,003

Motto by Hilton

 

U.S.

 

2

497

2

497

Hilton Garden Inn

 

U.S.

 

4

425

720

99,430

724

99,855

Americas (excluding U.S.)

 

11

1,571

48

7,270

59

8,841

Europe

 

19

3,642

58

9,451

77

13,093

Middle East & Africa

 

16

3,534

3

474

19

4,008

Asia Pacific

 

44

9,720

44

9,720

Hampton by Hilton

 

U.S.

 

28

3,648

2,271

223,896

2,299

227,544

Americas (excluding U.S.)

 

12

1,540

107

12,976

119

14,516

Europe

 

17

2,808

88

13,563

105

16,371

Middle East & Africa

 

3

723

3

723

Asia Pacific

 

189

31,103

189

31,103

Tru by Hilton

 

U.S.

 

202

19,720

202

19,720

Americas (excluding U.S.)

 

2

179

2

179

Homewood Suites by Hilton

 

U.S.

 

10

1,172

485

55,359

495

56,531

Americas (excluding U.S.)

 

3

406

23

2,590

26

2,996

Home2 Suites by Hilton

 

U.S.

 

2

210

485

50,800

487

51,010

Americas (excluding U.S.)

 

7

753

7

753

Other

 

4

2,164

2

244

6

2,408

Total hotels

 

60

19,185

723

228,656

5,836

793,313

6,619

1,041,154

Hilton Grand Vacations

 

57

9,177

57

9,177

Total system

 

60

19,185

723

228,656

5,893

802,490

6,676

1,050,331

____________

(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

 

June 30,

Increase / (Decrease)

 

2021

2020

$

%

Capital expenditures for property and equipment(1)

 

$

6

   

$

18

   

(12

)

 

(66.7

)

Capitalized software costs(2)

 

8

   

16

   

(8

)

 

(50.0

)

Total capital expenditures

 

14

   

34

   

(20

)

 

(58.8

)

Contract acquisition costs

 

72

   

12

   

60

 

NM(3)

 

Total capital expenditures and contract acquisition costs

 

$

86

   

$

46

   

40

 

87.0

                       
 

Six Months Ended

 

June 30,

Increase / (Decrease)

 

2021

2020

$

%

Capital expenditures for property and equipment(1)

 

$

9

   

$

30

   

(21

)

 

(70.0

)

Capitalized software costs(2)

 

16

   

33

   

(17

)

 

(51.5

)

Total capital expenditures

 

25

   

63

   

(38

)

 

(60.3

)

Contract acquisition costs

 

115

   

23

   

92

 

NM(3)

 

Total capital expenditures and contract acquisition costs

 

$

140

   

$

86

   

54

 

62.8

____________

(1)

Expenditures for hotels, corporate and other property and equipment, which include amounts indirectly reimbursed by hotel owners of $1 million and $4 million for the three months ended June 30, 2021 and 2020, respectively, and $1 million and $7 million for the six months ended June 30, 2021 and 2020, respectively. Excludes expenditures for FF&E replacement reserves of $11 million and $7 million for the three months ended June 30, 2021 and 2020, respectively, and $15 million and $21 million for the six months ended June 30, 2021 and 2020, respectively.

(2)

Includes $7 million and $6 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended June 30, 2021 and 2020, respectively, and $14 million and $20 million for the six months ended June 30, 2021 and 2020, respectively.

(3)

Fluctuation in terms of percentage change is not meaningful.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME (LOSS) AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(unaudited, in millions, except per share data)

 
 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2021

2020

2021

2020

Net income (loss) attributable to Hilton stockholders, as reported

 

$

130

$

(430

)

$

22

$

(412

)

Diluted EPS, as reported(1)

 

$

0.46

$

(1.55

)

$

0.08

$

(1.49

)

Special items:

 

Net other expenses from managed and franchised properties

 

$

55

$

166

$

119

$

237

Purchase accounting amortization(2)

 

12

47

24

96

FF&E replacement reserves

 

11

7

15

21

Reorganization costs

 

38

38

Impairment losses

 

15

127

Loss on debt extinguishment(3)

 

69

Tax-related adjustment(4)

 

(30

)

(30

)

Other adjustments(5)

 

(2

)

22

1

25

Total special items before taxes

 

46

295

198

544

Income tax expense on special items

 

(19

)

(35

)

(57

)

(94

)

Total special items after taxes

 

$

27

$

260

$

141

$

450

 

Net income (loss), adjusted for special items

 

$

157

$

(170

)

$

163

$

38

Diluted EPS, adjusted for special items(6)

 

$

0.56

$

(0.61

)

$

0.58

$

0.13

____________

(1)

The weighted average shares outstanding used in the calculation of diluted EPS for the three and six months ended June 30, 2020 were revised from previously reported amounts of 278 million and 279 million, respectively, to 277 million for both periods as the previously reported dilutive shares were determined to be anti-dilutive as a result of the net loss attributable to Hilton stockholders reported during those periods.

(2)

Represents the amortization of finite-lived intangible assets that were recorded at fair value in October 2007 when the Company became a wholly owned subsidiary of affiliates of The Blackstone Group Inc. Certain of these assets became fully amortized during the year ended December 31, 2020, and the majority of the remaining finite-lived intangible assets will be fully amortized during 2023.

(3)

Relates to the redemption of the 5.125% Senior Notes due 2026 and includes a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs of $14 million.

(4)

Includes benefits recognized in income tax benefit related to the United Kingdom's Finance Act 2021, enacted in June 2021, which did not have an effect on cash paid for taxes in the periods.

(5)

The three and six months ended June 30, 2020 include losses related to the disposal of an investment and the settlement of a debt guarantee for a franchised hotel, which were recognized in other non-operating loss, net.

(6)

The weighted average shares outstanding used in the calculation of diluted EPS, adjusted for special items, for the three months ended June 30, 2020 was revised from the previously reported amount of 278 million to 277 million as the previously reported dilutive shares were determined to be anti-dilutive as a result of a net loss, adjusted for special items, reported during the period. For the six months ended June 30, 2020, the weighted average shares outstanding used in the calculation of diluted EPS, adjusted for special items, remained unchanged at 279 million shares as net income, adjusted for special items, was reported for the period.

 

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(unaudited, dollars in millions)

 
 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2021

2020

2021

2020

Net income (loss)

 

$

128

$

(432

)

$

19

$

(414

)

Interest expense

 

101

106

204

200

Income tax benefit

 

(1

)

(12

)

(36

)

(47

)

Depreciation and amortization expenses

 

46

88

97

179

EBITDA

 

274

(250

)

284

(82

)

Loss (gain) on foreign currency transactions

 

1

13

(1

)

4

Loss on debt extinguishment

 

69

FF&E replacement reserves

 

11

7

15

21

Share-based compensation expense

 

53

24

92

12

Reorganization costs

 

38

38

Impairment losses

 

15

127

Amortization of contract acquisition costs

 

7

7

14

15

Net other expenses from managed and franchised properties

 

55

166

119

237

Other adjustments(1)

 

(1

)

31

6

42

Adjusted EBITDA

 

$

400

$

51

$

598

$

414

____________
(1)  

Includes severance not related to the 2020 reorganization and other items. The three and six months ended June 30, 2020 also include losses related to the disposal of an investment and the settlement of a debt guarantee for a franchised hotel.

 

Three Months Ended

Six Months Ended

 

June 30,

June 30,

 

2021

2020

2021

2020

Total revenues, as reported

 

$

1,329

$

564

$

2,203

$

2,484

Add: amortization of contract acquisition costs

 

7

7

14

15

Less: other revenues from managed and franchised properties

 

(755

)

(388

)

(1,276

)

(1,653

)

Total revenues, as adjusted

 

$

581

$

183

$

941

$

846

 

Adjusted EBITDA

 

$

400

$

51

$

598

$

414

 

Adjusted EBITDA margin

 

68.8

%

27.9

%

63.5

%

48.9

%

         

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(unaudited, dollars in millions)

         
 

June 30,

December 31,

 

2021

2020

Long-term debt, including current maturities

 

$

8,766

$

10,487

Add: unamortized deferred financing costs and discount

 

93

93

Long-term debt, including current maturities and excluding unamortized deferred financing costs and discount

 

8,859

10,580

Add: Hilton's share of unconsolidated affiliate debt

 

8

8

Less: cash and cash equivalents

 

(1,044

)

(3,218

)

Less: restricted cash and cash equivalents

 

(83

)

(45

)

Net debt

 

$

7,740

$

7,325

 

Six Months Ended

Year Ended

TTM Ended

 

June 30,

December 31,

June 30,

 

2021

2020

2020

2021

Net income (loss)

 

$

19

$

(414

)

$

(720

)

$

(287

)

Interest expense

 

204

200

429

433

Income tax benefit

 

(36

)

(47

)

(204

)

(193

)

Depreciation and amortization expenses

 

97

179

331

249

EBITDA

 

284

(82

)

(164

)

202

Loss (gain) on foreign currency transactions

 

(1

)

4

27

22

Loss on debt extinguishments

 

69

48

117

FF&E replacement reserves

 

15

21

57

51

Share-based compensation expense

 

92

12

97

177

Reorganization costs

 

38

41

3

Impairment losses

 

127

258

131

Amortization of contract acquisition costs

 

14

15

29

28

Net other expenses from managed and franchised properties

 

119

237

397

279

Other adjustments(1)

 

6

42

52

16

Adjusted EBITDA

 

$

598

$

414

$

842

$

1,026

 

Net debt

 

$

7,740

 

Net debt to Adjusted EBITDA ratio

 

7.5

____________
(1)  

Includes severance not related to the 2020 reorganization and other items. The six months ended June 30, 2020 and year ended December 31, 2020 also include losses related to the disposal of an investment and the settlement of a debt guarantee for a franchised hotel. The year ended December 31, 2020 also includes a gain related to the reimbursement by a third party for taxes owed resulting from the sale of a hotel in a prior period.

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 June 30, 2021, which is calculated as the six months ended June 30, 2021 plus the year ended December 31, 2020 less the six months ended June 30, 2020. 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 COVID-19 pandemic had a material adverse impact on the Company's results for the TTM period ended June 30, 2021 when compared to periods prior to the onset of the pandemic in early 2020, and the Company expects it will continue to have a significant adverse impact on the Company's results of operations in the near term. As such, this interim period, as well as upcoming periods, are unlikely to be comparable to periods prior to the onset of the pandemic or to other periods affected by the pandemic, and are not indicative of future performance. 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. 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 equity 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 and its 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, 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 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 it is capitalized and depreciated over the life of the FF&E; (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 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 to net income (loss) or other measures of financial performance or liquidity derived in accordance with GAAP. The Company's definitions of EBITDA, Adjusted EBITDA and Adjusted EBITDA margin may not be comparable to similarly titled measures of other companies and may have limitations as analytical tools.

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: (i) long-term debt, including current maturities and excluding unamortized deferred financing costs and discount, and (ii) the Company's share of unconsolidated affiliate debt; reduced by: (a) cash and cash equivalents and (b) restricted cash and cash equivalents. 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 of 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 6,619 hotels in the Company's system as of June 30, 2021, 5,617 hotels were classified as comparable hotels. The 1,002 non-comparable hotels included 43 hotels, or less than one 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 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 COVID-19 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"), reflects the underlying results of the business for the three and six months ended June 30, 2021 and 2020.

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 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 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, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and six months ended June 30, 2021 and 2020 use the exchange rates for the three and six months ended June 30, 2021, respectively.