Hilton Worldwide Holdings Inc. (NYSE: HLT) today reported its third quarter 2022 results. Highlights include:

  • Diluted EPS was $1.26 for the third quarter, and diluted EPS, adjusted for special items, was $1.31
  • Net income was $346 million for the third quarter, exceeding the high end of guidance
  • Adjusted EBITDA was $732 million for the third quarter, exceeding the high end of guidance
  • System-wide comparable RevPAR increased 29.9 percent, on a currency neutral basis, for the third quarter compared to the same period in 2021
  • System-wide comparable RevPAR increased 5.0 percent, on a currency neutral basis, for the third quarter compared to the same period in 2019
  • Approved 19,900 new rooms for development during the third quarter, bringing Hilton's development pipeline to 416,000 rooms as of September 30, 2022
  • Added 12,900 rooms to Hilton's system in the third quarter, contributing to 12,100 net additional rooms in Hilton's system during the period
  • Repurchased 4.0 million shares of Hilton common stock during the third quarter, bringing total capital return, including dividends, to $538 million for the quarter and $1,324 million year to date through October
  • Full year 2022 system-wide comparable RevPAR is expected to increase between 40 percent and 43 percent, on a currency neutral basis, compared to 2021; full year net income is projected to be between $1,219 million and $1,240 million; full year Adjusted EBITDA is projected to be between $2,500 million and $2,530 million
  • Full year 2022 capital return is projected to be between $1.5 billion and $1.9 billion

Overview

Christopher J. Nassetta, President & Chief Executive Officer of Hilton, said, "The third quarter marked an important milestone in our recovery as system-wide RevPAR exceeded the same period in 2019 for the first time since the pandemic began. Our diluted EPS, adjusted for special items and Adjusted EBITDA exceeded the high end of our guidance. Improved performance reflected the continued strength in leisure travel, as well as recovering business transient and group demand. We expect these strong trends to continue throughout the fourth quarter with system-wide RevPAR once again exceeding prior peaks."

For the three months ended September 30, 2022, system-wide comparable RevPAR increased 29.9 percent compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 33 percent. For comparison to pre-pandemic results, system-wide comparable RevPAR for the three months ended September 30, 2022 was up 5.0 percent compared to the same period in 2019.

For the nine months ended September 30, 2022, system-wide comparable RevPAR increased 49.6 percent compared to the same period in 2021, due to increases in both occupancy and ADR, and fee revenues increased 51 percent. For comparison to pre-pandemic results, system-wide comparable RevPAR for the nine months ended September 30, 2022 was down 4.0 percent compared to the same period in 2019.

For the three months ended September 30, 2022, diluted EPS was $1.26 and diluted EPS, adjusted for special items, was $1.31 compared to $0.86 and $0.78, respectively, for the three months ended September 30, 2021. Net income and Adjusted EBITDA were $346 million and $732 million, respectively, for the three months ended September 30, 2022, compared to $240 million and $519 million, respectively, for the three months ended September 30, 2021.

For the nine months ended September 30, 2022, diluted EPS was $3.32 and diluted EPS, adjusted for special items, was $3.31 compared to $0.94 and $1.36, respectively, for the nine months ended September 30, 2021. Net income and Adjusted EBITDA were $924 million and $1,859 million, respectively, for the nine months ended September 30, 2022, compared to $259 million and $1,117 million, respectively, for the nine months ended September 30, 2021.

Development

In the third quarter of 2022, Hilton opened 80 new hotels contributing 12,900 additional rooms to Hilton's system and achieved net unit growth of 12,100 rooms. During the quarter, Hilton opened the 25,000th room under the Curio Collection by Hilton brand and the 600th Hilton Hotels & Resorts property. Further, Hilton continued to expand its luxury portfolio with the opening of the Waldorf Astoria Kuwait, the brand's first property in the country.

As of September 30, 2022, Hilton's development pipeline totaled more than 2,810 hotels representing nearly 416,000 rooms throughout 112 countries and territories, including 29 countries and territories where Hilton does not currently have any existing hotels. Additionally, of the rooms in the development pipeline, 204,200 of the rooms were under construction and 242,600 of the rooms were located outside the U.S.

Balance Sheet and Liquidity

As of September 30, 2022, Hilton had $8.8 billion of long-term debt outstanding, excluding the deduction for deferred financing costs and discount, with a weighted average interest rate of 4.29 percent. Further 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 4.28 percent and no scheduled maturities until 2025. No debt amounts were outstanding under Hilton's $1.75 billion senior secured revolving credit facility as of September 30, 2022, which had an available borrowing capacity of $1,690 million after considering $60 million of outstanding letters of credit. Total cash and cash equivalents were $1,362 million as of September 30, 2022, including $80 million of restricted cash and cash equivalents.

During the third quarter of 2022, Hilton repurchased 4.0 million shares of its common stock at a cost of $497 million and an average price per share of $124.85. During the nine months ended September 30, 2022, Hilton repurchased 8.5 million shares of its common stock at a cost of $1,107 million and an average price per share of $130.47. Year-to-date through October 2022, Hilton repurchased 9.6 million shares of its common stock for $1,242 million and the amount remaining under Hilton's stock repurchase program was $994 million.

In September 2022, Hilton paid a quarterly cash dividend of $0.15 per share of common stock, for a total of $41 million. In October 2022, 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 December 30, 2022 to holders of record of its common stock as of the close of business on November 10, 2022.

Outlook

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 2022

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 40 percent and 43 percent compared to 2021, and to be down between 1 percent and 3 percent from 2019.
  • Diluted EPS is projected to be between $4.40 and $4.48.
  • Diluted EPS, adjusted for special items, is projected to be between $4.46 and $4.54.
  • Net income is projected to be between $1,219 million and $1,240 million.
  • Adjusted EBITDA is projected to be between $2,500 million and $2,530 million.
  • Contract acquisition costs and capital expenditures, excluding amounts indirectly reimbursed by hotel owners, are expected to be between $250 million and $275 million.
  • Capital return is projected to be between $1.5 billion and $1.9 billion.
  • General and administrative expenses are projected to be between $380 million and $400 million.
  • Net unit growth is expected to be approximately 5.0 percent.

Fourth Quarter 2022

  • System-wide comparable RevPAR, on a currency neutral basis, is expected to increase between 19 percent and 23 percent compared to the fourth quarter of 2021, and to increase between 2 percent and 6 percent from the fourth quarter of 2019.
  • Diluted EPS is projected to be between $1.08 and $1.15.
  • Diluted EPS, adjusted for special items, is projected to be between $1.15 and $1.23.
  • Net income is projected to be between $295 million and $316 million.
  • Adjusted EBITDA is projected to be between $641 million and $671 million.

About Hilton

Hilton (NYSE: HLT) is a leading global hospitality company with a portfolio of 18 world-class brands comprising more than 7,000 properties and more than 1.1 million rooms, in 123 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

Nine Months Ended

 

September 30,

September 30,

 

2022

2021

2022

2021

Revenues

 

Franchise and licensing fees

 

$

573

$

451

$

1,531

$

1,062

Base and other management fees

 

76

49

206

116

Incentive management fees

 

52

26

132

60

Owned and leased hotels

 

295

199

727

376

Other revenues

 

28

18

71

56

 

1,024

743

2,667

1,670

Other revenues from managed and franchised properties

 

1,344

1,006

3,662

2,282

Total revenues

 

2,368

1,749

6,329

3,952

 

Expenses

 

Owned and leased hotels

 

263

200

705

452

Depreciation and amortization

 

39

46

123

143

General and administrative

 

93

107

287

302

Other expenses

 

13

12

35

31

 

408

365

1,150

928

Other expenses from managed and franchised properties

 

1,337

944

3,589

2,339

Total expenses

 

1,745

1,309

4,739

3,267

 

Loss on sale of assets, net

 

(8

)

(8

)

 

Operating income

 

623

432

1,590

677

 

Interest expense

 

(106

)

(98

)

(295

)

(302

)

Gain on foreign currency transactions

 

4

1

Loss on debt extinguishment

 

(69

)

Other non-operating income, net

 

10

6

32

16

 

Income before income taxes

 

527

340

1,331

323

 

Income tax expense

 

(181

)

(100

)

(407

)

(64

)

 

Net income

 

346

240

924

259

Net loss attributable to noncontrolling interests

 

1

1

3

4

Net income attributable to Hilton stockholders

 

$

347

$

241

$

927

$

263

 

Weighted average shares outstanding:

 

Basic

 

273

279

277

278

Diluted

 

275

281

279

281

 

Earnings per share:

 

Basic

 

$

1.27

$

0.86

$

3.35

$

0.94

Diluted

 

$

1.26

$

0.86

$

3.32

$

0.94

 

Cash dividends declared per share

 

$

0.15

$

$

0.30

$

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS

BY REGION, BRAND AND SEGMENT

(unaudited)

     
 

Three Months Ended September 30,

 

Occupancy

ADR

RevPAR

 

2022

vs. 2021

2022

vs. 2021

2022

vs. 2021

Region

 

U.S.

 

74.5

%

6.0

% pts.

$

163.32

12.1

%

$

121.71

22.0

%

Americas (excluding U.S.)

 

71.4

17.6

147.08

31.2

104.99

74.2

Europe

 

77.4

18.5

159.10

45.9

123.15

91.7

Middle East & Africa

 

63.9

11.7

128.39

18.7

82.10

45.2

Asia Pacific

 

63.6

13.7

104.50

14.9

66.46

46.3

 

Brand

 

Waldorf Astoria Hotels & Resorts

 

55.3

%

9.7

% pts.

$

422.47

6.1

%

$

233.50

28.6

%

Conrad Hotels & Resorts

 

63.3

17.0

268.59

40.8

169.98

92.6

Canopy by Hilton

 

66.2

9.9

192.83

16.7

127.68

37.0

Hilton Hotels & Resorts

 

69.3

17.8

184.48

18.5

127.83

59.4

Curio Collection by Hilton

 

66.7

11.0

228.11

15.4

152.24

38.2

DoubleTree by Hilton

 

69.5

11.4

141.53

14.0

98.37

36.4

Tapestry Collection by Hilton

 

70.6

8.3

175.99

11.0

124.26

25.8

Embassy Suites by Hilton

 

73.3

10.5

178.81

11.7

131.05

30.5

Hilton Garden Inn

 

73.4

7.3

144.89

12.8

106.34

25.3

Hampton by Hilton

 

75.3

4.2

135.64

9.3

102.10

15.8

Tru by Hilton

 

75.1

3.0

131.31

7.7

98.67

12.2

Homewood Suites by Hilton

 

82.0

1.9

157.42

15.4

129.01

18.1

Home2 Suites by Hilton

 

81.3

0.3

139.68

12.0

113.62

12.4

 

Segment

 

Management and franchise

 

73.2

%

8.4

% pts.

$

154.97

14.1

%

$

113.46

28.8

%

Ownership(1)

 

70.4

27.6

209.81

31.8

147.62

116.6

 

System-wide

 

73.2

%

8.7

% pts.

$

155.86

14.5

%

$

114.04

29.9

%

HILTON WORLDWIDE HOLDINGS INC.

COMPARABLE AND CURRENCY NEUTRAL SYSTEM-WIDE HOTEL OPERATING STATISTICS (continued)

BY REGION, BRAND AND SEGMENT

(unaudited)

     
 

Nine Months Ended September 30,

 

Occupancy

ADR

RevPAR

 

2022

vs. 2021

2022

vs. 2021

2022

vs. 2021

Region

 

U.S.

 

70.5

%

10.3

% pts.

$

157.50

22.1

%

$

111.09

42.9

%

Americas (excluding U.S.)

 

63.0

23.1

138.05

31.4

87.04

107.7

Europe

 

65.9

29.4

147.18

51.5

97.02

173.2

Middle East & Africa

 

63.9

17.2

146.86

28.3

93.83

75.5

Asia Pacific

 

52.3

2.5

102.22

11.3

53.46

16.8

 

Brand

 

Waldorf Astoria Hotels & Resorts

 

53.5

%

16.7

% pts.

$

489.29

12.0

%

$

261.90

62.8

%

Conrad Hotels & Resorts

 

55.5

16.8

259.54

40.7

144.01

101.9

Canopy by Hilton

 

61.8

17.8

193.99

23.7

119.91

73.8

Hilton Hotels & Resorts

 

61.4

20.0

181.23

26.9

111.32

88.3

Curio Collection by Hilton

 

62.1

16.1

227.21

21.0

141.13

63.2

DoubleTree by Hilton

 

63.5

15.2

137.07

21.3

87.00

59.4

Tapestry Collection by Hilton

 

64.7

15.4

166.75

18.8

107.91

55.9

Embassy Suites by Hilton

 

68.9

13.9

174.14

22.0

119.98

53.0

Hilton Garden Inn

 

68.3

11.0

138.51

21.8

94.57

45.2

Hampton by Hilton

 

69.8

7.2

130.08

17.7

90.77

31.1

Tru by Hilton

 

71.0

7.6

124.70

17.9

88.55

32.0

Homewood Suites by Hilton

 

79.3

5.7

149.64

22.2

118.68

31.6

Home2 Suites by Hilton

 

78.9

4.5

134.41

18.9

106.08

26.1

 

Segment

 

Management and franchise

 

67.8

%

11.6

% pts.

$

150.10

22.8

%

$

101.76

48.1

%

Ownership(1)

 

57.7

31.4

202.64

36.1

116.89

199.0

 

System-wide

 

67.6

%

11.9

% pts.

$

150.86

23.2

%

$

102.02

49.6

%

____________

                                   

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

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY

As of September 30, 2022

                 
 

Owned / Leased(1)

Managed

Franchised

Total

 

Properties

Rooms

Properties

Rooms

Properties

Rooms

Properties

Rooms

Waldorf Astoria Hotels & Resorts

 

U.S.

 

12

4,488

12

4,488

Americas (excluding U.S.)

 

2

252

2

252

Europe

 

2

463

4

898

6

1,361

Middle East & Africa

 

6

1,432

6

1,432

Asia Pacific

 

6

1,259

6

1,259

LXR Hotels & Resorts

 

U.S.

 

3

522

3

522

Americas (excluding U.S.)

 

1

76

1

76

Europe

 

1

70

1

307

2

377

Middle East & Africa

 

1

41

1

234

2

275

Asia Pacific

 

1

114

1

114

Conrad Hotels & Resorts

 

U.S.

 

6

2,227

2

1,730

8

3,957

Americas (excluding U.S.)

 

3

787

3

787

Europe

 

4

1,155

1

107

5

1,262

Middle East & Africa

 

1

614

3

1,569

4

2,183

Asia Pacific

 

1

164

22

7,077

1

659

24

7,900

Canopy by Hilton

 

U.S.

 

25

4,296

25

4,296

Americas (excluding U.S.)

 

2

272

2

272

Europe

 

1

123

4

917

5

1,040

Middle East & Africa

 

1

200

1

200

Asia Pacific

 

4

614

4

614

Signia by Hilton

 

U.S.

 

2

1,814

2

1,814

Hilton Hotels & Resorts

 

U.S.

 

59

44,175

184

57,844

243

102,019

Americas (excluding U.S.)

 

1

405

29

11,298

26

7,826

56

19,529

Europe

 

39

11,514

45

15,135

43

11,280

127

37,929

Middle East & Africa

 

5

1,992

38

13,501

3

1,565

46

17,058

Asia Pacific

 

5

2,999

115

40,075

9

3,557

129

46,631

Curio Collection by Hilton

 

U.S.

 

10

3,990

62

13,582

72

17,572

Americas (excluding U.S.)

 

2

99

16

2,171

18

2,270

Europe

 

6

516

25

3,269

31

3,785

Middle East & Africa

 

4

741

2

557

6

1,298

Asia Pacific

 

4

773

2

248

6

1,021

DoubleTree by Hilton

 

U.S.

 

32

10,585

346

78,794

378

89,379

Americas (excluding U.S.)

 

3

587

36

7,238

39

7,825

Europe

 

14

3,580

109

18,635

123

22,215

Middle East & Africa

 

18

4,711

6

825

24

5,536

Asia Pacific

 

79

21,187

6

1,568

85

22,755

HILTON WORLDWIDE HOLDINGS INC.

PROPERTY SUMMARY (continued)

As of September 30, 2022

                 
 

Owned / Leased(1)

Managed

Franchised

Total

 

Properties

Rooms

Properties

Rooms

Properties

Rooms

Properties

Rooms

Tapestry Collection by Hilton

 

U.S.

 

74

8,839

74

8,839

Americas (excluding U.S.)

 

1

138

7

740

8

878

Europe

 

6

360

6

360

Asia Pacific

 

1

266

1

175

2

441

Embassy Suites by Hilton

 

U.S.

 

38

10,121

215

48,458

253

58,579

Americas (excluding U.S.)

 

2

354

6

1,649

8

2,003

Motto by Hilton

 

U.S.

 

3

871

3

871

Hilton Garden Inn

 

U.S.

 

5

527

736

101,752

741

102,279

Americas (excluding U.S.)

 

13

1,992

51

7,664

64

9,656

Europe

 

19

3,696

61

9,849

80

13,545

Middle East & Africa

 

17

3,555

3

474

20

4,029

Asia Pacific

 

52

11,401

3

495

55

11,896

Hampton by Hilton

 

U.S.

 

24

3,115

2,299

227,371

2,323

230,486

Americas (excluding U.S.)

 

12

1,537

115

13,932

127

15,469

Europe

 

16

2,697

108

16,765

124

19,462

Middle East & Africa

 

4

1,238

4

1,238

Asia Pacific

 

261

42,027

261

42,027

Tru by Hilton

 

U.S.

 

224

21,855

224

21,855

Americas (excluding U.S.)

 

3

333

3

333

Homewood Suites by Hilton

 

U.S.

 

9

1,131

497

56,875

506

58,006

Americas (excluding U.S.)

 

3

406

24

2,688

27

3,094

Home2 Suites by Hilton

 

U.S.

 

2

210

536

56,235

538

56,445

Americas (excluding U.S.)

 

7

753

7

753

Asia Pacific

 

15

2,198

15

2,198

Other

 

3

1,343

5

1,217

8

2,560

Total hotels

 

54

18,151

759

238,958

6,175

841,496

6,988

1,098,605

Hilton Grand Vacations

 

73

12,542

73

12,542

Total system

 

54

18,151

759

238,958

6,248

854,038

7,061

1,111,147

____________

                               

(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

 

September 30,

Increase / (Decrease)

 

2022

2021

$

%

Capital expenditures for property and equipment(1)

 

$

8

$

8

Capitalized software costs(2)

 

18

12

6

50.0

Total capital expenditures

 

26

20

6

30.0

Contract acquisition costs

 

20

45

(25

)

(55.6

)

Total capital expenditures and contract acquisition costs

 

$

46

$

65

(19

)

(29.2

)

         
 

Nine Months Ended

 

September 30,

Increase / (Decrease)

 

2022

2021

$

%

Capital expenditures for property and equipment(1)

 

$

19

$

17

2

11.8

Capitalized software costs(2)

 

43

28

15

53.6

Total capital expenditures

 

62

45

17

37.8

Contract acquisition costs

 

61

160

(99

)

(61.9

)

Total capital expenditures and contract acquisition costs

 

$

123

$

205

(82

)

(40.0

)

____________
(1)  

Represents expenditures for hotels, corporate and other property and equipment, which include amounts indirectly reimbursed by hotel owners of less than $1 million and $2 million for the three months ended September 30, 2022 and 2021, respectively, and $2 million and $3 million for the nine months ended September 30, 2022 and 2021, respectively. Excludes expenditures for FF&E replacement reserves of $13 million and $15 million for the three months ended September 30, 2022 and 2021, respectively, and $40 million and $30 million for the nine months ended September 30, 2022 and 2021, respectively.

(2)  

Includes $17 million and $11 million of expenditures that were indirectly reimbursed by hotel owners for the three months ended September 30, 2022 and 2021, respectively, and $40 million and $25 million for the nine months ended September 30, 2022 and 2021, respectively.

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(unaudited, in millions, except per share data)

         
 

Three Months Ended

Nine Months Ended

 

September 30,

September 30,

 

2022

2021

2022

2021

Net income attributable to Hilton stockholders, as reported

 

$

347

$

241

$

927

$

263

Diluted EPS, as reported

 

$

1.26

$

0.86

$

3.32

$

0.94

Special items:

 

Net other expenses (revenues) from managed and franchised properties

 

$

(7

)

$

(62

)

$

(73

)

$

57

Purchase accounting amortization(1)

 

11

11

34

35

FF&E replacement reserves

 

13

15

40

30

Asset dispositions(2)

 

8

8

Loss on debt extinguishment(3)

 

69

Tax-related adjustment(4)

 

(8

)

(38

)

Other adjustment items(5)

 

1

9

(9

)

10

Total special items before taxes

 

18

(27

)

(8

)

171

Income tax benefit (expense) on special items

 

(4

)

5

4

(52

)

Total special items after taxes

 

$

14

$

(22

)

$

(4

)

$

119

 

Net income, adjusted for special items

 

$

361

$

219

$

923

$

382

Diluted EPS, adjusted for special items

 

$

1.31

$

0.78

$

3.31

$

1.36

____________
(1)  

Amounts represent the amortization expense related to finite-lived intangible assets that were recorded at fair value in 2007 when the Company became a wholly owned subsidiary of affiliates of Blackstone Inc. The majority of the related assets that were remaining as of September 30, 2022 will be fully amortized during 2023.

(2)  

Amounts relate to the loss on the sale of one of the Company's owned hotels, which was recognized in loss on sale of assets, net.

(3)  

The amount relates to the redemption of senior unsecured notes and includes a redemption premium of $55 million and the accelerated recognition of unamortized deferred financing costs related to those senior unsecured notes of $14 million.

(4)  

Amounts include income tax benefits recognized related to changes in effective tax rates, which did not have an effect on cash paid for taxes in the periods.

(5)  

The amount for the nine months ended September 30, 2022 primarily includes a gain related to certain of Hilton's investments in unconsolidated affiliates, which was recognized in other non-operating income, net. Amounts for the three and nine months ended September 30, 2021 include costs recognized for certain legal settlements, which were recognized in general and administrative expenses.

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN

(unaudited, dollars in millions)

         
 

Three Months Ended

Nine Months Ended

 

September 30,

September 30,

 

2022

2021

2022

2021

Net income

 

$

346

$

240

$

924

$

259

Interest expense

 

106

98

295

302

Income tax expense

 

181

100

407

64

Depreciation and amortization expenses

 

39

46

123

143

EBITDA

 

672

484

1,749

768

Loss on sale of assets, net

 

8

8

Gain on foreign currency transactions

 

(4

)

(1

)

Loss on debt extinguishment

 

69

FF&E replacement reserves

 

13

15

40

30

Share-based compensation expense

 

42

52

126

144

Amortization of contract acquisition costs

 

10

9

28

23

Net other expenses (revenues) from managed and franchised properties

 

(7

)

(62

)

(73

)

57

Other adjustments(1)

 

2

13

(7

)

19

Adjusted EBITDA

 

$

732

$

519

$

1,859

$

1,117

____________
(1)  

Amount for the nine months ended September 30, 2022 primarily includes a gain related to certain of Hilton's investments in unconsolidated affiliates. Amounts for the three and nine months ended September 30, 2021 include costs recognized for certain legal settlements. All periods include severance and other items.

 

Three Months Ended

Nine Months Ended

 

September 30,

September 30,

 

2022

2021

2022

2021

Total revenues, as reported

 

$

2,368

$

1,749

$

6,329

$

3,952

Add: amortization of contract acquisition costs

 

10

9

28

23

Less: other revenues from managed and franchised properties

 

(1,344

)

(1,006

)

(3,662

)

(2,282

)

Total revenues, as adjusted

 

$

1,034

$

752

$

2,695

$

1,693

 

Adjusted EBITDA

 

$

732

$

519

$

1,859

$

1,117

 

Adjusted EBITDA margin

 

70.8

%

69.0

%

69.0

%

66.0

%

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

NET DEBT AND NET DEBT TO ADJUSTED EBITDA RATIO

(unaudited, dollars in millions)

         
 

September 30,

December 31,

 

2022

2021

Long-term debt, including current maturities

 

$

8,731

$

8,766

Add: unamortized deferred financing costs and discount

 

77

87

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

 

8,808

8,853

Less: cash and cash equivalents

 

(1,282

)

(1,427

)

Less: restricted cash and cash equivalents

 

(80

)

(85

)

Net debt

 

$

7,446

$

7,341

 

Nine Months Ended

Year Ended

TTM Ended

 

September 30,

December 31,

September 30,

 

2022

2021

2021

2022

Net income

 

$

924

$

259

$

407

$

1,072

Interest expense

 

295

302

397

390

Income tax expense

 

407

64

153

496

Depreciation and amortization expenses

 

123

143

188

168

EBITDA

 

1,749

768

1,145

2,126

Loss on sales of assets, net

 

8

7

(1

)

Loss (gain) on foreign currency transactions

 

(4

)

(1

)

7

4

Loss on debt extinguishment

 

69

69

FF&E replacement reserves

 

40

30

48

58

Share-based compensation expense

 

126

144

193

175

Amortization of contract acquisition costs

 

28

23

32

37

Net other expenses (revenues) from managed and franchised properties

 

(73

)

57

110

(20

)

Other adjustments(1)

 

(7

)

19

18

(8

)

Adjusted EBITDA

 

$

1,859

$

1,117

$

1,629

$

2,371

 

Net debt

 

$

7,446

 

Net debt to Adjusted EBITDA ratio

 

3.1

____________
(1)  

Amounts for all periods include severance and other items. Amount for the nine months ended September 30, 2022 also includes a gain related to certain of Hilton's investments in unconsolidated affiliates. Amounts for the nine months ended September 30, 2021 and year ended December 31, 2021 also include costs recognized for certain legal settlements.

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: NET INCOME AND DILUTED EPS, ADJUSTED FOR SPECIAL ITEMS

(unaudited, in millions, except per share data)

     
 

Three Months Ending

 

December 31, 2022

 

Low Case

High Case

Net income attributable to Hilton stockholders

 

$

295

$

316

Diluted EPS(1)

 

$

1.08

$

1.15

Special items(2):

 

Purchase accounting amortization

 

$

11

$

11

FF&E replacement reserves

 

15

15

Total special items before taxes

 

26

26

Income tax expense on special items

 

(6

)

(6

)

Total special items after taxes

 

$

20

$

20

 

Net income, adjusted for special items

 

$

315

$

336

Diluted EPS, adjusted for special items(1)

 

$

1.15

$

1.23

     
 

Year Ending

 

December 31, 2022

 

Low Case

High Case

Net income attributable to Hilton stockholders

 

$

1,222

$

1,243

Diluted EPS(1)

 

$

4.40

$

4.48

Special items(2):

 

Net other revenues from managed and franchised properties

 

$

(73

)

$

(73

)

Purchase accounting amortization

 

45

45

FF&E replacement reserves

 

55

55

Other adjustment items

 

(9

)

(9

)

Total special items before taxes

 

18

18

Income tax expense on special items

 

(2

)

(2

)

Total special items after taxes

 

$

16

$

16

 

Net income, adjusted for special items

 

$

1,238

$

1,259

Diluted EPS, adjusted for special items(1)

 

$

4.46

$

4.54

____________

       

(1) Does not include the effect of potential share repurchases.

(2) See "—Net Income and Diluted EPS, Adjusted for Special Items" for details of these special items.

HILTON WORLDWIDE HOLDINGS INC.

RECONCILIATIONS OF NON-GAAP FINANCIAL MEASURES

OUTLOOK: ADJUSTED EBITDA

(unaudited, in millions)

     
 

Three Months Ending

 

December 31, 2022

 

Low Case

High Case

Net income

 

$

295

$

316

Interest expense

 

116

116

Income tax expense

 

126

135

Depreciation and amortization expenses

 

40

40

EBITDA

 

577

607

FF&E replacement reserves

 

15

15

Share-based compensation expense

 

32

32

Amortization of contract acquisition costs

 

12

12

Other adjustments(1)

 

5

5

Adjusted EBITDA

 

$

641

$

671

     
 

Year Ending

 

December 31, 2022

 

Low Case

High Case

Net income

 

$

1,219

$

1,240

Interest expense

 

411

411

Income tax expense

 

533

542

Depreciation and amortization expenses

 

163

163

EBITDA

 

2,326

2,356

Gain on foreign currency transactions

 

(4

)

(4

)

FF&E replacement reserves

 

55

55

Share-based compensation expense

 

158

158

Amortization of contract acquisition costs

 

40

40

Net other revenues from managed and franchised properties

 

(73

)

(73

)

Other adjustments(1)

 

(2

)

(2

)

Adjusted EBITDA

 

$

2,500

$

2,530

____________

               

(1) Includes adjustments for severance and other items. See "—Adjusted EBITDA and Adjusted EBITDA Margin" for details of these adjustments.

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 September 30, 2022, which is calculated as the nine months ended September 30, 2022 plus the year ended December 31, 2021 less the nine months ended September 30, 2021. 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 pandemic had an adverse impact on certain of the Company's results for the TTM period ended September 30, 2022 when compared to periods prior to the onset of the pandemic. While the Company has experienced strong signs of economic recovery since early 2021, this TTM period, as well as upcoming periods, are not considered comparable, and no periods affected by the pandemic are expected to be comparable to future periods. 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 expenses. 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 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's 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 expenses, 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 accounting purposes. 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 depreciation of such capitalized assets is reported within depreciation and amortization expenses; (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 debt 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, either in isolation or as a substitute, for net income (loss) or other measures of financial performance or liquidity, including cash flows, derived in accordance with GAAP. Further, EBITDA, Adjusted EBITDA and Adjusted EBITDA margin have limitations as analytical tools, may not be comparable to similarly titled measures of other companies and should not be considered as other methods of analyzing the Company's results as reported under GAAP.

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: long-term debt, including current maturities and excluding the deduction for unamortized deferred financing costs and discount; reduced by: (i) cash and cash equivalents and (ii) restricted cash and cash equivalents. Beginning as of March 31, 2022, the Company has modified its definition of net debt to no longer include Hilton's share of unconsolidated affiliate debt. Since this debt is not consolidated by the Company, the modified definition more accurately reflects how the Company and the Company's investors evaluate Hilton's financial leverage, as well as its indebtedness.

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 between 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 6,988 hotels in the Company's system as of September 30, 2022, 5,847 hotels were classified as comparable hotels. The 1,141 non-comparable hotels included 260 hotels, or less than four percent of the total hotels in the Company's system, that were removed from the comparable group during the last twelve months because they have sustained substantial property damage, business interruption, undergone 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 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"), if they would have otherwise been included, reflects the underlying results of the business for the three and nine months ended September 30, 2022 and 2021.

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 the 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 occupancy, ADR and RevPAR throughout this press release are presented on a comparable basis, based on the comparable hotels as of September 30, 2022, and references to ADR and RevPAR are presented on a currency neutral basis, unless otherwise noted. As such, comparisons of these hotel operating statistics for the three and nine months ended September 30, 2022 and 2021 or 2019, use the foreign currency exchange rates used to translate the results of the Company's foreign operations within its unaudited condensed consolidated financial statements for the three and nine months ended September 30, 2022, respectively.