MCLEAN, Va.–Hilton Worldwide Holdings Inc. ("Hilton," "Hilton Worldwide" or the "Company") (NYSE: HLT) today reported its fourth quarter and full year 2015 results. Highlights include:
- EPS for the fourth quarter, adjusted for special items, increased 29 percent from the prior year to $0.22 and increased 17 percent to $0.81 for the full year; without adjustments, EPS was $0.82 for the fourth quarter and $1.42 for the full year
- Net income attributable to Hilton stockholders was $814 million for the fourth quarter and $1,404 million for the full year
- Adjusted EBITDA for the fourth quarter increased 7 percent from the prior year to $745 million and increased 13 percent to $2,879 million for the full year
- Management and franchise fees for the fourth quarter increased 12 percent from the prior year to $428 million and increased 15 percent to $1,691 million for the full year
- System-wide comparable RevPAR increased 3.7 percent and 5.4 percent for the fourth quarter and full year 2015, respectively, on a currency neutral basis
- Net unit growth was 43,000 rooms, or 6.6 percent addition to managed and franchised rooms, in 2015, including more than 13,000 rooms in the fourth quarter
- Approved nearly 28,000 rooms for development in the fourth quarter and over 100,000 rooms during the full year, growing development pipeline to approximately 275,000 rooms, including rooms approved but not yet signed, as of December 31, 2015
- Reduced long-term debt by $1.0 billion during 2015, including $233 million of prepayments during the fourth quarter
- Full year 2016 RevPAR expected to increase between 3.0 percent and 5.0 percent and Adjusted EBITDA expected to be between $3,020 million and $3,100 million
- Announced intention to spin off real estate and timeshare businesses
Overview
For the three months ended December 31, 2015, earnings per share ("EPS") was $0.82 compared to $0.16 for the three months ended December 31, 2014, and EPS, adjusted for special items, was $0.22 for the three months ended December 31, 2015 compared to $0.17 for the three months ended December 31, 2014. Special items in the fourth quarter of 2015 were primarily related to a $640 million deferred tax benefit resulting from transactions involving the conversion of certain U.S. subsidiaries from corporations to limited liability companies and the election to disregard certain foreign subsidiaries for U.S. Federal income tax purposes. Adjusted EBITDA increased 7 percent to $745 million for the three months ended December 31, 2015 compared to $699 million for the three months ended December 31, 2014, and net income attributable to Hilton stockholders was $814 million for the three months ended December 31, 2015 compared to $158 million for the three months ended December 31, 2014.
For the full year 2015, EPS was $1.42 compared to $0.68 for the year ended December 31, 2014, and EPS, adjusted for special items, was $0.81 for the full year 2015 compared to $0.69 for the year ended December 31, 2014. Adjusted EBITDA increased 13 percent to $2,879 million for the full year 2015 compared to $2,550 million for the year ended December 31, 2014, and net income attributable to Hilton stockholders was $1,404 million for the full year 2015 compared to $673 million for the year ended December 31, 2014.
Christopher J. Nassetta, President & Chief Executive Officer of Hilton Worldwide, said, "We are pleased to report strong results with Adjusted EBITDA exceeding the high end of our guidance for the quarter and the full year. In 2015, we entered our 100th country and territory and our distinct, market-leading brands continued to deliver accelerating organic growth, with 50,000 new rooms opened and over 100,000 new rooms approved in the year.
"Last month we launched our 13th brand, Tru by Hilton, an innovative midscale brand that already has commitments for 163 properties and is set to further strengthen our brand portfolio and continue to grow our development pipeline, which is already the largest in the industry," Nassetta added.
"Looking ahead, expected economic growth should drive continued performance, with global RevPAR expected to increase 3 to 5 percent, coupled with accelerating net unit growth, should drive strong Adjusted EBITDA growth.
"Later this year, we also intend to enhance long-term shareholder value by spinning off the bulk of our real estate business as a publicly traded REIT and by spinning our timeshare business as a separate publicly traded company."
Segment Highlights
Management and Franchise
Management and franchise fees were $428 million in the fourth quarter of 2015, an increase of 12 percent compared to the same period in 2014. RevPAR at comparable managed and franchised hotels in the fourth quarter increased 3.7 percent on a currency neutral basis (a 2.1 percent increase in actual dollars) compared to the same period in 2014.
During the full year 2015, management and franchise fees were $1,691 million, an increase of over 15 percent compared to the full year 2014. RevPAR at comparable managed and franchised hotels for the full year 2015 increased 5.5 percent on a currency neutral basis (a 3.7 percent increase in actual dollars) compared to the full year 2014. The increase in RevPAR at comparable managed and franchised hotels and new units yielded continued fee growth during 2015.
Ownership
Revenues from the ownership segment were $1,068 million in the fourth quarter of 2015, and ownership segment Adjusted EBITDA was $275 million, an increase of 5 percent(1) from the fourth quarter of 2014. Adjusted EBITDA margin(1)(2) increased 153 basis points. RevPAR at comparable hotels in the ownership segment increased 3.6 percent on a currency neutral basis (a 0.3 percent decrease in actual dollars) in the fourth quarter of 2015 compared to the same period in 2014, led by an increase in RevPAR of 4.0 percent on a currency neutral basis (a 5.2 percent decrease in actual dollars) at comparable ownership segment hotels outside of the United States.
For the full year 2015, revenues from the ownership segment were $4,262 million, and ownership segment Adjusted EBITDA was $1,064 million, an increase of 8 percent(1) from 2014. Adjusted EBITDA margin(1)(2) increased 166 basis points. RevPAR at comparable hotels in the ownership segment increased 4.8 percent on a currency neutral basis (a 0.2 percent decrease in actual dollars) for the full year 2015 compared to 2014, led by an increase in RevPAR of 5.5 percent on a currency neutral basis (a 6.7 percent decrease in actual dollars) at comparable ownership segment hotels outside of the United States. RevPAR at comparable ownership segment hotels in the United States increased 4.5 percent.
____________ (1) Excluding $9 million of Adjusted EBITDA in the fourth quarter of 2014 and $12 million and $28 million of Adjusted EBITDA for the full years of 2015 and 2014, respectively, related to the Hilton Sydney. (2) Calculated as ownership segment Adjusted EBITDA divided by ownership segment revenues. Excluding $24 million of revenues in the fourth quarter of 2014 and $38 million and $89 million of revenues for the full years of 2015 and 2014, respectively, related to the Hilton Sydney.
Timeshare
Timeshare segment revenue for the fourth quarter of 2015 was $334 million and timeshare Adjusted EBITDA was $93 million. For the full year 2015, timeshare segment revenue was $1,308 million, an increase of 12 percent from 2014, and timeshare Adjusted EBITDA was $352 million, an increase of 4 percent. Overall timeshare sales volume for the year increased 18 percent from 2014, driven by increased tour flow of 10 percent and increased net volume per guest of 8 percent. Commissions recognized from the sale of third-party developed timeshare intervals increased $136 million, or 75 percent, in 2015 compared to 2014, resulting from higher sales volume, and sales revenue on owned inventory decreased $21 million. Resort operations revenue increased $12 million, or 6 percent, compared to 2014.
During the three months and year ended December 31, 2015, 62 percent and 66 percent of intervals sold were developed by third parties, respectively. Hilton Worldwide's overall supply of timeshare intervals as of December 31, 2015 was approximately 134,000 intervals, or over six years at current sales pace, of which approximately 114,000, or 85 percent, were developed by third parties.
Development
During the fourth quarter of 2015, Hilton Worldwide expanded to 100 countries and territories with the opening of the Hilton N'Djamena in Chad, totaling 94 hotel openings in the quarter. In the quarter, Hilton Worldwide achieved net unit growth of more than 13,000 rooms, and 31 percent of gross openings were conversions from non-Hilton brands. During the year ended December 31, 2015, Hilton opened 320 hotels with more than 50,000 rooms and achieved net unit growth of 43,000 rooms, a 6.6 percent addition to the managed and franchised portfolio in 2015, making it the largest global hotel company(3) as of December 31, 2015, based on rooms.
As of December 31, 2015, Hilton Worldwide had the largest rooms pipeline in the lodging industry(4), with over 266,000 rooms at 1,616 hotels throughout 85 countries and territories, including 31 countries and territories where Hilton Worldwide does not currently have any open hotels. Approximately 142,000 rooms, or more than half of the pipeline, were located outside of the United States. Additionally, over half of the pipeline was under construction. At over 19 percent, Hilton Worldwide also has the largest share of rooms under construction globally(4). Including rooms approved but not yet signed, Hilton Worldwide's pipeline totaled approximately 275,000 rooms. All of the development pipeline is in the capital-light management and franchise segment.
Hilton Worldwide's continued global expansion has been achieved completely through organic growth with very little capital investment. Each category, luxury, full service, focused service and all suites, has record pipelines, and Hilton Worldwide has targeted new market segments through organically launched brands, including Canopy by Hilton, Curio – A Collection by Hilton and Home2 Suites by Hilton, which together include a total of 91 open hotels and 391 in the pipeline or in various states of approval, as of December 31, 2015. Additionally, in January 2016, Hilton Worldwide launched its newest brand, Tru by Hilton, an innovative midscale brand debuting with commitments for 163 properties(5), which is expected to add meaningfully to the development pipeline going forward.
____________ (3) Source: Smith Travel Research, Inc. ("STR") Global Census, January 2016 (adjusted to December 2015). (4) Source: STR Global New Development Pipeline (December 2015). (5) As of February 16, 2016.
Balance Sheet and Liquidity
For the full year 2015, Hilton Worldwide reduced its long-term debt by nearly $1 billion, including $100 million of voluntary prepayments on its senior secured term loan facility and $133 million of prepayments on its commercial mortgage-backed securities loan and other mortgage debt in the fourth quarter.
As of December 31, 2015, Hilton had $9.8 billion of outstanding indebtedness with a weighted average interest rate of 4.3 percent, excluding $726 million of non-recourse debt.
Total cash and cash equivalents were $856 million as of December 31, 2015, including $247 million of restricted cash and cash equivalents. No borrowings were outstanding under the $1.0 billion revolving credit facility as of December 31, 2015.
During the fourth quarter of 2015, Hilton Worldwide paid a quarterly cash dividend of $0.07 per share on shares of its common stock, for a total of $69 million bringing total cash dividends in 2015 to $138 million. Hilton Worldwide announced a regular quarterly cash dividend of $0.07 per share of common stock to be paid on or before March 31, 2016 to stockholders of record of its common stock as of the close of business on March 18, 2016.
To view full financial release and corresponding tables please click the PDF icon or visit:
http://news.hiltonworldwide.com/assets/HWW/docs/2016/Q1/2015YEEarningsReleaseFINAL.pdf
