Hilton Worldwide Holdings Inc. HLT reported first-quarter 2020 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. While the bottom line beat estimates for the seventh straight quarter, the top line beat the consensus mark for the fourth successive quarter. Following the results, the company’s shares increased 4.5% in pre-market trading session.
The company announced that its first-quarter results were materially impacted by the coronavirus pandemic. Hilton business is likely to reflect negative impact of the coronavirus pandemic in the second quarter.
Q1 in Detail
Hilton’s adjusted earnings of 74 cents per share surpassed the Zacks Consensus Estimate of 45 cents but declined 7.5% on a year-over-year basis.
Revenues totaled $1,920 million, which beat the consensus mark of $1,755 million. However, the reported figure declined 12.9% from the year-ago quarter. Both top and bottom lines were negatively impacted by the coronavirus outbreak.
Notably, Hilton opened 67 new hotels in first-quarter 2020. It also achieved net unit growth of roughly 6,100 rooms.
As of Mar 31, 2020, Hilton's development pipeline comprised more than 2,670 hotels, with roughly 405,000 rooms across 120 countries and territories — including 35 countries and territories, where it currently does not have any running hotels. Moreover, 223,000 rooms in the development pipeline were located outside the United States and 213,000 were under construction.
Hilton Worldwide Holdings Inc Price, Consensus and EPS Surprise
Hilton Worldwide Holdings Inc price-consensus-eps-surprise-chart | Hilton Worldwide Holdings Inc Quote
RevPAR and Adjusted EBITDA
In the quarter under review, system-wide comparable revenue per available room (RevPAR) slunped 22.6% on a currency-neutral basis due to a decline in occupancy, and management and franchise fee revenues. The downtrend can be attributed to decrease in travel and tourism and suspension of hotel operations due to the pandemic.
During the quarter, management and franchise fee revenues were down 18%. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $363 million compared with $499 million in the prior-year quarter.
Cash, Debt and Share Repurchase
As of Mar 31, 2020, cash and cash equivalent balance amounted to $1,805 million. As a precautionary measure in response to the coronavirus-induced crisis, the company borrowed the remaining amount available under its $1.75 billion senior secured credit facility in the first quarter. In April, the company strengthened its cash position by pre-sale of Hilton Honors points for $1.0 billion and the issuance of $1.0 billion aggregate principal amount of senior notes.
The company had $9.6 billion of long-term debt outstanding, excluding deferred financing costs and discount, with a weighted average interest rate of 3.92%.
In the first quarter, the company repurchased 2.6 million shares of its common stock for roughly $279 million. Average price per share was $107.26. The company had repurchased 56.6 million shares for nearly $4.4 billion since March 2017.
In March 2020, Hilton paid out a quarterly cash dividend of 15 cents per share on its common stock for $42 million. The company has suspended its share repurchase program and dividend due to the coronavirus pandemic.
Hilton, which shares space with Marriott MAR, Choice Hotels International CHH and Hyatt H, currently has a Zacks Rank #5 (Strong Sell).
You can see the complete list of today’s Zacks #1(Strong Buy) Rank stocks here.
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