Hilton(US:HLT)2023-07-25 16:00markdown [PART I FINANCIAL INFORMATION](index=3&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) This part covers Hilton's financial statements, management's analysis, market risk, and controls [Item 1. Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) This section presents Hilton Worldwide Holdings Inc.'s unaudited condensed consolidated financial statements, including balance sheets, statements of operations, comprehensive income, and cash flows for the periods ended June 30, 2023, and December 31, 2022 (balance sheet) or June 30, 2022 (income/cash flow statements) It also includes detailed notes explaining the company's organization, accounting policies, revenue recognition, variable interest entities, debt, fair value measurements, income taxes, share-based compensation, earnings per share, stockholders' equity, business segments, and commitments [Condensed Consolidated Balance Sheets](index=3&type=section&id=CONDENSED%20CONSOLIDATED%20BALANCE%20SHEETS) This section presents the company's financial position, detailing assets, liabilities, and equity Table: Condensed Consolidated Balance Sheets | Metric | June 30, 2023 (in millions) | December 31, 2022 (in millions) | | :-------------------------- | :-------------------------- | :------------------------------ | | **Assets** | | | | Total current assets | $2,580 | $2,870 | | Total intangibles and other assets | $12,717 | $12,642 | | **TOTAL ASSETS** | **$15,297** | **$15,512** | | **Liabilities** | | | | Total current liabilities | $3,435 | $3,372 | | Long-term debt | $8,696 | $8,708 | | Total liabilities | $16,720 | $16,610 | | **Equity (Deficit)** | | | | Total Hilton stockholders' deficit | $(1,431) | $(1,102) | | **TOTAL LIABILITIES AND EQUITY (DEFICIT)** | **$15,297** | **$15,512** | - Total assets decreased by **$215 million** from December 31, 2022, to June 30, 2023, primarily driven by a reduction in cash and cash equivalents[8](index=8&type=chunk) - Total liabilities increased by **$110 million**, and the total Hilton stockholders' deficit widened from **$(1,102) million** to **$(1,431) million**[8](index=8&type=chunk) [Condensed Consolidated Statements of Operations](index=5&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20OPERATIONS) This section details the company's revenues, expenses, and net income over specific periods Table: Condensed Consolidated Statements of Operations | Metric (in millions, except per share data) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------------------------------ | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total revenues | $2,660 | $2,240 | $4,953 | $3,961 | | Total expenses | $1,986 | $1,642 | $3,781 | $2,994 | | Operating income | $674 | $598 | $1,172 | $967 | | Net income attributable to Hilton stockholders | $411 | $368 | $617 | $580 | | Basic EPS | $1.56 | $1.33 | $2.33 | $2.09 | | Diluted EPS | $1.55 | $1.32 | $2.31 | $2.07 | | Cash dividends declared per share | $0.15 | $0.15 | $0.30 | $0.15 | - Total revenues increased by **18.8%** for the three months and **25.0%** for the six months ended June 30, 2023, compared to the prior year periods[11](index=11&type=chunk) - Net income attributable to Hilton stockholders grew by **11.7%** for the three months and **6.4%** for the six months ended June 30, 2023[11](index=11&type=chunk) [Condensed Consolidated Statements of Comprehensive Income](index=6&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20COMPREHENSIVE%20INCOME) This statement details net income and other comprehensive income components affecting equity Table: Condensed Consolidated Statements of Comprehensive Income | Metric (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $413 | $367 | $622 | $578 | | Total other comprehensive income | $20 | $6 | $2 | $65 | | Comprehensive income attributable to Hilton stockholders | $432 | $374 | $620 | $645 | - Total other comprehensive income significantly increased for the three months ended June 30, 2023, to **$20 million** from **$6 million** in the prior year, primarily due to cash flow hedge adjustments[13](index=13&type=chunk) - For the six months ended June 30, 2023, total other comprehensive income decreased to **$2 million** from **$65 million** in the prior year, mainly due to a smaller cash flow hedge adjustment[13](index=13&type=chunk) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=CONDENSED%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) This section outlines cash flows from operating, investing, and financing activities Table: Condensed Consolidated Statements of Cash Flows | Metric (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :------------------- | :----------------------------- | :----------------------------- | | Net cash provided by operating activities | $794 | $528 | | Net cash used in investing activities | $(154) | $(94) | | Net cash used in financing activities | $(1,031) | $(679) | | Net decrease in cash, restricted cash and cash equivalents | $(403) | $(258) | | Cash, restricted cash and cash equivalents, end of period | $883 | $1,254 | - Net cash provided by operating activities increased by **50.4%** to **$794 million** for the six months ended June 30, 2023, driven by higher management and franchise fee revenue[16](index=16&type=chunk)[113](index=113&type=chunk) - Net cash used in financing activities increased by **51.8%** to **$1,031 million**, primarily due to increased share repurchases and dividends paid[16](index=16&type=chunk)[116](index=116&type=chunk) [Note 1: Organization and Basis of Presentation](index=8&type=section&id=Note%201%3A%20Organization%20and%20Basis%20of%20Presentation) This note describes Hilton's business, global operations, and accounting principles - Hilton Worldwide Holdings Inc. is a global hospitality company engaged in managing, franchising, owning, and leasing hotels and resorts, and licensing its intellectual property[19](index=19&type=chunk) - The condensed consolidated financial statements are prepared in accordance with U.S. GAAP and are unaudited, with certain disclosures condensed or omitted[20](index=20&type=chunk) [Note 2: Revenues from Contracts with Customers](index=8&type=section&id=Note%202%3A%20Revenues%20from%20Contracts%20with%20Customers) This note details revenue recognition policies and contract liabilities from customer agreements Table: Contract Liabilities Activity | Contract Liabilities Activity (in millions) | Amount | | :---------------------------------------- | :----- | | Balance as of December 31, 2022 | $1,331 | | Cash received in advance | $324 | | Revenue recognized | $(150) | | Other | $(99) | | Balance as of June 30, 2023 | $1,406 | - As of June 30, 2023, deferred revenues for unsatisfied performance obligations totaled **$1,406 million**, primarily related to the Hilton Honors guest loyalty program (**$689 million**) and advance consideration from hotel owners (**$697 million**)[23](index=23&type=chunk)[24](index=24&type=chunk) [Note 3: Consolidated Variable Interest Entities](index=9&type=section&id=Note%203%3A%20Consolidated%20Variable%20Interest%20Entities) This note explains the consolidation of VIEs and their financial impact on Hilton's statements - Hilton consolidates two variable interest entities (VIEs) in Japan, each leasing one hotel property, as Hilton is the primary beneficiary[25](index=25&type=chunk) Table: VIE Assets and Liabilities | VIE Assets/Liabilities (in millions) | June 30, 2023 | December 31, 2022 | | :----------------------------------- | :------------ | :---------------- | | Cash and cash equivalents | $41 | $29 | | Property and equipment, net | $38 | $45 | | Long-term debt | $127 | $152 | [Note 4: Loss on Investments in Unconsolidated Affiliate](index=9&type=section&id=Note%204%3A%20Loss%20on%20Investments%20in%20Unconsolidated%20Affiliate) This note reports a significant loss on investments in an unconsolidated affiliate due to impairment - For the six months ended June 30, 2023, Hilton recognized a **$92 million** loss on investments in an unconsolidated affiliate (the 'Fund')[28](index=28&type=chunk) - This loss included a **$44 million** other-than-temporary impairment loss on the equity investment and **$48 million** in credit losses on financing receivables, due to the Fund's non-compliance with debt agreements amid rising interest rates[28](index=28&type=chunk) [Note 5: Debt](index=10&type=section&id=Note%205%3A%20Debt) This note provides a detailed breakdown of Hilton's debt structure, including term loans and notes Table: Debt Breakdown | Debt Type (in millions) | June 30, 2023 | December 31, 2022 | | :---------------------- | :------------ | :---------------- | | Senior secured term loan facility | $2,619 | $2,619 | | Senior notes (various maturities) | $7,000 | $7,000 | | Finance lease liabilities | $145 | $164 | | Other debt of consolidated VIEs | $34 | $37 | | Less: unamortized deferred financing costs and discount | $(67) | $(73) | | Less: current maturities of long-term debt | $(35) | $(39) | | **Long-term debt** | **$8,696** | **$8,708** | - The Revolving Credit Facility was amended in January 2023, increasing borrowing capacity from **$1.75 billion** to **$2.0 billion**, with **$1,940 million** available as of June 30, 2023[31](index=31&type=chunk) [Note 6: Fair Value Measurements](index=10&type=section&id=Note%206%3A%20Fair%20Value%20Measurements) This note describes fair value measurements for financial instruments and non-financial assets Table: Financial Instrument Fair Values | Financial Instrument (in millions) | Carrying Value (June 30, 2023) | Fair Value (June 30, 2023) | | :--------------------------------- | :----------------------------- | :------------------------- | | Interest rate swap (Assets) | $109 | $109 (Level 2) | | Long-term debt (Liabilities) | $8,619 | $8,048 (Level 1: $5,425, Level 3: $2,623) | - A non-recurring other-than-temporary impairment loss of **$44 million** was recognized on an equity method investment in the Fund, valued at zero using Level 3 inputs as of March 31, 2023[36](index=36&type=chunk) [Note 7: Income Taxes](index=11&type=section&id=Note%207%3A%20Income%20Taxes) This note discusses income tax provisions, including potential adjustments from IRS examinations - The IRS proposed adjustments for Hilton's 2016 transfer of intellectual property to a foreign jurisdiction, which could increase taxable income for 2016-2018 and future periods[38](index=38&type=chunk) - Hilton disagrees with the proposed adjustments and intends to vigorously contest them, having previously recorded **$73 million** in reserves for unrecognized tax benefits related to this matter[38](index=38&type=chunk) [Note 8: Share-Based Compensation](index=11&type=section&id=Note%208%3A%20Share-Based%20Compensation) This note details share-based compensation expense and equity awards granted to employees Table: Share-Based Compensation Expense | Share-Based Compensation Expense (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Total expense | $52 | $47 | $85 | $84 | - During the six months ended June 30, 2023, Hilton granted **602,000** RSUs, **341,000** options, and **244,000** performance shares[40](index=40&type=chunk)[41](index=41&type=chunk)[43](index=43&type=chunk) [Note 9: Earnings Per Share](index=12&type=section&id=Note%209%3A%20Earnings%20Per%20Share) This note presents the calculation of basic and diluted earnings per share Table: Earnings Per Share Metrics | EPS Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Basic EPS | $1.56 | $1.33 | $2.33 | $2.09 | | Diluted EPS | $1.55 | $1.32 | $2.31 | $2.07 | - Weighted average shares outstanding for diluted EPS were **266 million** for the three months and **267 million** for the six months ended June 30, 2023[45](index=45&type=chunk) [Note 10: Stockholders' Equity (Deficit) and Accumulated Other Comprehensive Loss](index=13&type=section&id=Note%2010%3A%20Stockholders%27%20Equity%20%28Deficit%29%20and%20Accumulated%20Other%20Comprehensive%20Loss) This note reconciles changes in stockholders' equity and accumulated other comprehensive loss Table: Stockholders' Equity Reconciliation | Equity Component (in millions) | Balance as of Dec 31, 2022 | Net Income | Other Comprehensive Income | Dividends | Repurchases of Common Stock | Share-Based Compensation | Balance as of June 30, 2023 | | :----------------------------- | :------------------------- | :--------- | :------------------------- | :-------- | :-------------------------- | :----------------------- | :-------------------------- | | Common Stock Amount | $3 | — | — | — | — | — | $3 | | Treasury Stock | $(6,040) | — | — | — | $(924) | $8 | $(6,956) | | Additional Paid-in Capital | $10,831 | — | — | — | — | $48 | $10,879 | | Accumulated Deficit | $(5,190) | $617 | — | $(81) | — | — | $(4,654) | | Accumulated Other Comprehensive Loss | $(706) | — | $3 | — | — | — | $(703) | | Noncontrolling Interests | $4 | $5 | $(1) | — | — | — | $8 | | **Total Deficit** | **$(1,098)** | **$622** | **$2** | **$(81)** | **$(924)** | **$56** | **$(1,423)** | - Hilton repurchased **6.5 million** shares of common stock for **$924 million** during the six months ended June 30, 2023[49](index=49&type=chunk) - Cash dividends of **$81 million** were paid during the six months ended June 30, 2023[49](index=49&type=chunk) [Note 11: Business Segments](index=15&type=section&id=Note%2011%3A%20Business%20Segments) This note presents financial information by business segment, distinguishing management/franchise and ownership - Hilton operates in two segments: management and franchise (managing hotels, licensing IP) and ownership (revenues from owned/leased hotels)[53](index=53&type=chunk)[54](index=54&type=chunk) Table: Segment Revenues | Segment Revenues (in millions) | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :----------------------------- | :------------------------------- | :----------------------------- | | Management and franchise | $681 | $1,458 | | Ownership | $282 | $589 | | **Segment revenues** | **$963** | **$2,047** | Table: Segment Operating Income | Segment Operating Income (in millions) | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :------------------------------------- | :------------------------------- | :----------------------------- | | Management and franchise | $791 | $1,458 | | Ownership | $37 | $30 | | **Segment operating income** | **$828** | **$1,488** | [Note 12: Commitments and Contingencies](index=16&type=section&id=Note%2012%3A%20Commitments%20and%20Contingencies) This note outlines the company's financial commitments, guarantees, and ongoing legal contingencies - Hilton has performance guarantees totaling approximately **$8 million** with expirations ranging from 2025 to 2043[60](index=60&type=chunk) - Debt guarantees and letters of credit totaled **$124 million** as of June 30, 2023, with expirations from 2023 to 2031[60](index=60&type=chunk) - The company is involved in various legal claims and lawsuits, but expects their ultimate resolution not to have a material adverse effect on its financial position[61](index=61&type=chunk) [Note 13: Supplemental Disclosures of Cash Flow Information](index=16&type=section&id=Note%2013%3A%20Supplemental%20Disclosures%20of%20Cash%20Flow%20Information) This note provides additional details on non-cash activities and supplemental cash flow data Table: Supplemental Cash Flow Information | Cash Flow Item (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--------------------------- | :----------------------------- | :----------------------------- | | Cash interest paid | $237 | $178 | | Income tax payments, net | $233 | $130 | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=17&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides a detailed discussion and analysis of Hilton's financial condition and results of operations It covers recent developments, an overview of the business, key performance metrics, a breakdown of revenues and expenses, segment results, and an assessment of liquidity and capital resources The analysis highlights significant improvements in performance compared to the prior year, driven by increased travel demand and strategic growth initiatives [Forward-Looking Statements](index=17&type=section&id=Forward-Looking%20Statements) This report contains forward-looking statements subject to various risks and uncertainties inherent to the hospitality industry, macroeconomic factors, and competition - The report contains forward-looking statements subject to various risks and uncertainties inherent to the hospitality industry, macroeconomic factors, and competition[64](index=64&type=chunk) [Recent Developments](index=17&type=section&id=Recent%20Developments) Results for the six months ended June 30, 2023, reflect notable improvement compared to the same period in 2022, considering the impact of the COVID-19 pandemic - Results for the six months ended June 30, 2023, reflect notable improvement compared to the same period in 2022, considering the impact of the COVID-19 pandemic[65](index=65&type=chunk) - Adverse developments in the financial services industry in 2023 have not had a material direct impact on operations, but future liquidity concerns could pose risks[66](index=66&type=chunk) [Overview](index=17&type=section&id=Overview) Hilton is one of the largest hospitality companies globally, with 7,295 properties and 1,144,849 rooms in 123 countries as of June 30, 2023 - Hilton is one of the largest hospitality companies globally, with **7,295** properties and **1,144,849** rooms in **123** countries as of June 30, 2023[67](index=67&type=chunk) - The Hilton Honors guest loyalty program grew to **166 million** members, an increase of over **19%** from June 30, 2022[68](index=68&type=chunk) - Hilton's development pipeline includes **3,064** hotels and **440,900** rooms, with **217,000** rooms under construction and **250,100** located outside the U.S[74](index=74&type=chunk) - Net unit growth from June 30, 2022, was **4.2%**, with nearly all new rooms expected to be in the management and franchise segment[74](index=74&type=chunk) [Key Business and Financial Metrics Used by Management](index=19&type=section&id=Key%20Business%20and%20Financial%20Metrics%20Used%20by%20Management) Key metrics include Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR), all presented on a comparable and currency-neutral basis - Key metrics include Occupancy, Average Daily Rate (ADR), and Revenue per Available Room (RevPAR), all presented on a comparable and currency-neutral basis[76](index=76&type=chunk)[77](index=77&type=chunk)[78](index=78&type=chunk)[79](index=79&type=chunk) - EBITDA and Adjusted EBITDA are non-GAAP measures used by management and investors to evaluate operating performance, excluding items like interest, taxes, depreciation, amortization, and share-based compensation[80](index=80&type=chunk)[81](index=81&type=chunk) [Results of Operations](index=21&type=section&id=Results%20of%20Operations) This section analyzes the company's financial performance, including hotel operating statistics, revenues, and expenses Table: Hotel Operating Statistics (System-wide) | Hotel Operating Statistics (System-wide) | Three Months Ended June 30, 2023 | Change 2023 vs. 2022 | Six Months Ended June 30, 2023 | Change 2023 vs. 2022 | | :--------------------------------------- | :------------------------------- | :------------------- | :----------------------------- | :------------------- | | Occupancy | 74.6% | 4.2% pts. | 71.3% | 7.0% pts. | | ADR | $163.47 | 5.9% | $158.62 | 7.9% | | RevPAR | $122.02 | 12.1% | $113.02 | 19.7% | - Asia Pacific led regional performance with RevPAR increases of **79.0%** (three months) and **84.7%** (six months) due to the removal of travel restrictions[85](index=85&type=chunk) Table: Adjusted EBITDA Reconciliation | Adjusted EBITDA (in millions) | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :---------------------------- | :------------------------------- | :------------------------------- | :----------------------------- | :----------------------------- | | Net income | $413 | $367 | $622 | $578 | | EBITDA | $716 | $652 | $1,171 | $1,077 | | **Adjusted EBITDA** | **$811** | **$679** | **$1,452** | **$1,127** | Table: Revenue Breakdown by Type | Revenue Type (in millions) | Three Months Ended June 30, 2023 | Change 2023 vs. 2022 | Six Months Ended June 30, 2023 | Change 2023 vs. 2022 | | :------------------------- | :------------------------------- | :------------------- | :----------------------------- | :------------------- | | Franchise and licensing fees | $618 | 13.4% | $1,126 | 17.5% | | Total management fees | $155 | 28.1% | $300 | 42.9% | | Owned and leased hotels revenues | $341 | 20.9% | $589 | 36.3% | | Other revenues | $46 | 84.0% | $81 | 88.4% | - Incentive management fees increased by **50.0%** for the three months and **67.5%** for the six months ended June 30, 2023, driven by improved hotel operating profits[88](index=88&type=chunk)[91](index=91&type=chunk) - Owned and leased hotels expenses increased by **15.6%** (three months) and **24.0%** (six months) on a currency-neutral basis, due to higher occupancy and related operating costs[94](index=94&type=chunk)[95](index=95&type=chunk) - Interest expense increased due to higher interest rates on variable rate debt, while a **$92 million** loss on investments in unconsolidated affiliate was recognized for the six months ended June 30, 2023[98](index=98&type=chunk)[99](index=99&type=chunk) [Segment Results](index=27&type=section&id=Segment%20Results) This section provides a breakdown of financial performance by Hilton's management and franchise, and ownership segments - As of June 30, 2023, the management and franchise segment included **781** managed hotels and **6,380** franchised hotels, totaling **1,112,716** rooms[102](index=102&type=chunk) - The ownership segment comprised **51** hotels with **17,485** rooms[102](index=102&type=chunk) [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) This section assesses Hilton's ability to generate and manage cash flows, including debt, share repurchases, and available credit - As of June 30, 2023, Hilton had **$883 million** in total cash and cash equivalents, including **$77 million** of restricted cash[104](index=104&type=chunk) - During the six months ended June 30, 2023, Hilton repurchased approximately **6.5 million** shares of common stock for **$916 million**, with **$2.2 billion** remaining under the stock repurchase program[107](index=107&type=chunk) Table: Cash Flow Summary | Cash Flow Summary (in millions) | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | Percent Change 2023 vs. 2022 | | :------------------------------ | :----------------------------- | :----------------------------- | :--------------------------- | | Net cash provided by operating activities | $794 | $528 | 50.4% | | Net cash used in investing activities | $(154) | $(94) | 63.8% | | Net cash used in financing activities | $(1,031) | $(679) | 51.8% | - Total indebtedness, excluding unamortized deferred financing costs, was approximately **$8.8 billion** as of June 30, 2023, with **$1,940 million** available under the Revolving Credit Facility[117](index=117&type=chunk) [Critical Accounting Estimates](index=29&type=section&id=Critical%20Accounting%20Estimates) This section confirms no material changes to critical accounting estimates from the prior annual report - There were no material changes to critical accounting estimates previously disclosed in the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[119](index=119&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Hilton is exposed to market risks from changes in interest rates and foreign currency exchange rates The company uses derivative financial instruments to hedge a portion of these risks There have been no material changes to the company's market risk exposure since the last annual report - Hilton is exposed to market risk primarily from changes in interest rates and foreign currency exchange rates[120](index=120&type=chunk) - Derivative financial instruments are used to reduce volatility associated with these rate changes, but some exposure remains[120](index=120&type=chunk) - The company's exposure to market risk has not materially changed from what was disclosed in its Annual Report on Form 10-K for the fiscal year ended December 31, 2022[120](index=120&type=chunk) [Item 4. Controls and Procedures](index=29&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms the effectiveness of Hilton's disclosure controls and procedures and reports no material changes in internal control over financial reporting during the most recent fiscal quarter - As of June 30, 2023, the company's disclosure controls and procedures were evaluated and deemed effective by management, including the CEO and CFO[121](index=121&type=chunk)[122](index=122&type=chunk) - There has been no material change in the company's internal control over financial reporting during the most recent fiscal quarter[123](index=123&type=chunk) [PART II OTHER INFORMATION](index=31&type=section&id=PART%20II%20OTHER%20INFORMATION) This part includes disclosures on legal proceedings, risk factors, equity sales, defaults, and other information [Item 1. Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) Hilton is involved in various legal claims and lawsuits in the ordinary course of business The company maintains adequate reserves and believes the ultimate outcome of these matters will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows - Hilton is involved in various claims and lawsuits, including tort, general liability, employee, and consumer protection claims[125](index=125&type=chunk) - The company believes it has adequate reserves and that the ultimate outcome of these proceedings will not materially adversely affect its financial position, results of operations, or cash flows[125](index=125&type=chunk) [Item 1A. Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) This section states that there have been no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K for the fiscal year ended December 31, 2022 - No material changes to the risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended December 31, 2022[126](index=126&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=31&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Hilton did not engage in any unregistered sales of equity securities The company continued its stock repurchase program, buying back over 3.3 million shares during the second quarter of 2023, with approximately $2.2 billion remaining authorized for repurchases - No unregistered sales of securities occurred during the period[126](index=126&type=chunk) Table: Share Repurchase Activity | Month (2023) | Total Number of Shares Purchased | Average Price Paid per Share | | :----------- | :------------------------------- | :--------------------------- | | April | 1,111,877 | $142.39 | | May | 1,120,111 | $142.04 | | June | 1,083,339 | $141.43 | | **Total** | **3,315,327** | **$141.96** | - As of June 30, 2023, approximately **$2.2 billion** remained available for share repurchases under the company's **$8 billion** stock repurchase program[128](index=128&type=chunk) [Item 3. Defaults Upon Senior Securities](index=31&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This section reports that there were no defaults upon senior securities during the period - No defaults upon senior securities occurred[129](index=129&type=chunk) [Item 4. Mine Safety Disclosures](index=31&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to Hilton Worldwide Holdings Inc - This item is not applicable[129](index=129&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) During the second quarter of 2023, no director or officer of the company adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement - No director or officer adopted or terminated a Rule 10b5-1 or non-Rule 10b5-1 trading arrangement during the three months ended June 30, 2023[130](index=130&type=chunk) [Item 6. Exhibits](index=32&type=section&id=Item%206.%20Exhibits) This section lists all exhibits filed as part of the Form 10-Q, including organizational documents, certifications, and XBRL-related documents - The exhibits include the Certificate of Incorporation, By-Laws, Section 302 and 906 certifications from the CEO and CFO, and various Inline XBRL documents[131](index=131&type=chunk) [Signatures](index=33&type=section&id=Signatures) The report is duly signed on behalf of Hilton Worldwide Holdings Inc. by its President and Chief Executive Officer, Christopher J. Nassetta, and its Chief Financial Officer and President, Global Development, Kevin J. Jacobs - The report was signed by Christopher J. Nassetta, President and Chief Executive Officer, and Kevin J. Jacobs, Chief Financial Officer and President, Global Development, on July 26, 2023[133](index=133&type=chunk)[134](index=134&type=chunk)