Hilton(US:HLT)2025-07-23 14:01markdown PART I. FINANCIAL INFORMATION [Financial Statements](index=3&type=section&id=Item%201.%20Financial%20Statements) Hilton's H1 2025 financial statements reflect decreased assets and increased deficit, alongside improved net income and operating cash flow [Condensed Consolidated Balance Sheets](index=3&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of June 30, 2025, total assets decreased, liabilities increased, and stockholders' deficit widened due to repurchases Balance Sheet Summary (in millions) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $371 | $1,301 | | Total Assets | $15,904 | $16,522 | | Long-term debt | $10,909 | $10,616 | | Total Liabilities | $20,453 | $20,211 | | Total stockholders' deficit | ($4,590) | ($3,727) | [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations) Q2 2025 revenues grew to **$3.14 billion** and net income to **$440 million**, reflecting overall positive performance for the first half Q2 Performance Comparison (in millions, except per share data) | Metric | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $3,137 | $2,951 | | Operating Income | $778 | $725 | | Net Income Attributable to Hilton | $440 | $421 | | Diluted EPS | $1.84 | $1.67 | Six-Month Performance Comparison (in millions, except per share data) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Total Revenues | $5,832 | $5,524 | | Operating Income | $1,314 | $1,258 | | Net Income Attributable to Hilton | $740 | $686 | | Diluted EPS | $3.07 | $2.71 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) H1 2025 operating cash flow significantly increased to **$1.11 billion**, while financing activities used **$1.96 billion**, primarily for stock repurchases Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,110 | $767 | | Net cash used in investing activities | ($86) | ($318) | | Net cash used in financing activities | ($1,960) | ($506) | | Net decrease in cash | ($928) | ($73) | - Repurchases of common stock were a primary use of cash, totaling **$1.644 billion** in the first six months of 2025, an increase from **$1.402 billion** in the same period of 2024[16](index=16&type=chunk) [Notes to Condensed Consolidated Financial Statements](index=8&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) Notes detail recent acquisitions, debt management, and the **Management and Franchise** segment's **$1.75 billion** Adjusted EBITDA as a key profitability driver - In May 2024, the company acquired the **Graduate brand** for **$210 million**, and in April 2024, it acquired a controlling interest in the **Sydell Group**, which owns the **NoMad brand**[22](index=22&type=chunk)[23](index=23&type=chunk) - In May 2025, the company repaid **$500 million** of Senior Notes at maturity. In July 2025, it issued **$1.0 billion** of new 5.750% Senior Notes due 2033 and used proceeds to repay outstanding borrowings on its Revolving Credit Facility[33](index=33&type=chunk)[34](index=34&type=chunk) Segment Adjusted EBITDA (in millions) | Segment | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Management and franchise | $1,745 | $1,635 | | Ownership | $65 | $69 | | **Total Segment Adjusted EBITDA** | **$1,810** | **$1,704** | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=19&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses global expansion, resilient performance with **1.0%** H1 RevPAR growth, a robust development pipeline, strong liquidity, and significant stock repurchases [Overview and System Growth](index=19&type=section&id=Overview%20and%20System%20Growth) Hilton's portfolio expanded to **8,807** properties and **1.3 million** rooms, with Hilton Honors reaching **226 million** members and a **510,600** room development pipeline - As of June 30, 2025, Hilton's system included **8,807** properties and **1,304,879** rooms, with **226 million** Hilton Honors members, a **16%** increase from the prior year[66](index=66&type=chunk) Development Pipeline as of June 30, 2025 | Metric | Hotels | Rooms | | :--- | :--- | :--- | | Net additions (H1 2025) | 360 | 36,600 | | Development pipeline (total) | 3,636 | 510,600 | - Net unit growth from June 30, 2024 to June 30, 2025 was **7.5%**[71](index=71&type=chunk) [Results of Operations](index=23&type=section&id=Results%20of%20Operations) Q2 2025 system-wide RevPAR declined **0.5%** (U.S. down **1.5%**), while H1 RevPAR grew **1.0%**, and Q2 Adjusted EBITDA rose to **$1.008 billion** Comparable Hotel RevPAR Change (Q2 2025 vs. Q2 2024) | Region | RevPAR Change | | :--- | :--- | | System-wide | (0.5)% | | U.S. | (1.5)% | | Americas (excluding U.S.) | 3.8% | | Europe | 2.0% | | MEA | 10.3% | | Asia Pacific | 0.3% | - The RevPAR decline in the U.S. for Q2 2025 was attributed to increased macroeconomic uncertainty and unfavorable holiday shifts, which led to a decline in group and business travel[83](index=83&type=chunk) Adjusted EBITDA Reconciliation Summary (in millions) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Net Income | $442 | $422 | $742 | $690 | | Adjusted EBITDA | $1,008 | $917 | $1,803 | $1,667 | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Hilton maintains strong liquidity with **$448 million** cash, **$1.11 billion** H1 operating cash flow, and managed debt, including **$1.6 billion** in stock repurchases - During the first six months of 2025, the company repurchased approximately **6.9 million** shares of common stock for **$1.6 billion**. As of June 30, 2025, **$2.8 billion** remained available under the stock repurchase program[109](index=109&type=chunk) - In May 2025, the company repaid the **$500 million** May 2025 Senior Notes. In July 2025, it issued **$1.0 billion** of 5.750% Senior Notes due 2033 and used proceeds to repay all **$515 million** of outstanding debt under its Revolving Credit Facility[108](index=108&type=chunk)[34](index=34&type=chunk) Net Cash Flow Summary (in millions) | Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,110 | $767 | | Net cash used in financing activities | ($1,960) | ($506) | [Quantitative and Qualitative Disclosures About Market Risk](index=29&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's primary market risks are from SOFR and foreign currency exchange rates, with no material changes since year-end 2024 - The company's primary market risk exposures are from changes in one-month SOFR and foreign currency exchange rates[122](index=122&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, 2024[122](index=122&type=chunk) [Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal controls over financial reporting - Based on an evaluation, the CEO and CFO concluded that the company's disclosure controls and procedures were effective as of the end of the period covered by the report[123](index=123&type=chunk) - There were no material changes to the company's internal control over financial reporting during the most recent fiscal quarter[124](index=124&type=chunk) PART II. OTHER INFORMATION [Legal Proceedings](index=31&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in ordinary course legal proceedings, which management believes will not materially affect its financial position or results - Hilton is involved in various claims and lawsuits from the ordinary course of business, but believes the ultimate outcome will not have a material adverse effect on its consolidated financial position, results of operations, or cash flows[127](index=127&type=chunk) [Risk Factors](index=31&type=section&id=Item%201A.%20Risk%20Factors) No material changes to risk factors have occurred since the Annual Report on Form 10-K for the fiscal year ended December 31, 2024 - As of June 30, 2025, there were no material changes from the risk factors disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024[128](index=128&type=chunk) [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) No unregistered equity sales; Q2 2025 saw **3.2 million** shares repurchased for **$755 million**, with **$2.8 billion** remaining for future repurchases Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 1,212,907 | $213.14 | | May 2025 | 924,191 | $245.08 | | June 2025 | 1,073,380 | $252.09 | | **Total** | **3,210,478** | **$235.36** | - As of the end of June 2025, approximately **$2.78 billion** remained available for purchase under the company's stock repurchase program[131](index=131&type=chunk) [Other Items (Defaults, Mine Safety, Other Info, Exhibits)](index=31&type=section&id=Other%20Items) No defaults on senior securities, mine safety disclosures are not applicable, and no Rule 10b5-1 trading arrangement changes were reported - Item 3: No defaults upon senior securities were reported[132](index=132&type=chunk) - Item 4: Mine Safety Disclosures are not applicable[133](index=133&type=chunk) - Item 5: No director or officer adopted, modified, or terminated a Rule 10b5-1 trading arrangement during the quarter[135](index=135&type=chunk)