InterContinental Hotels Group (NYSE:IHG) H2 2025 Earnings call February 17, 2026 03:30 AM ET Speaker8We will now begin the Q&A session. If you are listening by phone and would like to ask a question, please press star followed by one on your telephone keypad to raise your hand and join the queue. To withdraw your question, press the star one again. When called upon to ask your questions, please use your device handset and ensure you are not on mute. Again, that is star one to raise your hand, and I will now ...

Financial Performance and Key Metrics - The company reported a 1.5% growth in RevPAR, driven by rate and occupancy gains, reflecting a strong global footprint and diversified demand drivers [3][4] - Gross system growth was 6.6%, and net system growth was 4.7%, marking the fourth consecutive year of accelerating growth [4] - The fee margin increased by 360 basis points to 64.8%, contributing to a 13% increase in EBIT and a 16% growth in adjusted EPS [4][8][19] - Adjusted Free Cash Flow rose to $893 million, a year-on-year increase of $238 million, with Free Cash Conversion at 115% of adjusted earnings [20] Business Line Performance - Revenue from the fee business was $2.5 billion, with EBIT growing 7% and 13% respectively [8] - The Americas RevPAR grew 0.3% for the year, while EMEA RevPAR increased by 4.6% [10][11] - In Greater China, RevPAR declined by 1.6%, with a notable recovery in Q4 [11][12] Market Performance - The U.S. market saw a gross opening of 156 hotels, with a pipeline of 233 hotels, indicating strong owner confidence [41] - In EMEA, particularly Germany, the company doubled its presence to 190 hotels and signed 25 more into the pipeline [43] - The company celebrated its 50th anniversary in Greater China, reaching 882 open hotels and a pipeline of 582 hotels [42] Company Strategy and Industry Competition - The company launched a new premium collection brand, Noted Collection, and acquired Ruby to strengthen its portfolio in the premium segment [5][30] - The brand portfolio has expanded from 10 to 21 brands over the past decade, capturing a wider customer mix and enhancing loyalty program value [29] - The company aims to achieve fee revenue growth of high single digits while controlling overhead growth to a low single-digit increase per year [19] Management Commentary on Operating Environment and Future Outlook - Management expressed confidence in continuing to deliver on the growth algorithm, targeting 12%-15% adjusted EPS growth as a compound annual growth rate [60] - The company highlighted the strength of its business model and the resilience demonstrated despite turbulent trading conditions [5][59] - Management noted that the overall margin achievement in 2025 was unusually strong, driven by ancillary fee streams and cost actions [19] Other Important Information - The company announced a new $950 million share buyback program, expected to return over $1.2 billion to shareholders in 2026 [4][27] - The loyalty program, IHG One Rewards, grew to over 160 million members, with loyalty penetration now at approximately 66% of all room nights booked [54][55] - The company is leveraging AI and technology to enhance guest experiences and operational efficiencies [49][51] Q&A Session Summary Question: What are the growth prospects for the new Noted Collection brand? - The company expects Noted Collection to scale rapidly, with initial discussions already underway with multiple owners [36] Question: How is the company managing costs in the current environment? - The company has maintained a disciplined approach to cost management, achieving sustainable savings through process redesign and technology [15][19] Question: What is the outlook for the Greater China market? - Management remains confident in the long-term structural growth drivers in Greater China, with a significant under-penetration of hotels per capita [42]

Financial Data and Key Metrics Changes - RevPAR grew by 1.5%, driven by rate and occupancy gains, reflecting the breadth of the global footprint and diversification of demand drivers [3] - Gross system growth was 6.6%, and net system growth was 4.7%, marking the fourth consecutive year of accelerating growth [4] - Adjusted EPS grew by 16%, supported by a $900 million share buyback program [5][9] - Total revenue was $2.5 billion, with EBIT growing by 13% to $1.265 billion [8] Business Line Data and Key Metrics Changes - Fee business revenue and operating profit both increased by 7% and 13% respectively, with fee margin increasing by 360 basis points to 64.8% [8][16] - The company opened a record 443 hotels, adding over 65,000 rooms to the system, with a 10% year-on-year increase in openings [13][29] - The new premium collection brand, Noted Collection, was launched to strengthen the portfolio in the premium segment [5][29] Market Data and Key Metrics Changes - In the Americas, RevPAR grew by 0.3%, with a slight decline in occupancy [10] - EMEA RevPAR grew by 4.6%, with occupancy up 1.6 percentage points and rate up 2.4% [11] - Greater China saw a RevPAR decline of 1.6%, with occupancy slightly up and rate down [11] Company Strategy and Development Direction - The company aims to expand its brand portfolio, having doubled it from 10 to 20 brands over the past decade, with a focus on capturing more guests at various price points [29] - The strategy includes leveraging technology and AI to enhance operational efficiency and guest experience [46][49] - The company is focused on expanding in key growth markets, particularly in the U.S., Europe, and China, with significant growth potential in emerging markets [39][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to deliver on the growth algorithm, targeting high single-digit fee revenue growth and 100-150 basis points of margin expansion annually [6][60] - The company anticipates strong cash flow conversion and sustainable dividend growth, with a commitment to returning capital to shareholders [19][60] Other Important Information - The company plans to return over $1.2 billion to shareholders in 2026 through share buybacks and dividend payments [4][27] - Adjusted free cash flow was $893 million, representing a year-on-year increase of $238 million [19] Q&A Session Summary Question: What are the expectations for future growth in the U.S. market? - Management noted that development momentum in the U.S. continued to pick up, with gross openings growing 11% year-on-year and strong owner confidence in the brand [41] Question: How is the company leveraging technology for operational efficiency? - The company is implementing a new Revenue Management System and enhancing its Guest Reservation System to optimize operations and improve revenue performance for hotel owners [46][48]

Financial Data and Key Metrics Changes - RevPAR grew by 1.5%, driven by rate and occupancy gains, reflecting the breadth of the global footprint and diversification of demand drivers [3][4] - Gross system growth was 6.6%, and net system growth was 4.7%, marking the fourth consecutive year of accelerating growth [4] - Adjusted EPS grew by 16%, supported by a $900 million share buyback program [9][54] - Total revenue was $2.5 billion, with EBIT growing by 13% to $1.265 billion [7][54] Business Line Data and Key Metrics Changes - Fee business revenue and operating profit both increased by 7% and 13% respectively, with fee margin increasing by 360 basis points to 64.8% [7][8] - The company opened a record 443 hotels, taking the total estate to over 6,900 hotels and more than 1 million rooms [3][4] - The pipeline now stands at almost 2,300 hotels, representing 33% future rooms growth [4] Market Data and Key Metrics Changes - In the Americas, RevPAR grew by 0.3%, with a slight decline in occupancy [10] - Outside the U.S., RevPAR grew by 4%, with notable growth in Canada, Mexico, and the Latin America and Caribbean sub-region [10] - In EMEA, RevPAR grew by 4.6%, with occupancy up 1.6 percentage points and rate up 2.4% [11] - Greater China saw a RevPAR decline of 1.6%, with occupancy slightly up [11] Company Strategy and Development Direction - The company launched a new premium collection brand, Noted Collection, to strengthen its portfolio in the premium segment [5][27] - The brand portfolio has doubled from 10 to 20 brands over the past decade, capturing more guests at various price points [27] - The company aims to expand fee margin by 100-150 basis points annually while controlling overhead growth to a low single-digit increase [18] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in continuing to deliver on the growth algorithm, targeting high single-digit fee revenue growth and sustainable dividend growth [54][55] - The company remains well-positioned to capture guests in various markets, with a pipeline of hotels in fast-growing economies [36][42] - Management highlighted the strength of the loyalty program, with membership growing to over 160 million, driving increased revenue [49][50] Other Important Information - The company returned over $1.1 billion to shareholders, with a proposed 10% increase in total dividends [5][25] - Adjusted free cash flow was $893 million, representing a year-on-year increase of $238 million [18] - The company is leveraging technology, including AI, to enhance operational efficiency and guest experience [43][45] Q&A Session Summary Question: What are the growth prospects for the new Noted Collection brand? - Management expects Noted Collection to scale rapidly, with initial discussions already underway with multiple owners [33] Question: How is the company managing costs in the current environment? - The company has maintained a disciplined approach to cost management, achieving sustainable savings through process redesign and technology [15][18] Question: What is the outlook for the Greater China market? - Management remains confident in the long-term growth drivers in Greater China, with significant under-penetration of hotels per capita [39][42]

Financial Data and Key Metrics Changes - The company's underlying EBITDA grew by 25%, with an increased margin of 58% [10] - Underlying attributable profit reached $6.2 billion, and return on capital employed was 24%, both significantly up from the previous year [10] - An interim dividend of $0.73 per share was declared, representing a 46% increase half-on-half, with a total half-year dividend of $3.7 billion and a payout ratio of 60% [4][10] Business Line Data and Key Metrics Changes - Copper business generated a record $8 billion of EBITDA, accounting for over half of the group total, with a margin of 66% [11] - Production in copper increased by 2%, while gold production rose by 12% in Copper South Australia, leading to a more than 50% reduction in unit costs [12] - Western Australia Iron Ore achieved record first-half production and shipments, with C1 costs up only 1% to $17.66 per ton, maintaining its position as the lowest-cost major iron ore producer globally [12] Market Data and Key Metrics Changes - Global demand for copper is projected to grow by around 70% between 2021 and 2050, driven by traditional economic growth, energy transition, and increased data center needs [22] - The company expects to generate around $60 billion in attributable free cash flow over the next five years, even in a prolonged low-price environment [13] Company Strategy and Development Direction - The company's strategy focuses on investing in highly attractive commodities, operating world-class assets, and maintaining disciplined capital allocation [4][8] - Plans to grow copper production by around 40% by 2035, with a capital-efficient, predominantly brownfield growth approach [21] - The company aims to unlock up to $10 billion in capital for reinvestment into higher-returning opportunities and increased shareholder returns [4][16] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the business's ability to thrive amid favorable commodity demand and supportive policy environments, particularly in China and India [18][19] - The company is well-positioned to benefit from tight supply and strong fundamentals in the commodities market [19] Other Important Information - The company has made significant progress in its capital allocation framework, including a valuable silver streaming agreement related to Antamina's future silver production, unlocking $4.3 billion in cash [14][15] - The company is advancing its plans for the Jansen Potash asset, expected to deliver around $1 billion of EBITDA per year per stage, with margins above 60% [21] Q&A Session Summary Question: What is the outlook for copper production growth? - The company has raised production guidance for financial year 2026 and 2027, expecting to deliver over 500,000 more tons over the next five years compared to previous estimates, which could result in an additional $5 billion of EBITDA [23][24] Question: How does the company plan to manage costs amid increasing competition? - The company has maintained its position as the world's lowest-cost major iron ore producer and aims to reduce costs further while increasing production volumes [20]

Financial Data and Key Metrics Changes - The company's underlying EBITDA grew by 25%, with an increased margin of 58% [10] - Underlying attributable profit reached $6.2 billion, and return on capital employed was 24%, both significantly up from the previous year [10] - An interim dividend of $0.73 per share was declared, representing a 46% increase half-on-half, with a total half-year dividend of $3.7 billion and a payout ratio of 60% [4][10] Business Line Data and Key Metrics Changes - Copper business generated a record $8 billion of EBITDA, accounting for over half of the group total, with a margin of 66% [11] - Production in copper increased by 2%, while gold production rose by 12% in Copper South Australia, leading to a more than 50% reduction in unit costs [12] - Western Australia Iron Ore achieved record first-half production and shipments, with C1 costs up only 1% to $17.66 per ton, maintaining its position as the lowest-cost major iron ore producer globally [12] Market Data and Key Metrics Changes - Global demand for copper is projected to grow by around 70% between 2021 and 2050, driven by traditional economic growth, energy transition, and increased use of data centers [22] - The company expects to generate around $60 billion in attributable free cash flow over the next five years, even in a prolonged low-price environment [13] Company Strategy and Development Direction - The company's strategy focuses on investing in highly attractive commodities, operating world-class assets, and maintaining disciplined capital allocation [4][8] - Plans to grow copper production by around 40% by 2035, with a capital-efficient, predominantly brownfield growth approach [21] - The company aims to unlock up to $10 billion in capital for reinvestment into higher-returning opportunities and increased shareholder returns [4][16] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the business's ability to deliver strong results amid favorable commodity prices and operational excellence [3][10] - Expectations for global GDP growth in 2026 to be broadly in line with the previous year, supported by policy responses in major economies [18] - The company is well-positioned to thrive through commodity price cycles due to its diversified portfolio [13] Other Important Information - The company has made significant progress in its capital allocation framework, including a valuable silver streaming agreement related to Antamina's future silver production, unlocking $4.3 billion in cash [14][15] - The Jansen Potash asset is expected to become a world-class, low-cost potash producer, contributing significantly to the company's EBITDA [21] Q&A Session Summary Question: What is the outlook for copper production growth? - The company plans to increase copper production by around 40% by 2035, with a clear pathway for growth [21] Question: How does the company plan to manage capital allocation? - The capital allocation framework ensures all users of capital compete to maximize value and return for shareholders, with a focus on unlocking additional value from the capital base [14] Question: What are the expectations for global demand in the coming years? - Global demand for commodities is expected to remain robust, supported by favorable trade outcomes and improved confidence in major economies [18]

Financial Data and Key Metrics Changes - The underlying EBITDA grew by 25%, with an increased margin of 58% [9] - Underlying attributable profit reached $6.2 billion, and return on capital employed was 24%, both significantly up from the previous year [9] - An interim dividend of $0.73 per share was declared, representing a 46% increase half-on-half [4] Business Line Data and Key Metrics Changes - Copper business generated a record $8 billion of EBITDA, accounting for over half of the group total, with a margin of 66% [10] - Production in copper increased by 2%, while unit costs improved by approximately 4.5% despite inflation [10] - Western Australia Iron Ore achieved record first-half production and shipments, maintaining its position as the lowest-cost major iron ore producer globally [11] Market Data and Key Metrics Changes - Global demand for copper is projected to grow by around 70% between 2021 and 2050, driven by economic growth and energy transition [21] - The company expects to generate around $60 billion in attributable free cash flow over the next five years at current spot prices [12] - Even in a prolonged low-price environment, the company anticipates generating around $10 billion in attributable free cash flow [12] Company Strategy and Development Direction - The company focuses on investing in highly attractive commodities, operating world-class assets, and maintaining disciplined capital allocation [4][5] - A clear pathway to grow iron ore volumes to over 305 million tons per year by the end of financial year 2028 has been established [19] - The Jansen Potash asset is expected to deliver around $1 billion of EBITDA per year per stage, enhancing the company's portfolio [20] Management's Comments on Operating Environment and Future Outlook - The management expressed confidence in the business outlook, supported by healthy demand and favorable trade outcomes [17] - The company is well-positioned to thrive amid geopolitical uncertainties and expects global GDP growth in 2026 to align with the previous year [17] - The management highlighted the importance of operational performance in generating maximum value for deployed capital [6] Other Important Information - The company has identified potential to unlock up to $10 billion in capital for reinvestment or increased shareholder returns [4][15] - Recent agreements related to silver streaming and power consumption are expected to unlock over $6 billion in cash [13][14] - The company has a clear capital allocation framework to maximize value and returns for shareholders [13] Q&A Session Summary Question: What are the expectations for copper production growth? - The company expects a production growth of around 40% by 2035, primarily through capital-efficient brownfield projects [20] Question: How does the company plan to manage costs in the current environment? - The company has reduced costs in real terms post-COVID and aims to maintain its position as the lowest-cost major producer [6] Question: What is the outlook for the iron ore market? - The company anticipates fierce competition in the iron ore market but is well-positioned due to its cost leadership and operational excellence [18]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 31% to INR 74.8 billion for the nine months ending December 31, 2026, with a more than sixfold increase in profit after tax [8][9] - Revenue increased by 48% for the first nine months of the fiscal year compared to the previous year, driven by an increase in megawatts and contributions from the manufacturing business [17] - Headline leverage decreased from 8.2x in December 2024 to 7x debt to EBITDA currently, and is expected to reach 6.7x excluding contributions from joint venture partners [18] Business Line Data and Key Metrics Changes - Operating capacity increased from 10.7 GW to 11.8 GW, a 19% increase after adjusting for the sale of 900 MW of assets [5][17] - The manufacturing business contributed INR 10.8 billion to adjusted EBITDA for the first nine months [9][15] - The company sold 300 MW of solar assets this quarter, bringing total asset sales for the year to 600 MW [19] Market Data and Key Metrics Changes - The financing environment remains favorable, with interest rates on a downward trend, benefiting the company's capital structure [4] - Electricity demand has shown signs of recovery, with expectations for power demand to return to normal levels in fiscal 2027 [5] Company Strategy and Development Direction - The company is shifting focus from wind projects to more battery energy storage systems (BESS) and solar capacity to reduce capital expenditure and execution risk [7][13] - The strategic pivot aims to optimize cash flows and reduce volatility in revenues due to weather patterns [7][13] - The company plans to construct between 1.8 GW and 2.4 GW in the fiscal year ending March 31, 2026, up from previous guidance [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about macroeconomic conditions, citing a recent trade deal between India and the U.S. that is expected to benefit the economy [4] - The company is focused on improving balance sheet strength and reducing leverage further, with a target leverage ratio of 5.5x by 2028-2030 [73] Other Important Information - The company received an A grade rating from LSEG and a score of 90.41 out of 100, placing it in the top quartile globally for ESG performance [10][24] - The company has achieved water positive certification for two sites, marking significant progress in sustainability initiatives [10][25] Q&A Session Summary Question: Can you elaborate on the revised strategy towards more solar and BESS projects? - The decision to decrease wind capacity was driven by lower costs of BESS and solar, improved ability to firm up power, and execution challenges associated with wind projects [30][32] Question: What is the update on the take-private strategy? - The company cannot comment on specifics regarding privatization discussions, stating that any necessary disclosures will be made at the appropriate time [36] Question: Are there improvements in transmission project delays and curtailment? - There is increased visibility and discussion within government ministries to address these issues, with recognition that curtailment losses should be shared among stakeholders [40][42] Question: What is the current status of TGNA capacity and associated curtailment? - Approximately 400 MW to 500 MW is currently under TGNA, with some degree of curtailment expected, but compensation is received for projects with permanent GNA [63][65] Question: How is the manufacturing business performing in terms of margins? - Margins have held up well, with a temporary lull during monsoons, but demand appears to be stable currently [44]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 31% to INR 74.8 billion for the nine months ending December 31, 2026, with a more than sixfold increase in profit after tax [8][9] - Revenue increased by 48% for the first nine months of the fiscal year compared to the previous year, driven by increased megawatts and contributions from the manufacturing business [17] - Headline leverage decreased from 8.2x in December 2024 to 7x debt to EBITDA currently, with a trailing twelve-month EBITDA leverage of approximately 5.6x [18] Business Line Data and Key Metrics Changes - Operating capacity increased from 10.7 gigawatts to 11.8 gigawatts, a 19% increase after adjusting for the sale of 900 megawatts [5][17] - Manufacturing business contributed INR 10.8 billion to Adjusted EBITDA for the first nine months, with an external order book of 900 MW [15] - The company sold 300 MW of solar assets this quarter, totaling 600 MW for the year, raising $275 million through capital recycling [19] Market Data and Key Metrics Changes - Electricity demand in India rebounded sharply in December 2026, with expectations for power demand to return to normal levels in fiscal 2027 [5] - The financing environment remains favorable, with interest rates on a downward trend, benefiting the overall economic outlook [4] Company Strategy and Development Direction - The company is shifting focus from wind projects to more battery energy storage systems (BESS) and solar capacity to lower execution risk and improve cash flow predictability [7][13] - The strategic pivot aims to reduce capital expenditure and enhance revenue predictability, with a focus on balance sheet strength and reducing leverage [13][26] - The company plans to construct between 1.8 and 2.4 GW in the fiscal year ending March 31, 2026, with increased guidance for Adjusted EBITDA [26] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about India's growth projections remaining above 7% for fiscal 2026 and 2027, aided by a recent trade deal with the U.S. [4][5] - There is recognition of systemic issues in the industry, such as transmission project delays and curtailment, with ongoing discussions with government ministries to address these challenges [39][40] Other Important Information - The company received an A grade rating from LSEG and a score of 90.41 out of 100, placing it in the top quartile globally for ESG performance [10][23] - The company has achieved water positivity certification for two sites, marking significant progress in sustainability initiatives [24] Q&A Session Summary Question: Can you elaborate on the revised strategy towards more solar and BESS projects? - Management explained that the decision to decrease wind capacity was driven by lower costs of BESS and solar, improved execution ease, and historical performance issues with wind [29][30] Question: What is the update on the take-private strategy? - Management stated that they cannot comment on specific topics regarding privatization and will disclose any relevant information as necessary [35] Question: Are there improvements in transmission project delays and curtailment? - Management acknowledged ongoing discussions with government ministries to address these issues, recognizing them as systemic losses that should not solely impact developers [39][40] Question: How is the manufacturing segment performing in terms of margins? - Management indicated that margins have held up well, with a temporary lull during monsoons, but demand has picked up again in the current quarter [43] Question: What is the target leverage ratio and timeline for achieving it? - Management aims to reduce leverage to 5.5x over time, with a target timeframe suggested to be between 2028 and 2030 [71][72]

Financial Data and Key Metrics Changes - Adjusted EBITDA increased by 31% to INR 74.8 billion for the nine months ending December 31, 2026, with a more than sixfold increase in profit after tax [7][18] - Revenue increased by 48% for the first nine months of the fiscal year compared to the previous year, driven by an increase in megawatts and contributions from the manufacturing business [18] - Headline leverage decreased from 8.2x in December 2024 to 7x debt to EBITDA currently, with a trailing twelve-month leverage of approximately 5.6x for the operating portfolio [19][27] Business Line Data and Key Metrics Changes - Operating capacity increased from 10.7 gigawatts to 11.8 gigawatts, a 19% increase after adjusting for the sale of 900 megawatts [5][17] - The manufacturing business contributed INR 10.8 billion to Adjusted EBITDA for the first nine months, with an external order book of 900 MW [9][15] - The company sold another 300 MW of solar assets this quarter, raising a total of $275 million through capital recycling this year [20] Market Data and Key Metrics Changes - The electricity demand in India has shown recovery, with expectations for power demand to return to normal levels in fiscal 2027 [5] - The financing environment remains favorable, with interest rates on a downward trend, benefiting the overall economic outlook [4] Company Strategy and Development Direction - The company is shifting its focus from wind projects to more battery energy storage systems (BESS) and solar capacity to lower capital expenditure and execution risk [6][13] - The strategic path forward includes optimizing the portfolio for lower execution risk and more predictable cash flows, with a focus on balance sheet strength and reducing leverage [13][27] - The company aims to construct between 1.8 and 2.4 GW in the fiscal year ending March 31, 2026, with increased guidance for Adjusted EBITDA [27] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the macroeconomic environment, citing a recent trade deal between India and the U.S. that is expected to benefit the economy [4] - The company is committed to ESG initiatives, having received high ratings from LSEG and CDP, and aims to maintain leadership in sustainability within the sector [10][24] Other Important Information - The company has achieved water positive certification for two sites and continues to focus on reducing emissions and enhancing sustainability practices [10][25] - The company has been consistently growing its EBITDA at approximately 17% per year since its listing, relying on capital recycling without issuing new equity [12] Q&A Session Summary Question: Can you elaborate on the revised strategy towards more solar and BESS projects? - Management explained that the decision to decrease wind capacity was driven by lower costs for BESS and solar, improved execution capabilities, and historical performance issues with wind [30][33] Question: What is the update on transmission project delays and curtailment? - Management acknowledged these issues and noted that the government is actively working on solutions to improve transmission execution and address curtailment losses [40][41] Question: Are margins in cell manufacturing compressing? - Management indicated that margins have held up well, with a temporary lull during monsoons, but demand remains reasonable [44]