Hyatt Hotels (H) Tops Q1 EPS by 2c

Hyatt Hotels (NYSE: H) reported Q1 EPS of $0.33, $0.02 better than the analyst estimate of $0.31.

First quarter of 2018 financial highlights as compared to the first quarter of 2017 are as follows:

• Net income increased 643.6% to $411 million, aided by gains on sales of real estate.
• Adjusted EBITDA decreased 7.3% to $202 million, down 8.4% in constant currency.
• Comparable systemwide RevPAR increased 4.3%, including an increase of 1.6% at comparable owned and leased hotels. Excluding the impact of Easter holiday timing, comparable systemwide RevPAR increased 4.6% and comparable owned and leased RevPAR increased 2.0%.
• Comparable U.S. hotel RevPAR increased 2.7%; full service and select service hotel RevPAR increased 2.7% and 2.8%, respectively. Excluding the impact of Easter holiday timing, comparable U.S. hotel RevPAR increased 3.1%; full service and select service hotel RevPAR increased 3.3% and 2.8%, respectively.
• Net rooms growth was 7.2%.
• Comparable owned and leased hotel operating margin increased 80 basis points to 24.3%.
• Adjusted EBITDA margin decreased 30 basis points to 30.7%, in constant currency.

The Company is revising the following information for the 2018 fiscal year:

• Net income is expected to be approximately $495 million to $553 million, compared to previous expectation of $176 million to $215 million.
• Adjusted EBITDA is expected to be approximately $765 million to $785 million, compared to previous expectation of approximately $805 million to $825 million. These estimates also include a favorable impact from foreign currency of approximately $5 million (low end of forecast) to $10 million (high end of forecast), compared to previous expectation of $0 (low end of the forecast) to $5 million (high end of the forecast). Refer to the table on page 3 of the schedules for a reconciliation of Net Income Forecast to Adjusted EBITDA Forecast.
• Comparable systemwide RevPAR is expected to increase approximately 2.0% to 3.5% compared to previous expectation of 1.0% to 3.0%.
• Depreciation and amortization expense is expected to be approximately $320 million to $324 million, compared to previous expectation of $367 million to $371 million.
• Interest expense is expected to be approximately $76 million, compared to previous expectation of $75 million to $76 million.
• The effective tax rate is expected to be approximately 27% to 29%, compared to previous expectation of 27% to 31%.
• The Company expects to grow net rooms by approximately 6.5% to 7.0%, compared to previous expectation of approximately 6.0% to 6.5%. The number of hotel openings remains at approximately 60.
• Capital expenditures are expected to be approximately $375 million, compared to previous expectation of approximately $350 million. The increase is largely attributable to investments funded by cash proceeds from the 2017 sale of Avendra LLC.
• The Company expects to return at least $700 million to shareholders, compared to a previous expectation of at least $500 million, through a combination of cash dividends on its common stock and share repurchases.

The Company is reaffirming the following information for the 2018 fiscal year:

• Adjusted selling, general, and administrative expenses are expected to be approximately $300 million, consistent with previous guidance. This excludes approximately $34 million to $35 million of stock-based compensation expense, which reflects a $1 million decrease from previous guidance, and any potential expenses related to benefit programs funded through rabbi trusts.
• Other income (loss), net is expected to be negatively impacted by approximately $65 million to $75 million related to performance guarantee expense for the four managed hotels in France.

For earnings history and earnings-related data on Hyatt Hotels (H) click here.

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