Hyatt Q2 Earnings Beat, Revenues Lag Estimates, Stock Up

Hyatt Hotels Corporation H delivered second-quarter 2024 results, wherein earnings beat the Zacks Consensus Estimate but revenues missed the same. The company's top line declined year over year.

The timing of Easter, renovations at major resort properties and the lingering impact of the 2023 Maui wildfires affected the company's performance. Following the results, shares of this global hospitality company are up 2.7% in the pre-market trading session on Aug 6.

Q2 Earnings & Revenues

Hyatt reported adjusted earnings per share of $1.53, beating the Zacks Consensus Estimate of 95 cents. In the year-ago quarter, the company reported an EPS of 86 cents.

Revenues of $1,703 million lagged the consensus mark of $1,756 million and declined 0.1% on a year-over-year basis.

The year-over-year decline in revenues was due to a 7.9% decline in Owned and Leased revenues to $314 million and a 85.9% decrease in Other revenues. This was partially offset by Net fees increase of 10.6% year over year to $259 million and a Distribution increase of 1.1% to $278 million. Moreover, revenues for reimbursed costs increased to $842 million from $784 million reported in the prior year quarter.

Operating Highlights

Adjusted EBITDA was $307 million, up 10.1% year over year. Our model predicted the metric to be $328.9 million, up 20.5% year over year.

Adjusted EBITDA of Management and Franchising, as well as Distribution increased year over year by 10.5% and 23.9% to $222 million and $43 million, respectively. On the other hand, Owned and Leased, segment's adjusted EBITDA declined 7.4% year over year to $79 million.

Balance Sheet

As of Jun 30, 2024, Hyatt reported cash and cash equivalents of $1,957 million compared with $794 million reported in the previous quarter. Total liquidity was $3.5 billion in the second-quarter end. Total debt as of Jun 30, 2024, was $3.9 billion.

Other Business Updates

Regarding hotel openings, 18 new hotels (or 3,251 rooms) joined Hyatt's system in the second quarter. As of Jun 30, 2024, Hyatt had a pipeline of executed management or franchise contracts for approximately 670 hotels (or about 130,000 rooms).

2024 Outlook

For 2024, the company expects adjusted general and administrative expenses to be between $425 million and $435 million. Capital expenditures are projected to be $170 million. Net room growth is anticipated to be between 5.5% and 6% year over year.

Management anticipates 2024 system-wide RevPAR to rise 3-4% from 2023 levels, down from the prior estimate of 3-5%. Adjusted EBITDA is now expected to be in the band of $1.13-$1.17 billion compared with the prior expected range of $1.15-$1.19 billion.

Zacks Rank & Recent Consumer Discretionary Releases

Hyatt currently carries a Zacks Rank #3 (Hold).

Recent Consumer Discretionary Releases

Carnival Corporation & plc CCL reported impressive second-quarter fiscal 2024 results, with earnings and revenues beating the Zacks Consensus Estimate. The top and the bottom line increased on a year-over-year basis. The upside was primarily backed by sustained demand strength and increased booking volumes. The management expects net yields to exceed 10% and drive double-digit returns on invested capital.

The quarter's passenger ticket revenues amounted to $3.8 billion, up from $3.1 billion reported in the prior-year quarter. CCL reported strong booking momentum for 2025, with record volumes surpassing 2024 levels in price and occupancy. It reported strength in pricing for the North America, Australia and Europe segments for the third and the fourth quarter of 2024 on a year-over-year basis. The company's efforts to extend the booking curve and leverage favorable pricing trends resulted in record cumulative bookings for the remainder of 2024, with occupancy rates above 2023 levels.

Mattel, Inc. MAT reported mixed second-quarter 2024 results, with earnings surpassing the Zacks Consensus Estimate and revenues missing the same. The top line missed the consensus estimate for the third straight quarter.

The company experienced robust bottom-line performance, propelled mainly by significant gross margin expansion and growth in adjusted EBITDA. MAT is well positioned for the second half with new product innovation and increased retail support. For 2024, management continues to expect net sales to be comparable with the prior year's levels at cc. It also anticipates 2024 adjusted EPS to be between $1.35 and $1.45 compared with $1.23 in 2023.

American Outdoor Brands, Inc. AOUT reported mixed fourth-quarter fiscal 2024 (ended Apr 30, 2024) results. It reported break-even earnings, missing the Zacks Consensus Estimate, while net sales topped the same. The top line rose year over year, but the bottom line declined.

The quarterly results reflect growth in its outdoor lifestyle and shooting sports categories on the back of new product launches across its several brands. The footprint expansion in Canada also bodes well for the company, allowing it to offer outdoor brands to the consumers of Canada. The bottom line was negatively impacted by the amortization of tariff and freight costs, higher promotional product discounts and an immaterial adjustment to a tariff drawback claim submitted in the fiscal 2022.

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