Vertiv Holdings, Hilton Worldwide term loans inch higher with earnings announcements

By Sara Rosenberg

New York, Oct. 26 – Vertiv Holdings Co. saw its term loan strengthen in trading on Wednesday following the release of third quarter numbers that showed better-than-expected earnings per share and net sales.

Also, Hilton Worldwide Holdings Inc.’s term loan gained some ground in the secondary market after the company announced its quarterly results.

Vertiv gains

Vertiv’s term loan moved up to 95½ bid, 96½ offered from 95¼ bid, 96¼ offered after the company disclosed third quarter earnings, according to a market source.

For the quarter, the company reported diluted earnings per share of $0.06, versus $0.15 in the third quarter of 2021, and net income of $21.2 million, compared to net income of $56.2 million in the prior year. Non-GAAP adjusted diluted earnings per share for the quarter were $0.23, up from $0.20 in the comparable 2021 period, and non GAAP adjusted net income was $85.2 million, up from $73.3 million last year.

Net sales for the quarter were $1.481 billion, up 20.5% from $1.229 billion in the third quarter of 2021.

Net cash generated by operating activities in the third quarter was $4 million and free cash flow was a use of cash of $20 million. The company expects quarterly record high free cash flow generation in the fourth quarter of $250 million to $300 million and free cash flow for the full year 2022 to be a use of cash of $100 million to $150 million.

The company also increased the borrowing capacity under its ABL credit facility by $115 million during the quarter.

Vertiv is a Columbus, Ohio-based provider of critical digital infrastructure and continuity solutions.

Hilton rises

Hilton Worldwide’s term loan strengthened following the company’s third quarter earnings news. One trader had the loan quoted at 97 7/8 bid, 98 3/8 offered, up from 97¾ bid, 98¼ offered, and another trader had it quoted at 98 bid, 98 ½ offered, up an eighth of a point on the day.

For the quarter, the company reported diluted earnings per share of $1.26, compared to $0.86 in the 2021 third quarter, and diluted earnings per share adjusted for special items of $1.31, versus $0.78 in the prior year. Net income was $346 million for the quarter, up from $240 million last year.

Adjusted EBITDA for the quarter was $732 million, up from $519 million in the third quarter of 2021, and system-wide comparable RevPar was up 29.9% from the comparable period in the previous year.

“The third quarter marked an important milestone in our recovery as system-wide RevPAR exceeded the same period in 2019 for the first time since the pandemic began. Our diluted EPS, adjusted for special items and Adjusted EBITDA exceeded the high end of our guidance. Improved performance reflected the continued strength in leisure travel, as well as recovering business transient and group demand. We expect these strong trends to continue throughout the fourth quarter with system-wide RevPAR once again exceeding prior peaks,” said Christopher J. Nassetta, president and chief executive officer, in a news release.

Hilton is a McLean, Va.-based hospitality company.

Secondary flat to down

The secondary market in general was flat to down “a touch”, maybe by about an eighth of a point on the day, a trader remarked.

“Generally, people are not that all bulled up about the market”, the trader added.

Loan indices soften

In other news, IHS Markit’s iBoxx loan indices were lower on Tuesday, with the Leveraged Loan indexes (MiLLi) closing out the day down 0.06% and the Liquid Leveraged Loan indices (LLLi) closing out the day down 0.07%.

Month to date, the MiLLi is up 0.61% and year to date its down 3.04%. The LLLi is up 0.93% month to date and down 3.91% year to date.

Average secondary market bids in the U.S. on Tuesday were 92.31, down 0.05% from the previous day and down 4.69% year to date.

According to the IHS Markit data, some of the top advancers on Tuesday were Intermedia Holdings’ July 2018 covenant-lite term loan B at 73.75, up from 72.50, CPC Acquisition’s December 2020 covenant-lite term loan at 77.63, up from 76.63, and Latham Pool’s February 2022 term loan B at 90.75, up from 89.63.

Some top decliners on Tuesday were Genesis Care’s March 2020 U.S. covenant-lite term loan B at 32.67, down from 34.92, Bay Club’s September 2018 covenant-lite term loan at 86.67, down from 88.90 and Cineworld’s February 2018 U.S. covenant-lite term loan at 23.82, down from 24.40.

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