Release Details
Sabre Corporation Reports First Quarter 2014 Results
"Global travel industry growth was very healthy in the first quarter with our airline and hotel customers experiencing solid demand. Against this backdrop, Sabre's portfolio of software and technology solutions, which are the broadest and deepest in the industry, continued to deliver value across the travel ecosystem," said
Q1 2014 Financial Summary
Sabre reported Airline and Hospitality Solutions revenues that increased 8.8% to
Sabre reported total consolidated revenues of
Consolidated net loss attributable to
Financial Highlights (in thousands): |
Q1 2014 |
Q1 2013 |
% Change |
Total Company Excluding Travelocity: |
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Revenue |
|
|
7.2 |
Operating Income |
|
|
1.8 |
Adjusted EBITDA* |
|
|
3.7 |
Total Company Including Travelocity: |
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Revenue |
|
|
(0.5) |
Net Loss Attributable to |
( |
( |
N/A |
Adjusted Revenue* |
|
|
(0.3) |
Adjusted EBITDA* |
|
|
(4.6) |
|
|
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(21.8) |
Capital Expenditures |
|
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(2.0) |
Adjusted Capital Expenditures* |
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(20.7) |
Free |
|
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(48.2) |
Adjusted Free Cash Flow* |
|
|
38.5 |
Net Debt (total debt, less cash) |
|
|
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Net Debt / LTM Adjusted EBITDA |
4.4x |
4.2x |
|
Proforma Net Debt** |
|
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Proforma Net Debt /LTM Adjusted EBITDA** |
3.6x |
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Airline and Hospitality Solutions: |
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Revenue |
|
|
8.8 |
Passengers Boarded |
117,616 |
107,525 |
9.4 |
Operating Income |
|
|
16.8 |
Adjusted EBITDA* |
|
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30.8 |
Travel Network: |
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Revenue |
|
|
3.5 |
Air Bookings |
89,045 |
85,246 |
4.5 |
Non-air Bookings |
13,569 |
13,047 |
4.0 |
Total Bookings |
102,614 |
98,293 |
4.4 |
Bookings Share |
35.4% |
35.3% |
|
Operating Income |
|
|
(0.2) |
Adjusted EBITDA* |
|
|
2.2 |
|
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Revenue |
|
|
(34.0) |
Operating Income |
( |
( |
79.4 |
Adjusted Revenue |
|
|
(32.7) |
Adjusted EBITDA* |
( |
( |
181.7 |
*indicates non-GAAP financial measure; see descriptions and reconciliations below ** see "Initial Public Offering" below |
For the first quarter of 2014, Sabre reported a loss per share from continuing operations of
Strong growth across its customer base and the anniversary of customer implementations completed during the first quarter of 2013 led to an 8.8% increase in revenues in the first quarter of 2014. This revenue growth was driven in part by an increase in passengers boarded through the SabreSonic® airline reservation system. Total passengers boarded were 118 million, a 9.4% increase from 108 million in the first quarter of 2013. Revenues for the quarter also were bolstered by continued growth in Airline Solutions Commercial and Operations Solutions revenue and strong growth in Hospitality Solutions' SynXis Central Reservations System transactions and Internet Marketing Services.
Strong revenue growth and operating leverage across its SaaS and hosted solutions resulted in a 30.8% increase in Airline and Hospitality Solutions Adjusted EBITDA to
Airline and Hospitality Solutions recently signed several significant new agreements. A few examples include:
- The combined American Airlines and
US Airways , the world's largest airline, and airberlin, a leading carrier inEurope , both signed agreements to implement the SabreSonic® airline reservation system. When completed, we expect these implementations will result in more than 220 million passengers boarded annually; Vietnam Airlines , AirMalta,Cambodia Angkor Air , and WestJet were among those that renewed or expanded their agreements for Sabre Airline Solutions AirCentre, AirVision, or SabreSonic reservations software solutions;HNA Hotels & Resorts inChina signed an agreement with Sabre Hospitality to become an important part of the hospitality company's technology and connectivity strategy; and- Vimana Franchise Systems, franchisor of the
Centerstone Hotel and Key West Inn brands, announced the selection of Sabre Hospitality Solutions SynXis Central Reservations System, continuing the strong momentum in the Hospitality sector.
Sabre Travel Network
Sabre Travel Network is one of the world's largest travel marketplaces, transacting more than
For the first quarter, Travel Network revenue increased
Solid bookings and revenue growth resulted in Travel Network first quarter Adjusted EBITDA of
Sabre's product leadership continued to expand versus core competitors:
Sabre Red is the premier agency desktop in the industry. In the first quarter, Sabre launched a mobile version to wide acclaim. The Sabre Red App Centre, which allows Sabre, customers, and third party developers to expand Sabre Red functionality with value-added apps, continued to add new additions to the app store and increased agency downloads. New apps from partners like Trip Advisor (Seat Guru) and Evature Technologies (
TripCase, Sabre's leading consumer mobile itinerary management app, ramped to a pace that is expected to result in the app being used to manage well over 20 million trips this calendar year. The number of trips managed is the most important metric for success in this category of mobile travel apps. TripCase is expected to manage more trips than any other product in this space.
Through Sabre, airlines are able to market and sell their products the way they choose, generating new revenues and new choices for travelers. Sabre is helping airlines sell seats, bags, in-flight entertainment, and lounge access, among other types of ancillaries. In addition, Sabre helps airlines sell their branded fares, which supports an airline's ability to upsell during the shopping and booking process. Thus far in 2014, Sabre Travel Network has added 7 airlines to its list of customers using Sabre's airline merchandising capabilities, bringing the total to over 20 airlines.
Bolstering its efforts to increase share in EMEA, Travel Network recently opened its first office in
The
With the new agreement in place and the migration moving ahead as planned, first quarter 2014 Travelocity Adjusted Revenue declined 32.7% to
Initial Public Offering
On
In conjunction with the IPO, Sabre announced the adoption of a dividend policy with an initial targeted quarterly payout of
New Product Launches
Sabre recently launched three software and data analytics solutions - Customer Experience Manager, Guest Connect Upsell and TripCase Corporate - to help customers design and offer a more personalized shopping and travel experience for travelers.
Customer Experience Manager is a data-rich software solution to help airlines leverage traveler insights to deliver a highly personalized experience. With Customer Experience Manager, airlines can automate many manual customer service functions and stimulate revenue - all while significantly enhancing the customer experience.
Guest Connect Upsell is a new hotel booking capability that allows guests to upgrade to a higher room class instantly after their booking is confirmed via targeted offers based on the guest's unique preferences. Guest Connect Upsell enables hoteliers to generate incremental revenue by precisely targeting enhanced services and options that are aligned specifically to a guest's individual preferences.
TripCase Corporate is the business travel version of Sabre's popular TripCase consumer mobile app, which was used to manage more than 11 million trips in 2013, a number which is expected to increase to more than 20 million trips in 2014. With TripCase Corporate, travelers can make travel bookings and reservations from their smartphone and identify which trips are for business reasons. This enables our customers to better track travel spend, safety and security. General Electric and Hogg Robinson Group are among the first users of TripCase Corporate.
Business Outlook and Financial Guidance
The following forward-looking statements, as well as those made above, reflect expectations as of
Looking ahead, the Company expects the following:
Full Year 2014 Guidance ($ millions, except EPS) |
Sabre Excluding |
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Sabre |
Revenue |
|
|
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Adjusted EBITDA |
|
|
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Adjusted Net Income |
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Adjusted Diluted EPS |
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(Adjusted Net Income from continuing operations per share; based on FY fully diluted shares outstanding of 250M) |
Conference Call
The Company will conduct its first quarter 2014 investor conference call today at
About the Company
Sabre® is the leading technology provider to the global travel and tourism industry. Sabre's software, data, mobile and distribution solutions are used by hundreds of airlines and thousands of hotels to manage vital operations, such as passenger and guest reservations, revenue management, and flight, network and crew management. Sabre also operates the world's leading travel marketplace, processing more than
Website Information
We routinely post important information for investors on our website, www.sabre.com in the Investor Relations section. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases,
Note on Non-GAAP Financial Measures
This press release includes unaudited non-GAAP financial measures, including Adjusted Revenue, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and the ratios based on these financial measures. We present non-GAAP measures when our management believes that the additional information provides useful information about our operating performance. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See "Non-GAAP Financial Measures" below for an explanation of the non-GAAP measures and "Tabular Reconciliations for non-GAAP Measures" below for a reconciliation of the non-GAAP financial measures to the comparable GAAP measures.
Forward-looking statements
Certain statements herein are forward-looking statements about trends, future events, uncertainties and our plans and expectations of what may happen in the future. Any statements that are not historical or current facts are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "may," "will," "should," "expect," "intend," "plan," "goal," "anticipate," "believe," "estimate," "potential" or the negative of these terms or other comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Sabre's actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. Certain of these risks and uncertainties are described in the "Risk Factors" and "Cautionary Note Regarding Forward-Looking Statements" sections included in our prospectus filed with the
Contacts: |
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Media |
Investors |
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682-605-3864 |
682-605-0214 |
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CONSOLIDATED STATEMENTS OF OPERATIONS |
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(In thousands, except per share amounts) |
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(Unaudited) |
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Three Months Ended |
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2014 |
2013 |
||
Revenue |
|
|
|
Cost of revenue (1) (2) |
489,745 |
481,787 |
|
Selling, general and administrative(2) |
198,877 |
199,829 |
|
Operating income |
66,788 |
77,728 |
|
Other income (expense): |
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Interest expense, net |
(63,944) |
(82,530) |
|
Loss on extinguishment of debt |
(2,980) |
(12,181) |
|
Joint venture equity income |
2,441 |
2,746 |
|
Other, net |
(887) |
5,126 |
|
Total other expense, net |
(65,370) |
(86,839) |
|
Income (loss) from continuing operations before income taxes |
1,418 |
(9,111) |
|
Provision (benefit) for income taxes |
2,417 |
(4,948) |
|
Loss from continuing operations |
(999) |
(4,163) |
|
Loss from discontinued operations, net of tax |
(1,098) |
(11,017) |
|
Net loss |
(2,097) |
(15,180) |
|
Net income attributable to noncontrolling interests |
746 |
584 |
|
Net loss attributable to |
(2,843) |
(15,764) |
|
Preferred stock dividends |
9,146 |
8,972 |
|
Net loss attributable to common shareholders |
|
|
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Basic and diluted loss per share: |
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Continuing operations |
$ (0.06) |
$ (0.08) |
|
Discontinued operations |
(0.01) |
(0.06) |
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Basic and diluted loss per share attributable to common shareholders |
(0.07) |
(0.14) |
|
Basic and diluted weighted average common shares outstanding |
178,702 |
177,953 |
|
(1) Includes amortization of upfront incentive consideration |
$ 11,047 |
$ 9,599 |
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(2) Includes stock-based compensation as follows: |
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Cost of revenue |
$ 1,506 |
$ 458 |
|
Selling, general and administrative |
4,073 |
2,266 |
|
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CONSOLIDATED BALANCE SHEETS |
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(In thousands) |
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(Unaudited) |
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|
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Assets |
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Current assets |
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Cash and cash equivalents |
$ 286,356 |
$ 308,236 |
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Restricted cash |
706 |
2,359 |
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Accounts receivable, net |
459,962 |
434,288 |
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Prepaid expenses and other current assets |
56,077 |
53,378 |
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Current deferred income taxes |
49,873 |
41,431 |
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Other receivables, net |
31,309 |
29,511 |
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Assets of discontinued operations |
17,660 |
13,624 |
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Total current assets |
901,943 |
882,827 |
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Property and equipment, net of accumulated depreciation of |
502,543 |
498,523 |
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Investments in joint ventures |
134,523 |
132,082 |
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Goodwill |
2,138,223 |
2,138,175 |
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Trademarks and brand names, net of accumulated amortization of |
316,786 |
323,035 |
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Other intangible assets, net of accumulated amortization of |
281,644 |
311,523 |
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Other assets, net |
474,746 |
469,543 |
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Total assets |
$ 4,750,408 |
$ 4,755,708 |
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Liabilities, temporary equity and stockholders' deficit |
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Current liabilities |
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Accounts payable |
$ 123,047 |
$ 111,386 |
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Travel supplier liabilities and related deferred revenue |
184,086 |
213,504 |
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Accrued compensation and related benefits |
81,097 |
117,689 |
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Accrued subscriber incentives |
166,287 |
142,767 |
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Deferred revenues |
156,067 |
136,380 |
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Litigation settlement liability and related deferred revenue |
60,038 |
38,920 |
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Other accrued liabilities |
289,313 |
267,867 |
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Current portion of debt |
88,790 |
86,117 |
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Liabilities of discontinued operations |
32,864 |
41,788 |
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Total current liabilities |
1,181,589 |
1,156,418 |
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Deferred income taxes |
12,310 |
10,253 |
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Other noncurrent liabilities |
247,758 |
263,182 |
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Long-term debt |
3,621,680 |
3,643,548 |
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Commitments and contingencies (Note 13) |
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Temporary equity |
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Series A Redeemable Preferred Stock: |
643,262 |
634,843 |
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Stockholders' deficit |
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Common Stock: |
1,794 |
1,786 |
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Additional paid-in capital |
890,309 |
880,619 |
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Treasury Stock, at cost, 382,169 shares at |
(4,377) |
- |
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Retained deficit |
(1,797,543) |
(1,785,554) |
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Accumulated other comprehensive loss |
(47,628) |
(49,895) |
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Noncontrolling interest |
1,254 |
508 |
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Total stockholders' deficit |
(956,191) |
(952,536) |
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Total liabilities, temporary equity and stockholders' deficit |
$ 4,750,408 |
$ 4,755,708 |
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CONSOLIDATED STATEMENTS OF CASH FLOWS |
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(In thousands, except share amounts) |
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(Unaudited) |
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Three Months Ended |
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2014 |
2013 |
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Operating Activities |
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Net loss |
$ (2,097) |
$ (15,180) |
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Adjustments to reconcile net loss to cash provided by operating activities: |
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Depreciation and amortization |
85,394 |
79,379 |
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Amortization of upfront incentive consideration |
11,047 |
9,599 |
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Litigation related (gains) charges, net |
(519) |
2,040 |
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Stock-based compensation for employees |
5,579 |
2,724 |
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Allowance for doubtful accounts |
1,664 |
2,713 |
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Deferred income taxes |
(5,641) |
(15,312) |
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Joint venture equity income |
(2,441) |
(2,746) |
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Amortization of debt issuance costs |
1,682 |
1,671 |
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Third-party fees expensed in connection with the debt modification |
3,290 |
14,003 |
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Loss on extinguishment of debt |
2,980 |
12,181 |
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Other |
7,779 |
1,518 |
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Loss from discontinued operations |
1,098 |
11,017 |
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Changes in operating assets and liabilities: |
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Accounts and other receivables |
(30,315) |
(94,391) |
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Prepaid expenses and other current assets |
(1,844) |
1,016 |
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Capitalized implementation costs |
(7,653) |
(22,029) |
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Upfront incentive consideration |
(17,250) |
(11,977) |
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Other assets |
(7,826) |
(6,333) |
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Accrued compensation and related benefits |
(36,916) |
(30,074) |
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Accounts payable and other accrued liabilities |
64,187 |
152,564 |
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Cash provided by operating activities |
72,198 |
92,383 |
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Investing Activities |
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Additions to property and equipment |
(51,639) |
(52,701) |
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Other investing activities |
- |
(179) |
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Cash used in investing activities |
(51,639) |
(52,880) |
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Financing Activities |
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Proceeds of borrowings from lenders |
148,307 |
2,190,063 |
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Payments on borrowings from lenders |
(169,847) |
(2,198,204) |
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Debt issuance costs |
(3,290) |
(16,365) |
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Proceeds from exercise of stock options |
1,152 |
381 |
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Decrease in restricted cash |
1,653 |
473 |
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Other financing activities |
(6,577) |
(2,415) |
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Cash used in financing activities |
(28,602) |
(26,067) |
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Cash Flows from Discontinued Operations |
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Net cash (used in) provided by operating activities |
(14,057) |
1,769 |
|
Net cash provided by investing activities |
- |
8,801 |
|
Net cash (used in) provided by discontinued operations |
(14,057) |
10,570 |
|
Effect of exchange rate changes on cash and cash equivalents |
220 |
(468) |
|
(Decrease) increase in cash and cash equivalents |
(21,880) |
23,538 |
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Cash and cash equivalents at beginning of period |
308,236 |
126,695 |
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Cash and cash equivalents at end of period |
$ 286,356 |
$ 150,233 |
Non-GAAP Financial Measures
We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this press release, including Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures.
We define Adjusted Revenue as revenue adjusted for the amortization of Expedia SMA incentive payments, which are recorded as a reduction to revenue and are being amortized over the non-cancellable term of the Expedia SMA contract (see Note 3, Restructuring Charges, to our consolidated financial statements included in Part I, Item 1 of our Quarterly Report on Form 10-Q).
We define Adjusted Gross Margin as operating income (loss) adjusted for selling, general and administrative expenses, impairments, restructuring and other costs, litigation and taxes, including penalties, stock-based compensation, amortization of Expedia SMA incentive payments, amortization of upfront incentive consideration and depreciation and amortization. The definition of Adjusted Gross Margin has been revised in the current period to adjust for restructuring and other costs, litigation and taxes, including penalties and stock-based compensation included in cost of revenue which differs from Adjusted Gross Margin presented in our prospectus filed with the
We define Adjusted Net Income as income (loss) from continuing operations adjusted for impairment, acquisition related amortization expense, loss (gain) on sale of business and assets, loss on extinguishment of debt, other, net, restructuring and other costs, litigation and taxes, including penalties, stock-based compensation, management fees, amortization of Expedia SMA incentive payments and tax impact of net income adjustments.
We define Adjusted EBITDA as Adjusted Net Income adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, amortization of upfront incentive consideration, interest expense, and remaining (benefit) provision for income taxes. This Adjusted EBITDA metric differs from (i) the EBITDA metric referenced in the section entitled "—Liquidity and Capital Resources—Senior Secured Credit Facilities" in Part I, Item 2 of our Quarterly Report on Form 10-Q, which is calculated for the purposes of compliance with our debt covenants, and (ii) the Pre-VCP EBITDA and EBITDA metrics referenced in the section entitled "Compensation Discussion and Analysis" in our prospectus filed with the
We define Adjusted Capital Expenditures as additions to property and equipment and capitalized implementation costs during the period presented.
We define Free Cash Flow as cash provided by operating activities less cash used in additions to property and equipment. We define Adjusted Free Cash Flow as Free Cash Flow plus the cash flow effect of restructuring and other costs, litigation settlement and tax payments for certain items, other litigation costs, management fees and the working capital impact from the Expedia SMA and the sale of TPN (see "Factors Affecting our Results and Comparability —Travelocity Restructuring" in Part I, Item 2 of our Quarterly Report on Form 10-Q).
Adjusted Gross Margin and Adjusted EBITDA are key metrics used by management and our board of directors to monitor our ongoing core operations because historical results have been significantly impacted by events that are unrelated to our core operations as a result of changes to our business and the regulatory environment. We believe that Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures and Adjusted Free Cash Flow are used by investors, analysts and other interested parties as measures of financial performance and to evaluate our ability to service debt obligations, fund capital expenditures and meet working capital requirements. Adjusted Capital Expenditures includes cash flows used in investing activities, for property and equipment, and cash flows used in operating activities, for capitalized implementation costs. Our management uses this combined metric in making product investment decisions and determining development resource requirements. We also believe that Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA and Adjusted Capital Expenditures assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense. In addition, amounts derived from Adjusted EBITDA are a primary component of certain covenants under our senior secured credit facilities.
Adjusted Revenue, Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP. Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Capital Expenditures, Adjusted Free Cash Flow and ratios based on these financial measures have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity. Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted Free Cash Flow and ratios based on these financial measures exclude some, but not all, items that affect net income or cash flows from operating activities and these measures may vary among companies. Our use of Adjusted Gross Margin, Adjusted Net Income, Adjusted EBITDA, and Adjusted Free Cash Flow has limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:
- although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted Gross Margin and Adjusted EBITDA do not reflect cash requirements for such replacements;
- Adjusted Net Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;
- Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us;
- Free
Cash Flow and Adjusted Free Cash Flow do not reflect the cash requirements necessary to service the principal payments on our indebtedness; - Free
Cash Flow and Adjusted Free Cash Flow do not reflect payments related to restructuring, litigation, management fees andTravelocity working capital which reduced the cash available to us; - Free
Cash Flow and Adjusted Free Cash Flow remove the impact of accrual-basis accounting on asset accounts and non-debt liability accounts; and
other companies, including companies in our industry, may calculate Adjusted Revenue, Adjusted Net Income, Adjusted EBITDA, Free Cash Flow or Adjusted Free Cash Flow differently, which reduces its usefulness as a comparative measure.
Tabular Reconciliations for Non-GAAP Measures |
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Reconciliation of net income (loss) to Adjusted Net Income, Adjusted Net Income from Continuing Operations per Share, and to Adjusted EBITDA |
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(Amounts in thousands) |
Three Months Ended |
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Reconciliation of net income (loss) to Adjusted |
2014 |
2013 |
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Net Income and to Adjusted EBITDA: |
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Net loss attributable to |
$ (2,843) |
|
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Net loss from discontinued operations, net of tax |
1,098 |
11,017 |
|
Net income attributable to noncontrolling interests(1) |
746 |
584 |
|
Loss from continuing operations |
(999) |
(4,163) |
|
Adjustments: |
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Acquisition related amortization expense(2a) |
35,478 |
35,952 |
|
Loss on extinguishment of debt |
2,980 |
12,181 |
|
Other, net (3) |
887 |
(5,126) |
|
Restructuring and other costs(4) |
2,708 |
2,166 |
|
Litigation and taxes, including penalties(5) |
5,152 |
14,638 |
|
Stock-based compensation |
5,579 |
2,724 |
|
Management fees(6) |
1,932 |
2,722 |
|
Amortization of Expedia SMA incentive payments |
1,875 |
- |
|
Tax impact of net income adjustments |
(22,071) |
(17,139) |
|
Adjusted Net Income from continuing operations |
$ 33,521 |
$ 43,955 |
|
Adjusted Net Income from continuing operations per share |
$ 0.18 |
$ 0.24 |
|
Adjusted weighted-average shares outstanding for assumed inclusion of common stock equivalents |
187,727 |
184,400 |
|
Adjusted Net Income from continuing operations |
$ 33,521 |
$ 43,955 |
|
Adjustments: |
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Depreciation and amortization of property and equipment(2b) |
41,581 |
33,347 |
|
Amortization of capitalized implementation costs(2c) |
9,136 |
10,881 |
|
Amortization of upfront incentive consideration(7) |
11,047 |
9,599 |
|
Interest expense, net |
63,944 |
82,530 |
|
Remaining provision (benefit) for income taxes |
24,488 |
12,191 |
|
Adjusted EBITDA |
|
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Reconciliation of Adjusted Revenue: |
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Three Months Ended |
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(Amounts in thousands) |
2014 |
2013 |
|
Revenue |
|
|
|
Amortization of Expedia SMA incentive payments |
1,875 |
- |
|
Adjusted Revenue |
|
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Reconciliation of Adjusted Capital Expenditures: |
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Three Months Ended |
|||
(Amounts in thousands) |
2014 |
2013 |
|
Additions to property and equipment |
$ 51,639 |
$ 52,701 |
|
Capitalized implementation costs |
7,653 |
22,029 |
|
Adjusted capital expenditures |
$ 59,292 |
$ 74,730 |
Reconciliation of Adjusted Free Cash Flow: |
|||
Three Months Ended |
|||
(Amounts in thousands) |
2014 |
2013 |
|
Cash provided by operating activities |
$ 72,198 |
$ 92,383 |
|
Cash used in investing activities |
(51,639) |
(52,880) |
|
Cash provided by (used in) financing activities |
(28,602) |
(26,067) |
|
Three Months Ended |
|||
2014 |
2013 |
||
Cash provided by operating activities |
$ 72,198 |
$ 92,383 |
|
Additions to property and equipment |
(51,639) |
(52,701) |
|
Free |
20,559 |
39,682 |
|
Adjustments: |
|||
Restructuring and other costs(4) (9) |
11,862 |
2,166 |
|
Litigation settlement and tax payments for certain unusual items(5) (10) |
4,706 |
3,869 |
|
Other litigation costs(5) (9) |
4,428 |
612 |
|
Management fees(6) (9) |
1,932 |
2,722 |
|
|
24,466 |
||
Adjusted Free Cash Flow |
$ 67,953 |
$ 49,051 |
Reconciliation of Adjusted Gross Margin and Adjusted EBITDA by Segment: |
||||||
Three Months Ended |
||||||
Travel Network |
Airline and Hospitality Solutions |
|
Eliminations |
Corporate |
Total |
|
Operating income (loss) |
|
$ 26,462 |
$ (28,563) |
$ - |
|
$ 66,788 |
Add back: |
||||||
Selling, general and administrative |
25,672 |
12,395 |
80,712 |
(109) |
80,207 |
198,877 |
Cost of revenue adjustments: |
||||||
Depreciation and amortization(2) |
15,412 |
26,683 |
1,492 |
17,220 |
60,807 |
|
Restructuring and other costs(4) |
1,216 |
1,216 |
||||
Stock-based compensation |
1,506 |
1,506 |
||||
Litigation and taxes, including penalties(5) |
606 |
606 |
||||
Amortization of upfront incentive consideration(7) |
11,047 |
- |
11,047 |
|||
Amortization of Expedia SMA incentive payments |
1,875 |
- |
1,875 |
|||
Adjusted gross margin |
236,648 |
65,540 |
55,517 |
(109) |
(14,873) |
342,722 |
Selling, general and administrative |
(25,672) |
(12,395) |
(80,712) |
109 |
(80,207) |
(198,877) |
Joint venture equity income |
2,441 |
- |
2,441 |
|||
Joint venture intangible amortization(2a) |
801 |
- |
801 |
|||
Selling, general and administrative adjustments: |
||||||
Depreciation and amortization(2) |
625 |
315 |
23,647 |
24,587 |
||
Restructuring and other costs(4) |
1,492 |
1,492 |
||||
Stock-based compensation |
4,073 |
4,073 |
||||
Litigation and taxes, including penalties(5) |
4,546 |
4,546 |
||||
Management fees(6) |
1,932 |
1,932 |
||||
Adjusted EBITDA |
|
$ 53,460 |
$ (25,196) |
$ - |
$ (59,390) |
|
Three Months Ended |
||||||
Travel Network |
Airline and Hospitality Solutions |
|
Eliminations |
Corporate |
Total |
|
Operating income (loss) |
|
$ 22,655 |
$ (15,913) |
$ - |
|
$ 77,728 |
Add back: |
||||||
Selling, general and administrative |
24,350 |
14,329 |
88,148 |
(213) |
73,215 |
199,829 |
Cost of revenue adjustments: |
||||||
Depreciation and amortization(2) |
11,809 |
17,969 |
5,657 |
17,077 |
52,512 |
|
Restructuring and other costs(4) |
591 |
591 |
||||
Stock-based compensation |
458 |
458 |
||||
Litigation and taxes, including penalties(5) |
11,848 |
11,848 |
||||
Amortization of upfront incentive consideration(7) |
9,599 |
- |
9,599 |
|||
Adjusted gross margin |
230,657 |
54,953 |
77,892 |
(213) |
(10,724) |
352,565 |
Selling, general and administrative |
(24,350) |
(14,329) |
(88,148) |
213 |
(73,215) |
(199,829) |
Joint venture equity income |
2,746 |
- |
2,746 |
|||
Joint venture intangible amortization(2a) |
801 |
- |
801 |
|||
Selling, general and administrative adjustments: |
||||||
Depreciation and amortization(2) |
449 |
246 |
1,311 |
24,861 |
26,867 |
|
Restructuring and other costs(4) |
1,575 |
1,575 |
||||
Stock-based compensation |
2,266 |
2,266 |
||||
Litigation and taxes, including penalties(5) |
2,790 |
2,790 |
||||
Management fees(6) |
2,722 |
2,722 |
||||
Adjusted EBITDA |
|
$ 40,870 |
$ (8,945) |
$ - |
$ (49,725) |
|
Non-GAAP Footnotes: |
||
(1) |
Net income attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interest held in Sabre Travel Network Middle East of 40% for all periods presented. |
|
(2) |
Depreciation and amortization expenses: |
|
a. |
Acquisition related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date and amortization of the excess basis in our underlying equity in joint ventures. |
|
b. |
Depreciation and amortization of property and equipment represents depreciation of property and equipment, including software developed for internal use. |
|
c. |
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model. |
|
(3) |
Other, net primarily represents foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency. |
|
(4) |
Restructuring and other costs represents charges associated with business restructuring and associated changes implemented which resulted in severance benefits related to employee terminations, integration and facility opening or closing costs and other business reorganization costs. |
|
(5) |
Represents charges or settlements associated with airline antitrust litigation as well as payments or reserves taken in relation to certain retroactive hotel occupancy and excise tax disputes. |
|
(6) |
We have been paying an annual management fee to |
|
(7) |
Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to five years. Such consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. Such service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided upfront. Such service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met. |
|
(8) |
Represents the impact of the Expedia SMA and TPN on working capital for the three months ended |
|
(9) |
The adjustments to reconcile cash provided by operating activities to Adjusted Free Cash Flow reflect the amounts expensed in our statements of operations in the respective periods adjusted for cash and non-cash portions in instances where material. |
|
(10) |
Includes payment credits totaling |
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