05/05/15

Sabre Reports First Quarter 2015 Results

SOUTHLAKE, Texas, May 5, 2015 /PRNewswire/ -- Sabre Corporation (NASDAQ: SABR) today announced financial results for the quarter ended March 31, 2015.

"The first quarter marked a strong start to the year," said Tom Klein, Sabre President and CEO.  "Sabre's growth is being fueled by a strong pipeline of innovative, mission-critical solutions across all of our businesses, as demonstrated by our new long-term agreements with customers like Wyndham Hotel Group and LATAM Airlines Group, which we announced today.  This quarter's momentum increases our confidence that we will achieve our full-year objectives."

Q1 2015 Financial Summary

Sabre consolidated first quarter revenue increased 6.6% to $710 million, compared to $666 million for the same period last year.

Net income from continuing operations totaled $49 million, compared to $22 million in the first quarter of 2014. Consolidated Adjusted EBITDA was $244 million, a 15.3% increase from $211 million in the prior year first quarter. The increase in consolidated Adjusted EBITDA is the result of 33.7% growth in Airline and Hospitality Solutions Adjusted EBITDA and an 8.0% increase in Travel Network Adjusted EBITDA.

For the quarter, Sabre reported Income from continuing operations of $0.18 per share and Adjusted Net Income from continuing operations (Adjusted EPS) of $0.27 per share.

Cash flow from operations totaled $132 million, compared to $94 million in the first quarter of 2014. Free Cash Flow was $70 million, compared to $45 million in the year ago period. Adjusted Capital Expenditures, which includes capitalized implementation costs, totaled $76 million, compared to $57 million in the first quarter of 2014.

 

Three Months Ended March 31,

   

Financial Highlights (in thousands; unaudited):

2015

   

2014

 

% Change

   

Total Company (Continuing Operations):

   

Revenue

$

710,348

   

$

666,415

   

6.6

   

Income (loss) from continuing operations

$

49,330

   

$

21,959

   

124.6

   
                       

Adjusted EBITDA*

$

243,586

   

$

211,263

   

15.3

   
                       

Cash Flow from Operations

$

131,773

   

$

94,322

   

39.7

   

Capital Expenditures

$

61,912

   

$

49,658

   

24.7

   

Adjusted Capital Expenditures*

$

76,239

   

$

57,311

   

33.0

   
                       

Free Cash Flow*

$

69,861

   

$

44,664

   

56.4

   

Adjusted Free Cash Flow*

$

84,090

   

$

60,969

   

37.9

   
                       

Net Debt (total debt, less cash)

$

2,632,432

   

$

3,443,016

         

Net Debt / LTM Adjusted EBITDA

 

3.0

x

   

4.4

x

       

Airline and Hospitality Solutions:

   

Revenue

$

204,900

   

$

176,717

   

15.9

   

Passengers Boarded

 

126,092

     

117,616

   

7.2

   

Operating Income

$

28,491

   

$

26,462

   

7.7

   

Adjusted EBITDA*

$

71,488

   

$

53,460

   

33.7

   

Travel Network:

   

Revenue

$

507,930

   

$

491,726

   

3.3

   

Air Bookings

 

91,423

     

89,045

   

2.7

   

Non-air Bookings

 

14,011

     

13,598

   

3.0

   

Total Bookings

 

105,434

     

102,643

   

2.7

   

Bookings Share

 

35.7

%

   

35.4

%

       

Operating Income

$

197,251

   

$

184,517

   

6.9

   

Adjusted EBITDA*

$

232,087

   

$

214,843

   

8.0

   

*indicates non-GAAP financial measure; see descriptions and reconciliations below

 

Sabre Airline and Hospitality Solutions

First quarter 2015 Airline and Hospitality Solutions revenue increased 15.9% to $205 million from $177 million in the prior year period. The increase was driven by a 7.2% increase in passengers boarded through the SabreSonic® Customer Sales & Service (CSS) solution and strong growth in Sabre Hospitality Solutions.

Sabre Airline and Hospitality Solutions Adjusted EBITDA increased 33.7% to $71 million from $53 million in the prior year period. The increase in Adjusted EBITDA is the result of strong revenue growth and technology platform scale benefits, resulting in an Adjusted EBITDA margin of 34.9%, compared to 30.3% for the prior year quarter.

In the quarter, Wyndham Hotel Group selected the SynXis® Central Reservations Solution to power distribution and reservations for its 7,500 global properties. In December 2014, Wyndham Hotel Group announced that it would transition its 4,500 North American properties to the SynXis Property Manager Solution. These combined agreements make Wyndham Hotel Group the first hotel company to fully leverage the cloud-based SaaS reservations, property management and enhanced security solutions of the SynXis Enterprise Platform. Also in the first quarter, Four Seasons Hotels & Resorts contracted to migrate its properties to the SynXis Central Reservations Solution.

Today, Sabre announced LATAM Airlines Group would extend their use of SabreSonic CSS reservations across its entire network including LAN Airlines, which is a current SabreSonic CSS customer, as well as TAM Airlines, which will migrate to SabreSonic CSS. TAM is Brazil's largest airline. Combined, LATAM Airlines Group is one of the top ten largest airlines in the world, with more than 67 million passengers boarded annually.

With the addition of the expanded LATAM agreement, Sabre Airline Solutions' implementation pipeline represents more than 290 million passengers boarded annually to be implemented in 2015 through 2017, up from 250 million at year end.  

Sabre Travel Network

First quarter Travel Network revenue increased 3.3% to $508 million, compared to $492 million for the same period in 2014. Bookings increased 2.7%, with increasing momentum as the quarter progressed. Continued sales success resulted in strong Sabre bookings growth of 10% in Europe, Middle East and Africa (EMEA), compared to less than one percent growth for the EMEA market overall.

First quarter 2015 Travel Network Adjusted EBITDA increased 8.0% to $232 million.

Refinancing Activity

Early in the second quarter, Sabre redeemed $480 million of 8.5% 2019 maturity bonds. These bonds were redeemed through the issuance of $530 million, 5.375% senior secured notes due in 2023, which substantially covered the redeemed notes' principal, accrued interest and related fees, premiums and expenses.

Dividend

Sabre's Board of Directors has declared a quarterly dividend of $0.09 cents per share on the Company's common stock. The dividend will be payable on June 30, 2015, to stockholders of record on June 19, 2015.

Business Outlook and Financial Guidance

Sabre reiterated full-year guidance for 2015.

  • In Airline and Hospitality Solutions, Sabre expects 2015 revenue growth of between 9% and 11%.  Passengers boarded are expected to increase approximately 10% in 2015, including strong growth in the fourth quarter related to scheduled SabreSonic CSS customer implementations.
  • In Travel Network, Sabre expects 2015 revenue growth of 4% or more, driven by bookings growth of approximately 3%.
  • 2015 Adjusted Net Income and Adjusted EPS guidance remain unchanged at $275 million to $290 million and $1.00 to $1.06, respectively.  Free Cash Flow and Adjusted Free Cash Flow guidance are unchanged at more than $250 million and more than $300 million, respectively.

In summary, for the full year 2015, Sabre continues to expect the following results from continuing operations:

Full Year 2015 Guidance

Sabre

($ millions, except for EPS)

Revenue

$2,770 - $2,800

   

Adjusted EBITDA

$895 - $910

   

Adjusted Net Income

$275 - $290

   

Adjusted EPS

$1.00 - $1.06

 

Conference Call

Sabre will conduct its first quarter 2015 investor conference call today at 9:00 a.m. Eastern Time.  The live webcast, including accompanying slide presentation, can be accessed via the Sabre Investor Relations website at investors.sabre.com.  A recording of the call will be archived for replay following the conference call. 

About the Company

Sabre® is a 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 $110 billion of annual travel spend.  Headquartered in Southlake, Texas, USA, Sabre operates in approximately 60 countries around the world.

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, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Supplemental Financial Information

In conjunction with today's earnings report, a file of supplemental financial information will be available on the Investor Relations section of our website, www.sabre.com.

Note on Non-GAAP Financial Measures

This press release includes unaudited non-GAAP financial measures, including Adjusted Net Income, Adjusted EBITDA, Adjusted EPS, 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 "confidence," "expect," "anticipate," "assume," "may," "will," "should," "would," "intend," "believe," "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. The potential risks and uncertainties include, among others, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, adverse global and regional economic and political conditions, including, but not limited to, conditions in Venezuela and Russia, exposure to pricing pressure in the Travel Network business, the implementation and effects of new agreements, dependence on maintaining and renewing contracts with customers and other counterparties, dependence on relationships with travel buyers, changes affecting travel supplier customers, travel suppliers' usage of alternative distribution models, reliance on fourth-party distributor partners and joint ventures to extend our GDS services to certain regions and competition in the travel distribution market and solutions markets.  More information about potential risks and uncertainties that could affect our business and results of operations is included in the "Risk Factors" and "Forward-Looking Statements" sections included in our Annual Report on Form 10-K filed with the SEC on March 3, 2015. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. Unless required by law, Sabre undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made.

Contacts

 

Media

Investors

Nancy St. Pierre

Barry Sievert

682-605-3864

682-605-0214

nancy.st.pierre@sabre.com

barry.sievert@sabre.com

 

 

SABRE CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except share amounts; unaudited)

 
   

Three Months Ended March 31,

 
   

2015

   

2014

 

Revenue

 

$

710,348

   

$

666,415

 

Cost of revenue (1) (2)

   

468,998

     

451,970

 

Selling, general and administrative (2)

   

122,358

     

110,738

 

Operating income

   

118,992

     

103,707

 

Other income (expense):

               

Interest expense, net

   

(46,453)

     

(63,944)

 

Loss on extinguishment of debt

   

     

(2,980)

 

Joint venture equity income

   

8,519

     

2,441

 

Other, net

   

(4,445)

     

(2,354)

 

Total other expense, net

   

(42,379)

     

(66,837)

 

Income from continuing operations before income taxes

   

76,613

     

36,870

 

Provision for income taxes

   

27,283

     

14,911

 

Income from continuing operations

   

49,330

     

21,959

 

Income (loss) from discontinued operations, net of tax

   

158,911

     

(24,056)

 

Net income (loss)

   

208,241

     

(2,097)

 

Net income attributable to noncontrolling interests

   

747

     

746

 

Net income (loss) attributable to Sabre Corporation

   

207,494

     

(2,843)

 

Preferred stock dividends

   

     

9,146

 

Net income (loss) attributable to common shareholders

 

$

207,494

   

$

(11,989)

 
                 

Basic net income (loss) per share attributable to common shareholders:

               

Income from continuing operations

 

$

0.18

   

$

0.07

 

Income (loss) from discontinued operations

   

0.59

     

(0.13)

 

Net income (loss) per common share

 

$

0.77

   

$

(0.07)

 

Diluted net income (loss) per share attributable to common shareholders:

               

Income from continuing operations

 

$

0.18

   

$

0.06

 

Income (loss) from discontinued operations

   

0.57

     

(0.13)

 

Net income (loss) per common share

 

$

0.75

   

$

(0.06)

 

Weighted average common shares outstanding:

               

Basic

   

269,184

     

178,702

 

Diluted

   

276,688

     

187,727

 
                 

Dividends per common share

 

$

0.09

   

$

 
                 

(1) Includes amortization of upfront incentive consideration

 

$

11,172

   

$

11,047

 

(2) Includes stock-based compensation as follows:

               

Cost of revenue

 

$

3,533

   

$

1,386

 

Selling, general and administrative

   

5,261

     

2,213

 

 

SABRE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts; unaudited)

 
   

March 31, 2015

   

December 31, 2014

 

Assets

               

Current assets

               

Cash and cash equivalents

 

$

458,557

   

$

155,679

 

Restricted cash

   

496

     

720

 

Accounts receivable, net

   

422,490

     

362,911

 

Prepaid expenses and other current assets

   

35,455

     

34,121

 

Current deferred income taxes

   

184,295

     

182,277

 

Other receivables, net

   

35,332

     

29,893

 

Assets held for sale

   

     

112,558

 

Total current assets

   

1,136,625

     

878,159

 

Property and equipment, net of accumulated depreciation of $845,790 and $792,161

   

545,493

     

551,276

 

Investments in joint ventures

   

154,805

     

145,320

 

Goodwill

   

2,153,152

     

2,153,499

 

Trademarks and brandnames, net of accumulated amortization of $90,268 and $87,554

   

235,786

     

238,500

 

Other intangible assets, net of accumulated amortization of $993,861 and $975,701

   

223,326

     

241,486

 

Other assets, net

   

518,293

     

509,764

 

Total assets

 

$

4,967,480

   

$

4,718,004

 
                 

Liabilities and stockholders' equity

               

Current liabilities

               

Accounts payable

 

$

142,542

   

$

117,855

 

Accrued compensation and related benefits

   

54,889

     

83,828

 

Accrued subscriber incentives

   

170,841

     

145,581

 

Deferred revenues

   

184,886

     

167,827

 

Litigation settlement liability and related deferred revenue

   

69,194

     

73,252

 

Other accrued liabilities

   

191,978

     

189,612

 

Current portion of debt

   

417,232

     

22,435

 

Liabilities held for sale

   

     

96,544

 

Total current liabilities

   

1,231,562

     

896,934

 

Deferred income taxes

   

181,169

     

61,577

 

Other noncurrent liabilities

   

605,801

     

613,710

 

Long-term debt

   

2,662,166

     

3,061,400

 
                 

Stockholders' equity

               

Common Stock: $0.01 par value;  450,000,000 authorized shares; 271,994,071 and 268,237,547 shares issued, 271,280,037 and 267,800,161 outstanding at March 31, 2015 and December 31, 2014, respectively

   

2,720

     

2,682

 

Additional paid-in capital

   

1,956,593

     

1,931,796

 

Treasury Stock, at cost, 714,034 and 437,386 shares at March 31, 2015 and December 31, 2014, respectively

   

(11,425)

     

(5,297)

 

Retained deficit

   

(1,592,513)

     

(1,775,616)

 

Accumulated other comprehensive loss

   

(70,162)

     

(69,803)

 

Noncontrolling interest

   

1,569

     

621

 

Total stockholders' equity

   

286,782

     

84,383

 

Total liabilities and stockholders' equity

 

$

4,967,480

   

$

4,718,004

 

 

 

SABRE CORPORATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands; unaudited)

 
   

Three Months Ended March 31,

 
   

2015

   

2014

 

Operating Activities

               

Net income (loss)

 

$

208,241

   

$

(2,097)

 

Adjustments to reconcile net income (loss) to cash provided by operating activities:

               

Depreciation and amortization

   

90,061

     

81,634

 

Amortization of upfront incentive consideration

   

11,172

     

11,047

 

Litigation-related credits

   

(16,786)

     

(5,156)

 

Stock-based compensation expense

   

8,794

     

3,599

 

Allowance for doubtful accounts

   

3,355

     

1,416

 

Deferred income taxes

   

27,388

     

6,967

 

Joint venture equity income

   

(8,519)

     

(2,441)

 

Amortization of debt issuance costs

   

1,536

     

1,682

 

Debt modification costs

   

     

3,290

 

Loss on extinguishment of debt

   

     

2,980

 

Other

   

4,952

     

8,133

 

(Income) loss from discontinued operations

   

(158,911)

     

24,056

 

Changes in operating assets and liabilities:

               

Accounts and other receivables

   

(70,827)

     

(41,012)

 

Prepaid expenses and other current assets

   

(3,388)

     

5,903

 

Capitalized implementation costs

   

(14,327)

     

(7,653)

 

Upfront incentive consideration

   

(6,523)

     

(17,250)

 

Other assets

   

(7,189)

     

(6,710)

 

Accrued compensation and related benefits

   

(27,317)

     

(30,528)

 

Accounts payable and other accrued liabilities

   

60,172

     

25,077

 

Deferred revenue including upfront solution fees

   

29,889

     

31,385

 

Cash provided by operating activities

   

131,773

     

94,322

 

Investing Activities

               

Additions to property and equipment

   

(61,912)

     

(49,658)

 

Other investing activities

   

148

     

 

Cash used in investing activities

   

(61,764)

     

(49,658)

 

Financing Activities

               

Proceeds of borrowings from lenders

   

     

148,307

 

Payments on borrowings from lenders

   

(5,614)

     

(169,847)

 

Debt modification and issuance costs

   

     

(3,290)

 

Net proceeds (payments) on the settlement of equity-based awards

   

9,781

     

(779)

 

Cash dividends paid to common shareholders

   

(24,391)

     

 

Other financing activities

   

(2,057)

     

(2,993)

 

Cash used in financing activities

   

(22,281)

     

(28,602)

 

Cash Flows from Discontinued Operations

               

Cash used in operating activities

   

(18,156)

     

(35,985)

 

Cash provided by (used in) investing activities

   

278,834

     

(2,177)

 

Cash provided by (used in) discontinued operations

   

260,678

     

(38,162)

 
                 

Effect of exchange rate changes on cash and cash equivalents

   

(5,528)

     

220

 
                 

Increase (decrease) in cash and cash equivalents

   

302,878

     

(21,880)

 

Cash and cash equivalents at beginning of period

   

155,679

     

308,236

 

Cash and cash equivalents at end of period

 

$

458,557

   

$

286,356

 

 

Non-GAAP Financial Measures

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this earnings release, including 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 Gross Margin as operating income adjusted for selling, general and administrative expenses, amortization of upfront incentive consideration, and the cost of revenue portion of depreciation and amortization, restructuring and other costs, and stock-based compensation.

We define Adjusted Net Income as income from continuing operations adjusted for acquisition-related amortization, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, stock-based compensation, management fees and the 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, net, and remaining provision for income taxes.

We define Adjusted EPS as Adjusted Net Income divided by the applicable share count.

We define Adjusted Capital Expenditures as additions to property and equipment and capitalized implementation costs during the periods 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, acquisition-related costs, litigation settlement, other litigation costs and management fees.

These non-GAAP financial measures 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 these non-GAAP financial measures 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, Adjusted EPS 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 Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted EPS, Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP. These non-GAAP financial measures and ratios based on them 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. These non-GAAP financial measures and ratios based on them 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 these measures 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, acquisition-related and management fees;
  • 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 Gross Margin, Adjusted Net Income, Adjusted EBITDA, Adjusted EPS, Adjusted Capital Expenditures, Free Cash Flow or Adjusted Free Cash Flow differently, which reduces their usefulness as comparative measures.

 

Tabular Reconciliations for Non-GAAP Measures

(In thousands, except per share amounts; unaudited)

 

Reconciliation of Net Income (Loss) to Adjusted Net Income from Continuing Operations and Adjusted EBITDA

 
   

Three Months Ended March 31,

 
   

2015

   

2014

 

Net income (loss) attributable to common shareholders

 

$

207,494

   

$

(11,989)

 

(Income) loss from discontinued operations, net of tax

   

(158,911)

     

24,056

 

Net income attributable to noncontrolling interests(1)

   

747

     

746

 

Preferred stock dividends

   

     

9,146

 

Income from continuing operations

   

49,330

     

21,959

 

Adjustments:

               

Acquisition related amortization(2a)

   

21,675

     

32,889

 

Loss on extinguishment of debt

   

     

2,980

 

Other, net (4)

   

4,445

     

2,354

 

Restructuring and other costs (5)

   

     

1,556

 

Acquisition-related costs(6)

   

1,811

     

 

Litigation costs(7)

   

3,436

     

4,546

 

Stock-based compensation

   

8,794

     

3,599

 

Management fees(8)

   

     

1,932

 

Tax impact of net income adjustments

   

(14,557)

     

(19,443)

 

Adjusted Net Income from continuing operations

 

$

74,934

   

$

52,372

 

Adjusted Net Income from continuing operations per share

 

$

0.27

   

$

0.28

 

Diluted weighted-average common shares outstanding

   

276,688

     

187,727

 
                 

Adjusted Net Income from continuing operations

 

$

74,934

   

$

52,372

 

Adjustments:

               

Depreciation and amortization of property and equipment(2b)

   

61,663

     

40,449

 

Amortization of capitalized implementation costs(2c)

   

7,524

     

9,097

 

Amortization of upfront incentive consideration(3)

   

11,172

     

11,047

 

Interest expense, net

   

46,453

     

63,944

 

Remaining provision for income taxes

   

41,840

     

34,354

 

Adjusted EBITDA

 

$

243,586

   

$

211,263

 

 

Reconciliation of Adjusted Capital Expenditures:

 
   

Three Months Ended March 31,

 
   

2015

   

2014

 

Additions to property and equipment

 

$

61,912

   

$

49,658

 

Capitalized implementation costs

   

14,327

     

7,653

 

Adjusted Capital Expenditures

 

$

76,239

   

$

57,311

 

 

Reconciliation of Adjusted Free Cash Flow:

 
   

Three Months Ended March 31,

 
   

2015

   

2014

 

Cash provided by operating activities

 

$

131,773

   

$

94,322

 

Cash used in investing activities

   

(61,764)

     

(49,658)

 

Cash used in financing activities

   

(22,281)

     

(28,602)

 
                 
                 
   

Three Months Ended March 31,

 
   

2015

   

2014

 

Cash provided by operating activities

 

$

131,773

   

$

94,322

 

Additions to property and equipment

   

(61,912)

     

(49,658)

 

Free Cash Flow

   

69,861

     

44,664

 

Adjustments:

               

Restructuring and other costs(5) (9)

   

280

     

5,190

 

Acquisition-related costs(6) (9)

   

1,811

     

 

Litigation settlement(7) (10)

   

8,702

     

4,637

 

Other litigation costs(7) (9)

   

3,436

     

4,546

 

Management fees(8) (9)

   

     

1,932

 

Adjusted Free Cash Flow

 

$

84,090

   

$

60,969

 

 

Reconciliation of Operating Income (Loss) to Adjusted Gross Margin and Adjusted EBITDA by Segment:

 
 

Three Months Ended March 31, 2015

 
 

Travel

Network

   

Airline and

Hospitality

Solutions

   

Corporate

   

Total

 

Operating income (loss)

$

197,251

   

$

28,491

   

$

(106,750)

   

$

118,992

 

Add back:

                             

Selling, general and administrative

 

21,884

     

17,979

     

82,495

     

122,358

 

Cost of revenue adjustments:

                             

Depreciation and amortization(2)

 

13,812

     

42,729

     

8,126

     

64,667

 

Amortization of upfront incentive consideration(3)

 

11,172

     

     

     

11,172

 

Stock-based compensation

 

     

     

3,533

     

3,533

 

Adjusted Gross Margin

 

244,119

     

89,199

     

(12,596)

     

320,722

 

Selling, general and administrative

 

(21,884)

     

(17,979)

     

(82,495)

     

(122,358)

 

Joint venture equity income

 

8,519

     

     

     

8,519

 

Joint venture intangible amortization(2a)

 

801

     

     

     

801

 

Selling, general and administrative adjustments:

                             

Depreciation and amortization(2)

 

532

     

268

     

24,594

     

25,394

 

Acquisition-related costs(6)

 

     

     

1,811

     

1,811

 

Litigation costs(7)

 

     

     

3,436

     

3,436

 

Stock-based compensation

 

     

     

5,261

     

5,261

 

Adjusted EBITDA

$

232,087

   

$

71,488

   

$

(59,989)

   

$

243,586

 
 
 
 

Three Months Ended March 31, 2014

 
 

Travel

Network

   

Airline and

Hospitality

Solutions

   

Corporate

   

Total

 

Operating income (loss)

$

184,517

   

$

26,462

   

$

(107,272)

   

$

103,707

 

Add back:

                             

Selling, general and administrative

 

25,672

     

12,395

     

72,671

     

110,738

 

Cost of revenue adjustments:

                             

Depreciation and amortization(2)

 

15,412

     

26,683

     

16,714

     

58,809

 

Amortization of upfront incentive consideration(3)

 

11,047

     

     

     

11,047

 

Restructuring and other costs (5)

 

     

     

1,178

     

1,178

 

Stock-based compensation

 

     

     

1,386

     

1,386

 

Adjusted Gross Margin

 

236,648

     

65,540

     

(15,323)

     

286,865

 

Selling, general and administrative

 

(25,672)

     

(12,395)

     

(72,671)

     

(110,738)

 

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

     

21,885

     

22,825

 

Restructuring and other costs (5)

 

     

     

378

     

378

 

Litigation costs(7)

 

     

     

4,546

     

4,546

 

Stock-based compensation

 

     

     

2,213

     

2,213

 

Management fees(8)

 

     

     

1,932

     

1,932

 

Adjusted EBITDA

$

214,843

   

$

53,460

   

$

(57,040)

   

$

211,263

 

 

Non-GAAP Footnotes

   

(1)

Net income attributable to noncontrolling interests represents an adjustment to include earnings allocated to noncontrolling interests held in Sabre Travel Network Middle East of 40% for all periods presented and in Sabre Seyahat Dagitim Sistemleri A.S. of 40% beginning in April 2014 for the three months ended March 31, 2015.

(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 includes 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)

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.

(4)

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.

(5)

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.

(6)

Acquisition-related costs represent fees and expenses incurred associated with a possible acquisition, as previously disclosed, within our Travel Network segment.

(7)

Litigation settlement and other litigation costs represent settlements or charges associated with airline antitrust litigation.

(8)

We paid an annual management fee, pursuant to a Management Services Agreement ("MSA"), to TPG Global, LLC ("TPG") and Silver Lake Management Company ("Silver Lake") in an amount between (i) $5 million and (ii) $7 million, the actual amount of which is calculated based upon 1% of Adjusted EBITDA, earned by the company in such fiscal year up to a maximum of $7 million.  In addition, the MSA provided for reimbursement of certain costs incurred by TPG and Silver Lake, which are included in this line item. The MSA was terminated in April 2014 in connection with our initial public offering.

(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 used by American Airlines to pay for purchases of our technology services. The payment credits were provided by us as part of our litigation settlement with American Airlines.

 

 

To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/sabre-reports-first-quarter-2015-results-300077289.html

SOURCE Sabre Corporation

 

 

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