Facebook LinkedIn Twitter RSS << Back 05/05/15 Sabre Reports First Quarter 2015 Results Sabre Reports First Quarter 2015 Results 70.5 KB 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 News Provided by Acquire Media