Facebook LinkedIn Twitter RSS << Back 08/04/15 Sabre Reports Second Quarter 2015 Results Sabre Reports Second Quarter 2015 Results 846.8 KB SOUTHLAKE, Texas, Aug. 4, 2015 /PRNewswire/ -- Sabre Corporation (NASDAQ: SABR) today announced financial results for the quarter ended June 30, 2015. "In the second quarter, we continued to perform very well financially, operationally and in delivering new product innovation, capped off with the strategic Abacus acquisition in Asia-Pacific. We are well positioned as we look ahead to the coming years," said Tom Klein, Sabre President and CEO. "Travel Network revenue increased 7.0% year over year in the quarter, driven by growth in bookings across all regions, including an increase of 6.9% in North America and 19.7% growth in EMEA. In Airline and Hospitality Solutions, strong revenue growth and nearly four points of margin expansion drove a 29.5% increase in Adjusted EBITDA. Our performance has been fueled by our continued innovation for, and commitment to, our customers. Our momentum underpins our confidence to increase our full-year guidance." Q2 2015 Financial Summary Sabre consolidated second quarter revenue increased 9.4% to $707.1 million, compared to $646.4 million for the same period last year. Income from continuing operations totaled $32.6 million, compared to $6.5 million in the second quarter of 2014. Consolidated Adjusted EBITDA was $227.6 million, a 6.1% increase from $214.5 million in the prior year second quarter. The increase in consolidated Adjusted EBITDA is the result of 29.5% growth in Airline and Hospitality Solutions Adjusted EBITDA and a 4.0% increase in Travel Network Adjusted EBITDA. For the quarter, Sabre reported income from continuing operations of $0.12 per share and Adjusted Net Income from continuing operations (Adjusted EPS) of $0.27 per share. Cash flow from operations totaled $136.2 million, compared to $110.1 million in the second quarter of 2014. Second quarter Free Cash Flow was $70.2 million, compared to $53.3 million in the year ago period. Capital expenditures totaled $66.1 million, compared to $56.8 million in the year ago period. Adjusted Capital Expenditures, which includes capitalized implementation costs, totaled $81.3 million, compared to $66.8 million in the second quarter of 2014. Financial Highlights (in thousands; unaudited): Three Months Ended June 30, Six Months Ended June 30, 2015 2014 % Change 2015 2014 % Change Total Company (Continuing Operations): Revenue $ 707,091 $ 646,380 9.4 $ 1,417,439 $ 1,312,795 8.0 Income from continuing operations $ 32,589 $ 6,455 404.9 $ 81,919 $ 28,414 188.3 Adjusted EBITDA* $ 227,573 $ 214,548 6.1 $ 471,159 $ 425,811 10.6 Cash Flow from Operations $ 136,226 $ 110,134 23.7 $ 267,999 $ 204,456 31.1 Capital Expenditures $ 66,051 $ 56,812 16.3 $ 127,963 $ 106,470 20.2 Adjusted Capital Expenditures* $ 81,285 $ 66,756 21.8 $ 157,524 $ 124,067 27.0 Free Cash Flow* $ 70,175 $ 53,322 31.6 $ 140,036 $ 97,986 42.9 Adjusted Free Cash Flow* $ 81,669 $ 89,886 (9.1) $ 165,759 $ 150,855 9.9 Net Debt (total debt, less cash) $ 2,627,358 $ 2,855,413 Net Debt / LTM Adjusted EBITDA 3.0x 3.5x Airline and Hospitality Solutions: Revenue $ 216,632 $ 186,573 16.1 $ 421,532 $ 363,290 16.0 Passengers Boarded 139,265 131,450 5.9 265,439 249,066 6.6 Operating Income $ 49,075 $ 35,855 36.9 $ 77,566 $ 62,317 24.5 Adjusted EBITDA* $ 80,985 $ 62,555 29.5 $ 152,473 $ 116,015 31.4 Travel Network: Revenue $ 494,515 $ 462,337 7.0 $ 1,002,445 $ 954,064 5.1 Air Bookings 88,442 81,053 9.1 179,865 170,098 5.7 Non-air Bookings 14,687 13,862 6.0 28,698 27,460 4.5 Total Bookings 103,129 94,915 8.7 208,563 197,558 5.6 Bookings Share 36.8 % 35.6 % 36.3 % 35.5 % Operating Income $ 173,691 $ 165,597 4.9 $ 370,942 $ 350,114 5.9 Adjusted EBITDA* $ 205,957 $ 197,971 4.0 $ 438,044 $ 412,814 6.1 *indicates non-GAAP financial measure; see descriptions and reconciliations below Sabre Airline and Hospitality Solutions Second quarter 2015 Airline and Hospitality Solutions revenue increased 16.1% to $216.6 million from $186.6 million in the prior year period. Contributing to the increase in revenue was a 5.9% increase in airline passengers boarded through SabreSonic, strong traction from new solutions across the portfolio and continued strong growth in Sabre Hospitality Solutions. Sabre Airline and Hospitality Solutions Adjusted EBITDA increased 29.5% to $81.0 million from $62.6 million in the prior year period. The increase in Adjusted EBITDA is the result of strong revenue growth, excellent execution and technology platform scale benefits, resulting in an Adjusted EBITDA margin of 37.4%, compared to 33.5% for the prior year quarter. In Airline Solutions, LATAM Airlines Group, the largest airline in Latin America, signed an agreement to use the SabreSonic Suite for all airlines in the group. Sabre Travel Network Second quarter Travel Network revenue increased 7.0% to $494.5 million, compared to $462.3 million for the same period in 2014. Total bookings increased 8.7% with growth in all regions. Bookings growth in North America was 6.9% in the quarter. Sabre's focus on expansion in EMEA resulted in bookings growth of 19.7%. Second quarter 2015 Travel Network Adjusted EBITDA increased 4.0% to $206.0 million. On July 1, Sabre announced the completion of its acquisition of Abacus International, the leading global distribution system (GDS) in the Asia-Pacific region. Prior to the acquisition, Sabre owned 35% of Abacus. The Abacus acquisition brings fresh investment and growth opportunities in the travel industry's largest and fastest growing region. Concurrent with the completion of the Abacus acquisition, Sabre signed long-term distribution agreements with the 11 Asian airlines that had sold their 65% share of Abacus to Sabre. Refinancing Activity 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 On July 28, 2015, Sabre's Board of Directors declared a quarterly dividend of $0.09 cents per share on Sabre's common stock. The dividend will be payable on September 30, 2015, to stockholders of record on September 21, 2015. Business Outlook and Financial Guidance Sabre is increasing its full-year guidance for 2015 based on year-to-date results, continued bookings momentum in Travel Network, and the earlier than previously forecast July 1 close of the Abacus acquisition. Sabre expects full-year revenue of between $2.95 billion and $2.98 billion. 2015 Adjusted EBITDA is expected to be between $930 million and $945 million. In Airline and Hospitality Solutions, Sabre continues to expect 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 the American Airlines implementation. In Travel Network, first half performance and continued share gains results in increased expectations for 2015 growth. This increase in expectations is augmented by the earlier than previously forecast close of the Abacus acquisition. Sabre now expects 2015 Travel Network revenue growth of 13% or more, driven by bookings growth of approximately 17%. Excluding Abacus, Sabre now expects Travel Network revenue growth of greater than 5% on bookings growth of approximately 6%. Sabre increased 2015 Adjusted Net Income and Adjusted EPS guidance to $290 million to $305 million and $1.05 to $1.11, respectively. Free Cash Flow and Adjusted Free Cash Flow are expected to be $240 million and more than $290 million, respectively. In summary, for the full-year 2015, Sabre now expects the following results from continuing operations: Full-Year 2015 Guidance ($ millions, except for EPS) Revenue $2,950 - $2,980 Adjusted EBITDA $930 - $945 Adjusted Net Income $290 - $305 Adjusted EPS $1.05 - $1.11 Conference Call Sabre will conduct its second quarter 2015 investor conference call today at 9:00 a.m. ET. The live webcast and accompanying slide presentation can be accessed via the Sabre Investor Relations website at investors.sabre.com. A replay of the event will be available on the website for at least 90 days following the event. About Sabre Corporation Sabre Corporation 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 serves customers in more than 160 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 "expect," "guidance," "opportunity," "will," "anticipate," "may," "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, the financial and business effects of acquisitions, including integration of these acquisitions, 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 third-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 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. SABRE CORPORATION CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share amounts) (Unaudited) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Revenue $ 707,091 $ 646,380 $ 1,417,439 $ 1,312,795 Cost of revenue (1) (2) 461,126 422,647 930,124 874,617 Selling, general and administrative (2) 123,360 127,651 245,718 238,389 Operating income 122,605 96,082 241,597 199,789 Other income (expense): Interest expense, net (42,609) (53,235) (89,062) (117,179) Loss on extinguishment of debt (33,235) (30,558) (33,235) (33,538) Joint venture equity income 5,307 4,059 13,826 6,500 Other, net 197 391 (4,248) (1,963) Total other expense, net (70,340) (79,343) (112,719) (146,180) Income from continuing operations before income taxes 52,265 16,739 128,878 53,609 Provision for income taxes 19,676 10,284 46,959 25,195 Income from continuing operations 32,589 6,455 81,919 28,414 Income (loss) from discontinued operations, net of tax 696 (16,650) 159,607 (40,706) Net income (loss) 33,285 (10,195) 241,526 (12,292) Net income attributable to noncontrolling interests 1,078 702 1,825 1,448 Net income (loss) attributable to Sabre Corporation 32,207 (10,897) 239,701 (13,740) Preferred stock dividends — 2,235 — 11,381 Net income (loss) attributable to common shareholders $ 32,207 $ (13,132) $ 239,701 $ (25,121) Basic net income (loss) per share attributable to common shareholders: Income from continuing operations $ 0.12 $ 0.01 $ 0.30 $ 0.07 Income (loss) from discontinued operations — (0.07) 0.59 (0.19) Net income (loss) per common share $ 0.12 $ (0.05) $ 0.89 $ (0.12) Diluted net income (loss) per share attributable to common shareholders: Income from continuing operations $ 0.11 $ 0.01 $ 0.29 $ 0.07 Income (loss) from discontinued operations — (0.07) 0.57 (0.19) Net income (loss) per common share $ 0.12 $ (0.05) $ 0.86 $ (0.11) Weighted-average common shares outstanding: Basic 271,948 243,801 270,574 211,431 Diluted 279,101 252,336 278,082 219,969 Dividends per common share $ 0.09 $ — $ 0.18 $ — (1) Includes amortization of upfront incentive consideration $ 10,878 $ 11,742 $ 22,050 $ 22,789 (2) Includes stock-based compensation as follows: Cost of revenue $ 2,902 $ 1,972 $ 6,435 $ 3,358 Selling, general and administrative 4,428 2,913 9,689 5,126 SABRE CORPORATION CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) (Unaudited) June 30, 2015 December 31, 2014 Assets Current assets Cash and cash equivalents $ 578,033 $ 155,679 Accounts receivable, net 391,779 362,911 Prepaid expenses and other current assets 32,347 34,841 Current deferred income taxes 159,442 182,277 Other receivables, net 35,039 29,893 Assets held for sale — 112,558 Total current assets 1,196,640 878,159 Property and equipment, net of accumulated depreciation of $895,351 and $792,161 560,440 551,276 Investments in joint ventures 130,288 145,320 Goodwill 2,153,214 2,153,499 Trademarks and brand names, net of accumulated amortization of $93,052 and $87,554 233,002 238,500 Other intangible assets, net of accumulated amortization of $1,013,513 and $975,701 203,675 241,486 Other assets, net 574,319 509,764 Total assets $ 5,051,578 $ 4,718,004 Liabilities and stockholders' equity Current liabilities Accounts payable $ 133,011 $ 117,855 Accrued compensation and related benefits 57,486 83,828 Accrued subscriber incentives 179,162 145,581 Deferred revenues 176,554 167,827 Litigation settlement liability and related deferred revenue 55,099 73,252 Other accrued liabilities 178,178 189,612 Current portion of debt 488,930 22,435 Liabilities held for sale — 96,544 Total current liabilities 1,268,420 896,934 Deferred income taxes 165,555 61,577 Other noncurrent liabilities 602,237 613,710 Long-term debt 2,706,273 3,061,400 Stockholders' equity Common Stock: $0.01 par value; 450,000,000 authorized shares; 273,493,600 and 268,237,547 shares issued, 272,777,958 and 267,800,161 shares outstanding at June 30, 2015 and December 31, 2014, respectively 2,735 2,682 Additional paid-in capital 1,972,404 1,931,796 Treasury Stock, at cost, 715,642 and 437,386 shares at June 30, 2015 and December 31, 2014, respectively (11,462) (5,297) Retained deficit (1,584,834) (1,775,616) Accumulated other comprehensive loss (69,532) (69,803) Noncontrolling interest (218) 621 Total stockholders' equity 309,093 84,383 Total liabilities and stockholders' equity $ 5,051,578 $ 4,718,004 SABRE CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (In thousands) (Unaudited) Six Months Ended June 30, 2015 2014 Operating Activities Net income (loss) $ 241,526 $ (12,292) Adjustments to reconcile net income (loss) to cash provided by operating activities: Depreciation and amortization 166,617 152,337 Amortization of upfront incentive consideration 22,050 22,789 Litigation-related (credits) charges (32,557) (11,615) Stock-based compensation expense 16,124 8,484 Allowance for doubtful accounts 5,329 3,142 Deferred income taxes 36,757 11,583 Joint venture equity income (13,826) (6,500) Dividends received from joint venture investments 28,700 — Amortization of debt issuance costs 3,181 3,243 Debt modification costs — 3,290 Loss on extinguishment of debt 33,235 33,538 Other 7,505 8,046 (Income) loss from discontinued operations (159,607) 40,706 Changes in operating assets and liabilities: Accounts and other receivables (47,647) (25,510) Prepaid expenses and other current assets (631) 5,557 Capitalized implementation costs (29,561) (17,597) Upfront incentive consideration (22,994) (25,936) Other assets (43,618) (11,810) Accrued compensation and related benefits (22,802) (32,495) Accounts payable and other accrued liabilities 62,039 14,552 Deferred revenue including upfront solution fees 18,179 40,944 Cash provided by operating activities 267,999 204,456 Investing Activities Additions to property and equipment (127,963) (106,470) Other investing activities 148 235 Cash used in investing activities (127,815) (106,235) Financing Activities Proceeds of borrowings from lenders 600,000 148,307 Payments on borrowings from lenders (491,215) (791,426) Debt prepayment fees and issuance costs (40,215) (30,490) Proceeds from issuance of common stock in initial public offering, net — 672,644 Net proceeds (payments) on the settlement of equity-based awards 18,239 (650) Cash dividends paid to common shareholders (48,919) — Other financing activities (3,657) (1,964) Cash provided by (used in) financing activities 34,233 (3,579) Cash Flows from Discontinued Operations Cash used in operating activities (26,036) (151,423) Cash provided by (used in) investing activities 278,834 (240) Cash provided by (used in) discontinued operations 252,798 (151,663) Effect of exchange rate changes on cash and cash equivalents (4,861) 1,165 Increase (decrease) in cash and cash equivalents 422,354 (55,856) Cash and cash equivalents at beginning of period 155,679 308,236 Cash and cash equivalents at end of period $ 578,033 $ 252,380 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 EPS, 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 June 30, Six Months Ended June 30, 2015 2014 2015 2014 Net income (loss) attributable to common shareholders $ 32,207 $ (13,132) $ 239,701 $ (25,121) (Income) loss from discontinued operations, net of tax (696) 16,650 (159,607) 40,706 Net income attributable to noncontrolling interests(1) 1,078 702 1,825 1,448 Preferred stock dividends — 2,235 — 11,381 Income from continuing operations 32,589 6,455 81,919 28,414 Adjustments: Acquisition-related amortization(2a) 23,211 21,953 44,886 54,842 Loss on extinguishment of debt 33,235 30,558 33,235 33,538 Other, net(4) (197) (391) 4,248 1,963 Restructuring and other costs(5) — 2,128 — 3,684 Acquisition-related costs(6) 2,053 — 3,864 — Litigation costs(7) 2,043 2,572 5,479 7,118 Stock-based compensation 7,330 4,885 16,124 8,484 Management fees(8) — 21,576 — 23,508 Tax impact of net income adjustments (24,210) (32,481) (38,767) (51,924) Adjusted Net Income from continuing operations $ 76,054 $ 57,255 $ 150,988 $ 109,627 Adjusted Net Income from continuing operations per share $ 0.27 $ 0.23 $ 0.54 $ 0.50 Diluted weighted-average common shares outstanding 279,101 252,336 278,082 219,969 Adjusted Net Income from continuing operations $ 76,054 $ 57,255 $ 150,988 $ 109,627 Adjustments: Depreciation and amortization of property and equipment(2b) 46,244 40,661 107,907 81,110 Amortization of capitalized implementation costs(2c) 7,902 8,890 15,426 17,987 Amortization of upfront incentive consideration(3) 10,878 11,742 22,050 22,789 Interest expense, net 42,609 53,235 89,062 117,179 Remaining provision for income taxes 43,886 42,765 85,726 77,119 Adjusted EBITDA $ 227,573 $ 214,548 $ 471,159 $ 425,811 Reconciliation of Adjusted Capital Expenditures: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Additions to property and equipment $ 66,051 $ 56,812 $ 127,963 $ 106,470 Capitalized implementation costs 15,234 9,944 29,561 17,597 Adjusted Capital Expenditures $ 81,285 $ 66,756 $ 157,524 $ 124,067 Reconciliation of Adjusted Free Cash Flow: Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Cash provided by operating activities $ 136,226 $ 110,134 $ 267,999 $ 204,456 Cash used in investing activities (66,051) (56,577) (127,815) (106,235) Cash used in financing activities 56,514 25,023 34,233 (3,579) Three Months Ended June 30, Six Months Ended June 30, 2015 2014 2015 2014 Cash provided by operating activities $ 136,226 $ 110,134 $ 267,999 $ 204,456 Additions to property and equipment (66,051) (56,812) (127,963) (106,470) Free Cash Flow 70,175 53,322 140,036 97,986 Adjustments: Restructuring and other costs(5)(9) — 5,405 280 10,595 Acquisition-related costs(6)(9) 2,053 — 3,864 — Litigation settlement(7)(10) 7,398 7,011 16,100 11,648 Other litigation costs(7)(9) 2,043 2,572 5,479 7,118 Management fees(8)(9) — 21,576 — 23,508 Adjusted Free Cash Flow $ 81,669 $ 89,886 $ 165,759 $ 150,855 Reconciliation of Operating Income (loss) to Adjusted Gross Margin and Adjusted EBITDA by segment: Three Months Ended June 30, 2015 TravelNetwork Airline andHospitalitySolutions Corporate Total Operating income (loss) $ 173,691 $ 49,075 $ (100,161) $ 122,605 Add back: Selling, general and administrative 26,600 15,036 81,724 123,360 Cost of revenue adjustments: Depreciation and amortization(2) 14,758 31,671 6,650 53,079 Amortization of upfront incentive consideration(3) 10,878 — — 10,878 Stock-based compensation — — 2,902 2,902 Adjusted Gross Margin 225,927 95,782 (8,885) 312,824 Selling, general and administrative (26,600) (15,036) (81,724) (123,360) Joint venture equity income 5,307 — — 5,307 Joint venture intangible amortization(2a) 801 — — 801 Selling, general and administrative adjustments: Depreciation and amortization(2) 522 239 22,716 23,477 Acquisition-related costs(6) — — 2,053 2,053 Litigation costs(7) — — 2,043 2,043 Stock-based compensation — — 4,428 4,428 Adjusted EBITDA $ 205,957 $ 80,985 $ (59,369) $ 227,573 Three Months Ended June 30, 2014 TravelNetwork Airline andHospitalitySolutions Corporate Total Operating income (loss) $ 165,597 $ 35,855 $ (105,370) $ 96,082 Add back: Selling, general and administrative 24,555 12,924 90,172 127,651 Cost of revenue adjustments: Depreciation and amortization(2) 15,267 26,480 6,368 48,115 Amortization of upfront incentive consideration(3) 11,742 — — 11,742 Restructuring and other costs(5) — — 1,401 1,401 Stock-based compensation — — 1,972 1,972 Adjusted Gross Margin 217,161 75,259 (5,457) 286,963 Selling, general and administrative (24,555) (12,924) (90,172) (127,651) Joint venture equity income 4,059 — — 4,059 Joint venture intangible amortization(2a) 801 — — 801 Selling, general and administrative adjustments: Depreciation and amortization(2) 505 220 21,863 22,588 Restructuring and other costs(5) — — 727 727 Litigation costs(7) — — 2,572 2,572 Stock-based compensation — — 2,913 2,913 Management fees(8) — — 21,576 21,576 Adjusted EBITDA $ 197,971 $ 62,555 $ (45,978) $ 214,548 Six Months Ended June 30, 2015 TravelNetwork Airline andHospitalitySolutions Corporate Total Operating income (loss) $ 370,942 $ 77,566 $ (206,911) $ 241,597 Add back: Selling, general and administrative 48,484 33,015 164,219 245,718 Cost of revenue adjustments: Depreciation and amortization(2) 28,570 74,400 14,776 117,746 Amortization of upfront incentive consideration(3) 22,050 — — 22,050 Stock-based compensation — — 6,435 6,435 Adjusted Gross Margin 470,046 184,981 (21,481) 633,546 Selling, general and administrative (48,484) (33,015) (164,219) (245,718) Joint venture equity income 13,826 — — 13,826 Joint venture intangible amortization(2a) 1,602 — — 1,602 Selling, general and administrative adjustments: Depreciation and amortization(2) 1,054 507 47,310 48,871 Acquisition-related costs(6) — — 3,864 3,864 Litigation costs(7) — — 5,479 5,479 Stock-based compensation — — 9,689 9,689 Adjusted EBITDA $ 438,044 $ 152,473 $ (119,358) $ 471,159 Six Months Ended June 30, 2014 TravelNetwork Airline andHospitalitySolutions Corporate Total Operating income (loss) $ 350,114 $ 62,317 $ (212,642) $ 199,789 Add back: Selling, general and administrative 50,227 25,319 162,843 238,389 Cost of revenue adjustments: Depreciation and amortization(2) 30,679 53,163 23,082 106,924 Amortization of upfront incentive consideration(3) 22,789 — — 22,789 Restructuring and other costs(5) — — 2,579 2,579 Stock-based compensation — — 3,358 3,358 Adjusted Gross Margin 453,809 140,799 (20,780) 573,828 Selling, general and administrative (50,227) (25,319) (162,843) (238,389) Joint venture equity income 6,500 — — 6,500 Joint venture intangible amortization(2a) 1,602 — — 1,602 Selling, general and administrative adjustments: Depreciation and amortization(2) 1,130 535 43,748 45,413 Restructuring and other costs(5) — — 1,105 1,105 Litigation costs(7) — — 7,118 7,118 Stock-based compensation — — 5,126 5,126 Management fees(8) — — 23,508 23,508 Adjusted EBITDA $ 412,814 $ 116,015 $ (103,018) $ 425,811 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 and six months ended June 30, 2015 and 2014. (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 the acquisition of Abacus. (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-second-quarter-2015-results-300122921.html SOURCE Sabre Corporation News Provided by Acquire Media