UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 18, 2015

 

SABRE CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

(682) 605-1000

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

 

 

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On February 18, 2015, Sabre Corporation (“Sabre”) issued a press release and will hold a conference call regarding its financial results for the quarter and year ended December 31, 2014. A copy of the press release is attached as Exhibit 99.1.

The information in this Item 2.02 of Form 8-K and the attached exhibit shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Sabre makes reference to non-GAAP financial measures in the press release. A reconciliation of these non-GAAP financial measures to the comparable GAAP financial measures is contained in the attached press release.

 

(d) Exhibits

 

 

 

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

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EXHIBIT INDEX

 

 

 

Exhibit 99.1

Sabre Reports Fourth Quarter and Full Year 2014 Results

SOUTHLAKE, Texas – February 18, 2015 – Sabre Corporation (NASDAQ: SABR) today announced financial results for the quarter and year ended December 31, 2014.

“2014 was a year of significant strategic progress,” said Tom Klein, Sabre President and CEO.  “Both our Airline Solutions and Hospitality Solutions businesses had record years for revenue, Adjusted EBITDA and new sales. In Travel Network, we continued to build our share in EMEA, while navigating headwinds and positioning the global business for stronger growth going forward. We have also made significant progress toward divesting non-core online travel agency assets, which will generate significant value that we will reinvest to further strengthen our core businesses.”

Q4 2014 Financial Summary

Continued strong revenue growth in Airline and Hospitality Solutions, and a modest decline in Travel Network, resulted in Sabre consolidated fourth quarter revenue of $646 million, an increase of 3.1% compared to $627 million for the prior year quarter. Sabre has reclassified and is reporting all of the businesses associated with the Travelocity segment as discontinued operations.

Consolidated net income from continuing operations for the fourth quarter of 2014 totaled $41 million, compared to a loss of $9 million in the previous year quarter. Fourth quarter consolidated Adjusted EBITDA was $199 million, a 2.4% increase from $194 million in the prior year period. The increase in Adjusted EBITDA is the result of 25.7% growth in Adjusted EBITDA for Airline and Hospitality Solutions and lower corporate expenses, combined with a decline of 9.4% in fourth quarter Travel Network Adjusted EBITDA.

For the fourth quarter of 2014, Sabre reported income from continuing operations of $0.15 per share and Adjusted Net Income from Continuing Operations (Adjusted EPS) of $0.22 per share.

Cash Flow from Operations totaled $101 million for the fourth quarter of 2014, compared to a loss of $29 million in the fourth quarter of 2013. Adjusted Free Cash Flow totaled $40 million in the fourth quarter of 2014, compared to $40 million in the fourth quarter of 2013. Adjusted Free Cash Flow excludes the impacts of dispositions, litigation and other costs (see reconciliation below). Adjusted Capital Expenditures, which includes capitalized implementation costs, totaled $83 million for the fourth quarter of 2014, compared to $65 million in the prior year period.

 

 

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Sabre Airline and Hospitality Solutions

Fourth quarter 2014 Airline and Hospitality Solutions revenue increased 13.5% to $215 million from $189 million in the prior year period. The increase was driven by a combination of growth in passengers boarded through the SabreSonic® Customer Sales & Service (CSS) solution, which increased 4.5% in the quarter, solid performance across the Airline Solutions AirVision commercial suite and AirCentre operations suite and continued strong growth at Sabre Hospitality Solutions.

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Sabre Airline and Hospitality Solutions Adjusted EBITDA increased 25.7% from the prior year period to $85 million for the fourth quarter of 2014. The growth in profitability is a result of continued strong revenue growth and Adjusted EBITDA margin expansion to 39.6% for the quarter compared to 35.8% in the prior year quarter driven by the continued scale benefits of its Software-as-a-Service (SaaS) solutions.

In the fourth quarter of 2014, Hospitality Solutions announced the launch of the SynXis Enterprise Platform. This exciting launch included the introduction of the SynXis Property Manager, a hotel property management solution that seamlessly integrates with the industry leading SynXis Central Reservation System. Wyndham Hotel Group, the world’s largest and most diverse hotel company, became the first mega-hotel company to leverage the cloud-based SaaS reservations, revenue management and enhanced security solutions of the SynXis Enterprise Platform. As part of the agreement, Wyndham Hotel Group expects to migrate 4,500 of its North American properties to Sabre’s SynXis Property Manager beginning in mid-2015.

Airline Solutions posted a record sales year in 2014 that included a long-term agreement to provide the SabreSonic CSS passenger reservations system to American Airlines, the world’s largest passenger carrier, as well as an agreement to provide a broad suite of solutions to airberlin, one of Europe’s largest carriers. Additionally in the fourth quarter, Airline Solutions signed long-term agreements with Alitalia and Copa Airlines, who selected Airline Solutions leading SaaS platform and broad solutions set for critical airline operations and commercial activity, including the SabreSonic CSS passenger reservation system.

Sabre Travel Network

Fourth quarter Travel Network revenue declined 1.4% to $434 million compared to $440 million for the same period in 2013. The decline in fourth quarter Travel Network revenue is primarily attributable to lower joint venture data processing revenue. Bookings increased 1.1% in the quarter. EMEA performance remained strong with 7% bookings growth and continued share gains.

Fourth quarter 2014 Travel Network Adjusted EBITDA declined 9.4% to $172 million. The decline in Travel Network Adjusted EBITDA was primarily the result of lower year-over-year joint venture data processing revenue in the quarter and the timing of recognition of certain cost of revenue expense items compared to the prior year.

Travelocity

Consistent with Sabre’s stated strategy, the Company has made significant progress toward exiting the online travel agency business. As a result, Sabre has reclassified and is reporting all of the businesses associated with the Travelocity segment as discontinued operations.

On January 22, 2015, Sabre sold Travelocity.com to Expedia, Inc. for $280 million in cash consideration.

Additionally, on December 16, 2014, Sabre announced that it had received a binding offer from Bravofly Rumbo Group to acquire lastminute.com for a total transaction value of approximately $120 million resulting primarily from the transfer of commercial liabilities and an expanded long-term commercial agreement, in which Bravofly Rumbo Group’s brands and lastminute.com would continue to use the

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Sabre global distribution system. The transaction is expected to be completed in the first quarter of 2015. Sabre cannot provide any assurance that this transaction will occur on these terms or at all.

FY 2014 Financial Summary

For the full year 2014, Sabre reported total consolidated revenue of $2.631 billion, compared to $2.524 billion for the prior year, a 4.3% increase.

Airline and Hospitality Solutions revenue increased 10.5% to $786 million from $712 million in 2013, reflecting full year passenger boarded growth of 6.8%. 2014 revenue was also fueled by continued strong growth in the AirCentre and AirVision suites and by Sabre Hospitality Solutions.

Travel Network revenue increased 1.8% to $1.855 billion from $1.821 billion in 2013. Full year revenue growth was muted by the pricing impact of the merger of American Airlines and US Airways and the decline of travel in Venezuela, which combined, reduced growth by approximately 2%. Full year bookings increased 2.3%, reflecting growth in EMEA of more than 9% driven by solid share gains, and a modest increase in North America. Latin America saw a slight decline. Overall bookings share remained relatively stable at 35.7%.

2014 consolidated net income from continuing operations totaled $111 million, compared to $52 million in 2013. Adjusted EBITDA totaled $840 million, a 7.9% increase from $779 million in 2013. The increase in Adjusted EBITDA is the result of a 32.7% increase in Airline and Hospitality Solutions Adjusted EBITDA and a 0.8% increase in Travel Network Adjusted EBTIDA. There was a 7% increase in corporate expenses primarily due to incremental public company costs.

Sabre Airline and Hospitality Solutions Adjusted EBITDA increased 32.7% from 2013 to $283 million for the full year of 2014 driven by strong growth in profitability in both Airline Solutions and Hospitality Solutions resulting from the scale benefits of their SaaS software solutions. Full year Adjusted EBITDA margin at Airline and Hospitality Solutions increased to 35.9% from 29.9% in 2013.  

Full year Travel Network Adjusted EBITDA increased 0.8% to $779 million. Adjusted EBITDA growth was a result of 2.3% bookings growth and downward pressure from the pricing impact of the merger of American Airlines and US Airways and the decline in travel in Venezuela. Full year Travel Network Adjusted EBITDA margin declined to 42.0% from 42.4% in 2013.

Sabre reported income from continuing operations of $0.39 per share. Sabre reported full year 2014 Adjusted EPS of $0.94 per share.

Cash Flow from Operations totaled $388 million for the full year of 2014, compared to $228 million in 2013. Adjusted Free Cash Flow totaled $293 million in 2014, a 61% increase from $182 million in 2013. Adjusted Capital Expenditures, totaled $265 million in 2014, compared to $268 million in the prior year.

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Business Outlook and Financial Guidance

 

The Company has provided full-year guidance for 2015 for continuing operations below.

 

For the full year 2015, Sabre expects the following results from continuing operations:

 

 

Conference Call

 

The Company will conduct its fourth quarter and full year 2014 investor conference call today at 9:00 a.m. Eastern Time.  The live webcast, including accompanying slide presentation, can be accessed via Sabre’s Investor Relations website at http://investors.sabre.com.  A recording of the call will be archived for replay following the conference call.  

 

Investor Day

 

The Company plans to hold an investor day at the NASDAQ MarketSite in New York City on April 2, 2015. The event will be webcast and can be accessed via Sabre’s Investor Relations website at http://investors.sabre.com.  A recording of the event will be archived for replay following the event.

 

About the Company

 

Sabre^® is the leading technology provider to the global travel and tourism industry. Sabre’s software, data, mobile and distribution solutions are used by hundreds of airlines and thousands of hotels to manage vital operations, such as passenger and guest reservations, revenue management, and flight, network and crew management. Sabre also operates the world’s leading travel marketplace, processing more than $100 billion of annual travel spend.  Headquartered in Southlake, Texas, USA, Sabre operates in approximately 60 countries around the world.

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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,” “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, dependence on maintaining and renewing contracts with customers and other counterparties, exposure to pricing pressure in the Travel Network business, dependence on

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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 “Cautionary Note Regarding Forward-Looking Statements” sections included in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act of 1933, as amended, on February 5, 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

 

 

 

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SABRE CORPORATION

CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except share amounts)

(Unaudited)

 

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SABRE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands, except share amounts)

(Unaudited)

 

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SABRE CORPOATION

CONSOLIDATED STATEMENT OF CASH FLOWS

(In thousands)

(Unaudited)

 

 

 

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Non-GAAP Financial Measures

 

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this press release, including Adjusted Net Income, Adjusted EBITDA, Adjusted Net Income from Continuing Operations per Share (Adjusted EPS), Adjusted Capital Expenditures, Free Cash Flow, Adjusted Free Cash Flow and ratios based on these financial measures.

 

We define Adjusted Net Income as income (loss) from continuing operations adjusted for impairment, acquisition related amortization, loss on extinguishment of debt, other, net, restructuring and other costs, litigation and taxes, including penalties, stock-based compensation, management fees, and tax impact of net income adjustments.

 

We define Adjusted EBITDA as Adjusted Net Income adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, amortization of upfront incentive consideration, interest expense, net, and remaining provision (benefit) for income taxes. This Adjusted EBITDA metric differs from (i) the EBITDA metric referenced in the section entitled “—Liquidity and Capital Resources—Senior Secured Credit Facilities” in Part I, Item 2 of our Quarterly Report on Form 10-Q, which is calculated for the purposes of compliance with our debt covenants, and (ii) the Pre-VCP EBITDA and EBITDA metrics referenced in the section entitled “Compensation Discussion and Analysis” in our prospectus filed with the SEC pursuant to Rule 424(b) under the Securities Act on February 5, 2015, which are calculated for the purposes of our annual incentive compensation program and performance-based awards, respectively.

 

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, litigation settlement and tax payments for certain items, 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 and ratios based on these 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 Net Income, Adjusted EBITDA, Adjusted EPS, Adjusted Capital Expenditures, Free Cash Flow and Adjusted Free Cash Flow assist

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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 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:

 

 

 

 

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Tabular Reconciliations for Non-GAAP Measures

(In thousands, except share amounts; Unaudited)

Reconciliation of Net Income (loss) to Adjusted Net Income, Adjusted Net Income from Continuing Operations per Share, and to Adjusted EBITDA

 

 

 

 

 

 

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Reconciliation of Adjusted Capital Expenditures:

 

 

Reconciliation of Adjusted Free Cash Flow:

 

 

 

 

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Reconciliation of Adjusted Gross Margin and Adjusted EBITDA by Segment:

 

 

 

 

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Reconciliation of Adjusted Gross Margin and Adjusted EBITDA by Segment:

 

 

 

 

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Non-GAAP Footnotes

 

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