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 16, 2021
_____________________
(Exact name of registrant as specified in its charter)
_____________________
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of principal executive offices) | (Zip Code) | ||||||||||
(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:
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company | ||||||||
| If emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. | ☐ | |||||||
| Item 2.02 | Results of Operations and Financial Condition. | ||||
On February 16, 2021 , 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, 2020. 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.
| Item 9.01. | Financial Statements and Exhibits. | ||||
(d) Exhibits
| Exhibit Number | Description | ||||||||||
| 99.1 | |||||||||||
| 104 | Cover Page Interactive Data File - formatted as Inline XBRL. | ||||||||||
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.
| Sabre Corporation | |||||||||||
| Dated: | February 16, 2021 | By: | /s/ Aimee Williams-Ramey | ||||||||
| Name: | Aimee Williams-Ramey | ||||||||||
| Title: | Senior Vice President and General Counsel | ||||||||||
Sabre strengthens financial position, advances technology transformation and announces commercial wins; reports 2020 results
2020 Business highlights:
•Reduced go-forward annual costs by approximately $200 million
•Added liquidity, extended debt maturities and ended the year with a cash balance of $1.5 billion
•Advanced technology transformation and modernization with migration of 250+ applications to cloud, reduction in legacy technology infrastructure and strategic partnership with Google
•Attracted new content and functionality in the GDS, including agreements with Southwest Airlines and Lufthansa Group
•Signed new enterprise wins with Louvre Hotels Group and All-Inclusive by Marriott International
2020 Financial results:
•Revenue totaled $314 million in the fourth quarter and $1.3 billion for the full year
•Net loss attributable to common stockholders totaled $311 million in the fourth quarter and $1,280 million for the full year
•Net loss attributable to common stockholders per share totaled $0.98 in the fourth quarter and $4.42 for the full year
•Adjusted EPS totaled ($0.77) in the fourth quarter and ($3.18) for the full year
•All metrics were negatively impacted by the COVID-19 pandemic, partially offset by variable cost relief and implementation of cost-savings actions
SOUTHLAKE, Texas – February 16, 2021 – Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter and year ended December 31, 2020.
1
"In light of the COVID-19 pandemic, 2020 presented the greatest challenges ever faced by the global travel industry, with global air and hotel bookings down more than we have seen in any prior year. As the impact of the COVID-19 virus spread, we took quick and decisive actions to improve our financial position. We reduced our go-forward annual costs by approximately $200 million, which represents significant savings against our 2019 cost base. We added liquidity, extended our debt maturities and ended the year with a cash balance of $1.5 billion," said Sean Menke, President and CEO.
"Despite the challenges that 2020 presented, the year also included major advancements in our technology transformation and modernization, which is expected to reduce our operating costs by more than $100 million per year starting in 2024. We signed renewals with some of our largest customers, including important new distribution agreements, and won competitive reservations deals, new low-cost carriers and two new enterprise hotel customers. We believe that after the effects of the COVID-19 pandemic recede, we will be ready with a more profitable cost structure, strong customer engagement and innovations to advance the future of travel.”
Q4 2020 Financial Summary
Sabre consolidated fourth quarter revenue decreased 67% to $314 million, compared to $941 million in the fourth quarter of 2019. The decline in revenue was driven by unprecedented reductions in global air, hotel and other travel bookings due to the COVID-19 pandemic.
Operating loss was $220 million, versus operating income of $58 million in the fourth quarter of 2019. The decline in operating results in the quarter was primarily due to the significant decline in revenue driven by the COVID-19 pandemic, a $14 million abandonment charge related to the closure of certain office locations and a $9 million impairment charge associated with the recoverability of software developed for internal use and capitalized implementation costs. These impacts were partially offset by declines in Travel Solutions incentive expenses and Hospitality Solutions transaction-related costs, reduced headcount-related expenses resulting from implementation of cost-savings actions, a decline in technology costs due to lower transaction volumes and a $17 million reduction in legal costs associated with the now-terminated acquisition of Farelogix, as well as lower depreciation and amortization.
Net loss attributable to common stockholders totaled $311 million, versus net income of $10 million in the fourth quarter of 2019. Diluted net loss attributable to common stockholders per share (EPS) totaled $0.98, versus diluted net income attributable to common stockholders per share of $0.04 in the fourth quarter of 2019. The change in net income attributable to common stockholders was driven by the items impacting operating loss described above, as well as
2
increased interest expense, increased tax expense and an $11 million loss on extinguishment of debt. These impacts were partially offset by a $10 million gain resulting from the sale and leaseback of our headquarters buildings, which was completed for a net aggregate sale price of $69 million in the fourth quarter.
Adjusted Operating Loss was $169 million, versus Adjusted Operating Income of $98 million in the fourth quarter of 2019. The decline in Adjusted Operating results in the quarter was primarily due to the significant decline in revenue driven by the COVID-19 pandemic, partially offset by declines in Travel Solutions incentive expenses and Hospitality Solutions transaction-related costs, reduced headcount-related expenses resulting from implementation of cost-savings actions and a decline in technology costs due to lower transaction volumes, as well as lower depreciation and amortization.
For the quarter, Sabre reported Adjusted EPS of ($0.77), versus $0.16 in the fourth quarter of 2019.
Full Year 2020 Financial Summary
For the full year 2020, Sabre total consolidated revenue decreased 66% to $1.3 billion, compared to $4.0 billion for the prior year. The decline in revenue was driven by unprecedented reductions in global air, hotel and other travel bookings due to the COVID-19 pandemic.
Operating loss was $988 million, versus operating income of $363 million in 2019. The decline in operating results was primarily due to the significant decline in revenue driven by the COVID-19 pandemic. Other items impacting operating results include $86 million in restructuring charges related to severance benefits and the closure of certain office locations, a $45 million increase in the provision for expected credit losses and a $9 million impairment charge. Additionally, operating results were impacted by an unfavorable comparison to a $32 million benefit in the prior year related to the reversal of a previous accrual for a US Airways legal matter. These impacts were partially offset by declines in Travel Solutions incentives expenses and Hospitality Solutions transaction-related costs, a reduction in headcount-related expenses resulting from implementation of cost-saving actions, a decline in technology costs due to lower transaction volumes and a $27 million reduction in legal costs associated with the now-terminated acquisition of Farelogix, as well as lower depreciation and amortization.
Net loss attributable to common stockholders totaled $1,280 million, versus net income of $159 million in 2019. Diluted net loss attributable to common shareholders per share (EPS) totaled $4.42, versus diluted net income attributable to common stockholders per share of $0.57 in
3
2019. The change in net income attributable to common stockholders was driven by the items impacting operating loss described above, as well as increased interest expense, a $46 million charge related to the now-terminated acquisition of Farelogix, a $22 million loss on extinguishment of debt, a $18 million pension plan charge and $8 million recorded for preferred stock dividends. These impacts were partially offset by reduced tax expense and a $10 million gain resulting from the sale of our headquarters buildings.
Adjusted Operating Loss totaled $745 million, versus Adjusted Operating Income of $513 million in 2019. The decline in Adjusted Operating results was primarily due to the significant decline in revenue driven by the COVID-19 pandemic and a $45 million increase in the provision for expected credit losses. These impacts were partially offset by declines in Travel Solutions incentives expenses and Hospitality Solutions transaction-related costs, a reduction in headcount-related expenses resulting from implementation of cost-savings actions and a decline in technology costs due to lower transaction volumes, as well as lower depreciation and amortization.
For the full year 2020, Sabre reported Adjusted EPS of ($3.18), versus $1.01 per share in 2019.
With regards to Sabre's full year 2020 cash flows (versus prior year):
•Cash used in operating activities totaled $770 million (vs. $581 million provided by)
•Cash used in investing activities totaled $1 million (vs. $243 million)
•Cash provided by financing activities totaled $1,838 million (vs. $410 million used in)
•Capitalized expenditures totaled $65 million (vs. $115 million)
Free Cash Flow for the full year was negative $836 million, versus Free Cash Flow generation of $466 million in 2019.
4
Financial Results
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||||||||||||||
| (in thousands, except for EPS; unaudited): | 2020 | 2019 | % Change | 2020 | 2019 | % Change | |||||||||||||||||||||||||||||
| Total Company: | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 313,714 | $ | 941,422 | (67) | $ | 1,334,100 | $ | 3,974,988 | (66) | |||||||||||||||||||||||||
| Operating (Loss) Income | $ | (219,509) | $ | 57,637 | (481) | $ | (988,039) | $ | 363,417 | (372) | |||||||||||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (311,143) | $ | 10,091 | NM | $ | (1,280,403) | $ | 158,592 | (907) | |||||||||||||||||||||||||
| Diluted net (loss) income attributable to common stockholders per share (EPS) | $ | (0.98) | $ | 0.04 | NM | $ | (4.42) | $ | 0.57 | (875) | |||||||||||||||||||||||||
| Adjusted EBITDA* | $ | (82,597) | $ | 206,812 | (140) | $ | (372,852) | $ | 946,360 | (139) | |||||||||||||||||||||||||
| Adjusted EBITDA Margin* | NM | 22.0 | % | NM | 23.8 | % | |||||||||||||||||||||||||||||
| Adjusted Operating (Loss) Income* | $ | (168,902) | $ | 97,619 | (273) | $ | (745,274) | $ | 513,408 | (245) | |||||||||||||||||||||||||
| Adjusted Net (Loss) Income* | $ | (243,995) | $ | 43,997 | (655) | $ | (922,321) | $ | 279,215 | (430) | |||||||||||||||||||||||||
| Adjusted EPS* | $ | (0.77) | $ | 0.16 | (581) | $ | (3.18) | $ | 1.01 | (415) | |||||||||||||||||||||||||
| Cash (used in) provided by operating activities | $ | (183,176) | $ | 156,895 | (217) | $ | (770,245) | $ | 581,260 | (233) | |||||||||||||||||||||||||
| Cash provided by (used in) investing activities | $ | 51,343 | $ | (134,544) | NM | $ | (1,291) | $ | (243,026) | (99) | |||||||||||||||||||||||||
| Cash (used in) provided by financing activities | $ | (36,063) | $ | (58,297) | (38) | $ | 1,837,741 | $ | (409,721) | NM | |||||||||||||||||||||||||
| Capitalized expenditures | $ | 17,161 | $ | 23,042 | (26) | $ | 65,420 | $ | 115,166 | (43) | |||||||||||||||||||||||||
| Free Cash Flow* | $ | (200,337) | $ | 133,853 | (250) | $ | (835,665) | $ | 466,094 | (279) | |||||||||||||||||||||||||
| Net Debt (total debt, less cash) | $ | 3,307,840 | $ | 2,927,633 | |||||||||||||||||||||||||||||||
| Net Debt / LTM Adjusted EBITDA* | NM | 3.1x | |||||||||||||||||||||||||||||||||
| Travel Solutions: | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 275,826 | $ | 880,609 | (69) | $ | 1,176,694 | $ | 3,723,000 | (68) | |||||||||||||||||||||||||
| Operating (loss) Income | $ | (113,655) | $ | 154,560 | (174) | $ | (520,594) | $ | 727,222 | (172) | |||||||||||||||||||||||||
| Adjusted Operating (Loss) Income* | $ | (114,538) | $ | 154,631 | (174) | $ | (523,122) | $ | 729,266 | (172) | |||||||||||||||||||||||||
| Distribution Revenue | $ | 130,932 | $ | 638,483 | (79) | $ | 582,115 | $ | 2,730,845 | (79) | |||||||||||||||||||||||||
| Total Bookings | 26,313 | 128,333 | (79) | 124,684 | 566,308 | (78) | |||||||||||||||||||||||||||||
| Air Bookings | 22,892 | 112,359 | (80) | 103,331 | 499,111 | (79) | |||||||||||||||||||||||||||||
| Lodging, Ground and Sea Bookings | 3,421 | 15,974 | (79) | 21,353 | 67,197 | (68) | |||||||||||||||||||||||||||||
| Bookings Share | 36.6 | % | 38.9 | % | 40.9 | % | 38.8 | % | |||||||||||||||||||||||||||
| IT Solutions Revenue | $ | 144,894 | $ | 242,126 | (40) | $ | 594,579 | $ | 992,155 | (40) | |||||||||||||||||||||||||
| Passengers Boarded | 78,570 | 187,171 | (58) | 322,714 | 741,107 | (56) | |||||||||||||||||||||||||||||
| Hospitality Solutions: | |||||||||||||||||||||||||||||||||||
| Revenue | $ | 41,465 | $ | 71,355 | (42) | $ | 174,628 | $ | 292,880 | (40) | |||||||||||||||||||||||||
| Operating Loss | $ | (15,440) | $ | (6,161) | 151 | $ | (63,915) | $ | (21,632) | 195 | |||||||||||||||||||||||||
| Adjusted Operating Loss* | $ | (15,440) | $ | (6,161) | 151 | $ | (63,915) | $ | (21,632) | 195 | |||||||||||||||||||||||||
| Central Reservation System Transactions | 15,665 | 26,106 | (40) | 67,046 | 108,482 | (38) | |||||||||||||||||||||||||||||
| *Indicates non-GAAP financial measure; see descriptions and reconciliations below | |||||||||||||||||||||||||||||||||||
5
Travel Solutions
Fourth quarter 2020 results (versus prior year):
•Revenue decreased 69% to $276 million due to the unprecedented disruption in travel driven by the COVID-19 pandemic.
•Operating loss totaled $114 million, versus operating income of $155 million in the fourth quarter of 2019. The decline in operating income was driven by the reduction in revenue due to the COVID-19 pandemic, partially offset by lower incentive expenses, reduced headcount-related expenses resulting from implementation of cost-savings actions and a decline in technology costs due to lower transaction volumes.
•Distribution revenue decreased 79% to $131 million.
◦Global bookings, net of cancellations, declined 79% in the quarter.
◦In the quarter, North American bookings declined 77%, EMEA bookings declined 80%, Latin America bookings declined 71% and Asia-Pacific bookings declined 90%.
◦Gross air bookings declined 80%, 78% and 77% and net air bookings declined 81%, 80% and 78% in October, November and December, respectively.
◦Global air bookings share was 36.6%.
•IT Solutions revenue decreased 40% to $145 million.
◦Reservations revenue decreased 55% and Commercial and Operations revenue decreased 25%, primarily driven by the impact of the COVID-19 pandemic on the existing customer base.
◦Airline passengers boarded declined 58% in the quarter.
Full year 2020 results (versus prior year):
•Revenue decreased 68% to $1.2 billion due to the unprecedented disruption in travel driven by the COVID-19 pandemic.
•Operating loss totaled $521 million, versus operating income of $727 million in 2019. The decline in operating income was driven by the reduction in revenue due to the COVID-19 pandemic, partially offset by lower incentive expenses, reduced headcount-related expenses resulting from implementation of cost-savings actions and a decline in technology costs due to lower transaction volumes.
•Distribution revenue decreased 79% to $582 million.
◦Global bookings, net of cancellations, declined 78% in the year.
◦Global air bookings share increased 210 basis points to 40.9%.
•IT Solutions revenue decreased 40% to $595 million.
◦Reservations revenue decreased 52% and Commercial and Operations revenue decreased 27%.
6
◦Airline passengers boarded declined 56% in the year.
Hospitality Solutions
Fourth quarter 2020 results (versus prior year):
•Hospitality Solutions revenue decreased 42% to $41 million.
•Central reservation system transactions declined 40% to 16 million.
•Operating loss was $15 million, versus operating loss of $6 million in the fourth quarter of 2019. The increase in operating loss was primarily due to the reduction in CRS transactions driven by the COVID-19 pandemic, partially offset by a decline in transaction-based costs and reduced headcount-related expenses resulting from the implementation of cost-savings actions.
Full year 2020 results (versus prior year):
•Hospitality Solutions revenue decreased 40% to $175 million.
•Central reservation system transactions decreased 38% to 67 million.
•Operating loss was $64 million, versus operating loss of $22 million in 2019. The increase in operating loss was primarily due to the reduction in CRS transactions driven by the COVID-19 pandemic, partially offset by a decline in transaction-based costs and reduced headcount-related expenses resulting from the implementation of cost-savings actions.
Business Outlook
Given the ongoing magnitude and the uncertainty related to the COVID-19 pandemic and its economic effects, Sabre has not given guidance at this time.
Conference Call
Sabre will conduct its fourth quarter and full-year 2020 investor conference call today at 9:00 a.m. ET. The live webcast and accompanying slide presentation can be accessed via the Investor Relations section of its website, investors.sabre.com. A replay of the event will be available for at least 90 days following the event.
About Sabre
Sabre Corporation is the leading technology provider to the global travel industry. Sabre’s software, data, mobile and distribution solutions are used by hundreds of airlines and thousands of hotel properties to manage critical operations, including passenger and guest reservations,
7
revenue management, flight, network and crew management. Sabre also operates a leading global travel marketplace, which processes more than $120 billion of global travel expenditures annually by connecting travel buyers and suppliers. Headquartered in Southlake, Texas, USA, Sabre serves customers in more than 160 countries around the world.
Website Information
Sabre routinely posts important information for investors on the Investor Relations section of its website, investors.sabre.com, and on its Twitter account, @Sabre_Corp. We intend to use the Investor Relations section of our website and our Twitter account as a means of disclosing material, non-public information and for complying with disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of Sabre's website and our Twitter account, 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 or our Twitter account 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, investors.sabre.com.
Industry Data
This release contains industry data, forecasts and other information that Sabre obtained from industry publications and surveys, public filings and internal company sources, and there can be no assurance as to the accuracy or completeness of the included information. Statements as to Sabre's ranking, market position, bookings share and market estimates are based on independent industry publications, government publications, third-party forecasts and management’s estimates and assumptions about our markets and our internal research. The company has not independently verified this third-party information nor has it ascertained the underlying economic assumptions relied upon in those sources, and cannot assure you of the accuracy or completeness of this information.
Note on Non-GAAP Financial Measures
This press release includes unaudited non-GAAP financial measures, including Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income from continuing operations ("Adjusted
8
Net (Loss) Income"), Adjusted EBITDA, Adjusted Net (Loss) Income from continuing operations per share ("Adjusted EPS"), 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,” “future,” “believe,” “plan,” "guidance," "outlook," “anticipate,” “will,” "forecast," "continue," "strategy," "estimate," "project," “may,” “should,” “would,” “intend," “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, the severity, extent and duration of the global COVID-19 pandemic and its impact on our business and results of operations, financial condition and credit ratings, as well as on the travel industry and consumer spending more broadly, the actions taken to contain the disease or treat its impact, the effect of remote working arrangements on our operations and the speed and extent of the recovery across the broader travel ecosystem, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines' insolvency, suspension of service or aircraft groundings, the effect of cost savings initiatives, the timing, implementation and effects of the technology investment and other strategic initiatives, the completion and effects of travel platforms, travel suppliers' usage of alternative distribution models, exposure to pricing pressure in the Travel Solutions business, changes affecting travel supplier customers, maintenance of the integrity of our systems and infrastructure and the effect of any security breaches, failure to adapt to technological advancements, competition in the travel distribution market and solutions markets, implementation of software solutions, reliance
9
on third parties to provide information technology services and the effects of these services, the execution, implementation and effects of new, amended or renewed agreements and strategic partnerships, including anticipated savings, dependence on establishing, maintaining and renewing contracts with customers and other counterparties and collecting amounts due to us under these agreements, dependence on relationships with travel buyers, our collection, processing, storage, use and transmission of personal data and risks associated with PCI compliance, our ability to recruit, train and retain employees, including our key executive officers and technical employees, the financial and business results and effects of acquisitions, the effects of any litigation and regulatory reviews and investigations, adverse global and regional economic and political conditions, including, but not limited to, economic conditions in countries or regions with traditionally high levels of exports to China or that have commodities-based economies and the effect of "Brexit", risks arising from global operations, reliance on the value of our brands, failure to comply with regulations, use of third-party distributor partners, the effects of the implementation of new accounting standards, and tax-related matters, including the effect of the Tax Cuts and Jobs Act. 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 Quarterly Report on Form 10-Q filed with the SEC on November 6, 2020 and our Annual Report on Form 10-K filed with the SEC on February 26, 2020 and in our other filings with the SEC. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, 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 | ||||
| Kristin Hays | Kevin Crissey | ||||
| kristin.hays@sabre.com | kevin.crissey@sabre.com | ||||
| sabrenews@sabre.com | sabre.investorrelations@sabre.com | ||||
10
SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| Three Months Ended December 31, | Year Ended December 31, | |||||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | |||||||||||||||||||||||
| Revenue | $ | 313,714 | $ | 941,422 | $ | 1,334,100 | $ | 3,974,988 | ||||||||||||||||||
| Cost of revenue, excluding technology costs | 120,942 | 405,437 | 579,010 | 1,726,157 | ||||||||||||||||||||||
| Technology costs | 272,886 | 320,807 | 1,156,723 | 1,285,204 | ||||||||||||||||||||||
| Selling, general and administrative | 139,395 | 157,541 | 586,406 | 600,210 | ||||||||||||||||||||||
| Operating (loss) income | (219,509) | 57,637 | (988,039) | 363,417 | ||||||||||||||||||||||
| Other income (expense): | ||||||||||||||||||||||||||
| Interest expense, net | (71,417) | (39,027) | (235,091) | (156,391) | ||||||||||||||||||||||
| Loss on extinguishment of debt | (11,293) | — | (21,626) | — | ||||||||||||||||||||||
| Equity method (loss) income | (883) | 71 | (2,528) | 2,044 | ||||||||||||||||||||||
| Other, net | 5,054 | (3,314) | (66,961) | (9,432) | ||||||||||||||||||||||
| Total other expense, net | (78,539) | (42,270) | (326,206) | (163,779) | ||||||||||||||||||||||
| (Loss) income from continuing operations before income taxes | (298,048) | 15,367 | (1,314,245) | 199,638 | ||||||||||||||||||||||
| Provision for income taxes | 13,423 | 3,543 | (39,913) | 35,326 | ||||||||||||||||||||||
| (Loss) income from continuing operations | (311,471) | 11,824 | (1,274,332) | 164,312 | ||||||||||||||||||||||
| Income (loss) from discontinued operations, net of tax | 6,119 | (1,068) | 2,788 | (1,766) | ||||||||||||||||||||||
| Net (loss) income | (305,352) | 10,756 | (1,271,544) | 162,546 | ||||||||||||||||||||||
| Net income attributable to noncontrolling interests | 363 | 665 | 1,200 | 3,954 | ||||||||||||||||||||||
| Net (loss) income attributable to Sabre Corporation | (305,715) | 10,091 | (1,272,744) | 158,592 | ||||||||||||||||||||||
| Preferred stock dividends | 5,428 | — | 7,659 | — | ||||||||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (311,143) | $ | 10,091 | $ | (1,280,403) | $ | 158,592 | ||||||||||||||||||
| Basic net (loss) income per share attributable to common stockholders: | ||||||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (1.00) | $ | 0.04 | $ | (4.43) | $ | 0.58 | ||||||||||||||||||
| Income (loss) from discontinued operations | $ | 0.02 | $ | — | $ | 0.01 | $ | (0.01) | ||||||||||||||||||
| Net (loss) income per common share | $ | (0.98) | $ | 0.04 | $ | (4.42) | $ | 0.57 | ||||||||||||||||||
| Diluted net (loss) income per share attributable to common stockholders: | ||||||||||||||||||||||||||
| (Loss) income from continuing operations | $ | (1.00) | $ | 0.04 | $ | (4.43) | $ | 0.58 | ||||||||||||||||||
| Income (loss) from discontinued operations | $ | 0.02 | $ | — | $ | 0.01 | $ | (0.01) | ||||||||||||||||||
| Net (loss) income per common share | $ | (0.98) | $ | 0.04 | $ | (4.42) | $ | 0.57 | ||||||||||||||||||
| Weighted-average common shares outstanding: | ||||||||||||||||||||||||||
| Basic | 317,271 | 273,699 | 289,855 | 274,168 | ||||||||||||||||||||||
| Diluted | 317,271 | 276,222 | 289,855 | 276,217 | ||||||||||||||||||||||
| Dividends per common share | $ | — | $ | 0.14 | $ | 0.14 | $ | 0.56 | ||||||||||||||||||
11
SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
| December 31, 2020 | December 31, 2019 | ||||||||||
| Assets | |||||||||||
| Current assets | |||||||||||
| Cash and cash equivalents | $ | 1,499,665 | $ | 436,176 | |||||||
| Accounts receivable, net | 255,468 | 546,533 | |||||||||
| Prepaid expenses and other current assets | 132,972 | 139,211 | |||||||||
| Total current assets | 1,888,105 | 1,121,920 | |||||||||
| Property and equipment, net of accumulated depreciation | 363,491 | 641,722 | |||||||||
| Equity method investments | 24,265 | 27,494 | |||||||||
| Goodwill | 2,636,546 | 2,633,251 | |||||||||
| Acquired customer relationships, net of accumulated amortization | 289,150 | 311,015 | |||||||||
| Other intangible assets, net of accumulated amortization | 222,216 | 262,638 | |||||||||
| Deferred income taxes | 24,181 | 21,812 | |||||||||
| Other assets, net | 629,768 | 670,105 | |||||||||
| Total assets | $ | 6,077,722 | 5,689,957 | ||||||||
| Liabilities and stockholders’ equity | |||||||||||
| Current liabilities | |||||||||||
| Accounts payable | $ | 115,229 | $ | 187,187 | |||||||
| Accrued compensation and related benefits | 86,830 | 94,368 | |||||||||
| Accrued subscriber incentives | 100,963 | 316,254 | |||||||||
| Deferred revenues | 99,470 | 84,661 | |||||||||
| Other accrued liabilities | 193,383 | 189,548 | |||||||||
| Current portion of debt | 26,068 | 81,614 | |||||||||
| Tax Receivable Agreement | — | 71,911 | |||||||||
| Total current liabilities | 621,943 | 1,025,543 | |||||||||
| Deferred income taxes | 72,744 | 107,402 | |||||||||
| Other noncurrent liabilities | 380,621 | 347,522 | |||||||||
| Long-term debt | 4,639,782 | 3,261,821 | |||||||||
| Stockholders’ equity | |||||||||||
Preferred stock; $0.01 par value, 225,000 authorized, 3,340 and no shares issued and outstanding as of December 31, 2020 and 2019, respectively; aggregate liquidation value of $334,000 and $— as of December 31, 2020 and 2019, respectively | 33 | — | |||||||||
Common stock: $0.01 par value; 1,000,000 authorized shares; 338,662 and 294,319 shares issued, 317,297 and 273,733 shares outstanding at December 31, 2020 and 2019, respectively | 3,387 | 2,943 | |||||||||
| Additional paid-in capital | 3,052,953 | 2,317,544 | |||||||||
Treasury stock, at cost, 21,365 and 20,587 shares at December 31, 2020 and 2019, respectively | (474,790) | (468,618) | |||||||||
| Retained deficit | (2,090,022) | (763,482) | |||||||||
| Accumulated other comprehensive loss | (135,957) | (149,306) | |||||||||
| Non-controlling interest | 7,028 | 8,588 | |||||||||
| Total stockholders’ equity | 362,632 | 947,669 | |||||||||
| Total liabilities and stockholders’ equity | $ | 6,077,722 | $ | 5,689,957 | |||||||
12
SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
(Unaudited)
| Year Ended December 31, | |||||||||||
| 2020 | 2019 | ||||||||||
| Operating Activities | |||||||||||
| Net (loss) income | $ | (1,271,544) | $ | 162,546 | |||||||
| Adjustments to reconcile net (loss) income to cash provided by operating activities: | |||||||||||
| Depreciation and amortization | 363,743 | 414,621 | |||||||||
| Amortization of upfront incentive consideration | 74,677 | 82,935 | |||||||||
| Stock-based compensation expense | 69,946 | 66,885 | |||||||||
| Provision for expected credit losses | 65,710 | 20,563 | |||||||||
| Deferred income taxes | (46,234) | (22,925) | |||||||||
| Acquisition termination fee | 24,811 | — | |||||||||
| Loss on extinguishment of debt | 21,494 | — | |||||||||
| Amortization of debt discount and debt issuance costs | 18,939 | 3,972 | |||||||||
| Pension settlement charge | 18,071 | — | |||||||||
| Facilities-related charges | 5,816 | — | |||||||||
| Impairment and related charges | 8,684 | — | |||||||||
| (Income) loss from discontinued operations | (2,788) | 1,766 | |||||||||
| Other | 8,113 | 2,085 | |||||||||
| Changes in operating assets and liabilities: | |||||||||||
| Accounts and other receivables | 204,970 | (33,911) | |||||||||
| Prepaid expenses and other current assets | (1,908) | 1,145 | |||||||||
| Capitalized implementation costs | (17,301) | (28,588) | |||||||||
| Upfront incentive consideration | (27,445) | (71,447) | |||||||||
| Other assets | 16,012 | 38,795 | |||||||||
| Accrued compensation and related benefits | (15,317) | (17,469) | |||||||||
| Accounts payable and other accrued liabilities | (304,051) | (27,232) | |||||||||
| Deferred revenue including upfront solution fees | 15,357 | (12,481) | |||||||||
| Cash (used in) provided by operating activities | (770,245) | 581,260 | |||||||||
| Investing Activities | |||||||||||
| Proceeds from sale of property | 68,504 | — | |||||||||
| Additions to property and equipment | (65,420) | (115,166) | |||||||||
| Acquisitions, net of cash acquired | — | (107,462) | |||||||||
| Other investing activities | (4,375) | (20,398) | |||||||||
| Cash used in investing activities | (1,291) | (243,026) | |||||||||
| Financing Activities | |||||||||||
| Proceeds of borrowings from lenders | 2,982,000 | 45,000 | |||||||||
| Payments on borrowings from lenders | (1,533,597) | (106,560) | |||||||||
| Proceeds from issuance of preferred stock, net | 322,885 | — | |||||||||
| Proceeds from issuance of common stock, net | 275,003 | — | |||||||||
| Debt prepayment fees and issuance costs | (77,878) | — | |||||||||
| Payments on Tax Receivable Agreement | (71,958) | (101,482) | |||||||||
| Cash dividends paid to common shareholders | (38,544) | (153,508) | |||||||||
| Net payment on the settlement of equity-based awards | (5,996) | (5,736) | |||||||||
| Dividends paid on preferred stock | (5,850) | ||||||||||
| Repurchase of common stock | — | (77,636) | |||||||||
| Other financing activities | (8,324) | (9,799) | |||||||||
| Cash provided by ( used in) financing activities | 1,837,741 | (409,721) | |||||||||
| Cash Flows from Discontinued Operations | |||||||||||
| Cash used in operating activities | (2,932) | (2,383) | |||||||||
| Cash used in discontinued operations | (2,932) | (2,383) | |||||||||
| Effect of exchange rate changes on cash and cash equivalents | 216 | 781 | |||||||||
| Increase (decrease) in cash and cash equivalents | 1,063,489 | (73,089) | |||||||||
| Cash and cash equivalents at beginning of period | 436,176 | 509,265 | |||||||||
| Cash and cash equivalents at end of period | $ | 1,499,665 | $ | 436,176 | |||||||
| Cash payments for income taxes | $ | 24,505 | $ | 55,137 | |||||||
| Cash payments for interest | $ | 186,235 | $ | 157,648 | |||||||
| Capitalized interest | $ | 2,508 | $ | 5,085 | |||||||
| Non-cash additions to property and equipment | $ | — | $ | 33,136 | |||||||
13
Non-GAAP Financial Measures
We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures, including Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income from continuing operations ("Adjusted Net (Loss) Income"), Adjusted EBITDA, Adjusted EPS, Free Cash Flow and ratios based on these financial measures. As a result of our business realignment in the third quarter of 2020, we have separated our technology costs from cost of revenue and moved certain expenses previously classified as cost of revenue to selling, general and administrative to provide increased visibility to our technology costs for analytical and decision-making purposes and to align costs with the current leadership and operational organizational structure.
We define Adjusted Operating (Loss) Income as operating (loss) income adjusted for equity method (loss) income, impairment and related charges, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation.
We define Adjusted Net (Loss) Income as net (loss) income attributable to common stockholders adjusted for loss (income) from discontinued operations, net of tax, net income attributable to noncontrolling interests, impairment and related charges, acquisition-related amortization, loss on extinguishment of debt, other, net, restructuring and other costs, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of net income adjustments.
We define Adjusted EBITDA as (Loss) Income from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, impairment and related charges, restructuring and other costs, amortization of upfront incentive consideration, interest expense, net, other, net, loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining provision for income taxes.
We define Adjusted EPS as Adjusted Net (Loss) Income divided by diluted weighted-average common shares outstanding.
We define Free Cash Flow as cash (used in) provided by operating activities less cash used in additions to property and equipment.
14
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. We also believe that Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA and Adjusted EPS 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 Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA, Adjusted EPS, 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 are unaudited and 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:
•these non-GAAP financial measures exclude certain recurring, non-cash charges such as stock-based compensation expense and amortization of acquired intangible assets;
•although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements;
•Adjusted EBITDA does not reflect amortization of upfront incentive consideration or capitalized implementation costs associated with our revenue contracts, which may require future working capital or cash needs in the future;
•Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;
15
•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 removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness; and
•other companies, including companies in our industry, may calculate Adjusted Operating (Loss) Income, Adjusted Net (Loss) Income, Adjusted EBITDA, Adjusted EPS or Free Cash Flow differently, which reduces their usefulness as comparative measures.
16
Tabular Reconciliations for Non-GAAP Measures
(In thousands, except per share amounts; unaudited)
Reconciliation of net (loss) income attributable to common stockholders to Adjusted Net (Loss) Income from continuing operations, operating (loss) income to Adjusted Operating (Loss) Income, and (loss) income from continuing operations to Adjusted EBITDA and Last Twelve Months' (LTM) Adjusted EBITDA (for Net Debt Ratio):
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Net (loss) income attributable to common stockholders | $ | (311,143) | $ | 10,091 | $ | (1,280,403) | $ | 158,592 | |||||||||||||||
| (Income) loss from discontinued operations, net of tax | (6,119) | 1,068 | (2,788) | 1,766 | |||||||||||||||||||
Net income attributable to non-controlling interests(1) | 363 | 665 | 1,200 | 3,954 | |||||||||||||||||||
| Preferred stock dividends | 5,428 | — | 7,659 | — | |||||||||||||||||||
| (Loss) Income from continuing operations | $ | (311,471) | $ | 11,824 | $ | (1,274,332) | $ | 164,312 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Impairment and related charges(2) | 8,684 | — | 8,684 | — | |||||||||||||||||||
Acquisition-related amortization(3a) | 16,223 | 16,633 | 65,998 | 64,604 | |||||||||||||||||||
Restructuring and other costs(6) | 11,568 | — | 85,797 | — | |||||||||||||||||||
| Loss on extinguishment of debt | 11,293 | — | 21,626 | — | |||||||||||||||||||
Other, net(5) | (5,054) | 3,314 | 66,961 | 9,432 | |||||||||||||||||||
Acquisition-related costs(7) | (6,004) | 10,700 | 16,787 | 41,037 | |||||||||||||||||||
Litigation costs, net(8) | (4,022) | (3,224) | (1,919) | (24,579) | |||||||||||||||||||
| Stock-based compensation | 25,041 | 15,802 | 69,946 | 66,885 | |||||||||||||||||||
Tax impact of adjustments(9) | 9,747 | (11,052) | 18,131 | (42,476) | |||||||||||||||||||
| Adjusted Net (Loss) Income from continuing operations | $ | (243,995) | $ | 43,997 | $ | (922,321) | $ | 279,215 | |||||||||||||||
| Adjusted Net (Loss) Income from continuing operations per share | $ | (0.77) | $ | 0.16 | $ | (3.18) | $ | 1.01 | |||||||||||||||
| Diluted weighted-average common shares outstanding | 317,271 | 276,222 | 289,855 | 276,217 | |||||||||||||||||||
| Operating (loss) income | $ | (219,509) | $ | 57,637 | $ | (988,039) | $ | 363,417 | |||||||||||||||
| Add back: | |||||||||||||||||||||||
| Equity method (loss) income | (883) | 71 | (2,528) | 2,044 | |||||||||||||||||||
Impairment and related charges(2) | 8,684 | — | 8,684 | — | |||||||||||||||||||
Acquisition-related amortization(3a) | 16,223 | 16,633 | 65,998 | 64,604 | |||||||||||||||||||
Restructuring and other costs(6) | 11,568 | — | 85,797 | — | |||||||||||||||||||
Acquisition-related costs(7) | (6,004) | 10,700 | 16,787 | 41,037 | |||||||||||||||||||
Litigation costs, net(8) | (4,022) | (3,224) | (1,919) | (24,579) | |||||||||||||||||||
| Stock-based compensation | 25,041 | 15,802 | 69,946 | 66,885 | |||||||||||||||||||
| Adjusted Operating (Loss) Income | $ | (168,902) | $ | 97,619 | $ | (745,274) | $ | 513,408 | |||||||||||||||
| (Loss) income from continuing operations | $ | (311,471) | $ | 11,824 | $ | (1,274,332) | $ | 164,312 | |||||||||||||||
| Adjustments: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(3b) | 59,377 | 77,956 | 260,651 | 310,573 | |||||||||||||||||||
Amortization of capitalized implementation costs(3c) | 8,984 | 8,127 | 37,094 | 39,444 | |||||||||||||||||||
Acquisition-related amortization(3a) | 16,223 | 16,633 | 65,998 | 64,604 | |||||||||||||||||||
Impairment and related charges(2) | 8,684 | — | 8,684 | — | |||||||||||||||||||
Restructuring and other costs(6) | 11,568 | — | 85,797 | — | |||||||||||||||||||
Amortization of upfront incentive consideration(4) | 17,944 | 23,110 | 74,677 | 82,935 | |||||||||||||||||||
| Interest expense, net | 71,417 | 39,027 | 235,091 | 156,391 | |||||||||||||||||||
Other, net(5) | (5,054) | 3,314 | 66,961 | 9,432 | |||||||||||||||||||
| Loss on extinguishment of debt | 11,293 | — | 21,626 | — | |||||||||||||||||||
Acquisition-related costs(7) | (6,004) | 10,700 | 16,787 | 41,037 | |||||||||||||||||||
Litigation costs, net(8) | (4,022) | (3,224) | (1,919) | (24,579) | |||||||||||||||||||
| Stock-based compensation | 25,041 | 15,802 | 69,946 | 66,885 | |||||||||||||||||||
| Provision for income taxes | 13,423 | 3,543 | (39,913) | 35,326 | |||||||||||||||||||
| Adjusted EBITDA | $ | (82,597) | $ | 206,812 | $ | (372,852) | $ | 946,360 | |||||||||||||||
| Adjusted EBITDA margin | NM | 22.0 | % | NM | 23.8 | % | |||||||||||||||||
| Net Debt (total debt, less cash) | $ | 3,307,840 | $ | 2,927,633 | |||||||||||||||||||
| Net Debt / LTM Adjusted EBITDA | NM | 3.1x | |||||||||||||||||||||
17
Reconciliation of Free Cash Flow:
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Cash (used in) provided by operating activities | $ | (183,176) | $ | 156,895 | $ | (770,245) | $ | 581,260 | |||||||||||||||
| Cash provided by (used in) investing activities | 51,343 | (134,544) | (1,291) | (243,026) | |||||||||||||||||||
| Cash (used in) provided by financing activities | (36,063) | (58,297) | 1,837,741 | (409,721) | |||||||||||||||||||
| Three Months Ended December 31, | Year Ended December 31, | ||||||||||||||||||||||
| 2020 | 2019 | 2020 | 2019 | ||||||||||||||||||||
| Cash (used in) provided by operating activities | $ | (183,176) | $ | 156,895 | $ | (770,245) | $ | 581,260 | |||||||||||||||
| Additions to property and equipment | (17,161) | (23,042) | (65,420) | (115,166) | |||||||||||||||||||
| Free Cash Flow | $ | (200,337) | $ | 133,853 | $ | (835,665) | $ | 466,094 | |||||||||||||||
18
Reconciliation of Adjusted Operating (Loss) Income to Operating (Loss) Income in our statement of operations and Adjusted EBITDA to (Loss) Income from Continuing Operations in our statement of operations by business segment:
| Three Months Ended December 31, 2020 | |||||||||||||||||||||||
| Travel Solutions | Hospitality Solutions | Corporate | Total | ||||||||||||||||||||
| Adjusted Operating Loss | $ | (114,538) | $ | (15,440) | $ | (38,924) | $ | (168,902) | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Equity method loss | (883) | — | — | (883) | |||||||||||||||||||
Impairment and related charges(2) | — | — | 8,684 | 8,684 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 16,223 | 16,223 | |||||||||||||||||||
Restructuring and other costs(6) | — | — | 11,568 | 11,568 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | (6,004) | (6,004) | |||||||||||||||||||
Litigation costs, net(8) | — | — | (4,022) | (4,022) | |||||||||||||||||||
| Stock-based compensation | — | — | 25,041 | 25,041 | |||||||||||||||||||
| Operating loss | $ | (113,655) | $ | (15,440) | $ | (90,414) | $ | (219,509) | |||||||||||||||
| Adjusted EBITDA | $ | (38,138) | $ | (5,998) | $ | (38,461) | $ | (82,597) | |||||||||||||||
| Less: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(3b) | 50,516 | 8,398 | 463 | 59,377 | |||||||||||||||||||
Amortization of capitalized implementation costs(3c) | 7,940 | 1,044 | — | 8,984 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 16,223 | 16,223 | |||||||||||||||||||
Impairment and related charges(2) | — | — | 8,684 | 8,684 | |||||||||||||||||||
Restructuring and other costs(6) | — | — | 11,568 | 11,568 | |||||||||||||||||||
Amortization of upfront incentive consideration(4) | 17,944 | — | — | 17,944 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | (6,004) | (6,004) | |||||||||||||||||||
Litigation costs, net(8) | — | — | (4,022) | (4,022) | |||||||||||||||||||
| Stock-based compensation | — | — | 25,041 | 25,041 | |||||||||||||||||||
| Equity method loss | (883) | — | — | (883) | |||||||||||||||||||
| Operating loss | $ | (113,655) | $ | (15,440) | $ | (90,414) | $ | (219,509) | |||||||||||||||
| Interest expense, net | (71,417) | ||||||||||||||||||||||
Other, net(5) | 5,054 | ||||||||||||||||||||||
| Loss on extinguishment of debt | (11,293) | ||||||||||||||||||||||
| Equity method loss | (883) | ||||||||||||||||||||||
| Provision for income taxes | (13,423) | ||||||||||||||||||||||
| Loss from continuing operations | $ | (311,471) | |||||||||||||||||||||
| Operating income margin | NM | NM | NM | NM | |||||||||||||||||||
19
| Three Months Ended December 31, 2019 | |||||||||||||||||||||||
| Travel Solutions | Hospitality Solutions | Corporate | Total | ||||||||||||||||||||
| Adjusted Operating Income (Loss) | $ | 154,631 | $ | (6,161) | $ | (50,851) | $ | 97,619 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Equity method income | 71 | — | — | 71 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 16,633 | 16,633 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | 10,700 | 10,700 | |||||||||||||||||||
Litigation costs, net(8) | — | — | (3,224) | (3,224) | |||||||||||||||||||
| Stock-based compensation | — | — | 15,802 | 15,802 | |||||||||||||||||||
| Operating income (loss) | $ | 154,560 | $ | (6,161) | $ | (90,762) | $ | 57,637 | |||||||||||||||
| Adjusted EBITDA | $ | 249,489 | $ | 6,969 | $ | (49,646) | $ | 206,812 | |||||||||||||||
| Less: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(3b) | 64,847 | 11,904 | 1,205 | 77,956 | |||||||||||||||||||
Amortization of capitalized implementation costs(3c) | 6,901 | 1,226 | — | 8,127 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 16,633 | 16,633 | |||||||||||||||||||
Amortization of upfront incentive consideration(4) | 23,110 | — | — | 23,110 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | 10,700 | 10,700 | |||||||||||||||||||
Litigation costs, net(8) | — | — | (3,224) | (3,224) | |||||||||||||||||||
| Stock-based compensation | — | — | 15,802 | 15,802 | |||||||||||||||||||
| Equity method income | 71 | — | — | 71 | |||||||||||||||||||
| Operating income (loss) | $ | 154,560 | $ | (6,161) | $ | (90,762) | $ | 57,637 | |||||||||||||||
| Interest expense, net | (39,027) | ||||||||||||||||||||||
Other, net(5) | (3,314) | ||||||||||||||||||||||
| Equity method income | 71 | ||||||||||||||||||||||
| Provision for income taxes | (3,543) | ||||||||||||||||||||||
| Income from continuing operations | $ | 11,824 | |||||||||||||||||||||
| Operating income margin | 17.6 | % | NM | NM | 6.1 | % | |||||||||||||||||
20
| Year Ended December 31, 2020 | |||||||||||||||||||||||
| Travel Solutions | Hospitality Solutions | Corporate | Total | ||||||||||||||||||||
| Adjusted Operating Loss | $ | (523,122) | $ | (63,915) | $ | (158,237) | $ | (745,274) | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Equity method loss | (2,528) | — | — | (2,528) | |||||||||||||||||||
Impairment and related charges(2) | — | — | 8,684 | 8,684 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 65,998 | 65,998 | |||||||||||||||||||
Restructuring and other costs(6) | — | — | 85,797 | 85,797 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | 16,787 | 16,787 | |||||||||||||||||||
Litigation costs, net(8) | — | — | (1,919) | (1,919) | |||||||||||||||||||
| Stock-based compensation | — | — | 69,946 | 69,946 | |||||||||||||||||||
| Operating loss | $ | (520,594) | $ | (63,915) | $ | (403,530) | $ | (988,039) | |||||||||||||||
| Adjusted EBITDA | $ | (197,905) | $ | (21,126) | $ | (153,821) | $ | (372,852) | |||||||||||||||
| Less: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(3b) | 217,808 | 38,427 | 4,416 | 260,651 | |||||||||||||||||||
Amortization of capitalized implementation costs(3c) | 32,732 | 4,362 | — | 37,094 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 65,998 | 65,998 | |||||||||||||||||||
Impairment and related charges(2) | — | — | 8,684 | 8,684 | |||||||||||||||||||
Restructuring and other costs(6) | — | — | 85,797 | 85,797 | |||||||||||||||||||
Amortization of upfront incentive consideration(4) | 74,677 | — | — | 74,677 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | 16,787 | 16,787 | |||||||||||||||||||
Litigation costs, net(8) | — | — | (1,919) | (1,919) | |||||||||||||||||||
| Stock-based compensation | — | — | 69,946 | 69,946 | |||||||||||||||||||
| Equity method loss | (2,528) | — | — | (2,528) | |||||||||||||||||||
| Operating loss | $ | (520,594) | $ | (63,915) | $ | (403,530) | $ | (988,039) | |||||||||||||||
| Interest expense, net | (235,091) | ||||||||||||||||||||||
Other, net(5) | (66,961) | ||||||||||||||||||||||
| Loss on extinguishment of debt | (21,626) | ||||||||||||||||||||||
| Equity method loss | (2,528) | ||||||||||||||||||||||
| Provision for income taxes | 39,913 | ||||||||||||||||||||||
| Loss from continuing operations | $ | (1,274,332) | |||||||||||||||||||||
| Operating income margin | NM | NM | NM | NM | |||||||||||||||||||
21
| Year Ended December 31, 2019 | |||||||||||||||||||||||
| Travel Solutions | Hospitality Solutions | Corporate | Total | ||||||||||||||||||||
| Adjusted Operating Income (Loss) | $ | 729,266 | $ | (21,632) | $ | (194,226) | $ | 513,408 | |||||||||||||||
| Less: | |||||||||||||||||||||||
| Equity method income | 2,044 | — | — | 2,044 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 64,604 | 64,604 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | 41,037 | 41,037 | |||||||||||||||||||
Litigation costs, net(8) | — | — | (24,579) | (24,579) | |||||||||||||||||||
| Stock-based compensation | — | — | 66,885 | 66,885 | |||||||||||||||||||
| Operating income (loss) | $ | 727,222 | $ | (21,632) | $ | (342,173) | $ | 363,417 | |||||||||||||||
| Adjusted EBITDA | $ | 1,104,298 | $ | 31,466 | $ | (189,404) | $ | 946,360 | |||||||||||||||
| Less: | |||||||||||||||||||||||
Depreciation and amortization of property and equipment(3b) | 257,390 | 48,361 | 4,822 | 310,573 | |||||||||||||||||||
Amortization of capitalized implementation costs(3c) | 34,707 | 4,737 | — | 39,444 | |||||||||||||||||||
Acquisition-related amortization(3a) | — | — | 64,604 | 64,604 | |||||||||||||||||||
Amortization of upfront incentive consideration(4) | 82,935 | — | — | 82,935 | |||||||||||||||||||
Acquisition-related costs(7) | — | — | 41,037 | 41,037 | |||||||||||||||||||
Litigation costs, net(8) | — | — | (24,579) | (24,579) | |||||||||||||||||||
| Stock-based compensation | — | — | 66,885 | 66,885 | |||||||||||||||||||
| Equity method income | 2,044 | — | — | 2,044 | |||||||||||||||||||
| Operating income (loss) | $ | 727,222 | $ | (21,632) | $ | (342,173) | $ | 363,417 | |||||||||||||||
| Interest expense, net | (156,391) | ||||||||||||||||||||||
Other, net(5) | (9,432) | ||||||||||||||||||||||
| Equity method income | 2,044 | ||||||||||||||||||||||
| Provision for income taxes | (35,326) | ||||||||||||||||||||||
| Income from continuing operations | $ | 164,312 | |||||||||||||||||||||
| Operating income margin | 19.5 | % | NM | NM | 9.1 | % | |||||||||||||||||
22
Non-GAAP Footnotes
(1) Net income attributable to non-controlling interests represents an adjustment to include earnings allocated to non-controlling interests held in (i) Sabre Travel Network Middle East of 40% and Sabre Seyahat Dagitim Sistemleri A.S. of 40% for all periods presented, (ii) Sabre Travel Network Lanka (Pte) Ltd of 40% beginning in July 2015, and (iii) Sabre Bulgaria of 40% beginning in November 2017.
(2) Impairment and related charges consists of $5 million associated with software developed for internal use and $4 million associated with capitalized implementation costs related to a specific customer based on our analysis of the recoverability of such amounts.
(3) 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.
b. Depreciation and amortization of property and equipment includes software developed for internal use as well as amortization of contract acquisition costs.
c. Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model.
(4) Our Travel Solutions 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, excluding technology costs over an average expected life of the service contract, generally over three to ten years. This consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. These 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 up front. These 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.
(5) Other, net includes a $46 million charge related to termination payments incurred in 2020 in connection with the now-terminated acquisition of Farelogix Inc. ("Farelogix") and a $18 million pension settlement charge recorded in 2020, partially offset by a $10 million gain on sale of our headquarters building in the fourth quarter of 2020. In addition, all periods presented include foreign exchange gains and losses related to the remeasurement of
23
foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.
(6) Restructuring and other costs represents charges associated with business restructuring and associated changes, including a strategic realignment of our airline and agency-focused businesses, as well as other measures to support the new organizational structure and to respond to the impacts of the COVID-19 pandemic on our business, facilities and cost structure.
(7) Acquisition-related costs represent fees and expenses incurred associated with the now-terminated agreement to acquire Farelogix, as well as costs related to the acquisition of Radixx in 2019.
(8) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters. In 2020, we reversed the previously accrued non-income tax expense of $4 million due to success in our claims. In 2019, we recorded the reversal of our previously accrued loss related to the US Airways legal matter for $32 million.
(9) The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, the impact of the adjustments on valuation allowance assessments, and the tax effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions, and other items.
24