SEC Filing | Sabre Corporation

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sabr-20210930

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2021


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934

Sabre Corporation

(Exact name of registrant as specified in its charter)


Delaware	001-36422	20-8647322
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification No.)

3150 Sabre Drive

Southlake, TX 76092

(Address, including zip code, of principal executive offices)

(682)-605-1000

(Registrant’s telephone number, including area code)



Securities registered pursuant to Section 12(b) of the Act:
Common Stock, $0.01 par value	SABR	The NASDAQ Stock Market LLC
6.50% Series A Mandatory Convertible Preferred Stock	SABRP	The NASDAQ Stock Market LLC
(Title of each class)	(Trading Symbol)	(Name of each exchange on which registered)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 (the “Exchange Act”) during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days: Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer”, “smaller reporting company”, and "emerging growth company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an 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. ¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of October 28, 2021, 323,437,217 shares of the registrant’s common stock, par value $0.01 per share, were outstanding.

SABRE CORPORATION

TABLE OF CONTENTS



PART I. FINANCIAL INFORMATION		Page No.
Item 1.	Financial Statements:
	Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2021 and 2020	1
	Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2021 and 2020	2
	Consolidated Balance Sheets as of September 30, 2021 and December 31, 2020	3
	Consolidated Statements of Cash Flows for the Nin e Months Ended September 30, 2021 and 2020	4
	Consolidated Statements of Stockholders' Equity for the Three and Nin e Months Ended September 30, 2021 and 2020	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	46
Item 4.	Controls and Procedures	47
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	47
Item 1A.	Risk Factors	48
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	63
Item 6.	Exhibits	63

We may use our website, our Twitter account (@Sabre_Corp) and other social media channels as additional means of disclosing information to the public. The information disclosed through those channels may be considered to be material and may not be otherwise disseminated by us, so we encourage investors to review our website, Twitter account and other social media channels. The contents of our website or social media channels referenced herein are not incorporated by reference into this Quarterly Report on Form 10-Q.

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Revenue	$	441,086	$	278,365	$	1,188,238	$	1,020,386
Cost of revenue, excluding technology costs	171,429		115,426		498,011		458,068
Technology costs	269,111		276,362		782,991		883,837
Selling, general and administrative	157,234		119,626		446,847		447,011

Operating loss	(156,688)		(233,049)		(539,611)		(768,530)
Other income (expense):
Interest expense, net	(65,461)		(64,376)		(193,834)		(157,749)
Loss on extinguishment of debt	(13,070)		(10,333)		(13,070)		(10,333)
Equity method loss	(114)		(460)		(395)		(1,645)
Other, net	(5,993)		(18,431)		2,439		(72,015)
Total other expense, net	(84,638)		(93,600)		(204,860)		(241,742)
Loss from continuing operations before income taxes	(241,326)		(326,649)		(744,471)		(1,010,272)
Benefit for income taxes	(6,613)		(19,874)		(4,513)		(51,757)
Loss from continuing operations	(234,713)		(306,775)		(739,958)		(958,515)
Income (loss) from discontinued operations, net of tax	186		(533)		(158)		(3,331)
Net loss	(234,527)		(307,308)		(740,116)		(961,846)
Net income attributable to noncontrolling interests	714		125		1,657		837
Net loss attributable to Sabre Corporation	(235,241)		(307,433)		(741,773)		(962,683)
Preferred stock dividends	5,400		2,231		16,256		2,231
Net loss attributable to common stockholders	$	(240,641)	$	(309,664)	$	(758,029)	$	(964,914)

Basic net loss per share attributable to common stockholders:
Loss from continuing operations	$	(0.75)	$	(1.06)	$	(2.37)	$	(3.43)
Loss from discontinued operations	—		—		—		(0.01)
Net loss per common share	$	(0.75)	$	(1.06)	$	(2.37)	$	(3.44)
Diluted net loss per share attributable to common stockholders:
Loss from continuing operations	$	(0.75)	$	(1.06)	$	(2.37)	$	(3.43)
Loss from discontinued operations	—		—		—		(0.01)
Net loss per common share	$	(0.75)	$	(1.06)	$	(2.37)	$	(3.44)
Weighted-average common shares outstanding:
Basic	322,720		292,392		320,055		280,750
Diluted	322,720		292,392		320,055		280,750

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

(In thousands)

(Unaudited)


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Net loss	$	(234,527)	$	(307,308)	$	(740,116)	$	(961,846)
Other comprehensive income (loss), net of tax:


Foreign currency translation adjustments ("CTA")	(1,635)		4,439		(5,366)		4,732
Retirement-related benefit plans:
Net actuarial gain (loss), net of taxes of $6,153, $3,524, $—, $2,318	3,701		(12,101)		25,048		(7,960)
Pension settlement, net of taxes of $973, $(3,055), $—, $(3,055)	3,170		10,488		6,544		10,488
Amortization of prior service credits, net of taxes of $(122), $80, $38, $241	(392)		(278)		(948)		(834)
Amortization of actuarial losses, net of taxes of $931, $(525), $(38), $(1,451)	3,037		1,799		6,400		5,005
Net change in retirement-related benefit plans, net of tax	9,516		(92)		37,044		6,699
Derivatives:
Unrealized gains (losses), net of taxes of $2,715, $(544), $2,745, $5,641	2,698		2,224		2,595		(20,582)
Reclassification adjustment for realized losses, net of taxes of $(930), $(1,283), $(2,745), $(3,585)	3,237		4,500		9,553		12,894
Net change in derivatives, net of tax	5,935		6,724		12,148		(7,688)
Share of other comprehensive (loss) income of equity method investments	(250)		258		(474)		(540)
Other comprehensive income	13,566		11,329		43,352		3,203
Comprehensive loss	(220,961)		(295,979)		(696,764)		(958,643)
Less: Comprehensive income attributable to noncontrolling interests	(714)		(125)		(1,657)		(837)
Comprehensive loss attributable to Sabre Corporation	$	(221,675)	$	(296,104)	$	(698,421)	$	(959,480)

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	September 30, 2021		December 31, 2020
Assets
Current assets
Cash and cash equivalents	$	1,023,769	$	1,499,665
Restricted cash	21,039		—
Accounts receivable, net of allowance for credit losses of $77,751 and $96,150	329,838		255,468


Prepaid expenses and other current assets	137,639		132,972
Total current assets	1,512,285		1,888,105
Property and equipment, net of accumulated depreciation of $2,035,826 and $1,995,409	269,183		363,491
Equity method investments	22,698		24,265
Goodwill	2,624,108		2,636,546
Acquired customer relationships, net of accumulated amortization of $778,563 and $761,335	266,727		289,150
Other intangible assets, net of accumulated amortization of $742,221 and $714,095	193,017		222,216
Deferred income taxes	21,995		24,181
Other assets, net	532,895		629,768
Total assets	$	5,442,908	$	6,077,722

Liabilities and stockholders’ (deficit) equity
Current liabilities
Accounts payable	$	99,305	$	115,229
Accrued compensation and related benefits	126,621		86,830
Accrued subscriber incentives	133,689		100,963
Deferred revenues	117,856		99,470
Other accrued liabilities	173,824		193,383
Current portion of debt	30,124		26,068

Total current liabilities	681,419		621,943
Deferred income taxes	50,159		72,196
Other noncurrent liabilities	338,572		380,621
Long-term debt	4,727,835		4,717,808
Commitments and contingencies (Note 13)
Stockholders’ (deficit) equity
Preferred Stock, $0.01 par value, 225,000 authorized, 3,340 issued and outstanding as of September 30, 2021 and December 31, 2020; aggregate liquidation value of $334,000 as of September 30, 2021 and December 31, 2020	33		33
Common Stock: $0.01 par value; 1,000,000 authorized shares; 345,752 and 338,662 shares issued, 322,842 and 317,297 shares outstanding at September 30, 2021 and December 31, 2020, respectively	3,458		3,387
Additional paid-in capital	3,080,949		2,985,077
Treasury Stock, at cost, 22,910 and 21,365 shares at September 30, 2021 and December 31, 2020, respectively	(497,944)		(474,790)
Accumulated deficit	(2,857,653)		(2,099,624)
Accumulated other comprehensive loss	(92,605)		(135,957)
Non-controlling interest	8,685		7,028
Total stockholders’ (deficit) equity	(355,077)		285,154
Total liabilities and stockholders’ (deficit) equity	$	5,442,908	$	6,077,722

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2021		2020
Operating Activities
Net loss	$	(740,116)	$	(961,846)
Adjustments to reconcile net loss to cash used in operating activities:
Depreciation and amortization	204,308		279,159

Stock-based compensation expense	86,122		44,905
Amortization of upfront incentive consideration	46,063		56,733

Gain on sale of investment	(14,532)		—
Deferred income taxes	(13,489)		(65,551)

Loss on extinguishment of debt	13,070		10,333
Amortization of debt discount and issuance costs	8,815		6,736
Pension settlement charge	6,544		13,543
Provision for expected credit losses	(3,728)		58,375



Other	3,141		7,392
Debt modification costs	2,435		—
Dividends received from equity method investments	698		1,691

Loss from discontinued operations	158		3,331
Acquisition termination fee	—		24,811

Changes in operating assets and liabilities:
Accounts and other receivables	(76,249)		182,449
Prepaid expenses and other current assets	(4,312)		(1,967)
Capitalized implementation costs	(14,363)		(10,680)
Upfront incentive consideration	(3,823)		(26,468)
Other assets	8,368		12,837
Accrued compensation and related benefits	40,604		12,735
Accounts payable and other accrued liabilities	25,410		(263,925)
Deferred revenue including upfront solution fees	16,724		28,338
Cash used in operating activities	(408,152)		(587,069)
Investing Activities

Proceeds from disposition of investments and assets	24,874		—
Additions to property and equipment	(30,409)		(48,259)

Other investing activities	—		(4,375)
Cash used in investing activities	(5,535)		(52,634)
Financing Activities

Proceeds of borrowings from lenders	1,070,380		2,345,000
Payments on borrowings from lenders	(1,053,728)		(894,613)
Net payment on the settlement of equity-based awards	(22,378)		(5,298)
Dividends paid on preferred stock	(16,283)		—
Debt prepayment fees and issuance costs	(12,194)		(54,158)
Payment for settlement of exchangeable notes	(2,541)		—
Other financing activities	(269)		(4,513)
Proceeds from issuance of preferred stock, net	—		322,885
Proceeds from issuance of common stock, net	—		275,003
Payments on Tax Receivable Agreement	—		(71,958)
Cash dividends paid to common shareholders	—		(38,544)


Cash (used in) provided by financing activities	(37,013)		1,873,804
Cash Flows from Discontinued Operations
Cash used in operating activities	(2,376)		(3,739)

Cash used in discontinued operations	(2,376)		(3,739)
Effect of exchange rate changes on cash and cash equivalents	(1,781)		1,814
(Decrease) increase in cash, cash equivalents and restricted cash	(454,857)		1,232,176
Cash, cash equivalents and restricted cash at beginning of period	1,499,665		436,176
Cash, cash equivalents and restricted cash at end of period	$	1,044,808	$	1,668,352

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands, except share data)


	Stockholders’ Equity (Deficit)
	Preferred Stock			Common Stock			Additional Paid in Capital		Treasury Stock			Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Equity (Deficit)
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at December 31, 2020	3,340,000	$	33	338,661,960	$	3,387	$	2,985,077	21,365,227	$	(474,790)	$	(2,099,624)	$	(135,957)	$	7,028	$	285,154
Comprehensive loss	—	—		—	—		—		—	—		(260,678)		215		484		(259,979)
Preferred stock dividends(1)	—	—		—	—		—		—	—		(5,428)		—		—		(5,428)

Settlement of stock-based awards	—	—		2,900,693	29		148		764,947	(12,611)		—		—		—		(12,434)

Stock-based compensation expense	—	—		—	—		24,426		—	—		—		—		—		24,426

Balance at March 31, 2021	3,340,000	$	33	341,562,653	$	3,416	$	3,009,651	22,130,174	$	(487,401)	$	(2,365,730)	$	(135,742)	$	7,512	$	31,739
Comprehensive loss	—	—		—	—		—		—	—		(245,854)		29,571		459		(215,824)
Preferred stock dividends(1)	—	—		—	—		—		—	—		(5,428)						(5,428)

Settlement of stock-based awards	—	—		2,377,690	24		214		714,622	(9,820)				—		—		(9,582)

Stock-based compensation expense	—	—		—	—		29,478		—	—		—		—		—		29,478
Issuance of common stock upon conversion of exchangeable notes	—	—		1,269,497	12		9,813		—	—		—		—		—		9,825
Balance at June 30, 2021	3,340,000	$	33	345,209,840	$	3,452	$	3,049,156	22,844,796	$	(497,221)	$	(2,617,012)	$	(106,171)	$	7,971	$	(159,792)
Comprehensive loss	—	—		—	—		—		—	—		(235,241)		13,566		714		(220,961)
Preferred stock dividends(1)	—	—		—	—		—		—	—		(5,400)		—		—		(5,400)





Settlement of stock-based awards	—	—		542,451	6		355		65,518	(723)		—		—		—		(362)

Stock-based compensation expense	—	—		—	—		32,218		—	—		—		—		—		32,218

Settlement of exchangeable notes	—	—		—	—		(780)		—	—		—		—		—		(780)

Balance at September 30, 2021	3,340,000	$	33	345,752,291	$	3,458	$	3,080,949	22,910,314	$	(497,944)	$	(2,857,653)	$	(92,605)	$	8,685	$	(355,077)

(1) Our mandatory convertible preferred stock accumulates cumulative dividends at an annual rate of 6.50%.



	Preferred Stock			Common Stock			Additional Paid in Capital		Treasury Stock			Retained Earnings (Deficit)		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Equity
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at December 31, 2019	—	$	—	294,319,417	$	2,943	$	2,317,544	20,586,852	$	(468,618)	$	(763,482)	$	(149,306)	$	8,588	$	947,669
Comprehensive loss	—	—		—	—		—		—	—		(212,680)		(19,303)		783		(231,200)
Common stock dividends(1)	—	—		—	—		—		—	—		(38,544)		—		—		(38,544)

Settlement of stock-based awards	—	—		2,224,053	22		50		642,065	(5,272)		—		—		—		(5,200)

Stock-based compensation expense	—	—		—	—		17,577		—	—		—		—		—		17,577

Adoption of New Accounting Standards	—	—		—	—		—		—	—		(7,591)		—		—		(7,591)
Balance at March 31, 2020	—	$	—	296,543,470	$	2,965	$	2,335,171	21,228,917	$	(473,890)	$	(1,022,297)	$	(168,609)	$	9,371	$	682,711
Comprehensive loss	—	—		—	—		—		—	—		(442,570)		11,177		(71)		(431,464)


Settlement of stock-based awards	—	—		587,232	6		168		29,664	(215)		—		—		—		(41)

Stock-based compensation expense	—	—		—	—		8,762		—	—		—		—		—		8,762


Balance at June 30, 2020	—	$	—	297,130,702	$	2,971	$	2,344,101	21,258,581	$	(474,105)	$	(1,464,867)	$	(157,432)	$	9,300	$	259,968
Comprehensive loss	—	—		—	—		—		—	—		(307,433)		11,329		125		(295,979)
Accrued preferred stock dividend(2)	—	—		—	—		—		—	—		(2,231)		—		—		(2,231)
Issuance of preferred stock, net	3,340,000	33		—	—		322,852		—	—		—		—		—		322,885
Issuance of common stock, net	—	—		41,071,429	411		274,592		—	—		—		—		—		275,003


Settlement of stock-based awards	—	—		297,150	3		—		7,278	(60)		—		—		—		(57)



Stock-based compensation expense	—	—		—	—		18,566		—	—		—		—		—		18,566
Balance at September 30, 2020	3,340,000	$	33	338,499,281	$	3,385