SEC Filing | Sabre Corporation

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sabr-20220930

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, 2022


☐			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, 2022, 328,361,211 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, 2022 and 2021	1
	Consolidated Statements of Comprehensive Loss for the Three and Nine Months Ended September 30, 2022 and 2021	2
	Consolidated Balance Sheets as of September 30, 2022 and December 31, 2021	3
	Consolidated Statements of Cash Flows for the Nine Months Ended September 30, 2022 and 2021	4
	Consolidated Statements of Stockholders' (Deficit) Equity for the Three and Nine Months Ended September 30, 2022 and 2021	5
	Notes to Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	23
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	44
Item 4.	Controls and Procedures	44
PART II. OTHER INFORMATION
Item 1.	Legal Proceedings	44
Item 1A.	Risk Factors	45
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	60
Item 6.	Exhibits	60

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,
	2022		2021		2022		2021
Revenue	$	663,394	$	441,086	$	1,905,836	$	1,188,238
Cost of revenue, excluding technology costs	274,330		171,429		771,609		498,011
Technology costs	273,240		269,111		824,142		782,991
Selling, general and administrative	172,359		157,234		516,345		446,847

Operating loss	(56,535)		(156,688)		(206,260)		(539,611)
Other expense:
Interest expense, net	(77,120)		(65,461)		(205,062)		(193,834)
Loss on extinguishment of debt	—		(13,070)		(3,533)		(13,070)
Equity method income (loss)	199		(114)		215		(395)
Other, net	(7,687)		(5,993)		139,617		2,439
Total other expense, net	(84,608)		(84,638)		(68,763)		(204,860)
Loss from continuing operations before income taxes	(141,143)		(241,326)		(275,023)		(744,471)
Benefit for income taxes	(6,989)		(6,613)		(2,195)		(4,513)
Loss from continuing operations	(134,154)		(234,713)		(272,828)		(739,958)
(Loss) income from discontinued operations, net of tax	(446)		186		(596)		(158)
Net loss	(134,600)		(234,527)		(273,424)		(740,116)
Net income attributable to noncontrolling interests	776		714		1,933		1,657
Net loss attributable to Sabre Corporation	(135,376)		(235,241)		(275,357)		(741,773)
Preferred stock dividends	5,346		5,400		16,039		16,256
Net loss attributable to common stockholders	$	(140,722)	$	(240,641)	$	(291,396)	$	(758,029)

Basic net loss per share attributable to common stockholders:
Loss from continuing operations	$	(0.43)	$	(0.75)	$	(0.89)	$	(2.37)

Net loss per common share	$	(0.43)	$	(0.75)	$	(0.89)	$	(2.37)
Diluted net loss per share attributable to common stockholders:
Loss from continuing operations	$	(0.43)	$	(0.75)	$	(0.89)	$	(2.37)

Net loss per common share	$	(0.43)	$	(0.75)	$	(0.89)	$	(2.37)
Weighted-average common shares outstanding:
Basic	328,228		322,720		326,170		320,055
Diluted	328,228		322,720		326,170		320,055

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,
	2022		2021			2022		2021
Net loss	$	(134,600)	$	(234,527)		$	(273,424)	$	(740,116)
Other comprehensive income (loss), net of tax:


Foreign currency translation adjustments ("CTA")	(7,015)		(1,635)			(8,301)		(5,366)
Retirement-related benefit plans:
Net actuarial gain, net of taxes of $52, $6,153, $52, $—	263		3,701			1,934		25,048
Pension settlement, net of taxes of $—, $973, $—, $—	—		3,170			—		6,544
Amortization of prior service credits, net of taxes of $—, $(122), $—, $38	(358)		(392)			(1,074)		(948)
Amortization of actuarial losses, net of taxes of $—, $931, $—, $(38)	1,998		3,037			5,990		6,400
Net change in retirement-related benefit plans, net of tax	1,903		9,516			6,850		37,044
Derivatives:
Unrealized gains, net of taxes of $—, $2,715, $—, $2,745	4,422		2,698			4,405		2,595
Reclassification adjustment for realized (gains) losses, net of taxes of $—, $(930), $—, $(2,745)	(41)		3,237			203		9,553
Net change in derivatives, net of tax	4,381		5,935			4,608		12,148
Share of other comprehensive loss of equity method investments	(564)		(250)			(110)		(474)
Other comprehensive (loss) income	(1,295)		13,566			3,047		43,352
Comprehensive loss	(135,895)		(220,961)			(270,377)		(696,764)
Less: Comprehensive income attributable to noncontrolling interests	(776)		(714)			(1,933)		(1,657)
Comprehensive loss attributable to Sabre Corporation	$	(136,671)	$	(221,675)		$	(272,310)	$	(698,421)

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)


	September 30, 2022		December 31, 2021
Assets
Current assets
Cash and cash equivalents	$	782,763	$	978,352
Restricted cash	21,035		21,039
Accounts receivable, net of allowance for credit losses of $49,059 and $58,965	400,559		259,934


Prepaid expenses and other current assets	188,301		121,591

Current assets held for sale	—		21,358
Total current assets	1,392,658		1,402,274
Property and equipment, net of accumulated depreciation of $1,964,242 and $1,912,651	231,568		249,812
Equity method investments	22,188		22,671
Goodwill	2,528,430		2,470,206
Acquired customer relationships, net of accumulated amortization of $796,799 and $771,479	248,213		257,362
Other intangible assets, net of accumulated amortization of $767,671 and $751,917	174,700		183,321
Deferred income taxes	35,796		27,056
Other assets, net	386,069		475,424
Long-term assets held for sale	—		203,204
Total assets	$	5,019,622	$	5,291,330

Liabilities and stockholders’ deficit
Current liabilities
Accounts payable	$	135,256	$	122,934
Accrued compensation and related benefits	113,731		135,974
Accrued subscriber incentives	214,932		137,448
Deferred revenues	74,574		81,061
Other accrued liabilities	175,675		188,706
Current portion of debt	23,480		29,290
Current liabilities held for sale	—		21,092

Total current liabilities	737,648		716,505
Deferred income taxes	26,769		38,344
Other noncurrent liabilities	268,231		297,037
Long-term debt	4,718,970		4,723,685
Long-term liabilities held for sale	—		15,476
Commitments and contingencies (Note 12)
Stockholders’ deficit
Preferred stock, $0.01 par value, 225,000 authorized, 3,290 issued and outstanding as of September 30, 2022 and December 31, 2021; aggregate liquidation value of $329,000 as of September 30, 2022 and December 31, 2021	33		33
Common Stock: $0.01 par value; 1,000,000 authorized shares; 353,204 and 346,430 shares issued, 328,327 and 323,501 shares outstanding at September 30, 2022 and December 31, 2021, respectively	3,532		3,464
Additional paid-in capital	3,185,790		3,115,719
Treasury Stock, at cost, 24,877 and 22,930 shares at September 30, 2022 and December 31, 2021, respectively	(513,988)		(498,141)
Accumulated deficit	(3,341,091)		(3,049,695)
Accumulated other comprehensive loss	(77,240)		(80,287)
Noncontrolling interest	10,968		9,190
Total stockholders’ deficit	(731,996)		(499,717)
Total liabilities and stockholders’ deficit	$	5,019,622	$	5,291,330

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)


	Nine Months Ended September 30,
	2022		2021
Operating Activities
Net loss	$	(273,424)	$	(740,116)
Adjustments to reconcile net loss to cash used in operating activities:
Gain on sale of assets and investments	(180,081)		(14,532)
Depreciation and amortization	142,693		204,308

Stock-based compensation expense	70,081		86,122
Loss on fair value of investment	34,720		—
Amortization of upfront incentive consideration	34,277		46,063
Deferred income taxes	(18,869)		(13,489)
Amortization of debt discount and issuance costs	11,236		8,815
Impairment and related charges	5,146		—
Debt modification costs	4,905		2,435
Gain on loan converted to equity	(3,568)		—
Loss on extinguishment of debt	3,533		13,070
Loss from discontinued operations	596		158
Provision for expected credit losses	550		(3,728)
Dividends received from equity method investments	533		698
Other	247		3,141

Pension settlement charge	—		6,544

Changes in operating assets and liabilities:
Accounts and other receivables	(173,023)		(76,249)
Prepaid expenses and other current assets	(25,010)		(4,312)
Capitalized implementation costs	(10,043)		(14,363)
Upfront incentive consideration	(10,766)		(3,823)
Other assets	34,846		8,368
Accrued compensation and related benefits	(19,993)		40,604
Accounts payable and other accrued liabilities	60,545		25,410
Deferred revenue including upfront solution fees	(3,901)		16,724
Cash used in operating activities	(314,770)		(408,152)
Investing Activities
Net proceeds from dispositions	392,268		24,874
Purchase of investment in equity securities	(80,000)		—
Acquisitions, net of cash acquired	(72,543)		—
Additions to property and equipment	(53,474)		(30,409)

Cash provided by (used in) investing activities	186,251		(5,535)
Financing Activities


Payments on borrowings from lenders	(1,280,333)		(1,053,728)
Proceeds of borrowings from lenders	1,273,937		1,070,380
Debt discount and issuance costs	(23,751)		(12,194)
Dividends paid on preferred stock	(16,039)		(16,283)
Net payment on the settlement of equity-based awards	(15,857)		(22,378)
Other financing activities	397		(269)




Payment for settlement of exchangeable notes	—		(2,541)
Cash used in financing activities	(61,646)		(37,013)
Cash Flows from Discontinued Operations
Cash used in operating activities	(3,231)		(2,376)

Cash used in discontinued operations	(3,231)		(2,376)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	(2,197)		(1,781)
Decrease in cash, cash equivalents and restricted cash	(195,593)		(454,857)
Cash, cash equivalents and restricted cash at beginning of period	999,391		1,499,665
Cash, cash equivalents and restricted cash at end of period	$	803,798	$	1,044,808

See Notes to Consolidated Financial Statements.

SABRE CORPORATION

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ (DEFICIT) EQUITY

(In thousands, except share data)


	Stockholders’ Deficit
	Preferred Stock			Common Stock			Additional Paid in Capital		Treasury Stock			Retained Deficit		Accumulated Other Comprehensive Loss		Noncontrolling Interest		Total Stockholders' Deficit
	Shares	Amount		Shares	Amount				Shares	Amount
Balance at December 31, 2021	3,290,000	$	33	346,430,421	$	3,464	$	3,115,719	22,929,668	$	(498,141)	$	(3,049,695)	$	(80,287)	$	9,190	(499,717)
Comprehensive income	—	—		—	—		—		—	—		47,406		2,464		272		50,142
Preferred stock dividends(1)	—	—		—	—		—		—	—		(5,346)		—		—		(5,346)





Settlement of stock-based awards	—	—		3,883,688	39		(9)		1,077,178	(10,300)		—		—		—		(10,270)

Stock-based compensation expense	—	—		—	—		27,605		—	—		—		—		—		27,605


Other	—	—		—	—		—		—	—		—		—		(119)		(119)
Balance at March 31, 2022	3,290,000	$	33	350,314,109	$	3,503	$	3,143,315	24,006,846	$	(508,441)	$	(3,007,635)	$	(77,823)	$	9,343	$	(437,705)
Comprehensive loss												(187,387)		1,878		885		(184,624)
Preferred stock dividends(1)	—	—		—	—		—		—	—		(5,347)		—		—		(5,347)





Settlement of stock-based awards	—	—		2,629,221	26		(1)		777,678	(5,021)		—		—		—		(4,996)

Stock-based compensation expense	—	—		—	—		26,127		—	—		—		—		—		26,127
Other	—	—		—	—		—		—	—		—		—		(37)		(37)


Balance at June 30, 2022	3,290,000	$	33	352,943,330	$	3,529	$	3,169,441	24,784,524	$	(513,462)	$	(3,200,369)	$	(75,945)	$	10,191	$	(606,582)
Comprehensive loss												(135,376)		(1,295)		776		(135,895)
Preferred stock dividends(1)	—	—		—	—		—		—	—		(5,346)		—		—		(5,346)





Settlement of stock-based awards	—	—		260,577	3		—		92,784	(526)		—		—		—		(523)

Stock-based compensation expense	—	—		—	—		16,349		—	—		—		—		—		16,349
Other	—	—		—	—		—		—	—		—		—		1		1


Balance at September 30, 2022	3,290,000	33		353,203,907	3,532		3,185,790		24,877,308	(513,988)		(3,341,091)		(77,240)		10,968		(731,996)

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


		Stockholders’ Equity (Deficit)
	Preferred Stock		Common Stock		Additional Paid in Capital			Treasury Stock			Retained 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		—	—	—	—			—		—	—			(