Sabre reports second quarter 2017 results

  • Second quarter revenue increased 7%
  • Airline and Hospitality Solutions revenue grew 8%
  • Travel Network revenue rose 6%, driven by high value markets like EMEA
  • Travel Network bookings growth increased 2.4%, with EMEA contributing 11%
  • Company announced cost reduction and business alignment program expected to result in $110 million of per annum run-rate savings
  • Airline Solutions signed multiple SabreSonic renewals, a new agreement with IAG for Planning and Scheduling bundle, and solution sales at Scandinavia Airlines, Air China, Aerolineas Argentinas and Thai Airways International
  • Hospitality Solutions signed multiple agreements with customers like Rede Nacional Inn de Hotels and Hoteles Mission, the third largest hotelier in Mexico.

SINGAPORE – August 3, 2017 – Sabre Corporation (“Sabre” or the “Company”) (NASDAQ: SABR) recently announced financial results for the quarter ended June 30, 2017.

“Second quarter revenue growth was strong at 7%,” said Sean Menke, Sabre president and CEO. “We continued to make good progress across a number of key initiatives, including strengthening the senior leadership team, insourcing our shopping complex and Global Network Operations Center, accelerating the development of our next-generation hospitality property management system and undertaking a thorough review of our Airline Solutions portfolio. Today we announced a program to reduce costs and drive greater alignment across the organization.”

Q2 2017 Financial Summary
Sabre consolidated second quarter revenue increased 6.6% to $900.7 million, compared to $845.2 million in the year ago period.

Net loss attributable to common stockholders totaled $6.5 million, compared to net income of $72.0 million in the second quarter of 2016. The decrease in net income attributable to common stockholders is primarily the result of a $92.0 million impairment and related charges associated with the Airline Solutions Air Berlin contract and a $25.5 million charge related to the cost reduction and business alignment program.

Second quarter consolidated Adjusted EBITDA was $261.4 million, a 3.7% decrease from $271.5 million in the second quarter of 2016. The decrease in consolidated Adjusted EBITDA is the result of an Adjusted EBITDA increase at Airline and Hospitality Solutions, a decrease at Travel Network and higher corporate product and technology costs.

For the quarter, Sabre reported diluted net loss attributable to common stockholders per share of $0.02 compared to $0.25 net income attributable to common shareholders per share in the second quarter of 2016. Adjusted net income from continuing operations per share (Adjusted EPS) decreased 5.4% to $0.35 from $0.37 per share in the second quarter of 2016.

Cash provided by operating activities totaled $154.8 million, compared to $123.6 million in the second quarter of 2016. Cash used in investing activities totaled $79.1 million, compared to $95.4 million in the second quarter of 2016. Cash used in financing activities totaled $54.5 million, compared to $63.4 million in the second quarter of 2016. Second quarter Free Cash Flow was $75.7 million, compared to $34.5 million in the year-ago period. Capital expenditures totaled $79.1 million, compared to $89.1 million in the year-ago period. Adjusted Capital Expenditures, which include capitalized implementation costs, totaled $93.4 million, compared to $112.4 million in the second quarter of 2016.

During the second quarter of 2017, Sabre returned $49.7 million to shareholders including $39.0 million through its regular quarterly dividend and the repurchase of 483,058 shares under its share repurchase authorization for approximately $10.7 million in aggregate.


Sabre Airline and Hospitality Solutions
Second quarter Airline and Hospitality Solutions revenue increased 7.8% to $271.8 million compared to $252.2 million for the same period in 2016. Contributing to the rise in revenue was an 8.0% increase in airline passengers boarded through the SabreSonic reservation solution, high-single digit revenue growth in AirVision and AirCentre solutions and revenue growth of approximately 10% in Hospitality Solutions, offset by a decline in consulting revenue in the quarter.

Second quarter Airline and Hospitality Solutions operating income increased 11.7% to $61.9 million from $55.4 million in the prior-year period. Operating income margin was 22.8%, compared to 22.0% for the prior-year quarter. Second quarter Airline and Hospitality Solutions Adjusted EBITDA increased 10.6% to $101.7 million from $91.9 million in the prior-year period. Adjusted EBITDA margin was 37.4%, compared to 36.5% in the prior-year quarter.

Sabre Travel Network
Second quarter Travel Network revenue increased 6.3% to $635.6 million, compared to $597.9 million for the same period in 2016. Travel Network global bookings increased 2.4% in the quarter, driven by 11.1% growth in EMEA and 2.2% growth in North America, while bookings declined 1.1% in Asia-Pacific and 3.9% in Latin America.

Second quarter Travel Network operating income decreased 4.0% to $208.6 million from $217.3 million in the prior-year period. Operating income margin was 32.8%, compared to 36.3% for the prior-year quarter. Second quarter Travel Network Adjusted EBITDA decreased 2.3% to $245.9 million from $251.6 million in the prior-year period. Adjusted EBITDA margin was 38.7%, compared to 42.1% in the prior-year quarter.

Cost Reduction and Business Alignment Program
Sabre announced an initiative to streamline and focus the business through reorganizing certain functions, reducing layers of management, and lowering costs to enable a more nimble, faster moving and focused organization. The initiative is expected to reduce global headcount by approximately 9%. At full run-rate, the program is anticipated to result in approximately $110 million of annual savings. Sabre expects the program to be neutral to 2017 Free Cash Flow. The Company recognized a $25 million charge in the second quarter of 2017 related to the program and expects to realize approximately $25 million of cost savings in 2017. Cost savings under the initiative are expected to achieve full run-rate in 2018.

Business Outlook and Financial Guidance
With respect to the guidance below, full-year Adjusted Net Income guidance consists of full-year expected net income attributable to common stockholders less the estimated impact of loss from discontinued operations, net of tax, of approximately $5 million; net income attributable to non-controlling interests of approximately $5 million; acquisition-related amortization of approximately $100 million; impairment and related charges of $92 million; stock-based compensation expense of approximately $50 million; restructuring and other costs of $25 million; other items (primarily consisting of litigation and other costs) of approximately $40 million; and the tax benefit of these adjustments of approximately $105 million. Full-year Adjusted EPS guidance consists of Adjusted Net Income divided by the projected weighted-average diluted common share count for the full year of approximately 281.5 million.

Full-year Adjusted EBITDA guidance consists of expected Adjusted Net Income guidance less the impact of depreciation and amortization of property and equipment, amortization of capitalized implementation costs and amortization of upfront incentive consideration of approximately $365 million; interest expense, net of approximately $155 million; and provision for income taxes less tax impact of net income adjustments of approximately $170 million.

Full-year Free Cash Flow guidance consists of expected full-year cash provided by operating activities of $685 million to $705 million less additions to property and equipment of $335 million to $355 million.

Full-Year 2017 Guidance
Sabre reiterated full-year 2017 guidance ranges for all income statement metrics, with the exception of Adjusted EBITDA, which was lowered by $25 million at the top and bottom end of the range. While maintaining its full-year Adjusted Net Income and EPS guidance, Sabre expects that results will likely be in the lower half of their respective ranges. Strategic prioritization has led Sabre to reduce its expectations for 2017 capital expenditures and capitalized implementation costs by $50 million in aggregate. The Company continues to expect full-year Free Cash Flow to total approximately $350 million, which reflects the revised guidance for Adjusted EBITDA, the decrease in expected Adjusted Capital Expenditures and the cash impact of the charge taken in the second quarter of 2017 related to the cost reduction and business alignment program.

In summary, Sabre’s full-year 2017 guidance is as follows:

Supplemental Financial Information
In conjunction with the earnings report, a file of supplemental financial information will be available on the Investor Relations section of our website, investors.sabre.com.

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, revenue management, flight, network and crew management. Sabre also operates a leading global travel marketplace, which processes more than US$120 billion of global travel spend 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
We routinely post important information for investors on the Investor Relations section of our website, investors.sabre.com. We intend to use this website as a means of disclosing material, non-public information and for complying with our disclosure obligations under Regulation FD. Accordingly, investors should monitor the Investor Relations section of our website, in addition to following our press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, our website is not incorporated by reference into, and is not a part of, this document.

Industry Data
This release contains industry data, forecasts and other information that we 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 our 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. We have not independently verified this third-party information nor have we ascertained the underlying economic assumptions relied upon in those sources, and we 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 Gross Profit, Adjusted Operating Income, Adjusted Net Income, Adjusted EBITDA, Adjusted EPS, Adjusted Capital Expenditures, Free Cash Flow, and the ratios based on these financial measures. In addition, we provide certain forward guidance with respect to Adjusted EBITDA, Adjusted Net Income, Adjusted EPS and Free Cash Flow. We are unable to provide this forward guidance on a GAAP basis without unreasonable effort; however, see “Business Outlook and Financial Guidance” for additional information including estimates of certain components of the non-GAAP adjustments contained in the guidance.

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 “guidance,” “expect,” “will,” “anticipate,” “outlook,” “estimate,” “project,” “believe,” “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, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, exposure to pricing pressure in the Travel Network business, the implementation and effects of new or renewed agreements, the implementation and results of cost reduction and business alignment program, travel suppliers’ usage of alternative distribution models, maintenance of the integrity of our systems and infrastructure and the effect of any security breaches, competition in the travel distribution market and solutions markets, failure to adapt to technological developments, dependence on establishing, maintaining and renewing contracts with customers and other counterparties and collecting amounts due to us under these agreements changes affecting travel supplier customers, use of third-party distributor partners, dependence on relationships with travel buyers, 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” and uncertainty due to related negotiations, risks arising from global operations, reliance on third parties to provide information technology services, the financial and business effects of acquisitions, including integration of these acquisitions, our ability to recruit, train and retain employees, including our key executive officers and technical employees and the effects of litigation. 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 May 2, 2017 and our Annual Report on Form 10-K filed with the SEC on February 17, 2017 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.

Media Contact
Jovelyn Tay
+65 6426 0516
jovelyn.tay@sabre.com

Investors Contact
Barry Sievert
sabre.investorrelations@sabre.com