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Sabre reports fourth quarter and full-year 2018 results

Fourth quarter 2018 highlights:
Revenue increased 4.8%
Net income attributable to common stockholders increased 2.8% to $84.4 million
Diluted net income attributable to common stockholders per share (EPS) was consistent with the year ago period at $0.30
Adjusted EPS grew 6.3% to $0.34

Full year 2018 highlights:
Revenue increased 7.5%
Net income attributable to common stockholders increased 39.2% to $337.5 million
Diluted net income attributable to common stockholders per share (EPS) increased 40.2% to $1.22
Adjusted EPS grew 10.0% to $1.54
Cash provided by operating activities increased 6.9% to $724.8 million

SOUTHLAKE, Texas – February 12, 2019– Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter and year ended December 31, 2018.

"2018 demonstrates continued progress on a strong foundation," said Sean Menke, Sabre president and CEO. "Our commitment to the strategy we laid out at the beginning of 2018 resulted in strong financial and operational performance, with high-single digit revenue growth, solid EPS growth and strong growth in Free Cash Flow. We augmented our leadership team with skilled technology executives, evolved our go-to-market strategy and accelerated our technology evolution. Continued evidence of momentum behind our strategic and commercial initiatives demonstrates we are delivering for our customers and stockholders. Our progress gives me confidence in our 2019 expectations, including driving continued growth in Free Cash Flow."

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Q4 2018 Financial Summary

Sabre consolidated fourth quarter revenue increased 4.8% to $923.9 million, compared to $881.9 million in the year-ago period.

Operating income was $121.0 million, a decrease of 10.1% from $134.6 million in the fourth quarter of 2017. The decline in operating income was driven by Travel Network incentive expense growth, higher depreciation and amortization and an unfavorable comparison to a $10.9 million credit in the prior year quarter related to an impairment reduction, partially offset by solid revenue growth.

Net income attributable to common stockholders totaled $84.4 million, an increase of 2.8% from net income of $82.1 million in the fourth quarter of 2017. Diluted net income attributable to common stockholders per share (EPS) was consistent with the year ago period at $0.30. The increase in net income attributable to common stockholders was partially driven by a U.S. statutory tax rate reduction and favorable comparison to $46.6 million of transition tax expense in the year-ago quarter related to the enactment of the Tax Cuts and Jobs Act ("TCJA"). This was partially offset by the items impacting operating income described above and an unfavorable comparison to a $59.6 million provisional Tax Receivable Agreement liability reduction included in other income in the year-ago quarter, also related to the enactment of the TCJA.

Fourth quarter consolidated Adjusted Operating Income was $157.9 million, a 2.1% increase from $154.6 million in the fourth quarter of 2017. The increase in consolidated Adjusted Operating Income was the result of solid revenue growth, partially offset by Travel Network incentive expense growth and higher depreciation and amortization.

For the quarter, Sabre reported Adjusted Net Income from continuing operations per share (Adjusted EPS) of $0.34, an increase of 6.3% from $0.32 per share in the fourth quarter of 2017.

During the fourth quarter of 2018, Sabre returned $38.5 million to shareholders through its regular quarterly dividend.

Full-Year 2018 Financial Summary

For the full-year 2018, Sabre total consolidated revenue increased 7.5% to $3.867 billion, compared to $3.598 billion for the prior year.

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Operating income was $562.0 million, an increase of 13.9% from $493.4 million in 2017. Solid revenue growth and the benefits of the cost reduction and business alignment program initiated in August 2017 were largely offset by Travel Network incentive expense growth, increased technology operating expenses and higher depreciation and amortization. The increase in operating income was primarily driven by favorable comparisons to an $81.1 million impairment charge and a $25.3 million restructuring charge related to the announcement of the cost reduction and business alignment program recorded in the prior year, partially offset by an unfavorable comparison against a $43.0 million settlement with the company's insurance carriers, net of accrued legal and related expenses, in 2017 related to litigation that was settled in 2012.

Net income attributable to common stockholders totaled $337.5 million, an increase of 39.2% from $242.5 million in 2017. Diluted net income attributable to common shareholders per share (EPS) totaled $1.22 compared to $0.87 in 2017, an increase of 40.2%. The increase in net income attributable to common stockholders was driven by the items impacting operating income described above, a U.S. statutory tax rate reduction, a favorable comparison to $46.6 million of transition tax expense in the prior year related to the enactment of the TCJA and a favorable comparison to $14.8 million in debt modification costs in the prior year. This was partially offset by an unfavorable comparison to a $59.6 million provisional Tax Receivable Agreement liability reduction in the prior year, also related to the enactment of the TCJA.

Consolidated Adjusted Operating Income totaled $701.4 million, a 0.7% decrease from $706.1 million in 2017. The decrease in consolidated Adjusted Operating Income was the result of Travel Network incentive expense growth, increased technology operating expenses and higher depreciation and amortization, partially offset by solid revenue growth and the benefits of the cost reduction and business alignment program initiated in August 2017.

For the full-year 2018, Adjusted EPS increased 10.0% to $1.54 from $1.40 per share in 2017.

With regards to Sabre's full year 2018 cash flows (versus prior year):
Cash provided by operating activities totaled $724.8 million (vs. $678.0 million)
Cash used in investing activities totaled $275.3 million (vs. $317.5 million)
Cash used in financing activities totaled $306.5 million (vs. $356.8 million)
Free Cash Flow totaled $440.9 million (vs. $361.6 million)


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For the full year 2018, Sabre returned $180.4 million to shareholders, including $154.1 million through its regular quarterly dividend and the repurchase of 1.1 million shares for approximately $26.3 million in aggregate under its share repurchase authorization.

4



Financial Highlights
(in thousands, except for EPS; unaudited):
Three Months Ended December 31,
 
Year Ended December 31,
2018
 
2017
 
% Change
 
2018
 
2017
 
% Change
Total Company:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
923,928

 
$
881,862

 
4.8
 
$
3,866,956

 
$
3,598,484

 
7.5
Operating Income
$
121,019

 
$
134,600

 
(10.1)
 
$
562,016

 
$
493,440

 
13.9
Net income attributable to common stockholders
$
84,400

 
$
82,090

 
2.8
 
$
337,531

 
$
242,531

 
39.2
Diluted net income attributable to common stockholders per share (EPS)
$
0.30

 
$
0.30

 
 
$
1.22

 
$
0.87

 
40.2
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Gross Profit*
$
365,366

 
$
359,599

 
1.6
 
$
1,521,408

 
$
1,500,186

 
1.4
Adjusted EBITDA*
$
267,545

 
$
256,667

 
4.2
 
$
1,124,390

 
$
1,078,571

 
4.2
Adjusted Operating Income*
$
157,877

 
$
154,606

 
2.1
 
$
701,432

 
$
706,149

 
(0.7)
Adjusted Net Income*
$
95,045

 
$
87,961

 
8.1
 
$
427,570

 
$
390,118

 
9.6
Adjusted EPS*
$
0.34

 
$
0.32

 
6.3
 
$
1.54

 
$
1.40

 
10.0
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
188,604

 
$
222,127

 
(15.1)
 
$
724,797

 
$
678,033

 
6.9
Cash used in investing activities
$
(69,595
)
 
$
(74,573
)
 
(6.7)
 
$
(275,259
)
 
$
(317,525
)
 
(13.3)
Cash used in financing activities
$
(54,097
)
 
$
(55,844
)
 
(3.1)
 
$
(306,506
)
 
$
(356,780
)
 
(14.1)
Free Cash Flow*
$
110,328

 
$
148,502

 
(25.7)
 
$
440,857

 
$
361,597

 
21.9
 
 
 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
$
2,922,590

 
$
3,126,652

 
 
 
 
 
 
 
 
Net Debt / LTM Adjusted EBITDA*
2.6x

 
2.9x

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel Network:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
665,177

 
$
619,029

 
7.5
 
$
2,806,194

 
$
2,550,470

 
10.0
Transaction Revenue
$
622,555

 
$
577,031

 
7.9
 
$
2,634,571

 
$
2,376,816

 
10.8
Subscriber / Other Revenue
$
42,621

 
$
41,998

 
1.5
 
$
171,622

 
$
173,654

 
(1.2)
Operating Income
$
165,330

 
$
161,393

 
2.4
 
$
753,255

 
$
744,045

 
1.2
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income*
$
165,431

 
162,205

 
2.0
 
$
755,811

 
$
746,625

 
1.2
 
 
 
 
 
 
 
 
 
 
 
 
Total Bookings
126,774

 
121,412

 
4.4
 
558,274

 
524,824

 
6.4
Air Bookings
111,072

 
105,903

 
4.9
 
491,820

 
462,381

 
6.4
Lodging, Ground and Sea Bookings
15,702

 
15,509

 
1.2
 
66,454

 
62,443

 
6.4
Bookings Share
37.1
%
 
36.0
%
 
 
 
37.5
%
 
36.3
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airline Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
201,934

 
$
205,400

 
(1.7)
 
$
822,747

 
$
816,008

 
0.8
Operating Income
$
29,116

 
$
43,399

 
(32.9)
 
$
111,146

 
$
137,932

 
(19.4)
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income*
$
29,116

 
$
43,399

 
(32.9)
 
$
111,146

 
$
137,932

 
(19.4)
 
 
 
 
 
 
 
 
 
 
 
 
Passengers Boarded
184,143

 
173,052

 
6.4
 
752,548

 
772,149

 
(2.5)
 
 
 
 
 
 
 
 
 
 
 
 
Hospitality Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
66,726

 
$
64,281

 
3.8
 
$
273,079

 
$
258,352

 
5.7
Operating Income
$
2,954

 
$
2,649

 
11.5
 
12,881

 
9,670

 
33.2
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Operating Income*
$
2,954

 
$
2,649

 
11.5
 
$
12,881

 
$
9,670

 
33.2
 
 
 
 
 
 
 
 
 
 
 
 
Central Reservation System Transactions
22,436

 
N/A

 
N/A
 
88,655

 
N/A

 
N/A
*Indicates non-GAAP financial measure; see descriptions and reconciliations below

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Travel Network

Fourth quarter 2018 highlights (versus prior year):
Travel Network revenue increased 7.5% to $665.2 million. Revenue growth was driven by solid global bookings growth and an increase in average booking fee.
Global bookings increased 4.4%, driven by 9.0% growth in Asia-Pacific, 6.0% growth in North America and 1.8% growth in EMEA. Latin American bookings declined 8.6%.
Global air bookings share increased 110 basis points to 37.1%.
Operating income increased 2.4% to $165.3 million, and operating income margin was 24.9%.
Operating income was supported by strong revenue growth and a reduction in headcount-related and other costs, partially offset by incentive expense growth, increased technology operating expenses, and higher depreciation and amortization.

Full year 2018 highlights (versus prior year):
Travel Network revenue increased 10.0% to $2.806 billion. Revenue growth was driven by a stable bookings environment, global share gain and growth in average booking fee.
Global bookings increased 6.4%, driven by 17.4% growth in Asia-Pacific, 5.4% growth in North America and 3.1% growth in EMEA. Latin American bookings declined 3.9%.
Global air bookings share increased 120 basis points to 37.5%.
Operating income increased 1.2% to $753.3 million, and operating income margin was 26.8%.
Operating income was supported by strong revenue growth and the benefits of the cost reduction and business alignment program initiated in August of 2017, partially offset by incentive expense growth, increased technology operating expenses, and higher depreciation and amortization.

Airline Solutions

Fourth quarter 2018 highlights (versus prior year):
Airline Solutions revenue decreased 1.7% to $201.9 million. SabreSonic reservation revenue declined 1.0%, with passengers boarded growth offset by a modest decline in passengers boarded rate. AirVision and AirCentre commercial and operations solutions revenue declined 4.7% due to the impact of ASC 606 adoption. Discrete professional services revenue increased in the quarter.
The net year-over-year impact of ASC 606 adoption drove a $6.9 million reduction in revenue in the quarter, net of upfront revenue recognition from new license fee implementations and renewals. Excluding this impact, revenue grew 1.7%.

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Airline passengers boarded increased 6.4% in the quarter, driven by 2.9% growth on a consistent carrier basis and the SabreSonic reservation system implementation at LATAM Airlines that was completed in the second quarter of 2018.
Operating income decreased 32.9% to $29.1 million, and operating income margin was 14.4%.
The decline in operating income was driven by the impact of ASC 606, increased technology operating expenses and higher depreciation and amortization.

Full year 2018 highlights (versus prior year):
Airline Solutions revenue increased 0.8% to $822.7 million.
SabreSonic reservation revenue declined 0.6% as solid passengers boarded growth on a consistent carrier basis and new implementations largely offset the negative impact of ending legacy reservation system services to Southwest Airlines mid-2017. AirVision and AirCentre commercial and operations solutions revenue growth was 5.2%, driven by organic growth, new implementations and new license fee implementations and renewals that partially mitigated the negative impact of ASC 606 adoption. Discrete professional services revenue declined.
The net year-over-year impact of adopting ASC 606 drove an $11.6 million reduction in revenue for the year, net of upfront revenue recognition from new license fee implementations and renewals. Excluding the impacts of the Southwest de-migration and ASC 606, Airline Solutions revenue grew 5.4%.
Airline passengers boarded declined 2.5%, largely due to the impact of the Southwest Airlines de-migration, partially offset by 5.4% growth on a consistent carrier basis and the completion of the SabreSonic reservation system implementation at LATAM Airlines in the second quarter of 2018.
Operating income decreased 19.4% to $111.1 million, and operating income margin was 13.5%.
The decline in operating income was driven by a negative revenue mix shift, the impact of ASC 606 adoption, increased technology operating expenses and higher depreciation and amortization, partially offset by the benefits of the cost reduction and business alignment program initiated in August of 2017.

Hospitality Solutions

Fourth quarter 2018 highlights (versus prior year):
Hospitality Solutions revenue increased 3.8% to $66.7 million. SynXis software and services revenue increased 8.3%, driven by growth in central reservations system

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transactions. This growth was partially offset by a decline in project-based digital marketing services revenue.
Operating income increased 11.5% to $3.0 million, and operating income margin was 4.4%.
The increase in operating income was driven by revenue growth, including a mix shift toward higher margin revenue, and a reduction in headcount-related and other costs.

Full year 2018 highlights (versus prior year):
Hospitality Solutions revenue increased 5.7% to $273.1 million. SynXis software and services revenue growth of 11.0%, driven by growth in central reservation systems transactions. This growth was partially offset by a decline in project-based digital marketing services revenue.
Operating income increased 33.2% to $12.9 million, and operating income margin was 4.7%.
The increase in operating income was driven by revenue growth, including a mix shift toward higher margin revenue, and the benefits of the cost reduction and business alignment program initiated in August of 2017.

Dividend

Sabre's Board of Directors declared a quarterly dividend of $0.14 per share, payable on March 29, 2019 to shareholders of record on March 21, 2019.


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Full-Year 2019 Financial Guidance

"In 2019, we expect solid revenue growth and even stronger growth in Free Cash Flow. We have made great progress on our technology evolution in 2018 and expect to take significant steps to further accelerate our efforts in 2019," said Doug Barnett, CFO. “We expect to build on the momentum of our cloud migration and mainframe offload and complete our transition to agile development methods to drive tangible benefits to our customers and shareholders. We believe our more modern and flexible technology platform will enable us to accelerate delivery of new innovation to the market and deliver significant cost savings.

"In 2019, we expect total technology costs to increase 3% to 4%, which is in line with our March 2018 Investor Day expectations. With the increased efficiencies we are achieving, over the medium term from 2019 to 2022, we now expect total technology spend to increase at only a 1% CAGR, a reduction from our previous expectations. We expect this lower rate of technology spend growth to help drive an acceleration in Free Cash Flow over the medium term, with faster growth than previous expectations.

"As we have stated previously, the costs associated with our cloud migration are not capitalized under GAAP. This, combined with the acceleration of our mainframe offload and our transition to full adoption and maturity of agile development methods, is expected to reduce the capitalized portion of our total technology spend in 2019 and over the medium term, with no impact on total technology spend levels. The important thing to remember is these changes are Free Cash Flow neutral."

With respect to the 2019 guidance below, full-year Free Cash Flow guidance consists of expected full-year cash provided by operating activities of $615 million to $635 million less additions to property and equipment of $130 million to $150 million.
($ millions)
2019 Guidance
Growth Rate
Revenue
$4,005M - $4,085M
4% - 6%
 
 
 
Free Cash Flow
Approximately $485M
Approximately 10%


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Additional guidance metrics are included in the slide presentation and prepared remarks regarding Sabre's fourth quarter and full year 2018 earnings conference call, which have been posted on the Sabre Investor Relations website at investors.sabre.com. The slide presentation and prepared remarks includes further discussion of the change in capitalization mix discussed above.

Conference Call

Sabre will conduct its fourth quarter and full-year 2018 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, revenue management, flight, network and crew management. Sabre also operates a leading global travel marketplace, which processes more than US$130 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

Sabre routinely posts important information for investors on its Investor Relations section of its website, investors.sabre.com. The company intends to use this website 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, in addition to following the company's press releases, SEC filings, public conference calls, presentations and webcasts. The information contained on, or that may be accessed through, the Sabre website is not incorporated by reference into, and is not a part of, this document.

Supplemental Financial Information

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

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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 Gross Profit, Adjusted Operating Income, Adjusted Net Income from continuing operations ("Adjusted Net Income"), Adjusted EBITDA, Adjusted Net Income from continuing operations per share ("Adjusted EPS"), Free Cash Flow and the ratios based on these financial measures. In addition, we provide certain forward guidance with respect to 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

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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," "outlook," "forecast," “expect,” "momentum," "progress," "confidence," "plan," "anticipate," "estimate," "preliminary," "objective," "will," "provisional," "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, the closing, integration and effects of the acquisition of Farelogix and the financial performance of that company, exposure to pricing pressure in the Travel Network business, maintenance of the stability and integrity of our systems and infrastructure and the effect of any security incidents, the implementation and effects of new or renewed agreements, the effects of the implementation of new accounting standards, the effects of tax law changes, travel suppliers' usage of alternative distribution models, competition in the travel distribution market and solutions markets, the implementation and results of our cost reduction and business alignment program, 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, compliance with regulatory and other requirements, including data privacy, our ability to recruit, train and retain employees, including our key executive officers and technical employees, and the effects of litigation and regulatory investigations. 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 October 30, 2018 and our Annual Report on Form 10-K filed with the SEC on February 16, 2018 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.


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Contacts:

Media
Investors
Heidi Castle
Barry Sievert
+1-682-605-4290
sabre.investorrelations@sabre.com
heidi.castle@sabre.com
 
 

13



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited) 
 
Three Months Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Revenue
$
923,928

 
$
881,862

 
$
3,866,956

 
$
3,598,484

Cost of revenue
673,430

 
631,234

 
2,791,414

 
2,513,857

Selling, general and administrative
129,479

 
126,938

 
513,526

 
510,075

Impairment and related charges

 
(10,910
)
 

 
81,112

Operating income
121,019

 
134,600

 
562,016

 
493,440

Other (expense) income:
 
 
 
 
 
 
 
Interest expense, net
(40,208
)
 
(37,348
)
 
(157,017
)
 
(153,925
)
Loss on extinguishment of debt

 

 
(633
)
 
(1,012
)
Joint venture equity income
101

 
812

 
2,556

 
2,580

Other, net
2,237

 
56,318

 
(8,509
)
 
36,530

Total other (expense) income, net
(37,870
)
 
19,782

 
(163,603
)
 
(115,827
)
Income from continuing operations before income taxes
83,149

 
154,382

 
398,413

 
377,613

Provision for income taxes
(3,879
)
 
71,201

 
57,492

 
128,037

Income from continuing operations
87,028

 
83,181

 
340,921

 
249,576

Income (loss) from discontinued operations, net of tax
(1,478
)
 
296

 
1,739

 
(1,932
)
Net income
85,550

 
83,477

 
342,660

 
247,644

Net income attributable to noncontrolling interests
1,150

 
1,387

 
5,129

 
5,113

Net income attributable to common stockholders
$
84,400

 
$
82,090

 
$
337,531

 
$
242,531

 
 
 
 
 
 
 
 
Basic net income per share attributable to common
stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.31

 
$
0.30

 
$
1.22

 
$
0.88

Income (loss) from discontinued operations
(0.01
)
 

 
0.01

 
(0.01
)
Net income per common share
$
0.31

 
$
0.30

 
$
1.23

 
$
0.87

Diluted net income per share attributable to common
stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.31

 
$
0.30

 
$
1.21

 
$
0.88

Income (loss) from discontinued operations
(0.01
)
 

 
0.01

 
(0.01
)
Net income per common share
$
0.30

 
$
0.30

 
$
1.22

 
$
0.87

Weighted-average common shares outstanding:
 

 
 

 
 
 
 
Basic
275,322

 
274,272

 
275,235

 
276,893

Diluted
277,881

 
274,951

 
277,518

 
278,320

 
 
 
 
 
 
 
 
Dividends per common share
$
0.14

 
$
0.14

 
$
0.56

 
$
0.56



14



SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
December 31, 2018
 
December 31, 2017
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
509,265

 
$
361,381

Accounts receivable, net
508,122

 
490,558

Prepaid expenses and other current assets
170,243

 
108,753

Total current assets
1,187,630

 
960,692

Property and equipment, net
790,372

 
799,194

Investments in joint ventures
27,769

 
27,527

Goodwill
2,552,369

 
2,554,987

Acquired customer relationships, net
323,731

 
351,034

Other intangible assets, net
289,517

 
332,171

Deferred income taxes
24,322

 
31,817

Other assets, net
610,671

 
591,942

Total assets
$
5,806,381

 
$
5,649,364

 
 
 
 
Liabilities and stockholders’ equity
 
 
 
Current liabilities
 
 
 
Accounts payable
$
165,227

 
$
162,755

Accrued compensation and related benefits
112,866

 
112,343

Accrued subscriber incentives
301,530

 
271,200

Deferred revenues
80,902

 
110,532

Other accrued liabilities
185,178

 
198,353

Current portion of debt
68,435

 
57,138

Tax Receivable Agreement
104,257

 
59,826

Total current liabilities
1,018,395

 
972,147

Deferred income taxes
135,753

 
99,801

Other noncurrent liabilities
340,495

 
480,185

Long-term debt
3,337,467

 
3,398,731

Stockholders’ equity
 
 
 
Common stock: $0.01 par value; 450,000 authorized shares; 291,664 and 289,138 shares issued, 275,352 and 274,342 shares outstanding at December 31, 2018 and 2017, respectively
2,917

 
2,891

Additional paid-in capital
2,243,419

 
2,174,187

Treasury stock, at cost, 16,312 and 14,796 shares at December 31, 2018 and 2017, respectively
(377,980
)
 
(341,846
)
Retained deficit
(768,566
)
 
(1,053,446
)
Accumulated other comprehensive loss
(132,724
)
 
(88,484
)
Noncontrolling interest
7,205

 
5,198

Total stockholders’ equity
974,271

 
698,500

Total liabilities and stockholders’ equity
$
5,806,381

 
$
5,649,364



15



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Year Ended December 31,
 
2018
 
2017
Operating Activities
 
 
 
Net income
$
342,660

 
$
247,644

Adjustments to reconcile net income to cash provided by operating activities:
 
 
 
Depreciation and amortization
413,344

 
400,871

Impairment and related charges

 
81,112

Amortization of upfront incentive consideration
77,622

 
67,411

Tax Receivable Agreement
4,852

 
(59,603
)
Deferred income taxes
43,099

 
48,760

Stock-based compensation expense
57,263

 
44,689

Debt modification costs
1,558

 
14,758

Allowance for doubtful accounts
7,749

 
9,459

Amortization of debt issuance costs
3,981

 
5,923

Joint venture equity income
(2,556
)
 
(2,580
)
Loss (income) from discontinued operations
(1,739
)
 
1,932

Dividends received from joint venture investments
1,411

 
1,088

Loss on extinguishment of debt
633

 
1,012

Other
(2,349
)
 
13,284

Changes in operating assets and liabilities:
 
 
 
Accounts and other receivables
(45,586
)
 
(108,596
)
Upfront incentive consideration
(88,735
)
 
(94,296
)
Capitalized implementation costs
(39,168
)
 
(60,766
)
Prepaid expenses and other current assets
14,362

 
109

Other assets
(29,607
)
 
(21,111
)
Accounts payable and other accrued liabilities
(27,080
)
 
67,034

Deferred revenue including upfront solution fees
8,127

 
13,861

Accrued compensation and related benefits
(15,044
)
 
6,038

Cash provided by operating activities
724,797

 
678,033

Investing Activities


 


Additions to property and equipment
(283,940
)
 
(316,436
)
Other investing activities
8,681

 
(1,089
)
Cash used in investing activities
(275,259
)
 
(317,525
)
Financing Activities
 
 
 
Proceeds of borrowings from lenders

 
1,897,625

Payments on borrowings from lenders
(47,310
)
 
(1,880,506
)
Cash dividends paid to common stockholders
(154,080
)
 
(154,861
)
Repurchase of common stock
(26,281
)
 
(109,100
)
Payments on Tax Receivable Agreement
(58,908
)
 
(99,241
)
Debt prepayment fees and issuance costs
(1,567
)
 
(19,052
)
Net proceeds on the settlement of equity-based awards
2,040

 
12,647

Other financing activities
(20,400
)
 
(4,292
)
Cash used in financing activities
(306,506
)
 
(356,780
)
Cash Flows from Discontinued Operations
 
 
 
Cash used in operating activities
(1,895
)
 
(4,848
)
Cash used in discontinued operations
(1,895
)
 
(4,848
)
Effect of exchange rate changes on cash and cash equivalents
6,747

 
(1,613
)
(Decrease) increase in cash and cash equivalents
147,884

 
(2,733
)
Cash and cash equivalents at beginning of period
361,381

 
364,114

Cash and cash equivalents at end of period
$
509,265

 
$
361,381



16



Non-GAAP Financial Measures

We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures, including Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income from continuing operations ("Adjusted Net Income"), Adjusted EBITDA, Adjusted EPS, Free Cash Flow and ratios based on these financial measures.

We define Adjusted Gross Profit as operating income (loss) adjusted for selling, general and administrative expenses, impairment and related charges, the cost of revenue portion of depreciation and amortization, restructuring and other costs, amortization of upfront incentive consideration, and stock-based compensation included in cost of revenue.

We define Adjusted Operating Income (Loss) as operating income (loss) adjusted for joint venture equity income, impairment and related charges, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs (reimbursements), net, and stock-based compensation.

We define Adjusted Net Income as net income (loss) attributable to common stockholders adjusted for income (loss) 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 (reimbursements), net, stock-based compensation and the tax impact of net income adjustments.

We define Adjusted EBITDA as Adjusted Net Income adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, amortization of upfront incentive consideration, interest expense, net, and remaining provision for income taxes.

We define Adjusted EPS as Adjusted Net Income divided by diluted weighted-average common shares outstanding.

We define Free Cash Flow as cash provided by operating activities less cash used in additions to property and equipment.

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

17



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 Gross Profit, Adjusted Operating Income (Loss), Adjusted Net 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 Gross Profit, Adjusted Operating Income (Loss), Adjusted Net 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 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 Gross Profit and Adjusted EBITDA do not reflect cash requirements for such replacements;

Adjusted Operating Income (Loss), Adjusted Net Income and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs;

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;


18



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 Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income, Adjusted EBITDA, Adjusted EPS or Free Cash Flow differently, which reduces their usefulness as comparative measures.


19



Tabular Reconciliations for Non-GAAP Measures
(In thousands, except per share amounts; unaudited)

Reconciliation of net income attributable to common stockholders to Adjusted Net Income, Adjusted EBITDA and Adjusted Operating Income:

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Net income attributable to common stockholders
$
84,400

 
$
82,090

 
$
337,531

 
$
242,531

Loss (income) from discontinued operations, net of tax
1,478

 
(296
)
 
(1,739
)
 
1,932

Net income attributable to noncontrolling interests(1)
1,150

 
1,387

 
5,129

 
5,113

Income from continuing operations
87,028

 
83,181

 
340,921

 
249,576

Adjustments:
 
 
 

 
 

 
 

Impairment and related charges(2)

 
(10,910
)
 

 
81,112

Acquisition-related amortization(3a)
16,423

 
20,194

 
68,008

 
95,860

Loss on extinguishment of debt

 

 
633

 
1,012

Other, net(5)
(2,237
)
 
(56,318
)
 
8,509

 
(36,530
)
Restructuring and other costs(6)

 
(1,329
)
 

 
23,975

Acquisition-related costs(7)
3,266

 

 
3,266

 

Litigation costs (reimbursements)(8)
1,250

 
963

 
8,323

 
(35,507
)
Stock-based compensation
15,818

 
10,276

 
57,263

 
44,689

Tax impact of net income adjustments(9)
(26,503
)
 
41,904

 
(59,353
)
 
(34,069
)
Adjusted Net Income from continuing operations
$
95,045

 
$
87,961

 
$
427,570

 
$
390,118

Adjusted Net Income from continuing operations
per share
$
0.34

 
$
0.32

 
$
1.54

 
$
1.40

Diluted weighted-average common shares outstanding
277,881

 
274,951

 
277,518

 
278,320

 


 
 
 
 
 
 
Adjusted Net Income from continuing operations
$
95,045

 
$
87,961

 
$
427,570

 
$
390,118

Adjustments:
 
 
 

 
 

 
 

Depreciation and amortization of property
and equipment
(3b)
77,963

 
73,438

 
303,612

 
264,880

Amortization of capitalized implementation costs(3c)
11,407

 
11,510

 
41,724

 
40,131

Amortization of upfront incentive consideration(4)
20,298

 
17,113

 
77,622

 
67,411

Interest expense, net
40,208

 
37,348

 
157,017

 
153,925

Remaining provision for income taxes
22,624

 
29,297

 
116,845

 
162,106

Adjusted EBITDA
267,545

 
256,667

 
1,124,390

 
1,078,571

Less:
 
 
 

 
 

 
 

Depreciation and amortization(3)
105,793

 
105,142

 
413,344

 
400,871

Amortization of upfront incentive consideration(4)
20,298

 
17,113

 
77,622

 
67,411

Acquisition-related amortization(3a)
(16,423
)
 
(20,194
)
 
(68,008
)
 
(95,860
)
Adjusted Operating Income
$
157,877

 
$
154,606

 
$
701,432

 
$
706,149







20



Reconciliation of Free Cash Flow:

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Cash provided by operating activities
$
188,604

 
$
222,127

 
$
724,797

 
$
678,033

Cash used in investing activities
(69,595
)
 
(74,573
)
 
(275,259
)
 
(317,525
)
Cash used in financing activities
(54,097
)
 
(55,844
)
 
(306,506
)
 
(356,780
)

 
Three Months Ended December 31,
 
Year Ended December 31,
 
2018
 
2017
 
2018
 
2017
Cash provided by operating activities
$
188,604

 
$
222,127

 
$
724,797

 
$
678,033

Additions to property and equipment
(78,276
)
 
(73,625
)
 
(283,940
)
 
(316,436
)
Free Cash Flow
$
110,328

 
$
148,502

 
$
440,857

 
$
361,597



21



Reconciliation of net income (loss) attributable to common stockholders to LTM Adjusted EBITDA (for Net Debt Ratio):

 
Three Months Ended
 
 
 
Mar 31, 2018
 
Jun 30, 2018
 
Sep 30, 2018
 
Dec 31, 2018
 
LTM
Net income attributable to common stockholders
$
87,880

 
$
92,246

 
$
73,005

 
$
84,400

 
$
337,531

Loss (income) from discontinued operations, net of tax
1,207

 
(760
)
 
(3,664
)
 
1,478

 
(1,739
)
Net income attributable to noncontrolling interests(1)
1,362

 
1,079

 
1,538

 
1,150

 
5,129

Income from continuing operations
90,449


92,565


70,879

 
87,028

 
340,921

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization(3a)
17,590

 
17,588

 
16,407

 
16,423

 
68,008

Loss on extinguishment of debt
633

 

 

 

 
633

Other, net(5)
1,106

 
7,735

 
1,905

 
(2,237
)
 
8,509

Acquisition-related costs(8)

 

 

 
3,266

 
3,266

Litigation costs(8)
828

 
1,020

 
5,225

 
1,250

 
8,323

Stock-based compensation
12,606

 
13,594

 
15,245

 
15,818

 
57,263

Depreciation and amortization of property and equipment(3b)
74,463

 
74,960

 
76,226

 
77,963

 
303,612

Amortization of capitalized implementation costs(3c)
9,823

 
10,395

 
10,099

 
11,407

 
41,724

Amortization of upfront incentive consideration(4)
19,456

 
19,661

 
18,207

 
20,298

 
77,622

Interest expense, net
38,109

 
39,409

 
39,291

 
40,208

 
157,017

Provision for income taxes
36,275

 
75

 
25,021

 
(3,879
)
 
57,492

Adjusted EBITDA
$
301,338


$
277,002


$
278,505

 
$
267,545

 
$
1,124,390

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
2,922,590

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.6x



22



 
Three Months Ended
 
 
 
Mar 31, 2017
 
Jun 30, 2017
 
Sep 30, 2017
 
Dec 31, 2017
 
LTM
Net income (loss) attributable to common stockholders
$
75,939

 
$
(6,487
)
 
$
90,989

 
$
82,090

 
$
242,531

Loss (income) from discontinued operations, net of tax
477

 
1,222

 
529

 
(296
)
 
$
1,932

Net income attributable to noncontrolling interests(1)
1,306

 
1,113

 
1,307

 
1,387

 
5,113

Income (loss) from continuing operations
77,722


(4,152
)

92,825


83,181

 
249,576

Adjustments:
 
 
 
 
 
 
 
 

Impairment and related charges(2)

 
92,022

 

 
(10,910
)
 
81,112

Acquisition-related amortization(3a)
35,181

 
20,259

 
20,226

 
20,194

 
95,860

Loss on extinguishment of debt

 

 
1,012

 

 
1,012

Other, net(5)
15,234

 
752

 
3,802

 
(56,318
)
 
(36,530
)
Restructuring and other costs(6)

 
25,304

 

 
(1,329
)
 
23,975

Litigation costs (reimbursements), net (8)
3,501

 
958

 
(40,929
)
 
963

 
(35,507
)
Stock-based compensation
8,034

 
14,724

 
11,655

 
10,276

 
44,689

Depreciation and amortization of property and equipment (3b)
61,300

 
63,810

 
66,332

 
73,438

 
264,880

Amortization of capitalized implementation costs (3c)
9,189

 
8,948

 
10,484

 
11,510

 
40,131

Amortization of upfront incentive consideration(4)
16,132

 
16,161

 
18,005

 
17,113

 
67,411

Interest expense, net
39,561

 
38,097

 
38,919

 
37,348

 
153,925

Provision (benefit) for income taxes
31,707

 
(15,466
)
 
40,595

 
71,201

 
128,037

Adjusted EBITDA
$
297,561


$
261,417


$
262,926


$
256,667

 
$
1,078,571

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
3,126,652

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.9x




23



Reconciliation of operating income (loss) to Adjusted Gross Profit, Adjusted EBITDA and Adjusted Operating Income (Loss) by business segment:

 
Three Months Ended December 31, 2018
 
Travel
Network
 
Airline
Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
165,330

 
$
29,116

 
$
2,954

 
$
(76,381
)
 
$
121,019

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
42,694

 
18,181

 
8,323

 
60,281

 
129,479

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
27,371

 
43,332

 
10,091

 
6,369

 
87,163

Amortization of upfront incentive consideration(4)
20,298

 

 

 

 
20,298

Stock-based compensation

 

 

 
7,407

 
7,407

Adjusted Gross Profit
255,693

 
90,629

 
21,368

 
(2,324
)
 
365,366

Selling, general and administrative
(42,694
)
 
(18,181
)
 
(8,323
)
 
(60,281
)
 
(129,479
)
Joint venture equity income
101

 

 

 

 
101

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
2,940

 
3,500

 
949

 
11,241

 
18,630

Acquisition-related costs(7)

 

 

 
3,266

 
3,266

Litigation costs(8)

 

 

 
1,250

 
1,250

Stock-based compensation

 

 

 
8,411

 
8,411

Adjusted EBITDA
216,040

 
75,948

 
13,994

 
(38,437
)
 
267,545

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
30,311

 
46,832

 
11,040

 
17,610

 
105,793

Amortization of upfront incentive consideration(4)
20,298

 

 

 

 
20,298

Acquisition-related amortization(3a)

 

 

 
(16,423
)
 
(16,423
)
Adjusted Operating Income (Loss)
$
165,431

 
$
29,116

 
$
2,954

 
$
(39,624
)
 
$
157,877

 
 
 
 
 
 
 
 
 
 
Operating income margin
24.9
%
 
14.4
%
 
4.4
%
 
NM

 
13.1
%
Adjusted Operating Income Margin
24.9
%
 
14.4
%
 
4.4
%
 
NM

 
17.1
%
  

24



 
Three Months Ended December 31, 2017
 
Travel
Network
 
Airline
Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
161,393

43,499,000

$
43,399

 
$
2,649

 
$
(72,841
)
 
$
134,600

Add back:
 
 
 
 
 
 
 
 


Selling, general and administrative
42,700

 
17,372

 
10,118

 
56,748

 
126,938

Impairment and related charges(2)

 

 

 
(10,910
)
 
(10,910
)
Cost of revenue adjustments:
 
 
 
 
 
 
 
 


Depreciation and amortization(3)
27,154

 
40,475

 
9,658

 
10,837

 
88,124

Restructuring and other costs(6)

 

 

 
(372
)
 
(372
)
Amortization of upfront incentive consideration(4)
17,113

 

 

 

 
17,113

Stock-based compensation

 

 

 
4,106

 
4,106

Adjusted Gross Profit
248,360

 
101,246

 
22,425

 
(12,432
)
 
359,599

Selling, general and administrative
(42,700
)
 
(17,372
)
 
(10,118
)
 
(56,748
)
 
(126,938
)
Joint venture equity income
812

 

 

 

 
812

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 


Depreciation and amortization(3)
3,166

 
2,234

 
390

 
11,228

 
17,018

Restructuring and other costs(6)

 

 

 
(957
)
 
(957
)
Litigation costs(8)

 

 

 
963

 
963

Stock-based compensation

 

 

 
6,170

 
6,170

Adjusted EBITDA
209,638

 
86,108

 
12,697

 
(51,776
)
 
256,667

Less:
 
 
 
 
 
 
 
 


Depreciation and amortization(3)
30,320

 
42,709

 
10,048

 
22,065

 
105,142

Amortization of upfront incentive consideration(4)
17,113

 

 

 

 
17,113

Acquisition-related amortization(3a)

 

 

 
(20,194
)
 
(20,194
)
Adjusted Operating Income (Loss)
$
162,205

 
$
43,399

 
$
2,649

 
$
(53,647
)
 
$
154,606

 
 
 
 
 
 
 
 
 
 
Operating income margin
26.1
%
 
21.1
%
 
4.1
%
 
NM

 
15.3
%
Adjusted Operating Income Margin
26.2
%
 
21.1
%
 
4.1
%
 
NM

 
17.5
%
 

25



 
Year Ended December 31, 2018
 
Travel
Network
 
Airline Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
753,255

 
$
111,146

 
$
12,881

 
$
(315,266
)
 
$
562,016

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
160,298

 
73,675

 
33,626

 
245,927

 
513,526

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
106,877

 
170,258

 
36,826

 
27,692

 
341,653

Amortization of upfront incentive consideration(4)
77,622

 

 

 

 
77,622

Stock-based compensation

 

 

 
26,591

 
26,591

Adjusted Gross Profit
1,098,052

 
355,079

 
83,333

 
(15,056
)
 
1,521,408

Selling, general and administrative
(160,298
)
 
(73,675
)
 
(33,626
)
 
(245,927
)
 
(513,526
)
Joint venture equity income
2,556

 

 

 

 
2,556

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
11,399

 
12,173

 
3,117

 
45,002

 
71,691

Acquisition-related costs(7)

 

 

 
3,266

 
3,266

Litigation reimbursements(8)

 

 

 
8,323

 
8,323

Stock-based compensation

 

 

 
30,672

 
30,672

Adjusted EBITDA
951,709

 
293,577


52,824

 
(173,720
)
 
1,124,390

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
118,276

 
182,431


39,943

 
72,694

 
413,344

Amortization of upfront incentive consideration(4)
77,622

 



 

 
77,622

Acquisition-related amortization(3a)

 



 
(68,008
)
 
(68,008
)
Adjusted Operating Income (Loss)
$
755,811

 
$
111,146


$
12,881

 
$
(178,406
)
 
$
701,432

 
 
 
 
 
 
 
 
 
 
Operating income margin
26.8
%
 
13.5
%
 
4.7
%
 
NM

 
14.5
%
Adjusted Operating Income Margin
26.9
%
 
13.5
%
 
4.7
%
 
NM

 
18.1
%



26



 
Year Ended December 31, 2017
 
Travel
Network
 
Airline Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
744,045

 
$
137,932

 
$
9,670

 
$
(398,207
)
 
$
493,440

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
162,997

 
78,638

 
47,121

 
221,319

 
510,075

Impairment and related charges(2)

 

 

 
81,112

 
81,112

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(3)
96,796

 
149,685

 
31,686

 
39,645

 
317,812

Restructuring and other costs(6)

 

 

 
12,604

 
12,604

Amortization of upfront incentive consideration(4)
67,411

 

 

 

 
67,411

 Stock-based compensation

 

 

 
17,732

 
17,732

Adjusted Gross Profit
1,071,249

 
366,255

 
88,477

 
(25,795
)
 
1,500,186

Selling, general and administrative
(162,997
)
 
(78,638
)
 
(47,121
)
 
(221,319
)
 
(510,075
)
Joint venture equity income
2,580

 

 

 

 
2,580

Selling, general and administrative adjustments: