sabrelogoa57.jpg

Sabre reports first quarter 2019 results
  
First quarter revenue increased 6.2%
Travel Network revenue rose 7.3%, with bookings growth of 2.7%
Airline Solutions revenue grew 3.1%, with passengers boarded growth of 6.6%
Hospitality Solutions revenue grew 6.9%
Net income attributable to common stockholders totaled $56.9 million and diluted net income attributable to common stockholders per share (EPS) totaled $0.20
Adjusted EPS totaled $0.34
Cash provided by operating activities totaled $152.0 million

SOUTHLAKE, Texas – April 30, 2019 – Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter ended March 31, 2019.

"Today, I am pleased to report solid first quarter performance that provides continued evidence that we are progressing against our initiatives. With our technology-led leadership team in place and strategic focus on the retailing, distribution and fulfillment of travel, we have continued to meet and exceed our internal milestones and are gaining velocity in our technology transformation and evolved customer engagement approach. We are unlocking savings that fund investment to deliver new innovations that we believe will help advance the marketplace and drive future growth. We believe our strategy, technology transformation and customer engagement will lead to strong, long-term Free Cash Flow generation," said Sean Menke, Sabre president and CEO. "We gained air bookings share for the fifth quarter in a row, continued to progress on our long-term vision with the release of NDC and next-generation shopping solutions and received IATA ONE Order certification. With our solid first quarter results, I remain confident in the underlying performance of the business."




1



Q1 2019 Financial Summary

Sabre consolidated first quarter revenue increased 6.2% to $1,049.4 million, compared to $988.4 million in the year ago period.

First quarter operating income was $110.4 million, a decrease of 33.2% from $165.4 million in the first quarter of 2018. Consistent with the Company's execution of its technology strategy and as previously disclosed, the costs associated with its cloud migration, mainframe offload and utilization of agile development methods reduced the capitalized portion of its total technology spend in the first quarter. This resulted in increased technology operating expenses in the quarter, with a corresponding decline in capitalized expenditures. This shift had no impact on the level of total technology spend or Free Cash Flow. The decline in first quarter operating income was driven by the increased technology operating expenses, as well as Travel Network incentive expense growth and acquisition-related costs, partially offset by solid revenue growth.

Net income attributable to common stockholders totaled $56.9 million, a decrease of 35.3% from $87.9 million in the first quarter of 2018. Diluted net income attributable to common stockholders per share decreased 37.5% to $0.20 from $0.32 in the first quarter of 2018. The decrease in net income attributable to common stockholders was driven by the items impacting operating income described above.

First quarter consolidated Adjusted EBITDA Less Capitalized Software Development, which reflects the Company's total capitalized and expensed technology spend, was $235.1 million, a decrease of 3.6% from $243.9 million in the first quarter of 2018. This decrease was primarily driven by Travel Network incentive expense growth, in addition to modest growth in total technology spend, partially offset by solid revenue growth.

First quarter consolidated Adjusted Operating Income was $155.8 million, a 21.2% decrease from $197.6 million in the first quarter of 2018. The decrease in Sabre's consolidated Adjusted Operating Income was the result of increased technology operating expenses due to the increase in the expensed portion of total technology spend and Travel Network incentive expense growth, partially offset by solid revenue growth.

For the quarter, Sabre reported Adjusted Net Income from continuing operations per share (Adjusted EPS) of $0.34, a decrease of 22.7% from $0.44 per share in the first quarter of 2018.



2



With regards to Sabre's first quarter 2019 cash flows (versus prior year):
Cash provided by operating activities totaled $152.0 million (vs. $195.2 million)
Cash used in investing activities totaled $37.9 million (vs. $64.7 million)
Cash used in financing activities totaled $164.3 million (vs. $128.5 million)

First quarter Free Cash Flow totaled $114.1 million, a decrease of 12.5% from $130.5 million in the first quarter of 2018. The decrease in Free Cash Flow was driven by an unfavorable comparison to a $29.3 insurance settlement payment received in the prior year quarter. Excluding this, Free Cash Flow grew 12.8% in the quarter.

During the first quarter of 2019, Sabre returned $70.7 million to shareholders, including $38.6 million through its regular quarterly dividend and the repurchase of 1.5 million shares for approximately $32.1 million in aggregate under its share repurchase authorization.


3



Financial Highlights
(in thousands, except for EPS; unaudited):
Three Months Ended March 31,
2019
 
2018
 
% Change
Total Company:
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
1,049,361

 
$
988,369

 
6.2
Operating Income
$
110,407

 
$
165,401

 
(33.2)
Net income attributable to common stockholders
$
56,850

 
$
87,880

 
(35.3)
Diluted net income attributable to common stockholders per share (EPS)
$
0.20

 
$
0.32

 
(37.5)
 
 
 
 
 
 
Adjusted Gross Profit*
$
373,090

 
$
404,580

 
(7.8)
Adjusted EBITDA*
$
262,349

 
$
301,338

 
(12.9)
Adjusted EBITDA Less Capitalized Software Development*
$
235,137

 
$
243,886

 
(3.6)
Adjusted Operating Income*
$
155,762

 
$
197,596

 
(21.2)
Adjusted Net Income*
$
94,199

 
$
121,210

 
(22.3)
Adjusted EPS*
$
0.34

 
$
0.44

 
(22.7)
 
 
 
 
 
 
Cash provided by operating activities
$
152,000

 
$
195,192

 
(22.1)
Cash used in investing activities
$
(37,864
)
 
$
(64,699
)
 
(41.5)
Cash used in financing activities
$
(164,314
)
 
$
(128,471
)
 
27.9
 
 
 
 
 
 
Free Cash Flow*
$
114,136

 
$
130,493

 
(12.5)
Capital Expenditures
$
37,864

 
$
64,699

 
(41.5)
 
 
 
 
 
 
Net Debt (total debt, less cash)
$
2,958,827

 
$
3,113,248

 
 
Net Debt / LTM Adjusted EBITDA*
2.7x

 
2.9x

 

 
 
 
 
 
 
Travel Network:
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
773,968

 
$
721,136

 
7.3
Transaction Revenue
$
730,765

 
$
677,362

 
7.9
Other Revenue
$
43,203

 
$
43,774

 
(1.3)
Operating Income
$
192,639

 
$
210,674

 
(8.6)
 
 
 
 
 
 
Adjusted Operating Income*
$
193,172

 
$
211,845

 
(8.8)
 
 
 
 
 
 
Total Bookings
154,937

 
150,832

 
2.7
Air Bookings
138,561

 
134,651

 
2.9
Lodging, Ground and Sea Bookings
16,376

 
16,181

 
1.2
Air Bookings Share
38.3
%
 
36.9
%
 
 
 
 
 
 
 
 
Airline Solutions:
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
212,927

 
$
206,603

 
3.1
Operating Income
$
15,424

 
$
30,712

 
(49.8)
 
 
 
 
 
 
Adjusted Operating Income*
$
15,424

 
$
30,712

 
(49.8)
 
 
 
 
 
 
Passengers Boarded
186,177

 
174,643

 
6.6
 
 
 
 
 
 
Hospitality Solutions:
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
72,831

 
$
68,128

 
6.9
Operating (Loss) Income
$
(5,717
)
 
$
2,137

 
NM
 
 
 
 
 
 
Adjusted Operating (Loss) Income*
$
(5,717
)
 
$
2,137

 
NM
 
 
 
 
 
 
Central Reservation System Transactions
23,024

 
16,963

 
35.7
 
 
 
 
 
 
*Indicates non-GAAP financial measure; see descriptions and reconciliations below


4



Travel Network

First quarter 2019 highlights (versus prior year):
Travel Network revenue increased 7.3% to $774.0 million.
Global bookings increased 2.7% in the quarter, supported by an increase of 6.0% in North America and 0.3% in Asia-Pacific. Bookings declined 1.3% in EMEA and 3.5% in Latin America.
Global air bookings share increased 140 basis points to 38.3%.
Operating income decreased 8.6% to $192.6 million, and operating income margin was 24.9%.
The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend and incentive expense growth, partially offset by strong revenue growth.

Airline Solutions

First quarter 2019 highlights (versus prior year):
Airline Solutions revenue increased 3.1% to $212.9 million, supported by a 6.0% increase in SabreSonic reservation revenue and an increase in discrete professional services revenue, partially offset by a 1.2% decline in AirVision and AirCentre commercial and operations solution revenue.
Airline passengers boarded increased 6.6% in the quarter, driven by 3.2% 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 49.8% to $15.4 million, and operating margin was 7.2%.
The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend, partially offset by revenue growth.



5



Hospitality Solutions

First quarter 2019 highlights (versus prior year):
Hospitality Solutions revenue increased 6.9% to $72.8 million, primarily driven by growth in central reservation system transactions.
Central reservation system transactions increased 35.7% to 23.0 million.
Operating loss was $5.7 million, versus income of $2.1 million in the year-ago period.
The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend and higher depreciation and amortization, partially offset by revenue growth.



6



Business Outlook and Financial Guidance

"Our solid first quarter results provide a strong foundation to build on over the balance of the year. As we look at the rest of 2019, we believe our business is solid," said Doug Barnett, CFO. "As you have seen and read about, an Airline Solutions customer in India has recently suspended flight operations. Additionally, our deepest sympathies are with the families and loved ones impacted by the recent accidents involving the 737 MAX aircraft at two of our Airline Solutions customers that resulted in the grounding of that aircraft. There is an obvious near-term impact to our business related to these events that is reflected in our updated guidance. Although we have observed a modest slowdown in global GDS industry bookings, our expectations for continued share gain and our regional and customer mix give us confidence in the underlying performance of the business.

"We have revised our full year 2019 expectations to reflect both the airline customer's suspended operations and the impact of the 737 MAX aircraft situation."

With respect to the 2019 guidance below, full-year Free Cash Flow guidance consists of expected full-year cash provided by operating activities of $585 million to $605 million less additions to property and equipment of $130 million to $150 million.

($ millions, except EPS)
2019 Guidance
Growth Rate
Revenue
$3,965M - $4,045M
3% - 5%
 
 
 
Free Cash Flow
Approximately $455M
Approximately 3%

Additional guidance metrics are included in the slide presentation and prepared remarks regarding Sabre's first quarter 2019 earnings conference call, which have been posted on the Sabre Investor Relations website at investors.sabre.com.



7



Conference Call

Sabre will conduct its first quarter 2019 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 our website, investors.sabre.com. A replay of the event will be available on the website 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$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.

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.



8



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 (Loss), Adjusted Net Income from continuing operations ("Adjusted Net Income"), Adjusted EBITDA, Adjusted EBITDA Less Capitalized Software Development, 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.




9




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," "believe," "outlook," "long-term," "confident," "foundation," "long-term," "growth," "results," "position," "momentum," "expect," "estimate," "preliminary," "anticipate," "will," "project," “may,” “should,” “would,” “intend," “potential” or the negative of these terms or other comparable terminology. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause Sabre’s actual results, performance or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. The potential risks and uncertainties include, among others, dependency on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines' suspension of service or aircraft groundings, travel suppliers' usage of alternative distribution models, exposure to pricing pressure in the Travel Network business, changes affecting travel supplier customers, maintenance of the integrity of our systems and infrastructure and the effect of any security breaches, failure to adapt to technological advancements, competition in the travel distribution market and solutions markets, implementation of software solutions, reliance on third parties to provide information technology services, the implementation and effects of new or renewed agreements, dependence on establishing, maintaining and renewing contracts with customers and other counterparties and collecting amounts due to us under these agreements, dependence on relationships with travel buyers, our collection, processing, storage, use and transmission of personal data and risks associated with PCI compliance, our ability to recruit, train and retain employees, including our key executive officers and technical employees, 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 the value of our brands, the effects of litigation and regulatory investigations, failure to comply with regulations, use of third-party distributor partners, the financial and business effects of acquisitions, including costs, closing and integration of these acquisitions, the effects of the implementation of new accounting standards, and tax-related matters, including the effect of the Tax Cuts and Jobs Act. More information about potential risks and uncertainties that could affect our business and results of operations is included in the "Risk Factors" and “Forward-Looking Statements” sections in our Annual Report on Form 10-K filed with the SEC on February 15, 2019 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.



10



Contacts:

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


11



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended March 31,
 
2019
 
2018
Revenue
$
1,049,361

 
$
988,369

Cost of revenue
787,563

 
692,857

Selling, general and administrative
151,391

 
130,111

Operating income
110,407

 
165,401

Other income (expense):
 

 
 

Interest expense, net
(38,013
)
 
(38,109
)
Loss on extinguishment of debt

 
(633
)
Joint venture equity income
533

 
1,171

Other, net
(1,870
)
 
(1,106
)
Total other expense, net
(39,350
)
 
(38,677
)
Income from continuing operations before income taxes
71,057

 
126,724

Provision for income taxes
11,843

 
36,275

Income from continuing operations
59,214

 
90,449

Loss from discontinued operations, net of tax
(1,452
)
 
(1,207
)
Net income
57,762

 
89,242

Net income attributable to noncontrolling interests
912

 
1,362

Net income attributable to common stockholders
$
56,850

 
$
87,880

 
 
 
 
Basic net income per share attributable to common stockholders:
 

 
 

Income from continuing operations
$
0.21

 
$
0.32

Loss from discontinued operations
(0.01
)
 

Net income per common share
$
0.20

 
$
0.32

Diluted net income per share attributable to common stockholders:
 

 
 

Income from continuing operations
$
0.21

 
$
0.32

Loss from discontinued operations
(0.01
)
 

Net income per common share
$
0.20

 
$
0.32

Weighted-average common shares outstanding:
 

 
 

Basic
275,589

 
274,720

Diluted
277,605

 
276,844

 
 
 
 
Dividends per common share
$
0.14

 
$
0.14


12


SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
March 31, 2019
 
December 31, 2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
459,487

 
$
509,265

Accounts receivable, net
617,963

 
508,122

Prepaid expenses and other current assets
163,841

 
170,243

Total current assets
1,241,291

 
1,187,630

Property and equipment, net of accumulated depreciation of $1,596,627 and $1,524,795
753,949

 
790,372

Investments in joint ventures
27,333

 
27,769

Goodwill
2,550,983

 
2,552,369

Acquired customer relationships, net of accumulated amortization of $716,140 and $709,824
316,743

 
323,731

Other intangible assets, net of accumulated amortization of $644,684 and $634,995
279,828

 
289,517

Deferred income taxes
23,810

 
24,322

Other assets, net
665,626

 
610,671

Total assets
$
5,859,563

 
$
5,806,381

 
 
 
 
Liabilities and stockholders’ equity
 

 
 

Current liabilities
 

 
 

Accounts payable
$
220,820

 
$
165,227

Accrued compensation and related benefits
64,503

 
112,866

Accrued subscriber incentives
353,037

 
301,530

Deferred revenues
92,682

 
80,902

Other accrued liabilities
239,075

 
185,178

Current portion of debt
75,548

 
68,435

Tax Receivable Agreement
101,497

 
104,257

Total current liabilities
1,147,162

 
1,018,395

Deferred income taxes
119,062

 
135,753

Other noncurrent liabilities
309,537

 
340,495

Long-term debt
3,318,203

 
3,337,467

Commitments and contingencies (Note 10)
 
 
 
Stockholders’ equity
 

 
 

Common Stock: $0.01 par value; 450,000 authorized shares; 293,909 and 291,664 shares issued, 275,629 and 275,352 shares outstanding at March 31, 2019 and December 31, 2018, respectively
2,939

 
2,917

Additional paid-in capital
2,262,424

 
2,243,419

Treasury Stock, at cost, 18,280 and 16,312 shares at March 31, 2019 and December 31, 2018, respectively
(420,301
)
 
(377,980
)
Retained deficit
(750,310
)
 
(768,566
)
Accumulated other comprehensive loss
(137,252
)
 
(132,724
)
Noncontrolling interest
8,099

 
7,205

Total stockholders’ equity
965,599

 
974,271

Total liabilities and stockholders’ equity
$
5,859,563

 
$
5,806,381


13


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Three Months Ended March 31,
 
2019
 
2018
Operating Activities
 
 
 
Net income
$
57,762

 
$
89,242

Adjustments to reconcile net income to cash provided by operating activities:
 

 
 

Depreciation and amortization
103,443

 
101,876

Amortization of upfront incentive consideration
19,128

 
19,456

Stock-based compensation expense
15,694

 
12,606

Deferred income taxes
(13,932
)
 
20,413

Allowance for doubtful accounts
5,370

 
2,396

Loss from discontinued operations
1,452

 
1,207

Dividends received from joint venture investments
996

 
865

Amortization of debt issuance costs
993

 
1,003

Joint venture equity income
(533
)
 
(1,171
)
Loss on extinguishment of debt

 
633

Debt modification costs

 
1,558

Other
(1,189
)
 
4,252

Changes in operating assets and liabilities:
 

 
 

Accounts and other receivables
(95,354
)
 
(89,417
)
Prepaid expenses and other current assets
(24,429
)
 
8,482

Capitalized implementation costs
(7,619
)
 
(11,484
)
Upfront incentive consideration
(22,052
)
 
(25,699
)
Other assets
26,078

 
(1,816
)
Accrued compensation and related benefits
(47,150
)
 
(53,525
)
Accounts payable and other accrued liabilities
131,753

 
98,675

Deferred revenue including upfront solution fees
1,589

 
15,640

Cash provided by operating activities
152,000

 
195,192

Investing Activities
 

 
 

Additions to property and equipment
(37,864
)
 
(64,699
)
Cash used in investing activities
(37,864
)
 
(64,699
)
Financing Activities
 

 
 

Payments on Tax Receivable Agreement
(72,790
)
 
(58,908
)
Cash dividends paid to common stockholders
(38,594
)
 
(38,560
)
Repurchase of common stock
(32,146
)
 

Payments on borrowings from lenders
(11,828
)
 
(11,828
)
Net payments on the settlement of equity-based awards
(6,842
)
 
(4,797
)
Debt issuance and modification costs

 
(1,567
)
Other financing activities
(2,114
)
 
(12,811
)
Cash used in financing activities
(164,314
)
 
(128,471
)
Cash Flows from Discontinued Operations
 

 
 

Cash used in operating activities
(48
)
 
(1,139
)
Cash used in discontinued operations
(48
)
 
(1,139
)
Effect of exchange rate changes on cash and cash equivalents
448

 
(1,161
)
Decrease in cash and cash equivalents
(49,778
)
 
(278
)
Cash and cash equivalents at beginning of period
509,265

 
361,381

Cash and cash equivalents at end of period
$
459,487

 
$
361,103


14


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 March 31,
 
2019
 
2018
Net income attributable to common stockholders
$
56,850

 
$
87,880

Loss from discontinued operations, net of tax
1,452

 
1,207

Net income attributable to noncontrolling interests(1)
912

 
1,362

Income from continuing operations
59,214

 
90,449

Adjustments:
 

 
 

Acquisition-related amortization(2a)
15,984

 
17,590

Loss on extinguishment of debt

 
633

Other, net(4)
1,870

 
1,106

Acquisition-related costs(6)
11,706

 

Litigation costs(5)
1,438

 
828

Stock-based compensation
15,694

 
12,606

Tax impact of net income adjustments(7)
(11,707
)
 
(2,002
)
Adjusted Net Income from continuing operations
$
94,199

 
$
121,210

Adjusted Net Income from continuing operations per share
$
0.34

 
$
0.44

Diluted weighted-average common shares outstanding
277,605

 
276,844

 
 
 
 
Adjusted Net Income from continuing operations
$
94,199

 
$
121,210

Adjustments:
 

 
 

Depreciation and amortization of property and equipment(2b)
75,348

 
74,463

Amortization of capitalized implementation costs(2c)
12,111

 
9,823

Amortization of upfront incentive consideration(3)
19,128

 
19,456

Interest expense, net
38,013

 
38,109

Remaining provision for income taxes
23,550

 
38,277

Adjusted EBITDA
$
262,349

 
$
301,338

Less:
 
 
 
Depreciation and amortization(2)
103,443

 
101,876

Amortization of upfront incentive consideration(3)
19,128

 
19,456

Acquisition-related amortization(2a)
(15,984
)
 
(17,590
)
Adjusted Operating Income
$
155,762

 
$
197,596



15


Reconciliation of net income attributable to common stockholders to Adjusted Net Income, Adjusted EBITDA and Adjusted EBITDA Less Capitalized Software Development:

 
Three Months Ended March 31,
 
2019
 
2018
Net income attributable to common stockholders
$
56,850

 
$
87,880

Loss from discontinued operations, net of tax
1,452

 
1,207

Net income attributable to noncontrolling interests(1)
912

 
1,362

Income from continuing operations
59,214

 
90,449

Adjustments:
 

 
 

Acquisition-related amortization(2a)
15,984

 
17,590

Loss on extinguishment of debt

 
633

Other, net(4)
1,870

 
1,106

Acquisition-related costs(6)
11,706

 

Litigation costs(5)
1,438

 
828

Stock-based compensation
15,694

 
12,606

Tax impact of net income adjustments(7)
(11,707
)
 
(2,002
)
Adjusted Net Income from continuing operations
$
94,199

 
$
121,210

Adjusted Net Income from continuing operations per share
$
0.34

 
$
0.44

Diluted weighted-average common shares outstanding
277,605

 
276,844

 
 
 
 
Adjusted Net Income from continuing operations
$
94,199

 
$
121,210

Adjustments:
 

 
 

Depreciation and amortization of property and equipment(2b)
75,348

 
74,463

Amortization of capitalized implementation costs(2c)
12,111

 
9,823

Amortization of upfront incentive consideration(3)
19,128

 
19,456

Interest expense, net
38,013

 
38,109

Remaining provision for income taxes
23,550

 
38,277

Adjusted EBITDA
$
262,349

 
$
301,338

Less:
 
 
 
Capitalized Software Development
27,212

 
57,452

Adjusted EBITDA Less Capitalized Software Development
$
235,137

 
$
243,886










16


Reconciliation of Free Cash Flow:

 
Three Months Ended March 31,
 
2019
 
2018
Cash provided by operating activities
$
152,000

 
$
195,192

Cash used in investing activities
(37,864
)
 
(64,699
)
Cash used in financing activities
(164,314
)
 
(128,471
)


 
Three Months Ended March 31,
 
2019
 
2018
Cash provided by operating activities
$
152,000

 
$
195,192

Additions to property and equipment
(37,864
)
 
(64,699
)
Free Cash Flow
$
114,136

 
$
130,493


17


Reconciliation of Net Income to LTM Adjusted EBITDA (for Net Debt Ratio):

 
Three Months Ended
 
 
 
Jun 30, 2018
 
Sep 30, 2018
 
Dec 31, 2018
 
Mar 31, 2019
 
LTM
Net income attributable to common stockholders
$
92,246

 
$
73,005

 
$
84,400

 
$
56,850

 
$
306,501

(Income) loss from discontinued operations, net of tax
(760
)
 
(3,664
)
 
1,478

 
1,452

 
(1,494
)
Net income attributable to noncontrolling interests(1)
1,079

 
1,538

 
1,150

 
912

 
4,679

Income from continuing operations
92,565

 
70,879

 
87,028

 
59,214

 
309,686

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization(2a)
17,588

 
16,407

 
16,423

 
15,984

 
66,402

Other, net(4)
7,735

 
1,905

 
(2,237
)
 
1,870

 
9,273

Acquisition-related costs(6)

 

 
3,266

 
11,706

 
14,972

Litigation costs(5)
1,020

 
5,225

 
1,250

 
1,438

 
8,933

Stock-based compensation
13,594

 
15,245

 
15,818

 
15,694

 
60,351

Depreciation and amortization of property and equipment(2b)
74,960

 
76,226

 
77,963

 
75,348

 
304,497

Amortization of capitalized implementation costs(2c)
10,395

 
10,099

 
11,407

 
12,111

 
44,012

Amortization of upfront incentive consideration(3)
19,661

 
18,207

 
20,298

 
19,128

 
77,294

Interest expense, net
39,409

 
39,291

 
40,208

 
38,013

 
156,921

Provision for income taxes
75

 
25,021

 
(3,879
)
 
11,843

 
33,060

Adjusted EBITDA
$
277,002

 
$
278,505

 
$
267,545

 
$
262,349

 
$
1,085,401

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
2,958,827

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.7x



 
Three Months Ended
 
 
 
Jun 30, 2017
 
Sep 30, 2017
 
Dec 31, 2017
 
Mar 31, 2018
 
LTM
Net (loss) income attributable to common stockholders
$
(6,487
)
 
$
90,989

 
$
82,090

 
$
87,880

 
$
254,472

Loss (income) from discontinued operations, net of tax
1,222

 
529

 
(296
)
 
1,207

 
2,662

Net income attributable to noncontrolling interests(1)
1,113

 
1,307

 
1,387

 
1,362

 
5,169

(Loss) income from continuing operations
(4,152
)
 
92,825

 
83,181

 
90,449

 
262,303

Adjustments:
 
 
 
 
 
 
 
 
 
Impairment and related charges(8)
92,022

 

 
(10,910
)
 

 
81,112

Acquisition-related amortization (2a)
20,259

 
20,226

 
20,194

 
17,590

 
78,269

Loss on extinguishment of debt

 
1,012

 

 
633

 
1,645

Other, net (4)
752

 
3,802

 
(56,318
)
 
1,106

 
(50,658
)
Restructuring and other costs (6)
25,304

 

 
(1,329
)
 

 
23,975

Litigation costs (reimbursements), net (5)
958

 
(40,929
)
 
963

 
828

 
(38,180
)
Stock-based compensation
14,724

 
11,655

 
10,276

 
12,606

 
49,261

Depreciation and amortization of property and equipment (2b)
63,810

 
66,332

 
73,438

 
74,463

 
278,043

Amortization of capitalized implementation costs (2c)
8,948

 
10,484

 
11,510

 
9,823

 
40,765

Amortization of upfront incentive consideration (3)
16,161

 
18,005

 
17,113

 
19,456

 
70,735

Interest expense, net
38,097

 
38,919

 
37,348

 
38,109

 
152,473

Provision for income taxes
(15,466
)
 
40,595

 
71,201

 
36,275

 
132,605

Adjusted EBITDA
$
261,417

 
$
262,926

 
$
256,667

 
$
301,338

 
$
1,082,348

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
3,113,248

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.9x


18


Reconciliation of operating income (loss) to Adjusted Gross Profit, Adjusted EBITDA and Adjusted Operating Income (Loss) by business segment:
 
Three Months Ended March 31, 2019
 
Travel
Network
 
Airline
Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
192,639

 
$
15,424

 
$
(5,717
)
 
$
(91,939
)
 
$
110,407

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
43,460

 
22,677

 
9,960

 
75,294

 
151,391

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
27,453

 
40,030

 
11,467

 
5,970

 
84,920

Amortization of upfront incentive consideration(3)
19,128

 

 

 

 
19,128

Stock-based compensation

 

 

 
7,244

 
7,244

Adjusted Gross Profit
282,680

 
78,131

 
15,710

 
(3,431
)
 
373,090

Selling, general and administrative
(43,460
)
 
(22,677
)
 
(9,960
)
 
(75,294
)
 
(151,391
)
Joint venture equity income
533

 

 

 

 
533

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
3,102

 
2,940

 
1,255

 
11,226

 
18,523

Acquisition-related costs(6)

 

 

 
11,706

 
11,706

Litigation costs(5)

 

 

 
1,438

 
1,438

Stock-based compensation

 

 

 
8,450

 
8,450

Adjusted EBITDA
$
242,855

 
$
58,394

 
$
7,005

 
$
(45,905
)
 
$
262,349

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
30,555

 
42,970

 
12,722

 
17,196

 
103,443

Amortization of upfront incentive consideration(3)
19,128

 

 

 

 
19,128

Acquisition-related amortization(2a)

 

 

 
(15,984
)
 
(15,984
)
Adjusted Operating Income (Loss)
$
193,172

 
$
15,424

 
$
(5,717
)
 
$
(47,117
)
 
$
155,762

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income margin
24.9
%
 
7.2
%
 
NM

 
NM

 
10.5
%
Adjusted Operating Income Margin
25.0
%
 
7.2
%
 
NM

 
NM

 
14.8
%

19


  
 
Three Months Ended March 31, 2018
 
Travel
Network
 
Airline
Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
210,674

 
$
30,712

 
$
2,137

 
$
(78,122
)
 
$
165,401

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
40,505

 
18,217

 
9,416

 
61,973

 
130,111

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
27,382

 
40,835

 
8,690

 
7,019

 
83,926

Amortization of upfront incentive consideration(3)
19,456

 

 

 

 
19,456

Stock-based compensation

 

 

 
5,686

 
5,686

Adjusted Gross Profit
298,017

 
89,764

 
20,243

 
(3,444
)
 
404,580

Selling, general and administrative
(40,505
)
 
(18,217
)
 
(9,416
)
 
(61,973
)
 
(130,111
)
Joint venture equity income
1,171

 

 

 

 
1,171

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
2,905

 
2,872

 
932

 
11,241

 
17,950

Litigation costs(5)

 

 

 
828

 
828

Stock-based compensation

 

 

 
6,920

 
6,920

Adjusted EBITDA
$
261,588

 
$
74,419

 
$
11,759

 
$
(46,428
)
 
$
301,338

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
30,287

 
43,707

 
9,622

 
18,260

 
101,876

Amortization of upfront incentive consideration(3)
19,456

 

 

 

 
19,456

Acquisition-related amortization(2a)

 

 

 
(17,590
)
 
(17,590
)
Adjusted Operating Income (Loss)
$
211,845

 
$
30,712

 
$
2,137

 
$
(47,098
)
 
$
197,596

 
 
 
 
 
 
 
 
 
 
Operating income margin
29.2
%
 
14.9
%
 
3.1
%
 
NM

 
16.7
%
Adjusted Operating Income Margin
29.4
%
 
14.9
%
 
3.1
%
 
NM

 
20.0
%



20


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 Net Income from continuing operations per share ("Adjusted EPS"), Adjusted EBITDA, Adjusted EBITDA Less Capitalized Software Development, 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, the cost of revenue portion of depreciation and amortization, 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, acquisition-related amortization, acquisition-related costs, litigation costs (reimbursements), net and stock-based compensation.

We define Adjusted Net Income as net income attributable to common stockholders adjusted for income (loss) from discontinued operations, net of tax, net income attributable to noncontrolling interests, acquisition-related amortization, loss on extinguishment of debt, other, net, acquisition-related costs, litigation costs (reimbursements), net, stock-based compensation and 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 the remaining provision for income taxes.

We define Adjusted EBITDA Less Capitalized Software Development 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, the remaining provision for income taxes and capitalized software development.


21


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 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, Adjusted EBITDA Less Capitalized Software Development 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 EBITDA Less Capitalized Software Development, Adjusted EPS, Free Cash Flow, and ratios based on these financial measures are not recognized terms under GAAP. These non-GAAP financial measures and ratios based on them are unaudited and have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity. These non-GAAP financial measures and ratios based on them exclude some, but not all, items that affect net income or cash flows from operating activities and these measures may vary among companies. Our use of these measures has limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are:

22



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, Adjusted EBITDA and Adjusted EBITDA Less Capitalized Software Development do not reflect cash requirements for such replacements;

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

Adjusted EBITDA and Adjusted EBITDA Less Capitalized Software Development do not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness;

Adjusted EBITDA and Adjusted EBITDA Less Capitalized Software Development do not reflect tax payments that may represent a reduction in cash available to us;

Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness; and

other companies, including companies in our industry, may calculate Adjusted Gross Profit, Adjusted Operating Income (Loss), Adjusted Net Income, Adjusted EBITDA, Adjusted EBITDA Less Capitalized Software Development, Adjusted EPS or Free Cash Flow differently, which reduces their usefulness as comparative measures.


23


Non-GAAP Footnotes

(1)
Net income attributable to noncontrolling interests represents an adjustment to include earnings allocated to noncontrolling interests held in (i) Sabre Travel Network Middle East of 40%, (ii) Sabre Seyahat Dagitim Sistemleri A.S. of 40%, (iii) Abacus International Lanka Pte Ltd of 40%, and (iv) Sabre Bulgaria of 40%.

(2)
Depreciation and amortization expenses:
a.
Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date.
b.
Depreciation and amortization of property and equipment includes software developed for internal use.
c.
Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model, as well as amortization of contract acquisition costs.

(3)
Our Travel Network business at times provides upfront incentive consideration to travel agency subscribers at the inception or modification of a service contract, which are capitalized and amortized to cost of revenue over an average expected life of the service contract, generally over three to five years. This consideration is made with the objective of increasing the number of clients or to ensure or improve customer loyalty. These service contract terms are established such that the supplier and other fees generated over the life of the contract will exceed the cost of the incentive consideration provided up front. These service contracts with travel agency subscribers require that the customer commit to achieving certain economic objectives and generally have terms requiring repayment of the upfront incentive consideration if those objectives are not met.

(4)
Other, net primarily includes foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency.

(5)
Litigation costs, net represent charges associated with antitrust litigation.

(6)
Acquisition-related costs represent fees and expenses incurred associated with the 2018 agreement to acquire Farelogix Inc. ("Farelogix"), which is anticipated to close in 2019.

(7)
The tax impact on net income adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, and the tax effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions and other items.

24

View differences made from one to another to evaluate Sabre Corp's financial trajectory

Compare SEC Filings Year-over-Year (YoY) and Quarter-over-Quarter (QoQ)
Sample 10-K Year-over-Year (YoY) Comparison

Compare this 8-K Corporate News to its predecessor by reading our highlights to see what text and tables were  removed  ,   added    and   changed   by Sabre Corp.

Continue

Never Miss A New SEC Filing Again


Real-Time SEC Filing Notifications
Screenshot taken from Gmail for a new 10-K Annual Report
Last10K.com Member Feature

Receive an e-mail as soon as a company files an Annual Report, Quarterly Report or has new 8-K corporate news.

Continue

We Highlighted This SEC Filing For You


SEC Filing Sentiment Analysis - Bullish, Bearish, Neutral
Screenshot taken from Wynn's 2018 10-K Annual Report
Last10K.com Member Feature

Read positive and negative remarks made by management in their entirety without having to find them in a 10-K/Q.

Continue

Widen Your SEC Filing Reading Experience


Increased Reading Area for SEC Filings
Screenshot taken from Adobe Inc.'s 10-Q Quarterly Report
Last10K.com Member Feature

Remove data columns and navigations in order to see much more filing content and tables in one view

Continue

Uncover Actionable Information Inside SEC Filings


SEC Filing Disclosures
Screenshot taken from Lumber Liquidators 10-K Annual Report
Last10K.com Member Feature

Read both hidden opportunities and early signs of potential problems without having to find them in a 10-K/Q

Continue

Adobe PDF, Microsoft Word and Excel Downloads


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshots of actual 10-K and 10-Q SEC Filings in PDF, Word and Excel formats
Last10K.com Member Feature

Export Annual and Quarterly Reports to Adobe PDF, Microsoft Word and Excel for offline viewing, annotations and analysis

Continue

FREE Financial Statements


Download Annual and Quarterly Reports as PDF, Word and Excel Documents
Screenshot of actual balance sheet from company 10-K Annual Report
Last10K.com Member Feature

Get one-click access to balance sheets, income, operations and cash flow statements without having to find them in Annual and Quarterly Reports

Continue for FREE

Log in with your credentials

or    

Forgot your details?

Create Account