sabrelogoa59.jpg

Sabre reports second quarter 2019 results

Second quarter revenue increased 1.6%
Travel Network revenue rose 0.7%, with bookings growth of 0.9%
Airline Solutions revenue increased 3.4%
Hospitality Solutions revenue grew 8.1%
Net income attributable to common stockholders totaled $27.8 million and diluted net income attributable to common stockholders per share (EPS) totaled $0.10
Adjusted EPS totaled $0.24
Cash provided by operating activities totaled $105.7 million
Raised full-year 2019 earnings guidance

SOUTHLAKE, Texas – August 1, 2019– Sabre Corporation ("Sabre" or the "Company") (NASDAQ: SABR) today announced financial results for the quarter ended June 30, 2019.

"Sabre is a global technology leader in retailing, distribution and fulfillment to the $1.7 trillion travel marketplace. Our business model is underpinned by long-term contracts, renewal rates of well over 90% and revenue streams that are tied to travel volumes, which have proven resilient across economic cycles," said Sean Menke, President and CEO. "I'm pleased to report solid second quarter performance that was supported by our business model and commercial wins. The second quarter of 2019 marked the sixth consecutive quarter of strong gains in our GDS share. We grew bookings 8% in our home region of North America. At Airline Solutions, we saw a 15% increase in AirVision and AirCentre commercial and operations revenue in the quarter. Our broad set of SaaS airline solutions continues to gain momentum following our efforts over the past two years and has contributed to our ability to contract approximately 75% of our current Airline Solutions revenue base through 2023. At Hospitality Solutions, we have exceeded sales targets for the fourth quarter in a row and grew revenue 8% year-over-year in the quarter."

"We are accelerating innovations to differentiate versus our competitors. This includes the roll-out of Sabre Red 360 and new lodging innovations, including a significant expansion of properties available through our GDS supported by our partnerships with Booking.com and Expedia Affiliate Network. We recently launched the new Sabre Virtual Payments platform,


1



continued to progress in our NDC efforts, brought to market the industry's first Airline Commercial Platform and introduced an innovative Hospitality Intelligent Retailing Platform that opens new sources of revenue growth for our hotelier customers. We are the first GDS to have our entire shopping complex in the cloud. We are continuing to build out our global cloud landing zones and now have over 55% of our total compute footprint in the cloud. Our solid second quarter performance, commercial wins, leading innovation and infrastructure progress give me confidence in raising our full-year 2019 earnings guidance."

Q2 2019 Financial Summary

Sabre consolidated second quarter revenue increased 1.6% to $1,000.0 million, compared to $984.4 million in the year ago period.

Second quarter operating income was $81.9 million, versus $138.8 million in the second quarter of 2018. The decline in operating income was primarily due to increased technology expenses in the quarter, with a corresponding decline in technology capitalized expenditures, as well as modest growth in Travel Network incentive expense per booking and $8.9 million in acquisition-related costs, partially offset by solid revenue growth. The shift in technology cost recognition had no impact on the level of total technology spend or Free Cash Flow and is driven by the execution of the Company's previously disclosed technology strategy, including its cloud migration, mainframe offload and utilization of agile development methods, that increases the expensed portion of its total technology spend.

Net income attributable to common stockholders totaled $27.8 million, versus $92.2 million in the second quarter of 2018. Diluted net income attributable to common stockholders per share totaled $0.10, versus $0.33 in the second quarter of 2018. The decrease in net income attributable to common stockholders was driven by the items impacting operating income described above, as well a $12.1 million increase in income taxes primarily due to an unfavorable comparison to a tax rate benefit recognized in the second quarter of 2018.

Second quarter consolidated Adjusted EBITDA Less Capitalized Software Development, which reflects the Company's total capitalized and expensed technology spend, was $211.5 million, a decrease of 1.3% from $214.3 million in the second quarter of 2018. This decrease was primarily driven by modest growth in Travel Network incentive expense per booking and other transaction-related expenses, partially offset by solid revenue growth.

Adjusted Operating Income was $127.0 million, versus $172.0 million in the second quarter of 2018. The decline in Sabre's consolidated Adjusted Operating Income was primarily the result of


2



increased technology operating expenses due to the increase in the expensed portion of total technology spend and modest growth in Travel Network incentive expense per booking, partially offset by solid revenue growth.

For the quarter, Sabre reported Adjusted Net Income from continuing operations per share (Adjusted EPS) of $0.24, versus $0.37 per share in the second quarter of 2018.

With regards to Sabre's second quarter 2019 cash flows (versus prior year):
Cash provided by operating activities totaled $105.7 million (vs. $146.6 million)
Cash used in investing activities totaled $38.3 million (vs. $67.2 million)
Cash used in financing activities totaled $128.7 million (vs. $73.1 million)
Capitalized expenditures totaled $29.3 million (vs. $67.2 million)

Second quarter Free Cash Flow totaled $76.3 million, versus $79.5 million in the second quarter of 2018.

During the second quarter of 2019, Sabre returned $83.8 million to shareholders, including $38.3 million through its regular quarterly dividend and the repurchase of 2.2 million shares for approximately $45.5 million under its share repurchase authorization. Year-to-date, the Company has repurchased 3.7 million shares for approximately $77.6 million.





3



Financial Highlights
(in thousands, except for EPS; unaudited):
Three Months Ended June 30,
 
Six Months Ended June 30,
2019
 
2018
 
% Change
 
2019
 
2018
 
% Change
Total Company:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
1,000,006

 
$
984,376

 
1.6
 
$
2,049,367

 
$
1,972,745

 
3.9
Operating income
$
81,913

 
$
138,833

 
(41.0)
 
$
192,320

350,369,000

$
304,234

 
(36.8)
Net income attributable to common stockholders
$
27,838

 
$
92,246

 
(69.8)
 
$
84,688

 
$
180,126

 
(53.0)
Diluted net income attributable to common stockholders per share (EPS)
$
0.10

 
$
0.33

 
(69.7)
 
$
0.31

 
$
0.65

 
(52.3)
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Gross Profit*
$
350,438

 
$
373,678

 
(6.2)
 
$
723,528

 
$
778,257

 
(7.0)
Adjusted EBITDA*
$
235,635

 
$
277,002

 
(14.9)
 
$
497,984

 
$
578,340

 
(13.9)
Adjusted EBITDA Less Capitalized Software Development*
$
211,519

 
$
214,296

 
(1.3)
 
$
446,656

 
$
458,182

 
(2.5)
Adjusted Operating Income*
$
126,953

 
$
171,986

 
(26.2)
 
$
282,715

 
$
369,582

 
(23.5)
Adjusted Net Income*
$
67,454

 
$
102,343

 
(34.1)
 
$
161,653

 
$
223,553

 
(27.7)
Adjusted EPS*
$
0.24

 
$
0.37

 
(35.1)
 
$
0.58

 
$
0.81

 
(28.4)
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
105,661

 
$
146,647

 
(27.9)
 
$
257,661

 
$
341,839

 
(24.6)
Cash used in investing activities
$
(38,299
)
 
$
(67,187
)
 
(43.0)
 
$
(76,163
)
 
$
(131,886
)
 
(42.3)
Cash used in financing activities
$
(128,661
)
 
$
(73,054
)
 
76.1
 
$
(292,975
)
 
$
(201,525
)
 
45.4
Capitalized expenditures
$
(29,332
)
 
$
(67,187
)
 
(56.3)
 
$
(67,196
)
 
$
(131,886
)
 
(49.0)
 
 
 
 
 
 
 
 
 
 
 
 
Free Cash Flow*
$
76,329

 
$
79,460

 
(3.9)
 
$
190,465

 
$
209,953

 
(9.3)
 
 
 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
$
3,007,906

 
$
3,090,737

 
 
 
 
 
 
 
 
Net Debt / LTM Adjusted EBITDA*
2.9x

 
2.8x

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Travel Network:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
724,632

 
$
719,685

 
0.7
 
$
1,498,600

 
$
1,440,821

 
4.0
Transaction Revenue
$
681,394

 
$
679,300

 
0.3
 
$
1,412,159

 
$
1,356,662

 
4.1
Other Revenue
$
43,238

 
$
40,385

 
7.1
 
$
86,441

 
$
84,159

 
2.7
Operating Income
$
159,384

 
$
195,052

 
(18.3)
 
$
352,023

 
$
405,725

 
(13.2)
Adjusted Operating Income*
$
159,797

 
$
196,003

 
(18.5)
 
$
352,969

 
$
407,847

 
(13.5)
 
 
 
 
 
 
 
 
 
 
 
 
Total Bookings
142,125

 
140,817

 
0.9
 
297,062

 
291,649

 
1.9
Air Bookings
124,605

 
122,864

 
1.4
 
263,166

 
257,515

 
2.2
Lodging, Ground and Sea Bookings
17,520

 
17,953

 
(2.4)
 
33,896

 
34,134

 
(0.7)
Air Bookings Share
38.6
%
 
37.4
%
 
 
 
38.4
%
 
37.2
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Airline Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
211,833

 
$
204,822

 
3.4
 
$
424,760

 
$
411,425

 
3.2
Operating Income
$
22,660

 
$
22,813

 
(0.7)
 
$
38,084

 
$
53,525

 
(28.8)
Adjusted Operating Income*
$
22,660

 
$
22,813

 
(0.7)
 
$
38,084

 
$
53,525

 
(28.8)
 
 
 
 
 
 
 
 
 
 
 
 
Passengers Boarded
180,386

 
195,699

 
(7.8)
 
366,563

 
370,342

 
(1.0)
 
 
 
 
 
 
 
 
 
 
 
 
Hospitality Solutions:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
$
73,876

 
$
68,314

 
8.1
 
$
146,707

 
$
136,442

 
7.5
Operating (Loss) Income
$
(5,746
)
 
$
1,964

 
NM
 
$
(11,463
)
 
$
4,101

 
NM
Adjusted Operating (Loss) Income*
$
(5,746
)
 
$
1,964

 
NM
 
$
(11,463
)
 
$
4,101

 
NM
 
 
 
 
 
 
 
 
 
 
 
 
Central Reservation System Transactions
28,890

 
22,555

 
28.1
 
51,914

 
39,519

 
31.4
 
 
 
 
 
 
 
 
 
 
 
 
*Indicates non-GAAP financial measure; see descriptions and reconciliations below


4



Travel Network

Second quarter 2019 highlights (versus prior year):
Travel Network revenue increased 0.7% to $724.6 million.
Global air bookings share increased 120 basis points to 38.6%.
Global bookings increased 0.9% in the quarter, stronger than the GDS industry. Global bookings growth was supported by an increase of 7.9% in North America, representing the company's largest global footprint. Strong North American bookings growth offset a decline in international bookings.
Operating income totaled $159.4 million, versus $195.1 million in the second quarter of 2018, and operating income margin was 22.0%.
The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven by the Company's technology strategy, and modest incentive expense per booking growth, partially offset by revenue growth.

Airline Solutions

Second quarter 2019 highlights (versus prior year):
Airline Solutions revenue increased 3.4% to $211.8 million, supported by 14.7% growth in AirVision and AirCentre commercial and operations solutions revenue. SabreSonic revenue declined 3.0% due to the previously discussed impact of certain outside factors including the insolvency of Jet Airways and volume reductions at a certain carrier due to a 737 MAX incident, as well as the de-migrations of Pakistan International Airlines and Philippine Airlines.
Airline passengers boarded declined 7.8% in the quarter. Excluding the carriers referenced above, airline passengers boarded grew 4.3%.
Operating income totaled $22.7 million, versus $22.8 million in the second quarter of 2018, and operating income margin was 10.7%.
Solid revenue growth was offset by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven by the Company's technology strategy.







5



Hospitality Solutions

Second quarter 2019 highlights (versus prior year):
Hospitality Solutions revenue increased 8.1% to $73.9 million, primarily driven by growth in central reservation system transactions.
Central reservation system transactions increased 28.1% to 28.9 million.
Operating loss was $5.7 million, versus income of $2.0 million in the second quarter of 2018.
The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven by the Company's technology strategy and higher depreciation and amortization, partially offset by revenue growth.




6



Business Outlook and Financial Guidance

With respect to the 2019 guidance below:
Full-year Adjusted EPS guidance consists of (1) full-year expected net income attributable to common stockholders adjusted for the estimated impact of loss from discontinued operations, net of tax, of approximately $5 million; net income attributable to noncontrolling interests of approximately $5 million; acquisition-related amortization of approximately $65 million; stock-based compensation expense of approximately $75 million; other costs including litigation, other foreign non-income tax matters and foreign exchange gains and losses of $20 million; and the tax impact of the above adjustments of approximately $30 million, divided by (2) the projected weighted-average diluted common share count for the full year of approximately 277 million.
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.

Sabre raised full-year 2019 earnings guidance, summarized below:

($ millions, except EPS)
2019 Guidance
Vs. Previous Guidance
Revenue
$3,965M - $4,045M
 
 
 
 
Adjusted EPS
$0.91 - $1.05
+$0.02
 
 
 
Free Cash Flow
Approximately $455M
 

Additional guidance metrics are included in the slide presentation and prepared remarks regarding Sabre's second 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 second 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.

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


8



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 Adjusted EPS and Free Cash Flow. We are unable to provide this forward guidance on a GAAP basis without unreasonable effort; however, see "Business Outlook and Financial Guidance" for additional information including estimates of certain components of the non-GAAP adjustments contained in the guidance.

We present non-GAAP measures when our management believes that the additional information provides useful information about our operating performance. Non-GAAP financial measures do not have any standardized meaning and are therefore unlikely to be comparable to similar measures presented by other companies. The presentation of non-GAAP financial measures is not intended to be a substitute for, and should not be considered in isolation from, the financial measures reported in accordance with GAAP. See “Non-GAAP Financial Measures” below for an explanation of the non-GAAP measures and “Tabular Reconciliations for Non-GAAP Measures” below for a reconciliation of the non-GAAP financial measures to the comparable GAAP measures.

Forward-looking Statements

Certain statements herein are forward-looking statements about trends, future events, uncertainties and our plans and expectations of what may happen in the future. Any statements that are not historical or current facts are forward-looking statements. In many cases, you can identify forward-looking statements by terms such as "guidance," "outlook," "momentum," "expect," "estimate," "project," "believe," "will," "accelerate," "preliminary," "anticipate," “may,” “should,” “would,” “intend," “potential,” "momentum," "long-term," "growth," "results" 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


9



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' insolvency, 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, the effects of litigation and regulatory investigations, 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, failure to comply with regulations, use of third-party distributor partners, the financial and business effects of acquisitions, including related costs, and, if successfully completed, 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" section in our Quarterly Report on Form 10-Q filed with the SEC on May 1, 2019, 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
 
Kristin Hays
 
kristin.hays@sabre.com
 
sabrenews@sabre.com
 
 
 
Investors
 
Barry Sievert
 
sabre.investorrelations@sabre.com
 


11



SABRE CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
 
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Revenue
$
1,000,006

 
$
984,376

 
$
2,049,367

 
$
1,972,745

Cost of revenue
763,388

 
721,759

 
1,550,951

 
1,414,616

Selling, general and administrative
154,705

 
123,784

 
306,096

 
253,895

Operating income
81,913

 
138,833

 
192,320

 
304,234

Other income (expense):
 

 
 

 
 
 
 
Interest expense, net
(39,608
)
 
(39,409
)
 
(77,621
)
 
(77,518
)
Loss on extinguishment of debt

 

 

 
(633
)
Joint venture equity income
413

 
951

 
946

 
2,122

Other, net
(2,479
)
 
(7,735
)
 
(4,349
)
 
(8,841
)
Total other expense, net
(41,674
)
 
(46,193
)
 
(81,024
)
 
(84,870
)
Income from continuing operations before income taxes
40,239

 
92,640

 
111,296

 
219,364

Provision for income taxes
12,145

 
75

 
23,988

 
36,350

Income from continuing operations
28,094

 
92,565

 
87,308

 
183,014

Income (loss) from discontinued operations, net of tax
1,350

 
760

 
(102
)
 
(447
)
Net income
29,444

 
93,325

 
87,206

 
182,567

Net income attributable to noncontrolling interests
1,606

 
1,079

 
2,518

 
2,441

Net income attributable to common stockholders
$
27,838

 
$
92,246

 
$
84,688

 
$
180,126

 
 
 
 
 
 
 
 
Basic net income (loss) per share attributable to common stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.10

 
$
0.33

 
$
0.31

 
$
0.66

Income (loss) from discontinued operations

 

 

 

Net income per common share
$
0.10

 
$
0.33

 
$
0.31

 
$
0.66

Diluted net income (loss) per share attributable to common stockholders:
 

 
 

 
 
 
 
Income from continuing operations
$
0.10

 
$
0.33

 
$
0.31

 
$
0.65

Income (loss) from discontinued operations

 

 

 

Net income per common share
$
0.10

 
$
0.33

 
$
0.31

 
$
0.65

Weighted-average common shares outstanding:
 

 
 

 
 
 
 
Basic
274,245

 
275,715

 
274,911

 
275,220

Diluted
275,483

 
277,180

 
276,596

 
276,565

 
 
 
 
 
 
 
 
Dividends per common share
$
0.14

 
$
0.14

 
$
0.28

 
$
0.28


12


SABRE CORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
(Unaudited)
 
June 30, 2019
 
December 31, 2018
Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
396,848

 
$
509,265

Accounts receivable, net
604,403

 
508,122

Prepaid expenses and other current assets
151,328

 
170,243

Total current assets
1,152,579

 
1,187,630

Property and equipment, net of accumulated depreciation of $1,671,342 and $1,524,795
708,579

 
790,372

Investments in joint ventures
27,132

 
27,769

Goodwill
2,551,736

 
2,552,369

Acquired customer relationships, net of accumulated amortization of $722,456 and $709,824
310,750

 
323,731

Other intangible assets, net of accumulated amortization of $654,372 and $634,995
270,140

 
289,517

Deferred income taxes
30,869

 
24,322

Other assets, net
718,286

 
610,671

Total assets
$
5,770,071

 
$
5,806,381

 
 
 
 
Liabilities and stockholders’ equity
 

 
 

Current liabilities
 

 
 

Accounts payable
$
174,999

 
$
165,227

Accrued compensation and related benefits
86,738

 
112,866

Accrued subscriber incentives
343,792

 
301,530

Deferred revenues
124,568

 
80,902

Other accrued liabilities
236,492

 
185,178

Current portion of debt
82,661

 
68,435

Tax Receivable Agreement
71,098

 
104,257

Total current liabilities
1,120,348

 
1,018,395

Deferred income taxes
113,649

 
135,753

Other noncurrent liabilities
317,464

 
340,495

Long-term debt
3,298,922

 
3,337,467

 
 
 
 
Stockholders’ equity
 

 
 

Common Stock: $0.01 par value; 450,000 authorized shares; 294,160 and 291,664 shares issued, 273,632 and 275,352 shares outstanding at June 30, 2019 and December 31, 2018, respectively
2,942

 
2,917

Additional paid-in capital
2,281,995

 
2,243,419

Treasury Stock, at cost, 20,528 and 16,312 shares at June 30, 2019 and December 31, 2018, respectively
(467,232
)
 
(377,980
)
Retained deficit
(760,753
)
 
(768,566
)
Accumulated other comprehensive loss
(144,416
)
 
(132,724
)
Noncontrolling interest
7,152

 
7,205

Total stockholders’ equity
919,688

 
974,271

Total liabilities and stockholders’ equity
$
5,770,071

 
$
5,806,381


13


SABRE CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
 
Six Months Ended June 30,
 
2019
 
2018
Operating Activities
 
 
 
Net income
$
87,206

 
$
182,567

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

 
 

Depreciation and amortization
208,290

 
204,819

Amortization of upfront incentive consideration
38,974

 
39,117

Stock-based compensation expense
33,989

 
26,200

Deferred income taxes
(14,140
)
 
57,538

Allowance for doubtful accounts
13,613

 
3,152

Amortization of debt issuance costs
1,986

 
1,995

Dividends received from joint venture investments
1,164

 
981

Joint venture equity income
(946
)
 
(2,122
)
Loss from discontinued operations
102

 
447

Loss on extinguishment of debt

 
633

Debt modification costs

 
1,558

Other
(803
)
 
1,875

Changes in operating assets and liabilities:
 

 
 

Accounts and other receivables
(103,861
)
 
(83,162
)
Prepaid expenses and other current assets
(4,000
)
 
9,777

Capitalized implementation costs
(15,202
)
 
(21,597
)
Upfront incentive consideration
(35,236
)
 
(43,463
)
Other assets
(2,162
)
 
(16,867
)
Accrued compensation and related benefits
(23,675
)
 
(30,683
)
Accounts payable and other accrued liabilities
57,428

 
(8,597
)
Deferred revenue including upfront solution fees
14,934

 
17,671

Cash provided by operating activities
257,661

 
341,839

Investing Activities
 

 
 

Additions to property and equipment
(67,196
)
 
(131,886
)
Other investing activities
(8,967
)
 

Cash used in investing activities
(76,163
)
 
(131,886
)
Financing Activities
 

 
 

Payments on Tax Receivable Agreement
(101,482
)
 
(58,908
)
Repurchase of common stock
(77,636
)
 
(26,281
)
Cash dividends paid to common stockholders
(76,875
)
 
(77,053
)
Payments on borrowings from lenders
(23,655
)
 
(23,655
)
Net (payments) receipts on the settlement of equity-based awards
(7,002
)
 
1,637

Debt issuance and modification costs

 
(1,567
)
Other financing activities
(6,325
)
 
(15,698
)
Cash used in financing activities
(292,975
)
 
(201,525
)
Cash Flows from Discontinued Operations
 

 
 

Cash used in operating activities
(1,196
)
 
(3,064
)
Cash used in discontinued operations
(1,196
)
 
(3,064
)
Effect of exchange rate changes on cash and cash equivalents
256

 
3,258

Increase (decrease) in cash and cash equivalents
(112,417
)
 
8,622

Cash and cash equivalents at beginning of period
509,265

 
361,381

Cash and cash equivalents at end of period
$
396,848

 
$
370,003


14


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

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

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net income attributable to common stockholders
$
27,838

 
$
92,246

 
$
84,688

 
$
180,126

(Income) loss from discontinued operations, net of tax
(1,350
)
 
(760
)
 
102

 
447

Net income attributable to noncontrolling interests(1)
1,606

 
1,079

 
2,518

 
2,441

Income from continuing operations
28,094

 
92,565

 
87,308

 
183,014

Adjustments:
 

 
 

 
 

 
 

Acquisition-related amortization(2a)
16,011

 
17,588

 
31,995

 
35,178

Loss on extinguishment of debt

 

 

 
633

Other, net(4)
2,479

 
7,735

 
4,349

 
8,841

Acquisition-related costs(6)
8,935

 

 
20,641

 

Litigation costs(5)
1,386

 
1,020

 
2,824

 
1,848

Stock-based compensation
18,295

 
13,594

 
33,989

 
26,200

Tax impact of net income adjustments(7)
(7,746
)
 
(30,159
)
 
(19,453
)
 
(32,161
)
Adjusted Net Income from continuing operations
$
67,454

 
$
102,343

 
$
161,653

 
$
223,553

Adjusted Net Income from continuing operations per share
$
0.24

 
$
0.37

 
$
0.58

 
$
0.81

Diluted weighted-average common shares outstanding
275,483

 
277,180

 
276,596

 
276,565

 
 
 
 
 
 
 
 
Adjusted Net Income from continuing operations
$
67,454

 
$
102,343

 
$
161,653

 
$
223,553

Adjustments:
 

 
 

 
 

 
 

Depreciation and amortization of property and equipment(2b)
79,209

 
74,960

 
154,557

 
149,423

Amortization of capitalized implementation costs(2c)
9,627

 
10,395

 
21,738

 
20,218

Amortization of upfront incentive consideration(3)
19,846

 
19,661

 
38,974

 
39,117

Interest expense, net
39,608

 
39,409

 
77,621

 
77,518

Remaining provision for income taxes
19,891

 
30,234

 
43,441

 
68,511

Adjusted EBITDA
$
235,635

 
$
277,002

 
$
497,984

 
$
578,340

Less:
 
 
 
 
 
 
 
Depreciation and amortization(2)
104,847

 
102,943

 
208,290

 
204,819

Amortization of upfront incentive consideration(3)
19,846

 
19,661

 
38,974

 
39,117

Acquisition-related amortization(2a)
(16,011
)
 
(17,588
)
 
(31,995
)
 
(35,178
)
Adjusted Operating Income
$
126,953

 
$
171,986

 
$
282,715

 
$
369,582













15


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

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Net income attributable to common stockholders
$
27,838

 
$
92,246

 
$
84,688

 
$
180,126

(Income) loss from discontinued operations, net of tax
(1,350
)
 
(760
)
 
102

 
447

Net income attributable to noncontrolling interests(1)
1,606

 
1,079

 
2,518

 
2,441

Income from continuing operations
28,094

 
92,565

 
87,308

 
183,014

Adjustments:
 

 
 

 
 

 
 

Acquisition-related amortization(2a)
16,011

 
17,588

 
31,995

 
35,178

Loss on extinguishment of debt

 

 

 
633

Other, net(4)
2,479

 
7,735

 
4,349

 
8,841

Acquisition-related costs(6)
8,935

 

 
20,641

 

Litigation costs(5)
1,386

 
1,020

 
2,824

 
1,848

Stock-based compensation
18,295

 
13,594

 
33,989

 
26,200

Tax impact of net income adjustments(7)
(7,746
)
 
(30,159
)
 
(19,453
)
 
(32,161
)
Adjusted Net Income from continuing operations
$
67,454

 
$
102,343

 
$
161,653

 
$
223,553

Adjusted Net Income from continuing operations per share
$
0.24

 
$
0.37

 
$
0.58

 
$
0.81

Diluted weighted-average common shares outstanding
275,483

 
277,180

 
276,596

 
276,565

 
 
 
 
 
 
 
 
Adjusted Net Income from continuing operations
$
67,454

 
$
102,343

 
$
161,653

 
$
223,553

Adjustments:
 

 
 

 
 

 
 

Depreciation and amortization of property and equipment(2b)
79,209

 
74,960

 
154,557

 
149,423

Amortization of capitalized implementation costs(2c)
9,627

 
10,395

 
21,738

 
20,218

Amortization of upfront incentive consideration(3)
19,846

 
19,661

 
38,974

 
39,117

Interest expense, net
39,608

 
39,409

 
77,621

 
77,518

Remaining provision for income taxes
19,891

 
30,234

 
43,441

 
68,511

Adjusted EBITDA
$
235,635

 
$
277,002

 
$
497,984

 
$
578,340

Less:
 
 
 
 
 
 
 
Capitalized Software Development
24,116

 
62,706

 
51,328

 
120,158

Adjusted EBITDA Less Capitalized Software Development
$
211,519

 
$
214,296

 
$
446,656

 
$
458,182



















16


Reconciliation of Free Cash Flow:

 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Cash provided by operating activities
$
105,661

 
$
146,647

 
$
257,661

 
$
341,839

Cash used in investing activities
(38,299
)
 
(67,187
)
 
(76,163
)
 
(131,886
)
Cash used in financing activities
(128,661
)
 
(73,054
)
 
(292,975
)
 
(201,525
)


 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2019
 
2018
 
2019
 
2018
Cash provided by operating activities
$
105,661

 
$
146,647

 
$
257,661

 
$
341,839

Additions to property and equipment
(29,332
)
 
(67,187
)
 
(67,196
)
 
(131,886
)
Free Cash Flow
$
76,329

 
$
79,460

 
190,465

 
209,953


17


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

 
Three Months Ended
 
 
 
Sep 30, 2018
 
Dec 31, 2018
 
Mar 31, 2019
 
Jun 30, 2019
 
LTM
Net income attributable to common stockholders
$
73,005

 
$
84,400

 
$
56,850

 
$
27,838

 
$
242,093

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

 
1,452

 
(1,350
)
 
(2,084
)
Net income attributable to noncontrolling interests(1)
1,538

 
1,150

 
912

 
1,606

 
5,206

Income from continuing operations
70,879

 
87,028

 
59,214

 
28,094

 
245,215

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization(2a)
16,407

 
16,423

 
15,984

 
16,011

 
64,825

Other, net(4)
1,905

 
(2,237
)
 
1,870

 
2,479

 
4,017

Acquisition-related costs(6)

 
3,266

 
11,706

 
8,935

 
23,907

Litigation costs(5)
5,225

 
1,250

 
1,438

 
1,386

 
9,299

Stock-based compensation
15,245

 
15,818

 
15,694

 
18,295

 
65,052

Depreciation and amortization of property and equipment(2b)
76,226

 
77,963

 
75,348

 
79,209

 
308,746

Amortization of capitalized implementation costs(2c)
10,099

 
11,407

 
12,111

 
9,627

 
43,244

Amortization of upfront incentive consideration(3)
18,207

 
20,298

 
19,128

 
19,846

 
77,479

Interest expense, net
39,291

 
40,208

 
38,013

 
39,608

 
157,120

Provision for income taxes
25,021

 
(3,879
)
 
11,843

 
12,145

 
45,130

Adjusted EBITDA
$
278,505

 
$
267,545

 
$
262,349

 
$
235,635

 
$
1,044,034

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 


 
3,007,906

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.9x



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

 
$
82,090

 
$
87,880

 
$
92,246

 
$
353,205

Loss (income) from discontinued operations, net of tax
529

 
(296
)
 
1,207

 
(760
)
 
680

Net income attributable to noncontrolling interests(1)
1,307

 
1,387

 
1,362

 
1,079

 
5,135

Income from continuing operations
92,825

 
83,181

 
90,449

 
92,565

 
359,020

Adjustments:
 
 
 
 
 
 
 
 
 
Acquisition-related amortization(2a)
20,226

 
20,194

 
17,590

 
17,588

 
75,598

Impairment and related charges

 
(10,910
)
 

 

 
(10,910
)
Loss on extinguishment of debt
1,012

 

 
633

 

 
1,645

Other, net(4)
3,802

 
(56,318
)
 
1,106

 
7,735

 
(43,675
)
Restructuring and other costs

 
(1,329
)
 

 

 
(1,329
)
Litigation (reimbursements) costs, net(5)
(40,929
)
 
963

 
828

 
1,020

 
(38,118
)
Stock-based compensation
11,655

 
10,276

 
12,606

 
13,594

 
48,131

Depreciation and amortization of property and equipment(2b)
66,332

 
73,438

 
74,463

 
74,960

 
289,193

Amortization of capitalized implementation costs(2c)
10,484

 
11,510

 
9,823

 
10,395

 
42,212

Amortization of upfront incentive consideration(3)
18,005

 
17,113

 
19,456

 
19,661

 
74,235

Interest expense, net
38,919

 
37,348

 
38,109

 
39,409

 
153,785

Provision for income taxes
40,595

 
71,201

 
36,275

 
75

 
148,146

Adjusted EBITDA
262,926

 
256,667

 
301,338

 
277,002

 
1,097,933

 
 
 
 
 
 
 
 
 
 
Net Debt (total debt, less cash)
 
 
 
 
 
 
 
 
$
3,090,737

Net Debt / LTM Adjusted EBITDA
 
 
 
 
 
 
 
 
2.8x


18


Reconciliation of operating income (loss) to Adjusted Gross Profit, Adjusted EBITDA and Adjusted Operating Income (Loss) by business segment:
 
Three Months Ended June 30, 2019
 
Travel
Network
 
Airline
Solutions
 

Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
159,384

 
$
22,660

 
$
(5,746
)
 
$
(94,385
)
 
$
81,913

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
45,482

 
22,442

 
10,171

 
76,610

 
154,705

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
27,581

 
40,699

 
12,342

 
5,971

 
86,593

Amortization of upfront incentive consideration(3)
19,846

 

 

 

 
19,846

Stock-based compensation

 

 

 
7,381

 
7,381

Adjusted Gross Profit
252,293

 
85,801

 
16,767

 
(4,423
)
 
350,438

Selling, general and administrative
(45,482
)
 
(22,442
)
 
(10,171
)
 
(76,610
)
 
(154,705
)
Joint venture equity income
413

 

 

 

 
413

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
3,140

 
2,586

 
1,278

 
11,250

 
18,254

Acquisition-related costs(6)

 

 

 
8,935

 
8,935

Litigation costs(5)

 

 

 
1,386

 
1,386

Stock-based compensation

 

 

 
10,914

 
10,914

Adjusted EBITDA
210,364

 
65,945

 
7,874

 
(48,548
)
 
235,635

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
30,721

 
43,285

 
13,620

 
17,220

 
104,847

Amortization of upfront incentive consideration(3)
19,846

 

 

 

 
19,846

Acquisition-related amortization(2a)

 

 

 
(16,011
)
 
(16,011
)
Adjusted Operating Income (Loss)
$
159,797

 
$
22,660

 
$
(5,746
)
 
$
(49,757
)
 
$
126,953

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income margin
22.0
%
 
10.7
%
 
NM

 
NM

 
8.2
%
Adjusted Operating Income Margin
22.1
%
 
10.7
%
 
NM

 
NM

 
12.7
%

19


  
 
Three Months Ended June 30, 2018
 
Travel
Network
 
Airline
Solutions
 
Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
195,052

 
$
22,813

 
$
1,964

 
$
(80,996
)
 
$
138,833

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
35,467

 
18,568

 
8,043

 
61,706

 
123,784

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
25,560

 
42,879

 
8,646

 
7,928

 
85,013

 Amortization of upfront incentive consideration(3)
19,661

 

 

 

 
19,661

 Stock-based compensation

 

 

 
6,387

 
6,387

Adjusted Gross Profit
275,740

 
84,260

 
18,653

 
(4,975
)
 
373,678

Selling, general and administrative
(35,467
)
 
(18,568
)
 
(8,043
)
 
(61,706
)
 
(123,784
)
Joint venture equity income
951

 

 

 

 
951

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
 Depreciation and amortization(2)
2,875

 
3,424

 
344

 
11,287

 
17,930

 Litigation costs(5)

 

 

 
1,020

 
1,020

Stock-based compensation

 

 

 
7,207

 
7,207

Adjusted EBITDA
244,099

 
69,116

 
10,954

 
(47,167
)
 
277,002

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
28,435

 
46,303

 
8,990

 
19,215

 
102,943

Amortization of upfront incentive consideration(3)
19,661

 

 

 

 
19,661

Acquisition-related amortization(2a)

 

 

 
(17,588
)
 
(17,588
)
Adjusted Operating Income (Loss)
$
196,003

 
$
22,813

 
$
1,964

 
$
(48,794
)
 
$
171,986

 
 
 
 
 
 
 
 
 
 
Operating income margin
27.1
%
 
11.1
%
 
2.9
%
 
NM

 
14.1
%
Adjusted Operating Income Margin
27.2
%
 
11.1
%
 
2.9
%
 
NM

 
17.5
%
 
Six Months Ended June 30, 2019
 
Travel
Network
 
Airline
Solutions
 

Hospitality
Solutions
 
Corporate
 
Total
Operating income (loss)
$
352,023

 
$
38,084

 
$
(11,463
)
 
$
(186,324
)
 
$
192,320

Add back:
 
 
 
 
 
 
 
 
 
Selling, general and administrative
88,942

 
45,119

 
20,131

 
151,904

 
306,096

Cost of revenue adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
55,034

 
80,729

 
23,809

 
11,941

 
171,513

Amortization of upfront incentive consideration(3)
38,974

 

 

 

 
38,974

Stock-based compensation

 

 

 
14,625

 
14,625

Adjusted Gross Profit
534,973

 
163,932

 
32,477

 
(7,854
)
 
723,528

Selling, general and administrative
(88,942
)
 
(45,119
)
 
(20,131
)
 
(151,904
)
 
(306,096
)
Joint venture equity income
946

 

 

 

 
946

Selling, general and administrative adjustments:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
6,242

 
5,526

 
2,533

 
22,476

 
36,777

Acquisition-related costs(6)

 

 

 
20,641

 
20,641

Litigation costs(5)

 

 

 
2,824

 
2,824

Stock-based compensation

 

 

 
19,364

 
19,364

Adjusted EBITDA
453,219

 
124,339

 
14,879

 
(94,453
)
 
497,984

Less:
 
 
 
 
 
 
 
 
 
Depreciation and amortization(2)
61,276

 
86,255

 
26,342

 
34,417

 
208,290

Amortization of upfront incentive consideration(3)
38,974

 

 

 

 
38,974

Acquisition-related amortization(2a)

 

 

 
(31,995
)
 
(31,995
)
Adjusted Operating Income (Loss)
$
352,969

 
$
38,084

 
$
(11,463
)
 
$
(96,875
)
 
$
282,715

 
 
 
 
 
 
 
 
 
 
Operating income margin
23.5
%
 
9.0
%
 
NM

 
NM

 
9.4
%
Adjusted Operating Income Margin
23.6
%
 
9.0
%
 
NM

 
NM

 
13.8
%


20


 
Six Months Ended June 30, 2018
 
Travel
Network