Exhibit 99.1

Picture 1

Travelport Worldwide Limited Reports Fourth Quarter and Full Year 2018 Results

 

LANGLEY, U.K., February 22, 2019 — Travelport Worldwide Limited (NYSE: TVPT) today announced its financial results for the fourth quarter and full year ended December 31, 2018.

 

Key Points (for full year 2018 unless stated otherwise)

 

Net revenue increased 4% to $2,551 million, including Travel Commerce Platform revenue growth of 5% to $2,454 million

Net income decreased 46% to $75 million; Adjusted EBITDA was flat at $590 million

Income per share (diluted) decreased 50% to $0.57; Adjusted Income per Share (diluted) increased 1% to $1.46

Payment Solutions (eNett) net revenue grew 63% to $315 million

Net cash provided by operating activities increased 15% to $364 million; Free Cash Flow increased 10% to $220 million

Fourth quarter net revenue increased 3% to $589 million; net income decreased 93% to $3 million; and Adjusted EBITDA increased 1% to $140 million

 

Gordon Wilson, President and CEO of Travelport, commented:

 

“I am pleased to report that we ended the year with all of our full year key financial performance measures either in line with or better than management expectations and guidance.  We also made significant operational progress across our four customer priorities of delivering superior choice, performance, experiences and intelligence in travel and payments.

 

In December, we announced we entered into a definitive merger agreement to be acquired by affiliates of Siris Capital Group, LLC and Evergreen Coast Capital Corp.  We continue to work towards finalizing the merger, which currently is expected to close in the first half of this year.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

 

Year Ended

 

 

 

December 31,

 

December 31,

 

(in $ thousands, except per share amounts)

    

2018

    

2017

    

Change

    

2018

    

2017

    

Change

 

Net revenue

 

 

588,633

 

 

573,567

 

 

%  

 

2,551,064

 

 

2,447,279

 

%

Operating income

 

 

52,822

 

 

53,277

 

 

(1)

%  

 

216,894

 

 

289,274

 

(25)

%

Net income

 

 

3,067

 

 

45,370

 

 

(93)

%  

 

75,173

 

 

140,280

 

(46)

%

Income per share – diluted

 

$

0.02

 

$

0.37

 

 

(95)

%  

$

0.57

 

$

1.13

 

(50)

%

Adjusted EBITDA

 

 

139,704

 

 

138,017

 

 

%  

 

590,117

 

 

590,013

 

— 

 

Adjusted Operating Income

 

 

81,732

 

 

83,141

 

 

(2)

%  

 

349,943

 

 

351,606

 

— 

 

Adjusted Net Income

 

 

39,719

 

 

44,140

 

 

(10)

%  

 

186,625

 

 

181,174

 

%

Adjusted Income per Share – diluted

 

$

0.31

 

$

0.35

 

 

(11)

%  

$

1.46

 

$

1.44

 

%

Net cash provided by operating activities

 

 

78,929

 

 

43,320

 

 

82 

%  

 

364,364

 

 

317,662

 

15

%

Free Cash Flow

 

 

43,532

 

 

4,998

 

 

 

*  

 

219,731

 

 

200,148

 

10 

%

Cash dividend per share

 

$

0.075

 

$

0.075

 

 

—    

 

$

0.300

 

$

0.300

 

— 

 


Percentage calculated not meaningful

 

The Company refers to certain non-GAAP financial measures in this press release, including Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss), Adjusted Income (Loss) per Share - diluted, Capital Expenditures, Net Debt and Free Cash Flow.  Please refer to pages 15 to 18 of this press release for additional information, including reconciliations of such non-GAAP financial measures.

 

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Discussion of Results for the Fourth Quarter and Full Year of 2018

 

Net Revenue

 

Net revenue is comprised of:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

(in $ thousands)

    

2018

    

2017

    

% Change

    

2018

    

2017

    

% Change

Air

 

$

384,748

 

$

385,597

 

 

— 

 

$

1,706,273

 

$

1,701,097

 

 

— 

Beyond Air

 

 

181,008

 

 

163,564

 

 

11 

 

 

747,748

 

 

640,038

 

 

17 

Travel Commerce Platform 

 

 

565,756

 

 

549,161

 

 

 

 

2,454,021

 

 

2,341,135

 

 

Technology Services 

 

 

22,877

 

 

24,406

 

 

(6)

 

 

97,043

 

 

106,144

 

 

(9)

Net revenue 

 

$

588,633

 

$

573,567

 

 

 

$

2,551,064

 

$

2,447,279

 

 

 

Fourth Quarter 2018

 

Net revenue increased by $15 million, or 3%, to $589 million primarily due to growth in Travel Commerce Platform revenue of $17 million, or 3%.  Within Travel Commerce Platform revenue, Beyond Air revenue increased by $17 million, or 11%, offset by a marginal decrease in Air revenue of $1 million.  The increase in Beyond Air revenue was driven by an increase in net revenue from the Payment Solutions business of 38% to $75 million, primarily due to an increase in the volume of payments settled with existing customers that was partially offset by a decline in the remainder of the Beyond Air portfolio.  The marginal decrease in Air revenue was mainly due to a decrease in Air Reported Segments that includes the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds reported in earlier quarters, offset by improved pricing.  Technology Services revenue decreased $2 million, or 6%, primarily due to lower hosting revenue.

 

Full Year 2018

 

Net revenue increased by $104 million, or 4%, to $2,551 million primarily due to growth in Travel Commerce Platform revenue of $113 million, or 5%.  Within Travel Commerce Platform revenue, Beyond Air revenue increased by $108 million, or 17%, and Air revenue increased by $5 million.  The increase in Beyond Air revenue was driven by an increase in net revenue from the Payment Solutions business of 63% to $315 million, primarily due to an increase in the volume of payments settled with existing customers that was partially offset by a decline in the remainder of the Beyond Air portfolio.  The increase in Air revenue was mainly due to improved pricing that was offset by a decrease in Air Reported Segments that includes the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds and a $9 million recognition of revenue in 2017 in respect of revenue deferred in previous years.  Technology Services revenue decreased $9 million, or 9%, primarily due to the sale of IGT Solutions Private Ltd. in April 2017.

 

The table below sets forth Travel Commerce Platform revenue by region:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year Ended December 31,

(in $ thousands)

    

2018

    

2017

    

% Change

    

2018

    

2017

    

% Change

Asia Pacific

 

$

137,820

 

$

127,498

 

 

 

$

564,548

 

$

565,246

 

 

— 

Europe

 

 

191,428

 

 

184,651

 

 

 

 

861,510

 

 

753,462

 

 

14 

Latin America and Canada

 

 

25,432

 

 

25,713

 

 

(1)

 

 

112,949

 

 

109,632

 

 

Middle East and Africa

 

 

79,597

 

 

72,854

 

 

 

 

319,190

 

 

311,813

 

 

International 

 

 

434,277

 

 

410,716

 

 

 

 

1,858,197

 

 

1,740,153

 

 

United States

 

 

131,479

 

 

138,445

 

 

(5)

 

 

595,824

 

 

600,982

 

 

(1)

Travel Commerce Platform

 

$

565,756

 

$

549,161

 

 

 

$

2,454,021

 

$

2,341,135

 

 

 

2


 

The tables below set forth Travel Commerce Platform Reported Segments and global RevPas by region:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Segments (in thousands)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

    

2018

    

2017

    

% Change

    

2018

    

2017

    

% Change

Asia Pacific

 

 

15,880

 

 

15,210

 

 

 

 

65,052

 

 

69,922

 

 

(7)

Europe

 

 

18,595

 

 

19,724

 

 

(6)

 

 

84,132

 

 

83,202

 

 

Latin America and Canada

 

 

4,142

 

 

4,306

 

 

(4)

 

 

18,373

 

 

18,168

 

 

Middle East and Africa

 

 

9,340

 

 

8,854

 

 

 

 

37,640

 

 

37,125

 

 

International

 

 

47,957

 

 

48,094

 

 

— 

 

 

205,197

 

 

208,417

 

 

(2)

United States

 

 

26,383

 

 

29,509

 

 

(11)

 

 

129,974

 

 

134,161

 

 

(3)

Travel Commerce Platform Reported Segments

 

 

74,340

 

 

77,603

 

 

(4)

 

 

335,171

 

 

342,578

 

 

 

(2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

RevPas (in $)

 

 

Three Months Ended December 31,

 

Year Ended December 31,

 

    

2018

    

2017

    

% Change

    

2018

    

2017

    

% Change

International

 

$

9.06

 

$

8.54

 

 

 6

 

$

9.06

 

$

8.35

 

 

United States

 

$

4.98

 

$

4.69

 

 

 6

 

$

4.58

 

$

4.48

 

 

Travel Commerce Platform RevPas 

 

$

7.61

 

$

7.08

 

 

 8

 

$

7.32

 

$

6.83

 

 

 

Fourth Quarter 2018

 

Travel Commerce Platform RevPas increased 8% to $7.61, driving a $40 million increase in Travel Commerce Platform revenue.  International RevPas increased 6% to $9.06, and United States RevPas increased 6% to $4.98.  Reported Segments decreased 4% due to the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds.

 

International Travel Commerce Platform revenue increased by $24 million, or 6%, with growth in the Payment Solutions business across most regions contributing to this increase.

 

Full Year 2018

 

Travel Commerce Platform RevPas increased 7% to $7.32, driving a $164 million increase in Travel Commerce Platform revenue.  International RevPas increased 8% to $9.06, and United States RevPas increased 2% to $4.58.  Reported Segments decreased 2% due to the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds.

 

International Travel Commerce Platform revenue increased by $118 million, or 7%, with Europe mainly contributing to this increase due to an increase in its RevPas of 13%.  The decrease in Travel Commerce Platform revenue in Asia Pacific of $1 million includes the loss of revenue resulting from the loss of a large Pacific-based travel agency.

 

Operating Income

 

Fourth Quarter 2018

 

Operating income decreased by 1% to $53 million mainly due to the following:

 

$14 million increase in cost of revenue primarily due to incremental costs from the Payment Solutions business and an increase in travel distribution cost per segment driven by pricing, offset by a decrease in volume and favorable foreign exchange movements

$2 million increase in selling, general and administrative expenses (“SG&A”) primarily due to unfavorable foreign exchange movements and increase in other commercial operating costs, offset by lower employee related costs including lower equity-based compensation expense and related taxes and  a decrease in corporate and restructuring costs; offset by

3


 

$15 million increase in net revenue

 

Full Year 2018

 

Operating income decreased by $72 million, or 25%, to $217 million mainly due to the following:

 

$124 million increase in cost of revenue primarily due to incremental costs from the Payment Solutions business, an increase in travel distribution cost per segment driven by price, mix, impairment of customer loyalty payments and unfavorable foreign exchange movements, offset by a decrease in volume and higher capitalization of technology investments

$60 million increase in SG&A primarily due to unfavorable movements in the fair value of foreign currency derivative contracts, an increase in other commercial operating costs and corporate and restructuring costs, offset by lower employee related costs including lower equity-based compensation expense and related taxes; offset by

$104 million increase in net revenue

$9 million decrease in depreciation and amortization due to a lower level of depreciable property and equipment

 

Net Income

 

Fourth Quarter 2018

 

Net income decreased by $42 million, or 93%, to $3 million mainly due to the following:

 

$24 million increase in income tax expense primarily due to the favorable tax impact recognized in 2017 on enactment of U.S. Tax Cuts and Jobs Act (“U.S. Tax Reforms”) resulting from the reduction in the U.S. federal corporate tax rate

$17 million increase in interest expense, net, due to the unfavorable impact of fair value changes on interest rate derivative instruments

marginal decrease in operating income

 

Full Year 2018

 

Net income decreased by $65 million, or 46%,  to $75 million due to the following:

 

$72 million decrease in operating income

$22 million increase in loss on early extinguishment of debt due to the debt refinancing in March 2018

$6 million increase in the provision for income tax primarily due to the favorable tax impact recognized in 2017 resulting from U.S. Tax Reforms offset by the benefit realized in 2018 from the release of the U.K. valuation allowance on deferred tax assets and lower tax provision due to the decrease in pre-tax income and a change in geographical profit-mix; offset by

$26 million increase in income from discontinued operations due to the release of the indemnity provision during the first quarter of 2018

$9 million decrease in interest expense, net,  primarily due to a  reduced debt balance, lower amortization of debt finance cost and discount offset by the unfavorable impact of fair value changes of interest rate derivative financial instruments and higher interest rates

 

Net Cash Provided by Operating Activities

 

Fourth Quarter 2018

 

Net cash provided by operating activities increased by $36 million, or 82%, to $79 million, primarily due to the positive impact of changes in working capital and other assets and liabilities, and lower interest, income tax and customer loyalty payments.

4


 

 

Full Year 2018

 

Net cash provided by operating activities increased by $47 million, or 15%, to $364 million, primarily due to the positive impact of changes in working capital and other assets and liabilities, lower restructuring and interest payments, offset by higher customer loyalty and income tax payments.

 

Adjusted EBITDA

 

Fourth Quarter 2018

 

Adjusted EBITDA increased by $2 million, or 1%, to $140 million due to the following:

 

$15 million increase in net revenue; offset by

$13 million increase within cost of revenue (excluding a $1 million increase related to items that are excluded from net income to determine Adjusted EBITDA) primarily due to incremental costs from the Payment Solutions business and an increase in travel distribution cost per segment driven by pricing that is offset by a decrease in volume and favorable foreign exchange movements

 

Full Year 2018

 

Adjusted EBITDA was flat at $590 million mainly due to the following:

 

$104 million increase in net revenue; offset by

$96 million increase within cost of revenue (excluding a $28 million increase related to items that are excluded from net income to determine Adjusted EBITDA) primarily due to incremental costs from the Payment Solutions business,  an increase in travel distribution cost per segment driven by pricing,  mix and unfavorable foreign exchange movements offset by a decrease in volume and higher capitalization of technology investments

$12 million increase in SG&A (excluding $48 million increase related to non-core corporate costs that are excluded from net income to determine Adjusted EBITDA) mainly due to higher other commercial operating costs

 

Adjusted Net Income

 

Fourth Quarter 2018

 

Adjusted Net Income decreased by $4 million, or 10%, to $40 million due to the following:

 

$2 million increase in Adjusted EBITDA; offset by

$6  million decrease due to higher depreciation and amortization of property and equipment and customer loyalty payments and higher remaining provision for income taxes

 

Full Year 2018

 

Adjusted Net Income increased by $5 million, or 3%, to $187 million due to lower interest expense, net, (excluding the impact of unrealized gains (losses) on interest rate derivative financial instruments) offset by higher remaining provision for income taxes with Adjusted EBITDA remaining flat.

 

 

5


 

Free Cash Flow

 

Fourth Quarter 2018

 

Free Cash Flow increased by $39 million to a cash inflow of $44 million due to a $36 million increase in net cash provided by operating activities and a $3 million decrease in payments made for additions to property and equipment.

 

Full Year 2018

 

Free Cash Flow increased by $20 million, or 10%, to a cash inflow of $220 million due to a $47 million increase in net cash provided by operating activities offset by a $27 million increase in payments made for additions to property and equipment.

 

Net Debt

 

Net Debt decreased from $2,108 million as of December 31, 2017 to $2,036 million as of December 31, 2018 and is comprised of $2,252 million in total debt less $216 million in cash, cash equivalents and restricted cash.  The increase in total debt of $22 million reflects (i) $2,154 million principal amount of term loans repaid under the former 2014 senior secured credit agreement and $15 million principal amount of term loans repaid under the new 2018 senior secured credit agreement, (ii) $1,400 million principal amount of borrowings under the 2018 senior secured credit agreement in March 2018, (iii) the issuance of $745 million principal amount of senior secured notes in March 2018 and (iv) a net $36 million increase in capital lease obligations and other indebtedness, and is offset by a $94 million increase in cash, cash equivalents and restricted cash balance as of December 31, 2018 compared to December 31, 2017, contributing to a decrease of $72 million in the Net Debt balance.

 

Impact of Foreign Exchange Movements

 

Our results of operations are reported in U.S. dollars.  With approximately 87% of our net revenue denominated in U.S. dollars in the fourth quarter of 2018, changes in foreign exchange rates have a low impact on our net revenue.  Our Payment Solutions business, which represented approximately 13% of our net revenue in the fourth quarter of 2018, is the largest source of non-U.S. dollar net revenue.

 

Of our costs and expenses in the fourth quarter of 2018, excluding depreciation on property and equipment, amortization of customer loyalty payments, amortization of acquired intangible assets and non-core corporate costs, approximately 58% were denominated in U.S. dollars.

 

As part of our rolling hedging program, we employ foreign exchange forward contracts to hedge a portion of our net exposure to changes in foreign exchange rates, particularly against the British pound, the Euro and the Australian dollar, which are the main non-U.S. dollar components of our costs and expenses.  The year-on-year impact of foreign exchange rate movements on Adjusted EBITDA for the fourth quarter of 2018 was immaterial, net of the impact from realized foreign exchange rate hedges undertaken during 2017.

 

Acquisition of Travelport by Siris and Elliott

 

As announced in December 2018, Travelport has entered into a definitive agreement to be acquired by affiliates of Siris Capital Group, LLC (“Siris”) and Evergreen Coast Capital Corp. (“Evergreen”) in an all-cash transaction (the transaction hereafter referred to as “Merger”).  Evergreen is the private equity affiliate of Elliott Management Corporation (“Elliott”).  Under the terms of the agreement, Siris and Evergreen will acquire all the outstanding common shares of Travelport for $15.75 per common share in cash.  The Board of Directors of Travelport has unanimously approved the agreement and recommended that shareholders vote in favor of the transaction.  The Company is in the process of obtaining shareholders’ approval.  Upon the completion of the transaction, which is subject to shareholders’ approval and other regulatory and closing conditions under the agreement, Travelport will become a privately held company and Travelport common shares will no longer be listed on any public market.

6


 

Additional Information and Where to Find It

 

The proposed acquisition of Travelport by Siris and Evergreen will be submitted to the shareholders of the Company for their consideration.  In connection with the proposed transaction, the Company has filed with the Securities and Exchange Commission (the “SEC”) a proxy statement with respect to a special meeting of the Company’s shareholders to approve the proposed transaction.  The definitive proxy statement was mailed to the Company’s shareholders on or about February 13, 2019.  The Company also plans to file other documents with the SEC regarding the proposed transaction.  INVESTORS AND SECURITY HOLDERS OF THE COMPANY ARE URGED TO READ THE PROXY STATEMENT AND OTHER RELEVANT DOCUMENTS CAREFULLY AND IN THEIR ENTIRETY WHEN THEY BECOME AVAILABLE BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION ABOUT THE    COMPANY, SIRIS, EVERGREEN AND THE PROPOSED TRANSACTION.  Investors and shareholders can obtain free copies of the proxy statement and other documents containing important information about the Company, Siris and Evergreen, through the website maintained by the SEC at http://www.sec.gov.  Copies of the documents filed with the SEC by the Company are available free of charge on the Company’s website at ir.travelport.com or by contacting the Company’s Investor Relations Department at +44 (0)1753 288 686.

 

Certain Information Regarding Participants

 

Travelport and certain of its directors, executive officers and other members of management and employees may be deemed to be participants in the solicitation of proxies from the shareholders of Travelport in connection with the proposed transaction. Information about the directors and executive officers of Travelport is set forth in its Annual Report on Form 10-K for the year ended December 31, 2018, which will be filed with the SEC on February 22, 2019. Other information regarding the participants in the proxy solicitation and a description of their direct and indirect interests, by security holdings or otherwise, will be contained in the proxy statement and other relevant materials to be filed with the SEC when they become available. These documents can be obtained free of charge from the sources indicated above.

 

No Offer or Solicitation

 

This communication does not constitute a solicitation of proxy, an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such jurisdiction. No offer of securities shall be made except by means of a prospectus meeting the requirements of Section 10 of the Securities Act of 1933, as amended.

 

Dividend

 

As communicated in December 2018, pursuant to the pendency of Merger, Travelport’s Board of Directors has suspended declaring any future dividends, and no dividends were declared for the fourth quarter of 2018.

 

Conference Call

 

In light of the pending Merger, Travelport will not hold an earnings conference call to discuss its fourth quarter and full year 2018 results.

 

7


 

Contacts

 

For further information, please contact:

 

Investors:

Peter Russell

Head of Treasury and Investor Relations

Tel: +44 (0)1753 288 248

peter.russell@travelport.com

 

Media:

Julian Eccles

Vice President, PR and Corporate Communications

Tel: +44 (0)7720 409 374

julian.eccles@travelport.com

 

8


 

About Travelport (www.travelport.com)

 

Travelport (NYSE: TVPT) is the technology company that makes the experience of buying and managing travel continually better.  It operates a travel commerce platform providing distribution, technology, payment and other solutions for the global travel and tourism industry.  The Company facilitates travel commerce by connecting the world’s leading travel providers with online and offline travel buyers in a proprietary business-to-business (B2B) travel platform.

 

Travelport has a leadership position in airline merchandising, hotel content and distribution, car rental, mobile commerce and B2B payment solutions.  The Company also provides critical IT services to airlines, such as shopping, ticketing, departure control and other solutions.  With net revenue of over $2.5 billion in 2018, Travelport is headquartered in Langley, U.K., has over 3,700 employees and is represented in approximately 180 countries and territories.

 

Forward-Looking Statements

 

This press release contains “forward-looking statements” that are not limited to historical facts, but reflect Travelport’s current beliefs, expectations or intentions regarding future events.  In some cases, forward-looking statements can be identified by words such as “anticipate,” “believe,” “could,” “estimate,” “expect,” “intend,” “may,” “plan,” “predict,” “potential,” “should,” “will”, and “would” or other similar words.  Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements. These forward-looking statements include, without limitation, Travelport’s expectations with respect to the costs and other anticipated financial impacts of the proposed Merger transaction; future financial and operating results of Travelport; Travelport’s plans, objectives, expectations and intentions with respect to future operations and services; approval of the proposed transaction by shareholders; the satisfaction of the closing conditions to the proposed Merger transaction; and the timing of the completion of the proposed Merger transaction.

 

All forward-looking statements involve significant risks and uncertainties that could cause future results to differ from those expressed by the forward-looking statements, many of which are generally outside the control of Travelport and are difficult to predict. Examples of such risks and uncertainties include, but are not limited to, (i) the possibility that the proposed transaction is delayed or does not close, including due to the failure to receive required shareholder or regulatory approvals, the taking of governmental action to block the proposed transaction, the inability to obtain required financing, or the failure of other closing conditions, and (ii) the possibility that expected financial results will not be realized, or will not be realized within the expected time period, because of, among other things, factors affecting the level of travel activity, particularly air travel volume, including security concerns, pandemics, general economic conditions, natural disasters and other disruptions; general economic and business conditions in the markets in which Travelport operates, including fluctuations in currencies, particularly in the U.S. dollar, and the economic conditions in the Eurozone; pricing, regulatory and other trends in the travel industry; Travelport’s ability to obtain travel provider inventory from travel providers, such as airlines, hotels, car rental companies, cruise lines and other travel providers; Travelport’s ability to develop and deliver products and services that are valuable to travel agencies and travel providers and generate new revenue streams; maintenance and protection of Travelport’s information technology and intellectual property; the impact on travel provider capacity and inventory resulting from consolidation of the airline industry; the impact Travelport’s outstanding indebtedness may have on the way Travelport operates its business; Travelport’s ability to achieve expected cost savings from Travelport’s efforts to improve operational and technology efficiency, including through Travelport’s consolidation of multiple technology vendors and locations and the centralization of activities; Travelport’s ability to maintain existing relationships with travel agencies and to enter into new relationships on acceptable financial and other terms; and Travelport’s ability to grow adjacencies, such as payment and mobile solutions; and the impact on business conditions worldwide as a result of political decisions, including the United Kingdom’s decision to leave the European Union.

 

Forward-looking statements should not be read as a guarantee of future performance or results, and will not necessarily be accurate indications of the times at, or by which, such performance or results will be achieved. Forward-looking information is based on information available at the time and/or management’s good faith belief with respect to future events and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. The factors listed in the section captioned “Risk Factors” in Travelport’s Annual Report on Form 10-K for the year ended December 31, 2018,  to be filed with the SEC on February 22, 2019, provide examples of risks, uncertainties and events that may cause actual results to differ materially from the expectations

9


 

described in the forward-looking statements. You should be aware that the occurrence of the events described in these risk factors and elsewhere could have an adverse effect on Travelport’s business, results of operations, financial position and cash flows.

 

Forward-looking statements speak only as of the date the statements are made. Travelport assumes no obligation to update forward-looking statements to reflect actual results, changes in assumptions or changes in other factors affecting forward-looking information except to the extent required by applicable securities laws. If Travelport does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect thereto or with respect to other forward-looking statements. For any forward-looking statements contained in any document, Travelport claims the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995.

 

This press release includes certain non-GAAP financial measures as defined under SEC rules.  As required by SEC rules, important information regarding such measures is contained below.

10


 

TRAVELPORT WORLDWIDE LIMITED

CONSOLIDATED STATEMENTS OF OPERATIONS

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months

 

Three Months

 

Year

 

Year

 

 

Ended

 

Ended

 

Ended

 

Ended

 

 

December 31,

 

December 31,

 

December 31,

 

December 31,

(in $ thousands, except share data)

    

2018

    

2017

    

2018

    

2017

Net revenue 

 

$

588,633

 

$

573,567

 

$

2,551,064

 

$

2,447,279

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

Cost of revenue 

 

 

375,509

 

 

361,438

 

 

1,630,377

 

 

1,506,010

Selling, general and administrative 

 

 

110,055

 

 

108,413

 

 

505,148

 

 

444,685

Depreciation and amortization 

 

 

50,247

 

 

50,439

 

 

198,645

 

 

207,310

Total costs and expenses 

 

 

535,811

 

 

520,290

 

 

2,334,170

 

 

2,158,005

Operating income 

 

 

52,822

 

 

53,277

 

 

216,894

 

 

289,274

Interest expense, net 

 

 

(36,335)

 

 

(19,226)

 

 

(102,647)

 

 

(111,237)

Loss on early extinguishment of debt 

 

 

(36)

 

 

(684)

 

 

(27,735)

 

 

(5,366)

Gain on sale of a subsidiary

 

 

 —

 

 

 —

 

 

 —

 

 

1,217

Other expense

 

 

(265)

 

 

(847)

 

 

(995)

 

 

(3,385)

Income from continuing operations before income taxes 

 

 

16,186

 

 

32,520

 

 

85,517

 

 

170,503

(Provision for) benefit from income taxes

 

 

(13,119)

 

 

10,843

 

 

(38,091)

 

 

(32,230)

Net income from continuing operations

 

 

3,067

 

 

43,363

 

 

47,426

 

 

138,273

Income from discontinued operations, net of tax

 

 

 —

 

 

2,007

 

 

27,747

 

 

2,007

Net income

 

 

3,067

 

 

45,370

 

 

75,173

 

 

140,280

Net (income) loss attributable to non-controlling interest in subsidiaries 

 

 

(520)

 

 

1,210

 

 

(2,545)

 

 

2,183

Net income attributable to the Company

 

$

2,547

 

$

46,580

 

$

72,628

 

$

142,463

Income per share – Basic:

 

 

 

 

 

 

 

 

 

 

 

 

Income per share - continuing operations

 

$

0.02

 

$

0.36

 

$

0.36

 

$

1.13

Income per share - discontinued operations

 

 

 —

 

 

0.02

 

 

0.22

 

 

0.02

Basic income per share

 

$

0.02

 

$

0.38

 

$

0.58

 

$

1.15

Weighted average common shares outstanding – Basic

 

 

126,421,913

 

 

125,202,376

 

 

126,037,947

 

 

124,530,102

Income per share – Diluted:

 

 

 

 

 

 

 

 

 

 

 

 

Income per share - continuing operations

 

$

0.02

 

$

0.35

 

$

0.35

 

$

1.11

Income per share - discontinued operations

 

 

 —

 

 

0.02

 

 

0.22

 

 

0.02

Diluted income per share

 

$

0.02

 

$

0.37

 

$

0.57

 

$

1.13

Weighted average common shares outstanding – Diluted

 

 

128,104,575

 

 

126,109,980

 

 

127,923,586

 

 

126,008,533

Cash dividends declared per common share 

 

$

0.075

 

$

0.075

 

$

0.300

 

$

0.300

 

11


 

TRAVELPORT WORLDWIDE LIMITED

CONSOLIDATED BALANCE SHEETS

 

 

 

 

 

 

 

 

 

 

December 31,

 

December 31,

(in $ thousands, except share data)

    

2018

    

2017

Assets

 

 

 

 

 

 

Current assets:

 

 

 

 

 

 

Cash and cash equivalents 

 

$

213,001

 

$

122,039

Accounts receivable (net of allowances for doubtful accounts of $8,415 and $10,245 as of December 31, 2018 and 2017, respectively)

 

 

209,834

 

 

206,524

Other current assets 

 

 

113,605

 

 

109,724

Total current assets 

 

 

536,440

 

 

438,287

Property and equipment, net 

 

 

495,699

 

 

431,741

Goodwill 

 

 

1,083,766

 

 

1,089,590

Trademarks and tradenames 

 

 

313,097

 

 

313,097

Other intangible assets, net 

 

 

423,512

 

 

496,180

Deferred income taxes 

 

 

21,229

 

 

12,796

Other non-current assets 

 

 

55,314

 

 

76,808

Total assets 

 

$

2,929,057

 

$

2,858,499

Liabilities and equity

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

 

Accounts payable 

 

$

65,936

 

$

73,278

Accrued expenses and other current liabilities 

 

 

506,266

 

 

509,068

Current portion of long-term debt 

 

 

57,497

 

 

64,291

Total current liabilities 

 

 

629,699

 

 

646,637

Long-term debt 

 

 

2,194,537

 

 

2,165,722

Deferred income taxes 

 

 

37,254

 

 

34,899

Other non-current liabilities 

 

 

219,925

 

 

203,562

Total liabilities 

 

 

3,081,415

 

 

3,050,820

Commitments and contingencies

 

 

 

 

 

 

Shareholders’ equity (deficit):

 

 

 

 

 

 

Preference shares ($0.0025 par value; 225,000,000 shares authorized; no shares issued and outstanding as of December 31, 2018 and 2017)

 

 

 —

 

 

 —

Common shares ($0.0025 par value; 560,000,000 shares authorized; 128,229,030 shares and 126,967,010 shares issued; 126,436,176 shares and 125,346,613 shares outstanding as of December 31, 2018 and 2017, respectively)

 

 

320

 

 

317

Additional paid in capital 

 

 

2,680,615

 

 

2,700,133

Treasury shares, at cost (1,792,854 shares and 1,620,397 shares as of December 31, 2018 and 2017, respectively)

 

 

(27,623)

 

 

(24,755)

Accumulated deficit 

 

 

(2,648,761)

 

 

(2,722,375)

Accumulated other comprehensive loss 

 

 

(174,953)

 

 

(155,621)

Total shareholders’ equity (deficit) 

 

 

(170,402)

 

 

(202,301)

Equity attributable to non-controlling interest in subsidiaries 

 

 

18,044

 

 

9,980

Total equity (deficit) 

 

 

(152,358)

 

 

(192,321)

Total liabilities and equity 

 

$

2,929,057

 

$

2,858,499

 

12


 

TRAVELPORT WORLDWIDE LIMITED

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

 

 

 

 

 

 

 

 

 

Year Ended

 

Year Ended

 

 

December 31,

 

December 31,

(in $ thousands)

    

2018

    

2017

Operating activities

 

 

 

 

 

 

Net income

 

$

75,173

 

$

140,280

Income from discontinued operations, net of tax

 

 

(27,747)

 

 

(2,007)

Net income from continuing operations

 

 

47,426

 

 

138,273

Adjustments to reconcile net income from continuing operations to net cash provided by operating activities:

 

 

 

 

 

 

Depreciation and amortization

 

 

198,645

 

 

207,310

Amortization of customer loyalty payments

 

 

82,487

 

 

74,651

Impairment of long-lived assets

 

 

17,505

 

 

1,763

Amortization of debt finance costs and debt discount

 

 

4,728

 

 

10,012

Gain on sale of a subsidiary

 

 

 —

 

 

(1,217)

Loss on early extinguishment of debt

 

 

27,735

 

 

5,366

Unrealized loss (gain) on foreign exchange derivative instruments

 

 

25,814

 

 

(32,365)

Unrealized gain on interest rate derivative instruments

 

 

(1,343)

 

 

(5,764)

Equity-based compensation

 

 

16,980

 

 

32,972

Deferred income taxes

 

 

(7,121)

 

 

(27,352)

Customer loyalty payments

 

 

(89,167)

 

 

(76,008)

Pension liability contribution

 

 

(3,643)

 

 

(2,156)

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(3,398)

 

 

7,237

Other current assets

 

 

(7,486)

 

 

(12,911)

Accounts payable, accrued expenses and other current liabilities

 

 

30,350

 

 

14,445

Other

 

 

24,852

 

 

(16,594)

Net cash provided by operating activities

 

$

364,364

 

 

317,662

 

 

 

 

 

 

 

Investing activities

 

 

 

 

 

 

Property and equipment additions

 

$

(144,633)

 

 

(117,514)

Sale of subsidiary, net of cash disposed

 

 

 —

 

 

(3,433)

Net cash used in investing activities

 

$

(144,633)

 

 

(120,947)

 

 

 

 

 

 

 

Financing activities

 

 

 

 

 

 

Proceeds from term loans

 

$

1,400,000

 

$

114,000

Proceeds from issuance of senior secured notes

 

`

745,000

 

 

 —

Repayment of term loans

 

 

(2,168,750)

 

 

(237,750)

Repayment of capital lease obligations and other indebtedness

 

 

(43,760)

 

 

(43,311)

Debt finance costs and lender fees

 

 

(21,551)

 

 

(686)

Dividend to shareholders

 

 

(38,093)

 

 

(38,789)

Purchase of non-controlling interest in a subsidiary

 

 

 —

 

 

(1,063)

Proceeds from share issuance under employee share purchase plan and stock options

 

 

8,895

 

 

3,077

Treasury share purchase related to vesting of equity awards

 

 

(3,412)

 

 

(11,228)

Other

 

 

(2,240)

 

 

 —

Net cash used in financing activities

 

$

(123,911)

 

$

(215,750)

Effects of changes in exchange rates on cash, cash equivalents and restricted cash

 

 

(1,479)

 

 

1,136

Net increase (decrease) in cash, cash equivalents and restricted cash

 

 

94,341

 

 

(17,899)

Cash, cash equivalents and restricted cash at beginning of year

 

 

122,039

 

 

139,938

Cash, cash equivalents and restricted cash at end of year

 

$

216,380

 

$

122,039

Supplemental disclosures of cash flow information

 

 

 

 

 

 

Interest payments, net of capitalized interest

 

$

91,812

 

$

110,466

Income tax payments, net of refunds

 

 

47,732

 

 

42,886

Non-cash capital lease asset additions

 

 

77,377

 

 

38,355

Non-cash purchase of property and equipment

 

 

4,220

 

 

4,785

 

13


 

TRAVELPORT WORLDWIDE LIMITED

SEGMENT INFORMATION (1)

 

The table below sets forth net revenue of the Company by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year ended December 31,

(in $ thousands)

    

2018

    

2017

    

% Change

    

2018

    

2017

    

% Change

Travel Solutions

 

$

513,583

 

$

519,230

 

 

(1)

 

$

2,235,789

 

$

2,253,513

 

 

(1)

Payment Solutions

 

 

75,050

 

 

54,337

 

 

38

 

 

315,275

 

 

193,766

 

 

63

Net revenue

 

$

588,633

 

$

573,567

 

 

3

 

$

2,551,064

 

$

2,447,279

 

 

4

 

The table below sets forth Segment Adjusted EBITDA of the Company by segment:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended December 31,

 

Year ended December 31,

(in $ thousands)

    

2018

    

2017

    

% Change

    

2018

    

2017

    

% Change

Travel Solutions

 

$

130,492

 

$

133,857

 

 

(3)

 

$

552,637

 

$

569,186

 

 

(3)

Payment Solutions

 

 

9,212

 

 

4,160

 

 

121

 

 

37,480

 

 

20,827

 

 

80

Segment Adjusted EBITDA

 

$

139,704

 

$

138,017

 

 

1

 

$

590,117

 

$

590,013

 

 


(1)    Our operations are organized into two operating segments: (i) Travel Solutions and (ii) Payment Solutions.  Travel Solutions comprises our Air, Beyond Air (excluding our B2B travel payment solutions) and Technology Services.  Payment Solutions comprises our B2B travel payment solutions through eNett.  In prior periods, we have reported our Payment Solutions business together with Travel Solutions as one reportable segment as Payment Solutions was not considered to be material to be disclosed separately as a reportable segment.

 

14


 

TRAVELPORT WORLDWIDE LIMITED

NON-GAAP MEASURES

(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Adjusted Net Income,

 

Three Months Ended

 

Year Ended

Adjusted Operating Income and Adjusted EBITDA

 

December 31,

 

December 31,

(in $ thousands)

    

2018

    

2017

    

2018

    

2017

Net income

 

$

3,067

 

$

45,370

 

$

75,173

 

$

140,280

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Amortization of acquired intangible assets

 

 

10,165

 

 

10,166

 

 

40,662

 

 

40,854

Gain on sale of a subsidiary

 

 

 —

 

 

 —

 

 

 —

 

 

(1,217)

Loss on early extinguishment of debt 

 

 

36

 

 

684

 

 

27,735

 

 

5,366

Equity-based compensation and related taxes

 

 

5,084

 

 

10,384

 

 

16,921

 

 

34,739

Corporate and restructuring costs

 

 

7,011

 

 

10,101

 

 

31,715

 

 

24,998

Impairment of long-lived assets

 

 

2,593

 

 

1,078

 

 

17,505

 

 

1,763

Income from discontinued operations

 

 

 —

 

 

(2,007)

 

 

(27,747)

 

 

(2,007)

Other – non-cash (1)

 

 

14,365

 

 

(7,903)

 

 

24,903

 

 

(42,401)

Tax adjustments

 

 

(2,602)

 

 

(23,733)

 

 

(20,242)

 

 

(21,201)

Adjusted Net Income

 

 

39,719

 

 

44,140

 

 

186,625

 

 

181,174

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Interest expense, net (2)

 

 

26,027

 

 

26,111

 

 

103,990

 

 

117,001

Other expense

 

 

265

 

 

 —

 

 

995

 

 

 —

Remaining provision for income taxes

 

 

15,721

 

 

12,890

 

 

58,333

 

 

53,431

Adjusted Operating Income

 

 

81,732

 

 

83,141

 

 

349,943

 

 

351,606

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization of property and equipment

 

 

40,038

 

 

37,573

 

 

157,687

 

 

163,756

Amortization of customer loyalty payments