SABR Q3 2020 Earnings

Call Details

• Call Title: Sabre Corporation Q3 2020 Earnings Call
• Date: November 6, 2020 at 2:00 PM UTC
• Management Team:
  • Kevin Crissey (Vice President of Investor Relations)
  • Sean Menke (Chief Executive Officer)
  • Doug Barnett (Chief Financial Officer)
  • Dave Shirk (President of Travel Solutions)
  • Scott Wilson (President of Hospitality Solutions)

Call Summary

Financial Performance

• Revenue was down 72% year-over-year in Q3 to $278M versus $984M in Q3 2019.
• Distribution revenue declined 84% year-over-year to $105M in the quarter.
• IT solutions revenue fell 46% year-over-year, while hospitality revenue was down 40% with a 37% decline in CRS transactions.
• EBITDA, operating income, and net income were all negative in Q3 with no GAAP profit metrics disclosed on the call.
• Free cash flow was negative $201M in Q3, which included $20M of severance and $13M net cash outflows to carriers from prior cancellations.
• The company ended the quarter with $1.7B of cash on the balance sheet and stated no significant near-term uses of cash.
• The company recognized $30M of revenue from bookings not yet departed and held a $33M cancellation reserve.

Guidance

• The company expects approximately $90M of incremental negative free cash flow impact in Q4 due to seasonal interest payments, accelerated timing of employee cash benefits, and additional severance payments.
• Excluding severance and the $13M carrier cash outflow, monthly free cash flow was negative $56M compared to the prior referenced $80M monthly burn in a zero-booking environment.
• The leverage ratio covenant waiver under the amended credit agreement remains suspended through at least the end of 2020 and possibly through 2021 based on current IATA volume projections.
• The company expects to achieve $275M of non-volume-related cost savings in 2020 versus 2019.
• On a go-forward basis, the company expects a minimum of $200M of non-volume-related cost savings per year versus 2019.
• By 2024 the company expects total annual cost savings of $275M versus 2019, with some incremental savings potentially realized prior to 2024.