SABR Q3 2021 Earnings

Call Details

• Call Title: Sabre Corporation Q3 2021 Earnings Call
• Date: November 2, 2021 at 1:00 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

• Total revenue for Q3 2021 was $441M versus $278M in Q3 2020, representing a significant year-over-year improvement.
• Distribution revenue was $245M in Q3 2021 versus $105M in Q3 2020, with distribution bookings totaling $54M in the quarter.
• Net air bookings recovered to 38% of 2019 levels in Q3 2021 and were down 62% versus 2019 for the quarter as a whole.
• Average booking fee in Q3 2021 was $4.59 compared with $3.90 in Q1 2021 and $3.84 in Q2 2021.
• IT Solutions revenue was $145M in Q3 2021 versus $132M in Q3 2020, with passengers boarded reported as 116M, a 62% recovery versus Q3 2019 as stated on the call.
• Hospitality solutions revenue was $55M in Q3 2021 versus $45M in Q3 2020, with CRS transactions recovered to 88% of 2019 levels and CRS transactions totaling $27M in the quarter.
• EBITDA remained negative in the quarter but showed meaningful year-over-year improvement, and free cash flow was negative $83M in Q3 2021 with sequential improvement versus Q1 and Q2.
• Operating costs rose due to higher travel solutions incentives, hospitality transaction fees, increased technology costs, higher labor and professional services, and elevated litigation costs.
• Headcount exited September down 21% versus 2019 year-end, and cost-saving actions from Q3 2020 began to anniversary in Q3 2021.

Guidance

• No explicit multi-quarter or 2022 revenue or EPS guidance was provided on the call.
• Prior breakeven analysis referenced a bookings recovery range of 55% to 65% of 2019 levels for pre-cash-flow break-even, and commentary stated mix shifts may reduce the recovery level required.
• Target net leverage ratio remains unchanged at 2.5 to 3.5 times.
• Air Center sale to CAE for $392.5M is expected to close in Q1 2022 subject to regulatory approvals, and Air Center assets are being treated as held for sale until closing.
• An ATM program remains available to raise up to $300M through the end of 2022, with no shares sold to date.
• No change was announced to previously stated technology migration milestones and the company stated it is on track to meet or beat the 15% mid-range workload migration to GCP by year-end.
• The company stated that certain transition costs related to Air Center will be excluded from adjusted non-GAAP results.