SABR - Earnings call transcript Q2 2022

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Operator

Good morning and welcome to the Sabre Second Quarter 2022 Earnings Conference Call. My name is Amanda and I will be your operator.

As a reminder, please note today's call is being recorded. I will now turn the call over to the President of Investor Relations, Kevin Crissey. Please go ahead, sir.

Kevin Crissey

morning, good and Amanda everyone. Thanks joining Thank XXXX our quarter for call. you for earnings second us This an we our morning issued website available which at on is investors.sabre.com. earnings press release also Sabre Investor web which prepared accompanies A Relations this slide the remarks page. presentation is on call available today's during A replay available will call on this later website of today's morning. be our industry future arrangements, forward-looking expenses, and commercial effects our beliefs represent and We to you advise that from and liquidity, benefits would trends, among and costs margins, outlook duration that expectations recovery statements targets, events, about our like of and and the expected revenue, savings, COVID-XX, our our comments contain transformation, and including or others. cost technology financial strategic actual today's differ made All the statements call. from conference results to forward-looking risks may statements involve on materially and uncertainties cause that More XXXX and information in including release issued is SEC XX-Q morning our Form our XX-K. and earnings contained filings, on and Form our risks this QX uncertainties these XXXX also non-GAAP we today's presenting financial be Throughout measures. call, will certain References cash call EBITDA and adjusted EPS, income, margin, adjusted adjusted income, EBITDA, free operating during adjusted to have exclude certain adjusted been to items. today's flow net adjusted directly and are in documents measures earnings measures for non-GAAP available other website comparable posted release most and at our GAAP our on investors.sabre.com. reconciliations The Financial are with Participating Chief and me, Chief Kurt Board Barnett, and Doug Executive Officer. of Officer; our the Sean Menke, Chair President; Ekert, our turn call the over I'll that, Sean. With to

Sean Menke

also discuss by toward to hospitality for boarded, the specific including for financial on made seeing quarter an will trends. passengers results Good cover describe our XXXX those mean our Doug, trends today. the the Kevin. I’ll I meaningful and technology we expect overview Kurt, second in Kurt we progress travel and the CRS Thanks what transaction on topics for trends in joining slide call. marketplace, bookings, us then transformation. the and four, today’s perspective are everyone you thank can start of and On we you see morning providing will

want my financial But, take team job thank become do worldwide. platform to customers us travel. members of Finally, Doug while helping exceptional start, the the to you quarter. premier through technology Sabre in global an will our serving continue results I before I the They

slide are in currents to the of we five, macroeconomic right like travel a but lot with couple a how generally COVID minutes perspective receding Turning provide there falling. restrictions cross to to see now, market forecasts take on current the environment. I’d

XXXX recovery bookings period in Passengers distribution result as Solutions versus revenue second and recovery to of XX%, XXXX this higher second was The quarter, quarterly steadily XXXX. be impact the the Omicron the our the recovered. recovered IT June most quarter the the to recovery recovery countries January same to equates achieved period restrictions the since accelerated in second more was transactions relaxed Hotel lead Corporate improve nicely versus As XXXX. the Boarded in again. in XXXX, APAC revenue year, the Relative started travel second per started rate recovery XX% the XXXX, period XXX% quarter, second in to the quarter same improvement Latin The of receded higher. in the the the America region a booking which strongest to percentage every the XX% of the total a distribution to and XXXX. quarterly pandemic XXXX. points quarter of XXXX recover same slowest were of international and bookings sequential than to during in versus bookings continued sequential in travel and in greater CRS driving quarter. compared of booking showed in variant actually the XX continues

into GDS strong. the to July, industry recovery be of recovery broader moderate. very QX and continues better than our travel impact Late the we’ve was with the rate Globally, believe Expedia, we seen to desire or the in-line of in Excluding recovery.

demand countries. operational demand. They of to airlines seat handle to avoid airlines that passenger in net believe seek currently schedules lost in other airline fully near-term have airports currently to these satisfaction, caused of these limited that significantly. bags, demand in has is we their staffing passengers and to flying In their Europe, were capacity ability response fact, due recovery bookings so the to seats a COVID delays, has consumer great the reduced airfares shortages volume than This cancellations, earlier which and lower number countries, new is efficiently the more in and which demand, below up factors. outpaces as has customer match particularly constrained travel customer Consequently, challenges, constraints they ability are issues. in We still pandemic but have driven some capacity believe

the Delta, per American, airlines, a example, US was price three up of year-over-year For quarter service second the passenger’s and or for full mile, yield, year XX% largest XXXX in United. about

to This have help operations travelers temporarily So, aggressively believe but are is and airlines and that seat aggressively with operational than airport these costs. airlines with Sabre, importantly, to and we normal and operational and incentives in for consumers capacity want also have not aircraft sharply provide constrained despite also their to challenges. to costs has to airlines’ hiring pilots, a significant training fly working their eager to Many other higher staff but, good do The period fares, flexibility. financial higher capacity we unit hiring airports throughput inflight they increase improve and spread driven utilization news, so. and personnel are just been for

capacity quarter large points suggested several percentage second be up than calls more airlines XX that XXXX earnings to on current U.S. their they from levels. example, expect For

different to we optimistic we the forward few As XXXX, reasons. look balance are for a of

see though the less correlation chart the than still improving months, a and with is On over can the forward prior between last trend. improvement. have seen booking evident. months, you First, a Even is curves hospitality correlation XX of COVID-related distribution hospitality strong we hospitality as indicator this it

Second, recovery assume trends stronger future impacted months. that forward any more and tracking specifically, that bookings issues we that these looking passengers yet recessionary in would October August, for similar are beyond currently are experienced not has September travel. pressure If air operational in travel and and near-term the to continue,

Moving to slide six.

we’ve we before, for To discussed the international context international domestic. Sabre’s net was to booking international a bookings only As table international by as region recovery improve. Sabre. between broken June domestic are below presented percentage profitable six On our recovery shows more bookings Sabre’s generally here for basis, about in fully, flying. and out domestic profitability opportunity, provide air global returns this points Consequently, more than flying expect

bookings. we international However, low-margin, because Expedia’s recovery reduction bookings masks Expedia’s share believe mostly America the domestic are North true opportunity

as our other evidenced but would strong greatly estimate weighted international is restrictions recovered international. Excluding more XX% regions, flying. Expedia XXXX bookings periods, domestic by in the recovery only In the bookings June, travel of about curtail global average and relevant The We to were $XXX have international domestic region increase million. than current it recovery, more Sabre’s annualized than versus that Asia-Pacific, fly XXXX its to from percentage points the revenue XX of levels. was APAC about by in to APAC that recover to willingness if

I call to regarding transformation. Financial mean provide Outlook the Let turn just technology to for outlined me Kurt? our and walk the to you an update Kurt now over our trends through what

Kurt Ekert

Thank you, everyone. Sean hello and

our First and my echo teammates my I’d the been customers teammates each here hard to serve deeply forward. months Sean’s I’ve seven to the Sabre fellow to appreciate of world. around and thanks of now Sabre drive work

adjusted and scenarios. Turning [ph]. XXXX outlook of to each booking Today slide number increased revenue the eight EBITDA our for we recovery

stronger-than-anticipated we The each improvement better-than-expected the expectation at least second our in expect business mix recovery adjusted of revenue per as improved. driven part booking scenarios. in million, to our exceed Specifically, by which forecast EBITDA includes adjusted million bookings quarter EBITDA $XX under was $XX of prior our by

In expect year customer in to bookings incremental recent new contracts. from of addition, back the the we half add

would global Moving in how XXXX, air thought a useful given reduced that regarding compare travel. historically to to travel have [ph], slowdown, provide XXXX possible concerns how to we economic for recessions nine impacted COVID to slide perspective it and be

as airline of drop air was global passengers passengers only also reduce airlines when grow about different. global table X%. economically to of and willing travel resilient. can right calendar see multiple discount. was travel, As you to completely GDP, can slide, the a at The year in in In elastic see be a you a recession occurs, the effect price to side largest air Typically, and on on from tends at the tend passengers find the past this downturns, COVID pandemic’s economic chart, travel fares

raising take to travel to due there to time reducing Airlines customers slashing modern and restrictions, re-open. first able airfares. advantage to no in history, the were waiting perhaps capital, of for For capacity, staff, global resorted essentially travel lower aviation lanes

has airlines fly will COVID we capacity, COVID airline in the pandemic than the receded, fewer X.X crisis adding seeing normal They estimate billion decisions. up, XXXX times. have more preparing staffing passengers and As not the of this turn the will global actually We for would back are had reverse each are to about slide these just at estimate and Please in to passengers estimate year rough between fly XX we happened. represents number X.X% global number This admittedly passengers [ph]. year gap grown XXXX many XXXX. how

is which includes key mainframe times, and As of a and to improvement expected our we’ve Cloud, driver margin many by transformation, offload highlighted savings Google technology XXXX. migration

resonate pleased transformation goals enhancement in Additionally, technology believe market, our while on will the and am our track and XXXX opportunities, remains speed our significantly with with quarter to milestones which many progress transformation of our toward increasing product expected achieve XXXX. tech unlock customers. we second the our I to by made technology stated flexibility, the is end to we productivity,

Cloud our our Cloud, the begin to centers customer Google offload client are to a reminder, milestones reservations from migrations. technology Name solid more on-schedule was database, and win largest for to than Hospitality our to key Google CCRS In a the the second migrated as XX,XXX and properties. As and Cloud Platform. exit cloud for Hospitality Sabre-managed a Record, mainframe XXXX to System migrate quarter, Passenger Community two data platform, Solutions’ This efforts is the Google Central migration with Solutions’ overall Reservations we

benefits can of greater velocity now unlock agility, by provided business Hospitality Cloud. the and scalability, Google Our

regional migration extension Pryor, Google facilitate This expected we the During extension databases is to Platform second Tulsa. in rapid also completed in currently of a quarter, hosted of Oklahoma. regional Cloud

by points since Finally, of XXXX. servers on increased percentage of our eight quarter first Google we share Cloud the another

had Google public call and cloud. over end in year XX% I’ll XX% to and XX, to with servers As servers XX% a of of Cloud of of expect in Doug. we Google the continue our hand servers in to the June total now Cloud Platform

Doug Barnett

and Thank good you, Kurt morning everyone.

as the expected and Turning to financial improved. travel the second of our bookings. $XXX revenue of in hotel, recovery was last air, global in million. million mix results a of other QX in totaled than near accelerated XXXX XX, revenue revenue business improvement came versus Total $XXX better of the quarter Distribution $XXX million, due QX million, slide continued significant doubling in $XXX our primarily to a XXXX’s and recovery travel year,

bookings June quarter and XX% the to XX%, net totaled bookings Compared XX%, distribution quarter. whole. April, and in XX% in to the XXXX, a XX and Our recovered as in million air May,

cancellation fourth $X.XX average $X.XX as and XXXX compares the the expected. the in quarter improve the mix third The forecast than fee and quarter quarter our was in exceeded quarter to of fee booking lower $X.XX booking activity $X.XX continued Our $X.XX second last of our in XXXX. quarter, of second in to average business

average Adjusted million million, first EBITDA year. the incentives in XQ of quarter Solutions profitable portfolio with created partially considering was in versus in $XX reservation an more representing the system XX% broadening quarter improvement at Hospitality year-over-year the in regions of Centre XXXX, year-over-year higher recovery XXXX. sequential of levels in totaled quarter Travel XX.X% booking the Central totaled XXX% second XXXX. transactions $XX totaled increased the in higher million continued than transaction improvement million recovery fee a of quarter, $XXX types $XXX revenue by COVID-XX of solid period showed we travel. is revenue improvement recovery The the of quarter. improvement Hospitality in boarded $XX and the into attained The IT XXX sold revenue Solutions which an continued. Solutions of totaled same QX Solutions $XX This fees versus an consistent is and the were and year-over-year million a of in XXXX Additionally, our challenging as from the versus improvement Air the million strong was result volumes. million, last from expense revenue significant offset XXXX. pandemic revenue Passengers comparison. in

and increased the year EPS due net and million cash our Operating prior in volume transformation. technology the hosting expenses flow with quarter. was professional income, our the costs associated associated income, labor improved expected, recovery, service $XX technology to higher with costs As second and versus all quarter. Free higher negative

and We stronger earnings, the a we front. continue to follow free year than revenue, pattern the XXXX, similar what with to of the in half experienced cash expect flow to back

We to flow the expect of cash positive free XXXX. fourth turn in quarter

During we the quarter, second an free flow we not This solid considered part of our objectives previously the and with better making Global of progress GBT. payment XXXX cash to second in to flow. million about drive billion. or is financial $XX you. quarter expected, balance is of investing are In outlined. back closed We Travel of on quarter a the investment our second transformation, the Group, ended we than continue toward Sean, and technology shares cash cash medium-term Business therefore was $X conclusion,

Sean Menke

Great. Thanks Doug.

the retirement. the tenure I for by ever global to the investments Before largest with to the through for we flexibility the ensure quickly open Sabre without Doug a manage pandemic his Q&A, a wish and exogenous fantastic future, express having transformation. secured Doug’s pandemic. faced my finance company, team want stop and Doug including shock thanks to liquidity financial could technology I and him included our our to critical call

and Google well and as sale the headquarters, as of lease-back. at Sabre, time of its consolidation multi-year with our his also global the agreements DXC oversaw execution During including Doug

future. Additionally, Doug new Sabre retiring investment Systems will support Business to has Doug expected end from Global led the efficiency October. the be the improve at models our in and greatly for business of

month all for Sabre last with Chief Mike all wishing that I And allow joining teammates for of our a may next in we'd happiness You as I to to up be great Financial Randolfi can your leaders. in speak that our Q&A. Doug, open the for Officer transition seen you done. you between call of our adventures. Thank know Amanda, Sabre new week will this you’ve have like two period announcement later the

Operator

Mark Thank you. Research. [Operator Instructions] Bernstein ahead. with Our from first question Please is Moerdler go

Mark Moerdler

questions, the have limitation any much you up? very it's cancellation that And improvement much and of travel the don't A couple volumes? taking if increased Do Thank question a then due you nice for the results. really mind. I to how are in my issues? primarily to you the at quick see Also, impacting airports staffing flights are follow increasing Is rate? booking cancellation sense have

Sean Menke

let today. that, take for so me us joining Mark me and let Yes, thanks

and bit probably curve, we're place. a my that softness what little what of I the September about recovery think in recovery seen start to seen is Mark remarks I when nice August. in in specifically seeing we're we've taking seeing really would to is May going prepared We've it back what as timeframe in where talked about the booking I encouraged October. related I'm And

what So, that July we've impacts question, seeing from we really, operational is in answer to really late seen in timeframe. your the started June airlines,

you cancellation look at period we for a saw If of spike really cancellations, over just that the period. time a

probably So, in lot timeframe. it's moderate seeing back cancellations, were that pandemic June were a actually the in of we've dealing what nothing we we you early the seen early a like had

Mark Moerdler

that, said will have not XXXX not That's bad. happened. Kurt, pandemic the on billion would following fewer you so up in than fly passengers had X.X that

level bounce You Is -- growth XXXX the compounding theoretically back for that the not but possible? levels, we X.X travel to XXXX of will haven't believe that seen. that in to XXXX levels theory

Kurt Ekert

the of chart years, annual the growth XX a long seen very an time. over at notwithstanding, XX, last to for back look CAGR the X%. you Pandemic period be trend X% to you've if of we airline that a Yes, expect

indicate there, If the there's in that Asia, you are East, like look the would orders supply of demand in growth, amount markets market. that especially and aircraft robust opportunity at both the Middle and

back begin levels, the XXXX looked before, corporate. we guidance, to of we that we believe on on forward then we As leisure and recover indicated next both will that fully when and years, surpass at to couple in

Sean Menke

Yes, Mark.

that it, of capacity call of a that have two, just you I seen, recovered. that fully we've add thing do they thing as sort and think it moderated we domestic almost right opened one relates month next to the as for you recovered. our talked breakdown, international when world marketplace, marketplace, actually marketplace, you're regions because that U.S. even as just the The little capacity we increased that into sort and I And rates other to higher essentially earn. that know, to a when business, bodes at because now mean, nice actually you over, because region-by-region the of there look about shift bit, we capacity it international is that see the finding have seeing the up fully you is we're has that or of the seen has demand it's well it

Mark Moerdler

sense. I've all tell can planes makes And internationally. That are you, I been the full. traveling

good. So, Thank you much for very question. taking looks my

Sean Menke

Great. Thank you, Mark.

Operator

Thank And the line question next Baer of Morgan is you. Josh with our Stanley. from

open. line now Your is

Josh Baer

corporate of that alternatives world, about meetings past side? the in the And today's downturns at you're to forward see demand you conferences of side? is past and of, Thanks the business have question Great. corporate a a an and results. differences resiliency kind the the of the when downturns as and macro the business on thinking it's thinking question Question for ubiquity exist impact the and digital mix Zoom throughout recovery some improving that and for looking didn't to roadmap just good exercise sort how in are on about potential and looking

Sean Menke

over I provide to because and based Kurt off, me So, he his Josh, on it kick let think just pass experience. me to some insight going I'm let can previous

corporate we significantly we what corporate side. closed if been So, gap at recovery, have seen has with look it now, the the leisure and right on

that, of we're relative recover anticipated. pleased. I actually I very back quarters, who with seeing would people go questioning a know, that. think how we're definitely and couple corporate lot is a than So, And to quickly are us stronger this we people

I the think business relates be can happening But not traveling what even environment. we're people travel is I lot and place, we're what's where as when Kurt to hearing have it pick mix, to may work it that about seeing speak taking same see. a of are Sabre though from in we and companies, think a you within specifically, internal about up anywhere

Kurt, I'll to So, it you. over pass

Kurt Ekert

Yes, travel managers, time that. long-term six TMCs ago. thank will a more be about And about COVID to indicated, be And in may be than to going we there's et you, most in guidance cetera. you by newer -- was XXXX more in internal tell had rebound point fundamental earlier there issued echo you I corporate conjecture was the dampening much months I travel clearly I'm structural assumption of was lot a customers, think corporate recovery anticipated. and they see people point as where an much from expected. whether of that been seen bullish with corporate XXXX that travel than a time. although of corporate more we would there lot XX% There impairment We that in anywhere, as corporate in be some than I resulting was from work previously. at travel to can stronger this would indicated year, speak shift there robust Sean during technologies, we a than that's to We've

Josh Baer

it. Got

the mean, upside about targets that in today. be XXX% still was clarify And those it so XXXX more, would XX% just assumption if to if I recovery, them scenarios? didn't to or is But talk -- the we

Kurt Ekert

Correct.

Josh Baer

you. great. Thank Okay,

Sean Menke

Josh. Thanks

Operator

Jed Thank Oppenheimer. you. of And is next question Kelly our line from with

Your line open. is

Jed Kelly

may. the Hey, retirement. results questions great. on for Nice on the Thanks if taking congrats my job Two Doug, I questions. and

you the that can talk of And on half and kind back look then as more in to next pipeline? impacting circling say and logistics, -- talk about XX margins airlines the services. months, the what does we Like contracts do and XXXX? about Thank start that your travel you to corporate the back can you should you. more recovery, your their for think solution about solutions managing Just six out into them to in how figure expect to engage

Sean Menke

I'm then And take going second to that question. Yes, the Jed. let Thanks for first tackle question. Kurt joining I'll us.

Kurt Ekert

to with corporate Yes, and and think long revenue so I of $X.XX. is increased to Doug's We a and that increases expect Expedia, our should prior we've per XX% before, about had this remarks $X.XX revenue excluding booking calls range see toward talked in previously, our to XXXX was by per compared in guidance recovery. to shift to booking providing XX% haul that a you

the upside half in see do also of the and our we improve corporate. So, long with as distribution in the or continues GDS haul expect to second recovery to mix year, international

think is we So, there upside there.

Sean Menke

And then to your Jed. second question,

going As anything relates it the on. that's relates the and the pipeline change to my activities doesn't activity the perspective, it as to from pipeline and it

I they from stated sales operational issues is right that believe on out low think I there the would carriers service is as I long-term. now, capacity people beat because airlines need my perspective. thinking full right carriers prepared a comments, dealing active the are that cost in now, are team, temporary, airline and with Kurt echo on The specifically very the because the IT cost

You're in marketplace. still yields the seeing the higher

third high back quarter. go you relative they're what airlines to If the again, have revenues in expecting articulated,

slow a feel sort the of long-term we based on again, So, but capacity temporary, pipeline, maybe down piece, good.

Jed Kelly

see a to that? you how impact more does that the benefits follow-up, volume-wise? Thanks. of stronger stronger to Americans dollar want for maybe in you benefit just with terms abroad, them. Like, to travel from dollar potential because And Do the obviously just then

Doug Barnett

benefit. that's more Well, travel, if say how I'd Americans to want they

vast that dollars. are our already the remember revenues in majority Just of

FX no there's from the dollar. So, strong impact

Sean Menke

have perspective, continue. that we that been and a U.S. of booking Jed, traveling to are But from other traveling lot places, going citizens abroad there's lot throughout expect and a back, us of a just I Europe think

Jed Kelly

you. Thank

Operator

Cheng open. our you. with the line of is Bank Thank Victor next question Victor your line now And America. of is from

Victor Cheng

the Thanks may. for Thank you. solid questions. Congrats couple quarter. if A I on taking my

driving then can some going of leisure, back Is which the point if to the First of range of per And corporate, color revenue or you drivers? revenue outlook then pressure contracts is customer of the pricing the you more the lastly, displacing? driving And were you recent or of we lower earlier, by you're to volume all, booking, your per what on and still give new purely positive just it at XX%? see do are in us alluded is should booking? it key secondly, QX some mix it the at inflationary ticket expect free flow cash end the regions

Sean Menke

So, last lot then questions I'm question. Doug I'll first to there. in question, back Kurt of to circle let going take the your on there's a

Kurt Ekert

Victor, hi. Hey

On think our question, success I the customer is first which on front. the

in So, we of lines in especially have all wins business, had some distribution. nice

this announced, like recent we year XXXX. year GBT some Hopper, there some, and can into there expect sequential gains wins, which the not, baked gains the see expect point in example, volume that are also are see in will back be guidance additional at of half other about for you and we've know You to our that full to

Doug Barnett

And fee. the booking the per you're then mix under flow. revenue scenario cash the questions. free any business One with what's correct, with presented, the -- helping two yes, average be And cash we Yes, fourth to we quarter. expect booking drive flow is free positive in scenarios the the

Sean Menke

have there, that's This play going see what's in out the it our indicative. because think mix it's exactly why right actually we and the talking and of we're fee we is the in Victor, slide Yes, we're put that's one booking been thing out improvements is seeing place as one moves to actually favor, sort I now. about taking

Victor Cheng

you. Thank

mix Just on per do QX? and one booking that continue to improve given revenue follow-up the expect is, to QX in improve the you more

Sean Menke

you and place, not relative our have favorably to provided think taking in We moving it's but direction. what's the guide, as would mix

Victor Cheng

you. Thank it. Got

Operator

closing time, I'd I'm the at Menke And further over questions. showing this call turn to to you. for Thank no Mr. back like remarks.

Sean Menke

much, very Great. Amanda. Thank you

So, we the very as you progress quarter. would proud of second we're the in made imagine,

as as as see comments, can to the and you about the November-- future we're Q&A, place look -- just to and in taking talking As well our forward to pretty you what's it optimistic we relates at

Operator

with you morning. interest for your and us again Sabre soon. speaking forward in joining you again Thank look to this appreciate We

Sabre (SABR) 2 Aug 222022 Q2 Earnings call transcript