Sabre Holdings Reports First Quarter Financial Results
05 May 2005 - 10:01PM
Business Wire
Sabre Holdings Corporation (NYSE:TSG): -- 1Q 2005 Diluted EPS
(Adjusted) of $0.37 -- 1Q 2005 Diluted EPS (GAAP) of $0.44 -- 1Q
2005 revenue of $582 million, up 8 percent year-over-year --
Travelocity gross travel bookings up 27 percent; revenue up 32
percent, packaging revenue up 92 percent, year-over-year -- Note:
Analyst call today at 9:00 a.m. CDT, at
www.sabre-holdings.com/investor/index.html. Sabre Holdings
Corporation (NYSE:TSG) today reported better-than-expected revenue
and earnings results for the first quarter of 2005. The company
reported first quarter 2005 diluted earnings per share of $0.37 on
an adjusted basis and $0.44 per share on a GAAP basis. Revenue for
the first quarter was $582 million. "Steady travel demand combined
with operational excellence across our portfolio drove solid
quarterly financial results, including better-than-expected revenue
and earnings," said Sam Gilliland, chairman and CEO, Sabre
Holdings. "Throughout our businesses, we continued to see excellent
performance from initiatives that are bringing us differentiation
including packaging, new content and technology." SABRE HOLDINGS 1Q
2005 FINANCIAL HIGHLIGHTS (Note: See attached schedules for full
financial details and reconciliations of non-GAAP financial
measures, including adjusting items.) Revenue: First quarter
revenue was $582 million, an increase of 7.8 percent from $540
million in the year-ago quarter. Operating income: Excluding
adjusting items, operating income for the first quarter was $79
million, compared to $83 million in the year-ago quarter. Operating
income on a GAAP basis was $71 million, an increase of 2.5 percent
from the same period last year. The Sabre Travel Network and Sabre
Airline Solutions businesses exceeded company expectations.
Travelocity's North American operation performed very well in the
quarter; however, Travelocity incurred a loss, as expected, due to
incremental losses from its European operations as well as a change
in advertising expense recognition. Net earnings: For the first
quarter, net earnings, excluding adjusting items, were $49 million,
compared to $51 million in the first quarter of 2004. On a GAAP
basis, first quarter net earnings were $58 million compared to $43
million in the year-ago quarter. Net earnings (GAAP) includes an
approximate $13 million positive impact from the sale of an
investment in Karavel, a French tour operator. Adjusted EBITDA: For
the first quarter, adjusted earnings before interest, taxes,
depreciation, and amortization was $98 million. Adjusting items:
Adjusting items for the quarter included approximately $13 million
from the sale of the Karavel investment and $4 million of stock
compensation and amortization of intangible assets from mergers and
acquisitions, net of tax. Cash/Debt: The company balance sheet as
of March 31, 2005 reflected cash and marketable securities of $739
million. Total debt at the end of the quarter was $590 million,
which includes notes and bonds payable of $430 million and a $160
million capital lease obligation. SABRE HOLDINGS BUSINESS REVIEW
TRAVELOCITY For the first quarter, Travelocity gross travel
bookings were $1.6 billion, an increase of 27 percent
year-over-year. Revenue was $147 million, a 32 percent increase
from the year-ago quarter of $111 million. Transaction revenue for
the quarter was $125 million, an increase of 31.2 percent,
year-over-year. Non-transaction revenue, which includes
advertising, corporate, and international joint ventures, was $22
million, a 36.3 percent increase year-over-year. Other Travelocity
metrics for the first quarter (year-over-year): -- Air transaction
revenue grew 11.4 percent -- Non-air transaction revenue grew 47.7
percent -- Packaging revenue grew 92 percent -- Packaging revenue,
as a percent of total transaction revenue, was 27 percent -- Hotel
room nights across the Travelocity network were up 32.1 percent
SABRE TRAVEL NETWORK First quarter revenue from the Sabre Travel
Network business was $420 million, an increase of 2.2 percent from
$411 million in the year-ago quarter. Global direct transactions
(see note below) in the quarter were 92 million, growth of 2
percent year-over-year. Of the total direct transactions,
approximately 3 million were from non-traditional bookings. Note:
Beginning this quarter, the company revised its global booking
metric to better reflect Sabre Travel Network transaction revenue.
Direct transactions are travel reservations made through the Sabre
system that generate fees paid directly to the company from travel
suppliers, as well as travel agencies and corporate customers.
Indirect bookings from international joint ventures will no longer
be included in this metric. SABRE AIRLINE SOLUTIONS First quarter
revenue from Sabre Airline Solutions was $63 million, an increase
of 5.1 percent from $60 million in the year-ago quarter. Revenue
was primarily driven by an increase in sales of license fees and
application service provider (ASP) software products. RECENT
BUSINESS HIGHLIGHTS Sabre Holdings -- Acquired and relaunched
IgoUgo.com, an online travel community, and introduced the
industry's first travel-specific "keyword" search function to help
consumers better research and plan trips. -- Repurchased
approximately 2.9 million shares of common stock (approximately $61
million) as part of its two share buy back programs. -- Announced a
quarterly cash dividend of $0.09 payable on May 26, 2005 to
shareholders of record at the close of regular trading on the NYSE
on May 13, 2005. Travelocity -- Introduced "Customer Championship,"
sweeping initiatives grounded in consumer advocacy that build on
Travelocity's legacy of giving travelers information that makes
their trips better. The investments include extensive new
technology, training, retooled policies, and the introduction of
the Travelocity Guarantee and Traveler's Bill of Rights. -- Rolled
out its unmatched hotel connectivity technology (third generation)
to Hyatt Corporation's central reservation system allowing the most
accurate, up-to-date booking information. -- Extended its merchant
hotel product to its businesses in Germany and Scandinavia. --
Added Magic Your Way Tickets for all Walt Disney World theme parks
in Orlando to Travelocity's dynamic flight+hotel+travel extras
TotalTrip shopping engine. Sabre Travel Network -- Established a
joint venture with Gulf Air to further extend products and services
in the Middle East. -- Grew Synxis' coverage by 211 hotel
properties during the first quarter, which represented 26,000
rooms. -- Named World's Best Global Distribution System for the
11th consecutive year, and "world's leading travel technology
provider" by the World Travel Awards, based on input from more than
150,000 agents from 80,000 travel agencies. Sabre Airline Solutions
-- Signed a new 7-year passenger reservations contract with
Southwest Airlines. -- Migrated Aeroflot and Frontier Airlines'
core reservation systems to SabreSonic. -- Signed four new
SabreSonic deals with carriers in Europe, Asia and the Middle East.
-- Signed a 5-year deal with Gulf Air for the SabreSonic suite,
including passenger management, as part of an agreement to form a
joint venture. -- Reached an agreement with American Airlines to
provide open systems technology for Interline electronic ticketing
with alliance partners and other airlines, which helps improve
customer service and lower costs. SABRE HOLDINGS OUTLOOK 2Q 2005
For the second quarter 2005, the company projects revenue to be in
the range of $600 million to $620 million. Diluted earnings per
share are expected to be in the range of $0.43 to $0.48 on an
adjusted basis, and $0.40 to $0.45 on a GAAP basis. Full Year 2005
-- Reiterated total company revenue growth to approach 10 percent,
year-over-year -- Reiterated 2005 earnings per share on an adjusted
basis in the range of $1.50 to $1.60. -- Updated earnings per share
on a GAAP basis to be in the range of $1.50 to $1.60, versus
previous guidance of $1.41 to $1.51. About Sabre Holdings
Corporation Sabre Holdings, an S&P 500 company, is a world
leader in travel commerce, retailing travel products and providing
distribution and technology solutions for the travel industry.
Sabre Holdings supports travelers, travel agents, corporations and
travel suppliers through its companies: Travelocity, Sabre Travel
Network, and Sabre Airline Solutions. Headquartered in Southlake,
Texas, in the Dallas-Fort Worth Metroplex, the company has
approximately 6,800 employees in 45 countries. Full year 2004
revenues totaled $2.1 billion. Sabre Holdings is traded on the New
York Stock Exchange under the symbol TSG. More information is
available at http://www.sabre-holdings.com. Statements in this news
release and the schedules hereto which are not purely historical
facts, including statements about forecasted financial projections
or the expected competitive position of Sabre Holdings Corporation,
or other statements about anticipations, beliefs, expectations,
hopes, intentions or strategies for the future, may be
forward-looking statements within the meaning of Section 21E of the
Securities Exchange Act of 1934, as amended. Readers are cautioned
not to place undue reliance on forward-looking statements. All
forward-looking statements are based upon information available to
Sabre Holdings Corporation on the date this report was submitted.
Sabre Holdings Corporation undertakes no obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. Any
forward-looking statements involve risks and uncertainties that
could cause actual events or results to differ materially from the
events or results described in the forward-looking statements,
including risks or uncertainties related to the integration of any
acquired assets, such as acquired technology, into Sabre Holdings
Corporation, or risks or uncertainties related to the Company's
revenues being highly dependent on the travel and transportation
industries, such as the financial instability or bankruptcy of many
of the air carriers and competition from alternative travel
distributors, such as online vertical search engines. Sabre
Holdings Corporation may not succeed in addressing these and other
risks. Further information regarding factors that could affect our
financial and other results can be found in the risk factors
section of our most recent filing on Form 10-K with the Securities
and Exchange Commission. Financial Schedules to Follow -0- *T Sabre
Holdings Corporation Condensed Consolidated Statements of Income -
Unadjusted (Unaudited - In millions except per share amounts) Three
months ended March 31, ----------------------------- 2005 2004
Percent ---------- -------- --------- Revenues Sabre Travel Network
$419.8 $410.8 2.2% Travelocity 147.1 111.5 32.0% Sabre Airline
Solutions 62.8 59.7 5.1% Elimination of intersegment revenues
(47.8) (42.3) 13.0% ---------- -------- Total revenues 581.9 539.8
7.8% Operating expenses 510.7 470.3 8.6% ---------- --------
Operating income 71.2 69.5 2.5% Other income (expense) Interest
expense net (3.2) (3.2) 1.7% Other, net 20.7 0.3 -- Minority
interest 0.6 0.1 493.4% ---------- -------- Income before provision
for income taxes 89.2 66.7 33.6% Provision for income taxes 31.5
23.7 32.9% ---------- -------- Net earnings $57.7 $43.0 34.0%
========== ======== Operating Margin 12.2% 12.9% Earnings per
share- basic $0.44 $0.31 Earnings per share- diluted $0.44 $0.31
Weighted average shares -basic 130.3 139.2 Weighted average shares
-diluted 130.8 139.6 *T -0- *T Sabre Holdings Corporation Condensed
Consolidated Statements of Income - Adjusted (Unaudited - In
millions except per share amounts) Three months ended March 31,
----------------------------- 2005 2004 Percent -----------
--------- ------- Revenues Sabre Travel Network $419.8 $410.8 2.2%
Travelocity 147.1 111.5 32.0% Sabre Airline Solutions 62.8 59.7
5.1% Elimination of intersegment revenues (47.8) (42.3) 13.0%
---------- --------- Total revenues 581.9 539.8 7.8% Operating
expenses 502.5 456.7 10.0% ---------- --------- Operating income
79.4 83.1 (4.4%) Other income (expense) Interest expense net (3.2)
(3.2) 1.7% Other, net 0.1 0.3 (82.8%) ---------- --------- Minority
interest (0.6) (0.7) (14.0%) ---------- --------- Income before
provision for income taxes 75.6 79.5 (4.9%) Provision for income
taxes 26.8 28.4 (5.6%) ---------- --------- Net earnings $48.8
$51.1 (4.5%) ========== ========= Operating margin 13.7% 15.4%
Earnings per share- basic $0.37 $0.37 Earnings per share- diluted
$0.37 $0.37 Weighted average shares -basic 130.3 139.2 Weighted
average shares -diluted 130.8 139.6 *T -0- *T Sabre Holdings
Corporation Reconciliation of Unadjusted Results to Adjusted Net
Earnings Three Months ended March 31, 2005 (Unaudited, in millions,
except percents) Three months ended March 31,
---------------------------- 2005 2004 Change(a) --------- --------
--------- Unadjusted operating income $71.2 $69.5 2.5% Adjusting
items: Travelocity intangible amortization and stock compensation
$2.5 $9.4 (73.9%) Dillon Communication Systems and Gradient
intangible amort and stock comp $1.6 $2.2 (27.0%) Sabre Pacific and
Gulf Air intangible amortization $2.6 $1.7 52.2% Nexion, SynXis and
IgoUgo intangible amortization $1.0 $0.3 265.1% Airline Solutions
intangible amortization and stock compensation $0.6 $0.0 --
--------- -------- Adjusted operating income $79.4 $83.1 (4.4%)
Unadjusted other income (expense) and minority interest $18.0
($2.8) (749.6%) Adjusting items: Sale of Karavel Investment ($20.6)
$0.0 -- Impact of adjusting items on minority interests ($1.2)
($0.8) 46.9% Adjusted income before provision for income taxes
$75.6 $79.5 (4.9%) Unadjusted provision for income taxes $31.5
$23.7 32.9% Tax adjusting items ($4.6) $4.7 (198.3%) ---------
-------- Adjusted provision for income taxes $26.8 $28.4 (5.6%)
Adjusted net earnings $48.8 $51.1 (4.5%) ========= ======== (a)
Percents shown reflect changes in unrounded figures and may not
agree to the percent change in figures after rounding. *T -0- *T
Sabre Holdings Corporation Sabre Travel Network Transactions
Summary - First Quarter (millions) 1Q05 1Q04 % Change ---------
------- --------- Transactions 91.8 90.1 1.9% Geographic US 58.9
57.6 2.2% International 32.9 32.5 1.2% --------- ------- 91.8 90.1
1.9% Channel Traditional Agency 80.5 80.2 0.4% Consumer on-line
11.3 9.9 14.1% --------- ------- 91.8 90.1 1.9% Air/Non-Air Air
79.4 78.2 1.5% Non-Air 12.4 11.9 4.1% --------- ------- 91.8 90.1
1.9% Note: As of the first quarter, 2005, we are now counting as a
transaction, any travel reservation that generates a fee paid
directly to us including, but not limited to the following:
traditional booking fees paid by suppliers, non-traditional
transaction fees paid by suppliers, transaction fees paid by travel
agencies, and transaction fees paid by corporations related to our
online booking tool. Updated historical quarterly transaction
information available on
http://www.sabre-holdings.com/investor/highlights/statistics/historica
l.html (Due to its length, this URL may need to be copied/pasted
into your Internet browser's address field. Remove the extra space
if one exists.) *T -0- *T Sabre Holdings Corporation Non-GAAP
Financials Reconciliations ($ in millions) Operating Income
Reconciliation Sabre Holdings 1Q 2005 1Q 2004 ------- -------- GAAP
Operating Income $71.2 $69.5 GAAP Operating Margin 12.2% 12.9% Add:
amortization of intangibles 7.8 11.6 Add: stock compensation 0.5
2.0 ------- ------- Adjusted Operating Income $79.4 $83.1 Adjusted
Operating Margin 13.7% 15.4% Net Earnings Reconciliation 1Q 2005 1Q
2004 ------- -------- GAAP Net Earnings $57.7 $43.0 Adjustments,
net of taxes: Add: amortization of intangibles and stock
compensation 4.5 8.0 Less: realized gain on sale of investment in
Karavel (13.4) - ------- ------- Adjusted Net Earnings $48.8 $51.1
GAAP EPS $0.44 $0.31 Adjusted EPS $0.37 $0.37 Diluted share count
(millions) 130.8 139.6 Adjusted EBITDA Reconciliation 1Q 2005
------- GAAP Net Earnings $57.7 Add: taxes 31.5 Add: interest
expense 7.6 Less: interest income (4.4) Less: other, net (including
gain on sale of Karavel investment) (20.7) Less: minority interest
(0.6) Add: depreciation & amortization 27.1 ------- Adjusted
EBITDA $98.3 2005 Guidance --------------------- Net Earnings
Reconciliation 2Q 2005 Guidance FY 2005 Guidance ----------------
---------------- Low High Low High ------ ------ ------- -------
GAAP Net Earnings $52.2 $58.8 $196.0 $209.1 Adjustments, net of
taxes: Add: amortization of intangibles and stock compensation 3.8
3.8 14.6 14.6 Less: realized gain on sale of investment in Karavel
- - (13.4) (13.4) -------- ------ ------- ------- Adjusted Net
Earnings $56.1 $62.6 $197.2 $210.3 GAAP EPS $0.40 $0.45 $1.50 $1.60
Adjusted EPS $0.43 $0.48 $1.50 $1.60 Diluted share count (millions)
130.4 131.1 *T
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