Sabre Holdings Reports Third Quarter 2005 Financial Results
04 November 2005 - 12:05AM
Business Wire
Sabre Holdings Corporation (NYSE:TSG): -- 3Q 2005 diluted EPS
(Adjusted) of $0.50 -- 3Q 2005 diluted EPS (GAAP) of $0.45 -- 3Q
2005 revenue of $700 million, up 29 percent year-over-year --
Travelocity revenue up 98 percent including lastminute.com --
Travelocity adjusted operating income of $43 million; GAAP
operating income of $31 million; adjusted EBITDA of $50 million --
Sabre Travel Network adjusted operating income of $59 million; GAAP
operating income of $56 million; adjusted EBITDA of $70 million --
Sabre Airline Solutions nearly quadruples operating income; GAAP
operating income of $10 million; adjusted EBITDA of $16 million --
Note: Analyst call today at 9:00 a.m. CST, at
www.sabre-holdings.com/investor/index.html. Sabre Holdings
Corporation (NYSE:TSG) today announced financial results for the
third quarter 2005. The company reported revenue for the third
quarter of $700 million, up 29 percent, year-over-year. Diluted
earnings per share were $0.50 on an adjusted basis, compared to
$0.41 per share in the year-ago quarter. On a GAAP basis, diluted
earnings per share were $0.45 compared to $0.49 per share in the
year-ago quarter. "Across our portfolio, we delivered excellent
revenue and earnings results in the third quarter," said Sam
Gilliland, chairman and CEO, Sabre Holdings. "Travelocity, with the
acquisition of lastminute.com, continued to drive healthy top and
bottom line metrics including year-over-year profit improvement of
more than $30 million. As expected, our Travel Network business
drove solid margins and our Airline Solutions unit nearly
quadrupled operating income year-over-year." SABRE HOLDINGS 3Q 2005
FINANCIAL HIGHLIGHTS (Note: See attached schedules for full
financial details, reconciliations of non-GAAP financial measures,
and a description of adjusting items. Results include
lastminute.com from July 20, 2005.) Revenue: Third quarter revenue
was $700 million, an increase of 29 percent from $544 million in
the year-ago quarter. Lastminute.com added $100 million in revenue
during the quarter following its acquisition on July 20. Excluding
lastminute.com, revenue for the third quarter increased 10 percent
year-over-year. Operating income: Excluding adjusting items,
operating income for the third quarter was $112 million, compared
to $90 million in the year-ago quarter. Operating income on a GAAP
basis was $100 million, an increase of 29 percent from the same
period last year. Net earnings: For the third quarter, net
earnings, excluding adjusting items, were $65 million, or $0.50 per
share, compared to $56 million, or $0.41 per share in the third
quarter of 2004. On a GAAP basis, third quarter net earnings were
$58 million, or $0.45 per share on a diluted basis, compared to $67
million, or $0.49 per share on a diluted basis in the year-ago
quarter. (Note: GAAP earnings for the third quarter of 2004
included the positive impact from the reversal of an $18 million
tax accrual.) Adjusted EBITDA: For the third quarter, adjusted
earnings before interest, taxes, depreciation, and amortization
were $138 million. Cash/Debt: The company balance sheet as of Sept.
30, 2005 reflected cash and marketable securities of $595 million.
Total debt at the end of the quarter was $1.4 billion, which
included bridge financing for lastminute.com of $800 million, notes
and bonds payable of $430 million, and a $160 million capital lease
obligation. SABRE HOLDINGS BUSINESS REVIEW TRAVELOCITY (Note:
Results include lastminute.com from July 20, 2005.) For the third
quarter, Travelocity global gross travel booked was $2.1 billion,
an increase of 76 percent year-over-year, or 34 percent excluding
lastminute.com. Total global revenue for the quarter was $276
million, year-over-year growth of 98 percent, to which
lastminute.com contributed $100 million. On a geographic basis,
gross travel booked for Travelocity included the following: -0- *T
TRAVELOCITY 3Q05 3Q04 Y/Y Growth ------------------------------
------------- ------------ ------------ Gross Travel Booked
(millions) North America $1,586 $1,223 30% Europe $564 (1) N/A N/A
Total Gross Travel Booked $2,150 $1,223 76% (1) lastminute.com
Total Transaction Value converted to Travelocity Gross Travel
Booked methodology. *T Other Travelocity global metrics for the
third quarter (year-over-year): -- Total air transaction revenue
grew 40 percent -- Total non-air transaction revenue grew 137
percent -- Total packaging revenue grew 120 percent -- Packaging
revenue as a percent of total transaction revenue was 26 percent --
Hotel room nights sold across the Travelocity network were 4.6
million, growth of 94 percent year-over-year SABRE TRAVEL NETWORK
Third quarter revenue from the Sabre Travel Network business was
$403 million, an increase of 4 percent from $388 million in the
year-ago quarter. Global transactions in the quarter were 86
million, growth of 4 percent year-over-year. Through the first nine
months of the year, global transactions were up 4 percent,
year-over-year. SABRE AIRLINE SOLUTIONS Third quarter revenue from
Sabre Airline Solutions was $67 million, an increase of 11 percent
from $60 million in the year-ago quarter. Revenue was driven by
growth across each line of business -- airline products and
services, reservations and departure control solutions and
consulting services -- and included several wins in key growth
regions -- China, the Middle East, and India. RECENT BUSINESS
HIGHLIGHTS -- Signed a five-year deal with low-cost leader AirTran
Airways to distribute AirTran fares through all Sabre channels, and
for Travelocity to be the sole supplier of hotel, cruise and
vacation packages to the AirTran website. -- Accelerated
lastminute.com integration plans including launching Travelocity
merchant hotels on lastminute.com and consolidating technology and
content platforms in France and Scandinavia. -- Launched the "Meet
Me In" travel tool, a patent-pending product on Site59 that enables
family and friends to easily connect by traveling from two
different departure cities to a common destination with a
convenient, discounted travel package. -- Added Hyatt Hotels to the
many companies that provide special business travel discounts to
Travelocity Business corporate customers. -- Announced that SynXis,
our leading technology source for more than 7,000 hotels, resorts,
and destinations, was selected by Disneyland Resort Hotels(R) as
its new distribution partner for the three resort hotels in
Anaheim, CA. -- Signed additional agreements with airlines across
the Airline Solutions portfolio including Jet Airways, Swiss
International Air Lines Ltd., Turkish Airlines and Gulf Air. --
Declared a quarterly cash dividend of $0.09 payable on Nov. 29,
2005, to shareholders of record at the close of regular trading on
the New York Stock Exchange on Nov. 11, 2005. SABRE HOLDINGS
OUTLOOK 4Q 2005 For the fourth quarter 2005, the company projects
revenue to be in the range of $619 million to $638 million. Diluted
earnings per share are projected to be in the range of $0.16 to
$0.19 on an adjusted basis, and $0.07 to $0.10 on a GAAP basis.
Full Year 2005 -- Year-over-year revenue growth, including
lastminute.com, is now projected to be approximately 18 percent. --
Diluted earnings per share on an adjusted basis reiterated in range
of $1.45 to $1.50. -- Diluted earnings per share on a GAAP basis
are projected to be in the range of $1.31 to $1.36, an increase
from previous guidance of $1.27 to $1.32. About Sabre Holdings
Corporation Sabre Holdings connects people with the world's
greatest travel possibilities by retailing travel products and
providing distribution and technology solutions for the travel
industry. Sabre Holdings supports travelers, travel agents,
corporations, government agencies and travel suppliers through its
companies: Travelocity, Sabre Travel Network and Sabre Airline
Solutions. Headquartered in Southlake, Texas, the company has
approximately 9,000 employees in 45 countries. Full year 2004
revenues totaled $2.1 billion. Sabre Holdings, an S&P 500
company, is traded on the NYSE under the symbol TSG. More
information is available at http://www.sabre-holdings.com.
Statements in this release which are not purely historical facts or
which necessarily depend upon future events, including statements
about forecasted financial performance 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 Sabre Holdings Corporation revenues being subject to
adverse changes to our travel supplier relationships and potential
substantial decreases in travel transaction volumes. 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 Sabre Holdings Corporation's most recent filing on Form
10-Q with the Securities and Exchange Commission. -0- *T Sabre
Holdings Corporation Condensed Consolidated Statement of Income -
Unadjusted (Unaudited - In millions except per share amounts) Three
months ended Nine months ended Sept 30, Sept 30, 2005 2004 Percent
2005 2004 Percent ------- ------- ------- --------- ---------
------- Revenues Sabre Travel Network $402.6 $387.9 3.8% $1,251.4
$1,206.1 3.8% Travelocity 276.2 139.5 98.0% 595.3 376.5 58.1% Sabre
Airline Solutions 67.1 60.4 11.2% 196.8 180.7 8.9% Elimination of
intersegment revenues (46.2) (43.4) 6.5% (142.6) (128.2) 11.2%
------- ------- --------- --------- Total revenues 699.7 544.4
28.5% 1,900.8 1,635.0 16.3% Operating expenses 600.1 467.2 28.4%
1,647.0 1,399.9 17.6% Operating income 99.6 77.2 29.0% 253.9 235.1
8.0% Other income (expense) Interest income (expense) net (10.5)
(2.6) 309.8% (16.0) (8.9) 80.6% Other, net 2.2 2.0 9.5% 13.4 8.3
61.3% Minority interest 2.2 0.1 1806.7% 3.2 0.3 969.1% -------
------- --------- --------- Income before provision for income
taxes 93.5 76.7 21.9% 254.5 234.8 8.4% Provision for income taxes
35.0 9.3 276.5% 94.4 65.4 44.3% ------- ------- --------- ---------
Net earnings $58.5 $67.4 (13.2%) $160.1 $169.4 (5.5%) =======
======= ========= ========= Operating Margin 14.2% 14.2% 13.4%
14.4% Earnings per share - basic $0.45 $0.50 $1.23 $1.23 Earnings
per share - diluted $0.45 $0.49 $1.23 $1.22 Weighted average shares
- basic 129.3 135.5 129.6 137.4 Weighted average shares - diluted
130.1 138.1 130.3 139.2 Sabre Holdings Corporation Condensed
Consolidated Statement of Income - Adjusted (Unaudited - In
millions except per share amounts) Three months ended Nine months
ended Sept 30, Sept 30, 2005 2004 Percent 2005 2004 Percent -------
------- -------- --------- --------- -------- Revenues Sabre Travel
Network $402.6 $387.9 3.8% $1,251.4 $1,206.1 3.8% Travelocity 276.2
139.5 98.0% 595.3 376.5 58.1% Sabre Airline Solutions 67.1 60.4
11.2% 196.8 180.7 8.9% Elimination of intersegment revenues (46.2)
(43.4) 6.5% (142.6) (128.2) 11.2% ------- ------- ---------
--------- Total revenues 699.7 544.4 28.5% 1,900.8 1,635.0 16.3%
Operating expenses 587.6 454.6 29.3% 1,619.3 1,357.7 19.3% -------
------- --------- --------- Operating income 112.1 89.7 24.9% 281.6
277.3 1.5% Other income (expense) Interest income (expense) net
(10.5) (2.6) 309.8% (16.0) (8.9) 80.6% Other, net (0.3) 0.6
(144.7%) 0.3 2.0 (84.3%) Minority interest 1.5 (0.7) (315.9%) 0.7
(2.2) (129.8%) ------- ------- --------- --------- Income before
provision for income taxes 102.8 87.1 18.1% 266.5 268.3 (0.7%)
Provision for income taxes 38.2 31.1 22.9% 99.0 95.7 3.4% -------
------- --------- --------- Net earnings $64.6 $56.0 15.4% $167.5
$172.6 (2.9%) ======= ======= ========= ========= Operating margin
16.0% 16.5% 14.8% 17.0% Earnings per share - basic $0.50 $0.41
$1.29 $1.26 Earnings per share - diluted $0.50 $0.41 $1.29 $1.24
Weighted average shares - basic 129.3 135.5 129.6 137.4 Weighted
average shares - diluted 130.1 138.1 130.3 139.2 Sabre Holdings
Corporation Reconciliation of Unadjusted Results to Adjusted
Results (Unaudited, In millions) Three months ended Sept Nine
months ended Sept 30, 30, 2005 2004 Change(a) 2005 2004 Change(a)
------- ------ --------- ------- ------- --------- Unadjusted
operating income $99.6 $77.2 29.0% $253.9 $235.1 8.0% Adjusting
items: Travelocity intangible amortization and stock compensation
11.5 8.8 30.8% 15.9 26.9 (40.8%) Travel Network intangible
amortization 3.9 3.5 12.6% 13.5 15.0 (9.9%) Airline Solutions
intangible amortization 0.6 0.3 67.4% 1.7 0.3 406.5% Reversal of
accrual related to sale of IT business in 2001 (3.4) 0.0 -- (3.4)
0.0 -- ------- ------ ------- ------- Adjusted operating income
$112.1 $89.7 24.9% $281.6 $277.3 1.5% Unadjusted other income and
minority interest ($6.1) ($0.4) 1270.8% $0.6 ($0.3) (319.9%)
Adjusting items: Realized gain on sale of Karavel investment (0.7)
0.0 -- (21.3) 0.0 -- Impact of adjusting items on minority
interests (0.7) (0.8) (16.4%) (2.6) (2.5) 3.3% (Gain)/loss on
lastminute.com hedging activity (1.7) 0.0 -- 8.2 0.0 -- True-up of
previous gain on sale of assets 0.0 (1.4) (100.0%) 0.0 (1.4)
(100.0%) Arbitration Settlement 0.0 0.0 -- 0.0 (6.0) (100.0%)
Shareholder Settlement 0.0 0.0 -- 0.0 1.1 (100.0%) Adjusted income
before provision for income taxes $102.8 $87.1 18.1% $266.5 $268.3
(0.7%) Unadjusted provision for income taxes $35.0 $9.3 276.5%
$94.4 $65.4 44.3% Adjustment to taxes for reversal of tax accrual
0.0 17.9 (100.0%) 0.0 17.9 (100.0%) Adjustments to taxes for
adjusting items 3.2 3.9 (17.6%) 4.6 12.3 (63.2%) ------- ------
------- ------- Adjusted provision for income taxes $38.2 $31.1
22.9% $99.0 $95.7 3.4% Adjusted net earnings $64.6 $56.0 15.4%
$167.5 $172.6 (2.9%) ======= ====== ======= ======= (a) Percents
shown reflect changes in unrounded figures and may not agree to the
percent changes in figures after rounding. Sabre Holdings
Corporation Sabre Travel Network Transactions Summary (millions)
3Q05 3Q04 % Change YTD05 YTD04 % Change ----- ----- ---------
------ ------ --------- Transactions 85.6 82.1 4.2% 267.8 257.3
4.1% Geographic US 53.1 52.2 1.8% 168.1 164.1 2.4% International
32.4 29.9 8.3% 99.7 93.2 7.0% ----- ----- ------ ------ 85.6 82.1
4.2% 267.8 257.3 4.1% Channel Traditional Agency 74.3 71.9 3.3%
233.6 227.0 2.9% Consumer on-line 11.3 10.3 10.2% 34.2 30.3 12.8%
----- ----- ------ ------ 85.6 82.1 4.2% 267.8 257.3 4.1%
Air/Non-Air Air 72.6 69.9 3.8% 229.6 221.2 3.8% Non-Air 13.0 12.2
6.5% 38.2 36.2 5.7% ----- ----- ------ ------ 85.6 82.1 4.2% 267.8
257.3 4.1% Note: As of the first quarter, 2005, we are now counting
as a transaction, any travel reservation that generates a fee paid
directly to us including, but not limited to the following:
traditional booking fees paid by suppliers, non-traditional
transaction fees paid by suppliers, transaction fees paid by travel
agencies, and transaction fees paid by corporations related to our
online booking tool. Updated historical quarterly transaction
information available on http://www.sabre-
holdings.com/investor/highlights/statistics/historical.html Sabre
Holdings Corporation Non-GAAP Financials Reconciliations ($ in
millions, except per share data) Operating Income Reconciliations
Sabre Holdings 3Q 2005 3Q 2004 ------- ------------- GAAP Operating
Income $99.6 $77.2 GAAP Operating Margin 14.2% 14.2% Add:
amortization of intangibles 15.6 11.4 Add: stock compensation 0.4
1.2 Less: Reversal of accrual related to sale of IT business in
2001 (3.4) -- ------- ------ Adjusted Operating Income $112.1 $89.7
Adjusted Operating Margin 16.0% 16.5% Sabre Travel Network 3Q 2005
3Q 2004 ------- ------------- GAAP Operating Income $55.6 $74.1
GAAP Operating Margin 13.8% 19.1% Add: amortization of intangibles
3.9 3.5 ------- ------ Adjusted Operating Income $59.5 $77.6
Adjusted Operating Margin 14.8% 20.0% Travelocity 3Q 2005 3Q 2004
------- ------------- GAAP Operating Income $31.3 $0.9 GAAP
Operating Margin 11.3% 0.6% Add: amortization of intangibles 11.1
7.6 Add: stock compensation 0.4 1.2 ------- ------ Adjusted
Operating Income $42.8 $9.7 Adjusted Operating Margin 15.5% 6.9%
Sabre Airline Solutions 3Q 2005 3Q 2004 ------- ------------- GAAP
Operating Income $10.3 $2.6 GAAP Operating Margin 15.4% 4.3% Add:
amortization of intangibles 0.6 0.3 ------- ------ Adjusted
Operating Income $10.9 $2.9 Adjusted Operating Margin 16.2% 4.8%
Net Earnings Reconciliation 3Q 2005 3Q 2004 ------- -------------
GAAP Net Earnings $58.5 $67.4 Adjustments, net of taxes: Add:
amortization of intangibles and stock compensation 9.8 7.4 Less:
currency hedge associated with acquisition (1.1) Less: tax reserve
reversal (17.9) Less: True-up of previous gain on sale of assets
(0.5) (0.8) Less: Reversal of accrual related to sale of IT
business in 2001 (2.2) -- ------- ------ Adjusted Net Earnings
$64.6 $56.0 GAAP EPS $0.45 $0.49 Adjusted EPS $0.50 $0.41 Diluted
share count 130.1 138.1 million Adjusted EBITDA Reconciliations 3Q
2005 ------- GAAP Net Earnings $58.5 Add: taxes 35.0 Add: interest
expense 15.8 Less: interest income (5.3) Less: other, net
(including currency hedge associated with acquisition) (2.2) Less:
minority interest (2.2) Add: depreciation & amortization 38.8
------- Adjusted EBITDA $138.4 Sabre Travel Network 3Q 2005 -------
GAAP Operating Income $55.6 Add: depreciation & amortization
14.5 ------- Adjusted EBITDA $70.1 Travelocity 3Q 2005 ------- GAAP
Operating Income $31.3 Add: depreciation & amortization 18.6
------- Adjusted EBITDA $49.9 Sabre Airline Solutions 3Q 2005
------- GAAP Operating Income $10.3 Add: depreciation &
amortization 5.7 ------- Adjusted EBITDA $16.0 2005 Guidance
--------------------------------------- Net Earnings Reconciliation
4Q 2005 FY 2005 Guidance Guidance -------------- ---------------
Low High Low High ------ ------- ------- ------- GAAP Net Earnings
$9.7 $13.6 $170.4 $176.9 Adjustments, net of taxes: Add:
amortization of intangibles and stock compensation 11.1 11.1 29.5
29.5 Add: currency hedge associated with acquisition -- -- 5.2 5.2
Less: Reversal of accrual related to sale of IT business in 2001 --
-- (2.2) (2.2) Less: realized gain on sale of investment in Karavel
-- -- (13.9) (13.9) ------ ------- ------- ------- Adjusted Net
Earnings $20.9 $24.8 $189.0 $195.5 GAAP EPS $0.07 $0.10 $1.31 $1.36
Adjusted EPS $0.16 $0.19 $1.45 $1.50 Diluted share count 130.5
million 130.3 million *T
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