Sabre announces strategic initiatives expected to increase addressable market and lower costs by 2024; reports solid 2019 results.
Business highlights:*Acquired Radixxand investing in low-cost carrier solutions to expand our service to the industry's fastest growing segment*Announced plans to build full-service property management system with Accor, the Company's next enterprise hotelier customer*Joined forces with Google Cloud to utilize emerging technology trends across data analytics, artificial intelligence, machine learning and the cloud*$150 million incremental technology spend expected in 2020 to support strategic initiatives designed to complete transformation from transaction-based marketplace on mainframe infrastructure to cloud-based, customer-centric marketplace by 2024Fourth quarter and full-year 2019
highlights:*Revenue totaled $941.4 million in the fourth quarter and $3.975 billion for the full year*Net income attributable to common stockholders totaled $10.1 million in the fourth quarter and $158.6 million for the full year*Diluted net income attributable to common stockholders per share (EPS) totaled $0.04 in the fourth quarter and $0.57 for the full year*Adjusted EPS totaled $0.16 in the fourth quarter and $1.01 for the full yearSOUTHLAKE, Texas -February 26, 2020-Sabre Corporation ('Sabre' or the 'Company') (NASDAQ: SABR) today announced financial results for the quarter and year ended December31,2019.'Throughout 2017 and 2018, we built a strong technology foundation and an expert leadership team while enhancing collaboration across our business and successfully navigating a heavy customer renewal cycle. In 2019, we saw the commercial benefits with new business wins. We ended 2019 with a strong GDS share gain at Travel Network, solid Airline Solutions revenue growth and continued strong revenue growth at Hospitality Solutions. We also advanced our technology transformation activities and generated Free Cash Flow ahead of our guidance,' said Sean Menke, President and CEO. 'The travel ecosystem is continuing to shift as the needs of our airline, hotel and agency customers change. We must continue to evolve retailing, distribution and fulfillment of travel to help our customers drive revenue growth and increase traveler loyalty. We are working on ways to use data analytics, artificial intelligence, machine learning and the cloud to drive value for all players across the travel ecosystem. Our strategic initiatives are focused on creation and distribution of personalized offers including through NDC, increasing our footprint in low-cost carrier growth and innovation, building a full-service hotel property management system, and completing our technology transformation. We've already made bold moves aligning with these strategic initiatives, including our acquisition of Radixx, our continued desire to close the Farelogix acquisition and new collaboration plans with Accor. In addition, we are partnering with Google to facilitate our technology transformation and help unlock future revenue opportunities. There are 5 billion passengers boarded annually around the globe. Unlocking just one more dollar of value per passenger boarded potentially represents a $5billion opportunity for the global travel industry.In 2020, we expect to spend an incremental $150 million on technology to build an advanced travel marketplace that we expect will increase our addressable market and reduce costs. The 2020 financial outlook we are providing includes this incremental technology spend. We are also providing a target for long-term margin expansion. As we kick off 2020, a global health crisis related to the Coronavirus (COVID-19) is impacting travel bookings, but more importantly, the lives of many around the world. The situation continues to evolve, and while we hope its impact will be short-term in nature, Coronavirus will have a material impact on our 2020 financial results. We have not incorporated its impact into our 2020 guidance at this point.' Q4 2019 Financial SummarySabre consolidated fourth quarter revenue increased 1.9% to $941.4 million, compared to $923.9 million in the fourth quarter of 2018. Operating income was $57.6 million, versus $121.0million in the fourth quarter of 2018. The decline in operating income in the quarter was primarily due to increased technology expenses, an increase in acquisition-related costs and modest growth in Travel Network incentive expense per booking, partiallyoffset by solid revenue growth. Technology expenses increased by $64.5 million in the quarter, primarily due to a shift in technology capitalization mix and corresponding decline in technology capitalized expenditures, which had no impact on the level of total technology spend or Free Cash Flow. This shift is driven by the execution of the Company's previously disclosed technology strategy, including its cloud migration, mainframe offload and utilization of agile development methods, which increases the expensed portion of its total technology spend. Net income attributable to common stockholders totaled $10.1 million, versus $84.4 million in the fourth quarter of 2018. Diluted net income attributable to common stockholders per share (EPS) totaled $0.04, versus $0.30 in the fourth quarter of 2018. The decrease in net income attributable to common stockholders was largely driven by the items impacting operating income described above, as well as an increase in the tax rate.Fourth quarter consolidated Adjusted EBITDA Less Capitalized Software Development, which reflects the Company's total capitalized and expensed technology spend, was $188.4 million, a 4.2% decrease from $196.8 million in the fourth quarter of 2018. This decrease was driven by modest growth in total technology spend and modest growth in Travel Network incentive expense per booking, partially offset by solid revenue growth. Fourth quarter consolidated Adjusted Operating Income was $97.6 million, versus $157.9 million in the fourth quarter of 2018. The decline in Sabre's consolidated Adjusted Operating Income was primarily the result of increased technology operating expenses due to the increase in the expensed portion of total technology spend and modest growth in Travel Network incentive expense per booking, partially offset by revenue growth.For the quarter, Sabre reported Adjusted Net Income from continuing operations per share (Adjusted EPS) of $0.16, versus $0.34 per share in the fourth quarter of 2018.During the fourth quarter of 2019, Sabre returned $38.3 million to shareholders through its regular quarterly dividend.Full-Year 2019 Financial SummaryFor the full-year 2019, Sabre total consolidated revenue increased 2.8% to $3.975 billion, compared to $3.867 billion for the prioryear.Operating income was $363.4 million, versus $562.0 million in 2018. The decline in operating income was primarily due to increased technology expenses, as well as Travel Network incentive expense growth and acquisition-related costs, partially offset by solid revenue growth and a $31.8 million benefit related to the reversal of a previously accrued loss related to the US Airways legal matter. Technology expenses increased by $206.2 million during the year, primarily due to a shift in technology capitalization mix and corresponding decline in technology capitalized expenditures, which had no impact on the level of total technology spend or Free Cash Flow. This shift is driven by the execution of the Company's previously disclosed technology strategy, including its cloud migration, mainframe offload and utilization of agile development methods, which increases the expensed portion of its total technology spend. Net income attributable to common stockholders totaled $158.6 million, versus $337.5 million in 2018. Diluted net income attributable to common shareholders per share (EPS) totaled $0.57, versus $1.22 in 2018. This decrease in net income attributable to common stockholders was driven by the items impacting operating income described above,as well as an increase in the tax rate. Consolidated Adjusted EBITDA Less Capitalized Software Development, which reflects the Company's total capitalized and expensed technology spend, was $857.2 million, a 1.3% decrease from $868.8 million in 2018. This decrease was driven by modest growth in total technology spend and Travel Network incentive expense growth, partially offset by solid revenue growth. Consolidated Adjusted Operating Income totaled $513.4 million, a 26.8% decrease from $701.4 million in 2018. The decrease in consolidated Adjusted Operating Income was primarily the result of increased technology operating expenses due to the increase in the expensed portion of total technology spend and Travel Network incentive expense growth, partially offset by solid revenue growth.For the full-year 2019, Sabre reported Adjusted EPS of $1.01, versus $1.54 per share in 2018.With regards to Sabre's full year 2019 cash flows (versus prior year):*Cash provided by operating activities totaled $581.3 million (vs. $724.8 million) *Cash used in investing activities totaled $243.0 million (vs. $275.3 million)*Cash used in financing activities totaled $409.7 million (vs. $306.5 million)*Free Cash Flow totaled $466.1 million (vs. $440.9 million)For the full year, Sabre returned $231.1 million to shareholders, including $153.5 million through its regular quarterly dividend and the repurchase of 3.7 million shares for approximately $77.6 million in aggregate under its share repurchase authorization
Travel NetworkFourth quarter 2019 highlights (versus prior year):*Travel Network revenue increased 1.2% to $673.1 million. *Global air bookings share increased 180 basis points to 38.9%.*Global bookings increased 1.2% in the quarter, stronger than the GDS industry. Global bookings growth was supported by an increase of 5.0% in North America, representing the Company's largest global footprint. Strong North American bookings growth offset a decline in international bookings. The GDS industry declined in the quarter due to challenging macroeconomic and geopolitical factors,channel shift driven by the legacy European carrier families and the insolvency of a large Indian carrier.*Operating income totaled $136.9 million, versus $165.3 million in the fourth quarter of 2018, and operating income margin was 20.3%. *The decline inoperating income was primarily driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven by the Company's previously disclosedtechnology strategy and modest growth in incentive expense per booking, partially offset by revenue growth.Full year 2019 highlights (versus prior year):*Travel Network revenue increased 2.7% to $2.883 billion. *Global air bookings share increased 130 basis points to 38.8%.*Global bookings increased 1.4%, driven by 6.2% growth in North America, representing the Company's largest global footprint. Strong North American bookings growth offset a decline in international bookings. The GDS industry declined during the year due to challenging macroeconomic and geopolitical factors, channel shift driven by the legacy European carrier families and the insolvency of a large Indian carrier.*Operating income totaled $646.8 million, versus $753.3 million in 2018, and operating income margin was 22.4%.*The decline in operating income was primarily driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven by the Company's previously disclosed technology strategy and incentive expense growth, partially offset by revenue growth.
Airline SolutionsFourth quarter 2019 highlights (versus prior year):*Airline Solutions revenue increased 2.8% to $207.6 million, supported by 10.1% growth in AirVision and AirCentre commercial and operations revenue. SabreSonic reservation revenue declined 1.0% due to the previously disclosed impact of certain outside factors including the insolvency of Jet Airways and volume reductions at a certain carrier due to a 737 Max incident, as well as the de-migrations of Philippine Airlines and Bangkok Airlines, partially offset by the acquisition of Radixx and organic growth of the existing customer base. Excluding the carriers referenced above and the acquisition of Radixx, Airline Solutions revenue increased 7.2%.*Airline passengers boarded increased 1.6% in the quarter. Excluding the carriers referenced above and the acquisition of Radixx, airline passengers boarded grew 4.1%. *Operating income totaled $17.7 million, versus $29.1 million in the fourth quarter of 2018, and operating income margin was 8.5%.*The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven by the Company's previously disclosed technology strategy, partially offset by revenue growth. Full year 2019 highlights (versus prior year):*Airline Solutions revenue increased 2.1% to $840.3 million, supported by 4.3% growth in AirVision and AirCentre commercial and operations revenue and 0.9% growth in SabreSonic reservation revenue. Revenue growth, which includes the benefit of the acquisition of Radixx in the fourth quarter, was partially offset by the previously disclosed impact of certain outside factors including the insolvency of Jet Airways and volume reductions at a certain carrier due to a 737 MAX incident, as well as the de-migrations of Pakistan International Airlines, Philippine Airlines and Bangkok Airlines. Excluding the carriers referenced above and the acquisition of Radixx, Airline Solutions revenue increased 7.7%.*Airline passengers boarded declined 1.5%. Excluding the carriers referenced above and the acquisition of Radixx, airline passengers boarded grew 5.8%.*Operating income totaled $80.4 million, versus $111.1 million in 2018, and operating income margin was 9.6%. *The decline in operating income was driven by increased technology operating expenses due to the increase in the expensed portion of total technology spend (with a corresponding decrease in capitalized expenditures) driven bythe Company's previously disclosed technology strategy, partially offset by revenue growth
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SABRE CORPORATION 
