Global Business Travel (US:GBTG)2025-05-06 12:13PART I. FINANCIAL INFORMATION Item 1. Consolidated Financial Statements The company reported a $75 million net income in Q1 2025, a turnaround from a $19 million loss, with assets at $3,785 million and positive cash flow, while its CWT merger faces DOJ review Consolidated Balance Sheet Highlights (in $ millions) | Account | March 31, 2025 (Unaudited) | December 31, 2024 | | :--- | :--- | :--- | | Total Assets | $3,785 | $3,624 | | Cash and cash equivalents | $552 | $536 | | Accounts receivable, net | $717 | $571 | | Goodwill | $1,217 | $1,201 | | Total Liabilities | $2,658 | $2,567 | | Long-term debt, net | $1,365 | $1,365 | | Earnout derivative liabilities | $59 | $133 | | Total Shareholders' Equity | $1,127 | $1,057 | Consolidated Statements of Operations Highlights (in $ millions, except per share data) | Account | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Revenue | $621 | $610 | | Total operating expenses | $566 | $594 | | Operating income | $55 | $16 | | Fair value movement on earnout derivative liabilities | $74 | $18 | | Net income (loss) | $75 | ($19) | | Diluted income (loss) per share | $0.16 | ($0.04) | Consolidated Statements of Cash Flows Highlights (in $ millions) | Activity | Three months ended March 31, 2025 | Three months ended March 31, 2024 | | :--- | :--- | :--- | | Net cash from operating activities | $53 | $49 | | Net cash used in investing activities | ($18) | ($25) | | Net cash used in financing activities | ($25) | ($10) | | Net increase in cash, cash equivalents and restricted cash | $16 | $9 | - The company agreed to acquire CWT for approximately $540 million (cash and 50 million shares), with the U.S. Department of Justice filing a suit to block the merger, while the U.K. CMA approved the transaction232425 Notes to the Consolidated Financial Statements Notes detail the pending CWT merger, disaggregated revenue, debt refinancing, and significant changes in derivative liabilities and share repurchases Disaggregated Revenue (in $ millions) | Revenue Type | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Travel revenue | $499 | $492 | | Product and professional services revenue | $122 | $118 | | Total revenue | $621 | $610 | - In February 2025, the company repriced its Initial Term Loans, reducing the interest rate margin by 0.50% to 2.50%, resulting in a $2 million loss on early extinguishment49 - The fair value of earnout derivative liabilities decreased from $133 million at year-end 2024 to $59 million as of March 31, 2025, resulting in a $74 million recognized gain for Q1 202573101 - In Q1 2025, the company granted 6 million RSUs and 774,644 PSUs, incurring $19 million in equity-based compensation expense, with $128 million unrecognized compensation remaining757983 - The company repurchased 182,676 shares of Class A common stock for $2 million in Q1 2025, with $298 million remaining under the repurchase program85 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management attributes 2% revenue growth to increased transaction volume, with operating income surging to $55 million and Adjusted EBITDA rising 15% to $141 million, while liquidity improved through debt repricing Key Operating and Financial Metrics (in $ millions, except percentages) | Metric | Q1 2025 | Q1 2024 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | TTV | $8,349 | $8,105 | $244 | 3% | | Transaction Growth | 6% | 3% | n/m | n/m | | Revenue | $621 | $610 | $11 | 2% | | Operating income | $55 | $16 | $39 | 251% | | Net income (loss) | $75 | ($19) | $94 | n/m | | Adjusted EBITDA | $141 | $123 | $18 | 15% | | Adjusted EBITDA margin | 23% | 20% | 260 bps | 13% | | Free Cash Flow | $26 | $24 | $2 | 9% | - Revenue growth was driven by a 3% increase in Transaction Growth and TTV, partially offset by an 8bps yield decline to 7.4% and a $7 million adverse foreign exchange impact157 - Operating expenses decreased 5% year-over-year, primarily due to a $14 million reduction in cost of revenue from productivity and an $18 million decrease in G&A expenses from lower M&A costs138159163 - The company repriced term loans in February 2025, reducing the interest rate margin by 50 bps and expecting $7 million in annual interest savings, leading to credit rating upgrades by S&P to 'BB-' and Moody's to 'B1'172188191 Item 3. Quantitative and Qualitative Disclosures About Market Risk The company manages interest rate and foreign currency risks by fixing $900 million of notional debt at 4.2% via swaps and hedging $270 million in intercompany balances with forward contracts - To manage interest rate risk, the company entered into new interest rate swaps, fixing the rate at approximately 4.2% on a notional amount of $900 million201 - To manage foreign currency risk, the company entered into foreign currency forward contracts with an aggregate notional value of approximately $270 million to hedge intercompany balances202 Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of March 31, 2025, with no material changes to internal control over financial reporting during the quarter - Management concluded that the company's disclosure controls and procedures were effective as of the end of the reporting period204 - No material changes occurred to the company's internal control over financial reporting during the quarter205 PART II. OTHER INFORMATION Item 1. Legal Proceedings The company is involved in ordinary course litigation, but management believes no pending proceedings will materially affect its financial condition or results - Management believes no pending litigation will have a material adverse effect on the company's operations, financial condition, or cash flows208 Item 1A. Risk Factors No material changes occurred to the risk factors previously disclosed in the Annual Report on Form 10-K for the year ended December 31, 2024 - No material changes occurred to the risk factors previously presented in the Annual Report on Form 10-K for the three months ended March 31, 2025209 Item 2. Unregistered Sales of Equity Securities and Use of Proceeds In Q1 2025, the company repurchased 182,676 shares of Class A common stock for approximately $1.5 million, with $298.5 million remaining under the repurchase program Share Repurchases for Q1 2025 | Period | Total Shares Purchased | Average Price Paid Per Share | Approximate Value Remaining Under Program | | :--- | :--- | :--- | :--- | | Jan 2025 | - | - | $300,000,000 | | Feb 2025 | 140,000 | $8.31 | $298,836,600 | | Mar 2025 | 42,676 | $7.98 | $298,496,046 | | Total | 182,676 | | $298,496,046 | Item 5. Other Information No directors or officers adopted or terminated any Rule 10b5-1 or non-Rule 10b5-1 trading arrangements during Q1 2025 - No directors or officers adopted or terminated any Rule 10b5-1 trading arrangement or non-Rule 10b5-1 trading arrangement during the three months ended March 31, 2025214