Sabre(US:SABR)2025-08-07 12:01PART I. FINANCIAL INFORMATION Financial Statements Net loss for Q2 2025 significantly increased to $256.4 million due to discontinued operations and debt extinguishment losses, with total assets decreasing and stockholders' deficit widening Consolidated Statements of Operations Q2 2025 revenue slightly decreased to $687.1 million, but operating income improved, though a significant loss on debt extinguishment led to a $256.4 million net loss Consolidated Statements of Operations Highlights (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $687,149 | $695,050 | | Operating income | $89,134 | $48,722 | | Loss from continuing operations | ($201,018) | ($69,731) | | (Loss) income from discontinued operations | ($55,514) | $246 | | Net loss | ($256,532) | ($69,485) | | Net loss per common share | ($0.65) | ($0.18) | Consolidated Statements of Operations Highlights (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Revenue | $1,389,275 | $1,408,683 | | Operating income | $180,529 | $137,917 | | Loss from continuing operations | ($204,395) | ($136,821) | | Loss from discontinued operations | ($16,588) | ($3,769) | | Net loss | ($220,983) | ($140,590) | | Net loss per common share | ($0.57) | ($0.37) | Consolidated Balance Sheets Total assets decreased to $4.42 billion by June 30, 2025, primarily due to reduced cash, while total stockholders' deficit widened to $1.80 billion Consolidated Balance Sheet Highlights | Metric | June 30, 2025 (in thousands) | Dec 31, 2024 (in thousands) | | :--- | :--- | :--- | | Cash and cash equivalents | $426,118 | $724,479 | | Total current assets | $952,558 | $1,163,218 | | Total assets | $4,419,145 | $4,634,929 | | Long-term debt | $4,997,092 | $4,834,776 | | Total liabilities | $6,223,459 | $6,226,700 | | Total stockholders' deficit | ($1,804,310) | ($1,604,699) | Consolidated Statements of Cash Flows Cash used in operating activities significantly increased to $281.8 million in H1 2025, primarily due to interest payments, leading to a $298.4 million decrease in total cash Cash Flow Summary (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Cash used in operating activities | ($281,841) | ($29,856) | | Cash used in investing activities | ($30,083) | ($45,850) | | Cash provided by financing activities | $34,500 | $54,124 | | Decrease in cash, cash equivalents and restricted cash | ($298,375) | ($35,592) | - A key driver for the increased cash used in operations was a $199.9 million payment of previously paid-in-kind interest in H1 2025, which did not occur in H1 202416 Notes to Consolidated Financial Statements Notes detail the Hospitality Solutions sale, now a single segment, with H1 2025 revenue of $1.11 billion from Distribution and $274.4 million from IT Solutions, and $5.04 billion total debt after refinancing - The company sold its Hospitality Solutions business, which is now presented as discontinued operations. As a result, Sabre now manages and reports its business in a single reportable segment2223 Disaggregated Revenues (Six Months Ended June 30) | Category | 2025 (in thousands) | 2024 (in thousands) | | :--- | :--- | :--- | | Distribution | $1,114,881 | $1,122,852 | | IT Solutions | $274,394 | $285,831 | | Total Sabre Revenue | $1,389,275 | $1,408,683 | - On July 3, 2025, the company closed the sale of its Hospitality Solutions business for estimated net cash proceeds of $960 million to $980 million. A gain on the sale is expected to be recognized in Q3 202536 - Total outstanding debt was $5.04 billion as of June 30, 2025. In June 2025, the company issued $1.325 billion in new notes and repaid $1.225 billion of existing debt, resulting in an $85 million loss on extinguishment of debt5364 Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the Hospitality Solutions sale, Q2 2025 revenue decrease, improved operating income due to cost cuts, and projected full-year 2025 pro forma free cash flow of $100-$140 million Results of Operations Q2 2025 revenue decreased 1% to $687.1 million, but operating income significantly increased to $89.1 million due to cost reductions, despite a large debt extinguishment loss - Q2 2025 vs Q2 2024: - Revenue decreased by $8 million (1%) due to lower transaction volumes and IT solutions de-migrations147 - Technology costs fell by $27 million (13%) due to cost reduction plans and cloud migration savings149 - SG&A expenses decreased by $25 million (16%) from lower tax litigation reserves and cost savings151 - Operating income increased by $40.4 million (83%)152 - H1 2025 vs H1 2024: - Revenue decreased by $19 million (1%)158 - Technology costs fell by $53 million (13%)159 - SG&A expenses decreased by $25 million (9%)161 - Operating income increased by $42.6 million (31%)161 Non-GAAP Financial Measures Adjusted EBITDA increased to $118.3 million in Q2 2025, while H1 2025 Free Cash Flow showed a $321.0 million usage, primarily due to debt refinancing interest payments Non-GAAP Reconciliation Highlights (in thousands) | Metric | Q2 2025 | Q2 2024 | H1 2025 | H1 2024 | | :--- | :--- | :--- | :--- | :--- | | Adjusted Net Loss from continuing operations | ($7,821) | ($22,224) | ($5,037) | ($27,484) | | Adjusted EBITDA | $118,255 | $110,335 | $249,075 | $236,619 | | Free Cash Flow | N/A | N/A | ($320,991) | ($75,406) | Liquidity and Capital Resources Cash and equivalents were $426.1 million, with liquidity deemed sufficient due to the Hospitality Solutions sale proceeds used for debt repayment, and projected full-year 2025 pro forma free cash flow of $100-$140 million - Cash and cash equivalents were $426.1 million at June 30, 2025, down from $724.5 million at December 31, 2024166 - The company projects full-year 2025 pro forma free cash flow to range from $100 million to $140 million, adjusted for the Hospitality Solutions sale and a $227 million payment-in-kind interest payment170 - Following the Hospitality Solutions sale on July 3, 2025, the company used net proceeds to repay a total of $798 million across its 2021, 2022, and 2024 Term Loans, and $23 million of its Securitization Facility117177 Quantitative and Qualitative Disclosures About Market Risk Primary market risks include interest rates, foreign exchange, credit, and inflation, managed with derivatives, with no material changes since December 31, 2024 - Primary market risks include interest rates, foreign exchange rates, credit risk, and inflation197 - The company uses derivative instruments to mitigate interest rate risk on its floating-rate borrowings197 Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting during the quarter - The principal executive officer and principal financial officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025198 - No material changes to internal control over financial reporting occurred during the most recent fiscal quarter199 PART II. OTHER INFORMATION Legal Proceedings The company is involved in routine legal proceedings, with material cases detailed in Note 13 of the consolidated financial statements - The company is involved in various routine legal proceedings. For details on material cases, refer to Note 13, which discusses ongoing income and service tax litigation in India201109 Risk Factors Key risks include dependence on travel volumes, intense competition, significant indebtedness of $5.0 billion, IT system vulnerabilities, and potential costs from a Q3 2023 cybersecurity incident - The business is highly dependent on global travel transaction volumes and susceptible to disruptions from economic downturns, health crises, and political events203204 - The company faces significant competition, requiring substantial and ongoing investment in technology and innovation, such as New Distribution Capability and AI, to remain competitive206208 - A significant level of indebtedness ($5.0 billion as of June 30, 2025) poses risks, including increased vulnerability to economic conditions and the need to divert cash flow to service debt264 - The company is exposed to security incidents and cyberattacks. A Q3 2023 incident where an unauthorized actor extracted company data has led to a class-action lawsuit and could result in significant future costs248250 Unregistered Sales of Equity Securities and Use of Proceeds The $500 million share repurchase program remains suspended, with no repurchases in H1 2025 and $287 million still authorized - The company's share repurchase program remains suspended284 - No shares were repurchased in the six months ended June 30, 2025. Approximately $287 million remains authorized under the program284 Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during Q2 2025 - No directors or executive officers adopted or terminated Rule 10b5-1 trading plans during the second quarter of 2025285 Exhibits This section lists exhibits filed with the 10-Q, including agreements, CEO/CFO certifications, and XBRL data files - Exhibits filed include forms of executive compensation agreements, debt indentures, and certifications required by the Sarbanes-Oxley Act286