Sabre(SABR) - 2023 Q4 - Annual Report

PART I Item 1. Business Sabre Corporation is a global technology partner in the travel industry, connecting suppliers and buyers through its Travel Solutions and Hospitality Solutions segments - Sabre Corporation operates through two main business segments: Travel Solutions (global travel marketplace and airline software) and Hospitality Solutions (hotel software)[16][17][20] - The company's growth strategy centers on generating positive free cash flow, sustainable long-term growth, innovation, enhancing value propositions, and continued technology modernization, including integrating New Distribution Capability (NDC) and expanding product lines[21] - Sabre's technology strategy emphasizes operational stability, reliability, security, and performance, with significant investment in a unified, cloud-based architecture and AI-powered systems[22][23] - Revenue is primarily generated from transaction fees for GDS bookings (Travel Solutions), recurring usage-based fees for SaaS/hosted software (Travel Solutions IT Solutions and Hospitality Solutions), software licensing, professional services, and media/retailing[26][27][28][29] - The travel industry is seasonal, with bookings and revenue typically stronger in the first and third quarters and declining significantly in the fourth quarter, particularly in December[38] Employee Distribution as of December 31, 2023 | Region | No. of Employees | % of Total | | :------------- | :--------------- | :--------- | | United States | 1,736 | 28 % | | APAC | 1,765 | 28 % | | Europe | 1,629 | 26 % | | All Other | 1,102 | 18 % | | Total | 6,232 | 100 % | Item 1A. Risk Factors Sabre faces significant risks tied to global travel transaction volumes, intense competition, and pricing pressures from travel suppliers, alongside operational and financial challenges - Revenue is highly dependent on global travel industry transaction volumes, especially air travel, making the company susceptible to disruptions from economic conditions, disease outbreaks, geopolitical events, and climate change[47][48] - The company operates in highly competitive and evolving markets, requiring continuous innovation and substantial expenditures to adapt to new technologies (e.g., NDC) and maintain competitiveness against direct distribution channels and new entrants[51][52][53] - Sabre is exposed to pricing pressure from travel suppliers, particularly airlines, which can negotiate for lower fees and withhold content, potentially impacting revenue and margins[55][56] - The collection, processing, storage, and transmission of personal data expose the company to liabilities from governmental regulations (like GDPR), conflicting legal requirements, and security incidents[59] - Dependence on third-party IT service providers (network, cloud, mainframe, SaaS) creates risks of service interruptions, increased costs, and business disruption if these providers fail or contracts are terminated[85][86] - Cybersecurity incidents, including physical/electronic break-ins, malware, ransomware, and AI-related vulnerabilities, pose significant risks of liability, reputational damage, and operational disruption[92][93][96][97][98] - The company has a significant amount of indebtedness ($4.8 billion as of December 31, 2023), which could adversely affect cash flow, limit operational flexibility, and increase vulnerability to adverse economic conditions[113] Item 1B. Unresolved Staff Comments This item is not applicable to the company - The company has no unresolved staff comments to report[134] Item 1C. Cybersecurity Sabre manages cybersecurity risks through a dedicated function led by the CISO, with Board oversight, employing various controls and technologies to protect its environment - Sabre's cybersecurity risk management function, led by the CISO, is integrated into its enterprise risk management program, addressing operational risks, intellectual property theft, fraud, extortion, and reputational risks[135] - The company employs various cybersecurity technologies (e.g., cloud security posture management, endpoint detection and response, firewalls, identity management) and processes (e.g., training, vulnerability assessments, penetration testing) to protect its environment[137] - The Audit Committee of the Board of Directors has oversight of cybersecurity risk mitigation plans, receiving quarterly updates from management on threat management, strategy, and incident response[141][143] - As of the report date, the company does not believe any cybersecurity threats or incidents have materially affected or are reasonably likely to materially affect its business strategy, results of operations, or financial condition[140] Item 2. Properties Sabre Corporation operates globally with 61 leased offices across 38 countries, including corporate headquarters in Southlake, Texas, and regional headquarters in the UK and Singapore - Sabre operates 61 leased offices in 38 countries globally, including corporate headquarters in Southlake, Texas[144][145] - Regional headquarters are located in Richmond, United Kingdom for EMEA and Singapore for APAC[146][147] Item 3. Legal Proceedings Sabre is involved in routine legal proceedings and material litigation, including antitrust and tax disputes, with uncertain outcomes and potential for significant defense costs - The company is engaged in routine legal proceedings and material litigation, including antitrust and tax matters[148][149] - The ultimate outcome of these legal matters cannot be predicted, and the amount of possible loss is not always reasonably estimable, except where an aggregate litigation accrual has been recorded[149] Item 4. Mine Safety Disclosures This item is not applicable to the company - The company has no mine safety disclosures to report[150] Information About Our Executive Officers This section provides biographical information for Sabre Corporation's executive officers as of February 15, 2024, detailing their positions and professional backgrounds Executive Officers as of February 15, 2024 | Name | Age | Position | | :------------ | :-- | :----------------------------------------------------------------- | | Kurt Ekert | 53 | Chief Executive Officer and President | | Sean Menke | 55 | Executive Chair of the Board | | Ann Bruder | 58 | Executive Vice President and Chief Legal Officer | | Joe DiFonzo | 58 | Executive Vice President and Chief Information Officer | | Roshan Mendis | 51 | Executive Vice President and Chief Commercial Officer, Travel Solutions | | Michael Randolfi | 51 | Executive Vice President and Chief Financial Officer | | Shawn Williams | 51 | Executive Vice President and Chief People Officer | | Scott Wilson | 56 | Executive Vice President, Sabre and President, Hospitality Solutions | | Garry Wiseman | 47 | Executive Vice President and Chief Product and Technology Officer, Travel Solutions | - Kurt Ekert became CEO and President in April 2023, previously serving as President since January 2022, and has a background with Carlson Worldwide Travel and Travelport[152] - Sean Menke transitioned from CEO to Executive Chair of the Board in April 2023, having served as CEO since December 2016[153] PART II Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities Sabre's common stock trades on NASDAQ under "SABR," with a suspended share repurchase program having approximately $287 million remaining authorized - Sabre's common stock is traded on the NASDAQ Global Select Market under the symbol "SABR"[162] - As of February 8, 2024, there were 379,480,874 shares of common stock outstanding[5] - The share repurchase program, approved in February 2017 for up to $500 million, has been suspended since March 2020 due to market conditions, with approximately $287 million remaining authorized[287] Item 6. [Reserved] This item is reserved and contains no information - Item 6 is reserved and contains no information[165] Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations This section analyzes Sabre Corporation's financial condition and operating results, covering revenue, expenses, key metrics, non-GAAP measures, liquidity, and critical accounting estimates for recent fiscal years - Sabre operates through two business segments: Travel Solutions (global B2B travel marketplace and airline software) and Hospitality Solutions (hotel software)[167] - A significant portion of revenue is generated through transaction-based fees, recurring usage-based fees for SaaS/hosted systems, and upfront/professional services fees[168] - The company implemented a cost reduction plan in Q2 2023, incurring $72 million in restructuring costs, with an estimated annual operating expense reduction of $200 million[170] - Refinancing debt in 2022 and 2023 resulted in higher interest rates, increasing current and future interest expense[171] - Russian legislation effective October 30, 2022, prohibited Sabre from providing domestic air transportation processing services in Russia, negatively impacting revenue and results[172] Recent Developments Affecting our Results of Operations Recent developments include a $72 million restructuring cost for a $200 million annual expense reduction, debt refinancing, Russian service prohibitions, and the acquisition of Conferma - Implemented a cost reduction plan in Q2 2023, incurring $72 million in restructuring costs, expected to reduce annual operating expenses by approximately $200 million[170] - Refinanced portions of debt in 2022 and 2023, leading to higher interest rates and increased interest expense[171] - Russian legislation effective October 30, 2022, prohibited Sabre from providing domestic air transportation processing services in Russia, negatively impacting revenue[172] - Acquired Conferma, a virtual payments technology company, in August 2022 for $62 million net cash, consolidating its results into the Travel Solutions segment[173] - Sold 19% of Conferma's direct parent company to a third party in February 2023 for $16 million[173] - Sold the AirCentre airline operations portfolio on February 28, 2022, for $392 million, resulting in a pre-tax gain of approximately $180 million[175][176] Factors Affecting our Results Sabre's results are influenced by travel supplier strategies, technology transformation benefits, geographic booking mix, rising interest rates, and increasing travel agency incentive consideration - Travel suppliers' focus on cost-cutting and alternative distribution methods (e.g., NDC, direct channels) creates pricing pressure on Travel Solutions but also opportunities for IT solutions outsourcing[178] - Technology transformation efforts are yielding benefits in Technology costs, with re-platforming to open source and cloud-based solutions expected to finalize in 2024, aiming for a more secure, stable, and cost-efficient architecture[179][180] - Geographic mix of travel bookings impacts Travel Solutions revenue, with North America traditionally having lower booking fees and APAC showing strong recovery in 2023[181] Direct Billable Bookings Geographic Mix | Region | 2023 | 2022 | | :------------- | :--- | :--- | | North America | 55 % | 56 % | | EMEA | 17 % | 18 % | | APAC | 19 % | 15 % | | Latin America | 9 % | 11 % | | Total | 100 % | 100 % | - Higher interest rates from debt refinancing in 2022 and 2023 have increased interest expense; approximately 45% of debt (net of cash and hedging) is variable[182] - Travel agency incentive consideration, a large portion of Travel Solutions expenses, increased in 2022 and 2023 due to higher transaction volumes exceeding thresholds, a trend expected to continue in 2024[183][184] - LCC/hybrids are increasingly distributing through indirect channels, presenting growth opportunities, while the shift to SaaS and hosted solutions by airlines and hotels offers significant revenue potential due to outsourcing trends[185][186] - Growing demand for technology improvements in the fragmented hotel industry is expected to drive continued growth for Hospitality Solutions[189] Components of Revenues and Expenses This section details Sabre's revenue sources from Travel and Hospitality Solutions and outlines expense components including cost of revenue, technology costs, and selling, general and administrative expenses - Travel Solutions revenue comes from GDS distribution (direct billable bookings), IT solutions (reservation systems, commercial/operations products, agency solutions, booking data), and software licensing/maintenance[190] - Hospitality Solutions revenue is derived from upfront solution fees, recurring usage-based fees for SaaS/hosted software, and professional service fees[191] - Cost of revenue, excluding technology costs, includes delivery/distribution costs, employee-related costs, and significant travel agency incentive consideration (accrued monthly or capitalized and amortized)[192] - Technology costs encompass third-party providers, employee-related costs for operations, maintenance, minor enhancements, and technology transformation efforts[195] - Selling, general and administrative expenses include professional service fees, litigation costs, provision for expected credit losses, and personnel-related expenses for sales, support, and administrative functions[198] - Significant intersegment transactions, such as Hospitality Solutions paying fees to Travel Solutions for GDS hotel bookings, are accounted for at estimated current market prices[201] Key Metrics Sabre uses Direct Billable Bookings, Passengers Boarded, and Central Reservations System Transactions as key metrics to measure operating performance and monitor industry trends - Key metrics for Travel Solutions are Direct Billable Bookings (Air and LGS) and IT Solutions Passengers Boarded[202] - The primary metric for Hospitality Solutions is Central Reservations System Transactions[202] Key Operating Metrics (in thousands) | Metric | 2023 | 2022 | 2021 | YoY % Change (2023) | YoY % Change (2022) | | :-------------------------------- | :----- | :----- | :----- | :------------------ | :------------------ | | Travel Solutions | | | | | | | Direct Billable Bookings - Air | 302,656 | 260,804 | 183,629 | 16.0 % | 42.0 % | | Direct Billable Bookings - LGS | 52,053 | 41,038 | 23,384 | 26.8 % | 75.5 % | | Distribution Total Direct Billable Bookings | 354,709 | 301,842 | 207,013 | 17.5 % | 45.8 % | | IT Solutions Passengers Boarded | 688,501 | 637,438 | 423,838 | 8.0 % | 50.4 % | | Hospitality Solutions | | | | | | | Central Reservations System Transactions | 122,142 | 111,459 | 91,802 | 9.6 % | 21.4 % | Definitions of Non-GAAP Financial Measures Sabre utilizes Adjusted Operating Income, Adjusted Net Loss, Adjusted EBITDA, and Free Cash Flow as non-GAAP measures to assess core operations, excluding specific non-recurring or non-cash items - Adjusted Operating Income (Loss) is operating income (loss) adjusted for equity method income (loss), impairment and related charges, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation[205] - Adjusted Net Loss is net loss attributable to common stockholders adjusted for various non-core items and their tax impacts[206] - Adjusted EBITDA is loss from continuing operations adjusted for depreciation and amortization, interest expense, other net items, and various non-core costs[207] - Free Cash Flow is cash provided by (used in) operating activities reduced by cash used in additions to property and equipment[208] - These non-GAAP measures are used by management and investors to monitor core operations and evaluate financial performance, but they have limitations and are not GAAP alternatives[209][211] Non-GAAP Financial Measures This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts, including Adjusted Net Loss, Adjusted Operating Income, Adjusted EBITDA, and Free Cash Flow Reconciliation of Net Loss to Adjusted Net Loss from Continuing Operations (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net loss attributable to common stockholders | $ (541,865) | $ (456,833) | $ (950,071) | | Loss from continuing operations | $ (528,248) | $ (432,099) | $ (923,775) | | Adjustments (total) | 348,551 | 61,007 | 214,385 | | Adjusted Net Loss from continuing operations | $ (179,697) | $ (371,092) | $ (709,390) | | Adjusted Net Loss from continuing operations per share | $ (0.52) | $ (1.14) | $ (2.21) | | Diluted weighted-average common shares outstanding | 346,567 | 326,742 | 320,922 | Reconciliation of Operating Income (Loss) to Adjusted Operating Income (Loss) (in thousands) | Metric | 2023 | 2022 | 2021 | | :-------------------------------- | :--------- | :--------- | :--------- | | Operating income (loss) | $ 47,143 | $ (261,060) | $ (665,487) | | Add back: Adjustments (total) | 179,564 | 302,968 | 206,494 | | Adjusted Operating Income (Loss) | $ 228,707 | $ (68,042) | $ (459,317) | Reconciliation of Loss from Continuing Operations to Adjusted EBITDA (in thousands) | Metric | 2023 | 2022 | 2021 | | :-------------------------------- | :--------- | :--------- | :--------- | | Loss from continuing operations | $ (528,248) | $ (432,099) | $ (923,775) | | Adjustments (total) | 865,394 | 497,436 | 662,499 | | Adjusted EBITDA | $ 337,146 | $ 65,337 | $ (261,276) | Reconciliation of Free Cash Flow (in thousands) | Metric | 2023 | 2022 | 2021 | | :-------------------------------- | :--------- | :--------- | :--------- | | Cash provided by (used in) operating activities | $ 56,239 | $ (276,458) | $ (414,654) | | Additions to property and equipment | (87,423) | (69,494) | (54,302) | | Free Cash Flow | $ (31,184) | $ (345,952) | $ (468,956) | Results of Operations Sabre's consolidated revenue increased by 15% in 2023 to $2.91 billion, with improved operating income but a net loss of $528.2 million due to higher interest expense and debt extinguishment losses Consolidated Statement of Operations Data (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------ | :--------- | :--------- | :--------- | | Revenue | $ 2,907,738 | $ 2,537,015 | $ 1,688,875 | | Cost of revenue, excluding technology costs | 1,189,606 | 1,040,819 | 691,451 | | Technology costs | 1,036,596 | 1,096,097 | 1,052,833 | | Selling, general and administrative | 634,393 | 661,159 | 610,078 | | Operating income (loss) | 47,143 | (261,060) | (665,487) | | Interest expense, net | (447,878) | (295,231) | (257,818) | | Loss on debt extinguishment, net | (108,577) | (4,473) | (13,070) | | Loss from continuing operations | $ (528,248) | $ (432,099) | $ (923,775) | Years Ended December 31, 2023 and 2022 In 2023, total revenue grew 15% to $2.91 billion, driven by Travel Solutions and Hospitality, while interest expense surged 52% due to higher rates and financing activities Revenue by Segment (in thousands) | Segment | 2023 | 2022 | Change | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Travel Solutions | $ 2,642,077 | $ 2,311,275 | $ 330,802 | 14 % | | Hospitality Solutions | 304,169 | 254,620 | 49,549 | 19 % | | Eliminations | (38,508) | (28,880) | (9,628) | 33 % | | Total revenue | $ 2,907,738 | $ 2,537,015 | $ 370,723 | 15 % | - Travel Solutions distribution revenue increased by $434 million (27%) due to an 18% increase in direct billable bookings and favorable rate impacts from international and corporate bookings[223] - Travel Solutions IT solutions revenue decreased by $104 million (15%) due to de-migrations (Russian law changes) and the AirCentre portfolio sale, partially offset by an 8% increase in passengers boarded[223] - Hospitality Solutions revenue increased by $50 million (19%) driven by a 10% increase in SynXis transaction volumes[224] - Cost of revenue, excluding technology costs, increased by $144 million (16%) for Travel Solutions, primarily due to a $185 million increase in incentive consideration[225] - Technology costs decreased by $46 million (5%) for Travel Solutions due to mainframe offloads and data migrations, and by $10 million (9%) for Hospitality Solutions due to labor reductions[229][230] - Interest expense, net, increased by $153 million (52%) to $447.9 million, mainly due to higher interest rates on term loans and additional financing activities[235] - A loss on extinguishment of debt of $109 million was recognized in 2023, primarily from Q3 2023 financing activity[236] - Other, net increased by $123 million, primarily due to the $180 million gain on AirCentre sale in the prior year, partially offset by a reduced loss on GBT investment and other non-operating gains in 2023[237][238] Years Ended December 31, 2022 and 2021 In 2022, total revenue increased 50% to $2.54 billion, reflecting COVID-19 recovery, with significant growth in Travel Solutions distribution and Hospitality revenue Revenue by Segment (in thousands) | Segment | 2022 | 2021 | Change | % Change | | :------------------ | :--------- | :--------- | :------- | :--------- | | Travel Solutions | $ 2,311,275 | $ 1,503,539 | $ 807,736 | 54 % | | Hospitality Solutions | 254,620 | 202,628 | 51,992 | 26 % | | Eliminations | (28,880) | (17,292) | (11,588) | 67 % | | Total revenue | $ 2,537,015 | $ 1,688,875 | $ 848,140 | 50 % | - Travel Solutions distribution revenue increased by $721 million (80%) due to a 46% increase in direct billable bookings and favorable rate impacts from international and corporate bookings, reflecting COVID-19 recovery[242] - Travel Solutions IT solutions revenue increased by $87 million (14%) due to a 50% increase in passengers boarded and recognition of deferred revenue, partially offset by the AirCentre sale[242] - Hospitality Solutions revenue increased by $52 million (26%) driven by a 21% increase in SynXis transaction volumes due to COVID-19 recovery[242] - Cost of revenue, excluding technology costs, increased by $330 million (59%) for Travel Solutions, primarily due to a $337 million increase in incentive consideration[243] - Technology costs increased by $34 million (4%) for Travel Solutions due to higher transaction volumes and cloud migration efforts, and by $26 million (28%) for Hospitality Solutions[245][246] - Selling, general and administrative expenses increased by $38 million (12%) for Corporate, driven by litigation reserves, risk/security costs, and restructuring costs, partially offset by lower stock-based compensation[250] - Interest expense, net, increased by $37 million (15%) to $295.2 million, primarily due to higher interest rates on term loans[251] - Other, net increased by $138 million, primarily due to a $180 million gain on the sale of AirCentre, partially offset by a $26 million fair value loss on the GBT investment[254][255] Liquidity and Capital Resources Sabre's liquidity is supported by $648.2 million in cash, with $7 billion in total debt, and the company expects positive free cash flow in 2024 following debt refinancing and cost reductions Cash and Liquidity (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------------ | :------------------ | | Cash and cash equivalents | $ 648,207 | $ 794,888 | | Available undrawn balance under the AR Facility | 400 | — | | AR Facility outstanding balance | 110,000 | — | | Available under bilateral letter of credit facility | 8,486 | 8,473 | | Outstanding letters of credit | 11,514 | 11,527 | - The company believes it has sufficient resources to fund liquidity requirements for at least the next twelve months, despite an uncertain economic environment[260] - Total debt obligation, including interest, was $7 billion as of December 31, 2023, with $501 million due within the next 12 months[268] - Other material cash requirements include $97 million in lease obligations, $2.2 billion in IT agreements, and $271 million in purchase obligations[269][270][271] - The company expects positive free cash flow for the full year 2024 and anticipates being a U.S. federal cash taxpayer in 2024[263][265] - In June 2023, Sabre FB entered into a $700 million Senior Secured Term Loan Due 2028, with interest potentially payable-in-kind until December 31, 2025[282][283] - In September 2023, Sabre GLBL completed exchange offers, exchanging $853 million of senior secured notes due 2025 for 8.625% senior secured notes due 2027[283] - Cash provided by operating activities increased by $333 million to $56 million in 2023, primarily due to increased transaction volumes and working capital initiatives, partially offset by higher interest and severance payments[291] - Cash used in investing activities was $110 million in 2023, primarily for capital expenditures ($87 million) and investment/acquisition activities ($23 million)[294] - Cash used in financing activities was $94 million in 2023, including proceeds from new notes and term loans, payments on existing debt, and debt issuance costs[296] Recent Accounting Pronouncements Sabre adopted updated FASB guidance on LIBOR discontinuation and derivatives, neither of which had a material impact on its consolidated financial statements - Adopted FASB guidance on LIBOR discontinuation (SOFR Amendment) in Q2 2023, with no material impact on financial statements[412] - Adopted FASB guidance on derivatives and hedging in Q1 2022, with no material impact on financial statements[413] Critical Accounting Estimates Sabre's financial statements rely on critical accounting estimates for revenue recognition, asset recoverability, tax assets/liabilities, and loss contingencies, involving significant management judgment - Critical accounting estimates include revenue recognition for multiple performance obligation arrangements, evaluation of goodwill and long-lived asset recoverability, tax asset/liability calculations, and loss contingencies[298][299] - Revenue recognition for IT Solutions involves significant judgments in identifying distinct performance obligations, estimating total contract consideration, allocating amounts, and forecasting future volumes[301] - Goodwill is evaluated for impairment annually or when indicators exist, using qualitative and quantitative assessments based on discounted future cash flow projections and market multiples[305] - Deferred tax assets are regularly reviewed for recoverability, with valuation allowances established based on projected future taxable income and tax planning strategies; as of December 31, 2023, a cumulative valuation allowance of $486 million for U.S. federal and $47 million for state deferred tax assets was maintained[307][445] - Loss contingencies, including legal and tax claims, require careful analysis and accrual for probable and reasonably estimable losses, with inherent uncertainties in predicting ultimate outcomes[308][309] Item 7A. Quantitative and Qualitative Disclosures About Market Risk Sabre manages market risks related to interest rates, foreign exchange, credit, and inflation, with floating-rate debt partially hedged and credit risk concentrated in commercial air travel - Market risk management focuses on interest rates, foreign exchange rates, credit risk, and inflation, with derivative instruments used to manage interest rate risk[310] - Interest rate risk primarily relates to floating-rate indebtedness (approximately 45% of debt, net of cash and hedging) and the Senior Secured Term Loan Due 2028, which bears interest at a floating Reference Rate[311][316] Interest Rate Swaps Outstanding at December 31, 2023 | Notional Amount | Interest Rate Received | Interest Rate Paid | Effective Date | Maturity Date | | :-------------- | :--------------------- | :----------------- | :------------- | :------------ | | $250 million | 1 month SOFR | 4.72% | June 30, 2023 | June 30, 2026 | | $250 million | 1 month SOFR | 3.88% | December 31, 2023 | December 31, 2024 | - Foreign currency risk is associated with international operations (7% of revenue, 21% of operating expenses in 2023), with the Euro being the most significant currency for operating expenses[317][318] - Credit risk is concentrated in the travel industry, particularly commercial air travel, with approximately 76% of trade accounts receivable from this sector as of December 31, 2023; this risk is mitigated by collections through clearing houses like ACH[321][322][323] - Inflation, especially labor inflation, poses a material adverse impact on operations, results, liquidity, or cash flows[324] Item 8. Financial Statements and Supplementary Data This section presents Sabre Corporation's audited consolidated financial statements, including statements of operations, balance sheets, cash flows, and comprehensive notes, with an unqualified audit opinion - The section includes the audited consolidated financial statements for the years ended December 31, 2023, 2022, and 2021[328] - Ernst & Young LLP issued an unqualified opinion on the consolidated financial statements and the effectiveness of internal control over financial reporting as of December 31, 2023[328][329][340] Consolidated Statements of Operations In 2023, Sabre's revenue reached $2.91 billion, achieving a positive operating income of $47.1 million, despite a net loss of $541.9 million due to high interest and debt extinguishment costs Consolidated Statements of Operations (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Revenue | $ 2,907,738 | $ 2,537,015 | $ 1,688,875 | | Operating income (loss) | 47,143 | (261,060) | (665,487) | | Interest expense, net | (447,878) | (295,231) | (257,818) | | Loss on extinguishment of debt | (108,577) | (4,473) | (13,070) | | Loss from continuing operations | (528,248) | (432,099) | (923,775) | | Net loss attributable to common stockholders | $ (541,865) | $ (456,833) | $ (950,071) | | Basic net loss per common share | $ (1.56) | $ (1.40) | $ (2.96) | | Diluted net loss per common share | $ (1.56) | $ (1.40) | $ (2.96) | Consolidated Statements of Other Comprehensive Loss Sabre reported a total comprehensive loss of $536.1 million in 2023, comprising a net loss of $527.9 million and an other comprehensive loss of $8.2 million from retirement plans and derivatives Consolidated Statements of Comprehensive Loss (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Net loss | $ (527,940) | $ (432,778) | $ (926,307) | | Other comprehensive (loss) income, net of tax | (8,191) | 14,556 | 55,670 | | Comprehensive loss | $ (536,131) | $ (418,222) | $ (870,637) | | Comprehensive loss attributable to Sabre Corporation | $ (535,799) | $ (420,892) | $ (872,799) | - Key components of other comprehensive loss in 2023 included a net actuarial loss of $5.2 million from retirement-related benefit plans and net unrealized losses of $7.4 million on derivatives[352] Consolidated Balance Sheets Sabre's total assets decreased to $4.67 billion in 2023, with long-term debt at $4.83 billion and total stockholders' deficit increasing to $1.38 billion due to accumulated losses Consolidated Balance Sheets (in thousands) | Metric | December 31, 2023 | December 31, 2022 | | :------------------------------------------ | :------------------ | :------------------ | | Assets | | | | Total current assets | $ 1,158,591 | $ 1,361,489 | | Goodwill | 2,554,039 | 2,542,087 | | Total assets | $ 4,672,194 | $ 4,962,875 | | Liabilities and Stockholders' Deficit | | | | Total current liabilities | $ 914,713 | $ 815,571 | | Long-term debt | 4,829,461 | 4,717,091 | | Total stockholders' deficit | (1,375,819) | (872,827) | | Total liabilities and stockholders' deficit | $ 4,672,194 | $ 4,962,875 | - Cash and cash equivalents decreased from $794.9 million in 2022 to $648.2 million in 2023[355] - Goodwill increased slightly to $2.55 billion in 2023 from $2.54 billion in 2022[355] Consolidated Statements of Cash Flows Cash provided by operating activities significantly improved to $56.2 million in 2023, while investing activities used $110.0 million and financing activities used $94.2 million Consolidated Statements of Cash Flows (in thousands) | Metric | 2023 | 2022 | 2021 | | :------------------------------------------ | :--------- | :--------- | :--------- | | Cash provided by (used in) operating activities | $ 56,239 | $ (276,458) | $ (414,654) | | Cash (used in) provided by investing activities | (109,980) | 173,977 | (29,428) | | Cash used in financing activities | (94,219) | (75,370) | (50,558) | | Decrease in cash, cash equivalents and restricted cash | (146,679) | (183,468) | (500,274) | | Cash, cash equivalents and restricted cash at end of period | $ 669,244 | $ 815,923 | $ 999,391 | - Cash payments for interest increased to $394.5 million in 2023 from $286.1 million in 2022[358] - Additions to property and equipment (capital expenditures) were $87.4 million in 2023[358] Consolidated Statements of Stockholders' Deficit Sabre's total stockholders' deficit increased to $1.38 billion in 2023, primarily due to net loss and preferred stock dividends, with all preferred stock converted to common stock Consolidated Statements of Stockholders' Deficit (in thousands, except share data) | Metric | December 31, 2023 | December 31, 2022 | December 31, 2021 | | :------------------------------------------ | :------------------ | :------------------ | :------------------ | | Preferred Stock (shares) | — | 3,290,000 | 3,290,000 | | Common Stock (shares issued) | 405,914,663 | 353,436,503 | 346,430,421 | | Total stockholders' deficit | $ (1,375,819) | $ (872,827) | $ (499,717) | | Net loss attributable to Sabre Corporation | (527,608) | (435,448) | (928,469) | | Preferred stock dividends | 14,257 | 21,385 | 21,602 | - On September 1, 2023, all outstanding preferred stock was automatically converted into approximately 47 million shares of common stock[360][510] Notes to Consolidated Financial Statements These notes provide detailed explanations of Sabre Corporation's accounting policies, financial statement components, and specific transactions, crucial for understanding reported financial figures Item 9. Changes in and Disagreements With Accountants on Accounting and Financial Disclosure This item is not applicable to the company, indicating no changes in or disagreements with accountants on accounting and financial disclosure - The company has no changes in or disagreements with accountants on accounting and financial disclosure to report[565] Item 9A. Controls and Procedures Sabre's management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2023, despite a new billing system impacting revenue controls - Disclosure controls and procedures were deemed effective as of December 31, 2023, by the CEO and CFO[566] - Management concluded that internal control over financial reporting was effective as of December 31, 2023, based on the COSO framework[567] - Ernst & Young LLP issued an unqualified attestation report on the effectiveness of internal control over financial reporting[568] - A new billing system implemented in March 2023 affected the control environment over revenue, but no other material changes to internal control over financial reporting occurred[570] Item 9B. Other Information No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during the three months ended December 31, 2023 - No directors or executive officers adopted or terminated Rule 10b5-1 trading arrangements during Q4 2023[571] Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections This item is not applicable to the company - The company has no disclosure regarding foreign jurisdictions that prevent inspections to report[571] PART III Item 10. Directors, Executive Officers and Corporate Governance This item incorporates by reference information from the 2024 Proxy Statement regarding directors, corporate governance, and Audit Committee details, with executive officer information in Part I - Information on directors, nominees, Section 16(a) reports, Code of Business Ethics, stockholder nominations, and Audit Committee is incorporated by reference from the 2024 Proxy Statement[574][582] - Information about executive officers is provided in Part I of this Annual Report on Form 10-K[574] Item 11. Executive Compensation This item incorporates by reference information from the 2024 Proxy Statement concerning executive compensation, including the Compensation Discussion and Analysis and Director Compensation Program - Information on executive compensation, including Compensation Discussion and Analysis and Director Compensation Program, is incorporated by reference from the 2024 Proxy Statement[575] Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters This item incorporates by reference security ownership information from the 2024 Proxy Statement and details the company's equity compensation plans as of December 31, 2023 - Information on security ownership of certain beneficial owners and management is incorporated by reference from the 2024 Proxy Statement[576] Equity Compensation Plan Information as of December 31, 2023 | Metric | Number of securities to be issued upon exercise of outstanding options (a) | Weighted average exercise price of outstanding options (b) | Number of securities remaining available for future issuance under equity compensation plans (c) | | :------------------------------------------ | :------------------------------------------------------- | :------------------------------------------------------- | :------------------------------------------------------------------------------------------------- | | Equity compensation plans approved by stockholders | 28,388,434 | $ 12.20 | 9,410,406 | - The 2023 Omnibus Incentive Compensation Plan serves as a successor to previous plans, authorizing 27,791,761 shares of common stock for issuance[578][516] Item 13. Certain Relationships and Related Transactions, and Director Independence This item incorporates by reference information from the 2024 Proxy Statement regarding related party transactions, Board composition, and director independence - Information on certain relationships, related party transactions, Board composition, and director independence is incorporated by reference from the 2024 Proxy Statement[590] Item 14. Principal Accountant Fees and Services This item incorporates by reference information from the 2024 Proxy Statement concerning principal accounting firm fees and the Audit Committee's approval process for services - Information on principal accounting firm fees and Audit Committee approval of audit and non-audit services is incorporated by reference from the 2024 Proxy Statement[591] PART IV Item 15. Exhibits and Financial Statement Schedules This item lists all financial statements, schedules, and exhibits filed as part of the Annual Report on Form 10-K, many incorporated by reference from previous SEC filings - Financial statements are set forth under Item 8 of this Annual Report on Form 10-K[595] - Schedule II – Valuation and Qualifying Accounts is filed as part of this Annual Report[595] - A comprehensive list of exhibits, including asset purchase agreements, indentures, credit agreements, and equity compensation plans, is provided[596][597][599][600][601][602][603][604][605][606][609] Item 16. Form 10-K Summary This item is not applicable to the company - The company has no Form 10-K Summary to report[608]