Sabre(US:SABR)2022-11-02 14:20Financial Data and Key Metrics Changes - Total revenue for Q3 2022 was $663 million, a significant increase from $441 million in Q3 2021, driven by the recovery in global air, hotel, and other travel bookings [36] - Adjusted EBITDA improved to $34 million year-over-year, reflecting the ongoing recovery from the COVID-19 pandemic [40] - Free cash flow was negative $123 million in Q3 2022, impacted by timing of disbursements and restructuring costs, but is expected to turn positive in Q4 2022 [42][44] Business Line Data and Key Metrics Changes - Distribution revenue totaled $431 million in Q3 2022, up from $245 million in Q3 2021, with net air bookings recovering to 56% compared to 2019 [36][37] - IT Solutions revenue reached $173 million, an increase from $145 million in the previous year, with passengers boarded recovering to 96% of Q3 2019 levels [38] - Hospitality Solutions revenue was $67 million, up from $55 million in Q3 2021, with central reservation system transactions at 104% of 2019 levels [39] Market Data and Key Metrics Changes - Total distribution booking recovery was 57% compared to the same period in 2019, translating to a 64% revenue recovery due to higher booking rates [14] - In the Asia Pacific region, bookings improved significantly, particularly in Taiwan and Hong Kong, with recoveries of 45% and 29% respectively by the end of Q3 2022 [17] - International growth is outpacing domestic growth, with international seats to be flown up 3.4% in Q1 2023 compared to a decline in previous quarters [21] Company Strategy and Development Direction - The company is focused on a technology transformation, migrating to Google Cloud to improve agility and scalability, with significant progress made in Q3 2022 [25][26] - Distribution agreement renewals with major airlines like American and United are expected to enhance collaboration and advance retailing objectives [32] - The company anticipates that as international travel recovers, profitability will improve due to the generally higher margins associated with international bookings [16] Management's Comments on Operating Environment and Future Outlook - Management noted strong demand in both leisure and corporate travel, with no evidence of a slowdown despite concerns regarding global economic growth [18] - The company expects free cash flow to be positive in Q4 2022 and annually thereafter, driven by the recovery in travel and seasonal cash flow benefits [44][49] - Management remains optimistic about the travel recovery, particularly in the Asia Pacific region, and anticipates higher profitability going forward [50] Other Important Information - The company ended Q3 2022 with a cash balance of $804 million and is evaluating refinancing opportunities for its debt maturities [44][46] - The average booking fee in Q3 2022 was $5.38, reflecting a 13% increase compared to the same period in 2019 [37] - The technology transformation is expected to yield significant cost savings and margin improvements by 2025 [29] Q&A Session Summary Question: Average booking fees outlook and mix between corporate and leisure - Management indicated that average booking fees are currently closer to the lower end of the previously indicated range of $5.30 to $5.55, with opportunities for revenue per booking to increase as business mix improves [53] Question: Free cash flow improvement drivers - Management explained that the fourth quarter typically sees strong free cash flow due to timing of payments, and they expect to be free cash flow positive in 2023 [61][64] Question: Debt refinancing strategy - Management is considering refinancing options opportunistically, focusing on efficiency for shareholders [73] Question: Bookings recovery by region - Management noted that APAC has shown significant recovery, while EMEA has flattened out, and the US is seeing incremental improvements [102] Question: Impact of stronger dollar on long-haul travel - Management observed that the strong dollar has positively influenced US travelers going overseas, but emphasized the overall recovery cycle remains the primary focus [82] Question: Outlook for IT solutions segment - Management expressed confidence in medium to long-term growth within the Airline IT segment, with ongoing discussions with airlines about merchandising and retailing opportunities [88]