Sabre Corporation — Q3 2021 Form 10-Q
Reporting period: Three and nine months ended September 30, 2021. Dollar amounts are in millions unless otherwise noted. Sabre provides travel distribution and technology through Travel Solutions and hotel software through Hospitality Solutions. Results remained materially affected by COVID-19, although travel volumes improved year over year.
Financial performance and position
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $441.1 | $278.4 | $1,188.2 | $1,020.4 |
| Operating loss | $(156.7) | $(233.0) | $(539.6) | $(768.5) |
| Net loss attributable to Sabre | $(235.2) | $(307.4) | $(741.8) | $(962.7) |
| Net loss attributable to common stockholders | $(240.6) | $(309.7) | $(758.0) | $(964.9) |
| Basic and diluted loss per share | $(0.75) | $(1.06) | $(2.37) | $(3.44) |
- Revenue and segments: Q3 revenue increased 58%. Travel Solutions revenue rose 65% to $390.4 million, and Hospitality Solutions rose 23% to $55.2 million. For the nine months, revenue increased 16%, with Travel Solutions up 17% and Hospitality Solutions up 11%.
- Volumes: Q3 direct billable bookings increased 169% to 53.5 million, passengers boarded rose 103% to 115.6 million, and hotel reservation transactions increased 39% to 26.7 million. For nine months, those measures rose 52%, 21%, and 33%, respectively.
- Profitability: Q3 adjusted operating loss, a non-GAAP measure, was $102.6 million versus $196.7 million; adjusted EBITDA was negative $54.9 million versus negative $123.8 million. Nine-month adjusted EBITDA was negative $234.9 million versus negative $347.0 million. These adjusted measures exclude specified expenses and are not substitutes for GAAP results.
- Cash flow: Nine-month operating cash use was $408.2 million, improving from $587.1 million used in 2020. Capital expenditures were $30.4 million, making reported free cash flow negative $438.6 million versus negative $635.3 million.
- Liquidity: Cash and cash equivalents were $1,023.8 million at September 30, down from $1,499.7 million at year-end 2020; restricted cash was $21.0 million. The revolving credit commitments had been terminated, so there was no revolver availability. Management said it believed available resources would fund liquidity needs for at least the next twelve months, while emphasizing uncertainty and continued monitoring.
- Debt and equity: Debt totaled approximately $4.76 billion net of issuance costs and discounts, compared with $4.74 billion at year-end 2020. Stockholders’ equity was negative $355.1 million, versus positive $285.2 million at year-end. Interest expense was $65.5 million in Q3 and $193.8 million for nine months. The Q3 debt refinancing generated a $13.1 million extinguishment loss.
Changes, outlook, and significant items
- Improved bookings drove revenue growth, but the recovery remained uneven: domestic bookings exceeded international bookings, weighing on revenue mix, while higher transaction volumes increased travel-agency incentive consideration costs.
- Management stated that COVID-19 continued to materially harm results and liquidity and could do so beyond the pandemic’s containment. No specific financial guidance was provided in the filing. Management cited travel volumes, customer solvency, cancellations, and the pandemic’s duration as key uncertainties.
- On July 12, 2021, Sabre refinanced certain term loans and repaid and terminated its revolver commitments. The new term facilities mature in December 2027; the refinancing removed the prior $300 million minimum-liquidity covenant and leverage-ratio maintenance requirement. Sabre reported compliance with its remaining covenants.
- Sabre established a $300 million at-the-market common-stock offering program; no shares had been sold under it by September 30. The 6.50% mandatory convertible preferred stock generated $16.3 million in cash dividends during the first nine months.
- Subsequent event: On October 28, 2021, Sabre announced an agreement to sell its AirCentre airline operations portfolio for $392.5 million, subject to approvals and other closing conditions, with closing expected in Q1 2022. The filing provides no assurance the transaction will close on those terms or at all.
- Contingencies and risks: The US Airways antitrust case was scheduled for trial in April 2022; Sabre had no accrual for that matter. American Airlines’ request for a temporary injunction was denied on October 27, 2021, but the contract dispute continued. The DOJ investigation remained open. Indian tax litigation could result in approximately $45 million of taxes, interest, and penalties if the authorities prevailed; no liability was recorded. Sabre also disclosed ongoing cyber and data-security exposure, including potentially material costs that could not yet be estimated.
Investor verification points
- Track travel bookings and international versus domestic mix, including the effect of the OTA’s shift of North American volume to a competitor.
- Assess whether revenue recovery can outpace incentive consideration, technology, and other operating costs, and whether adjusted loss improvements translate into GAAP profitability.
- Monitor operating cash burn, cash balances, debt service and refinancing terms, and any use of the ATM equity program.
- Verify progress and proceeds from the AirCentre sale, including closing conditions and transition-service obligations.
- Follow the American Airlines and US Airways disputes, DOJ investigation, Indian tax proceedings, and cyber-related claims and costs.