Travelport Worldwide Limited Reports First Quarter 2018 Results
Travelport Worldwide Limited Reports First Quarter 2018 Results
LANGLEY, U.K., May 3, 2018 /PRNewswire/ -- Travelport Worldwide Limited (NYSE: TVPT) today announced its financial results for the first quarter ended March 31, 2018.
Key Points
-- Net revenue increased 4% to $678 million
-- Net income increased 6% to $59 million; Adjusted EBITDA decreased 9% to
$154 million
-- Travel Commerce Platform revenue increased 5% to $653 million;
Technology Services revenue decreased 12% to $25 million largely due to
the sale of IGT Solutions Private Ltd. ("IGTS") in April 2017
-- Beyond Air revenue increased 22% to $180 million, contributing 28% of
Travel Commerce Platform revenue (Q1 2017: 24%); eNett net revenue
increased 81% to $74 million
-- Income per share (diluted) increased 4% to $0.47; Adjusted Income per
Share (diluted) decreased 15% to $0.44
-- Net cash provided by operating activities decreased 13% to $83 million;
Free Cash Flow decreased 35% to $46 million
-- Completed comprehensive debt refinancing in March 2018, resulting in
extended maturity dates, diversified funding sources and lower exposure
to variable interest rates
Gordon Wilson, President and CEO of Travelport, commented:
"Travelport has delivered a strong start to the year with 5% Travel Commerce Platform revenue growth and Adjusted EBITDA ahead of our expectations. These results include the well-documented loss of one large travel agency in the Pacific region, which impacted Travel Commerce Platform revenue growth by 5 percentage points and Adjusted EBITDA by 9 percentage points. Our performance, therefore, demonstrates the continued success of our strategy, resulting in Air revenue growth in Asia and Europe in the quarter, as well as significant air market share gains in the latter region. Beyond Air revenue growth accelerated to 22%, largely due to eNett as the business continued to expand share of wallet at several large OTAs in Asia Pacific and Europe.
We continue to invest in innovation to drive growth. In the quarter, this investment supported several new business wins, building on the record level of new business that we signed and onboarded in 2017 and, moreover, enabling us to achieve a significant long-term renewal of our partnership with Priceline.com. Our start to the year, therefore, gives us the confidence to reiterate our financial guidance for full year 2018."
Summary
Three Months
Ended March 31,
---------------
(in $ thousands, except
per share amounts) 2018 2017 Change
----------------------- ---- ---- ------
Net revenue 677,838 650,763 4%
Operating income 77,664 99,716 (22)%
Net income 59,231 55,863 6%
Income per share - diluted $0.47 $0.45 4%
-------------------------- ----- ----- ---
Adjusted EBITDA 154,177 168,553 (9)%
Adjusted Operating Income 93,436 107,241 (13)%
Adjusted Net Income 54,938 64,357 (15)%
Adjusted Income per Share
- diluted $0.44 $0.51 (15)%
------------------------- ----- ----- ----
Net cash provided by
operating activities 83,097 95,022 (13)%
Free Cash Flow 46,434 71,413 (35)%
Cash dividend per share $0.075 $0.075 -
The Company refers to certain non-
GAAP financial measures in this
press release, including Adjusted
EBITDA, Adjusted Operating Income
(Loss), Adjusted Net Income
(Loss), Adjusted Income (Loss) per
Share - diluted, Capital
Expenditures, Net Debt and Free
Cash Flow. Please refer to pages
10 to 13 of this press release for
additional information, including
reconciliations of such non-GAAP
financial measures.
Discussion of Results
Net Revenue
Net revenue is comprised of:
Three Months Ended March 31,
----------------------------
(in $ thousands) 2018 2017 % Change
--------------- ---- ---- --------
Air $472,935 $474,475 -
Beyond Air 179,751 147,585 22
------- ------- ---
Travel Commerce
Platform 652,686 622,060 5
Technology
Services 25,152 28,703 (12)
------ ------ ---
Net revenue $677,838 $650,763 4
======== ======== ===
Net revenue increased by $27 million, or 4%, to $678 million primarily due to growth in Travel Commerce Platform revenue of $31 million, or 5%. Within Travel Commerce Platform revenue, Beyond Air revenue increased by $32 million, or 22%, offset by a decrease in Air revenue of $2 million. This increase in Beyond Air revenue was driven by an increase in eNett net revenue of 81% to $74 million primarily due to an increase in the volume of payments settled with existing customers. The decrease in Air revenue of $2 million includes the impact of the loss of a large travel agency in the Pacific region, offset by growth in other regions. Technology Services revenue decreased by $4 million, or 12%, primarily due to the sale of IGTS in April 2017.
The table below sets forth Travel Commerce Platform revenue by region:
Three Months Ended March 31,
----------------------------
(in $ thousands) 2018 2017 % Change
--------------- ---- ---- --------
Asia Pacific $141,551 $151,015 (6)
Europe 244,442 202,416 21
Latin America and Canada 29,859 28,782 4
Middle East and Africa 79,106 83,553 (5)
------ ------ ---
International 494,958 465,766 6
United States 157,728 156,294 1
------- ------- ---
Travel Commerce Platform $652,686 $622,060 5
======== ======== ===
The table below sets forth Travel Commerce Platform Reported Segments and global RevPas by region:
Segments (in thousands)
Three Months Ended March 31,
----------------------------
2018 2017 % Change
---- ---- --------
Asia Pacific 16,168 19,208 (16)
Europe 25,647 23,497 9
Latin America and Canada 4,710 4,626 2
Middle East and Africa 9,628 9,476 2
----- ----- ---
International 56,153 56,807 (1)
United States 36,168 36,390 (1)
------ ------ ---
Travel Commerce Platform 92,321 93,197 (1)
====== ====== ===
RevPas (in $)
Three Months Ended March 31,
----------------------------
2018 2017 % Change
---- ---- --------
International $8.81 $8.20 8
United States $4.36 $4.30 1
Travel Commerce Platform $7.07 $6.67 6
Reported Segments decreased marginally by 1 million, or 1%, during the three months ended March 31, 2018. Travel Commerce Platform RevPas increased 6% to $7.07, primarily driving a $36 million increase in Travel Commerce Platform revenue. International RevPas increased 8% to $8.81, and United States RevPas increased 1% to $4.36.
International Travel Commerce Platform revenue increased by $29 million, or 6%, with Europe contributing a majority of this increase, mainly due to:
-- An increase in RevPas of 11% and an increase in Reported Segments of 9%
-- Growth in payment solutions
Travel Commerce Platform revenue decreased in (i) Asia Pacific by $9 million, or 6%, primarily due to the loss of a large travel agency in the Pacific region and (ii) the Middle East and Africa by $4 million, or 5%, primarily due to $9 million of revenue deferred in previous years but recognized in 2017.
Operating Income
Operating income decreased by $22 million, or 22%, to $78 million mainly due to the following:
-- $40 million increase in cost of revenue primarily due to incremental
costs from the payment solutions business and an increase in travel
distribution cost per segment driven by pricing, mix and unfavorable
foreign exchange movements.
-- $14 million increase in selling, general and administrative expenses
("SG&A") primarily due to an increase in workforce expense; offset by
-- $27 million increase in net revenue
-- $4 million decrease in depreciation and amortization on property and
equipment
Net Income
Net income increased by $3 million, or 6%, to $59 million mainly due to the following:
-- $15 million benefit from a decrease in interest expense, net, resulting
from favorable unrealized gains on interest rate derivative contracts, a
reduced debt balance and lower interest rate margins
-- $9 million lower income tax expense following the benefit realized from
the release of the U.K. valuation allowance on deferred tax assets;
offset by
-- $22 million decrease in operating income
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased by $12 million, or 13%, to $83 million, primarily due to lower operating income, an increase in customer loyalty payments and income tax payments.
Adjusted EBITDA
Adjusted EBITDA decreased by $14 million, or 9%, to $154 million mainly due to the following:
-- $29 million increase within cost of revenue (excluding an $11 million
increase related to items that are excluded from net income to determine
Adjusted EBITDA) primarily due to incremental costs from the payment
solutions business and an increase in travel distribution cost per
segment driven by pricing, mix and unfavorable foreign exchange
movements
-- $14 million increase in SG&A (excluding a less than $1 million decrease
related to non-core corporate costs that are excluded from net income to
determine Adjusted EBITDA); offset by
-- $27 million increase in net revenue
Adjusted Net Income
Adjusted Net Income decreased by $9 million, or 15%, to $55 million due to the following:
-- $14 million decrease in Adjusted EBITDA; offset by
-- $5 million lower interest expense, net (excluding a $10 million increase
related to favorable movement in interest rate derivative contracts,
which are excluded to determine Adjusted Net Income) due to the reduced
outstanding balance of term loans and lower interest rate margins
Free Cash Flow
Free Cash Flow decreased by $25 million, or 35%, to a cash inflow of $46 million due to a $12 million decrease in net cash provided by operating activities and a $13 million increase in payments made for additions to property and equipment.
Net Debt
Net Debt decreased from $2,108 million as of December 31, 2017 to $2,096 million as of March 31, 2018 and is comprised of $2,223 million in total debt less $127 million in cash and cash equivalents. The decrease in total debt of $7 million reflects (i) $2,154 million of repayments of principal amount of term loans under the 2014 senior secured credit agreement, (ii) $1,400 million of borrowings under the 2018 senior secured credit agreement and (iii) the $745 million issuance of senior secured notes in March 2018, together with a $5 million increase in cash and cash equivalents balance as of March 31, 2018 compared to December 31, 2017, resulted in a decrease of $12 million in the Net Debt balance.
Debt Refinancing
In March 2018, we successfully completed a comprehensive debt refinancing. The refinancing, which resulted in no additional indebtedness, provides us with extended maturity dates, diversified funding sources and a capital structure that has lower exposure to variable interest rates.
We borrowed $1,400 million aggregate principal amount of term loans, maturing in March 2025, at a discount of 0.50%. The interest rate secured on these term loans is LIBOR plus 2.50%, a reduction of 0.25% compared to the interest rate on our previous term loans. In addition, we issued $745 million principal amount of senior secured notes due in March 2026, with an interest rate of 6.00%.
We used the proceeds from these borrowings, together with cash on the balance sheet, to repay the outstanding balance remaining under our previous term loans and to pay related transaction expenses and fees.
The refinancing does not change our financial guidance ranges for 2018 (see below).
Full Year 2018 Financial Guidance
The following forward-looking statements, as well as those made elsewhere within this press release, reflect expectations as of May 3, 2018. We assume no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this release and in Travelport's quarterly and annual Securities and Exchange Commission ("SEC") filings and/or furnishings, which are available on the SEC's website at www.sec.gov.
Our guidance for the full year 2018 is unchanged, as detailed below:
(in $ millions, except per
share amounts) FY 2018 Growth
Guidance
Net revenue $2,535 - $2,585 4% - 6%
Adjusted EBITDA (1) $585 - $605 (1)% - 3%
Adjusted Net Income (1) $170 - $185 (6)% - 2%
Adjusted Income per Share -
diluted (2) $1.34 - $1.46 (7)% - 1%
Free Cash Flow (3) $210 - $230 5% - 15%
----------------- ----------- -------
(1) Adjusted EBITDA guidance consists of
Adjusted Net Income guidance
excluding expected depreciation and
amortization of property and
equipment and expected amortization
of customer loyalty payments of
$250 million to $260 million,
expected interest expense, net
(excluding the impact of unrealized
gain (loss) on interest rate
derivative instruments) of
approximately $110 million and
expected related income taxes of
approximately $55 million.
Adjusted Net Income guidance
excludes the expected impact of
amortization of acquired intangible
assets of approximately $40
million, loss on early
extinguishment of debt of $28
million, expected equity-based
compensation and related taxes and
corporate and restructuring costs
of $60 million to $70 million,
income from discontinued operations
of $28 million related to the
release of an indemnity provision
for liabilities accrued upon the
sale of Gullivers Travel Associates
in 2011 and an expected income tax
benefit related to the adjustments
above of $10 million to $15
million. We are unable to
reconcile Adjusted EBITDA and
Adjusted Net Income to net income
(loss) determined under U.S. GAAP
due to the unavailability of
information required to reasonably
predict certain reconciling items
such as loss on early
extinguishment of debt, impairment
of long-lived assets, unrealized
gains or losses on foreign currency
and interest rate derivative
instruments, and the related tax
impact of such adjustments along
with other tax adjustments.
(2) Adjusted Income per Share - diluted
guidance consists of Adjusted Net
Income divided by our expected
weighted average number of dilutive
common shares for 2018 of
approximately 127 million.
(3) Free Cash Flow guidance reflects
expected net cash provided by
operating activities for 2018 of
$320 million to $350 million less
expected cash additions to property
and equipment of $110 million to
$120 million.
Our guidance above incorporates the expected impact of the adoption of the new revenue recognition standard on a modified retrospective basis. The adoption of this standard did not have a material impact on our consolidated condensed financial statements for the three months ended March 31, 2018. In addition, our guidance assumes spot foreign exchange rates as of April 26, 2018, together with the impact of foreign exchange rate hedges undertaken during 2017 as part of our rolling hedging program.
Our virtual payments business, eNett, has enjoyed a strong start to the year, with net revenue growth of 81% in the first quarter of 2018 and a continuation of this trajectory in April. As such, we will formally re-evaluate our net revenue guidance for eNett after the conclusion of the second quarter of trading in 2018. Our guidance is subject to exchange rate movements given that eNett's net revenue is largely denominated in currencies other than the U.S. dollar.
Impact of Foreign Exchange Movements
Our results of operations are reported in U.S. dollars. With approximately 90% of our net revenue denominated in U.S. dollars in the first quarter of 2018, changes in foreign exchange rates have a low impact on our net revenue. eNett, which represented approximately 11% of our net revenue in the first quarter of 2018, is the largest source of non-U.S. dollar net revenue.
Of our costs and expenses in the first quarter of 2018, excluding depreciation on property and equipment, amortization of customer loyalty payments, amortization of acquired intangible assets and non-core corporate costs, approximately 60% were denominated in U.S. dollars.
As part of our rolling hedging program, we employ foreign exchange forward contracts to hedge a portion of our net exposure to changes in foreign exchange rates, particularly against the British pound, the Euro and the Australian dollar, which are the main non-U.S. dollar components of our costs and expenses. While the year-on-year net impact of foreign exchange rate movements on Adjusted EBITDA for the first quarter of 2018 was adverse, but immaterial, it includes the benefit from realized foreign exchange rate hedges undertaken during 2017.
Dividend
On May 2, 2018, Travelport's Board of Directors declared a cash dividend of $0.075 per common share for the first quarter of 2018. The dividend will be payable on June 21, 2018 to shareholders on record as at market close on June 7, 2018.
Conference Call
The Company's first quarter 2018 earnings conference call will be held later today (on May 3, 2018) beginning at 8:30 a.m. (Eastern Time). A live audiocast of the presentation and accompanying slides will be available via the Investor Center section of Travelport's website at ir.travelport.com. Please visit the site or click the following link to pre-register: https://www.webcaster4.com/Webcast/Page/1138/25202. A replay of the audiocast will be available on the Investor Center section of Travelport's website shortly after the end of the earnings call, where it will remain for one year thereafter.
Contacts
For further information, please contact:
Investors:
Majid Nazir
Head of Investor Relations
Tel: +44 (0)1753 288 857
majid.nazir@travelport.com
Media:
Julian Eccles
Vice President, PR and Corporate Communications
Tel: +44 (0)7720 409 374
julian.eccles@travelport.com
About Travelport (www.travelport.com)
Travelport (NYSE: TVPT) is the technology company that makes the experience of buying and managing travel continually better. It operates a travel commerce platform providing distribution, technology, payment and other solutions for the global travel and tourism industry. The Company facilitates travel commerce by connecting the world's leading travel providers with online and offline travel buyers in a proprietary business-to-business (B2B) travel platform.
Travelport has a leadership position in airline merchandising, hotel content and distribution, car rental, mobile commerce and B2B payment solutions. The Company also provides critical IT services to airlines, such as shopping, ticketing, departure control and other solutions. With net revenue of over $2.4 billion in 2017, Travelport is headquartered in Langley, U.K., has over 4,000 employees and is represented in approximately 180 countries and territories.
Forward-Looking Statements
Certain statements in this press release, including outlook and financial guidance, constitute "forward-looking statements" that involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Statements preceded by, followed by or that otherwise include the words "believes", "expects", "anticipates", "intends", "projects", "estimates", "plans", "may increase", "may fluctuate" and similar expressions or future or conditional verbs such as "will", "should", "would", "may" and "could" are generally forward-looking in nature and not historical facts. Any statements that refer to expectations or other characterizations of future events, circumstances or results are forward-looking statements.
Various risks that could cause future results to differ from those expressed by the forward-looking statements included in this press release include, but are not limited to: factors affecting the level of travel activity, particularly air travel volume, including security concerns, pandemics, general economic conditions, natural disasters and other disruptions; general economic and business conditions in the markets in which we operate, including fluctuations in currencies, particularly in the U.S. dollar, and the economic conditions in the Eurozone; pricing, regulatory and other trends in the travel industry; our ability to obtain travel provider inventory from travel providers, such as airlines, hotels, car rental companies, cruise lines and other travel providers; our ability to develop and deliver products and services that are valuable to travel agencies and travel providers and generate new revenue streams; maintenance and protection of our information technology and intellectual property; the impact on travel provider capacity and inventory resulting from consolidation of the airline industry; the impact our outstanding indebtedness may have on the way we operate our business; our ability to achieve expected cost savings from our efforts to improve operational and technology efficiency, including through our consolidation of multiple technology vendors and locations and the centralization of activities; our ability to maintain existing relationships with travel agencies and to enter into new relationships on acceptable financial and other terms; and our ability to grow adjacencies, such as payment and mobile solutions; and the impact on business conditions worldwide as a result of political decisions, including the United Kingdom's decision to leave the European Union. Forward-looking information is based on information available at the time and/or management's good faith belief with respect to future events and is subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in the statements. These and other potential risks and uncertainties that could cause actual results to differ are more fully detailed under the caption "Risk Factors" in our Annual Report on Form 10-K filed with the Securities and Exchange Commission ("SEC") on February 20, 2018, and available on the SEC's website at www.sec.gov.
Other unknown or unpredictable factors could also have material adverse effects on our performance or achievements. In light of these risks, uncertainties, assumptions and factors, the forward-looking events discussed in this press release may not occur. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date stated, or if no date is stated, as of the date of this press release. Except to the extent required by applicable securities laws, the Company undertakes no obligation to release any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.
This press release includes certain non-GAAP financial measures as defined under SEC rules. As required by SEC rules, important information regarding such measures is contained below.
TRAVELPORT WORLDWIDE LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
(in $ thousands, except share
data) 2018 2017
----------------------------- ---- ----
Net revenue $677,838 $650,763
-------- --------
Costs and expenses
Cost of revenue 426,397 386,837
Selling, general and
administrative 125,200 111,301
Depreciation and amortization 48,577 52,909
------ ------
Total costs and expenses 600,174 551,047
------- -------
Operating income 77,664 99,716
Interest expense, net (14,935) (30,275)
Loss on early extinguishment of
debt (27,661) -
Other expense (93) (846)
--- ----
Income before income taxes 34,975 68,595
Provision for income taxes (3,491) (12,732)
------ -------
Net income from continuing
operations 31,484 55,863
Income from discontinued
operations, net of tax 27,747 -
------ ---
Net income 59,231 55,863
Net (income) loss attributable
to non-controlling interest in
subsidiaries (402) 243
---- ---
Net income attributable to the
Company $58,829 $56,106
======= =======
Income per share - Basic:
Income per share - continuing
operations $0.25 $0.45
Income per share - discontinued
operations 0.22 -
---- ---
Basic income per share $0.47 $0.45
===== =====
Weighted average common shares
outstanding - Basic 125,428,257 124,081,175
=========== ===========
Income per share - Diluted:
Income per share - continuing
operations $0.25 $0.45
Income per share - discontinued
operations 0.22 -
---- ---
Diluted income per share $0.47 $0.45
===== =====
Weighted average common shares
outstanding - Diluted 126,131,201 125,516,945
=========== ===========
Cash dividends declared per
common share $0.075 $0.075
TRAVELPORT WORLDWIDE LIMITED
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
March 31, December 31,
(in $ thousands, except share data) 2018 2017
---------------------------------- ---- ----
Assets
Current assets:
Cash and cash equivalents $127,165 $122,039
Accounts receivable (net of allowances for doubtful accounts of $9,566 and $10,245, 270,663 206,524
respectively)
Other current assets 142,526 109,724
------- -------
Total current assets 540,354 438,287
Property and equipment, net 435,354 431,741
Goodwill 1,090,515 1,089,590
Trademarks and tradenames 313,097 313,097
Other intangible assets, net 509,700 496,180
Deferred income taxes 22,864 12,796
Other non-current assets 77,358 76,808
------ ------
Total assets $2,989,242 $2,858,499
========== ==========
Liabilities and equity
Current liabilities:
Accounts payable $80,147 $73,278
Accrued expenses and other current liabilities 576,770 509,068
Current portion of long-term debt 54,089 64,291
------ ------
Total current liabilities 711,006 646,637
Long-term debt 2,169,035 2,165,722
Deferred income taxes 35,307 34,899
Other non-current liabilities 200,890 203,562
------- -------
Total liabilities 3,116,238 3,050,820
--------- ---------
Commitments and contingencies
Shareholders' equity (deficit):
Preference shares ($0.0025 par value; 225,000,000 shares authorized; no shares issued and - -
outstanding as of March 31, 2018 and December 31, 2017)
Common shares ($0.0025 par value; 560,000,000 shares authorized; 127,260,153 shares and 318 317
126,967,010 shares issued; 125,630,319 shares and 125,346,613 shares outstanding as of
March 31, 2018 and December 31, 2017, respectively)
Additional paid in capital 2,695,766 2,700,133
Treasury shares, at cost 1,629,834 shares and 1,620,397 shares as of March 31, 2018 and (24,867) (24,755)
December 31, 2017, respectively)
Accumulated deficit (2,662,560) (2,722,375)
Accumulated other comprehensive loss (148,878) (155,621)
-------- --------
Total shareholders' equity (deficit) (140,221) (202,301)
Equity attributable to non-controlling interest in subsidiaries 13,225 9,980
------ -----
Total equity (deficit) (126,996) (192,321)
-------- --------
Total liabilities and equity $2,989,242 $2,858,499
========== ==========
TRAVELPORT WORLDWIDE LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Three Months
Ended Ended
March 31, March 31,
(in $ thousands) 2018 2017
--------------- ---- ----
Operating activities
Net income $59,231 $55,863
Income from discontinued operations, net of tax (27,747) -
------- ---
Net income from continuing operations 31,484 55,863
Adjustments to reconcile net income from continuing operations to net cash provided by
operating activities:
Depreciation and amortization 48,577 52,909
Amortization of customer loyalty payments 22,343 18,795
Impairment of long-lived assets 491 685
Amortization of debt finance costs and debt discount 1,890 2,673
Loss on early extinguishment of debt 27,661 -
Unrealized loss (gain) on foreign exchange derivative instruments 242 (7,701)
Unrealized gain on interest rate derivative instruments (10,430) (226)
Equity-based compensation 5,056 8,006
Deferred income taxes (9,836) 152
Customer loyalty payments (27,366) (16,755)
Pension liability contribution (338) (595)
Changes in assets and liabilities:
Accounts receivable (62,768) (49,198)
Other current assets (8,057) (4,075)
Accounts payable, accrued expenses and other current liabilities 53,750 37,449
Other 10,398 (2,960)
------ ------
Net cash provided by operating activities of continuing operations $83,097 $95,022
------- -------
Investing activities
Property and equipment additions $(36,663) $(23,609)
-------- --------
Net cash used in investing activities $(36,663) $(23,609)
-------- --------
Financing activities
Proceeds from term loans $1,400,000 $ -
Proceeds from issuance of senior secured notes 745,000 -
Repayment of term loans (2,153,750) (5,938)
Repayment of capital lease obligations and other indebtedness (8,000) (9,511)
Debt finance costs and lender fees (17,381) -
Dividend to shareholders (9,427) (9,306)
Proceeds from share issuance under employee share purchase plan and stock options 2,088 632
Treasury share purchase related to vesting of equity awards (235) (128)
---- ----
Net cash used in financing activities $(41,705) $(24,251)
-------- --------
Effect of changes in exchange rates on cash and cash equivalents 397 307
--- ---
Net increase in cash and cash equivalents 5,126 47,469
Cash and cash equivalents at beginning of period 122,039 139,938
------- -------
Cash and cash equivalents at end of period $127,165 $187,407
======== ========
Supplemental disclosures of cash flow information
Interest payments, net of capitalized interest $31,530 $30,126
Income tax payments, net of refunds 11,902 3,905
Non-cash capital lease additions 2,164 1,651
Non-cash purchase of property and equipment 4,220 -
TRAVELPORT WORLDWIDE LIMITED
NON-GAAP MEASURES
(unaudited)
Reconciliation of Net Income
to Adjusted Net Income, Three Months Ended
Adjusted Operating Income and
Adjusted EBITDA March 31,
---------
(in $ thousands) 2018 2017
--------------- ---- ----
Net income $59,231 $55,863
Adjustments:
Amortization of acquired
intangible assets 10,166 10,392
Loss on early extinguishment
of debt 27,661 -
Equity-based compensation and
related taxes 4,833 7,786
Corporate and restructuring
costs 1,215 5,656
Impairment of long-lived
assets 491 685
Income from discontinued
operations (27,747) -
Other - non cash(1) (11,363) (16,374)
Tax adjustments (9,549) 349
------ ---
Adjusted Net Income 54,938 64,357
Adjustments:
Interest expense, net(2) 25,365 30,501
Other expense 93 -
Remaining provision for income
taxes 13,040 12,383
------ ------
Adjusted Operating Income 93,436 107,241
Adjustments:
Depreciation and amortization
of property and equipment 38,398 42,517
Amortization of customer
loyalty payments 22,343 18,795
------ ------
Adjusted EBITDA $154,177 $168,553
======== ========
(1) Other-non cash includes (i)
unrealized gains on foreign
currency derivatives contracts
of $1 million and $8 million
for the three months ended
March 31, 2018 and 2017,
respectively, (ii) unrealized
gains on interest rate
derivative contracts of $10
million and less than $1
million for the three months
ended March 31, 2018 and 2017,
respectively, (iii) $8 million
related to revenue deferred in
previous years, for the three
months ended March 31, 2017 and
(iv) other gains of $1 million
for the three months ended
March 31, 2017.
(2) Interest expense, net, excludes
the impact of unrealized gains
on interest rate derivative of
$10 million and less than $1
million for the three months
ended March 31, 2018 and 2017,
respectively, which is included
within "Other - non cash."
Reconciliation of net
cash provided by
operating Three Months Ended
activities to Free Cash
Flow: March 31,
---------
(in $ thousands) 2018 2017
--------------- ---- ----
Net cash provided by
operating activities $83,097 $95,022
Less: capital
expenditures on
property and equipment
additions (36,663) (23,609)
------- -------
Free Cash flow $46,434 $71,413
======= =======
Reconciliation of Net
Debt March 31, December 31,
(in $ thousands) 2018 2017
--------------- ---- ----
Current Portion of
long-term debt $54,089 $64,291
Non-current portion of
long-term debt 2,169,035 2,165,722
--------- ---------
Total debt 2,223,124 2,230,013
Less: cash and cash
equivalents (127,165) (122,039)
-------- --------
Net Debt $2,095,959 $2,107,974
========== ==========
TRAVELPORT WORLDWIDE LIMITED
NON-GAAP MEASURES
(unaudited)
Reconciliation of Income per Share - Diluted to Three Months Ended
Adjusted Income per Share - Diluted March 31,
---------
(in $) 2018 2017
----- ---- ----
Income per share - diluted $0.47 $0.45
Per share adjustments to net income to determine Adjusted Income per Share - diluted (0.03) 0.06
----- ----
Adjusted Income per Share - diluted $0.44 $0.51
===== =====
Three Months Ended
Reconciliation of Capital Expenditures March 31,
---------
(in $ thousands) 2018 2017
--------------- ---- ----
Property and equipment additions $36,663 $23,609
Repayment of capital lease obligations and other indebtedness 8,000 9,511
----- -----
Capital Expenditures $44,663 $33,120
======= =======
Other Metrics
Three Months Ended
March 31,
---------
(in thousands, except where specified) 2018 2017 % Change
------------------------------------- ---- ---- --------
Transaction value processed on the Travel Commerce Platform $23,254,776 $20,553,737 13
Percent of Air segment revenue from away bookings 69% 67% 2.6 ppts
Hotel room nights sold 16,563 16,250 2
Car rental days sold 24,683 22,242 11
Hospitality segments per 100 airline tickets issued 41 41 (2)
TRAVELPORT WORLDWIDE LIMITED
DEFINITIONS
(unaudited)
Definitions
Adjusted EBITDA is defined as Adjusted Net Income (Loss) excluding depreciation and amortization of property and equipment, amortization of customer loyalty payments, interest expense, net (excluding unrealized gains (losses) on interest rate derivative instruments), and related income taxes.
Adjusted Income (Loss) per Share - Diluted is defined as Adjusted Net Income (Loss) for the period divided by the weighted average number of dilutive common shares.
Adjusted Net Income (Loss) is defined as net income (loss) from continuing operations excluding amortization of acquired intangible assets, gain (loss) on early extinguishment of debt, and items that are excluded under our debt covenants, such as, non-cash equity-based compensation, certain corporate and restructuring costs, non-cash impairment of long-lived assets, certain litigation and related costs, and other non-cash items such as unrealized foreign currency gains (losses) on earnings hedges, and unrealized gains (losses) on interest rate derivative instruments, along with any income tax related to these exclusions. Tax impacts not related to core operations have also been excluded.
Adjusted Operating Income (Loss) is defined as Adjusted EBITDA less depreciation and amortization of property and equipment, amortization of customer loyalty payments and components of net periodic pension and post-retirement benefit costs other than service cost.
Capital Expenditures is defined as cash paid for property and equipment plus repayments in relation to capital leases and other indebtedness.
Customer Loyalty Payments are payments made to travel agencies or travel providers with an objective of increasing the number of travel bookings using the Company's Travel Commerce Platform and to improve the travel agencies or travel providers' loyalty, which are instrumented through agreements with a term over a year. Under the contractual terms, the travel agency or travel provider commits to achieve certain economic objectives for the Company. Such costs are specifically identifiable to individual contracts with travel agencies or travel providers, which have determinable contractual lives. Due to the contractual nature of the payments, the Company believes that such assets are appropriately classified as intangible assets.
Free Cash Flow is defined as net cash provided by (used in) operating activities of continuing operations, less cash used for additions to property and equipment.
Net Debt is defined as total debt comprising of current and non-current portion of long-term debt minus cash and cash equivalents.
Reported Segments means travel provider revenue generating units (net of cancellations) sold by the Company's travel agency network, geographically presented by region based upon the point of sale location.
Travel Commerce Platform RevPas ("RevPas") represents Travel Commerce Platform revenue per segment and is computed by dividing Travel Commerce Platform revenue by the total number of Reported Segments.
TRAVELPORT WORLDWIDE LIMITED
NON-GAAP FINANCIAL MEASURES
(unaudited)
Non-GAAP Financial Measures
We utilize non-GAAP (or adjusted) financial measures, including Adjusted EBITDA, Adjusted Operating Income (Loss), Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share - diluted, to provide useful supplemental information to assist investors in understanding and assessing our performance and financial results on the same basis that management uses internally. These adjusted financial measures provide investors greater transparency with respect to the key metrics used by management to evaluate our core operations, forecast future results, determine future capital investment allocations and understand business trends within the industry. Adjusted Operating Income (Loss) and Adjusted Net Income (Loss) per Share - diluted metrics are also used by our Board of Directors to determine incentive compensation for future periods. Management believes the adjusted financial measures assist investors in the comparison of financial results between periods as such measures exclude certain items that management believes are not reflective of our core operating performance consistent with how management reviews the business.
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Share - diluted, Adjusted Operating Income and Adjusted EBITDA are supplemental measures of operating performance that do not represent, and should not be considered as, alternatives to net income (loss), or net income (loss) per share-diluted, as determined under U.S. GAAP. In addition, these measures may not be comparable to similarly named measures used by other companies.
We believe Adjusted Income (Loss) per Share - diluted is a useful measure for our investors as it represents, on a per share basis, our consolidated results, taking into account depreciation and amortization on property and equipment and amortization of customer loyalty payments, as well as other items which are not allocated to the operating businesses such as interest expense (excluding unrealized gains (losses) on interest rate derivative instruments), certain components of net periodic pension and post-retirement benefit costs and related income taxes but excluding the effects of certain expenses not directly tied to the core operations of our businesses. Adjusted Income (Loss) per Share - diluted has similar limitations as Adjusted Net Income (Loss), Adjusted Operating Income (Loss) and Adjusted EBITDA and may not be comparable to similarly named measures used by other companies. In addition, Adjusted Net Income (Loss) does not include all items that affect our net income (loss) and net income (loss) per share for the period. Therefore, we believe it is important to evaluate these measures along with our consolidated condensed statements of operations.
We believe our important measure of liquidity is Free Cash Flow. This measure is useful indicator of our ability to generate cash to meet our liquidity demands. We use Free Cash Flow to conduct and evaluate our operating liquidity. We believe it typically presents an alternate measure of cash flows since purchases of property and equipment are a necessary component of our ongoing operations and provides useful information regarding how cash provided by operating activities compares to the property and equipment investments required to maintain and grow our platform. We believe it provides investors with an understanding of how assets are performing and measures management's effectiveness in managing cash. Free Cash Flow is non-GAAP measure and may not be comparable to similarly named measures used by other companies. This measure has limitation in that it does not represent the total increase or decrease in the cash balance for the period, nor do they represent residual cash flow for discretionary expenditures. This measure should not be considered as measure of liquidity or cash flows from operations as determined under U.S. GAAP.
We use Capital Expenditures to determine our total cash spent on acquisition of property and equipment and cash repayment of capital lease obligation and other indebtedness. We believe this measure provides management and investors an understanding of total capital invested in the development of our platform. Capital Expenditure is a non-GAAP measure and may not be comparable to similarly named measures used by other entities. This measure has limitation in that it aggregates cash flows from investing and financing activities as determined under U.S. GAAP.
Management uses Net Debt to review our overall liquidity, financial flexibility, capital structure and leverage. Further, we believe, certain debt rating agencies, creditors and credit analysts monitor our Net Debt as part of their assessment of our business. Net Debt is not a measurement of our indebtedness under U.S. GAAP and should not be considered in isolation or as alternative to assess our total debt or any other measures derived in accordance with U.S. GAAP.
These non-GAAP financial measures have limitations as analytical tools and should not be considered in isolation or as a substitute for analysis of Travelport's results as reported under U.S. GAAP.
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SOURCE Travelport Worldwide Limited
