Related to Forward-Looking Statements Related to Non-GAAP Financial Information

Transcription

1 Q Earnings

2 Disclaimers Related to Forward-Looking Statements Certain items in this presentation and in today s discussion, including matters relating to revenue, net income (loss), and percentages or calculations using these measures, capital structure, future business opportunities, plans, prospects or growth rates and other financial measurements and non-financial statements relating to future periods, constitute forward-looking statements. These forward-looking statements are based on management s current views with respect to future results and are subject to risks and uncertainties. These statements are not guarantees of future performance. Actual results may differ materially from those contemplated by forward-looking statements. Travelport Worldwide Limited (the Company or Travelport ) refers you to our periodic reports and filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 20, 2018, and our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 3, 2018, for the quarter ended June 30, 2018, filed with the SEC on August 2, 2018, and for the quarter ended September 30, 2018, to be filed with the SEC on November 1, 2018 for additional discussion of these risks and uncertainties, as well as a cautionary statement regarding forward-looking statements. Forward-looking statements made during this presentation speak only as of today s date. Travelport expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Related to Non-GAAP Financial Information Travelport analyzes its performance using Adjusted EBITDA, Adjusted Operating Income/(Loss), Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share Diluted, Capital Expenditures, Net Debt and Free Cash Flow, which are non-gaap financial measures. Such measures may not be comparable to similarly named measures used by other companies. We utilize these measures 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 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. 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 EBITDA is the primary metric used to evaluate and understand our underlying operations and business trends, forecasting and determining future capital investment allocations. Adjusted Operating Income/(Loss) and Adjusted Income/(Loss) per Share Diluted are also used by the Board of Directors to determine incentive compensation for future periods. Capital Expenditures, which impact depreciation and amortization, interest expense and income tax expense, are reviewed separately by management. These non-gaap measures are defined in the Definitions appendix of this presentation and discussed and reconciled to GAAP measures in our quarterly and annual filings with the SEC. Due to rounding, numberspresented throughoutthisdocumentmaynot add up preciselyto the totalsprovidedand percentagesmaynot preciselyreflecttherounded figures. This documentsupports thecompany s Q Results Presentation, a recordingof whichwill be availableon Travelport sinvestor relationswebsite shortlyafterthe livepresentationon November1,

3 Gordon Wilson President and Chief Executive Officer

4 Q key point summary Net revenue +2%, Adjusted EBITDA +2% and Adjusted Net Income +77% Growth driven by Beyond Air; another excellent quarter for enett Beyond Air +14% (including enett +58%), helping overcome market and customer headwinds in 2H Continue to deliver new business for future growth Significant content additions and key new innovations driving new business in fast-growing regions and business channels Remain on track to deliver within our financial guidance ranges for FY

5 Q highlights Expanded content and merchandising leadership Data, agency effectiveness and innovation 2% $1.34bn >270 airlines live with merchandising, including fares families, branded fares, ancillaries and tailored offers Became first GDS operator to transact bookings using NDC 44% Developed IBM Travel Manager, an industry-first AI platform to help businesses manage travel spend Expanded capabilities of award-winning point-of-sale Smartpoint with the integration of our Hotel Retail tool enett consistently delivering significant operational and financial benefits to its customer base Focusing on next-gen technology Caching and AI/Machine Learning platforms continue to drive faster global average response times Enhanced single API technology ecosystem now in production Further momentum in mobile: renewed contracts for bespoke work with easyjet and Etihad, and accelerated sales of Trip Assist solution for agencies OTAs Corporate Continuing to win and onboard new business Growing 2x the GDS market rate in Asia Growing 2x the market rate with OTAs 5

6 Bernard Bot Chief Financial Officer

7 Q3 revenue performance by channel & geography $ millions Q Q Better / (Worse) Air (3)% Beyond Air % Travel Commerce Platform Revenue % Technology Services % Net Revenue % Key takeaways Steady progress in most regions o o o Continued air share gains in Asia and Latin America Stable in Europe aside from Greekbased OTA contract termination Benefit of US market growth in Q3 not realized due to customer footprint Travel Commerce Platform Revenue +2% Q3 yoy growth Reported growth Revenue Impact of Pacificbased travel agency loss on growth International +3% (5) ppts United States (1)% Travel Commerce Platform +2% (4) ppts Travel Commerce Platform Reported Segments (4)% Q3 yoy growth Reported growth Reported Segments Impact of Pacificbased travel agency loss on growth International (5)% (7) ppts United States (4)% Travel Commerce Platform (4)% (4) ppts Continued to grow our OTA air market share in Q3 Hospitality attachment 1 stable (48) year over year enett revenue +58% (included in Beyond Air); YTD growth +72%. Continued share of wallet expansion with key OTA customers in Europe and Asia 1 Hospitality segments per 100 airline tickets issued. 7

8 Q3 bridge for net revenue less commissions Q3 net revenue less commissions Key takeaways $304m GDS profit growth Good growth in the GDS business, with pricing power more than offsetting volume and mix Travel Distribution Cost (TDC) rate flat year over year $291m $295m Strong contribution from enett Migration away of Pacific-based travel agency commenced in July 2017 (largely complete by 2017 year-end) Q FLCR Subtotal CLP impairment enett Volume/Mix Yield TDC FX Other Q Q Loss of Pacific Q CLP enett Volume/ based travel sub-total impairment Mix agency 1 Other includes the movement in Technology Services revenue and various non-transactional elements of our business. Pricing Travel Distribution Costs (TDC) rate inflation FX Other 1 Q

9 Summarized income statement (1 of 2) $ millions Q Q Better / (Worse) Net revenue % Commissions (328) (307) (7)% Net revenue less commissions (3)% % of Net revenue 47.4% 49.7% (2.3)ppts Add back: Amortization of CLPs % Add back: Impairment of CLPs and Other expense 1 3 (1) n/m Technology costs (73) (81) 10% SG&A 2 (106) (105) Adjusted EBITDA % % of Net revenue 22.4% 22.3% Depreciation on property and equipment (40) (40) Amortization of CLPs (20) (20) (1)% Adjusted Operating Income % % of Net revenue 12.7% 12.5% 0.2ppts Adjustments (to U.S. GAAP Operating Income) 3 (35) (15) 137% U.S. GAAP Operating Income (28)% Key takeaways Commissions up 7%, driven by enett Technology costs and SG&A 2 on a combined basis down 4% Adjusted EBITDA margin percentage stable year over year, and up excluding enett Adjusted Operating Income up 4% year over year n/m = percentage calculated not meaningful. 1 Other expense relates to the reclassification of certain components of pension and post-retirement benefit expense from SG&A resulting from adoption of the new pension guidance. 2 SG&A excluding Non-core corporate costs. Non-core corporate costs include corporate and restructuring costs, equity-based compensation and related taxes, impairment of property and equipment, and unrealized gains and losses on foreign currency derivative contracts. 3 Adjustments include amortization of acquired intangible assets, Non-core corporate costs, impairment of customer loyalty payments and, in the prior period only, Other expense. 9

10 Summarized income statement (2 of 2) $ millions Q Q Better / (Worse) Adjusted Operating Income % Interest expense, net 1 (27) (31) 12% Subtotal % Remaining provision for income taxes 2 (12) (23) 47% % of Subtotal 23.5% 50.4% (26.9)ppts Adjusted Net Income % Amortization of acquired intangible assets (10) (10) Other adjustments (to U.S. GAAP Net Income) 3 (24) (8) n/m U.S. GAAP Net Income % Key takeaways Interest expense down 12%, principally due to favourable impact of swaps, re-financing fees in Q3 2017, and lower debt balance Q effective tax rate of 24%; in line with full year expectation Adjusted Income Per Share diluted $0.31 $ % U.S. GAAP Income Per Share diluted $0.04 $0.04 4% n/m = percentage calculated not meaningful. 1 Interest expense, net excludes $(1)m and $2m of unrealized (losses)/gains on interest rate derivative contracts for Q and Q3 2017, respectively; and also includes, in the current period only, Other expense (see slide 9 for definition). 2 Remaining provision for income taxes is stated without the tax adjustments on items excluded from Adjusted Net Income. 3 Other adjustments include Non-core corporate costs, impairment of customer loyalty payments, unrealized losses and gains on interest rate derivative contracts, loss on early extinguishment of debt, other gains and losses and the tax adjustments on itemsexcludedfrom Adjusted NetIncome. 10

11 Summary cash flows and Net Debt $ millions Q Q Better / (Worse) Net cash provided by operating activities (13)% Capital expenditures on property and equipment additions (35) (32) (7)% Free Cash Flow (24)% Repayment of capital lease obligations and other indebtedness (12) (10) (13)% Dividend to shareholders (9) (9) (1)% Repayment of term loans, and other (7) (56) 87% Net increase/(decrease) in cash, cash equivalents and restricted cash 20 (12) n/m Supplemental cash flow information ($ millions) Q Q Better / (Worse) Interest payments (37) (27) (37)% Tax payments (11) (9) (19)% Customer loyalty payments (18) (19) 8% Key takeaways Net cash from operations down 13% primarily due to movements in working capital and phasing of interest payments Capital Expenditures equate to 7.5% of net revenue (Q3 2017: 7.0%) Interest payments up 37% due to timing of bond coupon (payable semi-annually in Q1 and Q3) $ millions September 30, 2018 June 30, 2018 September 30, 2017 Net Debt 2,061 2,089 2,070 LTM Adjusted EBITDA Net leverage multiple 3.50x 3.57x 3.55x n/m = percentage calculated not meaningful. 11

12 Gordon Wilson President and Chief Executive Officer

13 Summary and outlook (in $ millions, except per share amounts) FY 2018 Guidance* Growth Key point summary Continuing to deliver our strategy for long term growth Net revenue 2,535 2, % Adjusted EBITDA (1) 3% Adjusted Net Income (6) 2% Adjusted Income per Share diluted** (7) 1% Free Cash Flow % Strengthened content and technology proposition driving signing and onboarding of new business at record levels Beyond Air continues to be a strong source of differentiation, leveraging data, digital and payments Strong business momentum tempered in short term by specific customer headwinds and relative exposure in certain travel markets International and OTA channel growth continues; attractive growth in key markets, including Europe, Latin America and Asia * Guidance assumes spot foreign exchange rates as of October 25, ** Based on expected FY fully diluted shares outstanding of 127.0m. The information presented here represent forward-looking statements and reflect our expectations as of November 1, We assume no obligation to update these statements. Actual results may be materially different and are affected by many factors detailed in this presentation and in our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 20, 2018, and our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2018, filed with the SEC on May 3, 2018, for the quarter ended June 30, 2018, filed with the SEC on August 2, 2018, and for the quarter ended September 30, 2018, to be filed with the SEC on November 1,

14 Appendices Financial Statistics Operating Statistics Key Financials Definitions

15 Financial statistics Net Revenue ($ thousands) Q Q Better / (Worse) 9M M 2017 Better / (Worse) Air 404, ,371 (3)% 1,321,525 1,315,500 Beyond Air 192, ,782 14% 566, ,474 19% Travel Commerce Platform 597, ,153 2% 1,888,265 1,791,974 5% Technology Services 24,974 24,689 1% 74,166 81,738 (9)% Net Revenue 622, ,842 2% 1,962,431 1,873,712 5% Travel Commerce Platform revenue as a % of Net revenue 96% 96% 96% 96% 0.6ppts Beyond Air revenue as a % of Travel Commerce Platform revenue 32% 29% 3.5ppts 30% 27% 3.4ppts % of Air segment revenue from away bookings 67% 67% 0.5ppts 69% 67% 2.0ppts Travel Commerce Platform Revenue by Region ($ thousands) Q Q Better / (Worse) 9M M 2017 Better / (Worse) Asia Pacific 140, ,008 (3)% 426, ,748 (3)% Europe 202, ,801 9% 670, ,811 18% Latin America and Canada 28,202 27,563 2% 87,517 83,919 4% Middle East and Africa 78,824 77,494 2% 239, ,959 International 449, ,866 3% 1,423,920 1,329,437 7% % of Travel Commerce Platform revenue 75% 74% 0.9ppts 75% 74% 1.2ppts United States 148, ,287 (1)% 464, ,537 Travel Commerce Platform revenue 597, ,153 2% 1,888,265 1,791,974 5% 15

16 Operating statistics Reported Segments by Region (thousands) Q Q Better / (Worse) 9M M 2017 Better / (Worse) Asia Pacific 16,764 17,807 (6)% 49,172 54,712 (10)% Europe 18,658 20,117 (7)% 65,537 63,478 3% Latin America and Canada 4,793 4,706 2% 14,231 13,862 3% Middle East and Africa 9,180 9,354 (2)% 28,300 28,271 International 49,395 51,984 (5)% 157, ,323 (2)% United States 32,184 33,413 (4)% 103, ,652 (1)% Reported Segments 81,579 85,397 (4)% 260, ,975 (2)% Travel Commerce Platform RevPas ($) Q Q Better / (Worse) 9M M 2017 Better / (Worse) International RevPas $9.10 $8.38 9% $9.06 $8.29 9% United States RevPas $4.60 $4.50 2% $4.48 $4.42 1% Travel Commerce Platform RevPas $7.33 $6.86 7% $7.24 $6.76 7% Selected Travel Commerce Platform metrics Q Q Better / (Worse) 9M M 2017 Better / (Worse) Transaction value processed on the Travel Commerce Platform ($k) 22,217,208 21,432,958 4% 68,919,969 63,067,084 9% Hotel room nights sold (thousands) 16,965 17,615 (4)% 51,316 51,359 Car rental days sold (thousands) 29,245 29,841 (2)% 82,563 80,804 2% Hospitality segments per 100 airline tickets issued (2)% 1 A hospitality segment refers to one complete hospitality booking. For example, a five night hotel stay equals one hospitality segment. Hospitality includes hotel, car, rail and other non-air bookings. 16

17 Summarized income statement ($ thousands) Q Q Better / (Worse) 9M M 2017 Better / (Worse) Net Revenue 622, ,842 2% 1,962,431 1,873,712 5% Adjusted EBITDA 139, ,437 2% 450, ,996 Depreciation on property and equipment (40,032) (40,149) (117,649) (126,183) 7% Amortization of customer loyalty payments (20,062) (19,896) (1)% (64,553) (57,348) (13)% Adjusted Operating Income 79,219 76,392 4% 268, ,465 Interest expense, net 1 (26,597) (30,673) 13% (77,963) (90,890) 14% Other expense (266) n/m (730) n/m Remaining provision for income taxes (12,316) (23,048) 47% (42,612) (40,541) (5)% Adjusted Net Income 40,040 22,671 77% 146, ,034 7% Amortization of acquired intangible assets (10,165) (10,165) (30,497) (30,688) 1% Non-core corporate costs, and Other 2 (24,939) (5,488) n/m (73,642) (3,101) n/m Unrealized (losses)/gains on interest rate derivative contracts (1,175) 1,880 n/m 11,651 (1,121) n/m Loss on early extinguishment of debt (38) (4,682) n/m (27,699) (4,682) n/m Income from discontinued operations n/m 27,747 n/m Tax adjustments 2, n/m 17,640 (2,532) n/m Net Income 5,870 4,681 25% 72,106 94,910 (24)% n/m = percentage calculated not meaningful. 1 Interest expense, net excludes unrealized gains or losses on interest rate derivative contracts. 2 Other relates to revenue deferred in previous years, recorded in Q1 2017, impairment of customer loyalty payments, and gain on sale of a subsidiary, recorded in Q

18 Net revenue and Adjusted EBITDA Net Revenue ($ thousands) Q Q Better / (Worse) Net Revenue ($ thousands) 9M M 2017 Better / (Worse) Air 404, ,371 (3)% Beyond Air 192, ,782 14% Travel Commerce Platform 597, ,153 2% Technology Services 24,974 24,689 1% Net Revenue 622, ,842 2% Air 1,321,525 1,315,500 Beyond Air 566, ,474 19% Travel Commerce Platform 1,888,265 1,791,974 5% Technology Services 74,166 81,738 (9)% Net Revenue 1,962,431 1,873,712 5% Adjusted EBITDA ($ thousands) Q Q Better / (Worse) Adjusted EBITDA ($ thousands) 9M M 2017 Better / (Worse) Net Revenue 622, ,842 2% Commissions (327,516) (306,971) (7)% Add back: Amortization of CLPs 20,062 19,896 1% Add back: Impairment of CLPs 3,257 n/m Other expense 1 (846) n/m Technology costs (73,163) (81,056) 10% SG&A 2 (105,912) (105,428) Adjusted EBITDA 139, ,437 2% Adjusted EBITDA Margin 22.4% 22.3% 1 Other expense relates to the reclassification of certain components of pension expense from SG&A resulting from adoption of the new pension guidance. 2 SG&A excluding Non-core corporate costs. Net Revenue 1,962,431 1,873,712 5% Commissions (1,026,602) (899,224) (14)% Add back: Amortization of CLPs 64,553 57,348 13% Add back: Impairment of CLPs 13,622 n/m Related to revenue deferred in previous years, and Other expense 1 (10,149) n/m Technology costs (228,266) (245,348) 7% SG&A 2 (335,325) (324,343) (3)% Adjusted EBITDA 450, ,996 Adjusted EBITDA Margin 23.0% 24.1% (1.2)ppts 18

19 Summary cash flows, Capital Expenditures and Net Debt Free Cash Flow ($ thousands) Q Q M M 2017 Net cash provided by operating activities 83,149 95, , ,342 Capital expenditures on property and equipment additions (34,770) (32,363) (109,236) (79,192) Free Cash Flow 48,379 63, , ,150 Supplemental cash flow information ($ thousands) Q Q M M 2017 Interest payments 36,907 26,847 77,419 83,294 Tax payments 10,802 9,083 36,933 23,540 Customer loyalty payments 17,674 19,207 73,349 54,592 Capital Expenditures ($ thousands) Q Q M M 2017 Capital expenditures on property and equipment additions 34,770 32, ,236 79,192 Repayment of capital lease obligations and other indebtedness 11,654 10,321 30,632 29,811 Capital Expenditures 46,424 42, , ,003 Total Capital Expenditures as % of Net revenue 7.5% 7.0% 7.1% 5.8% Net Debt ($ thousands) September 30, 2018 June 30, 2018 September 30, 2017 Term loans 1 1,379,511 1,386,456 2,177,415 Senior secured notes 2 737, ,640 Capital leases and other indebtedness 147, ,762 97,148 Cash, cash equivalents and restricted cash (203,806) (183,510) (204,646) Net Debt 2,060,742 2,089,348 2,069,917 1 Net of unamortized debt discount and unamortized debt finance costs. 2 Net of unamortized debt finance costs. 19

20 Full year 2018 guidance With respect to our full year 2018 guidance: 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 $240 million to $250 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 approximately $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. 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. Free Cash Flow guidance reflects expected net cash provided by operating activities for 2018 of $345 million to $365 million less expected cash additions to property and equipment of approximately $140 million. 20

21 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), components of net periodic pension and post-retirement benefit costs other than service cost 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) excluding amortization of acquired intangible assets, gain (loss) on early extinguishment of debt, and items that are excluded under our debt covenants, such as income (loss) from discontinued operations, gain (loss) on sale of subsidiary, 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 the core business operations have also been excluded. Adjusted Operating Income (Loss) is defined as Adjusted EBITDA less depreciation and amortization of property and equipment and amortization of customer loyalty payments. 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, 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, cash equivalents and restricted cash. 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. 21

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