Travelport Q Results Presentation. Delivering Strategic Growth November 2, 2012

Transcription

1 Travelport Q Results Presentation Delivering Strategic Growth November 2,

2 Disclaimers Related to Forward-Looking Statements Certain items in this presentation and in today s discussion, including matters relating to revenue, net income and earnings, and percentages or calculations using these measures, capital structure, future business opportunities or growth rates and other financial measurements and nonfinancial statements in 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 materiality from those contemplated by forward-looking statements. Travelport Limited (the Company ) refers you to our filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2011 filed on March 22, 2012, 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 and unlevered free cash flow, which are non-gaap measures. Such measures may not be comparable to similarly named measures used by other companies. The Company believes Adjusted EBITDA provides management with a more complete understanding of the underlying results and trends and an enhanced overall understanding of the Company s financial liquidity and prospects for the future. Adjusted EBITDA is the primary metric for measuring our business results, forecasting and determining future capital investment allocations and is one of the measures used by the Board of Directors to determine incentive compensation. Capital expenditures, which impact depreciation and amortization, interest expense and income tax expense, are reviewed separately by management. Adjusted EBITDA is disclosed so that investors have the same tools as those available to management when evaluating the results of Travelport. Adjusted EBITDA is a critical measure as it is required to calculate our key financial ratios under our credit agreement covenants. Adjusted EBITDA is defined as EBITDA adjusted to exclude the impact of purchase accounting, impairment of goodwill and intangibles assets, expenses incurred to acquire and integrate Travelport s portfolio of businesses, costs associated with Travelport s restructuring efforts, non-cash equity-based compensation, and other adjustments made to exclude expenses management views as outside the normal course of operations. Unlevered free cash flow is defined as net cash provided by operations, adjusted to exclude cash interest payments and include capital expenditures and capital lease payments. The company believes unlevered free cash flow provides management and investors with a more complete understanding of the underlying liquidity of the core operating business and its ability to meet its current and future financing and investing needs. 2 This document supports the Company s Q Results Presentation, a recording of which will be available on Travelport s Investor Centre from November 3, 2012

3 Q Highlights Gordon Wilson, President and CEO

4 Highlights Industry Modest growth in global travel trends with Q3 air segment volumes +1% YoY amid continued macroeconomic uncertainty YTD volumes +2% YoY Travelport Q3 RevPas +3% YoY Adjusted EBITDA +$5m excluding the impact of the loss of the United MSA Q3 volume (2)% and Q3 Net Revenue +1% YoY (1) YTD volume flat and YTD Net Revenue +1% YoY (1) YTD cash flows from operations improved by +56% from $86m to $134m Further growth in air, hotel and merchandizing content Product portfolio extended with regional solutions High profile travel agency signings and migrations across all regions Expanded commercial leadership team Net Revenue Adjusted EBITDA Cash flows from operations Net Revenue Adjusted EBITDA Cash flows from operations Q than prior year Proforma (1) than prior year 489 (20) (12) 6 18 N/A Sep YTD 2012 than prior year Proforma (1) than prior year 1,545 (25) (35) (7) N/A 4 (1) Proforma variance is stated excluding the effects of the loss of the United MSA and foreign exchange

5 Q Financial Results Philip Emery, CFO

6 Financial Highlights Q3 Net Revenue is (4)% lower and Sep YTD Net Revenue is (2)% lower compared to prior year. Excluding the impact of foreign exchange and loss of the United MSA, Q3 Net Revenue and Sep YTD Net Revenue are both +1% higher compared to prior year Q3 Adjusted EBITDA is (10)% lower and Sep YTD Adjusted EBITDA is (9)% lower than prior year. Excluding the impact of foreign exchange and loss of the United MSA, Q3 Adjusted EBITDA is flat compared to prior year and Sep YTD Adjusted EBITDA is (2)% lower compared to prior year, which is in line with management expectations Q3 and Sep YTD Adjusted EBITDA include $16 million and $44 million of amortization charges for upfront payments to travel agencies, respectively. Working capital includes $158 million of upfront payments and prepaid commissions as of September 30, 2012 Sep YTD Interest expense of $215 million is $8 million lower in 2012 due to a lower net debt balance and favorable impact of interest rate hedges, offset by a higher underlying interest rate Cash flows from operations in Q3 of $6 million is $18 million higher compared to prior year primarily as a result of a decrease in cash interest payments and fluctuations in our collections and payments cycles Q3 unlevered free cash flow of $57 million is $8 million higher than prior year and represents 54% of Adjusted EBITDA. For Sep YTD, unlevered free cash flow of $262 million is $(3) million lower than prior year and represents 72% of Adjusted EBITDA We were in compliance with all our financial covenants as of September 30,

7 Net Revenue Net Revenue Q than prior year Sep YTD 2012 than prior year Transaction Processing 451 (5) 1,414 3 Airline IT Solutions 38 (15) 131 (28) Net Revenue 489 (20) 1,545 (25) Net Revenue Bridge Q Net Revenue Bridge Sep YTD (45) (3) 1,570 1,525 1,545 4 (24) (0) Q Net Revenue United MSA and FX Q Proforma Net Revenue Transaction Processing Airline IT Solutions Q Net Revenue Sep YTD 2011 Net Revenue United MSA and FX Sep YTD 2011 Proforma Net Revenue Transaction Processing Airline IT Solutions Sep YTD 2012 Net Revenue 7

8 Summary Income Statements Q than prior year Proforma (1) than prior year Sep YTD 2012 than prior year Proforma (1) than prior year Net revenue 489 (20) 4 1,545 (25) 20 Adjusted EBITDA 106 (12) 366 (35) (7) Operating income 27 (24) (12) 155 (41) (13) Interest expense, net (71) 3 3 (215) 8 8 Gain on early extinguishment of debt Loss from continuing operations before income taxes and equity in investment in Orbitz Worldwide (39) (16) (4) (54) (27) 1 8 (1) Proforma variance is stated excluding the effects of the loss of the United MSA and foreign exchange

9 Summary of Cash Flows Q than prior year Sep YTD 2012 than prior year Adjusted EBITDA 106 (12) 366 (35) Less: Cash interest payments (86) 3 (202) 38 Tax payments (5) (1) (9) 4 Changes in operating working capital FASA liability payments 3 (7) 5 Defined benefit pension plan funding (10) 1 (15) (2) Other adjusting items (11) (6) (43) (15) Net cash provided by operating activities of continuing operations Add cash interest payments 86 (3) 202 (38) Less capital expenditures (29) (8) (61) (11) Less repayments of capital leases (6) 1 (13) (2) Unlevered free cash flow (3) Cash flow conversion 54% 72% 9

10 Capitalization and Debt Maturities Security Maturity Sep 30, 2012 Dec 31, 2011 Covenants Sep 30, 2012 Dec 31, 2011 Non Extended Term Loans Aug Revolver Credit Facility Extended Term Loans (1) Aug-15 1,341 1,346 Tranche S Term Loans Aug Bank Term Loan and Revolving Credit Facility 1,513 1, Secured Term Loans Nov Second Priority Secured Notes Dec Senior Notes due 2014 Sep Senior Notes due 2016 Mar Senior Unsecured Notes 997 1,026 Total Leverage Ratio 7.03x 6.99x Maximum Total Leverage Ratio 8.00x 8.00x First Lien Leverage Ratio 3.40x 3.74x Maximum First Lien Leverage Ratio 4.00x 4.00x Senior Secured Leverage Ratio 3.79x N/A Maximum Senior Secured Leverage Ratio 4.95x N/A In compliance with all financial covenants as of September 30, 2012 Schedule of Debt Maturities (2) 1,648 Senior Subordinated Notes Sep Capital Leases Total Travelport Limited Indebtedness 3,384 3,407 Less: Cash Held as Collateral (137) (137) Cash and Cash Equivalents (125) (124) Net Debt 3,122 3, Thereafter 10 (1) Subject to a reduction in maturity to May 2014 under certain circumstances (2) Debt maturities table excludes the amounts due under the Revolving Credit Facility and capital leases

11 Q Business Update Gordon Wilson, President and CEO

12 Continued Strategic Execution Enhanced Travel Content Hotel Enhancements on the core GDS platform: Air Pullman and Sofitel join Lowest Public Rate scheme Launched industry-first, rate audit process 29 air agreements signed YTD New agreements signed: Americas Aeromexico, Avior Airlines (Venezuela) Europe Bulgaria Air, LOT Polish Airlines, transavia.com MEA Nasair, RAK Airways, Gulf Air APAC Air China, China Southern, Qantas Merchandizing milestones: Car Air Canada, KLM Launched Travelport Drive Me in APAC New content agreement in Italy with car park provider ParkinGo 12

13 Continued Strategic Execution Differentiated Product Momentum Increased adoption of new point of sale technology: Africa s largest travel management group, BidTravel, signed up for Travelport Universal Desktop New Travelport mobile solutions launched: Travelport Mobile Agent GalileoTerminal App for CTS Italian Youth Travel Services Travelport Universal API launched in MEA New corporate booking tool, TripGate, launched in Russia Investing in Key Adjacencies Development work with AXESS on track enett joint venture continues to progress rapidly: Substantial transaction volume growth 2012 TTV on track to exceed $1bn Travelport Universal API TUIfly.com adopts Travelport s interline e-ticketing technology 13

14 Continued Strategic Execution Targeted Geographical Growth High profile customer migrations to Travelport, including: ebookers (France), Statesman Travel (UK), TIX.nl (Netherlands) and Delgado Travel (US) Multiple customer renewals in all regions Successful expansion in growth regions: New Africa distributor in Tanzania New East African hub operation in Kenya 2 nd Travelport Russian operation in St. Petersburg Technology Investment Multiple Technology and Travel industry accolades: Gold Stevie American Business Award for Information Technology Team of the Year Best GDS in APAC Favorite GDS in Canada No service interruptions or performance issues 14

15 Geography/Customer Segments Q3 softening in air volume growth in US (33% of global GDS volume) and Western Europe (27% of global GDS volume) BRICS region, however, still showing growth in Q3 YoY, except India and Brazil: Russia 39% China 23% South Africa 9% Low Cost Carriers continue segment growth: Q3 at +1% YoY 7% of Travelport GDS air segments Q3 RevPas $5.30 or +3% YoY reflecting: New Travelport products and services Growth in hotels and advertising sales Travelport GDS Q3 Segments (in millions) Region (2) RevPas Proforma (1) Americas (6.2)% (0.8)% Europe % 0.7% APAC (9.2)% (9.2)% MEA % 0.9% Global (4.4)% (1.7)% $5.01 $5.08 $5.24 $5.34 $5.13 $5.30 $5.19 Q1 Q2 Q3 Q (1) Proforma variance is stated excluding the effect of the loss of the United MSA (2) Brazil is combined with Europe and not Americas

16 Summary and Outlook Q3 Performance in line with management expectations: Grown RevPas for sixth consecutive quarter Increased Gross Margin for fourth consecutive quarter (1) Continued strong cash flow generation No near term debt maturities In compliance with all financial covenants as of September 30, 2012 Macroeconomic uncertainty and volume challenge in major travel regions (USA / Europe) going into Q4 Continued execution of strategic plan: Renewed numerous air content agreements Achieved two merchandizing milestones with Air Canada and KLM Deployed new Travelport mobile solutions regionally Launched first Russian language corporate booking tool Signed and migrated high profile travel agencies across all regions Expanded commercial leadership team 16 (1) Excluding the effects of the loss of the United MSA and foreign exchange

17 Appendices Q Results

18 Appendix 1: Americas Q3 Highlights Galileo voted Favorite GDS for the third year in a row at 2012 Canadian Agents Choice Awards and ninth time in last 11 years Travelport and Air Canada unveil enhanced version of Travelport Agencia TM Delgado Travel completes successful conversion to Travelport Travelport named Information Technology Team of the Year and awarded a Gold Stevie in the annual American Business Awards New air agreement with Venezuelan carrier, Avior Airlines AITS agreement with TUIfly.com for interline e-ticketing technology Travelport GDS Q3 Segments (in millions) Region Proforma (1) Americas (2) (6.2)% (0.8)% Europe % 0.7% APAC (9.2)% (9.2)% MEA % 0.9% Global (4.4)% (1.7)% Post period end Aeromexico signs full content agreement Executive Travel and National Travel Systems designate Travelport as their primary technology partner Custom Travel Solutions (Canada) migrates to Travelport 18 (1) Proforma variance is stated excluding the effect of the loss of the United MSA (2) Excluding Brazil

19 Appendix 2: Europe Q3 Highlights Full content agreement with Bulgaria Air and LOT Polish Airlines transavia.com makes GDS debut with Travelport KLM Economy Comfort seat rollout completed for Benelux Top online travel agencies in Europe migrate to Travelport including TIX.nl, in the Netherlands, and ebookers in France Pullman and Sofitel join Lowest Public Rate hotel scheme First Russian language corporate booking tool launched in Russia New Travelport presence established in St Petersburg Travelport Mobile Agent launched across Europe Bespoke mobile app launched for Italian Youth Services New content agreement in Italy with car park provider ParkinGo Travelport GDS Q3 Segments (in millions) Region Proforma (1) Americas (6.2)% (0.8)% Europe (2) % 0.7% APAC (9.2)% (9.2)% MEA % 0.9% Global (4.4)% (1.7)% Post period end Statesman Travel migration in the UK Virgin Atlantic Flightstore selects Travelport 19 (1) Proforma variance is stated excluding the effect of the loss of the United MSA (2) Excluding Brazil

20 Appendix 3: Asia Pacific Q3 Highlights New full content agreements with Air China, China Southern and Qantas Pacific management team strengthened through appointment of new General Manager for the Pacific Alex Fitzpatrick Partnership renewed with Digital Travel, Australia s leading Asian VFR (visiting friends and relatives) agency group Post period end Travelport GDS Q3 Segments (in millions) Region Proforma (1) Americas (6.2)% (0.8)% Europe % 0.7% APAC (9.2)% (9.2)% MEA % 0.9% Global (4.4)% (1.7)% Travelport wins Best GDS in Asia Pacific at the TTG Asia Awards Damian Hickey appointed as Vice President, Distribution Sales and Services for Asia Pacific GalileoTerminal launched in Hong Kong, Singapore and Australia Travelport Universal API chosen by Skyscanner developers to create award-winning application Patrick Andres, from Sabre, joins as President and Managing Director for Asia Pacific 20 (1) Proforma variance is stated excluding the effect of the loss of the United MSA

21 Appendix 4: Middle East and Africa Q3 Highlights Travelport Universal API launched in MEA New NDC appointed in Tanzania New air agreements with Nasair, Gulf Air, Precision Air and RAK Airways Cozmo Travel becomes the first Middle East travel agency to sign up for Travelport Universal Desktop E-Travel renewal contract signed Team in Southern Africa strengthened through the appointment of Robyn Christie as General Manager Travelport GDS Q3 Segments (in millions) Region Proforma (1) Americas (6.2)% (0.8)% Europe % 0.7% APAC (9.2)% (9.2)% MEA % 0.9% Global (4.4)% (1.7)% Post period end New East African hub established in Kenya New air content agreement with Air Botswana BidTravel, Africa s largest travel management group, becomes latest Travelport Universal Desktop partner and signs new long term agreement 21 (1) Proforma variance is stated excluding the effect of the loss of the United MSA

22 Appendix 5: Definitions Adjusted EBITDA: defined as EBITDA adjusted to exclude the impact of purchase accounting, impairment of goodwill and intangibles assets, expenses incurred to acquire and integrate Travelport s portfolio of businesses, costs associated with Travelport s restructuring efforts, non-cash equity-based compensation, and other adjustments made to exclude expenses management views as outside the normal course of operations Cash flow conversion: computed by dividing Unlevered free cash flow by Adjusted EBITDA First lien leverage ratio: under the Fourth Amended and Restated Credit Agreement is computed by dividing the total first lien debt (as defined under our Fourth Amended and Restated Credit Agreement) as of the balance sheet date by a number which is broadly computed from the last twelve months of Travelport Adjusted EBITDA MSA: defined as Master Services Agreement RevPas: computed by dividing total transaction processing net revenue by the number of segments Senior Secured Leverage Ratio: under the 2012 Secured Credit Agreement is computed by dividing the total of the first lien debt (as defined under our Fourth Amended and Restated Credit Agreement) and the term loans issued under our 2012 Secured Credit Agreement as of the balance sheet date, by a number which is broadly computed from the last twelve months of Travelport Adjusted EBITDA Total leverage ratio: under the Fourth Amended and Restated Credit Agreement is computed by dividing the total debt (as defined under our Fourth Amended and Restated Credit Agreement) at the balance sheet date by a number which is broadly computed from the last twelve months of Travelport Adjusted EBITDA TTV: defined as Total Transaction Value Unlevered free cash flow: defined as net cash provided by operations adjusted to exclude cash interest payments and include capital expenditures and capital lease payments YoY: defined as Year on Year All figures are in USD $ millions unless otherwise stated 22