Travelport Q4 and Full Year 2011 Results Presentation. March 22, 2012

Transcription

1 Travelport Q4 and Full Year 2011 Results Presentation March 22,

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 non-financial statements in future periods, constitute forwardlooking 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 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, to be 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 forwardlooking 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 (used in) operations, adjusted to exclude cash interest payments and include capital expenditures, all of which are GAAP measures included within the Statements of Cash Flows. 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

3 Q4 2011/FY 2011 Highlights Gordon Wilson, President and CEO

4 Highlights Industry Continued upturn in global travel trends air segment volumes: Q4 +3%, FY +2% despite: Macroeconomic and geographical upheavals Continued uneven geographic market growth especially in Europe Travelport Volume: Q4 +2%, FY +2% Revenue: Q4 +3%, FY +2% Adjusted EBITDA in line with management expectations 10% 8% 6% 4% 2% - (2)% (4)% GDS Industry Global Air Segments Monthly YoY Growth 2011 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Air booking and Hotel TTV for 2011 $83 billion (YoY +6%) Average ticket sold (net of tax) $614 (+11%) Hotel Average Daily Rate $145 (YoY +12%) Continued product, content & geographic progress including: Unprecedented development agreement with TravelSky Additional hotel content including Booking.com Operational in nine new African countries Launched new mobile travel itinerary application Travelport Q4 FY Net revenue 465 2,035 Adj. EBITDA Cash flow from continuing operations

5 Q4 2011/FY 2011 Financial Results Philip Emery, CFO 5

6 Financial Highlights Q4 Net Revenue 3% higher and Full Year 2% higher than prior year Q4 Adjusted EBITDA (8)% lower and Full Year (7)% lower, but in line with management expectations Underlying Adjusted EBITDA flat in both Q4 and on a Full Year basis after adjusting for the cost of the re-introduction of the employee incentive plan in 2011 Full Year Adjusted EBITDA for 2011 includes $64 million of amortization charges for upfront payments to travel agencies. Working capital includes $163 million of upfront payments and prepaid commissions at December 31, 2011 Full Year Interest expense of $287 million was $15 million higher in 2011 due to a 2% increase in interest rates arising from amendments made to the senior secured credit agreement in Q4 of 2010 and fees and expenses incurred in September 2011 related to the amendment and restatement of our senior secured credit agreement, mitigated by lower debt levels after the sale of the GTA business in Q2 Cash from operations was lower in Q4 and the Full Year as a result of $35 million higher cash interest payments and a $21 million cash payment for the settlement of a legal dispute in 2011 as previously disclosed Full Year unlevered free cash flow of $319 million was $79 million higher than prior year and represented 63% of Adjusted EBITDA In compliance with covenant ratios at December 31,

7 Net Revenue Net revenue Q Better / (Worse) than prior year FY 2011 Better / (Worse) than prior year Transaction Processing , Airline IT Solutions Net Revenue , Revenue Bridge FY Revenue % 1,996 1,996 2,022 2,035 90% 2010 Net Revenue Transaction Processing Airline IT Solutions 2011 Net Revenue Transaction Processing Airline IT Solutions 7

8 Travelport Summary Income Statements Q Better / (Worse) than prior year FY 2011 Better / (Worse) than prior year Net revenue , Adjusted EBITDA 106 (9) 507 (38) Operating income 4 (41) 200 (74) Interest expense, net (64) 6 (287) (15) (Loss) from continuing operations before tax and equity in earnings of investment in Orbitz (60) (37) (87) (91) Net (loss) income (84) (15)

9 Travelport Statements of Cash Flows Q Better / (Worse) than prior year FY 2011 Reconciliation of Travelport Adjusted EBITDA to Net Cash Provided by Operating Activities of Continuing Operations Better / (Worse) than prior year Travelport Adjusted EBITDA 106 (9) 507 (38) Less: Cash interest payments (27) 5 (267) (35) Tax payments (9) (7) (22) 2 Changes in operating working capital 2 (6) (7) 40 FASA liability payments (4) (16) 2 Defined benefit pension plan funding (4) (1) (17) (14) Other non-operating and adjusting items (26) (22) (54) (14) Net cash provided by operating activities of continuing operations 38 (40) 124 (57) Reconciliation of Net Cash provided by Operating Activities of Continuing Operations to Unlevered Free Cash Flow Add cash interest payments 27 (5) Less capital expenditures (22) (2) (72) 101 Unlevered free cash flow 43 (47)

10 Travelport Consolidated Balance Sheets December 31, 2011 December 31, 2010 Goodwill and other intangibles 1,981 2,070 PP&E Working capital and other (223) (154) Net debt (3,146) (3,435) Net assets of GTA business held for sale 363 Total assets less total liabilities (957) (672) Equity (957) (672) 10

11 Travelport Capitalization and Debt Maturities Dec 31, Dec 31, Security Maturity Non extended Term Loans Aug Revolving Credit Facility 35 - Extended Term Loans (1) Aug-15 1,346 1,930 Tranche S Term Loan (for Letters of Credit) Aug Bank Term Loan & Revolving Credit Facility 1,679 2,298 Capital Leases Second Lien Notes Dec Senior Notes due 2014 Sep Senior Notes due 2016 Mar Senior Unsecured Notes 1,026 1,033 Senior Subordinated Notes Sep Total Travelport Limited Indebtedness 3,407 3,814 Comments Refinancing at HoldCo and OpCo successfully completed, including additional covenant headroom and extension of revolver maturity Repaid $655m of term loans with proceeds from sale of GTA 93% of current outstanding debt maturities in 2014 and beyond In compliance with covenant ratios at December 31, 2011 Schedule of Travelport Limited Debt Maturities (2) 1,487 Less Cash Held As Collateral (137) (137) Less Cash & Cash Equivalents (124) (94) Less Cash of Discontinued Operations - (148) Net Debt 3,146 3, Total Leverage Ratio 6.99x 5.49x Maximum Total Leverage Ratio 8.00x 5.75x First Lien Leverage Ratio 3.74x - Maximum First Lien Leverage Ratio 4.00x Thereafter 11 Note: (1) Subject to a reduction in maturity to May 2014 under certain circumstances (2) Debt maturities excludes the amounts due under the revolving credit facility

12 Q4 2011/FY 2011 Business Update Gordon Wilson, President and CEO

13 2011 Positioning Travelport for Future Growth 1. Differentiated Product: Universal uapi, Universal Desktop and Smartpoint Travelport e-pricing ViewTrip mobile application 2. Greater Content: Continued leadership in rail and airline content deals including LCCs Extensive new hotel content in Travelport Rooms and More Progress selling airline ancillary products 3. Invest in Key Adjacencies: enett joint venture for payment solutions Unprecedented development agreement with China s TravelSky Delivery of key applications for airline direct channel 4. Targeted Geographical Growth: Established operations in a number of new countries including 9 in Africa Grew MIDT share in both US and UK to highest level since 2008 Excellent growth in Russia and other Eastern European countries 5. Technology Investment: Initial roll out of first phase of Services Oriented Architecture Re-platforming Upgrading to ztpf 13

14 Product Momentum Travelport Rooms and More: Content providers include: Agoda, Booking.com, Laterooms, Miki and Transhotel Available now in more than 70 countries Expanded to include Rail Travelport Smartpoint App launched: Available globally since Jan 1, 2012 c.50% increase in users from Dec 11 Jan 12 Drives considerable productivity improvements Travelport Universal API: Strong global interest Developer Network successfully delivering innovation Rollout plans on track Travelport Universal Desktop: Attracting customers globally Rollout for Flight Centre Australia, New Zealand & South Africa completed 22 customers in beta testing by end of 2011 across 6 countries ViewTrip mobile itinerary application now available on iphone and Android devices Travelport e-pricing customers on advanced single search platform Rolled out globally following successful priceline deployment 14

15 Enhanced Travel Content Air Signed numerous new air content and functionality agreements: Five in Q4 27 in 2011 Seven post period end Airline Ancillary Products Deployed with carriers such as British Airways, Qantas, Air Canada, EasyJet, Cimber Sterling and United Certified for Electronic Miscellaneous Document (EMD) transaction processing new industry standard launched with Finnair Hotel Continued growth higher than air: + 5% segment growth in 2011 Complete Pricing Plus and Lowest Public Rate with 40 chains including IHG, Marriott and Leading Hotels of the World Travelport Rooms and More now includes: Hotel aggregators: Booking.com, Transhotel, Fastbooking, Hostelsclub, Medhotels, Miki Travel, Agoda, Hostelworld Rail/Car Signed new content and functionality agreements with NTV and Rail Europe post period end Distribution agreement with Tempest car hire in

16 Geography/Customer Segments Corporate travel continues to show strong annual growth as witnessed by our top global management companies: FY +8% BRIC region continues to grow for Travelport: FY segments +3% 6% of overall segments Low Cost Carriers continued segment growth: Q4 +11% 6% of Travelport GDS Air segments Travelport GDS Full Year Segments (in millions) Region Better / (Worse) Better / (Worse) Americas % Europe % MEA (1)% APAC % Global % Average Revenue Per Segment 2011 (RevPas) Travelport Agility, a simplified pricing scheme, launched globally: Offering wide-ranging products in a single package including Travelport Smartpoint and Travelport Rooms and More Enabling customers to reduce operating costs and improve productivity $5.14 FY Average $5.01 $5.24 $5.13 $5.19 Maintained RevPas at 2010 levels: Airline ancillary products beginning deployment $4.85 Q1 Q2 Q3 Q4 16

17 Americas Q4 Highlights Corporate travel continues to grow strongly among top global management companies Q4 +5% FY +7% Travelport US GDS share at its highest level since 2008 Primary Technology Partner agreements include: USA: A&I Travel Service, Blue Ribbon Travel and Cain Travel Central & Southern Americas: ASATEJ Travelport GDS Full Year Segments (in millions) Region Better / (Worse) Better / (Worse) Americas % Europe % MEA (1)% APAC % Global % New content agreement: Hilton Worldwide Inc Agreement Post period end YoY over 6% GDS MIDT growth in the USA (-1.4% in 2010) Content agreement extension: American Airlines Primary Technology Partner agreements include: Agency Technology LLC, Travel Leaders Network Conversion of Tzell Travel Group of PA 17 Notes: (1) Excluding Brazil

18 Europe Travelport GDS Full Year Segments (in millions) Q4 Highlights Geographic centric growth wide disparities in individual country growth Launch of a new service with Cimber Sterling New content agreements: BMI, Austrian Airways Double digit air segment volume growth in Russia Region Better / (Worse) Better / (Worse) Americas % Europe % MEA (1)% APAC % Global % Named Best Technology Provider 2011 by Travolution in UK Post period end YoY GDS market shows Russia double digit growth and UK +4% (Jan-Feb 2012) Full content agreements: TAP, Lufthansa, SWISS First GDS to sign agreement with high-speed Italian rail operator, NTV 18 Notes: (1) Including Brazil

19 Middle East and Africa Q4 Highlights Key customer wins: Asfar Travels, Global Destination Solutions SKALITE award for best GDS in Turkey Implementation of Inside Availability: Saudi Arabian Airlines Smartpoint rollout: Egypt, Kuwait, Kingdom of Saudi Arabia, Lebanon, Malawi, North Africa, Oman, South Africa, UAE, Zambia and Zimbabwe Operational in nine new African countries Travelport GDS Full Year Segments (in millions) Region Better / (Worse) Better / (Worse) Americas % Europe % MEA (1)% APAC % Global % Post period end Commencement of growth in North African GDS markets Opening of Levant HQ in Beirut, Lebanon Renewal of UAE Worldspan agreement with Stargate CyberActive Activation of Rapid Reprice Select with Emirates Airline Implementation of Inside Availability with Yemenia Airways Bahrain customer renewal: Dadabhai Travel 19

20 Asia Pacific Travelport GDS Full Year Segments (in millions) Q4 Highlights Travelport Rooms and More rolled out to 10 countries: Singapore, Hong Kong & Australia leading global bookings Travelport Universal Desktop: Flight Centre Limited completed rollout in Australia and New Zealand Multiple new Travelport Universal Desktop customers Region Better / (Worse) Better / (Worse) Americas % Europe % MEA (1)% APAC % Global % Unprecedented joint development agreement with TravelSky Post period end Very strong GDS growth in 2012 in Australia, growth in India slowed largely due to local carrier issues Full content agreement with Bangkok Airways Positive adoption of Travelport Smartpoint and Travelport Rooms and More continues across the region 20

21 Summary and Outlook Annual revenue increased Platform for growth established Successfully completed technical migration work for United Product rollout plans on track: Strong global customer interest Clear long-term growth strategy 2012 started in line with management expectations the world s leading provider of informed travel choice 21

22 Appendix: Definitions Adjusted EBITDA: is defined as EBITDA adjusted to exclude the impact of purchase accounting, impairment of goodwill and intangible 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 (used in) operating activities of continuing operations adjusted to exclude cash interest payments and include capital expenditures, all of which are GAAP measures included within the Statements of Cash Flows 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 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 FY: is defined as the 12 months ended December 31, 2011 PY: is defined as the 12 months ended December 31, 2010 YoY: is defined as year on year All figures are in USD $ millions unless otherwise stated 22

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