Q2 2017 Earnings
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, 2016, filed with the SEC on February 21, 2017 and our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017, and for the quarter ended June 30, 2017, to be filed with the SEC on August 3, 2017, 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, 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 EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share and Adjusted Operating Income/(Loss) 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. 2 Due to rounding, numbers presented throughout this document may not add up precisely to the totals provided and percentages may not precisely reflect the absolute figures This document supports the Company s Q2 2017 Results Presentation, a recording of which will be available on Travelport s investor relations website shortly after the live presentation on August 3, 2017.
Gordon Wilson President and Chief Executive Officer
First half 2017 key point summary % Net revenue up 4%, Adjusted EBITDA up 8% and Adjusted Income per Share (diluted) up 32% to $0.91 Continued leadership in Beyond Air, up 9%; enett revenue up 19% Strong Free Cash Flow generation of $132m; Net leverage down to 3.5x LTM Adjusted EBITDA Full year 2017 guidance: Net revenue and earnings unchanged; raising Free Cash Flow 4
Good momentum entering second half of the year Continued progress in airline distribution and merchandising enett on track for >20% revenue growth in FY 2017 ~230 Number of airlines live with merchandising, including fares families and branded fares (over 4x more than next competitor) Long term renewal of full content agreement with key airline partner On-going share of wallet growth with major customers Continued investment in product extensions and capabilities July net revenue growth >25% Launched key digital innovations Continued to de-lever and reduce interest expense Net leverage down to 3.5x LTM Adjusted EBITDA Re-price of term loans reduces interest rate by 50bps Travelport Fusion launched June 2017 5 Travelport Trip Assist launched May 2017
Revenue and Reported Segments Travel Commerce Platform Revenue (YoY growth) 6 +2% +2% $518m $523m $574m $584m Q2 2014 Q2 2015 Q2 2016 Q2 2017 Air YoY Flat (2)% 6% (1)% Beyond Air YoY 11% 13% 22% 8% RevPas progression (YoY growth) +2% +1% +4% +10% +10% +2% $5.75 $6.00 $6.61 $6.76 Q2 2014 Q2 2015 Q2 2016 Q2 2017 1 Represents International Travel Commerce Platform revenue as a percentage of total Travel Commerce Platform revenue 2 Represents International Reported Segments as a percentage of total Reported Segments CAGR +4% CAGR +6% Q2 2017 Travel Commerce Platform Revenue & Reported Segments (YoY growth) Regions (% growth) Revenue Reported Segments International +2% (1)% US Flat Flat All Regions +2% Flat International % 73% 1 60% 2
Recent developments Air Air revenue (YoY growth) Flat (2)% +6% (1)% CAGR +1% Continued air market share gains in Asia and Latin America Adoption of industry-leading airline merchandising solutions continues with ~250 airlines signed and ~230 implemented Q2 2017 Away 1 Air revenue $410m $401m $426m $424m Q2 2014 Q2 2015 Q2 2016 Away Air segments Q2 2017 Airline merchandising 67% 2 46% 3 ~230 airlines live 4 Launched a number of value-add digital innovations for airlines including Travelport Resolve and Travelport Fusion Continue to sign new agencies and grow share of wallet with OTA customers 7 1 Away bookings are defined as bookings made by travel buyers located outside the travel provider s home country 2 Represents % of total air segment revenue from Away bookings 3 Represents % of total air segments from Away bookings 4 Airlines live with merchandising including fares families, branded fares, ancillaries and tailored offers as of August 3, 2017
Recent developments Beyond Air Beyond Air revenue (YoY growth) 49 Hospitality attachment 1 +11% +12% +22% +8% $108m $122m $148m $160m Q2 2014 Q2 2015 Q2 2016 Q2 2017 17m Hotel room nights sold CAGR +14% 29m Car rental days sold Beyond Air revenue up 8% with growth across payments, mobile and hospitality Strong momentum in car rental supported by a number of new content partnerships Up 1% YoY Flat YoY enett revenue (YoY growth) +16% +85% +27% +46% $16m $20m $38m $44m Up 19% YoY CAGR +40% Launched Drive Me application for carwith-driver services, and Trip Assist digital solution for travel agencies enett revenue up 16% with strong growth in APAC 8 1 Hospitality segments per 100 airline tickets issued Q2 2014 Q2 2015 Q2 2016 Q2 2017
Bernard Bot Chief Financial Officer
Summarized income statement (1 of 2) $ millions Q2 2017 Q2 2016 Better / (Worse) Net revenue 612 606 1% Commissions (289) (293) 1% Add back: Amortization of CLPs 19 18 5% Subtotal 341 331 3% % of Net revenue 55.8% 54.6% 1.1ppts Technology costs (80) (84) 4% SG&A 1 (114) (108) (6)% Adjusted EBITDA 147 139 6% % of Net revenue 24.0% 22.9% 1.1ppts Depreciation on property and equipment (44) (39) (13)% Amortization of CLPs (19) (18) (5)% Adjusted Operating Income 85 83 2% % of Net revenue 13.9% 13.7% 0.2ppts Adjustments (to U.S. GAAP Operating Income) 2 (11) (45) 76% U.S. GAAP Operating Income 74 38 96% 10 1 SG&A excluding Non-core corporate costs 2 Adjustments relate to Non-core corporate costs and amortization of intangible assets,
Summarized income statement (2 of 2) $ millions Q2 2017 Q2 2016 Better / (Worse) Adjusted Operating Income 85 83 2% Interest expense, net 1 (30) (40) 25% Subtotal 55 43 28% Remaining provision for income taxes 2 (5) (9) 42% Adjusted Net Income 50 34 46% Amortization of acquired intangible assets (10) (14) 26% Other adjustments (to U.S. GAAP Net Income/(Loss)) 3 (6) (35) n/m U.S. GAAP Net Income/(Loss) 34 (14) n/m Adjusted Income Per Share diluted $0.40 $0.28 44% U.S. GAAP Income/(Loss) Per Share diluted $0.28 $(0.12) n/m 11 n/m = percentage calculated not meaningful 1 Interest expense, net excludes $3m and $6m of unrealized losses, on interest rate derivative contracts for Q2 2017 and Q2 2016, respectively, which is included within U.S. GAAP interest expense, net 2 Remaining provision for income taxes excludes the tax impact of items excluded from Adjusted Net Income 3 Other adjustments relate to Non-core corporate costs, unrealized gains and losses on interest rate derivative contracts, loss on early extinguishment of debt, gain on sale of subsidiary and tax impact of items excluded from Adjusted Net Income
Summary cash flows $ millions Q2 2017 Q2 2016 Better / (Worse) Net cash provided by operating activities 84 77 9% Capital expenditures on property and equipment additions (23) (22) (3)% Free Cash Flow 60 54 11% Repayment of capital lease obligations and other indebtedness (10) (11) 13% Dividend to shareholders (10) (9) (3)% Repayment of term loans (net of proceeds) (6) (2) n/m Acquisitions and disposals (3) (15) 80% Other (2) (17) 88% Net increase/(decrease) in cash and cash equivalents 29 (1) n/m Supplemental cash flow information ($ millions) Q2 2017 Q2 2016 Better / (Worse) Interest payments (26) (49) 47% Tax payments (11) (4) n/m Customer loyalty payments (19) (19) 12 n/m = percentage calculated not meaningful
Net Debt and Leverage $ millions June 30, 2017 March 31, 2017 December 31, 2016 Term loans 1 2,229 2,232 2,236 Capital leases and other indebtedness 101 101 109 Cash and cash equivalents (217) (187) (140) Net Debt 2,113 2,146 2,205 LTM Adjusted EBITDA 2 597 589 574 Net leverage multiple 3.5x 3.6x 3.8x Net Debt down to $2.1bn Net leverage falls to 3.5x LTM Adjusted EBITDA Another successful re-price Now paying LIBOR +275bps on term loans Was LIBOR +475bps ~1 year ago Interest rate swaps in place $1.4bn at L=1.4% (Feb 17-19) $1.2bn at L=2.2% (Feb 19-20) 13 1 Net of unamortized debt discount and unamortized debt issuance costs 2 Adjusted EBITDA on a last twelve months (LTM) basis
Full year 2017 guidance (in $ millions, except per share amounts) FY 2017 Guidance* Growth Net revenue 2,425 2,475 3 5% Adjusted EBITDA 585 595 2 4% Adjusted Net Income 165 175 7 13% Adjusted Income per Share diluted** 1.29 1.37 5 12% Free Cash Flow 190 210 (1) 10% * Guidance assumes spot foreign exchange rates as of July 27, 2017 ** Based on expected FY fully diluted shares outstanding of 127.5m 14 The information presented here represent forward-looking statements and reflect our expectations as of August 3, 2017. 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, 2016, filed with the SEC on February 21, 2017 and our Quarterly Reports on Form 10-Q for the quarter ended March 31, 2017, filed with the SEC on May 9, 2017 and for the quarter ended June 30, 2017, to be filed on August 3, 2017
Appendices Financial Statistics Operating Statistics Key Financials Definitions
Financial statistics Net Revenue ($ thousands) Q2 2017 Q2 2016 Better / (Worse) H1 2017 H2 2016 Better / (Worse) Air 423,654 425,861 (1)% 898,129 869,745 3% Beyond Air 160,107 148,197 8% 307,692 283,199 9% Travel Commerce Platform 583,761 574,058 2% 1,205,821 1,152,944 5% Technology Services 28,346 31,847 (11)% 57,049 62,224 (8)% Net Revenue 612,107 605,905 1% 1,262,870 1,215,168 4% Travel Commerce Platform revenue as a % of Net revenue 95% 95% 0.6ppts 95% 95% 0.6ppts Beyond Air revenue as a % of Travel Commerce Platform revenue 27% 26% 1.6ppts 26% 25% 1.0ppts % of Air segment revenue from away bookings 67% 66% 0.2ppts 67% 67% (0.5)ppts Travel Commerce Platform Revenue by Region ($ thousands) Q2 2017 Q2 2016 Better / (Worse) H1 2017 H2 2016 Better / (Worse) Asia Pacific 141,725 130,526 9% 292,740 259,021 13% Europe 180,594 182,710 (1)% 383,010 377,557 1% Latin America & Canada 27,574 28,245 (2)% 56,356 56,281 Middle East & Africa 77,912 77,346 1% 161,465 150,796 7% International 427,805 418,827 2% 893,571 843,655 6% % of Travel Commerce Platform revenue 73% 73% 0.3ppts 74% 73% 0.9ppts United States 155,956 155,231 312,250 309,289 1% Travel Commerce Platform revenue 583,761 574,058 2% 1,205,821 1,152,944 5% 16
Operating statistics Reported Segments by Region (thousands) Q2 2017 Q2 2016 Better / (Worse) H1 2017 H1 2016 Better / (Worse) Asia Pacific 17,697 17,009 4% 36,905 33,998 9% Europe 19,864 20,561 (3)% 43,361 43,694 (1)% Latin America & Canada 4,530 4,524 9,156 9,074 1% Middle East & Africa 9,441 9,912 (5)% 18,917 19,633 (4)% International 51,532 52,006 (1)% 108,339 106,399 2% United States 34,849 34,801 71,239 70,381 1% Reported Segments 86,381 86,807 179,578 176,780 2% Travel Commerce Platform RevPas ($) Q2 2017 Q2 2016 Better / (Worse) H1 2017 H1 2016 Better / (Worse) International RevPas $8.30 $8.05 3% $8.25 $7.93 4% United States RevPas $4.48 $4.46 $4.38 $4.39 Travel Commerce Platform RevPas $6.76 $6.61 2% $6.71 $6.52 3% Selected Travel Commerce Platform metrics Q2 2017 Q2 2016 Better / (Worse) H1 2017 H1 2016 Better / (Worse) Transaction value processed on the Travel Commerce Platform ($m) 21,080 20,788 1% 41,634 40,921 2% Hotel room nights sold (thousands) 17,494 17,423 33,744 33,096 2% Car rental days sold (thousands) 28,721 24,236 19% 50,963 46,163 10% Hospitality segments per 100 airline tickets issued 1 49 48 1% 45 46 (2)% 17 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
Summarized income statement ($ thousands) Q2 2017 Q2 2016 Better / (Worse) H1 2017 H1 2016 Better / (Worse) Net Revenue 612,107 605,905 1% 1,262,870 1,215,168 4% Adjusted EBITDA 147,006 139,013 6% 315,559 293,153 8% Depreciation on property and equipment (43,517) (38,530) (13)% (86,034) (79,632) (8)% Amortization of customer loyalty payments (18,657) (17,687) (5)% (37,452) (34,261) (9)% Adjusted Operating Income 84,832 82,796 2% 192,073 179,260 7% Interest expense, net 1 (29,716) (39,707) 25% (60,217) (78,146) 23% Remaining provision for income taxes (5,110) (8,802) 42% (17,493) (15,872) (10)% Adjusted Net Income 50,006 34,287 46% 114,363 85,242 34% Amortization of acquired intangible assets (10,131) (13,716) 26% (20,523) (24,855) 17% Non-core corporate costs and Other 2 366 (33,991) n/m 2,387 (39,448) n/m Unrealized losses on interest rate derivative contracts (3,227) (5,406) 40% (3,001) (21,862) 86% Tax impact of adjustments (2,648) 4,397 n/m (2,997) 3,675 n/m Net Income/(Loss) 34,366 (14,429) n/m 90,229 2,752 n/m 18 n/m = percentage calculated not meaningful 1 Interest expense, net excludes unrealized losses on interest rate derivative contracts 2 Other relates to gain on sale of subsidiary in Q2 2017 and H1 2017 and revenue deferred in previous years, recorded in Q1 2017 and H1 2017
Net revenue and Adjusted EBITDA Net Revenue ($ thousands) Q2 2017 Q2 2016 Better / (Worse) Net Revenue ($ thousands) H1 2017 H1 2016 Better / (Worse) Air 423,654 425,861 (1)% Beyond Air 160,107 148,197 8% Travel Commerce Platform 583,761 574,058 2% Technology Services 28,346 31,847 (11)% Net Revenue 612,107 605,905 1% Air 898,129 869,745 3% Beyond Air 307,692 283,199 9% Travel Commerce Platform 1,205,821 1,152,944 5% Technology Services 57,049 62,224 (8)% Net Revenue 1,262,870 1,215,168 4% Adjusted EBITDA ($ thousands) Q2 2017 Q2 2016 Better / (Worse) Adjusted EBITDA ($ thousands) H1 2017 H1 2016 Better / (Worse) Net Revenue 612,107 605,905 1% Commissions (289,464) (292,714) 1% Add back: Amortization of CLPs 18,657 17,687 5% Technology costs (80,244) (83,891) 4% SG&A 1 (114,050) (107,974) (6)% Adjusted EBITDA 147,006 139,013 6% Adjusted EBITDA Margin 24.0% 22.9% 1.1ppts Net Revenue 1,262,870 1,215,168 4% Commissions (592,253) (574,756) (3)% Add back: Amortization of CLPs 37,452 34,261 9% Technology costs (164,292) (164,526) - SG&A 1 (220,607) (216,994) (2)% Adjusted EBITDA 315,559 293,153 8% Adjusted EBITDA Margin 25.0% 24.1% 0.9ppts 19 1 SG&A excluding Non-core corporate costs
Income per share Income per share ($) Q2 2017 Q2 2016 H1 2017 H1 2016 Income (Loss) per share Diluted $0.28 $(0.12) $0.72 $0.01 Adjusted Income per Share Diluted $0.40 $0.28 $0.91 $0.69 Weighted average shares (millions) Q2 2017 Q2 2016 H1 2017 H1 2016 Weighted average common shares outstanding Basic 124.4 123.8 124.2 123.8 Weighted average common shares outstanding Diluted 125.8 123.8 125.6 123.9 20
Summary cash flows, Capital Expenditures and Net Debt Free Cash Flow ($ thousands) Q2 2017 Q2 2016 H1 2017 H1 2016 Net cash provided by operating activities 83,585 76,728 178,607 102,932 Capital expenditures on property and equipment additions (23,220) (22,464) (46,829) (44,985) Free Cash Flow 60,365 54,264 131,778 57,947 Supplemental cash flow information ($ thousands) Q2 2017 Q2 2016 H1 2017 H1 2016 Interest payments (26,321) (49,374) (56,447) (86,854) Tax payments (10,552) (4,024) (14,457) (8,573) Customer loyalty payments (18,630) (18,615) (35,385) (43,922) Capital Expenditures ($ thousands) Q2 2017 Q2 2016 H1 2017 H1 2016 Capital expenditures on property and equipment additions 23,220 22,464 46,829 44,985 Repayment of capital lease obligations and other indebtedness 9,979 11,463 19,490 23,542 Capital Expenditures 33,199 33,927 66,319 68,527 Total Capital Expenditures as % of Net revenue 5.4% 5.6% 5.3% 5.6% Net Debt ($ thousands) June 30, 2017 March 31, 2017 December 31, 2016 Term loans 2 2,228,768 2,232,453 2,236,157 Capital leases and other indebtedness 101,445 100,776 108,611 Cash and cash equivalents (216,513) (187,407) (139,938) Net Debt 2,113,700 2,145,822 2,204,830 21 1 Other adjusting items relate to payments for corporate and restructuring costs, and litigation and related costs 2 Net of unamortized debt discount and unamortized debt issuance costs
Full year 2017 guidance With respect to our full year 2017 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 $120 million to $125 million and expected related income taxes of $50 million to $55 million. Adjusted Net Income guidance excludes the expected impact of amortization of intangible assets of approximately $40 million, expected equity-based compensation and related taxes and corporate and restructuring costs of $55 million to $65 million and expected income tax benefit related to these adjustments of approximately $5 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 these adjustments. Adjusted Income per Share - diluted guidance consists of Adjusted Net Income divided by our expected weighted average number of dilutive common shares for 2017 of approximately 127.5 million. Free Cash Flow guidance reflects expected net cash provided by operating activities for 2017 of $300 million to $330 million less cash additions to property and equipment of $110 million to $120 million. 22
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 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. 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 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. 23
Q2 2017 Earnings