Q3 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, for the quarter ended June 30, 2017, filed with the SEC on August 3, 2017, and for the quarter ended September 30, 2017, to be filed with the SEC on November 2, 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 Q3 2017 Results Presentation, a recording of which will be available on Travelport s investor relations website shortly after the live presentation on November 2, 2017.
Gordon Wilson President and Chief Executive Officer
Year to date 2017: Key point summary %% Financial performance on track. Net revenue up 4%, Adjusted EBITDA up 2% and Adjusted Income per Share (diluted) up 7% to $1.09 Benefiting from differentiation. 10% revenue growth in Beyond Air and 6% revenue growth in higher yielding International (non-us) markets enett continues to grow. enett net revenue up 23% with growth accelerating in the second half of the year Strong cash generation. Free Cash Flow of $195m, up 36% 4
Continued strategic progress in 2017 Landmark customer signings further strengthen record pipeline Investing to enhance products and capabilities New segments signed and to be implemented Global average response time reduced by 1/3 YTD Expanding data, mobile and payments product ranges Partnership with India s largest OTA Increasingly leveraging cloud-based technologies Transition to TCS (Tata) complete; IGTS divested Signing of a leading Southeast Asian OTA 2014 2015 2016 2017E Investing in enhanced API conveyance mechanisms First in our industry to receive both IATA NDC Aggregator Level 1 and IT Provider Level 2 certification enett on track for >20% revenue growth in FY 2017 Continue to de-lever and reduce interest expense 5 Further penetration of large global OTAs Strong pipeline of new implementations Continued investments in wider product and currency capabilities Further successful re-price of term loans in August 2017 Further prepayment made in September 2017 for $50 million of term loans principal Net leverage stable at 3.6x LTM Adjusted EBITDA
Revenue and Reported Segments Travel Commerce Platform Revenue (YoY growth) 6 +4% +5% $501m $528m $560m $586m Q3 2014 Q3 2015 Q3 2016 Q3 2017 Air YoY 1% 2% 2% 2% Beyond Air YoY 14% 17% 18% 11% RevPas progression (YoY growth) +1% +5% +11% +6% +6% +3% $5.67 $6.29 $6.67 $6.86 Q3 2014 Q3 2015 Q3 2016 Q3 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 +5% CAGR +7% Q3 2017 Travel Commerce Platform Revenue & Reported Segments (YoY growth) Revenue Reported Segments International 7% 4% US Flat (2)% All Regions 5% 2% International % 74% 1 61% 2
Recent developments Air Air revenue (YoY growth) +1% +2% +2% +2% Significant contract renewals agreed with Japan Airlines, Norwegian Air and WestJet CAGR +2% 238 airlines now implemented 4 with Travelport s industry-leading airline merchandising solutions $390m $399m $408m $417m Q3 2014 Q3 2015 Q3 2016 Q3 2017 Q3 2017 Away 1 Air revenue Away Air segments Airline merchandising Continued air market share gains in Asia and Latin America 67% 2 47% 3 238 airlines live 4 Continued success in signing and onboarding new agencies; growing share of wallet with several key 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 November 1, 2017
Recent developments Beyond Air Beyond Air revenue (YoY growth) 48 Hospitality attachment 1 Down 1 YoY +14% enett revenue (YoY growth) $111m $129m $152m $169m Q3 2014 Q3 2015 Q3 2016 Q3 2017 +44% +17% 18m Hotel room nights sold +48% Up 4% YoY +18% +60% +11% CAGR +15% 30m Car rental days sold +30% $18m $27m $42m $54m Up 16% YoY CAGR +45% Beyond Air revenue up 11% with growth across payments, mobile and hospitality Renewed deals with major car rental companies including Hertz; including Travelport s innovative business intelligence tools Equipping customers with leading edge mobile capabilities through Travelport Trip Assist (agencies) and Travelport Fusion (airlines/hotels) enett net revenue up 30% with strong transaction growth in APAC and Europe 8 1 Hospitality segments per 100 airline tickets issued Q3 2014 Q3 2015 Q3 2016 Q3 2017
Bernard Bot Chief Financial Officer
Summarized income statement (1 of 2) $ millions Q3 2017 Q3 2016 Better / (Worse) Net revenue 611 591 3% Commissions (307) (274) (12)% Add back: Amortization of CLPs 20 21 (5)% Subtotal 324 338 (4)% % of Net revenue 53.0% 57.2% (4.2)ppts Technology costs (81) (78) (4)% SG&A 1 (106) (110) 3% Adjusted EBITDA 136 150 (9)% % of Net revenue 22.3% 25.5% (3.1)ppts Depreciation on property and equipment (40) (42) 4% Amortization of CLPs (20) (21) 5% Adjusted Operating Income 76 88 (13)% % of Net revenue 12.5% 14.9% (2.3)ppts Adjustments (to U.S. GAAP Operating Income) 2 (16) (26) 39% U.S. GAAP Operating Income 61 62 (2)% 10 1 SG&A excluding Non-core corporate costs. Non-core corporate costs include corporate and restructuring costs, equity-based compensation and related taxes, impairment of long-lived assets, and unrealized gains and losses on foreign currency derivative contracts. 2 Adjustments relate to Non-core corporate costs and amortization of intangible assets
Summarized income statement (2 of 2) $ millions Q3 2017 Q3 2016 Better / (Worse) Adjusted Operating Income 76 88 (13)% Interest expense, net 1 (31) (34) 10% Subtotal 46 54 (15)% Remaining provision for income taxes 2 (23) (13) (84)% Adjusted Net Income 23 41 (45)% Amortization of acquired intangible assets (10) (12) 14% Other adjustments (to U.S. GAAP Net Income) 3 (8) (8) (1)% U.S. GAAP Net Income 5 21 (78)% Adjusted Income Per Share diluted $0.18 $0.33 (46)% U.S. GAAP Income Per Share diluted $0.04 $0.17 (77)% 11 1 Interest expense, net excludes $2m and $4m of unrealized gains on interest rate derivative contracts for Q3 2017 and Q3 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, and the tax impact of items excluded from Adjusted Net Income
Summary cash flows $ millions Q3 2017 Q3 2016 Better / (Worse) Net cash provided by operating activities 96 111 (14)% Capital expenditures on property and equipment additions (32) (25) (29)% Free Cash Flow 63 86 (26)% Repayment of capital lease obligations and other indebtedness (10) (11) 3% Dividend to shareholders (9) (9) (1)% Repayment of term loans (net of proceeds) (56) (56) n/m Other 2 (75)% Net (decrease)/increase in cash and cash equivalents (12) 11 n/m Supplemental cash flow information ($ millions) Q3 2017 Q3 2016 Better / (Worse) Interest payments (27) (24) (11)% Tax payments (9) (6) (40)% Customer loyalty payments (19) (13) (52)% 12 n/m = percentage calculated not meaningful
Net Debt and Leverage $ millions September 30, 2017 June 30, 2017 December 31, 2016 Term loans 1 2,177 2,229 2,236 Capital leases and other indebtedness 97 101 109 Cash and cash equivalents (205) (217) (140) Net Debt 2,070 2,114 2,205 LTM Adjusted EBITDA 2 583 597 574 Net leverage multiple 3.55x 3.54x 3.84x Net Debt down to $2.1bn Net leverage of 3.6x LTM Adjusted EBITDA Benefit from August re-price Now paying LIBOR +275bps on term loans Was LIBOR +475bps ~18 months ago Interest rate swaps in place $1.4bn at L=1.4% (Feb 17-19) Further hedges in place out to 2021 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 ranges unchanged (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 October 26, 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 November 2, 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, for the quarter ended June 30, 2017, filed on August 3, 2017, and for the quarter ended September 30, 2017, to be filed on November 2, 2017
Appendices Financial Statistics Operating Statistics Key Financials Definitions
Financial statistics Net Revenue ($ thousands) Q3 2017 Q3 2016 Better / (Worse) 9M 2017 9M 2016 Better / (Worse) Air 417,371 407,926 2% 1,315,500 1,277,671 3% Beyond Air 168,782 151,857 11% 476,474 435,056 10% Travel Commerce Platform 586,153 559,783 5% 1,791,974 1,712,727 5% Technology Services 24,689 30,973 (20)% 81,738 93,197 (12)% Net Revenue 610,842 590,756 3% 1,873,712 1,805,924 4% Travel Commerce Platform revenue as a % of Net revenue 96% 95% 1.2ppts 96% 95% 0.8ppts Beyond Air revenue as a % of Travel Commerce Platform revenue 29% 27% 1.7ppts 27% 25% 1.2ppts % of Air segment revenue from away bookings 67% 66% 0.5ppts 67% 67% (0.2)ppts Travel Commerce Platform Revenue by Region ($ thousands) Q3 2017 Q3 2016 Better / (Worse) 9M 2017 9M 2016 Better / (Worse) Asia Pacific 145,008 129,309 12% 437,748 388,330 13% Europe 185,801 180,746 3% 568,811 558,303 2% Latin America & Canada 27,563 26,336 5% 83,919 82,617 2% Middle East & Africa 77,494 72,833 6% 238,959 223,629 7% International 435,866 409,224 7% 1,329,437 1,252,879 6% % of Travel Commerce Platform revenue 74% 73% 1.3ppts 74% 73% 1.0ppts United States 150,287 150,559 462,537 459,848 1% Travel Commerce Platform revenue 586,153 559,783 5% 1,791,974 1,712,727 5% 16
Operating statistics Reported Segments by Region (thousands) Q3 2017 Q3 2016 Better / (Worse) 9M 2017 9M 2016 Better / (Worse) Asia Pacific 17,807 16,735 6% 54,712 50,733 8% Europe 20,117 19,588 3% 63,478 63,282 Latin America & Canada 4,706 4,279 10% 13,862 13,353 4% Middle East & Africa 9,354 9,243 1% 28,271 28,876 (2)% International 51,984 49,845 4% 160,323 156,244 3% United States 33,413 34,100 (2)% 104,652 104,481 Reported Segments 85,397 83,945 2% 264,975 260,725 2% Travel Commerce Platform RevPas ($) Q3 2017 Q3 2016 Better / (Worse) 9M 2017 9M 2016 Better / (Worse) International RevPas $8.38 $8.21 2% $8.29 $8.02 3% United States RevPas $4.50 $4.41 2% $4.42 $4.40 Travel Commerce Platform RevPas $6.86 $6.67 3% $6.76 $6.57 3% Selected Travel Commerce Platform metrics Q3 2017 Q3 2016 Better / (Worse) 9M 2017 9M 2016 Better / (Worse) Transaction value processed on the Travel Commerce Platform ($m) 21,432,958 19,912,707 8% 63,067,084 60,833,894 4% Hotel room nights sold (thousands) 17,615 16,945 4% 51,359 50,041 3% Car rental days sold (thousands) 29,841 25,669 16% 80,804 71,832 12% Hospitality segments per 100 airline tickets issued 1 48 49 (3)% 46 47 (1)% 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) Q3 2017 Q3 2016 Better / (Worse) 9M 2017 9M 2016 Better / (Worse) Net Revenue 610,842 590,756 3% 1,873,712 1,805,924 4% Adjusted EBITDA 136,437 150,432 (9)% 451,996 443,585 2% Depreciation on property and equipment (40,149) (41,743) 4% (126,183) (121,375) (4)% Amortization of customer loyalty payments (19,896) (20,932) 5% (57,348) (55,193) (4)% Adjusted Operating Income 76,392 87,757 (13)% 268,465 267,017 1% Interest expense, net 1 (30,673) (34,204) 10% (90,890) (112,350) 19% Remaining provision for income taxes (23,048) (12,558) (84)% (40,541) (28,430) (43)% Adjusted Net Income 22,671 40,995 (45)% 137,034 126,237 9% Amortization of acquired intangible assets (10,165) (11,838) 14% (30,688) (36,693) 16% Non-core corporate costs and Other 2 (10,170) (14,639) 31% (7,783) (54,087) 86% Unrealized losses on interest rate derivative contracts 1,880 4,391 (57)% (1,121) (17,471) n/m Tax impact of adjustments 465 2,495 n/m (2,532) 6,170 n/m Net Income 4,681 221,404 n/m 94,910 24,156 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 9M 2017, revenue deferred in previous years, recorded in Q1 2017 and 9M 2017, loss on early extinguishment of debt and impairment of long-lived assets
Net revenue and Adjusted EBITDA Net Revenue ($ thousands) Q3 2017 Q3 2016 Better / (Worse) Net Revenue ($ thousands) 9M 2017 9M 2016 Better / (Worse) Air 417,371 407,926 2% Beyond Air 168,782 151,857 11% Travel Commerce Platform 586,153 559,783 5% Technology Services 24,689 30,973 (20)% Net Revenue 610,842 590,756 3% Air 1,315,500 1,277,671 3% Beyond Air 476,474 435,056 10% Travel Commerce Platform 1,791,974 1,712,727 5% Technology Services 81,738 93,197 (12)% Net Revenue 1,873,712 1,805,924 4% Adjusted EBITDA ($ thousands) Q3 2017 Q3 2016 Better / (Worse) Adjusted EBITDA ($ thousands) 9M 2017 9M 2016 Better / (Worse) Net Revenue 610,842 590,756 3% Commissions (306,971) (273,702) (12)% Add back: Amortization of CLPs 19,896 20,932 (5)% Technology costs (81,056) (77,832) (4)% SG&A 1 (106,274) (109,722) 3% Adjusted EBITDA 136,437 150,432 (9)% Adjusted EBITDA Margin 22.3% 25.5% (3.1)ppts Net Revenue 1,873,712 1,805,924 4% Commissions (899,224) (848,458) (6)% Add back: Amortization of CLPs 57,348 55,193 4% Technology costs (245,348) (242,358) (1)% SG&A 1 (326,881) (326,716) - Adjusted EBITDA 451,996 443,585 2% Adjusted EBITDA Margin 24.1% 24.6% (0.4)ppts 19 1 SG&A excluding Non-core corporate costs
Income per share Income per share ($) Q3 2017 Q3 2016 9M 2017 9M 2016 Income per share Diluted $0.04 $0.17 $0.76 $0.18 Adjusted Income per Share Diluted $0.18 $0.33 $1.09 $1.02 Weighted average shares (millions) Q3 2017 Q3 2016 9M 2017 9M 2016 Weighted average common shares outstanding Basic 124.5 123.9 124.3 123.8 Weighted average common shares outstanding Diluted 126.2 124.3 125.8 124.2 20
Summary cash flows, Capital Expenditures and Net Debt Free Cash Flow ($ thousands) Q3 2017 Q3 2016 9M 2017 9M 2016 Net cash provided by operating activities 95,735 110,926 274,342 213,858 Capital expenditures on property and equipment additions (32,363) (25,145) (79,192) (70,130) Free Cash Flow 63,372 85,781 195,150 143,728 Supplemental cash flow information ($ thousands) Q3 2017 Q3 2016 9M 2017 9M 2016 Interest payments (26,847) (24,134) (83,294) (110,988) Tax payments (9,083) (6,497) (23,540) (15,069) Customer loyalty payments (19,207) (12,611) (54,592) (56,533) Capital Expenditures ($ thousands) Q3 2017 Q3 2016 9M 2017 9M 2016 Capital expenditures on property and equipment additions 32,363 25,145 79,192 70,130 Repayment of capital lease obligations and other indebtedness 10,321 10,664 29,811 34,206 Capital Expenditures 42,684 35,809 109,003 104,336 Total Capital Expenditures as % of Net revenue 7.0% 6.1% 5.8% 5.8% Net Debt ($ thousands) September 30, 2017 June 30, 2017 December 31, 2016 Term loans 1 2,177,415 2,228,768 2,236,157 Capital leases and other indebtedness 97,148 101,445 108,611 Cash and cash equivalents (204,646) (216,513) (139,938) Net Debt 2,069,917 2,113,700 2,204,830 21 1 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 approximately $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 taxes related to these adjustments of up to $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
Q3 2017 Earnings