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8-K - FORM 8-K - Travelport LTD | y93345e8vk.htm |
Exhibit 99.1
Travelport
Third Quarter 2011 Update
Building the platform for growth
Third Quarter 2011 Update
Building the platform for growth
Atlanta, GA, November 9, 2011 Travelport Limited, a leading provider of critical transaction
processing for the global travel industry, today announces its financial results for the third
quarter ended September 30, 2011.
Financial Summary for Third Quarter 2011:
($ in millions)
($ in millions)
| Net Revenue Q3 2011: $509 (2010: $488) |
| Operating Income Q3 2011: $51 (2010: $75) |
| Adjusted EBITDA Q3 2011: $118 (2010: $135) |
Financial Summary for YTD 2011:
($ in millions)
($ in millions)
| Net Revenue YTD 2011: $1,570 (2010: $1,544) |
| Operating Income YTD 2011: $196 (2010: $229) |
| Adjusted EBITDA YTD 2011: $401 (2010: $430) |
| Net cash provided by operating activities of continuing operations YTD 2011: $86 (2010: $103) |
Operational Highlights:
| Further new product introduced Travelport Smartpoint App and Travelport Rooms and More |
| Expanded emerging markets geographic footprint |
| Continued to expand airline and hotel content including several merchandising agreements |
| Successfully completed debt restructuring with increased covenant headroom |
Post Quarter End Highlights:
| Signed unprecedented joint development agreement with TravelSky |
| Travelport Universal Desktop secured first customers in Asia and the USA |
Commenting on developments, Gordon Wilson, President and CEO of Travelport, said:
We continue to gain momentum on our commercial objectives of enhanced travel content aggregation,
the deployment of new point of sale technologies for travel agencies and travel product suppliers,
and expanding our geographic and customer segment footprints. I am pleased to report solid results
for the quarter, with revenue up 4%, volume up 3% and Adjusted EBITDA in line with management
expectations despite the uncertain economic climate in many key geographies.
Financial Highlights for Third Quarter 2011
Travelports main business is its global distribution system (GDS), which includes the Worldspan
and Galileo brands and the Companys Airline IT Solutions business.
($ in millions)
Q3 2011 | Q3 2010 | Change | % Change | |||||||||||||
Net Revenue |
$ | 509 | $ | 488 | $ | 21 | 4 | % | ||||||||
Operating Income |
$ | 51 | $ | 75 | $ | (24 | ) | (32 | )% | |||||||
EBITDA |
$ | 107 | $ | 130 | $ | (23 | ) | (18 | )% | |||||||
Adjusted EBITDA |
$ | 118 | $ | 135 | $ | (17 | ) | (13 | )% |
Travelports Net Revenue of $509 million for the third quarter of 2011 was $21 million (+4%) higher
than last year as a result of a $16 million increase in transaction processing revenue driven by a
+3% increase in segment volumes, with the largest increases in the Americas and Asia Pacific.
Airline IT Solutions revenue increased by $5 million to $53 million in the quarter. Operating
Income and EBITDA were $51 million and $107 million, respectively, for the third quarter of 2011,
with a decrease of 32% in Operating Income and a decrease of 18% in EBITDA compared to 2010.
Adjusted EBITDA was $118 million for the third quarter of 2011, a 13% decrease compared to 2010.
Adjusted EBITDA declined $17 million (13%) primarily due to the re-introduction of the management
incentive plan in 2011. Excluding the impact of the management incentive plan, the underlying
Adjusted EBITDA would have been consistent with the prior year.
1
Financial Highlights for YTD 2011
($ in millions)
YTD 2011 | YTD 2010 | Change | % Change | |||||||||||||
Net Revenue |
$ | 1,570 | $ | 1,544 | $ | 26 | 2 | % | ||||||||
Operating Income |
$ | 196 | $ | 229 | $ | (33 | ) | (14 | )% | |||||||
EBITDA |
$ | 365 | $ | 386 | $ | (21 | ) | (5 | )% | |||||||
Adjusted EBITDA |
$ | 401 | $ | 430 | $ | (29 | ) | (7 | )% |
Travelports Net Revenue of $1,570 million for YTD 2011 was $26 million (+2%) higher than last year
due to $16 million (+1%) incremental transaction processing revenue and $10 million (+7%)
incremental Airline IT Solutions revenue. Transaction processing revenue increased in Europe and
Asia Pacific and was partially offset by a decrease in the Middle East and Africa. Operating Income
and EBITDA were $196 million and $365 million, respectively, for YTD 2011, a decrease of 14% in
Operating Income and a decrease of 5% in EBITDA compared to 2010. Adjusted EBITDA was $401 million
for YTD 2011, a 7% decrease compared to 2010. Adjusted EBITDA declined $29 million (7%) primarily
due to the re-introduction of the management incentive plan in 2011. Excluding the impact of the
management incentive plan, Adjusted EBITDA would have been consistent with the prior year.
As previously announced, the restructuring of Travelport Holdings Limiteds, Travelports direct
parent company, senior unsecured payment-in-kind term loans was successfully completed. In
connection with the restructuring, on September 30, 2011, Travelport amended its existing credit
facility pursuant to the fourth amended and restated credit agreement, which, among other things,
allows for a new second lien term loan, of which $207.5 million was issued, and recorded as a
non-cash distribution to Travelport Holdings Limited. Travelport also distributed $89.5 million in
cash to Travelport Holdings Limited as part of the restructuring.
Interest costs of $223 million were $21 million higher for YTD 2011 due to higher interest rates
arising from amendments made to the senior secured credit agreement in the fourth quarter of 2010
and certain fees and expenses incurred in September 2011 related to the fourth amended and restated
credit agreement, partially offset by a reduction in interest costs as a result of the early
repayment of $655 million in term loans following the sale of GTA in the second quarter of 2011.
During the nine months ended September 30, 2011, Travelport generated $86 million in net cash
provided by operating activities of continuing operations, a $17 million decrease from 2010,
primarily due to the decrease in earnings and higher cash interest payments net of operating
working capital movements.
Travelports net debt was $3,157 million as of September 30, 2011, which comprised debt of $3,384
million less $90 million in cash and cash equivalents and less $137 million of restricted cash
provided as collateral.
2
Conference Call
The Companys third quarter 2011 earnings conference call for investors will be held on Wednesday,
November 9, 2011, beginning at 1200hrs (EDT). Conference call details are available through the
Investor Center section of the Companys website (www.travelport.com/investor.aspx), where
pre-registration for the event is required.
About Travelport
Travelport is a broad-based business services company and a leading provider of critical
transaction processing solutions to companies operating in the global travel industry.
With a presence in 160 countries, approximately 3,500 employees and reported 2010 revenues from
continuing operations of $2.0 billion, Travelport is comprised of the global distribution system
(GDS) business, which includes the Galileo and Worldspan brands and its Airline IT Solutions
business, which hosts mission critical applications and provides business and data analysis
solutions for major airlines.
Headquartered in Atlanta, Georgia, Travelport is a privately owned company.
Investor Contact
Julian Walker
Head of Corporate Communications and Investor Relations
+44 (0)17 5328 8210
julian.walker@travelport.com
Head of Corporate Communications and Investor Relations
+44 (0)17 5328 8210
julian.walker@travelport.com
3
Forward-Looking Statements
Certain statements in this press release constitute forward-looking statements that involve known
and unknown risks, uncertainties and other factors which may cause the actual results, performance
or achievements of the Company to be materially different from any future results, performance or
achievements expressed or implied by such forward-looking statements. Statements preceded by,
followed by or that otherwise include the words believes, expects, anticipates, intends,
projects, estimates, plans, may increase, may fluctuate and similar expressions or future
or conditional verbs such as will, should, would, may and could are generally
forward-looking in nature and not historical facts. Any statements that refer to expectations or
other characterizations of future events, circumstances or results are forward-looking statements.
Various risks that could cause future results to differ from those expressed by the forward-looking
statements included in this press release include, but are not limited to: the impact that our
outstanding indebtedness may have on the way we operate our business; factors affecting the level
of travel activity, particularly air travel volume, including security concerns, general economic
conditions, natural disasters and other disruptions; general economic and business conditions in
the markets in which we operate, including fluctuations in currencies; pricing, regulatory and
other trends in the travel industry; our ability to obtain travel supplier inventory from travel
suppliers, such as airlines, hotels, car rental companies, cruise lines and other travel suppliers;
our ability to develop and deliver products and services that are valuable to travel agencies and
travel suppliers and generate new revenue streams, including our new universal desktop product;
risks associated with doing business in multiple countries and in multiple currencies; maintenance
and protection of our information technology and intellectual property; the impact on supplier
capacity and inventory resulting from consolidation of the airline industry; financing plans and
access to adequate capital on favorable terms; our ability to achieve expected cost savings from
our efforts to improve operational efficiency; our ability to maintain existing relationships with
travel agencies and tour operators and to enter into new relationships on acceptable financial and
other terms; and our ability to grow adjacencies, such as our acquisition of Sprice and our
controlling interest in eNett. Other unknown or unpredictable factors also could have material
adverse effects on our performance or achievements. In light of these risks, uncertainties,
assumptions and factors, the forward-looking events discussed in this press release may not occur.
You are cautioned not to place undue reliance on these forward-looking statements, which speak only
as of the date stated, or if no date is stated, as of the date of this press release. Except to the
extent required by applicable securities laws, the Company undertakes no obligation to release any
revisions to any forward-looking statements, to report events or to report the occurrence of
unanticipated events unless required by law.
This release includes certain non-GAAP financial measures as defined under SEC rules. As
required by SEC rules, important information regarding such measures is contained below.
4
TRAVELPORT LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(unaudited)
Three Months | Three Months | Nine Months | Nine Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
September 30, | September 30, | September 30, | September 30, | |||||||||||||
(in $ millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net revenue |
509 | 488 | 1,570 | 1,544 | ||||||||||||
Costs and expenses |
||||||||||||||||
Cost of revenue |
313 | 279 | 940 | 867 | ||||||||||||
Selling, general and administrative |
89 | 79 | 261 | 287 | ||||||||||||
Restructuring charges |
| | 4 | 4 | ||||||||||||
Depreciation and amortization |
56 | 55 | 169 | 157 | ||||||||||||
Total costs and expenses |
458 | 413 | 1,374 | 1,315 | ||||||||||||
Operating income |
51 | 75 | 196 | 229 | ||||||||||||
Interest expense, net |
(74 | ) | (73 | ) | (223 | ) | (202 | ) | ||||||||
(Loss) income from continuing operations before income taxes and
equity in earnings of investment in Orbitz Worldwide |
(23 | ) | 2 | (27 | ) | 27 | ||||||||||
Provision for income taxes |
(8 | ) | (7 | ) | (27 | ) | (36 | ) | ||||||||
Equity in earnings of investment in Orbitz Worldwide |
5 | 8 | 4 | 10 | ||||||||||||
Net (loss) income from continuing operations |
(26 | ) | 3 | (50 | ) | 1 | ||||||||||
Income (loss) from discontinued operations, net of tax |
| 21 | (6 | ) | 24 | |||||||||||
Gain from disposal of discontinued operations, net of tax |
| | 312 | | ||||||||||||
Net (loss) income |
(26 | ) | 24 | 256 | 25 | |||||||||||
Net loss attributable to non-controlling interest in subsidiaries |
| 1 | 1 | 1 | ||||||||||||
Net (loss) income attributable to the Company |
(26 | ) | 25 | 257 | 26 | |||||||||||
5
TRAVELPORT LIMITED
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
September 30, | December 31, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
90 | 94 | ||||||
Accounts receivable (net of allowances for doubtful accounts of $31 and $24) |
209 | 161 | ||||||
Deferred income taxes |
4 | 4 | ||||||
Assets of discontinued operations |
| 1,066 | ||||||
Other current assets |
182 | 185 | ||||||
Total current assets |
485 | 1,510 | ||||||
Property and equipment, net |
441 | 484 | ||||||
Goodwill |
986 | 986 | ||||||
Trademarks and tradenames |
314 | 314 | ||||||
Other intangible assets, net |
702 | 770 | ||||||
Cash held as collateral |
137 | 137 | ||||||
Investment in Orbitz Worldwide |
100 | 91 | ||||||
Non-current deferred income tax |
4 | 4 | ||||||
Other non-current assets |
266 | 204 | ||||||
Total assets |
3,435 | 4,500 | ||||||
Liabilities and equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
96 | 72 | ||||||
Accrued expenses and other current liabilities |
495 | 474 | ||||||
Liabilities of discontinued operations |
| 555 | ||||||
Current portion of long-term debt |
12 | 18 | ||||||
Total current liabilities |
603 | 1,119 | ||||||
Long-term debt |
3,372 | 3,796 | ||||||
Deferred income taxes |
41 | 37 | ||||||
Other non-current liabilities |
199 | 220 | ||||||
Total liabilities |
4,215 | 5,172 | ||||||
Commitments
and contingencies |
||||||||
Shareholders equity: |
||||||||
Common shares $1.00 par value; 12,000 shares authorized; 12,000 shares
issued and outstanding |
| | ||||||
Additional paid in capital |
714 | 1,011 | ||||||
Accumulated deficit |
(1,429 | ) | (1,686 | ) | ||||
Accumulated other comprehensive loss |
(79 | ) | (9 | ) | ||||
Total shareholders equity |
(794 | ) | (684 | ) | ||||
Equity attributable to non-controlling interest in subsidiaries |
14 | 12 | ||||||
Total equity |
(780 | ) | (672 | ) | ||||
Total liabilities and equity |
3,435 | 4,500 | ||||||
6
TRAVELPORT LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months | Nine Months | |||||||
Ended | Ended | |||||||
September 30, | September 30, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Operating activities of continuing operations |
||||||||
Net income |
256 | 25 | ||||||
Income from discontinued operations (including gain from disposal), net of tax. |
(306 | ) | (24 | ) | ||||
Net (loss)/income from continuing operations |
(50 | ) | 1 | |||||
Adjustments to reconcile net (loss)/income from continuing operations to net
cash provided by operating |
||||||||
activities
of continuing operations: |
||||||||
Depreciation and amortization |
169 | 157 | ||||||
Provision for bad debts |
1 | (1 | ) | |||||
Equity-based compensation |
| 2 | ||||||
Amortization of debt finance costs |
14 | 19 | ||||||
(Gain) loss on interest rate derivative instruments |
(10 | ) | 5 | |||||
Loss (gain) on foreign exchange derivative instruments |
5 | (3 | ) | |||||
Equity in earnings of investment in Orbitz Worldwide |
(4 | ) | (10 | ) | ||||
Deferred income taxes |
3 | 3 | ||||||
FASA liability |
(12 | ) | (14 | ) | ||||
Defined benefit pension plan funding |
(13 | ) | ¯ | |||||
Changes in assets and liabilities, net of effects from acquisitions: |
||||||||
Accounts receivable |
(50 | ) | (31 | ) | ||||
Other current assets |
11 | (6 | ) | |||||
Accounts payable, accrued expenses and other current liabilities |
5 | (8 | ) | |||||
Other |
17 | (11 | ) | |||||
Net cash provided by operating activities of continuing operations |
86 | 103 | ||||||
Net cash (used in) provided by operating activities of discontinued operations |
(12 | ) | 151 | |||||
Investing activities |
||||||||
Property and equipment additions |
(55 | ) | (159 | ) | ||||
Proceeds from sale of GTA Business, net of cash disposed of $7 million |
628 | | ||||||
Investment in Orbitz Worldwide |
| (50 | ) | |||||
Businesses acquired |
| (16 | ) | |||||
Loan to a parent company |
| (9 | ) | |||||
Loan repaid
by a parent company |
| 9 | ||||||
Other |
5 | 5 | ||||||
Net cash provided by (used in) investing activities |
578 | (220 | ) | |||||
Financing activities |
||||||||
Principal repayments |
(669 | ) | (295 | ) | ||||
Proceeds from new borrowings |
| 380 | ||||||
Proceeds from settlement of derivative contracts |
33 | 10 | ||||||
Payments on settlement of derivative contracts |
| (74 | ) | |||||
Distribution to a parent company |
(89 | ) | | |||||
Debt finance costs |
(84 | ) | (5 | ) | ||||
Other |
| (3 | ) | |||||
Net cash (used in) provided by financing activities |
(809 | ) | 13 | |||||
Effect of changes in exchange rates on cash and cash equivalents |
5 | 5 | ||||||
Net (decrease) increase in cash and cash equivalents |
(152 | ) | 52 | |||||
Cash and
cash equivalents at beginning of period (including cash of
discontinued operations) |
242 | 217 | ||||||
Cash and cash equivalents at end of period |
90 | 269 | ||||||
Less: cash of discontinued operations |
| (178 | ) | |||||
Cash and cash equivalents of continuing operations at end of period |
90 | 91 | ||||||
Supplementary disclosures of cash flow information of continuing operations |
||||||||
Interest payments |
240 | 200 | ||||||
Income tax payments, net |
13 | 22 | ||||||
Non-cash capital distribution to a parent company |
208 | | ||||||
Non-cash capital lease additions |
16 | 28 |
7
TRAVELPORT LIMITED
NON-GAAP MEASURES
(in $ millions and unaudited)
NON-GAAP MEASURES
(in $ millions and unaudited)
Reconciliation of Travelport Adjusted EBITDA to Operating Income | Three Months Ended September 30, | |||||||
2011 | 2010 | |||||||
Travelport Adjusted EBITDA |
118 | 135 | ||||||
Less adjustments: |
||||||||
Corporate transaction costs |
(2 | ) | (6 | ) | ||||
Equity-based compensation |
¯ | 1 | ||||||
Unrealized (losses) gains on foreign exchange derivatives |
(6 | ) | 3 | |||||
Other |
(3 | ) | (3 | ) | ||||
Total |
(11 | ) | (5 | ) | ||||
EBITDA |
107 | 130 | ||||||
Less: Depreciation and amortization |
(56 | ) | (55 | ) | ||||
Operating income |
51 | 75 | ||||||
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
Travelport Adjusted EBITDA |
401 | 430 | ||||||
Less adjustments: |
||||||||
Corporate transaction costs |
(9 | ) | (32 | ) | ||||
Restructuring charges |
(4 | ) | (4 | ) | ||||
Equity-based compensation |
¯ | (2 | ) | |||||
Unrealized (losses) on foreign exchange derivatives |
(4 | ) | (1 | ) | ||||
Other |
(19 | ) | (5 | ) | ||||
Total |
(36 | ) | (44 | ) | ||||
EBITDA |
365 | 386 | ||||||
Less: Depreciation and amortization |
(169 | ) | (157 | ) | ||||
Operating income |
196 | 229 | ||||||
8
TRAVELPORT LIMITED
NON-GAAP MEASURES
(in $ millions and unaudited)
NON-GAAP MEASURES
(in $ millions and unaudited)
Reconciliation of Travelport Adjusted EBITDA to Net Cash Provided | ||||||||
by Operating Activities of Continuing Operations and Unlevered | Nine Months Ended | |||||||
Free Cash Flow | September 30, | |||||||
2011 | 2010 | |||||||
Travelport Adjusted EBITDA |
401 | 430 | ||||||
Less: |
||||||||
Cash interest payments |
(240 | ) | (200 | ) | ||||
Tax payments |
(13 | ) | (22 | ) | ||||
Changes in operating working capital |
(9 | ) | (55 | ) | ||||
FASA liability payments |
(12 | ) | (14 | ) | ||||
Defined benefit pension plan funding |
(13 | ) | ¯ | |||||
Other non-operating and adjusting items |
(28 | ) | (36 | ) | ||||
Net cash provided by operating activities of continuing operations |
86 | 103 | ||||||
Add cash interest payments |
240 | 200 | ||||||
Less capital expenditures of continuing operations |
(50 | ) | (153 | ) | ||||
Unlevered free cash flow |
276 | 150 | ||||||
Travelport Adjusted EBITDA is a non-GAAP measure and may not be comparable to similarly named
measures used by other companies. We believe this measure provides management with a more complete
understanding of the underlying results and trends and an enhanced overall understanding of our
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 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
available to management when evaluating the results of Travelport. Adjusted EBITDA is defined as
EBITDA adjusted to exclude the impact of purchase accounting, impairment of goodwill and
intangibles assets, expenses incurred in conjunction with Travelports separation from Cendant,
expenses incurred to acquire and integrate Travelports portfolio of businesses, costs associated
with Travelports restructuring efforts, non-cash equity-based compensation, and other adjustments
made to exclude expenses management views as outside the normal course of operations. Adjusted
EBITDA is a critical measure as it is required to calculate our key financial ratios under our
credit agreement covenants. These ratios use our Adjusted EBITDA for the last twelve months and use
our consolidated net debt and our first lien debt as at the balance sheet date and are known as our
Total Leverage Ratio and our First Lien Leverage Ratio. We are currently in compliance with our
Total Leverage Ratio and our First Lien Leverage Ratio. A breach of these covenants could result in
a default under the senior secured credit agreement and the indentures governing our notes.
Unlevered free cash flow is a non-GAAP measure and may not be comparable to similarly named
measures used by other companies. Unlevered free cash flow is defined as net cash provided by (used
in) continuing operations adjusted to exclude cash interest payments and include capital
expenditures, all of which are GAAP measures included within our Statements of Cash Flows. We
believe unlevered free cash flow provides management and investors with a more complete
understanding of the underlying liquidity of the core operating businesses and our ability to meet
its current and future financing and investing needs.
9
TRAVELPORT LIMITED
Operating Statistics
(unaudited)
Operating Statistics
(unaudited)
Three Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2011 | 2010 | Change | % Change | |||||||||||||
Segments (in millions) |
||||||||||||||||
Americas Segments |
44.9 | 43.5 | 1.4 | 3 | % | |||||||||||
International Segments: |
||||||||||||||||
Europe |
20.4 | 20.2 | 0.2 | 1 | % | |||||||||||
Asia Pacific |
14.4 | 13.6 | 0.8 | 6 | % | |||||||||||
Middle East and Africa |
9.3 | 8.9 | 0.4 | 4 | % | |||||||||||
Total Segments |
89.0 | 86.2 | 2.8 | 3 | % | |||||||||||
Nine Months Ended | ||||||||||||||||
September 30, | ||||||||||||||||
2011 | 2010 | Change | % Change | |||||||||||||
Segments (in millions) |
||||||||||||||||
Americas Segments |
137.3 | 135.0 | 2.3 | 2 | % | |||||||||||
International Segments: |
||||||||||||||||
Europe |
65.7 | 65.1 | 0.6 | 1 | % | |||||||||||
Asia Pacific |
43.5 | 41.8 | 1.7 | 4 | % | |||||||||||
Middle East and Africa |
29.0 | 30.0 | (1.0 | ) | (3 | %) | ||||||||||
Total Segments |
275.5 | 271.9 | 3.6 | 1 | % | |||||||||||
10