Sabre Q3 2024 Earnings Conference Call

In the recent Sabre (NASDAQ:SABR) Third Quarter 2024 Earnings Conference Call, the company reported a steady increase in revenue and Adjusted EBITDA, along with positive free cash flow. Sabre Corporation, a leading software and technology provider for the global travel industry, announced a 3% year-over-year revenue growth for Q3 2024, reaching $765 million. The company also shared optimistic projections for future earnings, aiming to double Adjusted EBITDA from 2023 to 2025.

Key Takeaways

• Q3 2024 revenue increased by 3% year-over-year to $765 million.
• Distribution revenue grew by 5% to $551 million, while Hospitality Solutions revenue rose by 7% to $84 million.
• Adjusted EBITDA for Q3 2024 stood at $131 million, a 19% increase from the previous year.
• The company anticipates Q4 2024 revenue of approximately $715 million and adjusted EBITDA of around $115 million.
• Sabre projects a full-year 2024 revenue of about $3.03 billion and adjusted EBITDA of $515 million.
• For 2025, Sabre aims for over $700 million in adjusted EBITDA and more than $200 million in free cash flow.

Company Outlook

• Sabre expects to maintain a long-term cost of revenue around 40%.
• The company is focused on strategic investments and cost management to enhance shareholder value.
• Plans to use free cash flow for debt reduction are in place.

Bearish Highlights

• IT Solutions revenue declined to $140 million, a decrease of $7 million from the previous year, due to prior demigrations.
• The company lost content from Turkish Airlines after unsuccessful negotiations, which may affect Q4 bookings.

Bullish Highlights

• Positive trends in distribution revenue and bookings, with an average booking fee increase to $5.94.
• Strongest adjusted EBITDA margin in five years at 17%.
• Optimism about competitive position and potential agreement with Turkish Airlines in the near future.

Misses

• IT Solutions segment experienced a decline in revenue.

Q&A Highlights

• CEO Kurt Ekert provided insights on Q4 guidance, stating that booking trends are consistent with Q3.
• Revenue per booking is expected to exceed $6 in Q4, influenced by seasonal trends.
• The company is confident in achieving over $700 million in adjusted EBITDA by 2025, backed by cost efficiencies and growth initiatives.
• Each point of improved industry air bookings could add approximately $13 million to EBITDA.

Sabre Corporation has demonstrated resilience and strategic growth in the third quarter of 2024. With a clear focus on enhancing shareholder value and a strong financial outlook for the coming years, the company remains steadfast in its transformation journey in the global travel industry.

InvestingPro Insights

Sabre's recent earnings call highlights steady growth and positive projections. However, a 13.04% stock drop over the past week raises concerns about the company's ability to meet its goals. Despite this, strong gross profit margins of 59.47% indicate a solid foundation for growth strategies. Nevertheless, analysts do not expect Sabre to be profitable this year, adding nuance to its ambitious projections.

Full transcript – Sabre Corporation (SABR) Q3 2024:

Operator: Good morning and welcome to the Sabre Third Quarter 2024 Earnings Conference Call. My name is Riska and I will be your operator. As a reminder, today's call is being recorded. I will now turn the call over to the Senior Vice President, Investor Relations and Treasurer, Brian Evans. Please go ahead, sir.

Brian Evans: Thank you and good morning everyone. Welcome to Sabre’s third quarter 2024 earnings call. This morning, we issued an earnings press release, which is available on our website at investors.sabre.com. A slide presentation, which accompanies today’s prepared remarks, is also available during this call on the Sabre Investor Relations web page. A replay of today’s call will be available on our website later this morning. We advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the effects of growth strategies, share growth and distribution volumes, results of our technology transformation, commercial arrangements, and our financial guidance and targets, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today’s conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our Form 10-Q for the quarter ended September 30, 2024. Participating with me are Kurt Ekert, President and CEO, and Mike Randolfi, Chief Financial Officer.

Kurt Ekert: Thanks, Brian. Hello everyone, and thank you for joining today’s presentation. I am pleased to share that the Sabre team delivered significant commercial, operational, and financial achievements in the third quarter. Earlier today, we reported third quarter results that highlight the progress we are making toward our key strategic and financial priorities. We delivered steady year-on-year revenue growth, a significant increase in Adjusted EBITDA, continued margin expansion, and positive free cash flow. We are on track to more than double Adjusted EBITDA from 2023 to 2025, supported by the continued execution of our growth strategies, a strong focus on cost management, and the realization of cost-savings objectives tied to our technology transformation. I commend our team members around the world for their commitment to innovation and their dedication to our customers.

Mike Randolfi: Thanks, Kurt and good morning, everyone. We achieved a number of important financial objectives in the third quarter. We generated year-on-year revenue growth and delivered solid cost management that resulted in higher margins and strong flow-through to the bottom-line. Adjusted EBITDA in the third quarter was meaningfully higher year-on-year and we generated positive free cash flow which is a key strategic priority as we focus on improving our capital structure and deleveraging the balance sheet.

As we prioritize utilizing expected free cash flow to pay down debt, we believe debt over time will comprise a smaller proportion, and equity a larger proportion of our enterprise value further enhancing shareholder value.