Latest News
HomeTechnologySabre reports first quarter 2002 financial results – revenue down 5.9%; net earnings up 33%

Sabre reports first quarter 2002 financial results – revenue down 5.9%; net earnings up 33%

Sabre<.> Holdings Corporation reported solid first quarter 2002 financial results despite a volatile industry environment…

Sabre<.> Holdings Corporation reported solid first quarter 2002 financial results despite a volatile industry environment. The company reported first quarter 2002 earnings per share, excluding special items, of $0.62, slightly higher than the company's projection due to lower operating costs and expense control. First quarter, 2002 revenues were $539 million, in line with previous projections. Revenues continued to reflect the impact of depressed travel in an industry that is still recovering. Global travel bookings in the first quarter were down 13.8 percent, year-over-year, in line with expectations.



For the first quarter, the company also reported strong results for other key financial metrics, including earnings before interest, taxes, depreciation, and amortization (EBITDA) of $150 million, and free cash flow of $84 million.



"We continue to achieve our financial targets despite challenging times for the travel industry," said William J. Hannigan, chairman and CEO, Sabre. "In the first quarter, we held the line on operating costs while executing on our long-term strategy, including announcing and subsequently closing the Travelocity tender offer, conducting a successful equity offering, and taking steps to strengthen merchant model capabilities with Travelocity's acquisition of Site59."



"We remain well positioned to capitalize on the gradual rebound of travel,"
Hannigan said.



FIRST QUARTER FINANCIAL RESULTS



Continuing Operations


  • Total revenues from continuing operations for the first quarter of 2002 were $539 million, a decrease of 5.9 percent from $573 million during the same period a year ago.

  • Operating income from continuing operations for the first quarter, excluding special items, was $141 million, up 22 percent from $115 million in the year-ago quarter.

  • Net earnings from continuing operations for the first quarter, excluding special items described below, were $84 million, an increase of 33.5 percent, compared to $63 million in the year-ago quarter.


Total Company


  • First quarter net earnings, before special items, were $84 million, a decline of 1.1 percent compared to $85 million in the first quarter of 2001. The prior year quarterly results include Sabre's airline infrastructure outsourcing business sold to EDS on July 2, 2001.

  • Total company earnings per share, before special items, on a diluted basis were $0.62, a 3.1 percent decline compared to $0.64 in the year-ago quarter.

  • Special items in the first quarter of 2002 included:

  • Expense of $20.5 million associated with the amortization of certain intangibles, stock compensation, and transaction fees arising from merger and acquisition activity.

  • A one-time gain of approximately $18 million from the sale of the company's former corporate office facility.

  • A one-time gain of $4 million related to the sale of France Telecom shares by one of Sabre's joint venture partners.


Including the impact of those special items, as described in the accompanying schedules, net earnings for the company in the first quarter were $87 million, or $0.64 per share on a diluted basis, compared to net earnings of $17 million, or $0.13 per share on a diluted basis in the year-ago quarter. If Financial Accounting Standards No. 142, Goodwill and Other Intangible Assets, adopted by the company effective January 1, 2002, had been in effect during the first quarter of 2001, comparable net earnings would have been $68 million, or $0.51 per share on a diluted basis, as a result of the non- amortization of goodwill and other intangible assets.



BUSINESS UNIT REVIEW



Travel Marketing and Distribution



Total worldwide travel bookings processed through the Sabre global distribution system, which includes direct bookings and joint venture bookings for which Sabre or its distribution partners earn a booking fee, were 108 million for the first quarter, 2002, a decrease of 13.8 percent from last year's record bookings quarter. Bookings within the United States declined 17.8 percent for the first quarter, year-over-year, while international bookings declined 8.1 percent.

Revenues from the travel marketing and distribution business were $424 million for the first quarter of 2002, down 9.2 percent from the year-ago quarter. While airline booking revenue was in line with expectations, non-air bookings revenue was slower to ramp up during the quarter.



Travelocity.com



With the successful completion of a tender offer, and subsequent short- form merger on April 11, Travelocity is now a wholly owned Sabre company. Sabre plans to report Travelocity financial and operating metrics in its earnings announcement going forward.



Travelocity diluted earnings per share, excluding special items, were $0.12 for the first quarter, 2002. Gross travel bookings in the first quarter were $783 million, compared to $834 million in the year-ago quarter, a six percent decrease. First quarter revenues were $74 million compared to $73 million in the first quarter of 2001, a 1.1 percent increase. First quarter transaction revenues for Travelocity were impacted by overall industry weakness and lower bookings due to an earlier than normal Easter holiday, typically a seasonally slow period.



During the quarter, Travelocity membership rose by 1.9 million members from the prior quarter to 33.8 million. Total transactions were up 13.6 percent sequentially and down 16.3 percent from the first quarter a year ago.



GetThere



Revenues from GetThere, Sabre's web-based travel booking system for corporations and suppliers, were $12 million in the first quarter of 2002, a 7.4 percent increase from $11 million in the year-ago quarter. GetThere saw strong corporate revenue growth of over 93 percent.



Corporate adoption rates, a key GetThere metric, now average 14 percent, an increase of about 56 percent from the same period last year. GetThere set corporate booking records during the quarter, with a record month in January, and a record day in February. GetThere also announced several new customers during the quarter, including Nokia.



Airline Solutions



First quarter revenues from Airline Solutions were $52 million, an increase of 7.5 percent, compared to $49 million in the year-ago quarter. Operating margins for Airline Solutions improved significantly, primarily due to cost control. While revenue grew at more than seven percent, the company expects Airline Solutions revenue to remain at previously stated guidance of flat to slightly better for the year. During the quarter, the business announced several customer wins, including China Airlines and KLM Royal Dutch Airlines.



1Q 2002 HIGHLIGHTS


  • Sabre launched a cash tender offer for the outstanding publicly held shares of Travelocity.com. Inc. common stock that Sabre did not own. Sabre had an approximately 70-percent ownership stake in Travelocity. The tender offer was successfully completed on April 5. After a merger on April 11, Travelocity is now a wholly owned Sabre company.

  • Sabre announced its plan to offer approximately 8.0 million shares of its Class A common stock under its effective shelf registration statement on file with the U.S. Securities and Exchange Commission. On April 4, 8.2 million shares were priced at $44.50. Sabre plans to use the proceeds from the offering for general corporate purposes. Travelocity purchased Site59.com, Inc., a leading online seller of last-minute merchant model air, hotel and rental car inventory, significantly increasing its merchant model sales capabilities. Under terms of the deal, Travelocity acquired Site59 for $43 million in cash.

  • Travelocity reached a major distribution agreement with Walt Disney Parks and Resorts to dynamically package Disney products under the Travelocity Vacations brand. Travelocity will also work directly with Disney to access theme park tickets and onsite hotel room inventory.

  • Travelocity secured new marketing agreements with several major airlines during the quarter, including Continental, Delta and Northwest. Through its new industry-leading cruise technology, Travelocity also recorded its first $1 million cruise booking day. Travelocity is now one of the leading online cruise agencies.

  • In Europe, French travel agency Jancarthier contracted to use the Sabre global distribution system for travel bookings. Jancarthier's 26 business travel centers and leisure agencies started converting to Sabre in March.

  • * GetThere and Rosenbluth International signed an agreement to provide GetThere's online corporate reservation system as a preferred offering for Rosenbluth's small and medium-sized clients. The new offering allows travelers to make reservations online while still adhering to the policies set forth within their company's corporate managed travel program.

  • Sabre's Airline Solutions business had several major wins in the first quarter. In a three-year deal, Sabre completed the successful implementation of a billing and marketing information access system for KLM Royal Dutch Airlines. The deal enables KLM to use the system via the Sabre eMergo web-enabled dedicated network solution.

  • Sabre reached a multi-million dollar, 10-year agreement to provide Royal Brunei Airlines with software systems for their reservations, airport check-in services, revenue management and loyalty operations, supplemented by consulting services.
Theodore Koumelis
Co-Founder & Managing Director - Travel Media Applications | Website

Theodore is the Co-Founder and Managing Editor of TravelDailyNews Media Network; his responsibilities include business development and planning for TravelDailyNews long-term opportunities.

19/07/2024
18/07/2024
17/07/2024
16/07/2024
15/07/2024