Sabre Corporation

Good morning, and welcome to the Sabre Third Quarter 2022 Earnings Conference Call. My name is Amy, and I will be your operator. As a reminder, please note today's call is being recorded. I will now turn the call over to the Vice President of Investor Relations, Kevin Crissy. Please go ahead, sir.

Thanks, Amy, and good morning, everyone. Thank you for joining us for our Third Quarter 2022 Earnings Call. This morning we issued an earnings press release which is available on our website at investors.saber.com. A slide presentation which accompanies today's prepared remarks is also available during this call on the Saber Investor Relations webpage. A replay of today's call will be available on our website later this morning. We would like to advise you that our comments contain forward-looking statements that reflect our beliefs or expectations about future events, including the duration and effects of COVID-19, industry and recovery trends, benefits from our technology transformation and commercial and strategic arrangements, our financial outlook and targets, expected revenue costs and expenses, cost savings, margins, and liquidity, 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 SECOND QUARTER 2022 FORM 10Q AND 2021 FORM 10K THROUGHOUT TODAY'S CALL WE'LL ALSO BE PRESENTING CERTAIN NON-GAP FINANCIAL MEASURES REFERENCES DURING TODAY'S CALL TO ADJUSTED OPERATING INCOME ADJUSTED NET INCOME ADJUSTED EBITDA ADJUSTED EBITDA MARGIN ADJUSTED EPS AND FREE CASH FLOW HAVE BEEN ADJUSTED TO EXCLUDE CERTAIN ITEMS THE MOST DIRECTLY COMPARABLE GAP MEASURES and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.saber.com. Participating with me are Sean Minke, Chair of the Board and Chief Executive Officer, Kurt Eckert, our President, and Mike Randolphie, our Chief Financial Officer. And with that, I'll turn the call over to Sean. Thanks, Kevin.

Good morning, everyone, and thank you for joining us today. On slide four, you can see an overview of the topics Kurt, Mike, and I will cover on today's call. As usual, I'll start by providing perspective on the trends we are seeing in the travel marketplace, including specific bookings, passengers boarded, and hospitality CRS transaction trends. Kurt will then discuss the significant progress we made in the third quarter towards our technology transformation and provide further perspective for how our technology architecture is changing. He will also update you on a few commercial accomplishments in the quarter. Finally, Mike will take you through the financial results of the quarter and our financial outlook for the remainder of 2022. Before I start, I want to thank my Sabre team members worldwide. Over the past few months, I've been able to travel and meet with many of them. The fantastic work they are doing for our customers is helping drive us to be the premier global technology platform in travel. Turning to slide five, I'm pleased to report that our air booking volumes improved considerably throughout the quarter. Volumes, specifically in July, were impacted by both airline and airport operational constraints. As the quarter progressed, we saw solid improvements, which translated into our best quarter of recovery since the onset of the COVID-19 pandemic. These positive trends continued in October. The current strength is attributable to the global recovery, with Asia Pacific the most pronounced. The total distribution booking recovery in the third quarter was 57% versus the same period in 2019. This equates to a 64% revenue recovery as a result of the higher booking rate achieved in the third quarter of 2022 versus the third quarter of 2019. Higher revenue per booking resulted from a continued improvement in international travel. IT Solutions passengers boarded recovered 96% in the third quarter versus the same period in 2019. Hotel CRS transactions in Q3 were 104% compared to the same period in 2019. Our key metrics remained strong in October. Specifically, as of the 26th of October, distribution bookings were 60% versus the same period in 2019. Passengers boarding, excluding RADx volumes, were at 86%, and CRS transactions were at 109%. Moving to slide six, Last quarter, we noted 100 million annualized revenue opportunity if our Asia Pacific region were to recover to the average recovery of the other regions. I am very pleased to say we are starting to see further positive signs in this region, particularly in international markets, which have been the slowest to recover. As we've discussed before, international bookings are generally more profitable than domestic bookings for SABR. Accordingly, as international flying returns more fully, We expect our profitability to improve. Within APAC, our bookings improvement has been most pronounced in Taiwan and Hong Kong, where travel restrictions have recently been relaxed. Hong Kong bookings started Q3 at just 16% of the same period in 2019. By the end of the quarter, the recovery there was 29%. Taiwan is an even better story, with the quarter starting at 17% recovery and ending at 45%. Turning to slide seven, Although we are aware of the concerns regarding global economic growth, we don't see evidence of a slowdown in either leisure or corporate demand. In fact, we have seen fares globally remain very strong and well above the fares prior to the COVID-19 pandemic. We see the effect for domestic and international flights, as depicted here, but also for leisure travel, which tends to book well in advance of departure, and for closing corporate travel. Our own internal review of fares being sold at walk-up, Advanced purchase between 7 and 21 days and 21 days and beyond are well above 2019 levels. It is also important to note that the average fare disparity between the purchase date is very small. Historically, there has been a more pronounced difference in the average fares based on advanced purchase periods. Higher air fares encourage airlines to increase the number of seats they plan to fly. In fact, we are seeing this materialize with the large U.S. network carriers. Current marketing schedules loaded for these carriers in the first quarter of 2023 reflects an increase in total seats to be flown of 1.6% versus 2019. This compares to total seats being down 11 and 9% respectively in the third and fourth quarter of 2022 versus the same period in 2019. More importantly, international growth is outpacing domestic growth. In the first quarter of 2023, Seats to be flown internationally are currently up 3.4% versus being down approximately 10% and approximately 3.5% in the third and fourth quarters of 2022 versus the same period in 2019. Moving to slide eight, we thought it would be helpful given the news flow regarding a possible economic slowdown to present this slide again this quarter. We believe it provides perspective for how significantly COVID impacted global air travel in 2020 to 2022. In short, even with the recovery to date, we believe the opportunity presented by a normalization of travel from COVID is significantly larger than the effect of any prior economic recession on global passenger traffic. Historically, the largest calendar year drop in global passengers was only about 3%. We estimate global passenger traffic in 2022 will likely be about 1.5 billion passengers below what we would expect in a normalized year, unaffected by COVID. Obviously, this is far greater than the 3%. Let me now turn the call over to Kurt to walk you through the latest regarding our technology transformation and a few commercial highlights. Kurt?