Global Business Travel Group, Inc.

Good morning and welcome to the American Express Global Business Travel Fourth Quarter and Full Year 2022 Earnings Conference Call. 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, Barry Seaver. So, please go ahead, sir.

Hello and good morning, everyone. Thank you for joining us for our Fourth Quarter Earnings Conference Call. This morning, we issued an earnings press release, which is available on the SEC and on our website at investors.nxglobalbusinesstravel.com. The slide presentation that accompanies today's prepared remarks is also available on the NXGVT investor relations webpage. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry events, cost savings, and acquisition synergies, 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 and other risks and uncertainties is contained in our earnings release issued this morning and our other SEC filings. Throughout today's call, we will also be presenting certain non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses, pre-cash flow, and net debt. All references during today's call to such non-GAAP financial measures have been adjusted to exclude certain items. Definitions of these terms and the most directly comparable GAAP measures and the reconciliations for non-GAAP measures are available in the supplemental materials of this presentation and in the earnings release. Participating with me on the call today are Paul Abbott, our chief executive officer, and Martin Giroux, our chief financial officer. Also joining for the Q&A session is Eric Lopp, our chief legal officer and head of global M&A. With that, I'll now turn the call over to Paul. Paul?

Well, thank you, Barry, and welcome to everyone. Thank you very much for joining our fourth quarter earnings call. I'd like to kick off by reviewing the fourth quarter highlights before turning it over to Martine, who will take us through the financials in more detail. And then we're going to go through our outlook and our guidance for 2023. So before I get into Q4 earnings, I'd just like to make a couple of comments to address the 8K that we filed on Tuesday. Martine Gervaud, who is our Chief Financial Officer, stepped down from her role to take a new position outside of the company. And Karen Williams, who joined Amex GBT as Deputy CFO in May of last year as part of our succession planning process for the CFO role, will take over effective July the 1st. Karen joined us from IHG, as well as prior to that working at Avios, which is part of IAG and also American Express, where Karen has held a series of senior financial leadership roles. Martine is going to be with us until the end of June, so we have plenty of time for a very thoughtful and orderly transition. I do want to extend my sincere thank you to Martine for her leadership, and her significant contribution to our business in her five and a half years as CFO. Martine helped navigate the organization through the financial impact of a global pandemic and of course was also instrumental in leading the successful listing of the company. So welcome and congratulations to Karen and of course Martine. So turning back to the fourth quarter, we reported a strong finish to 2022 driven by continued recovery, record new wins and margin expansion. Our full year revenue and adjusted EBITDA were both ahead of guidance at 1.85 billion and 103 million respectively. Revenue recovery for the fourth quarter reached 75% of pro forma 2019 levels and that was up from 72% in the third quarter. Our fourth quarter adjusted EBITDA was 43 million with an 8% adjusted EBITDA margin. Pleased to say we're also on the path toward positive free cash flow with significantly reduced cash usage in the fourth quarter. Precast flow usage in the quarter declined significantly to 25 million. We also continue to accelerate our momentum in SME. The SME space, we benefit from offering a choice of market-leading solutions, Amex GBT, and Agencia, and Ovation, in what is a very large and unconsolidated segment, a segment that has the fastest growth rates and the highest margins in the industry. Our SME transaction recovery reached 82% in Q4, and that was up from 80% in Q3. Our SME new wins value totaled $2.1 billion in the full year 2022, and that is at the current recovery levels. Now that we have reached what is a meaningful point in the travel recovery, please note that we are reporting our new wins for FME and overall using the current recovery levels instead of the previous 2019 pre-COVID levels. And that's to make it easier for analysts and investors to model the impact of those new wins on our current volumes. So in addition to the strong SME momentum, I am pleased to report that new wins value and customer satisfaction levels are also both at all time highs, which I think really demonstrates the value of our industry leading service and technology and software and savings. Our strong momentum positions us well for continued strong growth ahead. Transaction recovery reached 72% of pro forma 2019 in the fourth quarter. That was up from 71% in Q3, and importantly, up 26 points year over year. Our new wins momentum, I think it shows that we continue to deliver on the significant organic growth opportunity that we have. Total new wins value for the full year 2022 was 3.5 billion. Again, that's at current recovery levels. And finally, and obviously equally importantly, our customer retention rate for the full year remains stable at 95%. So overall, we exceeded our 2022 guidance for both revenue and adjusted EBITDA. We delivered on the share gains on SME acceleration and exceeded the 25 million synergy target that we had previously. from the Agencia acquisition. And so as we look ahead to 2023, feel that we are well positioned for continued strong growth. So on slide six, let's just take a closer look at the continuum recovery, where our performance continued to improve throughout the quarter. Transaction recovery was at 72% of 2019, that was up one point sequentially, and 25 points versus Q1. And we're clearly outpacing the broader market. 72% transaction recovery compares to the GBTA January survey that found the recovery of domestic business travel at 67% and international at 54%. So that compares to our 72% transaction recovery and 75% revenue recovery in the fourth quarter, clearly outpacing the broader market. Looking at Q4, December was softer than expected across the industry, but we have seen a significant rebound of transaction volumes in January and February. And as I'm going to discuss in more detail, the outlook for business travel demand in 2023 remains strong. TTV recovery reached 70% in the fourth quarter. That was consistent with Q3, and it was up 31 points versus Q1. And finally, revenue recovery was at 75% in Q4, up three points from Q3, and up 25 points from the first quarter. So here we just take a look at the recovery trends in more detail. First of all, you'll see by customer segment, global multinational customer recovery remained pretty steady in the fourth quarter versus the third quarter, while SME customers continued to lead the recovery. Q4 SME transactions were 21 percentage points above global multinational and reached 82% of 2019, driven by obviously a faster recovery in that segment, but also by our significant share gains in the SME segment. Air recovery was stable in the fourth quarter at 66% and hotel recovery up two points versus Q3. Hotel transaction recovery was 14 percentage points above air in the fourth quarter. And this is an important strategic priority for us. We're making good progress, increasing that ratio of hotel to air bookings. And we're doing that through improved hotel content and hotel displays in both our Agencia and Neo software platforms. And finally, here on a regional basis, both the Americas and EMEA continue to improve in Q4. Within the Americas, if you unpack that, US recovery actually reached 71% in the fourth quarter. Canada was a little slower to recover. EMEA recovered by two percentage points versus Q3 and reached 74% of 2019 levels. And now that the travel restrictions have been certainly either relaxed or removed in China and Hong Kong and Singapore, it provides additional opportunity for growth and recovery in Asia in 2023. So let's turn to our commercial highlights for the fourth quarter. We delivered record new wins. We received further recognition of our ESG technology and people leadership. We are the clear leader in a $1.2 trillion industry with a significant runway for growth. And we continue to gain share with $3.5 billion of total new wins value in 2022. Again, based on the current recovery levels. And of course, supported by strong customer retention of 95%. Of course, as I mentioned, our biggest growth opportunity is with SME customers. It represents a total opportunity of $950 billion of travel spend. We are already the number one player in managed travel for SME customers, but only 30% of that $950 billion is actually managed, providing us with a significant future growth opportunity. And you can see here that we're making good progress. We signed $2.1 billion of SME New Wins value in 2022. Approximately 25% of that value, 55% of the number of customers is actually from companies whose travel programs were previously unmanaged. So I think it demonstrates we are gaining more and more traction converting this unmanaged customer travel spend into managed spending. We're also recognized as an industry leader in ESG. In the quarter, we were awarded Platinum EcoVardis status This actually places us in the top 1% of independently assessed companies across the world. And I think it demonstrates how we are helping our customers and our partners achieve their sustainability goals. Another sustainability example we've integrated with Choose, Choose Climate Tech. This allows us to actually integrate carbon emissions data at the point of sale across all of our channels, whether it's voice, whether it's Agencia, NEO. We present our carbon emissions data consistently and accurately across all channels so that both travelers and travel managers can track and be more aware of their carbon emissions data. So supporting our technology leadership, Agencia was ranked number one in two categories of the G2 Winter 23 report, most implementable solution and best results. G2 is the largest and most trusted peer-to-peer review site. It has more than 60 million people viewing. It has many Fortune 500 companies using it to inform their software decisions. In addition, Agencia also ranked as a leader in 15 categories in the G2 study. So I think it's just validation that we're providing excellent software solutions and an excellent experience to our customers. Additionally, in the quarter, Agencia was named a leader in corporate travel applications by IDC Marketscape. IDC is an independent voice that evaluates travel tech solutions. And again, it's an important influence over the B2B buying process. IDC specifically recognized, and I quote here, our data-led intuitive product experience and our ability to embed machine learning and AI into the user experience. And finally here we were voted the number one business services company in the Forbes America's Best Large Employers report in February of this year. And I would like to extend a sincere thank you to all of my colleagues around the world for their commitment and their leadership that makes this valuable recognition possible. So moving on to our strategic priorities. When we became a public company, we shared these strategic priorities, and I'm pleased to say we are clearly delivering on these priorities, and it's creating strong momentum for 2023. First of all, business travel recovery continues. Q4 revenue recovery reached 75%, up three points from Q3, and a dramatic improvement from the start of 22. Second, our recovery is significantly ahead of the industry due to continued share gains. New wins value 3.5 billion at current recovery levels. Third, we said our focus on winning in the SME segment would accelerate growth, and our results show exactly that. Q4 SME transaction recovery reached 82%. We reported SME new wins value of 2.1 billion for the full year, with approximately 25% of those wins coming from unmanaged customers. Fourth here, we're clearly delivering on the Agencia synergies. We continue to expect total opportunity of 109 million synergies. In full year 2022, we achieved approximately 45 million of synergies from the agency acquisition, which exceeded our target of 25 million. Fifth, our business model is clearly delivering significant operating leverage. In the fourth quarter, we delivered 71% revenue growth with only 16% growth in adjusted operating expenses. And finally, all these results combine to deliver significant margin expansion. In the fourth quarter, we reported 66% adjusted EBITDA fall through and an adjusted EBITDA margin of 8% and delivering financial results ahead of guidance. So to sum it up, I think our fourth quarter performance provides yet another proof point of our continued strategic and commercial and financial progress. So that completes my review of the Q4 highlights. I'd like to hand it to Martine to discuss the financial results in more detail before we move on to our 2023 outlook.