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EX-10.1 - EX-10.1 - Travelport LTD | y92246exv10w1.htm |
8-K - FORM 8-K - Travelport LTD | y92246e8vk.htm |
Exhibit 99.1
Travelport
Second Quarter 2011 Update
Continuing to make significant progress on commercial objectives
Atlanta, GA, August 4, 2011 Travelport Limited, a leading provider of critical transaction
processing for the global travel industry, today announces its financial results for the second
quarter ended June 30, 2011.
Financial Summary for Second Quarter 2011:
($ in millions)
($ in millions)
| Net Revenue Q2 2011: $530 (2010: $520) | ||
| Operating Income Q2 2011: $66 (2010: $82) | ||
| Adjusted EBITDA Q2 2011: $136 (2010: $153) |
Financial Summary for First Half 2011:
($ in millions)
($ in millions)
| Net Revenue H1 2011: $1,061 (2010: $1,056) | ||
| Operating Income H1 2011: $145 (2010: $154) | ||
| Adjusted EBITDA H1 2011: $283 (2010: $295) | ||
| Net cash provided by operating activities of continuing operations H1 2011: $98 (2010: $106) |
Operational Highlights:
| Announced numerous supplier agreements | ||
| Grew Low Cost Carrier segments | ||
| Further developed our product and service offering | ||
| Completed the sale of GTA |
Post Quarter End Highlights:
| Launched Travelport Rooms and More |
Commenting on the performance for the First Half 2011, Gordon Wilson, President and CEO of
Travelport, said:
I am pleased to report a first half performance in line with management expectations, which was
achieved despite the impact of extraneous global events in the earlier part of the year.
We continue to make significant progress on our business objectives and look forward confidently
to the remainder of the year, with the knowledge that we have further developments to unveil over
the coming months.
Financial Highlights for Second Quarter 2011
Travelports main business is its global distribution system (GDS), which includes the Worldspan
and Galileo brands and the Companys Airline IT Solutions business.
($ in millions)
Q2 2011 | Q2 2010 | Change | % Change | |||||||||||||
Net Revenue |
$ | 530 | $ | 520 | $ | 10 | 2 | % | ||||||||
Operating Income |
$ | 66 | $ | 82 | $ | (16 | ) | (20 | )% | |||||||
EBITDA |
$ | 123 | $ | 136 | $ | (13 | ) | (10 | )% | |||||||
Adjusted EBITDA |
$ | 136 | $ | 153 | $ | (17 | ) | (11 | )% |
Travelports Net Revenue of $530 million for the second quarter of 2011 represented a $10
million increase compared to the corresponding period in the prior year. Operating Income and
EBITDA were $66 million and $123 million,
respectively, for the second quarter of 2011, with a decrease of 20% in Operating Income and a
decrease of 10% in EBITDA compared to 2010. Adjusted EBITDA was $136 million for the second quarter
of 2011, an 11% decrease compared to 2010. Net Revenue was $10 million higher than last year as a
result of a $6 million increase in transaction processing revenue due to increases in Europe and
Asia Pacific, partially offset by decreases in the Americas and the Middle East and Africa. Airline
IT Solutions revenue increased by $4 million to $54 million. Operating Income declined $16 million
(20%)
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and Adjusted EBITDA declined $17 million (11%) due to an increase in cost of revenue,
partially offset by a reduction in selling, general and administrative costs.
Second quarter 2011 interest costs of $72 million were $9 million higher than 2010 due to higher
interest rates arising from amendments made to our senior secured credit agreement in the fourth
quarter of 2010 partially offset by a reduction as a result of the early repayment in May 2011 of $655
million in term loans following the sale of GTA.
Financial Highlights for First Half 2011
($ in millions)
H1 2011 | H1 2010 | Change | % Change | |||||||||||||
Net Revenue |
$ | 1,061 | $ | 1,056 | $ | 5 | | |||||||||
Operating Income |
$ | 145 | $ | 154 | $ | (9 | ) | (6 | )% | |||||||
EBITDA |
$ | 258 | $ | 256 | $ | 2 | 1 | % | ||||||||
Adjusted EBITDA |
$ | 283 | $ | 295 | $ | (12 | ) | (4 | )% |
Travelports Net Revenue of $1,061 million for the first half of 2011 represented a $5 million
increase compared to the corresponding period in the prior year. Operating Income and EBITDA were
$145 million and $258 million, respectively, for the first half of 2011, with a decrease of 6% in
Operating Income and an increase of 1% in EBITDA compared to 2010. Adjusted EBITDA was $283 million
for the first half of 2011, a 4% decrease compared to 2010. Net Revenue increased compared to last
year due to $5 million incremental Airline IT Solutions
revenue. Transaction processing revenue
remained flat compared to the prior year, with an increase in transaction processing revenue in
Europe and Asia Pacific offset by decreases in the Americas and the Middle East and Africa.
Operating Income declined $9 million (6%) due to an increase in cost of revenue, partially offset
by a reduction in selling, general and administrative costs.
Interest costs of $149 million were $20 million higher for the first half of 2011 than for 2010 due
to higher interest rates arising from amendments made to our senior secured credit agreement in the
fourth quarter of 2010 partially offset by a
reduction as a result of the early repayment of $655 million in term loans following the sale of
GTA.
During the six months ended June 30, 2011, Travelport generated $98 million in net cash provided by
operating activities of continuing operations, an $8 million decrease from 2010, resulting from
higher cash interest paid and improved operating working capital.
On May 5, 2011, Travelport completed the sale of its Gullivers Travel Associates (GTA) business
to Kuoni Travel Holdings Limited (Kuoni). Proceeds from the sale, together with existing cash, were used to repay
$655 million of indebtedness outstanding under our senior secured credit agreement. As a
result, Travelports net debt was reduced to $2,816 million as of June 30, 2011, which
comprised debt of $3,241 million less $288 million in cash and cash equivalents and less $137
million of restricted cash provided as collateral.
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Conference Call/Webcast
The Companys second quarter 2011 earnings conference call will be accessible to the media and
general public via live Internet webcast on Thursday, August 4, 2011, beginning at 1100hrs (EDT)
and through a limited number of dial-in conference lines. The webcast and 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.
Travelport also owns approximately 48% of Orbitz Worldwide (NYSE: OWW), a leading global online
travel company. Travelport is a private company owned by The Blackstone Group, One Equity Partners,
Technology Crossover Ventures, and Travelport management.
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 | Six Months | Six Months | |||||||||||||
Ended | Ended | Ended | Ended | |||||||||||||
June 30, | June 30, | June 30, | June 30, | |||||||||||||
(in $ millions) | 2011 | 2010 | 2011 | 2010 | ||||||||||||
Net revenue |
530 | 520 | 1,061 | 1,056 | ||||||||||||
Costs and expenses |
||||||||||||||||
Cost of revenue |
310 | 285 | 627 | 588 | ||||||||||||
Selling, general and administrative |
96 | 96 | 172 | 208 | ||||||||||||
Restructuring charges |
1 | 3 | 4 | 4 | ||||||||||||
Depreciation and amortization |
57 | 54 | 113 | 102 | ||||||||||||
Total costs and expenses |
464 | 438 | 916 | 902 | ||||||||||||
Operating income |
66 | 82 | 145 | 154 | ||||||||||||
Interest expense, net |
(72 | ) | (63 | ) | (149 | ) | (129 | ) | ||||||||
Loss (income) from continuing
operations before income taxes and
investment in Orbitz Worldwide |
(6 | ) | 19 | (4 | ) | 25 | ||||||||||
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TRAVELPORT LIMITED
CONSOLIDATED CONDENSED BALANCE SHEETS
(unaudited)
June 30, | December 31, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Assets |
||||||||
Current assets: |
||||||||
Cash and cash equivalents |
288 | 94 | ||||||
Accounts receivable (net of allowances for doubtful accounts of $27 and $24) |
205 | 161 | ||||||
Deferred income taxes |
4 | 4 | ||||||
Assets of discontinued operations |
| 1,066 | ||||||
Other current assets |
246 | 185 | ||||||
Total current assets |
743 | 1,510 | ||||||
Property and equipment, net |
457 | 484 | ||||||
Goodwill |
987 | 986 | ||||||
Trademarks and tradenames |
314 | 314 | ||||||
Other intangible assets, net |
724 | 770 | ||||||
Cash held as collateral |
137 | 137 | ||||||
Other non-current assets |
318 | 299 | ||||||
Total assets |
3,680 | 4,500 | ||||||
Liabilities and equity |
||||||||
Current liabilities: |
||||||||
Accounts payable |
103 | 72 | ||||||
Accrued expenses and other current liabilities |
533 | 474 | ||||||
Liabilities of discontinued operations |
| 555 | ||||||
Current portion of long-term debt |
15 | 18 | ||||||
Total current liabilities |
651 | 1,119 | ||||||
Long-term debt |
3,226 | 3,796 | ||||||
Deferred income taxes |
40 | 37 | ||||||
Other non-current liabilities |
219 | 220 | ||||||
Total liabilities |
4,136 | 5,172 | ||||||
Commitments and contingencies |
||||||||
Total equity |
(456 | ) | (672 | ) | ||||
Total liabilities and equity |
3,680 | 4,500 | ||||||
6
TRAVELPORT LIMITED
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months | Six Months | |||||||
Ended | Ended | |||||||
June 30, | June 30, | |||||||
(in $ millions) | 2011 | 2010 | ||||||
Net cash provided by operating activities of continuing operations |
98 | 106 | ||||||
Net cash provided by operating activities of discontinued operations |
(12 | ) | 98 | |||||
Investing activities |
||||||||
Property and equipment additions |
(34 | ) | (136 | ) | ||||
Proceeds from sale of GTA Business, net of cash disposed of $7 million |
633 | | ||||||
Investment in Orbitz Worldwide |
| (50 | ) | |||||
Businesses acquired |
| (16 | ) | |||||
Loan to parent |
| (5 | ) | |||||
Other |
5 | 5 | ||||||
Net cash provided by (used in) investing activities |
604 | (202 | ) | |||||
Financing activities |
||||||||
Principal repayments |
(662 | ) | (112 | ) | ||||
Proceeds from new borrowings |
| 100 | ||||||
Proceeds from settlement of derivative contracts |
12 | | ||||||
Payments on settlement of derivative contracts |
| (30 | ) | |||||
Net cash used in financing activities |
(650 | ) | (42 | ) | ||||
Effect of changes in exchange rates on cash and cash equivalents |
6 | (10 | ) | |||||
Net increase (decrease) in cash and cash equivalents |
46 | (50 | ) | |||||
Cash and cash equivalents at beginning of period |
242 | 217 | ||||||
Cash and cash equivalents at end of period |
288 | 167 | ||||||
Less: cash
of discontinued operations |
| (116 | ) | |||||
Cash and
cash equivalents of continuing operations at end of period |
288 | 51 | ||||||
Supplementary disclosures of cash flow information |
||||||||
Interest payments |
151 | 111 | ||||||
Income tax payments, net |
9 | 15 | ||||||
Non-cash capital lease additions |
15 | 1 |
7
TRAVELPORT LIMITED
NON-GAAP MEASURES
(in $ millions and unaudited)
(in $ millions and unaudited)
Three Months Ended June 30, | ||||||||
Reconciliation of Travelport Adjusted EBITDA to Operating Income | 2011 | 2010 | ||||||
Travelport Adjusted EBITDA |
136 | 153 | ||||||
Less adjustments: |
||||||||
Acquisitions and corporate transaction costs |
4 | 7 | ||||||
Restructuring charges |
1 | 3 | ||||||
Unrealized losses on foreign exchange derivatives |
1 | 3 | ||||||
Other |
7 | 4 | ||||||
Total |
13 | 17 | ||||||
EBITDA |
123 | 136 | ||||||
Less: Depreciation and amortization |
(57 | ) | (54 | ) | ||||
Operating income |
66 | 82 | ||||||
Six Months Ended June 30, | ||||||||
2011 | 2010 | |||||||
Travelport Adjusted EBITDA |
283 | 295 | ||||||
Less adjustments: |
||||||||
Acquisitions and corporate transaction costs |
7 | 26 | ||||||
Restructuring charges |
4 | 4 | ||||||
Unrealized (gains) losses on foreign exchange derivatives |
(2 | ) | 4 | |||||
Other |
16 | 5 | ||||||
Total |
25 | 39 | ||||||
EBITDA |
258 | 256 | ||||||
Less: Depreciation and amortization |
(113 | ) | (102 | ) | ||||
Operating income |
145 | 154 | ||||||
8
TRAVELPORT LIMITED
NON-GAAP MEASURES
(in $ millions and unaudited)
(in $ millions and unaudited)
Reconciliation of Travelport Adjusted EBITDA to Net Cash Provided by Operating Activities of | Six Months Ended June 30, | |||||||
Continuing Operations and Unlevered Free Cash Flow | 2011 | 2010 | ||||||
Travelport Adjusted EBITDA |
283 | 295 | ||||||
Less: |
||||||||
Cash interest payments |
(151 | ) | (111 | ) | ||||
Tax payments |
(9 | ) | (15 | ) | ||||
Changes in operating working capital |
7 | (25 | ) | |||||
FASA liability payments |
(9 | ) | (9 | ) | ||||
Other non-operating and adjusting items |
(23 | ) | (29 | ) | ||||
Net cash provided by operating activities of continuing operations |
98 | 106 | ||||||
Add cash interest payments |
151 | 111 | ||||||
Less capital expenditures |
(29 | ) | (133 | ) | ||||
Unlevered free cash flow |
220 | 84 | ||||||
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. The Adjusted EBITDA measure is a defined term within our
credit agreement and bond indentures. 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 ratio under our credit agreement covenants. This ratio compares our
Adjusted EBITDA for the last twelve months to our consolidated net debt and is known as our
Leverage Ratio. We are currently in compliance with our Leverage Ratio. A breach of this covenant
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 | ||||||||||||||||
June 30, | ||||||||||||||||
2011 | 2010 | Change | % Change | |||||||||||||
Segments (in millions) |
||||||||||||||||
Americas Segments |
45.2 | 44.6 | 0.6 | 1 | % | |||||||||||
International Segments: |
||||||||||||||||
Europe |
21.1 | 20.7 | 0.4 | 2 | % | |||||||||||
Asia Pacific |
14.6 | 14.0 | 0.6 | 4 | % | |||||||||||
Middle East and Africa |
10.1 | 10.6 | (0.5 | ) | (5 | )% | ||||||||||
Total Segments |
91.0 | 89.9 | 1.1 | 1 | % | |||||||||||
Six Months Ended | ||||||||||||||||
June 30, | ||||||||||||||||
2011 | 2010 | Change | % Change | |||||||||||||
Segments (in millions) |
||||||||||||||||
Americas Segments |
92.4 | 91.5 | 0.9 | 1 | % | |||||||||||
International Segments: |
||||||||||||||||
Europe |
45.3 | 44.9 | 0.4 | 1 | % | |||||||||||
Asia Pacific |
29.1 | 28.2 | 0.9 | 3 | % | |||||||||||
Middle East and Africa |
19.7 | 21.1 | (1.4 | ) | (7 | )% | ||||||||||
Total Segments |
186.5 | 185.7 | 0.8 | | % | |||||||||||
10