Travelport reports third quarter 2015 results
11/02/2015|10:32:11 PM|Travelport

Key Points

· Strong Q3 financial performance with Adjusted Income per Share (diluted) of $0.25, up $0.28 year over year

· Net revenue up 6% to $560 million; RevPas up 11% to $6.29

· Double-digit revenue growth in Europe (11%), Asia Pacific (14%) and Latin America & Canada (21%)

· Over 100 airlines actively merchandising their enriched product content through Travelport, including branded fares and ancillaries

·  Beyond Air revenue up 17% to $129 million, accounting for 24% of Travel Commerce Platform revenue (Q3 2014: 22%)

· eNett reported revenue growth of 48%

· Hospitality segment attachment up 10% to 49 per 100 airline tickets issued

· Adjusted Free Cash Flow generation of $31 million, up $93 million

· Raising full year guidance on Adjusted Net Income and Adjusted Income per Share (diluted); tightening full year guidance on net revenue and Adjusted EBITDA

Gordon Wilson, President and CEO of Travelport, commented:

"Our financial performance during the quarter was driven by double-digit revenue growth across key geographies, particularly in Europe and Asia Pacific, benefiting from the increasing breadth of our Travel Commerce Platform.  We continue to truly differentiate ourselves from the competition in four key areas where we have taken industry-leading positions.  In airline merchandising, we continue to see growing adoption by airlines of our Rich Content and Branding merchandising solution, alongside strong growth in away air bookings.  Moreover, we've seen continued momentum in Beyond Air with hospitality and payments both making very good progress.  The integration of our recent acquisition in mobile travel technology, MTT, is progressing ahead of schedule, with many opportunities to explore from a new customer and product perspective.  All of this gives us comfort to tighten our full year guidance on net revenue and Adjusted EBITDA and also raise our guidance on full year Adjusted Net Income and Adjusted Income per Share."

Discussion of Results for the Third Quarter of 2015

Unless otherwise stated, all comparisons are for the third quarter of 2015 compared to the third quarter of 2014.

Net Revenue and Adjusted EBITDA

Net revenue increased by $31 million, or 6%, to $560 million primarily due to growth in Travel Commerce Platform revenue of $27 million, or 5%.  RevPas increased 11% to $6.29 driving a $42 million increase in Travel Commerce Platform revenue, which was offset by lower volumes.  International Reported Segments increased 2% driving $7 million of the increase, offset by 13% decrease in U.S. Reported Segments, due to the impact of our 2014 renegotiated contract with Orbitz Worldwide, Inc. ("Orbitz Worldwide").  Overall, total Reported Segments decreased 5% to 84 million.

Within Travel Commerce Platform revenue, there was an $18 million increase in Beyond Air revenue and a $9 millionincrease in Air revenue.  The Air revenue increase was mainly due to improved mix and merchandising.  Beyond Air revenue increased 17% to $129 million primarily driven by continued growth in payment solutions and hospitality, as well as our expansion into mobile solutions.  Technology Services revenue increased by $4 million primarily due to growth in application development.

Adjusted EBITDA decreased by $2 million, or 2%, to $131 million.  The decrease is primarily the result of lower volumes and increased expenses as we continue to invest in our platform through acquisition, expansion of our go-to-market commercial capabilities and incremental public company administrative expenses.

Operating Income 

Operating income increased by $33 million, or 155%, to $54 million primarily due to a reduction in non-core corporate costs of $29 million mainly related to $20 million of lower equity-based compensation and $6 million of lower unrealized loss on foreign currency derivative contracts, offset by a decrease in Adjusted EBITDA of $2 million.

Net Income 

Net income decreased by $150 million to $5 million primarily due to a $304 million gain on the sale of Orbitz Worldwide shares recognized for the three months ended September 30, 2014 compared to $0 for the three months ended September 30, 2015, offset by a decrease in interest expense and a loss on early extinguishment of debt of $121 million relating to the deleveraging, debt refinancing and IPO transactions completed in 2014 and a$33 million increase in operating income.

Adjusted Net Income (Loss)

Adjusted Net Income (Loss) increased by $33 million to $30 million.

Net Cash Provided by Operating Activities

Net cash provided by operating activities increased by $115 million to $62 million primarily as a result of a $77 million decrease in interest payments and $32 million of lower payments on other adjusting items and customer loyalty payments.

Adjusted Free Cash Flow

Adjusted Free Cash Flow increased by $93 million, primarily as a result of changes in our net cash provided by operating activities.

Net Debt 

Net Debt increased from $2,275 million at December 31, 2014 to $2,371 million at September 30, 2015, and is comprised of $2,472 million in total debt less $101 million in cash and cash equivalents.

Read more