LANGLEY, U.K., Nov. 1, 2018
/PRNewswire/ -- Travelport Worldwide Limited (NYSE: TVPT)
today announced its financial results for the third quarter and
nine months ended September 30,
2018.
Key Points (for the third quarter unless stated
otherwise)
- Net revenue increased 2% to $623
million
- Net income increased 25% to $6
million; Adjusted EBITDA increased 2% to $139 million
- Travel Commerce Platform revenue increased 2% to
$598 million
- Beyond Air revenue increased 14% to $193 million, contributing 32% of Travel Commerce
Platform revenue (Q3 2017: 29%); eNett net revenue increased 58% to
$86 million
- Income per share (diluted) increased 4% to $0.04; Adjusted Income per Share (diluted)
increased 74% to $0.31
- Net cash provided by operating activities decreased 13% to
$83 million; Free Cash Flow decreased
24% to $48 million
- Anticipate 2018 net revenue, Adjusted EBITDA and Free Cash
Flow to be at the lower end of guidance ranges
Gordon Wilson, President and CEO
of Travelport, commented:
"We delivered net revenue and Adjusted EBITDA growth of 2% each
in the quarter. The continued strong performance of Beyond Air,
driven by our virtual payments business eNett, helped us overcome
the more challenging market and customer environment we anticipated
for the second half of the year.
In the quarter, we continued to build the business in line with
our strategy. Our Travel Commerce Platform delivered further
business successes, especially in the regional corporate and online
sectors where we are clearly benefiting from the investments we are
making in the quality of our content and the capabilities and
efficiency of our technology. We also strengthened our value
proposition by concluding long-term deals to distribute the content
of Air India and Jet Airways, in both cases as the preferred
distributor. These add to our exclusive distribution contract with
IndiGo and give us significant additional advantage in India and key markets beyond it. Furthermore,
Travelport made history by becoming the first GDS to transact the
booking of flights using IATA's New Distribution Capability (NDC)
API protocol. These initiatives will contribute to the onboarding
of new business next year, alongside the continued growth of
eNett.
Despite these factors and our ongoing focus on the efficiency of
our cost base, our business momentum is being tempered by some
specific customer headwinds. We remain well positioned for longer
term profitable growth given our commercial wins and the ongoing
investments we're making in the key areas that differentiate us,
including our industry-leading travel content; our search,
merchandising and shopping capabilities; and our leading mobile,
data and payments solutions."
Summary
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Three
Months
|
|
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Nine
Months
|
|
|
Ended September
30,
|
|
|
Ended September
30,
|
(in $ thousands,
except per share amounts)
|
|
2018
|
|
|
2017
|
|
Change
|
|
|
2018
|
|
|
2017
|
|
Change
|
Net
revenue
|
|
622,585
|
|
|
610,842
|
|
2%
|
|
|
1,962,431
|
|
|
1,873,712
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|
5%
|
Operating
income
|
|
44,115
|
|
|
61,585
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(28)%
|
|
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164,072
|
|
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235,997
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(30)%
|
Net income
|
|
5,870
|
|
|
4,681
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25%
|
|
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72,106
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94,910
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(24)%
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Income per share –
diluted
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$
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0.04
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$
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0.04
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4%
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$
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0.55
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$
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0.76
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(28)%
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Adjusted
EBITDA
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139,313
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136,437
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2%
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450,413
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451,996
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—
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Adjusted Operating
Income
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79,219
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76,392
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4%
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268,211
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268,465
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—
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Adjusted Net
Income
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40,040
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|
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22,671
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77%
|
|
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146,906
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137,034
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7%
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Adjusted Income per
Share – diluted
|
$
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0.31
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$
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0.18
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74%
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$
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1.15
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$
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1.09
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6%
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Net cash provided by
operating activities
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83,149
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95,735
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(13)%
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285,435
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274,342
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4%
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Free Cash
Flow
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48,379
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63,372
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(24)%
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176,199
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195,150
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(10)%
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Cash dividend per
share
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$
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0.075
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$
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0.075
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—
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$
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0.225
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$
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0.225
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—
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________________
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The Company refers to
certain non-GAAP financial measures in this press release,
including Adjusted EBITDA, Adjusted Operating Income (Loss),
Adjusted Net Income (Loss), Adjusted Income (Loss) per Share -
diluted, Capital Expenditures, Net Debt and Free Cash Flow.
Please refer to pages 10 to 13 of this press release for additional
information, including reconciliations of such non-GAAP financial
measures.
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Discussion of Results for the Third Quarter of 2018
Unless otherwise stated, all comparisons are for the third
quarter of 2018 compared to the third quarter of 2017.
Net Revenue
Net revenue is comprised of:
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
(in $
thousands)
|
2018
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2017
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%
Change
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2018
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2017
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%
Change
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Air
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$
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404,643
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$
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417,371
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(3)
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$
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1,321,525
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$
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1,315,500
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—
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Beyond
Air
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192,968
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168,782
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14
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566,740
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|
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476,474
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19
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Travel Commerce
Platform
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597,611
|
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586,153
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2
|
|
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1,888,265
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|
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1,791,974
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|
5
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Technology
Services
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24,974
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24,689
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1
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74,166
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81,738
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(9)
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Net
revenue
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$
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622,585
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|
$
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610,842
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|
2
|
|
$
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1,962,431
|
|
$
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1,873,712
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|
5
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Net revenue increased by $12
million, or 2%, to $623
million primarily due to growth in Travel Commerce Platform
revenue of $11 million, or 2%.
Within Travel Commerce Platform revenue, Beyond Air revenue
increased by $24 million, or 14%,
offset by a decrease in Air revenue of $13
million, or 3%. The increase in Beyond Air revenue was
driven by an increase in eNett net revenue of 58% to $86 million, primarily due to an increase in the
volume of payments settled with existing customers, that was
partially offset by a decline in the remainder of the Beyond Air
portfolio. The decrease in Air revenue was mainly due to a decrease
in Air Reported Segments that includes the impact of the loss of a
large Pacific-based travel agency and other specific travel agency
headwinds, offset by improved pricing and mix. Technology Services
revenue remained stable.
The table below sets forth Travel Commerce Platform revenue by
region:
|
Three Months Ended
September 30,
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|
Nine Months Ended
September 30,
|
(in $
thousands)
|
2018
|
|
2017
|
|
%
Change
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2018
|
|
2017
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%
Change
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Asia
Pacific
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$
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140,186
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$
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145,008
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(3)
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$
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426,728
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$
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437,748
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(3)
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Europe
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202,300
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185,801
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9
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670,082
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568,811
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18
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Latin America and
Canada
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28,202
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27,563
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2
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87,517
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83,919
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4
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Middle East and
Africa
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78,824
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77,494
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2
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239,593
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238,959
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—
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International
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449,512
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435,866
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3
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1,423,920
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1,329,437
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7
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United
States
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148,099
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150,287
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(1)
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464,345
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462,537
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—
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Travel Commerce
Platform
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$
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597,611
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$
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586,153
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2
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$
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1,888,265
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$
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1,791,974
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5
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The table below sets forth Travel Commerce Platform Reported
Segments and global RevPas by region:
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Segments (in
thousands)
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|
Three Months Ended
September 30,
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|
Nine Months Ended
September 30,
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|
|
2018
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|
|
2017
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%
Change
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2018
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2017
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%
Change
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Asia
Pacific
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16,764
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17,807
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(6)
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49,172
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54,712
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(10)
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Europe
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18,658
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20,117
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(7)
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65,537
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63,478
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3
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Latin America and
Canada
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4,793
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|
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4,706
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|
2
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14,231
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|
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13,862
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|
3
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Middle East and
Africa
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|
9,180
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|
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9,354
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(2)
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28,300
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|
|
28,271
|
|
—
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International
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49,395
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|
|
51,984
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(5)
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|
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157,240
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160,323
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(2)
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United
States
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32,184
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|
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33,413
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(4)
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103,591
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|
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104,652
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(1)
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Travel Commerce
Platform Reported Segments
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81,579
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|
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85,397
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(4)
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260,831
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264,975
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(2)
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RevPas (in
$)
|
|
Three Months Ended
September 30,
|
|
Nine Months Ended
September 30,
|
|
|
2018
|
|
|
2017
|
|
%
Change
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|
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2018
|
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2017
|
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%
Change
|
International
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$
|
9.10
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$
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8.38
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9
|
|
$
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9.06
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|
$
|
8.29
|
|
9
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United
States
|
$
|
4.60
|
|
$
|
4.50
|
|
2
|
|
$
|
4.48
|
|
$
|
4.42
|
|
1
|
Travel Commerce
Platform RevPas
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$
|
7.33
|
|
$
|
6.86
|
|
7
|
|
$
|
7.24
|
|
$
|
6.76
|
|
7
|
Travel Commerce Platform RevPas increased 7% to $7.33, driving a $38
million increase in Travel Commerce Platform revenue.
International RevPas increased 9% to $9.10, and United States RevPas increased 2% to
$4.60. Reported Segments decreased 4%
due to the impact of the loss of a large Pacific-based travel
agency and other specific travel agency headwinds.
International Travel Commerce Platform revenue increased by
$14 million, or 3%, with Europe mainly contributing to this increase
due to an increase in its RevPas of 17%, offset partially by a
decrease in its Reported Segments of 7%. The decrease in Travel
Commerce Platform revenue in Asia
Pacific of $5 million, or 3%,
includes the loss of revenue resulting from the loss of a large
Pacific-based travel agency.
Operating Income
Operating income decreased by $17
million, or 28%, to $44
million mainly due to the following:
- $17 million increase in selling,
general and administrative expenses ("SG&A") primarily due to
an increase in corporate and restructuring costs and the
unfavorable movements in the fair value of foreign currency
derivative contracts, offset by a decrease in equity-based
compensation and related taxes
- $13 million increase in cost of
revenue primarily due to incremental costs from the payment
solutions business and an increase in travel distribution cost per
segment driven by mix and an impairment of customer loyalty
payments, offset by a decrease in volume and favorable foreign
exchange movements; offset by
- $12 million increase in net
revenue
Net Income
Net income increased by $1
million, or 25%, to $6 million
due to the following:
- $12 million decrease in income
tax expense primarily due to a decrease in pre-tax income and a
change in geographical profit mix
- $6 million benefit from a
decrease in loss on early extinguishment debt and interest expense,
net; offset by
- $17 million decrease in operating
income
Net Cash Provided by Operating Activities
Net cash provided by operating activities decreased by
$13 million, or 13%, to $83 million, primarily due to the negative impact
of changes in working capital and higher interest and income tax
payments.
Adjusted EBITDA
Adjusted EBITDA increased by $3
million, or 2%, to $139
million due to the following:
- $12 million increase in net
revenue; offset by
- $9 million increase within cost
of revenue (excluding a $3 million
increase related to items that are excluded from net income to
determine Adjusted EBITDA) primarily due to incremental costs from
the payment solutions business and an increase in travel
distribution cost per segment driven by mix that is offset by a
decrease in volume and favorable foreign exchange movements
Adjusted Net Income
Adjusted Net Income increased by $17
million, or 77%, to $40
million mainly due to the following:
- $11 million of lower income tax
expense (excluding the benefit of a $2
million tax movement related to non-core corporate costs and
other adjustments that are excluded from net income to determine
Adjusted Net Income) primarily due to a change in geographical
profit mix and quarterly phasing in 2017
- $4 million of lower interest
expense, net (excluding a $3 million
increase related to unrealized unfavorable movements in interest
rate swap derivative contracts that are excluded from net income to
determine Adjusted Net Income) due to the positive impact of cost
incurred in 2017 relating to amendments made to the 2014 senior
secured credit agreement, lower amortization of debt finance costs
and debt discount and a lower debt balance
- $3 million increase in Adjusted
EBITDA
Free Cash Flow
Free Cash Flow decreased by $15
million, or 24%, to a cash inflow of $48 million due to a $13
million decrease in net cash provided by operating
activities and a $2 million increase
in payments made for additions to property and equipment.
Net Debt
Net Debt decreased from $2,108
million as of December 31,
2017 to $2,061 million as of
September 30, 2018 and is comprised
of $2,265 million in total debt less
$204 million in cash, cash
equivalents and restricted cash. The increase in total debt of
$35 million reflects (i) $2,154 million principal amount of term loans
repaid under the former 2014 senior secured credit agreement and
$8 million principal amount of term
loans repaid under the 2018 senior secured credit agreement, (ii)
$1,400 million principal amount of
borrowings under the new 2018 senior secured credit agreement in
March 2018, (iii) the issuance of
$745 million principal amount of
senior secured notes in March 2018
and (iv) a net $42 million increase
in capital lease obligations and other indebtedness, and is offset
by an $82 million increase in cash,
cash equivalents and restricted cash balance as of September
30, 2018 compared to December 31,
2017, contributing to a decrease of $47 million in the Net Debt balance.
Full Year 2018 Financial Guidance
The following forward-looking statements, as well as those made
elsewhere within this press release, reflect expectations as of
November 1, 2018. We assume no
obligation to update these statements. Results may be
materially different and are affected by many factors detailed in
this release and in Travelport's quarterly and annual Securities
and Exchange Commission ("SEC") filings and/or furnishings, which
are available on the SEC's website at www.sec.gov.
Our overall guidance ranges for full year 2018 are unchanged
from those ranges initially communicated on February 20, 2018, as detailed below. We
anticipate net revenue, Adjusted EBITDA and Free Cash Flow to be at
the lower end of their respective ranges.
Furthermore, as previously communicated, we anticipate that our
virtual payments business, eNett, will grow net revenue by at least
50% for the full year 2018. Our guidance is subject to
exchange rate movements given that eNett's net revenue is largely
denominated in currencies other than the U.S. dollar.
(in $ millions,
except per share amounts)
|
FY 2018
Guidance
|
Growth
|
Net
revenue
|
$2,535
- $2,585
|
4% -
6%
|
Adjusted EBITDA
(1)
|
$585
- $605
|
(1)% -
3%
|
Adjusted Net Income
(1)
|
$170
- $185
|
(6)% -
2%
|
Adjusted Income per
Share – diluted (2)
|
$1.34
- $1.46
|
(7)% -
1%
|
Free Cash Flow
(3)
|
$210
- $230
|
5% -
15%
|
|
|
(1)
|
Adjusted EBITDA
guidance consists of Adjusted Net Income guidance excluding
expected depreciation and amortization of property and equipment
and expected amortization of customer loyalty payments of $240
million to $250 million, expected interest expense, net (excluding
the impact of unrealized gain (loss) on interest rate derivative
instruments) of approximately $110 million and expected related
income taxes of approximately $55 million. Adjusted Net
Income guidance excludes the expected impact of amortization of
acquired intangible assets of approximately $40 million, loss on
early extinguishment of debt of $28 million, expected equity-based
compensation and related taxes and corporate and restructuring
costs of $60 million to $70 million, income from discontinued
operations of $28 million related to the release of an indemnity
provision for liabilities accrued upon the sale of Gullivers Travel
Associates in 2011 and an expected income tax benefit related to
the adjustments above of approximately $15 million. We are
unable to reconcile Adjusted EBITDA and Adjusted Net Income to net
income (loss) determined under U.S. GAAP due to the unavailability
of information required to reasonably predict certain reconciling
items, such as loss on early extinguishment of debt, impairment of
long-lived assets, unrealized gains or losses on foreign currency
and interest rate derivative instruments, and the related tax
impact of such adjustments along with other tax
adjustments.
|
(2)
|
Adjusted Income per
Share – diluted guidance consists of Adjusted Net Income divided by
our expected weighted average number of dilutive common shares for
2018 of approximately 127 million.
|
(3)
|
Free Cash Flow
guidance reflects expected net cash provided by operating
activities for 2018 of $345 million to $365 million less expected
cash additions to property and equipment of approximately $140
million.
|
Our overall guidance incorporates the expected impact of the
adoption of the new revenue recognition standard on a modified
retrospective basis. The adoption of this standard did not
have a material impact on our consolidated condensed financial
statements for the three and nine months ended September 30, 2018. In addition, our
guidance assumes spot foreign exchange rates as of October 25, 2018, together with the impact of
foreign exchange rate hedges undertaken during 2017 as part of our
rolling hedging program.
Impact of Foreign Exchange Movements
Our results of operations are reported in U.S. dollars.
With approximately 86% of our net revenue denominated in U.S.
dollars in the third quarter of 2018, changes in foreign exchange
rates have a low impact on our net revenue. eNett, which
represented approximately 14% of our net revenue in the third
quarter of 2018, is the largest source of non-U.S. dollar net
revenue.
Of our costs and expenses in the third quarter of 2018,
excluding depreciation on property and equipment, amortization of
customer loyalty payments, amortization of acquired intangible
assets and non-core corporate costs, approximately 54% were
denominated in U.S. dollars.
As part of our rolling hedging program, we employ foreign
exchange forward contracts to hedge a portion of our net exposure
to changes in foreign exchange rates, particularly against the
British pound, the Euro and the Australian dollar, which are the
main non-U.S. dollar components of our costs and expenses.
The year-on-year impact of foreign exchange rate movements on
Adjusted EBITDA for the third quarter of 2018 was immaterial, net
of the impact from realized foreign exchange rate hedges undertaken
during 2017.
Dividend
On October 31, 2018, Travelport's
Board of Directors declared a cash dividend of $0.075 per common share for the third quarter of
2018. The dividend will be payable on December 20, 2018 to shareholders of record as at
market close on December 6, 2018.
Conference Call
The Company's third quarter 2018 earnings conference call will
be held later today (on November 1,
2018) beginning at 8:30 a.m. (Eastern
Time). A live audiocast of the presentation and
accompanying slides will be available via the Investor Center
section of Travelport's website at ir.travelport.com. Please
visit the site or click the following link to pre-register:
https://www.webcaster4.com/Webcast/Page/1138/27638.
A replay of the audiocast will be available on the Investor
Center section of Travelport's website shortly after the end of the
earnings call, where it will remain for one year thereafter.
Contacts
For further information, please contact:
Investors:
Majid
Nazir
Head of Investor Relations
Tel: +44 (0)1753 288 857
majid.nazir@travelport.com
Media:
Julian
Eccles
Vice President, PR and Corporate Communications
Tel: +44 (0)7720 409 374
julian.eccles@travelport.com
About Travelport (www.travelport.com)
Travelport (NYSE: TVPT) is the technology company that makes the
experience of buying and managing travel continually better.
It operates a travel commerce platform providing distribution,
technology, payment and other solutions for the global travel and
tourism industry. The Company facilitates travel commerce by
connecting the world's leading travel providers with online and
offline travel buyers in a proprietary business-to-business (B2B)
travel platform.
Travelport has a leadership position in airline merchandising,
hotel content and distribution, car rental, mobile commerce and B2B
payment solutions. The Company also provides critical IT
services to airlines, such as shopping, ticketing, departure
control and other solutions. With net revenue of over
$2.4 billion in 2017, Travelport is
headquartered in Langley, U.K., has over 4,000 employees and is
represented in approximately 180 countries and territories.
Forward-Looking Statements
Certain statements in this press release, including outlook and
financial guidance, 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: factors affecting
the level of travel activity, particularly air travel volume,
including security concerns, pandemics, general economic
conditions, natural disasters and other disruptions; general
economic and business conditions in the markets in which we
operate, including fluctuations in currencies, particularly in the
U.S. dollar, and the economic conditions in the Eurozone; pricing,
regulatory and other trends in the travel industry; our ability to
obtain travel provider inventory from travel providers, such as
airlines, hotels, car rental companies, cruise lines and other
travel providers; our ability to develop and deliver products and
services that are valuable to travel agencies and travel providers
and generate new revenue streams; maintenance and protection of our
information technology and intellectual property; the impact on
travel provider capacity and inventory resulting from consolidation
of the airline industry; the impact our outstanding indebtedness
may have on the way we operate our business; our ability to achieve
expected cost savings from our efforts to improve operational and
technology efficiency, including through our consolidation of
multiple technology vendors and locations and the centralization of
activities; our ability to maintain existing relationships with
travel agencies and to enter into new relationships on acceptable
financial and other terms; and our ability to grow adjacencies,
such as payment and mobile solutions; and the impact on business
conditions worldwide as a result of political decisions, including
the United Kingdom's decision to
leave the European Union. Forward-looking information is
based on information available at the time and/or management's good
faith belief with respect to future events and is subject to risks
and uncertainties that could cause actual performance or results to
differ materially from those expressed in the statements. These and
other potential risks and uncertainties that could cause actual
results to differ are more fully detailed under the caption "Risk
Factors" in our Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC") on February 20, 2018, and our Quarterly Reports on
Form 10-Q filed with the SEC on May 3,
2018 and August 2, 2018, and
available on the SEC's website at www.sec.gov.
Other unknown or unpredictable factors could also 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.
This press 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.
TRAVELPORT
WORLDWIDE LIMITED
|
CONSOLIDATED
CONDENSED STATEMENTS OF OPERATIONS
|
(Unaudited)
|
|
|
|
Three
Months
|
|
Three
Months
|
|
|
Nine
Months
|
|
Nine
Months
|
|
|
Ended
|
|
Ended
|
|
|
Ended
|
|
Ended
|
|
|
September
30,
|
|
September
30,
|
|
|
September
30,
|
|
September
30,
|
(in $ thousands,
except share data)
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Net revenue
|
|
$
|
622,585
|
|
$
|
610,842
|
|
|
$
|
1,962,431
|
|
$
|
1,873,712
|
Costs and
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of
revenue
|
|
|
400,679
|
|
|
388,027
|
|
|
|
1,254,868
|
|
|
1,144,572
|
Selling, general and
administrative
|
|
|
127,538
|
|
|
110,916
|
|
|
|
395,093
|
|
|
336,272
|
Depreciation and
amortization
|
|
|
50,253
|
|
|
50,314
|
|
|
|
148,398
|
|
|
156,871
|
Total costs and
expenses
|
|
|
578,470
|
|
|
549,257
|
|
|
|
1,798,359
|
|
|
1,637,715
|
Operating
income
|
|
|
44,115
|
|
|
61,585
|
|
|
|
164,072
|
|
|
235,997
|
Interest expense,
net
|
|
|
(27,772)
|
|
|
(28,793)
|
|
|
|
(66,312)
|
|
|
(92,011)
|
Loss on early
extinguishment of debt
|
|
|
(38)
|
|
|
(4,682)
|
|
|
|
(27,699)
|
|
|
(4,682)
|
Gain on sale of a
subsidiary
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
1,217
|
Other
expense
|
|
|
(266)
|
|
|
(846)
|
|
|
|
(730)
|
|
|
(2,538)
|
Income before
income taxes
|
|
|
16,039
|
|
|
27,264
|
|
|
|
69,331
|
|
|
137,983
|
Provision for income
taxes
|
|
|
(10,169)
|
|
|
(22,583)
|
|
|
|
(24,972)
|
|
|
(43,073)
|
Net income from
continuing operations
|
|
|
5,870
|
|
|
4,681
|
|
|
|
44,359
|
|
|
94,910
|
Income from
discontinued operations, net of tax
|
|
|
—
|
|
|
—
|
|
|
|
27,747
|
|
|
—
|
Net
income
|
|
|
5,870
|
|
|
4,681
|
|
|
|
72,106
|
|
|
94,910
|
Net (income) loss
attributable to non-controlling interest in
subsidiaries
|
|
|
(762)
|
|
|
169
|
|
|
|
(2,025)
|
|
|
973
|
Net income
attributable to the Company
|
|
$
|
5,108
|
|
$
|
4,850
|
|
|
$
|
70,081
|
|
$
|
95,883
|
Income per share –
Basic:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share –
continuing operations
|
|
$
|
0.04
|
|
$
|
0.04
|
|
|
$
|
0.34
|
|
$
|
0.77
|
Income per share –
discontinued operations
|
|
|
—
|
|
|
—
|
|
|
|
0.22
|
|
|
—
|
Basic income per
share
|
|
$
|
0.04
|
|
$
|
0.04
|
|
|
$
|
0.56
|
|
$
|
0.77
|
Weighted average
common shares outstanding – Basic
|
|
|
126,246,210
|
|
|
124,469,069
|
|
|
|
125,908,707
|
|
|
124,303,716
|
Income per share –
Diluted:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income per share –
continuing operations
|
|
$
|
0.04
|
|
$
|
0.04
|
|
|
$
|
0.33
|
|
$
|
0.76
|
Income per share –
discontinued operations
|
|
|
—
|
|
|
—
|
|
|
|
0.22
|
|
|
—
|
Diluted income per
share
|
|
$
|
0.04
|
|
$
|
0.04
|
|
|
$
|
0.55
|
|
$
|
0.76
|
Weighted average
common shares outstanding – Diluted
|
|
|
128,389,385
|
|
|
126,188,372
|
|
|
|
127,854,478
|
|
|
125,827,540
|
Cash dividends
declared per common share
|
|
$
|
0.075
|
|
$
|
0.075
|
|
|
$
|
0.225
|
|
$
|
0.225
|
TRAVELPORT
WORLDWIDE LIMITED
|
CONSOLIDATED
CONDENSED BALANCE SHEETS
|
(Unaudited)
|
|
|
September
30,
|
|
December
31,
|
(in $ thousands,
except share data)
|
2018
|
|
2017
|
Assets
|
|
|
|
|
|
Current
assets:
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
200,333
|
|
$
|
122,039
|
Accounts receivable
(net of allowances for doubtful accounts of $9,753 and $10,245,
respectively)
|
|
248,635
|
|
|
206,524
|
Other current
assets
|
|
125,612
|
|
|
109,724
|
Total current
assets
|
|
574,580
|
|
|
438,287
|
Property and
equipment, net
|
|
495,506
|
|
|
431,741
|
Goodwill
|
|
1,085,341
|
|
|
1,089,590
|
Trademarks and
tradenames
|
|
313,097
|
|
|
313,097
|
Other intangible
assets, net
|
|
444,602
|
|
|
496,180
|
Deferred income
taxes
|
|
22,359
|
|
|
12,796
|
Other non-current
assets
|
|
72,525
|
|
|
76,808
|
Total
assets
|
$
|
3,008,010
|
|
$
|
2,858,499
|
Liabilities and
equity
|
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
|
Accounts
payable
|
$
|
72,094
|
|
$
|
73,278
|
Accrued expenses and
other current liabilities
|
|
574,260
|
|
|
509,068
|
Current portion of
long-term debt
|
|
58,377
|
|
|
64,291
|
Total current
liabilities
|
|
704,731
|
|
|
646,637
|
Long-term
debt
|
|
2,206,171
|
|
|
2,165,722
|
Deferred income
taxes
|
|
37,881
|
|
|
34,899
|
Other non-current
liabilities
|
|
191,273
|
|
|
203,562
|
Total
liabilities
|
|
3,140,056
|
|
|
3,050,820
|
Commitments and
contingencies
|
|
|
|
|
|
Shareholders' equity
(deficit):
|
|
|
|
|
|
Preference shares
($0.0025 par value; 225,000,000 shares authorized; no shares issued
and outstanding as of September 30, 2018 and December 31,
2017)
|
|
—
|
|
|
—
|
Common shares ($0.0025
par value; 560,000,000 shares authorized; 128,047,376 shares and
126,967,010 shares issued; 126,306,329 shares and 125,346,613
shares outstanding as of September 30, 2018 and December 31,
2017, respectively)
|
|
320
|
|
|
317
|
Additional paid in
capital
|
|
2,685,806
|
|
|
2,700,133
|
Treasury shares, at
cost (1,741,047 shares and 1,620,397 shares as of
September 30, 2018 and December 31, 2017,
respectively)
|
|
(26,832)
|
|
|
(24,755)
|
Accumulated
deficit
|
|
(2,651,308)
|
|
|
(2,722,375)
|
Accumulated other
comprehensive loss
|
|
(156,566)
|
|
|
(155,621)
|
Total shareholders'
equity (deficit)
|
|
(148,580)
|
|
|
(202,301)
|
Equity attributable
to non-controlling interest in subsidiaries
|
|
16,534
|
|
|
9,980
|
Total equity
(deficit)
|
|
(132,046)
|
|
|
(192,321)
|
Total liabilities
and equity
|
$
|
3,008,010
|
|
$
|
2,858,499
|
TRAVELPORT
WORLDWIDE LIMITED
|
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
|
(Unaudited)
|
|
|
|
Nine
Months
|
|
Nine
Months
|
|
|
Ended
|
|
Ended
|
|
|
September
30,
|
|
September
30,
|
(in $
thousands)
|
|
2018
|
|
2017
|
Operating
activities
|
|
|
|
|
|
|
Net
income
|
|
$
|
72,106
|
|
$
|
94,910
|
Income from
discontinued operations, net of tax
|
|
|
(27,747)
|
|
|
—
|
Net income from
continuing operations
|
|
|
44,359
|
|
|
94,910
|
Adjustments to
reconcile net income from continuing operations to net cash
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
148,398
|
|
|
156,871
|
Amortization of
customer loyalty payments
|
|
|
64,553
|
|
|
57,348
|
Impairment of
long-lived assets
|
|
|
14,912
|
|
|
685
|
Amortization of debt
finance costs and debt discount
|
|
|
3,613
|
|
|
7,791
|
Gain on sale of a
subsidiary
|
|
|
—
|
|
|
(1,217)
|
Loss on early
extinguishment of debt
|
|
|
27,699
|
|
|
4,682
|
Unrealized loss (gain)
on foreign exchange derivative instruments
|
|
|
23,637
|
|
|
(27,256)
|
Unrealized (gain) loss
on interest rate derivative instruments
|
|
|
(11,651)
|
|
|
1,121
|
Equity-based
compensation
|
|
|
11,845
|
|
|
24,445
|
Deferred income
taxes
|
|
|
(7,129)
|
|
|
(304)
|
Customer loyalty
payments
|
|
|
(73,349)
|
|
|
(54,592)
|
Pension liability
contribution
|
|
|
(1,049)
|
|
|
(1,541)
|
Changes in assets and
liabilities:
|
|
|
|
|
|
|
Accounts receivable,
net
|
|
|
(41,966)
|
|
|
(39,209)
|
Other current
assets
|
|
|
(12,933)
|
|
|
(7,493)
|
Accounts payable,
accrued expenses and other current liabilities
|
|
|
84,249
|
|
|
61,504
|
Other
|
|
|
10,247
|
|
|
(3,403)
|
Net cash provided
by operating activities
|
|
$
|
285,435
|
|
$
|
274,342
|
|
|
|
|
|
|
|
Investing
activities
|
|
|
|
|
|
|
Property and
equipment additions
|
|
$
|
(109,236)
|
|
$
|
(79,192)
|
Sale of subsidiary,
net of cash disposed
|
|
|
—
|
|
|
(3,433)
|
Net cash used in
investing activities
|
|
$
|
(109,236)
|
|
$
|
(82,625)
|
|
|
|
|
|
|
|
Financing
activities
|
|
|
|
|
|
|
Proceeds from term
loans
|
|
$
|
1,400,000
|
|
$
|
114,000
|
Proceeds from
issuance of senior secured notes
|
|
|
745,000
|
|
|
—
|
Repayment of term
loans
|
|
|
(2,161,250)
|
|
|
(181,813)
|
Repayment of capital
lease obligations and other indebtedness
|
|
|
(30,632)
|
|
|
(29,811)
|
Debt finance costs
and lender fees
|
|
|
(21,551)
|
|
|
(686)
|
Dividend to
shareholders
|
|
|
(28,472)
|
|
|
(28,234)
|
Purchase of
non-controlling interest in a subsidiary
|
|
|
—
|
|
|
(1,063)
|
Proceeds from share
issuance under employee share purchase plan and stock
options
|
|
|
8,460
|
|
|
2,016
|
Treasury share
purchase related to vesting of equity awards
|
|
|
(2,621)
|
|
|
(2,461)
|
Other
|
|
|
(2,240)
|
|
|
—
|
Net cash used in
financing activities
|
|
$
|
(93,306)
|
|
$
|
(128,052)
|
Effect of changes in
exchange rates on cash, cash equivalents and restricted
cash
|
|
|
(1,126)
|
|
|
1,043
|
Net increase in
cash, cash equivalents and restricted cash
|
|
|
81,767
|
|
|
64,708
|
Cash, cash
equivalents and restricted cash at beginning of
period
|
|
|
122,039
|
|
|
139,938
|
Cash, cash
equivalents and restricted cash at end of
period
|
|
$
|
203,806
|
|
$
|
204,646
|
|
|
|
|
|
|
|
Supplemental
disclosures of cash flow information
|
|
|
|
|
|
|
Interest payments,
net of capitalized interest
|
|
$
|
77,419
|
|
$
|
83,294
|
Income tax payments,
net of refunds
|
|
|
36,933
|
|
|
23,540
|
Non-cash capital
lease asset additions
|
|
|
71,511
|
|
|
17,984
|
Non-cash purchase of
property and equipment
|
|
|
4,220
|
|
|
3,120
|
TRAVELPORT
WORLDWIDE LIMITED
|
NON-GAAP
MEASURES
|
(unaudited)
|
|
Reconciliation
of Net Income to Adjusted Net Income,
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
Adjusted
Operating Income and Adjusted EBITDA
|
|
September
30,
|
|
|
|
September
30,
|
(in $
thousands)
|
|
2018
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
Net
income
|
$
|
5,870
|
|
$
|
4,681
|
|
|
$
|
72,106
|
|
$
|
94,910
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization of
acquired intangible assets
|
|
10,165
|
|
|
10,165
|
|
|
|
30,497
|
|
|
30,688
|
Gain on sale of a
subsidiary
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|
(1,217)
|
Loss on early
extinguishment of debt
|
|
38
|
|
|
4,682
|
|
|
|
27,699
|
|
|
4,682
|
Equity-based
compensation and related taxes
|
|
(207)
|
|
|
8,676
|
|
|
|
11,837
|
|
|
24,355
|
Corporate and
restructuring costs
|
|
19,472
|
|
|
4,217
|
|
|
|
24,704
|
|
|
14,897
|
Impairment of
long-lived assets
|
|
3,269
|
|
|
—
|
|
|
|
14,912
|
|
|
685
|
Income from
discontinued operations
|
|
—
|
|
|
—
|
|
|
|
(27,747)
|
|
|
—
|
Other –
non-cash(1)
|
|
3,580
|
|
|
(9,285)
|
|
|
|
10,538
|
|
|
(34,498)
|
Tax
adjustments
|
|
(2,147)
|
|
|
(465)
|
|
|
|
(17,640)
|
|
|
2,532
|
Adjusted Net
Income
|
|
40,040
|
|
|
22,671
|
|
|
|
146,906
|
|
|
137,034
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense,
net(2)
|
|
26,597
|
|
|
30,673
|
|
|
|
77,963
|
|
|
90,890
|
Other
expense
|
|
266
|
|
|
—
|
|
|
|
730
|
|
|
—
|
Remaining provision for
income taxes
|
|
12,316
|
|
|
23,048
|
|
|
|
42,612
|
|
|
40,541
|
Adjusted Operating
Income
|
|
79,219
|
|
|
76,392
|
|
|
|
268,211
|
|
|
268,465
|
Adjustments:
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization of property and equipment
|
|
40,032
|
|
|
40,149
|
|
|
|
117,649
|
|
|
126,183
|
Amortization of
customer loyalty payments
|
|
20,062
|
|
|
19,896
|
|
|
|
64,553
|
|
|
57,348
|
Adjusted
EBITDA
|
$
|
139,313
|
|
$
|
136,437
|
|
|
$
|
450,413
|
|
$
|
451,996
|
__________________
|
(1) Other—non-cash
includes (i) unrealized losses (gains) on foreign currency
derivatives contracts of $2 million and $(7) million for the three
months ended September 30, 2018 and 2017, respectively, and $22
million and $(27) million for the nine months ended September 30,
2018 and 2017, respectively, (ii) unrealized losses (gains) on
interest rate derivative contracts of $1 million and $(2) million
for the three months ended September 30, 2018 and 2017,
respectively, and $(12) million and $1 million for the nine months
ended September 30, 2018 and 2017, respectively, (iii) $8 million
related to revenue deferred in previous years for the nine months
ended September 30, 2017 and (iv) other gains of $1 million for
the nine months ended September 30, 2017.
|
|
(2) Interest expense,
net, excludes the impact of unrealized losses (gains) on interest
rate derivative contracts of $1 million and $(2) million for the
three months ended September 30, 2018 and 2017, respectively, and
$(12) million and $1 million for the nine months ended September
30, 2018 and 2017, respectively, which is included within
"Other—non-cash."
|
|
Reconciliation
of net cash provided by operating
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
activities to Free Cash
Flow:
|
|
September
30,
|
|
|
|
September
30,
|
(in $
thousands)
|
|
2018
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
Net cash provided
by operating activities
|
$
|
83,149
|
|
$
|
95,735
|
|
|
$
|
285,435
|
|
$
|
274,342
|
Less: capital
expenditures on property and equipment additions
|
|
(34,770)
|
|
|
(32,363)
|
|
|
|
(109,236)
|
|
|
(79,192)
|
Free Cash
Flow
|
$
|
48,379
|
|
$
|
63,372
|
|
|
$
|
176,199
|
|
$
|
195,150
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reconciliation
of Net Debt
|
|
|
|
|
|
|
|
|
September
30,
|
|
|
December
31,
|
(in $
thousands)
|
|
|
|
|
|
|
|
|
2018
|
|
|
2017
|
Current portion of
long-term debt
|
|
|
|
|
|
|
|
$
|
58,377
|
|
$
|
64,291
|
Non-current portion
of long-term debt
|
|
|
|
|
|
|
|
|
2,206,171
|
|
|
2,165,722
|
Total
debt
|
|
|
|
|
|
|
|
|
2,264,548
|
|
|
2,230,013
|
Less: cash, cash
equivalents and restricted cash
|
|
|
|
|
|
|
|
|
(203,806)
|
|
|
(122,039)
|
Net
Debt
|
|
|
|
|
|
|
|
$
|
2,060,742
|
|
$
|
2,107,974
|
TRAVELPORT
WORLDWIDE LIMITED
|
NON-GAAP
MEASURES
|
(unaudited)
|
|
Reconciliation
of Income per Share – Diluted to
|
|
Three Months
Ended
|
|
|
|
Nine Months
Ended
|
Adjusted Income
per Share – Diluted
|
|
September
30,
|
|
|
|
September
30,
|
(in
$)
|
|
2018
|
|
|
2017
|
|
|
|
2018
|
|
|
2017
|
Income per
share – diluted
|
$
|
0.04
|
|
$
|
0.04
|
|
|
$
|
0.55
|
|
$
|
0.76
|
Per share adjustments
to net income to determine Adjusted Income per Share –
diluted
|
|
0.27
|
|
|
0.14
|
|
|
|
0.60
|
|
|
0.33
|
Adjusted Income
per Share – diluted
|
$
|
0.31
|
|
$
|
0.18
|
|
|
$
|
1.15
|
|
$
|
1.09
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
Nine Months
Ended
|
Reconciliation
of Capital Expenditures
|
September
30,
|
|
|
September
30,
|
(in $
thousands)
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
Property and
equipment additions
|
$
|
34,770
|
|
$
|
32,363
|
|
|
$
|
109,236
|
|
$
|
79,192
|
Repayment of capital
lease obligations and other indebtedness
|
|
11,654
|
|
|
10,321
|
|
|
|
30,632
|
|
|
29,811
|
Capital
Expenditures
|
$
|
46,424
|
|
$
|
42,684
|
|
|
$
|
139,868
|
|
$
|
109,003
|
Other
Metrics
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
September
30,
|
|
September
30,
|
(in thousands,
except where specified)
|
|
2018
|
|
|
2017
|
|
%
Change
|
|
|
2018
|
|
|
2017
|
|
%
Change
|
Transaction value
processed on the Travel Commerce Platform
|
$
|
22,217,209
|
|
$
|
21,432,958
|
|
4
|
|
$
|
68,919,969
|
|
$
|
63,067,084
|
|
9
|
Percent of Air
segment revenue from away bookings
|
|
67%
|
|
|
67%
|
|
0.5 ppts
|
|
|
69%
|
|
|
67%
|
|
2.0 ppts
|
Hotel room nights
sold
|
|
16,965
|
|
|
17,615
|
|
(4)
|
|
|
51,316
|
|
|
51,359
|
|
—
|
Car rental days
sold
|
|
29,245
|
|
|
29,841
|
|
(2)
|
|
|
82,563
|
|
|
80,804
|
|
2
|
Hospitality segments
per 100 airline tickets issued
|
|
48
|
|
|
48
|
|
—
|
|
|
45
|
|
|
46
|
|
(2)
|
TRAVELPORT WORLDWIDE
LIMITED
DEFINITIONS
(unaudited)
Definitions
Adjusted EBITDA is defined as Adjusted Net Income (Loss)
excluding depreciation and amortization of property and equipment,
amortization of customer loyalty payments, interest expense, net
(excluding unrealized gains (losses) on interest rate derivative
instruments), components of net periodic pension and
post-retirement benefit costs other than service cost and related
income taxes.
Adjusted Income (Loss) per Share – Diluted is
defined as Adjusted Net Income (Loss) for the period divided by the
weighted average number of dilutive common shares.
Adjusted Net Income (Loss) is defined as net income
(loss) excluding amortization of acquired intangible assets, gain
(loss) on early extinguishment of debt, and items that are excluded
under our debt covenants, such as, income (loss) from discontinued
operations, gain (loss) on sale of subsidiary, non-cash
equity-based compensation, certain corporate and restructuring
costs, non-cash impairment of long-lived assets, certain litigation
and related costs, and other non-cash items such as unrealized
foreign currency gains (losses) on earnings hedges, and unrealized
gains (losses) on interest rate derivative instruments, along with
any income tax related to these exclusions. Tax impacts not related
to core operations have also been excluded.
Adjusted Operating Income (Loss) is defined as
Adjusted EBITDA less depreciation and amortization of property and
equipment and amortization of customer loyalty payments.
Capital Expenditures is defined as cash paid for property
and equipment plus repayments in relation to capital leases and
other indebtedness.
Customer Loyalty Payments are payments made to travel
agencies or travel providers with an objective of increasing the
number of travel bookings using the Company's Travel Commerce
Platform and to improve the travel agencies or travel providers'
loyalty, which are instrumented through agreements with a term over
a year. Under the contractual terms, the travel agency or travel
provider commits to achieve certain economic objectives for the
Company. Such costs are specifically identifiable to individual
contracts with travel agencies or travel providers, which have
determinable contractual lives. Due to the contractual nature of
the payments, the Company believes that such assets are
appropriately classified as intangible assets.
Free Cash Flow is defined as net cash provided by (used
in) operating activities, less cash used for additions to property
and equipment.
Net Debt is defined as total debt comprising of current
and non-current portion of long-term debt minus cash, cash
equivalents and restricted cash.
Reported Segments means travel provider revenue
generating units (net of cancellations) sold by the Company's
travel agency network, geographically presented by region based
upon the point of sale location.
Travel Commerce Platform RevPas ("RevPas") represents
Travel Commerce Platform revenue per segment and is computed by
dividing Travel Commerce Platform revenue by the total number of
Reported Segments.
TRAVELPORT WORLDWIDE
LIMITED
NON-GAAP FINANCIAL
MEASURES
(unaudited)
Non-GAAP Financial Measures
We utilize non – GAAP (or adjusted) financial measures,
including Adjusted EBITDA, Adjusted Operating Income (Loss),
Adjusted Net Income (Loss) and Adjusted Net Income (Loss) per Share
– diluted, to provide useful supplemental information to assist
investors in understanding and assessing our performance and
financial results on the same basis that management uses
internally. These adjusted financial measures provide investors
greater transparency with respect to the key metrics used by
management to evaluate our core operations, forecast future
results, determine future capital investment allocations and
understand business trends within the industry. Adjusted Operating
Income (Loss) and Adjusted Net Income (Loss) per Share – diluted
metrics are also used by our Board of Directors to determine
incentive compensation for future periods. Management believes the
adjusted financial measures assist investors in the comparison of
financial results between periods as such measures exclude certain
items that management believes are not reflective of our core
operating performance consistent with how management reviews the
business.
Adjusted Net Income (Loss), Adjusted Net Income (Loss) per Share
– diluted, Adjusted Operating Income and Adjusted EBITDA are
supplemental measures of operating performance that do not
represent, and should not be considered as, alternatives to net
income (loss), or net income (loss) per share – diluted, as
determined under U.S. GAAP. In addition, these measures may not be
comparable to similarly named measures used by other companies.
We believe Adjusted Income (Loss) per Share – diluted is a
useful measure for our investors as it represents, on a per share
basis, our consolidated results, taking into account depreciation
and amortization on property and equipment and amortization of
customer loyalty payments, as well as other items which are not
allocated to the operating businesses such as interest expense
(excluding unrealized gains (losses) on interest rate derivative
instruments), certain components of net periodic pension and
post-retirement benefit costs and related income taxes but
excluding the effects of certain expenses not directly tied to the
core operations of our businesses. Adjusted Income (Loss) per
Share – diluted has similar limitations as Adjusted Net Income
(Loss), Adjusted Operating Income (Loss) and Adjusted EBITDA and
may not be comparable to similarly named measures used by other
companies. In addition, Adjusted Net Income (Loss) does not include
all items that affect our net income (loss) and net income (loss)
per share for the period. Therefore, we believe it is
important to evaluate these measures along with our consolidated
condensed statements of operations.
We believe our important measure of liquidity is Free Cash Flow.
This measure is useful indicator of our ability to generate cash to
meet our liquidity demands. We use Free Cash Flow to conduct
and evaluate our operating liquidity. We believe it typically
presents an alternate measure of cash flows since purchases of
property and equipment are a necessary component of our ongoing
operations and provides useful information regarding how cash
provided by operating activities compares to the property and
equipment investments required to maintain and grow our platform.
We believe it provides investors with an understanding of how
assets are performing and measures management's effectiveness in
managing cash. Free Cash Flow is a non – GAAP measure and may
not be comparable to similarly named measures used by other
companies. This measure has limitation in that it does not
represent the total increase or decrease in the cash balance for
the period, nor do they represent residual cash flow for
discretionary expenditures. This measure should not be considered
as a measure of liquidity or cash flows from operations as
determined under U.S. GAAP.
We use Capital Expenditures to determine our total cash spent on
acquisition of property and equipment and cash repayment of capital
lease obligation and other indebtedness. We believe this measure
provides management and investors an understanding of total capital
invested in the development of our platform. Capital Expenditures
is a non–GAAP measure and may not be comparable to similarly named
measures used by other entities. This measure has limitation in
that it aggregates cash flows from investing and financing
activities as determined under U.S. GAAP.
Management uses Net Debt to review our overall liquidity,
financial flexibility, capital structure and leverage.
Further, we believe, certain debt rating agencies, creditors and
credit analysts monitor our Net Debt as part of their assessment of
our business. Net Debt is not a measurement of our
indebtedness under U.S. GAAP and should not be considered in
isolation or as alternative to assess our total debt or any other
measures derived in accordance with U.S. GAAP.
These non–GAAP financial measures have limitations as analytical
tools and should not be considered in isolation or as a substitute
for analysis of Travelport's results as reported under U.S.
GAAP.
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SOURCE Travelport Worldwide Limited