Travelport Limited Travel Content Leadership -First Quarter 2014 Results-

ATLANTA, May 8, 2014 /PRNewswire/ -- Travelport is a travel commerce marketplace providing distribution, technology, payment and other solutions for the $7 trillion global travel and tourism industry.

Commenting on developments, Gordon Wilson, President and CEO of Travelport, said:

"As we celebrate the one year anniversary of our merchandising platform, I am pleased we have further strengthened our air proposition with the signing of new ground-breaking agreements with Ryanair and AirAsia, an extended partnership with easyJet, and over thirty airline agreements for our Rich Content and Branding functionality.  Through these unrivalled agreements, we are now uniquely positioned to sell the content of all the world's top ten airlines.  This milestone builds on our leadership in global hotel content distribution and augments our strong financial performance."

Highlights:

• Net Revenue +4% and Adjusted EBITDA +7%
• Unrivalled content added to our Travel Commerce Platform:
  • Uniquely distributing content from all the world's top ten airlines
  • One year anniversary of Travelport Merchandising Platform™ marked by:
    • New agreements with Ryanair and AirAsia and an extended partnership with easyJet
    • Over 30 airlines signed for Rich Content and Branding functionality, including British Airways / Iberia and Air China
  • Expanded hotel content leadership – now offering 580,000 unique properties
• Improvement of capital structure with deleveraging $135 million debt-for-equity exchange transactions completed in March

Financial Highlights

During the first quarter 2014, we realigned our reporting to better reflect our underlying operations to enable travel commerce through our platform.  As a result, we are reporting Adjusted EBITDA and Adjusted Net Income as key non-GAAP performance metrics, as defined on page 12, and presented in the table below:

Further, we have added Adjusted Free Cash Flow and Adjusted Unlevered Free Cash Flow to our cash flow reporting metrics on page 7 as also defined on page 12.  We are also reporting a split of our Revenue into Travel Commerce Platform revenue, including our Air and Beyond Air revenue, and Technology Services revenue in the table on page 8 with three year historical information provided on page 9.

Net Revenue of $572 million for the first quarter of 2014 was $24 million (4%) higher than the first quarter of 2013, and Adjusted EBITDA of $151 million was $10 million (7%) higher than the first quarter of 2013.

Adjusted Net Income of $3 million decreased from $14 million for the first quarter of 2014 primarily due to a $13 million increase in interest costs.  

Travel Commerce Platform RevPas increased 3% to $5.61.

Interest costs of $83 million for the three months ended March 31, 2014 were $13 million higher than 2013 due to higher interest rates on debt as a result of our debt refinancing in 2013.

Travelport's net debt reduced to $3,226 million as of March 31, 2014, which comprised debt of $3,485 million less $180 million in cash and cash equivalents and less $79 million of cash held as collateral, from $3,340 million as of December 31, 2013 following the deleveraging $135 million debt-for-equity exchange transactions completed in March.

Travelport generated $23 million in net cash from operating activities for the three months ended March 31, 2014 compared to net cash used in operating activities of $21 million for the three months ended March 31, 2013. The improvement of $44 million is primarily a result of the timing of interest payments, as some payments were deferred into the second quarter of 2014 as a result of our 2013 refinancing.

We continue to assess and evaluate potential capital markets transactions, including potential debt-for-equity exchanges, and similar transactions.  We can give no assurances that we will pursue or consummate such transactions as they are dependent, among other things, on market conditions and other factors that are inherently unpredictable.

Conference Call

The Company's first quarter 2014 earnings conference call will be held on May 8, 2014 beginning at 2.30 p.m. (EST). Details for this conference call as well as the earnings presentation are available through the Investor Center section of the Company's website (www.travelport.com/investors/Financial-Calendar), where pre-registration for the call is required. 

A recording of the call will be made available within 24 hours in the Financial/Operating Data section of the Investor Centre on the Company's website.

About Travelport

Travelport is a travel commerce marketplace providing distribution, technology, payment and other solutions for the $7 trillion global travel and tourism industry.  With a presence in over 170 countries, approximately 3,600 employees and 2013 net revenue of $2.1 billion, Travelport is a privately owned company comprised of:

• Our Travel Commerce Platform (formerly known as our global distribution system or "GDS" business), through which we facilitate travel commerce by connecting the world's leading travel providers with online and offline travel buyers in our proprietary business to business ("B2B") travel commerce marketplace.   As travel industry demands evolve, we are utilizing our Travel Commerce Platform to redefine the electronic distribution and merchandising of airline core and ancillary products, as well as extending our reach into the growing world of travel commerce beyond air, including to hotel, car rental, rail, cruise-line and tour operators. In addition, we have leveraged our domain expertise in the travel industry to design a pioneering B2B payment solution that addresses the needs of travel intermediaries to efficiently and securely settle travel transactions. We also utilize the extensive data managed by our platform to provide an array of additional services, such as advertising solutions, subscription services, business intelligence data services, and marketing-oriented analytical tools to travel agencies, travel providers and other travel data users.
• Our Technology Services, through which we provide critical IT services to airlines, such as pricing, shopping, ticketing, departure control and other solutions, enabling them to focus on their core business competencies and reduce costs. We manage reservations, inventory management and other related critical systems for Delta Air Lines.

Investor Contact

Peter Golby
Vice President, Investor Relations
+44 (0)1753 288 187
[email protected]

Media Contacts

Kate Aldridge 
Vice President, Corporate Communications 
+44 (0)1753 288 720 
[email protected]

Jill Brenner
Senior Director, Corporate Communications, Americas
+1 (973) 753 3110
[email protected] 

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 and the economic conditions in the eurozone; 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; 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 to enter into new relationships on acceptable financial and other terms; and our ability to grow adjacencies, such as our controlling interest in eNett. 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 unless required by law.

This press release includes certain non-GAAP financial measures as defined under Securities and Exchange Commission ("SEC") rules. As required by SEC rules, important information regarding such measures is contained below.

* Other adjusting items relate to payments for costs included within operating income but excluded from Adjusted EBITDA. These include (i) $6 million and $13 million of corporate costs payments during the three months ended March 31, 2014 and 2013, respectively, and (ii) $4 million of litigation and related costs payments for the three months ended March 31, 2013.

Our revenue is earned through our Travel Commerce Platform (including our Air and Beyond Air revenue) and Technology Services.  Our Travel Commerce Platform combines state-of-the-art technology with industry leading features, functionality and innovative solutions to address the high volume and growing transaction processing requirements for the evolving needs of the travel industry.

Air:  We provide sophisticated and comprehensive real-time search pricing, booking, change, payment and integrated itinerary creation for travelers who use the services of online and offline travel agents for both leisure and corporate travel. 

Beyond Air:  Our Beyond Air portfolio includes hospitality and advertising, payments and other platform services. 

The table below sets forth Travel Commerce Platform revenue by region:

The table below sets forth Travel Commerce Platform segments by region and global RevPas:

Note:

1) FY 2011 includes $35 million of Travel Commerce Platform Air revenue and $61 million of Technology Services revenue under the United MSA.

2) FY 2013 includes $8 million of Travel Commerce Platform Air revenue and $19 million of Technology Services revenue under the United MSA.

Note:

1) FY 2011 includes $35 million of Travel Commerce Platform Air revenue (all earned in the United States) under the United MSA.

2) FY 2012 includes $8 million of Travel Commerce Platform Air revenue (all earned in the United States) under the United MSA.

Note:

1) FY 2011 includes 8 million Travel Commerce Platform Reported Segments (all in the United States) under the United MSA.

2) FY 2012 includes 2 million Travel Commerce Platform Reported Segments (all in the United States) under the United MSA.

TRAVELPORT LIMITED 
HISTORICAL FINANCIAL INFORMATION 
(in $ millions and unaudited)

Definitions:

Adjusted EBITDA: is a non-GAAP financial 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 for future periods. Adjusted EBITDA is defined as Adjusted Net Income, adjusted to exclude depreciation and amortization of property and equipment, amortization of customer loyalty payments, interest expense, net and provision for income taxes. Capital expenditures, which impact depreciation and amortization, Customer Loyalty Payments, interest expense and income tax expense, are reviewed separately by management. Adjusted EBITDA is disclosed so investors have the same tools available to management when evaluating the results of Travelport. Adjusted EBITDA is a critical measure as it is required to calculate our key financial ratios under the covenants contained in our credit agreements. These ratios use a number which is broadly computed from Adjusted EBITDA for the last twelve months and consolidated net debt, as at the balance sheet date and are known as the Total Leverage Ratio and Senior Secured Leverage Ratio. Travelport is currently in compliance with all of its financial covenants. A breach of these covenants could result in a default under the senior secured credit agreement, second lien credit agreement and the indentures governing the notes.

Adjusted Free Cash Flow: is a non-GAAP measure and may not be comparable to similarly named measures used by other companies. Adjusted Free Cash Flow is defined as net cash provided by (used in) operating activities adjusted to exclude the cash impact of other adjusted items (which relate to payments for costs included within operating income, but excluded from Adjusted EBITDA, including corporate costs and litigation and related costs), and to include capital expenditures and capital lease repayments. We believe Adjusted Free Cash Flow provides management and investors with a more complete understanding of the underlying liquidity of the core operating businesses and its ability to meet current and future financing and investing needs.

Adjusted Net Income: is a non-GAAP financial 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. Adjusted Net Income is disclosed so investors have the same tools available to management when evaluating the results of Travelport. Adjusted Net Income is defined as Net Income adjusted to exclude items we believe potentially restrict our ability to assess the results of our underlying business, such as amortization of acquired intangible assets, corporate costs, equity-based compensation, litigation and related costs, other-non cash costs, equity in earnings (losses) of investment in Orbitz Worldwide and loss on extinguishment of debt.

Customer Loyalty Payments: development advance payments that are made with the objective of increasing the number of clients or improving customer loyalty with travel agents or travel providers. The amortization of such payments is excluded from Adjusted EBITDA under the terms of our senior secured credit agreement and our second lien credit agreement.

Travel Commerce Platform Reported Segments ("Segments"): Travel provider revenue generating units sold by our travel agency network, geographically presented by region based upon point of sale location.

Travel Commerce Platform RevPas ("RevPas"): Travel Commerce Platform revenue divided by the number of Travel Commerce Platform Reported Segments.

Unlevered Adjusted Free Cash Flow: is a non-GAAP measure and may not be comparable to similarly named measures used by other companies. Unlevered Adjusted Free Cash Flow is defined as Adjusted Free Cash Flow adjusted to exclude cash interest payments.

SOURCE Travelport

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