Good morning and welcome to the American Express Global Business Travel Second Quarter 2022 Earnings Conference Call. As a reminder, please note today's call is being recorded. I will now turn the call over to Vice President of Investor Relations, Barry Sievert. Please go ahead, sir.

Hello, and good morning, everyone. Thank you for joining us for our second quarter earnings conference call. This morning we issued an earnings release which is available on our website at investors.amexglobalbusinesstravel.com. The slide presentation which accompanies today's prepared remarks is also available on the Amex GBT Investor Relations webpage. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19 industry trends, cost savings and acquisition synergies, among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these and other risks and uncertainties is contained in our earnings release issued this morning a registration statement on Form S1 and the related prospectus filed on July 19, 2022 and our other SEC filings. Throughout today's call, we will also be presenting certain non-GAAP financial measures such as EBITDA, adjusted EBITDA, adjusted EBITDA margin, adjusted operating expenses and free cash flow. All references during today's call such non-GAAP financial measures have been adjusted to exclude certain items, definitions of these terms and the most directly comparable GAAP measures and reconciliations from GAAP – non-GAAP measures are available in the supplemental materials of this presentation and in the earnings release. Participating with me on the call today are Paul Abbott, our Chief Executive Officer, Martine Gerow, our Chief Financial Officer and also joining us for the Q&A session today is Eric Bach, our Chief Legal Officer and Head of Global M&A. With that, I'll now turn the call over to Paul. Paul?

Well, thank you very much, Barry, and welcome to everyone. Thank you all for joining us today for our first live earnings call as a public company. I'm going to start my section with the second quarter 2022 highlights. And of course, listing as a public company in the second quarter was a significant milestone for the company and really marked the beginning of the next chapter of growth for American Express GBT. I'm pleased to say business travel transactions continue to recover in the quarter reaching 76% of 2019 pro forma levels in June. And also pleased to say we reported positive adjusted EBITDA of 47 million in the quarter. New sales momentum continues to be very strong. Over the past 12 months, we've signed 4.2 billion of new wins, and equally important maintained very high levels of customer retention. Overall, a strong first half performance in 2022 and the continued share gains that we see give us the confidence to raise our full year 2022 guidance once again. So we reported strong second quarter revenue and earnings, revenue totaled 486 million up 217% over Q2 2021. Our positive adjusted EBITDA result was driven primarily by the strong recovery of business travel and of course continued cost discipline across the business. The transaction recovery for the second quarter reached 69% of 2019 pro forma levels and the revenue recovery reached 65%. As I mentioned, and which we're going to discuss in more detail the continued strength in the recovery of business travel and our share gains give us the confidence to raise our full year 2022 revenue guidance to a range of between 1.8 billion to 1.85 billion and raise our full year adjusted EBITDA guidance to a range of between 90 million and 100 million. Following the impact…

Thank you, Paul, and hello, everyone. The only industry recovery and the new business wins that you just heard from Paul were very much on track to add almost 350 million as adjusted EBITDA as compared to the 2019 baseline and this will be done through really two key levers. As you know, the first of those levers is Egencia synergies. This strategic acquisition significantly enhances our capability to accelerate growth in the very important SME space and consistent with our M&A track record. We do expect this acquisition to generate significant synergies of 109 million in total, of which 75 million on the revenue side driven by revenue harmonization and 34 million are on the cost side. So I'm pleased to report that the integration of Egencia is proceeding well. On the commercial front Egencia maintains a strong win loss ratio and customer retention rates and Egencia new win value tracking ahead of target. On the financial side, we are on track to exceed our synergy targets which was 25 million for 2022. We're tracking to exceed our revenue harmonization targets. And we've reached agreements for the majority of our key supplier contracts. We have launched Amex GBT preferred extra fares and integrated new hotel inventory into the Egencia platform. On the cost side, we have exited or combined 27 office locations, which results in 10 million of cost savings in 2022 in the real estate side, which you might recall driving about two thirds of our overall cost of energy. And our technology migration remains on track, we have exited the Amsterdam data center and we've migrated five products making tools already. Based on actions completed to-date and on a run rate basis, we've already achieved 65% of the synergies which we expect at full volume recovery. The…

Thank you. Our first question for today comes from Lee Horowitz from Deutsche Bank. Lee, your line is now open.

Great. Thanks for taking the questions. Two, if I could. So as it relates to the full year guidance you'd mentioned in terms of the transaction recovery, you're looking for a steady but modest pace in the back half of the year. I guess with the front half being anything but modest, why should we be looking for this recovery based too slow as you are looking down to the year? And then maybe one on costs. So you had talked about achieving 100% of the $235 million in permanent cost savings. At this point, can you help us understand better if wage inflation has offset that in any capacity this year? And how we should be thinking about how that flows through into next year? Thank you so much.

Hi. This is Martine. Thank you for the question. So on the recovery, we've certainly seen a very steep improvement in the second quarter. But you may recall that in the first quarter Omicron impacted us. We feel that a improvement in the balance of year is a steady improvement. There is industry expectations, expect also an improvement in recovery in the balance of year, when you look at business publications, particularly from airlines. But there are some economic headwinds, and we just want to make sure that we strike a balance across various elements that could impact demand recovery in the second half. But again, confident that recovery will continue to improve. On the cost side and so the 235 million is indeed the result of the actions that we completed in 2020 and 2021. And before the impact of inflation, I think we've shared with you in the past that we have a partial hedged against inflation, which is really coming from two sides. One is part of our revenues on the management fee basis. And therefore, we have a direct path to have any merit-related information that we need on the cost side. And the second is, if you believe that inflation would have an impact on ticket prices, whether a hotel or airline, that will result in additional revenue costs. On a net basis, we have about 50% hedge and the way to think about it is, for every point of merit inflation, we would have about a 6 million impact on adjusted EBITDA.

Thanks. Maybe one follow-up there just on the guidance point, if I could. So you had just mentioned, obviously, some of the economic headwinds that are top of mind for everyone. So I guess with that in mind, is it fair to kind of assume that your guidance incorporates some degree of conservatism around the way larger enterprises are going to be allocating costs in the back half of the year given the macro environment.

Maybe Martine, I'd just add a perspective here. I think, there's a balance to be struck for the rest of this year. I think there are some headwinds and there are also some tailwinds. And we're trying to find the right balance here. I think some of the headwinds have been the operational challenges in the second quarter, particularly airports and airlines, some of the supply constraints. And also macro economic conditions in the major markets that we operate certainly become more challenging. But at the same time, we also believe there's strong tailwind. We believe that recovery is going to continue. There's momentum, certainly in key markets, key segments. China is just one example, the other market that represented 5% of our total sales in 2019 that's not domestic China, but that's international travel to and from China. So U.S. to China, Europe to China within Asia. That market is still essentially at zero today. Because it was 14 days quarantine, now it's seven days quarantine. But when China opens up, this five points of recovery there, for example, and there's still definitely room for the recovery in certain markets and certain segments. So I think that's a continued tailwind. I also think the tailwind will come from supplies starting to improve, and the operational issues starting to stabilize. And so, we're trying to find the right balance of recognizing, the headwinds and tailwinds. And that's essentially, what's driven guidance to the level that it's at. So hopefully that helps. I mean, there's still obviously a fair amount of uncertainty in terms of how some of those headwinds will play out. But I think we're striking the right balance.

Very helpful. Thank you both.

Thank you. . Okay. We have no further questions for today. So I'll hand back to Paul Abbott for any further remarks.

Okay. Well, thank you very much for attending. And we appreciate your continued interest in the company. I do want to close by just thanking our team across Amex GBT for their dedication to our customers and the strong results that they've delivered in the first half of the year. Thank you very much, and we look forward to updating you again soon.

Thank you for joining today's call and we may now disconnect your lines.