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

Hello, and good morning, everyone. Thank you for joining us for our fourth quarter earnings conference call. This morning we issued an earnings press release, which is available on the SEC and our website at investors.amexglobalbusinesstravel.com. A slide presentation, which accompanies today’s prepared remarks, is also available on the Amex GBT Investor Relations web page. 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 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, free cash flow and net debt. All references during today’s call to 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 for 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; and Martine Gerow, our Chief Financial Officer. Also joining for the Q&A session today is Eric Bock, our Chief Legal Officer and Head of Global M&A. With that, I will now turn the call over to Paul. Paul?

Thank you, Barry. Welcome and thank you for joining our fourth quarter earnings call. I’d like to kick off by reviewing the fourth quarter highlights before turning it over to Martine to take us through the financials. We will then go through our outlook and guidance for 2023. So before I cover Q4 earnings, I would like to address the 8-K we filed on Tuesday. Martine Gerow, our CFO, will step down from her role to take a position outside of the company. Karen Williams, who joined Amex GBT as Deputy CFO in May of last year as part of our succession planning process for the CFO role, will take over effective July 1st. Karen joined us from IHG, as well as prior to that working at Avios, which is part of IAG and also American Express, Karen has held a series of senior financial leadership roles. Martin is going to be with us until the end of June. So we have plenty of time for a very thoughtful and orderly transition. I do want to extend my sincere thank you to Martine for her leadership and her significant contribution to our business in her five and a half years as CFO. Martine helped navigate the organization through the financial impact of the global pandemic, and of course, was also instrumental in leading the successful listing of the company. So welcome and congratulations to Karen, and of course, Martine. So turning back to the fourth quarter, we reported a strong finish to 2022, driven by continued recovery, record new wins and margin expansion. Our full year revenue and adjusted EBITDA were both ahead of guidance at $1.85 billion and $103 million, respectively. Revenue recovery for the fourth quarter reached 75% of pro forma 2019 levels and that was up from…

Thank you, Paul, and good morning, good afternoon, everyone. So as you heard from Paul, I’m on page 10, we continue to deliver on our strategic and financial priorities, and we did finish 2022 on a strong note. Our revenue recovery was 75% of 2019 pro forma, which is 3 points above where the third quarter was and it is 3 points above the transaction recovery in the fourth quarter, which was 72%. Our yield, which is measured as revenue over TTV, which is total transaction value was 8.9% in the fourth quarter. We benefited from improved yields across those air and hotels. In fourth quarter, Products and Professional Services revenue were actually up 14% sequentially meaning versus the third quarter, driven by solid growth in Management Fees and particularly Meeting and Events. Our TTV recovery reached 70% in the fourth quarter. Transaction recovery was 72%. That’s an improvement of 1 percentage point versus the third quarter. On a constant currency basis, TTV recover was actually in line with transaction recovery. And while we did noted a softening of the trends going into the holiday period, we are pleased to report that we are seeing a very strong rebound in January and February volumes, which is in line with our expectation for the first quarter of this year. Now looking at year-over-year results on a pro forma basis, fourth quarter TTV was up 93% to reach $5.9 billion. Our average transaction value was up 19%, now that’s largely driven by the strong recovery in international bookings versus prior year. Our fourth quarter total revenue increased 71% to $5.7 million. Now within this, travel revenue was up 101% in Q4. Again, revenue yield outperformed other quarters due to very strong end of year air and hotel performance. And traditionally, Q4 is…

Okay. Thank you, Martine. Let’s talk about 2023. As we said last quarter, there are several tailwinds that set us up for growth in 2023. First of all, the business travel recovery continues and the outlook remains positive with our customers. Industry experts predict business travel spend will continue to grow and capacity will continue to increase all supporting continued growth in 2023. Secondly, as we predicted, distributed teams and hybrid work are clearly creating new business travel, Meetings and Event demand, and we see this, particularly in our Meetings and Events results. Third, airline capacity is expected to improve throughout 2023 and this incremental supply will, of course, support increased demand. And fourth, our sales pipeline leads us to be confident in continued share gains in the year ahead with specifically continued momentum in the SME segment. So, all in all, I think, these results in expectations for strong revenue and earnings growth in 2023. Now I think importantly, these tailwinds and our expectations for the year ahead are supported by data from customers and data from suppliers and data from across the industry. According to GBTA’s Q1 2023 Business Travel Outlook Poll, this was published at the end of January. Domestic and international bookings are currently at 67% and 54% at 2019 levels and this is up from 63% and 50% in October. So industry momentum continues and you can see that we are clearly outpacing the industry with Q4 revenue recovery at 75%. Turning to customers, 78% of travel managers expect more or a lot more trips in 2023 versus 2022. 86% of travel suppliers are expecting higher spending from corporate customers in 2023 and that’s an improvement versus 80% in the survey in October, finance, insurance, professional services, consulting other sectors where we’re seeing the strongest…

Thank you, Paul. So on page 17, in 2023, we expect to deliver double-digit revenue growth and margin expansion and we project to turn free cash flow positive during the year and actually come within our target net leverage of 2 times to 3 times adjusted EBITDA. Now Let me review with you what are the key drivers for our 2023 guidance in which we assume a measured view of the macro environment this year. So starting with the components of our expected 17% to 20% revenue growth, 12 points of that growth really results from carrying forward the fourth quarter run rate and another 5 points to 8 points of additional growth is expected to come from a combination of share gains and organic growth. We project an overall revenue recovery of 77% to 79% in 2023. That’s about 2 points above where we project transaction recovery. On the cost side, as you heard from Paul, we expect single-digit growth in operating expenses as we improve operational efficiencies, fully realized cost synergies and achieve benefits from the reorganization we announced in January. Now in 2022, particularly in the second half and that impacted the fourth quarter as well, our operational productivity was negatively impacted, really a consequence of having to recruit and train a number of -- significant number of new agents, travel agents and a consequence of the travel disruptions as the industry was facing very similar challenges. Now in 2023, we expect to achieve significant productivity gains as we improve our operating metrics from where they were in the fourth quarter. And as a result, we expect to continue to deliver high operating leverage with an adjusted EBITDA fall-through of about 70% in 2023 and a margin expansion of 9 points to 11 points. As previously mentioned,…

Thank you. [Operator Instructions] We have a first question from Duane Pfennigwerth of Evercore ISI. You may proceed.

Hey. Thank you. Just with respect to your outlook for transaction volume recovery, can you talk about maybe the regions or the geographies where you’re seeing the biggest sequential improvement and understand maybe January wasn’t the hottest month? But maybe mark kind of where we are in the month of March versus the levels that you saw in the fourth quarter?

Do you want me to take that one?

Sure.

I will take that. Sure. I will take that, Duane. So in terms of the geographies, we expect a somewhat higher recovery in the countries that were, I’d say, the slowest to open, so there would be more some of the Southeast Asia, Canada is another market. Outside of those in China, the China is relatively a small impact, because we don’t consolidate, we don’t target China. Outside of those particular geographies, we expect a fairly steady recovery in both Europe and the U.S. And in terms of trends, as I was indicating, actually we -- based on what we’re seeing in January and February, we saw an improvement in the recovery, which is consistent with what we expected in the first quarter. So a very strong rebound after the holiday season.

It may be more of a U.S. phenomenon, but I would guess that March is the strongest month of the quarter in terms of corporate travel recovery. Any thoughts on kind of where March stands relative to fourth quarter and no problem if that’s not a level of detail that you want to get into?

I’ll comment on January, February, because March is just starting. And again, we’re very encouraged with what we saw in term of February, which saw -- which is an improvement over what we saw in the fourth quarter, particularly the exciting to the fourth quarter where we were impacted as the industry with the holiday. So very…

Thanks. And then…

Yeah.

Thank you. Thank you. And…

And we are -- okay.

Just for my follow-up, on the seasonality of working capital, nice improvement in that line over the balance of 2022. But can you help us think about kind of the seasonality of that working capital build around the bookings build here into 2023? And thanks for taking the questions.

Sure. So in terms of working capital, we tend to have the working capital build going into the first quarter and the second quarter, because that’s where most of the, let’s say, volume seasonality is. We tend to then get back down in the third quarter. And the fourth quarter result is usually favorable as well from the working capital. That’s usually very low working capital quarter. So we expect it to come up in the first half and then the use going into the fourth quarter.

Okay. Thank you very much.

Thank you. [Operator Instructions] And we now have [inaudible] of Morgan Stanley.

Hi. Thanks for taking the question. I just want to kind of come back to the remaining 20% of the permanent cost savings you guys are waiting on. I know you said in the past you expect it to come back on as volumes returned to around 100% and recovery nearing high 70%s in 2023. Just wondering if you could kind of give what you expect for cadence in realizing those savings and could you kind of give approximation of how much you would expect to realize at, say, 8% of pro forma versus 95%?

Sure. So we would expect the -- that remaining 20%, which is about $40 million. We would expect to start realizing some of that obviously this year, right, we’re in the high 70%s from a recovery standpoint. And then the remaining of that going into 2024 and 2025, as you hear the higher recovery level to be very -- to be pretty linear to what the volume recovery is.

Okay. Great. Thanks. And just one more question for me and you guys talked about the $3.1 billion in new wins. I guess could you just kind of give an idea of how much it takes for those wins to ramp and turn that into revenue on your guys income statement?

Sure. So to think about it is, it takes two years to three years depending on the customers. You don’t have necessarily 100% of conversion contribution, some of that is what we call partner volumes, so not up prior to the market but our partner market and some of that is a leakage. So we typically have around a 70% conversion and that conversion broadly takes place as a majority over a two-year period, and by the third year, we have all of that 70% volume converted.

Okay. Great. Thank you.

Thank you. [Operator Instructions] We now have Lee Horowitz of Deutsche Bank. Your may proceed.

Great. Two, if I may. I’d like to dig into the full year 2022 guide. You guys highlighted that GBTA spend expectation growth of 24% and your guidance suggests, call it, 20% revenue growth at the high end and 5 points to 8 points of share gains or plus organic growth for the year. It seems to sort of stand in contrast to what it is a high degree of confidence in driving incremental share this year. Can you just help us better understand the discount between those two?

Yeah. Martine, maybe I’ll start on that one. Look, I think the GBTA prediction is a prediction at this point, but it’s actually also travel spend. And if you look at our plan, that’s sort of the equivalent of our TTV and also TTV plan for 2023 is somewhere in that low to mid-20s as well. So our kind of TTV plan is pretty consistent with that GBTA outlook.

Helpful. Thank you. And then maybe take a step back, a question we often get from investors is around the outlook you’re seeing from distributed teams. Can you help us maybe get to quantify what you saw in 2022 regarding distributed teams driving incremental event volume? And maybe what you’re thinking about in terms of expectations as we look out to 2023 and 2024?

Yeah. I’m sorry I didn’t quite catch the question. You just cut out. I don’t know apologies if it was -- I know it was my end. Do you mind just repeating that?

No worries. It’s in regards to the uplift you’re seeing from distributed teams. We had this question from investors a lot. How much incremental meeting demand from distributed teams is offsetting some degree of compression across the industry due to proliferation of zero and those sorts of things. So if you can have us better understand maybe what you saw in 2022 in regards to incremental volume coming from distributed workforces and/or what your expectations are for that to sustain as we look out to 2023 and 2024, that would be super helpful?

Yeah. Sure. No. Thank you. And so as we exited 2022, so you look at the fourth quarter, the number of Meetings and Events that we were managing was actually above 2019 levels. So that gives you a sense of the level of demand. But it does have a slightly different mix. We have a division that deals with meetings for under 50 people to smaller meetings and that is the fastest-growing part of the business. So the number of meetings is at 2019 levels as we exited. But the mix has moved more towards a larger number of smaller to midsized meetings. As we look out to 2023, our adjusted EBITDA from our Meetings and Events division, we will see that at or above 2019. That’s how we kind of see the year ahead. And it’s one of the businesses where we have, frankly, a better view of the future, because the booking windows are so much further in advance for Meetings and Events. So we’re pretty confident in the outlook for 2023 for Meetings and Events.

Helpful. Thank you.

Thank you. [Operator Instructions] And we now have Stephen Ju of Credit Suisse. Your line is open.

Okay. Thank you. So just switching focus a little bit to the SME segment. Given the -- what looks like the very high level of fragmentation there, there is still a wide open feel for not only yourself but for others to look to consolidate share as well. So I’m wondering if there is any step-up in competitive intensity you may be seeing in the industry as the sector continues to recover? And second, in terms of the booking type that you guys have disclosed and I think this is on slide seven. Just wondering about the behavior among the clients, like why the hotel dollar recovery level seems to be charging ahead of error at this point? Thank you.

Yes. I think, in terms of the SME competitive landscape, I think, you hit on both points there, Stephen. I mean, yes, there are some new entrants and there’s increased competitive activity, but very few have gained any significant share or scale. And when you look at that alongside the sort of size of the opportunity, we don’t see any change. In fact, if you look at 2022, we had a record win loss rate in the SME segment. And looking at our pipeline for the year ahead, by confident we’ll set a new record. So, yes, there’s activity, but it’s certainly not impacting our ability to aggressively grow in that segment. And I think one of the major advantages that we have is the range of solutions that we offer. It’s not one single segment with one homogenous set of needs. If a customer is looking for a high touch, white glove service that includes both business travel and access to premium leisure, we have a fantastic solution for them innovation. If they’re looking for a turnkey SaaS solution with an intuitive customer experience with access to fantastic content, we have Egencia. And if they’re looking for that more sophisticated outsourcing of travel end-to-end, perhaps on a regional or global basis then that really tends to fit Amex-GBT more. So one of the major advantages that we have is going out into this very large segment is being able to offer that choice to customers, because there are different needs in different sub-segments of the SME space and I think we’re uniquely positioned with the solutions that we have there. I mean, I’d say, hotel one of the key elements that’s driving the increased recovery is that it has been a strategic priority for us to increase content and what we call attachment rates. So to increase the number of hotel bookings in relation to air bookings and bringing in all of the content from Expedia, for example, which we do through APIs, we bring it into our supply management platform and we are able to present that content through our Egencia platform, through our Neo platform. So improving the content, improving the displays is definitely increasing in conversion and increasing that attachment rate. But it is a broader trend as well across the industry where we have seen a hotel recovery above air and I think one of the trends supporting that is what we talked about before in terms of Meetings and Events. There’s a lot more demand for small Meetings and Events, which often are more localized and more hotel-driven than air driven. So I’d say those are the two key trends.

Thank you.

One other trend that perhaps is more specific to Europe is we are seeing growth in rail. And I think there’s obviously certain dynamic in Europe where there’s on certain routes, significant increased efficiency and frequency of rail and so that is a factor when you look at Europe specifically

Thank you. [Operator Instructions] There’s no questions at this time. So I’d like to hand it back to the management team.

Great. Well, look, thank you very much for your questions. In closing, I just want to thank our team across Amex GBT for their dedication to our customers and the strong results they’ve delivered. We are excited about the year ahead and very confident in our position and our outlook for growth in 2023. So thanks for joining us and your continued interest in the company. Thank you very much.