Good morning and welcome to the Sabre Second Quarter 2018 Earnings Call. Please note that today's call is being recorded and is also being broadcast live over the Internet on the Sabre corporate website. This broadcast is the property of Sabre. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of the company is strictly prohibited. I will now turn the call over to the Senior Vice President of Corporate Communications and Investor Relations, Mr. Barry Sievert. Please go ahead sir.

Thank you, Christina, and good morning, everyone. Thanks for joining us for our third quarter earnings conference call. This morning we issued an earnings press release, which is available on our website at investors.sabre.com. The slide presentation, which accompanies today's prepared remarks, is also available during this call on the Sabre IR web page. A replay of today's call will be available on our website later this morning. Throughout today's call, we'll be presenting certain non-GAAP financial measures, which have been adjusted to exclude certain items. All references during today's call to EBITDA, operating income, EPS and net income have been adjusted for these items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.sabre.com. We'd like to advise you that our comments contain forward-looking statements. These statements include, among others, disclosures of our guidance including revenue, EBITDA, operating income, net income, EPS, cash flow and CapEx, our expected segment results, the effects of changes in accounting standards and U.S. tax reform, and the effects of new or renewed agreements, products and implementations, our expectations of industry trends and various other forward-looking statements regarding our business. These statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. Information concerning the risks and uncertainties that could affect our financial results is contained in our SEC filings including our 2017 Form 10-K and our second quarter 2018 Form 10-Q. Participating with me on today's call are Sean Menke, our President and Chief Executive Officer; and Doug Barnett, Executive Vice President and Chief Financial Officer. Sean will start us off and provide a review of our strategic and commercial performance and outlook. Doug will offer additional perspective on our financial results and the forward outlook. We will then open the call to your questions. With that, I'll turn the call over to Sean.

Thanks, Barry. Good morning, everyone, and thank you for joining us. Today, I am pleased to report solid third quarter results that provide continued evidence of growing momentum behind our strategic and commercial initiatives. We continue to build on our efforts for the past 18 months and are focused on growing our position as a global technology leader serving the large and growing travel industry. We benefit from a transaction-driven business model with recurring revenue driven by continued volume growth at our customers across the travel ecosystem. The Sabre team is highly engaged and I want to thank all of them for their continued efforts. I'm seeing solid progress on all fronts from our platform development and cloud migration to innovation and customer engagement. We are partnering closely with our customers and winning in the marketplace, as evidenced by our third quarter bookings share gain of over 2 points. In the quarter, we delivered 8% revenue growth, 26% EPS growth and 17% growth in free cash flow. Let's take a moment and review each of our business units. Travel Network posted strong top line growth of 11%, with bookings gains in Asia Pacific, North America and EMEA that included solid growth in both air and lodging, ground and sea. We are the number one seller for hotel inventory through the GDS with approximately 50% share. With our new innovations and partnerships with leading digital travel platforms like Booking.com, we are providing what our customers are asking for and further strengthening our leadership role. During the quarter, we were designated NDC-certified level 3 as an aggregator by IATA, which complements our existing NDC level 3 capability as an IT provider. We also officially kicked off our Beyond NDC partner program in close collaboration with industry leaders from across the airline and…

Thanks, Sean, and good morning, everyone. Before we jump into the quarterly results, I want to take some time to share my initial thoughts on Sabre. Over the past three months I've taken a deep dive into our business. What surprised me the most is that the vast majority of our revenue is recurring. We benefit from a transaction-driven business model with recurring revenue driven by continued volume growth at our customers across the travel ecosystem, which we believe gives us a natural long-term tailwind and provides confidence in our overall revenue outlook. Just looking back over trailing 12 months, we generated $3.6 billion in recurring revenue, an increase of 8% year-over-year. Over that period, recurring revenue represented 94% of total revenue. Our recurring revenue streams have grown faster than our nonrecurring revenue over recent years and, as a percent of total revenue, increased 20 basis points year-over-year. You can find our definition of recurring revenue in the appendix of our earnings presentation. I've also been pleasantly surprised by the amount of data we have at our fingertips to make decisions on a daily basis. We are using this data to evaluate potential new metrics and KPIs that are consistent with those of other best-in-class software companies, providing additional insight as we manage the business. This includes recurring revenue. Such a high degree of recurring revenue reinforces the need to focus on controlling costs within our business. As a tech company, controlling technology hosting costs and seeking a higher return on our R&D investment are a given. Accordingly, starting this quarter, we'll be providing increased visibility into our technology spend to give you better clarity on the level and performance of these costs, both operating and capitalized, which I'll discuss more in a moment. Turning back to the Q3 results.…

Thanks, Doug. Before we open it up for Q&A, I do want to take a moment, so sort of summarize some of the things that I see taking place. And I think it's good to put it in a perspective of, really, what we talked about in Investor Day earlier this year. And one of the important things that I continue to be very impressed by is the Sabre team and what they're getting accomplished. We had set high expectations of what we wanted to do in 2018. And without a doubt, the team has continued to perform. And I just want to go through some of the things that we had discussed at Investor Day and where I see us standing. So the one thing that we had talked about is our investment and focus on product and stability. And I'm very happy to report that what I'm seeing really throughout the year and on the second half of this year, really the best performance that we have seen over – in five years as it relates to our ability to monitor, understanding what's happening with our systems. So a real call-out to the teams that have been focused on that. The other is the cloud migration and it is well underway. And just to give you a couple examples, if you look at DXC, our peak with DXC was really in the fourth quarter of 2017. And if you look at where we are right now, we've actually reduced – and I'll do this from a server perspective – we're down about 2%. But the important thing to understand is if you look at the growth in essentially the shopping that was taking place and other processing, if it had gone down that – continued to go down…

Thank you We'll take our first question from Mark Moerdler with Bernstein Research. Mark L. Moerdler - Sanford C. Bernstein & Co. LLC: Thank you. I've got two parts to the question – or two slightly different questions. The first one is you started the business alignment roughly a year ago, August of 2017. And we're seeing the effect this quarter which is impressive. Should we expect that that's going to continue to layer in for the next three quarters and beyond? And then I got a follow-up.

I think you have to break it down, Mark. As we look at it, and this is why I think it was helpful that as Doug broke this down, you can understand how we're operating the business as it relates to the actions that we have been taking and then some of the things that I would consider to be overhang based on how the company performed before. So it's creating that clarity. So we continue to see momentum specifically on the technology side and we believe that will continue to progress as we talked about, really, at Investor Day is I look at what's happening on the business unit side, it's sort of what I had outlined, we feel good about the actions that are taking place and the momentum we're gaining in TN. On the Airline Solutions side, we've gone through a period that it was really focusing on how we look at our products and capabilities and how do we position ourselves for the future. And I feel good about where we sit there. And so when I take a step back, Mark, it's one that I feel good where this organization is, what they've accomplished and how do we continue to drive momentum going forward. That's not to say we don't have more work to do, but the momentum that we have been building is – I believe, continues into the future. Mark L. Moerdler - Sanford C. Bernstein & Co. LLC: Appreciate the detail. And thanks for all the details on the tech investment and the way that tech is being done. It's a lot of information but very helpful. Quickly, digital marketing has been a drag on the Hospitality side. And it looks like we're going to have it next quarter. Is this something that's just going to be a long-term drag, or do you think at some point this turns?

Well, I don't know if it will be a long-term drag. There were some businesses that we expected to close this quarter, did not close. I wouldn't expect it to be a high growth area for Hospitality Solutions. And I think the good news is it's a very low-margin business. So to the extent that it doesn't grow or even does continue to decline, we do expect to decline slightly in Q4, it won't have a material impact on the bottom line. Mark L. Moerdler - Sanford C. Bernstein & Co. LLC: Perfect, thank you. And congrats on the quarter.

Thanks, Mark.

We'll take our next question from Brian Essex with Morgan Stanley. Brian Essex - Morgan Stanley & Co. LLC: Hi, good morning and thank you for taking the question. Congrats on the good results. Hey, I just wanted to get a sense of – and Doug, thanks from me as well for that additional detail. And as we think about some of the puts and takes on the cash flow side, how do you anticipate the way that some of the investments may trail off or maintain and impact that that might have on cash flow conversion. If we were to focus on cash flow going forward, how do we develop expectations there?

Obviously with regard to tech expense, we want to make sure you understood where that's being spent. Well, focus is moving (31:19) into February, we'll give you more guidance on 2019 and where we expect cash flow to be. But I don't expect a material increase in the overall tech expense, the amount we actually spend year-over-year. So that's how I'd give you a sense of what's going to happen on cash flow. Brian Essex - Morgan Stanley & Co. LLC: Okay. But are there any projects right now that are initiatives, whether they're for transition or extraordinary items that are impacting cash flow that we might anticipate trailing off? Or is this ongoing leverage in the business expected to improve cash flow conversion going forward?

Well, the big thing that will end up happening, Brian, is one what we're seeing as it relates to the cloud migration we've talked about – and this gets within the DXC piece of it, that'll happen over the number of years that we outlined. If we look at some of the things that have also been focused on as it relates to the stability, that'll come off a little bit. But the other thing that we're focused on is as it relates to the opportunities and where we want to continue and invest in products and services, that'll be the balance as we look at it going forward. And I think the level of granularity that Doug is driving to is making sure that, again, where we're investing that we're seeing the returns. And as you can imagine, we're in the midst of our budget process for 2019 right now and there's a high level of scrutiny taking place there. Brian Essex - Morgan Stanley & Co. LLC: Okay. That's helpful. Thank you very much.

We'll take our next question from John King with Merrill Lynch.

Yeah, good morning. Thanks for taking the questions. I've got two as well, please. So the first question was on the Hospitality trajectory. Obviously, I think coming out of Q2, you were a little bit more upbeat on how growth would fare in the back half of the year. Just trying to understand maybe what's changed with that? Is that some kind of specific ramp-up with a client that's been delayed? Obviously, from what we understand, they're pretty transactional businesses, so trying to work out how that's been impacted. And then the second question was going back into the services business. I think both Hospitality and Airline Solutions, you called out services as being weak. So I just wondered if that has any implications for your gross margin on services or whether there's a risk of some kind of restructuring plan if that continues to be a bit of a drag? Thank you.

So let me first talk about the Hospitality piece, John. If you look at what I consider to be the underlying foundation of Hospitality as it relates to SynXis and what we offer on the CRS and the PMS side of the equation. And I feel good about that. And that's why we called out, essentially, the growth that we have seen, what we're expecting in the fourth quarter and then as we look into the future. The part of the business that hasn't performed is the digital. And the one thing that you find with that is, as you would imagine, because of what we do there, a lot of that is close-in in nature. So just to be relatively frank, the deals that the teams thought they were going to close in the third quarter and what we're seeing in the fourth quarter aren't getting closed. But, as Doug identified, that's low-margin business. But I drive back to the primary piece of that business and we feel good on the CRS and where we said as it relates to property management moving forward, specifically on the limited service side of the equation. To your second question on the services piece, some of the softening there, more on the Airline Solutions does tie to implementations. And that's one thing that we focus on the product health and what's taking place. I feel good where we're positioned as it relates to opportunities going forward, and you typically find that professional services go with that. The other thing that I think is also beginning to play out, and I have been heavily engaged in this and it sits within sort of that group is what's playing out on NDC and the capabilities of expanding our capabilities of helping the marketplace understand. So when I look at I think this is just part of the transition we're going through, John. And as we continue to focus on the products and capabilities and we shared a lot of what we're rolling out within Airline Solutions, I think there's a lot to follow.

Thank you.

We'll take our next question from Ashish Sabadra with Deutsche Bank.

Thanks for taking my question. And again, congrats on the good results. Question about the CWT, you highlighted CWT strategic win several times. I was just wondering if you could highlight why did CWT choose you and Amadeus. What was the – like criterias used for decision-making? And then also if you can provide any color on how should we think about the materiality of the benefit. Is it a big one like Flight Centre or is it going to be modest improvement from here? Thanks.

Yeah. So I think – when I go back, I think the best way of sort of walking you through this, Ashish, is you go back to the investment that really TN made going back to the new Sabre Red Workspace, the win with Flight Centre, and our ability to sit with a number of agencies around the world and help them understand how we've invested in the product and what's taking place. And the way that I look at it is CWT did that same assessment and felt that they wanted to be a strategic partner on the technology side and moving forward. With that, we're seeing an increased level of bookings and what's taking place. The level of impact will not be at the Flight Centre level because it's not 100% conversion. There's the balance relative to what they're taking place. But I do believe it's a testament to what Travel Network organization has done with its product and capabilities.

That's helpful. And then maybe just a quick clarifying question. Wyndham acquired La Quinta, have they made any decision on the La Quinta front on migrating the CRS there onto your platform as well?

Yeah. Based on – and I might be off on my dates a little bit here – but that will be converted over, and based on what I think I remember correctly, it is going to be in the second quarter. I think it begins in the second quarter of 2019.

Okay. Congrats on that. And maybe one final question. Just on the license fee revenues in the Airline Solutions, we saw that in the first quarter and third quarter as well. Does it create some sort of lumpiness in the revenue growth there? And does it create some difficult comps going forward, particularly for 2019? Any color there.

It will create a little bit of lumpiness and a little bit of tough comparisons in 2019. But I think more importantly, it's a real testament to the work that's been done in Airline Solutions to stabilize the business to get all those renewals. So I'll take that benefit over the little headwinds that it will cause us in 2019.

Thanks. Thanks for the color.

We'll take our next question from Neil Steer with Redburn. Neil Steer - Redburn (Europe) Ltd.: Hi, thanks very much. I've just got two quick questions. Firstly, you mentioned during the presentation on Hospitality, that you're doing some work with IHG and selling a product that links into the third-party CRS and potentially PMS that they're using. Can you just add a little bit of color to that please?

Yeah. Part of it gets into – essentially, Neil, when they look at going out – number of hoteliers going out to essentially book a group in bookings, it allows them to do rate consolidation a little bit better that really drives to improvements of revenue. So, it's a capability that allows us to attach to, as I stated, the current capabilities that are out there from other PMS as well as CRS groups. Neil Steer - Redburn (Europe) Ltd.: And – excuse me asking – is that license-based or is that a transaction-based platform that you're selling them there?

It is a license-based. Neil Steer - Redburn (Europe) Ltd.: Okay. And the second question was during the comments on Travel Network, I think you suggested that you see a normalization of the incentive pressures coming through, I think you suggested, Q2 next year. Could you just add a little bit of context and color as to why you're so confident that that's going to be the case? Thank you.

Yeah.

Yeah – I'm sorry. Once we anniversary some of the major deals that have impacted the incentive fees going through 2018, that will begin to occur in the second quarter of 2019. So, we actually know when those begin to anniversary, so that's why we have confidence on that guidance. Neil Steer - Redburn (Europe) Ltd.: Okay. So, it's not based upon any peer group actions, it's more to do with the anniversarying of your specific deals?

No.

No. And Neil, I mean, sort of, how we look at the environment going forward, just based right now, because we get a lot of questions that relates to what you see on the capacity side and then it gets into what Doug was talking about, as it relates to booking fee and incentive fee and what do we see into the future. And this is just based on where we sit right now is that in the fourth quarter – and I do this more from a seat perspective because that's how our transactions are driven versus ASMs or ASKs. But as we look at Q4, we see growth, and this is on a global basis, of about 4.5% to 5%. But it's a little bit lower than where we were last year, which was in the low 5s. As we look at Q1, we're looking at growth based on schedules loaded between 5% and 5.5%. And last year, it was in the range of about 5.5% to 6%. So we're seeing a little bit of trimming of capacity but there hasn't been a significant trimming of capacity. And then on the booking fee side of the equation, as we articulated in our comments, we're seeing 1 point of upside roughly from what's happening within the EMEA marketplace. If you look at the third quarter, this quarter we actually had some lower impact specifically with IAG because we had moved into the new model and then you get the uptick associated with Air France KLM. We see that actually staying in place because based on where we are with Air France KLM, that took place in the beginning of the second quarter last year. And then the other piece of it is the mix that Doug was talking about, more in the APAC region specific to Flight Centre. And then on the incentive side, he just walked you through that. So again, this is just based on what we see right now as we look into the future. Neil Steer - Redburn (Europe) Ltd.: Okay. Thanks and congrats for the quarter.

Thanks, Neil.

We'll take our next question from Jed Kelly with Oppenheimer. Jed Kelly - Oppenheimer & Co., Inc.: Great. Thanks for taking my questions. First question, just can you give us any preliminary outlook into 2019, just sort of how you're thinking of the travel environment and what sort of assumptions you think we should be looking for? And then just on the comment on incentives growing in line with historical levels, over the last three years, the COGS growth rate's been pretty elevated, I know there's other factors. Can you kind of further just tell us what you mean by historical levels?

Yeah, Jed. I'll just recap – this is – responding to Neil and just what we're seeing as we go into 2019, and it was really on the first quarter capacity is that as we look at global capacity, we could see slight trimming on a year-over-year basis based on what is there right now. So what I mentioned is that capacity, based on what we see in schedules loaded, is up about 5% to 5.5%. And this is based on seats versus 5.5% to 6%. So we don't see a lot taking place there. When we look at your second question relative to growing in line with historically where it was, it's the low to mid-single-digit growth. And again, if you look at it on a historical basis, we have had really rates on the Airline side grow in line with the incentives. So that's where we begin to see a level of normalization taking place in the second quarter. Jed Kelly - Oppenheimer & Co., Inc.: And then your leverage ratio, I think you said it was 2.7 times. So it's in the lower end of your targeted range. I mean, how are you thinking of acquisitions? And I mean, I guess I would point to the Hospitality segment, right, that's still a pretty fragmented market. Just how are you thinking of the overall acquisition environment right now?

Yeah. So if you look at sort of where we are right now, it's one that I would say over the last 18 months, we were very focused on doing the things that we needed to do internally. As we look at opportunities as it relates to M&A in each of the three business units, we are exploring what those opportunities are and not afraid to move forward with what the opportunities may be able to do to essentially be a tuck-in and help us continue to grow. Jed Kelly - Oppenheimer & Co., Inc.: Thanks you. Congrats on the quarter.

Thanks.

Your next question from James Schneider with Goldman Sachs. James Schneider - Goldman Sachs & Co. LLC: Good morning. Thanks for taking my question. Sorry about that. Maybe wanted to ask at a high level about some of the investment opportunities that you see and the balance with respect to potential margin opportunities or rationalization of costs that you see over the next couple years. I know you kind of alluded to some of these things in the past, but maybe you could kind of wrap that up at a very high level in terms of what the trade-off between those two is. Do you think you're fully invested in all the new technologies you need to be in? And then at what point could we started to see a little bit more material margin expansion in the model?

First I would tell you with regards to just straight out margin impact, obviously, the credits that we've talked about that have a negative impact on us year-over-year from 2018 to 2017, we only have $15 million of those credits running through the P&L and in 2018, they obviously go to zero. So that's not as much headwind as the $43 million we faced coming into the year. We've seen a significant growth in D&A this year, well above the top line growth. I don't expect D&A to grow at the same levels in 2019 and 2020 as to what we've seen occur this year. We've talked a little bit about the incentive pressure that we've had. We expect that to normalize as we get into Q2 of next year. And obviously, we continue to take a look at our total technology spend and obviously figure out where we could more rationalize that going forward. So those are some major impacts of what we had 2018 that will not impact us in 2019 and 2020 going forward.

And as we look into the future, the one thing that we're definitely focused on is the sequencing of things that need to take place. And as I talked to the organization about this, the first thing that we need to focus on is our data infrastructure strategy and what's taking place there. So I've walked through that. It then gets into the product side of equation. So with the sequencing, I think there's more that we will continue to do that will allow us to look at ways of improving margin going forward. But there's a balance of what you can do, how quickly you can do it, and this is one that I see, really over the next several years, that is going to allow us to continue to see these improvements taking place. James Schneider - Goldman Sachs & Co. LLC: That's very helpful color. And then maybe as a follow-up, wanted to ask a little bit about kind of as you look forward, where you expect the GDS market share to go. Clearly, Travel Centre (46:48) and some of the other wins and the booking strength in APAC are helping that. But anything you can talk about from a market share perspective beyond just the kind of regional mix that normally flings things around a little bit.

Yeah. As you know, that's difficult to predict, just because of the competitive nature. And this is where I go back to what we have continued to do on the technology side and the focus that we have on our products, the engagement that we have, not only on the agency side but the airline side. And this is where I think the team is doing an exceptional job of getting out there and talking about what we're able to do. And in doing that, it does drive back to what our customers are seeing with these capabilities, be it through what we've done as it relates to shopping and improvements in times associated with that, or what we're doing on the product side of the equation. So the best way of essentially us continuing to win in the marketplace, I believe, is really pivoting hard to the technology things that we're doing. And if we're doing that right, our customers are definitely taking notice. And you've seen that with a couple of the deals that we've done here over the last 18 months. And I believe there's more in the pipeline that are very focused on taking advantage of those things that we've been developing. James Schneider - Goldman Sachs & Co. LLC: Thank you.

We'll take our next question from Adam Hackel with Imperial Capital.

Hi, guys. Thanks for taking the time here. Doug, just curious, for you, you talked about some of your initial takeaways in the business your first few months here. Any surprises in terms of sort of the customer side or the airline sides technically and either how they're using data or just sort of how Sabreists (48:37) can fit into a business long term?

Yeah. As I – when I looked and decided to come here, one of the things that really excited me about this opportunity was the fact that if I take a look at the whole travel ecosystem, I don't think that that industry yet has adopted the digital transformation a lot of other businesses have, and we have an enormous amount of data that I believe we're eventually going to be able to find a way to monetize and to use to run our businesses and help our customers run their businesses going forward. So I think there's a lot opportunity with the whole digital transformation that could take place within the travel ecosystem.

That's great. And I guess as – looking ahead into 2019 and going forward, is it an appropriate time for us to start thinking about shareholder returns or at least we look at that and maybe look on dividend at some point down the line?

Yeah, could you do me a favor and let me get to the – this is my first budgeting cycle with the organization, can I give you more color on that in February once we get through that? Because obviously, I'd like the benefit of that before I make any more comments on that.

Yeah, no problem. Thanks for taking the time, guys, great quarter.

Thank you.

And with that, I would like to turn the call back to Mr. Menke for closing remarks. Mr. Menke?

Great. Thank you, Christina, and thank you again for joining us for our call this morning. We appreciate your interest and support and again look forward to talking to you more about the progress that we're making here at Sabre. Have a great day.