00:02 Good morning, and welcome to the Sabre Fourth Quarter and Full Year 2021 Earnings Conference Call. My name is Victor, and I'll be your operator. As a reminder, please note today's call is being recorded. 00:14 I will now turn the call over to the Vice President of Investor Relations, Kevin Crissey. Please go ahead.

00:21 Thanks, Victor. Good morning, everyone. Thank you for joining us for our full year and fourth quarter 2021 earnings call. This morning, we issued an earnings press release which is available on our website at investors.sabre.com. A slide presentation, which accompanies today's prepared remarks is also available during this call on the Sabre Investor Relations webpage. A replay of today's call will be available on our website later this morning. 00:47 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 and recovery trends, benefits from commercial and strategic arrangements, expected revenue, costs and expenses, cost savings, margins and liquidity, among others. 01:09 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 risks and uncertainties is contained in our earnings release issued this morning and our SEC filings, including our third quarter 2021 10-Q and 2020 Form 10-K. 01:31 Throughout today's call, we will also be presenting certain non-GAAP financial measures. References during today's call to Adjusted Operating Loss, Adjusted Net Loss from continuing operations, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EPS, Free Cash Flow and Net Debt to LTM Adjusted EBITDA have been adjusted to exclude certain 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. 02:00 Participating with me are Sean Menke, our Chief Executive Officer; Kurt Ekert, our President; and Doug Barnett, our Chief Financial Officer. Scott Wilson, our President of Hospitality Solutions, will be available for Q&A after the prepared remarks. 02:16 With that, I will turn the call over to Sean.

02:18 Thanks, Kevin. Good morning, everyone, and thank you for joining us. As we know the past two years have been extraordinarily disruptive, we like others have had to deal with numerous, unpredictable headwinds. Despite these challenges, we never lost sight nor abandoned our focus on future opportunities. Some needed to be reprioritized; others, specifically the technology transformation, continued notwithstanding the challenging environment. 02:45 During our earnings call in February of 2020, we articulated the importance and expected benefits of our technology transformation. Despite these headwinds, we with our partners continued to execute. 2022 is the midpoint of these efforts and we are intent on accomplishing our goals for the technology transformation. We are confident that we will accomplish these goals by the end of 2024, and we believe our advanced agile global technology footprint and efficient cost structure will be superior to our competitors. 03:16 In 2025, we believe our full year run rate efficiencies and accrued technology benefits will drive superior financial results under multiple scenarios when compared to 2019. The global travel recovery was slow at the beginning of the year, but that has changed significantly. February month-to-date global GDS bookings were on pace to reach a similar level of recovery versus the same period in 2019 as November 2021, which was the best month since the onset of COVID-19. For these reasons, we believe 2022 is shaping up to be a year of recovery and progress. 03:54 Turning to Slide 4, let me now provide an overview of the topics we will cover on today's call. I'll begin by discussing the considerable opportunity we see for Sabre and our investors as recovery takes hold and we reach the other side of COVID. Next, I'll provide an update regarding the ongoing travel recovery, including specific booking, passengers…

05:51 Thank you, Sean. I appreciate the welcome. And this is an exciting time to have joined Sabre. Having worked as an executive at one of Sabre's competitors and more recently, at a top customer with CWT, I knew Sabre well from the outside. After just over a month, I'm gaining better appreciation for Sabre's many strengths first-hand. 06:13 Dynamic changes are coming in the travel sector, and I believe that Sabre's people, compelling product offerings and strong client relationships uniquely positioned us to capitalize on these changes. I am excited to partner with Sean and our global team to drive world-class innovation and financial performance. I also look forward to meeting our investors and analysts in the near future. 06:37 Sean, back to you.

6:40 Great. Thanks a lot, Kurt. Now I'd like to turn us to Slide 5. I'd like to start today's call with what I consider to be some of the most important aspects of the investment case for Sabre. As we've seen in our booking data over time, the demand for travel remains very strong but has been curtailed by global travel restrictions designed to counteract the COVID-19 pandemic. 07:00 As COVID case counts fall, we once again see travel restrictions lifted, and know our revenues and earnings improve. We believe Sabre is a travel recovery investment opportunity in the near-term based on these points. But Sabre offers much more as an investment than just travel recovery momentum. As we look ahead, we are investing to drive EBITDA, EBITDA margin, operating income and free cash flow higher than 2019 levels. 07:27 As mentioned, I will provide an illustration of what our 2025 financials look like under different recovery scenarios. Despite the challenges caused by the pandemic, our expectations for 2025 are in line with or better than our pre-pandemic guidance provided in February of 2020. Our ambitions are higher and illustrate the positive financial impact our technology transformation is expected to have on future earnings. We believe as we achieve these goals, value not currently recognized and the market will be unlocked. 07:59 Turning to Slide 6, our volume metrics, namely distribution gross air bookings, IT solutions passengers boarded, and hospitality gross CRS transactions have broadly tracked the inverse of COVID-19 cases over time. We saw a slowdown in travel bookings beginning in mid-June 2021 associated with increased Delta variant cases, followed by a sharp recovery from September to the end of November. 08:26 The Omicron variant hurt our booking trends in December and into January, but similar to past…

17:09 Great. Thanks, Sean and good morning, everyone. Turning to Slide 12. As expected, the COVID-19 pandemic continued to weigh heavily on our results in Q4. However, the fourth quarter showed significant financial improvement versus Q4 of 2020 and sequentially from Q3 2021. 17:28 Total revenue was $501 million, a significant improvement versus revenue of $314 million in Q4 last year due to the continued recovery in global air, hotel and other travel bookings. Distribution revenue totaled $286 million, an improvement versus revenue of $131 million in Q4 2020. Our distribution bookings totaled 58 million in the quarter. Compared to 2019, net air bookings recovered at 44%, 51%, and 39% in October, November, and December and 45% in the quarter as a whole. 18:11 Our average booking fee in the fourth quarter was $4.96 versus $3.90, $3.84, and $4.59 in the first, second and third quarters of the year. Our IT Solutions revenue totaled $165 million in the quarter, an improvement versus revenue of $145 million last year. Passengers boarded totaled 129 million, representing a 69% recovery versus the fourth quarter of 2019. Hospitality Solutions revenue totaled $54 million, an improvement versus revenue of $41 million in Q4 2020. Central reservation system transactions were at 90% of 2019 levels and totaled 23 million in the quarter. 18:58 EBITDA showed meaningful year-over-year improvement but remained slightly negative in the quarter, reflecting the continued impact of the COVID-19 pandemic. The significant year-over-year improvement in revenue in the quarter was partially offset by increased Travel Solutions incentives expense and Hospitality Solutions transaction fees due to higher volumes. As expected, our technology costs and selling, general and administrative expenses increased due to volume recovery trends and increased labor and professional service expenses. 19:30 Operating income, net income and EPS also showed improvement versus the…

24:54 [Operator Instructions] Our first question will come from the line of Mike -- sorry, Mark Moerdler from Bernstein Research. You may begin.

25:14 Thank you very much, and thanks for all the additional details on the -- both on the 2025 and then the IT change. I'd like to drill in a little bit on the IT side. Understanding that you're exceeded your technology target for 2021, how does this impact the timeline to completion? Are you going to planning to finish a little ahead? Is that why the additional payments and spending, you're going to have is to pull that forward? Are you seeing any benefits in customer retention or in closing new deals? Any color on that would be appreciated and then I got a follow-up.

25:51 Yeah. So, Mark, this is Sean and I'll let Doug jump in as well. And I think I'm going to take you back to February 2022 what we stated and walk you through a couple of things to try to address your questions. First, I'm going to focus on the global business system. So if you go back to 2020, we really try to illustrate what we were seeing at that point in time, relative to the savings and what it does for us relative to the benefits. And in doing that, Mark, this is the one thing that we've been able to sort of leverage through the pandemic is the relationship we have with our partners, specifically Google on how do we think about the spending curve of this taking place because we talk about essentially, they're providing some level of support in this happening. So as you look at what we have been able to progress through the pandemic, we've actually been able to stay on course. 26:40 If you look at what we're doing from here going forward, it's really completing what we outlined to do. So what we talk about Mark is really the exit run rate of 2024. And I would tell you, I think we're on track for it, what's happening. As it relates to the global business systems, this is one thing that we did push back a little bit the re-prioritization of spending. So when we announced that we were essentially cutting back expenses after the pandemic, this is one that we pause for a period of time. We actually were spending some money, but we have to complete this because it does really get into the capabilities, when we think about how the model is changing, but some of the contracts are out there. We look at just leakage and being able to make sure that we're recapturing that, these are all focused on what we have been talking about exiting 2024, and really giving you an insight into 2025. So hopefully that helps you, Mark, in sort of how we walked through all of this.

27:34 That makes sense. And then maybe a follow-up in there. In the prepared remarks, you talked about savings based on 80% of 2019 revenue. How should we think about IT spending now scaling or scaling once this is done if you beat those revenue targets, is it going to scale in line or slower? And how does that compare to the way in which cost scale pre the conversion, the tech conversion? Thanks.

28:02 Yeah. I think the way that I would answer that, Mark, is as we've looked at essentially what we have provided you for an outlook of 2025, a big part of that is really just recovery taking place. And if you think about the core technology of just the infrastructure, that is essentially will continue to come down, right? Now you'll see that with volumes going up under the Google Cloud agreement. But that's a good thing because we're driving more volume, which would see a revenue increase. 28:29 I think the other way of looking at it is what is happening with R&D. And when I think about the R&D side of the equation, and I'm sort of looking at Kurt across the table, it is one versus the ability to, what are we investing and that's going to drive more revenue. So the important thing is, as we look at this, there is definitely margin improvement that will occur with what's taking place as we go through this transition market.

28:54 Yeah. I think the other thing, Mark, obviously, the big benefits of this tech transformation is the unit cost has been much lower than if we hadn't gone through it because before also have the DXC contract and AWS was our cloud provider. We have much better economics now than we had before.

29:11 That's exactly what I was looking for. So you figure that unit economics will scale in line or maybe the unit cost scale little slower than the revenue scales?

29:22 Yeah. That is true.

29:24 Perfect. Thank you very much and I appreciate.

29:27 Thanks, Mark.

29:30 Our next question is from the line of Matthew Broome from Mizuho Securities. Your line is open.

29:36 Thanks very much. So -- hey, guys. You spoke a bit about the impact of Omicron bookings and cash flows sort of towards the start of the year. Can I also ask about the near-term revenue implications, is the revenue that you've already recognized that relates to flights that were booked subsequently canceled and that will, that revenue would -- would maybe have to be backed out, particularly in Q1 is that fair to say?

30:05 No. The way to look at is, when we gave you the monthly trends. We had in October, November, December, okay, what we're alluding to there is obviously we had really good strong bookings momentum coming in out of October, November, and so, almost a 12 percentage point decline coming into December. Well, obviously that cash is not going to spillover and be collected in January. Same thing, we got to a slow start in January. You saw that we’re only at 31% recovery. Obviously, we now expect that to pick back up. So you're going to have too slow months of collections because of low bookings that took place in December and January in the first quarter that's we're alluding to.

30:44 Okay. Fair enough. And then, I guess in terms of your new agreement with American Express Global Business Travel. What are your expectations there in terms of how that could affect bookings growth and over what kind of timeframe?

31:01 Yeah. So one, if you look at it, part of that agreement is that were the primary GDS and what we talk about is additional bookings going forward. So you're going to see a lift relative to the bookings that are taking place. When you think about AMEX GBT, and what they're doing, it's not only on the large corporate side of the equation, but it's also on the SME side of the equation. So that's important to what's there. 31:26 If you sort of look at the discussions, and I would even go broader relative to our discussions with other large TMCs that are out there. It's the technology, technology capabilities and where do we drive because we do think that this is an opportunity as it relates to the services and the technology that we have. So it's not only from an AMEX GBT perspective that we think we can continue to get additional bookings. But by enabling other TMCs, we think it's also important. 31:51 The thing that I call out a little bit because this gets broader into just global corporate travel recovery. And there is a lot of discussion relative to what's happening on the corporate side. And I think it's important just to talk about the numbers and what we're seeing right now. If you go back to the recovery on COVID, we really saw the first-two weeks of November, probably the best recovery period in corporate travel, down about 50% versus 2019. As you would assume, with Omicron and the impact, that did fall off. So on a global basis, we are seeing probably those bookings down 60%, -- 65%, 67% in the beginning of January. 32:33 What we're seeing right now is, again that momentum coming back that we're sort of down 50% on a global base with North America leading that. So the reason I bring that up is, we're a believer in corporate travel. When we look at the relationship with AMEX GBT, what we're focused on there as it relates to technology and it really does get into corporate booking tool capability. How are we thinking about merchandising and retailing? And really for them, it's how do they make sure that they continue to serve their customers in the way that they need to be served.

33:01 All right. Thanks very much, Sean and Doug. Appreciate it.

33:06 Thank you, Matt.

33:09 Our next question comes from the line of Josh Baer from Morgan Stanley. You may begin.

33:14 Great. Thanks for the question. Just wondering in the '22 and '25 scenarios and assumptions, what is embedded for the assumption around bookings mix versus pre-COVID levels?

33:30 Okay. So, Omicron, when I talk about ‘22 and then I'll go to ‘25. The guidance that we're giving you with regards to those ranges that we had the scenarios was basically based off of the booking mix that we had coming out of 2021, okay. So, it's still not a great mix for us. Sean talked a little about corporate picking up, but it really is not at the level -- member before, we always wanted to see kind of 50%-50% of -- where do you have, domestic versus international and 50-50 versus leisure versus corporate side. And so we're still more on the other side of work still closer to 70-30, 65-35 for those. So it is conservative with regards to 2022. 34:12 With regards to 2025, we've assume a good recovery back to normal, what I call, international and domestic but only a 90% recovery of corporate travel. We didn't expect the numbers -- the guidance we gave you does not assume the corporate travel comes all the way back to a 100% in 2025.

34:32 Okay. That's really helpful. Thank you. And just to confirm, in those frameworks for recovery when you're talking about percentage of bookings, is that just looking at 2019 your reported bookings numbers and taking the percentage off of that or are there any adjustments for the lost Expedia business or any other changes versus 2019?

34:59 That's literally just off of the 2019 fully reported bookings number.

35:04 Okay. Great. Thanks, guys.

35:08 Thank you.

35:10 Our next question comes from the line of Neil Steer from Redburn. You may begin.

35:16 Hi. Thanks very much for the opportunity to ask questions. Just following-on from the last question actually, was there any -- could you quantify what was the Expedia shift to share impact that we saw on the booking volumes in the fourth quarter. Could you just give us some sort of flavor on that please?

35:38 Yeah, Neil. I'll go back to what we talked about because I think it's really more focused on 2022 that it’s $15 million to $20 million in EBITDA impact. We're sort of immaterial relative to what happened in the fourth quarter relative to where they settled and what we're seeing in the first quarter.

35:55 Okay. Thanks very much. And Sean, just on the AMEX GBT partnership, you've talked a great deal obviously about the technology investments you're making and how -- there are some joint investments being made there and the broader opportunity amongst other TMCs. Do you have the opportunity to take the platform and the solutions that you're developing in partnership with AMEX GBT and sell those to other TMCs or is there a large part of that joint co-development work that remains proprietary to AMEX GBT?

36:32 No. What the way that we have enter these discussions, they would be available to the ecosystem in total.

36:42 Okay. Thanks very much. And could you just also give a little bit of flavor on the airline IT pipe, obviously, there was a little bit of sort of trading of carriers that we saw over the course of ’21, what’s the pipeline for airline IT renewals and new business opportunities?

37:03 Yeah. It's actually probably going on the low cost carrier side. This is an area that we are focusing on quite a bit. There has been a lot of action there Neil and what is taking place. I think if you look broader because it's something I sort of pushed the team on is, if you look at where we entered or where we were in 2019 as it related to total PPE, I think we're in the 780 million, 800 million PBs and I always sort of referenced back to that, if you look at where we are now with what sort of referencing what you're talking about we are net up as it relates to PPE and what's taking place. So, I feel good about where we weren't 2019. This assume that we're going to get back to 2019 levels that's going to ease that as the base. 37:46 If we look into the future, I would say there is more activity definitely on the low cost carrier side as we look at full service carriers. It's typically what we've seen historically. There's renewals that are taking place that we worked through. There's other opportunities that we try to advance on, but it's sort of similar to what we've seen historically, Neil.

38:07 Okay. Thanks very much. Thank you.

38:10 Our next question comes from the line of Jed Kelly from Oppenheimer. You may begin.

38:18 Hey, great. Thanks for taking my questions. Just going back to the technology investments in the roadmap you're laying out for the Google Cloud. Can you discuss how these investments are going to improve your win rate or what we should expect for new business opportunities as you start to scale these technology costs?

38:38 Yeah, Jed. I'm happy to answer that question. It's really important what we're doing. When you think about our first and foremost, it goes back to just what it's going to do with the underlying cost structure and the information that we provided to give you a lot of detail on that decision side, but it really does get into some of the things that Doug had highlighted and I’ve highlighted is really if you look at it from the faster time to market, we think that we can do, if you look at it again on the utility side, but I look at the development side and what we need to do and what ends up taking place and things are happening. 39:11 Can I tell you specifically the Louvre win on the hospitality side was the ability to actually have landing zones in Europe and as we continue to think about this, this becomes very important across the board, not only in hospitality and airlines, but also on the OTAs side because they are so focused on speed and what's happening. The other reason, I think it differentiates us and we don't get asked this question a lot, but we do believe we're ahead and you look at technology transformation and organizations like ourselves that are going through it we've embarked upon this early beginning in 2019. 39:41 We've had recent announcements by two of our competitors that they're going down the same path. Well, they're really going to do it, what we're doing, that’s what they're going to ask to investors as well and we think that we're well ahead in what's taking place, and the capabilities that they provide. We think our setting this organization up or it's actually what we've outlined in 2025, so I'm really pleased with where we are. We've kept our head at the grindstone as it relates to just continuing to manage through this as we've gone through the pandemic.

40:16 Thank you. And just following up, you said in your 2025, you have business travel getting back to 90% of 2019 levels. Just in those assumptions whereas leisure travel relative to 2019 and that's going through the GDS versus brand.com?

40:33 Yeah. I'd say, if business travel doesn't come back, then the balance and flow over the leisure side.

40:43 I mean, do you have an update that do you think it will -- so it's 20% -- can you provide like what the metric – what’s the balance?

40:50 Yeah. As I've told you before the basic breakdown between corporate and leisure is roughly 50-50. So if we go back to ‘19 then the other 10% is going to flow over so that way, you can calculate that.

41:02 All right. Thank you.

41:05 Thanks, Jed.

41:08 [Operator Instructions] Our next question from the line of Victor Cheng from Bank of America. Your line is open.

41:18 Hi. Good morning, Sean and Kurt. Thanks for taking my question. Are you able to provide some more color on the commercial updates? Have you signed more NDC distribution agreements with airlines? And then secondly, are you able to provide some more color on the booking fee unit economics as Q4 is, if I see currently is about pre-COVID levels despite more domestic mix. So how should we think about this going in 2022?

41:49 Yeah, Victor. I'll take the first question on NDC, then pass the second question to Doug. There continues to be an enormous amount of engagement with carriers around the world. It's not only on new agreements, but it's also just on the capabilities and building out the capabilities. Again, as we went through the budget process this year, there's a whole host of things that we're getting accomplished to make sure that, one, you could actually have those capabilities which you're actually able to do it at scale and that's one thing that's there. So as it relates to just additional agreements, I don't off the top of my head, I don't have them I know the team has been doing a lot of different things there. So, I feel good about the progress that we're making.

42:27 Yeah, sure. With risk average booking fee, it's a combination of things you alluded to one that partially, it's the lower than we have expected bookings that we get from Expedia and also higher -- a little bit higher corporate international bookings. So kind of still one-third, one-third, one-third if you want to take a look at the differential between the rate in Q3 and the rate that we ended up in Q4.

42:51 Got you. And then maybe just one final one, I think you alluded to it just now, on the -- if there is any updates on the Expedia bookings, I guess you were saying that is broadly in line with what you have communicated in Q3, is that correct?

43:08 That's correct, Victor.

43:10 That's correct.

43:10 Okay. Got you. That’s great.

43:15 Thank you. And I'm not showing any further questions in the queue. I'd like to turn it back over to Mr. Sean Menke for any closing remarks.

43:24 Great. Thank you very much. Well, as you can see, we have continued to move forward our technology transformation. As I look at 2022 and what's happening, we are definitely looking into the future and really finishing what we started because there is an enormous amount of financial upside as it relates to the technology transformation what we're doing, but it's the capabilities whether it's going to allow us to win in the marketplace. And hopefully, we'll continue to see a nice recovery throughout the balance of year and we look forward to talking to you again after the first quarter results. Thank you.

43:59 And this will conclude today's conference call. Thank you for participating. You may now disconnect. Everybody, have a great day.