Sabre Corporation (SABR) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for being with us today, and welcome to the Sabre Corporation's 2022 Annual Meeting of Stockholders. I'm Karl Peterson, Sabre's Chair of the Board, and I will chair the meeting here today. With me are Sean Menke, Sabre's CEO; Steve Milton, Corporate Secretary and Secretary of today's meeting. Also in attendance today are all the members of the Board, in addition to Sean and myself; these directors are George Bravante, Hervé Couturier, Gail Mandel, Phyllis Newhouse, Zane Rowe, Gregg Saretsky, John Scott and Wendi Sturgis. You should have a copy on your chairs of today's agenda and a few rules for today's meeting. You'll see from the agenda that we will first cover the legal requirements for the meeting, and then we will address the proposals contained in the proxy statement. After that, Sean will provide a business review, and then finally we'll have a report on the results of the voting and the proxy statement proposals. The items properly submitted for consideration at this meeting are the proposal for the election of the 10 directors named in the proxy, ratification and appointment of our independent auditors, approval of the 2022 Director Equity Compensation Plan and approval of the advisory nonbinding vote on the compensation of our named executive officers. Now, Steve, will you please give us your report as to the call of the meeting, the inspector's report as to the presence of a quorum, and the rules.

We provided the following materials to each stockholder of record as of the record date March 1, 2022: proper notice of this meeting and access to copies of the 2022 Proxy Statement and 2021 Annual Report. More than 86% of Sabre's common stock is represented at this meeting, either by attending the meeting or by proxy. As a result, this meeting is properly convened and a quorum is present. Affidavits concerning these matters as well as the certified list of stockholders are available for examination. The materials will be filed with the records of this meeting. The following inspector of election has been appointed: Barbara Robbins, Senior Vice President, Regional Manager, American Stock Transfer & Trust Company. As Karl mentioned, the ground rules for today -- for the agenda for today's meeting are included with the agenda placed in your chairs. In order to provide a fair and informative meeting, we have established these rules and procedures, and we do appreciate your cooperation. We'll introduce each of the 4 proposals set forth in the proxy statement and identified on the agenda. After the 4 proposals have been presented, we'll answer the questions submitted. We'll vote on the 4 proposals at the same time. If you're a stockholder and you wish to speak on a matter on the agenda, please raise your hand once the floor has been open for discussion and wait to be recognized. When you are recognized, the microphone will be brought to you. Then please identify yourself, the number of shares that you represent and the proposal on which you wish to speak. As described in the rules, individuals recognized to speak on any matter will be limited to 3 minutes. If you gave us your proxy or voted by telephone or the Internet, your shares will be voted by the Proxy Committee as you've directed. If you haven't voted your shares yet or if you wish to change your vote on any matter, please raise your hand now and a ballot will be brought to you. We'll collect the ballots later on during the meeting when the polls are declared open. Anybody need a ballot? Finally, during today's meeting, we'll make forward-looking statements based on management's expectations of future events, and actual results may differ materially from the forward-looking statements. For more information about risks that could cause this to happen, please refer to the Risk Factors and the Cautionary Note Regarding Forward-looking Statements sections in our 2021 Form 10-K as well as in our other filings with the SEC. In addition, we'll be presenting certain non-GAAP financial measures, and the most directly comparable GAAP measures and reconciliations are available in the presentation appendix as well as in our earnings releases and other documents that are posted on our website at investors.sabre.com. And now I'll turn it over to Sean Menke, our Chief Executive Officer.

Thank you, Steve, and welcome, everybody, to our 2022 Annual Meeting of Stockholders. We will first consider and vote on the proposals in our proxy statement. I will then provide a few comments on our business. And finally, Steve will report on the results of today's vote. Each of the 4 proposals on the ballot today has been described in detail in our 2022 proxy statement. The first proposal in the proxy statement is the election of George Bravante, Hervé Couturier, Gail Mandel, Sean Menke, Phyllis Newhouse, Karl Peterson, Zane Rowe, Gregg Saretsky, John Scott and Wendi Sturgis as directors. I'd like to thank each of them for their significant contributions to the Board, including collectively attending 125 Board and committee meetings in 2021 with an average attendance of 97%. In addition, I'd like to note that Gary Kusin has retired from the Board of Directors today. On behalf of the Board and the management team, I want to thank Gary for his service as director, and we wish him well. On behalf of the Board and its Governance and Nomination Committee, I declare that each of the 10 individuals named in our proxy statement has been properly nominated for a 1-year term expiring at the 2022 Annual Meeting of Stockholders. The next order of business is proposal 2, ratification of the Audit Committee selection of Ernst & Young as the company's independent registered public accounting firm to audit the company's 2022 financial statements. Trent Handy and Gabe Stagner from Ernst & Young are with us today. The next order of business is proposal 3, approval of our 2022 Director Equity Compensation Plan. The next order of business is proposal 4, approval of the advisory nonbinding vote on the compensation of our named executive officers. We will now open the floor for the general discussion. If you wish to ask a question, please raise your hand and wait to be recognized. Once recognized, please wait for a microphone, then state your name, the number of shares you own or represent and the proposal on which you will comment. Also please remember to limit your comments to 3 minutes each, to ensure others have an opportunity to speak. Is there any discussion or any of the proposals on any of the questions or comments? There being no questions, I declare that the polls are now open. Please raise your hand if you would like to cast a ballot from the floor and someone will come and collect from you -- collect it from you. [Voting]

I now declare that the polls are closed. While the inspector of election complete the vote tabulation, I will comment briefly on our business performance for 2021. Like most companies, we have had to deal with numerous unpredictable challenges over the past 2 years of the pandemic. Our financial results in 2021, although significantly better than 2020, reflected this environment. But we are encouraged by the trends we saw. Our financial performance improved sequentially each quarter during 2021, and we are optimistic about the future. People's desire to travel never waned; as the world reopened, we saw the positive effects. The recovery was initially led by North America domestic leisure travel, but broadly geographically. We also saw an acceleration in more profitable international and corporate travel. Consequently, our revenue per booking increased sequentially and significantly during 2021 since the second quarter of that year. Let me now touch on why I consider to be some of the most important aspects of the investment case for Sabre. We believe Sabre is an attractive travel economy investment opportunity in the near term. As I just outlined, the demand for travel has been strong. As travel restrictions are lifted, we expect improving financial results. But Sabre offers much more as an investment than just travel recovery momentum. As we look ahead, we're investing to drive EBITDA, EBITDA margin, operating income and free cash flow higher than 2019 levels. On our last earnings call, we noted that our expectations for 2025 are actually in line with or better than our pre-pandemic guidance provided in February of 2020. One of the primary facilitators of higher margin and cash flow for Sabre in the future is our technology transformation. On our last earnings call we stated that by investing in the mainframe offload and migration to Google Cloud, we would save approximately 50%, or $200 million to $250 million, and eliminate the need for an additional $150 million to $200 million in CapEx to refresh our servers and data centers. Importantly, we also expect to unlock product enhancements, including reduced latency, faster time to market, enhanced stability and security, easier customer deployment and global distributed global cloud footprint and lower cost of development. We believe we are ahead of our competitors in this move to the cloud, and these enhancements have already been influential in winning new business. As we achieve these financial and technology goals, we believe value not currently recognized in the market will be unlocked. Finally, I'd like to thank my team members around the world. I really appreciate their exceptional efforts to serve our customers while executing our transformation to help enable a new marketplace for personalized travel. I'll now turn it over to Steve to report on the voting results.

Thank you, Sean. First, let me say that the results that I'm about to announce are preliminary. We'll file the final results with the SEC on a Form 8-K within 4 business days. The inspector of election has advised me that each of the 10 nominees for director was elected for a 1-year term, the selection of Ernst & Young as the company's independent registered public accounting firm was ratified, the 2022 Director Equity Compensation Plan was approved, and the advisory nonbinding vote on the compensation of our named executive officers was approved. With that, I'll turn it over to Karl to adjourn the meeting.

Thank you, Steve. On behalf of the Board of Directors, the entire management team, I'd like to thank you for your attendance today and your continued support of Sabre. The meeting is now adjourned.