Travelport Worldwide Limited Reports Fourth Quarter and Full Year 2018 Results

LANGLEY, U.K., Feb. 22, 2019 /PRNewswire/ -- Travelport Worldwide Limited (NYSE: TVPT) today announced its financial results for the fourth quarter and full year ended December 31, 2018.

Key Points (for full year 2018 unless stated otherwise)

• Net revenue increased 4% to $2,551 million, including Travel Commerce Platform revenue growth of 5% to $2,454 million
• Net income decreased 46% to $75 million; Adjusted EBITDA was flat at $590 million
• Income per share (diluted) decreased 50% to $0.57; Adjusted Income per Share (diluted) increased 1% to $1.46
• Payment Solutions (eNett) net revenue grew 63% to $315 million
• Net cash provided by operating activities increased 15% to $364 million; Free Cash Flow increased 10% to $220 million
• Fourth quarter net revenue increased 3% to $589 million; net income decreased 93% to $3 million; and Adjusted EBITDA increased 1% to $140 million

Gordon Wilson, President and CEO of Travelport, commented:

"I am pleased to report that we ended the year with all of our full year key financial performance measures either in line with or better than management expectations and guidance.  We also made significant operational progress across our four customer priorities of delivering superior choice, performance, experiences and intelligence in travel and payments.

In December, we announced we entered into a definitive merger agreement to be acquired by affiliates of Siris Capital Group, LLC and Evergreen Coast Capital Corp.  We continue to work towards finalizing the merger, which currently is expected to close in the first half of this year."

Discussion of Results for the Fourth Quarter and Full Year of 2018

Net Revenue

Net revenue is comprised of:

Fourth Quarter 2018

Net revenue increased by $15 million, or 3%, to $589 million primarily due to growth in Travel Commerce Platform revenue of $17 million, or 3%.  Within Travel Commerce Platform revenue, Beyond Air revenue increased by $17 million, or 11%, offset by a marginal decrease in Air revenue of $1 million.  The increase in Beyond Air revenue was driven by an increase in net revenue from the Payment Solutions business of 38% to $75 million, primarily due to an increase in the volume of payments settled with existing customers that was partially offset by a decline in the remainder of the Beyond Air portfolio.  The marginal decrease in Air revenue was mainly due to a decrease in Air Reported Segments that includes the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds reported in earlier quarters, offset by improved pricing.  Technology Services revenue decreased $2 million, or 6%, primarily due to lower hosting revenue.

Full Year 2018

Net revenue increased by $104 million, or 4%, to $2,551 million primarily due to growth in Travel Commerce Platform revenue of $113 million, or 5%.  Within Travel Commerce Platform revenue, Beyond Air revenue increased by $108 million, or 17%, and Air revenue increased by $5 million.  The increase in Beyond Air revenue was driven by an increase in net revenue from the Payment Solutions business of 63% to $315 million, primarily due to an increase in the volume of payments settled with existing customers that was partially offset by a decline in the remainder of the Beyond Air portfolio.  The increase in Air revenue was mainly due to improved pricing that was offset by a decrease in Air Reported Segments that includes the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds and a $9 million recognition of revenue in 2017 in respect of revenue deferred in previous years.  Technology Services revenue decreased $9 million, or 9%, primarily due to the sale of IGT Solutions Private Ltd. in April 2017.

The table below sets forth Travel Commerce Platform revenue by region:

The tables below set forth Travel Commerce Platform Reported Segments and global RevPas by region:

Fourth Quarter 2018

Travel Commerce Platform RevPas increased 8% to $7.61, driving a $40 million increase in Travel Commerce Platform revenue.  International RevPas increased 6% to $9.06, and United States RevPas increased 6% to $4.98.  Reported Segments decreased 4% due to the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds.

International Travel Commerce Platform revenue increased by $24 million, or 6%, with growth in the Payment Solutions business across most regions contributing to this increase.

Full Year 2018

Travel Commerce Platform RevPas increased 7% to $7.32, driving a $164 million increase in Travel Commerce Platform revenue.  International RevPas increased 8% to $9.06, and United States RevPas increased 2% to $4.58.  Reported Segments decreased 2% due to the impact of the loss of a large Pacific-based travel agency and other specific travel agency headwinds.

International Travel Commerce Platform revenue increased by $118 million, or 7%, with Europe mainly contributing to this increase due to an increase in its RevPas of 13%.  The decrease in Travel Commerce Platform revenue in Asia Pacific of $1 million includes the loss of revenue resulting from the loss of a large Pacific-based travel agency.

Operating Income

Fourth Quarter 2018

Operating income decreased by 1% to $53 million mainly due to the following:

• $14 million increase in cost of revenue primarily due to incremental costs from the Payment Solutions business and an increase in travel distribution cost per segment driven by pricing, offset by a decrease in volume and favorable foreign exchange movements
• $2 million increase in selling, general and administrative expenses ("SG&A") primarily due to unfavorable foreign exchange movements and increase in other commercial operating costs, offset by lower employee related costs including lower equity-based compensation expense and related taxes and a decrease in corporate and restructuring costs; offset by
• $15 million increase in net revenue

Full Year 2018

Operating income decreased by $72 million, or 25%, to $217 million mainly due to the following:

• $124 million increase in cost of revenue primarily due to incremental costs from the Payment Solutions business, an increase in travel distribution cost per segment driven by price, mix, impairment of customer loyalty payments and unfavorable foreign exchange movements, offset by a decrease in volume and higher capitalization of technology investments
• $60 million increase in SG&A primarily due to unfavorable movements in the fair value of foreign currency derivative contracts, an increase in other commercial operating costs and corporate and restructuring costs, offset by lower employee related costs including lower equity-based compensation expense and related taxes; offset by
• $104 million increase in net revenue
• $9 million decrease in depreciation and amortization due to a lower level of depreciable property and equipment

Net Income

Fourth Quarter 2018

Net income decreased by $42 million, or 93%, to $3 million mainly due to the following:

• $24 million increase in income tax expense primarily due to the favorable tax impact recognized in 2017 on enactment of U.S. Tax Cuts and Jobs Act ("U.S. Tax Reforms") resulting from the reduction in the U.S. federal corporate tax rate
• $17 million increase in interest expense, net, due to the unfavorable impact of fair value changes on interest rate derivative instruments
• marginal decrease in operating income

Full Year 2018

Net income decreased by $65 million, or 46%, to $75 million due to the following:

• $72 mi