Transcript strong LEADERSHIP PARTNERSHIP OPPORTUNITY

Sabre Holdings
Sam Gilliland
Chairman and CEO
Merrill Lynch Conference
February 9, 2005
Agenda
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Overview
2004 Performance by Business
Key Trends and Current Industry Assessment
Company Strategy and Opportunity
2005 Strategic Priorities
Financials
Sabre Holdings
A world leader in
travel commerce,
retailing travel products
and providing distribution and
technology solutions for the travel industry
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Sabre at a Glance
• S&P 500 Company
• 6,800 employees in 45 countries
• Revenues of $2.13 billion in 2004
• 2004 earnings per share growth > 75%
• Three distinct businesses serving travelers, corporations,
travel agents and travel suppliers
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2004 Performance
all about execution
Maximize Business Unit Performance
•Travelocity profitability
•Cross-portfolio technology investments
Accelerate Travel Retailing and Portfolio Initiatives
•Travelocity content and capabilities expanded
•GDS merchandising programs launched
Reduce Costs for Competitive Advantage
•Reduced company-wide costs by over $80 million
•Lowered the rate of incentive growth
Return of Capital
•Returned ~ $270 million to shareholders
•Dividends of $41 million;repurchased $228 million in stock
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Travelocity : 2004 Accomplishments
Profitable for the full year on an adjusted basis
• >$65 million turnaround in YOY operating income
• Revenue growth of 30% (adjusted); 27% (GAAP)
Differentiated and enhanced consumer brand
• Major redesign of web site and new logo
• New advertising campaign launched: the Roaming Gnome
International expansion
• Buy-in of European joint venture
• Entered French online marketplace
• Acquired travelchannel.de in Germany
Delivered best-in-class capabilities
• Merchant hotel program; >17,000 properties
• Flight Navigator – industry leading air shopping path
• Travelocity Partner Network: Southwest Airlines Cruises,
AARP, American Express
Travelocity Business
• Revamped user interface
• Signed large customer accounts: Aetna, General Dynamics, AMA
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Sabre Travel Network: 2004 Accomplishments
Met revenue and well exceeded earnings growth targets
• Revenue growth ~2 percent (adjusted) and flat (GAAP)
• Operating margin of 19% (adjusted) and 17% (GAAP)
Expanded Distribution and Marketing Services for Hoteliers
• Launched Hotel Spotlight
• Acquired SynXis Corporation
Rolled out numerous merchandising programs
• Impressive gains for specific hotel properties
• Last minute packaging through the GDS
Cost Reductions across the business
• Consolidated customer call centers in Latin America
• Assured Vantage Program launched to help slow growth of incentive costs
Channel shift slowed
• Averaged under two points for the year
GetThere transactions increased >30%
• Rolled out industry’s first fully-automated online ticket exchange
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Airline Solutions: 2004 Accomplishments
Revenue and earnings growth dampened by tough year in software sales
• Revenue growth of ~5%;operating margin ~6%
• Fourth quarter revenue rebounded
Further developed and integrated products and services
• Launched SabreSonic, a new generation of airline passenger solutions suite
Expanded presence in high-growth markets
• Signed a multi-year, multi product agreement with low-cost carrier Frontier Airlines
• Moved into Canada’s low-fare carrier market by signing a five-year agreement to
support WestJet
Continued international diversification
• Signed Aeroflot and Air One for our SabreSonic suite of products
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Key Trends
and Current Industry Assessment
Channel Shift
Industry Consolidation
• Supplier-direct movement
slowing
• Intermediaries vertically
integrating
Low-Cost Carriers
Online Growth
• Robust in North America
• Accelerating globally
• Rapid growth, worldwide
• Focus on direct distribution
Deregulation
• CRS deregulation in US
• Now under review in Europe
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Emerging Trends
• Travel Search Engines
Industry Growth
global opportunity
2007 Global Gross Travel Spend
$ 1,000
$ 870 B
$ 900
$ 80
$ 11
$ 800
$Billion
$ 700
$ 600
$ 257
APAC
$ 51
LA
Rail
Cruise
$
349
19.1%
Corporate
$ 492
$ 419
$ 500
$ 400
$ 280
$ 40
$ 100
Car
$ 282
Offline
$ 175
Online
63.7%
$ 520
$ 200
$ 695
EMEA
$ 300
US and
Canada
$ 320
Leisure
$ 378
Air
Direct
3.9%
$0
REGION
SUPPLIER
SEGMENT
CHANNEL
Data Source: PhoCusWright, Jupiter, EuroMonitor, Sabre Holdings Analysis
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Indirect
Hotel
CHANNEL
Channel Trends
indirect and direct
Global Air Spend Mix
Leisure + Corporate
$400
$Billion
$300
OFFLINE
57%
$200
Indirect
ONLINE
$100
OFFLINE
43%
Direct
ONLINE
0
2003
2004
2005
2006
Data Source: PhoCusWright, Jupiter, EuroMonitor, Sabre Holdings Analysis
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2007
Extending From Reseller to Retailer
leveraging scale and growth
Core Global Distribution System (GDS)
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Comprehensive content, pricing aggregation, and global reach
High availability and real-time information
Accurate pricing and inventory
Leading technology and scalable platforms
Process automation and data integration
SCALE and EFFICIENCY
Retailer
DIRECT & INDIRECT
• Brand building and management
• Customer Insight
• Customer loyalty
• Wholesale product creation and distribution across channels
• Comprehensive product availability
• Partner point of sale technology
AREAS of GROWTH
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POWERFUL
GLOBAL
NETWORK
Optimize the Core GDS Business
Global Scale
• Cost advantage through leading transaction scale
• Content advantage through leading demand aggregation
Technology Investment
• World-class shopping and pricing
• Improved transaction efficiency
• Leverage TSG portfolio investment ― packaging
Business Model Evolution
• Agents ― choice, efficiency, high margin content,
and Marketing Services ― Jurni Network / Nexion
• Suppliers ― flexibility, value-based options, merchandising
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Growth through Retailing
Travel
Retailing
Direct / Indirect
Hotel
Packaging
Global
Expansion
Capabilities
Data and Customer Insight
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Differentiated, High-Margin Content
Marketing Services
Leading Technology
Travel Retailing
across the network
Supplier
DIRECT
PRIVATE LABEL
INDIRECT
PASSIVE
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Traveler
Economic Opportunity
increasing revenue per trip
Degree of influence over
travel product sold
Revenue
Per Trip
Retailing
HEAVY
HIGH
~ 4X
Retailing
LITE
~ 2X
TODAY
Booking Fee
LOW
Data Source: Internal
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~ 7X
$
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2005 Strategic Priorities
Grow Retail Revenue Across the Global Network
• Direct and indirect
• Hotel and packages
Expansion in Asia and Europe
• Large and growing segments
• Increase our presence
Leverage the Scale and Efficiency of the Distribution Business
• Grow scale, reduce cost
Deliver Leading Scaled Technology
• Innovate and differentiate
• Shopping and pricing, corporate, leisure
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2005 Financial Estimates
Total Company
• Total company revenue growth
approaching 10%
• Total company earnings per share growth
in the range of 2% to 9%
Solid financial results while making well
placed investments for future growth
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2005 Growth Projections
2004 Revenue
(in millions)
2005 Growth
Projections
Sabre Travel Network
$1,553
Low Single Digits
Travelocity
$503
25% - 30%
Sabre Airline Solutions
$243
~ 10%
Eliminations
($168)
Total Revenue (net elims)
$2,131
Approach 10%
Earnings Per Share, Adjusted
$1.47
$1.50 - $1.60
Earnings Per Share, GAAP
$1.38
$1.41 - $1.51
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Other Financial Projections and Capital Structure
Full year Adjusted EBITDA expected to be ~ $400 million
• GAAP Net income of ~ $190 million
Free cash flow expected to be ~ $200 million
• Cash flow from operations ~ $300 million
Enhance shareholder return through dividends and share
repurchases
• Increased quarterly dividend 20 percent, to $0.09 per share
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In Summary
• Superior Execution
• Pursue Growth Opportunities
• Manage Costs for the Long Term
• Invest for the Future
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Cautionary Statement
Statements in this presentation which are not purely historical facts or which necessarily depend
upon future events, including statements about forecasted financial performance or other
statements about anticipations, beliefs, expectations, hopes, intentions or strategies for the
future, may be forward-looking statements within the meaning of Section 21E of the Securities
Exchange Act of 1934, as amended. Readers are cautioned not to place undue reliance on
forward-looking statements. All forward-looking statements are based upon information available
to Sabre Holdings Corporation on the date of this presentation. Sabre Holdings Corporation
undertakes no obligation to publicly update or revise any forward-looking statements, whether as
a result of new information, future events or otherwise. Any forward-looking statements involve
risks and uncertainties that could cause actual events or results to differ materially from the
events or results described in the forward-looking statements, including risks or uncertainties
related to the Company's revenues being highly dependent on the travel and transportation
industries. Sabre Holdings Corporation may not succeed in addressing these and other risks.
Further information regarding factors that could affect our financial and other results can be
found in the risk factors section of Sabre Holdings Corporation's most recent filing on Form 10-Q
with the Securities and Exchange Commission.
References to non-GAAP financial statements and the reconciliation to GAAP can be found on
the Sabre Holdings' website http://www.sabre-holdings.com/investor/highlights/index.html in the
investor relations section.
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