CALL DETAILS:
Call Date and Time: FRIDAY FEBRUARY 2, AT 12:30 PM ET
Toll Free:
Toll:
UK: 0
Confirmation Number: 13675945
Link to materials to follow before the call
Key Points to be Discussed on the Call:
- CEO Making Changes: The CEO’s investments/opportunities include changes in the transaction processing cost structure, changes in the headcount, better communication with employees, potential further changes in unprofitable segments such as consulting, potentially creating some offsets for implementation expense, and replacing top management including recently the CFO. None of the changes are automatic fixes but there is a sustained, concerted effort to improve the company at every level.
- AHS Back to Growth: The Airline Solutions business took a beating in 2017 with the exit of Southwest, the cancellation of Air Berlin, and the indefinite delay of Copa. But in 1H18 the company should experience a lift from normal PB seasonality plus the company should ramp the 40m PBs from LATAM who were not already on the platform. On it’s own LATAM drives ~5.5% growth in annualized PB for Sabre in 2018. Hotel Solutions will also see chunky growth in 4Q17-2Q18 thanks to large steps in the Wyndham implementation.
- FCF: Puts/takes on FCF leave us looking for 5-20% y/y increase in 2018 FCF versus Street at 3%. We have tried to include as many potential negatives in our 2018 FCF including both direct and indirect losses of DXC cashback, ongoing Data Center expansion, cash taxes, and growth of working capital. Still, our math on the RIF benefits (above guidance) and Bookings growth lead us to either slight or meaningful improvement in 2018 FCF, and both ends of our range are above Street.
We see risk/reward in the $18-28 range using our new 2018 (unlevered) FCF at the same multiple we have always used (15-20x).
