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NEW YORK--(BUSINESS WIRE)--Nov 10, 2022--
American Express Global Business Travel, which is operated by Global Business Travel Group, Inc. (NYSE: GBTG) (“Amex GBT” or the “Company”), the world’s leading B2B travel platform, today announced financial results for the third quarter ended September 30, 2022.
Q3 2022 Highlights
Strong Revenue and Earnings Trends
Business Travel Recovery Has Strong Momentum
A Significant Runway for Growth
Delivering Egencia Synergies & Cost Savings
Paul Abbott, Amex GBT Chief Executive Officer, stated: “Our third quarter results provide yet another proof point of our business momentum and progress toward our financial and strategic objectives. Travel demand strengthened meaningfully post-Labor Day, with September transaction volumes up 43% versus July. The recovery continued to gain momentum in October with transaction recovery reaching 76%. Additionally, our SME growth strategy continues to gain momentum. Of our $4.1 billion of total new wins value over the past twelve months, $2.5 billion is from new SME customers. Of this, approximately 25% by value and 50% by number of new wins are customers whose travel programs were previously unmanaged. Our third quarter results and ongoing momentum give us confidence in delivering our full-year 2022 guidance.”
Third Quarter 2022 Financial Summary
(in millions, except percentages; unaudited) | Three Months Ended | % | |
September 30, | |||
2022 | 2021 | ||
Total Transaction Value (TTV) | $6,585 | $1,778 | 270% |
Transaction Growth | 207% | 137% |
|
Revenue | $488 | $197 | 147% |
Travel Revenue | $387 | $120 | 224% |
Product & Professional Services Revenue | $101 | $77 | 29% |
Total operating expenses | $533 | $321 | (66%) |
Net loss | ($73) | ($106) | 30% |
Net cash used in operating activities | ($81) | ($107) | 24% |
EBITDA 4 | ($12) | ($90) | 87% |
Adjusted EBITDA 2 | $41 | ($75) | 154% |
Adjusted Operating Expenses 5 | $446 | $272 | (64%) |
Free Cash Flow 6 | ($112) | ($117) | 4% |
Third Quarter 2022 Financial Highlights
Results for the third quarter ended September 30, 2022 include Egencia, which was acquired on November 1, 2021.
Revenue increased $291 million, or 147%, versus the same period in 2021. Within this, Travel Revenue increased $267 million, or 224%, due to incremental revenue of $95 million resulting from the Egencia consolidation and $172 million primarily resulting from Transaction Growth driven by the continued recovery in business travel from the COVID-19 pandemic. Product and Professional Services Revenue increased $24 million, or 29%, primarily due to increased Meetings and Events revenue driven by strengthening demand. Pro forma for the acquisition of Egencia, total third quarter 2022 revenue increased 101% from the third quarter of 2021.
Total operating expense increased $212 million, or 66%, primarily due to the inclusion of Egencia’s operating expenses in the third quarter of 2022, increased cost of revenue to support the rise in the volume of transactions, higher general and administrative costs, increased technology and content expenses, higher sales and marketing costs and increased depreciation and amortization.
Adjusted EBITDA 2 improved by $116 million, or 154%, primarily due to revenue growth, partially offset by increased Adjusted Operating Expenses. Pro forma for the acquisition of Egencia, third quarter 2022 Adjusted EBITDA improved by $163 million compared to the third quarter of 2021.
Net loss improved $33 million, or 30%, primarily due to a decrease in operating loss partially offset by a lower benefit from income taxes and higher interest expense. Pro forma for the acquisition of Egencia, third quarter 2022 net loss improved by $93 million compared to the third quarter of 2021.
Adjusted Operating Expenses 5 increased $174 million, or 64%, primarily due to the inclusion of Egencia’s operating expenses in the third quarter of 2022, increased cost of revenue to support the rise in the volume of transactions, higher general and administrative costs, increased technology and content expenses and higher sales and marketing costs.
Net cash used in operating activities decreased $26 million, or 24%, primarily due to the reduction in operating loss, partially offset by cash utilized for working capital driven by the continued business travel recovery.
Free Cash Flow 6 increased $5 million, or 4%, primarily due to the decrease in net cash used in operating activities, partially offset by increased cash outflow for the purchase of property and equipment.
Net Debt 7: As of September 30, 2022, total debt was $1,221 million as compared to $1,023 million as of December 31, 2021. Net Debt was $909 million as of September 30, 2022 compared to Net Debt of $507 million as of December 31, 2021. The increase in Net Debt was primarily driven by a $198 million increase in total debt primarily due to borrowing under the delayed draw term loan commitments and a $204 million decrease in cash and cash equivalents.
Reiterated Full-Year 2022 Guidance
| Full-Year 2022 Guidance |
Revenue | $1.8B – $1.85B |
% of 2019 Pro Forma 1 Revenue | 64% – 65% |
Adjusted EBITDA 2 | $90M – $100M |
Adjusted EBITDA Margin 8 | ~ 5% |
The Company’s 2022 guidance considers various material assumptions. Because the guidance is forward-looking and reflects numerous estimates and assumptions with respect to future industry performance under various industry scenarios as well as assumptions for competition, general business, economic, market and financial conditions and matters specific to the business of Amex GBT, all of which are difficult to predict and many of which are beyond the control of Amex GBT, actual results may differ materially from the guidance due to a number of factors, including the ultimate inaccuracy of any of the assumptions described above and the risks and other factors discussed in the section entitled “Forward-Looking Statements” below and the risk factors in the Company’s SEC filings.
The Company has not provided a quantitative reconciliation of Adjusted EBITDA guidance to forecasted GAAP net income (loss) within this earnings release because the Company cannot, without unreasonable effort, calculate certain reconciling items with confidence due to the variability and complexity of the adjusting items that would be excluded from Adjusted EBITDA guidance. Such adjustments are for items that are not indicative of the Company’s core operations and include restructuring and integration charges, mergers and acquisition costs, equity-based compensation, certain fair value measurements, including those related to fair value of earnouts, foreign exchange gains (losses), impairments of long-lived assets and corresponding income taxes. Further, the Company continuously evaluates its capital and debt structure that could impact interest payments. Such adjustments may be affected by changes in ongoing assumptions, judgements, as well as nonrecurring, unusual or unanticipated charges, expenses or gains/losses or other items that may not directly correlate to the underlying performance of the Company’s business operations. The exact amount of these adjustments is not currently determinable but may be significant.
Completion of Warrant Exchange Offer and Consent Solicitation and Update on Public Float
On October 12, 2022, the Company completed its previously announced exchange offer and consent solicitation relating to its outstanding public and private warrants. With the completion of the exchange offer and consent solicitation, the Company has increased the number of shares of common stock available for trading, eliminated all of the warrants and simplified the Company’s capital structure.
Holders of the warrants that were tendered prior to the expiration of the exchange offer and consent solicitation received 0.275 shares of Class A common stock in exchange for each warrant tendered. On October 31, 2022, the Company acquired and retired all remaining untendered warrants in exchange for Class A common stock at an exchange ratio of 0.2475 shares of Class A common stock for each untendered warrant. The Company issued 10,808,510 shares of Class A common stock in exchange for the warrants tendered in the exchange offer.
Additionally, the Company has in place an effective registration statement covering the resale by holders of certain of its securities. This includes approximately 32 million shares of Class A common stock issued in connection with the PIPE investment that are currently eligible for sale on the registration statement as well as approximately 394 million shares of Class A common stock, issuable upon the exchange of Class B common stock held by legacy shareholders, that are eligible for sale in the fourth quarter of 2022 when the contractual lockup on these shares expires on November 23, 2022. To the extent these holders choose to resell their securities, the Company expects that this will improve public float and the efficiency of trading in its stock.
Webcast Information
Amex GBT will host its third quarter 2022 investor conference call today at 9:00 a.m. E.T. The live webcast and accompanying slide presentation can be accessed on the Amex GBT Investor Relations website at investors.amexglobalbusinesstravel.com. A replay of the event will be available on the website for at least 90 days following the event.
Glossary of Terms
See the “Glossary of Terms” for the definitions of certain terms used within this press release.
Non-GAAP Financial Measures
The Company refers to certain financial measures that are not recognized under U.S. generally accepted accounting principles (“GAAP”) in this press release, including EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin, Adjusted Operating Expenses, Free Cash Flow and Net Debt. See “Non-GAAP Financial Measures” below for an explanation of these non-GAAP financial measures and “Tabular Reconciliations for Non-GAAP Financial Measures” below for reconciliations of the non-GAAP financial measures to the comparable GAAP measures.
About American Express Global Business Travel
American Express Global Business Travel is the world’s leading B2B travel platform, providing software and services to manage travel, expenses, and meetings & events for companies of all sizes. We have built the most valuable marketplace in B2B travel to deliver unrivalled choice, value and experiences. With travel professionals in more than 140 countries, our customers and travelers enjoy the powerful backing of American Express Global Business Travel.
Visit amexglobalbusinesstravel.com for more information about Amex GBT. Follow @amexgbt on Twitter, LinkedIn and Instagram.
GLOBAL BUSINESS TRAVEL GROUP, INC. | ||||||||||||||||
CONSOLIDATED STATEMENT OF OPERATIONS | ||||||||||||||||
(Unaudited) | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
| ||||
|
| Three months ended |
| Nine months ended | ||||||||||||
|
| September 30, |
| September 30, | ||||||||||||
(in $ millions, except share and per share data) |
| 2022 |
| 2021 |
| 2022 |
| 2021 | ||||||||
Revenue |
| $ | 488 |
|
| $ | 197 |
|
| $ | 1,324 |
|
| $ | 476 |
|
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
| ||||
Cost of revenue (excluding depreciation and amortization shown separately below) |
|
| 217 |
|
|
| 127 |
|
|
| 589 |
|
|
| 304 |
|
Sales and marketing |
|
| 81 |
|
|
| 51 |
|
|
| 235 |
|
|
| 139 |
|
Technology and content |
|
| 98 |
|
|
| 63 |
|
|
| 283 |
|
|
| 179 |
|
General and administrative |
|
| 94 |
|
|
| 42 |
|
|
| 248 |
|
|
| 122 |
|
Restructuring |
|
| (2 | ) |
|
| 4 |
|
|
| (5 | ) |
|
| (5 | ) |
Depreciation and amortization |
|
| 45 |
|
|
| 34 |
|
|
| 134 |
|
|
| 104 |
|
Total operating expenses |
|
| 533 |
|
|
| 321 |
|
|
| 1,484 |
|
|
| 843 |
|
Operating loss |
|
| (45 | ) |
|
| (124 | ) |
|
| (160 | ) |
|
| (367 | ) |
Interest expense |
|
| (26 | ) |
|
| (13 | ) |
|
| (69 | ) |
|
| (37 | ) |
Fair value movement on earnouts and warrants derivative liabilities |
|
| (6 | ) |
|
| — |
|
|
| 30 |
|
|
| — |
|
Other (loss) income, net |
|
| (5 | ) |
|
| — |
|
|
| (3 | ) |
|
| 5 |
|
Loss before income taxes and share of losses from equity method investments |
|
| (82 | ) |
|
| (137 | ) |
|
| (202 | ) |
|
| (399 | ) |
Benefit from income taxes |
|
| 10 |
|
|
| 31 |
|
|
| 39 |
|
|
| 126 |
|
Share of losses from equity method investments |
|
| (1 | ) |
|
| — |
|
|
| (3 | ) |
|
| (2 | ) |
Net loss |
|
| (73 | ) |
|
| (106 | ) |
|
| (166 | ) |
|
| (275 | ) |
Less: net loss attributable to non-controlling interests in subsidiaries |
|
| (53 |
|
| ) | (106 | ) |
|
| (167 | ) | ) |
| (275 | ) |
Net (loss) income attributable to the Company’s Class A common stockholders |
| $ | (20 | ) |
| $ | — |
|
| $ | 1 |
|
| $ | — |
|
Basic (loss) earnings per share attributable to the Company’s Class A common stockholders |
| $ | (0.43 | ) |
|
|
|
| $ | 0.02 |
|
|
|
| ||
Weighted average number of shares outstanding - Basic |
|
| 48,867,969 |
|
|
|
|
|
| 48,867,969 |
|
|
|
| ||
Diluted loss per share attributable to the Company’s Class A common stockholders |
| $ | (0.43 | ) |
|
|
|
| $ | (0.38 | ) |
|
|
| ||
Weighted average number of shares outstanding - Diluted |
|
| 48,867,969 |
|
|
|
|
|
| 443,316,450 |
|
|
|
|
GLOBAL BUSINESS TRAVEL GROUP, INC. | ||||||||
CONSOLIDATED BALANCE SHEETS | ||||||||
|
| |||||||
|
| September 30, |
| December 31, | ||||
(in $ millions except share and per share data) |
| 2022 |
| 2021 | ||||
|
| (Unaudited) |
|
|
| |||
Assets |
|
|
|
|
|
| ||
Current assets: |
|
|
|
|
|
| ||
Cash and cash equivalents |
| $ | 312 |
|
| $ | 516 |
|
Accounts receivable (net of allowances for doubtful accounts of $10 and $4 as of September 30, 2022 and December 31, 2021, respectively) |
|
| 781 |
|
|
| 381 |
|
Due from affiliates |
|
| 48 |
|
|
| 18 |
|
Prepaid expenses and other current assets |
|
| 157 |
|
|
| 137 |
|
Total current assets |
|
| 1,298 |
|
|
| 1,052 |
|
Property and equipment, net |
|
| 217 |
|
|
| 216 |
|
Equity method investments |
|
| 13 |
|
|
| 17 |
|
Goodwill |
|
| 1,148 |
|
|
| 1,358 |
|
Other intangible assets, net |
|
| 647 |
|
|
| 746 |
|
Operating lease right-of-use assets |
|
| 53 |
|
|
| 59 |
|
Deferred tax assets |
|
| 279 |
|
|
| 282 |
|
Other non-current assets |
|
| 45 |
|
|
| 41 |
|
Total assets |
| $ | 3,700 |
|
| $ | 3,771 |
|
Liabilities, preferred shares, and stockholders’ equity |
|
|
|
|
|
| ||
Current liabilities: |
|
|
|
|
|
| ||
Accounts payable |
| $ | 339 |
|
| $ | 137 |
|
Due to affiliates |
|
| 66 |
|
|
| 41 |
|
Accrued expenses and other current liabilities |
|
| 409 |
|
|
| 519 |
|
Current portion of operating lease liabilities |
|
| 18 |
|
|
| 21 |
|
Current portion of long-term debt |
|
| 3 |
|
|
| 3 |
|
Total current liabilities |
|
| 835 |
|
|
| 721 |
|
Long-term debt, net of unamortized debt discount and debt issuance costs |
|
| 1,218 |
|
|
| 1,020 |
|
Deferred tax liabilities |
|
| 11 |
|
|
| 119 |
|
Pension liabilities |
|
| 253 |
|
|
| 333 |
|
Long-term operating lease liabilities |
|
| 53 |
|
|
| 61 |
|
Earnouts and warrants derivative liabilities |
|
| 127 |
|
|
| — |
|
Other non-current liabilities |
|
| 34 |
|
|
| 23 |
|
Total liabilities |
|
| 2,531 |
|
|
| 2,277 |
|
Preferred shares (par value €0.00001; 3,000,000 shares authorized; 1,500,000 shares issued and outstanding as of December 31, 2021) |
|
| — |
|
|
| 160 |
|
Stockholders’ equity: |
|
|
|
|
|
| ||
Voting ordinary shares (par value €0.00001; 40,000,000 shares authorized; 36,000,000 shares issued and outstanding as of December 31, 2021) |
|
| — |
|
|
| — |
|
Non-Voting ordinary shares (par value €0.00001; 15,000,000 shares authorized; 8,413,972 shares issued and outstanding as of December 31, 2021) |
|
| — |
|
|
| — |
|
Profit Shares (par value €0.00001; 800,000 shares authorized, issued and outstanding as of December 31, 2021) |
|
| — |
|
|
| — |
|
Class A common stock (par value $0.0001; 3,000,000,000 shares authorized; 56,945,033 shares issued and outstanding as of September 30, 2022) |
|
| — |
|
|
| — |
|
Class B common stock (par value $0.0001; 3,000,000,000 shares authorized; 394,448,481 shares issued and outstanding as of September 30, 2022) |
|
| — |
|
|
| — |
|
Additional paid-in capital |
|
| 259 |
|
|
| 2,560 |
|
Accumulated deficit |
|
| (148 | ) |
|
| (1,065 | ) |
Accumulated other comprehensive loss |
|
| (35 | ) |
|
| (162 | ) |
Total equity of the Company’s stockholders |
|
| 76 |
|
|
| 1,333 |
|
Equity attributable to noncontrolling interest in subsidiaries |
|
| 1,093 |
|
|
| 1 |
|
Total stockholders’ equity |
|
| 1,169 |
|
|
| 1,334 |
|
Total liabilities, preferred shares, and stockholders’ equity |
| $ | 3,700 |
|
| $ | 3,771 |
|
| ||||||||
GLOBAL BUSINESS TRAVEL GROUP, INC. | ||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
(Unaudited) | ||||||||
|
| Nine months ended | ||||||
|
| September 30, | ||||||
(in $ millions) |
| 2022 |
| 2021 | ||||
Operating activities: |
|
|
|
|
|
| ||
Net loss |
| $ | (166 | ) |
| $ | (275 | ) |
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|
|
| ||
Depreciation and amortization |
|
| 134 |
|
|
| 104 |
|
Deferred tax benefit |
|
| (41 | ) |
|
| (126 | ) |
Equity-based compensation |
|
| 23 |
|
|
| 1 |
|
Fair value movements on earnouts and warrants derivative liabilities |
|
| (30 | ) |
|
| — |
|
Other non-cash |
|
| 24 |
|
|
| (2 | ) |
Pension contributions |
|
| (25 | ) |
|
| (18 | ) |
Proceeds from termination of interest rate swap derivative contract |
|
| 23 |
|
|
| — |
|
Changes in working capital, net of effects from acquisition |
|
|
|
|
|
| ||
Accounts receivables |
|
| (478 | ) |
|
| (62 | ) |
Prepaid expenses and other current assets |
|
| (55 | ) |
|
| 52 |
|
Due from affiliates |
|
| (31 | ) |
|
| 4 |
|
Due to affiliates |
|
| 26 |
|
|
| 5 |
|
Accounts payable, accrued expenses and other current liabilities |
|
| 206 |
|
|
| (26 | ) |
Net cash used in operating activities |
|
| (390 | ) |
|
| (343 | ) |
Investing activities: |
|
|
|
|
|
| ||
Purchase of property and equipment |
|
| (73 | ) |
|
| (28 | ) |
Business acquisition, net of cash acquired |
|
| — |
|
|
| (53 | ) |
Net cash used in investing activities |
|
| (73 | ) |
|
| (81 | ) |
Financing activities: |
|
|
|
|
|
| ||
Proceeds from reverse recapitalization, net |
|
| 269 |
|
|
| (4 | ) |
Redemption of preference shares |
|
| (168 | ) |
|
| — |
|
Proceeds from issuance of preferred shares |
|
| — |
|
|
| 150 |
|
Proceeds from senior secured term loans |
|
| 200 |
|
|
| 150 |
|
Repayment of senior secured term loans |
|
| (2 | ) |
|
| (6 | ) |
Repayment of finance lease obligations |
|
| (2 | ) |
|
| (2 | ) |
Payment of lender fees and issuance costs for senior secured term loans facilities |
|
| — |
|
|
| (7 | ) |
Payment of deferred consideration |
|
| (4 | ) |
|
| — |
|
Capital distributions to stockholders |
|
| — |
|
|
| (1 | ) |
Net cash from financing activities |
|
| 293 |
|
|
| 280 |
|
Effect of exchange rate changes on cash, cash equivalents and restricted cash |
|
| (30 | ) |
|
| (4 | ) |
Net decrease in cash, cash equivalents and restricted cash |
|
| (200 | ) |
|
| (148 | ) |
Cash, cash equivalents and restricted cash, beginning of period |
|
| 525 |
|
|
| 593 |
|
Cash, cash equivalents and restricted cash, end of period |
| $ | 325 |
|
| $ | 445 |
|
Supplemental cash flow information: |
|
|
|
|
|
| ||
Cash received for income taxes (net of payments) |
| $ | (1 | ) |
| $ | — |
|
Cash paid for interest (net of interest received) |
| $ | 66 |
|
| $ | 35 |
|
Dividend accrued on preferred shares |
| $ | 8 |
|
| $ | 5 |
|
Non-cash additions for operating lease right-of-use assets |
| $ | 10 |
|
| $ | 14 |
|
Deferred offering costs accrued |
| $ | — |
|
| $ | 8 |
|
Glossary of Terms
“B2B” refers to business-to-business.
“Customer retention rate” is calculated based on Total Transaction Value (TTV) and includes Egencia.
“PIPE” refers to Private Investment in Public Equity.
“Pro Forma New Wins Value” refers to expected annual average value over the contract term from new client wins based on 2019 spend and includes Egencia.
“Registration Statement” refers to the Registration Statement (File No. 333-267339) filed by Amex GBT which was declared effective by the SEC on October 3, 2022.
“SME” refers to clients Amex GBT considers small-to-medium-sized enterprises, which Amex GBT generally defines as having an expected annual spend on air travel of less than $20 million. This criterion can vary by country and client needs.
Total Transaction Value (or TTV) refers to the sum of the total price paid by travelers for air, hotel, rail, car rental and cruise bookings, including taxes and other charges applied by suppliers at point of sale, less cancellations and refunds.
Transaction Growth (Decline) represents year-over-year growth or decline as a percentage of the total number of transactions, including air, hotel, car rental, rail or other travel-related transactions, recorded at the time of booking and is calculated on a gross basis to include cancellations, refunds and exchanges. To calculate year-over-year growth or decline, Amex GBT compares the total number of transactions in the comparative previous period/year to the total number of transactions in the current period/year in percentage terms.
Transaction recovery represents the total number of transactions, including air, hotel, car rental, rail or other travel-related transactions, recorded at the time of booking and calculated on a gross basis to include cancellations, refunds and exchanges, in the current period as a percentage of the comparative period in 2019.
Non-GAAP Financial Measures
We report our financial results in accordance with GAAP. Our non-GAAP financial measures are provided in addition to, and should not be considered as an alternative to, other performance or liquidity measure derived in accordance with GAAP. Non-GAAP financial measures have limitations as analytical tools, and you should not consider them either in isolation or as a substitute for analyzing our results as reported under GAAP. In addition, because not all companies use identical calculations, the presentations of our non-GAAP financial measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company.
Management believes that these non-GAAP financial measures provide users of our financial information with useful supplemental information that enables a better comparison of our performance or liquidity across periods. In addition, we use EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses as performance measures as they are important metrics used by management to evaluate and understand the underlying operations and business trends, forecast future results and determine future capital investment locations. We also use Free Cash Flow and Net Debt as indicators of our ability to generate cash to meet our liquidity needs and to assist our management in evaluating our financial flexibility, capital structure and leverage. These non-GAAP financial measures supplement comparable GAAP measures in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and/or to compare our performance and liquidity against that of other peer companies using similar measures.
We define EBITDA as net (loss) income before interest income, interest expense, benefit from (provision for) income taxes and depreciation and amortization.
We define Adjusted EBITDA as net income (loss) before interest income, interest expense, loss on early extinguishment of debt, benefit from (provision for) income taxes and depreciation and amortization and as further adjusted to exclude costs that management believes are non-core to the underlying business of the Company, consisting of restructuring costs, integration costs, costs related to mergers and acquisitions, separation costs, non-cash equity-based compensation, long-term incentive plan costs, certain corporate costs, fair value movements on earnout and warrant liabilities, foreign currency gains (losses), non-service components of net periodic pension benefit (costs) and gains (losses) on disposal of businesses.
We define Adjusted EBITDA Margin as Adjusted EBITDA divided by revenue.
We define Adjusted Operating Expenses as total operating expenses excluding depreciation and amortization and costs that management believes are non-core to the underlying business of the Company, consisting of restructuring costs, integration costs, costs related to mergers and acquisitions, separation costs, non-cash equity-based compensation, long-term incentive plan costs and certain corporate costs.
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses are supplemental non-GAAP financial measures of operating performance that do not represent and should not be considered as alternatives to net (loss) income or total operating expenses, as determined under GAAP. In addition, these measures may not be comparable to similarly titled measures used by other companies. These non-GAAP measures have limitations as analytical tools, and these measures should not be considered in isolation or as substitutes for analysis of the Company’s results or expenses as reported under GAAP. Some of these limitations are that these measures do not reflect:
EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses should not be considered as measures of liquidity or measures determining discretionary cash available to us to reinvest in the growth of our business or as measures of cash that will be available to us to meet our obligations. We believe that the adjustments applied in presenting EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses are appropriate to provide additional information to investors about certain material non-cash and other items that management believes are non-core to the underlying business of the Company.
We use these measures as performance measures as they are important metrics used by management to evaluate and understand the underlying operations and business trends, forecast future results and determine future capital investment allocations. These non-GAAP measures supplement comparable GAAP measures in the evaluation of the effectiveness of our business strategies, to make budgeting decisions, and to compare our performance against that of other peer companies using similar measures. We also believe that EBITDA, Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted Operating Expenses are helpful supplemental measures to assist potential investors and analysts in evaluating our operating results across reporting periods on a consistent basis.
We define Free Cash Flow as net cash from (used in) operating activities, less cash used for additions to property and equipment.
We believe Free Cash Flow is an important measure of our liquidity. This measure is a useful indicator of our ability to generate cash to meet our liquidity demands. We use this measure to conduct and evaluate our operating liquidity. We believe it typically presents an alternate measure of cash flows since purchases of property and equipment are a necessary component of our ongoing operations and it provides useful information regarding how cash provided by operating activities compares to the property and equipment investments required to maintain and grow our platform. We believe Free Cash Flow provides investors with an understanding of how assets are performing and measures management’s effectiveness in managing cash.
Free Cash Flow is a non-GAAP measure and may not be comparable to similarly named measures used by other companies. This measure has limitations in that it does not represent the total increase or decrease in the cash balance for the period, nor does it represent cash flow for discretionary expenditures. This measure should not be considered as a measure of liquidity or cash flows from operations as determined under GAAP. This measure is not a measurement of our financial performance under GAAP and should not be considered in isolation or as alternative to net (loss) income or any other performance measures derived in accordance with GAAP or as an alternative to cash flows from operating activities as a measure of liquidity.
We define Net Debt as total debt outstanding consisting of current and non-current portion of long-term debt (defined as debt (excluding lease liabilities) with original contractual maturity dates of one year or greater), net of unamortized debt discount and unamortized debt issuance costs, minus cash and cash equivalents.
Net Debt is a non-GAAP measure and may not be comparable to similarly named measures used by other companies. This measure is not a measurement of our indebtedness as determined under GAAP and should not be considered in isolation or as alternative to assess our total debt or any other measures derived in accordance with GAAP or as an alternative to total debt. Management uses Net Debt to review our overall liquidity, financial flexibility, capital structure and leverage. Further, we believe that certain debt rating agencies, creditors and credit analysts monitor our Net Debt as part of their assessment of our business.
Pro Forma Financial Information
This press release includes certain pro forma financial information. The pro forma adjustments assume that the Company acquired Egencia, Ovation and DER as of January 1, 2019 and include a constant currency adjustment. The pro forma financial information is unaudited and is presented for illustrative purposes only (and not for purposes of Article 11 of Regulation S-X) and is not necessarily indicative of the operating results or financial position that would have occurred if the relevant transactions had been consummated on the date indicated, nor is it indicative of future operating results. The pro forma financial information is based on certain assumptions which may or may not be realized, including as a result of risks and other factors discussed in the section entitled “Forward-Looking Statements” below and the risk factors in the Company’s SEC filings.
Tabular Reconciliations for Non-GAAP Measures
Reconciliation of net loss to EBITDA and Adjusted EBITDA:
Three Months Ended September 30, | ||||||||
($ in millions) | 2022 |
| 2021 | |||||
Net loss | $ | (73 | ) | $ | (106 | ) | ||
Interest expense |
| 26 |
|
| 13 |
| ||
Benefit from income taxes |
| (10 | ) |
| (31 | ) | ||
Depreciation and amortization |
| 45 |
|
| 34 |
| ||
EBITDA |
| (12 | ) |
| (90 | ) | ||
Restructuring (a) |
| (2 | ) |
| 4 |
| ||
Integration costs (b) |
| 8 |
|
| 4 |
| ||
Mergers and acquisitions (c) |
| 19 |
|
| 2 |
| ||
Equity-based compensation (d) |
| 15 |
|
| — |
| ||
Fair value movements on earnout and warrants derivative liabilities (e) |
| 6 |
|
| — |
| ||
Other adjustments, net (f) |
| 7 |
|
| 5 |
| ||
Adjusted EBITDA | $ | 41 |
| $ | (75 | ) |
Reconciliation of total operating expenses to Adjusted Operating Expenses:
Three Months Ended September 30, | ||||||||
($ in millions) | 2022 |
| 2021 | |||||
Total operating expenses | $ | 533 |
| $ | 321 |
| ||
Adjustments: | ||||||||
Depreciation and amortization |
| (45 | ) |
| (34 | ) | ||
Restructuring (a) |
| 2 |
|
| (4 | ) | ||
Integration costs (b) |
| (8 | ) |
| (4 | ) | ||
Mergers and acquisitions (c) |
| (19 | ) |
| (2 | ) | ||
Equity-based compensation (d) |
| (15 | ) |
| — |
| ||
Other adjustments, net (f) |
| (2 | ) |
| (5 | ) | ||
Adjusted Operating Expenses | $ | 446 |
| $ | 272 |
|
| a) | Represents severance and related expenses due to restructuring activities. | |
| b) | Represents expenses related to the integration of businesses acquired. | |
| c) | Represents expenses related to business acquisitions, including potential business acquisitions, and includes pre-acquisition due diligence and related activities costs. The three months ended September 30, 2022 includes a charge of $19 million for a loss contingency in relation to a contingent event that existed as of the Egencia acquisition date. | |
| d) | Represents non-cash equity-based compensation expense related to the GBTG/GBT JerseyCo equity compensation plans. | |
| e) | Represents fair value movements on earnout and warrant liabilities during the periods. | |
| f) | Adjusted Operating Expenses excludes (i) long-term incentive plan expense of $(3) million and $3 million for the three months ended September 30, 2022 and 2021, respectively, and (ii) litigation and professional services costs of $5 million and $2 million for the three months ended September 30, 2022 and 2021, respectively. Adjusted EBITDA additionally excludes (i) unrealized foreign exchange losses (gains) of $7 million and $2 million for the three months ended September 30, 2022 and 2021, respectively, and (ii) non-service component of our net periodic pension benefit related to our defined benefit pension plans of $2 million for each of the three months ended September 30, 2022 and 2021. |
Reconciliation of net cash used in operating activities to Free Cash Flow:
Three Months Ended September 30, | ||||||||
($ in millions) | 2022 |
| 2021 | |||||
Net cash used in operating activities | $ | (81 | ) | $ | (107 | ) | ||
Less: Purchase of property and equipment |
| (31 | ) |
| (10 | ) | ||
Free Cash Flow | $ | (112 | ) | $ | (117 | ) |
Reconciliation of Net Debt:
As of | ||||||||
($ in millions) | September 30, 2022 | December 31, 2021 | ||||||
Senior Secured Credit Agreement | ||||||||
Principal amount of senior secured initial term loans (Maturity – August 2025) (1) | $ | 240 |
| $ | 242 |
| ||
Principal amount of senior secured tranche B-3 term loans (Maturity – December 2026) (2) |
| 1,000 |
|
| 800 |
| ||
| 1,240 |
|
| 1,042 |
| |||
Less: Unamortized debt discount and debt issuance costs |
| (19 | ) |
| (19 | ) | ||
Total debt, net of unamortized debt discount and debt issuance costs |
| 1,221 |
|
| 1,023 |
| ||
Less: Cash and cash equivalents |
| (312 | ) |
| (516 | ) | ||
Net Debt | $ | 909 |
| $ | 507 |
|
| 1) | Stated interest rate of LIBOR + 2.50% as of September 30, 2022 and December 31, 2021. | |
| 2) | Stated interest rate of LIBOR + 6.50% (with a LIBOR floor of 1.00%) as of September 30, 2022 and December 31, 2021. |
Reconciliation of Revenue Recovery vs. Pro Forma 2019:
($ in millions) | Three Months Ended | Three Months Ended | ||||
Revenue | $ | 488 | $ | 507 | ||
Egencia, Ovation & DER revenue |
| — |
| 166 | ||
Foreign exchange at constant currency |
| — |
| 7 | ||
Pro Forma Revenue | $ | 488 | $ | 680 | ||
Revenue Recovery vs. Pro Forma 2019 |
| 72% |
Reconciliation of Pro Forma Revenue, Pro Forma Adjusted EBITDA and Adjusted EBITDA Fall-Through on Year-over-Year Revenue Growth Versus 2021 Pro Forma:
Three Months Ended | Three Months Ended September 30, 2021 | YOY | ||||||||||||
Amex | Egencia | Pro Forma | ||||||||||||
Revenue | $ | 488 | $ | 197 | $ | 46 | $ | 243 | $ | 245 | ||||
Net loss |
| (73) |
| (106) |
| (60) |
| (166) |
| 93 | ||||
Interest expense |
| 26 |
| 13 |
| — |
| 13 |
| 13 | ||||
Benefit from income taxes |
| (10) |
| (31) |
| (4) |
| (35) |
| 25 | ||||
Depreciation and amortization |
| 45 |
| 34 |
| 11 |
| 45 |
| — | ||||
Restructuring |
| (2) |
| 4 |
| 8 |
| 12 |
| (14) | ||||
Integration costs |
| 8 |
| 4 |
| — |
| 4 |
| 4 | ||||
Mergers and acquisitions |
| 19 |
| 2 |
| — |
| 2 |
| 17 | ||||
Equity-based compensation |
| 15 |
| — |
| — |
| — |
| 15 | ||||
Fair value movements on earnout and warrants derivative liabilities |
| 6 |
| — |
| — |
| — |
| 6 | ||||
Other adjustments, net |
| 7 |
| 5 |
| (2) |
| 3 |
| 4 | ||||
Adjusted EBITDA | $ | 41 | $ | (75) | $ | (47) | $ | (122) | $ | 163 | ||||
Adjusted EBITDA Fall-Through |
| 67% |
Forward-Looking Statements
This communication contains certain “forward-looking statements” within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act, and are subject to the safe harbor created thereby under the Private Securities Litigation Reform Act of 1995. Forward-looking statements provide our current expectations or forecasts of future events. Forward-looking statements include statements about our expectations, beliefs, plans, objectives, intentions, assumptions and other statements that are not historical facts. Words such as “estimates,” “projected,” “expects,” “estimated,” “anticipates,” “suggests,” “projects,” “forecasts,” “plans,” “intends,” “believes,” “seeks,” “may,” “will,” “would,” “should,” “could,” “future,” “propose,” “target,” “goal,” “objective,” “outlook” and variations of these words or similar expressions (or the negative versions of such words or expressions) are intended to identify forward-looking statements. These forward-looking statements are based on our current expectations and beliefs concerning future developments and their potential effects on us and not guarantees of future performance, conditions or results. There can be no assurance that future developments affecting us will be those that we have anticipated. These forward-looking statements involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the control of the parties, that could cause actual results or outcomes to differ materially from those expressed or implied by the forward-looking statements.
The forward-looking statements contained in this communication are subject to a number of important factors that may affect actual results or outcomes including, among others: (1) changes to projected financial information or our ability to achieve our anticipated growth rate and execute on market opportunities, (2) our ability to achieve cost savings plans, (3) our ability to maintain our existing relationships with customers and suppliers and to compete with existing and new competitors in existing and new markets and offerings, (4) various conflicts of interest that could arise among us, affiliates and investors, (5) our success in retaining or recruiting, or changes required in, our officers, key employees or directors, (6) intense competition and competitive pressures from other companies in the industry in which we operate, (7) factors relating to our business, operations and financial performance, including market conditions and global and economic factors beyond our control, (8) the impact of the COVID-19 pandemic, Russia’s invasion of Ukraine, changes in base interest rates, inflation and significant market volatility on our business, the travel industry, travel trends and the global economy generally, (9) the sufficiency of our cash, cash equivalents and investments to meet our liquidity needs, (10) the effect of a prolonged or substantial decrease in global travel on the global travel industry, (11) political, social and macroeconomic conditions (including the widespread adoption of teleconference and virtual meeting technologies which could reduce the number of in person business meetings and demand for travel and our services), (12) the effect of legal, tax and regulatory changes and (13) other factors described in the Company’s SEC filings, including the Registration Statement. Should one or more of these risks or uncertainties materialize, or should any of our assumptions prove incorrect, actual results may vary in material respects from those projected in these forward-looking statements. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as may be required under applicable securities laws.
Disclaimer
An investment in Global Business Travel Group, Inc. is not an investment in American Express. American Express shall not be responsible in any manner whatsoever for, and in respect of, the statements herein, all of which are made solely by Global Business Travel Group, Inc.
_________________________________
1 Pro forma assumes Egencia, Ovation and DER acquisitions completed on January 1, 2019, presented with a constant currency adjustment.
2 Adjusted EBITDA is a non-GAAP financial measure. Please refer to the section below titled “Non-GAAP Financial Measures” for more information.
3 October transaction recovery is workday adjusted.
4 EBITDA is a non-GAAP financial measure. Please refer to the section below titled “Non-GAAP Financial Measures” for more information.
5 Adjusted Operating Expenses is a non-GAAP financial measure. Please refer to the section below titled “Non-GAAP Financial Measures” for more information.
6 Free Cash Flow is a non-GAAP financial measure. Please refer to the section below titled “Non-GAAP Financial Measures” for more information.
7 Net Debt is a non-GAAP financial measure. Please refer to the section below titled “Non-GAAP Financial Measures” for more information.
8 Adjusted EBITDA Margin is a non-GAAP financial measure. Please refer to the section below titled “Non-GAAP Financial Measures” for more information.
View source version on businesswire.com:https://www.businesswire.com/news/home/20221110005479/en/
CONTACT: Media:
Martin Ferguson
Vice President Global Communications and Public Affairs, American Express Global Business Travel
martin.ferguson@amexgbt.com
Investors:
Barry Sievert
Vice President Investor Relations, American Express Global Business Travel
investor@amexgbt.com
KEYWORD: UNITED STATES NORTH AMERICA NEW YORK
INDUSTRY KEYWORD: OTHER TRAVEL PROFESSIONAL SERVICES TRAVEL FINANCE
SOURCE: Global Business Travel Group, Inc.
Copyright Business Wire 2022.
PUB: 11/10/2022 07:45 AM/DISC: 11/10/2022 07:46 AM
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