Good morning, and welcome to the Sabre First Quarter 2019 Earnings Conference Call. Please note that today's call is being recorded and is also being broadcast live over the Internet on the Sabre corporate website. This broadcast is the property of Sabre. Any redistribution, retransmission or rebroadcast of this call in any form without the expressed written consent of the company is strictly prohibited. I will now turn the call over to the Senior Vice President of Investor Relations and Corporate Communications, Mr. Barry Sievert. Go ahead sir.

Thank you, Skyler, and good morning, everyone. Thanks for joining us for our first quarter earnings call. This morning we issued an earnings press release, which is available on our website at investors.sabre.com. A slide presentation which accompanies today's prepared remarks is also available during this call on the Sabre IR web page. A replay of today’s call will be available on our website later this morning. Throughout today's call, we will be presenting certain non-GAAP financial measures, which have been adjusted to exclude certain items. All references during today's call to EBITDA, EBITDA Less Capitalized Software Development, operating income, EPS and net income have been adjusted for these items. The most directly comparable GAAP measures and reconciliations for non-GAAP measures are available in the earnings release and other documents posted on our website at investors.sabre.com. We would like to advise you that our comments contain forward-looking statements. These statements include among others disclosures of our guidance, including revenue; EBITDA; EBITDA Less Capitalized Software Development; operating income; net income; EPS; cash flow and CapEx; our medium-term outlook; our expected segment results; the amount and effects of changes in capitalization mix and depreciation and amortization; the effects of customer financial conditions and new or renewed agreements, products and implementations; our expectations of industry trends and various other forward-looking statements regarding our business. These statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. Information concerning the risks and uncertainties that could affect our financial results is contained in our SEC filings, including our 2018 Form 10-K. Participating with me on today’s call are Sean Menke, our President and Chief Executive Officer; and Doug Barnett, Executive Vice President and Chief Financial Officer; Dave Shirk, our Executive Vice President and the President of Travel Solutions; and Clinton Anderson, Executive Vice President and President of Hospitality Solutions are also with us today and will be available for Q&A after the prepared remarks. Sean will start us off and provide a review of our strategic and commercial performance and our business outlook. Doug will offer additional perspective on our financial results and forward outlook, and we will then open the call to your questions. With that, I'll turn the call over to Sean.

Thanks, Barry. Good morning, everyone, and thank you for joining us. Today I am pleased to report solid first quarter results that provide continued evidence we are progressing against our initiatives. We delivered 6% revenue growth and excluding an insurance reimbursement payment in the prior year a 13% growth in free cash flow. With our technology-led leadership team in place and strategic focus on the retailing distribution and the fulfillment of travel, we have continued to meet and exceed our internal milestones and are gaining velocity in our technology transformation and evolved customer engagement approach. We are unlocking savings that fund investment in the delivery of new innovations that we believe will help advance the marketplace and drive future growth. We believe our strategy technology transformation and customer engagement will lead to long-term shareholder value creation. Let's look at our Q1 accomplishments. At Travel Network, we gained 140 basis points a share in the quarter, the fifth quarter in a row where we had gained share. We believe we are well positioned with the investment in our Sabre Red 360 next-generation agency desktop, new lodging content services capabilities and global cloud deployment of our shopping complex to continue winning share. As the trend continues for large global travel management companies to consolidate their technology footprints on best-in-class platforms similar to Flight Centre and CWT, we expect to continue to benefit. We released our first set of NDC APIs with United Airlines enabling shopping, pricing, booking and payment workflows. Our NDC solutions will allow United to offer new fare options and additional flight amenities for a more comprehensive shopping experience for customers to choose to book through Sabre. This development is a significant step forward, advancing the pan-industry vision, developed alongside or beyond NDC partners, and moving NDC closer to becoming…

Thank you, Sean. Looking more closely at our Q1 results, revenue was up 6% year-over-year driven by growth across each of our business segments. Over the period recurring revenue represented 93% of total revenue. We continue to make good progress on the execution of our technology transformation efforts. As previously disclosed, the costs associated with our cloud migration, mainframe offload, and the utilization of agile development methods are not capitalized. As expected, this reduced the capitalized portion of our total technology spend in the first quarter. This shift in capitalization mix resulted in an increased percentage of technology costs, hitting operating expenses in the quarter, with a corresponding decline in CapEx. Additionally, as we accelerate our technology transformation, more products are being placed into service leading to an increase in depreciation and amortization from previously capitalized technology spend. As we discussed last quarter, although this has no impact on our level of total technology spend or on free cash flow, there's obviously a near-term impact to our income statement from this shift. We continue to expect recovery to previously forecasted profitability levels in 2021, which means we continue to expect accelerated earnings growth next year when we begin to anniversary this impact. Accordingly, our first quarter results are as follows. EBITDA declined 13%. EBITDA Less Capitalized Software Development decreased 4%, and was in line with our expectations. The decline was primarily due to Travel Network incentive pressure. Remember, EBITDA Less Capitalized Software Development is the metric we introduced last quarter to normalize for the change in capitalization mix and reflect total technology spend growth, which as I will describe later, was below the rate of revenue growth. Operating income declined 21%, and earnings per share declined 23% to $0.34. On a like-for-like basis, excluding the shift in capitalization mix and…

Great. Thanks a lot Doug. I'm pleased with how we've kicked off the year and would like to thank my many colleagues and team members all around the world for their hard work and dedication. We are delivering on our strategic focus, making progress across the Board, specifically in our technology, transformation, and evolved customer engagement approach. Despite external challenges our solid first quarter results provide a strong foundation to build on over the balance of the year. I want to once again thank you for joining our call today and for your continued interest in Sabre. And with that, I'll ask the operator to open up the call for your questions.

Thank you. [Operator Instructions] Our first question comes from John King of Bank of America. Your line is now open.

Yeah, great. Thank you for taking the questions. I've got one and a follow-up. So first one Sean, I guess, just would like you to -- if you can address some of the news flow we've seen around the outages on the platform I think yesterday, but also a few weeks back as well. What has happened there? And how much of that is a Sabre issue versus third-party or airline issue? I just wonder if you could catch that in the context of some of those opportunities you've talked about and whether that is going to have an impact do you think in your standing in those negotiations.

Yes. Happy to address it, John. Thanks for being on the call this morning. First, the one thing that I want to acknowledge is our number 1 priority is our customer. And for any outage that we have we understand the impact that it has on their customers at the end of the day and that is our primary focus. Even though we have made some measurable progress in our technology transformation, we have had two recent incidents. And the first one, yes, I'll share a little bit on this. The first one is related to surge in volumes that really slowed the system and we've been able to rectify that. The second one that we're working through yesterday, we’re really finalizing our root cause analysis. And before I talk about that John, we want to make sure that we're communicating with our customers and what's taking place. I think the more important thing is as we continue to look at the investment and again going back to our customers and the importance of supporting our customers, there is an evolution that's taking place within the organization on the technology front. And in each of those two incidents, the investment that we did relative to our global operations center one in Bangalore and here in South Lake, really allowed us to respond a lot quicker than we would have been historically. You know with that -- we'll continue to move forward on our technology transformation. We've been in contact with the customers on what's taking place and we'll continue to do that going forward.

Thank you. And I guess given there's nothing called out, we should assume no material impact in terms of SLA penalties. I guess that would all be in the guidance anyway.

Yes. Everything if you look at it John relative to the guidance and what's taking place it's in the course of the business.

And the follow-up – thank you for that. And the follow-up was going to be just on the Travel Network business. Obviously, very impressive share gains going on there. And you continue to do well from a bookings standpoint. I'm wondering a couple of things. First of all, obviously, I guess the overall industry would have been dragged down by India. And I guess you're probably under-indexed a little bit there. So maybe you can talk to your kind of share gains before the India impact if that's materially different from the 140 basis points. And then I guess more specifically with the pricing you've called out and that was really helpful commentary you called out the 5% boost in pricing. I'm just wondering why not more of that hadn't flowed through to the margin because notwithstanding that the margin is still under pressure. I know you've detailed some of that. But it feels like the issues there is just a bit more significant than we've seen in the last few quarters in terms of the incentive fee pressure. I'm wondering if there's any mechanics around how you pass on that pricing that's flowing through to the customer in a bit of a greater way this quarter and in prior quarters.

Yes. So John on the incentive fee the one thing I did call out is relative to when we provided this guidance. We actually outperformed or we're actually -- from an incentive perspective, we were below which is good what we expected to be in the first quarter. So the trends that we had set-up I think that are modeled out for the year are actually in place. So I feel good about that. If you look at really more of the global GDS marketplace -- I think there's some things that you sort of got to take a step back and go up to maybe 35,000 feet and look at what's taking place not only as it relates to the GDSs, but what we're doing on technology and now even throw Farelogix in here as it relates to NDC and what's taking place. And this goes back to just how I believe we are resonating in the marketplace on how we're looking at content not just historical content, but how content is evolving and our ability to develop this Beyond NDC program. I'll be honest with you it has blown me away with the level of engagement both from airlines around the world as well as agencies around the world. And one of the biggest supporters that we have gotten with the announcement of Farelogix has actually been the agency community because of their focus of content. And I think this begins to flow back into what we're seeing in the marketplace. You know more specifically to the first quarter and what we're seeing around the world we have seen -- and I'd say more in the second quarter in the summer we are seeing some capacity pullback throughout the region. So that's one thing that does sort of…

It’s very helpful. Thank you.

Our next question comes from Jed Kelly with Oppenheimer. Your line is now open.

Great. Thanks for taking my question. Just a quick question on the change on the guidance change. Can you kind of help us unpack why there was an outsized impact taking down free cash flow versus what you reduced your revenue by?

Well, if you think about the vast majority of the revenues that we're going to lose are going to be from a SabreSonic standpoint, which are very high-profit flow-through. So that's why we lose $40 million worth of revenue and $30 million worth of earnings which basically flows right down into cash flow.

Okay. Makes sense. And then just can you give us an update just on the Airline Solutions pipeline and then how quickly do you think that segment can start to grow back in line with what the airlines are spending on technologies?

Yeah. Jed I'll kick-off and then I'll pass over to Dave to give a little more color on what's taking place. And this does go back to – if you look at the book of business that we renewed the teams involved in doing all that that's all baked into the forward guidance and what's taking place there. But part of it and this goes into my comments that I just made relative to the visits. I have been visiting a lot of what I consider to be opportunistic airlines – opportunistic from our perspective, but working with airlines for them to understand the scope of what we're doing from a strategic perspective and many of these carriers are not Sabre PSS carriers. They reside on another PSSs. So as it relates to that, it gets into – and I'll just – a meeting that we had a couple of weeks ago that is a non-Sabre PSS carrier that Dave was actually traveling with me. And we spent about two to three hours walking through a large contingent of their executive organization on what's taking place. And Dave I'll let you pick it up from there.

Yes. I mean Sean just to build on what you're saying. I think Doug and Sean both highlighted the last two years were a massive renewal cycle for us. We're able to secure 94% of the total contract value out of that. That's 75% of the revenue locked up in Airline Solutions for the next several years as a result of that. So the team is very focused on the installed base. And now switching from that defensive mode to the offensive mode to the visits and some of the engagements, I feel very positive about the pipeline. We've launched a new digital commercial platform in the fourth quarter. The interest level in what we're doing and some of the newer innovative technologies for Sabre that is the largest innovation release in over five years of the reservation and commercial platform capability set. We have people interested. As Sean was highlighting, the NDC movement around our retail and distribution and fulfillment pieces have made it even more interesting to them to check out what we're doing in the shopping area, a lot of our mobile-based capabilities, new pricing and offering systems that are out there in the market. So I feel pretty good about that. I feel pretty good about the interest level that's there. And we're going to continue to move through a much more offensive stance as we move through this year and into next year, so very positive outlook. Q – Jed Kelly: Okay. And then just one more and this is probably hard for you to comment on, but I'm going to ask it anyway. How should we be thinking in terms of how it relates to Sabre out of potential unfavorable outcome between United and Expedia? And is there anything you can kind of --…

[Operator Instructions] Our next question comes from Ashish Sabadra with Deutsche Bank. Your line is now open. Q – Ashish Sabadra: Hi. And my question is about your Hospitality Solutions with Wyndham completely live on the system, if you can comment on the pipeline. What are you seeing on the prospect pipeline? Have you seen increased interest from the hospitality -- from hotels sorry? And then just a quick follow-up on Hospitality Solutions, there was an expected impact from some M&A in the sector. I was wondering if that -- the numbers are -- could you see an impact going forward? A – Doug Barnett: Yes. Two quick thoughts there. First of all, as it relates to what we're seeing in terms of pipeline, Q3, Q4, Q1 have all been very strong sales quarters for us and so as we see continued growth in the mid-market space, we feel strongly in maintaining that guidance around 7% to 9%. That relates to your second question which is the acquisition by some of -- by the larger companies, large hotel enterprise brands acquiring some of our mid-market customers. That does have an impact for us. And so without that effect growth would be in the 11% to 13% range, but we are experiencing somewhere in the range of 200 to 400 basis points of headwind coming from happy customers being acquired off of our existing platforms. As it relates to momentum and pipeline in the enterprise space, we are having conversations with virtually every large enterprise customer. As you might imagine, they're typically sitting on relatively old technology stacks. And those platforms are in some cases 20, 30 even 40 years old. Now the difficulty of course is that it's a very tough decision for them, because they've got so many applications intertwined into that base application and base platform. But they do recognize to do the kind of things they want to do around retailing and around distribution means that they have to make some tough choices around technology. And so we're in those conversations, but as you might imagine the sales cycle has been quite long.

Ashish the one thing -- this is Sean. The one thing that's pretty similar between and this is as we go out and we visit with customers is -- be it on the airline side or the hospitality side of the equation, the retailing component of this is just so important in what's happening right now. And this is -- again we spend a lot of time talking about airlines, but we see the same focus on the hospitality side. And Clinton and team have done a very good job relative to capabilities on thinking about future retailing capabilities and what we can do in that space.

Ashish this is Doug. I just want to make sure you know the guidance that we gave the 7% to 9% for the year one is consistent with what we gave in the last quarter and does incorporate the acquisitions that we're -- and mergers we're just talking about.

Yes, thanks, thanks. That's helpful. And maybe just a quick question on the private channel deals in Europe, deals within the year. We talked about some of the headwinds to volume because of that. Any kind of lessons learned? And as we think about Qantas moving on to the private channel starting I believe August of this year any kind of impact to consider? Thanks.

Yes. It's been interesting. And I've commented on this in the past and it goes back to my own airline days and what I saw when we were going through this at Air Canada a number of years ago. And the initial steps because it's very focused on home country or home region you have the capability of essentially shifting that. As I mentioned, I think we do have this level of not seeing as much book away taking place, because of essentially where we are penetrated, which is outside of that region or away. The one thing that we have seen and we tracked this is that for one specific carrier there, if you go back to the 12 trailing months prior to the implementation of a surcharge and you actually look at where they are and this was just done for the 12 trailing months in March, we actually see that our bookings on a 12 trailing month basis are higher. So I think this is what I always tell people. You got to get into the data and understand what's taking place, because there's a lot of noise and a lot of discussion that takes place. And I think numbers don't lie. They tell you what's happening and that's why it's so important. And with each of these carriers, we continue to have levels of engagement. Again, the things that we're doing as it relates to the evolving of the distribution model we're smack dab in the middle of it. So again, as you can tell Ashish, we follow that closely. And we know that things change at its own pace, but we're a technology provider that has to help this acceleration that's good for all of our constituents be it the airlines or be it the agencies.

That's very helpful. Maybe if I can squeeze one more question which was just about -- congrats on the partnership with Visa and on the Sabre Virtual Payment. Maybe you can just talk about -- you also talked about a good pipeline there. Can you provide some more details on the traction that you're seeing on that front? Thanks.

Yes. I'll kick off and then I'll pass it over to Dave. But we have believed that there has been an opportunity here for a period of time. And for us it was finding the right partner to be able to do this. And as you can imagine, you couldn't find a better partner with -- better than Visa in this space. And in doing that, when we look at the virtual payment space and what's happening right now many of the people that are using virtual payments or with a competitor product are actually large Sabre subscribers. And as we continue to look at our retail and distribution strategy, we felt that the scope by which we have really outlined this agreement with Visa and what it covers is really good. And I'll let Dave just get into a couple of the components.

Yes. No. And Sean just to build on that Ashish to your question, it's a good blend, right? We have a mix of a very, very robust gateway, a multi -- now a multi-issuer multi-scheme kind of environment the Visa partnership which we're very excited about gives us a very competitive set of virtual card options for that customers that Sean was referring to on the B2B side that we were as easily able to fulfill previously. So we feel good about that. The other thing that ultimately comes out on this, which we see as part of the offering competitive landscape is the whole issue of dealing with global currency and FX. And with Visa, we take that entire issue off the table. So we're pretty excited about the possibility and the robustness of what that solution set will mean to all of our B2B agency customer set.

Ashish, the one thing that I think is important to note here, the way that we report it now and it's not a significant revenue stream right now, but we report on a net revenue basis. We do not report it on a gross revenue basis. That's the way we track the revenue.

Thanks and congrats on this partnership.

Okay. Thank you.

[Operator Instructions] Our next question is from Brian Essex with Morgan Stanley. Your line is now open.

Hi. Thank you. Good morning and thank you for taking the question. I was wondering if maybe Sean you could talk a little bit on some of the headwinds that you noted facing you and particularly the impact from the MAX issue. Is this materially an impact primarily, I guess, just on North America? And have you seen any impact from travel on the commercial versus leisure front?

Hey, Brian, thanks for joining us. When I look at it, I'll give sort of a breakdown on what we're seeing right now. So if I look at the MAX piece, a large part of that has been able to be redistributed on other capacity. I think as you get into the summer and this is going to be more impactful for those carriers that are there. But if you look at as a percentage of the total capacity in the marketplace, it's not huge. So we do believe that there's the ability for that to be essentially re-accommodated on other flights that are out there. More from just a global capacity perspective last summer we are looking -- and the way we look at it just relative to ASMs or ASKs, we have seen a slowdown and it has been less pronounced in North America. We're seeing a little more trimming of schedules in the European marketplace. If you go back to some of the larger carriers there, there were high single-digits last year in the summertime on capacity. And we're seeing that trend back a little bit and just because of what we're also seeing with the economic conditions within Latin America that we've seen capacity pullback there. So, all of this is factored into the guidance that we have provided you. And again, as we move forward, we'll provide more color as we see it. But again, it goes back to sort of the diversification that we have in the marketplace that we continue to see strength in North America. A number of things continue to play out in Europe. Asia-Pacific is one that we continue to watch just because of the growth only having ex Jet 1% growth there. So we're watching that and what's taking place. So that's that gives you a little color on what we're seeing right now.

Got it. Thanks for that. And maybe just a follow-up. Any update on Farelogix and where that is in the process? I know you had another round of I think Q&A that you had to address. But wondering what kind of milestones are ahead to kind of complete that deal?

Yes. Brian, I'll go back to what we had mentioned before, and it's still our expectation that we'll get mid-year approval on this. As you would assume, we're heavily engaged with the Department of Justice working at the staff level to make sure that they understand why we think this is good for the industry. And it really goes to the support that we're getting from customers. We have agencies involved and others that are helping them -- help them understand what's taking place. So again, a lot of effort to go into something that I think is transformational and good for this industry, and for all the parties that are there. But going back to your question, we still expect a mid-year approval on this.

Great. Thank you very much.

At this time, we're showing no further questions. I'd like to turn the call back to Mr. Menke for closing remarks.

I'd just like to thank everybody for joining us again on this morning's call. As you can see, a lot of progress continues to take place. There have been some things that have taken place within the environment that are outside of our control, but I couldn't be happier with how the team is performing, and what we're doing in the marketplace, and look forward to providing further updates. Thank you very much.

Ladies and gentlemen, thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone have a great day.