Good morning, ladies and gentlemen and welcome to the Sabre Fourth Quarter and Full Year 2022 Earnings Conference Call. My name is Olivia and I will be your operator. As a reminder, please note today’s call is being recorded. I will now turn the call over to the Senior Director of Investor Relations, Brian Roberts. Please go ahead, sir.

Thanks, Olivia, and good morning, everyone. Welcome to Sabre's fourth quarter and full year 2022 earnings call. This morning we issued an earnings press release, which is available on our website @investors.sabre.com. A slide presentation, which accompanies today's prepared remarks, is also available during this call on the Sabre Investor Relations webpage. A replay of today's call will be available on our website later this morning. We would like to advise you that our comments contain forward-looking statements that represent our beliefs or expectations about future events, including the duration and effects of COVID-19, industry and recovery trends, benefits from our technology transformation and commercial and strategic arrangements, our financial outlook and targets, expected revenue, adjusted EBITDA, free cash flow, costs and expenses, cost savings, margins and liquidity among others. All forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from the statements made on today's conference call. More information on these risks and uncertainties is contained in our earnings release issued this morning in our SEC filings, including our Q3 2022 Form 10-Q and 2021 Form 10-K. Throughout today's call, we will also be presenting certain non-GAAP financial measures references during today's call to adjusted operating income, adjusted net income, adjusted EBITDA, adjusted EBITDA margin, adjusted EPS and free cash flow have been adjusted to exclude certain 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@investors.saber.com. Participating with me are Sean Menke, our Chair of the Board and Chief Executive Officer; Kurt Ekert, our President and Mike Randolfi, Chief Financial Officer. With that, I'll turn the call over to Sean.

Thanks, Brian and good morning everyone and thank you for joining us today. On Slide 4 you can see an overview of the topics Kurt, Mike and I will cover on today’s call. I’ll review our many achievements for 2022, and then outline how these support our long-term objectives. Kurt will then review the latest industry trends, and review our plan for 2023 and beyond. He will also highlight the substantial progress we made in the fourth quarter and in 2022 toward our technology transformation. Further, he will also provide additional detail on key commercial accomplishments and review the important partnerships that we renewed and expanded upon in 2022. Finally, Mike will take you through the financial results of the quarter and year and our financial outlook for 2023. Before I start, I want to thank my Sabre team members worldwide. 2022 was a year of progress and recovery. The global pandemic brought on by COVID-19 in 2020 had a significant impact on the travel industry, and Sabre. Despite those headwinds, the Sabre team in 2022 made significant forward progress with our technology transformation, provided best-in-class service to our customers and won new business. I am extremely proud of what we have accomplished to date and what we will do for years to come. Turning to Slide 5; 2022 was a year of many accomplishments. Our revenue recovered to $2.5 billion. We returned to positive adjusted EBITDA. We generated positive free cash flow as we exited the year, and we continued our significant progress on our strategic initiatives. Sabre reached an important, positive inflection point. With these key financial metrics now positive, we expect the trend to continue, which we believe will give us the opportunity to delever our balance sheet. Our technology transformation is delivering financially and operationally in-line…

Thank you, Sean. And let's turn to Slide number 7. Before I discuss the latest industry trends, I will briefly revisit the guidance we provided in our last earnings call, and discuss why the results for the quarter did not meet our expectations. As Sean mentioned, shortly following our November earnings call, the upward trajectory of volume growth that we previously experienced was interrupted in corporate travel and in Asia-Pacific in late November and through the month of December. As you can see from this volume chart, the trajectory of the recovery in 2022 was higher overall, but uneven. The total distribution bookings recovery in the Q4 was 59% versus the same period in 2019. This 59% bookings recovery equates to a 65% revenue recovery as a result of the higher booking rate achieved in the Q4 of 2022 versus the Q4 of 2019. Higher revenue per booking resulted from a continued favorable mix. Importantly, we are already seeing improvement in both corporate travel and Asia Pacific volumes in 2023, through early February. To put numbers behind it, the year-to-date recovery in our travel management company business is about nine percentage points above December levels, and has strengthened on a sequential weekly basis. Accordingly, we believe the late 2022 recovery set-backs that we saw for both corporate travel and Asia Pacific are likely to prove temporary given the positive recovery trends we are now once again seeing. To illustrate this point, we’re now realizing a return of group bookings coming out of Asia that are reminiscent of pre-COVID travel patterns. Despite the fluctuations in air bookings in recent months, we believe several key trends are supportive of continued air traffic growth through 2023. Airline capacity is expected to rise as aircraft deliveries accelerate and operational constraints that have curtailed growth…

Thanks, Kurt, and good morning, everyone. Please turn to Slide 11. As we discuss Q4, I'd like to begin by reiterating some context on recent trends, specifically how we saw volumes evolve throughout the quarter and how that influences our plans going forward. During our third quarter conference call, vacated expectations of a Q4 air bookings recovery in the low 60% range and adjusted EBITDA for the fourth quarter of approximately $30 million. As Sean and Kurt stated, volume trends in late November and December were not as strong as expected, which was the primary reason we missed our Q4 recovery and adjusted EBITDA guidance. What we have learned over the last three years is that the volume recovery trajectory remains upward, but uneven. Given that context, we continue to have a heightened focus on cost control such that we are targeting for expenses to grow at a significantly slower rate than revenue to support our adjusted EBITDA and cash flow targets that are aligned with the guidance we have provided today. We expect to be free cash flow positive on an annual basis in 2023 and believe we are on track for our 2025 targets. Additionally, I would like to reiterate that as we transition to generating positive free cash flow for the full year 2023 and beyond, we view the highest priority of that free cash flow generation to be reducing debt and delevering our balance sheet with the long-term goal of being between two and half times to three and half times net debt to adjusted EBITDA. Total Q4 revenue was $631 million, an increase of $130 million or 26% versus last year. Distribution revenue totaled $417 million, a 46% increase compared to $286 million in Q4 2021. Our distribution bookings totaled $76 million in the quarter,…

[Operator Instructions] And our first question coming from the line of Matthew Broome with Mizuho Group.

So I guess, firstly, could you maybe provide a little bit more context as to what impacted the recovery in November and December? Was it limited to corporate and APAC? And really, what were the reasons for that?

Matthew, thank you. This is Kurt. So as I discussed during the prepared remarks, what we saw was basically an interruption in one, corporate travel; and two, Asia Pacific travel. There were certainly some other changes, but those were the two primary factors. The good news, as I indicated, is that as you look at the first 5 to 6 weeks of this year, we're seeing trading return to the trend levels that existed before that back half of Q4. And so we believe that what we experienced in Q4 was an interruption in a long-standing recovery that we expect to continue going forward.

Okay. And then sort of looking ahead in terms of your guidance, what level of bookings growth is sort of baked into that? And -- and I guess, how confident are you that the capacity constraints in travel that we saw last summer has now been resolved?

So in terms of the bookings recovery incorporated in our guidance, we're basically -- if you look at where we ended the year, we ended the year in the fourth quarter with a bookings recovery around 58%. We entered the year somewhere right around 60%. Inherent in our guidance today is the assumption of a steady incremental recovery from where we are. We're not assuming a big inflection of. We're just assuming a steady incremental study incremental recovery. In terms of constraints on the airline side, when we listen to our airline partners, they're working diligently to remove those constraints, which are primarily pilot training, hiring pilots and new aircraft, but they've also indicated it's going to take time to remove those constraints. So what we see is that the airlines are responding by trying to address those constraints. And as we move forward, there will be consistent increases in capacity likely as those constraints are removed, but they will continue to take time to us off.

And Matt, just let me add one last point, which is if you look at our GDS distribution business historically, we had about a 50-50 mix on corporate versus leisure and about a 50-50 mix on domestic versus international flights. Those obviously are very different numbers that you see in the broader airline distribution marketplace. And so as capacity begins to come back, we believe that benefit will accrue relatively more toward corporate travel and to international bookings and that our distribution business to outgrow the airline distribution marketplace overall.

Our next question coming from the line of Joshua from Morgan Stanley.

I wanted to ask a couple on the GDS booking segments. So first on hospitality, like the recovery in CRS trends and hospitality revenue is terrific. The losses are getting larger, though. So just wondering like what will it take for this business to become profitable? And assuming there's some sort of near-term tech cost headwinds or something else? Like what -- how should we think about the normalized margins for the segment?

Yes. Thank you. This is Kurt. Good question. So as you look at Hospitality Solutions and you look at 2022, the revenue and the trending that we were seeing as a result of one of a strong sector recovery in hopitality; two, as a result of us taking more opines in growing our CRS business. As we look forward to 2023, we expect to see strong top line growth in CRS as well as the new product offerings I mentioned during the prepared remarks. We do expect that, that business will be in the range of breakeven on an EBITDA basis for this calendar year and begin to become a strong EBITDA contributor in the years ahead.

Okay. And then just wanted to dig in on the IT Solutions headwinds. So Air Center closed in Q1 of '22, right?

Correct. Yes, at the end of February.

So just like thinking through the impacts, like passengers boarded grew 30%. And then in Q2 and Q3, we saw some nice growth year-over-year in IT solutions that also didn't have Air Center, not sure the $4 million alone from Russia sort of explains that. Is there any more context to help sort of piece together what happened in Q4 with IT Solutions revenue? And then also, I'm wondering about the -- just like where this $100 million headwind is coming from on the Russian law, like any more context there? And I think there was some commentary that it's like the vast majority is from of that $100 million headwind is Russia loss. So what else is in there?

Thanks. And let me start, and then I'll pass over to Mike to finish up. So I think it's important to take a step back as you look at airline IT what we experienced in Russia with the IT carrier demigration there was a consequence of local Russian law that was enacted last year. That had nothing to do with our performance or the quality of our technology. If you normalize that out and you look out over the last three to four years, our wins and losses on a PV basis are relatively neutral for the company. And we believe going forward, there is a good growth opportunity within the Airline IT Solutions suite. Now, I'll pass it to Mike.

Yes. And so let me just dive into a couple of different pieces. First, as you noted on the Air Center, there was about $35 million in revenue in Q1 of last year that we will not have this year due to the sale. Secondly, with regards to the $100 million, which is the vast majority of which is Russia, and there are some other demigrations in there. But the vast majority of that is Russia given the change in Russian law occurred during the fourth quarter, the majority of the revenue that was recognized associated with Russia was in the first three quarters of this year. So what you see going from Q3 to Q4, is a step down largely attributable to Russia. Now as we look at $100 million, that we referenced because most of that was revenue that was generated in the first three quarters of this year, that will create the greatest headwind in the first three quarters of 2023.

[Operator Instructions] Our next question coming from the line of Victor Cheng from Bank of America.

A couple, if I may. But first on the Russian impact of $100 million and then you said that $100 million is coming from mostly from the first three quarters. It seems just look at the Russian carrier PBs, it seems disproportionately big in terms of million of revenue. I would expect a much smaller amount. So I'm not sure whether you can shed some light into that. And then the other one is on tech savings. Obviously, you talked about $100 million -- or $150 million tax savings by 2025. If I remember correctly, is that based on an 80% recovery. So presumably, we're not expecting 80% recovery by '25. So what are your expectation on level of recovery in '25 and given that level of recovery, what is the actual tax savings that we should be looking at?

Yes. So with regard to your first question, as you think about the $100 million impact, the one thing I would point you to, and we called this out on the Q1 earnings call, that there was approximately $24 million of previously deferred revenue that have been recognized in the first quarter. And similarly, there's about another $5 million in the second quarter of 2022. So that may be why the number is larger than what you're contemplating. With regard to tech saving first, let me just start by -- we are optimistic that there will be a full recovery over the long run. That is our point of view that's consistent with what we hear from our airline partners. That's consistent with what they on their earnings calls and what they say publicly. Now our financial objectives are not predicated on a full recovery, but we do believe one ultimately is likely to ensue. And as noted today, we are reiterating the targets we provided for 2025 at the greater than 80%, greater than 100% and greater than 120% recovery levels. And as we previously stated, at the greater than 80% level, we expect tech savings to be $150 million. That's a greater than 100% recovery level we would expect the tech savings to be about $100 million. But obviously, that would be welcomed out that rate of recovery.

Got it. That's very clear. And then maybe 1 follow-up, if I may. How should we think about the revenue per booking trend going forward? Is room for inflation-related uplift? And again, is there room for mix improvement, I guess, as APAC reopens?

Victor, thank you. As we have discussed, we believe that there's ample upside both in corporate and international recoveries within our distribution business. Because of those, we believe that there's positive mix opportunity in 2023 and in the years ahead. So we believe there's upside to our average booking fee or revenue per booking.

And I'm showing no further questions at this time. I will now turn the call back over to Mr. Menke for any closing remarks.

Great. Thank you very much, and I want to thank everybody for joining us today. As you can see, as we talked about 2022 and as we think about 2023, there's been a lot of progress on our tech transformation to date. This is another big year for that, but the team has done an amazing job, and we're beginning to see really the efficiencies on the cost savings. As we look at 2023, I am excited about what we're doing as it relates to the product side, what we're doing on Airline IT, hospitality, IT as well as distribution, Kurt walked you through numerous things that are taking place there. And again, I think we're very focused on what we look at as the recovery continues to take place in the marketplace, which will allow us to really focus on free cash flow generation in the year. So again, a lot to talk about throughout the year, and thank you for joining us today.

Ladies and gentlemen, that does conclude our conference for today. Thank you for your participation. You may now disconnect.