Sabre Corporation (SABR) has reported a 76.85 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $40.82 million, or $0.14 a share in the quarter, compared with $176.34 million, or $0.63 a share for the same period last year. On the other hand, adjusted net income for the quarter stood at $75.36 million, or $0.27 a share compared with $80.89 million or $0.29 a share, a year ago.
Revenue during the quarter grew 6.88 percent to $838.98 million from $785 million in the previous year period. Gross margin for the quarter contracted 580 basis points over the previous year period to 29.24 percent. Total expenses were 89.25 percent of quarterly revenues, up from 86.14 percent for the same period last year. That has resulted in a contraction of 311 basis points in operating margin to 10.75 percent.
Operating income for the quarter was $90.15 million, compared with $108.77 million in the previous year period.
However, the adjusted operating income for the quarter stood at $150.92 million compared to $175.29 million in the prior year period. At the same time, adjusted operating margin contracted 434 basis points in the quarter to 17.99 percent from 22.33 percent in the last year period.
“In the third quarter, we continued to build on our track record of delivering innovation. That said, consolidated revenue and earnings growth rates did not meet the standards we have set for the business, even as most aspects of underlying business performance remained strong,” said Tom Klein, Sabre president and chief executive officer. “For the third quarter, Airline and Hospitality Solutions revenue grew 20%, while Travel Network increased global share and grew bookings in all regions, despite modestly slower market growth than anticipated. With new agency conversions and some improvement in the macro-environment at Travel Network and continued momentum in Airline and Hospitality Solutions, we have the pieces in place to expect strong consolidated revenue and earnings growth in the fourth quarter, setting us up well as we look toward 2017."
Sabre Corp forecasts revenue to be in the range of $3,365 million to $3,395 million for fiscal year 2016. For the financial year 2016, Sabre Corp expects adjusted net income to be in the range of $380 million to $395 million. For fiscal year 2016, the company expects diluted earnings per share to be in the range of $1.34 to $1.40 on adjusted basis.
Operating cash flow improves
Sabre Corporation has generated cash of $416.77 million from operating activities during the nine month period, up 7.19 percent or $27.97 million, when compared with the last year period.
The company has spent $418.71 million cash to meet investing activities during the nine month period as against cash outgo of $365.67 million in the last year period.
The company has spent $46.65 million cash to carry out financing activities during the nine month period as against cash outgo of $39.26 million in the last year period.
Cash and cash equivalents stood at $272 million as on Sep. 30, 2016, up 104.98 percent or $139.31 million from $132.70 million on Sep. 30, 2015.
Working capital remains negative
Working capital of Sabre Corporation was negative $153.48 million on Sep. 30, 2016 compared with negative $488.17 million on Sep. 30, 2015. Current ratio was at 0.85 as on Sep. 30, 2016, up from 0.62 on Sep. 30, 2015.
Days sales outstanding went down to 48 days for the quarter compared with 53 days for the same period last year.
At the same time, days payable outstanding went down to 19 days for the quarter from 26 for the same period last year.
Debt increases substantially
Sabre Corporation has witnessed an increase in total debt over the last one year. It stood at $3,428.89 million as on Sep. 30, 2016, up 711.62 percent or $3,006.41 million from $422.48 million on Sep. 30, 2015. Total debt was 59.66 percent of total assets as on Sep. 30, 2016, compared with 7.92 percent on Sep. 30, 2015. Debt to equity ratio was at 4.55 as on Sep. 30, 2016, up from 0.92 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 2.37 for the quarter from 2.68 for the same period last year.
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