CHICAGO, May 5, 2010 /PRNewswire via COMTEX/ --Orbitz Worldwide, Inc. (NYSE: OWW) today announced results for the first quarter ended March 31, 2010.
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"Orbitz Worldwide delivered strong Adjusted EBITDA growth of 12% in the first quarter. Transaction growth accelerated for the fourth consecutive quarter to 20% driven by consumer fee reductions and ongoing operational improvements," said Barney Harford, president & CEO of Orbitz Worldwide. "Room night growth remained solid at 13%, with particular strength coming from ebookers and Orbitz for Business, which grew stayed room nights 80% and 26% respectively."
Summary Operating Results
(in thousands, except per share data)
Three Months Ended
March 31,
---------
2010 2009 Change
---- ---- ------
Gross bookings (a) $3,011,625 $2,428,687 24%
Net revenue $187,153 $188,393 -1%
Net (loss) ($5,261) ($336,156) **
Basic and Diluted
EPS ($0.05) ($4.02) **
Operating cash flow $95,991 $116,712 -18%
Capital spending $7,367 $11,757 -37%
EBITDA (b) $25,353 ($309,222) **
Impairment $1,704 $331,527 **
Other adjustments $3,570 $5,123 **
Adjusted EBITDA (b) $30,627 $27,428 12%
Transaction growth
(c) 20% -12% 32 ppt
Hotel room night
growth (d) 13% -1% 14 ppt
** Not meaningful.
In the first quarter 2010, the company revised its gross bookings
reporting methodology for its ebookers brand to ensure
consistency with the reporting methodology used for its other
brands. Under this revised methodology, the company now reports
global gross bookings on a booked basis. The company had
previously reported ebookers gross bookings on a stayed basis.
The prior period amounts in the table above have been updated to
reflect this change in methodology. The company has also posted
on its website (www.orbitz-ir.com) a schedule that updates
(a) historically reported gross bookings for this change.
Non-GAAP financial measures. A definition of EBITDA and Adjusted
EBITDA and a reconciliation of these non-GAAP financial measures
to the most comparable GAAP financial measure are contained in
(b) Appendix A.
(c) Represents year over year transaction growth on a booked basis.
Represents year over year growth in stayed hotel room nights.
Includes both standalone hotel room nights and hotel room nights
(d) included in vacation packages.
First Quarter 2010 Financial Highlights
For the first quarter 2010, the company reported a net loss of $5.3 million or ($0.05) per diluted share compared with a net loss of $336.2 million or ($4.02) per diluted share for the first quarter 2009, which included a $331.5 million non-cash goodwill and intangible asset impairment charge. Adjusted EBITDA increased 12 percent year over year to $30.6 million from $27.4 million for the first quarter of the prior year.
Gross Bookings and Net Revenue
Global gross bookings increased 24 percent (22 percent on a constant currency basis) year over year. This increase was due primarily to higher transaction volume and higher air fares. Air gross bookings increased 30 percent (29 percent on a constant currency basis) and non-air gross bookings increased 11 percent (seven percent on a constant currency basis) year over year. Domestic gross bookings increased 21 percent and international gross bookings increased 41 percent (25 percent on a constant currency basis) year over year.
Net revenue was $187.2 million for the first quarter 2010, a decrease of one percent (three percent on a constant currency basis) year over year. Domestic net revenue was down eight percent while international net revenue increased 38 percent (19 percent on a constant currency basis) year over year. The net revenue decline was due primarily to the removal of most domestic air booking fees and a significant reduction in hotel booking fees, partially offset by higher air and standalone hotel transactions.
Gross Bookings and Net Revenue
(in thousands)
Three Months Ended
March 31,
---------
2010 2009 Change
---- ---- ------
Gross Bookings
Air $2,166,787 $1,667,527 30%
Non-air 844,838 761,160 11%
------- ------- ---
Total Gross Bookings $3,011,625 $2,428,687 24%
Domestic $2,506,631 $2,069,523 21%
International 504,994 359,164 41%
------- ------- ---
Total Gross Bookings (a) $3,011,625 $2,428,687 24%
Net Revenue
Air $71,625 $81,328 -12%
Hotel 43,468 39,441 10%
Vacation Packaging 27,853 28,905 -4%
Advertising and Media 12,218 14,006 -13%
Other 31,989 24,713 29%
------ ------ ---
Total Net Revenue $187,153 $188,393 -1%
Transactional Net Revenue
Domestic $130,266 $140,160 -7%
International 42,183 30,696 37%
------ ------ ---
Total Transactional Net Revenue
(b) $172,449 $170,856 1%
Non-transactional Net Revenue
Domestic $13,729 $16,861 -19%
International 975 676 44%
--- ---
Total Non-transactional Net
Revenue (c) $14,704 $17,537 -16%
Domestic $143,995 $157,021 -8%
International 43,158 31,372 38%
------ ------ ---
Total Net Revenue $187,153 $188,393 -1%
In the first quarter 2010, the company revised its gross
bookings reporting methodology for its ebookers brand to
ensure consistency with the reporting methodology used for its
other brands. Under this revised methodology, the company now
reports global gross bookings on a booked basis. The company
had previously reported ebookers gross bookings on a stayed
basis. The prior period amounts in the table above have been
updated to reflect this change in methodology. The company has
also posted on its website (www.orbitz-ir.com) a schedule
that updates historically reported gross bookings for this
(a) change.
Transactional net revenue is comprised of net revenue from air
bookings, hotel bookings, vacation packaging, car bookings,
(b) cruise bookings, destination services and travel insurance.
Non-transactional net revenue is primarily comprised of
advertising and media revenue and revenue from the company's
(c) hosting business.
--Air net revenue was $71.6 million in the first quarter 2010,
down 12 percent (13 percent on a constant currency basis) year
over year. Domestic air net revenue declined $13.2 million or 20
percent due to the removal of most domestic booking fees in April
2009, partially offset by higher air transactions as a result of
the fee removals. The company's domestic air transaction growth
rate increased 34 percentage points in the first quarter 2010
compared with the first quarter 2009 when the company still
charged booking fees on all airline tickets. The anniversary of
the fee removals was in early April 2010, and as a result, the
company expects that its air transaction growth rates will be
slower for the balance of the year. International air net
revenue increased $3.5 million or 23 percent (14 percent on a
constant currency basis) year over year due primarily to higher
air transactions, partially offset by lower net revenue per
airline ticket.
-- Hotel net revenue was $43.5 million in the first quarter
2010, up ten percent (two percent on a constant currency basis)
year over year. Hotel net revenue increased due to strong
performance at ebookers driven by an increase in standalone hotel
transactions and an increase in net revenue per transaction.
This strength at ebookers was partially offset by weak
performance at HotelClub. The decline at HotelClub was driven by
lower volume in European destinations and lower net revenue per
transaction due to the shift in the geographic mix of its
bookings. The Asia-Pacific region now represents over 65% of
HotelClub transactions. Hotel net revenue for the company's
domestic brands was flat year over year. Lower hotel booking
fees and lower breakage revenue offset the increase in domestic
standalone hotel transactions.
--Vacation package net revenue decreased four percent in the
quarter to $27.9 million as a result of lower domestic
transactions and lower breakage. The decline in domestic
transactions was primarily due to higher pricing for packages.
Strong demand for packages at ebookers partially offset this
decrease.
--Advertising and media revenue decreased 13 percent year over
year to $12.2 million, primarily due to a decline in revenue from
third party referral programs, specifically membership discount
programs. Effective March 31, 2010, the company ended the third
party membership discount program previously offered on its
domestic websites and terminated its relationship with its
supplier for these programs. The company is actively seeking out
opportunities to offset some if not all of the resulting revenue
decline over time.
--Other net revenue, which primarily includes car rental, cruise,
destination services and travel insurance revenue, increased 29
percent (28 percent on a constant currency basis) year over year,
due to an increase in global travel insurance revenue, domestic
car rental revenue and revenue from credit card surcharges.
Travel insurance revenue increased due to a change in the timing
of revenue recognition and, to a lesser extent, higher air
transaction volume, higher attachment and higher air fares.
Domestic car net revenue increased due to higher volume,
partially offset by lower average daily rates for car rentals.
The company has included a schedule in Appendix A to this press release that adjusts gross bookings and net revenue for currency impacts in order to provide a more comparable view of the company's operating performance across periods. The company has also included a schedule of trended operating metrics in Appendix B to this press release.
Operating Expenses
Cost of revenue
Cost of revenue is primarily comprised of customer service costs, credit card processing fees and other costs including ticketing and fulfillment, customer refunds and charge-backs, affiliate commissions and connectivity and other processing costs.
Three Months Ended
March 31,
--------- %
2010 2009 Change
---- ---- ------
(in thousands)
Customer service costs $14,413 $12,570 15%
Credit card processing
fees 11,726 10,674 10%
Other 12,111 12,112 -
Total cost of revenue $38,250 $35,356 8%
======= ======= ===
% of net revenue 20.4% 18.8%
Cost of revenue increased to 20.4 percent of net revenue in the first quarter 2010 due to lower net revenue per transaction and higher costs associated with the increase in transaction volume, both of which resulted from the removal of domestic air booking fees and lower hotel booking fees.
Selling, general and administrative expense (SG&A)
Our selling, general and administrative expense is primarily comprised of wages and benefits, contract labor costs, and network communications, systems maintenance and equipment costs.
Three Months Ended
March 31,
--------- %
2010 2009 Change
---- ---- ------
Wages and benefits $36,802 $40,620 -9%
Contract labor 4,637 5,243 -12%
Network communications,
systems maintenance and
equipment 6,530 7,212 -9%
Other 15,821 13,353 18%
Total SG&A $63,790 $66,428 -4%
======= ======= ===
SG&A expense decreased $2.6 million, or four percent, in the first quarter 2010 to $63.8 million due primarily to lower severance and compensation expense, lower contract labor costs and lower systems maintenance and equipment costs, partially offset by an increase in foreign currency losses.
Marketing expense
The company's marketing expense is primarily comprised of online marketing costs, such as search and banner advertising, and offline marketing costs, such as television, radio and print advertising.Marketing expense in the first quarter 2010 was $57.7 million, a decrease of ten percent year over year. This decrease was mainly due to improved online marketing efficiency, lower offline marketing spending and a quarterly shift in timing of marketing spending in 2010 relative to 2009. This decrease was partially offset by higher emarketing transactions.
Interest Expense
Orbitz Worldwide incurred net interest expense of $11.3 million in the first quarter 2010 compared with $14.5 million in the first quarter 2009. This year over year decline was due primarily to lower outstanding borrowings and a lower effective interest rate on the company's term loan. At March 31, 2010, $400.0 million of the $506.0 million outstanding on the company's term loan had fixed interest rates. The weighted average effective interest rate on the term loan was 4.78 percent at March 31, 2010, down from 6.13 percent at March 31, 2009.
Cash Flow
Orbitz Worldwide reported operating cash flow of $96.0 million for the first quarter 2010, a decrease of 18 percent year over year. The decline in operating cash flow for the quarter was primarily driven by changes in the company's working capital accounts due to changes in the timing of payments received from vendors and the payment of employee bonuses in the first quarter 2010. No bonus payment was made in the first quarter 2009 based on 2008 results. Lower booking fee revenue also contributed to the decline in operating cash flow. Higher merchant gross bookings, improved marketing efficiency and lower interest payments partially offset the decline in operating cash flow.
At March 31, 2010, cash and cash equivalents were $161.9 million compared with cash and cash equivalents of $112.4 million at March 31, 2009 (net of $60.5 million of borrowings under the revolving credit facility). The year over year increase in cash is driven in part by the $50.0 million of cash proceeds received from the additional equity investment made by Travelport in January 2010.
Operational Highlights
- In April, the company entered into an exclusive, multi-year partnership with New Orleans-based iSeatz to develop customized private label and in-path travel solutions. As part of the agreement, Orbitz Worldwide will give customers of existing iSeatz partners, including Delta Air Lines, Air France, KLM and Amtrak, the ability to book travel products through the Orbitz Worldwide global network of suppliers. Orbitz Worldwide and iSeatz will work together to bring increased power and flexibility to travel suppliers around the world.
- As of March 31, 2010, Orbitz Worldwide offered approximately 100,000 bookable hotels on its websites. Orbitz Worldwide websites offer 40,000 hotels in the EMEA region and 16,000 hotels in the Asia Pacific region.
- In February, the company removed hotel change and cancellation fees on its ebookers websites. The company previously removed hotel change and cancellation fees on its Orbitz and CheapTickets websites in September 2009.
- Orbitz for Business completed a strong first quarter, delivering 25% year over year transaction growth. This growth reflects accelerating corporate travel demand and the addition of new customers. During the first quarter, Orbitz for Business added major new clients including FMC Corporation and the European business of Cooper Industries. In addition, Orbitz for Business signed renewals with IBM and Yale University.
- During the first quarter, Orbitz Worldwide signed global contracts with a number of destination marketing organizations including the Puerto Rico Tourism Company, Vancouver Tourism and Illinois Bureau of Tourism to promote travel to those destinations. Orbitz Worldwide now has partner marketing agreements with nearly 165 destination marketing organizations.
Q2 2010 Outlook
For the second quarter 2010, the company expects to report:
- 3% to 6% year over year increase in net revenue;
- 20% to 22% cost of revenue as a percentage of net revenue, reflecting increased costs associated with higher transaction volume and higher customer service costs as a result of the eruption of the Eyjafjallajökull volcano; and
- 10% to 20% year over year decrease in Adjusted EBITDA, reflecting a number of factors, the largest of which is an expected year over year increase in marketing expense in the second quarter.
For the full year 2010, the company expects total marketing expense as a percentage of net revenue will approximate 2009 levels, although the 2010 quarterly pattern of marketing expenses will vary from the 2009 pattern. The company also expects that Adjusted EBITDA for the full year 2010 will exceed the full year 2009. The company anticipates annual capital expenditures in the range of $40 million to $45 million, consistent with 2009 levels.
The outlook above assumes relatively stable foreign exchange rates.
Quarterly Conference Call
Orbitz Worldwide will host a conference call to discuss its first quarter 2010 results at 10:00 a.m. EDT (9:00 a.m. CDT) on Wednesday, May 5, 2010. A live webcast of the conference call can be accessed through the Orbitz Worldwide Investor Relations website at www.orbitz-ir.com. An archive of the webcast and a transcript will also be available on the website for a period of at least 30 days.
About Orbitz Worldwide
Orbitz Worldwide is a leading global online travel company that uses innovative technology to enable leisure and business travelers to research, plan and book a broad range of travel products. Orbitz Worldwide owns a portfolio of consumer brands that includes Orbitz (www.orbitz.com), CheapTickets (www.cheaptickets.com), ebookers (www.ebookers.com), HotelClub (www.hotelclub.com), RatesToGo (www.ratestogo.com), the Away Network (www.away.com) and corporate travel brand Orbitz for Business (www.orbitzforbusiness.com). For more information on how your company can partner with Orbitz Worldwide, visit corp.orbitz.com.
Orbitz Worldwide uses its Investor Relations website to make information available to its investors and the public at www.orbitz-ir.com. You can sign up to receive email alerts whenever the company posts new information to the website.
Forward-Looking Statements
This press release and its attachments may contain forward-looking statements that involve risks, uncertainties and other factors concerning, among other things, Orbitz Worldwide's (the "Company's") expected financial performance and its strategic operational plans. The results presented are unaudited. The Company's actual results could differ materially from the results expressed or implied by such forward-looking statements and reported results should not be considered as an indication of future performance. The potential risks, uncertainties and other factors that could cause actual results to differ from those expressed by the forward-looking statements in this press release and its attachments include, but are not limited to, the current economic downturn and global financial crisis; competition in the travel industry; factors affecting the level of travel activity, particularly air travel volume; maintenance and protection of the Company's information technology and intellectual property; the outcome of pending litigation; the Company's level of indebtedness; risks associated with doing business in multiple currencies; trends in the travel industry; and general economic and business conditions. More information regarding these and other risks, uncertainties and factors is contained in the section entitled "Risk Factors" in the Company's filings with the Securities and Exchange Commission ("SEC") which are available on the SEC's website at www.sec.gov or the Company's Investor Relations website at www.orbitz-ir.com. You are cautioned not to unduly rely on these forward-looking statements, which speak only as of the date of this press release. All information in this press release and its attachments is as of May 5, 2010, and Orbitz Worldwide undertakes no obligation to publicly revise any forward-looking statement.
About Non-GAAP Financial Measures
This press release and its attachments include certain non-GAAP financial measures as defined by the SEC. These measures may be different from non-GAAP measures used by other companies. The presentation of this financial information is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with U.S. generally accepted accounting principles (GAAP). Further information regarding the non-GAAP financial measures included in this press release is contained in Appendix A attached to this press release.
Orbitz Worldwide, Inc.
Condensed Consolidated Statements of Operations (Unaudited)
(in thousands, except share and per share data)
Three Months Ended
March 31,
------------------
2010 2009
---- ----
Net revenue $187,153 $188,393
Cost and expenses
Cost of revenue 38,250 35,356
Selling, general and
administrative 63,790 66,428
Marketing 57,657 64,269
Depreciation and amortization 18,986 14,388
Impairment of other assets 1,704 -
Impairment of goodwill and
intangible assets - 331,527
Total operating expenses 180,387 511,968
------- -------
Operating income (loss) 6,766 (323,575)
Other (expense)
Net interest expense (11,311) (14,513)
Other expense (399) (35)
Total other (expense) (11,710) (14,548)
------- -------
Loss before income taxes (4,944) (338,123)
Provision (benefit) for income
taxes 317 (1,967)
Net loss ($5,261) ($336,156)
======= =========
Net loss per share-basic and
diluted:
Net loss per share ($0.05) ($4.02)
====== ======
Weighted average shares
outstanding 96,736,876 83,593,448
========== ==========
Orbitz Worldwide, Inc.
Condensed Consolidated Balance Sheets (Unaudited)
(in thousands, except share data)
March 31, December 31,
2010 2009
---------- -------------
Assets
Current assets:
Cash and cash equivalents $161,930 $88,656
Accounts receivable (net of
allowance for doubtful
accounts of $1,156 and $935,
respectively) 67,979 54,708
Prepaid expenses 17,841 17,399
Due from Travelport, net 13,540 3,188
Other current assets 4,072 5,702
----- -----
Total current assets 265,362 169,653
Property and equipment, net 172,935 180,962
Goodwill 714,483 713,123
Trademarks and trade names 155,261 155,090
Other intangible assets, net 14,528 18,562
Deferred income taxes, non-
current 9,057 9,954
Other non-current assets 55,745 46,898
Total Assets $1,387,371 $1,294,242
========== ==========
Liabilities and Shareholders'
Equity
Current liabilities:
Accounts payable $30,606 $30,279
Accrued merchant payable 310,493 219,073
Accrued expenses 111,058 112,771
Deferred income 45,233 30,924
Term loan, current 19,768 20,994
Other current liabilities 3,434 5,162
----- -----
Total current liabilities 520,592 419,203
Term loan, non-current 486,250 555,582
Line of credit - 42,221
Tax sharing liability 108,513 108,736
Unfavorable contracts 10,325 9,901
Other non-current liabilities 26,767 28,096
Total Liabilities 1,152,447 1,163,739
--------- ---------
Commitments and contingencies
Shareholders' Equity:
Preferred stock, $0.01 par
value, 100 shares authorized,
no shares issued or
outstanding - -
Common stock, $0.01 par value,
140,000,000 shares
authorized, 101,027,029 and
83,831,561 shares issued
and outstanding, respectively 1,010 838
Treasury stock, at cost,
24,913 and 24,521 shares
held, respectively (50) (48)
Additional paid in capital 1,022,509 921,425
Accumulated deficit (790,633) (785,372)
Accumulated other
comprehensive income (loss)
(net of accumulated tax
benefit of $2,558 and
$2,558, respectively) 2,088 (6,340)
Total Shareholders' Equity 234,924 130,503
------- -------
Total Liabilities and
Shareholders' Equity $1,387,371 $1,294,242
========== ==========
Orbitz Worldwide, Inc.
Condensed Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
Three Months Ended
March 31,
-------------------
2010 2009
---- ----
Operating activities:
Net loss ($5,261) ($336,156)
Adjustments to reconcile net loss to
net cash provided by operating activities:
Loss on extinguishment of debt 389 -
Depreciation and amortization 18,986 14,388
Impairment of other assets 1,704 -
Impairment of goodwill and intangible
assets - 331,527
Amortization of unfavorable contract
liability (825) (825)
Non-cash net interest expense 4,017 4,196
Deferred income taxes 291 (3,787)
Stock compensation 2,901 4,767
Provision for bad debts 141 255
Changes in assets and liabilities:
Accounts receivable (14,720) (4,796)
Deferred income 14,477 16,818
Due to/from Travelport, net (10,442) 8,567
Accrued merchant payable 96,073 67,879
Accounts payable, accrued expenses and
other current liabilities (7,947) 10,803
Other (3,793) 3,076
Net cash provided by operating
activities 95,991 116,712
------ -------
Investing activities:
Property and equipment additions (7,367) (11,757)
Changes in restricted cash (14) -
Net cash (used in) investing
activities (7,381) (11,757)
------ -------
Financing activities:
Proceeds from issuance of common
stock, net of issuance costs 48,950 -
Payment of fees to repurchase a
portion of the term loan (248) -
Payments on the term loan (20,994) (1,500)
Payments to satisfy employee tax
withholding obligations
upon vesting of equity-based awards (60) (36)
Proceeds from exercise of employee
stock options 65 -
Proceeds from line of credit - 99,457
Payments on line of credit (42,221) (59,823)
Net cash (used in) provided by
financing activities (14,508) 38,098
------- ------
Effects of changes in exchange rates
on cash and cash equivalents (828) (1,328)
---- ------
Net increase in cash and cash
equivalents 73,274 141,725
Cash and cash equivalents at beginning
of period 88,656 31,193
Cash and cash equivalents at end of
period $161,930 $172,918
======== ========
Supplemental disclosure of cash flow
information:
Income tax payments, net $1,072 $1,437
Cash interest payments, net of
capitalized interest of $10
and $43, respectively $6,695 $10,506
Non-cash financing activity:
Repayment of term loan in connection
with debt-equity exchange $49,564 -
Appendix A: Non-GAAP Financial Measures
EBITDA and Adjusted EBITDA
EBITDA is a performance measure used by management that is defined as net income or net loss plus: net interest expense, provision (benefit) for income taxes and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted for certain non-cash and unusual or non-recurring items as described below. Orbitz Worldwide uses and believes investors and other external users of the Company's financial statements benefit from the presentation of EBITDA and Adjusted EBITDA in evaluating its operating performance because:
- These measures provide greater insight into management decision making at Orbitz Worldwide as they are among the primary metrics by which management evaluates the operating performance of the Company's business. Management believes that when viewed with GAAP results and the accompanying reconciliation, EBITDA and Adjusted EBITDA provide additional information that is useful for management and other external users to gain an understanding of the factors and trends affecting the ongoing cash earnings capability of the Company's business, from which capital investments are made and debt is serviced. These supplemental measures are used by management and the board of directors to evaluate the Company's actual results against management's expectations. The compensation of management and other employees within the Company is also tied to the Company's actual performance, as measured by Adjusted EBITDA relative to performance targets established by the Company's board of directors and its compensation committee.
- EBITDA measures performance apart from items such as interest expense, income taxes and depreciation and amortization. Management believes that the exclusion of interest expense is necessary to evaluate the cash earnings capability of the business. The Company generally only funds working capital requirements with borrowed funds (specifically, funds borrowed under its revolving credit facility) in the fourth quarter of the year when its cash balances are typically the lowest. As a result, nearly all of the Company's interest expense is not incurred to fund its operating activities. In addition, excluding interest expense from the Company's non-GAAP measures is consistent with the Company's intent to disclose the ongoing cash earnings capability of the business, from which capital investments are made and debt is serviced. Management believes that the exclusion of non-cash depreciation and amortization is also necessary to evaluate the cash earnings capability of the business. Management believes that the review of its non-GAAP measures in conjunction with other GAAP metrics, such as capital expenditures, is more useful in understanding the Company's business than the inclusion of depreciation and amortization expense in the non-GAAP measures used by management, since depreciation and amortization expense has historically fluctuated as a result of purchase accounting and this expense involves management judgment (e.g. estimated useful lives).
- Adjusted EBITDA corresponds more closely to the ongoing cash earnings capability of the Company's business, by excluding the items described above, as well as certain other non-cash items, such as goodwill and intangible asset impairment charges and stock-based compensation, and other unusual and non-recurring items, such as restructuring expense. Adjusted EBITDA does not exclude certain non-cash items, such as accruals of revenue and expense, because these items represent timing differences and management believes that by including these items, it is providing a better view of the cash earnings capability of the business.
EBITDA and Adjusted EBITDA, as presented for the three months ended March 31, 2010 and March 31, 2009, are not defined under GAAP and do not purport to be an alternative to net income or net loss as a measure of operating performance. EBITDA and Adjusted EBITDA have certain limitations in that they do not take into account the impact of certain expenses to the Company's income statement, such as stock-based compensation, goodwill and intangible asset impairment charges, acquisition-related accounting and certain one-time items, if applicable. Because not all companies use identical calculations, this presentation of EBITDA and Adjusted EBITDA may not be comparable to other similarly-titled measures used by other companies.
The following table provides a reconciliation of net loss to EBITDA:
Three Months Ended March 31,
----------------------------
2010 2009
---- ----
(in thousands)
Net loss ($5,261) ($336,156)
Net interest expense 11,311 14,513
Provision (benefit) for income taxes 317 (1,967)
Depreciation and amortization 18,986 14,388
EBITDA $25,353 ($309,222)
======= =========
EBITDA was adjusted by the items listed and described in more detail
below. The following table provides a reconciliation of EBITDA to
Adjusted EBITDA.
Three Months Ended March 31,
----------------------------
2010 2009
---- ----
(in thousands)
EBITDA $25,353 ($309,222)
Impairment of other assets (a) 1,704 -
Impairment of goodwill and intangible
assets (b) - 331,527
Stock-based compensation expense (c) 3,181 5,091
Loss on extinguishment of debt (d) 389 -
Professional services fees (e) - 32
Adjusted EBITDA $30,627 $27,428
======= =======
(a) Represents a non-cash charge recorded in the first quarter 2010
for the impairment of an asset related to in-kind marketing and
promotional support from Northwest Airlines under the Charter
Associate Agreement. As a result of the completion of the
operational merger of Northwest Airlines and Delta Airlines into a
single operating carrier, Northwest Airlines will no longer be
obligated to provide the Company with in-kind marketing and
promotional support after June 1, 2010. Management adjusts for this
item because it represents a significant non-cash operating expense
that is not reflective of the cash earnings capability of the
business.
(b) Represents non-cash charges recorded for the impairment of
goodwill and intangible assets during the first quarter 2009.
Management adjusts for this item because it represents a significant
non-cash operating expense that is not reflective of the cash
earnings capability of the business.
(c) Primarily represents non-cash stock compensation expense; also
includes expense related to restricted cash awards granted prior to
the Company's initial public offering in July 2007 ("IPO").
Management adjusts for this item as it represents a significant non-
cash operating expense that is not indicative of the cash earnings
capability of the business.
(d) Represents the loss recorded upon extinguishment of $49.6
million of the Company's term loan. The fair value of the common
shares issued in the exchange was $49.4 million. After the write-
off of unamortized debt issuance costs and other miscellaneous fees
incurred to retire this debt, the Company recorded a $0.4 million
loss on extinguishment of the term loan. Management adjusts for this
item because it represents a significant non-recurring charge that
is not indicative of the cash earnings capability of the business.
(e) Represents accounting and consulting services primarily
associated with the IPO and post-IPO transition period. Management
adjusted for these costs because they were non-recurring charges,
representative of the Company's transition to a public company.
Gross Bookings and Net Revenue, at Constant Currency
The Company's reporting currency is the U.S. Dollar. As a result, reported financial results are impacted by the strength or weakness of the U.S. Dollar relative to the currencies of the international markets in which the Company operates particularly the Pound Sterling, Euro and Australian Dollar. Management evaluates the Company's operating performance with and without the impact of changes in foreign exchange rates because it believes excluding the impact of foreign exchange rates provides a more comparable view of the Company's operating performance across periods. Management believes that when viewed with GAAP results and the accompanying reconciliation, management and other external users are better able to gain an understanding of the factors and trends affecting operating performance. The following table adjusts gross bookings and net revenue for foreign currency impacts across the relevant periods:
Total
Orbitz
Domestic International Worldwide
-------- ------------- ---------
(in thousands)
Gross Bookings
--------------
Q1, 2010 Reported Gross Bookings $2,506,631 $504,994 $3,011,625
---------- -------- ----------
Q1, 2009 Reported Gross Bookings $2,069,523 $359,164 $2,428,687
Impact of Foreign Exchange Rates - 44,550 44,550
--- ------ ------
Q1, 2009 Gross Bookings at
Constant Currency $2,069,523 $403,714 $2,473,237
Reported Gross Bookings Growth 21% 41% 24%
Gross Bookings Growth at Constant
Currency 21% 25% 22%
Net Revenue
-----------
Q1, 2010 Reported Net Revenue $143,995 $43,158 $187,153
-------- ------- --------
Q1, 2009 Reported Net Revenue $157,021 $31,372 $188,393
Impact of Foreign Exchange Rates - 4,924 4,924
--- ----- -----
Q1, 2009 Net Revenue at Constant
Currency $157,021 $36,296 $193,317
Reported Net Revenue Growth -8% 38% -1%
Net Revenue Growth at Constant
Currency -8% 19% -3%
Appendix B: Trended Operational Metrics
1Q09 2Q09 3Q09
Year over Year Growth
Transaction Growth -12% 3% 7%
Hotel Room Night Growth -1% 2% 3%
Gross Bookings (in thousands)
Domestic
Air $1,439,161 $1,736,475 $1,616,320
Non-air 630,362 594,599 583,040
Total Domestic Gross Bookings 2,069,523 2,331,074 2,199,360
International
Air 228,366 225,730 216,246
Non-air 130,798 135,927 159,058
Total International Gross Bookings 359,164 361,657 375,304
Orbitz Worldwide
Air 1,667,527 1,962,205 1,832,566
Non-air 761,160 730,526 742,098
Total Gross Bookings $2,428,687 $2,692,731 $2,574,664
Year over Year Gross Bookings Growth
Domestic -13% -9% -5%
International -34% -29% -17%
Orbitz Worldwide -17% -12% -7%
At Constant Currency
Domestic -13% -9% -5%
International -18% -15% -10%
Orbitz Worldwide -14% -10% -6%
Net Revenue (in thousands)
Transactional Net Revenue
Domestic
Air $66,063 $53,577 $47,945
Non-air 74,097 79,103 79,675
Total Domestic Transactional Net Revenue 140,160 132,680 127,620
International
Air 15,265 15,389 11,930
Non-air 15,431 22,498 29,616
Total International Transactional Net
Revenue 30,696 37,887 41,546
Orbitz Worldwide
Air 81,328 68,966 59,875
Non-air 89,528 101,601 109,291
Total Orbitz Worldwide Transactional
Net Revenue $170,856 $170,567 $169,166
Non-transactional Net Revenue
Domestic $16,861 $16,362 $16,393
International 676 1,030 1,044
Total Orbitz Worldwide
Non-transactional Net Revenue $17,537 $17,392 $17,437
Orbitz Worldwide
Air $81,328 $68,966 $59,875
Non-air 107,065 118,993 126,728
Total Orbitz Worldwide Net Revenue $188,393 $187,959 $186,603
Year over Year Net Revenue Growth
Transactional Net Revenue
Domestic -8% -18% -24%
International -39% -24% -18%
Orbitz Worldwide -16% -20% -23%
Transactional Net Revenue
at Constant Currency
Domestic -8% -18% -24%
International -23% -9% -12%
Orbitz Worldwide -11% -17% -22%
Non-transactional Net Revenue 4% -5% -12%
Orbitz Worldwide Net Revenue -14% -19% -22%
Orbitz Worldwide Net Revenue
at Constant Currency -10% -15% -21%
4Q09 1Q10
Year over Year Growth
Transaction Growth 19% 20%
Hotel Room Night Growth 13% 13%
Gross Bookings (in thousands)
Domestic
Air $1,652,524 $1,845,225
Non-air 489,285 661,406
Total Domestic Gross Bookings 2,141,809 2,506,631
International
Air 238,292 321,562
Non-air 144,724 183,432
Total International Gross Bookings 383,016 504,994
Orbitz Worldwide
Air 1,890,816 2,166,787
Non-air 634,009 844,838
Total Gross Bookings $2,524,825 $3,011,625
Year over Year Gross Bookings Growth
Domestic 15% 21%
International 33% 41%
Orbitz Worldwide 17% 24%
At Constant Currency
Domestic 15% 21%
International 15% 25%
Orbitz Worldwide 15% 22%
Net Revenue (in thousands)
Transactional Net Revenue
Domestic
Air $46,408 $52,846
Non-air 70,372 77,420
Total Domestic Transactional Net Revenue 116,780 130,266
International
Air 13,066 18,779
Non-air 25,511 23,404
Total International Transactional Net Revenue 38,577 42,183
Orbitz Worldwide
Air 59,474 71,625
Non-air 95,883 100,824
Total Orbitz Worldwide Transactional
Net Revenue $155,357 $172,449
Non-transactional Net Revenue
Domestic $18,095 $13,729
International 1,241 975
Total Orbitz Worldwide
Non-transactional Net Revenue $19,336 $14,704
Orbitz Worldwide
Air $59,474 $71,625
Non-air 115,219 115,528
Total Orbitz Worldwide Net Revenue $174,693 $187,153
Year over Year Net Revenue Growth
Transactional Net Revenue
Domestic -12% -7%
International 49% 37%
Orbitz Worldwide -2% 1%
Transactional Net Revenue
at Constant Currency
Domestic -12% -7%
International 25% 19%
Orbitz Worldwide -5% -2%
Non-transactional Net Revenue -10% -16%
Orbitz Worldwide Net Revenue -3% -1%
Orbitz Worldwide Net Revenue
at Constant Currency -6% -3%
SOURCE Orbitz.com