Sabre Corporation reports 39.2% Net Income growth in 2018 and 7.5% Revenue growth
02/12/2019 • About Sabre Corporation (
$SABR) • By InTwits
Sabre Corporation reported 2018 financial results today. Here are the key drivers of the company's long term financial model:
- Sabre Corporation has medium CAPEX intensity: 5 year average CAPEX/Revenue was 8.8%. At the same time it's in pair with industry average of 7.6%
- CAPEX is quite volatile: $62m in FY2018, $50m in FY2017, $42m in FY2016, $23m in FY2015, $19m in FY2014
- In the last 5 years the company invested considerably less than D&A: $1,442m vs. $1,869m. In 2018 this situation was still the same: CAPEX was 284 while D&A was 413
- The company has highly profitable business model: ROIC is 12.9%
- It operates with medium-size leverage: Net Debt/EBITDA is 3.0x while industry average is 2.6x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
Sabre Corporation's Revenue increased on 7.5%. Revenue growth showed slowdown in 18Q4 - it was 4.8% YoY. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased on 5.7 pp from 30.8% to 25.1% in FY2018. EBITDA Margin followed a declining trend at -0.61 pp per annum in 2014-2018.
Gross Margin decreased on 2.3 pp from 30.1% to 27.8% in 2018. Gross Margin stuck to a declining trend at -1.6 pp per annum in 2014-2018. SG&A as a % of Revenue decreased slightly on 0.89 pp from 14.2% to 13.3% in 2018. During the last 5 years SG&A as a % of Revenue topped in 2015 at 18.8% and was declining since that time. Stock Based Compensation (SBC) as a % of Revenue showed almost no change in 2018. SBC as a % of Revenue stuck to a growing trend at 0.17 pp per annum in the last 5 years.
Net Income margin increased slightly on 2.0 pp from 6.7% to 8.7% in 2018. The efficient tax rate was 14.6% in 2018 while the average for the last five years was 21.7%.
Investments (CAPEX, working capital and M&A)
In 2018 Sabre Corporation had CAPEX/Revenue of 7.3%. The company showed decline in CAPEX/Revenue of 2.3 pp from 9.7% in 2015 to 7.3% in 2018. Average CAPEX/Revenue for the last three years was 8.6%. During 2014-2018 CAPEX as a % of Revenue topped in 2016 at 9.7% and was declining since that time.
Accounts receivable as a % of Revenue showed almost no change in 2018. Accounts payable as a % of Revenue decreased slightly on 0.56 pp from 6.5% to 5.9% in 2018.
Return on investment
The company operates at high and attractive ROE (40.7%) while ROIC is a bit lower (12.9%). ROIC increased slightly on 0.99 pp from 11.9% to 12.9% in 2018. ROE increased on 3.8 pp from 36.8% to 40.7% in 2018. During 2014-2018 ROIC bottomed in 2016 at 11.6% and was growing since that time.
Leverage (Debt)
Company's Net Debt / EBITDA is 3.0x and Debt / EBITDA is 3.5x. Net Debt / EBITDA dropped on 0.5x from 3.5x to 3.0x in 2018. Debt decreased slightly on 1.4% while cash jumped on 40.9%. Net Debt/EBITDA followed a declining trend at -0.3x per annum in 2014-2018.
Sabre Corporation has no short term refinancing risk: cash is higher than short term debt (744.2%).
Valuation and dividends
Sabre Corporation's trades at EV/EBITDA 9.3x and P/E 18.3x.
The company paid 45.6% of Net Income as dividends in 2018. Dividends grew on average at 26.3% per annum in the last 5 years).
Management team
The company's CEO Sean E Menke is a founder and has spent 2 years with the company. CEO total compensation was
$10,772,345 in 2018 which included
$943,269 salary. Sabre Corporation's CFO Douglas E Barnett "Doug" has spent 1 year with the company.
0.62% of the company is owned by insiders. Insider ownership didn't change in 2018.
At the end of financial year the company had 8,860 employees. The number of employees decreased slightly on 1.6%. Average revenue per employee in 2018 was
$436,451 and it increased on 9.2%.
Financial and operational results
FY ended 12/31/2018
Sabre Corporation ($SABR) key annual financial indicators| mln. $ | 2014 | 2015 | 2016 | 2017 | 2018 | 2018/2017 |
|---|
P&L
|
|---|
| Revenue | 2,631 | 2,961 | 3,373 | 3,598 | 3,867 | 7.5% |
| Gross Profit | 889 | 1,017 | 1,086 | 1,085 | 1,076 | -0.8% |
| SG&A | 468 | 557 | 626 | 510 | 514 | 0.7% |
| EBITDA | 711 | 811 | 874 | 894 | 975 | 9.1% |
| EBIT | 421 | 460 | 460 | 493 | 562 | 13.9% |
| Tax | 6 | 119 | 87 | 128 | 57 | -55.1% |
| Net Income | 69 | 545 | 243 | 243 | 338 | 39.2% |
| Stock Based Compensation | 20 | 30 | 49 | 45 | 57 | 28.1% |
Balance Sheet
|
|---|
| Cash | 156 | 321 | 364 | 361 | 509 | 40.9% |
| Accounts Receivable | 363 | 376 | 401 | 491 | 508 | 3.6% |
| Accounts Payable | 118 | 138 | 169 | 163 | 165 | 1.5% |
| Short Term Debt | 22 | 190 | 169 | 57 | 68 | 19.8% |
| Long Term Debt | 3,040 | 3,169 | 3,276 | 3,399 | 3,337 | -1.8% |
Cash flow
|
|---|
| Capex | 227 | 287 | 328 | 316 | 284 | -10.3% |
| Dividends | 48 | 99 | 144 | 155 | 154 | -0.6% |
| Acquisitions | 32 | 442 | 164 | | | |
Ratios
|
|---|
| Revenue growth | -13.7% | 12.5% | 13.9% | 6.7% | 7.5% | |
| EBITDA growth | 46.8% | 14.1% | 7.7% | 2.4% | 9.1% | |
|
|---|
| Gross Margin | 33.8% | 34.3% | 32.2% | 30.1% | 27.8% | -2.3% |
| EBITDA Margin | 27.0% | 27.4% | 25.9% | 24.9% | 25.2% | 0.4% |
| EBIT Margin | 16.0% | 15.5% | 13.6% | 13.7% | 14.5% | 0.8% |
| SG&A, % of revenue | 17.8% | 18.8% | 18.6% | 14.2% | 13.3% | -0.9% |
| SBC, % of revenue | 0.8% | 1.0% | 1.4% | 1.2% | 1.5% | 0.2% |
| Net Income Margin | 2.6% | 18.4% | 7.2% | 6.7% | 8.7% | 2.0% |
| CAPEX, % of revenue | 8.6% | 9.7% | 9.7% | 8.8% | 7.3% | -1.5% |
|
|---|
| ROIC | 13.8% | 13.3% | 11.6% | 11.9% | 12.9% | 1.0% |
| ROE | | 192.6% | 43.9% | 36.8% | 40.7% | 3.8% |
| Net Debt/EBITDA | 4.1x | 3.7x | 3.5x | 3.5x | 3.0x | -0.5x |
People
|
|---|
| Insider ownership | 0.6% | 0.6% | 0.6% | 0.6% | 0.6% | 0.0% |
| Employees | 8,000 | 9,100 | 10,000 | 9,000 | 8,860 | -1.6% |
| Revenue/Employee, th. $ | 329 | 325 | 337 | 400 | 436 | 9.2% |
Sabre Corporation ($SABR) key quoterly financial indicators
| mln. $ | 18Q1 | 18Q2 | 18Q3 | 18Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 988 | 984 | 970 | 924 | | 8.0% | 9.3% | 7.7% | 4.8% |
| EBITDA | 267 | 242 | 239 | 227 | | -0.6% | 116.4% | -12.5% | -5.4% |
| Net Income | 88 | 92 | 73 | 84 | | 15.7% | | -19.8% | 2.8% |
Balance Sheet
|
|---|
| Cash | 361 | 370 | 444 | 509 | | 25.5% | 20.6% | 65.6% | 40.9% |
| Short Term Debt | 57 | 57 | 64 | 68 | | -5.0% | -4.8% | 8.8% | 19.8% |
| Long Term Debt | 3,387 | 3,375 | 3,356 | 3,337 | | -1.5% | -1.5% | -1.6% | -1.8% |
Ratios
|
|---|
| Gross Margin | 29.9% | 26.7% | 27.5% | 27.1% | | -3.7% | -1.9% | -2.3% | -1.3% |
| EBITDA Margin | 27.0% | 24.6% | 24.7% | 24.5% | | -2.3% | 12.2% | -5.7% | -2.6% |
| Net Income Margin | 8.9% | 9.4% | 7.5% | 9.1% | | 0.6% | 10.1% | -2.6% | -0.2% |
Peers in Data Processing & Outsourced S
Below we provide Sabre Corporation benchmarking against other companies in Data Processing & Outsourced S industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | | 167.8% |
| StoneCo Ltd ($STNE) | | | | 74.3% | 106.0% |
| PagSeguro Digital Ltd. ($PAGS) | | 107.1% | 68.7% | 121.7% | 71.8% |
| Payment Data Systems, Inc. ($PYDS) | | 7.4% | -16.0% | 20.7% | 71.7% |
| StarTek, Inc. ($SRT) | | 12.8% | 8.9% | -4.8% | 66.4% |
| |
|---|
| Median (55 companies) | | 7.0% | 7.6% | 11.8% | 7.4% |
|---|
| Sabre Corporation ($SABR) | | 12.5% | 13.9% | 6.7% | 7.5% |
Top companies by Gross margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Verra Mobility Corp ($VRRM) | | | | 97.4% | 97.5% |
| Everi Holdings Inc. ($EVRI) | 25.8% | 38.3% | 36.1% | 34.5% | 79.9% |
| StoneCo Ltd ($STNE) | | | 69.7% | 70.8% | 79.5% |
| Paychex, Inc. ($PAYX) | 70.9% | 70.5% | 71.0% | 70.8% | 69.9% |
| Global Payments Inc. ($GPN) | 62.7% | 63.2% | 60.4% | 51.5% | 67.5% |
| |
|---|
| Median (44 companies) | 39.3% | 39.6% | 39.5% | 39.5% | 41.0% |
|---|
| Sabre Corporation ($SABR) | 33.8% | 34.3% | 32.2% | 30.1% | 27.8% |
Top companies by EBITDA margin, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Visa Inc. ($V) | 64.0% | 68.9% | 55.6% | 69.2% | 65.8% |
| FleetCor Technologies, Inc. ($FLT) | 56.1% | 50.4% | 52.0% | 50.8% | 55.9% |
| StoneCo Ltd ($STNE) | | | 31.4% | 26.0% | 53.0% |
| Mastercard Incorporated ($MA) | 57.5% | 56.3% | 56.9% | 56.5% | 51.8% |
| Everi Holdings Inc. ($EVRI) | 9.6% | 14.7% | 3.0% | 20.4% | 45.2% |
| |
|---|
| Median (56 companies) | 20.4% | 21.0% | 21.2% | 20.6% | 19.2% |
|---|
| Sabre Corporation ($SABR) | 27.0% | 27.4% | 25.9% | 24.9% | 25.2% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| Crypto Co/The ($CRCW) | 0.0% | 0.0% | | 1,216.6% | 853.5% |
| Steel Connect, Inc. ($STCN) | 0.6% | 1.5% | 1.7% | 1.1% | 75.6% |
| Everi Holdings Inc. ($EVRI) | 3.0% | 9.3% | 9.4% | 9.9% | 21.9% |
| StoneCo Ltd ($STNE) | | | 7.2% | 18.4% | 8.9% |
| Cardtronics plc ($CATM) | 10.2% | 11.9% | 9.9% | 9.6% | 8.0% |
| |
|---|
| Median (56 companies) | 3.1% | 3.0% | 3.2% | 2.9% | 3.0% |
|---|
| Sabre Corporation ($SABR) | 8.6% | 9.7% | 9.7% | 8.8% | 7.3% |
Top companies by ROIC, %
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| GreenSky, Inc. ($GSKY) | | | | 156.4% | 93.7% |
| Mastercard Incorporated ($MA) | 63.5% | 57.5% | 57.5% | 60.6% | 64.7% |
| Paychex, Inc. ($PAYX) | 54.5% | 58.7% | 61.9% | 63.9% | 64.5% |
| NIC Inc. ($EGOV) | 64.6% | 61.2% | 63.1% | 52.1% | 39.3% |
| Automatic Data Processing, Inc. ($ADP) | 23.9% | 28.9% | 37.9% | 36.6% | 37.5% |
| |
|---|
| Median (62 companies) | 13.6% | 12.8% | 11.3% | 10.6% | 10.2% |
|---|
| Sabre Corporation ($SABR) | 13.8% | 13.3% | 11.6% | 11.9% | 12.9% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 |
|---|
| StarTek, Inc. ($SRT) | -0.1x | | 2.2x | 2.3x | 18.4x |
| Square, Inc. ($SQ) | | | | | 13.3x |
| Steel Connect, Inc. ($STCN) | -12.5x | | | | 12.6x |
| Exela Technologies Inc ($XELAU) | | | 8.1x | | 9.7x |
| Alliance Data Systems Corporation ($ADS) | 9.3x | 9.1x | 10.7x | 10.1x | 9.0x |
| |
|---|
| Median (54 companies) | 0.4x | 0.5x | 1.3x | 2.3x | 2.0x |
|---|
| Sabre Corporation ($SABR) | 4.1x | 3.7x | 3.5x | 3.5x | 3.0x |
