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Travel Industry News |
Monday October 13th, 2008 |
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Orbitz Worldwide, Inc. Reports Fourth Quarter 2007 and Year-End 2007 Results |
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Net revenue for the year 2007 increased 14 percent to $859 million, and gross bookings increased 10 percent. |
Click here for financial tables
- Net revenue for the year 2007 increased 14 percent to $859 million, and gross bookings increased 10 percent.
- Net loss was $85 million for the year 2007, and the net loss for the fourth quarter of 2007 was $11 million.
- Adjusted EBITDA for the year increased 27 percent to $144 million.
- Fourth quarter 2007 net revenue increased 10 percent to $197 million.
- Adjusted EBITDA was $37 million for the fourth quarter of 2007, an increase of 16 percent.
Orbitz Worldwide, Inc. (NYSE:OWW) today announced results for the fourth quarter and year ended December 31, 2007. Net revenue increased to $197 million for the fourth quarter of 2007, up 10 percent from $179 million for the fourth quarter of 2006. The company reported a net loss in the fourth quarter of 2007 of $11 million or $.13 per share. Adjusted EBITDA for the fourth quarter of 2007 was $37 million, an increase of 16 percent over fourth quarter 2006 levels. Adjusted earnings per share was $.12 for the fourth quarter of 2007.
"Our strong growth in Adjusted EBITDA in 2007 is primarily the result of excellent performance at our international brands, good performance in the U.S., and the benefits of cost leverage as we grow our business. We sustained strong international growth in the fourth quarter of 2007, with a 43-percent increase in international gross bookings and a 33-percent increase in international revenue as compared to the fourth quarter of 2006. This growth was driven by particularly strong results in continental Europe," said Steve Barnhart, CEO and president of Orbitz Worldwide.
The attached Appendix A entitled "Non-GAAP Financial Measures" provides a definition and information about the use of non-GAAP financial measures in this press release and reconciles these non-GAAP financial measures to the GAAP financial measures that Orbitz Worldwide considers to be the most comparable.
For the full year, Orbitz Worldwide's net revenue increased 14 percent to $859 million, versus $752 million in the prior year. Operating income for the full year 2007 was $42 million as compared to an operating loss of $118 million in 2006. The company reported a net loss of $85 million for 2007 compared to a net loss of $146 million in 2006. For the year 2007, Adjusted EBITDA was $144 million, an increase of 27 percent over Adjusted EBITDA in 2006. Adjusted earnings per share was $.67 for the year 2007, up from $.09 per share for 2006.
"Looking forward, we expect continued strong growth in our international businesses and have a strong pipeline of activity to accelerate growth in the U.S.," continued Barnhart. "Our domestic operations face a difficult comparison in the first quarter of 2008 against the prior year, after which we expect our results will improve through the year as we realize the benefits of our strategic initiatives. We remain focused on growing our international operations as we roll out our new technology platform to the balance of our 13 ebookers sites. We will continue to invest in building our non-air business around the world, particularly by expanding the inventory of hotels that we offer our customers through all of our brands."
Fourth Quarter and Full Year 2007 Financial Highlights
Gross Bookings and Net Revenue
For the fourth quarter of 2007, Orbitz Worldwide's gross bookings were $2.4 billion, equal to the fourth quarter of 2006. Bookings for the air business declined one percent and bookings for the non-air and other businesses increased two percent compared to the fourth quarter of 2006. International gross bookings increased 43 percent (30 percent after adjusting for the impact of foreign exchange) due to strong growth at both ebookers and HotelClub. Domestic gross bookings declined five percent for the fourth quarter of 2007 as compared to same period of 2006.
For the full year 2007, gross bookings were $10.8 billion, up 10 percent over 2006 levels. Air gross bookings increased 10 percent year over year, while non-air and other bookings increased 11 percent from 2006 to 2007. International gross bookings grew by 35 percent in 2007 over 2006 levels, and domestic gross bookings increased by seven percent year over year.
Net revenue for the fourth quarter of 2007 was $197 million, an increase of 10 percent from $179 million in the fourth quarter of 2006. Of this increase, $18 million was due to the impact of purchase accounting adjustments, which reduced reported net revenue in the fourth quarter of 2006. This was offset by the sale of the offline U.K. travel business, which had revenue for the fourth quarter of 2006 of $7 million.
• Air revenue was $81 million for the fourth quarter of 2007, down five percent from $85 million in the fourth quarter of 2006. International air revenue increased slightly, offset by weakness in domestic air. After adjusting for the impact of foreign exchange, total air revenue declined five percent.
• Non-air/other revenue, which consists primarily of hotel, car, dynamic packaging and advertising revenue, was $116 million for the fourth quarter of 2007, up 23 percent from $94 million in the fourth quarter of 2006. After adjusting for the impact of foreign exchange, non-air/other revenue increased 19 percent.
• Domestic revenue was $153 million for the fourth quarter of 2007, an increase of five percent from fourth quarter 2006 revenue of $146 million. Purchase accounting adjustments reduced fourth quarter 2006 domestic revenue by $13 million. The company experienced a softer domestic air business in the fourth quarter of 2007, offset by revenue increases from hotels, dynamic packaging and advertising.
• International revenue was $44 million for the fourth quarter of 2007, an increase from $33 million reported in the fourth quarter of 2006. After adjusting for the impact of foreign exchange, international revenue increased 14 percent. The growth in international revenue was driven by particularly strong results at ebookers' sites in continental Europe.
For the full year 2007, revenue was $859 million, up 14 percent from $752 million in 2006. The strongest increases were in non-air revenue, which grew 26 percent year over year, and international revenue, which grew 28 percent from 2006 to 2007.
In an effort to improve comparability between years, the company has posted on its website (http://orbitz-ir.com/) a chart that adjusts net revenue for purchase accounting impacts, the sale of the offline U.K. travel business and currency fluctuations.
Additional operating metrics used by management to evaluate the results of Orbitz Worldwide are attached to this press release in Appendix B.
Expenses
Orbitz Worldwide's cost of revenue was $41 million in the fourth quarter of 2007. Cost of revenue as a percentage of revenue increased in the fourth quarter of 2007 as compared to the third quarter of 2007. However, for the full year, cost of revenue was 18 percent of net revenue, in line with the company's expectations.
Marketing expense in the fourth quarter of 2007 was $57 million, a decrease of eight percent from the fourth quarter of 2006. In response to significant inflation in the cost of eMarketing in the U.S. in the fourth quarter of 2007, the company adjusted spending to ensure an appropriate return across each area of its U. S. brand portfolio. For the full year, marketing expense increased nine percent to $302 million from $277 million in the prior year.
Selling, general and administrative (SG&A) expenses decreased 13 percent in the fourth quarter of 2007 to $69 million from $79 million in the same period of 2006. This decrease is attributable to lower consulting and professional fees, due in part to an insurance reimbursement of expenses related to the ongoing hotel occupancy tax litigation. In addition, fourth quarter 2006 included SG&A expenses associated with the U.K. offline travel business, which was sold in July 2007.
Adjusted EBITDA
Adjusted EBITDA was $37 million in the fourth quarter of 2007, an increase of 16 percent over fourth quarter 2006 levels. For the full year 2007, Adjusted EBITDA increased 27 percent to $144 million.
Interest
Orbitz Worldwide incurred net interest expense of $17 million in the fourth quarter of 2007, compared to net interest expense of $5 million in the fourth quarter of 2006. This increase primarily reflects the impact of the new $600 million term loan the company entered into in connection with the company's initial public offering (IPO) in late July 2007. For the full year 2007, net interest expense increased to $83 million from $27 million in 2006. This increase reflects both interest expense on the intercompany loan with Travelport that was repaid in connection with the IPO and interest expense on the company's $600 million term loan. Cash interest payments (net of capitalized interest) were $19 million for the fourth quarter 2007 and $74 million for the full year 2007.
Capital Spending
Capital spending for 2007 was $53 million, down sharply from $83 million in 2006. The decline was due primarily to two factors: the company invested heavily in infrastructure for its new global technology platform in 2006, which was non-recurring and Orbitz spent $13 million to relocate its corporate offices during 2006.
Other Highlights through February
• Orbitz Worldwide reached distribution agreements with JetBlue Airways and USA3000 Airlines, increasing the choice of affordable flights and vacation packages it offers customers through its Orbitz, CheapTickets and Orbitz for Business brands.
• ebookers successfully rolled out the global technology platform to its Ireland site in the fourth quarter of 2007, while the U.K. site continued to see benefits from its transition to the global platform in July 2007.
• HotelClub doubled the size of its hotel sourcing team dedicated to increasing inventory and building partnerships with hotels throughout Europe, Asia and the Middle East.
• The company announced new partnerships with a number of hotel groups, including NH Hoteles, a leading European-based hotel chain with 341 hotels in 21 countries, primarily in Europe with a presence in South America and Africa.
• The company recently renewed its long-term partnership with Marriott International with an agreement that gives its global customers access to room inventory for individual hotel room sales and vacation packages at Marriott branded lodging properties globally.
• Orbitz for Business signed significant new corporate accounts, including the University of California and The American Bar Association.
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