Coronavirus-Led Global Lockdown Hits Sabre (SABR) Q1 Revenues

Sabre Corporation’s SABR recently-released preliminary revenue data for first-quarter 2020 reflects the coronavirus outbreak’s brutal impact on its business. In an Apr 13 SEC filing, the company noted that its preliminary estimate for the quarter suggests revenues of $645-$670 million, significantly down from the previous expectations of approximately $1 billion.

On a year-over-year basis, revenues are likely to decline in the 36-39% range. The Zacks Consensus Estimate for quarterly revenues is pegged at $706.3 million, calling for a year-over-year decline of 32.7%.

Sabre provides technology solutions to the travel and tourism industry, which include hundreds of airlines and thousands of hotel properties across 160 countries. The company’s data, software, mobile and distribution solutions help its clients in revenue management, passenger and guest reservations, and manage flight, network and crew.

However, the global lockdown measures to contain the spread of coronavirus have hit the travel industry hard, thereby hurting Sabre’s travel bookings, financial condition and operating results during the March-end quarter.

In the SEC filing, Sabre stated that approximately 80% of its business is linked with air traffic, which directly exposes the company to the current crisis. The virus outbreak started affecting its operating results from mid-January, further accelerating in February and March. As a result, the company’s gross booking plunged 8%, 17%, and 70% in January, February, and March, respectively.

Measures Undertaken by Sabre to Stay Afloat

Sabre has undertaken several measures, including pay cuts, suspension of the 401 (K) program as well as putting brakes on its dividend and share-repurchase programs to preserve cash and maintain ample liquidity amid the coronavirus-led financial crisis. Per the company, these preemptive measures would help it save more than $200 million in costs.

Furthermore, on Mar 20, the company announced that it has drawn its $375-million revolver credit facility to improve liquidity. As of Mar 31, 2020, Sabre had cash and cash equivalents of $685 million, including the net proceeds from its revolver credit facility, according to the company’s latest SEC filing.

Additionally, on Apr 13, the Zacks Rank #3 (Hold) company’s wholly-owned subsidiary, Sabre GLBL Inc., issued secured and exchangeable notes worth $1.075 billion.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Sabre Corporation Price and Consensus

Sabre Corporation Price and Consensus

Sabre Corporation price-consensus-chart | Sabre Corporation Quote

Uncertainty Looms Large

The coronavirus outbreak has not only claimed human lives but has also been wreaking havoc on the global economy. It is affecting trade, investment, tourism and supply chains all over.

Companies across the globe are facing unprecedented challenges and taking stringent measures to tackle the crisis. Suspension of production, forced leaves/layoffs and cost cutting are becoming commonplace. Despite policymakers’ best efforts, companies are finding it difficult to stay afloat amid such trying times.

For instance, Yelp YELP is reducing its employee strength to survive amid this pandemic. In a letter to employees, Yelp co-founder and CEO Jeremy Stoppelman revealed that the company has decided to lay off 1,000 workers and furlough more than 1,100 staff, representing about 17% of its total workforce.

Yelp provides information through online communities on restaurants, shopping, nightlife, financial, health and other services. However, lockdowns and restrictions to contain the spread of coronavirus are hurting these businesses, affecting Yelp, in turn.

In the letter, Stoppelman noted that its Restaurant category volume has registered a 64% slump since Mar 10. The company’s Nightlife, Gym, and Salon and Other Beauty businesses have tanked 81%, 73%, and 83%, respectively, since Mar 10.

To preserve cash and maintain ample liquidity, Ford F, Boeing BA, and Delta Air Lines DAL have also scraped their quarterly dividends.

Given the recession that has hit the globe, cash is the king for businesses and investors. Therefore, amid the coronavirus crisis, many companies might be forced to take stringent measures for cash preservation.  So, until the fog clears, investors should brace for more layoffs, pay cuts, and dividend and share-buyback suspensions.

The Hottest Tech Mega-Trend of All

Last year, it generated $24 billion in global revenues. By 2020, it's predicted to blast through the roof to $77.6 billion. Famed investor Mark Cuban says it will produce ""the world's first trillionaires,"" but that should still leave plenty of money for regular investors who make the right trades early.

See Zacks' 3 Best Stocks to Play This Trend >>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Ford Motor Company (F) : Free Stock Analysis Report
 
The Boeing Company (BA) : Free Stock Analysis Report
 
Delta Air Lines, Inc. (DAL) : Free Stock Analysis Report
 
Yelp Inc. (YELP) : Free Stock Analysis Report
 
Sabre Corporation (SABR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research