Sabre Corp.’s fourth-quarter profits tumbled 81 percent to $24.6 million even though the Southlake-based travel technology company grew its revenues by almost 10 percent.
The company attributed the profit decline to income a year ago from a $106.2 million tax gain related to the sale of lastminute.com in 2015. Revenues for the quarter grew to $829.6 million as more airline passengers booked tickets through its reservation system.
“In 2016, we delivered a year of strong growth across all of our businesses,” said Sean Menke, the newly appointed chief executive of Sabre, which provides ticket reservations and travel management platforms to airlines and hotels.
Investors, however, were disappointed with the company’s results, and shares of Sabre [ticker: SABR] were down 10 percent, or $2.60, Tuesday, closing at $22.21. Excluding one-time accounting items, Sabre reported net income of 27 cents per share, missing Wall Street estimates.
For the full year, net income declined 55 percent to $242.5 million as revenues grew 13.9 percent to $3.37 billion.
Sabre told investors it expects revenues to grow another 5 to 7 percent in 2017, though profits may be hurt by capital expenditures to improve the company’s technology infrastructure. Two high-profile technical glitches with Sabre’s computer systems led to flight delays at multiple airlines last fall.
“Investment in hardware, software, and labor will accelerate the modernization of our technology infrastructure,” Menke told investors on a conference call.” We understand the impact this level of spending will have on our financial results in the short term but firmly believe it will set the stage for stronger growth and shareholder return in the years to come.”
The company also boosted its quarterly dividend by a penny to 14 cents per share and has begun a multi-year share repurchase program to buy up to $500 million of its common stock.