--Adjusted earnings rise, which company predicts will likely reoccur in first quarter
--Revenue outlook for first quarter weaker than expected
--CEO predicts recently completed technology migration to help earnings grow this year
(Updates with context, further details from earnings release throughout.)
By Joan E. Solsman and Melodie Warner
Orbitz Worldwide Inc.'s (>> Orbitz Worldwide, Inc.) fourth-quarter loss narrowed and its adjusted earnings rose as it continued to book more business from international and hotel operations.
However, shares were down 3.7% at $3.14 in recent trading, as the online travel agency's near-term revenue outlook fell short of expectations. Unlike competitors Expedia Inc. (>> Expedia Inc) and Priceline.com Inc. (>> Priceline.com Inc), Orbitz stock has fallen in the last year.
Chief Executive Barney Harford said the company completed its long ongoing migration to a global technology platform. He characterized 2011 as "an investment year" for the company and predicted Orbitz would be reaping the rewards of those investments this year.
The company, which operates its namesake site as well as CheapTickets and its European focused ebookers site, predicted full-year adjusted earnings before interest, taxes, depreciation and amortization--or Ebitda--would grow in a high-single to low-double digit.
That compares favorably with the outlook rival Expedia Inc. (>> Expedia Inc) provided last week, which was for midsingle percentage growth in adjusted Ebitda. Like Orbitz, Expedia is in the midst of uniting its businesses on a single technology platform. However, while Orbitz said Thursday it completed its tech migration, Expedia expected to continue tech investments this year, resulting in slow earnings growth particularly in the first half.
Orbitz forecast weaker-than-expected revenue for the first quarter at $187 million to $193 million versus the consensus analyst estimate of $196 million, based on a survey by Thomson Reuters.
However, Orbitz predicted first-quarter Ebitda would likely grow, possibly as much as 16%. Orbitz forecast $17 million to $20 million in adjusted Ebitda in the current quarter, compared with $17.3 million in the year-prior period.
In the latest period, Orbitz's adjusted Ebitda was up 14% at $30.1 million.
Gross bookings fell 1.3%, which the company attributed to another quarter of higher air fares, a mix shift toward international air carriers and higher average daily rates for hotel rooms.
Stand-alone air bookings posted a 3% decline and domestic bookings fell 2.8%. However, non-air bookings increased 3.9% while international bookings were up 5.9%. It continues a trend of recent quarters, in which Orbitz increasingly relies on its smaller, growth segments of non-air and international to offset moderation in the larger air and domestic businesses.
Orbitz said total hotel gross bookings were up about 4%, as an increase in daily rate offset a drop in room nights stayed. The company has been focusing on its hotel business lately, increasing hotel revenue as a percentage of the total top line.
Last week, competitor Expedia reported robust 19% growth in room nights stayed, although Expedia's revenue per room night dropped. Expedia generates the largest part of its revenue from its worldwide hotel business.
Thursday, Orbitz reported a loss of $46.5 million, or 44 cents a share, compared with a year-earlier loss of $78 million, or 76 cents. The most-recent quarter included goodwill impairment of $49.9 million, while the year-earlier quarter included $70.2 million for goodwill impairment and $9.4 million for the impairment of property and equipment. Analysts surveyed by Thomson Reuters, which typically exclude one-time items from their estimates, were expecting a penny profit per share.
Revenue dropped 2.9% to $177.1 million, beating its downbeat forecast. In November, Orbitz predicted $170 million to $174 million, below analysts' expectations at the time. Most recently, analysts were expecting a modest beat at $175 million.
Operating margin narrowed to negative 21.1% from negative 37.1%.
--By Joan E. Solsman and Melodie Warner, Dow Jones Newswires; 212-416-2291; [email protected]