--Adjusted earnings rise on strength in international operations, particularly Europe-focused ebookers unit
--Revenue outlook for first quarter weaker than expected
--CEO predicts recently completed technology migration to help earnings grow this year but mostly in second half
(Adds executive comments and additional data from conference call in sixth, seventh, 12th, 15th and 16th paragraphs; updates share price in second paragraph)
By Joan E. Solsman
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 4.9% at $3.10 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 multiyear 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 in 2012.
The company, which operates its namesake site as well as CheapTickets and ebookers, predicted full-year adjusted earnings before interest, taxes, depreciation and amortization--or Ebitda--would grow in a high-single digit to low-double digits.
That compares favorably with rival Expedia Inc.'s (>> Expedia Inc) outlook last week, 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.
But Orbitz expects other investments in the hopper this year would keep Ebitda growth more in the second half of the year than the first, executives said on a conference call with analysts. A complex launch of a partnership with American Express Co. (>> American Express Company) in particular would put pressure on the bottom line early on, they said.
Harford also stressed the source of the Ebitda improvement this year would stem not only from margin expansion but also revenue growth, though the company declined to provide revenue guidance yet. Executives said improving trajectory for travel in recent quarters has continued into the current quarter.
But 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. It predicted first-quarter Ebitda could 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 in the latest period 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%. But non-air bookings increased 3.9% and international bookings were up 5.9%. Lately, Orbitz has increasingly relied on its smaller, growth segments of non-air and international to offset moderation in the larger air and domestic businesses.
The company noted that the ebookers business--which focuses on European travelers--delivered another solid quarter with a 30% increase in stayed hotel room nights and a 13% revenue gain.
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. Expedia generates the largest part of its revenue from its world-wide hotel business.
On the call, Harford noted that in its Orbitz and CheapTickets operations, booked stand-alone hotel room nights increased 14% in the first six weeks of the year.
He also said that as the company takes advantage of the newly integrated technology platform, it would focus on three areas for growth: marketing optimization, user-experience improvement and further mobile development.
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. Both periods included impairments: $49.9 million in the latest and $79.6 million a year earlier.
Revenue dropped 2.9% to $177.1 million, beating a downbeat forecast. In November, Orbitz predicted $170 million to $174 million, below analysts' expectations at the time.
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]