Sabre Corp 10-Q

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Forward-Looking Statements This Quarterly Report on Form 10-Q, including this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in Part I, Item 2, contains information that may constitute forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, such as statements regarding our future financial condition or results of operations, our prospects and strategies for future growth, the development and introduction of new products, and the implementation of our marketing and branding strategies. In many cases, you can identify forward-looking statements by terms such as “expects,” “outlook,” "intends," "will," "may," "believes," “plans,” “provisional,” “predicts,” “potential,” “estimates,” “should,” “could,” “anticipates,” “likely,” “commit,” “guidance,” “anticipate,” “incremental,” “preliminary,” “forecast,” “continue,” “strategy,” “confidence,” “objective,” “project,” or the negative of these terms or other comparable terminology. The forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions and are subject to risks, uncertainties and changes in circumstances that may cause events or our actual activities or results to differ significantly from those expressed in any forward-looking statement. Certain of these risks, uncertainties and changes in circumstances are described in the "Risk Factors" section of this Quarterly Report on Form 10-Q and in the “Risk Factors” and “Forward-Looking Statements” sections included in our Annual Report on Form 10-K filed with the SEC on February 17, 2023. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future events, outlook, guidance, results, actions, levels of activity, performance or achievements. Readers are cautioned not to place undue reliance on these forward-looking statements. Unless required by law, the Company undertakes no obligation to publicly update or revise any forward-looking statements to reflect circumstances or events after the date they are made. The following discussion and analysis should be read in conjunction with our consolidated financial statements and related notes contained elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K filed with the SEC on February 17, 2023. Overview We connect people and places with technology that reimagines the business of travel. We operate our business and present our results through two business segments: (i) Travel Solutions, our global business-to-business travel marketplace for travel suppliers and travel buyers, including a broad portfolio of software technology products and solutions for airlines, and (ii) Hospitality Solutions, an extensive suite of leading software solutions for hoteliers. A significant portion of our revenue is generated through transaction-based fees that we charge to our customers. For Travel Solutions, we generate revenue from our distribution activities through transaction fees for bookings on our global distribution system ("GDS"), and from our IT solutions through recurring usage-based fees for the use of our Software-as-a-Service ("SaaS") and hosted systems, as well as upfront fees and professional services fees. For Hospitality Solutions, we generate revenue from recurring usage-based fees for the use of our SaaS and hosted systems, as well as upfront fees and professional services fees. Items that are not allocated to our business segments are identified as corporate and primarily include stock-based compensation expense, litigation costs, corporate headcount-related costs and other items that are not identifiable with either of our segments. Recent Developments Affecting our Results of Operations The travel industry continues to be adversely affected by the global health crisis due to the outbreak of the coronavirus, including variants ("COVID-19"). The travel ecosystem has shifted over the past few years, including through the COVID-19 pandemic, resulting in the changing needs of our airline, hotel and agency customers. This pandemic has resulted in continued material headwinds for our consolidated financial results in 2022 and through the first quarter of 2023. Despite the continued impacts of the COVID-19 pandemic on our business and global travel volumes, as travel restrictions have been relaxed and travel patterns return, we have seen gradual improvement in our key volume metrics during 2022 and through the first quarter of 2023. With the continued increase in volumes, our incentive consideration costs are also increasing significantly compared to previous periods. We believe our cash position and the liquidity measures we have taken will continue to provide flexibility as we manage through the global economic recovery from the COVID-19 pandemic. As a result, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months; however, given the magnitude of travel decline and the unknown duration of the COVID-19 impact, we will continue to monitor our liquidity levels and take additional steps should we determine they are necessary. See “—Recent Events Impacting Our Liquidity and Capital Resources” and “—Senior Secured Credit Facilities.” On May 4, 2023, we announced planned actions impacting our workforce. We estimate that these actions will reduce our operating expense on an annual basis by approximately $200 million. Restructuring and other costs from these actions are estimated to be approximately $70 million. In August 2022, we completed the acquisition of Conferma Limited ("Conferma"), a virtual payments technology company, to expand our investment in technology for the payments ecosystem in the travel industry . We acquired all of the outstanding stock and ownership interest of Conferma, for net cash consideration of $62 million and conversion of a pre-existing loan into 23 share capital. We have consolidated the results of Conferma from the date of acquisition into our Travel Solutions segment, which did not have a material impact on our results of operations. In February 2023, we sold 19% of the common shares of the direct parent of Conferma to a third party for proceeds of $16 million, resulting in a redeemable non-controlling interest. On October 28, 2021, we announced that we entered into an agreement with a third party to sell our suite of flight and crew management and optimization solutions, which represents our AirCentre airline operations portfolio within Travel Solution’s IT Solutions. On February 28, 2022, we sold the AirCentre product portfolio, related technology and intellectual property for $392 million . We recorded a pre-tax gain on sale of approximately $192 million (after-tax $121 million) in Other, net in our consolidated statements of operations for the three months ended March 31, 2022 , which was subsequently adjusted in the second quarter of 2022 related to $12 million in contingencies identified in connection with the sale . See Note 3. Acquisitions and Dispositions for further details. In March 2022, we terminated our distribution agreement with a Travel Solutions customer located in Russia which impacted our revenue in 2022. In August 2022, Russia adopted legislation and related regulations that, effective October 30, 2022, require activities related to the development, creation and operation of automated information systems for processing domestic air transportation within the Russian Federation to be owned and operated by Russian residents or legal entities with no updates from or connection with systems abroad. A Travel Solutions customer of these types of services located in Russia ceased using our systems on that date. This legislation and these regulations have prohibited our ability to provide these services in Russia, which has and is expected to continue to negatively impact our revenue and results. During the three months ended March 31, 2022, we recognized $24 million of previously deferred revenue due to a change in facts and circumstances associated with a certain Travel Solutions customer located in Russia. This amount was fully paid by the customer and it was no longer considered probable that this revenue would be reversed. See Note 2. Revenue from Contracts with Customers for details regarding the impact on revenue. Factors Affecting our Results In addition to the "—Recent Developments Affecting our Results of Operations" above, a discussion of trends that we believe are the most significant opportunities and challenges currently impacting our business and industry is included in the section entitled “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Factors Affecting our Results” in our Annual Report on Form 10-K filed with the SEC on February 17, 2023. The discussion also includes management’s assessment of the effects these trends have had and are expected to have on our results of continuing operations. This information is not an exhaustive list of all of the factors that could affect our results and should be read in conjunction with the factors referred to in the sections entitled “Risk Factors” and "Forward-Looking Statements" included in this Quarterly Report on Form 10-Q and in our Annual Report on Form 10-K filed with the SEC on February 17, 2023. Components of Revenues and Expenses Revenues Travel Solutions generates revenues from distribution activities through Direct Billable Bookings processed on our GDS, adjusted for estimated cancellations of those bookings. Travel Solutions also generates revenues from IT solutions activities from its product offerings including reservation systems for full-service and low-cost carriers, commercial and operations products, professional services, agency solutions and booking data. Additionally, Travel Solutions generates revenue through software licensing and maintenance fees. Recognition of license fees upon delivery has previously resulted and will continue to result in periodic fluctuations in revenue recognized. Hospitality Solutions generates revenue through upfront solution fees and recurring usage-based fees for the use of our software solutions hosted on secure platforms or deployed through our SaaS and through other professional service fees including Digital Experience ("DX"). Certain professional service fees are discrete sales opportunities that may have a high degree of variability from period to period, and we cannot guarantee that we will have such fees in the future consistent with prior periods. Cost of revenue, excluding technology costs Cost of revenue, excluding technology costs, incurred by Travel Solutions and Hospitality Solutions consists primarily of costs associated with the delivery and distribution of our products and services and includes employee-related costs for our delivery, customer operations and call center teams as well as allocated overhead such as facilities and other support costs. Cost of revenue, excluding technology costs, for Travel Solutions also includes incentive consideration expense representing payments or other consideration to travel agencies for reservations made on our GDS which accrue on a monthly basis. Cost of revenue, excluding technology costs, also includes amortization of upfront incentive consideration representing upfront payments or other consideration provided to travel agencies for reservations made on our GDS which are capitalized and amortized over the expected life of the contract. The technology costs excluded from Cost of revenue, excluding technology costs, are presented separately below. Corporate cost of revenue, excluding technology costs, includes certain expenses such as stock-based compensation, restructuring charges and other items not identifiable with either of our segments. 24 Depreciation and amortization included in cost of revenue, excluding technology costs, is associated with capitalized implementation costs and intangible assets associated with contracts, supplier and distributor agreements purchased through acquisitions. Technology Costs Technology costs incurred by Travel Solutions and Hospitality Solutions consist of expenses related to third-party providers and employee-related costs to operate technology operations including hosting, third-party software, and other costs associated with the maintenance and minor enhancement of our technology. Technology costs also include costs associated with our technology transformation efforts. Technology costs are less variable in nature and therefore may not correlate with related changes in revenue. Depreciation and amortization included in technology costs is associated with software developed for internal use that supports our products, assets supporting our technology platform, businesses and systems and intangible assets for technology purchased through acquisitions. Selling, General and Administrative Expenses Selling, general and administrative expenses consist of professional service fees, certain settlement charges or reimbursements, costs to defend legal disputes, provision for expected credit losses, other overhead costs, and personnel-related expenses, including stock-based compensation, for employees engaged in sales, sales support, account management and who administratively support the business in finance, legal, human resources, information technology and communications. Depreciation and amortization included in selling, general and administrative expenses is associated with property and equipment, acquired customer relationships, trademarks and brand names purchased through acquisitions or established through the take private transaction in 2007, which includes a remaining useful life of 14 years as of March 31, 2023 for trademarks and brand names. Intersegment Transactions We account for significant intersegment transactions as if the transactions were with third parties, that is, at estimated current market prices. Hospitality Solutions pays fees to Travel Solutions for hotel stays booked through our GDS. 25 Key Metrics “Direct Billable Bookings” and “Passengers Boarded” are the primary metrics utilized by Travel Solutions to measure operating performance. Travel Solutions generates distribution revenue for each Direct Billable Booking, which includes bookings made through our GDS (e.g., Air, and Lodging, Ground and Sea ("LGS")) and through our equity method investments in cases where we are paid directly by the travel supplier. Air Bookings are presented net of bookings cancelled within the period presented. Travel Solutions also recognizes IT solutions revenue from recurring usage-based fees for Passengers Boarded ("PBs"). The primary metric utilized by Hospitality Solutions is booking transactions processed through the Sabre Hospitality Solutions SynXis Central Reservation System (the "HS Central Reservation System"). These key metrics allow management to analyze customer volume over time for each of our product lines to monitor industry trends and analyze performance. We believe that these key metrics are useful for investors and other third parties as indicators of our financial performance and industry trends. While these metrics are based on what we believe to be reasonable estimates of our transaction counts for the applicable period of measurement, there are inherent challenges associated with their measurement. In addition, we are continually seeking to improve our estimates of these metrics, and these estimates may change due to improvements or changes in our methodology. The following table sets forth these key metrics for the periods indicated (in thousands): Three Months Ended March 31, 2023 2022 % Change Travel Solutions Direct Billable Bookings - Air 84,348 57,550 46.6% Direct Billable Bookings - LGS 12,295 7,428 65.5% Distribution Total Direct Billable Bookings 96,643 64,978 48.7% IT Solutions Passengers Boarded 165,032 129,163 27.8% Hospitality Solutions Central Reservations System Transactions 27,746 23,028 20.5% Definitions of Non-GAAP Financial Measures We have included both financial measures compiled in accordance with GAAP and certain non-GAAP financial measures in this Quarterly Report on Form 10-Q, including Adjusted Operating Income (Loss) , Adjusted Net Loss from continuing operations ("Adjusted Net Loss"), Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures. We define Adjusted Operating Income (Loss) 1 as operating loss adjusted for equity method loss, acquisition-related amortization, restructuring and other costs, acquisition-related costs, litigation costs, net, and stock-based compensation. We define Adjusted Net Loss 1 as net loss attributable to common stockholders adjusted for loss from discontinued operations, net of tax, net income attributable to noncontrolling interests, preferred stock dividends, acquisition-related amortization, restructuring and other costs, loss on extinguishment of debt, other, net, acquisition-related costs, litigation costs, net, stock-based compensation, and the tax impact of adjustments. We define Adjusted EBITDA 1 as loss from continuing operations adjusted for depreciation and amortization of property and equipment, amortization of capitalized implementation costs, acquisition-related amortization, restructuring and other costs, interest expense, net, other, net, loss on extinguishment of debt, acquisition-related costs, litigation costs, net, stock-based compensation and the remaining provision for income taxes. We define Free Cash Flow as cash used in operating activities less cash used in additions to property and equipment. We define Adjusted Net Loss from continuing operations per share as Adjusted Net Loss divided by adjusted diluted weighted-average common shares outstanding. These non-GAAP financial measures are key metrics used by management and our board of directors to monitor our ongoing core operations because historical results have been significantly impacted by events that are unrelated to our core operations as a result of changes to our business and the regulatory environment. We believe that these non-GAAP financial measures are used by investors, analysts and other interested parties as measures of financial performance and to evaluate our ability to service debt obligations, fund capital expenditures, fund our investments in technology transformation, and meet working capital requirements. We also believe that Adjusted Operating Income (Loss), Adjusted Net Loss and Adjusted EBITDA assist investors in company-to-company and period-to-period comparisons by excluding differences caused by variations in capital structures (affecting interest expense), tax positions and the impact of depreciation and amortization expense. In addition, amounts derived from Adjusted EBITDA are a primary component of certain covenants under our senior secured credit facilities. 26 Adjusted Operating Income (Loss), Adjusted Net Loss, Adjusted EBITDA, Free Cash Flow and ratios based on these financial measures are not recognized terms under GAAP. These non-GAAP financial measures and ratios based on them are unaudited and have important limitations as analytical tools, and should not be viewed in isolation and do not purport to be alternatives to net income as indicators of operating performance or cash flows from operating activities as measures of liquidity. These non-GAAP financial measures and ratios based on them exclude some, but not all, items that affect net income or cash flows from operating activities and these measures may vary among companies. Our use of these measures has limitations as an analytical tool, and you should not consider them in isolation or as substitutes for analysis of our results as reported under GAAP. Some of these limitations are: • these non-GAAP financial measures exclude certain recurring, non-cash charges such as stock-based compensation expense and amortization of acquired intangible assets; • although depreciation and amortization are non-cash charges, the assets being depreciated and amortized may have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements; • Adjusted EBITDA does not reflect amortization of capitalized implementation costs associated with our revenue contracts, which may require future working capital or cash needs in the future; • Adjusted Operating Loss, Adjusted Net Loss and Adjusted EBITDA do not reflect changes in, or cash requirements for, our working capital needs; • Adjusted EBITDA does not reflect the interest expense or the cash requirements necessary to service interest or principal payments on our indebtedness; • Adjusted EBITDA does not reflect tax payments that may represent a reduction in cash available to us; • Free Cash Flow removes the impact of accrual-basis accounting on asset accounts and non-debt liability accounts, and does not reflect the cash requirements necessary to service the principal payments on our indebtedness; and • other companies, including companies in our industry, may calculate Adjusted Operating Income (Loss), Adjusted Net Loss, Adjusted EBITDA or Free Cash Flow differently, which reduces their usefulness as comparative measures. ______________________ (1) For previous periods, no restructuring and other costs were recognized. Accordingly, such costs were not previously included in the calculation of this non-GAAP financial measure. 27 The following table sets forth the reconciliation of Net loss attributable to common stockholders to Adjusted Net Loss from continuing operations, Operating loss to Adjusted Operating Income (Loss), and Loss from continuing operations to Adjusted EBITDA (in thousands): Three Months Ended March 31, 2023 2022 Net (loss) income attributable to common stockholders $ (104,280) $ 42,060 Loss (income) from discontinued operations, net of tax 403 (134) Net (loss) income attributable to noncontrolling interests (1) (835) 272 Preferred stock dividends 5,346 5,346 (Loss) income from continuing operations (99,366) 47,544 Adjustments: Acquisition-related amortization (2a) 9,934 15,803 Restructuring and other costs (4) (319) — Loss on extinguishment of debt — 3,533 Other, net (3) (2,407) (191,241) Acquisition-related costs (5) 847 3,664 Litigation costs, net (6) — 3,475 Stock-based compensation 17,005 27,605 Tax impact of adjustments (7) 16,005 (3,552) Adjusted Net Loss from continuing operations $ (58,301) $ (93,169) Adjusted Net Loss from continuing operations per share $ (0.18) $ (0.29) Diluted weighted-average common shares outstanding 328,928 323,658 Operating loss $ (213) $ (79,532) Add back: Equity method income (loss) 423 (170) Acquisition-related amortization (2a) 9,934 15,803 Restructuring and other costs (4) (319) — Acquisition-related costs (5) 847 3,664 Litigation costs, net (6) — 3,475 Stock-based compensation 17,005 27,605 Adjusted Operating Income (Loss) $ 27,677 $ (29,155) (Loss) income from continuing operations (99,366) $ 47,544 Adjustments: Depreciation and amortization of property and equipment (2b) 21,029 26,966 Amortization of capitalized implementation costs (2c) 9,356 7,339 Acquisition-related amortization (2a) 9,934 15,803 Restructuring and other costs (4) (319) — Interest expense, net 99,784 61,058 Other, net (3) (2,407) (191,241) Loss on extinguishment of debt — 3,533 Acquisition-related costs (5) 847 3,664 Litigation costs, net (6) — 3,475 Stock-based compensation 17,005 27,605 Provision (benefit) for income taxes 2,199 (596) Adjusted EBITDA $ 58,062 $ 5,150 The following table sets forth the reconciliation of diluted weighted-average common shares outstanding, calculated in 28 accordance with GAAP, to the adjusted diluted weighted-average shares outstanding (in thousands): Three Months Ended March 31, 2023 2022 GAAP diluted weighted-average common shares outstanding 328,928 409,378 Less: Dilutive effect of stock options and restricted stock awards — 4,251 Less: Dilutive effect of exchangeable notes — 42,302 Less: Dilutive effect of preferred shares — 39,167 Adjusted diluted weighted-average common shares outstanding 328,928 323,658 The following tables set forth the reconciliation of Adjusted Operating Income (Loss) to Operating loss in our statement of operations and Adjusted EBITDA to (Loss) income from continuing operations in our statement of operations by business segment (in thousands): Three Months Ended March 31, 2023 Travel Solutions Hospitality Solutions Corporate Total Adjusted Operating Income (Loss) $ 90,102 $ (8,495) $ (53,930) $ 27,677 Less: Equity method income 423 — — 423 Acquisition-related amortization (2a) — — 9,934 9,934 Restructuring and other costs (4) — — (319) (319) Acquisition-related costs (5) — — 847 847 Stock-based compensation — 17,005 17,005 Operating income (loss) $ 89,679 $ (8,495) $ (81,397) $ (213) Adjusted EBITDA $ 114,708 $ (2,811) $ (53,835) $ 58,062 Less: Depreciation and amortization of property and equipment (2b) 16,628 4,306 95 21,029 Amortization of capitalized implementation costs (2c) 7,978 1,378 — 9,356 Acquisition-related amortization (2a) — — 9,934 9,934 Restructuring and other costs (4) — — (319) (319) Acquisition-related costs (5) — — 847 847 Stock-based compensation — — 17,005 17,005 Equity method income 423 — — 423 Operating income (loss) $ 89,679 $ (8,495) $ (81,397) $ (213) Interest expense, net (99,784) Other, net (3) 2,407 Equity method income 423 Provision for income taxes (2,199) Loss from continuing operations $ (99,366) 29 Three Months Ended March 31, 2022 Travel Solutions Hospitality Solutions Corporate Total Adjusted Operating Income (Loss) $ 45,306 $ (15,117) $ (59,344) $ (29,155) Less: Equity method loss (170) — — (170) Acquisition-related amortization (2a) — — 15,803 15,803 Acquisition-related costs (5) — — 3,664 3,664 Litigation costs, net (6) — — 3,475 3,475 Stock-based compensation — — 27,605 27,605 Operating income (loss) $ 45,476 $ (15,117) $ (109,891) $ (79,532) Adjusted EBITDA $ 73,560 $ (9,317) $ (59,093) $ 5,150 Less: Depreciation and amortization of property and equipment (2b) 22,115 4,600 251 26,966 Amortization of capitalized implementation costs (2c) 6,139 1,200 — 7,339 Acquisition-related amortization (2a) — — 15,803 15,803 Acquisition-related costs (5) — — 3,664 3,664 Litigation costs, net (6) — — 3,475 3,475 Stock-based compensation — — 27,605 27,605 Equity method loss (170) — — (170) Operating income (loss) $ 45,476 $ (15,117) $ (109,891) $ (79,532) Interest expense, net (61,058) Other, net (3) 191,241 Loss on extinguishment of debt (3,533) Equity method loss (170) Benefit for income taxes 596 Income from continuing operations $ 47,544 The following tables present information from our statements of cash flows and set forth the reconciliation of Free Cash Flow to cash used in operating activities, the most directly comparable GAAP measure (in thousands): Three Months Ended March 31, 2023 2022 Cash used in operating activities $ (72,409) $ (139,083) Cash (used in) provided by investing activities (18,110) 374,865 Cash provided by (used in) financing activities 111,939 (25,835) Three Months Ended March 31, 2023 2022 Cash used in operating activities $ (72,409) $ (139,083) Additions to property and equipment (18,110) (17,403) Free Cash Flow $ (90,519) $ (156,486) ______________________________ (1) Net income attributable to noncontrolling interests represents an adjustment to include earnings allocated to noncontrolling interests held in (i) Sabre Travel Network Middle East of 40%, (ii) Sabre Seyahat Dagitim Sistemleri A.S. of 40%, (iii) Sabre Travel Network Lanka (Pte) Ltd of 40%, (iv) Sabre Bulgaria of 4 0%, and (v) FERMR Holdings Limited (the direct parent of Conferma) of 19%. (2) Depreciation and amortization expenses: (a) Acquisition-related amortization represents amortization of intangible assets from the take-private transaction in 2007 as well as intangibles associated with acquisitions since that date. (b) Depreciation and amortization of property and equipment includes software developed for internal use as well as amortization of contract acquisition costs. (c) Amortization of capitalized implementation costs represents amortization of upfront costs to implement new customer contracts under our SaaS and hosted revenue model. 30 (3 ) Other, net includes a $192 million gain on the sale of AirCentre during the three months ended March 31, 2022. In addition, all periods presented include foreign exchange gains and losses related to the remeasurement of foreign currency denominated balances included in our consolidated balance sheets into the relevant functional currency. (4) Restructuring and other costs represents adjustments to charges recorded in previous periods associated with severance benefits related to employee terminations. (5) Acquisition-related costs represent fees and expenses incurred associated with acquisition and disposition-related activities. (6) Litigation costs, net represent charges associated with antitrust litigation and other foreign non-income tax contingency matters. See Note 13. Contingencies, to our consolidated financial statements. (7) The tax impact of adjustments includes the tax effect of each separate adjustment based on the statutory tax rate for the jurisdiction(s) in which the adjustment was taxable or deductible, and the tax effect of items that relate to tax specific financial transactions, tax law changes, uncertain tax positions, and other items. Results of Operations The following table sets forth our consolidated statements of operations data for each of the periods presented: Three Months Ended March 31, 2023 2022 (Amounts in thousands) Revenue $ 742,695 $ 584,910 Cost of revenue, excluding technology costs 307,042 223,034 Technology costs 271,438 273,730 Selling, general and administrative 164,428 167,678 Operating loss (213) (79,532) Interest expense, net (99,784) (61,058) Loss on debt extinguishment — (3,533) Equity method income (loss) 423 (170) Other, net 2,407 191,241 (Loss) income from continuing operations before income taxes (97,167) 46,948 Provision (benefit) for income taxes 2,199 (596) (Loss) income from continuing operations $ (99,366) $ 47,544 Three Months Ended March 31, 2023 and 2022 Revenue Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Travel Solutions $ 677,441 $ 533,998 $ 143,443 27 % Hospitality Solutions 73,812 56,004 17,808 32 % Total segment revenue 751,253 590,002 161,251 27 % Eliminations (8,558) (5,092) (3,466) 68 % Total revenue $ 742,695 $ 584,910 $ 157,785 27 % Travel Solutions— R evenue increased $143 million, or 27%, for the three months ended March 31, 2023 compared to the same period in the prior year, primarily due to: • a $183 million, or 53%, increase in transaction-based distribution revenue primarily due to a 49% increase in Direct Billable Bookings to 97 million and favorable rate impacts from improved international and corporate bookings; and • a $40 million, or 21% decrease in IT solutions revenue primarily due to a $36 million decrease from the sale of our AirCentre portfolio on February 28, 2022 and $37 million lower revenue from a de-migrated Russian carrier, of which $24 million is related to previously deferred revenue recognized during the three months ended March 31, 2022 due to a change in facts and circumstances. These reductions were partially offset by an increase in revenue of $15 million primarily due to a 28% increase in passengers boarded to 165 million and a $16 million increase due to the recognition of a termination fee on a de-migrated carrier that previously terminated. Hospitality Solutions— Revenue increased $18 million, or 32%, for the three months ended March 31, 2023 compared to the same period in the prior year. The increase was primarily driven by a $17 million increase in SynXis Software and Services revenue due to an increase in transaction volumes of 21% to 28 million, a favorable mix within our customer base, and a $1 million increase in DX revenue. 31 Cost of revenue, excluding technology costs Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Travel Solutions $ 267,427 $ 189,754 $ 77,673 41 % Hospitality Solutions 37,057 27,725 9,332 34 % Eliminations (8,558) (5,092) (3,466) 68 % Total segment cost of revenue, excluding technology costs 295,926 212,387 83,539 39 % Corporate 1,552 1,978 (426) (22) % Depreciation and amortization 9,564 8,669 895 10 % Total cost of revenue, excluding technology costs $ 307,042 $ 223,034 $ 84,008 38 % Travel Solutions— Cost of revenue, excluding technology costs, increased $78 million, or 41%, for the three months ended March 31, 2023 compared to the same period in the prior year. The increase was primarily driven by an $85 million increase in incentive consideration due to higher transaction volume as well as an increase in rates. This increase was partially offset by a $7 million decrease in labor and professional costs primarily due to the sale of AirCentre. Hospitality Solutions— Cost of revenue, excluding technology costs, increased $9 million, or 34%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to costs associated with increased transaction volumes and the mix of our customer base. Technology Costs Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Travel Solutions $ 233,020 $ 225,144 $ 7,876 3 % Hospitality Solutions 29,889 28,560 1,329 5 % Corporate 8,529 20,026 (11,497) (57) % Total technology costs $ 271,438 $ 273,730 $ (2,292) (1) % Travel Solutions— Technology cos ts increased $8 million, or 3%, for the three months ended March 31, 2023 compared to the same period in the prior year. The increase was primarily driven by an $18 million increase in labor and professional services costs to support our technology transformation initiatives. This increase was partially offset by a $5 million decrease in technology costs due to cost savings related to our mainframe offloads and data migrations. A dditionally, depreciation and amortization decreased by $5 million pr imarily due to the sale of our AirCentre portfolio and the completion of amortization of capitalized internal use software. Hospitality Solutions— Technology cost s increased $1 million, or 5%, for the three months ended March 31, 2023 compared to the same period in the prior year due to a $4 million increase in technology costs to support our technology transformation initiatives, including the migration of SynXis to the cloud. This increase was partially offset by a $2 million decrease in labor and professional services. Corporate— Technology costs decreased $11 million, or 57%, for the three months ended March 31, 2023 compared to the same period in the prior year due to a $5 million decrease in depreciation and amortization associated with a reduction in intangible amortization as a result of the completion of amortization of technology assets from prior acquisitions, a $4 million decrease in labor and professional services and a $2 million decrease in stock-based compensation. Selling, General and Administrative Expenses Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Travel Solutions $ 79,123 $ 67,031 $ 12,092 18 % Hospitality Solutions 13,989 13,626 363 3 % Corporate 71,316 87,021 (15,705) (18) % Total selling, general and administrative expenses $ 164,428 $ 167,678 $ (3,250) (2) % 32 Travel Solutions— Selling, general and administrative expenses increased $12 million, or 18%, for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to a $6 million increase in the provision for credit losses and a $5 million increase due to continued investment in our internal business systems. Corporate— Selling, general and administrative expenses decreased $16 million, or 18%, for the three months ended March 31, 2023 compared to the same period in the pri or year. This decrease was driven by an $8 million decrease in stock-based compensation primarily due to forfeitures of unvested shares, a $3 million decrease in professional services related to our business structure and strategy, a $3 million decrease in technology costs, and a reduction in other business expenses. These decreases were partially offset by a $2 million increase in labor and professional services and a $1 million increase in risk and security costs. Interest expense, net Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Interest expense, net $ 99,784 $ 61,058 $ 38,726 63 % Interest expense increased $39 million, or 63%, during the three months ended March 31, 2023 compared to the same period in the prior year primarily due to higher interest rates on our term loans. This increase was partially offset by the impact of our interest rate swaps. See Note 8. Derivatives for further details regarding our interest rate swaps. Loss on extinguishment of debt We recognized a loss on extinguishment of debt of $4 million for the three months ended March 31, 2022 as a result of the refinancing that occurred in the first quarter of 2022. See Note 7. Debt for further details. Other, net Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Other, net $ (2,407) $ (191,241) $ 188,834 (99) % Other, n et decreased $189 million for the three months ended March 31, 2023 compared to the same period in the prior year primarily due to the sale of AirCentre in the first quarter of 2022, which resulted in a gain of approximately $192 million. See Note 3. Acquisitions and Dispositions for further details regarding the sale of AirCentre. Provision (benefit) for Income Taxes Three Months Ended March 31, 2023 2022 Change (Amounts in thousands) Provision (benefit) for income taxes $ 2,199 $ (596) $ 2,795 (469) % For the three months ended March 31, 2023, we recognized $2 million of income tax expense, representing an effective tax rate of less than 1%, compared to an income tax benefit of $1 million, also representing an effective tax rate of less than 1% for the three months ended March 31, 2022. The effective tax rate remained relatively flat for the for the three months ended March 31, 2023 as compared to the same period in 2022. The difference between our effective tax rates and the U.S. federal statutory income tax rate primarily results from valuation allowances, our geographic mix of taxable income in various tax jurisdictions, tax permanent differences and tax credits. 33 Liquidity and Capital Resources Our current principal source of liquidity is our cash and cash equivalents on hand. As of March 31, 2023 and December 31, 2022, our cash and cash equivalents and outstanding letters of credit were as follows (in thousands): March 31, 2023 December 31, 2022 Cash and cash equivalents $ 817,075 $ 794,888 Available balance under the AR Facility 3,700 — AR Facility outstanding balance 115,000 — Available under the bilateral letter of credit facility 8,618 8,473 Outstanding letters of credit under the bilateral letter of credit facility 11,381 11,527 On March 30, 2023, we drew $115 million under the AR Facility to supplement our liquidity, which remained outstanding as of March 31, 2023. As of March 31, 2023 , the borrowing base was $119 million, of which Sabre had availability of $4 million. Our AR Facility matures on January 14, 2025 at the earliest and February 13, 2026 at the latest, depending on certain "springing" maturity conditions. The AR Facility allows us the ability to prepay the principal amount prior to the maturity date without penalty. See Note 7. Debt. We consider cash equivalents to be highly liquid investments that are readily convertible into cash. Securities with contractual maturities of three months or less, when purchased, are considered cash equivalents. We record changes in a book overdraft position, in which our bank account is not overdrawn but recently issued and outstanding checks result in a negative general ledger balance, as cash flows from financing activities. We invest in a money market fund which is classified as cash and cash equivalents in our consolidated balance sheets and statements of cash flows. We held no short-term investments as of March 31, 2023 and December 31, 2022. We had $21 million held as cash collateral for standby letters of credit in restricted cash on our consolidated balance sheets as of March 31, 2023 and December 31, 2022. Liquidity Outlook The ongoing effects of COVID-19 on our operations and global bookings have had, and we believe they will continue to have, a material negative impact on our financial results and liquidity, and this negative impact may continue notwithstanding any ongoing recovery from the outbreak. Given the uncertainties surrounding the duration and effects of COVID-19, on transaction volumes in the global travel industry, particularly air travel transaction volumes, including from airlines’ insolvency or suspension of service or aircraft groundings, we cannot provide assurance that the assumptions used to estimate our liquidity requirements will be accurate. However, based on our assumptions and estimates with respect to our financial condition, we believe that we have resources to sufficiently fund our liquidity requirements over at least the next twelve months. Given the magnitude of travel decline, the uncertain economic environment and the unknown duration of the COVID-19 impact, we will continue to monitor travel activity and take additional steps should we determine they are necessary. As previously disclosed, we responded to the impact of COVID-19 on our business with measures to increase our cash position during 2020, including the suspension of quarterly cash dividends on our common stock, effective with respect to the dividends occurring after the March 30, 2020 payment and share repurchases under our $500 million share repurchase program (the "Share Repurchase Program"), and completing debt and equity offerings. Additionally, given the market conditions resulting from COVID-19, we responded with cost savings measures during 2020, including the reduction of our workforce through voluntary severance and early retirement programs and a right-sizing of our global organization. In 2021, we refinanced and extended the maturity on a portion of our debt and amended the financial performance covenant to remove minimum liquidity and leverage ratio requirements. In 2022, we further refinanced and extended the maturity on other portions of our debt, which also negatively impacted our results due to increasing interest rates. We believe the ongoing effects of COVID-19 on our operations and global bookings will continue to have a material negative impact on our financial results and liquidity, and this negative impact may continue notwithstanding any ongoing recovery from the outbreak. We believe our cash position and the liquidity measures we have taken will provide additional flexibility as we manage through the industry's recovery from the COVID-19 pandemic. We will continue to monitor our liquidity levels and take additional steps should we determine they are necessary. We utilize cash and cash equivalents primarily to pay our operating expenses, make capital expenditures, invest in our information technology infrastructure, products and offerings, pay taxes, pay quarterly dividends on our Preferred Stock (as defined below) when declared, and service our debt and other long-term liabilities. Free cash flow is calculated as cash flow from operations reduced by additions to property and equipment. Cash payments for restructuring and other related costs are expected to be approximately $50 million for the full year 2023, which will impact our free cash flow. See “—Risk Factors" for further details. Our ability to generate cash depends on many factors beyond our control, and any failure to meet our debt service obligations could harm our business, financial condition and results of operations. Our ability to make payments on and to refinance our indebtedness, and to fund working capital needs and planned capital expenditures will depend on our ability to generate cash in the future, which is subject to general economic, financial, competitive, business, legislative, regulatory and other factors that are beyond our control, including the impacts of COVID-19. See “Risk Factors—The COVID-19 pandemic has had and is expected to continue to have a significant adverse impact on our business, including our financial results and 34 prospects, and the travel suppliers on whom our business relies." and "—We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available.” On an ongoing basis, we will evaluate and consider strategic acquisitions, divestitures, joint ventures, equity method investments, refinancing our existing debt or repurchasing our outstanding debt obligations in open market or in privately negotiated transactions, as well as other transactions we believe may create stockholder value or enhance financial performance. These transactions may require cash expenditures or generate proceeds and, to the extent they require cash expenditures, may be funded through a combination of cash on hand, debt or equity offerings. While the COVID-19 pandemic has had an adverse impact on our business, we recognized federal taxable income in 2022 based on our operating and non-operating results along with provisions of the Tax Cuts and Jobs Act that limit interest expense deduction and the annual use of Net Operating Loss ("NOL") carryforwards, and requires companies to capitalize and amortize research and development costs. As a result, we expect to be a U.S. federal cash taxpayer in 2023, and we also expect to benefit from the usage of NOLs in 2023 to the extent available. We expect to continue to benefit from our NOLs and certain tax credits in the near-term beyond 2023. Capital Resources As of March 31, 2023, our outstanding debt totaled $4,855 million, which is net of debt issuance costs and unamortized discounts. Currently approximately 28% of our debt, net of cash and hedging impacts from interest rates swaps, is variable and impacted by changes in interest rates. See “Risk Factors—We are exposed to interest rate fluctuations.." In the future, we may review opportunities to refinance our existing debt, as well as conduct debt or equity offerings to support future strategic investments, support operational requirements, provide additional liquidity, or pay down debt. The global capital markets experienced periods of volatility throughout 2022 and the first quarter of 2023, in response to the conflict in Ukraine, increases in the rate of inflation, and uncertainty regarding the path of U.S. monetary policy. During 2022, we refinanced portions of our debt which resulted in higher interest rates than prior years, increasing our current and future interest expense. We expect to further refinance portions of our debt in 2023 and 2024 which, at current interest rates, may negatively impact our interest expense. In addition, as a result of the judgment in our antitrust litigation with US Airways, we may be required as early as 2024 to pay US Airways' reasonable attorneys' fees and costs. See Note 13. Contingencies, to our consolidated financial statements. Depending on the amount of attorneys' fees and costs, if any, that might be awarded to US Airways, if we do not have sufficient cash on hand, we may be required to seek financing from private or public financing sources, which may not be assured. Our continued access to capital resources depends on multiple factors, including global economic conditions, the condition of global financial markets, the availability of sufficient amounts of financing, our ability to meet debt covenant requirements, our operating performance, and our credit ratings. These external events could lead to further market disruption and potential increases to our funding costs. While the terms of our outstanding indebtedness allow us to incur additional debt, subject to limitations, our ability to incur additional secured indebtedness is significantly limited. As a result, we expect that any such incremental indebtedness, if available and to the extent issued in the future, would likely be unsecured. If our credit ratings were to be downgraded, or financing sources were to become more limited or to ascribe higher risk to our rating levels or our industry, our access to capital and the cost of any financing would be negatively impacted. There is no guarantee that additional debt financing will be available in the future to fund our obligations, or that it will be available on commercially reasonable terms, in which case we may need to seek other sources of funding. In addition, the terms of future debt agreements could include more restrictive covenants than those we are currently subject to, which could restrict our business operations. For more information, see "Risk Factors—We may require more cash than we generate in our operating activities, and additional funding on reasonable terms or at all may not be available." Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends. In the first quarter of 2023, we entered into a securitization transaction on our accounts receivable balances pursuant to the AR facility which provided a maximum of $200 million in additional funding. As of March 31, 2023, we were in compliance with all covenants under the terms of the Amended and Restated Credit Agreement and the AR Facility. We are required to pay down our term loans by an amount equal to 50% of annual excess cash flow, as defined in the Amended and Restated Credit Agreement. This percentage requirement may decrease or be eliminated if certain leverage ratios are achieved. Based on our results for the year ended December 31, 2021, we were not required to make an excess cash flow payment in 2022, and no excess cash flow payment is required in 2023 with respect to our results for the year ended December 31, 2022. We are further required to pay down the term loans with proceeds from certain asset sales, net of taxes, or borrowings, that are not otherwise reinvested in the business, as provided in the Amended and Restated Credit Agreement. As of March 31, 2023, we have reinvested $245 million of the proceeds from the disposition of AirCentre. Additional reinvestments are expected prior to May of 2023. To the extent not considered reinvested into the business, any remaining proceeds from the disposition of AirCentre, net of taxes, will be used to pay down the term loans. As of March 31, 2023, we had outstanding approximately $1 billion of variable debt that is indexed to the London Interbank Offered Rate ("LIBOR") consisting of 2021 Term Loan B-1 for $396 million and 2021 Term Loan B-2 for $628 million. In July 2017, the Financial Conduct Authority announced its intention to phase out LIBOR by the end of 2021, and subsequently 35 extended the phase-out date to June 30, 2023. In July 2021, we entered into the 2021 Refinancing which, among other things, allows for the LIBOR rate to be phased out and replaced with SOFR plus a credit spread adjustment factor for 2021 Term Loan B-1 and 2021 Term Loan B-2, and we therefore do not anticipate a material impact from the anticipated phase out of LIBOR with respect to these loans. Recent Events Impacting Our Liquidity and Capital Resources Debt Agreements On March 9, 2022 and August 15, 2022, we refinanced and extended the maturity on a portion of the Term Loan B facility. See “— Senior Secured Credit Facilities" below. On December 6, 2022, Sabre GLBL entered into a new debt agreement consisting of $555 million aggregate principal amount of 11.250% senior secured notes due 2027 (the “December 2027 Notes”). We used the proceeds of the December 2027 Notes issuance to redeem the remaining principal balance on the Term Loan B of $536 million, plus $1 million of accrued interest (the “December 2022 Refinancing”). We recognized a loss on extinguishment of debt of $1 million during the year ended December 31, 2022 in connection the December 2022 Refinancing, which consisted of the write-off of unamortized debt issuance costs and discount of $1 million. See Note 7. Debt, to our consolidated financial statements for further information. AR Facility On February 14, 2023, Sabre Securitization, LLC, an indirect, consolidated subsidiary of Sabre Corporation and a special purpose entity (“Sabre Securitization”), entered into a three-year committed accounts receivable securitization facility (the “AR Facility”) of up to $200 million with PNC Bank, N.A. On March 30, 2023, we borrowed $115 million under the AR Facility. These proceeds are being used for general corporate purposes. Dividends The Preferred Stock accumulates cumulative dividends at a rate per annum equal to 6.50% and dividends are payable when, as and if declared by our board of directors, out of funds legally available for their payment to the extent paid in cash, quarterly in arrears on March 1, June 1, September 1 and December 1 of each year, beginning on December 1, 2020 and ending on, and including, September 1, 2023. Declared dividends on the Preferred Stock are payable, at our election, in cash, shares of our common stock or a combination of cash and shares of our common stock. We recorded $5 million of accrued preferred stock dividends in our consolidated results of operations for the three months ended March 31, 2023 and 2022. During the three months ended March 31, 2023 and 2022, we paid cash dividends on our preferred stock of $5 million. On April 26, 2023, the Board of Directors declared a dividend of $1.625 per share on Preferred Stock payable on June 1, 2023 to holders of record of the Preferred Stock on May 15, 2023. Share Repurchase Program In February 2017, we announced the approval of a multi-year share repurchase program (the "Share Repurchase Program") to purchase up to $500 million of Sabre's common stock outstanding. Repurchases under the Share Repurchase Program may take place in the open market or privately negotiated transactions. For the three months ended March 31, 2023, we did not repurchase any shares pursuant to the Share Repurchase Program. On March 16, 2020, we announced the suspension of share repurchases under the Share Repurchase Program in conjunction with the cash management measures we are undertaking as a result of the market conditions caused by COVID-19. Approximately $287 million remains authorized for repurchases under the Share Repurchase Program as of March 31, 2023. Senior Secured Credit Facilities On March 9, 2022, we entered into an amendment to refinance another portion of our then-outstanding Term Loan B facility (the "March 2022 Refinancing"). Our Senior Secured Credit Facility is governed by the Amended and Restated Credit Agreement including the Sixth Term A Loan Refinancing and Incremental Amendments entered into in December 2020 and all preceding amendments. We incurred no additional indebtedness as a result of the March 2022 Refinancing, other than amounts covering discounts and certain fees and expenses. The March 2022 Refinancing included the application of the proceeds of a new $625 million term loan “B” facility (the “2022 Term Loan B-1 Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $623 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement. The remaining proceeds, net of a discount of $1 million, were used to pay $1 million in other fees and expenses. We incurred an additional discount of $5 million and other fees of $3 million which were funded with cash on hand. We recognized a loss on extinguishment of debt in connection with the March 2022 Refinancing during the year ended December 31, 2022, of $4 million and debt modification costs for financing fees of $1 million recorded to Other, net. The 2022 Term Loan B-1 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-1 Facility after 12 months or to prepay or repay at a 101 premium before that date. The interest rates on the 2022 Term Loan B-1 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin. 36 On August 15, 2022, we entered into an amendment to refinance a portion of the Term Loan B facility (the "August 2022 Refinancing"). We incurred no additional indebtedness as a result of the August 2022 Refinancing, other than amounts covering discounts and certain fees and expenses. The August 2022 Refinancing included the application of the proceeds of a new $675 million term loan “B” facility (the “2022 Term Loan B-2 Facility”), borrowed by Sabre GLBL under our Amended and Restated Credit Agreement, with the effect of extending the maturity of approximately $647 million of the existing Term Loan B credit facility under the Amended and Restated Credit Agreement. The remaining proceeds, net of a discount of $25 million, were used to pay $3 million in other fees and expenses. We incurred an additional discount of $9 million and other fees of $2 million which were funded with cash on hand. We recognized debt modification costs for financing fees in connection with the August 2022 Refinancing during the year ended December 31, 2022 of $5 million recorded to Other, net. No loss on extinguishment of debt was recorded as a result of the August 2022 Refinancing. The 2022 Term Loan B-2 Facility matures on June 30, 2028 and offers us the ability to prepay or repay the 2022 Term Loan B-2 Facility after 12 months or to prepay or repay at a 101 premium before that date. The interest rates on the 2022 Term Loan B-2 Facility are based on Term SOFR, replacing LIBOR, plus an applicable margin.   Under the Amended and Restated Credit Agreement, the loan parties are subject to certain customary non-financial covenants, including restrictions on incurring certain types of indebtedness, creation of liens on certain assets, making of certain investments, and payment of dividends. As of March 31, 2023, we are in compliance with all covenants under the terms of the Amended and Restated Credit Agreement. Cash Flows Three Months Ended March 31, 2023 2022 (Amounts in thousands) Cash used in operating activities $ (72,409) $ (139,083) Cash (used in) provided by investing activities (18,110) 374,865 Cash provided by (used in) financing activities 111,939 (25,835) Cash provided by (used in) discontinued operations 52 (1,680) Effect of exchange rate changes on cash, cash equivalents and restricted cash 715 (205) Increase in cash, cash equivalents and restricted cash $ 22,187 $ 208,062 Operating Activities Cash used in operating activities total ed $72 million for the three months ended March 31, 2023. The $67 million increase in operating cash flow from the same period in the prior year was primarily due to increased transaction volumes, partially offset by a $29 million increase in interest payments related to our debt. Investing Activities For the three months ended March 31, 2023, we used $18 million of cash for capital expenditures primarily related to software developed for internal use. For the three months ended March 31, 2022, we received proceeds of $392 million from the sale of AirCentre, partially offset by $17 million of cash used on capital expenditures primarily related to software developed for internal use. Financing Activities For the three months ended March 31, 2023, financing activities provide d $112 million. Sig nificant highlights of our financing activities include: • proceeds of $115 million from borrowings on our AR Facility; • proceeds of $16 million from the sale of our common shares of Conferma; • payment o f $6 million o n our term loans; • payment of $2 million f or debt discount and issuance costs; • net payme nts of $5 million fro m the settlement of employee stock-option awards; and • payment o f $5 million in dividends on our preferred stock. For the three months ended March 31, 2022, financing activities used $26 million. Significant highlights of our financing activities include: • proceeds of $625 million from the issuance of New Other Term B Facility; • payment of $623 million on Term Loan B; • payment of $3 million on 2021 Term Loan B-1 and 2021 Term Loan B-2; 37 • payment of $10 million for debt prepayment fees and issuance costs; • net payments of $10 million from the settlement of employee stock-option awards; and • payment of $5 million in dividends on our preferred stock. Contractual Obligations There were no material changes to our future minimum contractual obligations since December 31, 2022 as previously disclosed in our Annual Report on Form 10-K filed with the SEC on February 17, 2023, other than the impact of interest rates on our debt and additional borrowings under the three-year committed accounts receivable securitization facility of $115 million. As of March 31, 2023, we had a total debt obligation of $6.4 billion, with $345 million due for the remainder of 2023. We had no off balance sheet arrangements during the three months ended March 31, 2023 and year ended December 31, 2022. Recent Accounting Pronouncements Information related to Recent Accounting Pronouncements is included in Note 1. General Information, to our consolidated financial statements included in Part I, Item 1 in this Quarterly Report on Form 10-Q, which is incorporated herein by reference. Critical Accounting Estimates This discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with GAAP. The preparation of these financial statements requires us to make estimates and judgments that affect our reported assets and liabilities, revenues and expenses and other financial information. Actual results may differ significantly from these estimates, and our reported financial condition and results of operations could vary under different assumptions and conditions. In addition, our reported financial condition and results of operations could vary due to a change in the application of a particular accounting standard. We regard an accounting estimate underlying our financial statements as a “critical accounting estimate” if the accounting estimate requires us to make assumptions about matters that are uncertain at the time of estimation and if changes in the estimate are reasonably likely to occur and could have a material effect on the presentation of financial condition, changes in financial condition, or results of operations. For a discussion of the accounting policies involving material estimates and assumptions that we believe are most critical to the preparation of our financial statements, how we apply such policies and how results differing from our estimates and assumptions would affect the amounts presented in our financial statements, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Estimates” included in our Annual Report on Form 10-K filed with the SEC on February 17, 2023. Since the date of the annual report on Form 10-K filed with the SEC on February 17, 2023, there have been no material changes to our critical accounting estimates.