Expects Revenues of $74-$75 Million, Below Prior Guidance of $77-$80 Million Lowers Guidance for Full Year 2004
Orbitz, Inc. (NASDAQ:ORBZ) today released preliminary financial results for the second quarter of 2004 and amended its guidance for the full year 2004.
The company expects earnings for the quarter ended June 30, 2004 to exceed its previous guidance. Orbitz now expects to report pre-tax income of $9 million to $10 million, or 21-23 cents per diluted share, compared with its previous guidance of $3.6 million to $6.6 million, or 8-15 cents per diluted share. Excluding stock-based compensation charges of approximately $1.4 million related to an April 2002 restructuring of its outstanding stock options(1) and a tax-related expense of about $700,000 to $1.3 million due to a tax-sharing agreement with Class B shareholders(2), Orbitz expects adjusted pre-tax income of $11 million to $12 million and adjusted pre-tax diluted earnings per share of 26-29 cents. The previous guidance was adjusted pre-tax income of $5 million to $8 million, or 11-18 cents per diluted share.
Orbitz expects second quarter 2004 revenues of $74 million to $75 million, compared with its previous guidance of $77 million to $80 million. Second quarter revenues and full-year expectations have been affected by a slower ramp-up of the Orbitz Merchant Hotel program and a more competitive marketing environment, which affected hotel and air revenues. While specific initiatives are under way to generate improvements, management expects these factors to influence the remainder of this year.
President and Chief Executive Officer Jeff Katz said, "Orbitz achieved another quarter of solid profitability and its seventh consecutive quarter of positive cash flow from operations. We've built a leading online travel business which has demonstrated compelling growth since Orbitz' launch three years ago. While growth for the balance of 2004 is not what we originally forecast, we expect that the initiatives we've implemented to accelerate sales of our higher-margin offerings, such as Orbitz Merchant Hotel and dynamic packaging, will help Orbitz get back on a strong growth track."
For the second quarter of 2004, Orbitz expects to report gross travel bookings of about $1.05 billion, a 21 percent increase from $865.7 million for the second quarter of 2003.
Full-Year 2004 Guidance
Orbitz has revised its full-year 2004 guidance as follows:
-- Revenues of $295 million to $305 million, compared with its previous
guidance of $320 million to $340 million.
-- Adjusted pre-tax income of $35 million to $40 million; adjusted pre-tax
diluted earnings per share of 80-91 cents. This compares with Orbitz'
previous guidance of $50 million to $60 million, or $1.14 to $1.36 per
diluted share. These figures exclude stock-based compensation charges
of approximately $5.6 million related to the April 2002 restructuring
of outstanding stock options and $4 million to $5 million attributable
to tax-sharing expenses.
-- As previously reported, Orbitz expects weighted average 2004 diluted
shares outstanding of approximately 44 million, including outstanding
options calculated via the treasury method and treating convertible
preferred stock on an as-converted basis. The company does not expect
to pay taxes in 2004, but will record a tax-related expense as part of
its tax-sharing agreement with its Class B shareholders.
