Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (March 2016)
39 slides from Transat A.t's investor presentation, March 2016
Slide 1: Ready for the Future: Transat More Nimble & Focused
READY FOR THE FUTURE: TRANSAT MORE NIMBLE & FOCUSED Investors Presentation March 2016
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE CORPORATION. THESE FORWARD-LOOKING STATEMENTS, BY THEIR NATURE, NECESSARILY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE
Slide 3: Agenda
AGENDA INTRODUCTION 4 SECTION 1 – SUN DESTINATIONS MARKET OVERVIEW 11 o Capacity and market share overview 12 o Outbound / Destinations overview 13 o Recent performance 14 o Strategy and Ocean Hotels investment 16 SECTION 2 – TRANSATLANTIC MARKET OVERVIEW 18 o Capacity and market share overview 19 o
Slide 4: One of the Largest Tour Operators in the World FY2015
ONE OF THE LARGEST TOUR OPERATORS IN THE WORLD FY2015 $101M EBITDA $3.6B 2.7M Customers Revenues ± 5,500 Employees 60+ Destinations (excluding France) 4
Slide 5: One of the Largest Tour Operators in the World (excluding France & Greece)
ONE OF THE LARGEST TOUR OPERATORS IN THE WORLD FY2015 (excluding France & Greece) $102M EBITDA $2.9B 2.3M Customers Revenues ± 4,500 Employees 60+ Destinations 5
Slide 6: True Vertically-Integrated Travel Provider
TRUE VERTICALLY-INTEGRATED TRAVEL PROVIDER Outbound Develops holiday travel packages for sun destinations and Europe Tour Operator Served 1.5M travelers from Canada and 0.6M from Europe in 2015 Largest retail holiday travel distributor in Canada with 466 outlets Distributor Comprehensive onl
Slide 7: Distinct Summer and Winter Markets
DISTINCT SUMMER AND WINTER MARKETS Summer Winter PAX Distribution (FY2015) 20% 10% 60% 80% 10% 20% Transatlantic South & Ocean Hotels France (1) Historical EBITDA $135 $133 $124 2013 2014 2015 2013 2014 2015 ($15) ($24) ($32) Strong and consistent performance in summer Focus on returning to pr
Slide 8: 2015-2017 Strategic Plan
2015-2017 STRATEGIC PLAN Key Initiatives Update on $100mm Cost Reduction and $100mm cost reduction and margin Margin Improvement Program (C$ mm) $100.0 improvement program Achieved 2015 target $75.0 Improve product offering $45.0 Introduce new European destinations Optimize sun destinations of
Slide 9: Multiple Value Drivers
MULTIPLE VALUE DRIVERS Implied Value Per Share FY2015 EBITDA of $94M excluding contribution from Ocean Hotels, French and Greek Tour Operators Integrated Tour Operator Strategic plan creates opportunity to reduce costs by an additional $55M in 2016 and 2017 ~$7.50 (1) (including Airline) Poten
Slide 10: Investment Highlights
INVESTMENT HIGHLIGHTS 1 Truly vertically-integrated travel provider with flexible cost structure Very strong position in sun destinations and transatlantic markets 2 with exceptional brand recognition Since 2012, Transat did a 3 Significant unrecognized asset value at current trading level turnaroun
Slide 11: Section 1 – Sun Destinations Market Overview
SECTION 1 – SUN DESTINATIONS MARKET OVERVIEW 11
Slide 12: Sun Destinations: Capacity and Market Share
SUN DESTINATIONS MARKET OVERVIEW CAPACITY AND MARKET SHARE(1) 1 400 000 Market share – -1% Winter 2015 (Actual) Winter 2016 (Forecast) Sun destinations, 1 200 000 TOTAL SEATS Winter 2016 +5% WINTER 2015 1 000 000 6 +3% 3,990,000 17 24 800 000 +11% 600 000 % TOTAL SEATS 22 400 000 -27% WINTER 2016 31
Slide 13: Winter 2016: 975,000 Travellers
SUN DESTINATIONS MARKET OVERVIEW OUTBOUND / DESTINATIONS OVERVIEW WINTER 2016: 975,000 TRAVELLERS (excluding USA) Origin of travellers Destination of travellers Atlantic 5 54 3 4 4 Mexico 9 33 Quebec Dom. Rep. Ontario % 44 % Cuba 27 Alberta Caribbean 34 Bristish Columbia 29 Jamaica Rest of Canada Ce
Slide 14: Sun Destinations Recent Performance: Q1 Highlights
SUN DESTINATIONS MARKET OVERVIEW RECENT PERFORMANCE Q1 HIGHLIGHTS (vs. 2015) 1st quarter January 31 (in thousands of C$) 2016 2015 2016 vs. 2015 First quarter is the less busy of the year Actual Actual $ % Prevented from improving our results REVENUES 846,928 788,581 58,347 7.4% • Significant drop i
Slide 15: Sun Destinations Recent Performance: Winter Highlights
SUN DESTINATIONS MARKET OVERVIEW RECENT PERFORMANCE WINTER HIGHLIGHTS (vs. 2015) Q1 Q2 Winter After a good start, our efficiency gains coming from our cost reduction program and margin initiatives were Adj. EBITDA 2015 (incl. hotels) (1) (36M) 4M (32M) offset by various factors : • Canadian dollar d
Slide 16: Fleet Strategy
SUN DESTINATIONS MARKET OVERVIEW FLEET STRATEGY WIDE-BODY W13 W14 W15 W16 Air Transat Base Fleet 21 21 21 21 - Seasonally withdrawn (1) - (4) (6) (6) - Sublease (1) (1) (1) (3) Total 20 16 14 12 (1) As a result to improved leasing terms, three A330s are withdrawn from the fleet in winter. In additio
Slide 17: Ocean Hotels Investment
SUN DESTINATIONS MARKET OVERVIEW OCEAN HOTELS INVESTMENT 35% Interest (65% held by H10 Hotels) H10 Panorama • $107M on balance sheet as of Jan 31 Havana, Cuba Grow Ocean Hotels from 3,225 as of today to 5,000 rooms by 2017 Ocean Maya Royale • Through a combination of owned and managed hotels Riviera
Slide 18: Section 2 – Transatlantic Market Overview
SECTION 2 – TRANSATLANTIC MARKET OVERVIEW 16 18
Slide 19: Transatlantic Market: Capacity and Market Share
TRANSATLANTIC MARKET CAPACITY AND MARKET SHARE(1) +20% 2 000 000 Summer 2015 (Actual) Market share – Summer 2016 (Forecast) Transatlantic routes, 1 750 000 TOTAL SEATS Summer 2016 SUMMER 2015 1 500 000 8 1 250 000 3,960,000 4 7 1 000 000 +8% 6 43 % 750 000 TOTAL SEATS 12 +2% SUMMER 2016 500 000 +20%
Slide 20: Market Share by Destinations (Summer 2016)
TRANSATLANTIC MARKET OVERVIEW MARKET SHARE BY DESTINATIONS (SUMMER 2016) Market share United Kingdom Europe: largest tourism market in the world 12 (more than 50% of travellers inbound & outbound) 4.6M seats in summer 2016 between Canada and Europe 18 % 51 Market share TRANSAT STRATEGY AND MARKET PO
Slide 21: Transatlantic Recent Performance: Summer Highlights
TRANSATLANTIC MARKET OVERVIEW RECENT PERFORMANCE Summer season ended October 31 SUMMER HIGHLIGHTS (vs. 2015) (in thousands of C$) 2015 2014 2013 Avg. 2013-2015 Two of our best summer results ever Actual Actual Actual in the last three years despite global REVENUES 1,759,289 1,786,356 1,735,620 1,760
Slide 22: Ancillary Revenues
TRANSATLANTIC MARKET OVERVIEW ANCILLARY REVENUES (In millions of dollars) 75 67 10 5 (1) 60 Grow ancillary revenues to 55 $75M by 2017 Introduction of the Datalex software to facilitate the sale of optional services New cargo agreement 2014 2015 2016 2017 Initial target New target 22 (1) Including t
Slide 23: Section 3 – E-Commerce & Distribution Strategy
SECTION 3 – E-COMMERCE & DISTRIBUTION STRATEGY 23
Slide 24: E-Commerce & Distribution Strategy: Canada Web + Call Center Results
E-COMMERCE & DISTRIBUTION STRATEGY CANADA WEB + CALL CENTER RESULTS (3-MONTH PERIOD ENDED AS JANUARY 31) B2C WEB Only Web + Call Center $$$ $$$ 11M 82K $86M 56K $56M 2015 visits passengers sales passengers sales 2015 vs. 2014 - 4% +16% +17% +29% +28% 13M 107K $105M 76K $70M 2016 visits passengers sa
Slide 25: Renewed Distribution
E-COMMERCE & DISTRIBUTION STRATEGY RENEWED DISTRIBUTION By the end of 2016, we will have 59 migrated our corporate travel Create a fully-integrated distribution agencies to the Transat Travel ecosystem comprised of a new Transat Travel brand website, connected to our call centers and The brand chang
Slide 26: Section 4 – Financial Profile
SECTION 4 – FINANCIAL PROFILE 26
Slide 27: Consolidated Recent Performance
FINANCIAL PROFILE CONSOLIDATED RECENT PERFORMANCE 12-month ended October 31 HIGHLIGHTS (in thousands of C$) 2015 2014 2013 Avg. 2013-2015 Profitability maintained Actual Actual Actual • Range of 100-120M Adjusted EBITDA(1) REVENUES 3,566,368 3,752,198 3,648,158 3,655,575 5 record summers in last 6 y
Slide 28: Current Financial Position
FINANCIAL PROFILE CURRENT FINANCIAL POSITION As at HIGHLIGHTS Jan. 31, Jan. 31, Free Cash: + $38M vs. 2015 (in thousands of C$, except ratios) 2016 vs. 2015 2016 2015 • Results of the last 12 months, working cap, net of capex • Share buyback ($14M) Actual Actual $ % Cash during the fall season • $25
Slide 29: Trading Comparables (Valuation Metrics)
FINANCIAL PROFILE TRADING COMPARABLES (VALUATION METRICS) Share price Adj. Adj. EV / EBITDAR(1) P/E Margins (LTM) (in millions of C$, except Latest Equity ratios) Enterprise Quarter Value 03/03/2016 Value CY2016E(2) CY2017E(2) CY2016E(2) CY2017E(2) EBITDAR EBITDA Direct comparables TUI AG €13.28 Dec
Slide 30: Trading Comparables (Capital Structure)
FINANCIAL PROFILE TRADING COMPARABLES (CAPITAL STRUCTURE) Adj. Capital Structure Capital Structure (%) (in millions of C$, unless otherwise noted) Cash Net Debt(1) Market Total Cash Adj. Market Total Adj. Leases Other Leases Cash Other Cap debt Adj. EV(1) Cap debt EV(1) Direct comparables TUI AG $1,
Slide 31: Appendix
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Slide 32: Appendix I: Winter Financial Results
APPENDIX I: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter Avg. 2011- (in thousands of CAD) 2015 2014 2013 2012 2011 2015 REVENUES 1,807,079 1,965,842 1,912,538 2,041,722 1,911,263 1,927,689 Adjusted EBITDAR (incl. hotels JV)(1) 15,493 15,135 26,312 (14,255) 21,238 12,785 Adjusted EBITDA (incl.
Slide 33: Appendix II: Summer Financial Results
APPENDIX II: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer Avg. 2011- (in thousands of CAD) 2015 2014 2013 2012 2011 2015 REVENUES 1,759,289 1,786,357 1,735,620 1,672,497 1,742,904 1,739,333 Adjusted EBITDAR (incl. hotels JV)(1) 184,187 172,023 175,280 123,066 81,465 147,204 Adjusted EBITDA (i
Slide 34: Appendix III: Annual Financial Results
APPENDIX III: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual Avg. 2011- (in thousands of CAD) 2015 2014 2013 2012 2011 2015 REVENUES 3,566,368 3,752,198 3,648,158 3,714,219 3,654,167 3,667,022 Adjusted EBITDAR (incl. hotels JV)(1) 199,680 187,158 201,592 108,811 102,703 159,989 Adjusted EBITDA
Slide 35: Appendix IV: Winter Financial Position
APPENDIX IV: WINTER FINANCIAL POSITION (5-YEAR HISTORICAL) As at January 31 As at April 30 (in thousands of CAD) 2015 2014 2013 2012 2011 2015 2014 2013 2012 2011 Free cash + ABCP investment (fair value) 393,631 359,596 247,877 291,234 274,009 441,536 404,554 336,148 349,457 356,430 Cash in trust or
Slide 36: Appendix V: Summer Financial Position
APPENDIX V: SUMMER FINANCIAL POSITION (5-YEAR HISTORICAL) As at July 31 As at October 31 (in thousands of CAD) 2015 2014 2013 2012 2011 2015 2014 2013 2012 2011 Free cash + ABCP investment (fair value) 515,552 497,072 389,337 318,692 385,777 336,423 308,887 265,818 198,525 260,327 Cash in trust or o
Slide 37: Appendix VI: Experienced Management Team
APPENDIX VI: EXPERIENCED MANAGEMENT TEAM Jean-Marc Eustache was the principal architect of the 1987 creation of Transat A.T. Inc. His Jean-François Lemay joined Transat’s senior management team in October 2011. He has some forward-thinking business vision — focused on vertical integration — combined
Slide 38: Appendix VII: Non-IFRS Financial Measures
APPENDIX VII: NON-IFRS FINANCIAL MEASURES Adjusted net income (loss): Net income (loss) attributable to shareholders before change in fair value of fuel-related derivatives and other derivatives, gain on disposal of a subsidiary, restructuring charge, impairment of goodwill and other significant unu
Slide 39: Thank You
THANK YOU READY FOR THE FUTURE: TRANSAT MORE NIMBLE & FOCUSED