Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (December 2016)
47 slides from Transat A.t's investor presentation, December 2016
Slide 1: Fourth Quarter Results Satisfactory Despite Tough Environment
FOURTH QUARTER RESULTS SATISFACTORY DESPITE TOUGH ENVIRONMENT FY2017: TRANSFORMATION PLAN UNDERWAY INVESTORS PRESENTATION DECEMBER 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: Section 1: Introduction
Section 1: Introduction Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 11 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution & Transformation Strategy 24 Section 5 Financial Profile 27 Appendix 33 3
Slide 4: One Of The Largest Tour Operators In The World
One Of The Largest Tour Operators In The World FY 2014-2016 Average $70M EBITDA (1) $2.9B 2.3M Revenues Customers ± 5,000 Employees 60+ Destinations (1) Adjusted EBITDA including hotels JV from continuing operations 4
Slide 5: Vertically-integrated Travel Provider
Vertically-integrated Travel Provider Develops holiday travel packages for sun destinations and Europe Served 1.5M travelers from Canada and 0.6M from Europe in 2016 Distributors Largest retail holiday travel distributor in Canada with 455 outlets Comprehensive online distribution platform
Slide 6: Distinct Summer And Winter Markets
Distinct Summer And Winter Markets 15% PAX Distribution (FY2016) 25% 75% 85% Distribution activities Hotel activities Total Distribution activities Hotel activities Total 116 Historical EBITDA (1) 103 4 4 8 (In millions of C$) 113 (19) 98 62 (25) (45) 64 (15) (21) (37) 5 3 (2) 2014 2015 2016 2014 20
Slide 7: 2015-2017 Strategic Plan (Key Initiatives)
2015-2017 Strategic Plan (Key Initiatives) $100M Cost Reduction and Margin Update on $100M Cost Reduction and Margin Improvement Program (C$ M) (1) Improvement Program Achieved 2015 target Achieved 2016 target $100 $75 Improve Product Offering $45 Introduce new European destinations Optimize
Slide 8: Illustrative Sum-of-the-Parts Analysis
Illustrative Sum-of-the-Parts Analysis Implied Value Value Driver Per Share 1 2014-2016 average Adjusted EBITDA of $65M from continuing operations excluding contribution from Ocean Hotels 2.0x – 3.0x Integrated Tour Operators Strategic plan creates opportunity to reduce costs by an additional $2
Slide 9: Transat Highlights
Transat Highlights 1 Vertically-integrated travel producer with flexible cost structure Since 2012, Transat achieved a Very strong position in sun destinations and transatlantic markets with turnaround to become more agile 2 exceptional brand recognition including a unique flexible aircraft fleet 3
Slide 10: Section 2: Transatlantic Market Overview
Section 2: Transatlantic Market Overview Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 11 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution & Transformation Strategy 24 Section 5 Financial Profile 27 Appendix 33 10
Slide 11: Transatlantic Capacity And Market Share
Transatlantic Capacity And Market Share (1) (Summer 2016) 2,000,000 +16% Summer 2015 (Actual) Summer 2016 (Actual) Transatlantic Market Share 1,750,000 TOTAL SEATS Summer 2016 SUMMER 2015 1,500,000 3,960,000 8 4 1,250,000 7 +6% 6 43 1,000,000 % 12 750,000 +2% TOTAL SEATS SUMMER 2016 500,000 +19% 20
Slide 12: Transatlantic Market Share by Destinations
Transatlantic Market Share by Destinations (Summer 2016) Market share GLOBAL MARKET OVERVIEW United Kingdom Europe: largest tourism market in the world 12 (more than 50% of travellers inbound & outbound) 4.5M seats in summer 2016 between Canada and Europe 18 % 51 TRANSAT STRATEGY AND MARKET POSITION
Slide 13: Fourth Quarter Financial Performance
Fourth Quarter Financial Performance Q4 HIGHLIGHTS (vs. 2015) 4th quarter results ended October 31 (in thousands of C$) Tough market conditions due to 14% 2016 2015 2016 vs. 2015 global capacity increase $ % • Precisely 19% increase on UK market REVENUES 612,111 634,004 (21,893) (3.5%) Transatlantic
Slide 14: Transat Summer Financial Performance
Transat Summer Financial Performance SUMMER HIGHLIGHTS (vs. 2015) Difficult market conditions Q3 Q4 Summer • Global capacity up by 14% Adj. EBITDA 2015 (incl. hotels) (1) 45M 71M 116M • Terrorism attack • Brexit, … ∆ FX / Fuel on costs on transatlantic flight 18M 14M 32M Transatlantic market • 87% o
Slide 15: Ancillary Revenues
Ancillary Revenues TOTAL ANCILLARY REVENUES (1) HIGHLIGHTS (In millions of C$) 85 Grow total ancillary revenues 79 ~ C$ 85M by 2017 10 10 Ancillary revenues allocation: 69 • Seat selection 64 9 • Different fares (Option flex, 9 eco extra, eco max) • Airport revenues • Buy-on-board 75 • Excess luggag
Slide 16: Transatlantic Capacity And Market Share (Summer 2017)
Transatlantic Capacity And Market Share (1) (Summer 2017) 2,250,000 Summer 2016 (Actual) +8% 2,000,000 Summer 2017 (Forecast) Transatlantic Market Share TOTAL SEATS Summer 2017 1,750,000 SUMMER 2016 4,510,000 8 1,500,000 4 7 1,250,000 5 44 1,000,000 +7% % 12 750,000 TOTAL SEATS -2% SUMMER 2017 +0% 2
Slide 17: Section 3: Sun Destinations Market Overview
Section 3: Sun Destinations Market Overview Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 11 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution & Transformation Strategy 24 Section 5 Financial Profile 27 Appendix 33 17
Slide 18: Sun Destinations Capacity And Market Share
Sun Destinations Capacity And Market Share (1) (Based on Winter 2016-17 scheduled and chartered flight deployed) 1,400,000 -1% Winter 2016 (Actual) Winter 2017 (Forecast) Sun Destinations Market Share 1,200,000 TOTAL SEATS Winter 2017 WINTER 2016 -3% 4,035,000 1,000,000 +30% +3% 5 23 22 800,000 600,
Slide 19: Sun Destinations Outbound And Destination Overview
Sun Destinations Outbound And Destination Overview Winter 2016-17 : 945,000 Travellers (Excluding USA) ORIGIN OF TRAVELERS DESTINATION OF TRAVELERS 5 3 Quebec 6 Mexico 4 4 8 Ontario 34 Dominican Republic 3 % Atlantic % 44 Cuba 25 Alberta Jamaica Bristish Columbia Caribbean 36 Rest of Canada 29 Centr
Slide 20: Transat Winter Financial Performance
Transat Winter Financial Performance HIGHLIGHTS (vs. 2016) Transat Q1 Q2 Winter • Unusual factors that affected directly our 2016 margin that will not occur in 2017 : Zika virus Adj. EBITDA 2016 (incl. hotels) (1) (32M) (5M) (37M) Pilot strike avoided (new 6-year agreement in place) Terrorism
Slide 21: Transat Aircraft Fleet
Transat Aircraft Fleet 2013 2014 2015 2016 2017 Wide-Body Base Fleet 21 21 21 21 21 21 21 23 23 23 - Seasonally withdrawn (1) - - (4) - (6) - (6) - (8) - - Sublease (1) - (1) - (1) - (3) - (3) - A330/A310 Total 20 21 16 21 14 21 12 23 12 23 (1) As a result to improved leasing terms, three A330s are
Slide 22: Ocean Hotels Investment
Ocean Hotels Investment Ocean Maya Royale Riviera Maya, Mexico Ocean Blue Sand Punta Cana, Dominican Republic OWNED AND HIGHLIGHTS MANAGED 35% Interest (65% held by H10 Hotels) Owned - Adult Only 320 rooms Owned - 708 rooms Now • C$ 97.7M on balance sheet as of Oct 31 Ocean Coral Turquesa 1,618 room
Slide 23: Section 4: Distribution & Transformation Strategy
Section 4: Distribution & Transformation Strategy Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 11 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution & Transformation Strategy 24 Section 5 Financial Profile 27 Appendix 33 23
Slide 24: Transat Distribution Strategy
Transat Distribution Strategy Create a fully-integrated distribution ecosystem comprised of a new Transat Travel website, 30% connected to our call centers and travel 25% Δ +20% agencies 19% Δ +25% Make online tools fully responsive to mobile 15% 17% Δ +19% Δ +13% devices Enhance offering with third
Slide 25: Transat Transformation Strategy
Transat Transformation Strategy • To ensure long-term success, Transat is looking to own the product across the value chain and adapt its distribution model 1 Acquisition of hotel business in order to benefit from higher profitability, secure room capacity, provide differentiated products and reduce
Slide 26: Section 5: Financial Profile
Section 5: Financial Profile Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 11 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution & Transformation Strategy 24 Section 5 Financial Profile 27 Appendix 33 26
Slide 27: Sale of French and Greek Operations
Sale of French and Greek Operations HIGHLIGHTS FINANCIAL RESULTS IMPACT CASH FLOW IMPACT Amount in € Amount in C$ Amount in € Amount in C$ October 21st, 2016 Proceeds of disposal 63.4M 93.3M Consideration received in cash 63.4M 93.3M • The anti-trust authorities approved Transaction costs (4.8M) (7.
Slide 28: Transat Current Financial Position
Transat Current Financial Position HIGHLIGHTS (additional details in Appendix) Free Cash: $364M vs $336M (2015) UNRESTRICTED CASH • Variation of +$28M explained by : • Proceeds from the sale of French and Greek operations of +C$ 93M $364 • Unrestricted cash related to discontinued activities of (C$
Slide 29: Transat Annual Financial Performance
Transat Annual Financial Performance HIGHLIGHTS 12-month period ended October 31 2016 YTD Results (in millions of C$, except per share amounts) 2016 2015 2014 2013 2012 • Unusual factors that had a direct impact on our margin REVENUES 2,889.6 2,898.0 2,996.1 2,969.6 3,051.8 • Sale of our French and
Slide 30: Trading Comparables (Valuation Metrics)
Trading Comparables (Valuation Metrics) Share Adj. (in millions of C$, except Latest Revenues Equity Adj. EV / EBITDAR(1) P/E Margins (LTM) price Enterprise ratios) Quarter (LTM) Value 07/12/2016 Value CY2017E(2) CY2018E(2) CY2017E(2) CY2018E(2) EBITDAR EBITDA Direct comparables TUI AG €12.45 Sep-16
Slide 31: Trading Comparables (Capital Structure)
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 $2,863 $8,772 $10,421
Slide 32: Appendix
Appendix Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 11 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution & Transformation Strategy 24 Section 5 Financial Profile 27 Appendix 33 32
Slide 33: First Quarter Financial Results Breakdown
First Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended January 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolid
Slide 34: Second Quarter Financial Results Breakdown
Second Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended April 30 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolida
Slide 35: Winter Financial Results Breakdown
Winter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 6-month period ended April 30 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidated Cons
Slide 36: Third Quarter Financial Results Breakdown
Third Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended July 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidate
Slide 37: Fourth Quarter Financial Results Breakdown
Fourth Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended October 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consoli
Slide 38: Summer Financial Results Breakdown
Summer Financial Results Breakdown (Continuing operations vs. Discontinued activities) 6-month period ended October 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidated Co
Slide 39: Annual Financial Results Breakdown
Annual Financial Results Breakdown (Continuing operations vs. Discontinued activities) 12-month period ended October 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidated C
Slide 40: 5-Year Historical Winter Financial Results
5-Year Historical Winter Financial Results (Consolidated Results) 6-month period ended on April 30 (in thousands of C$) 2016 2015 2014 2013 2012 REVENUES 1,898,713 1,807,079 1,965,842 1,912,538 2,041,722 Adjusted EBITDAR (incl. hotels JV)(1) 26,869 15,493 15,135 26,312 (14,255) Adjusted EBITDA (incl
Slide 41: 5-Year Historical Summer Financial Results
5-Year Historical Summer Financial Results (Consolidated Results) 6-month period ended on October 31 (in thousands of C$) 2016 2015 2014 2013 2012 REVENUES 1,676,712 1,759,289 1,786,357 1,735,620 1,672,497 Adjusted EBITDAR (incl. hotels JV)(1) 141,967 184,187 172,023 175,280 123,066 Adjusted EBITDA
Slide 42: 5-Year Historical Annual Financial Results
5-Year Historical Annual Financial Results (Consolidated Results) 12-month period ended on October 31 (in thousands of C$) 2016 2015 2014 2013 2012 REVENUES 3,575,426 3,566,368 3,752,198 3,648,158 3,714,219 Adjusted EBITDAR (incl. hotels JV)(1) 168,837 199,680 187,158 201,592 108,811 Adjusted EBITDA
Slide 43: 5-Year Historical Winter Financial Position
5-Year Historical Winter Financial Position (Consolidated Results) As at January 31 As at April 30 (in thousands of C$) 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 Free cash 431,411 393,631 359,596 247,877 291,234 454,881 441,536 404,554 336,148 349,457 Cash in trust or otherwise reserved 395,
Slide 44: 5-Year Historical Summer Financial Position
5-Year Historical Summer Financial Position (Consolidated Results) As at July 31 As at October 31 (in thousands of C$) 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 Free cash 504,261 515,552 497,072 389,337 318,692 363,664 336,423 308,887 265,818 198,525 Cash in trust or otherwise reserved 203,4
Slide 45: Experienced Management Team
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 with outstan
Slide 46: Non-IFRS Financial Measures
Non-IFRS Financial Measures Adjusted net income (loss): Net income (loss) attributable to shareholders before net income (loss) from discontinued operations, change in fair value of fuel-related derivatives and other derivatives, gain on disposal of a subsidiary, restructuring charge, impairment of
Slide 47: Thank You!
FOURTH QUARTER RESULTS SATISFACTORY DESPITE TOUGH ENVIRONMENT FY2017: TRANSFORMATION PLAN UNDERWAY THANK YOU !