Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 2023 Earnings Presentation
47 slides from Flight Centre Travel's earnings presentation, Feb 22, 2023
Slide 1: FY23 First Half Results Presentation
FY23 First Half Results Presentation February 22, 2023 1 | FCTG – 1H23 Presentation
Slide 2: Agenda: Today's presentation
Agenda: Today’s presentation Adam Campbell Chris Galanty James Kavanagh Melanie Waters-Ryan Graham “Skroo” Turner Global CFO CEO - Corporate CEO – Leisure CEO – Supply Global CEO FY23 1H Highlights & Results Strategic Update Strategic Update Strategic Update Outlook (Section 1) (Section 2) (Section
Slide 3: Section 1: 1H Highlights & Results
Section 1: 1H Highlights & Results Adam Campbell CFO 3 | FCTG – 1H23 Presentation 3
Slide 4: 1H: Operating highlights
FY23 1H: Operating highlights Solid start to the 2023 fiscal year in an improved, but not fully recovered, trading climate Profit for six months to December 31 ahead of expectations Investing in future growth drivers & other key areas • Underlying 1H EBITDA ($95m) 19% above the mid-point in initiall
Slide 5: 1H: Result snapshot
FY23 1H: Result snapshot Improvement across key metrics during early recovery phase $95m underlying $9.9b in TTV, 10.1% revenue 9.9% underlying cost EBITDA conversion EBITDA $1b in revenue margin margin • Circa $280m • More than tripled • Comfortably above • At record low level • 39% of incremental
Slide 6: 1H: Profit & Loss Analysis
FY23 1H: Profit & Loss Analysis • Strong TTV & revenue recovery across both leisure & corporate sectors • Group-wide, TTV up 203% compared to FY22 1H and revenue up 217% • Break-even underlying PBT result ($270m turnaround) • Underlying cost margin under 10% (excluding touring cost of sales) and rev
Slide 7: 1H: Positive margin momentum
FY23 1H: Positive margin momentum Cost margin trending down, revenue margin trending up as FLT targets 2% underlying profit before tax margin by end of FY25 Cost Margin Decreasing Revenue Margin Increasing • Tracking at record low levels – reflects permanent & • Gradually improving but set to remain
Slide 8: 1H: Continued cost efficiencies
FY23 1H: Continued cost efficiencies Cost reduction strategies have led to 30% reduction in underlying costs v pre-COVID Analysis FY20 H1 FY23 H1 Total • Costs tracking at 70% of pre-COVID levels FY23 H1 One-off FY23 H1 Adj Underlying FY23 H1 % Cost base ($m) Expenses Expenses Expenses Expenses of F
Slide 9: 1H: Balance sheet Analysis
FY23 1H: Balance sheet Analysis • Strong cash position, including $1.1b in cash and investments • Includes $59m of financial investments and $273 million of restricted cash • Net cash of $465m excluding convertible bonds ($800m face value) • Debt covenants expected to re-commence from 30 June 2023 a
Slide 10: 1H: Cash flow statement Analysis
FY23 1H: Cash flow statement Analysis • Operating cash outflow of $92million recorded, in line with normal seasonality and traditional cash flow patterns • FLT typically accumulates cash during peak booking seasons in the 2H of the FY and pays suppliers after peak travel seasons during the 1H of the
Slide 11: 1H: Summarised segment results
FY23 1H: Summarised segment results Businesses Geographic Other business segment includes contributions from TP Connects; Pedal Group; Avmin; Touring; Discova; Cross Hotels; GOGO wholesale; India FX and certain HO costs that have not been distributed to the Leisure and Corporate businesses. The prio
Slide 12: Section 2: Corporate Strategic Update
Section 2: Corporate Strategic Update Chris Galanty Corporate CEO 12 | FCTG – 1H23 Presentation 12
Slide 13: 1H: Corporate review
FY23 1H: Corporate review Strong recovery trajectory – outperforming the market across key sales metrics 88% revenue recovery 90% transaction recovery 103% TTV recovery Record 1H TTV of $5billion o 3.4% higher than previous record (FY20 1H: $4.87billion) & almost 150% up on FY22 1H o On track to top
Slide 14: Customer Funded Model: Where we play
Where we play – A two-sided model Customer Value Proposition Supplier Value Proposition Why are we different? Why are we different? Enterprise $100M+ spend ▪ The only global alternative to traditional TMCs Customer Funded Model ▪ Exclusive programs/content ▪ Highly personalised service ▪ Combination
Slide 15: Focus on SME market: Corporate Traveller
Focus on SME market: Corporate Traveller: How we solve our customers’ problems Committed to SME Our Proprietary Platform: Melon Our relentless focus on SMEs means the entire A Dedicated Travel Connecting SMEs The Best Content Corporate Traveller Consultant to our all-in-one experience is tailored to
Slide 16: 1H: Corporate Traveller
FY23 1H: Corporate Traveller Solving customers' problems & continuing to win business from competitors, disruptors & accounts that were previously unmanaged • Compelling customer offering built around hub cities in New Corporate Traveller accounts with annual spends of USA, Canada, UK, Australia, So
Slide 17: FCM: Strategic Journey (2017-2027)
FCM: Strategic Journey (2017-2027) Chapter 1 Chapter 2 Chapter 3 Truly Global Grow to Win Scale benefits ▪ 2017 journey from locally ▪ Focus on volume growth and ▪ Customer insights connected TMC to global TMC building scalable structure ▪ Productivity & cost focus ▪ Status quo not an option ▪ Re-br
Slide 18: 1H: FCM
FY23 1H: FCM The alternative to the traditional mega TMCs • Strong TTV recovery – new wins being onboarded & continuing to EVOLUTION OF CUSTOMER MIX & MARKET drive market-share growth RECOVERY • FCM volumes @ 95% of pre-COVID levels globally over 1H but 150% adversely impacted by slower volume recov
Slide 19: Section 3: Leisure Strategic Update
Section 3: Leisure Strategic Update James Kavanagh Leisure CEO 19 | FCTG – 1H23 Presentation 19
Slide 20: FY23: Trends
FY23: Trends Customer demand • Record post-COVID enquiry numbers in January 2023, along with post-COVID record TTV & profit • FCB customer base in-store grew 1% each month in 2022, and 3% each month online • Appealing to a younger demographic in FCB with average customer age 51, 40% of FCB online cu
Slide 21: 1H: Leisure
FY23 1H: Leisure Continued strong momentum Rapid TTV growth • $4.4b FY23 1H result more than 5-times FY22 1H result (almost 450% increase) • Generated 44% of group 1H TTV - up from 25% during FY22 1H Significant profit turnaround • $43m underlying EBITDA after $140m underlying loss during FY22 1H So
Slide 22: Leisure: Strategic Objectives
Leisure: Strategic Objectives Differentiate & grow Flight Centre Grow our market leading position in AU/NZ/RSA and fast track plans in the UK & CA Rapid expansion in growth categories Increase share in growing market segments: Luxury Travel & Independent Agents community Accelerate complementary mod
Slide 23: Leisure: Diversity
Leisure: Diversity Catering to broad customer mix Mass Market Luxury Complementary Independent B2C B2B The leading network of Specialist brands in: The fastest growing community Global omni-channel retailer luxury travel advisors • Packages 'holiday in a box' of independent travel famous for designi
Slide 24: Key value drivers – Leisure evolution
Key value drivers – Leisure evolution Operational transformation starting to pay dividends FY19 FY23 FORECAST Employee Based Model Independent Agent Model Online Other Employee Based Model Independent Agent Model Online • From a heavy bricks & mortar store & employee-based Leisure business • To a th
Slide 25: Leisure: Growth Investments
Leisure: Growth Investments GLOBAL EXPANSION INVESTING IN OUR FUTURE SIMPLIFYING THE BUSINESS Physical Growth Capability building Capital efficiency Growing portfolio of brands Digitalizing the CX Sweating new assets Network & People growth Extending Product Range Operational efficiencies M&A / Part
Slide 26: Progress Update
Progress Update Global expansion Capability building Simplifying the business ✓ Luxury Collection developed: Travel ✓ Digitalizing our CX ✓ Now a more productive business with Associates in ANZ, Scott Dunn in UK,USA & • Omni – enabling customers to seamlessly fewer systems/applications, improved Sin
Slide 27: Flight Centre in Market
FLIGHT CENTRE IN MARKET 27 | FCTG Leisure
Slide 28: | FCTG – 1H23 Presentation
28 | FCTG – 1H23 Presentation 28
Slide 29: Section 4: Supply Strategic Update
Section 4: Supply Strategic Update Melanie Waters-Ryan Supply CEO 29 | FCTG – 1H23 Presentation 29
Slide 30: Global Supply Excellence for a local market
Global Supply Excellence for a local market We deliver leading commercial returns, broadest content, operational excellence, cost leadership and strategic partnering across the end-to-end supply chain, to empower our brands to deliver on their market positioning, customer promise and profitability g
Slide 31: FY23: Key supply initiatives
FY23: Key supply initiatives ✓ Maximising product margin in COVID recovery ✓ Supply partnerships – global & local deep relationships – mutual recovery plans ✓ Fresh Air initiative & NDC capability ✓ Optimising operating & support model – cost and efficiency – as industry stabilises ✓ Expanding re
Slide 32: Supply Margin – Key Drivers
Supply Margin – Key Drivers AIRLINE CAPACITY CONTINUED HOTEL CONTENT AT SUPPLIER MIX PREFERRED RECOVERY POSITIVELY RECOVERY IN CRUISE IMPROVED MARGINS SUPPLIER GROWTH IMPACTING SUPPLY BOOKINGS DEALS Volume targets are returning Strengthening sales volume in Improvement in both Booking trends indicat
Slide 33: FY23: Fresh Air initiative
FY23: Fresh Air initiative A key strategic pathway for new air capability & air content freedom GDS-first but NDC-ready • Through its investment in TP Connects, FLT is well placed to access differentiated content that sits outside the traditional GDS • TP Connects delivers technical connectivity to
Slide 34: Travel Services
Travel Services Diverse and stable businesses Discova DMC Wholesale and external transformation Strong pipeline of sales won during COVID years Gogo and Infinity models undergoing transformation Monthly profitability post Asia opening & transformation of 1 Americas business 4 Integration with Bedban
Slide 35: Kaura
Kaura A new luxury tented resort opening in conjunction with the villagers of Manggis, Bali Proudly supported by Discova & FLT 35 | FCTG – 1H23 Presentation 35
Slide 36: Section 5: FY23 Outlook
Section 5: FY23 Outlook Skroo Turner CEO 36 | FCTG – 1H23 Presentation 36
Slide 37: Outlook: Guidance
FY23 Outlook: Guidance Prospect of stronger profit growth in months ahead, given ongoing solid demand and margin improvement trajectory Full Year Guidance o Targeting $250m-$280m underlying EBITDA for 12 months to June 30 excluding Scott Dunn contribution (circa $6-8m EBITDA expected from acquisitio
Slide 38: Outlook: Opportunities in a recovering market
FY23 Outlook: Opportunities in a recovering market Considerable pent-up demand yet to flow through Upside Potential • Outbound travel (leisure business’s core product) rebounding but still well below pre-COVID levels - significant pent-up demand (revenge travel) yet to flow through • Australian shor
Slide 39: Outlook: Heightened demand for assistance
FY23 Outlook: Heightened demand for assistance Expert help needed to navigate an improving but still complex travel environment • Most restrictions now removed, but some ongoing complexity & disruption • Australian domestic flight cancellations still tracking above historic averages (see accompanyin
Slide 40: Outlook: Resilience of global travel market
FY23 Outlook: Resilience of global travel market A discretionary product that customers prioritise & feel compelled to buy every year Growth sector: Travel has consistently grown year-on-year. Prior Travel is a high priority: Customers more likely to to COVID, downturns have been relatively rare & g
Slide 41: Outlook: Solid ongoing demand
FY23 Outlook: Solid ongoing demand A discretionary product that customers prioritise & feel compelled to buy every year Further recovery in early 2H trading • No evidence of material impacts on demand during the early post-COVID recovery phase as a result of macro-economic changes • Strong demand fo
Slide 42: End of presentation: Questions?
End of presentation: Questions? 42 | FCTG – 1H23 Presentation
Slide 43: Appendices
Appendices 43 | FCTG – 1H23 Presentation
Slide 44: Appendix 1: Commitment to sustainability
Appendix 1: Commitment to sustainability 44 | FCTG – 1H23 Presentation
Slide 45: Appendix 2: Five-year result summary
Appendix 2: Five-year result summary 45 | FCTG – 1H23 Presentation
Slide 46: Appendix 3: Normal travel patterns gradually resuming
Appendix 3: Normal travel patterns gradually resuming Holidays surpassed VFR as main reason for travelling during CY22 but VFR still tracking well above historical levels Key Points - CY2022 • The holidaymaker has now usurped the visiting friends/relatives (VFR) travellers - 48% v 37% - but is still
Slide 47: Appendix 4: Scott Dunn acquisition completed
Appendix 4: Scott Dunn acquisition completed Scott Dunn acquisition provides an attractive opportunity for FLT to establish a presence in the UK and US luxury markets Diversifies and extends existing Leisure business Increases exposure to high quality luxury segment • Adds scale to Flight Centre’s e
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