Corporate Travel Management Limited · ASX:CTD
Corporate Travel Management — Merger or Acquisition (September 2020)
53 slides from Corporate Travel Management's merger presentation, Sep 29, 2020
Slide 1: Acquisition of Travel & Transport and Entitlement Offer
Acquisition of Travel & Transport and Entitlement Offer 29 September 2020 www.travelctm.com
Slide 2: Important Notices and Disclaimer
Important Notices and Disclaimer This investor presentation (Presentation) has been dated 29 September 2020 and has been prepared and authorised by Corporate Travel Management Limited (ACN 131 207 611) (CTM). This Presentation has been prepared in relation to CTM's acquisition of Travel & Transport,
Slide 3: Important Notices and Disclaimer (Cont'd)
Important Notices and Disclaimer (Cont’d) FINANCIAL INFORMATION All dollar values contained in this document are expressed in Australian dollars unless otherwise stated. A number of figures, amounts, percentages, estimates and calculations of value, and fractions in this Presentation are subject to
Slide 4: Important Notices and Disclaimer (Cont'd)
Important Notices and Disclaimer (Cont’d) FUTURE PERFORMANCE This Presentation may contain certain statements that constitute "forward-looking statements". These statements can be identified by the use of terminology such as "will", “anticipate”, “believe”, “expect”, “project”, "continue", "assume",
Slide 5: Important Notices and Disclaimer (Cont'd)
Important Notices and Disclaimer (Cont’d) NOT FOR DISTRIBUTION OR RELEASE IN THE UNITED STATES This Presentation may not be distributed or released in the United States. This Presentation does not constitute a recommendation, offer to sell, or a solicitation of any offer to buy, any securities in th
Slide 6: Important Notices and Disclaimer (Cont'd)
Important Notices and Disclaimer (Cont’d) DISCLAIMER No person is authorised to give any information or make any representation in connection with the Entitlement Offer which is not contained in this Presentation. Any information or representation not contained in this Presentation may not be relied
Slide 7: Contents
Contents 1 Executive Summary Page 8 2 Strategic Rationale Page 12 3 Overview of Travel & Transport Page 19 4 Integration Plan Page 23 5 Trading Update Page 26 6 Entitlement Offer Details Page 29 A Appendices Page 34 7
Slide 8: 1 Executive Summary
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Slide 9: Key Transaction Highlights
Key Transaction Highlights ✓ Binding agreement to acquire 100% of Travel & Transport, a leading North American corporate travel business with CY19 TTV of US$2.8bn (A$4.0bn)1 ✓ Expected to be EPS² accretive on a pro-forma CY19 basis, pre-synergies (approx. 10%) post synergies (approx. 30%) • Scope fo
Slide 10: Transaction Overview
Transaction Overview Acquisition of • CTM has entered into a binding agreement to acquire 100% of Travel & Transport, Inc (Travel & Transport or T&T) for an enterprise value of Travel & US$200.4m (A$274.5m)1 Transport ‒ T&T is a leading North American corporate travel business with CY19 TTV of US$2.
Slide 11: Transaction Overview (Cont'd)
Transaction Overview (Cont’d) Acquisition • Consideration of US$200.4m (A$274.5m)1 on a debt and cash free basis, subject to working capital adjustment Consideration • Key T&T executives, including CEO, to invest in CTM stock and Funding • The purchase price, transaction costs and integration costs
Slide 12: 2 Strategic Rationale
2 Strategic Rationale
Slide 13: Compelling Strategic Rationale
Compelling Strategic Rationale 1 Build Scale ✓ CTM will strengthen its position as one of the leading global mid-market corporate travel managers with A$10.8b TTV (based on pro-forma CY19)4 ✓ Materially enhances CTM’s scale in the North American corporate travel market adding an additional US$2.5bn
Slide 14: Global Leader in Mid-market Corporate Travel
Global Leader in Mid-market Corporate Travel • Combined business would have TTV of approximately A$10.8b, an increase of ~60% (based on pro-forma CY19)1 • Positions CTM as a global leader in the mid-market segment • Improved competitive position due to a broader diversified client base (particularly
Slide 15: Highly Complementary US Client Coverage
Highly Complementary US Client Coverage CTM and T&T client office locations - extensive US coverage when combined Alaska CTM T&T strength strength CTM T&T 15
Slide 16: Scope for Material Combination Benefits
Scope for Material Combination Benefits The combination of CTM and T&T is estimated to deliver US$18m (A$25m)1 of synergies on a full run-rate basis, based on CY192,4 • Efficiencies from reducing duplicate spend Operating Expenses • Corporate cost and functional overhead rationalisations Property Fo
Slide 17: Meaningful Increase in North American and European Operations
Meaningful Increase in North American and European Operations Combined North American business represents 56% of the Group’s revenue based on CY19 pro-forma1 A$m; CY19 Pro-Forma Pro-Forma CTM North CTM North CTM Pro-Forma T&T3 Synergies4 America ANZ Asia Group6 America Europe Europe Pro-Forma5 TTV2
Slide 18: High Quality Management Team to Lead Combined US Business
High Quality Management Team to Lead Combined US Business Combined management team provides broader and deeper leadership capability within the North American business Kevin O’Malley Maureen Brady Tim Fleming Josh Weiss CEO COO President & Integration Lead CFO • Joined T&T in 1994; named CEO in • Jo
Slide 19: 3 Overview of Travel & Transport
3 Overview of Travel & Transport
Slide 20: Overview of Travel & Transport
Overview of Travel & Transport • Founded in 1946, T&T is a leading US travel management company 2019 TTV by Category 2019 TTV2 : Customer Sector (Top 50) headquartered in Omaha, Nebraska • Core focus on business travel services: Other 9% ‒ Approx. 60% / 40% split between domestic and international t
Slide 21: History of Travel & Transport
History of Travel & Transport 74 year history operating in North American corporate travel Made minority investment in German Founded in Omaha, corporate travel Acquired 100% of Nebraska company MfG Reisen Radius Travel 1946 Oct-12 May-15 May-17 Oct-18 Acquired New York Acquired UK-based based Ultra
Slide 22: Historical Financial Performance
Historical Financial Performance • T&T has demonstrated an ability to generate organic growth through new wins and client retention • T&T generated revenue of US$206m in the year ended 31 December 2019, and pro-forma EBITDA1 of US$29m, representing a pro-forma EBITDA margin of approx. 14% ‒ CY19 TTV
Slide 23: 4 Integration Plan
4 Integration Plan
Slide 24: Integration Plan
Integration Plan Key Integration Objectives • Significant integration planning undertaken during due diligence ✓ Focus on retaining clients • Internal integration team led by Tim Fleming who has had prior experience in integrations ✓ Retain and empower key employees • Direct oversight on integration
Slide 25: High Level Integration Road Map
High Level Integration Road Map Majority of integration expected to be completed by June 2021 Operate Fully Diligence & Planning Preparation Delivery Finalise Integrated Business Completed October 2020 November 2020 – June 2021 30 June 2022 From 1 July 2022 ✓ Acquisition rationale ✓ Finalise detaile
Slide 26: 5 Trading Update
5 Trading Update
Slide 27: Trading Update and Pro-Forma Group Position
Trading Update and Pro-Forma Group Position July and August 2020 Average Pro-Forma Group CTM Travel & Transport Comments Position Revenue • A$9.5m1 per month • A$4.5m per month • Average revenue of • July and August are seasonal A$14.0m per month holidays in Europe and North America so quieter month
Slide 28: CTM and T&T US Client Activity Performance Update
CTM and T&T US Client Activity Performance Update • COVID-19 has had a material impact on both companies, with CTM and T&T currently operating at 25% and 13% of last year’s transaction volumes respectively • CTM has a higher essential travel client base than T&T, however T&T have almost half of its
Slide 29: 6 Entitlement Offer Details
6 Entitlement Offer Details
Slide 30: Acquisition Funding Summary
Acquisition Funding Summary • Fully underwritten 1 for 4.03 pro-rata accelerated non-renounceable entitlement offer (Entitlement Offer) to existing shareholders to raise approximately A$375m Entitlement Offer • New Shares will be issued at a fixed price of $13.85 (Offer Price) • Approximately 27 mil
Slide 31: Pro-forma Net Assets
Pro-forma Net Assets T&T Pro-forma Net Assets (at 30-June-20), A$m1 CTM Acquisition Adj. Funding Adj. CTM PF (unaudited) Cash and Equivalents 92.8² 49.3 (49.3) 72.8 165.6 Accounts Receivable 64.5 18.9 - - 83.4 PP&E 12.1 17.4 - - 29.5 Intangibles 524.5 41.6 227.1³ - 793.3 Other Assets 69.6 13.3 12.5
Slide 32: Equity Raising Overview
Equity Raising Overview • Fully underwritten 1 for 4.03 pro-rata accelerated non-renounceable entitlement offer (Entitlement Offer) to existing shareholders to raise approximately $375m • Eligible shareholders will be invited to subscribe for 1 new CTM share (New Shares) for every 4.03 existing CTM
Slide 33: Equity Raising Timetable
Equity Raising Timetable Event Date Announcement of accelerated non-renounceable entitlement offer Tuesday, 29 September 2020 Entitlement Offer Record Date 7:00pm Thursday, 1 October 2020 Institutional Entitlement Offer Institutional Entitlement Offer opens 10:00am Tuesday, 29 September 2020 Institu
Slide 34: A Appendix
A Appendix
Slide 35: Income Statement (Last 6 Months)
Income Statement (Last 6 Months) ¹ • T&T business has been well managed in response to COVID-19, with a reduction in non-essential spend and structural cost-outs leading to a material reduction in the cost base 1. Assumes 1 AUD = 0.70 USD. Financial information presented is unaudited, under current
Slide 36: Key Risks
Key Risks This section describes the key business risks of investing in CTM together with the risks relating to participation in the Offer which may affect the value of CTM shares. It does not describe all the risks of an investment. Before investing in CTM, you should be aware that an investment in
Slide 37: Key Risks (Cont'd)
Key Risks (Cont’d) Risks Specific to the Acquisition (Cont’d) Integration and The Acquisition of Travel & Transport will be transformational for CTM's business, operational profile and size compared to that of CTM on a standalone basis. There is a risk that the synergies success and profitability of
Slide 38: Key Risks (Cont'd)
Key Risks (Cont’d) Risks Specific to the Acquisition (Cont’d) Risks The members of the Group (which, following Completion, will include Travel & Transport) are party to various contractual arrangements, some of which are material to the operations of associated the Group. There is a risk that these
Slide 39: Key Risks (Cont'd)
Key Risks (Cont’d) Risks to the Group Travel industry The Group’s financial prospects are dependent on the strength of the travel industry generally. A decline in the domestic and/or international travel industry, whether as a result of a disruption and particular event (such as a war, terrorism, he
Slide 40: Key Risks (Cont'd)
Key Risks (Cont’d) Risks to the Group (Cont’d) Supplier risk The Group’s business model and financial prospects and operations are reliant on mutually beneficial contractual arrangements with a number of third party suppliers, including airlines, rail travel providers and global distribution system
Slide 41: Key Risks (Cont'd)
Key Risks (Cont’d) Risks to the Group (Cont’d) Foreign The Group operates internationally and is exposed to foreign exchange risk. The Group uses foreign exchange spot and forward contracts to manage its net risk position. At times, the exchange risk Group also uses its multi-currency debt facility
Slide 42: Key Risks (Cont'd)
Key Risks (Cont’d) Risks to the Group (Cont’d) Key Personnel CTM relies on the talent and experience of its directors, key senior management and staff generally. The loss of any key personnel could cause disruption to the conduct of CTM's business in the short term and may have a material adverse im
Slide 43: Key Risks (Cont'd)
Key Risks (Cont’d) Risks to the Group (Cont’d) Change in Accounting standards may change. This may affect the reported earnings of CTM and its financial position from time to time. CTM has previously and will continue to assess and accounting disclose, when known, the impact of adopting new accounti
Slide 44: Key Risks (Cont'd)
Key Risks (Cont’d) Offer and General Risks (Cont’d) Dilution Eligible shareholders who do not participate in the Offer, or do not take up their entitlements under the Offer in full, will have their percentage shareholding in CTM diluted. Such shareholders will not be exposed to future increases or d
Slide 45: International Offer Restrictions
International Offer Restrictions This document does not constitute an offer of new ordinary shares ("New Shares") of the Company in any jurisdiction in which it would be unlawful. In particular, this document may not be distributed to any person, and the New Shares may not be offered or sold, in any
Slide 46: International Offer Restrictions (Cont'd)
International Offer Restrictions (Cont’d) Hong Kong WARNING: This document has not been, and will not be, registered as a prospectus under the Companies (Winding Up and Miscellaneous Provisions) Ordinance (Cap. 32) of Hong Kong, nor has it been authorised by the Securities and Futures Commission in
Slide 47: International Offer Restrictions (Cont'd)
International Offer Restrictions (Cont’d) Singapore This document and any other materials relating to the New Shares have not been, and will not be, lodged or registered as a prospectus in Singapore with the Monetary Authority of Singapore. Accordingly, this document and any other document or materi
Slide 48: Glossary
Glossary ACN Australian Company Number Institutional Means the pro-rata accelerated non-renounceable entitlement offer of New Shares to Eligible Institutional Entitlement Shareholders under the Entitlement Offer Acquisition The acquisition by CTM of 100% of the shares in Travel and Transport, Inc (T
Slide 49: Share Purchase Agreement Summary
Share Purchase Agreement Summary Share Purchase Agreement Summary Acquisition 100% of all issued and outstanding capital stock of Travel and Transport Purchase US$200.4m, debt and cash free, subject to net working capital adjustment Price Conditions • Expiry of the early termination waiting period u
Slide 50: Underwriting Agreement Summary
Underwriting Agreement Summary CTM has entered into an underwriting agreement with the underwriters (Underwriters) in respect of the Entitlement Offer on 29 September 2020 (Underwriting Agreement). The Underwriters' obligations under the Underwriting Agreement, including to underwrite and manage the
Slide 51: Underwriting Agreement Summary (Cont'd)
Underwriting Agreement Summary (Cont’d) • a member of the Group becomes insolvent (the particulars of which are referred to in the Underwriting Agreement) or there is an act or omission which will result in a member of the Group becoming insolvent; • any of the following occurs in relation to the Ac
Slide 52: Underwriting Agreement Summary (Cont'd)
Underwriting Agreement Summary (Cont’d) • any of the following occurs: • a general moratorium on commercial banking activities in Australia, New Zealand, the United States, Hong Kong, the Peoples' Republic of China, a member of the European Union, or the United Kingdom is declared by the relevant ce
Slide 53: travelctm.com
ccm travelctm.com
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