Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2021 Earnings Presentation
55 slides from Flight Centre Travel's earnings presentation, Feb 25, 2021
Slide 1: FLT: Half Year Results Presentation (FY21)
FLT: Half Year Results Presentation (FY21) February 25, 2021
Slide 2: Today's presentation
Today’s presentation Graham Turner Adam Campbell Chris Galanty Melanie Waters-Ryan ● Global MD / CEO ● CFO ● Corporate - CEO ● Leisure - CEO ● Introduction and Outlook ● Financial Results ● Corporate Update ● Leisure Update ● (Sections 1 and 5) ● (Section 2) ● (Section 3) ● (Section 4) 2
Slide 3: Weathering the unprecedented COVID-19 challenge
Weathering the unprecedented COVID-19 challenge Cost base lowered to sustainable level – circa $1.9b (almost 70%) reduction in annualised costs during past 12 months Continued revenue generation in pre-vaccination, domestic-only world – December revenue at its highest point since travel restrictions
Slide 4: Well placed for the recovery phase
Well placed for the recovery phase Now a leaner & more efficient organisation, with a lengthy liquidity runway & headed by a highly experienced management team Key assets retained and enhanced during pandemic, including brand equity & key people Diversity & strength – large scale leisure & corporate
Slide 5: Positive signs starting to emerge
Positive signs starting to emerge ● Most customers keen to travel when they can 01 Pent-up demand ● ● Strong & immediate rebounds in both leisure & corporate travel when restrictions are eased/lifted Heavy domestic weightings ● UAE corporate business profitable since Q2 Some smaller businesses now 0
Slide 6: Vaccination programs gaining momentum
Vaccination programs gaining momentum Well underway in FLT’s key US & UK markets Early signs of success 6
Slide 7: The road to recovery
The road to recovery FY21 Q3 FY21 Q4 FY22 Q1/Q2 Eventually paving way Vaccination programs for a return to a degree Culminating in herd gaining momentum of normality immunity Large portion of the population is 20XX Mortality & infection rates start to protected Underway in most countries & at an fal
Slide 8: Other key drivers on the road to recovery
Other key drivers on the road to recovery Permanent domestic border Broader border International travel corridors re-openings reopenings Potential material impact, Likely to precede full After vulnerable given domestic business’s international border communities/health size in Australia reopenings c
Slide 9: 1H: Result overview
1H: Result overview ● 12% of PCP & gradually recovering during 1H $1.5b in TTV ● Corporate tracking at 17% of prior year levels globally in H1 (18% in January) ● 7% in leisure YTD (8% in January), which is subject to heavier restrictions ● Overall revenue margin reduced from 12.5% in H1 FY20 - refle
Slide 10: 1H: Result overview
1H: Result overview ● Continued discipline in low revenue environment Cost control ● Further reductions delivered post July after achieving initial COVID-period target ● Month-on-month improvements Lower cash outflows ● December operating cash outflows down to $30m from $43m in July 2020 ● Well plac
Slide 11: Lengthy liquidity runway
Lengthy liquidity runway a) Working capital assets (excl. cash and investments) As at 31 December 2020 $m Liquidity position Retail and corporate debtors 244 Trade and other receivables 29 Override debtors 67 As at 31 December 2020 $m Accrued revenue 12 Cash and investments 1,680 Prepayments 21 Work
Slide 12: 1H: Investing in key growth drivers
1H: Investing in key growth drivers $20.9m 1H cap-ex Heavy technology weighting – leisure & corporate tech spend maintained at pre-COVID levels Expecting strong ROI - bringing new & differentiated products to market, making travel safer & easier, enhancing productivity Major investments in new corpo
Slide 13: One-Off cash costs & cash outflow
One-Off cash costs & cash outflow One-Off Cash Costs $m Cash Costs Paid FY20 19 Cash Costs Paid 1H 21 158 Cash Costs Paid To Date 177 Cash Costs To Be Paid (Est) to complete accrued at 31 Dec* 47 Cash Costs To Be Paid (Est) to complete not accrued at 31 Dec* 3 Total Cash Costs Estimate 227 Net Cash O
Slide 14: 1H: Profit & loss
1H: Profit & loss 1H Analysis AUD $'m 1H FY21 1H FY20 Mvmt ● Other income includes government Group TTV 1,533 12,399 (10,866) support of $178m, the majority of which has been offset by employee costs for Operating revenue 160 1,546 (1,386) stood down or furloughed employees. The Total revenue 160 1,5
Slide 15: 1H: Underlying cost base
1H: Underlying cost base 1H FY21 1H Analysis 1H FY21 1H FY20 1H FY21 One Off & AUD $'m Comp. Underlying Mvmt % Expenses underlying ● Cost reduction strategies implemented Expense Expenses costs since March 2020 reflected in overall Employee benefits (459) (165) (294) (822) (64%) decreased expenses M
Slide 16: 1H: Balance sheet
1H: Balance sheet 1H Analysis AUD $'m Dec-20 Jun-20 Mvmt Cash & cash equivalents 1,670 1,867 (197) ● $1.7b cash at 31 Dec ($77m Financial assets 10 8 2 restricted) Trade & other receivables 240 320 (80) Contract assets 47 97 (50) Other current assets 136 146 (10) ● Trade and other receivables Curren
Slide 17: 1H: Cash flow statement
1H: Cash flow statement 1H Analysis AUD $'m 1H FY21 1H FY20 Mvmt Operating activities ● Operating cash flows include Operating activities before interest and tax (667) (77) (590) government subsidies of $191m Net interest and tax paid 7 (59) 66 Cash inflow from operating activities (660) (136) (524)
Slide 18: 1H: Segment results
1H: Segment results Business segments AUD $'m LEISURE CORPORATE OTHER HY21 HY20 HY21 HY20 HY21 HY20 TTV 501 6,619 823 5,149 209 631 Revenue 54 987 89 519 17 40 PBT (251) (68) (81) 129 15 (22) PBT (underlying) (172) (11) (67) 134 (8) (20) Margins Revenue Margin 11% 15% 11% 10% 8% 6% PBT Margin (50%)
Slide 19: 1H: Segment results
1H: Segment results Geographic segments AUD $'m ANZ AMERICAS EMEA ASIA OTHER HY21 HY20 HY21 HY20 HY21 HY20 HY21 HY20 HY21 HY20 TTV 749 6,318 307 2,827 222 1,916 239 1,187 16 150 Revenue 65 769 50 332 32 249 7 49 6 147 PBT (144) 47 (84) 22 (35) 45 (11) 3 (43) (78) PBT (underlying) (101) 56 (61) 24 (3
Slide 20: Corporate - CEO Chris Galanty
Corporate - CEO Chris Galanty Corporate - CEO Chris Galanty 20
Slide 21: Corporate: 1H update & highlights
Corporate: 1H update & highlights Achieving Strategic Objectives ● Continued development of two market leading brands - Corporate Traveller (start-ups & SMEs) & FCM (MNC sector) ● Continued significant investment during 1H in platforms, systems & data ● Growing to win ○ Strong organic growth profile
Slide 22: Corporate: Key priorities
Corporate: Key priorities 1 Win and retain customers to grow market-share 2 Successful launch of Melon in Corporate Traveller and deploy the brand’s business model shift in all markets 3 Continued progression of FCM Truly Global business plan, including development of FCM’s new platform. 4 Investmen
Slide 23: Corporate: A two-sided model
Corporate: A two-sided model CUSTOMER VALUE PROPOSITION SUPPLIER VALUE PROPOSITION Flight Centre DNA | Service & Savings Growth, Market Share | Yield ENTERPRISE Volume Top Flagship > $100M spend • Global Scale and Consistency • Flexibility GLOBAL Multi-country > $50M spend REGIONAL $10M-$50M spend M
Slide 24: Corporate: Global, with focus on core markets
Corporate: Global, with focus on core markets 100 23 MARKETS EQUITY 10 CORE MARKETS OUT OF THE GLOBAL TOP 16 We have scale, investing in depth • Fully integrated countries • Implementation • Consistency • Customer Experience • Same customer technology deployed • Core offering in key travel markets 2
Slide 25: Sales update
| SALES UPDATE SALES PIPELINE Wins YTD | $691m Pipeline | $800m+ Recent Key Wins | Spotify, Mars (re-win), LyondellBasell , Infineon Technologies, Nationwide 25
Slide 26: New wins in diversified industries and geographies
New wins in diversified industries and geographies Geographic Diversity Industry Diversity 60%+ of the new accounts won will transact in the key Broad base of industry sectors skewed towards government, Americas & EMEA markets manufacturing, transportation and financial services. 26
Slide 27: Corporate: SME OBT
Corporate: SME OBT V melon Your next meeting starts here. “4 XY Your upcoming trips Washington ELIGHT,CENTRE
Slide 28: Corporate: FCM platform
Corporate: FCM platform a FCM 1 My tinerary © Booktin nat itn consultant Rovreats& avons Company guide & Travelpotey My itinerary Noxt trips Post inps Requested New York 19-22 of October > SbeiSoisra9 06:15 © ot aston Legan nternaona pert Checkin avatabe fm toate mesa Hertz company BB ew ore poston
Slide 29: Two brands built on a single core
Two brands built on a single core Corporate Traveller is the TMC CORPORATE BRANDS that’s fanatical about SMEs and CV FCM is The Alternative TMC for The two key brands that delivers Care Uplifted through the Multi-National Corporates. The flexibility represent FCTG globally power of our people and of
Slide 30: Leisure - CEO Melanie Waters-Ryan
Leisure - CEO Melanie Waters-Ryan
Slide 31: Leisure: 1H overview
Leisure: 1H overview Achieving Strategic Objectives within Uncertainty ● Limited revenue generation opportunities since restrictions were applied ● Greatly reduced sustainable cost base, while maintaining key assets/models: ○ Shop network reach - 95% of Australian Flight Centre customers live within
Slide 32: Leisure: Global footprint
Leisure: Global footprint CANADA UNITED KINGDOM Models: Shops, Online, IC, Models: Shops Premium Brands: FCB, Student Universe Brands: FCB, FC.com, FC Associates, LDV, Student Universe USA INDIA NEW ZEALAND Models: Hubs, IC, Online Models: Shops Models: Shops, Online, IC Brands: Liberty, Independent
Slide 33: Leisure: Global portfolio
Leisure: Global portfolio B2B Home of the Travel Entrepreneur The most distinctive The go-to multi-channel The leading network and premium/ luxury boutique Complementary yet independent mass travel retailer with product proposition for travel brand in market with travel brands accelerating to be the
Slide 34: Leisure: Core business platform
Leisure: Core business platform BRANDS & CUSTOMER Flight Centre is the go to multi channel retailer Travel Associates and our premium travel with irresistible deals and savvy personal service advisers famous for providing 7 star service Two key brands and Customer accessible to our travellers howeve
Slide 35: Leisure: Flight Centre Brand
Leisure: Flight Centre Brand Flight Centre is the go to multi channel retailer with irresistible deals and savvy personal service accessible to our travellers however, wherever, whenever they want. Rejuvenated and modernised Customer Driven Irresistible Deals Winning Millennial Offer consistent FC B
Slide 36: Operating strategy: Four models
Operating strategy: Four models Network of world-class World-class Sales Centre Independent Contractor Self Service / E-Commerce Shops ➔ Right network – size and spread ➔ Irresistible deal driven ➔ Career path and flexibility model ➔ Customer first capability ➔ Appealing /attractive brand ➔ Speciali
Slide 37: Flight Centre: Online strategy
Flight Centre: Online strategy Shift customer perception that FCB is a multi channel travel market place – always every channel, always a choice, always marketed. To drive strong eCommerce growth for FCB with a broad offering across air and holidays (irresistible deals). Improve travel content Onlin
Slide 38: Flight Centre: Online strategy
Flight Centre: Online strategy 38
Slide 39: Leisure: Premium strategy
Leisure: Premium strategy Travel Associates and our premium travel advisers famous for providing 7 star service and unique products for frequent, discerning and luxury travellers. Largest network of premium and Unique product for frequent and Winning boutique model Brand & marketing luxury travel ad
Slide 40: Leisure: B2B strategy
Leisure: B2B strategy Grow an independent and affiliated network of agents and agencies (the largest in Australia, New Zealand and South Africa) offering the widest and best range of travel and technology products, delivering solid capabilities and financial returns to members in all its leisure mar
Slide 41: Leisure: B2B strategy
Leisure: B2B strategy B2B Marketing Content - Australia 41
Slide 42: Complementary and independent brands
Complementary and independent brands Complementary yet independent travel brands accelerating to be the number one in region / global. Student Universe Ignite / My Brands BYOjet (JetMax) Travel Money ➔ Solid levels of pre covid TTV ➔ Pivot to domestic and cruise ➔ Lower sales (international skew ➔ H
Slide 43: CEO / MD Graham Turner
CEO / MD Graham Turner 43
Slide 44: FY21: Other businesses
FY21: Other businesses In-Destination 99 Bikes Avmin The Travel Junction ➔ Discova destination management ➔ Continuing to trade strongly - 1H ➔ Sales up circa 50% during FY21 ➔ Externally-focussed bedbank company in hibernation in Asia sales more than doubled & PBT 1H start-up performing well & but
Slide 45: FY21: Outlook
FY21: Outlook Stable cost base – fixed costs now tracking below $70m per month – but ongoing uncertainty around exact revenue recovery timeframe given changing domestic & international border policies Lack of clarity means it is impossible to provide FY21 guidance Expecting domestic travel recovery
Slide 46: FY21: 2H trends & market dynamics
FY21: 2H trends & market dynamics January results generally in line with expectations, given increased volatility (Australian domestic border openings/closures & temporary UK travel corridor closures) Customers now responding to uncertainty by booking closer to departure & seeking flexible options +
Slide 47: Post-pandemic travel will be anything but normal
POST-PANDEMIC TRAVEL WILL BE ANYTHING BUT NORMAL As the world continues to battle the Covid-19 pandemic, FLT’s corporate brands are embracing several emerging technology trends to prepare customers for what travel will look like in a post-pandemic world 47
Slide 48: Trends We're Watching
Trends We’re Watching Technologies that FLT is investing in for a post-pandemic travel world We continue to play an active role in the industry by championing and investing in emerging technology solutions to promote a safe return to travel globally. The following are three trends we’re actively wor
Slide 49: Emerging tech: Health passports
EMERGING TECH: HEALTH PASSPORTS Momentum is building for “Health Passports” to provide a means for quarantine-free travel. FCTG continues to innovate in this space as industry standards begin to emerge, while respecting global data security & privacy laws. FCM Digital Health Wallet In conjunction wi
Slide 50: Appendices
FLIGHT, CENTRE TRAVEL GROUP”
Slide 51: Appendix 1: Global Activity (Jan 21)
Appendix 1: Global Activity (Jan 21) Tracking at 13% of pre-COVID global gross TTV (Corporate 20% Leisure 9%) Canada Corporate 13% Europe Leisure 3% Corporate 15% UK Corporate 7% United States Leisure 6% Corporate 7% China Leisure 12% Corporate 23% SE Asia Corporate 4% India Corporate 17% New Zealan
Slide 52: Appendix 2: International travel grounded
Appendix 2: International travel grounded Key Highlights ● 98.6% decrease in Australian short-term resident departures during the FY21 1H ● Just 86,000 departures during the 6 months ● FLT issued 35,000 international tickets in Australia during the same period (a lead indicator of outbound departure
Slide 53: Appendix 3: Results summary
Appendix 3: Results summary 5-YEAR SUMMARY HY21 HY20 HY19 HY18 HY17 TTV $1,533m $12,399m $11,155m $10,154m $9,343m Income margin 10.4% 12.5% 13.1% 13.4% 14.0% PBT $(317.3m) $38.8m $127.4m $139.4m $109.2m PBT (underlying) $(247.2m) $102.7m $140.4m $139.4m $113.2m NPAT $(233.5m) $22.1m $85.0m $102.3m
Slide 54: Appendix 4: Rapid rebounds post border reopenings
Appendix 4:Rapid rebounds post border reopenings Dec 2: FLT’s domestic sales reach 107% of prior year following the QLD border reopening on Dec 1 Nov 24: QLD Announces plans to reopen its border to travellers from Victoria Nov 25: FLT’s domestic sales in Australia surpass the PCP (102%) Nov 23: QLD
Slide 55: Appendix 5: Market-share gains
Appendix 5: Market-share gains Key Highlights ● The flagship Flight Centre leisure brand in Australia has increased its share of total GDS segments from 15-16% in November/December 2019 to 16-18% in the same period of 2020. ● As expected, given the domestic-only trading environment, flightcentre.com
Flight Centre Travel Group — H1 FY2021 Earnings Presentation on 6ix