Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — FY2022 Earnings Presentation
55 slides from Flight Centre Travel's earnings presentation, Aug 25, 2022
Slide 1: FLT: FY22 Full Year Result Presentation
FLT: FY22 Full Year Result Presentation August 25, 2022 1 FY22 H1 – FCTG Presentation
Slide 2: Agenda: Today's presentation
Agenda: Today’s presentation Graham "Skroo" Adam Campbell Chris Galanty James Kavanagh Melanie Waters-Ryan Turner CEO - Corporate CFO CEO – Leisure CEO – Supply Global MD & CEO FY22 Highlights & Results FY23 Outlook Strategic Update Strategic Update Strategic Update (Section 1) (Section 2) (Section
Slide 3: FY22 Results & Highlights
FY22 Results & Highlights Adam Campbell CFO 3 FY22 FY22H1- FCTG – FCTGFull Presentation Year Results Presentation
Slide 4: FY22: Highlights
FY22: Highlights Positive Early Steps on Path to Recovery – Targeted Return to Profitability Timeframes Achieved ✓ Bottom-line result better than initially expected & well within upgraded range • $183.1m underlying EBITDA loss ($180m-$190m FY22 target in place) • Breakeven 2H result with solid 4Q pr
Slide 5: FY22: Highlights
FY22: Highlights Achieving Strategic Objectives – Ready For Growth ✓ Corporate business out-performing - winning organically & growing market-share • High customer retention rates + new account wins with circa $2.5b in annual spends secured during FY22 • Outpacing industry recovery – June 2022 gross
Slide 6: FY22: Profit & Loss
FY22: Profit & Loss $'000 FY22 FY21 Mvmt FY22 Analysis Group TTV 10,340 3,945 6,395 • H2 revenue significantly improved on H1 as demand for Operating revenue 1,007 396 611 global travel recommences. Total revenue 1,007 396 611 • Other income includes government support of $34m, of FV gain on change
Slide 7: FY22: TTV Growth
FY22: TTV Growth $10.3b in TTV with heavy 2H weighting – market share increasing • $10.3b TTV for the year representing 162% year on year growth – solid progress on the path back to $23.7b FY19 TTV record • Corporate TTV up 158% to $5.6b & topped PC gross TTV levels in June 2022 – therefore deliveri
Slide 8: FY22: Continued cost efficiencies
FY22: Continued cost efficiencies Cost reduction strategies have led to 48% reduction in underlying costs v PC Analysis FY22 One- FY19 Total • Employee benefits expense well below FY19 FY22 off FY22 Adj Underlying FY22 % of Cost base ($'000) Expenses Expenses Expenses Expenses FY19 but increasing, a
Slide 9: FY22: Summarised segment results
FY22: Summarised segment results Businesses AU$m Leisure Corporate Other FY22 FY21 FY22 FY21 FY22 FY21 TTV 4,135 1,391 5,588 2,169 618 385 Revenue 463 156 525 217 20 23 Underlying EBITDA (180) (262) 14 (80) (16) 4 Revenue margin 11.2% 11.2% 9.4% 10.0% n.a. n.a Geographic AU$m ANZ Americas EMEA As
Slide 10: FY22: Segment results
FY22: Segment results Geographic Corporate Leisure & Experiences • Geographic diversity • $5.6b in TTV (54% of group) • $4.1b in TTV • Strong momentum - TTV more than • Profitable during FY22 • Returned to profitability in Q4 doubled year-on-year in each segment • Global diversity– 70% of gross TTV
Slide 11: FY22: Strong year-end liquidity position
FY22: Strong year-end liquidity position Liquidity position As at 30 June 2022 $'000 Overview • Operating cash inflow circa $40m during Q4 Cash and investments 1,286 Working capital assets (excl. cash and investments) 943 • Client cash building to $636m at year-end Working capital liabilities (excl.
Slide 12: FY23 Outlook
FY23 Outlook Skroo Turner CEO 12 FY22 FY22H1- FCTG – FCTGFull Presentation Year Results Presentation
Slide 13: FY23: Upside opportunities in recovering market
FY23: Upside opportunities in recovering market Considerable pent-up demand yet to flow through ✓ Resilience of global travel market Travel Resilience: Historically, downturns in travel • Consistent year-on-year growth delivered PC – travel is demand have tended to be short-lived & then followed a d
Slide 14: FY23: On track to outpace industry recovery
FY23: On track to outpace industry recovery Positive TTV & market-share trends • Full market recovery not expected in FY23, but FLT likely to be tracking close to monthly PC TTV levels by year-end if current trends continue • Strong momentum from 4Q • Corporate TTV recovery achieved in June 2022 -
Slide 15: FY23: Outlook supply constraints
FY23: Outlook supply constraints Supply constraints early in FY23 - lack of capacity affecting airfare pricing & helping to spark travel advisor “renaissance” Global airline capacity gradually increasing – 87% of PC levels at end of July 2022 with heavy domestic weighting (97% domestic, 72% internat
Slide 16: FY23: Monitoring macro-economic changes
FY23: Monitoring macro-economic changes Positive & negative factors in play Cost of living increases Very low unemployment rates • Inflationary pressures • Significant offsetting factor - customers with desire & means to • Interest rates rising but typically low travel by historical standards • FLT
Slide 17: Attracting talent
Attracting talent Successfully navigating tight labour markets Novice Recruitment Programs Reinitiated at Scale • FLT has a long history of recruiting, training and developing industry newcomers • Novice recruitment programs reactivated in July 2021 to help expand workforce & service increasing dema
Slide 18: FY23: Outlook – some macro-economic tailwinds
FY23: Outlook – some macro-economic tailwinds • Interest rates rising but still well below historic averages in • Unemployment levels also well below long-term averages FLT's three largest markets, where circa 80% of the – now at a 48-year low in Australia (July 2022) company's cash is typically hel
Slide 19: FY23: Outlook
FY23: Outlook Too early to provide FY23 guidance, given industry is in early recovery phase & experiencing some ongoing volatility – significant parts of Asia yet to reopen Conditions currently set to normalise as year progresses, ahead of stronger industry recovery globally late in FY24 (Source: IA
Slide 20: Outlook: Well-placed to benefit
Outlook: Well-placed to benefit Ready & able to capitalise on opportunities that will arise during the recovery phase Aspiring to be one of the largest, diversified travel company globally - rapidly growing corporate business with broad global footprint, high profile leisure business with large mark
Slide 21: Board expansion
Board expansion Kirsty Rankin joins Gary Smith, Colette Garnsey, Rob Baker, John Eales & Graham Turner on FLT's board ABOUT KIRSTY An entrepreneur & former CEO with global experience in data-driven insights, digital transformation, loyalty programs, customer engagement & new product development acro
Slide 22: FY22 Strategic Update – Corporate
FY22 Strategic Update Chris Galanty Corporate CEO 22 FY22 FY22H1- FCTG – FCTGFull Presentation Year Results Presentation
Slide 23: Corporate: Reflections on 2022
Corporate: Reflections on 2022 Evolution of customer needs Return to travel Changing customer needs Competitive landscape ▪ Most COVID restrictions eased ▪ Volatility of market reduced capacity ▪ Large corporations have less and increased fares, greater need for choice & seeking an alternative – ▪ E
Slide 24: Corporate recovery – at June 30, 2022
Corporate recovery – at June 30, 2022 Outpacing the market across key sales metrics – overall industry recovery estimated to be 75-80% of PC volumes Monthly Transaction Monthly TTV Volumes Rebound to above pre-COVID gross Solid recovery - no slowdown in forward demand among resilient 102% levels - d
Slide 25: Corporate: Growth targets
Corporate: Growth targets Return to PC TTV achieved in June 2022 (six months ahead of schedule) AT "Signed not yet trading" 70% MARKET RECOVERY reflects accounts that are signed, currently being implemented and expected to trade later Now targeting circa 120% in FY23. monthly TTV recovery by June 20
Slide 26: Corporate: Consistent 3-year strategy
Corporate: Consistent 3-year strategy Achieving the Grow To Win objectives & gaining scale benefits Scale benefits – profit growth to be driven by Strong foundations established rapid transaction growth at lower cost per transaction 23% 100% Turnover recovery 26% Customer 61% base 74% growth 93% Inv
Slide 27: Corporate: Grow to Win timeline
Corporate: Grow to Win timeline FY2021 FY2022 Q3 Q4 Q1 Q2 Q3 Q4 platform launch Booking launched in FCTG Corporate Japan Spain US Rebrand FCM platform Duty of care and China Melon launch Approval Voice of Customer Corporate Traveller Rebrand Hotel aggregation Air content platform Investment platform
Slide 28: Customer Funded Model
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 29: Corporate strategy on a page: Unique value proposition
Corporate strategy on a page: Unique value proposition Winning Brands Two globally differentiated winning brands Corporate Traveller is the TMC that’s fanatical about SMEs and delivers FCM is The Alternative TMC for Multi-National Corporates. Care Uplifted through the power of our people and technol
Slide 30: Corporate: Next 18 months
Corporate: Next 18 months Future deliverables Accelerate customer growth ▪ Continue delivery of core strategy ▪ Technology rollout 01 ▪ Invest in new customer segments and geographies Leverage new market dynamics ▪ Own & control content capabilities 02 ▪ New airline & hotel retailing opportunities A
Slide 31: FY22 Strategic Update – Leisure
FY22 Strategic Update James Kavanagh Leisure CEO 31 FY22 FY22H1- FCTG – FCTGFull Presentation Year Results Presentation
Slide 32: Leisure: Key Trends
Leisure: Key Trends Leisure Performance Customer/Market Trends Renaissance of Travel Accelerated H2 sales $3.2bn Holidays now replacing VFR Advisor Customers keen but cautious Uncertainty is new norm Growing Market-share ANZ Shorter booking lead times Some restrictions remain Consultant productivity
Slide 33: Leisure: Horizons of Growth
Leisure: Horizons of Growth Differentiate & grow Flight Centre Grow our market leading position in AU/NZ/RSA and fast track UK & CA, with our omni growth plans Rapid Expansion in growth categories Increase share in growing market segments: Independent Agents (b2b) & Premium Travel (b2c) Accelerate
Slide 34: Leisure: Brand portfolio
Leisure: Brand portfolio Mass Generalist Premium Complementary Independent B2C B2B Specialist product brands: The leading network of • ready-made holidays The fastest growing community Modern omni-channel luxury travel advisors • foreign exchange of independent travel agents and retailer famous for
Slide 35: Global Leisure TTV: Model Shift
Global Leisure TTV: Model Shift Online Leisure Growth • Collectively, FLT's leisure online businesses generated circa $750m in gross TTV during FY22 - captured above within FCB & Complementary (BYO, Student Universe, MyHolidays) • In Australia, flightcentre.com.au delivered record gross TTV & genera
Slide 36: Leisure Growth Investments
Leisure Growth Investments Global Expansion Digitalising the CX Product Extension Simplifying Business People & Culture Brands Omni Channel Exclusive Packages Productive work-flows Starting Network Personalisation Hosted Tours Reduced applications Staying Operating Model Leveraging Data Assets – Cru
Slide 37: FY22 H1 – FCTG Presentation
37 FY22 H1 – FCTG Presentation
Slide 38: Complementary Brands
Complementary Brands Accelerating to be the next big thing Student Low-Cost Youth forex OTA Packages Packages 38 FY22 FY22 H1 – FCTG - FCTG FullPresentation Year Results Presentation
Slide 39: FY22 – FCTG Full Presentation
39 FY22 FY22H1- FCTG – FCTGFull Presentation Year Results Presentation
Slide 40: FY22 Strategic Update – Supply
FY22 Strategic Update Melanie Waters-Ryan Supply CEO 40 FY22 FY22H1- FCTG – FCTGFull Presentation Year Results Presentation
Slide 41: Supply
Supply Formally established as FLT’s 3rd pillar during FY22 Leisure & corporate supply mart Delivering & overseeing product & supply-related services including supplier partnerships, content 01 management & connectivity, pricing & revenue management, fulfilment & supply support, consultant support,
Slide 42: Leisure & corporate supply mart
Leisure & corporate supply mart Content 01 Ensuring breadth & depth of all content requirements across the group & delivering upon brand unique & differentiated content Supply Partner Relationship Management 02 Best-in-market supply partnerships Distribution Efficiency 03 Embedding new technology, c
Slide 43: Supply: Market shift to NDC gaining momentum
Supply: Market shift to NDC gaining momentum FLT at forefront of changing climate & well placed to benefit – investment in TP Connects • Airlines continue to invest in NDC (New Distribution Capability) & are keen to work with industry leaders • FLT has invested in TP Connects to aggregate content fr
Slide 44: In-destination businesses
In-destination businesses Strengthening FLT’s position as a diversified global travel company, while providing core products that deliver unique selling propositions that are aligned to and reinforce our leisure and corporate brands’ positioning at superior margins & profitability Touring – Topdeck,
Slide 45: Commitment to sustainability – Manggis Village
Commitment to sustainability – Manggis Village • Collaboration between FLT's in-destination businesses Discova, Cross Hotels & Resorts and local villagers to develop community-based tourism that will bring prosperity and community pride back to this East Bali village decimated by the pandemic • Crea
Slide 46: END OF PRESENTATION: Questions?
END OF PRESENTATION: Questions? 46 FY22 H1 – FCTG Presentation
Slide 47: Appendices
Appendices 47 FY22 H1 – FCTG Presentation
Slide 48: Appendix 1: Ramping up ESG efforts
Appendix 1: Ramping up ESG efforts Preserving & enriching a world worth seeing – CY22 timeline Dec - Feb - Mar Apr May Jun - Aug Sep - Dec Jan Project Initiation Materiality Vision & narrative Carbon Data Strategy Targets set Global sustainability Science Based Target Vision generation Carbon road m
Slide 49: Appendix 2: FY22 balance sheet
Appendix 2: FY22 balance sheet $'m June 2022 June 2021 Mvmt FY22 Analysis Cash & cash equivalents 1,227 1,291 (64) Financial assets — 65 (65) • $1.3b cash and investments at 30 June 2022. Trade & other receivables 669 279 (40) Contract assets 130 50 (46) • Corporate debtor book building as volume Ot
Slide 50: Appendix 3: FY22 Cash flow statement
Appendix 3: FY22 Cash flow statement $'m FY22 FY21 Mvmt FY22 Analysis Operating activities • Operating cash flows include Operating activities before interest and government subsidies of $41m and tax (120) (922) 802 tax refunds of $44m. Net interest and tax refunds 19 10 9 • $40m outflow for the acq
Slide 51: Appendix 4: Rebound in its infancy
Appendix 4: Rebound in its infancy Clear growth prospects with outbound travel tracking at just 35% of pre-COVID levels during FY22 (peaking at 60% in June 2022) • Large potential upside as pent-up demand continues to flow through, and as normal outbound travel patterns resume. 51 FY22 FY22 H1 – FCT
Slide 52: Appendix 5: VFR outweighing holidaymakers
Appendix 5: VFR outweighing holidaymakers • Almost half the people who travelled overseas during FY22 were visiting friends & relatives, compared to about a quarter during FY19. • 34% said they had been on holiday overseas, compared to 57% during FY19 52 FY22 FY22 H1 – FCTG - FCTG FullPresentation Y
Slide 53: Appendix 6: Airfare affordability
Appendix 6: Airfare affordability While prices have increased from very low PC levels, fares have generally remained highly affordable by historical standards Affordability (% of full- Affordability (% of full-time Headline Return Airfare Adjusted Return Fare Headline Return Airfare Route time adult
Slide 54: Appendix 7: Five-year result summary
Appendix 7: Five-year result summary $’m FY22 FY21 FY20 FY19 FY18 TTV $10,340 $3,945 $15,303 $23,728 $21,818 Revenue margin 9.7% 10.0% 12.4% 12.9% 13.4% EBITDA ($200) ($432) ($594) $427 $442 EBITDA (underlying) ($183) ($338) ($407) $427 $463 PBT ($378) ($602) ($849) $344 $364 PBT (underlying) ($361)
Slide 55: Appendix 8: Presentation glossary
Appendix 8: Presentation glossary ANZ = Australia & New Zealand LDV = Laurier Du Vallon (leisure brand) AM = account managers LCC = low-cost carrier AUD = Australian dollars M&A = mergers & acquisitions BAU = business as usual MTD = month-to-date BDM = business development managers NDC = new distrib
Flight Centre Travel Group — FY2022 Earnings Presentation on 6ix