Flight Centre Travel Group Limited · ASX:FLT
Flight Centre Travel — H1 FY2024 Earnings Presentation
49 slides from Flight Centre Travel's earnings presentation, Feb 28, 2024
Slide 1: FLT: FY24 1st Half Result Presentation
FLT: FY24 1st Half Result Presentation February 28, 2024 1 | FLT
Slide 2: Speakers & Presentation Sections
SPEAKERS & PRESENTATION SECTIONS Adam Campbell Chris Galanty James Kavanagh Greg Parker Graham “Skroo” Turner Global CFO CEO – Corporate CEO – Leisure CEO – Supply Global MD & CEO Results & Highlights Corporate Overview Leisure Overview Supply Overview Outlook (Section 1) (Section 2) (Section 3) (Se
Slide 3: FY24 Introduction
FY24 INTRODUCTION Graham Turner ST RO N G T U R N A RO U N D Underlying 1H PBT comfortably in excess of $100m & on track to deliver record full year TTV IM PROV ED SH A REH O LD ER RET U RN S EPS up strongly to 39.7cents, 10 cents per share fully franked interim dividend declared & total shareholder
Slide 4: Results & Highlights
SECTION 1 RESULTS & HIGHLIGHTS 4 | FLT
Slide 5: Result Overview
FY24 1H Result Overview SOLID SALES GROWTH – HIGHLIGHTING FLT'S DIVERSITY & STRONG 1H PROFIT UPLIFT & SOLID START TO 2H SECTOR'S RESILIENCE • $106m underlying PBT - 565% improvement on underlying $16m FY23 1H result • 15% TTV growth to $11.3b - 2nd best start to a year (behind only FY20 1H) with • $
Slide 6: Margin Strategies Gaining Traction
FY24 1H Margin Strategies Gaining Traction REVENUE MARGIN REBOUND ONGOING COST MARGIN FOCUS Supplier Margins Costs Base "Rebased" • Focus on total available margin (TAM) across all product ranges • Permanent, structural change made during pandemic • Generally maintaining or improving TAM in all sect
Slide 7: "We are a 2% profit margin business"
"We are a 2% profit margin business" • All brands & businesses progressing towards tailored internal targets • Leisure & corporate businesses overall targeting 2%+ underlying net margin C LEA R PAT H IN PLAC E Company-wide focus • Leisure & corporate margin improvement opportunities as existing stra
Slide 8: Strong divisional performance
FY24 1H Strong divisional performance CORPORATE (52% of Group 1H TTV) LEISURE (46% of Group 1H TTV) • Strong & consistent strategic execution – Grow to Win strategy • Transformation program that was fast-tracked during the pandemic continues, with Productive Operations accelerating now delivering a
Slide 9: Segment Results
FY24 1H Segment Results L E IS U R E CORPORATE OTHER Group $'m HY2024 HY2023 HY2024 HY2023 HY2024 HY2023 HY2024 HY2023 TTV 5,155 4,389 5,886 5,040 286 456 11,327 9,886 Revenue 626 471 542 455 119 76 1,287 1,002 Underlying PBT 60 2 93 61 (47) (47) 106 16 Underlying EBITDA 105 43 114 80 (30) (28) 189
Slide 10: Profit & Loss
FY24 1H Profit & Loss $'m HY24 HY23 Mvmt Mvmt % Group TTV 11,327 9,886 1,442 15% H IG H LIG H T S Operating revenue 1,287 1,002 285 28% • Almost $1.5b TTV increase YOY – solid growth achieved, but adversely impacted by Total revenue 1,287 1,002 285 28% airfare price deflation in Australia & closure
Slide 11: Balance Sheet
FY24 1H Balance Sheet $'m Cash & cash equivalents Financial assets 31-Dec-23 835 30 30-Jun-23 1,328 20 Mvmt (493) 10 Trade & other receivables 679 835 (156) H IG H LIG H T S Contract assets 396 318 79 Other current assets 136 129 7 • Strong balance sheet retained during the pandemic – working now to
Slide 12: Cash Flow
FY24 1H $’m HY24 HY23 Mvmt Cash Flow Operating activities Operating activities before interest and tax 29 (97) 126 Net interest and tax paid (18) 5 (23) H IG H LIG H T S Cash inflow from operating activities 11 (92) 103 • Positive operating cash flows in seasonally softer 1H – strong 2H inflow Inves
Slide 13: Overview & Update: Corporate
SECTION 2 OVERVIEW & UPDATE C OR P OR AT E 13 | FLT
Slide 14: Customer Funded Model
WHERE WE PLAY C O R P O R AT E Global Winning Brands | Market Segments CUSTOMER VALUE PROPOSITION SUPPLIER VALUE PROPOSITION Why are we different? Why are we different? • Exclusive programs/content ENTERPRISE • Combination of local vs. $100M+ spend • The only global alternative to traditional TMCs C
Slide 15: FY24 1H Scorecard
C O R P O R AT E FY24 IH Scorecard TRANSACTION REVENUE UNDERLYING CUSTOMER NEW BUSINESS VOLUME MARGIN PBT MARGIN RETENTION WON +20% +17bps +37bps 98% $1.3B Estimated annual spend across FCM (contracted) & Corporate Traveller (non-contract) from July 1-January 31 CORPORATE CORPORATE CORPORATE CORPORA
Slide 16: Segment result & highlights
TTV by Geography C O R P O R AT E Segment result & highlights 13% Continuing to significantly out-perform the overall sector 30% Proven organic growth model delivering further TTV growth ü Record 1H result of almost $5.9b – 16.8% increase on previous best (FY23: $5b) - with new sales milestones esta
Slide 17: Strategy on a page
C O R P O R AT E Strategy on a page GLOBAL WINNING BRANDS Two globally differentiated winning brands focused on SME and GMN Corporate Traveller is the TMC that’s fanatical about SMEs and delivers Care Uplifted through the power of our people and technology FCM is The Alternative TMC for Multi-Nation
Slide 18: Mass adoption of Melon & FCM Platform
HOW WE WIN C O R P O R AT E Mass adoption of Melon & FCM Platform New revenue streams by solving customer problems Melon is a one-stop shop for our customers to search, book and Our vision is to be the “Alternative”, the most flexible business travel manage their business travel, allowing CT to impr
Slide 19: Productive Operations
C O R P O R AT E Productive Operations 01 02 03 Digititisation & Standardisation Enable Self Service Content access & of Operations Capabilities distribution Building a single global operating system for both brands that drives every activity through the right channel. Lowering costs and growing inc
Slide 20: AI powering productive operations
C O R P O R AT E AI powering productive operations ONGOING FOCUS ON IMPROVING PRODUCTIVITY & THE CUSTOMER EXPERIENCE Continued development of capabilities & product suite with several new initiatives underway including: • Revolutionizing Customer Service with AI: Our new AI feature intelligently cat
Slide 21: Key Drivers
C O R P O R AT E Key Drivers C O N T IN U ED O RG A N IC SA LES G REATER EFFIC IEN C Y / G ROW TH SC A LE B EN EFIT S • High customer retention rates • Continuing to reduce costs per transaction - staff numbers now being reduced as operational efficiency improved & • Investment in leading Sales & Ma
Slide 22: Overview & Update: Leisure
SECTION 3 OVERVIEW & UPDATE L E I S UR E 22 | FLT
Slide 23: Positioned to Grow
LEISURE Positioned to Grow W ELL PO SITIO N ED TO G ROW T RA N SFO RM ED O PERAT IN G M O D EL Core markets: AU, NZ, RSA New operating model with winning models fueling growth Challenger: US, UK, CA, SG POWERED BY M U LT I C H A N N EL EN A B LED B RA N D S PRO D U C T IV E RETA IL FO OT PRIN T Abil
Slide 24: Business Overview
LEISURE Business Overview FOUR LEISURE CATEGORIES, OPERATING WITH A LEANER COST BASE & SCALABLE OFFERINGS Mass Market Luxury Complementary Independents Global omni-channel travel The leading network of Specialist brands: Fast growing community retailer famous for flights + luxury travel advisors des
Slide 25: Ongoing Business Model Shift
Ongoing Business Model Shift Employee Model Online Model Independent Model • Generate the largest share of TTV and continue • Travel products sold through FLT brands • Lower cost (payroll and property costs) vs to be a growth model. including FC.com, BYOJet, Aunt Betty and employee-based models Stud
Slide 26: FY24 1H Scorecard
LEISURE FY24 IH Scorecard TTV REVENUE UNDERLYING NET PROMOTER REPEAT MARGIN PBT MARGIN SCORE CUSTOMERS +18% +141bps +112bps ~47-85 ~50-70% LEISURE LEISURE LEISURE LEISURE LEISURE Compared to FY23 IH Compared to FY23 IH Compared to FY23 IH Lowest to highest brand Lowest to highest brand 26 | FLT
Slide 27: Segment result & highlights
LEISURE Segment result & highlights Solid TTV growth – investment in new growth model now generating tangible returns • 18% TTV increase to $5.2b (FY23: $4.4b) with Flight Centre contributing 55% of performance • Significant TTV contributions (circa 45% of leisure total) from Complementary, Luxury &
Slide 28: Outlook: Longer Term Objectives
LEISURE O utlook: Longer Term Objectives Global leisure is laser focused on five ”Big Moves” 1 D IFFEREN T IAT E FLIG H T C EN T RE Omni Travel Retailer of choice, famous for flights + holidays, backed by expertise 2 LU X U RY TRAVEL Grow collection of brands through organic growth, M&A, partnership
Slide 29: Key Drivers
LEISURE Key Drivers SC A LIN G O U R PO RT FO LIO O F D IFFEREN T IAT ED W IN N IN G M O D ELS PRO D U C T S • Physical expansion (consultants, specialist • Ancillary travel & service products teams, independent agents) • Unique manufactured product & holiday ranges • Globalise Winning Models • Digi
Slide 30: Enhanced Digital Capability
LEISURE Key Digital Advancements Enhanced Digital Capability Building our brands together on a shared ecosystem of tech-powered products. Key investment in digital capability, and mobility to capture a greater share of wallet, drive customer personalization and support sales growth. Leveraging machi
Slide 31: Envoyage for every journey
> ENVOYAGE for every journey
Slide 32: Set Sail with Cruiseabout
Set Sail with Cruiseabout Sea the difference 32 | FLT
Slide 33: Supply
SECTION 4 SUPPLY FLIGHT CENTRE TRAVEL GROUP’
Slide 34: Business Overview
S U P P LY Business Overview Authentic & Strategic Partner Relationships W H IC H LEA D S TO ST R EN G T H EN S Growth in our targeted mix of supplier volume GLOBAL Industry leading content, contracts and commercial returns SUPPLY W H IC H LEA D S TO W H IC H D ELIVERS Investment in our streamlined
Slide 35: 3 Key Areas
S U P P LY Procurement Travel Services 3 Key Areas AIR TOURING • Margins now generally stable with traditional • Good start to the year with continued strong structures in place, but generally lower than pre- performance from Back-Roads (small group) & COVID in ANZ following commission cuts from imp
Slide 36: Outlook
SECTION 5 OUTLOOK FLIGHT CENTRE TRAVEL GROUP”
Slide 37: FY24: Outlook
OUTLOOK FY24: Outlook Diversified business with resilient customer base – well placed to achieve FY24 targets G O O D M O M EN TU M PO SIT IV E M A RG IN T REN D S • Solid 1H & with seasonally strongest trading months to come (almost 70% of • Profit & revenue margins improving, with seasonal step-up
Slide 38: FY24: Guidance Amended
OUTLOOK FY24: Guidance Amended TRADING IN LINE WITH EXPECTATIONS BUT TARGETED RANGE INCREASED TO REFLECT EXCLUSION OF CONVERTIBLE NOTE AMORTIZATION. • Now targeting underlying PBT between $300m & $340m (previously $270m-$310m) given $30m of Convertible bond amortisation will be excluded from underly
Slide 39: Longer Term Priorities
OUTLOOK Longer Term Priorities Ongoing focus on delivering sustainable, long-term value. 1 T H E RIG H T PEO PLE O N T H E BU S Positive, productive, motivated & incentivised/rewarded people workforce & culture with business P&L accountability & ownership 2 PRO D U C T A great range of quality, cura
Slide 40: Horizon 2 Businesses taking off
OUTLOOK Independents Horizon 2 Businesses taking off Circa $768 1H TTV Becoming significant contributors to group earnings Asia Corporate Circa $740m 1H TTV Travel Money Circa $440m 1H TTV Travel Associates Circa $360m 1H TTV Ignite (MyHolidays) Circa $180m 1H TTV Scott Dunn Circa $100m 1H TTV 40 |
Slide 41: Thank You
THANK YOU QUESTIONS 41 | FLT FLT’s board of directors has authorized this announcement
Slide 42: Five-year result summary
APPENDIX 1 Five-year result summary $'m December 2023 December 2022 December 2021 December 2020 December 2019 TTV $11,327 $9,886 $1,533 $12,399 $11,155 Revenue margin 11.4 % 10.1 % 10.4 % 12.5 % 13.0 % EBITDA $219 $77 ($226) $165 $167 EBITDA (underlying) $189 $95 ($156) $229 $180 PBT $120 ($17) ($31
Slide 43: Capital Allocation Framework
APPENDIX 2 Capital Allocation Framework Maximising shareholder returns & long-term growth while balancing a conservative capital structure underpins FLT’s capital allocation framework Business • Portfolio growth 2% • Transformation & optimisation Underlying PBT reinvestment margin by 2025 • M&A oppo
Slide 44: $49m 1H capital expenditure
APPENDIX 3 $49m 1H capital expenditure ENHANCING PRODUCTIVITY, THE CUSTOMER EXPERIENCE & REDUCING COSTS CIRCA 70% WEIGHTED TOWARDS SYSTEMS/TECHNOLOGY IMPROVEMENTS Key Focus Areas CORPORATE LEISURE SUPPLY / OTHER • Customer-facing platforms – Melon, • Omni-channel enhancements, • Helio – consultant d
Slide 45: Geographic segment results
APPENDIX 4 Geographic segment results ANZ AMERICAS EMEA ASIA OTHER $'000 HY2024 HY2023 HY2024 HY2023 HY2024 HY2023 HY2024 HY2023 HY2024 HY2023 TTV 6,033 5,222 2,384 2,111 2,002 1,712 754 742 156 99 Revenue 662 503 249 213 219 184 52 38 105 63 Underlying PBT 105 36 14 (4) 36 35 4 (5) (52) (46) Underl
Slide 46: Bridge between statutory & underlying PBT
APPENDIX 5 Bridge between statutory & underlying PBT HY24 HY23 $'000 Restated* ADJUSTMENTS MADE TO UNDERLYING PBT INCLUDE: Net Profit /(Loss) Before Tax 120,236 (18,320) • Buy-back & remeasurement of CBs - no change expected for full Acquisition transaction costs - Scott Dunn 3,350 year unless furth
Slide 47: 13% average reduction in adult economy fares
APPENDIX 6 13% average reduction in adult economy fares FY24 Q2 Vs FY23 Q2 47 | FLT
Slide 48: Australian Short-Term Resident Departures
APPENDIX 7 Australian Short-Term Resident Departures 5.9% compound annual growth from 1979-2019 (Source: Australian Bureau of Statistics) Australian Short-Term Resident Departures 16.0m 14.7m 14.0m Australian short-term resident 11.6m departures increased almost 10- 12.0m 10.6m fold between 1979 and
Slide 49: Glossary
APPENDIX 8 Glossary ABS Australian Bureau of Statistics 1H First half MoM Month-on-month ABV Average booking value 1Q First quarter NDC New Distribution Capability AI Artificial intelligence EMEA Europe, Middle East & Africa NPAT Net profit after tax Avg Average FCB Flight Centre brand PBT Profit be
Flight Centre Travel Group — H1 FY2024 Earnings Presentation on 6ix