Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (March 2014)
29 slides from Transat A.t's investor presentation, March 2014
Slide 1: Road Bump: Sudden Currency Move Hurts Winter Results
ROAD BUMP: SUDDEN CURRENCY MOVE HURTS WINTER RESULTS MARGIN IMPROVEMENT PLAN ON TRACK TRANSAT’S INVESTORS PRESENTATION MARCH 2014
Slide 2: Forward-Looking Statements
FORWARD-LOOKING STATEMENTS THIS PRESENTATION CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS WITH RESPECT TO THE CORPORATION. THESE FORWARD-LOOKING STATEMENTS, BY THEIR NATURE, NECESSARILY INVOLVE RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE CONTEMPLATED BY THE
Slide 3: Agenda
AGENDA 1. TRANSAT MARKET 2. CAD DEPRECIATION 3. KEY FINANCIAL RESULTS • WINTER 2014 • SUMMER 2014 4. FINANCIAL POSITION 5. COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES 6. FLEET STRATEGY 7. STRUCTURE AND ORGANIZATION 8. UP-SELLING STRATEGY 9. ROAD MAP FOR 2014 AND 2015 3
Slide 4: Two Seasons, Three Markets
TWO SEASONS, THREE MARKETS 25 Sun 10 65 % 80 % Transatlantic 10 10 France
Slide 5: CAD Depreciation
CAD DEPRECIATION USD/CAD HISTORICAL LINE CHART 1.12 First quarter 2014 results release Spot rate :1.11 (▲ +5%) Q2 2014 – Inventory sold: 70% 1.10 Summer 2014 – Inventory sold: 27% 1.08 Fourth quarter 2013 results release Spot rate :1.06 Winter 2013-14 – Inventory sold: 44% 1.06 Summer 2014 – Invento
Slide 6: Key Financial Results: First Quarter 2014
KEY FINANCIAL RESULTS FIRST QUARTER 2014 1st quarter ended January 31 HIGHLIGHTS (vs. 2013) (in thousands of C$) 2014 2013 2014 vs. 2013 Prevented from improving our Actual $ % results by drop in value of CAD Actual (-$14M YOY) REVENUES 847,222 805,714 41,508 5.2% EBITDAR(1) (4,642) (598) (4,044) -6
Slide 7: Anticipated Impact of Currency on Costs Year-over-Year
KEY FINANCIAL RESULTS ANTICIPATED IMPACT OF CURRENCY ON COSTS YEAR-OVER-YEAR Sun destinations Q1 Q2 Winter Average selling price : $1,300 $1,300 $1,300 % in foreign currency (USD) 65% 65% 65% As of December 12, 2013 2014 average rate 1.0250 1.0300 1.0275 2013 average rate 1..0000 1.0000 1.0000 FX Im
Slide 8: Change in Outlook for Second Quarter 2014
KEY FINANCIAL RESULTS CHANGE IN OUTLOOK FOR SECOND QUARTER 2014 As of December As of March 13, Between 12, 2013 2014 Price 5.0% 4.0% (1.0%) % Load Factor (2.0%) (2.0%) 0.0% Impact before FX +3.0% +2.0% (1.0%) FX Impact (1.8%) (3.4%) (1.6%) Net Impact +1.2% (1.4%) (2.6%) 8
Slide 9: Impact on Adjusted EBITDA
KEY FINANCIAL RESULTS IMPACT ON ADJUSTED EBITDA Q1 Q2 Winter Adjusted EBITDA 2013 (21M) 3M (18M) ∆ FOREIGN CURRENCY (USD) (14M) (28M) (42M) Adjusted EBITDA incl. currency impact (35M) (25M) (60M) Yield management (price and load factor) +11M Adjusted EBITDA 2014 (24M) 9
Slide 10: Sun Destinations Market: Capacity and Market Share
SUN DESTINATIONS MARKET: CAPACITY AND MARKET SHARE +9% Winter 2013 Actual Market share – Winter 2014 Forecast +0% TOTAL Sun, Winter 2013 WINTER 2013 +4% 3,465,000 +6% % TOTAL WINTER 2014 -7% 3,630,000 +5% Other
Slide 11: Key Financial Results: Second Quarter 2014
KEY FINANCIAL RESULTS SECOND QUARTER 2014 (AS OF MARCH 13, 2014) 2nd quarter ended April 30 Sun destinations 2014 • Capacity down by 2% (in thousands of C$) 2013 2012 Avg. 2004-2008 • 70% of inventory sold Outlook Actual Actual Actual • Load factor down by 2% REVENUES 1,106,824 1,212,426 840,659 • P
Slide 12: Sun Destinations Outbound from Canada
SUN DESTINATIONS OUTBOUND FROM CANADA Winter 2013: 990,000 travellers (excluding Florida) 4 18 6 8 3 30 % 47 24 % 31 29
Slide 13: A Distinctive Experience
A DISTINCTIVE EXPERIENCE Exclusive hotels Transat Collections EXCLUSIVE HOTELS VOLUME TRANSAT HOLIDAYS DISTINCTION 14 19 Meals and discovery with all the comforts 24 clubs In 2013, 30 exclusive hotels % 26 in 2014 % ROOM NIGHTS MARGIN NOLITOURS LUXURY Exciting packages 12 clubs in 2013, 38 % 46 at u
Slide 14: Anticipated Impact of Currency on Costs: Transatlantic
KEY FINANCIAL RESULTS ANTICIPATED IMPACT OF CURRENCY ON COSTS YEAR-OVER-YEAR Transatlantic Q3 Q4 Summer Average selling price : $1,000 $1,000 $1,000 % in foreign currency (USD, EUR, GBP) 55% 55% 55% As of December 12, 2013 2014 average rate 1.0600 / 1.4400 / 1.7100 1.0650 / 1.4500 / 1.7150 1.0625 /
Slide 15: Impact on Adjusted EBITDA: Summer
KEY FINANCIAL RESULTS IMPACT ON ADJUSTED EBITDA Q3 Q4 Summer Adjusted EBITDA 2013 54M 81M 135M ∆ FOREIGN CURRENCY (USD, EUR AND GBP) (28M) (29M) (57M) Adjusted EBITDA incl. currency impact 26M 52M 78M Yield management (price and load factor) Adjusted EBITDA 2014 15
Slide 16: Transatlantic Market: Capacity and Market Share
TRANSATLANTIC MARKET: CAPACITY AND MARKET SHARE (Transat Markets) +16% Winter 2013 Actual Market share – Winter 2014 Forecast TOTAL Transatlantic, SUMMER 2013 Summer 2013 3,465,000 +1% 0% TOTAL % SUMMER 2014 -3% +18% +19% 4,130,000 +33% +9% Other
Slide 17: Key Financial Results: Summer 2014
KEY FINANCIAL RESULTS SUMMER 2014 (AS OF MARCH 13, 2014) Summer season ended October 31 Too early to make forecast (in thousands of C$) 2014 2013 2012 Avg. 2009-2013 Transatlantic Outlook Actual Actual Actual • Capacity up by 1% REVENUES 1,735,620 1,672,497 1,667,991 • 27% of inventory sold EBITDAR(
Slide 18: Transatlantic Market, Summer 2013
TRANSATLANTIC MARKET, SUMMER 2013 (Transat Markets) 49 Netherlands 325,000 % 51 Room nights in Canada Ireland 200,000 Room nights in Europe UK Belgium 160,000 Jonview products Germany % France Switzerland 75,000 56 % 44 Land portion Greece Italy 20,000 Portugal European cruises Spain Turkey Sales ma
Slide 19: Financial Position
FINANCIAL POSITION AS OF JANUARY 31, 2014 As at HIGHLIGHTS Jan. 31, Jan. 31, (in thousands of C$, except ratios) 2014 vs. 2013 Free Cash – Variation of $112M YoY: 2014 2013 − Higher payables (+$70M), including Actual Actual $ % variable compensations paid in February 2014 and higher payables related
Slide 20: Cost Reduction and Margin Improvement Initiatives
COST REDUCTION AND MARGIN IMPROVEMENT INITIATIVES 2012: Achieved targeted cost reductions of $20M, mainly through reductions TARGETS in headcount and general expenses. 2013: Achieved targeted cost reductions of $15M, stemming in part from new operational processes at Air Transat, including the remov
Slide 21: Fleet Strategy
AIR TRANSAT FLEET STRATEGY WIDE-BODY W13 S13 W14 S14 W15 S15 Air Transat Base Fleet 21 21 21 21 21 21 Less:Temporarily withdrawn(1) - - (4) - (6) - Less:Sub-Lease (1) - (1) - (1) - Total 20 21 16 21 14 21 1) As announced in July, we signed an agreement for the renewal of six A330 with improved terms
Slide 22: Structure and Organization
STRUCTURE AND ORGANIZATION Jean-Marc Eustache President and Chief Executive Officer Simplified structure in Canada Jean-François Lemay Annick Guérard Patrice Caradec Air Transat Transat Tours Canada Transat France Transat Discoveries and Vacances Tours Mont-Royal now under Transat Tours Canada Forma
Slide 23: Air Transat Up-Selling Strategy
AIR TRANSAT UP-SELLING STRATEGY ANCILLARY REVENUES Revised terms and conditions: more flexibility for a fee (2012) IN DOLLAR / PESSENGER New cabin configuration contributed to an increase in the selling price of Club seats New search engine for selling tours on airtransat.ca Core business ancillary
Slide 24: Road Map for 2014 and 2015
ROAD MAP FOR 2014 AND 2015 Creating Shareholder Value • Sharp fall of Canadian currency hurt profitability as abrupt price increases could not be implemented in a highly competitive, sizable market, especially given its timing. But, as history has shown, the market will quickly integrate and absorb
Slide 25: Annex: Winter Financial Results
ANNEX: WINTER FINANCIAL RESULTS (5-YEAR HISTORICAL) Winter (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 1,912,538 2,041,722 1,911,263 1,852,948 2,006,331 EBITDAR(1) 22,688 (16,594) 26,440 23,386 57,554 EBITDA(1) (18,287) (58,065) (5,470) (4,211) 30,632 As % of revenues -1.0% -2.8% -0.3% -0
Slide 26: Annex: Summer Financial Results
ANNEX: SUMMER FINANCIAL RESULTS (5-YEAR HISTORICAL) Summer (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 1,735,620 1,672,497 1,746,901 1,645,929 1,539,010 EBITDAR(1) 175,228 121,910 78,907 157,145 90,128 EBITDA(1) 134,933 75,020 41,967 131,793 62,763 As % of revenues 7.8% 4.5% 2.4% 8.0% 4.1
Slide 27: Annex: Annual Financial Results
ANNEX: ANNUAL FINANCIAL RESULTS (5-YEAR HISTORICAL) Annual (in thousands of C$) 2013 2012 2011 2010 2009 REVENUES 3,648,158 3,714,219 3,568,164 3,498,877 3,545,341 EBITDAR(1) 197,916 105,316 105,347 180,531 147,682 EBITDA(1) 116,646 16,955 36,497 127,582 93,395 As % of revenues 3.2% 0.5% 1.0% 3.6% 2
Slide 28: Annex: Financial Position
ANNEX: FINANCIAL POSITION (5-YEAR HISTORICAL) As at April 30 As at October 31 (in thousands of C$) 2013 2012 2011 2010 2009 2013 2012 2011 2010 2009 Free cash + ABCP investment (fair value) 336,148 349,457 356,431 281,340 320,612 265,818 198,525 260,327 252,973 251,953 Cash in trust or otherwise res
Slide 29: Thank You!
ROAD BUMP: SUDDEN CURRENCY MOVE HURTS WINTER MARGIN IMPROVEMENT PLAN ON TRACK THANK YOU!