Transat A.t. Inc. · TSX:TRZ
Transat A.t — Investor Presentation (September 2016)
45 slides from Transat A.t's investor presentation, September 2016
Slide 1: Long Term Transformation And Growth Plan
Long Term Transformation And Growth Plan INVESTORS PRESENTATION SEPTEMBER 2016
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: Section 1: Introduction
Section 1: Introduction Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 12 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution Strategy & Hotels Development 24 Section 5 Financial Profile 28 Appendix 33 3
Slide 4: One Of The Largest Tour Operators In The World
One Of The Largest Tour Operators In The World FY 2015 $101M EBITDA $3.6B 2.7M Revenues Customers ± 5,500 Employees 60+ Destinations 4
Slide 5: One Of The Largest Tour Operators In The World
One Of The Largest Tour Operators In The World FY 2015 (From continuing operations) $101M EBITDA $2.9B 2.3M Revenues Customers ± 4,500 Employees 60+ Destinations 5
Slide 6: True Vertically-integrated Travel Provider
True Vertically-integrated Travel Provider Outbound Develops holiday travel packages for sun destinations and Europe Tour Operator Served 1.5M travelers from Canada and 0.6M from Europe in 2015 Largest retail holiday travel distributor in Canada with 485 outlets Distributor Comprehensive onl
Slide 7: Distinct Summer And Winter Markets
Distinct Summer And Winter Markets PAX Distribution (FY2015) 20% 10% 60% 80% 10% 20% Transatlantic South & Ocean Hotels France (1) $135 $124 $133 (In millions of C$) (In millions of C$) 2013 2014 2015 $12 $17 $18 Historical EBITDA ($12) ($15) ($21) $123 $116 ($3) $106 ($15) ($3) ($17) ($24) 20
Slide 8: 2015-2017 Strategic Plan (Key Initiatives)
2015-2017 Strategic Plan (Key Initiatives) $100M Cost Reduction and Margin Update on $100M Cost Reduction and Margin Improvement Program (C$ M) Improvement Program Achieved 2015 target YTD 2016: 75% achieved $100 $75 Improve Product Offering $45 Introduce new European destinations Optimize s
Slide 9: Multiple Value Drivers
Multiple Value Drivers Implied Value Per Share 2014-2016 average EBITDA of $70M excluding contribution from Ocean Hotels, French and Greek Tour Integrated Tour Operators Operator Strategic plan creates opportunity to reduce costs by an additional $25M in 2017 ~$3.75-5.75$ (1) (including Airline)
Slide 10: Investment Highlights
Investment Highlights 1 Truly vertically-integrated travel producer with flexible cost structure Very strong position in sun destinations and transatlantic markets with exceptional 2 brand recognition Since 2012, Transat did a turnaround to become more agile including a unique flexible 3 Significa
Slide 11: Section 2: Transatlantic Market Overview
Section 2: Transatlantic Market Overview Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 12 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution Strategy & Hotels Development 24 Section 5 Financial Profile 28 Appendix 33 11
Slide 12: Transatlantic Capacity And Market Share
Transatlantic Capacity And Market Share (1) 2,000,000 +16% Summer 2015 (Actual) Summer 2016 (Forecast) Transatlantic Market Share 1,750,000 TOTAL SEATS Summer 2016 SUMMER 2015 1,500,000 3,960,000 8 4 1,250,000 7 +6% 6 43 1,000,000 % 12 750,000 +2% TOTAL SEATS SUMMER 2016 500,000 +19% 20 4,515,000 -4
Slide 13: Transatlantic Market Share by Destinations
Transatlantic Market Share by Destinations Market share GLOBAL MARKET OVERVIEW United Kingdom Europe: largest tourism market in the world 12 (more than 50% of travellers inbound & outbound) 4.5M seats in summer 2016 between Canada and Europe 18 % 51 TRANSAT STRATEGY AND MARKET POSITION Market share
Slide 14: Third Quarter Financial Performance
Third Quarter Financial Performance 3rd quarter results ended July 31 Q3 HIGHLIGHTS (vs. 2015) (from continuing operations) (in thousands of C$) Various factors have impacted our 2016 vs. 2015 2016 2015 bottom line : $ % • Global capacity increased • Terrorism attack REVENUES 663,591 704,844 (41,253
Slide 15: Transat Summer Financial Performance
Transat Summer Financial Performance Q4 HIGHLIGHTS (vs. 2015) Results from continuing Difficult Market Conditions operations • Global capacity up by 14% Q3 Q4 Summer • Terrorism attack • Olympic Games (travelers habit changed) Adj. EBITDA 2015 (incl. hotels) (1) 45M 71M 116M Transatlantic Market • 8
Slide 16: Ancillary Revenues
Ancillary Revenues (In millions of C$) 75 HIGHLIGHTS 67 10 5 60 55 (1) Grow ancillary revenues to C$ 75M by 2017 Introduction of Datalex software to facilitate the sale of optional services New cargo agreement 2014 2015 2016 2017 Initial target New target (1) Including third party contribution 16
Slide 17: Section 3: Sun Destinations Market Overview
Section 3: Sun Destinations Market Overview Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 12 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution Strategy & Hotels Development 24 Section 5 Financial Profile 28 Appendix 33 17
Slide 18: Sun Destinations Capacity And Market Share
Sun Destinations Capacity And Market Share (1) 1,400,000 0% Winter 2016 (Actual) Winter 2017 (Forecast) Sun Destinations Market Share 1,200,000 TOTAL SEATS Winter 2017 1% WINTER 2016 4,035,000 1,000,000 29% 5 3% 23 22 800,000 600,000 % % TOTAL SEATS 21 29 400,000 -6% WINTER 2017 200,000 4,260,000 Tr
Slide 19: Sun Destinations Outbound And Destination Overview
Sun Destinations Outbound And Destination Overview Winter 2017 : 980,000 Travellers (Excluding USA) Origin of Travelers Destinations of Travelers Mexico Quebec 3 3 6 5 3 Ontario Dominican 8 Republic 3 Atlantic Cuba 44 33 % Alberta 28 % Jamaica 36 Bristish Columbia Caribbean Rest of Canada 27 Central
Slide 20: Transat Winter Financial Performance
Transat Winter Financial Performance HIGHLIGHTS (vs. 2016) Results from continuing operations Transat • Unusual year in 2016 due to various external factors Q1 Q2 Winter that affected directly our margin. • French and Greek operations sales should be finalized around year-end Adj. EBITDA 2016 (incl.
Slide 21: Transat Aircraft Fleet
Transat Aircraft Fleet 2013 2014 2015 2016 2017 Wide-Body Base Fleet 21 21 21 21 21 21 21 23 23 23 - Seasonally withdrawn (1) - - (4) - (6) - (6) - (8) - - Sublease (1) - (1) - (1) - (3) - (3) - A330/A310 Total 20 21 16 21 14 21 12 23 12 23 (1) As a result to improved leasing terms, three A330s are
Slide 22: Ocean Hotels Investment
Ocean Hotels Investment Ocean Maya Royale Ocean Blue Sand HIGHLIGHTS Riviera Maya, Mexico Punta Cana, Dominican Republic OWNED 35% Interest (65% held by H10 Hotels) Owned - Adult Only Now • C$ 99.2M on balance sheet as of July 31 320 rooms Owned - 708 rooms Ocean Coral Turquesa 1,618 rooms Grow Ocea
Slide 23: Section 4: Distribution Strategy & Hotels Development
Section 4: Distribution Strategy & Hotels Development Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 12 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution Strategy & Hotels Development 24 Section 5 Financial Profile 28 Appendix 33 23
Slide 24: Transat Distribution Strategy
Transat Distribution Strategy Create a fully-integrated distribution ecosystem comprised of a new Transat Travel website, 30% connected to our call centers and travel Δ +25% agencies 24% 19% Δ +25% Make online tools fully responsive to mobile 15% 17% Δ +13% Δ +13% devices Enhance offering with third
Slide 25: Hotels Investment Rationale
Hotels Investment Rationale (1st Priority) Advances transformation from travel distributor to vertically-integrated travel producer Enhanced value proposition through owning the end product Improves financial stability from reduced seasonality and increased exposure to stable, high-margin hotel bu
Slide 26: U.S. Market Distributor Development Rationale
U.S. Market Distributor Development Rationale (2nd Priority) Become a North American leader from complementary outbound market profiles to similar destinations Substantial value creation potential • Unleash significant synergy potential by reducing seasonality of number of rooms taken from hoteliers
Slide 27: Section 5: Financial Profile
Section 5: Financial Profile Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 12 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution Strategy & Hotels Development 24 Section 5 Financial Profile 28 Appendix 33 27
Slide 28: Transat Current Financial Position
Transat Current Financial Position HIGHLIGHTS (additional details in Appendix) Free Cash: $504M vs $516M (2015) LEVERAGE RATIO (1) • Variation of ($12M) explained by : • Positive results in the last 12 months • Negative working capital 2.6x • Negative net of Capex • Share buyback ($10M) • Dividend r
Slide 29: Transat Annual Financial Performance
Transat Annual Financial Performance HIGHLIGHTS Consolidated Results 12-month period ended October 31 2016 YTD Results (in millions of C$, except per share amounts) 2015 2014 2013 2012 2011 • Unusual year due to various external factors REVENUES 3,566.4 3,752.2 3,648.2 3,714.2 3,654.2 • Firm offer f
Slide 30: Trading Comparables (Valuation Metrics)
Trading Comparables (Valuation Metrics) Share price Adj. Adj. EV / EBITDAR(1) P/E Margins (LTM) Latest Equity (in millions of C$, except ratios) Enterprise Quarter Value 26/08/2016 Value CY2016E(2) CY2017E(2) CY2016E(2) CY2017E(2) EBITDAR EBITDA Direct comparables TUI AG €12.23 Jun-16 $10,431 $19,84
Slide 31: Trading Comparables (Capital Structure)
Trading Comparables (Capital Structure) Adj. Capital Structure Capital Structure (%) (in millions of C$, unless otherwise noted) Cash Net Debt(1) Market Total Cash Adj. Market Total Adj. Leases Other Leases Cash Other Cap debt Adj. EV(1) Cap debt EV(1) Direct comparables TUI AG $2,417 $10,671 $10,43
Slide 32: Appendix
Appendix Page Section 1 Introduction 4 Section 2 Transatlantic Market Overview 12 Section 3 Sun Destinations Market Overview 18 Section 4 Distribution Strategy & Hotels Development 24 Section 5 Financial Profile 28 Appendix 33 32
Slide 33: First Quarter Financial Results Breakdown
First Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended January 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolid
Slide 34: Second Quarter Financial Results Breakdown
Second Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended April 30 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolida
Slide 35: Winter Financial Results Breakdown
Winter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 6-month period ended April 30 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidated Cons
Slide 36: Third Quarter Financial Results Breakdown
Third Quarter Financial Results Breakdown (Continuing operations vs. Discontinued activities) 3-month period ended July 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidate
Slide 37: Year-To-Date Financial Results Breakdown
Year-To-Date Financial Results Breakdown (Continuing operations vs. Discontinued activities) 9-month period ended July 31 2016 2015 Change (in millions of C$, except per share amounts and % of revenues) Continuing Discontinued Continuing Discontinued Continuing Discontinued Consolidated Consolidated
Slide 38: 5-Year Historical Winter Financial Results
5-Year Historical Winter Financial Results (Consolidated Results) 6-month period ended on April 30 (in thousands of C$) 2016 2015 2014 2013 2012 REVENUES 1,898,713 1,807,079 1,965,842 1,912,538 2,041,722 Adjusted EBITDAR (incl. hotels JV)(1) 26,869 15,493 15,135 26,312 (14,255) Adjusted EBITDA (incl
Slide 39: 5-Year Historical Summer Financial Results
5-Year Historical Summer Financial Results (Consolidated Results) 6-month period ended on October 31 (in thousands of C$) 2015 2014 2013 2012 2011 REVENUES 1,759,289 1,786,357 1,735,620 1,672,497 1,742,904 Adjusted EBITDAR (incl. hotels JV)(1) 184,187 172,023 175,280 123,066 81,465 Adjusted EBITDA (
Slide 40: 5-Year Historical Annual Financial Results
5-Year Historical Annual Financial Results (Consolidated Results) 12-month period ended on October 31 (in thousands of C$) 2015 2014 2013 2012 2011 REVENUES 3,566,368 3,752,198 3,648,158 3,714,219 3,654,167 Adjusted EBITDAR (incl. hotels JV)(1) 199,680 187,158 201,592 108,811 102,703 Adjusted EBITDA
Slide 41: 5-Year Historical Winter Financial Position
5-Year Historical Winter Financial Position (Consolidated Results) As at January 31 As at April 30 (in thousands of C$) 2016 2015 2014 2013 2012 2016 2015 2014 2013 2012 Free cash 431,411 393,631 359,596 247,877 291,234 454,881 441,536 404,554 336,148 349,457 Cash in trust or otherwise reserved 395,
Slide 42: 5-Year Historical Summer Financial Position
5-Year Historical Summer Financial Position (Consolidated Results) As at July 31 As at October 31 (in thousands of C$) 2016 2015 2014 2013 2012 2015 2014 2013 2012 2011 Free cash 504,261 515,552 497,072 389,337 318,692 336,423 308,887 265,818 198,525 260,327 Cash in trust or otherwise reserved 203,4
Slide 43: Experienced Management Team
Experienced Management Team Jean-Marc Eustache was the principal architect of the 1987 creation of Transat A.T. Inc. His Jean-François Lemay joined Transat’s senior management team in October 2011. He has some forward-thinking business vision — focused on vertical integration — combined with outstan
Slide 44: Non-IFRS Financial Measures
Non-IFRS Financial Measures Adjusted net income (loss): Net income (loss) attributable to shareholders before net income (loss) from discontinued operations, change in fair value of fuel-related derivatives and other derivatives, gain on disposal of a subsidiary, restructuring charge, impairment of
Slide 45: Thank You
Long Term Transformation And Growth Plan THANK YOU !
Transat A.T. — Investor Presentation (September 2016) on 6ix