Corporate Travel Management Ltd (ASX: CTD) released its half year (HY) report this morning for the period ending 31st December 2018.

Corporate Travel Management is a provider of travel management solutions to the corporate market. They pride themselves on personalised service excellence and client-facing technology solutions, and these traits have helped them to win AFTA’s award for Australia’s Best Corporate Travel Management Company twelve times. They are currently operating throughout Australia, New Zealand, North America, Europe and Asia.

Here Are the 5 Key Points

  • Revenue and other income increased by 23% to $212.2 million
  • Underlying EBITDA showed an increase of 21% to $64.6 million
  • Statutory NPAT was up 27% to $38.9 million
  • Statutory EPS increased 25% to 36 cents per share
  • Half year dividend was increased 20% to 18 cents per share, full franked

Growth Drivers

The largest region of growth for Corporate Travel Management was Asia, with revenue up 47%. Australia/New Zealand, North America and Europe saw increases of 15%, 18% and 21% respectively. By revenue, North America is the largest market, making up approximately 33% of total revenue.

In Australia and New Zealand, Corporate Travel Management is seeing a record level of new client wins and retention rates.

In North America, a new technology suite was launched to market with, “on-going client rollout and regular enhancements underway”.

Management Commentary

Speaking to the HY report, Corporate Travel’s Managing Director Jamie Pherous commented, “We have delivered another great set of results across all of our operating regions. This strong performance reaffirms our clear strategy to build a global network by applying a high-quality growth business model.”

Discussing Corporate Travel Management’s competitive advantage, Mr Pherous stated, “Our diverse business model and global footprint gives us a competitive advantage, while our proven M&A strategy is also providing strong returns.” He also noted, “Our win and retention rates are at historically high levels, and this includes several multinational clients that recognise our international capabilities.”

As Rask Media reported here, Corporate Travel was caught in the crosshairs of notable short-sellers who attempted to poke holes in the company’s valuation.

Going Forward

With the release of FY18 results in August 2018, Corporate Travel Management also released FY19 guidance with an EBITDA range of $144-150 million. With these half-year results, they are now tracking towards the top end of this range, which would represent an increase in EBITDA of approximately 20%.

Based on previous years, Corporate Travel Management tend to see higher EBITDA in the second half of the year. Over the last 5 years, it’s been roughly 57%-60% in the second half and 40%-43% in first half.

The revenue margin did drop slightly in 1H19 from 31.1% to 30.7%, but Corporate Travel Management is confident that its growing scale, technology and automation will eventually result in higher margins.

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Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).

Disclaimer: At the time of writing, Max does not own shares in any of the companies mentioned.