The Corporate Travel Management Ltd (ASX: CTD) share price is under the spotlight after reporting its FY21 result with a big recovery in Q4.
Corporate Travel’s troubled FY21
Investors may want to know that the business experienced a “rapid return” to positive underlying EBITDA (EBITDA explained) in the fourth quarter, led by its exposure to the recovery momentum in North America and Europe.
But let’s look at the overall result.
Total transaction value (TTV) for FY21 was down 65% to $1.61 billion – remember the first half of FY20 was unaffected by COVID-19. However, the FY21 second half TTV at $1.2 billion was 199% higher than the FY21 first half.
FY21 revenue was down 43% for the year to $200.5 million. But again, there was a good recovery. FY21 first half revenue was $74.2 million, then the second half was $126.3 million – up 70%. Fourth quarter revenue was $74.1 million.
Total FY21 underlying EBITDA (EBITDA explained) was a loss of $7.2 million (down 110% year on year). But that was a $15.3 million underlying EBITDA loss in the first half and a underlying EBITDA profit of $8.1 million. Fourth quarter EBITDA profit was $13.6 million.
Underlying net profit after tax in FY21 was a loss of $33.4 million and it reported a statutory loss of $57.8 million in FY21.
Other highlights
The business finished the year with no debt and cash of $99 million. It’s targeting a return to dividend payments in the 2022 calendar year.
The Travel & Transport acquisition is leading to achieving strong synergy benefits, being delivered as planned.
The ANZ region was profitable throughout FY21 despite the ongoing border closures.
Outlook for Corporate Travel and the share price
The ASX travel share said that after the year end, July delivered a record post-COVID revenue result, defying activity reduction in the Northern Hemisphere during the seasonal vacation period.
Management continue to see encouraging signs that momentum is building in the North American and European regions.
After the Travel & Transport acquisition, the company estimates it’s now the world’s fourth largest global travel management company.
Thanks to its recent acquisitions, realised synergies and permanent reduction in its cost base, it’s expecting “material” profit growth to after-COVID earnings.
The second half of FY22 is expected to show a particularly good recovery for travel.
If you believe that we’re through the worst of COVID and that business travel will return strongly, then today’s Corporate Travel share price could be a long-term opportunity, particularly in the US with T & T. It will be interesting to see how Corporate Travel performs compared to Webjet Limited (ASX: WEB) and Flight Centre Travel Group Ltd (ASX: FLT).
However, it’s not a business that is high on my own watchlist. There are other ASX growth shares that I’m looking at. But a potential return to dividends sounds like management are feeling quite bullish about the medium term future.
