The Corporate Travel Management Ltd (ASX: CTD) share price is higher after the ASX travel share announced that it had a strong finish to FY23, with momentum for FY24.
FY23 profit rebound
The company announced that it expects FY23 underlying EBITDA (EBITDA explained) to be between $165 million and $170 million, meaning that second half underlying EBITDA is going to be between $113.7 million and $118.7 million.
The second half underlying EBITDA is expected to be more than double the FY23 first half of $51.3 million which indicates “strong momentum into FY24.” The FY23 second half EBITDA (to revenue) margin was 31.5%.
It was able to achieve this result because FY23 fourth quarter revenue was more than 90% of pro-forma FY19 revenue.
Corporate Travel revealed that it’s averaging over $20 million per month of underlying EBITDA and $16.5 million per month of profit before tax and client amortisation (PBTa).
Europe EBITDA was double pro forma (underlying/company calculated) FY19 levels. Asia EBITDA has been tracking at record levels since March, surpassing FY19. North American revenue has averaged over 80% of pro forma FY19 levels.
Pleasingly, Corporate Travel said that its client retention rate was very high, at 97%.
Strong outlook for FY24
The ASX travel share said that these highlights “demonstrate the rapid growth in the business and provide strong momentum into FY24.”
The company also said that, based upon client assumptions of annualised spend at the time of the client win, it has won $2.95 billion of annualised new client wins, with the majority not yet transacting in FY23. This seems to bode well for future revenue and profit growth in FY24.
Final thoughts on the Corporate Travel share price
The company can’t control what happens with the share price, but it can obviously affect its earnings. It’s doing a good job of riding the travel rebound and winning more clients. It’s demonstrating good operating leverage – where revenue grows quicker than profit.
With the Corporate Travel share price up 35% in 2023 to date, it’s not as good value as it was before.
I like the business, and it could do well in the long-term, but I’d prefer to wait for a better price in the short-term because the strong travel conditions are largely known now.
