Redefining Travel Commerce. Bernstein Strategic Decisions Conference 2016

Transcription

1 Redefining Travel Commerce Bernstein Strategic Decisions Conference 2016

2 Disclaimers Related to Forward-Looking Statements Certain items in this presentation and in today s discussion, including matters relating to revenue, net income (loss), and percentages or calculations using these measures, capital structure, future business opportunities, plans, prospects or growth rates and other financial measurements and non-financial statements in future periods, constitute forward-looking statements. These forward-looking statements are based on management s current views with respect to future results and are subject to risks and uncertainties. These statements are not guarantees of future performance. Actual results may differ materially from those contemplated by forward-looking statements. Travelport Worldwide Limited (the Company or Travelport ) refers you to our periodic reports and filings with the Securities and Exchange Commission (SEC), including our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 18, 2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2016, filed with the SEC on May 5, 2016, for additional discussion of these risks and uncertainties, as well as a cautionary statement regarding forward-looking statements. Forward-looking statements made during this presentation speak only as of today s date. Travelport expressly disclaims any obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. Related to Non-GAAP Financial Information Travelport analyzes its performance using Adjusted EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share, Adjusted Operating Income, Capital Expenditures, Net Debt, and Adjusted Free Cash Flow, which are non-gaap financial measures. Such measures may not be comparable to similarly named measures used by other companies. The Company believes these measures provide management with a more complete understanding of underlying results, trends and the liquidity of the core operating business, along with the Company s ability to meet its current and future financing and investing needs. Adjusted EBITDA is the primary metric, used to evaluate and understand our underlying operations and business trends, forecasting and determining future capital investment allocations. Adjusted EBITDA, Adjusted Net Income/(Loss), Adjusted Income/(Loss) per Share and Adjusted Operating Income are also used by the Board of Directors to determine incentive compensation for future periods. Capital Expenditures, which impact depreciation and amortization, interest expense and income tax expense, are reviewed separately by management. These measures are disclosed so that investors have the same tools as those available to management when evaluating the results of Travelport. These non-gaap measures are defined in the Definitions appendix of this presentation and discussed and reconciled to GAAP measures in our quarterly and annual filings with the SEC. 2

3 Industry leader with global, differentiated platform Travelport has transformed though investments to lead the global travel distribution industry. Our platform is differentiated in 5 key areas and is fully focused on value creation for our customers. 1 Airline Merchandising Global travel 5 B2B Payments distribution industry s clear leader in 2 LCC Distribution 3 Hospitality and Digital Media 4 Mobile Commerce 3

4 Airline hosting is critical for back-end IT systems but does not drive value creation at the front-end Majority of world s largest airlines do not use Amadeus or Sabre PSS But six of ten utilize IT solutions provided by Travelport o Hosting decisions do not drive distribution decisions By definition travel intermediaries book all carriers regardless of host Top 10 Global Airlines 1 in 2015 (in millions) American Delta United Southwest China Southern Hosted by Sabre Sonic Hosted by Travelport, development by Delta Not Hosted on Amadeus Altea or Sabre Sonic Product (2) Not Hosted on Amadeus Altea or Sabre Sonic Product Not Hosted on Amadeus Altea or Sabre Sonic Product Ryanair Hosted on Navitaire, recently purchased by Amadeus China Eastern Not Hosted on Amadeus Altea or Sabre Sonic Product Air China Lufthansa easyjet Not Hosted on Amadeus Altea or Sabre Sonic Product Hosted on Amadeus Altea Product Not Hosted on Amadeus Altea or Sabre Sonic Product 1. Top 10 global airlines measured by passengers boarded represent around a third of global passengers boarded; Source: CAPA 2. Southwest uses Amadeus Altea for international flights, being a small proportion of Southwest s business 4

5 Travelport is focused on differentiated value creation at the front-end Airline content Network carriers Low cost carriers Airline merchandising Ancillaries and branded fares Tailored offerings Aggregated shopping Distribution Travel Commerce GDS IT Solutions Platform Hotels ~650,000 chain & independent hotel properties Other distribution ~60 cruise lines 13 major rail networks Content Hospitality Hotels Rental car and ground transport B2B travel industry digital media Payments enett Content Front-End Back-end: IT solutions Car rental ~36,000 car rental locations Employees: Mobile commerce MTT Locomote Travelport remains essentially a transaction fee based business 5

6 The key proof points of our industry-leading platform Airline distribution and merchandising Hospitality attachment 65% of Air segment revenue in FY 15 from away bookings (FY 11: 58%) 160 airlines 1 live with merchandising, including fares families, branded fares, ancillaries and tailored offers FY 15 FY 14 FY 13 FY 12 FY Hospitality segments per 100 airline tickets issued Mobile commerce Mobile commerce Payments MTT continues to perform well adding global airlines and TMCs to its client roster, across multiple regions FY 15 $92m FY 14 FY 13 $45m $67m Q revenue up +76% FY 12 $19m FY 11 $2m Etihad Airways mobile app launched in the App Store on April 11, 2016 enett revenue 6 1 As of May 23, 2016

7 Our model selling the way the airlines want to sell Before: Legacy Desktops After: Travelport Smartpoint Traditional GDS screen used to present airline products for well over 30 years Screens reduce airline s product offerings to a line of alphanumeric text Much less intuitive user interface for agents Travelport s proprietary point-of-sale application for travel agencies and management companies Integrates Rich Content and Branding merchandising capabilities Enables sale of ancillary services and promotion of entire product value and brand propositions Changing the distribution paradigm with a supplier-centric focus on presenting product to the customer 7

8 Airlines signed up to Rich Content and Branding represent ~60% of our air segment volumes Our high value-adding merchandising solutions, including Rich Content and Branding, continue their rapid momentum Now at a critical mass of participation; 160 airlines signed to date represent ~60% 1 of our air segment volumes (including eight out of the world s 10 largest airlines 2 ) Etihad.com Business Class with Etihad is not business as usual Travelport Airline merchandising today within our award-winning Smartpoint point-of-sale 8 1 Represents percentage of air segment volumes (for FY 2015) derived from airlines signed to Rich Content and Branding as of May 23, As measured by passengers boarded; top ten airlines represent around a third of global passengers boarded

9 Travelport's tailored offerings another unique differentiator Travelport further expanded its product set in 2015 to include tailored offerings Tailored offerings include negotiated deals between corporates and airlines; available through self-booking tools and to travel agencies Tailored merchandising available through our universal API (uapi) technology Tailored merchandising made real today within our award-winning Smartpoint point-of-sale 9

10 We offer leading airline technology to our partners Travelport provides a broad range of innovative technology solutions and services to our customers to enhance their direct selling and customer experience capabilities Delta Hosting Solutions Branded Fares Mobile Commerce Data Analytics GDS Delta Hosting Signed new long-term agreement in 2014 to run Delta host reservation and key operating system (AIR4) Recently upgraded to ztpf Provide Rapid Reprice, EMD and other technology Extending to other Delta investment carriers (Virgin Atlantic) Emirates Inspire Me - exclusive live-search solution: proprietary mapping and search technology infuses real-time availability and pricing into the search process Emirates Fare Branding and Upsell - choose the right fare brand based on value, not just the lowest price, and easily upgrade to the next branded fare MTT focuses on delivering world-class mobile solutions to leading airlines, hotels and travel agencies Designs and runs mobile apps for easyjet, BCD Travel, LATAM, Etihad, Saudia, Capita Travel and Singapore Airlines Multi-award winning service Cloud-based data and analytics for route planning, fares, revenue management and sales effectiveness. Global scale and used by multiple airlines 10

11 Case study: Value-add solutions for Emirates own website 11

12 International (excl. US) air market share is stable International regions (~70% of total GDS market) tend to yield higher RevPas and margins than the US International GDS segments 3% CAGR between Q1 12 and Q1 16; faster than US segments Travelport air share gains in APAC, Latin America; stable in Europe 60% 50% 40% 30% 20% 10% 0% Q1 12 Q2 12 Q3 12 Q4 12 Q1 13 Q2 13 Q3 13 Q4 13 Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Travelport Amadeus Sabre & Abacus 12

13 Differentiated focus on travel commerce Beyond Air Hotel Distribution Digital and Mobile Solutions ~650,000 hotel properties bookable Retail rates for independent hotels from leading aggregators (Travelport Rooms and More) Corporate rates for independent hotels (Hotelzon) Mobile platform and apps for the travel industry (MTT) Corporate self-booking tools (Locomote and Hotelzon) Digital media B2B advertising (~3,500 advertisers) BEYOND AIR 2015 revenue: $492m (+16%) 23% of Travel Commerce Platform Revenues (21% in FY 2014) ~36,000 car rental locations bookable ~60 cruise lines & tour operators and 13 major rail networks B2B payments by travel agencies to travel providers (enett) Car, Tours and Other Distribution Payments 13

14 Powering hotel distribution to corporate and retail Travelport Smartpoint includes significant further enhancements to hotel booking Travelport Hotelzon enhancing content, efficiency and choice in the corporate hotel booking market Travelport Smartpoint version 7.0, launched March 2016 Latest version of Hotelzon Online Travelport has significant advantages through the depth and breadth of hotel content all bookable in real-time 14

15 Focus on mobile commerce provides differentiation and value Travelport Mobile Key customers include: Focused on delivering world-class mobile solutions to leading airlines, hotels and travel agencies Airline customers use a variety of IT solutions providers ~200 employees specialized in mobile travel commerce 22 million downloads to date of apps developed by Travelport for customers; top-rated travel app in 78 different countries Key adjacency that significantly enhances Travelport s Beyond Air value proposition, with mobile fast becoming the key travel commerce channel Locomote Corporate Travel Platform Example Locomote apps: Strengthens offering to both Corporates and TMCs, combining mobile technology with leading travel content Corporate travel management apps, focused on providing solutions for all corporate travel management needs, incorporating artificial intelligence and actionable data analytics 15

16 Fast-growing enett is redefining B2B payments Driving security, efficiency and value for travel agencies and travel providers Unique value proposition Risk Fraud protection Protection against airline insolvencies AGENCIES Reward Rebates paid on every transaction Reduced FX exposure Pre-funded model developed in partnership with Optal payment experts Unique banking relationships established Deep, strategic partnership with MasterCard Fully integrated into travel agency workflows and GDS-agnostic TRAVEL PROVIDERS First mover advantage and proven business model Reconciliation 100% data match between booking and payment - avoids time-consuming, manual reconciliation processes Competitive advantage over commercial banks and our traditional GDS competitors Deployed in >70 countries $92m reported revenue in FY 2015 for Travelport Strong barriers to entry Uniquely positioned for accelerating growth within the >$800bn addressable market 16

17 with revenue rapidly accelerating enett reported revenue (in $ millions) $92 $45 $67 More than 1/3 of FY 2015 revenue $19 $33 First mover advantage in a nascent industry $ Q Reliable solution with broad acceptance Generating EBITDA, net income and free cash flow since

18 Investments in Beyond Air delivering strong, sustainable growth Beyond Air continues its strong growth (+16% in FY 2015; +23% in Q1 2016) enett revenue up 36% with strong pipeline into 2016 (+76% in Q1 2016) Beyond Air revenue excluding enett up 12% (+11% in Q1 2016) Hospitality attachment rate 1 reaches 47% in 2015 Mobile performing well with recent major business wins including Etihad Airways and Aeroméxico Hospitality attachment 1 enett Revenue +11% FY % FY 2015 Continued strong Beyond Air Revenue growth $ millions; CAGR FY 2012 FY 2015 CAGR 15% Hotel room nights sold Car rental days sold % % % % +8% FY 2012 FY 2013 FY 2014 FY 2015 FY 2015 FY Hospitality segments per 100 airline tickets issued

19 Full year 2015 summary Key Financials Travel Commerce Platform Revenue ( Growth) Net Revenue $2,221m Adj. EBITDA $535m 3% (1)% Flat +1% +5% Q Q Q Q % FY % Adj. Net Income $122m $133m Air (3)% (2)% 2% 3% Beyond Air 14% 12% 17% 21% RevPas progression and Growth Adj. EPS (diluted) $1.00 Adj. FCF 1 $134m $1.12 $173m +11% +15% +4% +2% $6.63 $5.73 $6.00 $6.29 $6.63 $6.29 $6.00 $5.73 FY % Q Q Q Q Adj. FCF Adjusted Free Cash Flow

20 Q highlights Net Revenue $609m Adj. EBITDA $154m Adj. Net Income $51m 6% 12% $21m Travel Commerce Platform revenue up 7% Solid revenue growth in Air driven by pricing, mix and merchandising Beyond Air grew 23% with enett revenue up 76% International revenue growth of 12% Adjusted EBITDA up 12% to $154m Adj. EPS (diluted) $0.41 $0.17 Good operational performance drives significantly higher Adjusted Net Income and higher Adjusted Free Cash Flow Adj. FCF 1 $(5)m $16m 20 1 Adj. FCF Adjusted Free Cash Flow

21 Our capital structure & capital allocation strategy Simplified and improved capital structure Continuing to build a track record of balanced and disciplined approach to capital allocation Significant reduction in total debt, from $3.8bn in 2011 to $2.4bn today Continued investment Current debt is single tranche, raised publicly in the capital markets Covenant-light, fully pre-payable without any penalties and no significant maturities until 2021 Strong free cash flow conversion, even after debt servicing Mergers and acquisitions Returns to debt holders Target to reduce net leverage to around 3.0x Adjusted EBITDA by 2018 Returns to equity holders Building a track record of balanced and disciplined capital allocation 21

22 Outlook 2016 and beyond (in $ millions, except per share amounts) FY 2016 Guidance* Growth Net revenue 2,350 2,400 6% 8% Adjusted EBITDA % 8% Adjusted Net Income % 23% Adjusted Income per Share diluted** % 20% Adjusted Free Cash Flow % 23% Long Term Goals By 2020, achieve: $3bn Travel Commerce Platform revenue, with >1/3 in Beyond Air > $250m Adj. Free Cash Flow * Guidance assumes foreign exchange rates as of April 28, 2016 ** Based on expected FY fully diluted shares outstanding of 125m 22 The information presented here represent forward-looking statements and reflect our expectations as of May 5, We assume no obligation to update these statements. Results may be materially different and are affected by many factors detailed in this presentation and in our Annual Report on Form 10-K for the year ended December 31, 2015, filed with the SEC on February 18, 2016 and our Quarterly Report on Form 10-Q for the quarter ended March 31, 2015, filed on May 5, 2016.

23 Creating long-term shareholder value Strong core Differentiated focus Leading technology Truly global Focused on the markets that need us Compelling financials Disciplined capital allocation Core business model is resilient, recurring and transactionbased with strong competitive advantages Differentiated platform approach to address evolving travel commerce ecosystem in airline merchandising, hospitality, mobile commerce and payments Significantly upgraded technology platform and industry-leading product suite Broad international presence to leverage international focus of our customers Strong focus on corporate and servicepremium travel Entering clear growth phase with multiple, compelling drivers Capital-light model with strong free cash flow generation and clear and disciplined approach to capital allocation 23

24 Q Highlights

25 International revenue growth at double-digit level for third successive quarter International revenue up 12% to $425m 73% of Travel Commerce Platform revenue (Q1 2015: 70%) Higher-value business drives International RevPas up 11% to $7.81 Broad geographic footprint driving growth Q Travel Commerce Platform revenue by region - Growth (%) Europe +18% International growth more than offset anticipated revenue decline in the US LATAM & Canada +18% Continued success in Europe, Latin America & Canada and Asia Pacific Europe sees benefit of wins in H driving stronger growth in Q1 APAC MEA International Flat +9% +12% Latin America & Canada delivers fourth successive quarter of double-digit growth Asia Pacific builds on prior year momentum with good Q1 performance US (4)% All Regions +7% 25

26 Solid growth in net revenue Air revenue up 3%; Beyond Air revenue up 23% Technology Services stable ; new revenue generating projects replacing completed 2015 activities RevPas of $6.43 (+12%) delivered Travel Commerce Platform revenue growth of 7% Over half of RevPas growth driven by improving pricing, mix and merchandising in Air Net revenue growth in Q1 Key growth drivers Q $ millions; Percentage growth % flat % 68% ~160 Airlines International Revenue Away bookings 1 Airline merchandising % 444 Travel Commerce Platform revenues comprise Air and Beyond Air % % +76% +12% Q Q Beyond Air Air Technology Services Hospitality attachment 3 enett Revenue RevPas % of Air segment revenue from away bookings 2. Number of airlines live with Travelport s merchandising solutions 3. Hospitality segments per 100 airline tickets issued

27 Adjusted EBITDA Adjusted EBITDA continues to benefit from higher margin away/international business and airline merchandising solutions (including Rich Content and Branding) Commissions increase primarily due to geographical footprint and mix SG&A* increase primarily due to workforce expense related to acquisitions, partially offset by FX benefit (net of hedging) Adjusted EBITDA Q1 Bridge $ millions 37 (14) (1) (5) Q Adjusted EBITDA Net Revenue Commissions** Tech Costs SG&A Costs* Q Adjusted EBITDA 27 * SG&A excluding non-core corporate costs (see appendices for further details) ** Commissions excluding amortization of Customer Loyalty Payments (see appendices for further details)

28 Strong Adjusted Net Income and improved Free Cash Flow Adjusted EBITDA growth drives continued improvement in Adjusted Net Income and Free Cash Flow Adjusted Income per Share (diluted) of $0.41 (+$0.17 ) Adjusted Net Income Q1 Bridge Adjusted Free Cash Flow Q1 Bridge $ millions $ millions (5) 51 (21) (1) (3) 30 Q Adjusted Net Income Adjusted EBITDA Depr n of PPE & Amortization of CLPs Interest Expense & Taxes Q Adjusted Net Income Q Adjusted Free Cash Flow Adjusted EBITDA CLP * & Capex ** Working Capital & Other Interest & Tax Q Adjusted Free Cash Flow 28

29 Appendices Financial model Capital light

30 Highly attractive financial model Transaction-Based, Recurring, Highly Visible Revenue Transaction-based, volume driven model (not linked to price) High recurring revenue from air and beyond air providers Legacy contracts addressed with 2015 being the transition year for their financial impact Diversified and Resilient Model Global, geographically balance business with limited regional concentration Consistent performance, even in challenging macro environment No customer accounts for more than 10% of revenue Low capital intensity Strong Free Cash Flow Generation Low working capital needs Cash flow conversion 1 of ~70% Expect enhanced long-term cash flow through deleveraging and growth Strategic Deployment of Capital Leverage target of around 3x Adjusted EBITDA by 2018 No current plan to change return of capital to shareholders Free cash flow used for regular dividend, deleveraging and tuck-in acquisitions 30 1 Cash flow conversion calculated as (Adjusted EBITDA Capital Expenditures) / Adjusted EBITDA

31 Differentiated platform with compelling financial drivers Segment volume x RevPas = Travel Commerce Platform revenue Technology + Services = Air Beyond Air Air, hotel and other travel agency segments Airline distribution and merchandising Hospitality (hotel, car and other) attachment Payments Mobile commerce Strong focus on higher value away and international business 31

32 Low capital intensity and strong cash flow Low Capital Intensity Capital Expenditures ($ in millions) Cash Flow Conversion (1) Strong Cash Flow Conversion 78% 75% 73% 73% $108 $127 $144 $ % 6.1% 6.7% 6.4% Capital Expenditures as % of Net Revenue Net Revenue ($ in millions) Adjusted EBITDA ($ in millions) $2,002 $2,076 $2,148 $2,221 $494 $517 $540 $ Cash flow conversion calculated as (Adjusted EBITDA Capital Expenditures) / Adjusted EBITDA 32

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