CTM nearly doubles earnings in 1H24, announces rigorous five year plan

CTM nearly doubles earnings in 1H24, announces rigorous five year plan
Edited by Travel Weekly

    Corporate Travel Management (CTM) has identified continued client growth and a five-year strategy to double its FY24 profits as it announced its 1H24 results today.

    Key Statistics

    CTM announced an EBITDA (earnings before interest, taxes, depreciation & amortization) increase of 96 per cent up to $100.7 million when compared to the same period for FY23. This came alongside a 25 per cent increase in revenue and income to $363.7m.

    Another key takeaway is the strong position of the CTM balance sheet, which shows no drawn debt and $131.3 million cash.

    The first half was a record result for CTM, exceeding internal expectations of a 1⁄3 EBITDA skew to 1H or $87m4 based on initial guidance.

    Dividends are expected to be maintained at 50 per cent of NPAT (dividends are currently unfranked).

    Two themes driving results

    CTM has attributed its strong 1H24 results to two key factors.

    Continued client wins delivering above-industry growth saw CTM win $630m of new clients in the first half of the year. It has also converted revenue to higher profit growth, as highlighted by its  EBITDA growth as well as 160 and 162 per cent growth in PBTA and NPAT respectively.

    Jamie Pherous, the MD of CTM, said, “The underlying business is performing well, and we are executing on the things we can control as demonstrated by continued market share gains and our ability to successfully convert revenue into profit growth.”

    The company also outlined three key metrics of success that are either on track or exceeding expectations:

    • New client wins on track to exceed annualised travel spend value of $1b for FY24.
    • Client retention is on track at 97 per cent.
    • Revenue per full-time equivalent employee (revenue/FTE) – which reflects cost control and productivity gains from automation, is up 17 per cent on the prior corresponding period (p.c.p).

    Issues impacting the broader industry

    CTM noted several ‘macro’ issues out of its control that impacted the business performance in 2Q24, specifically, negative travel sentiment relating to the conflict in the Middle East, American client calendar-year travel budgets being fully utilised by the end of 1Q24 due to unsustainably high-ticket prices, and a slower China outbound recovery.

    The 1H24 results indicate that these issues appear to have dissipated with the Group experiencing a strong rebound in January 2024.

    Regional Operation Outcomes

    Market Revenue & Other Income

    ($ millions) 

    EBITDA – underlying 

    ($ millions) 

    North America+ 3% to 150.7+23% to 20.5
    Europe+118% to 98.5+271% to 63
    Australia/New Zealand+1% to 81.4-21% to 18.6
    Asia+63% to 32.5+168% to 9.1


    Five year growth strategy

    CTM has also unveiled a plan to double its FY24 profits in the next five years to FY24 and identified five drivers that will underpin the process.

    1. Revenue growth of 10 per cent+ per annum over 5 years.
    2. Client retention at 97 per cent per annum
    3. Continue to benefit from productivity and innovation projects.
    4. EBITDA growth > revenue growth: half of every dollar of revenue falls to EBITDA.
    5. Continued acquisitions over five year timeline.

    “The key metrics required to execute the plan (client wins, retention, automation project execution, revenue/FTE) are already being met or exceeded in FY23 and FY24,” Pherous, said.

    “Furthermore, CTM has a strong track record of acquisition execution and synergy extraction, and any future acquisitions would be additional to the organic growth from this strategy.

    “When combined with our strong balance sheet, we are well positioned for any likely industry consolidation.”

    Outlook and revised guidance

    CTM highlighted its UK Bridging Contract is materially underperforming versus client’s initial expectations, due to immigration challenges and resulting timing delays. This is expected to have a negative $25m impact to full year results.

    CTM has taken a conservative approach to guidance as it relates to the UK Bridging Contract and has
    assumed no further growth from current levels. Any future additional activity will be upside to the
    guidance range.

    Combined, these issues will have a $40m impact to the full year EBITDA guidance mid-point. As a result, FY24 guidance has been revised as follows:

    • Revenue $730-760m, representing 15% growth on FY23 at the mid point of the range
    • Underlying EBITDA: $210-$230m, representing 31.7 per cent growth on FY23 at the mid point
    • Underlying PBTA: $167-$187m
    • Underlying NPAT to owners of CTM: $125-$140m

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