The Corporate Travel Management Ltd (ASX: CTD) share price is under pressure on Wednesday.
In morning trade, the corporate travel specialist's shares are down 7% to $18.10.
This follows the release of the company's full-year results.
Corporate Travel share price falls despite strong growth
- Total transaction value (TTV) up 77% to $8,959.5 million
- Revenue up 70% to $660.1 million
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) to 179% to $167.1 million
- Underlying net profit after tax up 367% to $92.5 million
- Dividend up 340% to 22 cents per share
What happened during FY 2023?
For the 12 months ended 30 June, Corporate Travel Management reported a 70% increase in revenue to $660.1 million. This was ahead of its guidance thanks to a particularly strong fourth quarter.
In fact, the fourth quarter was so strong, management highlights that it generated the equivalent of ~90% of its FY 2019 revenue in just three months.
Corporate Travel Management's top-line growth was driven by strong performances across all regions. North American revenue rose 40% to $303.7 million, European revenue was up 70% to $143 million, ANZ revenue climbed 134% to $160.1 million, and Asia revenue jumped 198% to $51.6 million.
Growing even quicker was the company's earnings. Underlying EBITDA rose 179% to $167.1 million and net profit after tax increased 367% to $92.5 million.
Once again, this growth came from all sides of the business. However, the two highlights were the ANZ and Europe businesses which reported a 265% increase in EBITDA to $42.4 million and a 125% lift in EBITDA to $84.1 million, respectively.
It is also worth noting that the latter business doesn't yet include the full impact of the controversial UK contract to manage the accommodation needs of asylum seekers. This contract became operational in June and had little impact on its FY 2023 results. However, management expects it to contribute significantly to the region's results in future years.
Management commentary
Corporate Travel Management's managing director, Jamie Pherous, said:
Our performance in FY23 validates our successful strategy during the pandemic which has given us a larger global platform. We are taking strong momentum into FY24 with EBITDA averaging $20 million per month and PBTa averaging $16.5 million per month since February 2023. Pleasingly we are successfully converting the revenue recovery into net profit.
Outlook
Also failing to give the Corporate Travel Management share price a boost today was the company's guidance for FY 2024.
If you thought its earnings growth was about to moderate, think again. Management is guiding to underlying EBITDA of $240 million to $280 million and underlying profit before tax and amortisation of $193 million to $233 million.
For underlying EBITDA, this represents growth of 43.6% to 67.6%. Whereas for profit before tax, it will mean growth of 54.6% to 86.7%.
How does this compare to expectations?
According to a note out of Goldman Sachs, its analysts were expecting an EBITDA of $163.1 million for FY 2023.
However, for FY 2024 the broker was expecting a guidance range of $275 million to $293 million and had pencilled in EBITDA of $289.3 million. So, while the company has beaten this year, its guidance is short of expectations.
This is likely to be why the Corporate Travel share price is tumbling this morning.
