World Blue Group Holding AG (GB) Q3 2024 Earnings Name Transcript

World Blue Group Holding AG (NYSE:GB) Q3 2024 Outcomes Convention Name February 23, 2024 8:00 AM ET

Firm Individuals

Jacques Stern – CEO

Roxane Dufour – CFO

Frances Gibbons – Head of IR

Jacques Stern

Good morning. Good afternoon. I’m, as we speak with Roxanne Dufour, CFO of the group. I’m Jacques Stern, the CEO of the group, and we are going to remark to you our Q3 figures. I’ll begin by an govt abstract to attract the primary key factors to bear in mind.

First, the primary 9 months of the 12 months has been robust by way of income with 41% improve. The EBITDA on the finish of 9 months have elevated by 103% at €115 million and this interprets a drop by of the income into adjusted EBITDA of 62.8%. We’re additionally on this Q3, seeing an acceleration of the annualized adjusted EBITDA at €159 million.

Roxane will touch upon that. And if we go to January figures, the January have confirmed the energy of the restoration in continental Europe with a restoration of 125% versus 118% in Q3, and identical in APAC with a restoration which is now reaching 161% of 2019 in January versus from 115% in Q3. I offers you far more data on that within the coming minutes.

Simply to say on this predominant takeaway, it’s possible you’ll keep in mind that we’ve got closed the refinancing by early December 2023, which resulted into a brand new senior debt of €610 million and FCF of virtually €100 million with a maturity of seven years, and alongside additionally to say that, we see a really robust enchancment of the web leverage ratio at 3.6x versus greater than 6x final 12 months. And we verify our goal to go beneath 2.5x by way of web leverage ratio.

These are actually the takeaway and now I’ll give the ground to Roxane to present you extra element on Q3 and the 9 months monetary efficiency.

Roxane Dufour

Thanks, Jacques. I am Roxane Dufour, the CFO of World Blue and I’ll take you thru the group’s monetary efficiency for the sub-quarter 9 months interval ended thirty first of December 2023. As a reminder, our monetary 12 months runs from April to March and all of the reconciliations to the closest IFRS metrics are included into the appendix.

Let’s transfer to Slide 7 for our adjusted P&L of the third quarter. We’re happy right here to report one other strong quarter with vital progress throughout the enterprise. TFS and AVPS reported gross sales in retailer elevated by €1.5 billion a rise of 27.7% versus Q3 final 12 months, group income elevated by 26.2% to €109.4 million versus the identical interval final 12 months.

Turning to adjusted EBITDA, we’ve got delivered a big enchancment to €39.8 million leading to an 8.5 level improve within the adjusted EBITDA margin to 36.3% and with a 69% income drop by to adjusted EBITDA. Lastly, we recorded an adjusted web earnings for the group of €9.1 million versus €6.6 million in Q3 final 12 months.

Let’s flip now to Slide 8 for the income. Right here you possibly can see that we’ve got delivered one other robust quarter vital development, delivered a 26.2% improve in income versus the identical interval final 12 months. I’ll go into the element per division on the next slides, however you possibly can see right here, TFS, EVPS and NTS contributed to additional €22.7 million in income with an additional €1 million scope impact from TFS and NTS. We then have a €1 million FX affect which provides us on the finish to €109.4 million of income in Q3 this 12 months versus €86.7 million final 12 months’s identical interval.

Turning now to the income efficiency per division. TFS 74% of our income in Q3. TFS delivered a powerful efficiency with a rise in income of 24.8% on a reported foundation to €80.3 million. On a like-for-like foundation income in continental Europe elevated by 17.7% to €68 million whereas income in Asia-Pacific elevated by 83.5% to €12 million income.

This robust efficiency in Asia displays the continued restoration throughout all origin nationality with the reopening of Chinese language border in January 2023 being the important thing driver of the income enhancements, particularly in Asia, as I discussed, the place gross sales in retailer of buyers from mainland China has already recovered to 105% in Q3 this 12 months versus 2019. And Jacques will cowl that in additional particulars later.

Turning now to AVPS. AVPS, that is 20% of our group income. This division additionally delivered a powerful efficiency with a rise in income of 37.4% on a reported foundation to €22.3 million, reflecting a powerful efficiency throughout each enterprise segments. On a like-for-like foundation, income in FX resolution elevated by 64% to €10.6 million whereas income within the buying enterprise elevated by 26.2% to virtually €12 million. As with TFS, AVPS can be benefiting from the continued restoration within the journey business.

Turning now to RTS. RTS 6% of the group income in Q3 this 12 months. As a reminder, RTS displays the acquisition of ZigZag in March ’21, consolidation of Yogoda from September ’21 and the acquisition of ShipUp in November ’22. Right here you possibly can see RTS income rising by 11.6% on a reported foundation to €6.8 million income in Q3 this 12 months. There was an natural development of three.9% and a further 500,000 from the acquisition of ShipUp.

Whereas like-for-like income development was average at 3.9% because of the cessation of gross sales of carriage to ZigZag purchasers, which is income with decrease contribution, the like-for-like contribution development of the phase, which is after provider value, was very robust at 80%.

Turning now to element on adjusted EBITDA, the numerous enchancment in income along with the continued deal with the fee base led to a 65.2% improve in adjusted EBITDA in Q3 this 12 months. And the income drop by is 69.2% and I’ll take you thru the small print right here. We start with our adjusted EBITDA, which was €24.1 million final 12 months.

If we have a look at the extra contribution of every enterprise, contribution being the marginal income minus marginal direct variable value, we’ve got an additional €19.4 million in Q3 this 12 months. Then contemplating the €3.8 million affect of fastened value after which the scope impact from TFS and RTS and the FX affect, the group delivered an adjusted EBITDA of €39.8 million with a rise within the adjusted EBITDA margin of 8.5 factors to 36.3%.

Turning now to Slide 13 for additional element on the web finance prices, we’re displaying right here a big improve of €8.3 million in web finance value. Few factors to contemplate, first, we’ve got a rise in curiosity value of €5.3 million. This is because of a rise in rate of interest from 3.26% in October-November ’22 final 12 months to this 12 months’s identical interval, 6.5%. And in December, it raised to eight.4% because of the refinancing.

After which, we’ve got a unfavourable overseas change variation of €3 million versus the identical interval final 12 months. As a reminder, Q3 final 12 months was impacted by the overseas change associated to the Certares and Knighthead fairness transaction and likewise the supplemental shareholder facility, which was denominated in USD whereas World Blue report in euro.

Turning now to the element of quarterly adjusted EBITDA. Right here we’re displaying the annualized adjusted EBITDA for the group based mostly on the quarterly restoration. You may see right here a gentle and constant enchancment within the annualized quarterly adjusted EBITDA. And now based mostly on the third quarter restoration, the annualized quarterly adjusted EBITDA is at €159 million. This has led to a big enchancment by way of margin from 28.8% final 12 months’s identical interval to this 12 months, 36.7%.

Now, I’ll take you thru the monetary element for the 9 months efficiency. Right here, we’re displaying the adjusted P&L for the 9 months over the 12 months, and once more we see the identical tendencies as with the Q3. TFS and AVPS reported gross sales in retailer elevated by €5.9 billion a rise of virtually 45% versus the 9 months final 12 months.

Group income elevated by 41% to €317 million after which turning to adjusted EBITDA, we’ve got delivered a big enchancment to virtually €115 million and with a giant enchancment by way of margin, 11 factors enchancment and the margin now at 36.2%. Lastly, we recorded an adjusted web earnings for the group at €25.3 million once more a big enchancment versus final 12 months, which was unfavourable at €7.1 million.

Let’s flip now and get in additional particulars on our adjusted EBITDA. Much like Q3, we’re displaying the element for the 9 months. We achieved a 102% improve in adjusted EBITDA versus final 12 months, and we’ve got a drop by of 63%.

Beginning with our adjusted EBITDA at €56.7 million final 12 months for a similar interval, for those who have a look at the extra contribution for every enterprise, we’ve got an additional €73.3 million in 9 months after which making an allowance for the fastened value, €30 million the scope impact about €2 million after which the overseas change affect about €500,000. The group delivered an adjusted EBITDA of €114.7 million with a rise, as I discussed, of the adjusted EBITDA margin at 36.2%, which means plus 11 factors.

Transferring now to the G&A and the web finance value. When it comes to adjusted G&A, so we’ve got a slight improve of €600,000, and now we’re at €27.6 million for the interval. On the annualized foundation, this provides us a G&A of €36 million which is consistent with our present degree of CapEx. Then associated to the web finance value, we skilled the identical tendencies right here as we had in Q3.

The web finance prices elevated over the 9 months interval by €9 million, and that is due primarily to the curiosity value as a result of they’ve elevated on a blended foundation from 3.17% to six.37%. This was offset by a lower of different finance prices by €8.3 million and that is the results of the overseas change affect associated to Certares and Knighthead transaction and supplemental shareholder facility that I’ve already defined.

Let’s flip now to the money circulation assertion. After an adjusted EBITDA of €114.7 million, the extent of CapEx is €27.9 million. After which you possibly can see right here a working capital influx of €6.1 million within the interval, which I’ll cowl intimately on the subsequent slide. You will have additionally the next degree of curiosity paid, about €41 million and that is primarily as a result of rates of interest over the interval that has been raised over the interval.

Then, the strategic fairness investments from Tencent, that has been executed in November and that resulted in an influx of €45 million. You too can see right here the fee associated to our refinancing for about €24 million. Lastly, our web debt has improved by €41.2 million.

Let’s flip now to the subsequent slide so as to take a look on the working capital dynamics. As a reminder, our working capital is pushed by timing distinction between the moments we proceed the refunds that we make to the worldwide vacationers and the second we obtain VAT funds from service provider and tax authorities.

We sometimes refund vacationers on common 30 to 45 days earlier than we’re paid by the service provider or authorities. Consequently, we skilled money circulation seasonality by the 12 months with a bigger web working capital wanted throughout spring summer time months, when worldwide buyers journey extra incessantly adopted by working capital and wind throughout autumn winter season, our off-season.

As we’ve got seen the journey business get better, we’ve got additionally seen a big improve in quantity, which result in a a lot greater working capital want. You may see right here, the place we add a very excessive outflow of €43 million throughout the 9 months earlier 12 months, that means monetary 12 months ’22, ’23 the place we had been in full restoration.

Now, we’re in a extra settled setting. You may see this stabilize with a extra balanced working capital wanted throughout spring and summer time adopted by working capital extra throughout the autumn, which has led right here to a €6 million influx however undoubtedly we will say that, we’re in a enterprise with working capital neutrals.

Now turning to an evaluation of our web debt place. As of 31 December 2023, our web monetary debt amounted to €508.6 million together with money and money equal of €101.4 million. You may see right here that there was a powerful enchancment of the web leverage ratio, which was talked about on this introduction by Jacques. So from 6.5x on the finish of March ’23 we at the moment are at 3.6x on the finish of December ’23.

As a reminder, in November, we took the chance to renegotiate our senior debt to strengthen the steadiness sheet with, on the finish, meaningfully deleverage the group. The refinancing was closed on the start of December and with a senior debt at €610 million with maturity of seven years and the revolving credit score facility at €97.5 million which was not drawn on the finish of December.

Turning now to the important thing takeaways. First, we’re happy to report a strong restoration with vital improve of 41% of our income, which lands at €370 million. Then due to the robust income development and ongoing administration on the fee base, we’re happy to report a powerful enchancment in 9 months on our adjusted EBITDA. We’re at about €115 million, a rise of c% versus the identical interval final 12 months and a drop by of virtually 63% in adjusted EBITDA.

On that foundation, if we analyze the adjusted EBITDA based mostly on the quarterly efficiency of the group, there’s an acceleration in 9 months at €159 million. And to strengthen the steadiness sheet, the group refinanced its complete indebtedness with a senior debt of €610 million and a revolving credit score facility of €97.5 million. That is in place till 2030.

Lastly, we’ve got delivered a powerful key enchancment within the web leverage ratio to three.6x and that is reiterating our goal of being beneath 2.5x. So this concludes the monetary part.

And I’ll now hand over to Jacques to current the newest tendencies in the long run development of Nobel.

Jacques Stern

Thanks, Roxane. So fast replace on the newest tendencies particularly January 2024, we’ve got seen a worthwhile strong efficiency an enchancment versus Q3. We are able to see right here the figures with 7 level enchancment of restoration in Europe, 11 factors in APAC. So, it is a good dynamic in January.

If we go intimately in Web page 25, you possibly can see that in Europe we’ve got reached now 125% restoration to be in comparison with 118% in Q3 and that is led particularly by a rise of the spend of 34%. If we glance by way of variety of worldwide shopper, we nonetheless are beneath 2019 at 93%. If we go now into the element of the nationality coming to Europe, continental Europe as a vacation spot, I feel I’ll make a number of feedback there.

First, we’re seeing and I’ve a number of slides for you within the coming second. On the U.S., we’re seeing a U.S. holding agency SAME for the Gulf nation each nationality or group of nationality being round 275% to 300% restoration versus 2019, very robust, and likewise worse to say that Mainland China, who used to characterize 25% of the spend in 2019 have seen in January an acceleration from 58% in Q3 to 80%. So, these would be the two focus that I want to share with you.

Beginning by the American, we’re seeing that regardless of some weak spot by way of client demand domestically within the U.S., the worldwide spends are very robust. So, 290% in January, which is pushed by a restoration very robust by way of variety of buyers, virtually 200%, particularly 195% and likewise a powerful improve of the spend of American going and purchasing in Europe at 49%, resulting in this 290% restoration of the spend versus 2019.

If we go into a little bit bit extra element making an attempt to know why this efficiency, you possibly can see on this chart the place we’re evaluating client who used to — who’ve shopped within the final quarter of the calendar 12 months. So our Q3, however calendar 12 months This fall, you possibly can see that because it has been the case for the reason that starting of the restoration, the restoration is admittedly very robust for prime community people and prosperous. You may see that on excessive community people, so folks in our segmentation, that are spending greater than 20K, they’re spending in common greater than 3x what they used to spend in 2019, and within the final quarter, it was even virtually 4x.

In abstract, American restoration, very robust, we see no signal of decline and it is led by the, I might say, excessive spender. If we transfer for Chinese language going into continental Europe as a vacation spot, we see there that the acceleration as talked about in January with 80% restoration, which is a mix of low restoration by way of variety of shopper, 49%, nicely beneath the restoration by way of air capability in January.

Few clarification, one, the price of the flight, which remained very excessive, but additionally some constraints by way of the visa issuing, which stays necessary particularly when traveler desires to go to France or to Germany. I’ll give a little bit bit extra element within the subsequent slide, which mainly explains why we’ve got this low degree of restoration of 49% versus air capability.

Then again like for different nationality, we’re seeing a powerful improve of the spent, 63%, which result in this 80% restoration by way of spent. If we transfer now to the restoration in APAC as a vacation spot, you see that additionally they in January, the restoration has been stronger than in Q3, 161 versus 150%.

And I might say, not like in Europe, it is mainly pushed by the mix of the robust improve of worldwide shopper. We’re nicely above 2019 in APAC as a vacation spot, one in 18, but additionally by a powerful improve of spend, 36%, consistent with what we’re seeing in Europe.

Once we go to the element of the newest tendencies per nationality coming into APAC as a vacation spot, a very powerful factor on this slide is, the acceleration of mainland China, which used to characterize 56% of the spend of 2019 and for which we’ve got seen an acceleration from 105% in Q3 to 127% in January.

If we go a little bit bit extra intimately on this Chinese language restoration, we see that like in Europe, the variety of worldwide traveler continues to be, I might say low, 59% could be in comparison with an air capability of 82%. However the improve of spend is far more necessary, 115%, resulting in this 127% degree of restoration.

And a bit like for the American, this desk present per phase for folks having store within the final quarter versus 2019, so ship passport what’s the a number of of spend that they’ve. And also you see that, surprisingly or unsurprisingly, as you need, we see the identical development then for American, i.e. the restoration is admittedly led by a networked particular person that are spending 3x greater than what they used to spend in 2019 and the affluence is round 2x. Virtually the identical, I might say, figures that you’ve got seen a few minutes in the past for the US.

If we undertaking ourselves by way of subsequent month for mainland China, a number of components to bear in mind, first, the willingness to buy and overseas stay very robust. You may see that on this slide, each month we survey greater than 10,000 Chinese language to guage their willingness to journey and to buy overseas. You see that the willingness is robust at greater than 76% and it has been fairly secure for the previous few months.

When it comes to air capability, we’ve got seen this inflow of January in Europe and in APAC, which is an excellent information. We should always stay excessive particularly February, which is Chinese language New 12 months. Clearly, we are going to see the acceleration of the patron coming again. Everyone knows that, after capability being in place, you want a few months or weeks to be able to see the profit by way of the variety of vacationers.

Excellent news from that standpoint. Simply right here, simply to say by way of air capability, what we’re seeing is that the restoration may be very robust by way of Tier 1 metropolis. You see that, it is 84% for Europe and 90% for APAC. Tier 1 metropolis in China going to Europe or going to APAC.

The secondary and the third cities of China being a little bit bit much less, I might say recovered, which clarify additionally why for these shoppers who’re spending lower than the one from Tier 1 metropolis, we’re seeing this undeniable fact that we’ve got a restoration of vacationers, which is decrease than the air capability, however a rise of spend which is greater. One of many causes being this blended impact by way of restoration from traveler coming from Tier 1 versus different cities.

You will have on the left the restoration for the assorted geographies. You see that France, which is likely one of the hub for Chinese language, however usually for vacationers while you are available in Europe, nonetheless has a low restoration by way of variety of flights. So if in Europe we at the moment are again to virtually 80%, the restoration of France is dragging down the efficiency in Europe as a result of often alternative need first to go in France after which go on different international locations.

Final factor by way of details about China is the visa issuance, which present that, one, issues are going higher as a result of we see an increasing number of international locations the place Chinese language can get their visa in lower than seven days, however we nonetheless see that France and Germany, that are two key international locations by way of traction for Chinese language, stay, I might say, troublesome if you need or prolonged if you wish to get the visa.

So these issues ought to enhance within the coming months. However for now, clearly, they’re nonetheless one of many explanation why we see this decrease variety of buyers versus air capability. However once more, this could enhance.

Final however not least, if we undertaking ourselves within the coming months, coming quarter, clearly you understand this slide it’s how we simulate based mostly on the restoration on Mainland China what may very well be the restoration of the EBITDA of the Group.

And as ordinary, I offers you a little bit little bit of element. So in grey, you’ll acknowledge the Q3 annual figures at €159 million that Roxane talked about a couple of minutes in the past, which implied a 52% restoration by way of mainland China, if we simulate a restoration, which hopefully will come within the subsequent quarter of this degree of restoration.

For instance, being at 100% of restoration, you possibly can see that the implied degree of EBITDA could be round €200 million on this slide to be exact, €202 million. This slide is simply there that will help you to know based mostly on totally different degree of simulation of Chinese language, what may very well be the affect — optimistic affect on World Blue EBITDA of subsequent 12 months, which is an efficient transition to speak about steering and targets.

So, we challenge steering and goal in September. So two feedback there, first, we’re confirming our steering for full 12 months ’23 and ’24 of €145 million to €165 million. Having in thoughts that we attain after 9 months, €150 million, and for ’24, ’25, we’re in search of an EBITDA above 200 million.

With that in thoughts, you see additionally the reiteration of the target of leverage ratio beneath €2.5 million. Nothing has modified, however we need to reaffirm these targets and steering. And final however not least, simply to remind you that World Blue is nicely aged by way of inflation, as a result of the highest line of World Blue, i.e., the quantity, the SIS is immediately linked to the posh bronze worth improve, which have grown and which is able to proceed to develop greater than the inflation.

And there and on the other facet, simply to remind you if ever we’re getting right into a recession, which appears to be not the case within the newest tutorial situation, but when ever that is the case, to remind you additionally that we’re nicely hedged in opposition to that, due to this excessive community people, that are much less delicate to the financial shock that I used to be displaying to you earlier than.

So, in abstract, a really wholesome Q3 with a optimistic development in January and a really robust work of the group to be able to strengthen the steadiness sheet after which leverage the Firm. So, thanks for the listening. And as ordinary, you possibly can contact our Investor Relations, Frances Gibbons, who will organize a one-on-one assembly between you, Roxane, and myself. Thanks very a lot.

Query-and-Reply Session

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