Shares of travel management business, Helloworld Ltd (ASX: HLO), have traded slightly lower today on the back of the release of its half-yearly results this morning.
For the six months to 31 December 2014, Helloworld's total transaction value fell to $2.3 billion, down 9%, following the strategic transition from Jetset Travelworld, whilst its net loss narrowed to just $0.2 million, an improvement of 84% on the prior corresponding period.
Whilst the Australian transformation of Helloworld is now complete, revenue fell 8% during the period, reflective of a leaner retail branch network.
Helloworld's preferred measure of performance, adjusted EBITDAI, came in at $10.6 million, down 44% from $19 million in the prior corresponding period. EBITDAI is earnings before interest, tax, depreciation, amortization, share-based payments and defined benefits expense. This includes "CEO resignation costs", "costs relating to GST matter", "business transformation costs" and gains or losses on disposal of investments.
Following the announcement to buy back up to 2.5% of its own issued stock, coupled with a stronger operating result, earnings per share jumped from – 1.06 cents to 0.17 cents.
Pleasingly, the company's brand awareness is increasing with 1 in 4 Australian travellers recognising the brand, up from 1 in 10 in April 2014.
Commenting on the results CEO, Elizabeth Gaines said, "We are delivering on our priorities of engaging with our network of agents and preferred suppliers, driving opportunities through investment in technology, delivering successful and targeted marketing, growing our brand awareness, refreshing our agents' stores and continuing to roll-out our Ambassador store initiative."
At 31 December 2014, the company had $28.3 million in cash but during the half, Helloworld's net cash outflow from operating activities was $43.1 million. However the group does have access to total finance facilities of $96.7 million, with available headroom of $60.8 million.
Given that total transaction value for helloworld.com.au increased by 155% from July to December, it continues to be an important part of the company's omni-channel growth strategy.
Looking ahead, Ms Gaines said, "This continued investment in Helloworld's digital offering, along with the subdued consumer sentiment in Australia, means that the Group is currently tracking to deliver an Adjusted EBITDAI in the range of $25 – $30 million and remains on track to deliver a Profit before tax in FY15."
Should you buy Helloworld shares?
Given that Helloworld's revenue has fallen slightly and its operating cash flows are still negative, I'd err on the side of caution and probably hold off buying shares for now. Whilst it could be following in the profitable footsteps of Flight Centre Travel Group Ltd (ASX: FLT), I'd rather wait until its full year results are out.
