Investor Presentation Tourism Holdings Limited October 2014 – Presented to Australian Fund Managers
CUSTOMER PROPOSITION
thl today
INTERNATIONAL BUSINESS • NZSX listed since 1986 • Market Cap circa $160m • Operations in NZ, Australia, USA. Franchise in South Africa • Top 50 shareholders own 73% • Over 4,000 investors • Gross dividend yield 10% • Improvement in ROFE from 5.2% in FY13 to 9.6% in FY14 • 3,900 vehicles – Over $200m *South Africa is a franchise model
FY2009 - FY2014 FY13 FY09 FY11 NZ merger and GFC Impacts. Road Bear (USA) purchased. industry consolidation. New purpose - AU and NZ experience Australian fleet ‘Unforgettable holiday demand decline. downsized experiences’. New New vehicle build cost vehicle build design lowered commences. Manufacturing turnaround $22.8M $16.0M EBIT* $14.6M $9.9M $4.3M $1.1M FY10 FY12 FY14 New low build cost Full year of Road Bear RV. First full year of NZ achieved. Manufacturing post-merger. Australian AU fleet build consolidation/JV performance improving from increased Rugby World Cup (est’d H2. Manufacturing EBIT impact + $4.5M) performing well. All business units in growth. * Excluding Impairment
WORLD TRAVEL TRENDS • Travelling is a global mega-trend • Modest growth from the developed world – higher travel frequency • Fast growth from emerging markets – ‘new world middle class’ to double by 2030 = 1.5 billion more middle class people eager to travel around the world • Travel from Asia, Middle East and BRIC countries will grow strongly “One Third of Humanity is Travelling But Two Thirds Are Not Yet Travelling” > 70% 40% - 69% < 40% Source: ITB World Travel Trends Report 2013
RENTALS BUSINESS MODEL – BUILD RENT SELL FOCUS ON MAXIMISING VALUE OVER TOTAL LIFE OF VEHICLE RENT BUILD / BUY SELL • Maximise the rental returns • Build well designed • Create further value in the Model from the vehicle fleet. vehicles to robust ownership market with Depreciate vehicles over the rental standards. strong sale networks and life on fleet to residual value Where appropriate dedicated product that allows for small profits on buy using market sale scale. • RVMG Manufacturing JV • NZ-AU Vehicles rotated • NZ vehicle sales mainly Business with owner operator through rental brands 2-6 through RV Super Centre Structure supplies NZ and AU years • AU and US sales through vehicles • US Rentals 1-2 years fleet independent dealer • US vehicles externally rotation networks sourced • Long experience • Established multi-channel • Growing demand for Value Drivers • Strong design focus that distribution private ownership of meets rental and owner motorhomes – baby • Experience driven needs boomer segment • Largest player in the world • Relentless focus on lowering • NZ retail, trade-ins and • Global operation cost of build servicing • Economies of scale
MEETING OUR COMMITMENTS - 2013-14 Commitment Outcome Deliver NPAT above $10.5M Achieved $11.1M Reduce debt to sub $90M from $120M Achieved $79M (plus Line of Credit for manufacturing facility of $6M) Address Australia Cost Structure Delivered 2 H run rate to achieve FY15 – Achieve respectable ROFE in FY15 we are on track Fix Manufacturing Delivered $1.0M profit vs (1.4M) pcp. ( thl share) FY15 Commitments Deliver NPAT above $15M Achieve acceptable returns in Australia and New Zealand Commence a plan for growth
FY14 PROFIT BRIDGE
CURRENT DIRECTION Summarized by Positive Change: • Industry has been consolidated in NZ and AU • Debt reduction has been ahead of targets • Turnaround on track and underlying business model improving Why and what's next … • New blood and focus • Strategic decisions delivering to plan • Market recovery Annual Meeting will be the opportunity to share a glimpse of where to next … • Create the new and compelling • Grow the underperformers to target • Create growth from existing businesses
FINANCIAL STRENGTH NET DEBT • Business Metrics broadly aligned to Moody’s Baa/S&P BBB grade rating or above. • Debt levels were increased to fund purchase of United and KEA in 2012. • Debt levels reduced as fleet has been downsized to match demand. To be maintained below Ratio June 13 June 14 Debt:EBITDA of 2x. Debt/Debt + Equity 47% 36% Debt:EBITDA 2.1 1.4 • Sale of fleet has proven the ability EBITDA:Interest 7.9 10.6 to reduce capital employed as required to respond to demand cycles.
RENTALS NEW ZEALAND
BUSINESS SUMMARY: Rentals NZ r Financial FY13 FY14 Current Focus % thl EBIT 38% 33% (5%) Lifting ROFE to an acceptable return Further downsize of fleet to lift ROFE Fleet Size 2,210 2,019 (9%) Business simplification underway EBIT $M 5.5 7.4 35% Operational improvements to lift Funds Employed $M 128 111 (13%) consistency of service offering Return on Funds Employed 4.3% 6.7% 2.4% Development of growth opportunities within vehicle sales Market Context Estimated rental market (vehicles) 4,500 Outlook thl estimated market share (vehicles) 45% Total market fleet capacity steady Main competitors Apollo Inbound visitors +4.9% YTD Sep14 Jucy thl vehicle sales circa 450 pa +4.5% MBIE forecast 434 FY14 for 2015 “Strong EBIT growth to acceptable performance levels in a positive market”
RENTALS AUSTRALIA
BUSINESS SUMMARY: Rentals AU Current Focus r Financial FY13 FY14 Building on performance improvement % thl EBIT 9% 16% 7% commenced in H2 FY14 arising from Fleet Size 1,421 1,336 (6%) strategic review. Lifting ROFE to an EBIT $M 1.3 3.7 185% acceptable return Application of smart and disciplined Funds Employed $M 72 58 (19%) logistics practices Return on Funds Employed 1.8% 6.3% 4.5% Strong new management team over the past 18 months Market Context Estimated rental market (vehicles) 3,500 thl estimated market share (vehicles) 40% Outlook Main competitors Apollo Total market fleet capacity steady Jucy Inbound visitors +8.2% YTD Aug 2014 TAB thl vehicle sales circa 250 pa +5.6% year to June (292 FY14) 2015 Tourism Research Australia Forecast “Model changes near completion and delivering gains. Consolidate”
RENTALS USA
BUSINESS SUMMARY: Rentals USA Current Focus r FINANCIAL FY13 FY14 Transition of CEO to executive director role % thl EBIT 45% 33% (8%) and new CEO Fleet Size 541 537 (1%) Modest and stable growth in fleet EBIT $M 6.5 7.6 17% Grow new Orlando site (2013) Funds Employed $M 34 30 (12%) Explore growth opportunities following Return on Funds Employed 19.3% 25.4% 6.1% Camping World exit Market Context Outlook Estimated rental market (vehicles) 6,000 Total market fleet Steady-falling thl estimated market share (vehicles) 8% capacity Camping World (est. 400 vehicles) exiting the market Main competitors Cruise America El Monte Inbound visitors +8.7% YTD Jun14 Camping World +4.0% year to Dec15 forecast thl vehicle sales circa 500 pa US National Travel & (514 FY14) Tourism Office “Maintain outstanding ROFE and look for growth”
RV MANUFACTURING GROUP (JV)
BUSINESS SUMMARY: RV Manufacturing Group (JV) Current Focus RVM r FINANCIAL FY13 FY14 • Production including new product: 4 berth thl share of JV earnings $M (1.4) 1.0 171% non toilet shower and 3 berth toilet shower van product. • Ongoing focus on lowering production Net thl interest in JV 7.1 7.5 0.4 cost. Action Motor Bodies • Full production schedule • New product development for the RVMG Joint Venture emergency vehicle market RVM Manufacture of motorhomes for thl NZ and AU. Outlook Action Motor Bodies Specialist commercial vehicle RVM Increased production for thl manufacturer including emergency fleet FY15 vehicles, mobile medical units, Action Motor Bodies Increased production refrigerated vehicles and minivans. Debt to thl Repayment of advances “Return loans to thl , grow and maintain build cost reductions”
WAITOMO GLOWWORM CAVES VISITOR CENTRE AWARDS:
KIWI EXPERIENCE
BUSINESS SUMMARY: Tourism Current Focus Kiwi Experience r Financial FY13 FY14 • New fleet and efficiencies • New product development % thl EBIT 27% 29% 2% • Growing the market EBIT $M 4.0 6.6 66% Waitomo Funds Employed $M 28 26 (7%) • Gaining growth in Chinese market Return on Funds Employed 14.3% 25.4% 11.1% • Leveraging Hobitton/Trilogy product • New product development Tourism Businesses Outlook Glowworm Caves Iconic guided experience Inbound Visitors +4.9% YTD Sep14 Aranui Top 10 Lonely Planet total Forecast Ruakuri ‘world’s most illuminating +4.5% MBIE forecast for 2015 experiences’ 2014. Inbound visitors +6.1% 15-34yr inbound YTD to Wide market appeal. youth sector Aug14 The Legendary Black Water Adventure tourism guided Rafting Co. experience. Youth focus. Inbound visitors +7.2% Peoples Republic of Peoples Republic of China inbound YTD Aug14 Kiwi Experience Flexible coach services China +11.9% MBIE forecast for 2015 facilitating experiences for the FIT youth market. “Growing strongly”
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