Investor Presentation Tourism Holdings Limited - October 2014 - Presented to Australian Fund Managers
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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
FY09 FY11 FY13
GFC Impacts. Road Bear (USA) purchased. NZ merger and
New purpose - AU and NZ experience industry consolidation.
‘Unforgettable holiday demand decline. Australian fleet
experiences’. New New vehicle build cost downsized
vehicle build design lowered
commences.
Manufacturing
turnaround
$22.8M
$16.0M
$14.6M EBIT*
$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
BUILD / BUY RENT SELL
Model • Build well designed • Maximise the rental returns • Create further value in the
vehicles to robust from the vehicle fleet. ownership market with
rental standards. Depreciate vehicles over the strong sale networks and
Where appropriate life on fleet to residual value dedicated product
buy using market that allows for small profits on
scale. sale
• 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
Value Drivers • Long experience • Established multi-channel • Growing demand for
• Strong design focus that distribution private ownership of
meets rental and owner • Experience driven motorhomes –baby
needs • Largest player in the world boomer segment
• Relentless focus on lowering • Global operation • NZ retail, trade-ins and
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
Achieve respectable ROFE in FY15
Delivered 2 H run rate to achieve 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
to reduce capital employed as EBITDA:Interest 7.9 10.6
required to respond to demand
cycles.RENTALS NEW ZEALAND
BUSINESS SUMMARY: Rentals NZ
Financial FY13 FY14 r Current Focus
% thl EBIT 38% 33% (5%) Lifting ROFE to an acceptable return
Fleet Size 2,210 2,019 (9%) Further downsize of fleet to lift ROFE
EBIT $M 5.5 7.4 35% Business simplification underway
Funds Employed $M 128 111 (13%) Operational improvements to lift
Return on Funds Employed 4.3% 6.7% 2.4%
consistency of service offering
Development of growth opportunities
Market Context within vehicle sales
Estimated rental market (vehicles) 4,500
Outlook
thl estimated market share (vehicles) 45%
Total market fleet capacity steady
Main competitors Apollo
Jucy Inbound visitors +4.9% YTD Sep14
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
Financial FY13 FY14 r
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
Funds Employed $M 72 58 (19%) Application of smart and disciplined
Return on Funds Employed 1.8% 6.3% 4.5% logistics practices
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
FINANCIAL FY13 FY14 r Current Focus
% thl EBIT 45% 33% (8%) Transition of CEO to executive director role
Fleet Size 541 537 (1%) and new CEO
EBIT $M 6.5 7.6 17%
Modest and stable growth in fleet
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
Main competitors Cruise America vehicles) exiting the market
El Monte Inbound visitors +8.7% YTD Jun14
Camping World
thl vehicle sales circa 500 pa +4.0% year to Dec15 forecast
(514 FY14) US National Travel &
Tourism Office
“Maintain outstanding ROFE and look for growth”RV MANUFACTURING GROUP (JV)
BUSINESS SUMMARY: RV Manufacturing Group (JV)
Current Focus
FINANCIAL FY13 FY14 r RVM
• 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.
Net thl interest in JV 7.1 7.5 0.4 • Ongoing focus on lowering production
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
Financial FY13 FY14 r • New fleet and efficiencies
% thl EBIT 27% 29% 2% • New product development
EBIT $M 4.0 6.6 66% • Growing the market
Funds Employed $M 28 26 (7%) Waitomo
Return on Funds Employed 14.3% 25.4% 11.1% • Gaining growth in Chinese market
• 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.
Wide market appeal. Inbound visitors +6.1% 15-34yr inbound YTD to
youth sector Aug14
The Legendary Black Water Adventure tourism guided
Rafting Co. experience. Youth focus. Inbound visitors +7.2% Peoples Republic of
Kiwi Experience Flexible coach services Peoples Republic of China inbound YTD Aug14
facilitating experiences for China +11.9% MBIE forecast for 2015
the FIT youth market.
“Growing strongly”EXECUTIVE MANAGEMENT
Grant Webster Mark Davis Grant Brady Keith Chilek
Chief Executive Officer Chief Financial Officer Managing Director Chief Technology Officer
RV Manufacturing Group Joining thl in August 2014, Keith
Joining thl in 2005 as Chief Joining thl in February 2014,
Operating Officer – Attractions Mark leads the finance function After a successful career in the is responsible for the technology
division, Grant was appointed to the including reporting to the Board construction industry in New direction, product development
role of Chief Executive Officer in of Directors, external reporting, Zealand, Australia and the USA and creating a best in class online
December 2008. Appointed internal and external auditing, Grant co-founded KEA Campers in user experience for thl
Chairman, RV Manufacturing Group investor relations and banking 1995. As the primary shareholder customers. Keith spent the
joint venture in 2012. Grant is also relationships. He also fulfils the within the KEA Group, Grant previous 12 years in the USA
on the board of Tourism Industry New Zealand Stock Exchange maintained 100% ownership of building consumer facing
Association. requirements of thl as a listed KEA Manufacturing and supplied products in the education space,
Grant’s background includes senior entity. Mark’s background product to KEA New Zealand, KEA holding various positions ranging
executive roles across the tourism, includes senior finance roles in Australia and KEA South Africa. from Co-founding partner to
hospitality, gaming and retail the media, gaming and Grant is Managing Director of Senior Vice President of
industries where he held director entertainment, and thl’s vehicle manufacturing joint Engineering. Keith holds a
and general management roles telecommunications venture, RV Manufacturing Group Bachelor of Business
within the retail sector before sectors. Prior to joining thl, Mark LP of which he owns 50%. In Administration degree with an
moving into tourism. Prior to joining was CFO of The Radio Network. addition to these responsibilities emphasis in Information and
thl Grant was a General Manager at Mark holds a Bachelor of Grant also leads the vehicle sales Operations Management from
SKYCITY Auckland. Grant holds a Management Studies (Hons) business for thl in New Zealand Texas A&M University.
Bachelor of Commerce degree from degree from Waikato University and has a particular focus on the
Victoria University and has and is a member of the New newly formed RV Super Centre
completed executive studies at the Zealand Institute of Chartered based in Albany, Auckland.
Insead Advanced Management Accountants.
Programme in Fontainebleau, and
Monash University, Melbourne
Australia.EXECUTIVE MANAGEMENT
Matt Harvey Mike Horne Kate Meldrum Daniel Schneider
General Manager General Manager General Manager Group Revenue, CEO & President
Australian Operations New Zealand Rentals Operations Brand & Customer Experience Road Bear RV Rentals & Sales
Matt joined thl in April 2010 as Mike leads the New Zealand Kate joined thl in 1991 in the Following the acquisition of Los
Commercial Operations Manager Rentals Operation having rejoined Sales and Marketing team as Angeles based RV rentals
and progressed through to the thl in September 2010. Prior to Account Manager for North company, Road Bear, Daniel
role of National Operation this, Mike had two years as Chief America. She left in 1996 and joined thl 31st December 2010. A
Manager for NZ Rentals in Executive of Auckland Aquarium held several part-time and Swiss and US citizen, Daniel
January 2012. In August 2013 Limited, running Village contract marketing roles whilst has over 20 year’s experience in
Matt moved across to Melbourne Roadshow’s New Zealand raising a family before re-joining the USA rental RV industry with
and now leads the Australian attractions business. Mike was the company again in 2003 as expertise in sales, operations,
Operations. Matt’s background previously with thl as General Sales & Marketing Manager for product design and business
includes a number of operation Manager of Fullers Bay of Islands New Zealand. Kate joined the general management/ownership.
management roles within the with general responsibility for the executive team in November Daniel holds a Bachelor degree in
SKYCITY Group in New Zealand Northland region. Previous 2009 as General Manager Automotive Engineering from Biel
and financial analyst roles within experience included senior Marketing & Customer Switzerland.
the Gaming industry in London. management roles within the Experience and as of April 2014,
Matt holds a Bachelor of Hospitality and Events sector has assumed responsibility for
Commerce degree from Auckland both here and in Australia. Mike Group Revenue for the self-drive
University. holds a Bachelor of Business experience businesses, and
Studies from Massey University. overall responsibility for
marketing and sales channels.
Kate holds a Post Graduate
Diploma in Business from
Auckland University.BOARD OF DIRECTORS
Rob Campbell (Auckland)
Chairman
Chair, Market Disclosure Committee
Independent Director appointed in May 2013. Appointed Chairman of thl in August 2013 and Chair of Market Disclosure
Committee in April 2014. Rob has over 30 years’ experience in investment management and corporate governance.
Currently Chair of Summerset Group Holdings Limited (NZ), and a director of Guinness Peat Group Limited (UK), Precinct
Properties and Turners and Growers. He is a director of substantial private companies based in Australia and New Zealand.
In addition he is a director of or advisor to a number of hedge and private equity funds in a number of countries. Rob
trained as an economist and has worked in a variety of capital market advisory and governance roles over a long period.
Graeme Bowker (Melbourne)
Chairman, Audit & Risk Committee
Independent Director appointed in February 2003. Appointed Chairman of thl Audit & Risk Committee 31st October 2012.
Currently is Chair of Silverstripe Australia Pty Limited and acts as a mentor to executives. Formerly the Victorian Managing
Partner for Deloitte Touche Tohmatsu and prior to this, Country Managing Partner in New Zealand.
Christina Domecq (Auckland)
Chair, Marketing & Customer Experience Committee
Independent Director appointed in February 2014. Appointed Chair of Marketing & Customer Experience Committee in
February 2014. Currently the CEO of Ora, winner of the Westpac Supreme Business Excellence Award in 2013. Christina has
operated internationally as a technology entrepreneur as well as an investor and a director in a variety of premium New Zealand
brands, including Stolen Rum, Umajin , Localist and The Market NZ. Starting her first company at the age of 20, Christina has
owned and invested in a large variety of companies around the world. Christina has broad skills in strategic assessment,
monetising ideas from concept to viable commercial entities and decisively seizing competitive advantage. Christina holds a
Bachelor of Arts & Science from Boston College and Master of Finance from Notre Dame University and has won a raft of awards
including Ernst & Young UK, ‘Young Entrepreneur of the Year' and ‘Science and Technology Entrepreneur of the Year’ in 2006
and CNBC Entrepreneur of the Year in 2009.BOARD OF DIRECTORS
Kay Howe (Auckland)
Non Independent Director appointed in October 2012. With a background in a variety of industries Kay entered into
the tourism market in 1978 starting her first motorhome rental business as a small family operation. An industry
pioneer, Kay is experienced in the operational, financial, sales and marketing of a rental motorhome business in New
Zealand and has established strong industry relationships in many European markets. Kay founded United Vehicle
Rentals in 1994 which was sold to thl on the 31st October, 2012. Kay is a non independent director under the NZX
listing rules due to being a director of an entity that is a substantial security holder in thl.
David Neidhart (Switzerland)
Non Independent Director appointed in June 2013. David was proposed for appointment by the Sterling Grace funds,
an entity that is a substantial security holder in thl. David accumulated more than 4 years of experience in vehicle
rental industry as a Director of Strategy for the International business unit of Hertz. During his professional career,
David has operated across a number of international markets across various disciplines and industries. David has
managed Strategy and M&A for large International companies such as Hertz as well as being active in Asset
Management and Private Equity industries, Valartis and Bisange. David holds a Master of Finance of the Sciences-po
University in Paris and a Diploma of the Geneva University.
Graeme Wong (Wellington)
Chairman, Remuneration & Nomination Committee
Independent Director appointed in November 2007. Appointed Chairman Remuneration & Nomination Committee
October 2013. Background in stock broking, capital markets and investment. Founded and became Executive
Chairman of Southern Capital Limited which listed on the NZX and evolved into Hirequip New Zealand Limited. The
business was sold to private equity interests in 2006. Previous directorships include New Zealand Farming Systems
Uruguay Limited, Sealord Group Limited, Tasman Agriculture Limited, Magnum Corporation Limited, and At Work
Insurance; alternate director of Air New Zealand. Currently Chairman of Harbour Asset Management Limited;
Director of Areograph Limited, Precinct Properties New Zealand Limited and shareholder and Director of Southern
Capital Partners (NZ) Limited. Member of the Trust Board of Samuel Marsden Collegiate School and Member of the
Management Board of The Bible Society Development (New Zealand) Incorporated.You can also read
