TOURISM HOLDINGS LTD FY16 INTERIM RESULTS PRESENTATION. 23 February 2016

Transcription

1 TOURISM HOLDINGS LTD FY16 INTERIM RESULTS PRESENTATION 23 February 2016

2 $M H1 FY16 Highlights Revenue $134M up 20% Earnings before interest and tax* $15.0M up 42% Net profit after tax $8.2M up 45% H1 EBIT 15.0 Interim dividend 9 cps (partially imputed) up 29% FY13 FY14 FY15 FY16 * EBIT excludes joint venture and associates earnings 2

3 Results Summary NZD $M H1 FY16 H1 FY15 Var % Operating revenue % Earnings before interest and tax* % Operating profit before tax % Profit after tax % Earnings per share (in cents) % H1 Operating Profit Before Tax (NZD$M) Profit Before Tax H1 FY15 Rentals NZ Rentals Aus Rentals USA Tourism Group Group Services Action Manufacturing Interest Profit Before Tax H1 FY16 * EBIT excludes joint venture and associates earnings 3

4 Rentals NZ Rental income growth of 11% achieved with a similar sized fleet. Flex fleet did not start until late December. Improved profitability mainly due to small increase in utilisation and yield improvement. H1 FY16 - NZD NZD $M H1 FY16 H1 FY15 Var % Rental income % Sale of goods % Costs (4.2) (11%) EBIT 0.0 (1.1) % Costs well controlled, with 3% growth on operating costs. Total cost increase of 11% arises from higher vehicle sales volumes and higher average net book value of vehicles sold. Vehicle sales volumes up 19 units on LY. Vehicle sales contribution lower due to mix of vehicles sold. Core rental fleet is lower than Dec FY15, with flex fleet (short term inventory to be sold after peak) providing growth. Vehicle Fleet Units: H1 FY16 H1 FY15 Var Fleet Sales H Fleet Purchases H Closing Fleet Dec 2,038 1, Peak season demand is strong. 4

5 Rentals Australia A flat result on FY15. Includes upfront costs for Telematics and Melbourne RV Sales Centre, with benefits not yet realised. Rental income was up 2% in AUD on FY15 due to higher utilisation with a lower fleet. Vehicle sales have improved on FY15. Melbourne RV Sales Centre is now open for direct retail sales, with momentum growing. Costs excluding vehicle sales were up 4% in AUD on last year. 4WD owned vehicles have been reduced and were replaced with leased fleet for peak 4WD season in H1. Fleet numbers down 61 units, mainly due to 4WD fleet. H1 FY16 - NZD NZD $M H1 FY16 H1 FY15 Var % Rental income % Sale of goods % Costs (1.3) (4%) EBIT % H1 FY16 - AUD AUD $M H1 FY16 H1 FY15 Var % Rental income % Sale of goods % Costs (1.5) (5%) EBIT % Vehicle Fleet Units: H1 FY16 H1 FY15 Var Fleet Sales H Fleet Purchases H Closing Fleet Dec 1,310 1,371 (61) 5

6 Rentals USA A strong EBIT result, up 25% in USD terms and 61% in NZD. Rental income was up 15% in USD terms with higher utilisation, increased fleet and improved yield. Vehicle sales demand has been strong, with YTD sales ahead of expectations. Vehicle sales revenue in USD was up 25% on LY. The development of the new Seattle branch is on track for opening in summer Forward bookings are meeting expectations. H1 FY16 - NZD NZD $M H1 FY16 H1 FY15 Var % Rental income % Sale of goods % Costs (9.6) (48%) EBIT % H1 FY16 - USD USD $M H1 FY16 H1 FY15 Var % Rental income % Sale of goods % Costs (3.3) (20%) EBIT % Fleet to be increased for summer 2016 by ~10% units. Vehicle Fleet Units: H1 FY16 H1 FY15 Var Fleet Sales H Fleet Purchases H Closing Fleet Dec

7 Tourism Group EBIT up 37%. Includes launch costs of new Waitomo Caves Homestead offering café/ restaurant, retail and ticketing. Visitation growth across the shoulder season and running into summer has been very strong. Chinese growth, in particular, is benefiting Waitomo. H1 FY16 - NZD NZD $M H1 FY16 H1 FY15 Var % Revenue % Costs (1.5) (14%) EBIT % Kiwi Experience peak travel period started in late December, with travel volumes up strongly. Glamping sites have been set up in 3 key stop-offs to ensure accommodation is available. The Waitomo Caves Homestead opened on schedule in December. Initial performance is in line with expectations. 7

8 Action Manufacturing NPBT down on FY15, as expected, due to lower motorhome margins. This results in lower build costs for thl. H1 included first production of new KEA Breeze 4 berth and Action Pods, both used as flex fleet by Rentals NZ across summer peak. NPBT H1 FY16 (thl share) - NZD NZD $M H1 FY16 H1 FY15 Var % Revenue % Costs (1.7) (13%) NPBT (0.2) (18%) Continued progress on reducing costs of motorhomes. Debt outstanding to thl reduced by $1.3M. Focus on international opportunities for emergency vehicle market. 8

9 New Initiatives Update Flex Fleet NZ rental income has met expectations. Forward vehicle sales looking positive. Total Customer Experience Behind schedule. Functionality obtained through Geozone purchase being integrated into tablet offer. Telematics Launch slow, but now fitted in all Australian vehicles and under pilot in NZ. Speeding and other poor driving behaviour being positively impacted. Mighway Vehicle owners signups over 100 and growing. First rentals started in late December. Waitomo Caves Homestead Opened December. Meeting expectations. Just Go Provided fleet for flex fleet initiative. Growing fleet for next high season. 9

10 Business Model and Capital Flexibility thl recognises the capital intensity of the core business model and is adapting its approach to investment in fleet accordingly. Our traditional response to growing demand would be to increase long term core fleet. This potentially created fleet over-capacity when demand dropped, leading to yield and utilisation impacts and negative operating leverage. Flex fleet initiatives and balance sheet management are enabling thl to take advantage of the high demand periods without creating potential long term risk for the business. The following changes have been made to the business model to create more flexibility and resilience: Diversification now operating in NZ, Australia, USA and UK. Reduced the core fleet. Introduced flex fleet with a fast stock-turn, building on the Road Bear model. Adjusted covenants with the banks, including creating allowances for shock events. Improved ROFE of the core business and balance sheet ratios. 10

11 Long Term Debt Versus Working Capital We have positioned the business model today to look at debt and working capital in a different way. The accounting methodologies haven t changed and fleet are still considered fixed assets. We are now positioning flex-fleet as, in essence, working capital as the purchase cycle and sale cycle are dramatically different to the past. Buy Traditional Core debt Flex fleet Working capital Sell Years Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell Buy Sell 11

12 Capital Spend - Flexibility Flex fleet in FY16 takes the form of: USA fleet, turned over in 9-18 months NZ flex fleet trialled in NZ for FY16 summer period, turned over in under 9 months. AU flex fleet 4WD vehicles purchased under a buy-back arrangement for the 2016 winter season, turned over in under 9 months. The increase in forecast gross capex spend for FY16 is mainly funding flexible fleet that is turned over in under 18 months. Forecast core gross capex spend on long-term fleet is stable at around $60M. 12

13 $M Debt:EBITDA Capital Structure Net debt has increased to $90M, predominantly funding flex fleet. Key ratios remain well within benchmark Baa/BBB target rating measures and are considered conservative. There is capacity for value accretive acquisitions. Ratio^ H1 FY16 H1 FY15 Debt:EBITDA # Debt/Debt + Equity 38% 38% EBIT/Interest EBITDA/Interest $6M $79M $85M Net Debt $14M $69M $90M June 2014 Dec 2014 June 2015 Dec 2015 Net Debt (lhs) LC Commitments* Debt:EBITDA (rhs) (incl LC commitment) * Commitments under the documentary letter of credit (LC) facility in June each year relate to work in progress on NZ fleet for the following season produced by AMLP. ^ Based on 12 months ending December. # Debt includes LC commitment. 13

14 $M Gross and Net Capex Spend Gross capex spend forecast for FY16 has been increased by ~$25M, all but $4M (Homestead) related to flex fleet growth. FY16 fleet sales proceeds forecast has been increased by ~$15M due to higher flex fleet sales - USA and NZ Gross & net capex spend (full year) Net capex spend has been increased on last forecast by circa $10M, mainly due to Australian 4WD vehicles to be purchased under a buy-back arrangement as opposed to leased as per last year, and the Waitomo Caves Homestead purchase FY14 FY15 FY16f Gross capex spend less Vehicle sales proceeds Net capex on core fleet and infrastructure is stable on FY15. equals Net capex. Net capex equals plus plus Net core capex Net flex capex Waitomo Caves Homestead. 14

15 Outlook and Guidance FY16 full year profit guidance NZD $M Current Previous FY15 Net profit after tax ~$24M ~$22M $20.1M Outlook The outlook for the NZ tourism industry remains positive in both the short and medium term. Globally, tourism remains a high growth industry with emerging markets continuing to evolve and traditional markets returning to, or reaching, new highs. The Australian outlook is positive, albeit not as strong as New Zealand. The USA and UK continue to grow. Full Year NPAT Guidance Increase to around $24M, up from previous guidance of around $22M. The forecast full year result is net of costs related to investment in new resource to support growth and the launch of Mighway, totalling approximately $2M. 15

16 Dividend 9 cent partially imputed (to 50%) interim dividend declared. 50% imputation due to approximately 50% of profits before tax being derived from NZ. Within dividend policy of 75%-90% of NPAT. Dividend cps FY14 Interim* FY14 Final FY15 Interim FY14 FY15 Final FY15 Payout ratio % NPAT 110% 85% FY16 Interim Dividend dates Ex date 6 April 2016 Record date 7 April 2016 Payment date 14 April 2016 * FY14 Interim dividend 100% imputed. Subsequent dividends 50% imputed 16

17 Strategic Outlook for thl The business remains focused on achieving ROFE targets in all businesses and delivering the $30M NPAT growth goal by FY2019 or earlier. This goal does not include any growth by acquisition. The balance sheet metrics remain strong and we continue to explore opportunities on a global basis within the tourism industry, with a particular focus on the wider RV industry. We are very cognisant of the need to ensure that if any acquisition occurs it is appropriately earnings per share accretive. 17

18 Disclaimer The information in this presentation was prepared by thl with due care and attention. However, the information is supplied in summary form and is therefore not necessarily complete, and no representation is made as to the accuracy, completeness or reliability of the information. In addition, neither the company nor any of its directors, employees, shareholders nor any other person shall have liability whatsoever to any person for any loss (including, without limitation, arising from any fault or negligence) arising from this presentation or any information supplied in connection with it. This presentation may contain forward-looking statements and projections. These reflect thl s current expectations, based on what it thinks are reasonable assumptions. However, for any number of reasons the future could be different and the assumptions on which the forward looking statements and projections are based could be wrong. thl gives no warranty or representation as to its future financial performance or any future matter. Except as required by law or NZX listing rules, thl is not obliged to update this presentation after its release, even if things change materially. This presentation is for information purposes only and does not constitute financial advice. It is not an offer of securities, or a proposal or invitation to make any such offer, and may not be relied upon in connection with any purchase of thl securities. This presentation may contain a number of non-gaap financial measures. Because they are not defined by GAAP or IFRS, thl s calculation of these measures may differ from similarly titled measures presented by other companies and they should not be considered in isolation from, or construed as an alternative to, other financial measures determined in accordance with GAAP. Although thl believes they provide useful information in measuring the financial performance and condition of thl s business, readers are cautioned not to place undue reliance on these non-gaap financial measures. The information contained in this presentation should be considered in conjunction with thl s latest financial statements and other market announcements, which are available at: All currency amounts are in New Zealand dollars unless stated otherwise. 18

19 Supporting Analysis 19

20 Income Statement Summary 6 Months to December $M FY 16 FY 15 Var Var % Revenue from sale of services % Revenue from sale of goods % Total revenue % EBITDA % EBIT % Interest (2.3) (2.2) (0.1) 5% Share of JV Profit (loss) (0.2) (18%) Share of Associates Profit before taxation % Taxation (5.5) (3.9) (1.6) 42% Profit attributable to thl shareholders % Basic EPS % 20

21 Revenue 6 Months to December In Base $M FY16 FY15 Var Currency THL Rentals - Rental Revenue New Zealand % 11% Australia % 2% USA % 15% % 8% THL Rentals - Sale of Goods New Zealand % 20% Australia % 20% USA % 25% % 22% Tourism Group % 19% Total net turnover as reported % 13% Split Australia % 5% USA % 21% NZ and other % 15% % 13% Operating Revenue Split Sale of Services % 9% Sale of Goods % 22% % 13% 21

22 Divisional EBIT 6 Months to December $M FY16 FY15 Var THL Rentals New Zealand (0.0) (1.1) 98% Australia (0%) USA % % Tourism Group % Total Operating Divisions % Group Support Services (2.8) (1.6) (79%) EBIT % Split Australia (0%) USA % NZ and other 0.5 (0.2) (308%) Total EBIT % 22

23 Divisional Review 6 months to December Months to December 2014 Divisional Funds Operating Divisional Funds Operating $M Revenue EBIT Employed Cashflow* Revenue EBIT Employed Cashflow* Rentals New Zealand 42.8 (0.0) (17.8) 37.5 (1.1) (14.7) Rentals Australia Rentals USA Tourism Group Group Support Services - (2.8) 3.1 (6.9) - (1.6) 7.0 (3.4) Non-recurring Items thl 100% owned entities (9.0) Action Manufacturing - JV^ Associates # Group Total (9.0) ^AMLP Joint Venture 50% NPBT * Operating cashflow includes the sale and purchase of rental assets. # Associates includes Just Go (UK) and Geozone until October 2015, when 100% acquired. 23

24 EBITDA 6 Months to December $M FY 16 FY 15 Var Var % EBIT % Add back non-cash Items: Amortisation Depreciation EBITDA % 24

25 Balance Sheet As at $M Dec 15 Dec 14 Var Equity Non current liabilities Current liabilities (17.3) Total source of funds Intangible assets and goodwill Investments in associates Non current assets Current assets Total use of funds Net debt position Net tangible assets NTA per share $ 1.31 $ 1.23 Book value of net assets per share $ 1.49 $ 1.42 Debt / debt + equity ratio (net of Intangibles) 38% 38% Equity ratio (net of Intangibles) 48% 49% AUD exchange rate at period end USD exchange rate at period end

26 Cashflow 6 Months to December $M FY 16 FY 15 Var Var % Vehicle sales % Vehicle purchases (61.9) (39.5) (22.4) 57% Net fleet capex (17.0) (6.0) (11.0) 183% Other operating cashflow % Cashflow from operating activities (9.0) 1.9 (10.9) (574%) Purchase of property, plant and equipment (6.6) (1.0) (5.6) 560% Other investing cashflow % Cashflow from investing activities (4.4) (0.1) (4.3) 4300% Borrowings % Dividends (9.1) (6.7) (2.4) 36% Share issues % Cashflow from financing activities % Net cashflow (0.4) 3.0 (3.4) (113%) 26

27 Gain on Fleet Vehicle Sales and Gross Profit 6 Months to December $M FY16 FY15 Var Var % Gain on sales of motorhome fleet before selling costs % Vehicle sales costs ($M) % Gain on sales of motorhome fleet after selling costs % Gross profit on non-fleet vehicle and accessory sales % Reported gain on sale % Average gain on sale ($000) incl selling costs (0.8) (11%) Fleet motorhomes sold AU NZ US Total fleet motorhomes sold (units) Fleet motorhomes at period end AU 1,310 1,371 (61) NZ 2,038 1, US Total fleet motorhomes 3,795 3,

28 Forecast FY16 NPAT $M H1 H2 FY FY15 reported actual NPAT FY16 forecast NPAT FY16 forecast NPAT before exchange rate impact Exchange rate impact* FY16 forecast NPAT NPAT growth before exchange rate impact % 9% 14% * Impact of movements in NZD:USD exchange rate on translation of USD earnings. H2 FY16 is based on forecast exchange rate at The impact of movements in NZD:AUD exchange rates is negligible. 28

29 Fleet Size Rentals NZ Rentals Australia 2,200 1,400 2,000 1,800 1,350 1,300 1,250 1,600 1,200 1,400 1,150 1,200 1,100 1,050 1,000 June 2014 Dec 2014 June 2015 Dec ,000 June 2014 Dec 2014 June 2015 Dec Rentals USA Proportion of Fleet % % 54% June 2014 Dec 2014 June 2015 Dec 2015 Rentals NZ Rentals AU Rentals USA 29

30 $M Gross Capex Spend Gross capex spend (full year) FY16 gross capital spend forecast has been increased by ~$25M to $125M- $130M due to: Waitomo Caves Homestead +$4M Increase in US fleet due to strong sales, increase for summer 2016 & exchange rate NZ Rentals flex-fleet AU 4WD fleet for winter 2016 on a buyback arrangement, vs lease in FY14 FY15 FY16 fcast Rentals USA Rentals AU Rentals NZ Other 30

31 $M Fleet Sales Proceeds Fleet sales proceeds forecast increased by ~$15M to $80M-$85M due to: Fleet sales proceeds (full year) Improved US demand for vehicle sales NZ Rentals flex-fleet FY14 FY15 FY16f Rentals USA Rentals AU Rentals NZ 31

32 $M Net Capex Spend Net capex cashflow forecast for FY16 $40M-$45M. Increase on last forecast ~$10M mainly due to: Net capital expenditure (full year) Australian 4WD flex-fleet for winter This year will be on buy-back arrangement vs operating lease in Waitomo Caves Homestead FY14 FY15 FY16 fcast Rentals USA Rentals AU Rentals NZ Group and Other 32

33 End 33