Tourism Holdings Limited · NZX:THL
Tourism — Investor Day (May 2023)
63 slides from Tourism's investor day presentation, May 8, 2023
Slide 1: 2023 Investor Day Presentation and Trading Update (media release)
Tourism Holdings Limited Tel: +64 9 336 4299 The Beach House Fax: +64 9 309 9269 Level 1, 83 Beach Road www.thlonline.com Auckland City PO Box 4293, Shortland Street Auckland 1140, New Zealand 8 May 2023 NZX | ASX | MEDIA RELEASE TOURISM HOLDINGS LIMITED (thl) 2023 INVESTOR DAY PRESENTATION AND TRAD
Slide 2: For personal use only
For personal use only
Slide 3: Welcome
For personal use only Welcome Grant Webster CEO & Managing Director
Slide 4: Agenda
For personal use only Agenda Site Tour – Action Manufacturing Factory, Hamilton Welcome & Trading Update Grant Webster – CEO & Managing Director Business Overview Grant Webster – CEO & Managing Director Scott Fahey – Chief Marketing Officer Nick Judd – Chief Financial Officer Australia and New Zeala
Slide 5: Trading update
For personal use only Trading update Latest trends in the tourism and RV sector
Slide 6: Our views and experiences on travel and tourism trends
Our views and experiences on travel and tourism trends For personal use only o Despite broader macroeconomic challenges, the travel and tourism industry has remained resilient and is experiencing strong growth o Forward booking activity for the 2023 high season in our Northern Hemisphere businesses
Slide 7: RV rental yields remain strong
RV rental yields remain strong o Yields are being closely managed in all markets and are continuing to experience growth or holding the recent growth For personal use only o North American yields for the 2023 high season continue to grow beyond the already strong yields achieved in the 2022 high sea
Slide 8: Our expectations for yield trends
Our expectations for yield trends We are managing yield to the market environments For personal use only CA US AU UK NZ Pre-COVID Peak Breakout Flattening Pre-COVID Recovery Normalising Disruption Growth Growth 7 Note: Illustrative chart only
Slide 9: Vehicle sales margins are coming off peaks
Vehicle sales margins are coming off peaks o Vehicle sales demand has commenced softening in all markets from the recent peaks For personal use only o While vehicle sales margins have remained elevated longer than earlier expectations, these are now starting to normalise in most markets, with the US
Slide 10: Supply challenges and cost increases are ongoing
Supply challenges and cost increases are ongoing For personal use only o Supply remains a challenge in each market however lead times are continuing to move towards normalising as the pandemic backlog and labour shortages are addressed o Our current expectations are that: o Chassis supply in New Zea
Slide 11: Our previous FY23 profit guidance is unchanged
For personal use only Our previous FY23 profit guidance is unchanged No change to earlier guidance for expected FY23 net profit after tax above $48M (or above $75M on a pro-forma basis)1. There is some risk in meeting our FY23 profit expectations should vehicle sales deliveries delay from Q4 FY23 in
Slide 12: Business Overview
For personal use only Business Overview Grant Webster CEO & Managing Director
Slide 13: The merged group has created a platform with multiple future growth levers
The merged group has created a platform with multiple future growth levers For personal use only 1 2 Build – Rent – Sell Organic fleet growth 3 4 Realisation of Acquisitions and merger synergies partnerships 12 1 2 3 4
Slide 14: We create value across the Build – Rent – Sell model
For personal use only We create value across the Build – Rent – Sell model o Decades of experience designing and building durable RVs for rentals Build / o Scale purchasing benefits Buy o Long standing relationships with OEMs o Largest commercial RV rental operator in the world - #1 in New Zealand,
Slide 15: A design-led approach to manufacturing with strong supplier relationships
A design-led approach to manufacturing with strong supplier relationships For personal use only Maui 6-Berth Motorhome Action Manufacturing, Hamilton New Zealand Defence Force Medical Truck o Four manufacturing facilities in New Zealand, one in Brisbane and a sub-assembly plant in Melbourne. o Actio
Slide 16: Action Manufacturing, Hamilton, New Zealand
Action Manufacturing Hamilton, New Zealand For personal use only 15
Slide 17: Apollo Manufacturing, Brisbane, Australia
Apollo Manufacturing Brisbane, Australia For personal use only 16
Slide 18: We are the global leader in commercial RV rentals
We are the global leader in commercial RV rentals We estimate we are #1 or #2 in RV rentals within all markets we operate in For personal use only o We estimate that we are the largest or second largest commercial RV rental operator in each operating jurisdiction o Our market share estimates are Aus
Slide 19: With a competitive advantage in efficient rental asset management
With a competitive advantage in efficient rental asset management Rental fleet as at For personal use only 31 December 2022 Location UK / Europe 455 Brand Age Proposition Market Positioning NZ AU US CA UK Canada 1,162 maui ✓ ✓ 0 – 2 Years Premium CanaDream ✓ 0 – 2 Years Premium Road Bear ✓ Flexible
Slide 20: Vehicle Sales and Dealerships
For personal use only Vehicle Sales and Dealerships Scott Fahey Chief Marketing Officer
Slide 21: Our ANZ dealership model covers all aspects of the owner lifecycle
Our ANZ dealership model covers all aspects of the owner lifecycle For personal use only o Build/Buy – Sourcing the best brands to sell, either built in our factory or from our manufacturer partners o Retail Experience – Give our customers an excellent experience throughout the entire retail journey
Slide 22: We aim to maximise the value achieved in sales
We aim to maximise the value achieved in sales While most rental operators hold vehicles and then treat them as “disposals”, we have a sales dealership mentality and recognise it is a business in its own right For personal use only xxx Kratzmann Caravans and Motorhomes, QLD George Day Caravans and M
Slide 23: We have a suite of retail product brands
We have a suite of retail product brands We offer a wide range of caravan and motorhome brands including our own brand suite only Brand Suite Core * use personal Our Franchises Our Brand For 22 1 2 3 4 * Apollo has the exclusive right to manufacture Winnebago in Australia and New Zealand
Slide 24: We leverage ancillary opportunities in the RV category
We leverage ancillary opportunities in the RV category Our dealerships in ANZ offer a wide range of RV accessories in-store and online, we also offer finance, insurance, protection products, parts and servicing1 For personal use only RV Super Centre online store RV Super Centre Auckland branch 23 1
Slide 25: Nick Judd, Chief Financial Officer
For personal use only Nick Judd Chief Financial Officer
Slide 26: We have an imperative for smart fleet growth
We have an imperative for smart fleet growth Detailed rolling reviews are conducted by market. When external conditions are dynamic, fleet purchase and sales decisions are made on a near weekly basis For personal use only Smart Growth Fleet Plans Rolling Review Horizons Imperatives by Market Hold or
Slide 27: We have a disciplined approach to return on funds employed
We have a disciplined approach to return on funds employed For personal use only We review market conditions for every investment decision o thl’s Board oversees and approves all major fleet capital expenditure decisions by vehicle type and region o Each fleet purchase decision undergoes thl’s capit
Slide 28: We aim to maximise returns across the vehicle lifecycle
We aim to maximise returns across the vehicle lifecycle We assess rental and sales values and volumes monthly to determine tactical sales plans For personal use only There is an immediate unrealised equity benefit between build/buy cost and retail value o Market value declines at Sale Assessment cer
Slide 29: We have debt facilities available to fund the re-fleet
We have debt facilities available to fund the re-fleet The Board and management are conscious of maintaining an appropriate net debt to EBITDA ratio throughout the regrowth programme For personal use only o We do not expect to require additional equity to undertake the fleet regrowth programme Over
Slide 30: The pace of fleet regrowth will respond to the recovery in demand
The pace of fleet regrowth will respond to the recovery in demand We will continue to maximise fleet For personal use only +1,402 growth under our ROFE 14,000 vehicles requirements while mindful of market share goals +1,063 12,033 vehicles 12,000 Our current medium-term 10,631 expectations are that
Slide 31: A proven history of flexibly managing the balance sheet
For personal use only A proven history of flexibly managing the balance sheet Debt is invested in growing assets and earnings through a larger fleet of revenue-generating vehicles Vehicles are mobile, liquid and generally have embedded equity above their book value This gives thl the flexibility to
Slide 32: Borrowings are invested in growing funds employed
Borrowings are invested in growing funds employed We apply strong discipline to any decisions to increase funds with our 15% Return on Funds Employed target For personal use only 600 500 400 NZD$M 300 200 100 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Bank Borrowing
Slide 33: Grant Webster, CEO & Managing Director
For personal use only Grant Webster CEO & Managing Director
Slide 34: Progressing well in realising merger synergies
Progressing well in realising merger synergies On track to deliver a steady-state EBIT uplift of $23M - $24M For personal use only Savings on track for FY23. FY24 may be slightly delayed due to integration Labour intensity, no long-term concerns Group Support / Corporate Duplicate group support serv
Slide 35: Embedding realised synergies is a key focus
Embedding realised synergies is a key focus Our synergy tracking model is about tracking measurable results against the counterfactual baselines, with permanent P&L indicators embedded to sustain For personal use only synergies NPAT Record NPAT achievement is the ultimate test and measure of success
Slide 36: We have a long history of acquisitions and partnerships
For personal use only We have a long history of acquisitions and partnerships 35 1 2 3 4
Slide 37: M&A opportunities we expect to consider
M&A opportunities we expect to consider While currently focused on the merger integration, we also consider the appropriate next opportunities for growth For personal use only o Organic growth is the primary focus at present, given the merger and existing fleet growth opportunities o We intend to co
Slide 38: Preparing for the transition to EV
Preparing for the transition to EV Trialling a new EV rental product for of the 2023/24 New Zealand summer For personal use only o The thl Board has approved a level of ongoing annual capital expenditure to trial EV and other sustainable new vehicle technologies o This year we are trialling six new
Slide 39: Our global sustainability strategy is based on the Future-Fit Business Benchmark
Our global sustainability strategy is based on the science- based goals of the Future-Fit Business Benchmark For personal use only ✓ Established a science aligned target of absolute reduction of Scope 1 and 2 GHG emissions of 50.4% from FY20 baseline ✓ Rolled out Country and Branch Action Plans that
Slide 40: Australia and New Zealand Markets
For personal use only Australia and New Zealand Markets Stacey Davis – Chief Operating Officer, Australia
Slide 41: A large, established RV industry
A large, established RV industry Darwin Cairns Broome For personal use only o thl is the leader in RV rentals with 1,855 fleet1 and ~30 – 35% market share2 o Key competitors with estimated fleet of 300+ each include Jucy, Travellers Autobarn, Cruisin’, Wicked and Let’s Go Motorhomes, with a long tai
Slide 42: A popular international RV travel destination
For personal use only A popular international RV travel destination RV o thl is the leader in commercial RV Auckland rentals with 1,485 fleet1 and ~25 – 30% market share2 o Key competitors with estimated fleet of 300+ each include Jucy, Wenderkreisen, Escape, Spaceships and Tui Rentals, with long ta
Slide 43: The market dynamics in the two countries
The market dynamics in the two countries The New Zealand market has a greater weighting of international bookings For personal use only Australia New Zealand o Historically ~40 - 45% of customers are domestic – Apollo o Historically ~90% of customers are international had a greater international foc
Slide 44: The ANZ fleet model targets all customer segments
The ANZ fleet model targets all customer segments Vehicles range from small to large and from new to ~six years, across a portfolio of brands For personal use only o Nearly all fleet self-manufactured with some European imports. Under the flex model, New Zealand imports ex-Just go fleet for the high
Slide 45: Vehicles flow through the brand portfolio
Vehicles flow through the brand portfolio Off-fleeting for sales at all age points provides the dealerships with stock at all price points For personal use only 44
Slide 46: The UK/Europe Markets
For personal use only The UK/Europe Markets Nick Roach Chief Operating Officer, UK/Europe
Slide 47: The UK rental market is highly fragmented
The UK rental market is highly fragmented There is an opportunity to increase the fleet to 1,000+ vehicles in the UK & Ireland in future use only United Kingdom & Ireland o Just go and Bunk are collectively the largest Just go and Bunk commercial RV rental operator in the UK1 o With an expected peak
Slide 48: A predominantly domestic business with regular re-fleeting
For personal use only A predominantly domestic business with regular re-fleeting o ~65 – 70% of customers are domestic – we expect to grow the international part of the business in future Customers and o Key international origin markets are Europe (Germany, Spain, France) and Demand Australia/New Ze
Slide 49: Just go, Edinburgh, Scotland
Just go Edinburgh, Scotland For personal use only 48
Slide 50: We offer a premium product and operate a young fleet
For personal use only We offer a premium product and operate a young fleet o Vehicles are 2 to 6 berth self-contained with central heating and televisions o We target replenishing the entire fleet every year so that no vehicle is more than two summers old o Current average fleet age is older due to
Slide 51: Just go, Greater London, England
Just go Greater London, England For personal use only 50
Slide 52: Synergy opportunities in the UK market
Synergy opportunities in the UK market The synergies are expected to deliver material earnings growth to the UK business For personal use only o Insurance consolidation Commercial o Cross-sale of Camperco products via RV Super Centre o Standardisation of product offering o Property consolidation – E
Slide 53: The North American Markets
For personal use only The North American Markets Gordon Hewston Chief Operating Officer, United States
Slide 54: The largest RV market in the world
The largest RV market in the o Road Bear originally founded in 1980s and El Monte RV founded in 1970’s. world o Estimated market share of ~10 – 15%, positioned #2 to largest operator Cruise America1 United States For personal use only o Road Bear is positioned as highest quality offering in market w
Slide 55: The market dynamics in the two countries
The market dynamics in the two countries The Canadian market has a greater weighting of international bookings For personal use only United States Canada o Historically ~45% of the business was domestic – o Pre-COVID ~ 20% of the business was domestic – currently elevated due to domestic growth duri
Slide 56: El Monte RV, Santa Fe Springs, California
El Monte RV Santa Fe Springs, California For personal use only 55
Slide 57: CanaDream, Calgary
56 For personal use only Calgary CanaDream
Slide 58: The Road Bear and El Monte fleet models
For personal use only The Road Bear and El Monte fleet models o Fleet consists of 4 to 8 berth vehicles, ranging from Class A to Class C o Road Bear operates a near new fleet. Vehicle sales generally commence after a single season with the aim to sell at a higher price than the wholesale purchase co
Slide 59: The CanaDream fleet model
The CanaDream fleet model We operate Class C, Class B and campers ranging from 2 to 6 berth For personal use only 2 Berth Deluxe 6 Berth Maxi 3 Berth Maxi Class B Camper Class C Motorhome Travel Camper o Fleet consists of Class C, Class B and campers ranging from 2 to 6 berth o Most of the fleet is
Slide 60: Synergy opportunities in North America
For personal use only Synergy opportunities in North America Procurement Exploring opportunities involving CanaDream, Road Bear and El Monte’s supply options Operational Utilisation Adopting a cross-border fleet approach to improve utilisation of Canadian fleet in Q3 which currently has utilisation
Slide 61: Wrap Up and Q&A
For personal use only Wrap Up and Q&A Grant Webster CEO & Managing Director
Slide 62: Investor Day May 2023
INVESTOR DAY 9 MAY 2023
Slide 63: Disclaimer
For personal use only Disclaimer This presentation contains forward-looking statements and subject to, the registration of the US Securities Act and projections. These reflect thl’s current expectations, based on applicable US State securities laws. Past performance what it thinks are reasonable ass