Tourism Holdings Limited · NZX:THL
Tourism — FY2020 Earnings Presentation
53 slides from Tourism's earnings presentation, Sep 18, 2020
Slide 1: Resilience to reset
FY20 FY19 FULL F U L L Y YEAR E A R R E SRESULTS ULTS PRESENTATION PRESENTATION Resilience to reset 18 September 2020
Slide 2: Disclaimer
Disclaimer This presentation contains forward-looking statements and projections. These reflect thl’s current expectations, based on what it thinks are reasonable assumptions. The statements are based on information available to thl at the date of this presentation and are not guarantees or predicti
Slide 3: Important notes
Important notes • All financials are in NZ dollars unless stated otherwise (throughout presentation). • All comparisons are against the prior corresponding period (pcp). • The average NZD:AUD cross-rate (average of the 12 month rates) for FY20 was 0.9480 (FY19 - 0.9383). • The average NZD:USD cross-
Slide 4: IFRS 16 Leases
IFRS 16 | Leases thl’s FY20 results include changes in financial disclosures resulting from the adoption of IFRS 16: • Right-of-use assets of $69.6M as at 30 June 2020 and lease liabilities of $81.9M as at 30 June 2020 have been recognised on the thl balance sheet, increasing total assets and total
Slide 5: COVID-19 related events in FY20
COVID-19 related events in FY20 thl has included the following amounts within its statement of comprehensive income for the year ended 30 June 2020 in relation to the COVID-19 pandemic: Recognition in statement of Description of event Amount (NZ$) comprehensive income Increase in provision for doubt
Slide 6: Summary
Summary • Statutory net profit after tax (NPAT) of $27.4 million, down 8% on the prior corresponding period (pcp) • Underlying NPAT of $20 million, down 28% on the pcp • Global rental revenue was achieving revenue growth in the first eight months of FY20 compared to the pcp • The USA vehicle sales b
Slide 7: A year of two parts
A year of two parts As at 30 June 2020 REVENUE OPERATING PROFIT BEFORE NET PROFIT AFTER UNDERLYING NPAT2 VEHICLE SALES QUANTITY FINANCING COSTS AND TAX (EBIT)1 TAX (NPAT)1 $401M -5% $48.6M -22% $27.4M -8% $20.0M 2,066 0% (FY19 $423M) (FY19 $62.1M) (FY19 $29.8M) (FY19 $27.9M) (FY19 2,059) 8 MONTHS 8
Slide 8: FY20 financial highlights
FY20 financial NZD $M FY20 FY19 VAR % NZD $M FY20 FY19 VAR % highlights Operating revenue Earnings before interest 400.9 48.6 423.0 62.1 (22.1) (13.5) (5%) (22%) Underlying NPAT Deferred tax benefit USA 20.0 1.1 27.9 1.9 (7.8) (0.8) (28%) (42%) and tax* Operating profit before tax 26.1 39.9 (13.8) (
Slide 9: Our response to COVID-19
Our response to COVID-19 A range of cost reduction initiatives Cost reduction 1 April – 31 May FY20 FY19 VAR % • Significant cost reduction programme involving: Labour costs $6.1M $14.5M -58% • Variable costs moving down effectively with volume reductions • Lowering of labour expense to match staff
Slide 10: Our response to COVID-19
Our response to COVID-19 Fleet management and cash preservation initiatives Fleet management Net debt of $188M as at 31 March 2020 was reduced by • Managed reduction in fleet levels to meet dual objectives of: $60M to approximately $128M at 30 June 2020 • Right-sizing fleet for anticipated near-term
Slide 11: Resilience through the last four months of FY20
Resilience through the last four months of FY20 Our flexible business model and liquid asset backing allows us to effectively manage our balance sheet Net Debt $M 200 187.6 183.9 180 166.0 160 140 127.7 120 98.2 100 75.1 80 60 40 20 - 31-Mar-20 30-Apr-20 31-May-20 30-Jun-20 31-Jul-20 31-Aug-20 FY20
Slide 12: Positioned to reset thl and our vehicle sales business
Positioned to reset thl and our vehicle sales business • For many years we have been focused on our core business model of BUILD – RENT – SELL. This remains as important today as it ever Vehicle sales revenue has FY21 FY20 VAR VAR % 1 July – 31 August ($NZ) • In the current domestic environment we h
Slide 13: Phases in thl's recovery roadmap
Phases in thl’s recovery roadmap Target once international Lockdown period FY21, depending on demand outcomes and seasonality tourism resumes Sales proceeds facilitate Rental revenue facilitates Group profitability Cash burn positive cash flow positive cash flow and growth • Minimal revenue through
Slide 14: Framework for FY21
Framework for FY21 The framework: Create flexibility through fleet management, cost reduction and debt reduction THE CONTEXT THE RESPONSE • Globally, the RV rental market has been materially • thl will look to capitalise on the recent demand growth by maximising affected by the implementation of tra
Slide 15: Vehicle expenditure in FY21
Management’s current estimates of purchases and sales targets in FY21 Vehicle expenditure in FY21 Current Prior FY21 vehicle purchases1 estimate estimate2 • Given our recent vehicle sales achievements, we have New Zealand 170+ 140 - 170 placed an initial order for 300 vehicles in the United States a
Slide 16: Balance sheet
Balance sheet Net Debt Net Debt:EBITDA* $128M 1.5X LAST YEAR LAST YEAR • Net debt and Net Debt:EBITDA as at 30 June 2020 were significantly lower than in the prior year, a $202M 1.9X reflection of our efforts to reduce debt in the last four months of FY20 Net debt • Net debt of $202M last year was p
Slide 17: Banking arrangements
Banking arrangements • Debt facilities are in place with thl’s banking partners Maturity of debt facilities • New funding arrangements were concluded during FY20, with changes including: September 2021 NZ$30M • a requirement for consent from thl’s banking partners for any distribution to shareholder
Slide 18: Pivoting to new business activities
Pivoting to new business activities • During the COVID-19 pandemic, we Managed Facility in New Zealand Managed Facility in the United States Mobile Offices were proactive about identifying unique opportunities by leveraging our operational expertise and existing infrastructure • We were one of the f
Slide 19: get moving, to get New Zealand moving
get moving, to get New Zealand moving Our survey indicated that: • 65% of customers were first-time motorhome travellers • 85% would travel by motorhome again • 40% would consider purchasing a motorhome • We launched our domestic rentals campaign in New Zealand in May, with exceptionally low price p
Slide 20: Divisional Review
Divisional Review FY2 109 FULL YEAR RESULTS PRESENTATION 20
Slide 21: Divisional EBIT
Divisional EBIT Full Year 8 Months to 29 February 4 Months to 30 June $M FY20 FY19 Var Var % FY20 FY19 Var Var % FY20 FY19 Var Var % thl Rentals New Zealand 30.2 31.5 (1.3) (4%) 30.2 27.9 2.3 8% 0.0 3.6 (3.5) (100%) Australia 8.6 11.3 (2.7) (24%) 12.1 11.9 0.2 1% (3.5) (0.6) (2.9) 468% USA 10.9 13.0
Slide 22: New Zealand rentals and sales
Full Year New Zealand rentals and sales NZD $M FY20 FY19 VAR VAR % Rental income 91.6 97.9 (6.3) (6%) Sale of goods 45.9 50.8 (4.8) (10%) • We are pleased with the FY20 result given the impact of COVID-19 and Costs (107.3) (117.2) 9.9 (8%) the traditional reliance of the New Zealand rentals business
Slide 23: Australia rentals and sales
Full Year Australia rentals and sales NZD $M FY20 FY19 VAR VAR % Rental income 57.6 70.0 (12.4) (18%) Sale of goods* 16.8 13.6 3.2 24% • FY20 EBIT of A$8.3M was down A$2.3M – a decrease of 22% on the Costs (65.8) (72.3) 6.5 (9%) EBIT 8.6 11.3 (2.7) (24%) prior year • The last 12 months have been a d
Slide 24: USA rentals and sales
Full Year USA rentals and sales NZD $M FY20 FY19 VAR VAR % Rental income 77.5 82.9 (5.4) (6%) Sale of goods 80.8 66.5 14.3 21% • A year of two parts with performance in the last four months Costs (147.4) (136.4) (11.0) 8% recovering the majority of the decline in the first eight months, EBIT 10.9 13
Slide 25: Tourism
Tourism Full Year NZD $M FY20 FY19 VAR % Revenue 30.7 41.4 (10.7) (26%) • A difficult year for the Tourism businesses given the significant Costs (26.8) (29.2) 2.4 (8%) reliance on international tourism to New Zealand EBIT 3.9 12.2 (8.3) (68%) • An EBIT of $3.9M in FY20, down $8.3M on the prior year
Slide 26: Equity Investments
Equity Investments FY2 109 FULL YEAR RESULTS PRESENTATION 26
Slide 27: Equity investments
Equity investments • These part-owned businesses are not controlled by thl and are equity accounted. The results are not reported in EBIT, and are not included in our ROFE calculations Equity Investments • Action Manufacturing (50%) • Net profit before tax of $1.4M was in line with the prior year an
Slide 28: Group support services and other
Group support services and other Group Support Services and Others NZD $M FY20 FY19 VAR % • Group support services expense of $2.7M, down 55% on the prior year Revenue – – – NA Costs (2.7) (6.0) 3.3 (55%) • The reduction in expense is reflective primarily of reduced EBIT* (2.7) (6.0) 3.3 (55%) labou
Slide 29: Other events
Other events FY2 109 FULL YEAR RESULTS PRESENTATION 29
Slide 30: Structured exit from Togo Group
Structured exit from Togo Group Key commercial deal outcomes • thl retained rights to Fleet, Insights, Mighway and triptech (formerly Outdoria) • Agreed that thl had no further obligation to provide additional investment into Togo Group • thl realised part of its interest in cash through the receipt
Slide 31: Accounting for Togo transaction
Accounting for Togo transaction NZ$ Disposal of the carrying value of the equity-accounted ($48.4M) investment in Togo Group (TH2connect, LLC) • The transaction resulted in: Fair value of the assets and liabilities received: • a disposal of the equity accounted investment in Togo Group (TH2connect,
Slide 32: thl digital
thl digital • In August 2020 we established thl digital as the umbrella brand for the thl 100% owned technology business portfolio • Since our structured exit from Togo Group, we have strengthened our digital strategy through: • the acquisition of SHAREaCAMPER in New Zealand and Australia; and • by
Slide 33: Fleet
Fleet thl trade partners will have access to Fleet, and be able to • Fleet is targeted at enterprise fleet vehicle operators, tourism agencies and travel and make highly customisable mobility businesses booking searches • Provides an incredibly powerful SaaS In setting rates and availability, platfo
Slide 34: Insights
Insights Insights Telematics Insights Analytics Insights Driver Application A fleet management platform powered by telematics and built A platform dedicated to industry-wide data analytics A suite of applications to connect fleet operators with their to connect rental operators with their fleet, imp
Slide 35: Mighway peer-to-peer
Mighway peer-to-peer • New Zealand’s leading peer-to-peer RV rentals company, offering both fully managed and self-managed programs for motorhome owners across New Zealand • Mighway has seen an increase in revenue YOY, and improved guest booking conversion to 48%, fast approve functionality and impr
Slide 36: SHAREaCAMPER peer-to-peer
SHAREaCAMPER peer-to-peer • thl acquired the New Zealand and Australian operations of SHAREaCAMPER in March 2020 • Limited forward bookings at time of acquisition due to impact of COVID-19 • Business has since experienced a positive recovery in activity while pivoting to domestic RV customers • SHAR
Slide 37: triptech
triptech • A joint venture partnership between thl and Gerry Ryan (founder of What is triptech? Jayco), with thl having an approximately 60% shareholding • triptech is an Australasian based travel and tourism • Revenue generated through: technology company, focused on reaching travellers that are in
Slide 38: Outlook
Outlook FY2 109 FULL YEAR RESULTS PRESENTATION 38
Slide 39: Outlook
Outlook THE GROUP • We are managing the business to the constantly evolving environment, with a focus on operating in a domestic-only context for FY21 and likely the 2021 calendar year • We will manage fleet size to reduce debt, but only to a level where we can still manage demand and position ourse
Slide 40: Supporting Analysis
Supporting Analysis FY2 109 FULL YEAR RESULTS PRESENTATION 40
Slide 41: Income statement summary
Income statement summary Full Year 8 Months to 29 February 4 Months to 30 June $M FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % Revenue from trading 257.4 292.2 (34.8) (12%) 210.4 205.4 5.0 2% 47.0 86.8 (39.8) (46%) Revenue from sale of fleet 143.5 130.8 12.7 10% 77.9 80.1 (2.2) (3%) 6
Slide 42: Revenue
Revenue Full Year 8 Months to 29 February 4 Months to 30 June $M FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % thl Rentals - Sale of Services New Zealand 91.6 97.9 (6.3) (6%) 75.8 71.6 4.3 6% 15.8 26.3 (10.6) (40%) Australia 57.6 70.0 (12.4) (18%) 50.5 50.3 0.2 0% 7.1 19.7 (12.6) (64%)
Slide 43: Divisional summary
Divisional summary Year ending 30 June 2020 Year ending 30 June 2019 REVENUE DIVISIONAL AVE FUNDS OPERATING REVENUE DIVISIONAL AVE FUNDS OPERATING $M EBIT EMPLOYED CASHFLOW* EBIT EMPLOYED CASHFLOW* Rentals New Zealand 137.5 30.2 163.4 10.4 148.7 31.5 159.1 14.8 Rentals Australia 74.4 8.6 80.3 9.6 83
Slide 44: EBIT margin
EBIT margin Full year 8 Months to 29 February 4 Months to 30 June $M FY20 FY19 VAR FY20 FY19 VAR FY20 FY19 VAR THL Rentals New Zealand 22.0% 21% 0.8% 27.9% 27.7% 0.2% 0.0% 7.5% (7.4%) Australia 11.6% 14% (1.9%) 20.1% 20.0% 0.1% (24.5%) (2.5%) (21.9%) USA 6.9% 8.7% (1.8%) 5.3% 12.5% (7.2%) 9.1% 2.0%
Slide 45: EBITDA
EBITDA Full Year 8 Months to 29 February 4 Months to 30 June $M FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % EBIT 48.6 62.1 (13.5) (22%) 53.5 57.0 (3.5) (6%) (4.9) 5.1 (10.0) (196%) Add back non-cash items: Depreciation 62.0 51.5 10.4 20% 41.0 33.2 7.8 24% 21.0 18.4 2.6 14% Amortisati
Slide 46: Balance sheet
Balance sheet $M JUN 20 As at JUN 19 VAR As at Equity 325.1 277.0 48.1 Non current liabilities 184.4 239.0 (54.6) Current liabilities 62.2 86.5 (24.3) Lease Liabilities (IFRS 16) 81.9 0.0 81.9 Total source of funds 653.6 602.5 51.1 Intangible assets and goodwill 50.3 44.2 6.1 Investments in associat
Slide 47: Funds employed
Funds employed Average Funds Year end Funds $M FY20 FY19 VAR JUN 20 JUN 19 VAR Rentals New Zealand 163.4 159.1 3% 152.4 148.4 3% Australia 80.3 81.5 (1%) 68.7 72.2 (5%) USA 170.3 162.0 5% 143.8 184.3 (22%) Total Rentals 414.0 402.6 3% 364.9 404.9 (10%) Tourism Group 16.2 22.0 (26%) 16.9 21.9 (23%) J
Slide 48: Gain on vehicle sales and gross profit
Gain on vehicle sales and gross profit Full Year 8 Months to 29 February 4 Months to 30 June $M FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % FY20 FY19 VAR VAR % Proceeds from sales of motorhome fleet 124.2 109.6 14.5 13% 66.8 66.7 0.1 0% 57.4 42.9 14.5 34% Net book value of vehicles sold (incl writeoffs)
Slide 49: Trends
Revenue $M EBIT $M EBIT Margin1 $M Trends 23.1 63.5 62.1 51.0 47.7 (2.4) FY17 FY18 FY19 FY20 EBIT before non-recurring items Non-recurring items EBITDA $M Total NPAT $M Group ROFE1 (Average Funds) 62.4 24.9 134.0 23.1 111.7 37.5 29.8 27.4 110.9 114.8 114.2 1.9 7.3 87.5 20.0 30.2 27.9 (2.4) FY17 FY18
Slide 50: Capital expenditure in FY20
Capital expenditure in FY20 Gross Capital Expenditure ($M) Proceeds from Fleet Sales ($M) Net Capital Expenditure ($M) 76 58 58 (16) FY17 FY18 FY19 FY20 Core Flex Some investors may assess net CAPEX in a non-GAAP manner. The net CAPEX of -$16M could be compared to the total depreciation for FY20 of
Slide 51: Return on funds employed
Return on funds employed Return on Average Funds FY20 FY19 VAR Rentals and Sales New Zealand 17.9% 19.8% (1.9%) Australia 9.6% 13.9% (4.3%) USA 5.3% 8.0% (2.7%) Total Rentals and Sales 12.0% 13.9% (1.8%) Tourism Group 23.7% 55.9% (32.2%) Total Return on Funds Employed before Togo Group* 10.2% 14.2%
Slide 52: Depreciation and vehicle sales channels
Depreciation and vehicle sales channels Real Depreciation Rates per annum * FY20 FY19 AU 7% 7% NZ 6% 6% US 5% 4% * The Real Depreciation Rate (RDR) is the measure of the difference between the purchase price and sale price of the vehicles sold in the financial year. It allows for no gain on sale or
Slide 53: End
FY20 FY19 FULL F U L LYEAR Y E A R RRESULTS ESULTS PRESENTATION PRESENTATION End FY20 FULL YEAR RESULTS PRESENTATION 53