Tourism Holdings Limited · NZX:THL
Tourism — FY2016 Earnings Presentation
48 slides from Tourism's earnings presentation, Aug 23, 2016
Slide 1: FY16 Full Year Results Presentation and Shareholder Review
Unforgettable experiences. Sustaining success. FY16: Full Year Results Presentation and Shareholder Review 23 August 2016
Slide 2: Disclaimer
DISCLAIMER The information in this presentation dated 23 August 2016 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 assumpti
Slide 3: Our business is connecting people to unforgettable experiences
OUR BUSINESS IS CONNECTING PEOPLE TO UNFORGETTABLE EXPERIENCES IN UNIQUE AND REMARKABLE PLACES AROUND THE WORLD. In FY16 we have evolved our business to a more sustainable and responsive model. We have balanced growth in our core business with investment in new technology, business models and resour
Slide 4: Chairman's Introduction
CHAIRMAN’S INTRODUCTION Overall the result for the year should be seen as positive progress for the company. The performance of the business continues to be enhanced across all activities and markets. This is an ongoing process of improvement in the experiences we provide and the profitability and s
Slide 5: CEO's Introduction
CEO’S INTRODUCTION The thl business has changed dramatically over the past few years (it needed to) and yet we still have significant potential and are only starting to unlock the opportunities. The following are some key points of note regarding the last financial year from my perspective: • We hav
Slide 6: CEO's Introduction (cont.)
CEO’S INTRODUCTION (CONT.) Taking a broader industry and global view, we can see where our competencies can be leveraged for growth, but in a smarter manner than the past. Within this presentation we detail the business model today and how we are adapting for improved future results. We have several
Slide 7: Financial Highlights
FINANCIAL HIGHLIGHTS REVENUE EARNINGS BEFORE NET PROFIT INTEREST AND TAX AFTER TAX $279M $38.7M $24.4M UP UP UP 18% 20% 21% ROFE (AVERAGE FUNDS)* AVERAGE NET FUNDS EMPLOYED FULL YEAR DIVIDEND 15.1% $256M 19cps (50% imputed) UP FROM UP UP FROM 12.9% $8M 15cps (50% imputed) All financials in NZ Dollar
Slide 8: Trends
TRENDS Revenue EBIT EBIT Margin 279 13.9% 39 13.7% 225 226 237 32 10.1% 23 6.5% 15 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 EBITDA NPAT Group ROFE 73.6 (average funds) 65.5 15.1% 24.4 12.9% 58.9 60.3 20.1 8.6% 11.1 5.2% 3.8 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY16 FY13 FY14 FY15 FY
Slide 9: Financial Highlights
FINANCIAL HIGHLIGHTS • We have achieved a balance of growth in earnings and ROFE from existing businesses, while investing in new growth NZD $M FY16 FY15 VAR initiatives. Operating revenue 278.9 236.6 42.3 • NPAT growth of 21%. Earnings before interest 38.7 32.3 6.4 and tax* • Strong growth in EBIT
Slide 10: FY16 New Initiative Highlights
FY16 NEW INITIATIVE HIGHLIGHTS Flex Fleet Telematics Mighway Launched successfully Rolled out across Australia Launched and operating in in NZ for summer fleet. and small trial in NZ. NZ. Australian 4WD flex model Driver behaviour being Over 200 vehicle owners on expanded with a buy-back positively
Slide 11: Return on Average Funds Employed
RETURN ON AVERAGE FUNDS EMPLOYED* FY16 FY15 VAR Rentals NZ 13.0% 10.6% +2.4% Rentals AU 11.6% 10.8% +0.8% Rentals USA 27.7% 23.5% +4.2% Rentals TOTAL 15.6% 13.0% +2.6% Tourism Group 37.1% 30.7% +6.4% Operating divisions TOTAL^ 17.9% 14.9% +3.0% thl Group TOTAL 15.1% 12.9% +2.2% • ROFE was 15.1% agai
Slide 12: Dividend
DIVIDEND • Final dividend of 10 cents per share imputed to 50%. FINAL DIVIDEND FY16 FULL YEAR DIVIDEND • At upper end of dividend distribution policy of 75% to 10 cents 19 cents 90% of NPAT. Per Share – 50% Imputed Per Share – 50% Imputed • The dividend increase is the UP UP 6th successive increase.
Slide 13: Capital Expenditure
CAPITAL EXPENDITURE $M $M $M • Gross FY16 capex spend of $126M. • Core long term fleet sales of $33M was • Net capex spend of $45M, including This includes $6M related to Australian up $1M on FY15. 4WD buy-back fleet. 4WD fleet purchased under buy-back • Remaining increase in fleet sales • Net capex
Slide 14: Balance Sheet
BALANCE SHEET • Net debt at 30 June 2016 was $79M, up $10M on 30 June 2015. Increase NET DEBT DEBT : EBITDA is due to the lift in fleet to be turned over in less than 18 months. As at 30 June, NBV of flex fleet in NZ and Australia to be sold within 4 months is $79M 1.4x ~$10M. • The Letter of Credit
Slide 15: Divisional Review
DIVISIONAL REVIEW 15
Slide 16: Divisional EBIT
DIVISIONAL EBIT Full Year 6 Months to June 6 Months to December ; $M JUNE 16 JUNE 15 VAR JUNE 16 JUNE 15 VAR DEC 15 DEC 14 VAR thl Rentals New Zealand* 15.4 12.2 26% 15.4 13.3 16% 0.0 (1.1) 100% Australia 6.8 6.1 11% 2.1 1.4 45% 4.7 4.7 1% USA 12.4 8.9 40% 2.6 2.7 (5%) 9.8 6.1 60% Total Rentals 34.6
Slide 17: Rentals NZ
RENTALS NZ Moving Ahead • A successful first season of flex fleet and Full Year positive tourism dynamics have resulted in good EBIT growth and improvement in NZD $M FY16 FY15* VAR % margin and ROFE. Rental income 68.4 60.8 7.6 13% • Our RV Supercentres (retail and service) Sale of goods 35.5 29.2 6
Slide 18: Rentals AU
RENTALS AU Showing Progress Full Year • An improved second half. The Australian business is performing well NZD $M FY16 FY15 VAR % ahead of the long term average, Rental income 55.9 55.0 0.9 2% however we are not accepting of a ROFE below 14%. Sale of goods 12.4 11.1 1.3 12% • Australian domestic de
Slide 19: Rentals USA
RENTALS USA Continued Growth & Strong ROFE Full Year • Another year of strong ROFE (27.7%). NZD $M FY16 FY15 VAR % • USD EBIT growth of 16%, translated to 39% when converted to NZD. Rental income 27.9 21.1 6.8 32% • Rental demand for summer 2015 was Sale of goods 42.3 29.6 12.7 43% strong. Demand in
Slide 20: Tourism Group
TOURISM GROUP Leveraging China & General Demand Full year • Customer growth has exceeded NZD $M FY16 FY15 Var % inbound visitor arrivals growth (11%). Revenue 36.3 29.9 6.4 21% • Waitomo has benefited from strong growth in Asian markets, particularly Costs 26.3 22.2 (4.1) (18%) China. These markets
Slide 21: Group Support Services and Other
GROUP SUPPORT SERVICES AND OTHER Investment in Growth Full year • Costs increased $3.4M as planned, all related to growth initiatives. NZD $M FY16 FY15* Var % • The most significant of these costs Revenue 0.3 0.3 related to the start-up of the Mighway sharing economy business in NZ. The Costs 6.2 2.
Slide 22: Equity Investments
EQUITY INVESTMENTS Action Manufacturing • Action Manufacturing NPBT was flat on Action Manufacturing (50% share NPBT) LY after adjusting for a profit on the sale of an investment in FY15. NZD $M FY16 FY15 VAR % • There were further reductions in motorhome costs to thl (reducing Action H1 0.9 1.2 (0.
Slide 23: Strategy Update
STRATEGY UPDATE 23
Slide 24: Our Business Model Today - Tourism Products and Services
OUR BUSINESS MODEL TODAY – TOURISM PRODUCTS AND SERVICES PRODUCT FOCUS SERVICE FOCUS RV and tourism RV products RV and tourism physical products (flexible ownership) services (owned) (low / no capital) Build-Buy / Rent / Sell Build-Buy / Rent / Sell Experience Seeker • Global scale • Mighway sharing
Slide 25: Deeper Customer Engagement
DEEPER CUSTOMER ENGAGEMENT Our new initiatives are increasing opportunities for customer engagement throughout the journey New customer interaction Traditional customer interaction 25
Slide 26: A More Flexible Fleet Model
A MORE FLEXIBLE FLEET MODEL We will grow capacity through flex fleet, while maintaining core fleet • In FY17 we will build on the success of the more flexible fleet • Mighway will continue to grow, enabling thl to meet greater capital deployment model that was trialled in NZ in FY16. peak season dem
Slide 27: Growing Spend Per Customer
GROWING SPEND PER CUSTOMER We are focused on growing yield and spend per customer Build/buy Rent Sell Core New scope • Action Manufacturing is gaining • Deeper customer engagement and • Building a deeper relationship with traction in new markets with new technology is providing the the customer post
Slide 28: Focus FY17
FOCUS FY17 The internal theme for FY17 is ‘DELIVER’ ORGANIC GROWTH INORGANIC GROWTH MIGHWAY Flex fleet in NZ and AU Ongoing search for value Scale up NZ fleet for summer. Rentals. accretive opportunities that Prove scalability of the model. Increased fleet in US leverage our global RV and NZ tourism
Slide 29: Sustainability Matters
SUSTAINABILITY MATTERS Community • At thl we take our role as a leader in the tourism industry • We have taken a lead role in addressing concerns around seriously and actively work to ensure that the impacts of freedom camping, and are inaugural members of the tourism on the wider community are posi
Slide 30: Sustainability Matters
SUSTAINABILITY MATTERS The environment Health and safety • We are committed to mitigating the increasing carbon footprint. We • Our senior management and Board are committed to maintaining a are implementing a carbon management plan across all our safe and healthy working environment. This includes
Slide 31: Outlook
OUTLOOK 31
Slide 32: The Macro Environment
THE MACRO ENVIRONMENT The long term macro environment remains positive LAST 12 TRAVEL & ANNUAL MONTHS ESTIMATED TOURISM SPEND VISITOR COUNTRY VISITOR MARKET SIZE GROWTH ARRIVALS ARRIVALS FORECAST FORECAST GROWTH New Zealand NZD $13B 7.5% CAGR 5.4% CAGR +11% Australia AUD $46B 7.7% CAGR 5.9% CAGR +10
Slide 33: FY17 Capital Expenditure
FY17 CAPITAL EXPENDITURE • Gross capital expenditure forecast for FY17 is circa $145M. Capital expenditure for core long term fleet and non-fleet capex is at a similar level to FY16. • Growth in FY17 gross capex spend of circa $25M relates to Rentals NZ flex fleet and Rentals AU flex fleet. • Vehicl
Slide 34: Outlook and Guidance
OUTLOOK AND GUIDANCE Tourism Environment Lions Tour • The outlook for the tourism industry remains • The Lions tour of New Zealand commences in positive, particularly for New Zealand. FY17 June 2017 and continues into July 2017. As this trading results for July were positive and forward occurs in th
Slide 35: Corporate Governance
CORPORATE GOVERNANCE • During the last quarter of the year David Neidhart resigned as a Director of the company following the sale of the Sterling Grace shareholding. The Board would like to thank David for his contribution and the owners of Sterling Grace for their long standing shareholder support
Slide 36: Supporting Analysis
SUPPORTING ANALYSIS 36
Slide 37: Income Statement Summary
INCOME STATEMENT SUMMARY Full Year 6 Months to June 6 Months to December $M FY16 FY15 Var Var % FY16 FY15 Var Var % FY16 FY15 Var Var % Revenue from trading 188.7 166.8 21.9 13% 99.9 88.9 11.0 12% 88.8 77.9 10.9 14% Revenue from sale of fleet 90.2 69.8 20.4 29% 45.3 36.3 9.0 25% 44.9 33.5 11.4 34% T
Slide 38: Revenue
REVENUE Full Year 6 Months to June 6 Months to December $M JUNE 16 JUNE 15 VAR JUNE 16 JUNE 15 VAR DEC 15 DEC 14 VAR thl Rentals - Rental Revenue New Zealand 68.4 60.8 12% 41.9 36.9 13% 26.5 23.9 11% Australia 55.9 55.0 2% 25.7 25.1 2% 30.3 29.9 1% USA 27.9 21.1 32% 11.0 9.6 14% 16.9 11.5 47% 152.2
Slide 39: Divisional Review
DIVISIONAL REVIEW Year ended 30 June 2016 Year ended 30 June 2015 DIVISIONAL AVE FUNDS OPERATING DIVISIONAL AVE FUNDS OPERATING $M REVENUE EBIT EMPLOYED CASHFLOW* REVENUE EBIT EMPLOYED CASHFLOW* Rentals New Zealand 103.8 15.4 118.7 5.8 89.9 12.2 115.2 8.9 Rentals Australia 68.4 6.8 58.2 3.3 66.1 6.1
Slide 40: EBIT Margin
EBIT MARGIN Full Year 6 Months to June 6 Months to December JUNE 16 JUNE 15 VAR JUNE 16 JUNE 15 VAR DEC 15 DEC 14 VAR THL Rentals New Zealand 14.8% 13.6% 1.2% 25.2% 25.4% (0.2%) 0.0% (2.9%) 2.9% Australia 9.9% 9.2% 0.7% 6.5% 4.6% 1.9% 12.9% 13.3% (0.4%) USA 17.7% 17.6% 0.2% 8.5% 11.3% (2.8%) 24.8% 2
Slide 41: EBITDA
EBITDA Full Year 6 Months to June 6 Months to December $M FY16 FY15 Var Var % FY16 FY15 Var Var % FY16 FY15 Var Var % EBIT 38.7 32.3 6.4 20% 23.7 21.8 1.9 9% 15.0 10.6 4.5 42% Add back non-cash items: Amortisation 1.6 1.6 0.0 0.8 0.8 0.0 0.8 0.8 0.0 Depreciation 33.3 31.6 1.7 17.2 16.2 1.0 16.1 15.4
Slide 42: Balance Sheet
BALANCE SHEET As at As at $M JUNE 16 JUNE 15 VAR DEC 15 DEC 14 Var Equity 172.1 172.5 (0.4) 169.6 159.3 10.3 Non current liabilities 97.3 84.0 13.3 109.0 75.4 33.6 Current liabilities 64.4 61.8 2.6 49.1 66.4 (17.3) Total source of funds 333.8 318.3 15.5 327.7 301.1 26.6 Intangible assets and goodwil
Slide 43: Funds Employed
FUNDS EMPLOYED Average Funds Year end Funds $M JUNE 16 JUNE 15 VAR JUNE 16 JUNE 15 VAR Rentals New Zealand 118.7 115.2 3% 116.3 109.4 6% Australia 58.2 56.3 3% 53.6 52.4 2% USA 45.0 37.8 19% 48.1 44.2 9% Total Rentals 221.9 209.2 6% 218.0 205.9 6% Tourism Group 26.9 25.0 8% 27.6 22.1 25% Joint Ventu
Slide 44: Return on Funds Employed
RETURN ON FUNDS EMPLOYED Average Funds Year end Funds JUNE 16 JUNE 15 VAR JUNE 16 JUNE 15 VAR Rentals New Zealand 13.0% 10.6% 2.4% 13.2% 11.2% 2.0% Australia 11.6% 10.8% 0.8% 12.6% 11.6% 1.0% USA 27.7% 23.5% 4.2% 25.9% 20.1% 5.8% Total Rentals 15.6% 13.0% 2.6% 15.9% 13.2% 2.7% Tourism Group 37.1% 30
Slide 45: Gain on Fleet Vehicle Sales and Gross Profit
GAIN ON FLEET VEHICLE SALES AND GROSS PROFIT Full Year 6 Months to June 6 Months to December $M FY16 FY15 Var Var % FY16 FY15 Var Var % FY16 FY15 Var Var % Gain on sales of motorhome fleet before selling costs 13.5 11.6 1.9 17% 7.1 5.7 1.3 23% 6.5 5.8 0.7 12% Vehicle sales costs ($M) 4.6 3.3 1.3 40%
Slide 46: Fleet Size
FLEET SIZE RENTALS NZ RENTALS AUSTRALIA 2,200 1,450 1,400 2,000 1,350 1,800 1,300 1,250 1,600 1,200 1,400 1,150 1,100 1,200 1,050 1,000 1,000 JUNE 13 JUNE 14 JUNE 15 JUNE 16 JUNE 13 JUNE 14 JUNE 15 JUNE 16 RENTALS USA PROPORTION OF FLEET 700 650 600 35% 550 500 450 400 350 46% 300 19% 250 200 JUNE 1
Slide 47: Foreign Currency Movement
FOREIGN CURRENCY MOVEMENT • The movement in the New Zealand dollar (NZD) had some impact in the translation of earnings and debt. All overseas YEAR END FX RATE FY16 FY15 businesses have associated debt in the local currency, which partially hedges the NZD : AUD 0.9817 0.9048 currency movement impact
Slide 48: End
END 48