Bright Horizons Delivering on the Plan FY17: Interim Results - - PowerPoint PPT Presentation

Bright Horizons Delivering on the Plan

FY17: Interim Results Presentation

21 February 2017

DISCLAIMER

The information in this presentation dated 21 February 2017 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 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. This presentation does not take into account any specific investors objectives, and does not constitute financial or investment

• advice. Investors are encouraged to make an independent assessment of thl.

The information contained in this presentation should be read in conjunction with thl’s latest financial statements, which are available at: www.thlonline.com

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110 111 134 146 FY14 FY15 FY16 FY17

H1 REVENUE

H1 FY17 FINANCIAL HIGHLIGHTS

REVENUE

$146M

UP

9%

EARNINGS BEFORE INTEREST AND TAX

$18.7M

UP

25%

INTERIM DIVIDEND

10cps (50% imputed)

UP FROM

9cps (50% imputed)

All financials in NZ Dollars unless stated otherwise (throughout presentation) All comparisons are against prior corresponding period

NET PROFIT AFTER TAX

$11.3M

UP

38%

2.5 5.6 8.2 11.3 FY14 FY15 FY16 FY17

H1 NPAT

+9% +20% +1% +38% +45% +129%

3

FINANCIAL HIGHLIGHTS

• NPAT growth of 38%.
• Rentals NZ achieved $3.7M EBIT, an

increase of $3.7M on the pcp.

• Tourism EBIT growth of $1.0M or 30% on

the pcp.

• Rentals Australia 5% rental income

growth, 28% EBIT growth on a constant currency basis.

• Growth in the underlying US Rentals

EBIT of 7%. In NZD terms EBIT is down 2% due to the stronger exchange rate.

• Group and Other costs were up $1.3M,

due to the ongoing investment in the Mighway and GeoZone new initiatives. NZD $M H1 FY17 H1 FY16 VAR VAR %

Operating revenue 146.0 133.7 12.3 9% Earnings before interest and tax* 18.7 15.0 3.7 25% Operating profit before tax 17.7 13.7 4.0 29% Profit after tax 11.3 8.2 3.1 38%

* EBIT excludes joint venture and associates earnings

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H1 FY17 GROWTH INITIATIVE HIGHLIGHTS

El Monte

Purchase of the second largest RV rental business in the USA completed on 6 January. Synergies in fleet and

• perations to be realised
• ver next three years.

Roadtrippers

Purchased 22.5% of Roadtrippers USA, the leading US road trip travel app provider. GeoZone sold into Roadtrippers Australasian JV.

Mighway

Operating successfully across NZ summer peak. Commitment to launch in North America, with West Coast USA focus from Q1 2017 calendar year.

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BALANCE SHEET

NET DEBT DEC 2016

$103M

LAST YEAR

$90M

JUNE 2017 FORECAST

$185M

• Net debt at 31 December 2016 was

$103M, up $13M on 31 December 2015.

• Increase in debt on prior year is due

to the lift in flex fleet, to be turned

• ver in less than 18 months. As at 31

Dec, Net Book Value of flex fleet in NZ and Australia to be sold within six months is ~$26M, up $16M on FY16.

• The purchase of El Monte lifts

forecast debt levels to ~$200M.

• Debt:EBITDA forecast at 2.0x

remains below market comparators and within our target Moody’s Baa guidelines.

DEBT:EBITDA

1.4X

LAST YEAR

1.3X

JUNE 2017 FORECAST

2.0X

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DIVIDEND

INTERIM DIVIDEND

10 cents

Per Share – 50% Imputed

UP

11%

• Interim dividend of 10 cents per share

imputed to 50%.

• Sustaining dividends over the longer

term remains a key focus for the business.

• Key dates:
• Ex-date

31 March 2017

• Record date

3 April 2017

• Payment date 13 April 2017
• A Dividend Reinvestment Plan, to

provide a cost effective means for shareholders to reinvest dividends, will be introduced for the interim dividend payment.

• The issue price will be based on the 5

day volume weighted share price following the record date, less a 2% discount.

• Details of the plan will be sent to

eligible shareholders in early March.

*Dividends imputed to 50% from FY14 Final Dividend

INTERIM DIVIDEND PER SHARE*

+40% +29% +11%

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DIVISIONAL REVIEW

8

DIVISIONAL EBIT

9

; $M

DEC 16 DEC 15 VAR VAR %

thl Rentals New Zealand 3.7 0.0 3.7 N/a Australia 5.6 4.7 0.9 19% USA 9.6 9.8 (0.2) (2%)

Total Rentals

18.9 14.5 4.4 30% Tourism Group 4.3 3.3 1.0 30% Total operating divisions 23.2 17.8 5.4 30% Group Support Services & Other (4.1) (2.8) (1.3) (46%) EBIT before non-recurring Items 19.1 15.0 4.1 27% Non-recurring Items Profit on Geozone Sale 1.3 1.3 Transaction Costs - El Monte Acquisition (1.6) (1.6) EBIT 18.7 15.0 3.7 25% Split Australia 5.6 4.7 0.9 19% USA 9.6 9.8 (0.2) (2%) NZ 3.5 0.5 3.0 600% Total EBIT 18.7 15.0 3.7 25%

6 Months to December

RENTALS NZ

Strong H1 Performance

• Rentals NZ has achieved a strong

result, achieving a $3.7M profit, in what has historically been a loss- making half.

• Rental income growth of 16% was

achieved through increased flex fleet, improved utilisation and yield growth.

• Costs well controlled, resulting in

improved EBIT margin.

• The RV Super Centres (retail and

service) in Auckland and Christchurch have continued to grow the contribution from non-fleet sales and

• service. The growth in contribution

(revenue less cost of sales) was 78%.

• Demand for motorhome sales remains
• strong. The lower fleet sales

compared with last year reflects the lower volume of ex-fleet vehicles available for sale.

• Flex fleet for summer has lifted peak

fleet by approximately 7% over last year.

Half Year NZD $M H1 FY17 H1 FY16 VAR % Rental income 30.8 26.5 4.3 16% Sale of goods 18.6 16.3 2.3 14% Costs (45.7) (42.8) (2.9) (7%) EBIT 3.7 0.0 3.7 n/a Vehicle Fleet Units: H1 FY17 H1 FY16 VAR % Opening Fleet July 1,740 1,787 (47) Fleet Sales (206) (219) 13 (6%) Fleet Purchases 640 470 170 36% Closing Fleet Dec 2,174 2,038 136 7%

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Vehicle Fleet Units: H1 FY17 H1 FY16 VAR % Opening Fleet July 1,323 1,297 26 2% Fleet Sales -External (150) (159) 9 6% Fleet Sales -Buybacks (105) (105)

Fleet Purchases 348 172 176 102% Closing Fleet Dec 1,416 1,310 106 8% Half Year

AUD $M H1 FY17 H1 FY16 VAR % Rental income 29.6 28.1 1.5 5% Sale of goods 5.7 5.5 0.2 4%

Costs (29.8) (29.3) (0.5) (2%) EBIT 5.5 4.3 1.2 28%

RENTALS AU

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Continued Progress

• The Rentals Australia business has

made further progress in H1, growing EBIT by 28% in AUD terms.

• The 4WD buy-back arrangement

worked well, lifting returns on the pcp.

• Rental income growth of 5% in AUD

arose from some fleet growth and yield growth.

• Vehicle sales have met volume

expectations, with improved average margin. The volume of retail fleet sales through the Melbourne RV Sales Centre (launched FY16) is growing.

• Telematics units have contributed to

good cost control.

• The increase in fleet purchases

reflects summer flex fleet, which have lifted peak summer fleet by 8%. Core fleet purchases were flat

• n the prior year.

Half Year NZD $M H1 FY17 H1 FY16 VAR % Rental income 30.3 30.3 0.0 0% Sale of goods 5.9 5.9 0.0 0% Costs (30.6) (31.5) 0.9 3% EBIT 5.6 4.7 0.9 19%

Half Year USD $M H1 FY17 H1 FY16 VAR % Rental income 13.1 11.3 1.8 16% Sale of goods 18.2 15.3 2.9 19% Costs (24.2) (20.0) (4.2) (21%) EBIT 7.1 6.6 0.5 7%

RENTALS USA – ROAD BEAR

Continued Growth & Strong ROFE

• EBIT growth of 7% has been achieved

in USD terms. A stronger NZD:USD exchange rate (0.74 FY17 vs 0.67 FY16) has resulted in a lower NZD EBIT result.

• As expected, EBIT margin is down due

to investment in head office resource and infrastructure to facilitate growth.

• Summer 2016 saw good growth in

rental income. To date, summer 2017 bookings support a positive rental

• utlook.
• Vehicle sales demand remains strong.

US RV industry motorhome shipments were up 16% for the year to November 2016.

• Road Bear sold 52 additional units

(+16%) in H1 compared with last year.

• Lower fleet purchases in H1 is a timing

difference, with later delivery of new season fleet in FY17 than the prior year.

Vehicle Fleet Units: H1 FY17 H1 FY16 VAR % Opening Fleet July 698 613 85 14% Fleet Sales (373) (321) (52) 16% Fleet Purchases 10 155 (145) (94%) Closing Fleet Dec 335 447 (112) (25%) Half Year NZD $M H1 FY17 H1 FY16 VAR % Rental income 17.8 16.9 0.9 5% Sale of goods 24.7 22.7 2.0 9% Costs (32.9) (29.8) (3.1) (10%) EBIT 9.6 9.8 (0.2) (2%)

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TOURISM GROUP

Leveraging Tourism Demand

• Customer growth has exceeded YTD

inbound holiday visitor arrivals growth (15%).

• The retail space at the Glowworm

Caves was expanded early in the year and has seen improved retail performance across the peak period.

• The Waitomo Caves Homestead has

now been open for a year. First season financial results are ahead of plan.

Half year NZD $M H1 FY17 H1 FY16 VAR % Revenue 17.7 15.1 2.6 17% Costs 13.4 11.8 (1.6) (14%) EBIT 4.3 3.3 1.0 30%

13

GROUP SUPPORT SERVICES AND OTHER

Investment in Growth

• Costs before non-recurring items

increased by $1.5M, mainly due to the Mighway and GeoZone new initiatives.

• Mighway is in its first full peak season,

following last year’s limited trial. Growth

• f the owner base has been positive,

with over 400 owners registered. Summer rental demand is meeting

• expectations. This start-up remains in a

loss-making position ($1.0M EBIT loss YTD).

• Note that revenue reported for Mighway

is the net revenue retained after sharing with owners and managers (for managed rentals).

• The profit on sale of the GeoZone

business to Roadtrippers was $1.3M

• Transaction costs related to the El

Monte and Roadtrippers investments were $1.6M.

Half year NZD $M H1 FY17 H1 FY16 VAR % Revenue 0.3 0.1 0.2 200% Costs (4.4) (2.9) (1.5) (51%) EBIT before non-recurring items (4.1) (2.8) (1.3) (46%) Profit on sale of GeoZone 1.3 1.3 Transaction costs (1.6) (1.6) EBIT after non-recurring items (4.4) (2.8) (1.6) (57%)

14

JOINT VENTURES AND ASSOCIATES

Action Manufacturing

• Action Manufacturing Net Profit

Before Tax is up strongly on FY17 due mainly to higher motorhome build volumes, including flex fleet.

• The specialist vehicle manufacturing

division has a strong pipeline of new business, including the first ambulances for the Australian market.

Just Go (UK)

• Just Go enjoyed a successful

summer season, with a fleet that was increased by 30% on the prior year.

• Good progress has been made on

developing vehicle sales capability.

Roadtrippers

• The Roadtrippers results reflect the

equity accounted losses for November and December for Roadtrippers USA, and a small December loss for the Roadtrippers Australasian JV.

Share of Profit/Loss NZD $M H1 FY17 H1 FY16 VAR % Joint Ventures (50%) Action Manufacturing 1.24 0.89 0.35 39% Roadtrippers Australasia (0.01) 1.23 0.89 0.33 37% Associates Just Go (49%) 0.34 0.14 0.20 143% Roadtrippers USA (22.5%) (0.16) (0.16) GeoZone (0.02) 0.02 0.18 0.12 0.06 50%

15

FY17 PROGRESS & OUTLOOK

16

EL MONTE UPDATE

• January was the first month of ownership and the

transition has been smooth.

• Immediate focus is on the sale of older fleet and fleet

management.

• The fair value accounting for the purchase is not yet

complete due to working capital adjustments yet to be completed.

• The 3.4M shares issued as part consideration were fair

valued at the date of acquisition. $1.5M of goodwill has arisen as a result, due to an upward movement in the share price from that agreed at the time of the negotiation of the purchase price.

El Monte Acquisition Provisional Accounting Fair Value NZD $M Cash 78.5 thl shares issued 12.5 Total consideration 91.0 Fixed assets 62.6 Inventory – including vehicles held for sale 5.4 Other current assets 3.8 Goodwill 23.7 Current liabilities (4.5) Total Net Assets Acquired 91.0

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FOCUS FY17

ORGANIC GROWTH

• Flex fleet in NZ and AU

Rentals.

• Increased fleet in US

for summer 2016.

• Ongoing leverage of inbound

tourism at Waitomo and Kiwi Experience. INORGANIC GROWTH

• Ongoing search for value

accretive opportunities that leverage our global RV and NZ tourism capability. MIGHWAY

• Scale up NZ fleet for summer.
• Prove scalability of the model.
• Explore US market if NZ

market model is proven.

• Disciplined approach to each

stage of financial commitment.

• Flex fleet for summer in NZ

and AU on fleet as planned and rental volumes are meeting expectations.

• USA 2016 summer peak fleet

was up ~15%.

• Waitomo and Kiwi benefiting

from YTD inbound holiday arrivals growth of 15%.

• Acquisition of owners in NZ is

progressing well and summer rental volumes are meeting expectations.

• USA trial with focus on West

Coast has commenced.

Half year progress report

• El Monte purchase completed
• n 6 January 2017. Lifts thl to

second largest USA RV rental

• perator.
• Sale of GeoZone, purchase of

22.5% of Roadtrippers USA and formation of JV with Roadtrippers in Australasia gives global scale to trip planning and in-trip tablet

• ffering.

FY17 Goals The internal theme for FY17 is ‘DELIVER’

18

FOCUS FY17

• Platform in all NZ and AU

vehicles for summer.

• Ongoing development of the

tablet functionality in conjunction with Roadtrippers. TCEX

• Complete development
• f the digital platform including

content and transactional functionality.

• Customer satisfaction metrics

tracking well across peak season.

• Awarded ACC tertiary

workplace safety status in NZ in January 2017. THE FUNDAMENTALS

• Continue the focus on delivering

unforgettable experiences.

• Maintain a safe and healthy

environment for staff and customers.

• Develop an engaged, skilled

workforce that delivers unforgettable customer experiences.

• Development is progressing

well, with key functionality at prototype stage. TECHNOLOGY INVESTMENT

• Update core rentals booking,

billing and scheduling systems to create benefits in yield and utilisation.

The internal theme for FY17 is ‘DELIVER’ FY17 Goals Half year progress report

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FY17 CAPITAL EXPENDITURE

• Gross capital expenditure forecast now at ~$175M for FY17 including $20M related to El Monte new season fleet

purchases.

• Excluding El Monte, 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 ~$50M relates mainly to Rentals NZ and AU flex fleet ($27M), Road Bear ($3M)

and El Monte fleet ($20M).

• Vehicle sales proceeds is now forecast at ~$118M, $37M up on FY16, mainly due to increased flex fleet sales for Rentals

NZ and AU ($26M) and El Monte fleet sales ($13M), offset by lower NZ/AU core fleet sales.

• Net capital expenditure is forecast at ~$57M, up ~$10M on last year with El Monte adding $7M.

20 * Note: CAPEX reported includes vehicles purchased and sold under buyback arrangements.

NZ$M NPAT FY17 Forecast FY16 Actual Existing Business1 29.2 24.4 Mighway USA and Roadtrippers investments (0.6) Total pre one offs and El Monte 28.6 24.4 El Monte Impact (including funding)2 (1.7) Group NPAT before one offs 26.9 24.4 Transaction Costs3 (1.1) Profit on sale of Geozone business 1.2 Total thl NPAT 27.0 24.4

GROUP OUTLOOK UPDATE – FULL YEAR

Note 1: Businesses owned prior Roadtrippers and El Monte transactions. Includes GeoZone, Mighway (NZ). Note 2: Loss in FY17 H2 for El Monte primarily due to the low season. Note 3: Net of tax (certain transaction costs are deductible in the USA).

• Outlook for the full year is unchanged

from the guidance provided in December.

• We continue to drive the business to

exceed this target.

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SUPPORTING ANALYSIS

22

INCOME STATEMENT SUMMARY

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$M

FY17 FY16 Var Var %

Revenue from services 96.8 88.8 8.0 9% Revenue from sale of fleet 49.2 44.9 4.3 10% Total revenue 146.0 133.7 12.3 9% Costs 110.2 101.8 (8.4) (8%) EBITDA 35.8 31.9 3.9 12% Depreciation & amortisation 17.1 16.9 (0.2) (1%) EBIT 18.7 15.0 3.7 25% Interest (2.4) (2.3) (0.1) 4% Share of Joint Ventures 1.2 0.9 0.4 33% Share of Associates 0.2 0.1 0.0 34% Profit before taxation 17.7 13.7 4.0 29% Taxation (6.4) (5.5) (0.9) (16%) Profit attributable to thl shareholders 11.3 8.2 3.1 38% Basic EPS

9.7 7.2 2.5 35%

6 Months to December

REVENUE

24

$M

FY17 FY16 VAR

thl Rentals - Rental Revenue New Zealand 30.8 26.5 16% Australia 30.3 30.3 0% USA 17.8 16.9 5% 78.9 73.7 7% thl Rentals - Sale of Goods New Zealand 18.6 16.3 14% Australia 5.9 5.9 (1%) USA 24.7 22.7 9% 49.2 44.9 10% Tourism Group 17.6 15.1 17% Other 0.3 0.1 436% Total Revenue 146.0 133.7 9% Split Australia 36.2 36.2 0% USA 42.5 39.6 7% NZ and other 67.3 57.9 16% 146.0 133.7 9% Revenue Split Sale of Services 96.8 88.8 9% Sale of Goods 49.2 44.9 10% 146.0 133.7 9% 6 Months to December

DIVISIONAL REVIEW

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DIVISIONAL AVE FUNDS OPERATING DIVISIONAL AVE FUNDS OPERATING

$M

REVENUE EBIT EMPLOYED CASHFLOW* REVENUE EBIT EMPLOYED CASHFLOW*

Rentals New Zealand 49.4 3.7 125.0 (23.5) 42.8 0.0 111.8 (17.8) Rentals Australia 36.2 5.6 63.5 (1.9) 36.2 4.7 59.8 1.9 Rentals USA 42.5 9.6 37.8 25.1 39.6 9.8 37.5 8.9 Tourism Group 17.6 4.3 26.6 5.5 15.1 3.3 25.1 4.9 Group Support Services/Other 0.3 (4.1) (1.5) (5.8) 0.1 (2.8) 1.4 (6.9) Non-recurring Items

• (0.4)
• (0.3)
• thl 100% owned entities

146.0 18.7 251.4 (0.9) 133.7 15.0 235.6 (9.0) Joint Ventures 1.2 3.6 0.9 5.3 Associates 0.2 5.3 0.1 4.4 Group Total 146.0 20.1 260.3 (0.9) 133.7 16.0 245.3 (9.0) * Operating cashflow includes the sale and purchase of rental assets.

Six Months Ended 31 December 2016 Six Months Ended 31 December 2015

EBITDA

$M

FY17 FY16 Var Var %

EBIT 18.7 15.0 3.7 25% Add back non-cash items: Amortisation 0.8 0.8 0.0 Depreciation 16.3 16.1 0.2 EBITDA 35.8 31.9 3.9 12%

6 Months to December

26

BALANCE SHEET

$M DEC 16 DEC 15 Var Equity 174.7 169.6 5.1 Non current liabilities 127.9 109.0 18.9 Current liabilities 61.8 49.1 12.7 Total source of funds 364.4 327.7 36.7 Intangible assets and goodwill 20.2 20.9 (0.7) Investments in associates and joint ventures 16.2 3.8 12.4 Non current assets 254.1 249.2 4.9 Current assets 73.9 53.8 20.1 Total use of funds 364.4 327.7 36.7 Net debt position 103.0 90.4 12.6 Net tangible assets (NTA) 154.5 148.7 5.8 NTA per share $1.33 $1.31 Book value of net assets per share $1.51 $1.49 Debt / debt + equity ratio (net of Intangibles) 40% 38% Equity ratio (net of Intangibles) 45% 48% AUD exchange rate at period end 0.9868 0.9563 USD exchange rate at period end 0.7161 0.7002 As at

27

GAIN ON FLEET VEHICLE SALES AND GROSS PROFIT

Real depreciation (the difference between original cost and sale price) rates are within ranges: NZ ~7% AU ~9% US <0%

28

$M

FY17 FY16 Var Var %

Gain on sales of motorhome fleet before selling costs 7.1 6.5 0.6 10% Vehicle sales costs 2.3 2.1 0.2 9% Gain on sales of motorhome fleet after selling costs 4.9 4.4 0.5 10% Gross profit on non-fleet vehicle and accessory sales 1.1 0.6 0.5 78% Reported gross profit 5.9 5.0 0.9 18% Average gain on sale ($000) after selling costs

6.7 6.4 0.2 3% Fleet motorhomes sold (incl writeoffs) AU 150 145 5 3% NZ 206 218 (12)

• 6%

US 373 321 52 16% Total fleet motorhomes sold (units) 729 684 45 7% Fleet motorhomes at period end AU 1,416 1,310 106 8% NZ 2,174 2,038 136 7% US 335 447 (112)

• 25%

Total fleet motorhomes 3,925 3,795 130 3%

6 Months to December

END

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