FY 2017 FULL YEAR RESULTS PRESENTATION: 22 AUGUST 2017 Disclaimer - - PowerPoint PPT Presentation

GROWING GLOBALLY

FY–2017

FULL YEAR RESULTS PRESENTATION: 22 AUGUST 2017

Disclaimer

• The information in this presentation, dated 22 August 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

FY17: Full Year Results Presentation

Important Note

FY17: Full Year Results Presentation

El Monte Acquisition

• The purchase of the El Monte RV Rental and Sales business in the USA was effective from 1 January 2017 and settled on 6 January 2017.
• Throughout this presentation we have shown the impact of the El Monte acquisition, where appropriate, to aid the understanding of the results.
• The peak season for El Monte is from July-September, and the half-year ending 30 June is predominately off-season, with corresponding low

profits.

• The financial impact of the El Monte acquisition on the results of the group in H2 of FY17 is:

General

• All financials in NZ dollars unless stated otherwise (throughout presentation).
• All comparisons are against prior corresponding period.
• The average NZD:AUD cross-rate (average of the 12 month rates) for FY17 was 0.9706 (FY16 0.9361).
• The average NZD:USD cross-rate (average of the 12 month rates) for FY17 was 0.7331 (FY16 0.6836).
• Return On Funds Employed (ROFE) is a non-Gaap measure that thl uses to measure performance of business units, and the Group, in relation to

the financial resources utilised. ROFE is calculated as EBIT divided by average monthly net funds employed. Net funds employed are measured as total assets, less non-interest bearing liabilities and cash on hand. The calculation is done in NZ dollars.

No.

OUR BUSINESS IS CONNECTING PEOPLE TO UNFORGETTABLE EXPERIENCES IN UNIQUE AND REMARKABLE PLACES AROUND THE WORLD.

FY17: Full Year Results Presentation

In FY17 we have progressed our strategy to become truly global and position ourselves as the largest RV rental operator in the world. We have balanced growth in our core business with new investments, in El Monte and Roadtrippers, to cement our place as the second largest RV rental operator in the USA. We have continued to invest in our digital services and sharing economy platforms, while continuing to grow our financial returns. We have achieved our goal of $30M NPAT,

• riginally targeted for FY19, and reset our new

target to $50M for FY20.

Financial Highlights

Revenue to

$341M

Up by 22%

Earnings before interest and tax

$47.7M

Up by 23%

Net profit after tax

$30.2M

Up by 24%

Return on average funds employed1

14.3%

Last year 15.1%

Earnings per share

25.6c

Up by 20%

Full year dividend

21cps(76% imputed)2

Up from 19cps (50% imputed)

FY17: Full Year Results Presentation

Trends

FY17: Full Year Results Presentation

228 237 279 308 33

FY14 FY15 FY16 FY17

REVENUE

23 32 39 48

FY14 FY15 FY16 FY17

EBIT

FY14 FY15 FY16 FY17

EBIT MARGIN

60 66 74 83 5

FY14 FY15 FY16 FY17

EBITDA

11 20 24 30 1

FY14 FY15 FY16 FY17

NPAT

FY14 FY15 FY16 FY17

GROUP ROFE

(Average Funds)

341 88

15.5% 16.7%

Financial Highlights

• Growth across all operating divisions

in operating currency.

• Strong growth in EBIT from Rentals
• NZ. Reflects flex-fleet and market

growth.

• Road Bear (USA) EBIT up 6% in USD,

but down $0.2M in NZD due to FX

• movement. El Monte EBIT ($33k) –

ahead of expectations.

• Group Services and Other costs up

$1.0M, including Mighway ($0.6M).

• JV & associates – strong growth in

Action Manufacturing and Just go,

• ffset by Roadtrippers losses.
• Interest increase mainly due to El

Monte acquisition.

NZD $M FY17 FY16 VAR

Operating revenue 340.8 278.9 61.9 Earnings before interest and tax 47.7 38.7 9.0 Operating profit before tax 43.7 36.5 7.2 Profit after tax 30.2 24.4 5.8 36.5 43.7 8.8 1.1 0.2 0.8 1.0 0.3 0.7 2.5

OPERATING PROFIT BEFORE TAX (NZD$M)

FY17: Full Year Results Presentation

Key Achievements FY17

Progress against our FY17 theme of ‘deliver’

FY17: Full Year Results Presentation

Organic growth

Delivered

• Summer flex fleet in NZ and AU

successful.

• Revenue growth of 10% from

existing business units.

• EBIT growth of 23%.

Inorganic growth

Delivered

• El Monte acquisition completed.
• Roadtrippers investment and JV

completed.

Mighway

Model Progressed

• NZ business well established, with
• ver 500 vehicles.
• USA pilot launched.

TCEx

Delivering results – more to come

• Telematics delivering in Australia.
• Tablet technology in all NZ and AU

vehicles.

• Ongoing product development with

Roadtrippers.

Technology

In progress & on track

• Booking system development

progressing well.

• Now fully cloud-based.
• First modules live.
• Full roll-out in FY18.

The fundamentals

Delivered & more to come

• Strong customer service metrics.
• Improvement in staff engagement.
• Health and safety programmes on

track and working well.

• Sustainability reporting

commenced.

• Governance in line with NZX code.

Return On Funds Employed

FY17: Full Year Results Presentation

Rentals NZ 18.3% 13.0% +5.3% Rentals Australia 11.8% 11.6% +0.2% Rentals USA – Road Bear 28.0% 27.7% +0.3% Total Rentals before El Monte 18.3% 15.6% +2.7% Rentals USA – El Monte (0.1%) Tourism Group 40.4% 37.1% +3.3% TOTAL GROUP 14.3% 15.1% (0.8%) TOTAL GROUP excl. El Monte 16.7% 15.1% +1.6%

• Continued growth in ROFE for all
• perating business units.
• El Monte reduces overall ROFE due

to half year of off-season earnings.

Dividend

FY17: Full Year Results Presentation

Final Dividend

11 cents

per share 100% imputed

+10%

• Current dividend is fully imputed,

due to available imputation credits. Ongoing dividends will return to a lower imputation rate, due to mix of earnings.

• This represents a payout ratio of

84% NPAT.

• Dividend will be eligible for Dividend

Reinvestment Plan, with issue price at a 2% discount from five day volume weighted share price after record date.

• Record date and DRP election date:

3 October 2017.

• Payment date: 16 October 2017.

5 7 9 10 6 8 10 11

FY14 FY15 FY16 FY17

Dividends

Interim Final

FY17 Full Year Dividend

21 cents

per share 76% imputed1

+11%

10.0 17.9 21.4 25.6

FY14 FY15 FY16 FY17

Earnings per share

Capital Expenditure

FY17: Full Year Results Presentation

• Gross CAPEX of $171M ($17M under buyback2).
• Net CAPEX $59M ($6M under buyback).
• FY17 net CAPEX in line with half-year forecast.
• El Monte net CAPEX $5M – 300 new fleet, sales ahead of expectations.
• Core net CAPEX of $35M.
• Flex fleet net CAPEX $19M.

25 50 75 100 125 150 175 200

FY14 FY15 FY16 FY17

Gross Capex $M

Core Flex El Monte

25 50 75 100 125 150 175 200

FY14 FY15 FY16 FY17

Fleet Sale Proceeds $M

Core Flex El Monte

10 20 30 40 50 60

FY14 FY15 FY16 FY17

Net Capex $M

Core Flex El Monte

Balance Sheet

FY17: Full Year Results Presentation

Net Debt

$176M

last year

$79M

• Net debt has increased, due to the El Monte

acquisition.

• At 30 June, Net Debt was lower, and

Debt:EBITDA higher, than the forecast ($185M, 2.0x) at the time of the interim results.

• We continue to remain comfortable with the

debt:EBITDA ratio at around 2.0x, within our Moody’s Baa guidelines.

• The forecast of Net Debt at 31 Dec 2017 is

~$200M and Debt:EBITDA of ~2.0x.

Debt : EBITDA1

1.9X

last year

1.4X

79 69 79 176 6 14 17 10 1.4 1.3 1.4 1.9

FY14 FY15 FY16 FY17

Net Debt

Net Debt LoC Debt:EBITDA

Funding

FY17: Full Year Results Presentation

• New $243M1 multicurrency syndicated facility in

place with existing bankers ANZ and Westpac - and HSBC joining syndicate in June 2017.

• Maturity of debt facilities is:
• August 2018

$50M

• February 2019

$135M

• February 2021

$58M

• Interest rate hedging in place for FY18, with

average notional principal covering 62% of currently drawn net debt.

Divisional Review

Divisional EBIT

44% 14% 22% 20%

EBIT before Group Services & Other

52% 21% 27%

Revenue by Geography

FY17: Full Year Results Presentation

Rentals NZ

FY17: Full Year Results Presentation

Growing positively in all aspects

• Very strong result, driven by increased

flex fleet, improved yield and improved vehicle sales contribution.

• Underpinned by strong rental demand

and a positive vehicle sales market.

• Lions Tour contributed approximately

$0.5M. Good off-season revenue was partly off-set by increased costs for vehicle preparation and higher than usual staffing levels.

• Peak fleet was ~7% up on the prior
• year. Improved utilisation and yield

lifted revenue growth to 18%.

• Fleet sales and purchases include 106

units under buy-back arrangement.

• Re-purposing of flex-fleet after the

peak season provided sales

• pportunity for Action Manufacturing.
• Positive vehicle sales market. Non-

fleet sales (new, trade-ins, retail accessories, service) contribution increased by over 30%.

Full Year

Rental income 80.7 68.4 12.3 18% Sale of goods 39.6 35.5 4.1 12% Costs (96.1) (88.5) (7.6) (9%) EBIT 24.2 15.4 8.8 57%

Vehicle Fleet

Rentals Australia

FY17: Full Year Results Presentation

Small steps forward

• 22% growth in AUD EBIT.
• Further progress in growing ROFE, but

still a work in progress.

• Successful introduction of summer flex-

fleet contributed to growth in yield and hire days. Utilisation of 4WD flex fleet for winter 2017 has been below expectations.

• Costs well controlled. Benefits of in-

sourcing and telematics has had a positive impact on costs, particularly R&M and accident damage.

• Good progress in development of

Melbourne RV Sales Centre. Significant increase in vehicle sales volumes.

• Fleet sales and purchases increases

reflect flex-fleet initiatives for both summer and 4WD (winter) fleet. Summer flex-fleet sales have progressed, though at a slower rate than planned. Higher fleet at 30 June, due mainly to 4WD.

Full Year

Rental income 58.0 55.9 2.1 4% Sale of goods 13.2 12.4 0.8 6% Costs (63.4) (61.5) (1.9) (3%) EBIT 7.8 6.8 1.0 15%

Full Year

Rental income 56.3 52.2 4.1 8% Sale of goods 12.8 11.6 1.2 10% Costs (61.4) (57.5) (3.9) (7%) EBIT 7.7 6.3 1.4 22%

Vehicle Fleet

Rentals USA – Road Bear

FY17: Full Year Results Presentation

Still delivering Investing in resource

• ROFE remains very strong at 28%.
• EBIT growth of 6% in USD. A

stronger NZD:USD exchange rate has resulted in a lower NZD result.

• As forecast, investment in head
• ffice resource and infrastructure, to

support the higher fleet, impacted EBIT margins. This is now in place, and opportunities for leverage of combined Road Bear and El Monte infrastructure and capability is the focus.

• Vehicle sales demand remains
• strong. Fleet sales were ahead of

expectations - and purchases lifted accordingly.

• Good demand for peak summer

2017 rentals, with fleet around 10% up; yield relatively flat.

Full Year

Rental income 29.6 27.9 1.7 6% Sale of goods 45.9 42.3 3.6 9% Costs (63.3) (57.8) (5.5) (10%) EBIT 12.2 12.4 (0.2) (2%)

Full Year

Rental income 21.7 19.1 2.6 14% Sale of goods 33.6 28.8 4.8 17% Costs (46.3) (39.4) (6.9) (17%) EBIT 9.0 8.5 0.5 6%

Vehicle Fleet

Rentals USA – El Monte

FY17: Full Year Results Presentation

A Good Beginning

• Overall ahead of original expectations, mainly due

to benefit of higher vehicle sales volume and margin.

• Vendor (Schork family) management has ensured a

smooth transition. thl GM – Matt Harvey, ex- Australian Rentals - in the market from July.

• Vehicle sales have performed ahead of

expectations - 354 sold, including 147 of the 182

• lder fleet. Margins have been ahead of

expectations.

• The sell-down of the older fleet represents a benefit
• f ~USD$1M, that is of a one-off nature.
• The average age of the remaining fleet is now 2.4

years, compared with 3.7 years at acquisition.

• Utilisation has improved as fleet reduced. Hire days

down on prior year by 5%. International rental demand is volatile, however domestic is growing.

• Operating costs well controlled and newer fleet

starting to impact R&M costs.

• Some cost synergies achieved, with labour,

property and procurement the focus in FY18.

Full Year1

Rental income 17.4 Sale of goods 16.9 Costs (34.3) EBIT 0.0

Full Year

Rental income 12.6 Sale of goods 11.6 Costs (24.2) EBIT 0.0

Vehicle Fleet

El Monte Scorecard Update

FY17: Full Year Results Presentation

Goal: Achieve 19% ROFE by FY20

EBIT ahead of forecast. Funds employed on forecast.

ROFE

Goal: Property synergies realised by July 2018

Property synergies targeted by July 2018. Labour synergies on track.

Synergies

Goal: 390 sales, including all inventory fleet, by Sept 2017

On track, including older inventory fleet.

Fleet Sales

Goal: CY EBIT of approximately US$6.6M for 2017

H2 FY17 EBIT up on target due to vehicle sales, but calendar likely to fall short up to 20% due to rental income. FY20 target remains.

2017 EBIT

Goal: Forecast debt at December 2017 of approximately $205M

Debt at 30 June below target. On track for December forecast.

thl Debt Forecast

Goal: Increase utilisation

Utilisation for H2 FY17 improved on pcp, though behind long-term goals.

Utilisation

An update on the longer term goals we set in December 2016

Tourism

FY17: Full Year Results Presentation

Waitomo strong, Kiwi Experience weak

• Waitomo achieved strong growth,

with visitor growth above total inbound visitor growth to NZ. Modest yield growth.

• Waitomo visitors - strong growth

from China, USA, South East Asia and UK (Lions).

• Improved performance from ancillary

business (F&B incl Homestead and retail). Expansion of main site retail successful.

• Kiwi Experience EBIT well below

expectations, due to impact of Kaikoura earthquake and softer volume from UK backpacker market.

Full Year

Revenue 39.9 36.3 3.6 10% Costs (29.2) (26.3) (2.9) (11%) EBIT 10.7 10.0 0.7 7%

Equity Investments

FY17: Full Year Results Presentation

Equity Investment Reporting

• These part-owned businesses are not

controlled by thl and are equity accounted. The results are not reported in the Earnings Before Interest and Tax (EBIT), and are not included in our core ROFE calculations. Action Manufacturing (50%)

• A record year, with high production volumes

for both motorhomes and specialist vehicles.

• Flex-fleet has lifted production volumes and

driven growth for repurposed vans.

• First production of ambulances for

Queensland Ambulance Service.

Action Manufacturing 3.1 1.7 1.4 82% Just Go 0.5 0.3 0.2 67% Roadtrippers (0.9) (0.9) Total 2.7 2.0 0.7 35%

Just go (49%)

• Result impacted by weaker GBP after Brexit,

but strong growth through increased fleet and vehicle sales.

• Good progress, with a growing fleet and an

increase in vehicle sales capability and volumes. Roadtrippers (23% USA, 50% Australasia)

• Roadtrippers losses arise from current

development phase.

• Positive progress in relation to our goal of

connecting RV customers on the road.

Group Support Services & Other

FY17: Full Year Results Presentation

• This segment includes Group Support

Services and Mighway.

• The Mighway pre-tax loss for the year

was $1.9M (FY16 $1.3M).

• Good progress with Mighway NZ,

growing owners fleet to over 500

• vehicles. In the peak season, the

business briefly achieved a cashflow positive position. Key resourcing and platform is in place to leverage moving forward, including USA expansion.

• USA pilot under way. Good owner

acquisition, but demand generation slow to start.

• Group Support Services includes a net

loss of $0.4M related to one-offs:

• Transaction costs El Monte/

Roadtrippers $1.7M

• Profit on sale of GeoZone $1.3M

Revenue 0.6 0.3 0.3 100% Costs (7.8) (6.2) (1.6) (26%) EBIT (7.2) (5.9) (1.3) (22%)

FY18 Focus

Strategic Imperatives

Continue to build the base business Leverage the RV eco-system Innovate with technology Do so sustainably

FY17: Full Year Results Presentation

Key Focus for FY18

FY17: Full Year Results Presentation

Complete USA pilot and assess the next phase. Grow the NZ customer base. Grow the owner integration model.

Mighway

Implement the new generation booking and billing system and ERP system globally. Develop telematics. Complete and trial the EV prototype.

Technology

Deeper customer engagement through technology.

Customer

Further expand retail and ancillary options for low capital growth.

RV Ecosystem

Deliver to our materiality topics (refer sustainability report).

Sustainability

Progress the plan to integrate the business, renew the fleet and proposition and lift ROFE.

El Monte

Leverage growth opportunities, continue flex fleet & operational focus.

Core Business

Ongoing review of three-year growth plans for all investments.

Joint Ventures

Sustainability

• At the heart of the business is a responsible tourism operator.
• For FY17, we are releasing our first annual sustainability report under GRI standards, which we

encourage you to read.

• Our sustainability pillars are:
• And our focal points for sustainability are:

Emissions & Climate Change Shareholder Satisfaction Crew & Staff Responsible Travel Positive Communities

FY17: Full Year Results Presentation

Outlook

Visitor Forecasts

4.8% annual growth in international visitors 2017-2023

Ministry of Business, Innovation and Employment

5.8% annual growth in international visitors 2017-2027

Tourism Research Australia

3.3% annual growth in international visitors 2016-2021

US Department of Commerce

New Zealand Australia USA A positive demand environment is forecast.

FY17: Full Year Results Presentation

Capital Expenditure FY18

FY17: Full Year Results Presentation

• Gross CAPEX for FY18 forecast at approximately $200M. Most of growth on FY17 relates to El Monte,

as we progress the reduction in the age of the fleet.

• Fleet vehicle sales forecast at $160M. Most of increase from El Monte and Road Bear.
• Net CAPEX forecast at $40M. Reduction on FY17 due to Road Bear, El Monte and Rentals Australia.

73 92 126 171 200

FY14 FY15 FY16 FY17 FY18 forecast

Gross CAPEX $M

61 62 81 112 160

FY14 FY15 FY16 FY17 FY18 forecast

Fleet Sales Proceeds $M

12 30 45 59 40

FY14 FY15 FY16 FY17 FY18 forecast

Net CAPEX $M

Outlook and Guidance

Macro-Environment

• The macro-environment for tourism remains

positive, particularly in New Zealand.

• We are monitoring geo-political risks, particularly

around the USA.

• We are mindful of the risk of new competitors

and the growth of fleet of existing competitors, but do not currently have significant concerns.

• The vehicle sales outlook remains positive,

particularly in the USA.

• The stronger NZD:USD cross rate will likely

have a negative year-on-year impact on USD earnings in the 2017 calendar peak season.

Profit Guidance

• Long-term target is $50M NPAT by FY20.
• FY18 forecast in the range of $36M-$39M.
• An update on guidance will be provided at the

Annual Meeting in October, when there is more visibility of the peak season for NZ and Australia, and progress at El Monte is more advanced.

$36M-$39M

NPAT FY18

FY17: Full Year Results Presentation

Corporate Governance

• Have adopted NZX Corporate Governance Code early.
• Board gender diversity: four female, two male directors.
• Focus on gender diversity in the wider business.
• Increased sustainability focus.
• Risk focus includes cyber-security, data privacy and health & safety.

Annual Meeting:

• Date: 2pm Wednesday 18 October 2017.
• Venue: Heritage Hotel, Auckland and online.

FY17: Full Year Results Presentation

Supporting Analysis

Bridge to December Forecast

FY17: Full Year Results Presentation

Existing Business at Dec 20161 32.1 29.2 2.9 Mighway USA (0.3) (0.2) (0.1) Roadtrippers USA (0.7) (0.4) (0.3) Total pre-one-offs & El Monte 31.1 28.6 2.5 El Monte trading 0.0 (0.7) 0.7 El Monte funding2 (1.0) (1.0)

• Transaction Costs3

(1.2) (1.1) (0.1) Profit on sale of Geozone 1.3 1.2 0.1 Group NPAT 30.2 27.0 3.2

• Strong trading result for Rentals NZ

lifted ‘existing business’ contribution.

• El Monte achieved improved vehicle

sales contribution.

Income Statement Summary

FY17: Full Year Results Presentation

Revenue

FY17: Full Year Results Presentation

Divisional Review

FY17: Full Year Results Presentation

• 51.0

• (0.4)
• thl 100% owned entities

EBIT Margin

FY17: Full Year Results Presentation

EBITDA

FY17: Full Year Results Presentation $M FY17 FY16 Var Var % FY17 FY16 Var Var % FY17 FY16 Var Var % EBIT 47.7 38.7 9.0 23% 29.0 23.7 5.3 22% 18.7 15.0 3.7 25% Add back non-cash items: Amortisation 1.5 1.6 (0.1) 0.7 0.8 (0.1) 0.8 0.8 0.0 Depreciation 38.3 33.3 5.0 22.0 17.2 4.8 16.3 16.1 0.2 EBITDA 87.5 73.6 13.9 19% 51.7 41.7 10.0 24% 35.8 31.9 3.9 12% Full Year 6 Months to June 6 Months to December

Balance Sheet

FY17: Full Year Results Presentation

Funds Employed

FY17: Full Year Results Presentation

$M FY17 FY16 VAR JUN 17 JUN 16 VAR Rentals New Zealand 131.7 118.7 11% 122.2 116.3 5% Australia 66.2 58.2 14% 68.5 53.6 28% USA - Road Bear 43.7 45.0 (3%) 48.2 48.1 0% USA - El Monte 51.0 89.6 Total Rentals 292.5 221.9 32% 328.4 218.0 51% Tourism Group 26.6 26.9 (1%) 25.6 27.6 (7%) Joint Venture 4.8 4.9 (1%) 6.6 3.6 83% Associates 9.0 4.0 126% 10.8 3.4 217% Group Support Services 3.3 (1.6) (304%) (1.1) (1.4) (21%) Total Net Funds Employed 336.3 256.0 31% 370.3 251.1 47% Excluding El Monte 285.3 256.0 11% 280.7 251.1 12% Average Funds Year end Funds

Gain on Vehicle Sales and Gross Profit

FY17: Full Year Results Presentation

• costs. This was required following the El Monte transaction, and it is considered more meaningful to group all R&M costs under operating expenses.

• 11%

• 21%

• 10%

• 13%

• 6%

Thank you