Release Date: August 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Sales revenue increased by 17% to $127 million, the highest level since the onset of the pandemic.
- Underlying EBITDA improved by 27% to $14.4 million, showcasing strong operational performance.
- Skydiving segment saw a significant recovery with volumes up 27% versus PCP.
- Adventure Experiences segment remained the largest contributor to group earnings, demonstrating resilience.
- Cash and cash equivalents ended the financial year at $8.2 million, indicating a healthy balance sheet.
Negative Points
- Reported loss before tax was $2 million, including $1.4 million of net costs related to non-ordinary activities.
- Premium Adventure segment experienced a disappointing year due to softness in walking and premium lodging divisions.
- Significant weather impacts, including Tropical Cyclone Jasper and record rainfalls, affected operations.
- Net debt increased to $8.9 million, partly due to drawdowns for organic growth projects.
- Domestic cost-of-living pressures are impacting domestic volumes in Australia, particularly in the Skydiving segment.
Q & A Highlights
Q: In regards to the strategic review, is this open-ended or is there a timeline in mind for when that will come to an end?
A: (John O'Sullivan, CEO) We will update the market when we think it's appropriate. We don't see this as a process in perpetuity, but we will provide updates when necessary.
Q: Can you provide insights into the operating leverage and scope for the Adventure Experiences segment?
A: (John O'Sullivan, CEO) We are pleased with Reef Unlimited's performance despite weather impacts. Treetops Adventure has been consistent, but we need to work on increasing dwell time and ancillary spend per customer. Wild Bush Luxury saw a reversal in outbound travel trends in July, which is encouraging.
Q: What is the outlook for the Skydiving business, particularly in New Zealand and Australia?
A: (John O'Sullivan, CEO) New Zealand is performing well with high average revenue per customer. Australia is growing but not as quickly, impacted by macroeconomic conditions and slower return of the Chinese market. Backpacker market recovery is at 70% of FY19 levels.
Q: Can you clarify the lease costs and CapEx intentions?
A: (Gavin Yates, CFO) Lease liabilities include $3 million under AASB16 and payouts of historical asset finance leases. CapEx is tightly controlled and expected to be similar to last year, focusing on organic growth projects like the new Treetops Canberra site.
Q: What are the average loads per plane and capacity in the Skydiving segment?
A: (Gavin Yates, CFO) In Australia, the average load is around 4.7, with some sites like Wollongong closer to seven. In New Zealand, it's closer to seven. The capacity of planes is typically around nine, but this varies across peak and off-peak periods.
Q: What is the margin on incremental revenue for new passengers in the Skydiving segment?
A: (Gavin Yates, CFO) The margin on incremental revenue is reasonably high, around 40% to 50%, after backing out variable costs.
Q: Are there any risks associated with tactical pricing strategies?
A: (John O'Sullivan, CEO) Tactical pricing depends on the customer market in each location. For example, North Queensland responded well to tactical pricing. We also use weekday versus weekend pricing to mitigate risks.
Q: Are you hearing anything positive about the return of Chinese tourists to Australia?
A: (John O'Sullivan, CEO) The sentiment is positive, but Australia is seen as an expensive destination. Short-haul travel is more prevalent for Chinese tourists currently. However, aviation capacity is recovering, which is a positive indicator.
Q: Do you think the Chinese market will recover to pre-COVID levels?
A: (John O'Sullivan, CEO) Yes, in the longer term, we expect the market to recover. There is still strong appetite for adventure and marine-based experiences among Chinese tourists.
Q: What are your thoughts on the company's current structure and the strategic review?
A: (John O'Sullivan, CEO) We are looking at various options through the strategic review. We acknowledge the need to improve margins and are committed to delivering better shareholder value.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
