Release Date: August 27, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Tourism Holdings Ltd (ASX:THL, Financial) reported an underlying profit after tax of $51.8 million, within the guidance range.
- Record EBIT results were achieved for New Zealand rentals & sales, action manufacturing, and the New Zealand tourism businesses.
- The company declared a final dividend of $0.05 per share, bringing the full-year dividend to $0.095 per share.
- Tourism Holdings Ltd (ASX:THL) successfully refinanced its banking facility, increasing capacity from $250 million to $475 million with better covenants and pricing.
- The company is focused on cost efficiencies and merger synergies, which are expected to positively impact future performance.
Negative Points
- Statutory net profit was $39.4 million, impacted by a $12.4 million impairment for the UK and Ireland divisions.
- Returns on funds employed declined, reflecting the challenging economic situation.
- The goal of achieving a $100 million net profit after tax by FY26 is now considered unlikely.
- The USA and Canadian businesses reported disappointing results, with the USA market described as particularly tough.
- The UK and Ireland divisions faced significant challenges, including vehicle supply issues and increased insurance costs, leading to a concerning result.
Q & A Highlights
Q: Can you give us a sense of how you see the RevPARV outlook in each market for FY25?
A: We've provided the best commentary we can at this point. We still see RevPARV growth into FY25, with hire days growth and peak season yields coming back. The growth rate is slowing, but we don't expect it to go backwards.
Q: How will the changes in depreciation rates impact the difference between RDRs and actual depreciation rates over time?
A: We expect efficiencies in procurement and manufacturing to improve historic rates. Actual depreciation rates are likely to be closer to pre-COVID levels, but not as high as previous RDRs due to inherent efficiencies.
Q: Can you clarify what you mean by full fleet rotation in Canada and the US?
A: It refers to transitioning from high-priced 2023 vehicles to more cost-effective models. This involves detailed analysis of vehicle types, build prices, and content to maximize returns. The realization of this will take about three years.
Q: Can you update us on the refinancing and where things stand relative to covenants?
A: We've secured more funds with better terms, including more favorable covenants and better pricing. Our metrics are still improving, thanks to the efforts of our team.
Q: What are your expectations for gross CapEx for the year?
A: Gross CapEx will be less than last year. We have committed CapEx of around $106 million, but we haven't provided specific fleet numbers. We expect overall fleet utilization to improve, reducing the need for new purchases.
Q: How is the retail sales demand unfolding in Australia?
A: We've picked up some market share, but margins and pricing continue to be squeezed. The market remains tough, and we expect it to stay challenging in FY25.
Q: Are you seeing stronger signs for incremental sales volumes in the US?
A: Dealers like Camping World are focusing on lower-priced, older models. We're seeing some improvement, but it's still a challenging market. June was a good month, but July was not as strong.
Q: Is it fair to say that the US is seeing light at the end of the tunnel, while Australia still has a way to go to clear excess inventory?
A: Yes, industry data suggests the US market is stabilizing, while Australia still faces challenges. We've seen some small manufacturers and dealerships go into liquidation in Australia.
Q: What can we expect from the China procurement project for action manufacturing?
A: We've been working with various suppliers in China and have several projects underway. These products are of high quality, lower cost, and efficient in terms of lead time and inventory management. However, we can't provide specific dollar values at this time.
Q: What are the key drivers for your NPAT improvement year on year?
A: Key drivers include cost-out opportunities, improved utilization, and some fleet growth. We expect RevPARV improvement in all jurisdictions, particularly in the US and Australia.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
