USA Acquisition Summary. December 2010

Transcription

1 USA Acquisition Summary December 2010

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3 Strategic Intent 1. To leverage the existing business capabilities in a significant sized and growing tourism market with a similar customer base. 2. To grow thl NPAT and Return on Invested Capital. The time is now right for thl to deliver to the strategy it is built for

4 Key Points of note This is the delivery of a strategy initiated in The USA tourism market and RV sales markets are showing positive growth from a recent low point. The core customer base is the same as our current business ie Germanic Europe. There is greater fleet flexibility in Road Bear than thl i.e. timeframe to buy and sell down fleet as required. This is a considered beachhead entry option. The business currently achieves a cost of capital return above thl s current and required performance.

5 Transaction Summary 100% purchase of shares in the business. Fully funded from debt facilities. Goodwill payment of US$5m. US$12m of vehicle assets purchased at acquisition. Average age of fleet at acquisition is less than one year. Vendors remain in the business: Daniel Schneider as President & CEO Horst Hagner will transition out in 2011

6 USA Tourism Market International Visitors to the USA and Projections (f) 2011 (f) 2012 (f) 2013 (f) 2014 (f) Growth expectation circa 5% per year compounding.

7 Market Comparison The key NZ & AU business origin markets are even more dominant within the USA Top 10 Tourist Generating Countries USA Australia NZ RANK 1 Canada New Zealand Australia 2 Mexico United Kingdom United Kingdon 3 United Kingdom United States United States 4 Japan China China 5 Germany Japan Japan 6 France Singapore Germany 7 South Korea Malaysia South Korea 8 Australia South Korea Canada 9 Brazil Germany Singapore 10 Hong Kong Hong Kong India

8 Market Overview RV Sales RV Shipments (000) Change JANUARY % FEBRUARY % MARCH % APRIL % MAY % JUNE % JULY % AUGUST % SEPTEMBER OCTOBER NOVEMBER DECEMBER TOTAL Note: Motor homes account for circa 10% of total RV production Source:

9 Market Overview RV Sales Indicators for Future Growth Population and demographic trends favour long-term RV market growth. Buyers aged are the largest segment of RV owners, according to the 2005 University of Michigan study commissioned by RVIA. RV ownership has reached record levels. Approximately 8.2 million American households now own a RV a 15% increase since 2000 and a 58% increase gain since 1980.

10 Road Bear- the business

11 Road Bear Commenced operation in 1980 Current ownership since 2001 RV rental and sales business 5 Locations (4 West Coast) One brand 4 vehicle types

12 Locations Los Angeles San Francisco Denver Las Vegas New York

13 Vehicle Type - A Class

14 Vehicle Types C Class 23-25ft

15 Vehicle Type C Class 25-28ft

16 Vehicle Type C Class 29-31ft

17 The Vendors Daniel Schneider Swiss born, an engineer by trade with 19 years in the USA rental RV industry. Daniel has expertise in sales, operations, product design and business general management / ownership. Daniel will remain with the business for the medium term as President and CEO of the business. Horst Hagner German born, also an engineer by trade with 10 years experience in the industry. Horst has expertise in IT, operations and business general management / ownership. Horst will transition out through 2011

18 Business Fundamentals Premium product positioning Strong design innovation Strong trade customer base Predominately German, Swiss and Dutch customers Strong vehicle sales network Competitive purchasing power Multiple manufacturers to buy from Peak season June September with very low off season utilisation Strong history of positive earnings throughout last 5 years Approximately 5 to 7% market share

19 Key opportunities for thl Operating a business in the largest RV market. Possible future growth opportunities if performance meets expectations. Leverage of thl infrastructure for support to Road Bear - i.e. online, systems, sales, marketing, finance. Operating a business with much shorter capex (RV) build lead times and flexibility in capital structure.

20 Key USA Competitors

21 Year One Expectations Road Bear currently operates a December year end. For the six months to June 2011 EBIT forecast is a loss of circa US$0.3m (NZ$0.4m) low season. For 12 months to December 2011 Rentals revenue forecast at US$10m and vehicle sales revenue at US$12m. For 12 months to Dec 2011 EBIT is forecast at circa US$2.1m (NZ$2.7m). 12 months to December 2011 Gross Capex spend US$15m (spent during Jan-April 2011). Disposals US$12m (over 12 months to Dec 2011) US$7m in 6 months to June Fleet fluctuates between units. Note: assumed exchange rate US$0.77 to NZ$1

22 thl Balance Sheet Impact Completion date 31 Dec 2010 Road Bear assets of US$12m and goodwill US$5m $US17m fully debt funded (NZ$22m added to thl debt) At 30 June 2011 Road Bear Fixed assets forecast at US$18m (NZ$23m) Increase in thl debt US$23m (NZ$32m) thl total debt forecast of $100m - $105m

23 thl Funding Impact Funding provided by Westpac/ANZ / Vendor loans Goodwill payment ex NZD facilities and fixed exchange rate USD facility set up to fund RV purchases and provides natural hedge Same margins as NZ and AU facilities plus Libor Expiry 2012 / 2013 in line with existing facilities (Expiry date reviewed annually) Vendor loans at 6%

24 thl P&L Impact FY $NZD Road Bear EBIT trading loss of NZ$0.4m for the 6 months to June 2011 (low season trading only) Non-deductible acquisition costs are likely to be in the order of $1m. Interest costs for the January to June 2011 period are expected to increase by $0.7m. The combined impact total $1.5m. FY2011 NPAT guidance is now $2.5m.

25 Key Growth Opportunities Note: The growth from options below have not been budgeted within thl to date. Greater distribution capacity More capex capability than vendors (fleet expansion) More online resource and capability Greater thl exposure to alternative customer markets eg Australia, New Zealand, United Kingdom Greater number of industry customers and trade relationships Market share is significantly lower than thl s share in current market

26 Performance Comparatives $NZ millions FY Calendar Year NZ Actual AU Actual US Forecast EBIT Net Assets EBIT / Net Asset % 2.6% 8.0% 13.0%

27 Integration Plan Business Model Leave the business model as a top tier product brand Systems Medium term - Full integration with thl reservations and fleet management systems People Both Vendors remain as indicated

28 Timetable Sale and Purchase Agreement signed today (3 rd December 2010) December 31 st 2010 proposed settlement date Consolidated into FY2011 First Half accounts June - September first high season

29 Summary Beachhead entry to the largest RV market in the world. Meets thl return requirements, and is well in excess of current business performance. Profitable business with vendor support for the medium term. Operates with our existing customer base. USD debt naturally hedged with RV units in the USA. RV sales market has improved and we can flex the fleet / debt more easily than NZ / AU. USA tourism growth is strong at present. Three year market reconnaissance completed before purchase.

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