THL - Tourism Holdings Rentals

[Dona Ferentes]

 thl is a global tourism operator listed on the NZX and ASX (code: THL) and is the largest commercial RV rental operator in the world. In late November 2022, thl merged with Apollo Tourism & Leisure (see under ATL thread ), creating a multi-national, vertically integrated RV manufacturing, rental, and retail business spanning motorhomes, campervans and caravans. thl also operates tourism adventure, travel technology, and commercial vehicle manufacturing businesses.

In New Zealand/ Australia, thl operates rental brands (Maui, Britz, Apollo, Mighty, Hippie, Cheapa Campa), manufacturing (Action Manufacturing), retail brands (Talvor, Kea, Winnebago, Adria, Coromal, Windsor), retail dealerships (RV Super Centre, Kratzmann, George Day, Sydney RV, E-Camperco), travel technology (TripTech) and tourism attractions (Kiwi Experience and the Discover Waitomo Group, which includes Waitomo Glowworm Caves, Ruakuri Cave, Aranui Cave and The Legendary Black Water Rafting Co.). In North America, thl operates the Road Bear RV, El Monte RV, CanaDream, Apollo, Britz and Mighty rental brands. In UK and Europe, thl operates the Just Go and Bunk Campers rental brands.

.... the new entity started trading late Nov 2022. Insto are on board, including small cap outfits like WAM and Mirrabooka. Listed on both NZ and Aust exchanges, and last traded around A$3.30

 

[Dona Ferentes]

On track to meet forecasts.

And a high since listing

 

[Dona Ferentes]

thinly traded
.
A RECORD UNDERLYING PROFIT, $0.15 DIVIDEND AND POSITIVE GROWTH OUTLOOK
Summary:
• Statutory net profit after tax (NPAT) of $49.9M, an increase of $52M on the prior year
• A record underlying NPAT of $47.8M and pro forma underlying NPAT of $77.1M (which includes the impact of acquisition accounting)
• Pro forma underlying NPAT of $81.1M after removing the impact of acquisition accounting, which was not included in previous guidance of $75M+
• Historic merger with Apollo completed with successful initial integration
• Group Return on Funds Employed of 15.8%
• A final dividend of 15 cents per share (100% imputed, 25% franked), representing the full year dividend as no interim dividend was paid
• New thl dividend policy targets distribution of 40 – 60% of underlying NPAT

 

[Dona Ferentes]

might have been a weak half yearly?

.
and gone from MIR top 20 over the last few months

 

[The Triangle]

I worry about THL. Things didn't end will for Apollo. I've used THL (well their brands) a number of times and actually have no problems with the company itself. I think they are a great rental company from a customer perspective but as an investment I have some concerns:

1) They continue to load themselves up with debt ($450 million) at a time when the cost of debt is expensive - likely to go even higher in the next 6 months.
2) Operating cashflows were very positive until 2022. Then started to look pretty bad. It seems rental assets get allocated to operating cashflow and not capital expenditure - I'm not sure I really understand this but I don't really care. Anyone who's been around Australia knows the market and country is already saturated with campervans and it's not a cheap when you add fuel, and camp fees to the rental costs. The US and Canada probably has some room to grow - but I've said before Australian business is rarely successful in the US.
3) Asset sales are dropping in FY24 and they're sticking to a "100m" NPAT guidance for FY26 - when they already downgraded FY24 - which I suspect means they'll do some silly things like make overpriced acquisitions at the expensive of shareholder value.

If they were trading below NTA I might be interested as surely, they will be cutting back on spending at some stage, but right now I think they're too rich for me.

 

[Dona Ferentes]

I worry about THL.

... as do a lot of others ... down 40 per cent now that :

THL REDUCES FY24 NPAT GUIDANCE

thl advises that, following a review of all divisions, it now expects net profit after tax in FY24 to be between $50M and $53M. This compares to earlier guidance set in February 2024 for NPAT to be around $75M.

The weakening economy has impacted most regions and business divisions negatively and lowered expectations into Q4. Vehicle sales have been a major factor globally, with sales volumes and margins now declining more quickly than expected in most markets. Over 50% of the overall group EBIT decline is attributable to the Australian Retail Dealership division and in particular, a shortfall in the sales volumes of high-margin ex-fleet vehicles.

Rental yields have generally met expectations in most markets, however a recent slowdown in forward booking intakes for the Australasian shoulder season will lead to a poorer rental performance than earlier forecasts in the remainder of FY24.

Outlook for FY25 and FY26
thl has retained the goal for $100M NPAT in FY26. thl has considered the assumptions underlying the goal and believe the goal remains appropriate based on a positive rental growth outlook and a recovery in the
RV sales market globally. However, expectations for FY25 are now below the FY23 Pro Forma NPAT of $77.1M.

Other implications
Based on its new forecast, thl is forecasting to be compliant with its covenant assessments for the 30 June 2024 quarter. However, thl will engage with its banking syndicate to seek to amend its covenant package to better reflect current trading conditions.

Based on a preliminary review, thl also believes it is probable that there will be impairment in relation to the UK/Ireland business division as part of the upcoming 2024 year-end process.

 

[The Triangle]

... as do a lot of others ... down 40 per cent now that :

THL REDUCES FY24 NPAT GUIDANCE

thl advises that, following a review of all divisions, it now expects net profit after tax in FY24 to be between $50M and $53M. This compares to earlier guidance set in February 2024 for NPAT to be around $75M.

The weakening economy has impacted most regions and business divisions negatively and lowered expectations into Q4. Vehicle sales have been a major factor globally, with sales volumes and margins now declining more quickly than expected in most markets. Over 50% of the overall group EBIT decline is attributable to the Australian Retail Dealership division and in particular, a shortfall in the sales volumes of high-margin ex-fleet vehicles.

Rental yields have generally met expectations in most markets, however a recent slowdown in forward booking intakes for the Australasian shoulder season will lead to a poorer rental performance than earlier forecasts in the remainder of FY24.

Outlook for FY25 and FY26
thl has retained the goal for $100M NPAT in FY26. thl has considered the assumptions underlying the goal and believe the goal remains appropriate based on a positive rental growth outlook and a recovery in the
RV sales market globally. However, expectations for FY25 are now below the FY23 Pro Forma NPAT of $77.1M.

Other implications
Based on its new forecast, thl is forecasting to be compliant with its covenant assessments for the 30 June 2024 quarter. However, thl will engage with its banking syndicate to seek to amend its covenant package to better reflect current trading conditions.

Based on a preliminary review, thl also believes it is probable that there will be impairment in relation to the UK/Ireland business division as part of the upcoming 2024 year-end process.

The world is facing recessions. Inflation continues to persist. I don't even think we've begun to see the reduction in RV sales yet... I know a number of people who were spending money upgrading RVs and campervans in the past couple of years. It was not an increase in demand it was a case of having money to spare since covid kicked travel in the nuts. That's now back to normal and when the economy starts to hurt RV sales will be hurting.

What a stunning downgrade from $75 million to $50 million in only a matter of months. Incompetence!!! With what looks like renegotiation with debt holders I suspect no dividend which will probably smash the SP even more (although they couldn't afford one beforehand).

Now that they're below NTA (which I think was just below $2.00) it's got a little interesting! But I believe now we're going to be looking at a predatory capital raising over the next 12 months to "Strengthen the balance sheet and deliver a platform for growth" or whatever is the standard lines these firms are using nowadays. Probably see a firesale in RVs to reduce debt as well.

 

[The Triangle]

If you believe the annaul report from THL then you'll believe anything!!!

The RV market is collapsing around us. https://www.zerohedge.com/markets/r...ocalyptic-mode-largest-dealership-offering-55

They had a negative $95 million or so in operating cashflows - negative $60 million or so the previous year. They've added significant levels of debt, seen earnings plummet from 26 to 18 cents despite acquiting a rival last year... Not sure how they can continue to use other peoples money to acquire rental assets which are not producing and pay a dividend and not take any writedowns.

Where is the growth comming from exactly?????

 

[Value Hunter]

But I believe now we're going to be looking at a predatory capital raising over the next 12 months to "Strengthen the balance sheet and deliver a platform for growth" or whatever is the standard lines these firms are using nowadays.

I agree the balance sheet is looking very weak. An equity ratio of 37.1% (even lower if you strip out intangible assets). Interest bearing liabilities net of cash is $446 million compared to NPAT of just under $40 million. As you point out a capital raising is highly likely within the next 12 months. But due to management being incompetent they will wait until the last minute to do the capital raising when the share price will be in the gutter. Realistically management should have done a capital raising at the start of this year when the share price was $3.50. They will probably do a capital raising when the share price is under $1. ******* muppets. I am glad I don't own this stock.