RVIA Economic Impact Study

The Recreation Vehicle Industry Association commissioned an Economic Impact Study on the RV industry, released on June 7, 2016. The study found that the RV industry contributes about $49.7 billion in economic output or 0.28 percent of the Gross Domestic Product. Through its production and distribution linkages, the industry impacts firms in 426 of the 440 sectors of the United States economy.

Nationwide, the industry is responsible for 216,170 jobs, both directly and inderectly, creating an economic impact of $37.5 billion. The full study results, along with each individual state and congressional district's economic impact is available on the website by clicking here .

THL of New Zealand Acquires El Monte RV Rental and Sales

Wed Dec 21, 2016

THL of New Zealand has announced the acquisition of the El Monte RV Rental and Sales business, based in North America, for an enterprise value of $65.3 million. The purchase price represents an EBIT multiple of 10.8x before fleet and operating synergies, compared to THL's trading multiple of 11.9x. THL will implement a fleet rationalization program, property and operational synergies.

As a result of the transaction and a review of the current business, a growth goal has been set to achieve $50 million Net Profit After Tax in Fiscal Year 2020. This reflects the ongoing expected growth in the current operating businesses, the addition of El Monte and recent initiatives, including Roadtrippers and Mighway.

The goal Return on Funds Employed for the business continues to climb above the current benchmark 14 percent.

"We are positively resetting the expectations for THL," Chairman Rob Campbell says. "These transactions and the operating plans, which they enable, leverage our current business, skills and balance sheet. We are making the right steps to be truly global in our platform. The acquisition of El Monte positions THL as the second largest player in the North American market, in a smart way that manages market capacity. We still see opportunities in other operating markets, such as Europe, at the right time. Shareholders can have confidence that we will manage the fleet and debt position to deliver an acceptable return on funds employed and use capital effectively."

The acquisition is expected to settle on Jan. 6, 2017 and is only subject to usual closing conditions that THL expects to be satisfied prior to settlement. The transaction is primarily debt funded, with $8 million of the purchase price being funded by the issue of 3,384,266 shares in THL, which, following settlement, will represent 2.8 percent of THL’s ordinary shares on issue. The number of THL shares to be issued is fixed and is based on an agreed exchange rate (0.7410) and the THL volume weighted average price of the three months prior to the negotiation of the purchase price ($3.19).

The El Monte business is the No. 2 operator in fleet size in the North American RV rental market and is a long established player in both the domestic and international tourist industry.

The business will be operated separately for at least the first 12 months, with a focus on fleet and operating efficiencies.

"The El Monte business has a positive, long standing reputation in the USA," THL CEO Grant Webster says. "Their operational excellence, combined with a 'THL' approach to capital deployment is expected to create realizable synergies. We are looking forward to combining fleet procurement, operating different rental brands and maximising RV sales through both our traditional wholesale channels and the El Monte retail sites; a model we know. This is a much lower risk strategy than trying to grow to an equivalent market share from the Road Bear platform."

As part of the expansion of the business and the desire to create a leading global platform within the RV industry, THL has partnered with Roadtrippers (the top North American-based road travel app and data business). The partnership involves the creation of a joint venture business in Australia and New Zealand, combining the THL GeoZone business with Roadtrippers in these markets and the investment of $6 million ($5 million in cash and $1 million in GeoZone assets transfer) for a 22.5 percent holding in the Roadtrippers’ parent company, including a Board seat.

Roadtrippers has more than 2.5 million users per month and has created a world-leading position in the provision of travel points of interest data. Roadtrippers will use the funds from THL to complete the next stage of growth for the company as it scales the data business globally and expands the Roadtrippers product portfolio.

In conjunction with these announcements, THL has confirmed that it will take the Mighway business and platform into North America in the first quarter of the 2017 year. The Mighway owner model fundamentals have been proven within the New Zealand market. The El Monte acquisition and infrastructure can be effectively leveraged for Mighway in North America.

The half-year NPAT forecast is $11.1 million vs. the prior corresponding period of $8.2 million.

The previous guidance for Fiscal Year 2017 NPAT was $27.5 million - $28.5 million and, prior to the impact of the transactions highlighted in this release, is now $29.2 million.

The transactions highlighted in this release result in a trading NPAT forecast of $26.9 million (includes El Monte low season losses and new venture losses).

One-off items total $0.1 million (on a net basis), giving a new NPAT forecast of $27 million for Fiscal Year 2017.

In the calendar year 2017, the El Monte business is expected to deliver EBIT of $6.6 million.

The half year results release, along with an update on all the initiatives, will be presented in late February.