Market update on USA review

Market Update
USA Capital and Operational Review
27 May 2019

USA CAPITAL AND OPERATIONAL REVIEW
DISCLAIMER
2
This presentation contains forward-looking statements and projections. These reflect thl’s current expectations, based on what
it thinks are reasonable assumptions. The statements are based on information available to thlat the date of this presentation
and are not guarantees or predictions of future performance. For any number of reasons, the future could be different and the
assumptions on which the forward-looking statements and projections are based could be wrong. thlgives no warranty or
representation as to its future financial performance or any future matter. Except as required by law or NZX listing rules, thlis
not obliged to update this presentation after its release, even if things change materially. Past performance information given
in this presentation is given for illustrative purposes only and should not be relied upon as an indication of future performance.
This presentation has been prepared for publication in New Zealand and may not be released or distributed in the
United States.
This presentation is for information purposes only and does not constitute financial advice. It is not an offer of securities, or a
proposal or invitation to make any such offer, in the United States or any other jurisdiction, and may not be relied upon in
connection with any purchase of thlsecurities. thlsecurities have not been, and will not be, registered under the US
Securities Act of 1933 and may not be offered or sold in the United States, except in transactions exempt from, or not subject
to, the registration of the US Securities Act and applicable US State securities laws.
This presentation may contain a number of non-GAAP financial measures. Because they are not defined by NZ GAAP or
IFRS, thl’s calculation of these measures may differ from similarly titled measures presented by other companies and they
should not be considered in isolation from, or construed as an alternative to, other financial measures determined in
accordance with NZ GAAP.
This presentation does not take into account any specific investors objectives and does not constitute financial or investment
advice. Investors are encouraged to make an independent assessment of thl. The information contained in this presentation
should be read in conjunction with thl’s latest financial statements, which are available at: www.thlonline.com

USA CAPITAL AND OPERATIONAL REVIEW
KEY ACTIONS FROM OUR REVIEW
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•We expect our USA business to generate positive operating cash flow in
FY2020 of approximately US$35M.
•FY2020 capital expenditure in the USA business has been lowered by
approximately US$40M from our previous plan.
•FY2020 fleet size for both Road Bear and El Monte RV will be lower than in
FY2019 and FY2018.
•Targeting a reduction in funds employed in the USA business of approximately
US$20M by the end of FY2020.
•Decisive changes have been made to the organisational structure of the USA
business.
•We expect to emerge from the current market conditions in a stronger position
within North America.

USA CAPITAL AND OPERATIONAL REVIEW
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CEO COMMENTARY
Our strategy
and direction
are right.
We need to
keep acting,
reflecting,
changing and
upping the
ante on
delivery.
Despite the current market conditions, our USA
performance for FY2019 to date is unacceptable. At
thl, we are of the view that we should be able to
deliver regardless of what the broader market
conditions are doing, given our relatively small size
compared to the total size of the market.
We’ve had a detailed review and have a clear plan,
which has commenced at pace.
Given today’s market conditions, we expect that our
USA FY2020 result will also be impacted. However,
there is nothing which indicates our fundamental
Build/Buy, Rent and Sell model is broken or that we
have a poor business.
We do not see the current performance being a
long-term issue.
We have reviewed our company strategy and remain
confident in our direction despite these immediate
USA issues.
We are extremely focused on getting the USA
business back in shape.

USA CAPITAL AND OPERATIONAL REVIEW
THE FOUR PILLARS OF OUR REVIEW
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THE FOUR
PILLARS
PEOPLE
Ensuring we have the right people and
capability in the USA.
OPERATIONS
Ensuring we are even
tougher about reducing
costs and extracting
synergies between Road
Bear and El Monte RV.
CAPITAL
Reducing capital to reflect softer market
conditions. FY2020 purchase decisions are the
point of impact.
REVENUE
Continued strong focus on
growing the international
rental market and adapting
our approach to the domestic
market.

USA CAPITAL AND OPERATIONAL REVIEW
USA VEHICLE SALES UPDATE
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Tourism Holdings - Gain on Sale of Fleet Assets - Road Bear & El Monte RV
10 Months ending 30 April
US$MFY19FY18VARVAR %
Proceeds from sales of motorhome fleet33.454.3(20.9)(38%)
Net book value of vehicles sold (incl writeoffs)29.145.8(16.7)(37%)
Gain on sales of motorhome fleet before selling costs4.38.4(4.1)(49%)
Vehicle sales costs (warranty only)0.2 0.3 (0.2)(47%)
Gain on sales of motorhome fleet after selling costs4.18.1(4.0)(49%)
Gross profit on non-fleet vehicles, retail and accessory sales0.70.7(0.0)(4%)
Gross profit4.88.8(4.0)(45%)
Total average gain on sale ($000) after selling costs6.07.2(1.2)(17%)
Total fleet motorhomes sold (units), excl. buybacks683 1,120 (437)(39%)

USA CAPITAL AND OPERATIONAL REVIEW
OUR VIEWS ON THE USA VEHICLE SALES MARKET
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•The USA vehicle sales market has declined.
•Over the prior six months we estimate that the wholesale market is down 40% by volume
and the retail market is down 10% by volume (against prior corresponding period)*.
•The anticipated seasonal uplift in vehicle sales has not materialised.
•Heavy discounting from retailers, manufacturers and rental companies has occurred, creating
margin pressure.
•We expect this margin pressure to continue for the next 12 months, when wholesale volumes are
expected to grow.
•We will continue to assess the market conditions and adjust our pricing, as required.
* thl management estimates.

USA CAPITAL AND OPERATIONAL REVIEW
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•We have implemented a number of
organisational changes in the USA.
•Gordon Hewston will be appointed as
the new “General Manager –USA RV
Operations”. Gordon is currently the
Vice President of El Monte RV.
•In his new role, Gordon will be
reporting directly to the CEO, Grant
Webster.
•Hannes Rosskopf, currently General
Manager of Road Bear will be leaving
the business.
PILLAR ONE | PEOPLE
•Daniel Schneider (previous owner of
Road Bear), currently a consultant to
thlin respect of USA operations, will
have greater responsibilities in the
adapted role of “Executive Director –
USA Operations”. Daniel will have a
particular focus on vehicle sales and
will report directly to the CEO.
•Jerry Hunter, an experienced RV sales
leader, has recently been appointed.
Jerry will be responsible for wholesale
vehicle sales in the USA, and will work
with the existing vehicle sales teams.
•We are also seeking an additional
leadership position for the USA who will
report to Gordon. We expect to hire a
person from within New Zealand, with
specific complementary skills that we
desire in the USA.

USA CAPITAL AND OPERATIONAL REVIEW
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PROPERTY CHANGES
We have conducted a profit-
by-location review in the USA.
As a result, we will be looking
to franchise or exit up to five
locations.
We expect that the
implementation of these
changes could result in
ongoing annual savings of
approximately US$500-800k
from FY2021.
We would give up some
future revenue as a result, but
we are confident the change
would be positive for our
return on funds employed.
PILLAR TWO | OPERATIONS
PEOPLE
We see an opportunity to
reduce labour costs in
certain support areas over
the coming two years, as
a result of improvements
in underlying systems and
the full integration of the
USA with our New
Zealand and Australian
models.
We are targeting ongoing
annual savings of
approximately US$1M
from FY2021.
GENERAL OPERATING
COSTS
We are implementing a
general cost reduction
plan in the coming year
across the thlgroup.
We are currently working
through a bottom-up
process across the USA
business to identify
deliverable cost savings
from FY2021.

USA CAPITAL AND OPERATIONAL REVIEW
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PILLAR THREE | CAPITAL
Reviewing our Capital Expenditure Decisions
•In light of our review, FY2020 capital expenditure in the USA has been lowered by US$40M from our
earlier expectations. Fleet size for both Road Bear and El Monte RV will, therefore, be lower in
FY2020 than in FY2019 and FY2018.
•There will be a small increase in average vehicle age (less than 0.5 years) as a result of lower
FY2020 vehicle purchases. This will not change the quality proposition to our customers, as we have
reduced the average fleet age in recent years giving us the ability and tolerance to age our fleet with
minimal impact to the customer proposition and P&L.
•Our fleet size and FY2020 capital expenditure decisions have taken into consideration and balanced
the flow-on impacts to FY2021 rental and sales revenue.
Reduced Funds Employed in the USA
•We are targeting a reduction in funds employed in the USA of approximately US$20M by the end of
FY2020.
•Approximately 80 new vehicle purchases initially intended for Road Bear in FY2019 will remain in
our storage facility in Middlebury. This will reduce costs associated with holding this fleet because:
•The vehicles will not be registered until FY2020.
•Depreciation on these vehicles will be at a lower rate prior to registration, reflecting that there
will be no mileage on those vehicles.

USA CAPITAL AND OPERATIONAL REVIEW
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PILLAR THREE | CAPITAL
$71.0
$62.5
$23.8
FY18AFY19FFY20F
USA Gross FleetCAPEX US$M
$8.5
$16.4
~-$20.0
FY18AFY19FFY20F
USA Net Fleet CAPEX US$MUSAFleet Size *
2,109
~2,400
~2,000
FY18AFY19FFY20F
* at year-end

USA CAPITAL AND OPERATIONAL REVIEW
GUIDANCE

USA CAPITAL AND OPERATIONAL REVIEW
GUIDANCE
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•We reaffirm our intention to declare a FY2019 final dividend of 14 cps, keeping our total FY2019
dividend in line with FY2018.
•We reaffirm our previously stated FY2019 net profit after tax guidance of between NZ$25M -
$28M*.
•Included within this guidance is the impact of one-off costs relating to an issue with an Australian
vehicle dealership and a historical New Zealand holiday pay issue, the combined impact of which
is expected to be circa. NZ$1.5M.
•We expect thl’s net debt at the end of FY2019 to be approximately NZ$240M, slightly higher than
previous guidance and reflective of the decline in the vehicle sales environment.
* As per previous guidance, this range excludes a potential one-off Australian tax issue, which thl continues to
challenge.

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Tourism Holdings Limited
Tel: +64 9 336 4299
The Beach House
Email: info@thlnz.co.nz
Level 1, 83 Beach Road
www.thlonline.com
Auckland City

PO Box 4293, Shortland Street

Auckland 1140, New Zealand




27 May 2019

TOURISM HOLDINGS LIMITED (thl)
MARKET UPDATE ON USA REVIEW

Please see attached, a market update on thl’s capital and operational review of the USA business, as previously
indicated to the market on 18 April 2019.

END

Authorised by:


Rob Campbell
Chairman
Tourism Holdings Limited

For further information contact:
Grant Webster
thl Chief Executive
Direct Dial: +64 9 336 4255 | Mobile: +64 21 449 210