16 May 2018 By Bridget O'Connell
One of the Australasia’s most acquisitive operators, Experience Co, has had to downgrade its earnings forecast following a wet start to the year that hampered activity across its NZ and Australian businesses.
The Australian-listed adventure tourism and leisure group, formerly known as Skydive the Beach, has advised that its top end full-year earnings before interest, taxes, depreciation and amortisation (EBITDA) could be down 16% on previous guidance.
In an update for the March quarter, that also took in the month of April, the Wollongong-based company said EBITDA will be between A$30-A$31m, on revenue in the range of A$127–A$130m.
In its half-year results released February, it had guided revenue of between A$135–A$140m and EBITDA at A$35–A$37m.
The downgrade comes after adverse weather patterns resulted in a wetter than normal March in NZ and record rainfall in parts of Australia in both March and April.
In New Zealand, where it owns skydiving operations NZONE at Queenstown, Skydive Southern Alps at Glenorchy and Wanaka Skydive, Experience Co said March’s processing rate was 71% of all customer skydive bookings, compared with 88% the previous year across all NZ drop zones.
In Australia at its North Queensland skydiving and adventure operations the poor March weather resulted in:
Ballooning: 8 days lost where activities were completely non-operational;
Canyoning: 31 days non-operational;
Tully River Rafting: 22 days non-operational;
Barron River Rafting: 6 days non-operational;
Fitzroy Island Thunderbolt: 13 days non-operational;
GBR Helicopters: 8 days non-operational;
Tropical Journeys: 7 days non-operational;
Skydive Cairns: 3 days non-operational; and
Skydive Mission Beach: 9 days non-operational
Its total average processing rates for skydiving in March 2018 “was down at 75%, compared with 84% in March 2017”.
Experience Co added that poor weather – and, as a result, lower performance – continued into April across many of its products.
It said: “The gross profit margins of the business have also been adversely affected during this time.
“March and April are considered peak times for the business, and during these periods a number of short term fixed contracts are entered into with extra ground staff, etc, on the assumption of normal weather patterns, to allow for the processing a large number of customers.”
As a result, the quarter ended 31 March 2018 fell “well short of management’s sales and EBITDA expectations”, and April would fare little better.
“Accordingly, these adverse weather factors over two months have seriously impacted the company’s outlook for the financial year ended 30 June 2018 (FY18).”
However, it said that it “remains on track to realise expected synergies from recent acquisitions and organic growth from all its adventure activities in FY19 and beyond.”
In the six months to December 2017, the acquisitive company went on a buying spree spending more than A$80m acquiring six operators comprising Byron Bay Ballons, Wine Country Balloons, Great Barrier Reef Helicopters, Blue Ocean Productions, Big Cat Green Island Cruises and Tropical Journeys.
At the time chief executive, Anthony Ritter, said: “We will continue to pursue further organic and acquisition opportunities in our pursuit to become the leading adventure tourism company in the world.”
Article Tags: Experience Co
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