Camplify Holdings Limited (CHL) Earnings Call Transcript & Summary

Good afternoon, everybody, and thanks for joining us today. Today's call is to discuss the strategic investment and partnership announced by Camplify Holdings Limited to the ASX this morning. My name is Justin Hales, CEO of Camplify Holdings. Thanks for joining us today. To begin, I would like to hand over to Brett Edwards, our CFO, who will provide a quick overview of our quarter 1 performance, and then I'll focus on the progression with our strategic placement. Thanks, Brett.

Thanks, Justin. Good afternoon, everybody. Yes, just a quick run through the trading for the quarter. We were cash flow positive for Q1 which is all from operating activities. We didn't have any investment or financing activities during the quarter. So it was pleasing to see the positive outcome. We did see softer trading conditions, particularly in Australia, where there was a fair bit of wet weather in August, which seemed to impact the short-term hirings that we're relying on. We've also seen quite a slow rollout of the TAP program in New South Wales with the government's very carefully managing fan allocations. So not a lot of traction just yet with that. But the good news is the forward bookings are returning ahead of the busy summer period for Australia and New Zealand. And we're also just starting to see the Europe inquiries now build as people start to plan their 2026 summer holidays. Typically, October is fairly quiet, but in November, we start to see interest returning. Marketing expenditure was probably a little bit light during the quarter. We've been refocusing our spend to make sure that it's as efficient as possible. But we do expect Q2 will start to lift that. We've got some new initiatives such as rolling out an increased presence on YouTube. So that should lift things. Otherwise, pleased to see the expenditure remained fairly tightly controlled and in line with our expectations. So a good start to the financial year. I'll hand back to yourself, Justin.

Yes. Thanks very much, Brett. So now I'll focus on the announcement today. We're absolutely delighted to be speaking with you today to announce a significant strategic investment and a new commercial partnership with JB Group. For those of you who aren't familiar with JB Group, JB Group are a market leader in the Australian RV industry and one of the country's largest and fastest-growing recreational vehicle manufacturers. Their portfolio includes brands like JB Caravans, New Age Caravans, Paradise Motorhomes, Traveller Caravans and LPT Caravans. Beyond manufacturing, the ecosystem includes a national dealer network of over 40 locations, including 10 company-owned dealerships, the ETIME RV CENTRE for parts and recreation and the What's Up Down Under Media platform. This agreement establishes a multifaceted partnership that accelerates our growth strategy. It's comprised of 2 key components: firstly, a strategic placement; and secondly, a binding long-term strategic services agreement. Firstly, the placement. Under a subscription agreement, JBM Group will subscribe to 10.4 million new shares, ordinary shares in CHL. This will be issued at a price of 0.3 -- sorry, $0.30 per share, which represents a 10-day volume-weighted average share price with no discount. The placement will raise a total of $3.2 million. Upon completion, which is expected to happen before the 10th of November, [J Group B Group] represented by Alex and Sharon Bi, will hold an interest of approximately 12.7% of Camplify's total issued share capital. This proportion -- positions them as a significant and highly aligned strategic shareholder. The agreement also provides for JB Group to nominate one director to the CHL Board for consideration. The proceeds from this placement will be used to strengthen our balance sheet, provide working capital and allow us to invest in future product development and support the operational integration with JB Group. The strategic services agreement is a second component. This is commercially powerful is the long-term services agreement or this agreement is designed to be a growth engine for Camplify, leveraging JB's extensive dealership and media network. The key foundations include managed services rollout. We'll be rolling out Camplify's full managed services offering to key JB Group-owned dealerships. This program enables us to provide a comprehensive low-touch solution for RV owners, where managers will handle bookings, storage, servicing and customer handovers. This includes owner and hire handovers pre- and post-hire reporting and maintenance. The rollout will commence with key locations in Pakenham, Newcastle, Burpengary and Perth. Further expansion will be reviewed with the JB network. It's a great opportunity for anyone who owns an RV to be able to put this into a program and have a really low-touch return on their investment as well as be able to use that vehicle personally through that program. So it provides a really simple way for anyone to get started with rental and allows for experts to be able to manage that experience for hires, both in an online environment and the physical environment. It also allows us to be able to look at future opportunities to potentially do one-way rentals and also to reposition vehicles into key locations based on seasonality. So it's a real crew for us to be able to provide this product integrated with JB. Pro distribution, JB Group will actively promote the Camplify products across its entire national network. That is includes promoting Club Camplify membership to all of its customers and its dealerships and marketing the Camplify marketplace platform to all of the JB Group's customer database. Camplify will receive significant advertising and promotional support by the JB Group's What's Up Down Under Media Assets, which is Australia's leading Caribbean and camping lifestyle platform, including published magazines, digital assets and also a TV show, which is currently on Sheldon. Manufacturer program. Finally, the JB Group will also participate in Camplify's new paid manufacturer programs. This will include our about to launch Try Before You Buy program with our digital assets on the platform with particular brands. As I mentioned at the start, this is a significant commercial partnership that truly accelerates our growth strategy. JB Group's deep industry footprint and powerful sales network provides a scaled distribution channel for our products. This alignment allows us to scale both managed services and Club Camplify offerings. The team at JB shares the vision in their words, they're thrilled to invest and partner with Camplify. And as you can see, as the way -- this is a great way for us to provide a more end-to-end product for both of their customers in this engagement. We believe this synergy will unlock a significant new growth phase for both companies, and this partnership creates significant and sustainable value for all CHL shareholders, and we look forward to a long-term successful partnership. So I now open it up to questions from people on the call.

No questions. I'll [indiscernible] couple of minutes for the questions. Steven, yes, question now I'll just open up the line for you. You just one mute Steve.

Just seeing if you can hear me...

Yes.

Excellent. Sorry about that. I've just got a couple of questions, if that's okay. Just on the managed service offering, can you just remind us of the unit economics of that and just perhaps your expectations for the amount of vehicles that can actually get on to that program?

Yes, for sure. So we've been running this program for a little while with more of a referral network. So we've had a lot of managers manage other people's vehicles in Australia. The result has been sort of, I guess, a little bit inconsistent. We've had some really good results. We've had some companies have come and gone in that process. So now we're looking to really provide a great consistency. Probably the best area for us to look at has been New Zealand in that regard, where we've been running this managed services program for a number of years with RV Supercenter. So what we do in that environment is put vehicles into that program that are really premium vehicles. So they're perfect for those locations. They could be caravans or motorhomes or campervans that are really going to net a fantastic return. So we would expect to average from a vehicle that went into that program around sort of $20,000 to $25,000 a year in rental income, GTV. We then charge a fee to manage that to the customer. So it typically, that's around 40% of that rental income. And so in this arrangement, moving forward over the long term, what we will agree is that, that 40% of that rental income on top of the standard CHL fees to an owner is then split evenly between the dealership who's managing the physical handover and Camplify who's doing the digital and virtual program. So that obviously increases our take rate on those particular rentals and provides us with a big boost in terms of the ability really to service and provide a premium for customers looking to rent. So rather than having a one-on-one handover with an individual, it will mean that they can go to a branded depot -- they can do that physical handover directly with that dealer who also has the ability to make sure that vehicle is really well serviced, can be repaired, whatever it needs to be inside a really fantastic time frame. So one of their first locations will be Newcastle. The dealership in Newcastle is about 10 minutes from the airport, which is a new international airport. So this really gives us an opportunity to provide a premium experience for hires looking to come into this environment. So we're really super excited about what it could look like long term, particularly as we start to look at more locations through both the network and the company-owned locations as well.

And maybe just talk to your confidence around that one-way rental optionality with JB. I know it was something that you discussed quite a while ago through a previous arrangement. But just talk to those sort of discussions that you've had with JB's and how many of their dealerships do you expect to partake?

I guess our focus at the start is on the company-owned one. So that will be around 10, 11 dealerships in Australia. I think the key for us is to show that it's super valuable for those dealerships in terms of people coming into the dealership and renting through that environment and also the engagement with the owner of those vehicles. So ideally, those people who are in that managed service, we'd love them to see a great return on investment, by additional vehicles to put in that program, ideally buy them with JB. And then the JB dealerships get the upside of the servicing and the maintenance, et cetera, on that as well. So I think over time, we'll prove that it's a really valuable service to provide at every dealership. And then we've got a network of over 40 locations that we can really spider web that approach with through Australia's and also a couple of New Zealand. So it provides us with a great opportunity there, particularly the company-owned ones because we're managing the virtual asset, we can move vehicles around. We can reallocate that listing in that process. So we're going to have the ability to do that from pretty much day 1. So we can look at what are the charges we need to do from a one-way environment. We can also look at seasonality. So if we see that in winter, we've got more likelihood of getting rentals in Brisbane than we do in Melbourne, we can actually physically move stock and look at a reallocation of those as well. So it really enables us to level up in terms of that offering.

Just got one final one, if that's okay, I'll sneak it in. Just maybe yourself or Brett can help with it. But just on the marketing spend, obviously, quite light in 1Q, and you talked to sort of a slight ramp-up in the second quarter. Maybe can you just talk to -- is there any additional marketing spend that will be required as you ramp up with JB's? Or is that all sort of covered under the agreement? And I'm obviously talking to the Channel 10 show and the like. Is that all covered under the agreement? Or should we expect sort of a little uptick in that marketing spend?

So certainly, in the next 18-month period, that's all pretty much covered under the agreement. So we don't expect to have any additional marketing spend in the engagement with JB. What we do want to see, I guess, is us making sure that we're effectively managing our marketing spend in our current existing business, particularly through the digital environment. So we've seen in October that we started to really drill into the efficiencies of that spend as different markets ramp up into peak season. So in Australia, for example, we're seeing a dramatic reduction in our spend, but a slight increase from what we were the previous months, but our marketing efficiency is holding. So that means that our conversion rate from traffic through to paid bookings is significantly improved from the year before, which basically means that we can reduce our daily spend on digital advertising to be able to get those hires. And over time, I think with this partnership with JB, it will mean that we can also potentially reduce our spend on owner acquisition. So I think in the long term, it's going to have a significant effect on that marketing spend to allocate it to the right areas. Yes. Patrick, I'll just open it up for you to ask a question.

I'm just keen to find out more on the JB front and also how they're incentivized to onsell the Camplify products. If you can give us a bit of color around the metrics there, that would be great.

Yes, I guess so from -- we have a services agreement in place around offering those products to all customers through their sales channels that exist. So through the aftersales product that we have in terms of an agreement. There's obviously a lot of standard industry ways to do that around commission and rental return, et cetera, in that process. So we'll continue to go through that process with them. We already have existing channels in place to enable us to do that through our registration deal process that we've already created and through our affiliate links that we have. So all the mechanisms are already there. We now just need to be able to actually implement them into the dealerships, train the staff and really get them moving on those key products that we have. So really, the focus around the marketplace, the ability for people to rent the vehicle Cam products, so insurance alternative through that mutual that we have. And then obviously, the managed services products, so people who want to be able to buy them and put it into that program straight away. So through that, they'll be -- they'll be incentivized with long tail commissions on those products. Another question that just came out on about -- is there any exclusivity, I guess, or anything with any other competitors? No, we don't have any exclusivity in this environment with JB. We can offer our products to other operators out there, such as the online marketplaces or other dealerships, and we'll continue to do that. But obviously, we have the ability to have a really tight relationship with JB in the way that we do this and integrate it directly into their sales process across the board. And they certainly are super keen to do that. And we'll start out with those company-owned network to be able to provide that. So I think that gives us an amazing opportunity to really accelerate that. Okay. That seems like all the questions. So thank you very much. Appreciate the time and looking forward to updating you as we progress with this partnership and also progress with the products for next quarter.