More rentals27 Jun 2021 08:29
Spotted another bricklive rental that’s not on the recently uploaded calendar of events. This one in Germany, with a previous customer, and its started yesterday, for a large renal set. RNS must be inbound. Should be an interesting few weeks here IMO.
https://livecompanygroup.com/pdfs/bl_calendar.pdf
What’s interesting is that the majority of these are repeat customers; some have been renting more than 3 times. If the products weren’t working why would they come back so often? Once the world gets back to normal, its easy to see why their unique products will be in such demand. And yes there are others out there building brick models, but LVCG have the unique IP partnerships with the most popular children’s brands on the planet and also the capacity to do this at scale.
The last research note from SP Angle gives the economics of these touring models, with gross margins of above 80%.
“In order to understand the potential for LVCG, it is critical to understand the economic proposition presented by these touring asset models. The initial, upfront costs to design and build these models are typically associated with the cost of steel which is used to build the base skeleton of the structure, the cost of the colourful bricks which form the outer layer of the structure, and labour to design and assemble the model. The average cost of one of the larger touring set of assets, for example the Ocean tour with over 25 models, is about £300,000 and takes about 3 months to complete. Once the models are in production, the touring schedule can begin to be established. We estimate that an average exhibit term is about 3 months and generates revenue of ~£100,000-150,000 with gross margins of about 80%. This implies a cash payback period of 2-3 average term (3 months) bookings, or 7 to 9 months overall. Understandably, not all tours are booked for every month of a year, particularly when shipping times, and cleaning/maintenance may be required between shows. However, optimisation of a tour’s travel itinerary can result in significant profitability for LVCG, particularly for those higher demand tours. With this in mind, it makes sense for LVCG to continue investment in these touring assets to meet the demands of its exhibiting customers around the globe. Notably, some of the smaller tours will cost less and likely garner lower revenue. On the same basis, the more popular IP branded tours are likely to cost a bit more and also generate much higher levels of revenue and margins.
Assuming these assets have an 8 to 10-year life, the total return on each touring set of models, assuming 4-6 month/year utilisation rate and a gross margin of ~80%, is up to £2.0m over its life.”
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