Fleetpartners Group Limited · ASX:FPR
Fleetpartners — H1 2023 Earnings Presentation
37 slides from Fleetpartners's earnings presentation, May 8, 2023
Slide 1: 1H23 results presentation
1H23 results presentation FleetPartners Group Limited (ASX:FPR) 8 May 2023
Slide 2: Legal disclaimer
Legal disclaimer This Presentation contains summary information about FleetPartners Group Limited (FleetPartners) and its subsidiaries and their activities, current as at the date shown on the front page of this Presentation. The information in this Presentation does not purport to be complete. It s
Slide 3: Agenda
Agenda 1. Performance highlights 2. Financial result 3. Operating segment performance 4. Outlook 5. Appendix
Slide 4: Performance highlights
Performance highlights F FleetPartners
Slide 5: 1H23 financial performance highlights
1H23 financial performance highlights Continuing to deliver AUMOF growth despite a challenging supply environment AUMOF New car supply delays continue New business writings (NBW) +2% 1 including 5% growth in balance sheet funded AUMOF, driving annuity-like income impacted by production, biosecurity
Slide 6: Growing earnings per share (EPS)
Growing earnings per share (EPS) Four sources of EPS growth expected from organic growth, inorganic expansion opportunities and capital management Strategic Pathways Accelerate program • Above market growth in three • Removal of duplication by consolidating underpenetrated, high returning segmen
Slide 7: Strategic Pathways
Strategic Pathways Expanding market share in three underpenetrated, high returning segments Corporate AU & NZ Small Fleets Novated 1.5m c.900k Outsourced to FMOs Managed in-house 40% Market penetration 60% vehicles1 employees4 2.5m vehicles TAM1,2 with only 40% FMO penetration 2% FMO penetra
Slide 8: Positioned for higher AUMOF growth as supply normalises
Positioned for higher AUMOF growth as supply normalises Strategic Pathways delivering a strong orders performance and an elevated NBW pipeline … helps underwrite future AUMOF growth NBW orders taken1 New business writings (NBW)2 NBW order pipeline1 Sale and lease-back $8m $4m $26m $0m $0m 1.3x $33
Slide 9: Strong demand for EVs driven by recent policy introductions
Strong demand for EVs driven by recent policy introductions As the leading FMO in NZ where the EV transition is further progressed, FleetPartners is exporting expertise across the Group Corporate and Small Fleets Novated • Transitioning to EVs is a key priority for most customers however the high wh
Slide 10: Accelerate program's key milestones
Accelerate program’s key milestones Business transformation program that will deliver an annualised $6m opex saving by mid-FY25 FY23 FY24 FY25 Status • Accelerate program is on time and within budget 1. FleetPlus NZ transition into FleetPartners WAVE 1 2. Group rebrand to FleetPartners • FleetPlus
Slide 11: Capital management
Capital management On track to return 25% of share capital over the last 2.5 years Buy-back1 Comments 7% of SOI illustratively to be Target amount % of NPATA cancelled4 Top end of capital 10% of SOI payout ratio range 1H23 buy-back $28m 65% cancelled3 1H23 special $10m 25% buy-back $10m $166m $28m S
Slide 12: EPS growth drivers
EPS growth drivers Great progress across EPS growth drivers during 1H23 Strategic Pathways Accelerate program Share buy-back Acquisitions Pleasing progress made with the On time and within budget $43m buy-back announced, M&A remains a key aspect of execution of Strategic Pathways rep
Slide 13: Environmental, Social and Governance highlights
Environmental, Social and Governance highlights Ensuring robust stewardship of the business to deliver long-term growth whilst operating in an ethical and transparent way Sustainability Longstanding Modern Slavery Report funding Statement published and aligned to relationship with the Clean champion
Slide 14: Financial result
Financial result F FleetPartners
Slide 15: Asset growth driven by balance sheet funded leases
Asset growth driven by balance sheet funded leases Grown AUMOF 2%1 against a backdrop of ongoing supply constraints Assets under management or financed1 ($bn) Comments Balance sheet 2 P&A $1.90bn $1.90bn $1.94bn • AUMOF is the key driver of net operating income pre EOL and provisions, generating pre
Slide 16: Income statement
Income statement Strong underlying NPATA result despite ongoing supply delays and unwinding of COVID-19 tailwinds, as expected $ million 1H23 1H22 PCP (%) Comments Net operating income pre EOL and provisions1 73.9 79.4 (7)% End of lease income 35.6 51.4 (31)% • NOI pre EOL & provisions margin return
Slide 17: NOI pre EOL and provisions margin
NOI pre EOL and provisions margin Margin has returned to normalised range in 1H23, as previously guided Average AUMOF & NOI pre EOL and provisions margin Illustrative Illustrative avg. AUMOF average AUMOF 8.21% $1.9bn $2.0bn $2.1bn 7.70% Illustrative IllustrativeNOI NOIpre preEOL EOLand provisions1
Slide 18: Funding and liquidity
Funding and liquidity Successful issuance of Australian ABS providing funding flexibility and capacity to support growth plans Funding mix and interest rate exposure Liquidity AU NZ Warehouse ABS P&A Corporate debt Base rate $45m of $75m total Hedged at lease origination NZ$250m movement No exposure
Slide 19: Portfolio credit quality remains high
Portfolio credit quality remains high FleetPartners is well placed to face any macro uncertainty given the underlying credit quality of the portfolio 90+ day arrears1 (bps) Portfolio exposure 5.2% Building construction, food services and retail Other industries Reduced to 49 26bps in Apr-23 35 37 94
Slide 20: End of lease income
End of lease income End of lease income remains elevated, but is slowly trending downwards, having peaked in FY22 Vehicles sold & end of lease income per vehicle1 Comments • Used vehicle prices remain elevated given ongoing supply constraints EOL charges per vehicle ($) • Prices in Australia peaked
Slide 21: History of disciplined opex control
History of disciplined opex control Against a backdrop of significant inflation in recent periods, opex has remained broadly flat for 5 years Core operating expenses1 Comments $82.5m $78.7m $79.9m $80.3m $83.0m • FleetPartners has demonstrated a disciplined approach to managing opex over an extended
Slide 22: Balance sheet
Balance sheet Balance sheet remains strong, with disciplined capital management $ million 31 Mar 2023 30 Sep 2022 % Comments Assets Cash and cash equivalents 114.4 101.5 13% • Continuation of capital return to shareholders with the announcement of a Restricted cash and cash equivalents 154.7 136.8 1
Slide 23: Cash generation
Cash generation Strong organic cash generation supported by elevated EOL and cash tax shield $ million 1H23 $ million 1H23 Operating cash flow Net cash flow 26.3 Customer receipts 392.3 Capex 8.0 Payment to suppliers & employees (194.3) Change in corporate debt - Income tax paid (8.0) Movement in sh
Slide 24: Operating segment performance
Operating segment performance
Slide 25: Fleet Australia
Fleet Australia Order activity remains robust, whilst NBW impacted by supply – asset base remains stable NBW orders1 New business writings (NBW) Comments 1.1x SLBs 1.0x 1.0x 1.0x $24m $4m • Demand has remained strong with new orders at similar levels 0.9x $4m $0m to those seen pre-COVID-191 due to t
Slide 26: Fleet New Zealand
Fleet New Zealand Strong increase in new orders in 1H23 driving a record high pipeline – asset base is growing NZD NBW orders1 New business writings (NBW) Comments 1.9x SLB 1.9x $1m $9m $0m • Fleet NZ has driven a strong uptick in orders in 1H23, reaching 1.5x 1.5x c1.9x pre-COVID-19 levels1 1.4x •
Slide 27: Novated
Novated Significant increase in new orders in 1H23, driving order pipeline to 4.9x – balance sheet funded asset base growing NBW orders1 New business writings (NBW)2 Comments 1.8x $96m $99m • Novated has driven a significant uptick in orders in 1H23, 1.5x $94m $92m 1.4x 1.4x $83m reaching c1.8x pre-
Slide 28: Outlook
Outlook F FleetPartners
Slide 29: FY23 expectation analysis
FY23 expectation analysis FY23 FY22A Comments (expectation) FY23 expected to be less than 5% below FY22, due to: • Delay in NBW due to continued supply disruptions in 1H23 NOI pre EOL and provisions $157.4m • Continuation of maintenance activity levels observed in 1H23 due to higher fleet utilisatio
Slide 30: Operating environment and strategic priorities
Operating environment and strategic priorities FleetPartners has a clear strategy to pursue long-term growth Operating environment Strategic priorities FleetPartners today • AUMOF growth has continued and proven resilient • Strategic Pathways primed for growth … targeting Multiple EPS growth drive
Slide 31: Questions
Questions F FleetPartners
Slide 32: Appendices
Appendices F FleetPartners
Slide 33: Operating segment results
Operating segment results Half-year ended March 2023 Fleet AU Novated Fleet NZ Group ($m, unless stated) NOI before EOL & Impairments 46.2 8.3 19.5 73.9 End of lease 27.7 0.1 7.8 35.6 Impairments (0.8) (0.1) (0.0) (0.9) NOI 73.1 8.2 27.2 108.6 Operating expenses (28.7) (5.6) (7.3) (41.5) EBITDA 44.5
Slide 34: FleetPartners has a simple and predictable business model
FleetPartners has a simple and predictable business model Deriving c.50% of income from numerous service based products and c.71% of income being annuity-like earnings2 Finance In-life fleet services EOL • 33% of NOI • 50% of NOI • 17% of NOI • 63% annuity3 • 100% annuity • 60% annuity4 Operating, V
Slide 35: Vehicle delivery delays set to continue throughout 2023
Vehicle delivery delays set to continue throughout 2023 Vehicle delivery delays created by global production back-log are being compounded by shipping shortages and port congestion Production Shipping, logistics and port congestion • Global car production has been gradually improving over the last t
Slide 36: Illustrative impact on income from transition to EV fleet
Illustrative impact on income from transition to EV fleet Impact on revenue expected to be a net positive, as higher net interest margin earned offsets lower maintenance and rebates • EVs typically have higher purchase price, generating +++ ̶ ̶ + greater net interest margin (NIM) • Management fees e
Slide 37: Thank you
Thank you fleetpartners.com.au