Slide 1: Eclipx Group FY21 results presentation
Eclipx Group FY21 results presentation 3 November 2021
Slide 2: Legal disclaimer
Legal disclaimer This Presentation contains summary information about Eclipx Group Limited (Eclipx) and its subsidiaries and their Such forward‐looking statements are based on numerous assumptions regarding Eclipx’s present and future business activities current as at the date shown on the front pag
Slide 3: FY21 results agenda
FY21 results agenda 1 Performance highlights 2 Financial result 3 Strategic Pathways 4 Outlook 3 3
Slide 4: 1. Performance highlights
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Slide 5: FY21 performance highlights
FY21 performance highlights 30 September 2021 FY21A FY20A5 Var +/(-) (A$m unless specified) Income statement 1 2 POSITIVE JAWS 110% NOI pre EOL & provisions2 151.5 140.8 8% INCREASE IN NPATA EOL 69.2 33.3 108% 32% NOI GROWTH AND 2% OPEX REDUCTION Provisions 2.6 (4.8) nm NOI 223.3 169.3 32% 3 4 80% B
Slide 6: EBITDA growth drivers
EBITDA growth drivers 63% EBITDA growth in FY21, driven by net margin expansion, provision releases and temporarily elevated EOL income Opex in line with expectations $1.6m $143.4m $35.9m Mostly from release of FY20 COVID overlay $7.4m $10.7m $90.6m ($2.8m) $87.9m Stronger EOL result due to elevated
Slide 7: NPATA growth drivers
NPATA growth drivers 110% NPATA growth driven by EBITDA contribution, cost discipline and reduced corporate debt costs $5.3m ($19.1m) $1.5m $1.8m $0.1m $55.5m SBP lower due to $86.1m new LTI plans Reduction driven Lower depreciation by repayment of related to reduced corporate debt property footprin
Slide 8: Corporate net debt reduction
Corporate net debt reduction Corporate net debt reduced to $20 million, debt facilities refinanced to flexible, lower cost terms Net corporate debt and leverage 1 Commentary Net Debt Leverage • Facility refinanced in September 2021 $189m • Closing gross debt: $96m (net debt: $20m) 3.03x $144m • Inte
Slide 9: Capital management
Capital management Capital payout ratio (CPR) of 65% of FY21 NPATA, implies a yield of 7.2%1—going forward the Group expects a CPR of 55 – 65% of NPATA Share Buy-Back program increased from $40m to $56m Buy-back rationale 2 Yield1 Balance sheet position Market cap $782m • Organic capital generation
Slide 10: FY21—Key achievements
FY21—Key achievements Managed through Simplification & COVID-19 Increased business profitability $86m NPATA $41m 1 2 $34m Non-core Strengthening divestments balance sheet FY19 FY20 FY21 3 4 De-leveraged the Group Cost Investment in optimisation sustainable core Leverage growth 3.0x 1.1x 0.1x FY19 FY
Slide 11: 2. Financial result
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Slide 12: Lease extensions, order pipeline and EOL
Lease extensions, order pipeline and EOL Pre-Covid (FY19) Order pipeline (multiple of FY19 order pipeline) Lease extensions End of lease income per vehicle Supply chain $164m Decision inertia 2.1x 13,155 12,962 6,558 given COVID constraints and uncertainty delayed decisioning in FY20, driving $115m
Slide 13: New business writings and orders
New business writings and orders NBW growth returning but remains below pre-COVID levels as new vehicle supply remains constrained Corporate & SME new business writings (NBW) – ex Panel Comments • NBW growth of 22% in 2H21 on pcp or 10% hoh • 2H21 NBW at 95% of pre-COVID levels (1H20) • Global auto
Slide 14: Assets and vehicles under management
Assets and vehicles under management While the order pipeline is at all-time highs, vehicle supply constraints have led to lower NBW and assets under management—despite a 4% reduction in AUMOF, NOI pre EOL and provisions has grown by 8% Assets under management or financed (AUMOF; $m) Comments • AUMO
Slide 15: Financial performance
Financial performance Strong growth in NOI and end of lease income coupled with disciplined cost management has resulted in outperformance in EBITDA Financial performance Comments Net operating income pre EOL and provisions Net operating 151.5 up 8% on pcp driven by: income pre EOL & prov. ($m) 144.
Slide 16: Income statement
Income statement NPATA of $86.1m, represents growth of 110% on pcp $ million FY21 FY20 FY20 PCP (%) (Core standalone1) (Core) (Core standalone) Net operating income pre EOL and provisions 151.5 140.8 140.8 8% Comments End of lease income 69.2 33.3 33.3 108% • EBITDA growth of 63% driven by strong NO
Slide 17: Group balance sheet
Group balance sheet Balance sheet strength underpinned by the successful execution of the Simplification Plan and temporarily elevated cash generation relating to EOL income and the cash tax shield in Australia $ million 30 Sept 21 30 Sept 20 Prior period (%) Assets Comments Cash and cash equivalent
Slide 18: Cash generation
Cash generation Strong organic cash generation (FY21: 121% of NPATA) supported by elevated EOL and cash tax shield enabling repayment of corporate debt and return of capital via buy-back Cash flow Organic cash generation and cash conversion $m $m FY21 FY21 Operating cash flow Net cash flow 16.9 Cust
Slide 19: Illustration of steady state FY21 NOI after adjusting for COVID impacts
Illustration of steady state FY21 NOI after adjusting for COVID impacts COVID had three influences on Group NOI: EOL (positive), NBW supply delays (negative) and Provisions (positive)—charts below reflect an illustrative steady state FY21 NOI Illustrative NOI pre EOL & provisions sensitivity Illustr
Slide 20: FY22 expectation analysis
FY22 expectation analysis FY22 FY21A (expectation) Cash item Update • Continued downward pressure on average AUMOF given supply constraints, partially mitigated by NOI margin expansion expected on the back of warehouse renewal and lower cost of funds NOI pre EOL & provisions $151.5m ✓ • Incremental
Slide 21: 3. Strategic Pathways
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Slide 22: Environmental, Social and Governance (ESG)
Environmental, Social and Governance (ESG) CUSTOMERS ENVIRONMENT Customer advocacy Significant growth in NPS since FY18 Climate Active Status1—only Fleet 95% of medium-term internal target achieved Management Organisation Supporting clients with their ESG and Longstanding funding relationship with t
Slide 23: Approach to the market opportunity
Approach to the market opportunity Strategic priorities 1. Grow underpenetrated markets (Corporate, SME & Novated) First “end-to-end” novated leasing Novated 2. Expand internal talent pool to drive leading outcomes experience with STP credit 3. Enhance education of SME and Novated customers Go-to-ma
Slide 24: Strategic Pathways—FY21 outcomes
Strategic Pathways—FY21 outcomes Good progress made in all three target markets during the first 12 months of Strategic Pathways NOVATED CORPORATE SME 22% NBW growth in 2H21 on pcp (incl. 17% NBW growth in 2H21 on pcp SME) NBW GROWTH & ORDERS NBW and orders outperforming expectations Order pipeline
Slide 25: Strategic Pathways—System simplification
Strategic Pathways—System simplification Streamlined and Enhanced data Increased sales & Improved sales centralised CRM quality and single relationship management effectiveness supporting source of truth productivity commercial intensity COMPLETE Cloud data Enable data driven insights for the AI/ML
Slide 26: Strategic Pathways—looking forward and strategic outcomes
Strategic Pathways—looking forward and strategic outcomes Foundations now developed, with focus on full activation and enhancements of digital origination platforms NOVATED CORPORATE SME PENETRATION OF EXISTING DISTRIBUTION PARTNERSHIPS VIA NOVATED EMPLOYEE BASE & ABOVE MARKET NBW GROWTH DIGITAL PLA
Slide 27: 4. Outlook
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Slide 28: FY22 outlook
FY22 outlook Group well positioned Supply disruption FY21 NPATA up 110% on pcp Impacting vehicle deliveries (NBW), but customer order pipeline at all-time highs 121% cash conversion Expectation is that supply returns, and the back log is Significant investment in traditional sales Digital originatio
Slide 29: Questions
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Slide 30: Appendix
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Slide 31: A. Equity highlights
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Slide 32: Equity highlights
Equity highlights Highly predictable, cash generative and defensive business in strong asset class—invested for growth in underpenetrated target markets 1 Equity market outperformance over the last two years 1 2 170%1 $59M 2 Planned ongoing capital returns to shareholders, given high cash INCREASE I
Slide 33: B. Business unit performance & other financial information
B. Business unit performance & other financial information 33
Slide 34: Business unit performance
Business unit performance Half-year ended September 2021 Half-year ended March 2021 ($m, unless stated) Fleet AU Novated Fleet NZ Group ($m, unless stated) Fleet AU Novated Fleet NZ Group NOI before EOL & Impairments NOI before EOL & Impairments 42.0 11.5 19.0 72.6 46.9 13.1 18.9 78.9 End of lease 2
Slide 35: Group Income Statement
Group Income Statement $ million FY21 FY20 PCP (%) Net operating income pre EOL and provisions 151.5 153.2 (1%) End of lease income 69.2 32.1 115% Fleet and credit provisions 2.6 (4.4) nm Net operating income 223.3 180.9 23% Total operating expenses (79.9) (103.5) 23% EBITDA 143.4 77.4 85% Share bas
Slide 36: Operating expense reconciliation
Operating expense reconciliation $ million 1H20 FY20 1H21 FY21 FY22 (expectation) Operating expenses (38.4) (78.7) (39.4) (79.9) (80.0) Depreciation and interest on leases (AASB 16) (2.7) (5.3) (2.2) (4.5) (4.5) Operating expenses (pre AASB16) (41.1) (83.9) (41.6) (84.4) (84.5) Stranded costs (pre A
Slide 37: Illustration of steady state FY21 NOI after adjusting for COVID impacts
Illustration of steady state FY21 NOI after adjusting for COVID impacts COVID had three influences on Group NOI: EOL (positive), NBW supply delays (negative) and Provisions (positive)—table below reflects an illustrative steady state FY21 NOI FY21A Adj. PF FY21 Adjustments NBW & AUMOF • NBW was impa
Slide 38: C. Supply constraints & used vehicle prices
C. Supply constraints & used vehicle prices 38
Slide 39: New vehicle supply
New vehicle supply New vehicle supply has constrained ECX’s ability to write new business—for the most part, OEMs appear to be past the low points of their production cycles, and general consensus is that as supply returns, the backlog of orders is expected to be cleared during 4QCY22 Commentary Glo
Slide 40: End of lease income up 108% pcp
End of lease income up 108% pcp End of lease income was up 108%, driven by elevated used car prices. As new vehicle supply is restored, EOL income expected to normalise Disposed vehicles and end of lease income per vehicle Comments 7,204 • Elevated used car prices given new vehicle supply 6,557 6,59
Slide 41: D. Treasury
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Slide 42: Warehouse and ABS Funding
Warehouse and ABS Funding Restructured AU warehouse and NZ warehouse extension provide significant capacity to support organic growth plans at improved cost of funds Warehouses and public market asset backed securitisation Warehouse Capacity * ✓ Unique and most diversified funding structures with ac
Slide 43: Corporate debt
Corporate debt Recently completed syndicated debt refinance extending maturity profile and providing increased flexibility at a lower average cost of funds Corporate debt refinance extending maturity, increased flexibility & lower CoF Refinanced corporate debt facility ($m) Participants • 7 core rel
Slide 44: E. Portfolio & credit risk
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Slide 45: Portfolio credit risk remains low
Portfolio credit risk remains low The Group remains well placed to face any further macro uncertainty given the quality of the portfolio Comments Provisioning (% of operating leases, finance leases & trade receivables on balance sheet) • 79% of the exposure of the top 20 customers is investment grad
Slide 46: F. ECX Board & Executive
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Slide 47: 5 new appointments across the Board and Executive team this year
5 new appointments across the Board and Executive team this year Board of Directors Chairperson NED NED NED NED NED Gail Pemberton 1 Fiona Trafford-Walker Cathy Yuncken Linda Jenkinson Russell Shields Trevor Allen CEO CFO COO CCO2 MD NZ CSO Executive Julian Russell Damien Berrell Adriana Sheedy Dani
Slide 48: END
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