Fleetpartners Group Limited · ASX:FPR
Fleetpartners — H1 2024 Earnings Presentation
37 slides from Fleetpartners's earnings presentation, May 13, 2024
Slide 1: 1H24 results presentation
1H24 results presentation FleetPartners Group Limited (ASX:FPR) 13 May 2024
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: Acknowledgement of Country
Acknowledgement of Country In the spirit of reconciliation, FleetPartners acknowledges the Traditional Custodians of Country throughout Australia and their connections to land, sea and community. We pay our respects to their Elders past and present, and extend that respect to all Aboriginal and Torr
Slide 4: Agenda
Agenda 1. Performance highlights 2. Financial result 3. Operating segment performance 4. Outlook 5. Appendices
Slide 5: 1. Performance highlights
1. Performance highlights Damien Berrell Chief Executive Officer and Managing Director
Slide 6: 1H24 performance highlights
1H24 performance highlights 1H24 highlighted strong NBW and AUMOF growth of 39%1 and 10% on pcp, respectively STRATEGIC PATHWAYS A PROVEN DEFENSIVE ONGOING DELIVERY DRIVING STRONG GROWTH BUSINESS MODEL OF SHAREHOLDER RETURNS 39%1 ~95% On time Strategic Pathways delivering high NBW growth of NOI pre
Slide 7: 18% CAGR in cash earnings per share (EPS) since 1H19
18% CAGR in cash earnings per share (EPS) since 1H191 Creating shareholder value via three distinct, clearly defined and well-established drivers for EPS growth Cash EPS growth Strategic Capital ◼ Normalised EPS1 Accelerate Pathways Management ◼ Elevated EOL performance2 Driving growth in three Busi
Slide 8: Strategic Pathways
Strategic Pathways Expanding market share in three underpenetrated, high-returning target markets Corporate AU & NZ Small Fleets1 Novated 2.5m 1.5m c.1m TAM2 vehicles3 vehicles3 employees4 ✓ Strong returns and high barriers to entry ✓ High growth and high return opportunity ✓ Novated enhances value
Slide 9: Strategic Pathways – 1H24 highlights
Strategic Pathways – 1H24 highlights Good momentum maintained across the three target markets of Strategic Pathways Corporate AU & NZ Small Fleets2 Novated • $257m NBW1 in 1H24, up 19% pcp • Record AU NBW in 1H24 of $25m – up 83% pcp • Record NBW in 1H24 of $167m … up 81% pcp • Several new customer
Slide 10: Accelerate
Accelerate Business transformation program that aims to leverage the scale created by Strategic Pathways to maximise profitability Simplified technology stack Standardised operational processes One go-to-market brand ✓ Moving from 2 operational systems (ERP) in ✓ Greater economies of scale ✓ Consoli
Slide 11: Capital management
Capital management Additional $27m announced buy-back representing 65% of 1H24 NPATA Cumulative buy-back1 Comments • 2H24 share buy-back of up to $27 million has been declared representing 65% of 1H24 NPATA, being the top end of the Group’s targeted capital payout range • By the end of 2H24, c. 29%
Slide 12: 1H24 Environmental, Governance and Social highlights
1H24 Environmental, Governance and Social highlights Recording a 6.1% annual reduction Assisting investors to prioritise Demonstrating our ongoing in our overall gender pay gap. investments with solutions relating commitment to ethical business to climate change. practices and human rights. Informin
Slide 13: 2. Financial result
2. Financial result James Owens Chief Financial Officer
Slide 14: New business writings
New business writings NBW up 39%1 compared to 1H23 as supply continues to improve New Business Writings1,2 Comments ◼ Sale and lease-back • Strategic Pathways has delivered NBW growth of 39%1 in 1H24 compared to pcp, supported by continued improvement in new vehicle supply $1m • Novated achieved NBW
Slide 15: Asset growth funded on balance sheet
Asset growth funded on balance sheet AUMOF up 10% as a result of strong NBW performance, with growth funded primarily via the balance sheet1 Assets under management or financed Comments AUMOF - Balance sheet1 • AUMOF is the key driver of net operating income pre EOL and provisions, AUMOF - P&A $2,13
Slide 16: Income statement
Income statement Earnings continued to normalise in 1H24 as COVID-19 tailwinds unwind $ million 1H24 1H23 PCP (%) Comments 1 Net operating income pre EOL and provisions 76.1 75.1 1% • NOI pre EOL & provisions increased by 1% in 1H24, driven by growth in average End of lease income 35.9 35.6 1% AUMOF
Slide 17: NOI pre EOL and provisions margin
NOI pre EOL and provisions margin Margins continue to normalise as expected, as COVID-19 tailwinds unwind – with additional impacts from strong NBW growth NOI pre EOL and provisions margin1 Comments 8.02% 7.66% 7.74% 7.49% • Margins presented on a 12-month basis, given earnings weighted to second ha
Slide 18: End of lease income
End of lease income End of lease income remains elevated, supported by increased disposal volumes, while profit per unit is gradually trending down Vehicles sold & end of lease income per vehicle1 Comments $8,300 • Used vehicle prices remain elevated, but have reduced from the peak in Feb-22 EOL cha
Slide 19: Portfolio credit quality remains high
Portfolio credit quality remains high Portfolio continues to perform strongly with minimal exposure to higher risk sectors 90+ day arrears1 (bps) Portfolio exposure Building construction, food services and retail 5% Other Industries Reduced to 38bps at Apr-24 48 42 36 95% FPR Mar-24 FPR Avg 2 Prime
Slide 20: Funding and liquidity
Funding and liquidity $400m Australian ABS priced in May-24 providing further capacity to support growth plans Comments Warehouse capacity and funding mix – Mar-24 • Warehouse funding capability since 2007 and regular ABS issuer since 2010, with a proven ability Undrawn Warehouse Drawn ABS to issue
Slide 21: Cash generation
Cash generation Strong organic cash generation supported by elevated EOL and cash tax shield $ million 1H24 $ million 1H24 Operating cash flow Net cash flow (0.0) Customer receipts 446.2 Add-back capex 9.2 Payment to suppliers & employees (221.9) Add-back change in corporate debt 2.5 Income tax paid
Slide 22: 3. Operating segment performance
3. Operating segment performance James Owens Chief Financial Officer
Slide 23: Fleet Australia
Fleet Australia Strong NBW drives asset growth as vehicle supply returns New business writings1 Order pipeline2 AUMOF3 ◼ AUMOF – Balance sheet3 ◼ AUMOF – P&A $187m $175m 2.6x $1,016m $1,041m 2.5x $1,004m $994m $159m $159m 2.3x 2.3x 2.2x $142m $485m $474m $507m $492m $502m $531m $568m $497m 1H22 2H22
Slide 24: Fleet New Zealand
Fleet New Zealand NBW remains robust, supported by drawdown of pipeline as economy softens – asset base continues to grow New business writings1 Order pipeline2 AUMOF3 ◼ AUMOF – Balance sheet3 ◼ AUMOF – P&A NZ$571m NZ$554m NZ$124m NZ$522m NZ$18m 5.1x NZ$506m NZ$24m 4.8x NZ$31m 4.5x NZ$34m NZ$98m NZ$
Slide 25: Novated
Novated NBW continues to grow, supported by EVs and a drawdown of pipeline – asset base continues strong growth New business writings1 Order pipeline2 AUMOF3 ◼ AUMOF – Balance sheet3 ◼ AUMOF – P&A $572m $167m $151m 4.9x $503m $103m 4.6x $451m $453m $123m 3.7x 3.8x 3.8x $155m $143m $94m $92m $83m $46
Slide 26: 4. Outlook
4. Outlook Damien Berrell Chief Executive Officer and Managing Director
Slide 27: FY24 expectation analysis
FY24 expectation analysis NOI pre EOL and provisions margin normalisation partially offsetting growth in AUMOF FY24 FY23A Comments (changes to AGM expectation comments indicated in italics) (expectation) • Growth in average AUMOF partially offset by reduction in management fees as extensions and ine
Slide 28: Operating environment and strategic priorities
Operating environment and strategic priorities FleetPartners is continuing to execute on its clear strategy to pursue long-term value creation Operating environment Strategic priorities FleetPartners today • Customer demand continues to be strong across Fleet AU • Drive growth with Strategic Pathway
Slide 29: Questions
Questions F FleetPartners
Slide 30: 5. Appendices
5. Appendices F FleetPartners
Slide 31: Electric Vehicles – state of play
Electric Vehicles – state of play Decarbonisation of fleets being well supported by government policy New vehicle efficiency standard (AU) Clean car standard (NZ) Clean car discount (NZ) Electric car discount (AU) • Penalties for OEMs failing to meet CO2 targets • Commenced in Jan-23 with penalties
Slide 32: Electric Vehicles – state of play
Electric Vehicles – state of play Acceptance and uptake continues to be strongest in Novated, with the Corporate transition still at early stages IFRS S2 Barriers to EV adoption EV residual values EV revenue model • International accounting standard effective ◔ Fit-for-purpose options • Too early an
Slide 33: Illustrative profile of operating lease profits
Illustrative profile of operating lease profits Operating leases become progressively more profitable through the lease term Illustrative weighting of net finance income over 4-year operating lease Comments 40% • The top chart to the left illustrates the amount of total lease net finance income1 ear
Slide 34: Operating segment results
Operating segment results Fleet Australia 1H24 1H23 Var % Fleet New Zealand 1H24 1H23 Var % ($m, unless stated) ($m, unless stated) NOI before EOL & Impairments 45.4 46.8 (3)% NOI before EOL & Impairments 18.0 19.6 (8)% End of lease 24.7 27.7 (11)% End of lease 10.4 7.8 33% Impairments (1.7) (0.8) (
Slide 35: Balance sheet
Balance sheet Balance sheet remains strong, with disciplined capital management $ million 31 Mar 2024 30 Sep 2023 % Comments Assets Cash and cash equivalents 73.3 87.6 (16)% • Continuation of capital return to shareholders with the announcement of a further buy-back of up to $27m – $196m of capital
Slide 36: Change to calculation of NPATA
Change to calculation of NPATA The calculation of NPATA has been updated to remove the impact of non-cash hedge ineffectiveness New Old Comments $ million 1H23 FY23 FY22 1H23 FY23 FY22 • FPR hedges 100% of its interest rate exposure on leases via interest rate swaps NOI pre EOL & provisions1 75.1 15
Slide 37: Thank you
Thank you fleetpartners.com.au