The Eclipx Group Ltd (ASX: ECX) share price is pushing higher on Thursday after the release of a business update.
At the time of writing the salary packaging and fleet management company's shares are up 1% to $1.52.
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What did Eclipx announce?
This morning Eclipx released an update on its Simplification Plan ahead of its appearance at the Macquarie Group Ltd (ASX: MQG) Emerging Leaders forum.
According to the release, the company's Simplification Plan has now largely been delivered on.
It has divested all non-core businesses, operating expenses have been reduced, gross corporate debt has been reduced, and it is now solely focused on developing its core fleet business and strategy.
In respect to its operating expenses, Eclipx was targeting an annualised $15 million reduction in its core fleet operating expense base from $99.5 million in FY 2019 to $84.5 million by the end of FY 2021. On a run-rate basis, its operating expense target has now been achieved.
As for its debt, the company was targeting a gross corporate debt reduction from $350 million to $175 million. As at 31 August 2020, gross corporate debt had dropped below its target and stood at $170 million.
Management also notes there is significant headroom under the revised corporate debt covenants, which were further improved in May 2020.
Total liquidity is currently ~$180 million, including ~$105 million in undrawn capacity under the corporate debt facility.
Trading update.
Eclipx also revealed that its business performance is improving again.
At the end of August, new business writings in corporate operating leasing was tracking at ~70% to 80% of average pre-COVID-19 levels (October 2019 to February 2020 average).
It notes that this reflects the desire of some clients to seek lease extensions as a substitute for renewals or new business writings. Similarly, novated monthly volumes are tracking above 80% of average pre-COVID-19 levels.
In addition, end of lease car sales have continued to show positive momentum since mid-April 2020. As a result, management expects end of lease income in the second half to be about 90% of first half end of lease income.
