The Eclipx Group Ltd (ASX: ECX) share price is flying out of the gates on Wednesday. The strong price appreciation comes after the fleet management and salary packaging company reported its full-year results for FY21.
At the time of writing, the company's shares are 4.1% higher to $2.54. However, more impressively, Eclipx shares reached an intraday high of $2.72 (an 11.5% jump) soon after the commencement of trade today. It appears the initial enthusiasm has partially tempered as investors absorb the information.
Let's inspect the full-year results for ourselves and see what kind of year it was for Eclipx.
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A strong year lifts the Eclipx share price
- Revenue from operations down 3.9% year on year to $648.06 million
- Like-for-like earnings before interest, tax, depreciation, and amortisation (EBITDA) up 63% to $143.4 million
- New business writings increased 2% to $644 million
- Cash net profit after tax and amortisation surged 156.3% year on year to $86.15 million
- Net corporate debt decreased 80% compared to FY20 to $20 million
- Existing share buyback of $40 million extended to $56 million
What happened during the financial year?
Despite supply constraints on new vehicles, Eclipx managed to deliver a full year of growth in many regards. The company's profitability during the period is eye-catching, to say the least.
An impressive 156.3% increase in cash earnings during the year was thanks to a combination of factors. Firstly, margin expansion on its revenue resulted in Eclipx realising an increased EBITDA. Strong end-of-lease income was experienced due to elevated profits per unit.
Secondly, the company took a disciplined approach to its capital in FY21. By reducing its property footprint, Eclipx lowered its depreciation costs. Likewise, a substantial slashing in corporate debt – from $99 million to $20 million – reduced interest payments.
Accounting for these adjustments, the fleet management company booked $86.1 million in cash profits. This achievement is significant considering its earnings had not previously surpassed $63 million since listing in 2015. Such a milestone could explain the improved sentiment for the Eclipx share price today.
As a result, management has decided to reward shareholders with its record earnings. The $40 million buyback program currently running will be increased to $56 million, reflecting 65% of FY21 net profit after tax and amortisation.
During the period, Eclipx booked $644 million in new business writings (NBW) and orders. While the second half experienced a lift in NBW, the company is yet to return to pre-COVID-19 levels.
What is the outlook?
The company noted it expects a continuation in the constrained supply for new vehicles. Admittedly, this would also constrain Eclipx's NBW.
However, the group is positive about the future, boasting a strong order pipeline and recent tender wins.
The Eclipx share price is up 44.23% year to date. Based on the cash earnings of FY21, the company is now trading on a price-to-earnings (P/E) ratio of ~9.4 times.
