McMillan Shakespeare (MMS) H2 2024 earnings summary

Executive summary

• Achieved strong financial performance in FY24 with organic growth and margin expansion across all segments, led by Group Remuneration Services and robust novated lease sales, particularly in EVs.

• Strategic initiatives under the Simply Stronger program advanced, focusing on customer experience, technology-enabled productivity, and broadening solutions, including the launch of Oly targeting SMEs.

• Supported Australia's transition to a low-carbon future, with EVs comprising up to 43.2% of new novated orders and average customer tailpipe emissions reduced by 10%.

• Completed sale of UK and Australian Asset Finance Aggregation businesses; results now reflect continuing operations.

• Delivered increased dividends and higher normalized return on capital employed (ROCE).

Financial highlights

• Normalized revenue from continuing operations rose 11.5% to AUD 525.8 million year-over-year; statutory revenue up 12.3% to AUD 521.0 million.

• Normalized EBITDA increased 34.8% to AUD 177 million; normalized UNPATA up 38.2% to AUD 107.6 million; statutory NPAT up 158.5% to AUD 83.5 million.

• Normalized EPS grew 42.9% to 154.5c; fully franked full-year dividend of AUD 1.54 per share, up 24.2%, representing a 100% payout ratio of normalized UNPATA.

• Cash conversion at 136% of group UNPATA; total cash AUD 153 million, net cash AUD 86.7 million.

• Debt to EBITDA at 0.5x; interest coverage at 11.7x.

Outlook and guidance

• FY25 expected to see continued inflation, cost-of-living pressures, and more EV brands and models, with price competition intensifying.

• FBT exemption for plug-in hybrids expires April 2025; battery EV exemption continues, with review by mid-2027.

• Oly to be fully rolled out and promoted, targeting SME market expansion.

• Onboard Finance warehouse to maintain ~20% of novated lease volume (excluding Oly) in FY25; normalization adjustment of AUD 9 million expected.

• Approximately AUD 11 million in capital expenditure allocated for FY25, focused on digital solutions and technology modernization.