Smartgroup (SIQ) H1 2024 earnings summary

Executive summary

• Revenue rose 27% year-over-year to $148.5 million, driven by strong novated leasing demand and improved vehicle supply.

• NPAT increased 18% to $34.3 million, with NPATA up 16% to $34.1 million, and operating cash flow conversion at 108% of NPAT/NPATA.

• EBITDA grew 20% to $56.2 million, with a margin of 40% excluding South Australian Government contract costs.

• Interim fully franked dividend of 17.5 cents per share declared, representing 69% of NPAT and payable 23 September 2024.

• Strategic priorities advanced, including digital transformation, new Smart brand, and divestment of non-core businesses.

Financial highlights

• Revenue: $148.5 million, up 27% year-over-year.

• EBITDA: $56.2 million, up 20% year-over-year; margin at 40% excluding contract costs.

• NPATA: $34.1 million, up 16% year-over-year; statutory net profit: $34.3 million, up 18%.

• Operating cash flow: $36.6 million, 108% of NPATA.

• Interim dividend: 17.5 cps fully franked, up 13% year-over-year.

Outlook and guidance

• Continued focus on margin improvement, targeting above 40% EBITDA margin in the medium term.

• Robust demand for novated leasing and salary packaging expected to persist; July 2024 orders and settlements up on prior year.

• Monitoring macroeconomic conditions and customer sentiment, but no current impact on demand.

• No material profit contribution expected from the South Australian Government contract in 2024.

• Additional strategic initiatives planned for H2 2024.