Smartgroup (SIQ) H2 2021 earnings summary

Executive summary

• CY 2021 revenue rose 3% YoY to $221.8m; adjusted operating EBITDA increased 8% to $103.0m and adjusted NPATA rose 7% to $69.5m.

• Renewed or extended all 8 top-20 client contracts due in 2021; total salary packages grew by 17,000 and new novated lease orders increased 14%.

• Strong operating cash flow and a $3.6m net cash position supported 49.0cps in final and special dividends; total CY 2021 dividends were 72.0cps.

Financial highlights

• Revenue was $221.8m, up 3% YoY; adjusted operating EBITDA was $103.0m, up 8%, with a 46% margin versus 44% in CY 2020.

• Adjusted NPATA was $69.5m, up 7% YoY; statutory NPAT was $61.8m versus $46.8m, up 32%.

• Adjusted PBT increased 33% to $88.9m; net finance costs declined 45% to $1.7m and amortisation fell 58% to $9.3m.

• Adjusted operating cash flow was $78.3m, equal to 113% of NPATA, versus $74.8m and 115% in CY 2020.

Outlook and guidance

• January 2022 novated leasing leads were up 8% YoY; key Smart Future digital asset deliverables were on track.

• Excess open vehicle orders represented about $12m of potential future revenue, including about $10m from orders written in 2021, assuming historic order-to-settlement conversion rates.

• Vehicle supply constraints were expected to continue into 2022, with availability varying by manufacturer and model; operations were positioned to benefit from improved supply.