New Format

We believe the best way to become a transactions expert is to be working on a live deal and the next best thing is to perform an analysis on a potential future deal or look back on deals gone by.

Each week we will perform a high level analysis on transactions that have the public eye so you can get a feel for what goes on behind the scenes, starting with FleetPartners.

Let us know what you think about the new format!

Who is FleetPartners?

FleetPartners is a leading provider of fleet leasing and management services, operating across Australia and New Zealand. FleetPartners manages over 88,000 vehicles and offers a comprehensive range of services including the acquisition, commissioning, and management of company vehicles, as well as providing funds access for businesses of all sizes.

Additionally, FleetPartners facilitates salary packaging benefits for Australians, making it easier for them to maximize their salary through novated leasing arrangements.

The company was established in 1997 as ‘Eclipx’, listed on the ASX in 2015 and rebranded to FleetPartners in 2023. It has been considered a takeover target for Marubeni for some time with JPMorgan now rumoured to be also working with a client looking at an acquisition.

Performance breakdown

Revenue

FleetPartners was significantly impacted by Covid with new business writings (NBW) between March 2020 to September 2020 falling to 79% of pre Covid numbers, driven by delays in replacing fleets given market uncertainty and decreased demand for new leases drive by low business confidence.

This drop on NBW continued throughout 2021 despite customer demands for new leases returning to pre-Covid level due to the industry-wide delays for new vehicles. Revenue numbers dropped further from 2020 levels due to these results being propped up by the 6 months prior to Covid.

The financials rebounded in 2022 with Commercial NBW surpassing pre-Covid levels and order pipelines remaining at historic highs. Despite this there was a further drop in Novated leases (down 9% on 2021) with delivery delays impacting demand.

In the first half of 2023 these supply constraints led to a 11% decrease in revenue compared to 2022 however these constraints began to ease towards the second half and demand increased with new orders taken for 2H23 at 1.3x the levels seen pre-Covid.

Gross Margin

The cost of revenue is primarily driven by the cost of vehicles sold and the depreciation on operating leased assets. The sharp increase in Gross Margin % from 2020 to 2021 is due to the ability to capture a greater return on the vehicles sold with margin increasing from 8% to 25%. The return on lease rentals (the difference between depreciation & lease income) was relatively stable, with margins increasing by 1%.

This increase gross margin has remained relatively stable since the increase in 2021.

Profit

Profit in 2023 dropped by $22.3m (21.6%), driven almost entirely from the sharp increase in Finance Costs ($21.9m, up 63.1%). This increase is partly due to increased borrowings from $1,192m to $1,380m (15.8%) but mainly caused by the sharp increase in the RBA cash rate from 2.35% in September 2022 to 4.1% in September 2023, which has flowed through to FleetPartner’s variable interest rate borrowings.

Next week: comparable transactions & valuations