Eclipx Group Ltd (ASX: ECX) has reported its half year result for the six months to 31 March 2019, here’s why the share price is jumping.
Eclipx is one of Australia’s largest providers of fleet, equipment leasing & management, vehicle rentals and online auction services to businesses and consumers in Australia and New Zealand. At 31 March 2019 it managed or financed 117,669 vehicles with $2.5 billion of assets under management (AUM).
Here’s What Eclipx Reported
The company reported that net operating income was down 15% to $132 million. In the ‘Core Fleet and Novated’, total assets under management or financed (AUMOF) was up 7% to $2.1 billion and total vehicles under management or financed grew 6% to 103,414.
The Eclipx group’s EBITDA including one-off costs like the goodwill impairment was down 46% to $31.3 million (click here to learn what EBITDA means). The company recognised a $118.4 million impairment to goodwill, which has no income tax benefit, relating to its Consumer businesses including Right2Drive and GraysOnline.
The leasing company said that its net profit after tax and amortisation (NPATA) was down 62% to $13.8 million, but it reported a statutory loss after tax of $120.3 million compared to a $25 million profit last year. This also includes restructuring costs and costs relating to the failed merger with McMillan Shakespeare Limited (ASX: MMS) which cost around $10 million post-tax.
Eclipx blamed the underperformance on ‘non-core’ businesses of GraysOnline, Right2Drive and Commercial Equipment, which is why the company recognised an impairment.
Eclipx Management Comments
Eclipx Chairman Kerry RoxBurgh said: “The Board and I are extremely disappointed in the underperformance. As a result, we have taken action, putting into place a simplification plan, including the renewal of our senior leadership team. We have prepared the way for divestments of our non-core businesses, being Grays, RIght2Drive and Commercial Equipment, and to right size the Group cost base.”
A new CEO, Julian Russell, was appointed on 13 May 2019.
Is Eclipx A Buy?
No dividend being declared was disappointing, but it is important that its funding covenants are not broken.
The Eclipx share price is up 12.1% in early trade, so clearly investors thought it was better than expected, however Eclipx is not the type of business I’d buy for my portfolio, I’d rather invest in the growth shares in the free report below.
At the time of publishing, Jaz does not have a financial interest in any of the companies mentioned.