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Europcar Mobility Group
Earnings Release • Oct 28, 2021
1311_10-q_2021-10-28_e1c4d48f-acbb-4e6d-83b8-0741c29fa8a8.pdf
Earnings Release
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Press Release Paris – October 28th, 2021
THIRD QUARTER 2021 RESULTS PERFORMANCE ABOVE EXPECTATIONS, DUE TO STRUCTURAL MEASURES AS WELL AS FAVOURABLE CONJUNCTURAL BUSINESS ENVIRONMENT
RECORD CORPORATE EBITDA MARGIN AT 27.4 %
RAISED AMBITIONS FOR 2021
Q3 2021 AND FIRST 9M 2021 HIGHLIGHTS
- Revenue over the first 9 months 2021: up +20%1 to €1,625m, with a rebound of +45%1 in Q3 2021 driven by a solid performance in Leisure, low-cost segment in particular, with high RPD2
- Q3 2021 revenue at €782.6m: close to Q3 2019 level, reducing the gap month by month
- Strong rebound in Corporate EBITDA3 to €215m in Q3 2021 with record margin of 27.4% (21.9%1 in Q3 2019)
- Reduction in Corporate net debt at end September vs June 2021: €211m vs €266m respectively, thanks to high Corporate Operating FCF conversion (40%) and seasonality effect. Reduced Corp. liquidity to €372m from €447m
- Successful fleet debt refinancing for a total of €2.2bn with sustainability-linked bond issuance & SARF reengineering
OUTLOOK FOR 2021 AND MID-TERM TRAJECTORY
- The Group is raising its ambitions for FY2021 earnings compared to previous communication thanks to higherthen-expected Q3 2021 performance, with a particularly strong month in September and an anticipated continued robust business trend through year-end, and assuming no additional lockdown:
- o Corporate EBITDA pre-IFRS 16 above €150m versus "above €110m" (compared to -€276m in 2020 and €278m in 20194)
- o Corporate net debt expected in the range of €250-300m versus €300-350m
- The Group is confident in the long-term prospects of the business, relying on structural gains from Reboot and ongoing Connect transformation roadmap, but expects some significant mid-term headwinds in 2022:
- o While pricing momentum is expected to remain positive, volumes will be constrained by continuing market fleet shortage
- o In the context of this shortage, higher fleet cost per unit is expected as well as higher cash consumption as the Group searches for alternative sources of vehicles
- o Significant levels of inflation are also being seen across some other cost lines
UPDATE ON THE TENDER OFFER
Pending the review by the French stock market authority (AMF), expected opening of the proposed tender offer (projet d'offre publique d'acquisition) filed on September 20, 2021 by the consortium led by Volkswagen5 for the Company's
1 Proforma basis: at constant exchange rate and perimeter
2 RPD (revenue per transaction day): corresponds to rental revenue for the period divided by the number of rental days for the period 3 Post-IFRS 16
4 2019 PF (pro-forma) Corp. EBITDA pre-IFRS 16 of €0.26bn refers to full year inclusion in 2019 of Fox Rent-a-Car and Finland and Norway franchisees
5 Through Green Mobility Holding SA, a special-purpose company controlled by the consortium led by Volkswagen Group, and also composed of Attestor Capital LLP and Pon Holdings BV
shares in the course of Q4 2021 and completion of the offer (subject to certain antitrust clearances) in the course of Q1 20226
Caroline Parot, CEO of Europcar Mobility Group, declared:
"Despite a slow start of the year due to COVID, the Group has achieved great performance, starting from May and over the 3 last months, which leads us to upgrade our ambitions for the full year in terms of Corporate EBITDA.
We owe this performance, among other things, to our employees, who have once again demonstrated their resilience and commitment and for which I would like to thank them.
We also benefited from both structural and conjunctural factors. Structurally, we have enjoyed the benefits of our cost adaptation programme "Reboot", as well as the positive impact of our financial restructuring. Conjuncturally, we smartly leveraged the combined effects of a "post-lockdown" appetite for travel and a scarcity of supply due to the semiconductor shortage, which increased our pricing power. All of these factors have placed our Group in the best possible conditions to take full advantage of the recovery in the Travel & Leisure market.
In 2022, in a context of the lasting semiconductor crisis that makes vehicle sourcing more cash-intensive, we expect a continuing tension between supply and demand in the leisure market, that we will play with an overall focus on profitability versus volumes, while taking advantage of the gradual recovery in international traffic.
As we move forward in our "Connect" transformation, we are confident in our recovery plan positioning the Group as a strong leader in sustainable mobility solutions."
*****
Europcar Mobility Group invites you to its Q3 2021 Results Conference Call on: Thursday, October 28th, at 6:00pm CET
Dial-in Access telephone numbers:
France : +33 (0)1 76 77 25 07 Germany: +49 (0)89 2030 35526 UK: +44 (0)330 336 9434 USA: +1 929-477-0324 Confirmation Code: 7299797
Webcast live:
You can watch the presentation on the following link:
https://globalmeet.webcasts.com/starthere.jsp?ei=1500545&tp_key=b7e08fca6c
Slides related to third quarter 2021 results are available on the Group's website, in the "Financial documentation" section:
https://investors.europcar-group.com/results-center
6 The draft offer document of Green Mobility Holding as well as the Company's draft response document to the Offer, containing in particular the reasoned opinion of the board of directors and the report of the independent expert, have been the subject of specific press releases and are available on the AMF's website (https://www.amf-france.org/) and on the websites of the Volkswagen Group and of the Company (https://investors.europcargroup.com/tender-offer), respectively
KEY FINANCIALS OVER THE FIRST 9 MONTHS 2021
Q3 2021 financial results
| All data in €m, except if mentioned | Q3 2021 | Q3 2020 | % Change at constant perimeter and currency |
|---|---|---|---|
| Number of rental days (million) | 19.3 | 16.4 | 18.2% |
| Average Fleet (thousand) | 268.1 | 248.7 | 7.8% |
| Financial Utilization rate | 78.5% | 71.6% | |
| Total revenues | 782.6 | 537.2 | 45.1% |
| Adjusted Corporate EBITDA (IFRS 16) | 214.7 | 54.4 | |
| Adjusted Corporate EBITDA Margin | 27.4% | 10.1% | |
| Operating Income | 183.0 | 18.8 | |
| Income before taxes | 148.4 | (30.5) | |
| Net profit/loss | 141.5 | (9.7) | |
| Corporate Free Cash Flow | 86.2 | (46.7) | |
| Corporate Net Debt at end of the period | 211.2 | 1 322.1 |
NB: Average fleet and utilization rate include Urban Mobility. Historical data have been adjusted accordingly
9M 2021 financial results
| All data in €m, except if mentioned | 9M 2021 | 9M 2020 | % Change at constant perimeter and currency |
|---|---|---|---|
| Number of rental days (million) | 45.3 | 43.4 | 4.5% |
| Average Fleet (thousand) | 222.1 | 266.5 | -16.7% |
| Financial Utilization rate | 74.9% | 59.4% | |
| Total revenues | 1 625 | 1 352 | 20.1% |
| Adjusted Corporate EBITDA (IFRS 16) | 190 | (154) | |
| Adjusted Corporate EBITDA Margin | 11.7% | ||
| Operating Income | 93.0 | (248.4) | |
| Income before taxes | 16.8 | (393.9) | |
| Net profit/loss | 18.7 | (295.9) | |
| Corporate Free Cash Flow | 2.4 | (342.3) | |
| Corporate Net Debt at end of the period | 211.2 | 1 322.1 |
NB: Average fleet and utilization rate include Urban Mobility. Historical data have been adjusted accordingly
No change in perimeter between 9M 2021 and 9M 2020. As a reminder, the last two acquisitions were Fox Rent A Car in the US consolidated in November 2019 and franchisees in Norway and Finland in July 2019.
PROFIT & LOSS
Management Account presentation: accounts are presented under IFRS 16, unless explicitly mentioned
Revenue and Profit & Loss are analyzed through the evolution at constant perimeter and exchange rates. Reported changes are in Appendix.
| All data in €m | Q3 2021 | Q3 2020 | % Change at constant perimeter and currency |
Q3 2019 |
|---|---|---|---|---|
| Total revenue | 782.6 | 537.2 | 45.1% | 1 069.4 |
| Average fleet size ('000) | 268.1 | 248.7 | 7.8% | 418.8 |
| Rental days volume (in Million) | 19.3 | 16.4 | 18.2% | 30.6 |
| Utilization rate | 78.5% | 71.6% | 79.6% | |
| Fleet holding costs | (148.4) | (150.4) | 2.2% | (253.1) |
| Variable costs | (241.2) | (175.5) | -36.7% | (346.9) |
| Sales and marketing expenses | (4.8) | (1.9) | -146.7% | (7.3) |
| Fleet financing costs | (31.2) | (25.7) | -20.9% | (37.5) |
| Direct & variable costs | (425.6) | (353.6) | -19.6% | (644.8) |
| Margin after Direct costs | 357.0 | 183.6 | 94.4% | 424.6 |
| In % of revenue | 45.6% | 34.2% | 39.7% | |
| Network | (73.2) | (69.2) | -5.3% | (114.0) |
| HQ Costs | (69.1) | (59.9) | -13.8% | (76.0) |
| Fixed & semi-fixed costs | (142.3) | (129.2) | -9.3% | (190.0) |
| Adjusted Corporate EBITDA (IFRS 16) | 214.7 | 54.4 | 234.6 | |
| In % of revenue | 27.4% | 10.1% | 21.9% | |
| IFRS 16 impact on premises and parking | (18.5) | (18.2) | (24.3) | |
| IFRS 16 impact on the fleet and financing costs & variable costs | (2.4) | (10.0) | (5.5) | |
| Adjusted Corporate EBITDA excl. IFRS-16 | 193.8 | 26.2 | 204.9 | |
| Depreciation – excluding vehicle fleet: | (34.2) | (42.4) | 19.8% | (40.2) |
| Non-recurring income and expense | (20.2) | (9.6) | (16.0) | |
| Other financing income and expense not related to the fleet | (12.0) | (32.8) | 63.6% | (22.9) |
| Net financial restructuring costs | - | - | ||
| Profit/loss before tax | 148.4 | (30.5) | 155.5 | |
| Income tax | (6.9) | 20.7 | (42.9) | |
| Share of profit/(loss) of associates | - | - | 0.1 | |
| Net profit/(loss) excl. IFRS 16 | 143.2 | (8.4) | 117.3 | |
| Net profit/(loss) incl. IFRS 16 | 141.5 | (9.7) | 112.7 |
| All data in €m | 9M 2021 | 9M 2020 | % Change at constant perimeter and currency |
9M 2019 |
|---|---|---|---|---|
| Total revenue | 1 624.5 | 1 352.0 | 20.1% | 2 510.1 |
| Average fleet size ('000) | 222.1 | 266.5 | -16.7% | 356.2 |
| Rental days volume (in Million) | 45.3 | 43.4 | 4.5% | 74.3 |
| Utilization rate | 74.9% | 59.4% | 76.6% | |
| Fleet holding costs | (386.6) | (484.0) | 20.2% | (633.1) |
| Variable costs | (550.7) | (497.9) | -10.7% | (840.8) |
| Sales and marketing expenses | (11.4) | (12.3) | 6.8% | (28.3) |
| Fleet financing costs | (77.7) | (83.8) | 6.9% | (104.1) |
| Direct & variable costs | (1 026.5) | (1 078.0) | 4.7% | (1 606.3) |
| Margin after Direct costs | 598.0 | 274.0 | 117.7% | 903.8 |
| In % of revenue | 36.8% | 20.3% | 36.0% | |
| Network | (198.5) | (222.1) | 10.2% | (332.0) |
| HQ Costs | (209.6) | (206.1) | -1.4% | (262.1) |
| Fixed & semi-fixed costs | (408.1) | (428.2) | 4.6% | (594.0) |
| Adjusted Corporate EBITDA (IFRS 16) | 189.9 | (154.2) | 309.8 | |
| In % of revenue | 11.7% | 12.3% | ||
| IFRS 16 impact on premises and parking | (55.2) | (58.0) | (61.0) | |
| IFRS 16 impact on the fleet and financing costs & variable costs | (8.6) | (23.0) | (19.1) | |
| Adjusted Corporate EBITDA excl. IFRS-16 | 126.1 | (235.2) | 229.7 | |
| Depreciation – excluding vehicle fleet: | (102.5) | (119.5) | 14.6% | (115.3) |
| Non-recurring income and expense | (38.6) | (30.0) | (42.0) | |
| Other financing income and expense not related to the fleet | (54.2) | (90.1) | 39.6% | (99.5) |
| Net financial restructuring costs | 22.3 | - | ||
| of w/h non-recurring impact | (13.6) | - | ||
| of w/h financial result impact (IFRIC 19 & Transaction costs) | 35.9 | - | ||
| Profit/loss before tax | 16.8 | (393.9) | 53.0 | |
| Income tax | 1.9 | 98.0 | (20.5) | |
| Share of profit/(loss) of associates | - | - | - | |
| Net profit/(loss) excl. IFRS 16 | 23.5 | (291.7) | 43.6 | |
| Net profit/(loss) incl. IFRS 16 | 18.7 | (295.9) | 32.4 |
Constant perimeter includes Fox consolidated in November 2019 & franchisees in Finland and Norway in July 2019.
Variable costs: Revenue related costs, rental related costs, fleet operating costs and others
Average fleet and utilization rate include Urban Mobility. Historical data have been adjusted accordingly.
1. From revenue to MADC over the first 9M 2021
As explained in previous statements and reflected in the revenue table below, the Group's organization is now structured around 3 Service Lines as to respond to specific mobility use cases and design the appropriate offers and associated customer journey.
- Leisure customers: expectations on price competitiveness and speed to serve. Main use cases: Travel & Leisure
- Professional customers: planned and contracted operations with flexibility on solutions, quality of service as a must and a strong network. Main use cases: vehicles replacement, business travel, fleet services, local mobility for businesses
- Proximity customers: looking for higher accessibility of the service. Main use cases: vehicle substitute for long term and on-demand solutions like carsharing.
Strong recovery in revenue in Q3 2021
On a proforma basis (i.e. at constant perimeter and exchange rates), Group's revenue rose by +20.1% to €1,625m over the first 9M 2021 versus the same period of last year, well driven by a solid growth in the Low Cost, particularly in the US, with a strong rebound of +45.1% to €782.6m in Q3 2021 compared to Q3 2020.
Third quarter recovered on travel restrictions ease, high level of domestic demand faced to a limited supply due to the semiconductors shortage impact on OEMs' manufacturing capacities. In a context of a strong customers' appetitive for vacation in domestic markets, Southern Europe in particular, the Group recorded favourable pricing which was well supported by an optimized yielding strategy.
Compared to Q3 2019, the Group reduced the gap month by month: -27% in Q3 2021 resulting from a -34% decline in July, -26% in August and -18% in September. This good performance was primarily driven by prices on a more favourable business mix across the quarter.
| €m | Q3 2021 | Q3 2020 | % Change at constant | 9M 2021 | 9M 2020 | % Change at constant |
|---|---|---|---|---|---|---|
| currency | currency | |||||
| Proximity | 107.5 | 85.9 | 24.4% | 202.9 | 198.8 | 1.4% |
| Professional | 209.1 | 167.3 | 23.5% | 495.3 | 464.8 | 5.8% |
| Leisure | 346.9 | 185.7 | 87.6% | 601.1 | 408.6 | 49.0% |
| CARS | 663.5 | 439.0 | 50.6% | 1 299.3 | 1 072.3 | 21.2% |
| Proximity | 23.7 | 18.3 | 29.0% | 59.6 | 46.6 | 27.6% |
| Professional | 67.7 | 61.5 | 9.1% | 204.2 | 178.3 | 14.0% |
| VANS & TRUCKS | 91.4 | 79.9 | 13.7% | 263.8 | 224.9 | 16.8% |
| Rental Revenues (incl. Mobility) | 754.9 | 518.8 | 44.9% | 1 563.1 | 1 297.2 | 20.4% |
| Other income (incl. franchisee) | 27.7 | 18.4 | 50.3% | 61.4 | 54.7 | 12.6% |
| Total Revenues | 782.6 | 537.2 | 45.1% | 1 624.5 | 1 352.0 | 20.1% |
CARS: revenue increased significantly by +51% to €663.5m in Q3 2021 compared to Q3 2020, driven by prices increases due to the fleet scarcity as a result of the shortage of semiconductors, excess demand over supply and to a lower extent volumes. The US and Southern Europe performed extremely well.
Among the three Service Lines, Leisure recorded the strongest growth (+88%) despite no recovery in international traffic.
The analysis below details the performance of CARS by Service Line:
- § Leisure Service Line, which mainly relates to activity in airports and railways, benefited from the strong rebound in the Low-Cost segment driven by Goldcar in Spain and Fox-Rent-A-Car in the US.
- § Professional Service Line: kept benefiting from long-term solutions (LTS) which are bringing agility and flexibility to businesses. Those solutions are particularly well adapted to the clients' demand.
- § Proximity Service Line: local mobility on-demand as well as car substitute performed well in Q3 2021, validating the shift of urban customers towards alternatives to vehicle ownership with a high proportion of repeat business.
VANS & TRUCKS: with revenue of €91m in Q3 2021, up +13.7% compared to the same period of last year, the BU is close to its 2019 levels, primarily driven by solid volume growth, Spain and the UK in particular and ondemand local mobility. Supersites also remained positively oriented, which perfectly fit with Corporate clients' demand and the success from long-term solutions (LTS).
MADC (Margin after Direct Costs): outstanding fleet management
In Q3 2021, the Group managed remarkably its fleet to address growing demand during the Summer season by deploying alternative solutions while constrained by fleet scarcity at OEMs using longer holding period and secondhand market vehicles. This translated into a +28% increase in the average fleet to 268k vehicles in Q3 2021 versus Q2 2021. Utilization rate also improved tremendously to 78.5%, the highest rate since Q4 2019, but slightly below Q3 2019 (79.6%) due to partial lockdowns in Australia.
The Group kept controlling tightly its direct and variable costs, by limiting the increase of its "direct and variable costs" by +19.6% to €426m over the quarter versus Q3 2020, whilst revenue was up +45%. This good performance has been spurred by fleet holding costs which increased by a limited +2.2% to €148m compared to the same period last year, while average fleet rose by +7.8% to 268k vehicles. The Group managed with great agility its fleet and benefited from favourable conditions for the resale of second-hand vehicles.
As a result, MADC almost doubled to €357m in Q3 2021 versus Q3 2020 (2.2x over the first 9M 2021) with a record high 45.6% margin.
Compared to Q3 2019, direct & variable costs were down -34% on revenue down 27%.
2. From MADC to Adj. Corporate EBITDA: record Corporate EBITDA margin in Q3 2021
In Q3 2021, the Group continued to optimize its network and HQs costs but without benefiting any longer from furlough measures: fixed and semi-fixed costs rose by +9% to €142m in Q3 2021 from €129m in Q3 2020, a limited increase compared to the +45% revenue growth recorded during that period.
In Q3 2021 the Group removed -25% of those semi-fixed and fixed costs, in line with revenue decline compared with the pre-pandemic period in Q3 2019. This illustrates the positive impact of all adaptation measures taken by the Group to mitigate the impact of the crisis.
This led the Group to record a 3.9x increase in Corporate EBITDA to €214.7m in Q3 2021 compared to Q3 2020, translating into record margin of 27.4% (vs 10.1% in Q3 2020 and 21.9% in Q3 2019). All in all, the Group recorded a limited 7% fall-through in Corporate EBITDA versus Q3 2019, despite the €287m drop in revenue.
3. From Adjusted Corporate EBITDA to Group net income
Depreciation expenses: down on the reduced Network stations
Financial income and expenses not related to the fleet: down -40% to -€54.2m over the first 9M 2021 versus - €90.1m at the same period last year, mainly coming from the removal of Corporate bonds, as part of the financial restructuring, and partially offset by new interest on state guaranteed loans and increased costs of the facilities (TLB and RCF) put in place post-restructuring.
Non-recurring expenses amounted to -€38.6m over the first 9M 2021 (-€30.0m at the same period last year) with -€20.2m in Q3 2021 (-€9.6m in Q3 2020). They reflected adaptation (i) measures in HQs and Network which have been implemented in the Reboot plan to deliver a fast payback in adapting the cost base to the new size of the company; and (ii) in Q3 2021 part of the fees related to the contemplated offer and other one-off items.
Net financial restructuring costs: +€22.3m in 9M 2021, recorded in Q1 2021, split into -€13.6m of restructuring fees (accounted in the P&L) and +€35.9m non-cash income (including +€48m booked under IFRIC 19 accounting standards, coming from the difference between the book value of the debt converted into equity instruments and the fair value of these instruments at the transaction date; and -€12m of previous transaction cost write-off).
Tax: -€6.9m in Q3 2021 versus +€20.7m in Q3 2020, reflecting a cautious approach with lower activation of tax losses carry-forward compared to the same period last year.
Net income: the Group posted positive earnings of €141.5m in Q3 2021 compared to -€9.7m in the same period last year.
CORPORATE FREE CASH FLOW, CORPORATE NET DEBT & FLEET DEBT
High Corporate Operating Cash Flow conversion
The Group improved significantly its Corporate Operating cash flow in Q3 2021 compared to Q3 2020 thanks to positive Corporate EBITDA and tight control of cash expenses: non-recurring and leases expenses decreased while capex was up due to progressive ramp-up in IT capex and lower change in WC due to low pre-payment in Q2 2021.
Corporate Operating cash flow came in positive territory at +€86m in Q3 2021 after -€84m in H1 2021, leading to a high Operating free cash flow conversion of 40%.
| All data in €m | Q3 2021 | Q3 2020 | Q3 2019 | 9M 2021 | 9M 2020 | 9M 2019 |
|---|---|---|---|---|---|---|
| Adjusted Corporate EBITDA | 214.7 | 54.4 | 247.4 | 189.9 | (154.2) | 329.2 |
| Lease liability repayment (IFRS 16 Impact) | (20.9) | (28.2) | (29.7) | (63.9) | (81.0) | (80.1) |
| Non-recurring expenses | (6.5) | (9.6) | (11.6) | (24.8) | (30.9) | (37.2) |
| Non-fleet capex | (14.1) | (8.4) | (19.1) | (40.6) | (33.2) | (58.1) |
| Change in NFWC and Provisions | (81.6) | (41.0) | (100.3) | (40.5) | (32.8) | (14.3) |
| Income tax paid | (5.3) | (13.9) | (17.9) | (17.7) | (10.2) | (27.3) |
| Corporate operating free cash flow | 86.2 | (46.7) | 68.8 | 2.4 | (342.3) | 112.2 |
Decreased Corporate Net debt7 at September 30th, 2021 versus June 30th, 2021
Corporate net debt decreased to €211mas at September 30th, 2021 from €266mat June 30th, 2021, primarily driven by the performance at Corporate EBITDA but also due to seasonality effect and high proportion of Leisure customers. Corporate liquidity reduced to €372m as at 30 Sept 2021 from €447m as at 30 June 2021 reflecting cash used for fleet financing. As at September 30, 2021, the Group has drawn €80m of the €225m fleet financing.
Successful refinancing fleet debt with sustainability-linked targets
Europcar Mobility Group successfully refinanced part of its fleet debt in Q3 2021 for a total of €2.2bn by proactively managing its debt profile: SARF refinancing for €1.7bn with a maturity at July 2024 and Senior Notes refinancing for €500m with a 3.0% coupon, maturing in Nov. 2026. The gross proceeds from the Notes Offering, together with cash-on-hand, has been used for early redemption in full of the 2.375% Senior Secured Notes due 2022 issued by EC Finance plc (the "2022 Notes").
The Group is the first player to finance with sustainability-linked targets in the car rental sector. Europcar Mobility Group has established robust and ambitious sustainability performance targets, namely:
§ Reducing carbon emissions for its car and van fleet to reach an average of 93 g CO2/km and 144 g CO2/km respectively by the end of 2024
7 Excluding liabilities related to leases
§ Its target to have green vehicles (less than 50 g CO2/km) account for 20% of its car and van fleet by the end of 2024.
Those two goals that constitute the sustainability performance targets applicable to the Sustainability-Linked Notes, will be tested for the first time in 2024. For the SARF, the Group has selected as green vehicles target as a percentage of the total Group's fleet (20% of its car and van fleet by the end of 2024), which will be tested on an annual basis from 2022.
FULL YEAR 2021 OUTLOOK: RAISED AMBITIONS
The Group is raising its ambitions for Corporate EBITDA and Corporate net debt for the FY 2021 thanks to higherthan expected Q3 2021 performance, with a particularly strong month in September and an anticipated continued robust business trend through year-end, and assuming no additional lockdown:
- § The Group re-iterates its ambition to deliver significant revenue growth for the FY 2021 based on:
- o Continued robust pricing in a context of an acceleration in fleet shortage
- o Continuation of the good trend in Leisure and domestic demand
- § Objective for Corporate EBITDA pre-IFRS 16: above €150m versus above €110m communicated on September 20th, 2021 at the occasion of the Group's trading update (compared to -€276m in 2020 and €278m in 20198)
- § Objective for Corporate net debt in the range of €250-300m versus €300-350m previously communicated
MID-TERM TRAJECTORY
The Group is confident in the long-term prospects of the business, relying on structural gains from Reboot and ongoing Connect transformation roadmap but expects some significant mid-term headwinds in 2022:
- § Revenue profile: profitability over volumes
- o While pricing momentum is expected to remain positive, volumes will be constrained by continuing market fleet shortage
- o Strong focus on profitability vs volumes, with continued optimized and yielding pricing strategies
- o Gradual recovery in international traffic
- § Fleet: alternative fleet model and higher costs than initially anticipated
- o Acquisition costs likely to increase substantially, due to the impact of semiconductors shortage on OEMs manufacturing capacities
- o For the exact same reason, balance between share of « buy-back » and « at risk » likely to evolve
- § Costs & cash: expected significant increase of the cost base
- o Non-fleet costs: expected increases (e.g. wages and progressive re-staffing where necessary)
- o Constrained Corporate Cash: fleet sourcing more cash-intensive vs 2021
- § Transformation: well on track
- o Sustained efforts and increased investments, to enable accelerated « Connect » implementation and Group's transformation into a mobility platform, with notably, a focus on digitization of Operations & Customer experience, as well as on subscription solutions
8 2019 PF (pro-forma) Corp. EBITDA of €0.26bn refers to full year inclusion in 2019 of Fox Rent-a-Car and Finland and Norway franchisees
UPDATE ON THE PROPOSED TENDER OFFER FOR THE COMPANY'S SHARES
As a reminder, Green Mobility Holding SA, controlled by the consortium led by Volkswagen, filed on September 20, 2021 a proposed cash tender offer (projet d'offre publique d'achat) at a price of €0.50 per share, plus a potential earn-out of €0.01 per share if the 90% squeeze-out threshold is reached at the end of the offer. Main shareholders (Anchorage, CarVal, Attestor, Centerbridge, Diameter, Monarch and Marathon) have already committed into firm undertakings to tender their shares to the offer, representing c. 68% of the share capital.
On September 17, 2021, the Company's board of directors, in its reasoned opinion on the offer, unanimously determined that the offer is in the best interests of the Company, its shareholders, employees and other stakeholders and recommended that the Company's shareholders tender their shares to the offer9.
The proposed tender offer is currently being reviewed by the AMF. Assuming a clearance decision from the French Autorité des marchés financiers (AMF) relating to the Offer over the course of November 2021, the tender offer is expected to be opened in the course of Q4 2021 and completed (subject to certain antitrust clearances) in the course of Q1 2022.
9 The draft offer document of Green Mobility Holding as well as the Company's draft response document to the Offer, containing in particular the reasoned opinion of the board of directors and the report of the independent expert, have been the subject of specific press releases and are available on the AMF's website (https://www.amf-france.org/) and on the websites of the Volkswagen Group and of the Company (https://investors.europcargroup.com/tender-offer), respectively.
Investor Relations
Caroline Cohen - [email protected]
Press Relations
Valérie Sauteret - [email protected]
Vincent Vevaud - [email protected]
About Europcar Mobility Group
Europcar Mobility Group is a major player in mobility markets and listed on Euronext Paris. Europcar Mobility Group's purpose is to offer attractive alternatives to vehicle ownership, in a responsible and sustainable manner. With this in mind, the Group offers a wide range of car and van rental services – be it for a few hours, a few days, a week, a month or more – with a fleet that is already "C02 light" and equipped with the latest engines, and which will be increasingly "green" in the years to come.
Customers' satisfaction is at the heart of the Group's ambition and that of its employees. It also fuels the ongoing development of new offerings in the Group's three service lines - Professional, Leisure and Proximity - which respond to the specific needs and use cases of both businesses and individuals. The Group's 4 major brands are: Europcar® - the European leader of car rental and light commercial vehicle rental, Goldcar® - the low-cost car-rental Leader in Europe, InterRent® – 'mid-tier' car rental and Ubeeqo® – one of the European leaders of round-trip car-sharing (BtoB, BtoC). Europcar Mobility Group delivers its mobility solutions worldwide through an extensive network in over 140 countries (including wholly owned subsidiaries – 18 in Europe, 1 in the USA, 2 in Australia and New Zealand – completed by franchises and partners).
Further details on our website: www.europcar-mobility-group.com
Forward-looking statements
This press release includes forward-looking statements based on current beliefs and expectations about future events. Such forward-looking statements may include projections and estimates and their underlying assumptions, statements regarding plans, objectives, intentions and/or expectations with respect to future financial results, events, operations and services and product development, as well as statements, regarding performance or events. Forward-looking statements are generally identified by the words "expects", "anticipates", "believes", "intends", "estimates", "plans", "projects", "may", "would", "should" or the negative of these terms and similar expressions. Forward looking statements are not guarantees of future performance and are subject to inherent risks, uncertainties and assumptions about Europcar Mobility Group and its subsidiaries and investments, trends in their business, future capital expenditures and acquisitions, developments in respect of contingent liabilities, changes in economic conditions globally or in Europcar Mobility Group's principal markets, competitive conditions in the market and regulatory factors. Those events are uncertain; their outcome may differ from current expectations which may in turn materially affect expected results. Actual results may differ materially from those projected or implied in these forward-looking statements. Any forward-looking statement contained in this press release is made as of the date of this press release. Other than as required by applicable law, Europcar Mobility Group does not undertake to revise or update any forward-looking statements in light of new information or future events. The results and the Group's performance may also be affected by various risks and uncertainties, including without limitation, risks identified in the "Risk factors" of the Universal Registration Document registered by the Autorité des marchés financiers and also available on the Group's website: www.europcar-mobility-group.com. This press release does not contain or constitute an offer or invitation to purchase any securities in France, the United States or any other jurisdiction.
Regulated information related to this press release is available on the website:
https://investors.europcar-group.com/results-center
www.europcar-mobility-group.com
Appendix 1 – P&L (Management account) in Q3 2021 and 9M 2021 (incl. & excl. IFRS 16)
| All data in €m | Q3 2021 | Q3 2020 | % Change | % Change at constant perimeter and currency |
9M 2021 | 9M 2020 | % Change | % Change at constant perimeter and currency |
|---|---|---|---|---|---|---|---|---|
| Total revenue | 782.6 | 537.2 | 45.7% | 45.1% | 1 624.5 | 1 352.0 | 20.2% | 20.1% |
| Average fleet size ('000) | 268.1 | 248.7 | 7.8% | 7.8% | 222.1 | 266.5 | -16.7% | -16.7% |
| Rental days volume (in Million) Utilization rate |
19.3 78.5% |
16.4 71.6% |
18.2% | 18.2% | 45.3 74.9% |
43.4 59.4% |
4.5% | 4.5% |
| Fleet holding costs Variable costs Sales and marketing expenses Fleet financing costs Direct & variable costs |
(148.4) (241.2) (4.8) (31.2) (425.6) |
(150.4) (175.5) (1.9) (25.7) (353.6) |
1.3% -37.4% -148.0% -21.1% -20.4% |
2.2% -36.7% -146.7% -20.9% -19.6% |
(386.6) (550.7) (11.4) (77.7) (1 026.5) |
(484.0) (497.9) (12.3) (83.8) (1 078.0) |
20.1% -10.6% 6.9% 7.3% 4.8% |
20.2% -10.7% 6.8% 6.9% 4.7% |
| Margin after Direct costs In % of revenue |
357.0 45.6% |
183.6 34.2% |
94.5% | 94.4% | 598.0 36.8% |
274.0 20.3% |
118.3% | 117.7% |
| Network HQ Costs Fixed & semi-fixed costs |
(73.2) (69.1) (142.3) |
(69.2) (59.9) (129.2) |
-5.7% -15.4% -10.2% |
-5.3% -13.8% -9.3% |
(198.5) (209.6) (408.1) |
(222.1) (206.1) (428.2) |
10.6% -1.7% 4.7% |
10.2% -1.4% 4.6% |
| Adjusted Corporate EBITDA (IFRS 16) In % of revenue |
214.7 27.4% |
54.4 10.1% |
189.9 11.7% |
(154.2) | ||||
| IFRS 16 impact on premises and parking | (18.5) | (18.2) | (55.2) | (58.0) | ||||
| IFRS 16 impact on the fleet and financing costs & variable costs |
(2.4) | (10.0) | (8.6) | (23.0) | ||||
| Adjusted Corporate EBITDA excl. IFRS-16 Depreciation – excluding vehicle fleet: Non-recurring income and expense |
193.8 (34.2) (20.2) |
26.2 (42.4) (9.6) |
19.4% | 19.8% | 126.1 (102.5) (38.6) |
(235.2) (119.5) (30.0) |
14.2% | 14.6% |
| Other financing income and expense not related to the fleet Net financial restructuring costs |
(12.0) - |
(32.8) - |
63.5% | 63.6% | (54.2) 22.3 |
(90.1) - |
39.8% | 39.6% |
| Profit/loss before tax | 148.4 | (30.5) | 16.8 | (393.9) | ||||
| Income tax | (6.9) | 20.7 | 1.9 | 98.0 | ||||
| Share of profit/(loss) of associates | - | - | - | - | ||||
| Net profit/(loss) excl. IFRS 16 | 143.2 | (8.4) | 23.5 | (291.7) | ||||
| Net profit/(loss) incl. IFRS 16 | 141.5 | (9.7) | 18.7 | (295.9) |
Fleet holding costs do not include the estimated interests included in operating lease. They are disclosed within the fleet financing expenses in the Management Accounts
Appendix 2 – IFRS Income Statement
| In €m | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 |
|---|---|---|---|---|
| After IFRS 16 | After IFRS 16 | After IFRS 16 | After IFRS 16 | |
| Revenue | 782.6 | 537.2 | 1 624.5 | 1 352.0 |
| Fleet holding costs | (156.9) | (159.8) | (406.5) | (512.5) |
| Fleet operating, rental and revenue related costs | (241.2) | (175.6) | (550.7) | (497.9) |
| Personnel costs | (112.5) | (86.3) | (296.8) | (291.0) |
| Network and head office overhead costs | (43.4) | (44.9) | (133.4) | (150.3) |
| Non-fleet depreciation, amortization and impairment | ||||
| expense | (34.2) | (42.4) | (102.5) | (119.5) |
| Other income | 8.8 | 0.2 | 10.7 | 0.9 |
| Current operating income | 203.2 | 28.5 | 145.2 | (218.3) |
| Other non-recurring income and expense(1) | (20.1) | (9.6) | (52.2) | (30.0) |
| Operating income | 183.0 | 18.9 | 93.0 | (248.3) |
| Net fleet financing expenses | (22.6) | (16.4) | (57.8) | (55.4) |
| Net non-fleet financing expenses | (8.9) | (20.3) | (35.5) | (56.6) |
| Net other financial expenses(2) | (3.0) | (12.6) | 17.2 | (33.6) |
| Net financing costs | (34.6) | (49.2) | (76.1) | (145.5) |
| Profit/(loss) before tax | 148.3 | (30.5) | 16.8 | (393.9) |
| Income tax benefit/(expense)(3) | (6.9) | 20.8 | 1.9 | 98.0 |
| Net profit/(loss) for the period | 141.4 | (9.7) | 18.7 | (295.9) |
(1) Composed mainly by additional restructuring costs, provisions for risk and litigations and oneoff costs related to the take-over process launched by the Group during the third quarter of 2021.
(2) Includes an income of 48 million euros in relation with the application of IFRIC 19.
(3) Computed at the country level and determined on the basis of the forecasted profit before tax on full year basis and in compliance with the rules for accounting for deferred taxes in each jurisdiction. The effective tax rate at the end of September is not representative of the end-of-year landing due to the strong seasonality of activity and the diversity of countries.
Appendix 3 – Reconciliation from consolidated accounts to management accounts (including IFRS 16)
| All data in €m | Q3 2021 | Q3 2020 | 9M 2021 | 9M 2020 |
|---|---|---|---|---|
| Adjusted Consolidated EBITDA | 366.5 | 201.6 | 573.4 | 328.1 |
| Fleet depreciation | (65.7) | (74.3) | (173.6) | (263.4) |
| Fleet depreciation (IFRS16) | (54.9) | (47.2) | (132.1) | (135.1) |
| Total Fleet depreciation | (120.6) | (121.5) | (305.7) | (398.5) |
| Fleet financing expenses | (31.2) | (25.7) | (77.7) | (83.8) |
| Adjusted Corporate EBITDA | 214.7 | 54.4 | 189.9 | (154.2) |
| Amortization, depreciation and impairment expense | (34.2) | (42.4) | (102.5) | (119.5) |
| Reversal of net fleet financing expenses | 22.6 | 16.4 | 57.8 | 55.4 |
| Current operating income | 203.2 | 28.5 | 145.2 | (218.3) |
Appendix 4: Impact IFRS 16 on Consolidated accounts, Adjusted Corporate EBITDA and Balance sheet
IFRS 16 is the standard on leases, with first application on January 1, 2019.
All leases contracts are accounted for in the balance sheet through an asset representing the "Right of Use" of the leased asset along the contract duration, and the corresponding liability, representing the lease payments obligation. Europcar Mobility Group is using the simplified retrospective method, according to which there is no restatement of comparative periods. Main impacts on 30 September 2021 consolidated statements are the following:
| P&L (in €m) | 9M 2021 Excl. IFRS 16 |
IFRS 16 Impact | 9M 2021 Incl. IFRS 16 |
|---|---|---|---|
| Revenue | 1 625 | - | 1 625 |
| Fleet, rental and revenue related costs | (967) | 10 | (957) |
| Personnel Costs | (297) | - | (297) |
| Network & HQ Costs | (189) | 55 | (133) |
| D&A and Impairment | (42) | (60) | (103) |
| Other Income | 11 | - | 11 |
| Current operating Income | 140 | 5 | 145 |
| Operating Income | 88 | 5 | 93 |
| Financial result | (66) | (10) | (76) |
| Profit before tax | 22 | (5) | 17 |
| Net income | 23 | (5) | 19 |
Management P&L (in €m)
| Restatement of Adj Corporate EBITDA (in M€) | 9M 2021 Excl. IFRS 16 |
IFRS 16 Impact | 9M 2021 Incl. IFRS 16 |
|---|---|---|---|
| Current operating Income | 140 | 5 | 145 |
| D&A and Impairment | 42 | 60 | 103 |
| Net Fleet Financing expenses | (57) | (1) | (58) |
| Adj Corporate EBITDA calculated | 126 | 64 | 190 |
| Balance sheet (in €m) | Sep 2021 |
|---|---|
| Assets : | 364 |
| -Property, Plant & Equipment - Rental Fleet in balance sheet |
263 101 |
| Liabilities : | 380 |
| - Liabilities linked to non-fleet leases | 277 |
| - Liabilities linked to fleet leases | 103 |
Appendix 5 – IFRS Balance Sheet
| In €m | Sep 2021 After IFRS 16 |
Dec 2020 After IFRS 16 |
||
|---|---|---|---|---|
| Assets | ||||
| Goodwill | 1 004.4 | 998.1 | ||
| Intangible assets | 1 061.6 | 1 055.8 | ||
| Property, plant and equipment | 401.3 | 413.2 | ||
| Other non-current financial assets | 43.0 | 54.1 | ||
| Deferred tax assets | 172.0 | 176.9 | ||
| Total non-current assets | 2 682.2 | 2 698.1 | ||
| Inventory | 21.8 | 16.1 | ||
| Rental fleet recorded on the balance sheet | 3 053.6 | 2 197.2 | ||
| Rental fleet and related receivables | 637.5 | 504.0 | ||
| Trade and other receivables | 463.4 | 382.0 | ||
| Current financial assets | 20.5 | 23.2 | ||
| Current tax assets | 46.6 | 29.0 | ||
| Restricted cash | 120.2 | 82.0 | ||
| Cash and cash equivalents | 264.1 | 364.6 | ||
| Total current assets | 4 627.8 | 3 598.2 | ||
| Total assets | 7 310.0 | 6 296.3 | ||
| Equity | ||||
| Total equity attributable to the owners of | 1 568.3 | 189.7 | ||
| Europcar Mobility Group | ||||
| Non-controlling interests | 0.4 | 0.5 | ||
| Total equity | 1 568.7 | 190.3 | ||
| Liabilities | ||||
| Financial liabilities | 1 372.6 | 1 890.6 | ||
| Non-current liabilities related to leases | 207.7 | 214.6 | ||
| Non-current financial instruments | 41.5 | 60.1 | ||
| Employee benefit liabilities | 156.3 | 167.2 | ||
| Non-current provisions | 11.9 | 10.8 | ||
| Deferred tax liabilities | 216.0 | 214.8 | ||
| Other non-current liabilities | 0.1 | 0.1 | ||
| Total non-current liabilities | 2 006.1 | 2 558.3 | ||
| Current portion of financial liabilities | 2 136.0 | 2 069.7 | ||
| Current liabilities related to leases | 171.9 | 139.5 | ||
| Employee benefits | 2.6 | 2.6 | ||
| Current provisions | 236.0 | 214.2 | ||
| Current tax liabilities | 40.6 | 46.1 | ||
| Rental fleet related payables | 582.6 | 555.1 | ||
| Trade payables and other liabilities | 565.3 | 520.5 | ||
| Total current liabilities | 3 735.1 | 3 547.8 | ||
| Total liabilities | 5 741.2 | 6 106.0 | ||
| Total equity and liabilities | 7 310.0 | 6 296.3 |
Appendix 6 – IFRS Cash Flow Statement
| In €m | 9M 2021 After IFRS 16 |
9M 2020 After IFRS 16 |
|---|---|---|
| Profit/(loss) before tax | 16.8 | (393.9) |
| Reversal of the following items | ||
| Depreciation and impairment expenses on property, plant and equipment | 75.7 | 92.5 |
| Amortization and impairment expenses on intangible assets | 26.8 | 27.0 |
| Impairment of assets | - | 1.5 |
| Changes in provisions and employee benefits (1) | 10.2 | (23.9) |
| Recognition of share-based payments | 0.7 | (0.7) |
| Profit/(loss) on disposal of assets | 0.2 | 0.0 |
| IFRIC 19 impact (2) | (48.4) | - |
| Other non-cash items | 2.9 | 6.7 |
| Total net interest costs | 104.7 | 117.6 |
| Amortization of transaction costs (3) | 17.8 | 7.4 |
| Net financing costs | 122.5 | 125.0 - |
| Net cash from operations before changes in working capital | 207.5 | (165.7) |
| Changes to the rental fleet recorded on the balance sheet (4) | (825.0) | 840.2 |
| Changes in fleet working capital | (92.6) | 108.4 |
| Changes in non-fleet working capital | (53.2) | (8.1) |
| Cash generated from operations | (763.4) | 774.8 |
| Income taxes received/paid | (17.7) | (10.2) |
| Net interest paid | (84.8) | (91.6) |
| Net cash generated from (used by) operating activities | (866.0) | 673.0 |
| Acquisition of intangible assets and property, plant and equipment (5) | (41.7) | (35.3) |
| Proceeds from disposal of intangible assets and property, plant and equipment | 1.1 | 1.1 |
| Acquisition of subsidiaries, net of cash acquired and other financial investments | 15.4 | 1.4 |
| Net cash used by investing activities | (25.2) | (32.7) |
| Capital increase (net of fees paid) (6) | 246.7 | - |
| (Purchases) / Sales of treasury shares net | 0.9 | 0.7 |
| Change in other borrowings (7) | 627.6 | (658.3) |
| Change in rental debts | (40.3) | (125.9) |
| Payment of transaction costs (8) | (10.7) | (4.9) |
| Net cash generated from (used by) financing activities | 824.2 | (788.4) |
| Cash and cash equivalent at beginning of period | 444.6 | 628.2 |
| Net increase/(decrease) in cash and cash equivalents after effect of foreign exchange differences | (67.0) | (148.1) |
| Changes in scope | - | - |
| Effect of foreign exchange differences | 2.3 | (3.5) |
| Cash and cash equivalents at end of period | 380.0 | 476.5 |
Footnotes to IFRS Cash Flow Statement
- (1) In 2021, the variation is mainly explained by the change in the insurance provision and the provision for reconditioning of vehicles in Buy-Back.
- (2) With the application of IFRIC 19, the difference between the book value of the debt converted into equity instruments and the fair value of these instruments at the transaction date revealed a non-monetary financial gain of €48 million, which has been recognized on the income statement.
- (3) In 2021, includes the recycling of capitalized refinancing costs for an amount of €12 million, related to the debt restructuring and converted into equity.
- (4) Given the average holding period for the fleet, the Group reports vehicles as current assets at the beginning of the contract. Their variations from one period to another is therefore similar to operating flows generated by the activity.
- (5) In 2021, limited to IT developments for Group's digital transformation.
- (6) In 2021, capital increase via a capital injection and the issue of new ordinary shares, maintaining shareholders' preferential subscription rights, for an amount of €250 million, cash injection related to the exercise of the Guarantee Warrants, the Participation Warrants and the Coordination Warrants, distributed mainly to Bondholders for an amount of €6 million. The amount of the capital increase is net of the fees paid for €9 million.
- (7) In 2021 and 2020, primarily related to the changes in SARF.
- (8) In 2021, payment of Transaction Costs in the context of the debt restructuring for €5m and to the SARF extension for €4 million.
Appendix 7 – Corporate net debt and Fleet net debt
LTV as at September 30th, 2021: 94.9%
| €million | Maturity | Dec. 31, 2020 Jun. 30, 2021 Sep. 30, 2021 | ||
|---|---|---|---|---|
| High Yield Senior Notes | 2024 | 600 | 0 | 0 |
| High Yield Senior Notes | 2026 | 450 | 0 | 0 |
| State guaranteed Loans | 281 | 282 | 282 | |
| Crédit Suisse Facility | 50 | 0 | 0 | |
| Term Loan B (€500m) & RCF | 2023 | 624 | 500 | 560 |
| FCT Junior Notes, accrued interest not yet due, capitalized financing costs and other |
(204) | (198) | (328) | |
| Gross Corporate debt | 1 801 | 584 | 514 | |
| Short-term Investments and Cash in operating and holding entities | (375) | (318) | (303) | |
| CORPORATE NET DEBT | 1 426 | 266 | 211 | |
| €million | Maturity | Dec. 31, 2020 Jun. 30, 2021 Sep. 30, 2021 | ||
| High Yield EC Finance Notes | 2022 | 500 | 500 | 500 |
| New Fleet Financing €225m | 2024 | 0 | 50 | 80 |
| Senior asset revolving facility (€1.7bn SARF) | 2022 | 445 | 770 | 1 051 |
| FCT Junior Notes, accrued interest, financing capitalized costs | 243 | 223 | 353 | |
| and other | ||||
| UK, Australia and other fleet financing facilities | 969 | 997 | 1 006 | |
| Gross financial fleet debt | 2 157 | 2 540 | 2 990 | |
| Cash held in fleet financing entities and Short-term fleet investments |
(118) | (98) | (109) | |
| Fleet net debt in Balance sheet | 2 039 | 2 442 | 2 881 |