Eagers Automotive Limited (APE) Earnings Call Transcript & Summary

Well, thank you for joining us today for our half year 2026 result briefing. I'm joined by Sophie Moore, our CFO; and Edward Geschke, our Chief Operating Officer. And together, we have the privilege of presenting the company's results. Our results deck, including the slides for the presentation have been lodged with and should be visible now via the webcast. Our first half 2026 result reflects another significant milestone in the evolution of Eagers Automotive. During the period, we delivered record earnings successfully completed the Canada One investment and continued to expand strategic growth platforms across the group. Today's presentation is structured around 5 components. We'll start with our trading highlights, then provide financial, operational and strategic updates. And finally, we'll move to our outlook. As you move through the presentation, there is one underlying theme I would encourage you to keep in mind. And that is that while this result demonstrates record current performance, what excites us most is the platform we are building. Eagers is becoming a more diversified business with a broader international footprint -- and in turn, we are creating a growing range of opportunities capable of creating value for shareholders over the long term. With that, let's begin with an overview of the results and the key takeaways from the first half of 2026. One of the defining characteristics of Eagers Automotive is the ability to grow consistently and materially while maintaining discipline. In our view, growth and returns are not mutually exclusive. Our objective has always been to build a business that can grow sustainably, improve productivity, strengthen margins and create long-term value for shareholders. In the first half of 2026 is another demonstration of this in action. Our half year revenue increased by 24% or approximately $1.6 billion to a record half year turnover of $8.1 billion. Importantly, even excluding the Canada One contribution, like-for-like turnover increased by approximately $500 million, highlighting the continued strength of the underlying business. Underlying return on sales or our net profit margin increased to 3.1% despite ongoing industry transformation and general economic pressure. Now this reflects the benefits of our scale our productivity strategy and the continued execution of our long-term optimization plans. At Eagers, we always take a long-term approach, which is probably not surprising for our 113-year-old company. And the chart on the right demonstrates the transformation from approximately $3.8 billion of turnover in 2016, pro forma base approaching $19 billion today. In doing so, creating one of the largest automotive retail platforms globally over this last decade. Importantly, that growth has not come at the expense of shareholder returns. On a pro forma basis, earnings per share will increase by approximately 22% when incorporating a full 12 months of Canada One earnings, highlighting both the earnings quality of the acquisition and the value creation potential of the combined platform. Now the message from this slide is simple. Eagers continued to deliver strong results today while building an even stronger and larger platform for tomorrow. We demonstrated a proven ability to grow through cycles, and we believe the opportunities ahead of us, both in Australia and internationally are greater than at any point in our history. Moving now to the financial scorecard. And during the first half of 2026, Eagers delivered a record half year revenue, which pleasingly translated into a record half year underlying operating profit before tax of $250 million A key highlight is the contribution from Canada. While we've only recognized 2 months in this result, Canada One delivered approximately $1 billion of revenue over the 2 months and more than $43 million of underlying operating profit before tax, reinforcing our confidence in both the quality of the business, the quality of our partners and the strategic rationale for the investment. The combination of Australia, New Zealand and Canada resulted in new vehicle deliveries exceeding 111,000 units for the half, up almost 27% on the prior period. In Australia alone, we increased new vehicle deliveries by 16% or more than 14,000 units in the half on a like-for-like basis. Now taking collectively, these metrics highlight that we are not just building a larger business. It's stronger, it's more resilient and it's increasingly more diversified. Before discussing our results any further today, it's important to Eagers and critical for us to explain what drives Eagers. That is the real story that sits behind the numbers and support long-term investment in this company. At Eagers, we are adamant that culture is a foundation to all great companies. And it's this culture built over decades protected and enhanced every day that allows the company to deliver. Now this slide is not a theoretical framework. It's something we consistently demonstrate through our actions. Importantly, our culture is the foundation that is building a strong and sustainable business, which is a safe place to invest. This foundation then enables optimization, which improves returns and in turn, drives our growth. Many organizations pursue growth first. We've consistently taken the opposite approach. We focus on building a better business first, earning the right to grow and scaling from a position of strength. And this philosophy has served us exceptionally well over many years. Back in 2019, Eagers Automotive undertook what was arguably the most significant transaction in our company's history. The merger with Automotive Holdings Group transformed gas from a strong regional automotive retailer into Australia's leading integrated retail group. It materially increased our scale -- it strengthened our capabilities and it created a platform that has underpinned our growth over the last 7 years. We did not simply become larger following that merger, we integrated it successfully. We optimized the business. We improved productivity we expanded margins, and we've now built one of the strongest operating platforms in the industry. Moving to our partnership with Canada One, which we completed in the first half of 2026, and this represents our second significant step change. It establishes greater scale and broader capabilities while also entering a significantly larger addressable market. a Canadian market that is both more fragmented than the Australian market and with more favorable industry economic dynamics, and that is a very compelling combination. The first step change with AHG delivered incredible shareholder value. Our second step change with Canada One represents the next chapter in that journey. Now the first test of any acquisition investment is whether the business performs in line with expectations following completion. And I'm pleased to report that Canada One has done exactly that. While these results include only 2 months of ownership, Canada One contributed approximately $1 billion in revenue, $58.8 million of EBITDA and $43.2 million of underlying profit. At the same time, our Australia and New Zealand operations continued to perform strongly, delivering revenue growth of 8%, profit growth of 5% and maintaining a 3% return on sales despite market conditions. The more interesting question is not what Canada One contributed over 2 months. The real opportunity is understanding what the combined platform looks like over a full year. and why we believe the transaction represents a transformational step in the evolution of Eagers Automotive. And Slide 9 demonstrates just that. The upper section on this slide represents the last 12 months of Eagers, including 12 months of Eagers' actual Australia New Zealand results plus the 2-month contribution from Canada One. -- almost 20% higher volume higher PBT improved margin and a 7% lift in EPS. It's the lower section of this slide, however, representing the pro forma basis that we see the truly transformative outcome this merger will deliver. Revenue increases from $12.2 billion to approximately $19 billion. EBITDA increases to approximately $938 million per annum and PBT increases to approximately $653 million. All with an expected 22% lift in EPS. I'll now pass over to our CFO, Sophie Moore, to take us through the financials.

Thank you, Keith. Today, as Keith said, we released our record financial results for the first half of 2026 financial year. The results included 2 months of trading from our Canadian partners, Canada One, which settled on 30 April. The headline numbers highlighted by TE demonstrate the growing strength and resilience of our global business. In the 6 months to 30 June, we delivered strong growth with both record revenue and profit compared to the prior corresponding period. Underlying EBITDA reached a record $364.6 million with a margin of 4.5%. This remained above the long-term average of 4.1% demonstrating the benefits of scale, operating leverage and cost discipline. Slide 36 and 37 in the appendix reconciles statutory underlying EBITDA and profit before tax. Underlying profit before tax was a record $250.4 million. Australia and New Zealand contributed [ $207.2 ] million up $9.5 million or 5% on the prior corresponding period. As Keith said, Canada One contributed a profit for 2 months of $43.2 million. Return on sales margins remained strong at 3% in Australia and New Zealand and 4.2% in Canada with both businesses continuing to outperform industry averages. Statutory PBT was $243.1 million compared with the underlying profit before tax of $254 million. with the differences driven by acquisitions, capital raising and integration costs during the period. Overall, these results demonstrates the benefit of scale and optimized operating model and sustain productivity and cost discipline. Turning to Slide 12. Eagers remains in a strong financial position supported by a substantial property portfolio, a resilient asset base and significant balance sheet capacity. Our approach to capital management links back to our culture of business sustainability, growing the group's profitability while also strengthening our underlying asset base. We have consistently delivered both, including through 2025, a transformative year for the group. At 30 June 2026, group corporate debt net of cash, was $674.9 million. Long-term debt supports our $1.6 billion property portfolio in strategic locations across both Australia and Canada. On 30 June, the group held $624 million of property equity reinforcing the strength of our asset base. Total liquidity is supported by $1.9 billion of committed core debt facilities from our Australian syndicate and captive partners with maturities extending from 2028 to 2044. Undrawn facilities totaled $735 million in 30 June. Additional liquidity was secured in Australia in both 2024 and 2025, reflecting our finance partners commitments and confidence in the Next100 strategy and our ability to perform through all cycles. Canada One has also refinanced its corporate debt facilities with its long-term finance syndicate group in June 2026, providing more than $700 million of undrawn capacity to support growth. And lastly, I would say we are well positioned to continue to fund growth opportunities through this disciplined execution and to deliberate capital allocation in both Australia and North America. I will hand back to Keith now to cover the operational highlights.

Thank you, Sofie. Looking now at the first half business performance in Australia. When adjusted for the brands that don't report in VFX and report by the EV Council, the industry overall grew year-to-date, and it culminated in an all-time monthly sales record in June of approximately 140,000 new vehicles. Into this record total market, Eagers delivered record market share with 17.9% of the new car market delivered by Eagers, representing an all-time record share for our total new vehicle monthly deliveries and market share. This incredible outcome is a result of anticipating where the industry will go a number of years ago, positioning the business to win this trend and then executing on this winning position. The biggest story, however, is the changing demand for plug-in vehicles in Australia. In 2020, new energy vehicles, which represents any vehicle that could be plugged in, whether that's full battery electric or plug-in hybrid represented less than 1% of the Australian market. Today, they represent approximately 1/4 of new vehicles sold. Into this, the fastest-growing segment, Eagers continues to deliver more than 30% of all vehicles in Australia. A great example of positioning the business to win the trend. One of the most important principles within Egas is that growth alone is not enough. For more than a decade, we have followed a very deliberate strategy of earning the right to grow by continuously improving the quality and productivity of our business before pursuing the next phase of expansion. This slide demonstrates the outcome of that discipline. Since 2019, we have materially increased scale across the group. But importantly, at the same time, we have systematically optimized the operating model via an obsession, an absolute obsession with productivity. And we've talked about our productivity obsession relentlessly since 2021, probably one of the few companies to talk about it at every half year briefing. And at Eagers, we don't simply ask teams to work harder. We consolidate operations using scale. We develop and implement technology to assist redesigned work processes. Equally at Eagers, we don't target cost out we target waste. In fact, we celebrate proactively identifying any waste to our business because so often, waste is linked to inefficient and unproductive activity in a large company. And finally, this is not an ad hoc program run from time to time. It is every day in every way. And ultimately, it becomes part of the DNA of the business. let's look now the evidence of this DNA. Since 2019, we have exited more than 100 leases while increasing own property to more than $900 million in value. We've streamlined our footprint. We've improved processes, we leverage technology and we are supporting a redesigned workflows with greater tech, which all materially increases productivity across the organization. Productivity has increased from approximately $900,000 in sales per team member per annum in 2019 to almost 1.6 million today, an increase of almost 75%. And and above our ambition from a few years ago of only 1.5 million sales per person. This is a result of deliberate and ongoing action. As a result, our underlying cost base before interest and depreciation has fallen from 14.2% of revenue in 2019 to a record low of 11.6% today, down from last year's previous record. The key takeaway from this slide is that growth and optimization and not competing priorities. In fact, they enable and reinforce each other. The larger we become, the more opportunity we have to improve productivity, enhance net margins and create long-term value for the shareholders. Simply offset it before, we are not just building a bigger company. We are building a better company at the same time. The next slide demonstrates clearly how this overall operating model supports net margin outperformance of the industry. The Slides 14 and 15 explain how we are winning the trend in a rapidly evolving automotive landscape and how in parallel, we have spent more than a decade optimizing our operating model. The outcome of these combined efforts is shown on this slide. Quite simply, Eagers today operates at a level of profitability that is materially ahead of the broader industry. Our underlying return on sales for the first half was 3%, which compares to an industry average, which includes Eagers of 0.7% for the first half of 2026. Now that delta, when you apply it to our turnover represents about $350 million in incremental net profit before tax that Eagers is generating compared to industry average. It's quite staggering. Moving now to Canada One. And at the end of April, we completed the second significant step change in Eagers recent history. Today, we're excited to be able to provide the first update on the performance of Canada One following this completion. And I wanted to share some interesting metrics to demonstrate the quality of this business and underlying the confidence we have in our partners. We announced this partnership in the second half of 2025. And at the time, the average turnover of the Canada One business was $411 million per month. We updated the market at the end of 2025 and the average monthly turnover had increased to $445 million per month. Canada One has continued this strong pace of organic growth -- with the first 2 months since completion, turnover is up 7.5% on the same period last year, all organic or like-for-like. Furthermore, in May '26, the business Canada One set an all-time combined new and used retail car delivery record for the group. Not a bad result for the very first month after the partnership completed. When we announced this transaction, we outlined a clear investment thesis around partnering with high-quality operators, entering an attractive market and creating a platform for long-term growth. The first 2 months are important because they provide early evidence that business is performing exactly as we expected. And to be clear, our expectations were very high. and it reinforces our conviction that Canada One is a growth platform that materially expands the future opportunity for Eagers Automotive. When we announced our partnership with Canada One, the attraction was more than simply the business as it stands today. It's the opportunity to establish a leading position in a highly attractive market and create a platform capable of supporting long-term growth across North America. The business today operates 42 locations across 5 provinces in retail is approximately 48,000 new vehicles per annum and holds a national market share of around 2.5%. Across Canada and the United States, the North American new vehicle market represents approximately 18.6 million annual new vehicle sales, making it second only to China globally and more than 15x the Australian market. This slide does not simply represent 42 dealerships. It demonstrates a proven operating platform with industry best leadership, deep talent and long-standing OEM relationships accessing one of the largest automotive markets in the world. We remain incredibly positive about the opportunity to expand in this market with further growth opportunities well progressed is me. Moving on to our strategy update for 2026 half year. And this slide brings together 2 themes we've spoken about through today's presentation. The first is that eagers certainly in Australia operates in a changing market. The second is that disciplined capital allocation is one of our most important competitive advantages. For many years, we have actively managed our portfolio with a simple objective, deploy capital where we are most confident of return that can compound over the long term. Now let's look at the 2 thematics that underpin capital allocation in our industry. That is who do we invest with and into which markets do we invest? It's well understood that the automotive industry is undergoing historic change. We are no longer able to simply base partnerships on cyclical ups and downs within a single OEM brand portfolio. Change and the impact on all OEMs and is now structural. The bell curve on the left of Slide 21 represents the market impact on the y-axis, while the x-axis shows the market segments from low-priced used cars on the left, all the way up to super luxury segments on the far right. You can see via the bell curve, the largest impact sits on the transformation that is undergoing in new car segments up to $120,000 in value with less impact on the luxury and super luxury segments above $120,000. The used car market on the left-hand side of the bell curve is without doubt the most insulated from disruption of new OEM entrants and the changing consumer preferences to powertrains. It's worth noting that even within the segment that is most impacted, which is mainstream new car brands, the impacts for each OEM, both established and new is different. We have simply never faced such a rapidly evolving OEM environment. Now looking at geographic market dynamics, and you'll see a compelling metric on the right-hand side of this slide, that supports the Canadian market opportunity. The average revenue generated per new vehicle retailed is circa 30% higher in Canada than Australia. That's a staggering metric. This is driven by higher average transaction values, higher used to new car sales ratio, higher finance and insurance attachment rates and bigger service and part businesses on average. All of that occurs in a market that is 58% bigger than in Australia. So what this means is that to replicate the current size of the Eagers Australia, New Zealand revenue base, we could achieve that in Canada with just over 7% of the new car market in Canada, which is not an overly ambitious target based on our current 2% market share. Now these 2 thematics are critical to understand, and they support several of the investments we anticipate announcing over the next 12 months. Earlier this year, we announced the formation of our joint venture partnership with Grand Motors Group. This investment represents a 49% strategic interest in the Grand Motor Group, which includes Toyota, BMW, MINI, Mazda and Kia across 11 locations on the Gold Coast and in Sydney Metro, which are 2 geographic markets that we are underweight by representation. This group represents approximately $490 million of annual turnover, sells more than 6,000 new vehicles each year, and it's settled on the 31st of July 2026. We look forward to growing this business with Greg Scott, the Founder of Grand Motors Group and his dealer partners. We also announced the acquisition of Audi Center Melbourne and Audi Center Richmond, which represented a targeted expansion with a brand, Audi, that we are equally underrepresented with. Together, they contribute approximately $140 million of annual turnover and more than 1,100 annual vehicle sales. This acquisition was made from the Zigami group, founded, owned and operated by Bobby Zigami, who is the leading super luxury group in Australia. Slide 24 is an important example of disciplined capital allocation in practice. We have just entered a process to divest our New Zealand franchised automotive operations to the Armstrong Automotive Group, led by Rick Armstrong, while retaining and continuing to invest behind our easy auto platform in New Zealand. The New Zealand market is undergoing an evolution of how brands are represented. And with the limited size of the new car market, increasing new entrants from China and the prevalence of gray used car imports it has dictated an increasingly combined importer/retailer landscape. Now what this means is that without a strategic shift to our approach, in New Zealand, Eagers would become structurally disadvantaged in this marketplace with limited franchise new car growth potential available. Easy Auto continues to provide a scalable independent used vehicle platform in New Zealand with attractive long-term growth characteristics and alignment to our broader mobility strategy. One of the themes we've discussed consistently over recent years the evolution of Eagers from a traditional automotive retailer towards a broader mobility ecosystem. And the investment with Karma announced earlier this year is another important step in that journey. It also complements both our franchised new car automotive network by driving new car vehicle sales and our easy auto used car business with vehicle disposals and additional inventory to supply that business. and the Karma investment is expected to settle some time in September. Our ambition is simple, whatever mobility solution our customer needs, Eagers should be best positioned to help whilst also participating in the economic value chain. Now on to easy auto. And easy auto is the epitome of Eagers Automotive positioning the company to win the trend and leverage market opportunity. And we shared this bell curve earlier, but one other critical point must be highlighted. Not only are used cars largely immune from the new car OEM transformation, but the used car market is circa 3x the size of the new car market. So materially bigger, materially more stable and with a materially less capital-intensive growth requirement, 3 key fundamentals and only 3 that make the easy auto business so compelling for Eagers Automotive. And I'm pleased to report that our independent used car business continues to grow and perform. During the first half, the business delivered another record performance with underlying profit up 20% on prior year and with 14% additional volume. Putting out the easy auto retail component and excluding the Carlins auction business and the metrics look even better, with retail volume up 30%, retail revenue up 40% and underlying profit before tax increasing by 43% Today, easyauto is approaching 30,000 vehicles retailed annually pro rata and has established itself as the leading independent used vehicle retailer in Australia. One of the clearest indicators of the strength of the easy auto platform is that it continues to outperform regardless of market conditions. In fact, it's a business with operating metrics that are institutional. They're not market dependent, and that means it's profit that can be scaled more securely. For the first half of 2026, the used car market in Australia fell 6%. Easy auto grew sales by 30%. And easy auto margins grew by 11% when the retained values in the marketplace fell 7%. And we continue to turn inventory every 35 days on average compared to a market average of 50 days. These are the lead indicators and the operating discipline that makes the profit repeatable and scalable. Stock turn velocity underpins easy auto. Fast stock turns reduce risk improve working capital efficiency and provides greater flexibility in managing inventory levels as market conditions evolve. But -- and it is a considerable but. Stock velocity is a theoretic pipe dream unless you are able to have a consistent large volume of the right price stock to supply the business. Remember, there is no such thing as a used car factory from which to source your inventory. And this is the moat that exists around Easy Auto and the globally unique competitive advantage that Eagers' 16% and growing new car share and the access to trade-ins is provided. I hope that Eagers Automotive could never be accused of being passive or lacking ambition. We also like to think we are transparent in communicating our plans and this slide is a case in point. Eagers Auto has now reached approximately 30,000 vehicles retailed annually and has delivered another record performance. The Australian used vehicle market is valued at approximately $100 billion per annum and remains around 3x larger than the new vehicle market. The pathway for easy auto to retail 100,000 vehicles per annum by 2030 is clearly defined. But importantly, it's not dependent on a single initiative. When we look at easy auto, we see a clear pathway to becoming the scaled national leader. Few opportunities offer that combination of market size, proven execution and future growth potential. On to the outlook. And as we look ahead, we are focused on growing bigger and better business. The second half of '26 for Eagers will be characterized by 5 key factors. The whole industry and for eagers will be characterized by continued new car portfolio optimization, but that's nothing new for Egas. We've been doing that consistently over the last decade. Eager's outperformance of the industry on a margin basis will be supported by our larger Tier 1 OEM partnerships. We'll have strong Canada One contributions with a positive outlook for the second half and with a particular Toyota SKU, which mirrors the Australian expectations for Toyota also. We will continue to scale easyauto, and we will integrate the recent acquisitions and strategic joint venture partnerships. Turnover growth will be strong, whilst we expect to maintain our material net profit margin outperformance of the wider industry. Looking to 2027 and beyond, the bigger and stronger we get, the more active we become. This activity extends to both existing business optimization as well as organic, greenfield and acquisitive growth. The most important point to the Eagers growth pathway is that we outlined, it's not dependent on a single transaction or a single market or a single initiative. Rather, we have built a portfolio capable of delivering multiple years of earnings growth through disciplined execution and deliberate capital allocation while we continue to evolve our partner platform model. In such a dynamic industry, globally, this platform provides solutions for a wide range of industry participants, solutions for new brand entrants, solutions for established brands looking to new business models, solutions for stand-alone businesses to join the platform where all parties mutually benefit from the scale and value it creates for customers. It's becoming a globally unique competitive advantage that is very difficult to replicate. Today's result demonstrates the strength of Eagers Automotive, the quality of our people and the effectiveness of the strategy we've executed over many years. We've delivered record financial performance. We've successfully entered the Canadian market continued to expand our portfolio of growth platforms and further strengthen the foundations of the group for the future. Now importantly, none of this happens without the extraordinary commitment of our people. Across Australia and New Zealand and now Canada, thousands of team members continue to deliver for our customers, support our business partners and represents the wider business every single day. Their dedication, professionalism and commitment to continuous improvement what ultimately drive the results we get the privilege to report. Eagers Automotive has successfully evolved for more than 113 years. And today, we are laying the foundation for the next chapter of that journey based on the quality of the people we do business with. Be they employees, our customers, our valued business partners or our shareholders and investors. We look forward to updating you on our progress as we continue building one of the world's leading automotive retail and mobility platforms. Thank you so much for your attention

[Operator Instructions]. Your first question comes from Phil Chippindale from Ord Minnett.

Firstly, just in terms of margin expectations into the second half, Keith, could you just give us a sense of how you think the Australian business is sort of positioned and where you think those PBT margins also head towards in the second half, please?

Yes, sure, Phil. Hard to judge exactly. I think the comment that we've made in our presentation is we continue to grow the outperformance that eager delivers compared to the industry. we're more fortunate than most. We've got some very material parts of our business and relationships with some brands that we expect very strong second half. There was a call out around the well-documented SKU that Toyota, both in Canada and Australia is likely to be able to produce. We've got a number of other very large positions with really strong businesses that we expect a very strong second half from. That will certainly underpin our performance. One stat that is really interesting that most people don't know is this talk around portfolio optimization. Since 2019, we certainly don't communicate this widely, but we've actually sold, closed or consolidated 109 dealerships, which most people don't realize. In the last 12 months, we have opened greenfield operations in 93 different locations. So the reason I give those stats, Bill, is that we're super active on managing our portfolio to be the best portfolio. So it's not just about growing market share, and we sit at 16% of the new car market. It's making sure that we've got the best 16%. So if we've got with the best portfolio, if we continue to manage our business in a disciplined way and drive our cost down and optimize our operations, we're likely to significantly outperform. So as we see the second half, we usually have an improvement in the second half return on sales because of KPI checks from some large OEMs. We don't expect that to change this year. As I said, we've got a couple of key OEMs that will have a very strong second half. easy auto will continue to grow and its returns are very good. And then we've got 6 months of Canada on top. So as we sit here today, we don't we don't see a material change on what we produced previously.

Okay. Just covering to the OpEx line, that did beat my expectations. So well done once again, and you've obviously got a long track record of driving productivity and efficiency. Again, how much more do you feel like you've got in terms of opportunity to continue to squeeze your business a little bit more and continue to drive that efficiency going forward?

It's interesting, Phil. I wouldn't put a number on it. And it's a good question to ask. The best way to answer it is we've got so far to go in terms of rolling out the initiatives that we've got I sit here and I'll be quite frank. I'm frustrated with our lack of progress on a number of the productivity initiatives that we've got. Even though we've been doing them for 5 or 6 years, I believe there's a lot more to be done in that. The other thing is that, obviously, that as a percentage of revenue, that gets driven down with the scale that we drive and the operating leverage. So it's a combination of both the -- it's that operating leverage out of scaling the top line as well as the initiatives. We've got -- but Edward with me, we probably have 6 different technology initiatives that are in early-stage rollout that will make material benefits there. So it's a big part of our -- as I said in my speech notes, it's a big part of our DNA because we don't ever profess to grows better than other dealers that represent the same brands as us. We mine from time to time, and we certainly try and create more growth opportunities through ancillary performance like finance, insurance, car care and things like that. But ultimately, our success is based on having a lean operating model that is the most productive in the industry, and that's what we keep delivering on. So hard to put a number on it, Phil, but there's still plenty of road ahead.

Your next question comes from Tom Kierath from Barrenjoey.

Just at the AGM, I think you guys said orders outstrip deliveries by about 29%. It looks like you've delivered quite a lot in May and June, but are you able to give us an update of that order versus deliveries at the end of the half, just so we can, I guess, assess what's going to happen in the second half?

We still seeing there, time with an order bank of more than 25,000 units. So we've still got a very, very substantial order bank. But we were fortunate that we were able to deliver into the half year probably better than some others. But I also should point out that our order bank and our order right was materially higher even on a percentage base than virtually anyone else in the industry. As we go into the second half of the year, as we sit here in August, order right on a like-for-like basis is up 4% in August. Pleasingly, and I've sort of flagged it a couple of times, we don't generally talk to OEMs specifically on our calls. It's one of the things that eagers doesn't do. But pleasingly, on a number of those OEMs that we are overweight with or have a very large position with -- we've started to see that order right on a like-for-like basis lift as we go into the second half, which is great. And that under sort of pins the confidence that I just mentioned when I was answering the previous question.

Great. And then in Canada, there's obviously been some changes allowing Chinese OEMs into the market there. You've obviously got a pretty good track record with BYD. Can you maybe just talk at a high level how the discussions are going with the Chinese OEMs in the Canadian market to potentially bring them in over the next few years?

I'll talk about at a macro level, the industry over there is very interesting. It's a big market, $1.9 million. And the tariff-free Chinese volume is 49,000. So it's almost immaterial in terms of that total market. And I think it only grows to 70,000 over 5 years. So firstly, it is it allows an entry into that market for Chinese OEMs. And I think that is the most important point from an optics point of view for the Canadian government and the Canadian economy. At the end of the day, Canada makes a lot of cars. They produce a low cars over almost 1.5 million vehicles a year are made in Canada. So they've got a very local manufacturing base that they need to protect. And I think that's actually the most important thing in Canada to remember that they have that local manufacturing to protect. So I think the Canadian market is -- certainly, the door has been pushed a jar for a Chinese entrants. However, we expect that it will be a while before it's going to become a material part of the Canadian market, while things are as they are, if that makes sense.

Your next question comes from Jared Gelsomino from Morgans.

As I think in the results just interested in the EA 123 target FY '30, targeting 100,000 pretty meaningful uplift from the 30,000 -- you a bridge on the slide, but I'd be really interested if you speak to the execution obviously in a little more detail?

Big question, Jared, but thank you for asking it. It's an important question. The point of what we're talking about there is, and you can see the bridge is made up of a number of components, and I'll just talk to those components. So optimization is material, and it's more than 10,000 units per annum is out of optimizing our existing operation. What that means is lifting the, I guess, the bottom 30% of our operations to equal the average of the top 30%. And that will generate more than 10,000 units just out of the existing business. The reason that's so important is that's the eager DNA I've talked about. You got to make sure that your existing business is optimized and performing as well as it can before you rush off and grow elsewhere. There is still additional volume that will be transitioned into easy auto as we roll out our strategy in our franchise automotive business. So think of as we, again, consolidate, redevelop property and traditional stand-alone very small-scale used cars transition that -- those trade-in volumes and that very valuable used car inventory, they get access to when they sell a new car into easy auto. That's an equal sort of late in terms of volume there. The NAV upside is significant. One of the drags on the opportunity, not on our performance, but on the opportunity is at the moment, NAV still has had an overweight percentage of sales through the novated channels. and the novated channels are less conducive to allowing tradings to be captured. We are rapidly fixing that. That NAV opportunity is significant and to be able to use our scale partnerships with a number of key NAV brands and to funnel in and capture even our group average trade-in ratio seriously moves the dial and easy auto. Fleet is partnering with large fleet. Again, we're having some incredible wins. We are the only plug-and-play national disposal option for large fleets that can allow retail auction, but our prices, sell on behalf of a consignment sale, we have got a truly unique competitive advantage, and we're generating significant upside in fleet. And then the final is something that we've alluded to before, and that is using our partner model. And the best example of that is this recent acquisition. Our investment with Grand Motor Group is a classic example. We don't have any operations on the Gold Coast. It's a fantastic market for used cars. And when we spoke to Greg Scott, the founder of Green Motor Group, we talked about the easy opportunity and to establish a beachhead on the Gold Coast, and that's highly appealing to him. And that is just, I guess, a breadcrumb of how the partner model will roll out over the next 3 years. But we're very confident those bar graphs will -- some of them will be bigger and some of them will be smaller and some will happen sooner rather than later. But we're fairly confident and we wanted to communicate that and we wanted to put the pressure on because that's our plan on the growth of easyauto. It's really significant.

Perfect. That's clear. And maybe just one more if I can, just on Canada. I mean the group's probably outperformed the broader market there, which is a little softer to start the year, but impacting growth in recent months. I mean could you maybe just touch on how much has that being overweighted in those big 3 OEMs that you are over there versus maybe the impact of operational execution from the Canada One?

Well, it's a combination of both, Jared. You're absolutely right, being with the right brands, but like the eager story here, having the best portfolio is step one. then outperforming your peers and the market in those same brands. So to give you a stat, the Canada One team are up 5.5% in volume in that period in that 2-month period compared to those same brands consolidated in the marketplace being up only 0.7%. So they continually outperform their peers in the marketplace, and that goes to the quality of the operators. An interesting stat is that as we move into July and why we're so confident about Canada, their turnover was up by 12.8%, July '26 versus July '25, which is fantastic. And so we're really very confident in the way they're performing over there. The Canadian team. We've said it a million times. So I think we'll continue to say they are absolutely first class, but it's nice when they're first class and they're also confident.

Your next question comes from Chris Savage from Bell Porter.

Just on Toyota in Australia, you typically get a so-called check from Toyota every November, December, which is linked to volume. So is the lighter volume in the first half of the year potentially going to affect the check size come November, December?

Chris, it won't be overly material. The reason is it's on annual sales that -- what you're referring to and Toyota have very strong ambitions for the second half. And I think as I said there, lower volume in the first half was largely related to lack of supply. To give you an interesting stat. I think our deliveries for the first half were down circa 20%. Order rate was only down 7%, but even that's a misread. Because that 7% wasn't because demand was down 7%. It probably related to people who walked into a Toyota store and said, I'd like to buy Model X, and we said we can't supply for a number of months. And they went and bought something else because they're urgent to buy a car. So it wasn't a lack of demand and the order bank and the order right is strong. So Toyota have very strong ambitions to have a record second half of 2026. And we expect our overall year to be still very strong. So the materiality of that check when you flow that through to us is it was -- it's immaterial.

Do you expect a similar check size come November, December?

Maybe slightly less, but it's not -- it will be around the year.