Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — FY2023 Earnings Presentation
49 slides from Aurizon's earnings presentation, Aug 14, 2023
Slide 1: Aurizon FY2023 Results
Slide 2: No reliance on this document / Statements about the future
NO RELIANCE ON THIS DOCUMENT STATEMENTS ABOUT THE FUTURE This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to as “Aurizon” which includes its related This document contains “forward-looking statements”. The words “expect”, “anticipate”, “likely”, “intend”, “should”,
Slide 3: TRIFR, LTIFR and SIFR safety performance
TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)1 AND LOST ACTUAL AND POTENTIAL SERIOUS INJURY AND FATALITY TIME INJURY FREQUENCY RATE (LTIFR) FREQUENCY RATE (SIFRa+p)2 Incidents per million hours worked Incidents per million hours worked 10.21 6.77 -2% 8.51 8.36 restatement -56% 4.41 3.49 3.46 2.93 1
Slide 4: Photog Sed Freight train ahead of thé launchror the Secone wegily Meibounjeto PerthService >
Photog Sed Freight train ahead of thé launchror the Secone wegily Meibounjeto PerthService > =~ : —.* Sy 8 > Caley : 3 = — 3 "a? AURIZON. iv
Slide 5: Aspirational statements note
1. Please refer to slides 2 and 3 of Aurizon’s 2023 Investor Day presentation (available at aurizon.com.au) for important cautionary language in respect of ‘aspirational statements’. As noted in those slides, market share opportunities assume Aurizon secures part of an available range of organic and
Slide 6: Aspirations: Resilient Coal and Network, drive Bulk growth, Containerised Freight
Resilient Coal and Drive Bulk growth Establish nationally significant Network businesses across national footprint containerised freight supply chain Our aspiration to achieve Our aspiration to achieve Highly disciplined businesses, supporting Aurizon's 25-30% >500k TEU diversified portfolio share o
Slide 7: Resilient Coal and Network businesses; Drive Bulk growth
Growth in Bulk and Resilient Coal and Network Drive Bulk growth Establish nationally significant Containerised Freight reduces businesses across national footprint containerised freight supply chain thermal coal revenue exposure Coal plus Network EBITDA ($m) Bulk EBITDA ($m) TEUs3 Non-Network Revenu
Slide 8: FY2023 results highlights
EBITDA ONE RAIL ROIC2 FREE CASH FLOW3 (EXCLUDES GROWTH CAPEX) Bulk acquisition (and $1,428m East Coast Rail divestment) 7.5% $297m down 3% down 2.8ppts down 61% complete COAL VOLUMES BULK VOLUMES BULK: REVENUE SHARE4 DIVIDEND (EXCLUDES NETWORK BUSINESS UNIT) Total 15.0cps 185.0m 68.2m 45% down 30% d
Slide 9: Business unit performance and FY2024 outlook
Lower volumes from the impact of prolonged wet weather and (non- Step-up in EBITDA driven by Bulk Central partly offset by wet Network volumes were below the regulatory forecast resulting in an pass through) access take-or-pay driving lower EBITDA weather, supply chain disruptions and customer speci
Slide 10: Financial Performance
—iInancial-Performance " Géor piatt . g S roup Executive Strategy ~ Photo: Containerised Freight train at Stuart, Queensland \ £7? AURIZON.
Slide 11: Group financial results
$m 1H 2H FY2023 FY2022 Variance (%) › Revenue growth primarily driven by the acquisition of One Rail Australia (Bulk Central) completed July 2022, and a Revenue 1,694 1,817 3,511 3,075 14% minor increase to Network Allowable Revenue, offsetting Operating Costs (Total) (1,021) (1,062) (2,083) (1,608)
Slide 12: Coal: revenue, operating costs and EBITDA drivers
EBITDA: Major drivers ($M) Revenue 1 Operating costs 2 net of fuel and access (revenue and cost) 541 $1,181m ($726m) 52 (2%) (10%) 6 28 1 455 13 EBITDA Tonnes hauled $455m 185.0m FY2022 Volume Net Revenue Net Take- Other Operating FY2023 Yield or-Pay Costs (16%) (5%) › EBITDA decreased to $455m due
Slide 13: Bulk: revenue, operating costs and EBITDA drivers
EBITDA: Major drivers ($M) Total Revenue Operating Costs net of fuel and external access (revenue and cost) $1,063m ($849m) +52% (50%) 260 340 214 1 135 EBITDA Rail Tonnes Hauled $214m 68.2m FY20222 Revenue Operating Costs Other FY2023 +59% +34% › EBITDA increased by $79m to $214m due to acquisition
Slide 14: Network: revenue, operating costs and EBITDA drivers
EBITDA: Major drivers ($M) Total Revenue Operating Costs net of fuel and energy/electric charges (revenue and cost) $1,337m ($524m) 23 30 +12% (34%) 813 19 801 EBITDA Tonnes $813m 207.6m FY2022 Access Revenue Other Revenue Other Operating Costs FY2023 +1% +1% › Network volumes were below the regulat
Slide 15: Free cash flow
FREE CASH FLOW ($M)1 FY24 Driven by Bulk $765 Central & Network ($39) take-or-pay Free cash flow expected to be materially higher driven by: ($102) Driven by Network and • Higher earnings One Rail acquisition Driven by higher tax • Lower cash taxes instalment rate in FY2023 and the • Collection of N
Slide 16: Capital expenditure
CAPITAL EXPENDITURE1 ($M) ~850-960 Growth: Coal & Network 770 Growth: Bulk & Containerised Freight 4 ~250-300 Non-Growth: All Business Units 208 527 532 490 495 490 ~600-6602 558 FY18 FY19 FY20 FY21 FY22 FY23 FY24f Bulk & 3 4 Network Coal Containerised Freight Corporate Total Non-Growth 331 114 90 2
Slide 17: Growth capital expenditure
FY2023 FY2024 Actual Expected Rolling Stock $128m ~$185m Standard Gauge Locomotives & Wagons (and Containers) Port and Terminal Equipment $21m ~$40m Terminal Land and Infrastructure $29m ~$30m Track Infrastructure and Other $34m ~$30m Total Growth Capital1 $212m $250m-$300m Investor Day (July 2023)
Slide 18: Funding activity and key debt metrics
FUNDING ACTIVITY KEY DEBT METRICS1 FY2023 FY2022 Aurizon Network Weighted average maturity1 3.6 years 3.4 years › $100m across 10-year and 12-year A$ Private Placement issued in December 2022 and February 2023 Group interest cost on drawn debt 4.1% 3.4% › $1,090m re-financing of existing bilateral b
Slide 19: Photo: Aurizon train carrying minerals sands for Tronox at Lake Hart Rest Area, South
Photo: Aurizon train carrying minerals sands for Tronox at Lake Hart Rest Area, South Australia
Slide 20: FY2024 outlook and key assumptions
FY2024: › Group underlying EBITDA expected to be in the range of $1,590m - $1,680m › Sustaining capex expected to be $600-$660m (including ~$40m of transformational project capital) › Growth capex expected to be $250-$300m Key assumptions › Network: revenue and EBITDA growth driven by a $125m increa
Slide 21: FY2023 results: outlook and key takeaways
FY2023 RESULTS = OUTLOOK & KEY TAKEAWAYS, Key Messages Network and Coal businesses are resilient, generating attractive free cash flow -~ Greater market share and Ror) operational synergies unlocked from One Rail Australia acquisition Focus on safe and efficient services & as Containerised Freight s
Slide 22: Slide 22
Slide 23: Appendix
Slide 24: Aurizon business units overview
Network ▪ Operation of the Central Queensland Coal Network (2,670km), critical infrastructure supporting ~90% of Australian metallurgical coal export volume ▪ Around 70% of volume hauled across the network is considered to be metallurgical coal (remaining 30% thermal coal), with demand linked to Asi
Slide 25: Capital allocation hierarchy
Capital Allocation Hierarchy Capital Management › Opportunities if there is surplus capital Determine Available Capital Non-Growth Capital Dividends › Ongoing operating cash flows › Sustaining and transformation › Within 70-100% payout ratio or → projects › Additional funding capacity available: › N
Slide 26: Sustainability: net-zero, communities and governance
NET-ZERO COMMITMENT BY 20501… …WHILE WE SUPPORT OUR REGIONS AND …AND LEAD THROUGH TRANSPARENT COMMUNITIES… GOVERNANCE › Climate Strategy and Action Plan released in › Third Reconciliation Action Plan published in › Board provides sustainability oversight and October 2020 March 2022 direction › Conti
Slide 27: Steel production and thermal coal import trends
GLOBAL CRUDE STEEL PRODUCTION | BLAST FURNACE-BASIC OXYGEN ASIA: THERMAL (STEAM) COAL IMPORT VOLUME | SHARE OF GLOBAL THERMAL FURNACE SHARE1 (STEAM) COAL IMPORT MARKET2 2.0bt 1,000mt 83% 90% +3% 80% 800mt 1.5bt 70% 600mt 1.0bt 60% 400mt 73% 71% 72% 50% 74% 0.5bt 69% 65% 200mt 34% 40% 55% 58% 62% 0.0
Slide 28: Australian exploration, capex, crop production and supply growth
AUSTRALIA: EXPLORATION EXPENDITURE: SELECTED BASE METALS1 CAPITAL EXPENDITURE: METAL ORE MINING1 +15% $1,000m $25b +6% $20b $750m $15b $500m $10b $250m $5b $0m $0b CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 AUSTRALIA: CROP PRODUCTION VOLUME2 A
Slide 29: Volumes by quarter: tonnes, TEUs, NTKs
Quarter Ending Financial Year Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Variance1 FY2022 FY2023 Variance1 Tonnes (million) Coal: CQCN 36.5 33.1 33.8 30.1 36.6 - 141.1 133.6 (5%) Coal: NSW & SEQ 13.3 11.6 12.1 13.4 14.4 8% 52.9 51.4 (3%) Coal Total 49.8 44.7 45.8 43.4 51.0 2% 194.0 185.0 (5%) Bulk Total 13.
Slide 30: Enterprise agreements
# Staff Headline Increases Term Enterprise Agreement Covered Expiry Date Status (years) Year 1 Year 2 Year 3 Year 4 (approx.) SA/NT Bulk Rail Operations 170 4 16 Dec 2023 3.0% 3.0% 3.0% 3.0% Planning Traincrew & Transport Operations 5.3% QLD Bulk 370 1 24 Jan 2024 Planning Maintenance 5.3% SA/NT Bul
Slide 31: EBITDA by segment
FY2023 FY20222 Variance Coal 455 541 (16%) Bulk 214 135 59% Network 813 801 1% Other (54) (10) (440%) EBITDA 1,428 1,467 (3%) 1. Continuing operations 31 2. The Bulk and Other segments for FY2022 have been restated for consistency with current year presentation
Slide 32: EBITDA bridge by segment
12 86 79 1,467 44 1,428 FY2022 Bulk Network Coal Other FY2023 1. Continuing operations 32 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 33: Summary balance sheet
30 June 2023 30 June 2022 Current assets 1,193 860 Property, plant and equipment (PP&E) 9,945 8,416 Other non-current assets 541 400 Total Assets 11,679 9,676 Other current liabilities (744) (713) Total borrowings (5,142) (3,221) Non-current liabilities (1,440) (1,330) Total Liabilities (7,326) (5,2
Slide 34: Debt maturity profile
1,353 AURIZON NETWORK ($m) 120 455 711 500 425 778 310 264 205 142 195 82 75 80 184 20 115 122 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 AURIZON OPERATIONS ($m) 900 400 475 465 335 196 500 153 65 103 50 130 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 Undra
Slide 35: Debt reconciliation to financial statements
$m Commentary Total debt including working capital facility 5,296 Borrowings on a cash basis Reconciliation to Financial Statements Add/(less): Borrowings acquired in connection with the Tarcoola-to-Darwin Concession Deed Corporation Loan 6 for face value of $50m issued at below market interest rate
Slide 36: Dividend history
Year Interim Final Total Payout Ratio1 Franking Ratio2 cents/share cents/share cents/share FY2023 7.0 8.0 15.0 75.0% 80.0% FY2022 10.5 10.9 21.4 75.0% 98.0% FY2021 14.4 14.4 28.8 100.0% 70.0% FY2020 13.7 13.7 27.4 100.0% 70.0% FY2019 11.4 12.4 23.8 100.0% 70.0% FY2018 14.0 13.1 27.1 100.0% 55.0% FY2
Slide 37: Coal financial summary
$m FY2023 FY2022 Variance Above rail 1,175 1,195 (2%) Track access 350 360 (3%) Other 6 4 50% Total Revenue 1,531 1,559 (2%) Access costs (400) (376) (6%) Operating costs (676) (642) (5%) EBITDA 455 541 (16%) Depreciation & Amortisation (204) (208) 2% EBIT 251 333 (25%) Tonnes (m) 185.0 194.0 (5%) N
Slide 38: Coal volumes by system
FY2023 FY2022 Variance Central Queensland Coal Network (CQCN) Newlands 16.1 17.8 (10%) Goonyella 60.1 61.5 (2%) Blackwater 44.4 49.5 (10%) Moura 13.0 12.3 6% Total CQCN 133.6 141.1 (5%) New South Wales and South East Queensland (NSW & SEQ) West Moreton 2.1 2.7 (22%) Hunter Valley and Illawarra 49.3
Slide 39: Coal contract volume expiry
AURIZON COAL CONTRACT VOLUME EXPIRY BY YEAR1 COAL CONTRACT PORTFOLIO EXPIRY1 AS AT 30 JUNE 2023 AS AT 30 JUNE 2023 75 12% 21% 0-3 years 3-7 years 60 7+ years Million tonnes per annum (Mtpa) 45 67% FORECAST COAL CONTRACTED VOLUMES (MT) 30 230 230 230 62 57 60 15 169 173 170 0 FY24 FY25 FY26 FY27 FY28
Slide 40: Bulk financial summary
$m FY2023 FY20221 Variance Revenue 1,063 700 52% Access costs (104) (80) (30%) Operating costs (745) (485) (54%) EBITDA 214 135 59% Depreciation & Amortisation (108) (39) (177%) EBIT 106 96 10% Above Rail Tonnes (m) 68.2 50.8 34% Note: Due to rounding, the sum of components may not equal the corresp
Slide 41: Network financial summary
$m FY2023 FY2022 Variance Track Access 1,255 1,134 11% Services & Other 82 59 39% Revenue 1,337 1,193 12% Energy & Fuel (215) (108) (99%) Other Operating Costs (309) (284) (9%) EBITDA 813 801 1% Depreciation & Amortisation (351) (345) (2%) EBIT 462 456 1% Tonnes (m) 207.6 206.5 1% NTK (bn) 50.4 51.9
Slide 42: Network volumes by system
FY2023 FY2022 Variance Newlands 20.7 13.9 49% Goonyella 107.0 105.6 1% Blackwater 52.4 58.3 (10%) Moura 12.9 12.0 8% GAPE 14.6 16.8 (13%) Total (mt) 207.6 206.5 1% 42 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 43: Network access revenue movement
$m Increase in non GAPE MAR (excluding Revenue Cap) from FY2022 to FY2023 34 Revenue Cap movements FY2022 to FY2023 (6) Volume under-recovery for FY2022 net of take-or-pay (reversal of impact) 39 Volume under-recovery for FY2023 net of take-or-pay (21) GAPE revenue (9) WIRP Fees (10) Electric Tracti
Slide 44: Indicative Network adjusted Maximum Allowable Revenue
INDICATIVE NETWORK ADJUSTED MAXIMUM ALLOWABLE REVENUE (MAR)1 FY2022 – FY20242 ($M) +$125m 1,088 99 Adjustments Adjustments 29 5 963 5 10 1 1 4 1 27 21 935 39 941 896 FY22 FY19/FY20 Minerva DAAU FY21 Capital Rec Rev Cap FY20 Rev Cap FY21 Non-Adjustment FY23 Cap Rec Rev Cap FY21 Rev Cap FY22 Non-Adjus
Slide 45: Revenue adjustment amounts
› Revenue adjustment amounts (RAA) are the difference by system between Aurizon’s Total Actual AT2-5 Revenue and Allowable AT2-5 Total Total AT2-4 AT5 Revenue Financial Year (inc-GAPE) (ex-GAPE) $m $m $m $m › The RAA amounts are collected or repaid through a tariff adjustment two years later › All r
Slide 46: Network access revenue reconciliation
FY2023 FY2022 FY2021 $m Actual Actual Actual Access Revenue (AT1 to AT5) (ex. GAPE) 942 891 911 Approved Adjustments to MAR Revenue Cap (ex. GAPE and inclusive of capitalised interest) (1) 5 - Regulated Access Revenue (ex. GAPE) 941 896 911 Total non-regulated Access Revenue (ex. GAPE) 161 77 86 Tot
Slide 47: Proposed final allowable revenue
PROPOSED FINAL ALLOWABLE REVENUE ($m)1 Building block component FY20242 FY2025 FY20263 FY2027 Preliminary Allowable Revenue Proposed Final Allowable Revenue Proposed Final Allowable Revenue Proposed Final Allowable Revenue Return on capital 493.7 515.5 520.9 523.9 Depreciation (less inflation) 249.5
Slide 48: UT5 WACC reset process
UT5 WACC RESET PROCESS 14 March 2022 1 July 2023 30 June 2027 1 July 2024 1 July 2025 Report Date1 Reset Date Terminating Date WACC Preliminary Reset WACC Proposed Final Reset WACC Revenue Cap true up of Final Reset WACC (compared to Preliminary 6.30% 8.18% 8.51%3 Reset WACC) for the period 1 July 2
Slide 49: Investor relations contacts
James Coe | oF ae % | Head of Investor Relations & Market Intelligence — . 7526 P , MES com.au Pd ¥ Jason Di Pietro Manager Investor Relations +617 3019 1135 Jason.DiPietro@aurizon.com.a ASX: AZJ £2? AURIZON. i 4 Woden Maintainer and Emma Bradtke, Apprentice Mechanical Fitter, Stuart (Quéepsiand) w