Emeco Holdings Limited · ASX:EHL
Emeco — H1 2011 Earnings Presentation
31 slides from Emeco's earnings presentation, Feb 22, 2011
Slide 1: 2011 Interim Results
For personal use only 2011 Interim Results Keith Gordon, Managing Director & Chief Executive Officer Stephen Gobby, Chief Financial Officer
Slide 2: Emeco 2011 Interim Results
For personal use only Emeco 2011 Interim Results Overview Financials Strategy & Outlook Questions Appendices Picture: Komatsu 830E-AC 240 tonne dump truck being prepared for rent in Mackay, Queensland
Slide 3: Overview
For personal use only Overview Keith Gordon Managing Director & Chief Executive Officer
Slide 4: Summary
Summary Strong activity in all core markets driving improved financial performance For personal use only Highlights Strong operating performance in all regions (87.6% average utilisation) New debt facility established with extended maturities Further investment in large mining fleet Refocusi
Slide 5: Financial summary
Financial summary Maintaining focus on shareholder returns For personal use only Normalised NPAT of $29.5M, up 116.9% PCP Statutory NPAT of $24.1M o Discontinued operations delivered $0.6M profit o One-off impairment of Indonesian debtor $6.0M Significant balance sheet capacity to pursue growt
Slide 6: Rental fleet utilisation
Rental fleet utilisation Consistently high fleet utilisation in all regions For personal use only High enquiry levels from customers Average Equipment Utilisation by WDV 100 % 31 Dec - 87.1% High utilisation of existing fleet providing 95 % opportunities to further invest 87.6% Avg 90 % 83% Avg
Slide 7: Equipment
Equipment Continuing to grow the large mining fleet For personal use only June 09 June 10 Dec 10 Civil Fleet Civil Fleet Civil Fleet 8% 9% 16% WDV: Small Mining Jun-09: $623M 45% Large Large Mining Small Mining Jun-10: $572M Small Mining 36% 55% Large Mining Dec-10: $557M 24% Mining 47% 60% Civil Fl
Slide 8: Customers
Customers Leveraged to bulk commodities and gold with significant exposure to production cycle For personal use only Diversified global commodity exposure Customer composition differs by market Australia Indonesia Canada 9% 18% 100% 100% 100% 7% 75% 75% 75% 9% 21% 50% 50% 50% 9% 25% 25% 25% 9% 18% 0
Slide 9: Safety performance
For personal use only LTI FR (per million hrs) - 10.0 12.0 2.0 4.0 6.0 8.0 Dec-08 Jan-09 Feb-09 Mar-09 Apr-09 Safety performance May-09 Jun-09 Jul-09 Aug-09 Sep-09 Oct-09 Nov-09 Dec-09 Jan-10 Note: LTIFR measured as number of LTI incidents per million man hours Feb-10 Mar-10 Apr-10 Our customers val
Slide 10: Business unit returns
Business unit returns Positive trend in ROFE across all core markets For personal use only Investment of incremental capital can deliver acceptable returns 24.0% R12 at Jun-08 25.0% 23.4% R12 at Jun-09 R12 at Jun-10 20.0% 17.6% R12 at Dec-10 16.6% R6 at Dec-10 15.0% 14.0% 15.0% 13.0% 10.0% 8.8% 5.0%
Slide 11: Financials
For personal use only Financials Stephen Gobby Chief Financial Officer
Slide 12: Earnings
Earnings Trough earnings in 1H10 with earnings momentum continuing from 2H10 into 1H11… For personal use only A$ Millions 1H10 2H10 1H11 Var Var Operating Operating Normalised $ % Revenue 208.5 235.9 253.6 45.1 21.6 EBITDA 82.5 107.9 115.0 32.5 39.4 margin (%) 39.6 45.7 45.4 - 5.8 EBIT 32.1 51.5 54.
Slide 13: Earnings composition
Earnings composition Improving capital turnover and consolidation of margins For personal use only Rental Revenue Earnings & Margins EBITDA EBIT 350 80.0% Margin Margin 50.0% 140 70.0% 45.0% 300 120 40.0% 60.0% CAPITAL TURNOVER 250 35.0% 100 50.0% 30.0% 200 80 A$M A$M 40.0% 25.0% 150 60 20.0% 30.0%
Slide 14: Cash flow
Cash flow $57.8M capital released through inventory reductions and civil fleet disposals 1H11 Cash Flow For personal use only 140 33.8 120 100 24.0 80 A$m 77.6 (5.0) 60 40 (85.0) (11.3) 34.1 20 (12.8) 21.3 0 Operating Working Sales & Parts Disposals Rental Capex Other Capex Cash flow Dividends Free
Slide 15: Balance sheet & borrowings
Balance sheet & borrowings Balance sheet capacity positions Emeco for growth Net Debt & Facility Headroom For personal use only 700 600 Reducing debt profile given strong operating cash 500 flow & capital release 400 A$M 300 200 Conservative gearing of 1.15x (Net Debt:EBITDA) 100 below target ra
Slide 16: Capital management
Capital management Capital release program and excess franking credits supports one-off fully franked special dividend For personal use only Returning $31.6M to shareholders by way of special dividend o Funded from $33.4M capital released in 1H11 from underperforming assets o Balance of $60.0M cap
Slide 17: Return on capital
Return on capital Improving shareholder returns For personal use only Return on Capital ROC of 11.2% at 31 Dec-10 1,400 18.0% ROC improvement the combination 1,200 16.0% of strong earnings from mining assets 14.0% 1,000 and liberation of underperforming 12.0% capital 800 10.0% 600 8.0% Additio
Slide 18: Strategy & Outlook
For personal use only Strategy & Outlook Keith Gordon Managing Director & Chief Executive Officer
Slide 19: The Emeco Strategy
The Emeco Strategy Strategy developed to drive business performance and growth For personal use only Ongoing optimisation of Grow without sacrificing invested capital and quality of earnings earnings Leverage capabilities for Continue to evolve the growth business model Consistent Value Crea
Slide 20: Focus on Growth
Focus on Growth Full utilisation and robust demand outlook supports further organic growth investment For personal use only Organic Growth Procurement Strategy Capital Investment Target large mining fleet to enhance FY11 estimated capex portfolio returns • Sustaining: $100-110M (1H11 $50M) • Gro
Slide 21: Summary
For personal use only Summary Strong operating result delivering improved financial performance Positive commodity fundamentals in key operating regions Committed capex resulting from procurement strategy to meet further growth opportunities Balance sheet to support value accretive growth 21
Slide 22: Questions
For personal use only Questions
Slide 23: Company Contact Details
For personal use only Company Contact Details Thank you for your interest in Emeco Further investor enquiries should be directed to: Keith Gordon CEO Stephen Gobby CFO Graham Borgerson Investor Relations emecogroup.com
Slide 24: Appendix
For personal use only Appendix
Slide 25: Detailed Financials
For personal use only Detailed Financials Profit & Loss Cash flow A$ Millions 1H10 2H10 1H11 Var Var A$ Millions 1H10 2H10 1H11 PCP PCP Operating Operating Normailsed $ % A$ m A$ m A$ m $ % Revenue 208.5 235.9 253.6 45.1 21.6 Operating Cash flow 81.1 97.1 106.7 25.6 31.6 EBITDA 82.5 107.9 115.0 32.5
Slide 26: Detailed Financials
For personal use only Detailed Financials Balance Sheet Debt Facilities Facility limit Drawn Headroom Maturity A$ Millions Dec 09 Jun-10 Dec-10 A$ Millions (31 Dec 10) A$ m A$ m A$ m Senior Debt (3-year) 300.0 242.7 57.3 Nov 2013 General working capital 65.3 85.9 73.2 Senior Debt (5-year) 150.0 – 15
Slide 27: Operating Segments
For personal use only Operating Segments Earnings bridge (2H10 to 1H11) 65 60 6.1 4.3 (0.1) 55 (1.5) (3.9) 1H11 50 (1.7) 2H10 EBIT A$m 45 EBIT $54.7M $51.5M 40 35 30 2H10 AUS RENTAL VIC RENTAL SALES & PARTS CANADA INDONESIA CORPORATE 1H11 Funds Employed at Jun-10 Funds Employed at Dec-10 3% 3% 7% QL
Slide 28: Australian Business Unit Utilisation
For personal use only –% 100 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % Dec-07 Feb-08 Apr-08 Jun-08 Aug-08 Oct-08 Dec-08 Feb-09 Apr-09 WA Jun-09 Aug-09 Oct-09 Dec-09 –% 100 % 10 % 20 % 30 % 40 % 50 % 60 % 70 % 80 % 90 % Feb-10 Dec-07 Apr-10 Feb-08 Jun-10 Apr-08 Aug-10 Jun-08 Oct-10 Aug-08 Dec-10
Slide 29: International Business Unit Utilisation
For personal use only International Business Unit Utilisation PTI Canada 100 % 100 % 90 % 90 % 80 % 80 % 70 % 70 % 60 % 60 % 50 % 50 % 40 % 40 % 30 % 30 % 20 % 20 % 10 % 10 % –% –% Feb-08 Feb-09 Feb-10 Dec-07 Jun-08 Dec-09 Jun-10 Dec-10 Dec-08 Jun-09 Aug-08 Aug-09 Aug-10 Oct-08 Oct-09 Oct-10 Apr-09
Slide 30: Commodity Exposure
For personal use only Commodity Exposure Australian Rental Indonesian Rental Canadian Rental Coking Coal Coking Coal Thermal Coal 2% 4% 6% 3% 18% Thermal Coal Iron Ore 13% 23% Iron Ore Gold 38% Gold Zinc Zinc Copper 26% 17% Copper Oilsands Oilsands Civil 44% 14% 91% Civil Other Other 30 Note: Percen
Slide 31: Disclaimer
For personal use only Disclaimer Reliance on third party information The information and views expressed in this presentation were prepared by Emeco Holdings Ltd (the Company) and may contain information that has been derived from publicly available sources that have not been independently verified.