Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — FY2019 Earnings Presentation
33 slides from Cleanaway Waste Management's earnings presentation, Aug 15, 2019
Slide 1: FY19 Full Year Results
f FY19 Full Year Results For the twelve months ended 30 June 2019 15 August 2019
Slide 2: Disclaimer
Disclaimer • Forward looking statements – This presentation contains certain forward-looking statements, including with respect to the financial condition, results of operations and businesses of Cleanaway Waste Management Limited (“CWY”) and certain plans and objectives of the management of CWY. Fo
Slide 3: Agenda
Agenda FY19 Results Updates: Page • Safety and Environmental 4 • Group Performance Overview 5-8 • Segments Performance 9-12 • Personalisation of Health Care 13 • Statutory NPAT Reconciliation to Underlying NPAT 14 • Balance Sheet, Cash Flow, Debt and Change to Accounting Standard AASB 16 15-18 Enter
Slide 4: Safety and Environmental – Our objective is Goal Zero
Safety and Environmental – Our objective is Goal Zero Total Recordable Injury Frequency Rate1 -8.1% 26.6 16.7 12.6 10.6 10.8 7.6 6.2 5.7 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 Total recordable injury frequency Safety performance remains a key No major environmental incidents rate improvement on pri
Slide 5: Group performance overview
Group performance overview Underlying Results Statutory Results $million FY18 FY19 Growth FY18 FY19 Growth Gross Revenue 1,714.3 2,283.1 33.2% 1,714.3 2,283.1 33.2% Net Revenue1 1,564.9 2,109.1 34.8% 1,564.9 2,109.1 34.8% EBITDA 339.7 461.6 35.9% 323.1 433.7 34.2% EBITDA Margin 21.7% 21.9% +20bps 20
Slide 6: Revenue and earnings improvements in addition to Toxfree acquisition driven by organic growth and synergy realisation
Revenue and earnings improvements in addition to Toxfree acquisition driven by organic growth and synergy realisation Second Half FY19 vs Second Half FY18 Full Year FY19 vs Full Year FY18 Net Revenue ($million) Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBITDA ($million) and EBIT
Slide 7: Sustained earnings growth continues
Sustained earnings growth continues Net Revenue ($million) EBITDA ($million) EBIT ($million) CAGR +12.8% CAGR +18.9% CAGR +25.4% 2,109.1 461.6 240.8 339.7 281.3 301.3 166.4 1,564.9 231.3 142.9 122.6 1,301.1 1,320.7 1,350.7 97.5 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY19 FY15 FY16 FY17 FY18 FY
Slide 8: Increasing cash flows and shareholders returns
Increasing cash flows and shareholders returns Operating Cash Flow1 ($million) Free Cash flow ($million) Cash Capex ($m) and % of D&A CAGR +18.8% CAGR +81.8% 350.8 192.5 206.4 175.9 153.5 155.3 143.5 221.2 131.5% 176.2 190.7 189.6 117.0 96.7% 98.0% 82.8% 87.2% 50.7 62.7 18.9 FY15 FY16 FY17 FY18 FY19
Slide 9: Segments performance summary
Segments performance summary Net Revenue EBITDA1 EBIT1 $million FY18 FY19 Growth FY18 FY19 Growth FY18 FY19 Growth Solid Waste Services 1,107.3 1,362.3 23.0% 285.7 352.8 23.5% 159.2 204.0 28.1% Industrial & Waste Services 185.8 341.9 84.0% 18.9 46.6 146.6% 5.1 22.5 341.2% Liquid Waste & Health 322.4
Slide 10: Solid Waste Services performance
Solid Waste Services performance 1,362.3 % change $million FY18 FY19 FY19 v FY18 1,107.3 Net revenue 1,107.3 1,362.3 23.0% 958.8 EBITDA 285.7 352.8 23.5% 26.8% 25.8% 25.9% EBITDA Margin 25.8% 25.9% +10bps 14.4% 14.4% 15.0% EBIT 159.2 204.0 28.1% EBIT Margin 14.4% 15.0% +60bps FY17 FY18 FY19 Revenue
Slide 11: Industrial & Waste Services performance
Industrial & Waste Services performance % change 341.9 $million FY18 FY19 FY19 v FY18 Net revenue 185.8 341.9 84.0% 175.9 185.8 EBITDA 18.9 46.6 146.6% 13.6% EBITDA Margin 10.2% 13.6% +340bps 10.3% 10.2% 6.6% EBIT 5.1 22.5 341.2% 2.4% 2.7% EBIT Margin 2.7% 6.6% +390bps FY17 FY18 FY19 Revenue EBITDA
Slide 12: Liquid Waste & Health Services performance
Liquid Waste & Health Services performance 495.0 % change $million FY18 FY19 FY19 v FY18 Net revenue 322.4 495.0 53.5% 322.4 260.0 EBITDA 54.2 86.9 60.3% 16.8% 17.6% EBITDA Margin 16.8% 17.6% +80bps 15.7% 10.7% 11.4% 10.9% EBIT 36.8 54.0 46.7% EBIT Margin 11.4% 10.9% (50)bps FY17 FY18 FY19 Revenue E
Slide 13: Personalisation of health care
Personalisation of health care ❖ Small strategic acquisition of ASP Healthcare was completed in March 2019 ❖ ASP is a designer and manufacturer of healthcare sharps containers in Australia ❖ ASP holds patents relating to the FitPack personal sharps containers, enhancing the personalisation of health
Slide 14: Statutory NPAT reconciliation to underlying NPAT
Statutory NPAT reconciliation to underlying NPAT $million FY19 Statutory Profit After Income Tax Attributable to Ordinary Equity Holders 123.1 Pre-tax adjustments: Change in discount rate on remediation provisions 9.1 Loss on sale of investments 2.2 Acquisition and integration costs 16.6 Revaluation
Slide 15: Balance Sheet
Balance Sheet $million 30 June 20181 30 June 2019 ASSETS Cash and cash equivalents 52.0 56.2 ❖ Landfill remediation provision Trade and other receivables 369.5 382.0 increase from June 2018 mainly Inventories 21.0 19.9 reflects change of the discount rate Income tax receivable 8.2 — and increased pr
Slide 16: Cash Flow
Cash Flow $million FY18 FY19 Underlying EBITDA 339.7 461.6 Cash flow of underlying adjustments (24.5) (17.6) ❖ Net cash from operating activities Other non-cash items 2.0 (0.1) increased 58.6% compared to Payments for rectification and remediation (37.0) (36.0) previous corresponding period Other ch
Slide 17: Capital Structure – Debt
Capital Structure – Debt $million 30 June 2018 30 June 2019 Current finance leases 13.5 17.1 Non-current borrowings 623.5 580.3 Non-current finance leases 88.2 117.3 Gross Debt 725.2 714.7 Cash and cash equivalents (52.0) (56.2) Net Debt per Balance Sheet 673.2 658.5 Gearing ratio 21.3% 20.3% Net De
Slide 18: Change to accounting standards – AASB 16
Change to accounting standards – AASB 16 $million Estimated pro-forma impact on FY20: Increase in EBITDA 35 to 45 ❖ Adoption of AASB 16 Increase in Depreciation 30 to 40 commenced on 1 July 2019 ❖ Operating leases move onto the Increase in Interest Expense 8 to 12 balance sheet Decrease in Net Profi
Slide 19: Capital expenditure – discipline remains strong
Capital expenditure – discipline remains strong ❖ Cash capital expenditure1 in FY19 of $192.5 million ❖ Finance leasing utilised in FY19 of $47.9 million for government related contracts ❖ Cash capital expenditure1 in FY20 will be ~10% of net revenue ❖ When applicable, leases will be further utilise
Slide 20: Countdown to the end of legacy landfill remediation
Countdown to the end of legacy landfill remediation ❖ Expenditure in FY19 of $36.0 million is lower than expected due to project timing ❖ We advised in FY16 that spend would average ~$45 million per annum through to FY20 ❖ FY21 to FY25 average ~$20 million per annum and reducing to an average of ~$1
Slide 21: Toxfree integration remains on track
Toxfree integration remains on track To achieve the $35 million in total synergies the integration is managed through six major categories Segment & Business Unit Alignment to Operating Model Go to Market Harmonisation Organization Design by Segments and Strategic Business Units Operating Model and
Slide 22: Toxfree integration (continued…..)
Toxfree integration (continued…..) Segment and business unit alignment to operating ❖ Toxfree acquisition provides scale to split businesses by segment to allow greater model market focus ❖ Creation of Solids Northern Australia strategic business unit to better serve customers in the north regional
Slide 23: Toxfree integration (continued…..)
Toxfree integration (continued…..) Group procurement ❖ Procurement team and approach has been restructured ❖ Capability build complete ❖ Benefits from first tranche of contract negotiations realized 0% 50% 100% Company wide processes and IT Systems ❖ Data centers now consolidated ❖ Payroll systems s
Slide 24: Evolving tonne through a value chain – developing further within the circular economy
Evolving tonne through a value chain – developing further within the circular economy Continuing to invest in the right ‘package’ of assets across the value chain through the evolving tonne Collections Resource recovery Treatment and Disposal Plastic Pelletizing Cardboard Pulping Glass Beneficiation
Slide 25: Circular economy answer to China National Sword issues
Circular economy answer to China National Sword issues ❖ Bringing in manufacturing of Daniels Sharpsmart from third party China sourced to Plastic from the recycling In-house pelletizer in-house in Sydney stream of plastic ❖ Closed loop by using pelletized plastic from locally Depending on Supplies
Slide 26: Progress on the implementation of Footprint 2025…
Progress on the implementation of Footprint 2025… Over the past four years we have been recycling low return assets into highly prized infrastructure assets Old landfills • Brooklyn x 2 • Clayton • Tullamarine buffer land Old unlicensed sites • Crestmead • Kurri Kurri • Launceston • Bayswater • Morn
Slide 27: Alignment from Our Purpose to Our Operations to ESG Standards
Alignment from Our Purpose to Our Operations to ESG Standards with continued high standards of governance Working to report into ESG metrics by June 2020 except where disclosure of information may impact commercial outcomes 27
Slide 28: Priorities and FY20 Outlook
Priorities and FY20 Outlook Priority ❖ Improving driver attentiveness ❖ Maintaining the momentum of growth and improvement in all of our businesses, especially customer service while wrapping up the Toxfree integration ❖ Continue Footprint 2025 journey on the enhanced value chain FY20 Outlook ❖ We e
Slide 29: Questions
Questions
Slide 30: Appendices
Appendices Page Group Income Statement – Statutory and Underlying Results 31 Net Finance Costs 32 Statutory Segment Disclosures 33 30
Slide 31: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Underlying Statutory Results Underlying Results Adjustments $million FY18 FY19 Growth FY18 FY19 FY18 FY19 Growth Sales revenue external and other revenue (Gross Revenue) 1,714.3 2,283.1 33.2% — — 1,714.3 2,283.1 33.2% Share of profits in equi
Slide 32: Net Finance Costs
Net Finance Costs Statutory Underlying $million FY18 FY19 FY18 FY19 Cash interest expense Bank interest and finance leases 9.1 27.5 8.6 27.5 Commitment and Guarantee fees 5.3 2.9 5.3 2.9 USPP Notes 2.5 — 2.5 — Interest received (3.0) (0.7) (2.3) (0.7) Net cash interest expense 13.9 29.7 14.1 29.7 No
Slide 33: Statutory Segment Disclosures
Statutory Segment Disclosures Solid Waste Industrial & Liquid Waste Equity Corporate & Eliminations – GROUP Services Waste & Health Accounted Other Group Services Services Investments $million Revenue Sales of goods and services 1,490.6 324.6 434.2 — — — 2,249.4 Other revenue 12.7 0.2 20.8 — — — 33.
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