Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — H1 FY2019 Earnings Presentation
32 slides from Cleanaway Waste Management's earnings presentation, Feb 14, 2019
Slide 1: FY19 Half Year Results
FY19 Half Year Results For the six months ended 31 December 2018 14 February 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 1H19 Results Update Page • Safety and Environmental 4 • Group Performance Overview 5-8 • Segments Performance 9-12 • Statutory NPAT Reconciliation to Underlying NPAT 13 • Balance Sheet, Cash Flow and Debt 14-16 • Changes to Accounting Standards 17 Enterprise Updates: • Capital Expenditure 18
Slide 4: Safety and Environmental – Our objective is Goal Zero
Safety and Environmental – Our objective is Goal Zero Total Recordable Injury Frequency Rate1 26.6 16.7 12.6 10.6 10.8 7.6 6.2 6.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1H19 Total recordable injury frequency Safety performance remains a key rate, with Toxfree included is in- performance measure for all
Slide 5: Group Performance Overview
Group Performance Overview Underlying Results Statutory Results $ million 1H18 1H19 Growth 1H18 1H19 Growth Gross Revenue 785.5 1,149.7 46.4% 785.5 1,149.7 46.4% Net Revenue 722.2 1,064.6 47.4% 722.2 1,064.6 47.4% EBITDA 159.0 228.9 44.0% 154.2 220.8 43.2% EBITDA Margin 22.0% 21.5% (50)bps 21.4% 20.
Slide 6: Revenue and earnings improvements driven by Toxfree acquisition, organic growth and synergy realisation
Revenue and earnings improvements driven by Toxfree acquisition, organic growth and synergy realisation Net Revenue ($million) 91.0 1,064.6 255.3 (3.9) 973.6 ❖ Organic growth in 1H19 was: ❖ Revenue up 9.3% 722.2 ❖ EBITDA up 14.7% ❖ EBITDA margins increased to 21.5%, up CWY 1H18 Tox 1H18 Elimination
Slide 7: Sustained earnings growth continues
Sustained earnings growth continues Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBIT ($million) and EBIT margin (%) 1,064.6 117.2 228.9 842.7 180.7 159.0 86.9 722.2 150.4 669.7 672.4 137.2 79.5 22.4% 22.0% 67.0 11.0% 11.0% 21.4% 21.5% 58.5 10.0% 10.3% 8.7% 20.5% 1H16 1H17 1H18 2H1
Slide 8: Increasing cash flows and shareholder returns
Increasing cash flows and shareholder returns Operating Cash Flow ($m) Cash Capex ($m) and % of D&A Free Cash Flow ($m) 175.6 112.1 93.0 85.7 74.3 70.0 67.5 112.8 108.4 117.0% 99.8 49.5 89.1% 50.5 77.8 89.0% 34.5 76.7% 18.0 53.8% 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18
Slide 9: Segments Performance Summary
Segments Performance Summary 9
Slide 10: Solid Waste Services Performance
Solid Waste Services Performance ❖ Revenue and earnings growth enhanced by: o Addition of Toxfree Solids collections business in North West WA and Qld o Full ramp up of recent major contract wins o Increase in landfill volumes along the east coast ❖ Commodity pricing was stable in first half of FY19
Slide 11: Industrial & Waste Services Performance
Industrial & Waste Services Performance ❖ Toxfree acquisition a major factor in growth ❖ Modest organic growth achieved after taking into account the completion of the Toxfree Wheatstone project in the previous corresponding period ❖ Increased scale allows segmentation and management across two dedi
Slide 12: Liquid Waste & Health Services Performance
Liquid Waste & Health Services Performance ❖ The Toxfree businesses of Technical & Environment Services and Health Services have both performed well and continue to deliver revenue and earnings growth ❖ Hydrocarbons had a good first half and remains on track for further growth with increased product
Slide 13: Statutory NPAT Reconciliation to Underlying NPAT
Statutory NPAT Reconciliation to Underlying NPAT $ million 1H19 Statutory Profit After Income Tax Attributable to Ordinary Equity Holders 60.8 Pre-tax adjustments: Loss on sale of investments 2.4 Acquisition and integration costs 5.7 Total Underlying Adjustments to EBITDA and EBIT 8.1 Tax impact of
Slide 14: Balance Sheet
Balance Sheet $ million 31 Dec 2017 30 June 2018 31 Dec 2018 ASSETS Cash and cash equivalents 183.3 52.0 44.9 ❖ Landfill remediation provision Trade and other receivables 261.1 369.5 384.4 reduction from June 2018 reflects remediation payments made offset Inventories 13.1 21.0 25.1 by the unwinding
Slide 15: Cash Flow
Cash Flow $ million 1H18 1H19 Underlying EBITDA 159.0 228.9 Cash flow of underlying adjustments (3.4) (8.3) ❖ Net cash from operating activities Less: Non-cash share of profits from associates (0.2) (0.8) increased 55.7% compared to Less: Other non-cash items 3.8 0.5 previous corresponding period Pa
Slide 16: Capital Structure – Debt
Capital Structure – Debt $ million 31 Dec 17 30 Jun 18 31 Dec 18 ❖ At 31 December 2018, the Group Current interest bearing liabilities – – – has $309.4 million of headroom Current finance leases 3.1 13.5 14.9 under existing banking facilities Non-current interest bearing liabilities 7.8 623.5 587.4
Slide 17: Changes to accounting standards
Changes to accounting standards1 Changes to accounting standards applied in FY19 ❖ Adopted from 1 July 2018 Revenue from contracts with customers ❖ Uses the full retrospective method of adoption ❖ No material impact AASB 15 ❖ Adopted from 1 July 2018 Financial Instruments ❖ Limited to balance sheet
Slide 18: Capital expenditure
Capital expenditure ❖ Cash capital expenditure1 in FY19 will be between 85% and 90% of D&A of $210-215 million (excluding ~$12 million relating to amortisation of customer intangibles and licences from the acquisition of Toxfree) ❖ Leasing finance utilised in 1H19 of $27.8 million for government rel
Slide 19: Landfill Remediation
Landfill Remediation ❖ Expenditure in 1H19 of $12.6 million in line with expectations ❖ No change to forecast spending previously advised: ❖ FY19 and FY20 ~$45 million per annum ❖ FY21 to FY25 ~$20 million per annum and reducing to an average of ~$10 million per annum thereafter Forecast Landfill Re
Slide 20: 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 21: Toxfree integration (continued…..)
Toxfree integration (continued…..) Segment and business unit alignment to operating ❖ Aligning strategic business units to waste streams, service offers and assets. Liquids vs model Technical & Environmental Services; Toxfree Solids internalisation where applicable ❖ Align Industrial & Waste Service
Slide 22: Toxfree integration (continued…..)
Toxfree integration (continued…..) Group procurement ❖ Major procurement program underway with significant additional resources and capabilities added ❖ Focussed effort on renegotiations, enabling and compliance of new deals. Enabling and compliance have been historic issues in procurement for savin
Slide 23: Multiple points of value creation – The Evolving Tonne
Multiple points of value creation – The Evolving Tonne Investing in the right ‘package’ of assets across the value chain through the evolving tonne Collections Resource recovery Treatment & Landfill ❖ Operational efficiency ❖ Access to strategic resource ❖ Well located prized assets ❖ Strong market
Slide 24: Footprint 2025 strategy implementation considers dimensions
Footprint 2025 strategy implementation considers 3 dimensions AVOID Value Chain Example RE-USE Value of the evolving 1. Waste stream: putrescible waste tonne through prism of RECYCLE 2. Value chain: Organics treatment waste hierarchy 3. Geography: Victoria ENERGY RECOVERY TREAT DISPOSE Geography Rel
Slide 25: The Toxfree acquisition expanded our footprint of prized infrastructure assets
The Toxfree acquisition expanded our footprint of prized infrastructure assets Darwin Wyndham Narangba (QLD) Cairns ▪ Treatment facility using PlasCon technology to treat and destroy various Kununurra Kwinana (WA) Derby ozone depleting substances, PCBs and pesticides ▪ Industrial & hazardous Fitzroy
Slide 26: In addition our prized infrastructure asset footprint was further enhanced in the half
In addition our prized infrastructure asset footprint was further enhanced in the half Brisbane Perth New waste transfer station located in Sydney Adelaide western Sydney. Commenced operations in January 2019. Licensed to handle 300,000 Melbourne tonnes per annum of putrescible and C&I waste New was
Slide 27: Priorities and FY19 Outlook
Priorities and FY19 Outlook Priority ❖ Maintaining the momentum of organic improvement in all of our businesses while continuing to generate synergies from the Toxfree integration ❖ Continue to work on improving customer service to deliver better volume and price outcomes ❖ Further optimisation of o
Slide 28: Questions
Questions
Slide 29: Appendices
Appendices Page Group Income Statement – Statutory and Underlying Results 30 Net Finance Costs 31 Statutory Segment Disclosures 32 29
Slide 30: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Statutory Results Underlying Adjustments Underlying Results $ million 1H18 1H19 1H18 1H19 1H18 1H19 Sales revenue external and other revenue (Gross Revenue) 785.5 1,149.7 — — 785.5 1,149.7 Share of profits in equity accounted investments 0.2
Slide 31: Net Finance Costs
Net Finance Costs Statutory Underlying $ million 1H18 1H19 1H18 1H19 Cash interest expense Bank interest and finance leases 4.8 14.1 4.8 14.1 Commitment and Guarantee fees 1.8 1.2 1.8 1.2 USPP Notes 2.5 — 2.5 — Interest received (0.2) (0.4) (0.2) (0.4) Net cash interest expense 8.9 14.9 8.9 14.9 Non
Slide 32: 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 744.3 169.4 218.3 — — — 1,132.0 Other revenue 7.2 0.1 10.2 — 0.2 — 17.
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