Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — FY2024 Earnings Presentation
41 slides from Cleanaway Waste Management's earnings presentation, Aug 21, 2024
Slide 1: FY24 Results Presentation
FY24 Results Presentation 21 August 2024
Slide 2: Disclaimer
Disclaimer This presentation contains summary information about the current activities of Cleanaway Waste Management Limited (“CWY”) and its subsidiaries that should be read in conjunction with CWY's Consolidated Financial Report for the financial year ended 30 June 2024 and associated results annou
Slide 3: Acknowledgement of Country
Acknowledgement of Country Cleanaway acknowledges the Traditional Owners of the lands on which we operate and in the communities in which we exist. We pay our respect to all Aboriginal and Torres Strait Islander peoples. Artwork by Marcus Lee, a proud Aboriginal descendant of the Karajarri people fr
Slide 4: Agenda
Agenda 1. Highlights and overview Presenters: 2. Financial performance Mark Schubert, CEO & MD Paul Binfield, CFO 3. Segment updates 4. Strategic progress and outlook Front cover: Cleanaway Mansfield, VIC trucks in their new livery, July 2024
Slide 5: FY24 highlights and overview
FY24 highlights and overview Execution and progress underpins confidence in continued delivery in FY25, FY26 and beyond • Delivered double digit EBIT growth and increased ROIC • Restoration plans executed ‒ QLD Solids profitability restored ‒ Health Services transformation on track ‒ Vacancies and t
Slide 6: FY24 financial highlights
FY24 financial highlights Delivered strong financial result and improved shareholder returns Net Revenue1,2 EBITDA EBIT Net operating $3,194.5m $728.7m $359.2m cashflow 7.7% 9.1% 18.9% $542.1m on FY23 on FY23 on FY23 12.5% on FY23 EBIT margin 11.2% up 100 bps vs FY23 NPAT ROIC EPS Final DPS
Slide 7: Working together to create a safe and respectful culture
Working together to create a safe and respectful culture Execution of HS&E and People & Culture strategies to drive sustainable change Progressing our focus on preventing serious injuries Total Recordable Injury Frequency Rate (TRIFR) 4.5 4.6 • Cleanaway’s personal safety performance amongst best-in
Slide 8: Recovering resources and reducing emissions
Recovering resources and reducing emissions Enabling at-scale-circularity and executing our methane reduction plan Protecting the environment GHG emissions reduction on track to meet 2030 targets Improved environmental controls Compared with FY23: • No significant environmental incidents • 7.8% redu
Slide 9: Financial Performance
Financial Performance Pictured: Western Sydney MRF water tanks
Slide 10: Financial performance summary
Financial performance summary Delivered improved returns to shareholders through EBIT margin expansion and higher ROIC Underlying Statutory FY24 FY23 Variance FY24 FY23 Variance ($m) ($m) (%) ($m) ($m) (%) Gross Revenue 3,758.2 3,558.8 5.6 3,758.2 3,558.8 5.6 Net Revenue 3,194.5 2,965.8 7.7 3,194.5
Slide 11: Net operating cash flow
Net operating cash flow Underlying business improvement driving cash flow growth during a period of higher interest payments Net operating cash flow ($m) • Net operating cash flow increased by $60.3m due to: + Higher EBITDA due to improved business performance and lower New Chum rectification costs
Slide 12: Capital expenditure
Capital expenditure FY24 total capex $445.8m within guidance range; Ongoing capital discipline FY24: Strengthened capital discipline Total capital expenditure1 ($m) • FY24 spend included: 445.8 431.0 ‒ VIC CDS 339.8 321.6 160.6 ‒ Western Sydney MRF 155.2 267.5 ‒ Customer Connect 154.2 116.7 84.6 75.
Slide 13: Segment Updates
Segment Updates Pictured: Inside Western Sydney MRF pre-commissioning
Slide 14: Solid Waste Services
Solid Waste Services Strong EBIT growth driven by operational excellence initiatives and pricing discipline • 6.3% revenue growth driven by price increases and volume growth Net EBIT • Revenue outpaced costs EBIT2 $m Revenue1 margin + Labour efficiency improving Solid Waste Services $2,224.2 $329.0
Slide 15: Solid Waste Services (cont'd)
Solid Waste Services (cont’d) Growth in Collections, Resource Recovery and CDS; C&D impacted by soft market conditions Landfills Resource recovery • EBIT down 2.4% as returns focused management partially Organics offset 8.7% lower volumes • Revenue and EBIT growth driven by better leveraging the ‒ K
Slide 16: Liquid Waste & Health Services
Liquid Waste & Health Services Continued growth in LTS; Health Services on track to complete restoration in FY25; Hydro’s low-carbon products Liquids Technical Services (LTS) Net EBIT1 EBIT Strengthened reputation for delivering large-scale, complex $m Revenue margin projects, safely and on-time to
Slide 17: Liquid Waste & Health Services (cont'd)
Liquid Waste & Health Services (cont’d) EBIT growth driven by revenue growth and margin expansion in all three SBU’s Health Services Reset business on both cost and capacity, positioned for growth in profitability • Continue to expect FY25 EBIT ~$15m • Transformed business through reset of core acti
Slide 18: Industrial & Waste Services
Industrial & Waste Services FY24 tempered by 2H market conditions; medium-term outlook remains attractive • Revenue up on pcp due to 1H volume growth from project work Net EBIT and the Santos contract coming online EBIT1 $m Revenue margin • EBIT flat on pcp as 2H impacted by Industrial & Waste ‒ Sof
Slide 19: Strategic progress and outlook
Pictured: Cleanaway/City of Casey side lift truck powered by HVO100 Strategic progress and outlook
Slide 20: Blueprint 2030 Growth Strategy
Blueprint 2030 Growth Strategy Building a safe and resilient platform, delivering sustainable growth and improving returns in FY25, FY26 and beyond Sustainable Customer Solutions + Greater Market Share Strategic Infrastructure Growth Operational Excellence + Accretive Investments + Improved Profitab
Slide 21: On track to deliver mid-term financial ambition of >$450m EBIT
On track to deliver mid-term financial ambition of >$450m EBIT Restoration two thirds delivered, efficiency initiatives gaining momentum, infrastructure capital deployed FY23 FY24 FY25 FY26 Guidance Mid-term EBIT1 $302m $359 ambition $395 - $425m m > $450m Health Services Restoration Stabilisation L
Slide 22: Operational Efficiency initiatives to deliver >$50m EBIT in FY26
Operational Efficiency initiatives to deliver >$50m EBIT in FY26 Branch Optimisation program delivered benefits in FY24 2 APPLY PERFORMANCE IMPROVEMENT PLANS, SWOT and LEAN PROGRAMS E.g. NSW Solids branch EBIT margin doubled via SWOT Where: Large regional NSW branch Key initiatives What: SWOT team o
Slide 23: Operational Efficiency initiatives to deliver more than $50m EBIT in FY26
Operational Efficiency initiatives to deliver more than $50m EBIT in FY26 Branch-led growth supported by layering of centrally led programs Fleet transformation CustomerConnect Optimise running and capital costs to maximise returns by taking Improve efficiency and grow market share by investing in a
Slide 24: Strategic infrastructure growth projects to deliver ~$50m EBIT in FY26
Strategic infrastructure growth projects to deliver ~$50m EBIT in FY26 Projects on-track to contribute in FY26 and continue delivering growth beyond Strategic Infrastructure Growth Pillar 3 Pillar 2 Pillar 1 Pillar 1 PROJECT Western Sydney CDS NSW FOGO Santos New business areas, MRF and capacity gro
Slide 25: Strategic infrastructure growth beyond FY26
Strategic infrastructure growth beyond FY26 Progressing opportunities to extend our leading network of strategic waste infrastructure assets Strategic Infrastructure Growth Citywide Waste acquisition1 Lucas Heights Landfill extension Energy-from-Waste (EfW) update • Agreed to acquire collections bus
Slide 26: FY26 Financial Ambition and Scorecard
FY26 Financial Ambition and Scorecard Blueprint 2030 aligned priorities FY24 • Driving operational efficiency across SBU’s including: ─ Completed restoration of Queensland solids (slide 22) ─ Restoration of Health performance and business transformation (slide 17) ─ Deliver group-wide labour effic
Slide 27: Performance and progress provides confidence for FY25
Performance and progress provides confidence for FY25 FY25 outlook • FY25 underlying1 EBIT expected to be between $395 to $425m ‒ D&A expected to be between $380 and $400m ‒ Interest expense approximately $130m (assumes no change to the RBA cash rate) ‒ Total capital expenditure expected to be appro
Slide 28: Q&A
Q&A Pictured: Branch Manager Neddie Agdon at Clayton Resource Recovery Facility
Slide 29: Appendices
Appendices Appendices Pictured: Wingfield Above: Depot, Cleanaway S.A. IWS trucks
Slide 30: Cleanaway reporting segments
Cleanaway reporting segments Cleanaway comprises three segments, encompassing ten strategic business units, designed to create value through customer proximity while leveraging centralised enterprise services Solid Waste Services Liquid Waste & Health Services Industrial & Waste Services 6 3 1 Busin
Slide 31: 2024 Underlying Segment Disclosures
2024 Underlying Segment Disclosures1 Industrial & Liquid Waste Equity Solid Waste Corporate & Eliminations – Group $ (million) Waste & Health Accounted Services Other Group Result Services Services Investments Revenue Revenue from customers 2,691.4 390.2 618.8 3,700.4 Other revenue 37.0 0.1 20.7 57.
Slide 32: Group Income Statement – Statutory and underlying results
Group Income Statement – Statutory and underlying results Statutory Result Adjustments Underlying Result $ (million) FY24 FY23 FY24 FY23 FY24 FY23 Sales revenue external and other revenue (Gross Revenue) 3,758.2 3,558.8 - 3,758.2 3,558.8 Share of losses from equity accounted investments (6.1) (0.7)
Slide 33: Balance Sheet
Balance Sheet $ (million) 30-Jun-24 31-Dec-23 30-Jun-23 ASSETS Cash and cash equivalents 120.6 60.6 102.1 Trade and other receivables 557.3 589.1 551.7 Inventories 58.2 53.3 31.2 Property, plant and equipment 1,777.1 1,724.1 1,577.9 Right-of-use assets 611.1 616.3 609.4 Intangible assets 3,067.9 3,0
Slide 34: Cash Flow
Cash Flow $ (million) FY24 FY23 Underlying EBITDA 728.7 668.1 Cash flow of underlying adjustments1 (50.7) (79.6) Other non-cash items 4.3 (0.5) Payments for rectification and remediation of landfills (34.0) (21.9) Other changes in working capital (16.1) (10.2) Net interest paid (85.3) (64.7) Tax pai
Slide 35: Statutory NPAT to underlying NPAT reconciliation
Statutory NPAT to underlying NPAT reconciliation $ (million) FY24 Commentary Statutory NPAT attributable to ordinary equity holders 156.6 • Insurance recoveries of $12.5 million were recognised during the period in relation to Pre-tax adjustments: property damage and business interruption claims Net
Slide 36: Balance Sheet, Liquidity and Covenants
Balance Sheet, Liquidity and Covenants Overview Key ratios • As at 30 June 2024, the Group had $276.4 million $ million FY24 FY23 headroom under committed debt facilities Net Debt1 1,656.4 1,533.1 • Weighted average debt maturity of 4.0 years with next Gearing ratio 35.6% 34.3% term loan facility no
Slide 37: Net Finance Costs
Net Finance Costs $ (million) FY24 FY23 Commentary Cash interest expense • Unwind of discount on provisions and other Bank interest and leases 60.6 47.5 liabilities (non-cash interest expense) represents the difference in their present value between two Commitment and Guarantee fees 3.5 4.8 balance
Slide 38: Cleanaway reporting segments
Cleanaway reporting segments $ (million) FY20 FY21 FY22 FY23 FY24 Solids Waste Services Net Revenue 1,372.8 1,476.3 1,818.6 2,091.7 2,224.2 EBITDA 388.3 405.5 469.4 562.7 612.8 EBITDA Margin 28.3% 27.5% 25.8% 26.9% 27.6% EBIT 212.7 213.0 227.8 278.1 329.0 EBIT Margin 15.5% 14.4% 12.5% 13.3% 14.8% Li
Slide 39: Landfill accounting
Landfill accounting Principles Example • Active (or Open) versus Closed Site 1• Landfill purchased • Landfill constructed - Any increase or decrease in the remediation provision is initially taken to ― BS: land value ― BS: landfill asset landfill asset and depreciated. Once last customer waste is re
Slide 40: Return on invested capital (ROIC)
Return on invested capital (ROIC) Cleanaway calculation: Net Operating Profit after Tax Return on invested capital (NOPAT) excluding tax effected Average Invested Capital (ROIC) interest Underlying ROIC FY20 FY21 FY22 FY23 FY24 NPAT att. to parent 150.3 150.8 143.3 146.7 169.0 (+) Net Interest 47.4
Slide 41: Contacts
Contacts Investor contact: Media contact: Josie Ashton Mark Biddulph Head of Investor Relations Head of Corporate Affairs + 61 416 205 234 +61 499 322 601 Josie.Ashton@cleanaway.com.au Mark.Biddulph@cleanaway.com.au Registered Office: P +61 03 8397 5100 Level 4, 441 St Kilda Road, Melbourne VIC F +6
Cleanaway Waste Management — FY2024 Earnings Presentation on 6ix