Service Stream Limited · ASX:SSM
Service Stream — H1 FY2018 Earnings Presentation
27 slides from Service Stream's earnings presentation, Feb 14, 2018
Slide 1: FY18 First Half Results Presentation
Service Stream Limited FY18 First Half Results Presentation For personal use only Leigh Mackender Managing Director 14 February 2018
Slide 2: Contents
Contents For personal use only 1 Company Profile 2 Performance Highlights 3 Financial Performance 4 Operational Performance 5 Group Strategy & Outlook 2
Slide 3: Company Profile
Company Profile Service Stream Limited (ASX: SSM) is a S&P/ASX 300 company providing design, construction, installation and maintenance services across essential infrastructure networks within the For personal use only Telecommunication and Utility sectors Network operations, Network engineering, de
Slide 4: Performance Highlights
Performance Highlights EBITDA of $32.1m and EBIT of $28.4m … each up 52% on 1H17 For personal use only Group NPAT of $19.9m … up 53% on 1H17 Financial Solid cash generation leading to Net Cash of $63.6m at 31-Dec-17 Increased interim dividend to 3.0 cents per share (fully-franked) Announce
Slide 5: Financial Performance
754kW Commercial Solar Installation Kingspan Distribution Centre Somerton, Victoria For personal use only FINANCIAL PERFORMANCE
Slide 6: Financial Highlights
Financial Highlights $294.1m For personal use only Revenue up 22% … with growth in all three operating segments relative to the prior corresponding period (1H17) Revenue up from $240.8m in 1H17 1H18 is the ninth consecutive half-year delivering growth in each $32.1m of EBITDA, EBIT, NPAT and EPS
Slide 7: Key Financial Measures
Key Financial Measures Group Revenue $350 ($m) 294.1 $300 For personal use only 261.0 240.8 $250 221.9 215.0 213.8 217.1 197.4 Key financial measures $200 174.6 $150 FY18 FY17 $ million Change $100 1st half 1st half $50 Profitability: $0 Revenue 294.1 240.8 53.4 22% 1H14 2H14 1H15 2H15 1H16 2H16 1H1
Slide 8: Segment Results
Segment Results Group EBITDA $35 ($m) 32.1 $30 For personal use only 27.3 $25 21.1 Segment results 20.1 $20 14.7 15.7 FY18 FY17 $15 $ million Change 10.7 1st half 1st half 9.0 $10 7.5 Fixed Communications 145.7 101.0 44.7 $5 Network Construction 99.2 93.6 5.6 Energy & Water 53.5 48.6 5.0 $0 1H14 2H1
Slide 9: Cashflow Results
Cashflow Results EBITDA to OCFBIT conversion % 300% 241% 250% For personal use only 219% 196% 200% 178% Cashflow results 164% 150% 134% 115% 119% FY18 FY17 100% $ million Change 1st half 1st half 50% 16% EBITDA 32.1 21.1 11.0 0% +/- non-cash items & change in working capital 25.0 3.2 21.8 1H14 2H14
Slide 10: Capital Management
Capital Management For personal use only The Group’s balance sheet continues to strengthen with Net Cash Net Cash / (Net Debt) ($m) $80 increasing by $13.7m to $63.6m during the half-year after: 63.6 $60 49.9 41.1 44.1 37.7 $40 tax payments of ($14.6m) … including ($4.9m) associated with the res
Slide 11: Dividend Policy
Dividend Policy For personal use only The Board has formalised the Company’s Dividend Policy to provide existing and prospective shareholders with greater transparency with respect to this element of their investment decision: Service Stream confirms its progressive dividend approach. Under this a
Slide 12: On-market Share Buy-back
On-market Share Buy-back For personal use only The Board is of the view that the Company’s share price trading range since November 2017 materially under-values Service Stream The Board has determined that an on-market share buy-back is currently the most appropriate means of investing the Group
Slide 13: Operational Performance: Business Units Update
Business Units Update For personal use only OPERATIONAL PERFORMANCE
Slide 14: Safety Performance
Safety Performance The delivery of industry-leading OHS performance remains a key strategic imperative for the business For personal use only Implemented further safety initiatives and enhancements across higher-risk field operations which continue to support improved safety performance Develope
Slide 15: Fixed Communications
Fixed Communications Fixed Communications Revenue ($m) 145.7 Network operations, maintenance and minor works $150 $125 114.6 For personal use only 102.1 101.0 93.2 97.2 $100 84.8 Revenue up 44.3% on 1H17 driven by an increase in nbn $75 OMMA volumes and an increase in nbn minor projects $50 $25
Slide 16: Network Construction
Network Construction Network Construction Network engineering, design and construction $150 Revenue ($m) $125 For personal use only 103.2 99.2 $100 94.9 93.6 82.9 75.7 Revenue up 6.0% on 1H17 with an increase in nbn design $75 63.6 & construction activities under the MIMA & DCMA $50 contracts more
Slide 17: Energy & Water
Energy & Water Energy & Water Utility asset installation, inspection and maintenance $75 Revenue ($m) For personal use only 53.5 48.6 $50 46.0 43.8 40.9 36.3 38.2 Revenue up 10.2% on 1H17 on the back of the TechSafe acquisition in May 2017 $25 EBITDA margin steady $0 1H15 2H15 1H16 2H16 1H17 2H1
Slide 18: Group Strategy & Outlook
For personal use only GROUP STRATEGY & OUTLOOK
Slide 19: Delivering Continued Growth
Delivering Continued Growth The business remains well positioned to deliver continued and sustainable growth into the future For personal use only Business continues to experience solid organic growth across all three market sectors Growth underpinned by a solid contracted pipeline across a blue
Slide 20: Telecommunications Market Outlook
Telecommunications Market Outlook Investment in new telecommunications networks and ongoing maintenance activities supports long-term sustainable growth opportunities For personal use only Telecommunications network maintenance activity forecasted to increase and hold steady over medium to long te
Slide 21: Revenue Analysis & Contract Pipeline
Revenue Analysis & Contract Pipeline For personal use only 1H18 Revenue by Service Contracted Revenue Pipeline % of Group Revenue 2H18 and FY19 16% 100% 98% 99% 100% 96% 100% 90% 20% $294m 50% 64% 0% Ticket Of Work FY18 H2 FY19 Project Services TOW Project Services Design & Construction Design & Con
Slide 22: FY18 Outlook
FY18 Outlook For personal use only We expect profit for the second-half of FY18 to be broadly in-line with the first-half We expect Fixed Communications to experience an increase in assurance, remediation and minor project works in the second-half, to offset the impact of nbn’s decision to tempo
Slide 23: Historical Financial Performance Data
For personal use only Historical Financial Performance Data
Slide 24: Profit & Loss
PROFIT & LOSS $ million 1H15 2H15 1H16 2H16 1H17 2H17 1H18 FY15 FY16 FY17 For personal use only Fixed Communications $93.16 $102.12 $97.19 $84.79 $100.96 $114.64 $145.70 $195.29 $181.99 $215.59 Network Construction $63.65 $75.74 $82.90 $94.89 $93.63 $103.19 $99.20 $139.38 $177.80 $196.82 Energy & Wa
Slide 25: Segment Results
SEGMENT RESULTS $ million 1H15 2H15 1H16 2H16 1H17 2H17 1H18 FY15 FY16 FY17 For personal use only Fixed Communications nbn Activation & Assurance $43.27 $54.32 $61.63 $57.81 $66.80 $79.54 $109.94 $97.60 $119.45 $146.33 nbn Minor Projects $2.50 $4.92 $5.88 $6.86 $6.76 $6.59 $12.50 $7.42 $12.74 $13.34
Slide 26: Shareholders' Perspective
SHAREHOLDERS' PERSPECTIVE $ million 1H15 2H15 1H16 2H16 1H17 2H17 1H18 FY15 FY16 FY17 For personal use only Avg number of shares on issue (millions) 386.390 386.390 386.390 382.770 363.846 365.189 365.189 386.390 384.590 364.512 NPAT $4.05 $7.68 $8.81 $11.17 $13.03 $15.34 $19.90 $11.72 $19.98 $28.37
Slide 27: Cash Flow
CASH FLOW $ million 1H15 2H15 1H16 2H16 1H17 2H17 1H18 FY15 FY16 FY17 For personal use only EBITDA $10.66 $14.73 $15.68 $20.14 $21.09 $27.26 $32.05 $25.39 $35.82 $48.35 +/- non-cash items & change in w/capital ($8.97) $17.53 $15.03 $12.83 $3.25 $5.26 $25.05 $8.57 $27.86 $8.51 OCFBIT $1.69 $32.27 $30