Emeco Holdings Limited · ASX:EHL
Emeco — FY2008 Earnings Presentation
32 slides from Emeco's earnings presentation, Aug 26, 2008
Slide 1: Emeco Holdings Limited 2008 Full Year Results Presentation
Emeco Holdings Limited 2008 FFullll Y Year R Results lt Presentation P t ti For personal use only
Slide 2: Disclaimer
Disclaimer For personal use only This ppresentation mayy contain forward lookingg statements that are subject j to a rangeg of risk factors and uncertainties. Whilst these statements are considered to be based on reasonable assumptions, the statements themselves and the assumptions upon which they a
Slide 3: Agenda
Agenda g For personal use only 1 1. Hi hli h Highlights 2 2. Financials 3. Strategic g Outlook 4. Guidance 5. Appendix Page 3
Slide 4: 2008 highlights—Full year overview
2008 highlights—Full g g yyear overview For personal use only Operating revenues increased by 11.4% on 2007 to $617.9m EBITDA increased by 3.0% to $213.5m EBITA decreased by 6.4% to $120.3m NPAT decreased by 9.6% 9 6% to $67 5m1 (2H08 NPAT increased by +21.4% $67.5m +21 4% on 1H08) NPATA decreased b
Slide 5: 2008 highlights—Tale of two halves
2008 highlights—Tale g g of two halves For personal use only Positive 2H08 contrasted a disappointing pp g Global rental utilisation 1H08 affected by infrastructure bottlenecks, severe weather conditions Utilisation (%) 85 % and start-up phase of offshore businesses by $ value Strong 2H08 growth in
Slide 6: 2008 highlights—Key deliverables
2008 highlights—Key g g y deliverables For personal use only Key market deliverables identified at the half year result Deliverable Result Comment NPAT $65–$72m $67.5m ($69.5m1) • Full year result primarily impacted by short term market events in 1H08 • Global utilisation (by value) increased from 6
Slide 7: Agenda
Agenda g For personal use only 1 1. Hi hli h Highlights 2 2. Financials 3. Strategic g Outlook 4. Guidance 5. Appendix Page 7
Slide 8: Summary earnings
Summaryy earnings g For personal use only 6 months to Change 12 months Change A$m Dec 07 Dec-07 Jun-08 Jun 08 h/h (%) FY2007 FY2008 y/y (%) Revenue 288.2 329.7 14.4 554.4 617.9 11.4 EBITDA 1 98.6 114.8 16.5 207.3 213.5 3.0 margin (%) 34.2 34.8 37.4 34.5 FY08 earnings largely impacted by 1H08 EBITA 1
Slide 9: Focus on margins
Focus on margins g For personal use only Revenue increased byy 11.4% % in FY08 but at a EBITA % of Revenue slower rate than expected due to short term market factors % of Revenue 35.0% Growth and investment in business infrastructure has increased costs 30.0% Increase in ancillary rental services at
Slide 10: Earnings composition
Earnings g composition p For personal use only Revenue EBITA Rental business remains core 626 129 120 earnings driver whilst sales and 600 554 parts strategically compliment 125 Emeco model 500 89 POSA continues to form part of 383 100 rental plant disposal cycle 400 292 63 Higher depreciation to re
Slide 11: Earnings bridge full year pcp
Earnings g bridge g full year y pcpp p For personal use only 75 74.7 Reflects rental fleet disposal profits 1.1 (1.6) +1.1 +1.8 2.3 70 (2.9) 2.9 A$m (1.4) +2.0 (1 1) (1.1) -0.8 67.5 (2.2) 65 (4 3) (4.3) Specific items1 60 FY07 Australia Indonesia Canada USA Europe POSA Amortisation Interest Tax FY08
Slide 12: Earnings bridge half on half
Earnings g bridge g half on half For personal use only Material improvement across all geographic barring Europe Commented on the delayed 45 sale of redeployed rental gear at time of 1H08 result 0.8 5.1 3.9 40 +1.1 (0.5) +2.0 1.0 -0.8 1.5 +1.8 A$$m 35 16 1.6 (3.1) 37.0 (3.6) 30 30.5 Specific items1
Slide 13: Balance sheet and gearing
Balance sheet and gearing g g For personal use only Successful refinancing and upsizing of senior debt facility provides funding certainty Successfully refinanced senior bank Change debt facility from $515m to $630m A$m 1 Jun 07 Dec Jun-07 Dec-07 07 Jun Jun-08 08 h/h (%) including $595m 3 year senio
Slide 14: Working capital bridge (half on half)
Working g capital p bridge g (half ( on half)) For personal use only Significant reduction in working capital to be maintained going forward 335 Further focus 22.2 on receivable $59.5m reduction in Sales machines management in now in-line with historical FY09 315 investment levels 4.1 $22.2m increas
Slide 15: Operating cash flow
Operating p g cash flow For personal use only 12 month: Emeco continues to generate A$m FY07 FY08 significant operating cashflow EBITDA 207 3 207.3 213 5 213.5 Net maintenance capex comprising Working capital (80.0) (1.5) equipment replacement & major FX/Other 8.0 (7.6) overhauls lumpy but should tr
Slide 16: Return on funds employed
Return on funds employed p y For personal use only LTM ROFE ROFE declines due to short term market ROFE LTM rolling lli EBITA $M LTM rolling lli D Dep'n ' $M A$m events ramp up of offshore businesses events, 40% EBITA ROFE % EBITDA ROFE % 250 and growth in rental fleet & sales 35% 30% 200 inventory
Slide 17: Agenda
Agenda g For personal use only 1 1. Hi hli h Highlights 2 2. Financials 3. Strategic g Outlook 4. Guidance 5. Appendix Page 17
Slide 18: Organic growth opportunities
Organic g g growth opportunities pp For personal use only Emeco’s primary markets are forecast to continue growing at between 3–10% p/a over the medium term A Australian li Coal Coal C l Australian Gold Australian Iron Australian Ore Iron Ore Australian 350 450 550 500 400 CAGR – 6% CAGR – 3% CAGR –
Slide 19: Current market conditions
Current Renting market with Emeco conditions For personal use only Emeco’s outlook and earnings momentum remain strong heading into FY09 Australia • Continued growth in coal, coal iron ore and gold markets are translating to strong fleet utilisation • Limited availability of new equipment is driving
Slide 20: Current market conditions
Current market conditions Renting with Emeco For personal use only Emeco’s outlook and earnings momentum remain strong heading into FY09 United States • Appalachian coal prices have increased 100% over past six months translating to increased activity • US business infrastructure now well establishe
Slide 21: Strategic outlook
Strategic g outlook For personal use only Strategic growth Strategic St t i focus f on driving d i i organic i growth th opportunities t iti iin allll off E Emeco’s ’ existing i ti regions i andd markets and returning ROFE/ utilisation to historic levels Uncertainty of funding sources from debt and
Slide 22: Strategic outlook
Strategic g outlook For personal use only Organisational capabilities Continued integration of global business units and standardisation of Emeco systems and processes Enhancement of global procurement and asset management team Ongoing development of management team depth and capability (executive a
Slide 23: Agenda
Agenda g For personal use only 1 1. Hi hli h Highlights 2 2. Financials 3. Strategic g Outlook 4. Guidance 5. Appendix Page 23
Slide 24: Guidance
Guidance For personal use only Following a strong 2H08 recovery for Emeco and a continuing robust outlook in each of Emeco’ss operating exposures Emeco exposures, management remain confident in the outlook for FY2009 A significant increase in borrowing costs (c. 130bps) will adversely impact profits
Slide 25: Agenda
Agenda g For personal use only 1 1. Hi hli h Highlights 2 2. Financials 3. Strategic g Outlook 4. Guidance 5. Appendix Page 25
Slide 26: Australia—overview
Australia—overview For personal use only Rental end market exposure Rental client profile Rental type of customer 7% 100% 11% 29% 34% 30% 80% 5% 60% 19% 40% 17% 29% 19% 20% Coal Gold Zinc 0% Top 5 Top 6 – 10 Large Small Total Civil Iron Ore Other Top 11 – 20 Remainder Miner Contractor Other Notes: N
Slide 27: Australia—overview
Australia—overview For personal use only Rental machine profile Funds employed and utilisation 100% 700 Truck 218 90% 600 Dozer 63 80% Fundss employed (A$m) Loader 128 70% 500 Utilisation Excavator 58 60% 400 Grader 40 50% 40% 300 Other 75 30% 200 20% 100 10% 0% – 05 06 07 Jul-05 Jan-06 Jul-06 Jan-0
Slide 28: Indonesia—overview
Indonesia—overview For personal use only Rental end market Rental client profile Funds employed and utilisation 0% 83% 100% 100 28% 90% 90 Funds em 80% 80 70% 70 on 60% 60 mployed (A$m) Utilisatio 50% 50 61% 40% 40 11% 30% 30 20% 20 17% 10% % 10 Coal Gold 0% – Nov-05 Nov-06 Nov-07 Jul-05 Jan-06 Jul-
Slide 29: Canada—overview
Canada—overview For personal use only Rental end market Rental client profile Funds employed and utilisation 100% 160 1% 2% 90% 140 32% 52% 11% 80% Funds em 120 70% 100 Utilisatiion 60% mployed (A$m) 12% 50% 80 40% 60 65% 30% 40 25% 20% 10% 20 0 Civil Oil and Gas Top 5 Top 6 – 10 0% – Nov-05 Nov-06
Slide 30: US—overview
US—overview For personal use only Rental end market Rental client profile Funds employed and utilisation 6% 94% Funds employed (A$m) 100% 60 Uttilisation 80% 50 60% 40 30 40% 20 20% 10 0% – Nov-05 Nov-06 Nov-07 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Sep-05 Mar-06 May-06 Sep-06 Mar-07 May-07 Sep-0
Slide 31: Europe—overview
Europe—overview p For personal use only Funds employed 30 25 Funds Employedd (A$m) 20 15 Number of rental machines: 8 10 Number of sales machines: 121 F 5 0 Occt-06 Deec-06 Jun-07 Occt-07 Deec-07 Jun-08 Feb-07 Appr-07 Aug-07 Feb-08 Appr-08 Funds employed Note: 1. Funds employed is defined as net tan
Slide 32: Historical financial information
Historical financial information For personal use only Australia Indonesia Canada US Europe A$m FY2006 FY2007 FY2008 FY2006 FY2007 FY2008 FY2006 FY2007 FY2008 FY2006 FY2007 FY2008 FY2006 FY2007 FY2008 Financial performance Revenue 291.4 418.9 459.5 32.7 27.5 23.8 27.4 39.8 51.7 30.9 45.2 43.2 0.3 23