Emeco Holdings Limited · ASX:EHL
Emeco — H1 FY2014 Earnings Presentation
27 slides from Emeco's earnings presentation, Feb 20, 2014
Slide 1: 2014 Interim Results
For personal use only 2014 INTERIM RESULTS 20 FEBRUARY 2014 KEN LEWSEY, MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER STEPHEN GOBBY, CHIEF FINANCIAL OFFICER
Slide 2: Presentation Overview
PRESENTATION OVERVIEW For personal use only • Highlights • Operational review • Financials • Strategy & Outlook • Questions • Appendices 2
Slide 3: Highlights
For personal use only HIGHLIGHTS Ken Lewsey Managing Director & Chief Executive Officer
Slide 4: Immediate Focus
IMMEDIATE FOCUS For personal use only Improve Utilisation Reduce Debt A$M 31 Dec 13 500 100% 450 80% $135M 400 Feb 14 60% 54% 350 455 40% 300 395 341 20% 320 250 765 machines, WDV $717M 0% 200 Dec-12 Jun-13 Dec-13 Feb-14 1 Impact of AUD depreciation 1. FX rates: 31 Dec 12: AUD:USD – 1.038, AUD:CAD –
Slide 5: H1 FY14 Snapshot
H1 FY14 SNAPSHOT For personal use only CONTRACT WINS IMPROVING UTILISATION MOVING INTO 2H14 Operating EBITDA of $33.1M, with 2H14 earnings Financial performance1 pickup supported by improving utilisation A$million 1H13 2H13 1H14 PCP Var $M Utilisation averaged 45% as miners continued to Revenue
Slide 6: Safety & Sustainability
SAFETY & SUSTAINABILITY For personal use only A HIGH STANDARD OF SAFETY IS KEY IN A COMPETITIVE MARKET Safety Total Recordable Injury Frequency Rate (TRIFR) o TRIFR improved 37% since Dec 2012 20 o Implemented various initiatives including Core Risk 15 Control Protocols TRIFR 10.1 10 o Safety capa
Slide 7: Operational Review
For personal use only OPERATIONAL REVIEW Ken Lewsey Managing Director & Chief Executive Officer 7
Slide 8: Regional Performance - Australia
REGIONAL PERFORMANCE - AUSTRALIA For personal use only CONTRACT WINS IN RECENT MONTHS HAVE BENEFITED UTILISATION Revenue EBITDA Utilisation 31 Dec 13 152.6 73.6 100% 98.0 47.7 80% 70.4 60% Feb 14 44% 26.0 40% 20% 413 machines, WDV $351M 0% 1H13 2H13 1H14 1H13 2H13 1H14 Trough utilisation due to lo
Slide 9: Regional Performance - Canada
REGIONAL PERFORMANCE - CANADA For personal use only CUSTOMER STRATEGY POSITIONS BUSINESS FOR STRONGER PERFORMANCE Revenue1 EBITDA1 Utilisation 31 Dec 13 47.2 47.0 24.8 100% 37.1 21.7 Feb 14 80% 84% 12.1 60% 40% 20% 130 machines, WDV $167M 0% 1H13 2H13 1H14 1H13 2H13 1H14 Redeployment of $13.1M fle
Slide 10: Regional Performance - Chile
REGIONAL PERFORMANCE - CHILE For personal use only CONTINUE TO BUILD OUT GEOGRAPHIC AND COMMODITY DIVERSIFICATION Revenue1 EBITDA1 Utilisation 12.8 12.5 8.1 100% 6.6 80% Feb 14 72% 60% 4.6 3.0 40% 20% 36 machines, WDV $118M 0% 1H13 2H13 1H14 1H13 2H13 1H14 Major mining region, significant copper p
Slide 11: Regional Performance - Indonesia
REGIONAL PERFORMANCE - INDONESIA For personal use only ASSET DISPOSALS IN RESPONSE TO ONGOING MARKET WEAKNESS Revenue1 EBITDA1 Utilisation 31 Dec 13 31.7 100% 28.6 18.4 80% 60% 9.6 40% 2.6 20% Feb 14 186 machines, WDV $81M 1.3% 0% 1H13 2H13 1H14 1H13 2H13 1H14 (3.8) Decision taken to significantly
Slide 12: Financials
For personal use only FINANCIALS Stephen Gobby Chief Financial Officer
Slide 13: Financial Summary
FINANCIAL SUMMARY For personal use only At a glance… PCP Var A$million 1H131 2H131 1H141 $M Revenue 246.7 193.0 126.4 (120.3) EBITDA 110.7 77.6 33.1 (77.6) EBIT 49.1 26.5 (8.3) (57.4) NPAT 25.1 10.1 (16.3) (41.4) Statutory NPAT2 22.5 (16.5) (179.8) (202.3) Free cash flow (69.4) 60.1 75.0 144.4 ROC3
Slide 14: Operating Costs & Margins
OPERATING COSTS & MARGINS For personal use only RESPONDING TO THE DOWNTURN EBITDA 1H14 EBITDA and Margins impacted by: 110.7 o One-off fleet preparation costs totaling $2.6M 77.6 relating to recent contracts wins o Indonesia incurred fleet demobilization cost of 33.1 $2.0m 44.9% 40.2% o Lower-marg
Slide 15: Cash Generation
CASH GENERATION For personal use only CASHFLOW GENERATION REMAINS A KEY FEATURE OF BUSINESS MODEL 1H13 2H13 1H14 Sustained good conversion of operating cashflow Cash from operations 124.4 81.6 33.1 General working capital (1.7) (1.0) 29.1 Free cashflow of $75.0M in 1H14, with key levers 3.3 18.9
Slide 16: Rental Fleet & Capital Strategy
RENTAL FLEET & CAPITAL STRATEGY For personal use only STRATEGY FOCUSED ON RIGHT SIZING FLEET WHILE MAINTENANCE STANDARDS KEY Sustaining Capex1 Sustaining capex of $17.3M in 1H14 down 63.5 due to: o End of life replacement spend on hold - right sizing fleet via attrition 25.2 o Major Components spe
Slide 17: Free Cashflow Across the Cycle
FREE CASHFLOW ACROSS THE CYCLE For personal use only Free Cash Flow Generation (excl. Growth Capex & Capital Mgt) A$M Utilisation % 100% 250.0 200.0 80% 150.0 60% 100.0 Current utilisation 54% 50.0 40% - 20% -50.0 -100.0 0% 1H09 2H09 1H10 2H10 1H11 2H11 1H12 2H12 1H13 2H13 1H14 Free cashflow before
Slide 18: Funding Profile
FUNDING PROFILE For personal use only DEBT REDUCTION IN H1 FY14 FROM STRONG FREE CASH FLOW Deleveraging balance sheet by $135M over Net debt 500 past 14 months $135M 400 Expect net debt of approximately $320M at end of February 14’ 455 300 320 Combination of quality cashflow, limited 200 capex
Slide 19: Strategy & Outlook
For personal use only STRATEGY & OUTLOOK Ken Lewsey Managing Director & Chief Executive Officer
Slide 20: Earnings Outlook
EARNINGS OUTLOOK For personal use only Improvement in earnings in 2H14 o FY14 Operating EBITDA $82M to $94M – revised from $90M to $105M following slower than expected award and commencement of new contracts Earnings growth in 2H14 supported by: o High activity levels in Canadian oil sands winte
Slide 21: Key Strategic Focus
KEY STRATEGIC FOCUS For personal use only Disciplined approach to balance sheet management – ongoing fleet rationalisation and moderate capex Increased earthmoving and demand for equipment expected over medium term as mining companies expected to revert to life of mine operating plans and resumi
Slide 22: Questions
For personal use only QUESTIONS 22
Slide 23: Further Information
FURTHER INFORMATION For personal use only Thank you for your interest in Emeco Further investor enquiries should be directed to: • Ken Lewsey CEO • Stephen Gobby CFO • Brendan Shalders Investor Relations 23
Slide 24: Appendices
For personal use only APPENDICES 24
Slide 25: Detailed Financials
DETAILED FINANCIALS For personal use only Profit & Loss Cashflow A$ Millions HonH A$ Millions PCP Var 1H13 2H13 1H14 PCP Var $ 1H13 2H13 1H14 Var $ $ Revenue 246.7 193.0 126.4 (66.6) (120.3) Operating cashflow 124.4 81.6 33.1 (91.3) EBITDA 110.7 77.6 33.1 (44.5) (77.6) General working capital (1.7)
Slide 26: Disclaimer
DISCLAIMER For personal use only Reliance on third party information The information and views expressed in this Presentation were prepared by Emeco Holdings Ltd (the Company) and may contain information that has been derived from publicly available sources that have not been independently verified.
Slide 27: Learn more about us
For personal use only Learn more about us emecogroup.com