Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — FY2018 Earnings Presentation
39 slides from Cleanaway Waste Management's earnings presentation, Aug 22, 2018
Slide 1: FY18 Full Year Results
For personal use only FY18 Full Year Results For the twelve months ended 30 June 2018 22 August 2018
Slide 2: Cleanaway – Making a sustainable future possible
Cleanaway – Making a sustainable future possible For personal use only ✓ Diversified exposure to Australia’s growing waste market ✓ Leading player in each of our operating segments of Solids, Liquid Waste & Health and Industrial Services ✓ Owner of an irreplaceable and largest network of prized infr
Slide 3: 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 4: Agenda
Agenda For personal use only FY18 Results Update Page • Safety and Environmental 5 • Group Financial Performance 6-9 • Divisional Performance 10-15 • Statutory NPAT Reconciliation to Underlying NPAT 16 • Debt, Balance Sheet and Cash Flow 17-19 Other Key Updates: • Toxfree Acquisition and Integration
Slide 5: Safety and Environmental – Our objective is Goal Zero
Safety and Environmental – Our objective is Goal Zero Total Recordable Injury Frequency Rate1 For personal use only From FY12 to FY15 Total Recordable Injury Frequency Rate was for employees only. From FY16 onwards statistics include both employees and contractors. -18.4% 26.6 10.8 7.6 16.7 6.2 12.6
Slide 6: FY18 Group Financial Performance Overview
FY18 Group Financial Performance Overview Group Underlying Results Group Statutory Results For personal use only $ million FY17 FY18 Growth FY17 FY18 Growth Gross Revenue 1,454.4 1,714.3 17.9% 1,454.4 1,714.3 17.9% Net Revenue 1,350.7 1,564.9 15.9% 1,350.7 1,564.9 15.9% EBITDA 301.3 339.7 12.7% 314.
Slide 7: FY18 Group Financial Performance Overview (continued)
FY18 Group Financial Performance Overview (continued….) For personal use only Underlying results – CWY & TOX ($ million) FY17 FY18 TOX Total CWY CWY CWY (7 weeks in Total Growth Growth FY18) (incl. Tox) Gross Revenue 1,454.4 1,646.7 13.2% 70.7 1,714.31 17.9% Net Revenue 1,350.7 1,497.3 10.9% 70.7 1,
Slide 8: Sustained earnings growth
Sustained earnings growth Net Revenue ($m) EBITDA1 ($m) EBIT1($m) For personal use only CAGR +6.3% CAGR +13.7% CAGR +19.5% 1,564.9 339.7 166.4 281.3 301.3 142.9 1,350.7 231.3 122.6 1,301.1 1,320.7 97.5 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 FY15 FY16 FY17 FY18 NPAT1 ($m) Earnings Per Share1,2 (cent
Slide 9: Driving increased cash flows and shareholders returns
Driving increased cash flows and shareholders returns Return on Invested Capital1 (%) Operating Cash Flow ($m) Cash Capex ($m) and % of D&A For personal use only CAGR +12.0% CAGR +7.9% ~85% of D&A 221.2 5.2% 175.9 4.8% 153.5 155.3 143.5 4.2% 190.7 189.6 3.7% 131.5% 176.2 96.7% 98.0% 82.8% FY15 FY16
Slide 10: FY18 Cleanaway Division Performance Summary
FY18 Cleanaway Division Performance Summary Net Revenue1 EBITDA2 EBIT2 For personal use only $ million FY17 FY18 Growth FY17 FY18 Growth FY17 FY18 Growth Solids – Collections 810.5 907.9 12.0% 160.9 165.5 2.9% 98.8 100.8 2.0% Solids – Post Collections 185.0 232.8 25.8% 96.1 116.6 21.3% 38.8 56.4 45.
Slide 11: Cleanaway Total Solids Performance
Cleanaway Total Solids Performance For personal use only 1,092.8 % change $ million 958.8 FY17 FY18 FY18 v FY17 924.0 Net revenue1 958.8 1,092.8 14.0% EBITDA 257.0 282.1 9.8% 25.7% 26.8% 25.8% EBITDA Margin 26.8% 25.8% (100)bps 14.4% 14.4% EBIT 137.6 157.2 14.2% 12.3% EBIT Margin 14.4% 14.4% _ FY16
Slide 12: Cleanaway Solids – Collections Performance
Cleanaway Solids – Collections Performance For personal use only % change 907.9 $ million FY17 FY18 FY18 v FY17 810.5 Net revenue 810.5 907.9 12.0% 779.0 EBITDA 160.9 165.5 2.9% 19.2% 19.9% 18.2% EBITDA Margin 19.9% 18.2% (170)bps 12.2% 11.1% 11.0% EBIT 98.8 100.8 2.0% EBIT Margin FY16 FY17 FY18 12.
Slide 13: National Sword Policy and Recycling
National Sword Policy and Recycling ❖ Change to China National Sword policy reshaped global markets for recycled commodities For personal use only ❖ With less exposure to lower quality residential recyclables our pricing has recently improved on a majority of volumes ❖ The outlook for recycled plast
Slide 14: Solids – Post Collections Performance
Solids – Post Collections Performance For personal use only 232.8 % change $ million FY17 FY18 FY18 v FY17 Gross Revenue 288.7 382.2 32.4% 177.0 185.0 Net revenue (excl. landfill levies) 185.0 232.8 25.8% EBITDA 96.1 116.6 21.3% 49.7% 51.9% 50.1% EBITDA Margin 51.9% 50.1% (180)bps 21.0% 24.2% EBIT 3
Slide 15: Cleanaway Liquids & Industrial Services Performance
Cleanaway Liquids & Industrial Services Performance For personal use only % change 440.2 $ million 436.6 424.0 FY17 FY18 FY18 v FY17 Net revenue 424.0 440.2 3.8% 13.9% 14.3% EBITDA 58.9 63.0 7.0% 13.2% EBITDA Margin 13.9% 14.3% 40bps 8.1% 7.6% 7.6% EBIT 32.1 35.5 10.6% EBIT Margin 7.6% 8.1% 50bps FY
Slide 16: FY18 Statutory to Underlying Profit Reconciliation
FY18 Statutory to Underlying Profit Reconciliation Interest For personal use only $ million EBIT Tax expense NPAT expense Underlying result 166.4 (30.5) (38.1) 97.8 Cleanaway rebranding costs (2.5) — 0.8 (1.7) Acquisition costs mainly related to Toxfree (16.6) (1.6) 1.6 (16.6) Gain on sale of proper
Slide 17: Capital Structure – Debt
Capital Structure – Debt For personal use only $ million 30 Jun 17 31 Dec 17 30 Jun 18 ❖ $101.7 million in finance leases following the award of new Current borrowings 62.4 – – government contracts and Toxfree leases as part of the acquisition (30 Non-current borrowings 307.8 7.8 623.5 June 2017: $N
Slide 18: Balance Sheet
Balance Sheet $ million 30 June 2017 31 Dec 2017 30 June 2018 For personal use only ASSETS Cash and cash equivalents 43.2 183.3 52.0 ❖ Landfill remediation provision reduction from June 2017 reflects Trade and other receivables 247.9 261.1 369.5 payments made, updated Inventories 11.1 13.1 21.0 assu
Slide 19: Cash Flow
Cash Flow $ million FY17 FY18 For personal use only Underlying EBITDA 301.3 339.7 ❖ Net cash from operating activities Cash flow of underlying adjustments (12.5) (24.5) increased 16.7% compared to last Other non cash items (0.5) 2.0 Payments for rectification and remediation of landfills (42.5) (37.
Slide 20: Acquisition of Toxfree
Acquisition of Toxfree For personal use only ❖ Cleanaway announced on 11 December 2017 the proposed acquisition of Toxfree via a recommended scheme of arrangement for $3.425 per share, less the Acquisition special dividend paid by Toxfree of $0.58 per share summary ❖ Integration will take two years
Slide 21: Toxfree FY18 full year results
Toxfree FY18 full year results1 For personal use only For the 12 months ended 30 June 2018 Underlying Statutory Underlying adjustments Net revenue 495.5 — 495.5 EBITDA 56.6 26.1 82.7 EBITDA Margin 11.4% n/a 16.7% EBIT 8.8 26.1 34.9 EBIT Margin 1.8% n/a 7.0% ❖ The FY18 results for Toxfree were in lin
Slide 22: Toxfree Integration is on track
Toxfree Integration is on track To achieve the $35 million in synergies over the next two years the integration For personal use only will be managed through six major categories Segment and Business Units Alignment to Operating Model & Fit for Purpose Go to Market Harmonisation Organization Design
Slide 23: The Cleanaway operating model sets the foundation for all integration activities
The Cleanaway operating model sets the foundation for all integration activities For personal use only 23
Slide 24: Toxfree integration (continued)
Toxfree integration (continued…..) For personal use only Segment and business unit alignment to operating ❖ Aligning strategic business units to waste streams, service offers and assets model for example Liquids and Technical & Environment Services ❖ Aligned Industrial Services to the markets - Infr
Slide 25: Toxfree integration (continued)
Toxfree integration (continued…..) For personal use only Group procurement ❖ Key spend categories identified ❖ Two major areas of focus: o Utilise improved purchasing power across entire group o Mobilise targeted campaigns to negotiate improved pricing 0% 50% 100% Company wide processes ❖ Stabilised
Slide 26: Operational focus remains underpinned by five key pillars
Operational focus remains underpinned by five key pillars For personal use only 26
Slide 27: Customer for Growth and Continuous Improvement for Cost
Customer for Growth and Continuous Improvement for Cost For personal use only Customer for Growth ❖ Major contract wins such as Chevron, Coles, Hills Shire, Noosa Council and NSW Container Deposit Organic volume Scheme mobilised during the year. growth ❖ The Central Coast Municipal Council contract
Slide 28: Capital for Cash – Capital Discipline to continue
Capital for Cash – Capital Discipline to continue ❖ Cash capital expenditure1 in FY18 includes spending on equipment for major new non-government contracts won in For personal use only 2H17 such as Coles and Chevron ❖ Leasing finance utilised in FY18 of $95.6 million for government related contracts
Slide 29: Capital for Cash – Reconfirming Landfill Remediation
Capital for Cash – Reconfirming Landfill Remediation ❖ Sale of closed landfill site in Victoria reduced the Landfill Remediation provision by $5.4 million For personal use only ❖ Expenditure in FY18 of $37.0 million in line with expectations ❖ No change to forecast spending previously advised: ❖ FY1
Slide 30: Cleanaway Footprint 2025 continues – Optimizing Waste Value Chain
Cleanaway Footprint 2025 continues – Optimizing Waste Value Chain For personal use only Landfill/alternative Collections Resource recovery waste disposal Operational efficiency Access to strategic resource Well located prized assets Strong market share position by recovery facilities Long
Slide 31: Footprint 2025 – Optimising NSW Solids Post Collections Footprint
Footprint 2025 – Optimising NSW Solids Post Collections Footprint Container Deposit Scheme Transfer Station and ResourceCo Refuse Derived For personal use only Sorting Line Resource Recovery Fuel Facility ❖ Currently has over 660 collection ❖ Under construction in Erskine Park, ❖ Licenced to receive
Slide 32: Priorities and FY19 Outlook
Priorities and FY19 Outlook Priorities For personal use only ❖ Integration of Toxfree ❖ Improving margins through continuing good quality top line growth and ongoing cost discipline ❖ Increase free cash flow ❖ Further improving customer service to increase customer satisfaction leading to improved v
Slide 33: Questions
For personal use only 33 Questions
Slide 34: Appendices
Appendices For personal use only Page Adjusted EPS Calculations 35 Group Income Statement – Statutory and Underlying Results 36 FY18 Segment Performance Summary 37 Net Finance Costs 38 34
Slide 35: Adjusted EPS Calculations
Adjusted EPS Calculations The following earnings per share calculation adjusts for the impact of the equity raising For personal use only undertaken in December 2017 and January 2018 to partially fund the acquisition of Toxfree Adjusted EPS calculation FY17 FY18 Net underlying profit attributable to
Slide 36: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Underlying For personal use only Statutory Results Underlying Results Adjustments $ million FY17 FY18 Growth FY17 FY18 FY17 FY18 Growth Sales revenue external and other revenue (Gross Revenue) 1,454.4 1,714.3 17.9% — — 1,454.4 1,714.3 17.9% S
Slide 37: FY18 Segment Performance Summary
FY18 Segment Performance Summary $ million Net Revenue1 EBITDA2 EBIT2 For personal use only Segments FY17 FY18 Growth FY17 FY18 Growth FY17 FY18 Growth Solids – Collections 810.5 907.9 12.0% 160.9 165.5 2.9% 98.8 100.8 2.0% Solids – Post Collections 185.0 232.8 25.8% 96.1 116.6 21.3% 38.8 56.4 45.4%
Slide 38: Net Finance Costs
Net Finance Costs Statutory Underlying For personal use only $ million FY17 FY18 FY17 FY18 Cash interest expense Bank interest and finance leases 10.0 9.1 10.0 8.6 Commitment and Guarantee fees 2.7 5.3 2.7 5.3 USPP Notes 6.1 2.5 6.1 2.5 Interest received (0.4) (3.0) (0.4) (2.3) Net cash interest exp
Slide 39: For personal use only
For personal use only 39
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