Emeco Holdings Limited · ASX:EHL
Emeco — H1 FY2016 Earnings Presentation
29 slides from Emeco's earnings presentation, Feb 25, 2016
Slide 1: 2016 Interim Results
2016 INTERIM RESULTS 25 FEBRUARY 2016 IAN TESTROW, MANAGING DIRECTOR & CHIEF EXECUTIVE OFFICER GREG HAWKINS, EXECUTIVE DIRECTOR, FINANCE 1
Slide 2: Highlights
HIGHLIGHTS Margins improving, but recovery will be slow Group fleet utilisation currently 78%, operating utilisation 50% (compared to 70% and 42% a year earlier) Increased utilisation in Australia and Chile offset by weakening market conditions in Canada Revenue slightly below 1H15, operating
Slide 3: 1H FY16 Overview
1H FY16 OVERVIEW Recent utilisation growth in Australia closing the utilisation gap Operating performance up on 1H15, margins improving with successful implementation of Project Fit initiatives OPERATING PERFORMANCE FINANCIAL PERFORMANCE4,5 PCP Var 100% A$million 1H15 2H15 1H16 $M 80% 78% Revenue3 1
Slide 4: Financial Performance
FINANCIAL PERFORMANCE Project Fit driving margin improvements Project Fit on target to achieve $13.6M savings in FY16, further cost reduction initiatives to achieve $26.7M annual cost savings by end of FY16 OPERATING EBITDA MARGINS PROJECT FIT OUTCOMES1 A$million 30% 27.6% Ex-Canada 30 25% 25 2.7 20
Slide 5: Earnings Composition
EARNINGS COMPOSITION Earnings composition has shifted significantly compared to the prior year New South Wales, Queensland and Chile operating at high levels of utilisation, offsetting weaker performance in Canada REVENUE BY GEOGRAPHY OPERATING EBITDA BY REGION A$million 1H15 1H16 35 30 4.1 WA 6.0 C
Slide 6: Operational Review
OPERATIONAL REVIEW
Slide 7: Safety and Human Resources
SAFETY AND HUMAN RESOURCES Best practice safety standards and employee development key to the future success of Emeco Health, Safety & Environment Safety Performance TRIFR down to 5.9, from 7.5 at 30 June 2015 8.0 7.0 Consistent application of OHS policies and practices across the global busin
Slide 8: Technology & Innovation
TECHNOLOGY & INNOVATION EOS continues market penetration Alkane Resources continues building on strong EOS Mining pilot Alkane Resources project continues to achieve significant productivity benefits through the implementation of the EOS Mining service. Unit cost for the load and haul system has r
Slide 9: Regional Performance: New South Wales
REGIONAL PERFORMANCE New South Wales Continue to build presence with existing customer base Revenue Operating EBITDA Utilisation1 31 Dec 2015 100% 95% 80% 34.4 34.3 14.0 13.1 65% 60% 24.3 40% 20% 5.4 0% 1H FY15 2H FY15 1H FY16 1H FY15 2H FY15 1H FY16 Utilisation Operating Utilisation Additional 20
Slide 10: Regional Performance: Queensland
REGIONAL PERFORMANCE Queensland Continues to improve, capacity for increased scale to drive further earnings growth Revenue Operating EBITDA Utilisation1 31 Dec 2015 100% 95% 4.6 80% 14.4 12.7 60% 50% 40% 8.6 0.8 20% 0% (1.4) 1H FY15 2H FY15 1H FY16 1H FY15 2H FY15 1H FY16 Utilisation Operating Util
Slide 11: Regional Performance: Western Australia
REGIONAL PERFORMANCE Western Australia Restructuring generating positive margins on lower earnings. EOS leading penetration into the Western Australian gold sector Revenue Operating EBITDA Utilisation1 31 Dec 2015 100% 9.0 80% 29.2 27.8 7.7 60% 47% 40% 40% 15.4 20% 3.7 0% 1H FY15 2H FY15 1H FY16 1H
Slide 12: Regional Performance: Canada
REGIONAL PERFORMANCE Canada Low oil price environment taking its toll, business assessing options to relocate this fleet Revenue1 Operating EBITDA1 Utilisation2 31 Dec 2015 100% 40.3 10.7 80% 36.0 8.6 60% 55% 40% 22.9 20% 20% (0.7) 0% 1H FY15 2H FY15 1H FY16 1H FY15 2H FY15 1H FY16 Utilisation Opera
Slide 13: Regional Performance: Chile
REGIONAL PERFORMANCE Chile Improved performance at Encuentro combined with a second significant contract driving earnings uplift Revenue1 Operating EBITDA1 Utilisation2 31 Dec 2015 1 94% 22.4 9.2 0.8 75% 0.6 17.7 0.4 11.9 0.2 4.4 0 2.2 1H FY15 2H FY15 1H FY16 1H FY15 2H FY15 1H FY16 Utilisation Oper
Slide 14: Financials
FINANCIALS
Slide 15: Financial Summary: At a glance
FINANCIAL SUMMARY At a glance… Volume growth in New South Wales, Queensland and Chile, combined with Project Fit cost reductions, driving improved margins 1H16 Operating revenue of $109.1M slightly below 1H15, A$million 1H15 2H15 1H16 1H16 Operating EBITDA of $23.2M up 43.2% on 1H15 Revenue1 110.7
Slide 16: Operating Costs
OPERATING COSTS Resizing the business in line with current market conditions Excluding Canada cost margins have improved significantly since FY15 Operating costs as a % of revenue Depreciation 1H16 A$million 1H15 Repairs and 60 % of revenue 33.7% 25.9% 39.1% maintenance % of revenue 50 42.2% 51.7 Co
Slide 17: Project Fit Cost Savings
PROJECT FIT COST SAVINGS Project Fit expected to achieve $26.7M of annual cost savings Project Fit Cost Savings Project Fit phase 1 included significant cost saving initiatives: Project Projected A$m FY15A Project Fit FY16F Fit II FY17 workshop closure and staff restructuring in WA Overheads R
Slide 18: Balance Sheet
BALANCE SHEET Net debt reduced by $38M during 1H16 We continue to right size our fleet to match asset classes to regional demand Rental fleet1 Net debt2 A$million Total fleet 475 439 482 500 500 450 400 27.8 # of fleet 34.1 400 300 24.5 200 412 350 367 388 413.9 403.1 377.2 100 300 0 250 1H15 2H15 1
Slide 19: Cash Flow
CASH FLOW Net cashflow declining in line with reduced earnings and disposals Deteriorating second hand equipment market decreasing ability for business to generate value from disposals A$million Cashflows 100 80 60 40 20 0 -20 -40 1H14 2H14 1H15 2H15 1H16 Operating Cash Flow Sustaining Capex Disposa
Slide 20: Strategy & Outlook
}Emeco aia BETTER EQUIPPED
Slide 21: Strategy & Outlook
STRATEGY & OUTLOOK Focus to continue strengthening core business Operating utilisation excluding Canada up to 58%, Operating EBITDA margins up to 27.6% On target to achieve ~$13.6M Project Fit savings FY16, further cost reductions identified to Achievements bring annual cost savings to $26.7M by
Slide 22: Questions
QUESTIONS
Slide 23: Further Information
FURTHER INFORMATION Thank you for your interest in Emeco For further investor enquiries please contact: Brendan Shalders Group Manager, Investor Relations & Corporate Development +61 (0) 8 9420 0258 brendan.shalders@emecogroup.com 23
Slide 24: Appendices
APPENDICES
Slide 25: Emeco Operations
EMECO OPERATIONS Canada Queensland $22.9M 1H16 revenue $14.4M 1H16 revenue Number of fleet: 91 Number of fleet: 59 Fleet WDV: $35M Fleet WDV: $66M 1H16 Revenue Composition 1H16 Revenue Composition Thermal Iron Ore Coal 11% Thermal Other13% Coal 3% 29% Coking Other Coal 8% 63% Oilsands Western Region
Slide 26: Detailed Financials
DETAILED FINANCIALS Profit & Loss Cashflow A$million 1H15 2H15 1H16 PCP $ A$million 1H15 2H15 1H16 PCP $ Revenue 110.7 132.1 109.1 (1.6) Operating cashflow 13.3 19.3 25.2 11.9 EBITDA 16.2 27.2 23.2 7.0 General working capital (3.8) 11.0 2.1 5.9 Margin(%) 14.6% 20.6% 21.3% 6.7% Sales & parts inventor
Slide 27: Geographical Segments
GEOGRAPHICAL SEGMENTS New South Wales Queensland Western Australia A$million 1H15 2H15 1H16 PCP $ A$million 1H15 2H15 1H16 PCP $ A$million 1H15 2H15 1H16 PCP $ Revenue 24.3 34.4 34.3 10.0 Revenue 8.6 12.7 14.4 5.8 Revenue 29.2 27.8 15.4 (13.8) EBITDA 5.4 14.0 13.1 7.7 EBITDA (1.4) 0.8 4.6 6.0 EBITDA
Slide 28: Disclaimer
DISCLAIMER 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. No representation or
Slide 29: Thank You
Thank you Learn more about us emecogroup.com