Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — H1 FY2020 Earnings Presentation
40 slides from Cleanaway Waste Management's earnings presentation, Feb 19, 2020
Slide 1: FY20 Half-Year Financial Results
19 February 2020 Company Announcements Office ASX Limited Exchange Office Level 4, 20 Bridge Street Sydney NSW 2000 Dear Sirs/Madam, FY20 HALF-YEAR FINANCIAL RESULTS MEDIA RELEASE AND INVESTOR PRESENTATION Please find attached the following documents in relation to the Company’s FY20 half-year resul
Slide 2: FY20 Half-Year Results
ASX & Media Release 19 February 2020 FY20 HALF‐YEAR RESULTS Organic Growth and Margin Expansion Underlying EPS up 15.2%, Interim Dividend up 21% to 2.0c Fully Franked Underlying NPAT (pre AASB161) at $76.2m was up 13.7% Underlying EBIT (pre AASB161) at $125.2m up 6.8% and margin expansion by 70b
Slide 3: Management Commentary
ASX & Media Release 19 February 2020 Management Commentary Chief Executive Officer and Managing Director of Cleanaway, Vik Bansal, said: “I am pleased to report results that once again reflect the resilience of Cleanaway. “At the outset I reiterate that the safety of everyone at Cleanaway has, and a
Slide 4: Dividend and Underlying Segment Performance
ASX & Media Release 19 February 2020 Dividend An interim dividend of 2.0 cents per share (pcp: 1.65 cents per share) has been declared, representing an increase of 21.2% on the interim dividend paid last year. The dividend will be fully franked and paid on 3 April 2020 to shareholders on the registe
Slide 5: Industrial & Waste Services
ASX & Media Release 19 February 2020 Industrial & Waste Services Industrial & Waste Services reported lower net revenue and earnings. Compared to 1H19, net revenue decreased 6.4% to $165.7 million as the business reduced its exposure to lower margin less specialised services. EBITDA (pre AASB16) dec
Slide 6: FY20 Outlook
ASX & Media Release 19 February 2020 FY20 Outlook We expect to deliver earnings growth in 2H20 over 1H20 and 2H19. We are targeting underlying EBITDA post AASB16 of ~$515 million to $525 million for the FY20 financial year (includes ~$43 to $45 million positive impact from AASB16). Investor Briefing
Slide 7: FY20 Half Year Results
FY20 Half Year Results For the six months ended 31 December 2019 19 February 2020
Slide 8: 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 9: Agenda
Agenda 1H20 Results Update Page Safety and Environmental 4 Highlights 5 Group Performance Overview 6‐8 Commodities Exposure 9 Revenue Streams 10 Segment Performance 11‐13 Statutory NPAT Reconciliation to Underlying NPAT 14 Balance Sheet, Cash Flow and Debt 15‐17 Enterprise Updates
Slide 10: Safety and Environmental – Our Objective is Goal Zero
Safety and Environmental – Our Objective is Goal Zero Total Recordable Injury Frequency Rate1 26.6 16.7 12.6 10.6 10.8 7.6 6.2 5.7 5.1 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 1H20 Total recordable injury frequency Environmental compliance Safety performance remains a key rate has again improved on l
Slide 11: 1HFY20 Highlights
1HFY20 Highlights FINANCIAL: Interim Dividend up 21.2% to 2.0c fully franked at 30% Underlying NPAT up 13.7% (pre AASB16) and EPS up 15.2% (pre AASB16) on 1H19 Underlying EBIT up 6.8% (pre AASB16) and EBIT margin improved by 70bps to 11.7% Underlying EBITDA up 2.5% (pre AASB16) to $234.6m ($
Slide 12: Group Performance Overview
Group Performance Overview Underlying Results Statutory Results $ million 1H19 1H20 Growth 1H20 1H19 1H20 Growth (Pre AASB16) (Pre AASB16) (Post AASB16) Gross Revenue 1,149.7 1,197.2 4.1% 1,197.2 1,149.7 1,197.2 4.1% Net Revenue 1,064.6 1,070.0 0.5% 1,070.0 1,064.6 1,070.0 0.5% EBITDA 228.9 234.6 2.
Slide 13: Sustained Earnings Growth Continues
Sustained Earnings Growth Continues Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBIT ($million) and EBIT margin (%) 256.4 127.2 1,064.6 1,070.0 1,070.0 125.2 228.9 234.6 117.2 722.2 669.7 672.4 159.0 150.4 137.2 79.5 67.0 11.7% 11.9% 24.0% 58.5 22.4% 22.0% 11.0% 11.0% 21.5% 21.9%
Slide 14: Cash Flows and Shareholder Returns
Cash Flows and Shareholder Returns Operating Cash Flow ($m) Cash Capex ($m) and % of Net Revenue Free Cash Flow ($m) 175.6 100.7 112.1 157.1 105.0 Tax Refund(1) 25.0 93.0 140.1 85.7 83.2 74.3 112.8 70.0 99.8 49.5 150.6 77.8 12.9% 34.5 10.5% 11.0% 9.4% 18.0 8.0% 1H16 1H17 1H18 1H19 1H20 1H20 1H16 1H1
Slide 15: Commodities Revenue Declining as Percentage of Group Net Revenue
Commodities Revenue Declining as Percentage of Group Net Revenue Commodity Revenue (1) and Commodity as % of Net Revenue Revenue from the sale of commodities has 1,064.6 1,070.0 declined as a percentage of net revenue. Commodity Revenue Declining contributor to the business. 52.4 35.0 9.5% In 1H
Slide 16: Revenue Streams with Defensive Characteristics
Revenue Streams with Defensive Characteristics Cleanaway’s revenue base is largely Solid Waste Services 59% underpinned by long term contracts with a geographically diverse customer base of Serves 100,000+ Commercial and Industrial municipal councils, hospitals, infrastructure, businesses and 100+
Slide 17: Solid Waste Services Performance
Solid Waste Services Performance $million 1H19 1H20(2) change 1H20(2) Net Revenue ($m) and margins (%) (Pre AASB16) 1H19 v 1H20 (Post AASB16) 682.4 698.8 698.8 Net revenue(1) 682.4 698.8 2.4% 698.8 524.2 EBITDA 175.7 176.6 0.5% 193.0 479.4 26.8% 26.6% 27.6% EBITDA Margin 25.7% 25.3% (40) bps 27.6% 2
Slide 18: Industrial & Waste Services Performance
Industrial & Waste Services Performance $million 1H19 1H20(1) change 1H20(1) Net Revenue ($m) and margins (%) (Pre AASB16) 1H19 v 1H20 (Post AASB16) Net revenue 177.0 165.7 (6.4)% 165.7 177.0 165.7 165.7 EBITDA 23.2 22.8 (1.7)% 23.1 84.4 EBITDA Margin 13.1% 13.8% 70bps 13.9% 77.3 13.1% 13.8% 13.9% E
Slide 19: Liquid Waste & Health Services Performance
Liquid Waste & Health Services Performance 1H20(1) change 1H20(1) Net Revenue ($m) and margins (%) $million 1H19 (Pre AASB16) 1H19 v 1H20 (Post AASB16) 251.0 258.6 258.6 Net revenue 251.0 258.6 3.0% 258.6 EBITDA 42.7 49.1 15.0% 52.8 141.7 129.3 EBITDA Margin 17.0% 19.0% 200bps 20.4% 20.4% 19.0% 17.0
Slide 20: Statutory NPAT Reconciliation to Underlying NPAT
Statutory NPAT Reconciliation to Underlying NPAT $ million 1H20 Statutory Profit After Income Tax Attributable to Ordinary Equity Holders 46.2 Pre‐tax adjustments: Impact of Perth MRF fire net of partial insurance recoveries recognised1 18.0 Acquisition costs 7.4 Integration costs 14.4 Total Underly
Slide 21: Balance Sheet
Balance Sheet $ million 30 June 2019 31 Dec 2019 31 Dec 2018 (Post AASB16) ASSETS Cash and cash equivalents 44.9 56.2 37.8 Adoption of AASB16 has Trade and other receivables 384.0 382.0 404.4 increased assets by $278 million Inventories 25.1 19.9 20.9 and liabilities by $288 million. Property, pla
Slide 22: Cash Flow
Cash Flow $ million 1H19 1H20 1H20 Comments on Pre AASB16 (Pre AASB16) (Post AASB16) Underlying EBITDA 228.9 234.6 256.4 Net cash from operating activities Cash flow of underlying adjustments (8.3) (24.4) (24.4) declined by $35.5m compared to Less: Other non‐cash items (0.3) (6.2) (6.2) the previo
Slide 23: Capital Structure – Debt
Capital Structure – Debt $ million 31 Dec 18 30 Jun 19 31 Dec 19 31 Dec 19 (Pre AASB16) (Post AASB16) Capital structure 31 December 2019: Current leases 14.9 17.1 19.4 65.2 At 31 December 2019, the Group had $226 Non‐current interest bearing liabilities 587.4 580.3 646.4 646.4 million of headroom
Slide 24: Capital Expenditure
Capital Expenditure Cash capital expenditure1 in the half was 9.4% of net revenue. We will continue to target capex at ~10% of net revenue. Leasing finance utilised in 1H20 of $23.1 million for government related contracts Additional leases of ~$35 million will be utilised in 2H20 for new an
Slide 25: Countdown to the End of Legacy Landfill Rectification & Remediation
Countdown to the End of Legacy Landfill Rectification & Remediation Expenditure in 1HFY20 of ~$20m is in line with expectations. On track for a $55m spend this year. We advised in FY16 that spend would average ~$45m per annum through to FY20 and we remain on target. Cashflow will benefit in FY
Slide 26: Footprint 2025: Progress Continues
Footprint 2025: Progress Continues Continuing to invest in the right ‘package’ of assets across the value chain through the evolving tonne Collections Resource recovery Treatment and Disposal Acquired SKM assets which gave us complete commingled resource recovery assets for Victorian and Tasmanian
Slide 27: Footprint 2025: Addition of KEY Prized Infrastructure to Portfolio
Footprint 2025: Addition of KEY Prized Infrastructure to Portfolio SKM Adelaide sites SKM Coolaroo MRF • No operations at sites Key prized asset • Wingfield and Lonsdale • Plant and equipment • Sites to be sold and on relatively new (~1 yr.) but in market now need of R&M • Potential to add pute SKM
Slide 28: SKM Assets: Progress Since Acquisition
SKM Assets: Progress Since Acquisition The clean up, asset upgrades, negotiations with councils and removal of stockpiles are progressing well 22
Slide 29: Plastics pelletizing partnership with Pact and Asahi
Plastics pelletizing partnership with Pact and Asahi Cleanaway has signed a Memorandum of Understanding with Pact and Asahi to re‐process recycled plastics and develop a circular economy for plastics Cross value chain collaboration provides local ‘bottle to bottle’ recycling solution for plastics
Slide 30: Footprint 2025: Sydney Energy from Waste Development
Footprint 2025: Sydney Energy from Waste Development Site Facts & Overview Project Facts & Overview ~8 hectare site, located in Eastern Creek 500ktpa of residual C&I and MSW waste feedstock Blacktown Local Government Area 45MW of baseload power, enough for ~65,000 homes Suitable zoning for
Slide 31: Toxfree Integration Remains on Track
Toxfree Integration Remains on Track To achieve the $35 million in total synergies the integration is managed through six major categories Segment & Business Unit Alignment to Operating Model Go to Market Harmonisation Organisation Design by Segments and Strategic Business Units Operating Model and
Slide 32: Toxfree Integration (continued…)
Toxfree Integration (continued…) Segment and business unit alignment to operating model Alignment of business units to the operating model is now complete Experienced management team selected from the combined organisation 0% 50% 100% Go to market harmonisation Brand harmonisation complete F
Slide 33: Toxfree Integration (continued…)
Toxfree Integration (continued…) Group procurement Capability uplift complete Now leveraging disciplines across the combined enterprise 0% 50% 100% Company wide processes and IT Systems 1ERP Project underway, scheduled completion by Q3 FY20 Health & Safety platform upgraded across the organi
Slide 34: Priorities and FY20 Outlook
Priorities and FY20 Outlook Priority Safety, Customer and Growth remain our key priorities across all three segments and across the Enterprise. We expect commodity price volatility to remain but impact at a group level is expected to be relatively small from the current base. Heavy focus on alig
Slide 35: Questions
Questions Confidential | 29 29
Slide 36: Appendices
Appendices Page Group Income Statement – Statutory and Underlying Results 30 Underlying Segment disclosures 31 Net Finance Costs 32 Net Debt Reconciliation 33 30
Slide 37: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Statutory Results Underlying Adjustments Underlying Results (Post AASB16) $ million 1H19 1H20 1H19 1H20 1H19 1H20 Sales revenue external and other revenue (Gross Revenue) 1,149.7 1,197.2 — — 1,149.7 1,197.2 Share of profits/(losses) in equity
Slide 38: Underlying Segment Disclosures (Post AASB16)
Underlying Segment Disclosures (Post AASB16) Solid Waste Industrial & Liquid Waste Equity Corporate & Eliminations – GROUP $ million Services Waste & Health Accounted Other Group Services Services Investments Revenue Sales of goods and services 796.9 159.0 225.2 — — — 1,181.1 Other revenue 5.9 — 10.
Slide 39: Net Finance Costs
Net Finance Costs Statutory Underlying Underlying (Pre AASB16) (Post AASB16) $ million 1H19 1H20 1H19 1H20 1H20 Cash interest expense Bank interest and leases 14.1 17.2 14.1 12.4 17.2 Commitment and Guarantee fees 1.2 1.1 1.2 1.1 1.1 USPP Notes — — — — — Interest received (0.4) (1.1) (0.4) (1.1) (1.
Slide 40: Net Debt Reconciliation
Net Debt Reconciliation Net Debt Bridge Considerations for 2H20: Increase in Gross Debt 287.9 1,045.0 Full year Capex equivalent to ~10% of Net 49.6 30.6 revenue 18.4 658.5 Rectification/remediation of ~$55m in FY20 Expecting lower underlying cash outflows in 2H20 following completion of Toxfr
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