Emeco Holdings Limited · ASX:EHL
Emeco — FY2007 Earnings Presentation
43 slides from Emeco's earnings presentation, Aug 30, 2007
Slide 1: Emeco Holdings Limited 2007 Annual Results Presentation
Emeco Holdings Limited 2007 Annual Results Presentation For personal use only Page 1
Slide 2: Disclaimer
FY07 Results – Presentation Final 280807 For personal use only Disclaimer This presentation may contain forward looking statements that are subject to a range of risk factors and uncertainties. Whilst these statements are considered to be based on reasonable assumptions, the statements themselves an
Slide 3: Agenda
For personal use only Agenda 1. Highlights 2. Financial Results 3. Operational Overview 4. Outlook Page 3
Slide 4: FY07 Financial Highlights
For personal use only FY07 Financial Highlights Revenue up 44.8% to $554.4M Pro Forma EBITDA up 44.6% to $207.3M with a margin of 37.2% Pro Forma EBITA up 43.7% to $128.5M with a margin of 23.1% Pro Forma NPAT of $74.7M with a margin of 13.4% Pro Forma NPATA of $78.2M with a margin of 14.0% Pro Form
Slide 5: Staff Health and Safety
For personal use only Staff Health and Safety A Safety Health and Environment Team comprising senior Emeco executives and the national OH&S manager has been formed to assist in the ongoing development of our OH&S systems and to monitor Emeco’s performance An Emeco Safety Health and Environment Plan
Slide 6: FY07 Business Highlights
FY07 Business Highlights Solid FY07 result above prospectus forecast whilst enduring significant challenges For personal use only $243M of capital invested during the year; $183M in growth capital ($135M organic growth and $48M in acquisitions) and $60M in maintenance capital Increasing acceptance o
Slide 7: Emeco's Global Vision
Emeco’s Global Vision We have continued to make significant progress in establishing the foundations for our For personal use only global business vision Canada Russia USA Europe Emeco Sites UAE India West Africa Potential Future Sites Indonesia South Africa Australia Chile Page 7
Slide 8: Global Vision
Global Vision We have made significant progress to become a major world player For personal use only Source: International Rental News – June 2007 Page 8
Slide 9: Indonesia operations
Foundations of a Global Business- Indonesia Our Indonesian operations are ideally located to service the extensive coal fields of For personal use only Kalimantan and metalliferous operations in the surrounding area Emeco site Coal fields Metalliferous Deposits Page 9
Slide 10: Indonesia expansion opportunities
Foundations of a Global Business- Indonesia A number of new opportunities are being discussed and evaluated to expand For personal use only geographically into S.E Asia within the next couple of years Emeco sites Opportunities Page 10
Slide 11: Indonesia new facility
Foundations of a Global Business- Indonesia Land was acquired in 2007 and a new facility is to be built in 2008 to service the S.E For personal use only Asian region, enabling us to replicate the product offerings available in Australia Page 11
Slide 12: Canada: River Valley acquisition
Foundations of a Global Business- Canada Emeco acquired River Valley in August 2005 with 114 rental machines, operating from Edmonton For personal use only Page 12
Slide 13: Canada new sites
Foundations of a Global Business- Canada In 2007, 2 new sites were opened and local, experienced business development staff were recruited For personal use only Rental machine numbers increased to 281 machines and procurement of sales inventory commenced Fort McKay Emeco Sites Business development P
Slide 14: Canada Fort McKay site
Foundations of a Global Business- Canada The new Fort McKay site is located in the middle of the “oil sands patch”, surrounded by leases For personal use only granted to predominantly 4 major producers Page 14
Slide 15: Canada oil field expansions
Foundations of a Global business- Canada The 4 major producers have several oil field expansions under construction to increase production For personal use only Syncrude Suncor 500 500 ,000 BPD 400 400 300 BPD ,000 300 200 200 100 100 0 0 2007 2015 2007 2008 2010 Shell - Albian Sands CNRL 500 300 ,0
Slide 16: Canada larger rental machines
Foundations of a Global Business- Canada Larger rental machines are being brought into Fort McKay as demand from clients grow For personal use only Page 16
Slide 17: Canada Fort McKay facility construction
Foundations of a Global Business- Canada Construction of custom built facilities has commenced at Fort McKay to enable us to For personal use only replicate the product offerings available in Australia …… Page 17
Slide 18: Canada current maintenance facility
For personal use only Foundations of a Global Business- Canada …… as the current maintenance facility is inadequate! Page 18
Slide 19: Canada Edmonton and Grand Prairie
Foundations of a Global Business- Canada Edmonton and Grand Prairie targeted mining and construction markets For personal use only Emeco Sites Business Development Metalliferous Mines Coal Mines Coal Deposits Page 19
Slide 20: USA London, Kentucky site
Foundations of a Global Business- USA Emeco acquired equipment from TSM in July 2006 and established a new site in For personal use only London, Kentucky to target opportunities in the Appalachian coal mining region Emeco sites London (Rental & Sales) Coal fields Atlanta (Sales) Houston (Sales) Page
Slide 21: USA new custom built facility
Foundations of a Global Business- USA A new custom built facility is being constructed in London, Kentucky, to enable us to For personal use only replicate the product offerings available in Australia Page 21
Slide 22: Europe: Euro Machinery acquisition
Foundations of a Global Business- Europe Emeco acquired Euro Machinery on 1 January 2007….. For personal use only Page 22
Slide 23: Europe Hardenberg facility
Foundations of a Global Business- Europe ….. and relocated the business to a 40,000m2 world class custom built facility in For personal use only Hardenberg in March 2007 Page 23
Slide 24: Europe trading platform
Foundations for a Global Business- Europe Euro Machinery provides Emeco with a major trading platform in Europe from which we can grow For personal use only An experienced Australian rental manager has recently been appointed Managing Director of Europe to evaluate, establish and promote complimenta
Slide 25: Europe sales team
Foundations of a Global Business- Europe Since acquiring Euro Machinery, we have recruited additional experienced sales representatives. For personal use only Our sales team in Europe are now fluent in 10 languages and trade across Europe in conjunction with our global procurement division Euro Mach
Slide 26: Agenda
For personal use only Agenda 1. Highlights 2. Financial Results 3. Operational Overview 4. Outlook Page 26
Slide 27: Pro forma summary financials
Pro forma summary financials Growth continues to be driven by significant capital expenditure in rental machines and For personal use only investment in inventory 12 months to: Jun-06 Jun-07 Change $M $M % Financial Performance Revenue 382.8 554.4 44.8% EBITDA 143.4 207.3 44.6% EBITA 89.4 128.5 43.7
Slide 28: Continued Growth through FY07 whilst maintaining margins
Continued Growth through FY07 whilst maintaining For personal use only margins Revenue P ro Form a EBITDA 600 250 40.0% 38.0% 500 CAGR 30.7% C A GR 35.9% 200 36.0% 34.0% 400 150 32.0% 30.0% 300 554.4 100 207.3 28.0% 200 143.4 26.0% 382.8 291.8 50 96.4 24.0% 251.3 60.7 73.3 100 189.9 22.0% 0 20.0% 0
Slide 29: Working Capital
Working Capital Working capital increased with additional investment in machines and tyres to support For personal use only future operating and growth requirements Emeco has negotiated a new 5 year “preferred customer” guaranteed supply contract with a renowned global tyre manufacturer with 2 x 5 y
Slide 30: Balance Sheet
For personal use only Balance Sheet Emeco remains conservatively geared and has $249M in unused facilities in place to fund future growth Jun-06 Jun-07 Change $M $M % Working Capital 163.5 252.3 54.3% Rental Plant 423.4 520.2 22.9% Total Assets 892 1,097.5 23.0% Net Assets 236.3 672.9 184.8% Net Deb
Slide 31: Cash Flow
Cash Flow As incremental working capital requirements reduce, free cash flow before growth will increase, which For personal use only can either be re-invested in growth or returned to shareholders Statutory Pro Forma Jun-07 Jun-07 $M $M EBITDA 205.9 207.3 Working Capital (80.0)1 (80.0) 1 Non Cash/O
Slide 32: Currency Risk
For personal use only Currency Risk Adverse currency movements since preparing the Director’s Forecast has dampened the reported results as overseas operations, recorded in USD, CAD and EURO, are translated into AUD - Currency translation has dampened EBITDA by $3.3M and EBITA by $1.6M in FY07 Emeco
Slide 33: Return on funds employed
For personal use only Return on funds employed Emeco continues to maintain strong and consistent pro forma ROFE’s Pro forma return on funds employed (“ROFE”)1 40% 200 EBITDA and EBITA ROFE’s slightly below 30% 180 average at 27.8% and 17.3% 20% 160 140 10% Marginal decline in ROFE’s due to: 120 0% -
Slide 34: Agenda
For personal use only Agenda 1. Highlights 2. Financial Results 3. Operational Overview 4. Outlook Page 34
Slide 35: Utilisation and Customers
Utilisation and Customers Utilisation rates have remained high in Australia whilst there has been a shift in For personal use only customers from small contractors to large miners Utilisation Rates1 Type of Customer2 100.0% FY06 FY07 90.0% 80.0% 100.0% 100.0% 70.0% 80.0% 80.0% 60.0% 50.0% 60.0% 60.0
Slide 36: Contract and Customer Revenue Profile
For personal use only Contract and Customer Revenue Profile Longer initial term contracts are being entered into with the shift in customers, whilst maintaining customer diversity Average initial contract length Customer revenue contribution 20 FY06 FY07 16 14 16% 18% 15 Top 5 10% 10 8% Top 6–10 7 T
Slide 37: Emeco's Market Segments
For personal use only Emeco’s Market Segments Growth in Australia and Canada has been achieved whilst maintaining diversity FY07 Revenue Contribution FY07 Rental Revenue Contribution Rest of World Zinc Other Civil 5% 19% Oil 5% 13% 3% Iron Ore 9% Indonesia 5% Gold Coal 20% Australia 45% 76% Note: Oi
Slide 38: Agenda
For personal use only Agenda 1. Highlights 2. Financial Results 3. Operational Overview 4. Outlook Page 38
Slide 39: Market Outlook
Market Outlook Emeco’s primary markets are forecast to continue growing at between 4% – 10% p/a over the For personal use only medium term Australian Coal Australian Gold Australian Iron Ore 400 350 450 CAGR – 4% CAGR – 5% CAGR – 8% 350 400 300 350 MT 300 MT MT 300 250 250 250 200 200 200 2005 2007F
Slide 40: Growth Outlook
Growth Outlook Emeco is strongly positioned to grow through: For personal use only - growth in volumes of earth moved in our primary markets - increasing customer acceptance and penetration of our rental model - developing our investments in new regions by: ¾ establishing our presence and building o
Slide 41: Capital Expenditure Outlook
Capital Expenditure Outlook Gross maintenance capital for FY08 is likely to be circa $100M For personal use only Growth capital of up to $250M can be funded from existing facilities and free cash flow in FY08 as suitable investment opportunities arise, such as: ¾ Organic Growth – Currently discussin
Slide 42: Future Outlook
For personal use only Future Outlook Emeco has an exciting future with significant growth potential Market Outlook • forecast CAGR 4% – 10% in primary markets over the next 5 years Business Model • accepted by customers and scalable globally with high barriers to entry People • talented, experienced
Slide 43: Helping you move the Earth
TM “Helping you move the Earth” For personal use only Page 43