Downer Edi Limited · ASX:DOW
Downer Edi — FY2024 Earnings Presentation
36 slides from Downer Edi's earnings presentation, Aug 30, 2024
Slide 1: Investor Presentation
Investor Presentation For the year ended 30 June 2024 30 August 2024
Slide 2: Agenda
Agenda Key messages Group financials Priorities Q&A Results summary Outlook and segment updates Peter Tompkins (MD & CEO) Malcolm Ashcroft (CFO) Peter Tompkins (MD & CEO) FY24 RESULTS 2
Slide 3: The Downer advantage
The Downer advantage Strong diversified exposure to tailwinds and growth sectors Transport Road Services Rail & Transit Systems Infrastructure projects Utilities Energy Defence Population Local industry Telecommunications transition capability growth revitalisation Water Power & Gas Energy Networks
Slide 4: Building momentum in performance
Building momentum in performance EBITA margin performance Earnings H2 margin Cost out FY24 3.3% +34% 4.0% $130m Pro forma Pro forma versus initial $100m target FY23 2.6% EBITA1,2 $384.1m FY24 EBITA1,2 margin 3.3% (annualised gross cost) H2 +0.7pp on 2.6% in FY23 4.0% H2 3.0% Op cash Leverage NPAT 10
Slide 5: FY24 achievements
FY24 achievements Enhanced governance, Turnaround on track risk management Reshaping our future and performance ▪ Improvement across earnings, margins ▪ Board renewal (3 new directors) and ▪ Good progress on business reset – new and cash metrics Project Governance Committee in operation trans-Tasman
Slide 6: Transport
Transport Well positioned for improved profitability with a healthy forward pipeline in core markets to maximise value capture from integrated delivery model $6.0bn $252.8m 4.2% Revenue EBITA EBITA % 7.8% 5.0% 0.1pp ▪ Volumes affected by lower Transport Agency spending in AUS ▪ Commercial rese
Slide 7: Utilities
Utilities Turnaround continues with solid future pipeline $2.4bn $54.5m 2.3% Revenue EBITA EBITA % 6.5% >100% 2.8pp ▪ Telco outperformance ▪ New external COO appointed in 2H to lead Energy & Utilities – businesses merged to leverage energy transition opportunities ▪ Consistent with H1, result
Slide 8: Facilities
Facilities Predictable long-term contracts delivering strong margins $3.2bn $179.3m 5.7% Revenue EBITA EBITA % 0.7% 3.3% 0.2pp ▪ Portfolio of Government Health & Education PPPs stable ▪ Outcome of the Defence Base Services Tender and performing well expected in 2H25 ▪ Downer Professional Servi
Slide 9: $38.5bn work-in-hand
$38.5bn work-in-hand Long-dated ~90% government related Diversified by industry ~90% services5 Movement13 Profile 14 ▪ High proportion of secured revenue for FY25 $38.1bn $37.5bn $38.5bn 12 ▪ Improvement in risk profile and quality of 12.9 10 work-in-hand through disciplined bidding and 13.5 14.5 en
Slide 10: Significant contract wins
Significant contract wins Continued to secure new Facilities work in FY24 across Department of Defence - EMOS $400m 12 month contract extension to Jul-25 sectors and geographies Estate Maintenance and Operation Services (EMOS) Unitywater Utilities $600m contract for an initial 5 year term Department
Slide 11: ESG update
ESG update Sustainability Linked Loan (SLL) Environmental 27.7 tCO2-e / $m 300 tCO2-e Refinanced a $500m tranche of the Focus on investment in 8% reduction from FY23 reduction in FY24 $1.4bn syndicated SLL facility and renewable energy to established a new sustainability reduce Scope 2 Reduction in
Slide 12: Group financials
Group financials FY24 RESULTS 12
Slide 13: Progress on business turnaround
Progress on business turnaround Revenue1,6 5.5% Work in hand 1.0% EBITA margin performance $11.7bn $38.5bn FY24 3.3% +0.7pp in FY24 EBITA1,2 34.1% EBITA margin 0.7pp FY23 2.6% $384.1m 3.3% H2 +1.0pp in 2H24 4.0% NPATA1,2 H2 45.4% Statutory NPAT >100% 3.0% $212.3m $82.1m H1 +0.5pp in 1H24
Slide 14: On track to achieve $175m cost out target
On track to achieve $175m cost out target Annualised gross cost out ▪ $130m of annualised gross cost out achieved in FY24 v initial FY25 - $45m $45m $100m target remaining ▪ Clear line of sight to the remaining $45m target by end of FY25 $175m ▪ FY25 run rate benefit expected from the $50m annualise
Slide 15: Reconciliation to statutory result
Reconciliation to statutory result Pro forma to statutory EBITA ($m)1,2,7 Net EBITA contribution from divestments Costs incurred in business reset: completed in the - Redundancy and severance ($28.7m) period removed - Transformation program (including IT) (not in go forward and other ($32.9m) earnin
Slide 16: Significant improvement to FY24 cash conversion
Significant improvement to FY24 cash conversion Disciplined back to basics focus – working capital management, cash collections, resolution of contractual variations and claims 2 3 4 6 5 1 Opening Operating Capex Payment of IT Other Free cash Dividends Net Borrowings Closing cash cash flow lease lia
Slide 17: Group debt profile
Group debt profile ▪ Weighted average debt facility duration of 2.9 years8 Debt maturity profile (A$m) (3.3 years at 31 December 2023) ▪ Compliant with all financial covenants 1,000 ▪ Fitch BBB investment grade rating with Stable Outlook Bilateral bank facilities affirmed May-24 800 A$ MTN JPY MTN ▪
Slide 18: Capital allocation framework
Capital allocation framework Cash generated from business ▪ Operating cash flow – targeting average cash conversion >90% in the Securing Interest / tax medium term, noting project phasing and working capital requirements balance sheet performance can influence period cash conversion Operating cash f
Slide 19: Priorities and outlook
Priorities and outlook FY24 RESULTS 19
Slide 20: Maintaining the momentum
Maintaining the momentum Progress ▪ Implement The Downer Difference, our new high >4.5%18 Driving a performance culture program Leadership performance HY24 ▪ Changes to Board composition and governance structures ~0.5% & culture culture (3 new directors since Jun-23) ~0.7% Net cost out 3.3% ▪ Change
Slide 21: FY25 priorities
FY25 priorities Executing our strategy which is supported by a back to basics approach, an agile contractor mindset, cost control, risk management and enhanced project delivery ▪ Safety is our highest priority with a focus on critical risk control effectiveness ▪ Implement our performance-based lead
Slide 22: FY25 segment outlook
FY25 segment outlook Transport Utilities Facilities ▪ Commercial reset of low margin ▪ Merger of Utilities and Industrial & ▪ Facilities outlook remains positive projects, FY24 cost out, and Energy businesses provides enhanced performance improvement initiatives capabilities and overhead efficiencie
Slide 23: Group outlook
Group outlook Management target The FY24 result demonstrates: EBITA margin of >4.5%18 ▪ Our ability to deliver earnings and EBITA margin improvement is reflected in the in varied market conditions within enhanced risk guardrails LTI scorecard gates ▪ The resilience of our diversified and high-qualit
Slide 24: Supplementary Information
Supplementary Information FY24 RESULTS 24
Slide 25: Our Purpose, Promise and Pillars
Our Purpose, Promise and Pillars Our Purpose Enabling communities to thrive. Our Promise Our customers' success is our success. Safety and sustainability Safety is our first priority. Zero Harm to our people, communities and environment is embedded in our culture. We will leave a positive legacy for
Slide 26: Transport
Transport Road Services WIH profile $bn Top 5 contracts remaining 6.0 1. Queensland Train Manufacturing Program until 2042 Rail & Transit Systems 5.0 4.0 2. Maintaining Waratah trains until 2044 Projects 3.0 2.0 3. Maintaining HCMTs until 2053 1.0 0.0 4. Maintaining Sydney Growth Trains until 2044 F
Slide 27: Utilities
Utilities Telecommunications WIH profile $bn Top 5 contracts remaining 2.5 1. South-east Queensland water (Unitywater) until 2029 (plus Water 2.0 three two-year extensions) Power & Gas 1.5 2. Sydney Water until 2030 (Confluence Water JV) 1.0 3. Logan City Council (water) until 2027 (plus one two-yea
Slide 28: Facilities
Facilities Government WIH profile $bn Top 5 contracts remaining Health & Education 7.0 1. New Royal Adelaide Hospital PPP until 2046 6.0 Defence 5.0 4.0 2. Bendigo Hospital PPP until 2042 Industrial & Energy 3.0 2.0 3. Sunshine Coast University Hospital PPP until 2042 1.0 4. Sydney International Con
Slide 29: FY24 revenue composition
FY24 revenue composition Revenue diversified across Transport, Utilities and FY24 Revenue $11.7 billion1 Facilities markets All numbers are pro forma1 unless stated otherwise. Refer to slide 32. FY24 RESULTS 29
Slide 30: Cash flow
Cash flow Change in cash ($m) FY24 FY23 Change Cash conversion ($m) FY24 FY23 Change Total operating cash flow 544.1 318.2 71.0% Underlying7 EBIT 357.7 297.2 20.4% Net capex (69.8) (205.4) 66.0% Add: Depreciation and amortisation 346.0 336.2 2.9% Payment of principal lease liabilities (163.5) (165.0
Slide 31: Reconciliation of pro forma to statutory result
Reconciliation of pro forma to statutory result Amortisation of Net finance Tax acquired intangibles Reconciliation of pro forma to statutory result ($m) EBITA2 cost expense12 NPATA2 (post-tax) NPAT Pro forma result 384.1 (88.7) (83.1) 212.3 (16.2) 196.1 Net divestment contribution (3.3) - 1.1 (2.2)
Slide 32: Reconciliation pro forma to underlying result
Reconciliation pro forma to underlying result FY24 FY2314 ($m) Pro forma Underlying7 Pro forma Underlying7 Divestments Divestments Transport Revenue 6,042.4 179.6 6,222.0 5,606.3 1,246.2 6,852.5 FY24 divestments EBITA 252.8 (2.4) 250.4 240.8 48.1 288.9 Australian Transport Projects business (Transpo
Slide 33: Group underlying financial performance
Group underlying financial performance Underlying7 performance ($m) FY24 FY23 Change Underlying7 segment performance ($m) FY24 FY23 Change Total revenue6 11,967.6 12,619.7 (5.2%) Transport 250.4 288.9 (13.3%) EBITDA 703.7 633.4 11.1% Utilities 55.6 (10.3) >100% Depreciation and amortisation (322.9)
Slide 34: Notes
Notes 1. Pro forma reflects the statutory results adjusted for ISI and excludes the revenue and EBITA contribution relating to completed divestments to provide a like for like comparison at 30 June 2024. The pro forma result is a non-IFRS measure that is used by Management to assess the performance
Slide 35: Important notice and disclaimer
Important notice and disclaimer The information in this presentation has been prepared by Downer EDI Limited ABN 97 003 872 848 (Downer or the Company) and includes general background information about Downer’s activities current as at the date of this presentation. This information is given in summ
Slide 36: Slide 36