Emeco Holdings Limited · ASX:EHL
Emeco — H1 2009 Earnings Presentation
31 slides from Emeco's earnings presentation, Feb 25, 2009
Slide 1: 2009 Interim Results
Emeco Holdings Limited For personal use only 2009 Interim Results MR LAURIE FREEDMAN, Managing Director & Chief Executive Officer MR STEPHEN GOBBY, Chief Financial Officer
Slide 2: Disclaimer
Disclaimer For personal use only 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 and the assumptions upon which they are bas
Slide 3: Agenda
Agenda For personal use only 1. Highlights 2. Financials 3. Operational Review 4. Outlook 5. Appendix Page 3
Slide 4: 1H09 Highlights
1H09 Highlights For personal use only Operating revenue up 8% pcp contributing to record operating profit of $39.0m, up 27.9% pcp Operating cash flow including sustaining capex of $51.4 million or 8.2 cents per share 83% average utilisation of assets in the period (by asset value) Performance improv
Slide 5: 1H09 Highlights
1H09 Highlights For personal use only Continuation of 2H08 performance and in- 100 % line with expectations 95 % Asset Utilisation % 90 % 87% Market penetration of offshore business 85 % Utilisation by $ value 83% Avg units continued underpinning strong 80 % 78% Avg 76% 75 % performance 70 % 69% 65
Slide 6: Agenda
Agenda For personal use only 1. Highlights 2. Financials 3. Operational Review 4. Outlook 5. Appendix Page 6
Slide 7: Financial Performance
Financial Performance Improved margins and maturing international businesses contributed to growth in For personal use only earnings and ROFE 1H08 1H09 Var Var A$ m A$ m A$ m % Revenue 288.2 309.8 21.6 7.5% EBITDA 98.6 128.6 29.9 30.4% margin (%) 34.2 41.5 7.3 21.3% EBITA 55.4 69.7 14.3 25.8% margin
Slide 8: Earnings Composition
Earnings Composition Revenue EBITDA EBITA For personal use only 350 330 150 80 303 310 129 70 300 288 70 67 125 65 115 61 252 108 60 250 100 99 55 100 50 209 50 200 81 174 40 154 75 40 150 138 63 34 30 29 50 47 49 100 20 50 25 10 0 0 0 1H05 2H05 1H06 2H06 1H07 2H07 1H08 2H08 1H09 1H05 2H05 1H06 2H06
Slide 9: Half Year Earnings
Half Year Earnings International businesses maturing with increasing contribution to group earnings For personal use only FY08 % EBIT Composition 21% A$m Australia 60 Canada +129% +82% USA 50 +56% 5.4 0.8 +28% Europe +280% 4.0 79% 6.4 (2.4) (0.7) 39.0 Indonesia 40 +3% -204% (2.7) POSA 30.5 1.6 -32%
Slide 10: Operating Cash Flow
Operating Cash Flow Achieved first half target to remain cash flow neutral with free cash flow to grow in 2009 For personal use only Strong operating cash flow including 1H08 A$ m 2H08 A$ m 1H09 A$ m sustaining capex equating to 8.2 cents EBITDA 98.6 114.8 128.6 per share General Working Capital (3.
Slide 11: Balance Sheet
Balance Sheet Funding certainty and quality asset base provide strong foundation to capture future For personal use only opportunities NTA of $501 million equivalent to $0.79 cents per share Dec-07 Jun-08 Dec-08 A$ m A$ m A$ m Senior debt facility secured until August 2011, $274 million facilities G
Slide 12: Borrowings
Borrowings For personal use only Senior Multi-Currency Debt Facility: Based on 31 Dec 08: EBITDA performance would Facility limit - A$595 million have to deteriorate by ~40% in order to breach Drawn at 31 Dec 08 - A$400.4 million covenants (assuming constant asset & debt levels) Currency drawings -
Slide 13: Asset Values
Asset Values For personal use only Short term asset pricing trends vary across equipment classes Currently observing surplus capacity in some markets However a range of factors underpinning Emeco’s tangible asset values: • 28% decline in AUD:USD over past 6 months is increasing cost of importing new
Slide 14: Funds employed and ROFE
For personal use only Funds employed (A$m) Page 14 – 200 400 600 800 1,000 1,200 10% 11% 12% 13% 14% 15% 16% 17% ROFE Jul-07 Sep-05 408 426 Aug-07 446 Dec-05 462 Sep-07 510 538 Oct-07 Mar-06 572 594 607 Nov-07 Jun-06 628 626 Dec-07 710 Sep-06 733 Jan-08 735 15.2% 744 Dec-06 748 Feb-08 764 770 Mar-08
Slide 15: Agenda
Agenda For personal use only 1. Highlights 2. Financials 3. Operational Review 4. Outlook 5. Appendix Page 15
Slide 16: Volume Outlook
Volume Outlook Despite commodity price declines Emeco’s primary markets are forecast to continue volume For personal use only growing at between 3–16% p/a over the medium term Australian Thermal Coal Australian Iron Ore Australian Metallurgical Coal 250 550 250 500 200 CAGR – 7% 200 CAGR – 7% 450 CA
Slide 17: Regional Overview
Regional Overview Renting with Emeco Australia • Australian Rental experienced strong demand in thermal coal, gold, iron ore and coking coal for most For personal use only of the period • Deterioration in customer activity in coking coal and base metals in December • While medium term volumes appear
Slide 18: Regional Overview
Regional Overview Renting with Emeco For personal use only United States • Appalachian coal production supported by stable demand from domestic power generators • US business infrastructure now well established to capitalise on opportunities • Additional growth projects underway in 2H09 • Increased
Slide 19: Agenda
Agenda For personal use only 1. Highlights 2. Financials 3. Operational Review 4. Outlook 5. Appendix Page 19
Slide 20: Market Outlook
Market Outlook Volumes For personal use only Global market uncertainty driving operational decisions affecting short term volumes Medium to long term volume outlook remains robust Government fiscal policy supporting civil construction / infrastructure projects Equipment Capacity In short term excess
Slide 21: Strategies – What are we doing?
Strategies – What are we doing? For personal use only Now have debt secured up to August 2011 Maximising Free cash flow by managing working capital, limiting growth capex and cost management initiatives Disposals - Repositioning fleet into larger sized mining equipment and liberating surplus assets
Slide 22: FY09 Guidance
FY09 Guidance For personal use only The company anticipates net profit after tax for the full year to be in the range of $65 - $72 million, broadly in-line with average consensus estimates of approximately $70 million and in-line with FY08 Rental – business remains leveraged to volumes however short
Slide 23: Questions & Answers
For personal use only Questions & Answers Page 23
Slide 24: Agenda
Agenda For personal use only 1. Highlights 2. Financials 3. Operational Review 4. Outlook 5. Appendix Page 24
Slide 25: Australia
Australia For personal use only Rental end market Rental client profile Rental client type 100% 4% 7% 26% 30% 80% 30% 12% 60% 40% 16% 18% 20% 20% 20% 17% Top 5 Top 6-10 0% Gold Thermal Coal Coking Coal Zinc Iron Ore Other Large Small Total Top 11-20 Remainder Civil Miner Contractor Other Notes: 1. P
Slide 26: Australia
Australia For personal use only Rental machine profile Funds employed and utilisation Truck 207 100% 700 Funds employed (A$m) 90% 600 Dozer 130 80% Loader 63 70% 500 Utilisation 60% 400 Excavator 58 50% 40% 300 Grader 55 30% 200 Other 68 20% 100 10% 0% – Jun-06 Jun-07 Jun-08 Sep-05 Dec-05 Mar-06 Sep
Slide 27: Indonesia
Indonesia For personal use only Rental end market Rental client profile Funds employed and utilisation 4% 7% 7% 100% 100 Funds employed (A$m) 90% 90 80% 80 25% 70% 70 Utilisation 25% 60% 60 50% 50 64% 40% 40 30% 30 68% 20% 20 10% 10 Thermal Coal Coking Coal Top 5 Top 6-10 0% – Jun-06 Jun-07 Jun-08 S
Slide 28: Canada
Canada For personal use only Rental end market Rental client profile Funds employed and utilisation 3% 1% 3% 16% 100% 160 Funds employed (A$m) 90% 140 80% 120 29% 70% Utilisation 14% 60% 100 56% 50% 80 64% 40% 60 30% 14% 40 20% 10% 20 Oil Sands Civil Top 5 Top 6-10 0% – Jun-06 Jun-07 Jun-08 Sep-07 S
Slide 29: US
US For personal use only Rental end market Rental client profile Funds employed and utilisation 4% 1% 8% 100% 90 Funds employed (A$m) 4% 13% 80 80% 70 Utilisation 60 60% 50 61% 40% 40 18% 30 91% 20% 20 10 Top 5 Top 6-10 0% – Thermal Coal Civil Jun-06 Jun-07 Jun-08 Mar-06 Mar-07 Mar-08 Sep-05 Dec-05
Slide 30: Europe
Europe For personal use only Funds employed 30 Funds Employed (A$m) 25 20 Number of rental machines: 17 15 Number of sales machines: 144 10 5 0 Nov-06 Nov-07 Nov-08 Feb-06 May-06 Aug-06 Feb-07 Feb-08 May-07 Aug-07 May-08 Aug-08 Funds employed Note: 1. Funds employed is defined as net tangible assets
Slide 31: Historical Financial Performance
Historical Financial Performance For personal use only Australia Indonesia Canada US Europe A$m Dec-07 Jun-08 Dec-08 Dec-07 Jun-08 Dec-08 Dec-07 Jun-08 Dec-08 Dec-07 Jun-08 Dec-08 Dec-07 Jun-08 Dec-08 Financial performance Revenue 210.9 248.6 214.4 9.9 13.9 25.7 23.7 28.0 35.3 20.6 22.5 23.3 23.0 16