Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — H1 FY2021 Earnings Presentation
42 slides from Cleanaway Waste Management's earnings presentation, Feb 19, 2021
Slide 1: FY21 Half Year Financial Results Media Release and Investor Presentation
19 February 2021 Company Announcements Office ASX Limited Exchange Office Level 4, 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam, FY 21 HALF YEAR FINANCIAL RESULTS MEDIA RELEASE AND INVESTOR PRESENTATION Please find attached the following documents in relation to the Company’s FY21 half year resul
Slide 2: FY21 Half-Year Results
ASX & Media Release 19 February 2021 FY21 HALF-YEAR RESULTS Continued earnings growth delivers record profit with further margin expansion Interim dividend up 12.5% Cleanaway Waste Management Limited (“Cleanaway”) ASX:CWY today announced a Statutory Net Profit of $79.4m for the six months ended 31 D
Slide 3: Management Commentary
ASX & Media Release 19 February 2021 Management Commentary Chief Executive Officer and Managing Director of Cleanaway, Vik Bansal, said, “Today I am reporting my final set of financial and operational results for Cleanaway, with record outcomes achieved again across all key metrics. I am proud of th
Slide 4: Dividend
ASX & Media Release 19 February 2021 Dividend The Board declared an interim dividend of 2.25 cents per share (pcp: 2.0 cents per share) representing an increase of 12.5% on the interim dividend paid in the pcp. The dividend will be fully franked and paid on 7 April 2021 to shareholders on the regist
Slide 5: Industrial & Waste Services
ASX & Media Release 19 February 2021 During the period Cleanaway won several national and large mid-market accounts. We also secured a landfill height extension at Erskine Park in Sydney that will extend the life of that asset. Cleanaway also successfully tendered for the Blacktown City Council recy
Slide 6: Leadership Transition
ASX & Media Release 19 February 2021 The Liquids & Technical Services business saw lower volumes in states with significant tourism (particularly Queensland), hospitality (grease traps), cruise ships and automotive sectors because of COVID-19. The consolidation of the LTS business and structural adj
Slide 7: FY21 Half Year Results
FY21 Half Year Results For the six months ended 31 December 2020 Vik Bansal – CEO and Managing Director Brendan Gill – COO 19 February 2021
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 Results Update Page ❖ People and Culture 4-5 ❖ Highlights 6 ❖ Group Performance Overview 7-9 ❖ Revenue Streams 10 ❖ Segment Performance 11 - 13 ❖ Statutory NPAT Reconciliation to Underlying NPAT 14 ❖ Balance Sheet, Cash Flow and Debt 15 - 17 Enterprise Updates ❖ Capital Expenditure 18 ❖ Margi
Slide 10: People & Culture: Key Metrics
People & Culture : Key Metrics Total Recordable Injury Frequency Rate (TRIFR)1 Employee Engagement Survey2 700 0 Top quartile CAGR – 19.4% 78% 6,015 (69%+) Engagement External Benchmark FY16 – 1H21 73% 600 0 ANZ ( 794 companies ANZ) 68% 4,224 4,453 500 0 4,169 4,224 Zone (52-69%) Moderate 63% 400 0
Slide 11: People & Culture: Key Metrics
People & Culture : Key Metrics Voluntary turnover (%) and Headcount Female participation 18.1% 18.1% 1,4 00 19% 18% 17.0% 1,2 00 1,196 17% 1,158 1,112 16% 14.6% 1,0 00 15% 14% 13.1% 13.1% 800 834 832 813 804 13% 12% 10.6% ToxFree & SKM 600 11% acquisitions 4,179 4,224 4,171 4,453 5,939 6,015 6,256 4
Slide 12: First-half FY21 Highlights
First-half FY21 Highlights FINANCIAL: ❖ Statutory NPAT of $79.4m was 75.3% higher than 1H20 and marginally higher than 1H21 underlying NPAT. ❖ Interim Dividend up 12.5% to 2.25c per share, fully franked at 30%. ❖ Underlying NPAT up 6.5% and EPS up 2.7% on 1H20. ❖ Underlying EBIT up 3.9% and EBIT mar
Slide 13: Group Performance Overview
Group Performance Overview Underlying Results Statutory Results $ million 1H20 1H21 Change 1H20 1H21 Change Gross Revenue 1,197.2 1,170.3 (2.2)% 1,197.2 1,170.3 (2.2)% Net Revenue 1,070.0 1,070.2 —% 1,070.0 1,070.2 —% EBITDA 256.4 263.8 2.9% 236.4 256.9 8.7% EBITDA Margin 24.0% 24.6% 60 bps 22.1% 24
Slide 14: Sustained Earnings, Quality and Growth Continues
Sustained Earnings, Quality and Growth Continues1,2 Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBIT ($million) and EBIT margin (%) 256.4 263.8 132.2 CAGR +8.5% 1,064.6 1,070.0 1,070.2 CAGR +13.7% CAGR +14.9% 127.2 1H15 – 1H21 1H15 – 1H21 228.9 1H15 – 1H21 117.2 722.2 655.7 669.7
Slide 15: Sustained improvement in Cash Flows and Shareholder Returns
Sustained improvement in Cash Flows and Shareholder Returns Operating Cash Flow ($m) Cash Capex ($m) and % of Net Revenue Free Cash Flow ($m) 202.4 117.9 120.9 112.1 175.6 105.0 Tax Refund(1) CAGR +32.6% 157.1 100.7 1H15 – 1H21 25.0 CAGR +16.3% 93.0 1H15 – 1H21 85.7 112.8 74.4 74.3 70.0 99.8 49.5 81
Slide 16: Revenue streams linked to GDP with defensive characteristics
Revenue streams linked to GDP with defensive characteristics ❖ Cleanaway’s revenue base is Solid Waste Services largely underpinned by long-term Typical contract duration 1H21 Segment Net contracts across all sectors with a • Municipal: 7 - 10 years geographically diverse customer • Commercial & Ind
Slide 17: Solid Waste Services Performance
Solid Waste Services Performance Net Revenue ($m) and margins (%) $million 1H20 1H21 change 698.8 713.2 682.4 Net revenue(1) 698.8 713.2 2.1% 524.2 EBITDA 193.0 198.4 2.8% 479.4 26.8% 26.6% 27.6% 27.8% EBITDA Margin 27.6% 27.8% 20 bps 25.7% EBIT 104.4 108.3 3.7% 15.3% 15.0% 14.9% 15.2% 13.5% 1H17 1H
Slide 18: Industrial & Waste Services Performance
Industrial & Waste Services Performance $million 1H20 1H21 change Net Revenue ($m) and margins (%) Net revenue 165.7 151.7 (8.4)% 177.0 165.7 151.7 EBITDA 23.1 23.8 3.0% 84.4 EBITDA Margin 13.9% 15.7% 180 bps 77.3 15.7% 13.1% 13.9% EBIT 10.8 11.9 10.2% 11.5% 10.2% 7.8% 5.9% 6.5% 3.3% 2.6% EBIT Margi
Slide 19: Liquid Waste & Health Services Performance
Liquid Waste & Health Services Performance $million 1H20 1H21 change Net Revenue ($m) and margins (%) 251.0 258.6 252.6 Net revenue 258.6 252.6 (2.3)% EBITDA 52.8 55.1 4.4% 141.7 129.3 EBITDA Margin 20.4% 21.8% 140 bps 20.4% 21.8% 17.0% 14.8% 15.6% 12.6% 13.5% EBIT 32.5 34.2 5.2% 10.5% 9.5% 10.2% EB
Slide 20: Statutory NPAT Reconciliation to Underlying NPAT
Statutory NPAT Reconciliation to Underlying NPAT $ million 1H21 Statutory Profit After Income Tax Attributable to Ordinary Equity Holders 78.3 Pre-tax adjustments: Impact of Perth MRF fire 5.1 Acquisition costs 1.4 Integration costs 1.9 Change in landfill remediation and rectification discount rate
Slide 21: Balance Sheet
Balance Sheet $ million 31 Dec 2019 30 June 2020 31 Dec 2020 ❖ Increase in PP&E and Intangibles ASSETS reflects bolt-on acquisitions including Cash and cash equivalents 37.8 79.8 31.8 the Grasshopper Environmental and Stawell businesses and investments in Trade and other receivables 404.4 348.1 359.
Slide 22: Cash Flow
Cash Flow $ million 1H20 1H21 Change Underlying EBITDA 256.4 263.8 7.4 ❖ Net cash from operating activities Cash flow of underlying adjustments (24.4) (14.8) 9.6 increased by $45.3m compared to the Other non-cash items (6.2) 3.4 9.6 prior corresponding period reflecting Payments for rectification an
Slide 23: Capital Structure – Debt
Capital Structure – Debt $ million 31 Dec 19 30 Jun 20 31 Dec 20 Capital structure 31 December 2020: Leases 436.5 437.3 454.0 ❖ At 31 December 2020, the Group had ~$433 USPP Notes (10.9) 426.9 373.1 million of debt headroom under existing Other interest bearing liabilities 658.1 201.2 184.0 banking
Slide 24: Capital Expenditure
Capital Expenditure ❖ Cash capital expenditure1 in the half was 11.3% of net revenue. ❖ We will continue to target capex at ~10% of net revenue with FY21 capex skewed to H1. ❖ Leasing finance utilised in 1H21 of $34.2 million for government related contracts. ❖ Additional leases of ~$60 million will
Slide 25: Medium Term Segment Margin Targets
Medium Term Segment Margin Targets ❖ Consistent EBITDA growth driven by revenue growth, cost management and execution discipline towards operating leverage delivering margin improvements. ❖ Progressing very well towards medium term margin targets (Provided at FY20 Results) despite COVID-19 headwinds
Slide 26: Delivering Footprint 2025 – Acquisitions and Greenfield to continue
Delivering Footprint 2025 – Acquisitions and Greenfield to continue Collections Resource recovery Energy from Waste Treatment and Disposal ✓ Perth MRF1 ✓ Doubled electricity generation ✓ Planning permit for MRL until ✓ 2 x WA transfer stations at Melbourne facility 2046 ✓ SE Melbourne transfer stati
Slide 27: …while significant work continues on BAU infrastructure development
…while significant work continues on BAU infrastructure development Collections Resource recovery Energy from Waste Treatment and Disposal Solid Waste Services Solid Waste Services Solid Waste Services Solid Waste Services ✓ Coolaroo putrescible ✓ FOGO plant at Mildura, VIC ✓ Further gas ✓ Mechanica
Slide 28: Footprint 2025: Recent bolt-on acquisitions enhance footprint
Footprint 2025: Recent bolt-on acquisitions enhance footprint ❖ Strategic entry into the NSW Construction & Demolition (C&D) market – Cleanaway now nationally 2nd largest C&D player while still maintaining C&D exposure less than 10% of Revenue. ❖ Grasshopper is a C&D collections business with an inf
Slide 29: Data & Analytics Enablers
Data & Analytics workstreams over the next ~3 years represent a margin expansion opportunity …… Stage 1 Stage 2 Stage 3 Selective use-case Digitised customer Digitisation at scale Work underway deployment experience Not started Work Program: Work Program: Work Program: Collections Post Collections ✓
Slide 30: A significant opportunity in recyclable polymers exists
A significant opportunity in recyclable polymers exists Australian Plastics Consumption by Polymer Polymers most suitable for mechanical recycling Total 3.4 million tones 1 1 PET PET Other 363 kt 26% 363 kt 2 11% 2 HDPE 654 kt HDPE 19% Nylon 1.9mt 4 3% 352 kt 54% PS 4% 502 Kt 10% LDPE 15% PVC 4 12%
Slide 31: Energy from Waste
Energy from Waste Energyto Waste from Waste Energy Construction • Joint Venture with Macquarie Green • ~900 direct jobs. Investment Group. • ~1200 indirect jobs. • EIS exhibition complete. Operations • 3-year construction period. • ~50 direct jobs. • 30+ year operation period. • ~95% landfill divers
Slide 32: Energy from Waste
Energy from Waste Energyto Waste from Waste Energy Oct 20 Dec 20 | 2021 | EIS Public exhibition WSERRC prepare Response To Submissions 6 Oct – 16 Nov 20201 Response to Submissions DPIE assess Response To Submissions published by DPIE DPIE potentially request more information DPIE publishes Merit Ass
Slide 33: Priorities and FY21 Outlook
Priorities and FY21 Outlook Priorities ❖ No change to strategy : Sustainability and profitable organic growth remain our key priorities across all three segments and across the Enterprise. ❖ Focus on improving our quality of earnings through near-term operational initiatives and longer-term initiati
Slide 34: Questions
Questions Confidential | 28 28
Slide 35: Appendices
Appendices Financial Results Page ❖ Group Performance Overview 31 ❖ Summary Charts 32 ❖ Group Income Statement – Statutory and Underlying Results 34 ❖ Underlying Segment disclosures 35 ❖ Net Finance Costs 36 29
Slide 36: Group Performance Overview
Group Performance Overview Underlying Results Change Change v $ million 1H20 1H21 2H20 1H21 v prior pcp half Gross Revenue 1,197.2 1,170.3 (2.2)% 1,134.8 1,170.3 3.1% Net Revenue 1,070.0 1,070.2 —% 1,030.0 1,070.2 3.9% EBITDA 256.4 263.8 2.9% 259.3 263.8 1.7% EBITDA Margin 24.0% 24.6% 60 bps 25.2% 2
Slide 37: Sustained Earnings, Quality and Growth Continues
Sustained Earnings, Quality and Growth Continues Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBIT ($million) and EBIT margin (%) 2,109.1 2,100.1 256.6 515.7 240.8 CAGR +10.0% CAGR +17.4% CAGR +21.4% 461.6 FY15 - FY20 FY15 - FY20 FY15 - FY20 1,564.9 1,301.1 1,320.7 1,350.7 339.7 24
Slide 38: Sustained improvement in Cash Flows and Shareholder Returns
Sustained improvement in Cash Flows and Shareholder Returns Operating Cash Flow ($m) Cash Capex ($m) and % of Net Revenue Free Cash Flow ($m) 209.8 CAGR +17.9% 401.5 192.5 274.4 FY15 - FY20 Tax Refund(1) 350.8 175.9 CAGR +70.8% 25.0 FY15 - FY20 153.5 155.3 206.4 143.5 120.9 221.2 202.4 190.7 189.6 1
Slide 39: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Statutory Results Underlying Adjustments Underlying Results $ million 1H20 1H21 1H20 1H21 1H20 1H21 Sales revenue external and other revenue (Gross Revenue) 1,197.2 1,170.3 — — 1,197.2 1,170.3 Share of profits/(losses) in equity accounted inv
Slide 40: Underlying Segment Disclosures
Underlying Segment Disclosures 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 781.9 147.7 222.7 — — — 1,152.3 Other revenue 5.9 — 12.1 — — — 18.0 I
Slide 41: Net Finance Costs
Net Finance Costs Statutory Underlying $ million 1H20 1H21 1H20 1H21 Cash interest expense Bank interest and leases 17.2 10.2 17.2 10.2 Commitment and Guarantee fees 1.1 1.8 1.1 1.8 USPP Notes — 3.4 — 3.4 Interest received (1.1) (0.2) (1.1) (0.2) Net cash interest expense 17.2 15.2 17.2 15.2 Non-cas
Slide 42: Further Information
Further Information Investors Media Richie Farrell Mark Biddulph Head of Investor Relations Head of Corporate Affairs M: +61 409 829 014 M: +61 499 332 601 E: Richie.Farrell@cleanaway.com.au E: Mark.Biddulph@cleanaway.com.au W: cleanaway.com.au/about-us/for-investor 36
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