Aurizon Holdings Ltd. · ASX:AZJ
Aurizon — FY2023 Earnings Presentation
50 slides from Aurizon's earnings presentation, Aug 14, 2023
Slide 1: Full year results presentation
Aurizon Holdings Limited ABN 14 146 335 622 ASX Market Announcements ASX Limited 20 Bridge Street For personal use only Sydney NSW 2000 BY ELECTRONIC LODGEMENT 14 August 2023 Full year results presentation Attached is Aurizon Holding Limited’s full year results presentation for release to the market
Slide 2: For personal use only
For personal use only
Slide 3: Important notice and statements about the future
For personal use only NO RELIANCE ON THIS DOCUMENT STATEMENTS ABOUT THE FUTURE This document was prepared by Aurizon Holdings Limited (ACN 146 335 622) (referred to as “Aurizon” which includes its related This document contains “forward-looking statements”. The words “expect”, “anticipate”, “likely”
Slide 4: Safety: TRIFR, LTIFR and SIFR
For personal use only TOTAL RECORDABLE INJURY FREQUENCY RATE (TRIFR)1 AND LOST ACTUAL AND POTENTIAL SERIOUS INJURY AND FATALITY TIME INJURY FREQUENCY RATE (LTIFR) FREQUENCY RATE (SIFRa+p)2 Incidents per million hours worked Incidents per million hours worked 10.21 6.77 -2% 8.51 8.36 restatement -56%
Slide 5: For personal use only
SZ ® 12) =) =z ‘S Q 1 ee Freight train ahead of thé launclr or thé Second weqldy Meibourge to-Perth service > <== : — 3 "a? AURIZON. iv
Slide 6: Strategy and aspirations
For personal use only 1. Please refer to slides 2 and 3 of Aurizon’s 2023 Investor Day presentation (available at aurizon.com.au) for important cautionary language in respect of ‘aspirational statements’. As noted in those slides, market share opportunities assume Aurizon secures part of an availabl
Slide 7: Resilient businesses, bulk growth, containerised freight
For personal use only Resilient Coal and Drive Bulk growth Establish nationally significant Network businesses across national footprint containerised freight supply chain Our aspiration to achieve Our aspiration to achieve Highly disciplined businesses, supporting Aurizon's 25-30% >500k TEU diversi
Slide 8: Growth reduces thermal coal revenue exposure
For personal use only Growth in Bulk and Resilient Coal and Network Drive Bulk growth Establish nationally significant Containerised Freight reduces businesses across national footprint containerised freight supply chain thermal coal revenue exposure Coal plus Network EBITDA ($m) Bulk EBITDA ($m) TE
Slide 9: FY2023 results highlights
For personal use only EBITDA ONE RAIL ROIC2 FREE CASH FLOW3 (EXCLUDES GROWTH CAPEX) Bulk acquisition (and $1,428m East Coast Rail divestment) 7.5% $297m down 3% down 2.8ppts down 61% complete COAL VOLUMES BULK VOLUMES BULK: REVENUE SHARE4 DIVIDEND (EXCLUDES NETWORK BUSINESS UNIT) Total 15.0cps 185.0
Slide 10: Business unit highlights and outlook
For personal use only Lower volumes from the impact of prolonged wet weather and (non- Step-up in EBITDA driven by Bulk Central partly offset by wet Network volumes were below the regulatory forecast resulting in an pass through) access take-or-pay driving lower EBITDA weather, supply chain disrupti
Slide 11: Financial Performance
—iInancial-Performance " Géor piatt . g S roup Executive Strategy ~ Photo: Containerised Freight train at Stuart, Queensland \ £7? AURIZON.
Slide 12: Group financial results
For personal use only $m 1H 2H FY2023 FY2022 Variance (%) › Revenue growth primarily driven by the acquisition of One Rail Australia (Bulk Central) completed July 2022, and a Revenue 1,694 1,817 3,511 3,075 14% minor increase to Network Allowable Revenue, offsetting Operating Costs (Total) (1,021) (
Slide 13: Coal: EBITDA major drivers
For personal use only EBITDA: Major drivers ($M) Revenue 1 Operating costs 2 net of fuel and access (revenue and cost) 541 $1,181m ($726m) 52 (2%) (10%) 6 28 1 455 13 EBITDA Tonnes hauled $455m 185.0m FY2022 Volume Net Revenue Net Take- Other Operating FY2023 Yield or-Pay Costs (16%) (5%) › EBITDA d
Slide 14: Bulk: EBITDA major drivers
For personal use only EBITDA: Major drivers ($M) Total Revenue Operating Costs net of fuel and external access (revenue and cost) $1,063m ($849m) +52% (50%) 260 340 214 1 135 EBITDA Rail Tonnes Hauled $214m 68.2m FY20222 Revenue Operating Costs Other FY2023 +59% +34% › EBITDA increased by $79m to $2
Slide 15: Network: EBITDA major drivers
For personal use only EBITDA: Major drivers ($M) Total Revenue Operating Costs net of fuel and energy/electric charges (revenue and cost) $1,337m ($524m) 23 30 +12% (34%) 813 19 801 EBITDA Tonnes $813m 207.6m FY2022 Access Revenue Other Revenue Other Operating Costs FY2023 +1% +1% › Network volumes
Slide 16: Free cash flow
For personal use only FREE CASH FLOW ($M)1 FY24 Driven by Bulk $765 Central & Network ($39) take-or-pay Free cash flow expected to be materially higher driven by: ($102) Driven by Network and • Higher earnings One Rail acquisition Driven by higher tax • Lower cash taxes instalment rate in FY2023 and
Slide 17: Capital expenditure
For personal use only CAPITAL EXPENDITURE1 ($M) ~850-960 Growth: Coal & Network 770 Growth: Bulk & Containerised Freight 4 ~250-300 Non-Growth: All Business Units 208 527 532 490 495 490 ~600-6602 558 FY18 FY19 FY20 FY21 FY22 FY23 FY24f Bulk & 3 4 Network Coal Containerised Freight Corporate Total N
Slide 18: Growth capital expenditure
For personal use only FY2023 FY2024 Actual Expected Rolling Stock $128m ~$185m Standard Gauge Locomotives & Wagons (and Containers) Port and Terminal Equipment $21m ~$40m Terminal Land and Infrastructure $29m ~$30m Track Infrastructure and Other $34m ~$30m Total Growth Capital1 $212m $250m-$300m Inv
Slide 19: Funding activity and key debt metrics
For personal use only FUNDING ACTIVITY KEY DEBT METRICS1 FY2023 FY2022 Aurizon Network Weighted average maturity1 3.6 years 3.4 years › $100m across 10-year and 12-year A$ Private Placement issued in December 2022 and February 2023 Group interest cost on drawn debt 4.1% 3.4% › $1,090m re-financing o
Slide 20: For personal use only
For personal use only Photo: Aurizon train carrying minerals sands for Tronox at Lake Hart Rest Area, South Australia
Slide 21: FY2024 outlook
For personal use only FY2024: › Group underlying EBITDA expected to be in the range of $1,590m - $1,680m › Sustaining capex expected to be $600-$660m (including ~$40m of transformational project capital) › Growth capex expected to be $250-$300m Key assumptions › Network: revenue and EBITDA growth dr
Slide 22: Outlook and key takeaways
For personal use only FY2023 RESULTS = OUTLOOK & KEY TAKEAWAYS, Key Messages © ©) B Network and Coal businesses are resilient, generating attractive free cash flow Greater market share and operational synergies unlocked from One Rail Australia acquisition Focus on safe and efficient services as Cont
Slide 23: For personal use only
For personal use only
Slide 24: For personal use only
For personal use only
Slide 25: Business units overview
For personal use only Network ▪ Operation of the Central Queensland Coal Network (2,670km), critical infrastructure supporting ~90% of Australian metallurgical coal export volume ▪ Around 70% of volume hauled across the network is considered to be metallurgical coal (remaining 30% thermal coal), wit
Slide 26: Capital allocation hierarchy
For personal use only Capital Allocation Hierarchy Capital Management › Opportunities if there is surplus capital Determine Available Capital Non-Growth Capital Dividends › Ongoing operating cash flows › Sustaining and transformation › Within 70-100% payout ratio or → projects › Additional funding c
Slide 27: Net-zero commitment, communities and governance
For personal use only NET-ZERO COMMITMENT BY 20501… …WHILE WE SUPPORT OUR REGIONS AND …AND LEAD THROUGH TRANSPARENT COMMUNITIES… GOVERNANCE › Climate Strategy and Action Plan released in › Third Reconciliation Action Plan published in › Board provides sustainability oversight and October 2020 March
Slide 28: Steel production and thermal coal import markets
For personal use only GLOBAL CRUDE STEEL PRODUCTION | BLAST FURNACE-BASIC OXYGEN ASIA: THERMAL (STEAM) COAL IMPORT VOLUME | SHARE OF GLOBAL THERMAL FURNACE SHARE1 (STEAM) COAL IMPORT MARKET2 2.0bt 1,000mt 83% 90% +3% 80% 800mt 1.5bt 70% 600mt 1.0bt 60% 400mt 73% 71% 72% 50% 74% 0.5bt 69% 65% 200mt 3
Slide 29: Australian exploration, capex and supply growth
For personal use only AUSTRALIA: EXPLORATION EXPENDITURE: SELECTED BASE METALS1 CAPITAL EXPENDITURE: METAL ORE MINING1 +15% $1,000m $25b +6% $20b $750m $15b $500m $10b $250m $5b $0m $0b CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 CY13 CY14 CY15 CY16 CY17 CY18 CY19 CY20 CY21 CY22 AUSTRALIA: CRO
Slide 30: Volumes by quarter and financial year
For personal use only Quarter Ending Financial Year Jun-22 Sep-22 Dec-22 Mar-23 Jun-23 Variance1 FY2022 FY2023 Variance1 Tonnes (million) Coal: CQCN 36.5 33.1 33.8 30.1 36.6 - 141.1 133.6 (5%) Coal: NSW & SEQ 13.3 11.6 12.1 13.4 14.4 8% 52.9 51.4 (3%) Coal Total 49.8 44.7 45.8 43.4 51.0 2% 194.0 185
Slide 31: Enterprise agreements
For personal use only # Staff Headline Increases Term Enterprise Agreement Covered Expiry Date Status (years) Year 1 Year 2 Year 3 Year 4 (approx.) SA/NT Bulk Rail Operations 170 4 16 Dec 2023 3.0% 3.0% 3.0% 3.0% Planning Traincrew & Transport Operations 5.3% QLD Bulk 370 1 24 Jan 2024 Planning Main
Slide 32: EBITDA by segment
For personal use only FY2023 FY20222 Variance Coal 455 541 (16%) Bulk 214 135 59% Network 813 801 1% Other (54) (10) (440%) EBITDA 1,428 1,467 (3%) 1. Continuing operations 31 2. The Bulk and Other segments for FY2022 have been restated for consistency with current year presentation
Slide 33: EBITDA bridge FY2022 to FY2023
For personal use only 12 86 79 1,467 44 1,428 FY2022 Bulk Network Coal Other FY2023 1. Continuing operations 32 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 34: Balance sheet
For personal use only 30 June 2023 30 June 2022 Current assets 1,193 860 Property, plant and equipment (PP&E) 9,945 8,416 Other non-current assets 541 400 Total Assets 11,679 9,676 Other current liabilities (744) (713) Total borrowings (5,142) (3,221) Non-current liabilities (1,440) (1,330) Total Li
Slide 35: Debt maturity profile
For personal use only 1,353 AURIZON NETWORK ($m) 120 455 711 500 425 778 310 264 205 142 195 82 75 80 184 20 115 122 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY33 FY34 FY35 FY36 AURIZON OPERATIONS ($m) 900 400 475 465 335 196 500 153 65 103 50 130 FY24 FY25 FY26 FY27 FY28 FY29 FY30 FY31 FY32 FY3
Slide 36: Debt reconciliation to financial statements
For personal use only $m Commentary Total debt including working capital facility 5,296 Borrowings on a cash basis Reconciliation to Financial Statements Add/(less): Borrowings acquired in connection with the Tarcoola-to-Darwin Concession Deed Corporation Loan 6 for face value of $50m issued at belo
Slide 37: Dividend history
For personal use only Year Interim Final Total Payout Ratio1 Franking Ratio2 cents/share cents/share cents/share FY2023 7.0 8.0 15.0 75.0% 80.0% FY2022 10.5 10.9 21.4 75.0% 98.0% FY2021 14.4 14.4 28.8 100.0% 70.0% FY2020 13.7 13.7 27.4 100.0% 70.0% FY2019 11.4 12.4 23.8 100.0% 70.0% FY2018 14.0 13.1
Slide 38: Coal financial results
For personal use only $m FY2023 FY2022 Variance Above rail 1,175 1,195 (2%) Track access 350 360 (3%) Other 6 4 50% Total Revenue 1,531 1,559 (2%) Access costs (400) (376) (6%) Operating costs (676) (642) (5%) EBITDA 455 541 (16%) Depreciation & Amortisation (204) (208) 2% EBIT 251 333 (25%) Tonnes
Slide 39: Coal volumes by system
For personal use only FY2023 FY2022 Variance Central Queensland Coal Network (CQCN) Newlands 16.1 17.8 (10%) Goonyella 60.1 61.5 (2%) Blackwater 44.4 49.5 (10%) Moura 13.0 12.3 6% Total CQCN 133.6 141.1 (5%) New South Wales and South East Queensland (NSW & SEQ) West Moreton 2.1 2.7 (22%) Hunter Vall
Slide 40: Coal contract expiry and contracted volumes
For personal use only AURIZON COAL CONTRACT VOLUME EXPIRY BY YEAR1 COAL CONTRACT PORTFOLIO EXPIRY1 AS AT 30 JUNE 2023 AS AT 30 JUNE 2023 75 12% 21% 0-3 years 3-7 years 60 7+ years Million tonnes per annum (Mtpa) 45 67% FORECAST COAL CONTRACTED VOLUMES (MT) 30 230 230 230 62 57 60 15 169 173 170 0 FY
Slide 41: Bulk financial results
For personal use only $m FY2023 FY20221 Variance Revenue 1,063 700 52% Access costs (104) (80) (30%) Operating costs (745) (485) (54%) EBITDA 214 135 59% Depreciation & Amortisation (108) (39) (177%) EBIT 106 96 10% Above Rail Tonnes (m) 68.2 50.8 34% Note: Due to rounding, the sum of components may
Slide 42: Network financial results
For personal use only $m FY2023 FY2022 Variance Track Access 1,255 1,134 11% Services & Other 82 59 39% Revenue 1,337 1,193 12% Energy & Fuel (215) (108) (99%) Other Operating Costs (309) (284) (9%) EBITDA 813 801 1% Depreciation & Amortisation (351) (345) (2%) EBIT 462 456 1% Tonnes (m) 207.6 206.5
Slide 43: Network volumes by system
For personal use only FY2023 FY2022 Variance Newlands 20.7 13.9 49% Goonyella 107.0 105.6 1% Blackwater 52.4 58.3 (10%) Moura 12.9 12.0 8% GAPE 14.6 16.8 (13%) Total (mt) 207.6 206.5 1% 42 Note: Due to rounding, the sum of components may not equal the corresponding total
Slide 44: Network access revenue movement
For personal use only $m Increase in non GAPE MAR (excluding Revenue Cap) from FY2022 to FY2023 34 Revenue Cap movements FY2022 to FY2023 (6) Volume under-recovery for FY2022 net of take-or-pay (reversal of impact) 39 Volume under-recovery for FY2023 net of take-or-pay (21) GAPE revenue (9) WIRP Fee
Slide 45: Indicative Network adjusted Maximum Allowable Revenue
For personal use only INDICATIVE NETWORK ADJUSTED MAXIMUM ALLOWABLE REVENUE (MAR)1 FY2022 – FY20242 ($M) +$125m 1,088 99 Adjustments Adjustments 29 5 963 5 10 1 1 4 1 27 21 935 39 941 896 FY22 FY19/FY20 Minerva DAAU FY21 Capital Rec Rev Cap FY20 Rev Cap FY21 Non-Adjustment FY23 Cap Rec Rev Cap FY21
Slide 46: Revenue adjustment amounts
For personal use only › Revenue adjustment amounts (RAA) are the difference by system between Aurizon’s Total Actual AT2-5 Revenue and Allowable AT2-5 Total Total AT2-4 AT5 Revenue Financial Year (inc-GAPE) (ex-GAPE) $m $m $m $m › The RAA amounts are collected or repaid through a tariff adjustment t
Slide 47: Network access revenue reconciliation
For personal use only FY2023 FY2022 FY2021 $m Actual Actual Actual Access Revenue (AT1 to AT5) (ex. GAPE) 942 891 911 Approved Adjustments to MAR Revenue Cap (ex. GAPE and inclusive of capitalised interest) (1) 5 - Regulated Access Revenue (ex. GAPE) 941 896 911 Total non-regulated Access Revenue (e
Slide 48: Proposed final allowable revenue
For personal use only PROPOSED FINAL ALLOWABLE REVENUE ($m)1 Building block component FY20242 FY2025 FY20263 FY2027 Preliminary Allowable Revenue Proposed Final Allowable Revenue Proposed Final Allowable Revenue Proposed Final Allowable Revenue Return on capital 493.7 515.5 520.9 523.9 Depreciation
Slide 49: UT5 WACC reset process
For personal use only UT5 WACC RESET PROCESS 14 March 2022 1 July 2023 30 June 2027 1 July 2024 1 July 2025 Report Date1 Reset Date Terminating Date WACC Preliminary Reset WACC Proposed Final Reset WACC Revenue Cap true up of Final Reset WACC (compared to Preliminary 6.30% 8.18% 8.51%3 Reset WACC) f
Slide 50: Investor relations contacts
James Coe | Head of Investor Relations & Market Intelligence 7526 | MES com.au ° ~ Jason Di Pietro Manager Investor Relations +617 3019 1135 Jason.DiPietro@aurizon.com.a' ASX: AZJ LP AURIZON. v 4 Ve Maintainer and Emma Bradtke, Apprentice Pn os Stuart (Quéepsiand) - —-" <a