Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — H1 FY2018 Earnings Presentation
35 slides from Cleanaway Waste Management's earnings presentation, Feb 21, 2018
Slide 1: FY18 Half Year Results
For personal use only FY18 Half Year Results For the six months ended 31 December 2017 21 February 2018
Slide 2: 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 3: Agenda
Agenda Page For personal use only Safety and Environmental 4 Group Performance 5 Divisional Performance 8 Statutory NPAT Reconciliation to Underlying NPAT 13 Balance Sheet, Cash Flow and Debt 14 Update on 5C’s Strategic Initiatives 17 China National Sword Program 22 Acquisition of Toxfree 24 Complet
Slide 4: Safety and Environmental – Our objective is Goal Zero
Safety and Environmental – Our objective is Goal Zero For personal use only Total Recordable Injury Frequency Rate1 From FY12 to FY15 Total Recordable Injury Frequency Rate was for employees only. From FY16 onwards statistics include both employees and contractors. -4% 26.6 10.8 7.6 16.7 7.3 12.6 10
Slide 5: Group 1H18 Performance Overview
Group 1H18 Performance Overview Underlying Results For personal use only Statutory Results $ million 1H17 1H18 Growth 1H17 1H18 Growth Gross Revenue 724.5 785.5 8.4% 724.5 785.5 8.4% Net Revenue 672.4 722.2 7.4% 672.4 722.2 7.4% EBITDA1 150.4 159.0 5.7% 150.0 154.2 2.8% EBITDA Margin 22.4% 22.0% (40
Slide 6: Cleanaway – our ongoing journey from a good to great company
Cleanaway – our ongoing journey from a good to great company Net Revenue ($million) EBITDA1 ($million) and EBITDA margin (%) EBIT1 ($million) and EBIT margin (%) For personal use only $159.0 $79.5 $722.2 $150.4 $672.4 $67.0 $669.7 $137.2 $58.5 11.0% 22.4% 22.0% 10.0% 20.5% 8.7% 1H16 1H17 1H18 1H16 1
Slide 7: Cleanaway – our ongoing journey from a good to great company
Cleanaway – our ongoing journey from a good to great company For personal use only Organic growth in revenue and earnings through focus on volume, price, customer service and operations Increased prized infrastructure assets as part of Footprint 2025, within our capital budget Disciplined, pre
Slide 8: 1H18 Division Performance Summary
1H18 Division Performance Summary For personal use only Net Revenue1 EBITDA2 EBIT2 $ million 1H17 1H18 Growth 1H17 1H18 Growth 1H17 1H18 Growth Solids – Collections 404.0 441.7 9.3% 81.0 85.3 5.3% 49.8 53.5 7.4% Solids – Post Collections 93.6 107.9 15.3% 47.7 53.9 13.0% 15.0 26.7 78.0% Liquids & Ind
Slide 9: Total Solids Performance
Total Solids Performance For personal use only $ million 1H171 1H181 Growth 524.2 479.4 Net revenue2 479.4 524.2 9.3% 464.5 EBITDA 128.7 139.2 8.2% EBITDA Margin 26.8% 26.6% (20)bps 26.8% 26.6% 25.3% EBIT 64.8 80.2 23.8% 13.5% 15.3% 11.9% EBIT Margin 13.5% 15.3% 180bps 1H16 1H17 1H18 Revenue EBITDA
Slide 10: Solids – Collections Performance
Solids – Collections Performance 1H171 1H181 For personal use only $ million Growth 441.7 393.3 404.0 Net revenue 404.0 441.7 9.3% EBITDA 81.0 85.3 5.3% EBITDA Margin 20.0% 19.3% (70)bps 20.0% 18.8% 19.3% EBIT 49.8 53.5 7.4% 11.1% 12.3% 12.1% EBIT Margin 12.3% 12.1% (20)bps 1H16 1H17 1H18 Revenue EB
Slide 11: Solids – Post Collections Performance
Solids – Post Collections Performance 107.9 1H171 1H181 Growth For personal use only $ million 93.6 Gross revenue 145.7 171.2 17.5% 89.3 Net revenue (excl. landfill levies)2 93.6 107.9 15.3% EBITDA 47.7 53.9 13.0% 48.6% 51.0% 50.0% EBITDA Margin 51.0% 50.0% (100)bps 24.7% EBIT 15.0 26.7 78.0% 16.0%
Slide 12: Liquids & Industrial Services Performance
Liquids & Industrial Services Performance $ million 1H171 1H181 Growth For personal use only 224.5 214.7 208.0 Net revenue 208.0 214.7 3.2% EBITDA 28.8 30.0 4.2% 13.8% 14.0% EBITDA Margin 13.8% 14.0% 20bps 11.9% EBIT 15.1 16.5 9.3% 7.3% 7.7% 6.5% EBIT Margin 7.3% 7.7% 40bps 1H16 1H17 1H18 Revenue EB
Slide 13: Statutory NPAT Reconciliation to Underlying NPAT
Statutory NPAT Reconciliation to Underlying NPAT $ million For personal use only 1H18 Rebranding program now completed Statutory Profit After Income Tax Attributable to Ordinary Equity 45.0 six months ahead of schedule and on Holders budget Pre-tax adjustments: Acquisition costs for SA Waste and
Slide 14: Balance Sheet
Balance Sheet $ million 31 Dec 2016 30 June 2017 31 Dec 2017 For personal use only ASSETS Cash and cash equivalents 44.5 43.2 183.3 Landfill remediation provision 246.2 reduction from June 2017 reflects Trade and other receivables 247.9 261.1 payments made, updated Inventories 15.7 11.1 13.1 assum
Slide 15: Cash Flow
Cash Flow $ million 1H17 1H18 For personal use only Underlying EBITDA 150.4 159.0 Cash flow of underlying adjustments (5.5) (3.4) Net cash from operating activities Less: Non-cash share of profits from associates (0.4) (0.2) increased 13.0% compared to Less: Other non-cash items 2.4 3.8 previous c
Slide 16: Capital Structure – Debt
Capital Structure – Debt For personal use only $ million 31 Dec 16 30 Jun 17 31 Dec 17 $31 million in finance leases Current interest bearing liabilities 66.6 62.4 – following the award of new Non-current interest bearing liabilities 304.0 307.8 7.8 government contracts utilised during the half. E
Slide 17: Strategy remains underpinned by five key pillars
Strategy remains underpinned by five key pillars For personal use only 17
Slide 18: Customer for Growth and Continuous Improvement for Cost
Customer for Growth and Continuous Improvement for Cost For personal use only Customer for Growth Major contract wins such as Chevron, Coles, Hills Shire, Noosa Council and NSW Container Deposit Scheme in joint venture with TOMRA mobilised during the first half. Impressed with the way our business
Slide 19: NSW Container Deposit Scheme
NSW Container Deposit Scheme In joint venture with TOMRA Systems ASA, world leader in reverse vending machines For personal use only Scheme commenced on 1 December 2017 Currently have over 400 collection points in operation across New South Wales Since 1 December 2017, approximately 100 mill
Slide 20: Capital for Cash – Capital Expenditure
Capital for Cash – Capital Expenditure Cash capital expenditure1 in 1H18 includes spending on equipment for major new contracts won in 2H17 For personal use only Leasing finance utilised in 1H18 of $31.4 million for government related contracts such as Container Deposit Scheme, Brisbane City Cou
Slide 21: Capital for Cash – Landfill Remediation
Capital for Cash – Landfill Remediation For personal use only Sale of closed landfill site in Victoria reduces the Landfill Remediation provision by $5.4 million Expenditure in 1H18 of $20.0 million in line with expectations No change to forecast spending previously advised: FY18 to FY20 ~$4
Slide 22: China National Sword Program
China National Sword Program A change to the recycling market For personal use only Chinese government has enacted a mechanism to raise the quality of recycled products being imported into the country The change limits contamination rates on recycled products to less than 0.5% This new contami
Slide 23: China National Sword Program
China National Sword Program Cleanaway has limited exposure to the change For personal use only Commodity Revenue by Percentage Wide range of commodities sold from a variety of sources C&I Cardboard Commercial & Industrial (C&I) and Oil 40% 38% waste oil collections remain the major source of co
Slide 24: Acquisition of Toxfree
Acquisition of Toxfree On 11 December 2017, Cleanaway announced the acquisition of Toxfree Solutions subject to customary closing conditions For personal use only including Toxfree shareholder approval, court approval and ACCC approval. We continue to expect that the acquisition will complete in 2Q
Slide 25: Acquisition of Toxfree Solutions
Acquisition of Toxfree Solutions For personal use only Cleanaway entered into a scheme implementation deed with Toxfree to acquire 100% of Toxfree’s shares on issue by way of a recommended scheme of arrangement for $3.425 cash per share (“Acquisition”) (“Acquisition Price”) – Given the anticipated
Slide 26: Cleanaway Value Operating Model – Post Acquisition of Toxfree
Cleanaway Value Operating Model – Post Acquisition of Toxfree For personal use only Collections Customers Solid Waste Services Industrial Liquids & Medical Waste Services Services Growth & Marketing Infrastructure Liquids & Medical & Resources Hazardous Enterprise Services Municipal C&I Waste Waste
Slide 27: Completion of Equity Raising
Completion of Equity Raising Total of ~$590 million raised via a 1 for 3.65 pro-rata non-renounceable entitlement offer For personal use only Offer Structure 437.3 million new ordinary shares representing 27.4% of existing shares on issue Offer price of $1.35 per share Institutional Entitlem
Slide 28: Priorities and FY18 Outlook
Priorities and FY18 Outlook For personal use only Priority Deliver top line growth and quality of earnings Continue to work on improving customer service to deliver better volume and price outcomes Complete the acquisition of Toxfree and commence integration to extract synergies, while maintai
Slide 29: Questions
For personal use only 29 Questions
Slide 30: Appendices
Appendices For personal use only Page Adjusted EPS Calculations 31 Group Income Statement – Statutory and Underlying Results 32 1H18 Segment Performance Summary 33 Net Finance Costs 34 Reconciliation of Divisional Results to Statutory Segment Disclosures 35 30
Slide 31: Adjusted EPS Calculations
Adjusted EPS Calculations The following earnings per share calculation adjusts for the impact of the equity raising For personal use only undertaken in December 2017 to partially fund the acquisition of Toxfree Adjusted EPS calculation 1H17 1H18 Net underlying profit attributable to members of the p
Slide 32: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Underlying Statutory Results Underlying Results For personal use only Adjustments $ million 1H17 1H18 Growth 1H17 1H18 1H17 1H18 Growth Sales revenue external and other revenue (Gross Revenue) 724.5 785.5 8.4% — — 724.5 785.5 8.4% Share of pr
Slide 33: 1H18 Segment Performance Summary
1H18 Segment Performance Summary For personal use only $ million Net Revenue1 EBITDA2 EBIT2 Segments 1H17 1H18 Growth 1H17 1H18 Growth 1H17 1H18 Growth Solids – Collections 404.0 441.7 9.3% 81.0 85.3 5.3% 49.8 53.5 7.4% Solids – Post Collections 93.6 107.9 15.3% 47.7 53.9 13.0% 15.0 26.7 78.0% Intra
Slide 34: Net Finance Costs
Net Finance Costs Statutory Underlying For personal use only $ million 1H17 1H18 1H17 1H18 Cash interest expense Bank interest 5.1 4.8 5.1 4.8 Commitment and Guarantee fees 1.4 1.8 1.4 1.8 USPP Notes 3.1 2.5 3.1 2.5 Interest received (0.2) (0.2) (0.2) (0.2) Net cash interest expense 9.4 8.9 9.4 8.9
Slide 35: Reconciliation of Divisional Results to Statutory Segment Disclosures
Reconciliation of Divisional Results to Statutory Segment Disclosures For personal use only Total Equity Solids Solids Post Eliminations Total Liquids Accounted Corporate Eliminations $ million Collections Collections – Solids Solids & Ind Serv Investments & Other – Group GROUP Revenue Sales of good
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