Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — H1 FY2023 Earnings Presentation
41 slides from Cleanaway Waste Management's earnings presentation, Feb 23, 2023
Slide 1: FY23 Half Year Financial Results
23 February 2023 Company Announcements Office ASX Limited Exchange Office Level 4, 20 Bridge Street Sydney NSW 2000 Dear Sir/Madam, FY 23 HALF YEAR FINANCIAL RESULTS MEDIA RELEASE AND INVESTOR PRESENTATION Please find attached the following documents in relation to the Company’s FY23 half year resul
Slide 2: FY23 Half-Year Results
ASX & Media Release 23 February 2023 FY23 HALF-YEAR RESULTS Growing EBIT across all segments and building momentum into 2023 Cleanaway Waste Management Limited (“Cleanaway”) ASX:CWY today announces a Statutory Net Profit of $49.0 million for the six months ended 31 December 2022 (“H1FY23”), down 6.7
Slide 3: ASX & Media Release
ASX & Media Release 23 February 2023 Net Revenue of $1,471 million was 19.6% higher than the pcp with higher revenue across all segments primarily driven by recent acquisitions (SRN and GRL), price increases and a general recovery in economic conditions partially offset by lower commodity (OCC) reve
Slide 4: ASX & Media Release
ASX & Media Release 23 February 2023 “Over the last 6 months we have embedded new HS&E capability and our team has rapidly developed an HS&E strategy and intensive improvement roadmap focused on three key areas. Firstly, improved critical risk management. Secondly, growing leadership capability and
Slide 5: Dividend
ASX & Media Release 23 February 2023 Dividend An interim dividend of 2.45 cents per share (pcp: 2.45 cents per share) has been declared. The dividend will be unfranked and paid on 6 April 2023 to shareholders on the register on 7 March 2023. The Dividend Reinvestment Plan (DRP) will be in operation
Slide 6: ASX & Media Release
ASX & Media Release 23 February 2023 We commenced ground works on the Western Sydney MRF with the facility expected to be operational towards the end of FY24. Liquid Waste & Health Services Liquid Waste & Health Services revenue increased 10.1% to $306.1 million, underlying EBITDA decreased 9.6% to
Slide 7: ASX & Media Release
ASX & Media Release 23 February 2023 EBITDA of $25.4 million reflected strong contract management, increased activity at existing sites, new contracts and negotiated price increases to somewhat offset cost pressures. Persistent cost inflation compressed EBITDA margins. Underlying EBIT increased by $
Slide 8: Investor Briefing
ASX & Media Release 23 February 2023 Investor Briefing The Company will be holding an investor and analyst briefing on the results at 9.30am (AEDT) today. Presenters: Mr Mark Schubert - Managing Director & Chief Executive Officer Mr Paul Binfield - Chief Financial Officer Tele-conference: https://s1
Slide 9: H1 FY23 results presentation
Cleanaway Waste Management Limited Australia’s leading total waste H1 FY23 results presentation management services provider for the six months ended 31 December 2022 Presenters Mark Schubert, Managing Director & CEO Paul Binfield, Chief Financial Officer
Slide 10: Forward looking statements
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. Forward-looking
Slide 11: Agenda
1. Highlights 2. People & Environment 3. Financial Performance 4. Net Operating Cash Flow 5. Capital Expenditure 6. Balance Sheet, Liquidity and Interest Rates 7. Segment Review 8. Delivering BluePrint 2030 9. Outlook and Priorities 10. Appendices
Slide 12: Highlights
Financial • Strong revenue growth across all segments reflecting NET business growth and contractual price increases REVENUE EBIT EBITDA • Full period contribution from SRN and initial four-month contribution from GRL $1,471.1M $322.2M $138.3M • EBIT growth across all segments versus 2HFY22 with UP
Slide 13: People & Environment
New HSE strategy & improvement roadmap focused on: People First Culture • Improved critical risk management • Strategy and roadmap, with new values and behaviours required to • Growing leadership capability and safety culture deliver Blueprint 2030, focused on 3 pillars • Embedding a learning mindse
Slide 14: Financial Performance
Underlying Statutory $ (million) H1FY23 H1FY22 Variance H1FY23 H1FY22 Variance Gross Revenue 1,777.9 1,364.6 30.3% 1,777.9 1,364.6 30.3% Net Revenue 1,471.1 1,229.9 19.6% 1,471.1 1,229.9 19.6% EBITDA 322.2 273.7 17.7% 298.5 253.2 17.9% EBITDA Margin 21.9% 22.3% (40 bps) 20.3% 20.6% (30 bps) EBIT 138
Slide 15: Improved contributions from most SBUs partially offset by…
Improved contributions from most SBUs partially offset by… EBIT variance ($m) 13 33 11 8 8 2 1 4 138.3 129.9 H1FY22 SRN & GRL Commodities New Chum / QLD Other SWS Health Services LTS & Hydro IWS Corporate costs & Other H1FY23 SWS LW&HS IWS Commentary • SRN & GRL: full period contribution and initial
Slide 16: Business generally performing well and building momentum
Business generally performing well and building momentum … EBIT variance ($m) 3 1 4 7 2 11 12 4 138.3 127.2 H2FY22 GRL Commodities QLD Network Other SWS Health Services LTS & Hydro IWS Corporate costs & Other H1FY23 SWS LW&HS IWS Commentary • GRL: initial four month contribution • Lower Commodities
Slide 17: Adversely affected by both the rebate lag and lower index prices
Adversely affected by both the rebate lag and lower index prices Commentary • We collect commodities either directly from customers, to whom we often pay a rebate, and through our MRFs • We aim to mitigate commodity price risk through rebates tied to indices • Most of our commodity volume comprises
Slide 18: Servicing customers a priority, despite labour shortages
Servicing customers a priority, despite labour shortages… Response >1,700 roles filled YTD 773 ✓ Supervisors backfilling labour gaps 701 ✓ Recruitment Process Outsourcing (RPO) commenced in 672 October ✓ Women’s Driver Academy (92 new drivers) • Runner to Driver Academy (new initiative) • Establishi
Slide 19: Both business units endured ongoing challenges from FY22
Both business units endured ongoing challenges from FY22… Queensland • Rectification works undertaken at New Chum in preparation for current wet season (Oct – Mar) • Preparing for expected reopening in FY24, with modest contribution pending height rise approval • Fleet replacement program almost com
Slide 20: Net Operating Cash Flow
Net Operating Cash Flow ($ million) Commentary 235.2 257.9 • Net cash from operating activities decreased by $20.2 217.2 11.6 54.5 million (slide 32) 14.8 ₊ Underlying EBITDA ─ Cash outflows attributable to underlying 223.6 adjustments, increased working capital and higher 202.4 203.4 interest payme
Slide 21: Total Capital Expenditure
Total Capital Expenditure ($ million) Commentary • H1FY23 Blueprint 2030 capex included • Victorian plastic pelletising facilities • Energy-from-Waste in Queensland and Victoria • CustomerConnect and Western Sydney Material Recovery Facility H1FY21 H1FY22 H1FY23 • Stable stay-in-business capex Lease
Slide 22: Balance Sheet, Liquidity and Interest Rates
Overview • Strong balance sheet positioned for growth • At 31 December 2022, the Group had $5551 million $ million 31 Dec 2022 31 Dec 2021 headroom under committed debt facilities Net Debt 1,490.7 1,645.9 • Leverage ratio2 of 1.94x following equity raising in August Gearing ratio 33.0% 38.3% • The G
Slide 23: Segment Review
1. Solid Waste Services • Victoria Segment Review • New South Wales/ACT Cleanaway comprises three segments, 6 • • Queensland Western Australia/Northern Territory encompassing ten strategic business Business • South Australia/Tasmania units, designed to create value through Units • Container Deposit
Slide 24: Solid Waste Services
Solid Waste Services Financial performance NET ₊ Full six month SRN contribution and initial GRL REVENUE EBITDA EBIT contribution $1,038.0M $267.9M $124.5M ₊ New customer wins UP 24.4% UP 28.1% UP 16.4% ₊ Contracted price increases (labour, fuel, other CPI) (PCP $834.4M) (PCP $209.1M) (PCP $107.0M)
Slide 25: Transaction completed, team onboarded and asset immediately accretive
Transaction completed, team onboarded and asset immediately accretive Commentary ✓ $167.0 million acquisition completed on 31 August 2022 ✓ Facility currently processes approximately 220 ktpa of Sydney’s ‘red-bin’ household waste ✓ High circular low carbon solution - >30% landfill diversion ✓ Contri
Slide 26: Liquid Waste & Health Services
Liquid Waste & Health Services Financial performance ₊ Return of cruise line and hospitality volumes and REVENUE EBITDA EBIT customer uprates in Liquids offset by labour availability and higher equipment related costs $306.1M $48.3M $26.6M UP 10.1% DOWN 9.6% DOWN 15.6% ─ Strain on Health Services ne
Slide 27: Industrial & Waste Services
Industrial & Waste Services Financial performance ₊ Strong revenue performance across all regions driven by REVENUE EBITDA EBIT increased activity with existing customers and new contract wins partially offset by non-recurring projects $182.6M $25.4M $12.4M UP 11.8% UP 7.6% UP 17.0% ₊ Earnings impro
Slide 28: Delivering Blueprint 2030
Delivering Blueprint 2030 DI CLEANAWAY;
Slide 29: Sustainable Customer Solutions
Sustainable Customer Solutions Our aim is to keep resources circulating in the economy… AVOID & REDUCE 7 Leadership in Carbon & Circularity RE-USE • The traditional waste hierarchy has a single category for ‘Recycling’ • This fails to recoginise that different recycling solutions have very DOMESTIC
Slide 30: Strategic Infrastructure Growth
Strategic Infrastructure Growth Lowering the carbon footprint of our current footprint … 1 2 3 4 Energy-from-Waste C&D Organics Landfill Optimisation Since July 2022: • >250 landfill gas wells drilled or reconnected • 15% capture efficiency improvement • Commenced VIC planning • Appointed GM and est
Slide 31: Strategic Infrastructure Growth
Strategic Infrastructure Growth Delivering mechanical plastic recycling today… 6 Innovation Existing projects 76,000tpa New plastic recycling capacity developed $146m Invested 133 Permanent full-time jobs created 28,000tpa + 28,000tpa 20,000tpa Mechanical plastic recycling facility Cleanaway CDS sor
Slide 32: Operational Excellence
Operational Excellence Strategic pillar driving margin improvement… 10 11 12 14 Data & Analytics CustomerConnect Fleet Optimisation Operating Model • Enhancing insight capability ✓ Released ‘Request For Tender’ • Optimise routes and reduce • Core processes – ensure key • Improving productivity and t
Slide 33: Outlook
Outlook • Consistent with our prior expectations, FY23 underlying EBITDA including GRL is expected to be approximately $670 million • Compared with the first half, the second half assumes • similar post collections volumes, • a partial recovery in OCC margin, • margin improvement through contractual
Slide 34: Appendices
Appendices Sinn CLEANAWAY)
Slide 35: Commitment to maintaining a strong balance sheet and Group credit profile
Commitment to maintaining a strong balance sheet and Group credit profile… Optimise operational Effective working Improve capital Commentary efficiency capital management efficiency • Improving capital allocation decision-making Strong Operating Cash Flow disciplines • Greater visibility over pipeli
Slide 36: Statutory to Underlying Result
Statutory Result Adjustments Underlying Result $ (million) H1FY23 H1FY22 H1FY23 H1FY22 H1FY23 H1FY22 Revenue from customers and other revenue (Gross Revenue) 1,777.9 1,364.6 - - 1,777.9 1,364.6 Share of profit/(losses) in equity accounted investments 0.6 (0.1) - - 0.6 (0.1) Expenses (net of other in
Slide 37: Segment results
Solid Waste Industrial & Liquid Waste Equity Corporate & Eliminations Group $ (million) Services Waste & Health Accounted Other – Group Result Services Services Investments Revenue Revenue from customers 1,308.8 177.4 272.1 - - - 1,758.3 Other revenue 9.5 - 10.1 - - - 19.6 Inter-segment sales 26.5 5
Slide 38: Commentary
$ (million) H1FY23 Commentary Statutory NPAT Attributable to Ordinary Equity Holders 47.9 • Incurred significant incremental treatment and Pre-tax adjustments: disposal costs as a result of the hammer mill loss Medical Waste Processing Facility Outage 18.4 in Victoria Acquisition and integration cos
Slide 39: Net finance costs
Underlying Statutory Commentary $ (million) H1FY23 H1FY22 H1FY23 H1FY22 Cash interest expense • Net finance costs were $22.5 Bank interest and leases 22.2 10.6 22.2 10.6 million higher reflecting the Commitment and guarantee fees 2.7 2.4 2.7 2.4 increased borrowings to fund USPP Notes 7.6 3.3 7.6 3.
Slide 40: Cash flow statement
$ (million) H1FY23 H1FY22 Underlying EBITDA 322.2 273.7 Cash flow of underlying adjustments (45.6) (11.6) Other non-cash items (0.6) 0.2 Payments for rectification and remediation of landfills (11.1) (8.8) Other changes in working capital (24.3) (8.4) Net interest paid (28.7) (15.5) Tax paid (8.5) (
Slide 41: Balance sheet
$ (million) 31 Dec 22 30 Jun 22 ASSETS Cash and cash equivalents 124.9 66.5 Trade and other receivables 588.4 532.5 Inventories 34.3 26.7 Property, plant and equipment 1,505.5 1,434.5 Right-of-use assets 597.4 614.7 Intangible assets 3,096.8 3,060.3 Other assets 106.1 113.5 Total Assets 6,053.4 5,84
Cleanaway Waste Management — H1 FY2023 Earnings Presentation on 6ix