Cleanaway Waste Management Ltd. · ASX:CWY
Cleanaway Waste Management — Investor Presentation (August 2020)
44 slides from Cleanaway Waste Management's investor presentation, Aug 26, 2020
Slide 1: ASX & Media Release: FY20 Full-Year Results
ASX & Media Release 26 August 2020 FY20 FULL-YEAR RESULTS Continued Earnings Growth with operating leverage and further Margin Expansion Underlying EPS up 8.7%, Total Dividend up 15.5% to 4.1c Fully Franked Cleanaway Waste Management Limited (“Cleanaway”) ASX:CWY today announced its financial result
Slide 2: ASX & Media Release: FY20 results summary
ASX & Media Release 26 August 2020 Underlying (pre AASB161) Underlying (post AASB16) FY20 vs FY19 FY20 vs FY19 Gross revenue ($m) 2,332 +2.1% 2,332 +2.1% Net revenue ($m) 2,100 -0.4% 2,100 -0.4% EBITDA ($m) 473.0 +2.5% 515.7 +11.7% EBIT ($m) 251.9 +4.6% 256.6 +6.6% Net profit after tax ($m) 152.9 +8
Slide 3: ASX & Media Release: management commentary and dividend
ASX & Media Release 26 August 2020 “Cleanaway continued to deliver on both short and medium-term commitments in FY20. We: • completed the integration of the Toxfree business on time and are benefiting from over $35 million of annual synergies; • completed the majority of the legacy landfill remediat
Slide 4: Underlying Segment Performance: Solid Waste Services
ASX & Media Release 26 August 2020 Underlying Segment Performance Solid Waste Services Solids Waste Services reported increased net revenue and earnings. Compared to FY19, net revenue increased 0.8% to $1,372.8 million. Excluding commodities, FY20 net revenue increased 2.4% from $1,267.9 million to
Slide 5: Industrial & Waste Services; Liquid Waste & Health Services
ASX & Media Release 26 August 2020 Industrial & Waste Services Industrial & Waste Services reported lower net revenue and earnings. Compared to FY19, net revenue decreased 8.3% to $313.4 million as the business reduced its exposure to lower margin less specialised services. EBITDA (pre AASB16) decre
Slide 6: Investor Briefing and Investor Relations
ASX & Media Release 26 August 2020 Investor Briefing The Company will be holding an investor and analyst briefing on the results at 9.30am (AEST) today. Presenters: CEO and Managing Director – Mr Vik Bansal CFO – Mr Brendan Gill Tele-conference: Register at https://s1.c-conf.com/diamondpass/10008048
Slide 7: FY20 Full Year Results
FY20 Full Year Results For the twelve months ended 30 June 2020 26 August 2020
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 FY20 Results Update Page ❖ Safety and Environmental 4 ❖ Highlights 5 ❖ Group Performance Overview 6-8 ❖ Commodities Exposure 9 ❖ Covid-19: Impact on Segments and P & L 10-13 ❖ Segment Performance and Margin targets 14-17 ❖ Statutory NPAT Reconciliation to Underlying NPAT 18 ❖ Balance Sheet, C
Slide 10: Safety and Environmental – Our Objective is Zero Harm
Safety and Environmental – Our Objective is Zero Harm Total Recordable Injury Frequency Rate1 -21.1% 26.6 16.7 12.6 10.6 10.8 7.6 6.2 5.7 4.5 FY12 FY13 FY14 FY15 FY16 FY17 FY18 FY19 FY20 In FY20 we successfully trialled a Environmental compliance Safety performance remains a key driver interface sys
Slide 11: FY20 Highlights
FY20 Highlights FINANCIAL: ❖ Final Dividend up 10.5% to 2.1c fully franked at 30% ❖ Underlying NPAT up 8.7% (pre AASB16) and EPS up 8.7% (pre AASB16) on FY19 ❖ Underlying EBIT up 4.6% (pre AASB16) and EBIT margin improved by 60bps to a record 12.0% ❖ Underlying EBITDA up 2.5% (pre AASB16) to $473.0m
Slide 12: Group Performance Overview
Group Performance Overview Underlying Results Statutory Results $ million FY191 FY20 Growth FY20 FY191 FY20 Growth (Pre AASB16) (Pre AASB16) (Post AASB16) Gross Revenue 2,283 2,332 2.1% 2,332 2,283 2,332 2.1% Net Revenue 2,109 2,100 (0.4)% 2,100 2,109 2,100 (0.4%) EBITDA 461.6 473.0 2.5% 515.7 433.7
Slide 13: Sustained Underlying Earnings Growth Continues
Sustained Underlying Earnings Growth Continues Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBIT ($million) and EBIT margin (%) CAGR1 +10.0% CAGR1 +15.4% CAGR1 +20.9% NPAT ($million) and NPAT margin (%) NPATA ($million) and NPATA margin (%) Return on Invested Capital2 (%) 152.9 150
Slide 14: Cash Flows and Shareholder Returns
Cash Flows and Shareholder Returns Operating Cash Flow ($m) Cash Capex ($m) and % of Net Revenue Free Cash Flow ($m) CAGR1 +15.7% CAGR1 +64.9 % Tax Refund2 Net Debt ($m) and Net debt / EBITDA3 (x) Dividend (cents) & Payout Ratio (%) Underlying Earnings per share (cents) CAGR1 +22.3% CAGR1 +21.8 % No
Slide 15: Commodities Revenue Declining as Percentage of Group Net Revenue
Commodities Revenue Declining as Percentage of Group Net Revenue Commodity Revenue1 and Commodity as % of Net Revenue ❖ Revenue from the sale of commodities has 7.3% 7.2% 2,109.1 2,100.1 continued to decline as a percentage of net 6.1% 94.4 74.5 revenue ❖ FY20 Commodity revenue was $74.5m and Commod
Slide 16: Revenue Streams linked with GDP and Defensive Characteristics
Revenue Streams linked with GDP and Defensive Characteristics ❖ Cleanaway’s revenue base is Solid Waste Services largely underpinned by long-term Typical contract duration FY20 Segment Net contracts across all sectors with a • Municipal: 7 - 10 years geographically diverse customer • Commercial & In
Slide 17: Covid-19: Cleanaway's Response
Covid-19: Cleanaway’s Response Consistent communication of three priorities: • Keep our people safe • Keep company sustainable and our people in jobs during and post Covid-19 • Keep serving our customers, as an essential service provider To keep our people in jobs while delivering financial returns
Slide 18: Covid-19: Impacted Sub Segments and Waste Streams
Covid-19: Impacted Sub Segments and Waste Streams Run rate impact resulting from Covid-19 Negative >10% <10% Positive >10% <10% d Packaged Goods ❖ A GDP linked company will be impacted by general economic slow down. To determine true impact of Covid-19 is impossible. Actively managing costs is criti
Slide 19: Covid-19: Revenue and EBITDA impacts
Covid-19: Revenue and EBITDA impacts Net Revenue ($m) and EBITDA ($m) (Pre AASB16) ❖ Covid-19 impacted the financial +2.5% +2.4% performance of Cleanaway in the last 1,064.6 1,070.0 1,044.5 1,030.1 quarter of FY20 Net Revenue ($m) ❖ H2FY20 net revenue declined 1.4% against +1.6% EBITDA ($m) H2FY19 –
Slide 20: Solid Waste Services Performance
Solid Waste Services Performance FY202 change FY202 change $million FY19 FY19 v Pre AASB FY19 vs Post Net Revenue ($m) and margins (%) (Pre AASB16) (Post AASB16) FY20 AASB FY20 EBITDA Margin Net revenue1 1,362.3 1,372.8 0.8% 1,372.8 0.8% 1,362.3 1,372.8 1,372.8 EBIT Margin EBITDA 352.8 358.1 1.5% 38
Slide 21: Industrial & Waste Services Performance
Industrial & Waste Services Performance FY201 change FY201 change $million FY19 FY19 v Pre AASB FY19 v Post Net Revenue ($m) and margins (%) (Pre AASB16) (Post AASB16) FY20 AASB FY20 EBITDA Margin Net revenue 341.9 313.4 (8.3)% 313.4 (8.3)% 341.9 EBIT Margin 313.4 313.4 EBITDA 46.6 44.9 (3.6)% 45.9
Slide 22: Liquid Waste & Health Services Performance
Liquid Waste & Health Services Performance FY201 change FY201 change $million FY19 FY19 v Pre FY19 v Post Net Revenue ($m) and margins (%) (Pre AASB16) (Post AASB16) AASB FY20 AASB FY20 513.6 513.6 EBITDA Margin 495.0 Net revenue 495.0 513.6 3.8% 513.6 3.8% EBIT Margin EBITDA 86.9 97.9 12.7% 106.3 2
Slide 23: Revised medium-term EBITDA margin targets
Revised medium-term EBITDA margin targets Solid Waste Services 29.0-29.5% 28.3% 27.0% ❖ FY20 EBITDA margin uplift of 220 bps due to AASB16 26.1% 21.5-22.0% 20.7% ❖ Prior medium-term target was 27% pre AASB16 20.0% 19.1% 15.5-16.0% 15.0% ❖ Revised medium term target is 29% - 29.5% 14.6% 14.3% Industr
Slide 24: Statutory NPAT Reconciliation to Underlying NPAT
Statutory NPAT Reconciliation to Underlying NPAT $ million H1 H2 FY20 FY20 FY20 Statutory Profit After Income Tax Attributable to Ordinary Equity Holders 46.2 66.7 112.9 Pre-tax adjustments: Impact of Perth MRF fire net of insurance recoveries1 18.0 (3.4) 14.6 Acquisition costs 7.4 1.1 8.5 Integrati
Slide 25: Balance Sheet
Balance Sheet $ million 30 June 2020 30 June 2020 30 June 2019 (Pre AASB16) (Post AASB16) ❖ Adoption of AASB16 has increased assets by $252.4 million and ASSETS liabilities by $264.2 million Cash and cash equivalents 56.2 79.8 79.8 ❖ Increase in Other assets largely Trade and other receivables 382.0
Slide 26: Cash Flow
Cash Flow $ million FY19 FY20 FY20 Comments on Pre AASB16 (Pre AASB16) (Post AASB16) Underlying EBITDA 461.6 473.0 515.7 ❖ Excluding the $25m prior period tax refund, Cash flow of underlying adjustments (17.6) (27.7) (26.1) Net cash from operating activities increased Less: Other non-cash items (0.1
Slide 27: Capital Structure – Debt
Capital Structure – Debt 30 June 2020 30 June 2020 $ million 30 June 2019 (Pre AASB16) (Post AASB16) Capital structure 30 June 2020: Leases 134.4 172.2 437.3 ❖ At 30 June 2020, the Group had $421 million of USPP Notes — 426.9 426.9 headroom under existing banking facilities Other interest-bearing li
Slide 28: Capital Expenditure Discipline
Capital Expenditure Discipline ❖ Cash capital expenditure1 for the year was 10.0% of net revenue in line with our ongoing target ❖ Leasing finance utilised in FY20 of $57.7 million for government related contracts ❖ FY21 finance leases of over $75 million to be utilised for new and renewed governmen
Slide 29: Toxfree Integration – On time and within budget
Toxfree Integration – On time and within budget In excess of $35 million annual synergies delivered… Alignment ❖ Business units fully aligned to operating model ❖ Organisation design and restructuring completed Harmonisation ❖ Brand harmonisation and asset rebranding complete ❖ Pricing disciplines e
Slide 30: SKM Integration
SKM Integration Integration of prized assets complete… ❖ Assets acquired for $66 million and ownership commenced on 31 October 2019 ❖ MRFs are equipped with advanced optical sorters to produce high quality commodities ❖ Plastics recovery facility in Laverton can sort mixed plastics into individual p
Slide 31: Legacy Landfill Rectification and Remediation
Legacy Landfill Rectification and Remediation Major elements of the rectification program complete… ❖ Legacy landfill rectification spending largely complete ❖ FY20 spend of $46.5 million in line with prior guidance ❖ FY16 - FY20 average spend was $41.4 million ❖ Ongoing remediation of legacy, close
Slide 32: Sustainability Reporting
Sustainability Reporting First year to report sustainability performance … ❖ Our Sustainability Report is centred around our Value Creation Story, which explains how the business transforms its inputs to create value for our stakeholders ❖ We identified the relevant metrics for our business to repor
Slide 33: 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 MRF* ✓ Doubled electricity generation ✓ Planning permit for ✓ 2 x WA transfer stations at Melbourne facility Melbourne Regional Landfill ✓ SE Melbourne t
Slide 34: Recycling Assets – from depreciating to prized infrastructure
Recycling Assets – from depreciating to prized infrastructure Over the past five years we have been recycling low return assets into highly prized infrastructure assets • Old landfills / buffer • Brooklyn x 2 • Clayton • Tullamarine • Old unlicensed sites • Crestmead • Kurri Kurri • Launceston • Bay
Slide 35: PET Plastic Pelletising Joint Venture
Resource recovery PET Plastic Pelletising Joint Venture Value Chain Extension Cross value chain collaboration with Pact and Asahi for bottle to bottle recycling of ~1 billion bottles p.a. Milestone Progress Feedstock JV Partner selection & formation Site identification Technical specification and de
Slide 36: Sydney Energy from Waste Development
Sydney Energy from Waste Development Waste to Energy Preliminary Facility Design Milestone Progress Cleanaway & Macquarie JV May 2019 Site acquisition Oct 2019 Scoping Report submission Nov 2019 Development and Commercialisation EIS submission Project Facts & Overview ❖ Located in waste and industri
Slide 37: Regulatory Update
Regulatory Update Energy from Waste • Role of Energy from Waste becoming clearer in key states • Policy clarity by state governments will aid investment decisions Landfill levies • Victorian annual levy increases postponed to 1 Jan in response to Covid-19 • Step change levy increases proposed in VIC
Slide 38: Priorities and FY21 Outlook
Priorities and FY21 Outlook Priority ❖ Safety, Customer and Growth remain our key priorities across all three segments and across the Enterprise. ❖ Active management of the ongoing Covid-19 headwinds focusing on Health and Safety, Customer Service, Management of receivables and cash, and active cost
Slide 39: Questions
Questions Confidential | 33 33
Slide 40: Appendices
Appendices Page Group Income Statement – Statutory and Underlying Results 35 Underlying Segment disclosures 36 Net Finance Costs 37 Performance Summary – FY19 v FY20 (with AASB16 adoption) 38 34
Slide 41: Group Income Statement – Statutory and Underlying Results
Group Income Statement – Statutory and Underlying Results Statutory Results Underlying Adjustments Underlying Results (Post AASB16) $ million FY19 FY20 FY19 FY20 FY19 FY20 Sales revenue external and other revenue (Gross Revenue) 2,283.1 2,332.1 — — 2,283.1 2,332.1 Share of profits/(losses) in equity
Slide 42: Underlying Segment Disclosures (Post AASB16)
Underlying Segment Disclosures (Post AASB16) 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 1,549.0 300.7 450.1 — — — 2,299.8 Other revenue 11.8 —
Slide 43: Net Finance Costs
Net Finance Costs Statutory Underlying Underlying (Pre AASB16) (Post AASB16) $ million FY19 FY20 FY19 FY20 FY20 Cash interest expense Bank interest 21.7 13.8 21.7 13.8 13.8 Lease interest 5.8 15.7 5.8 6.5 15.3 Commitment and Guarantee fees 2.9 2.5 2.9 2.5 2.5 USPP Notes — 3.4 — 3.4 3.4 Interest rece
Slide 44: Performance Summary — FY19 v FY20
Performance Summary — FY19 v FY20 (with AASB16 adoption) Underlying Group Results Segment Performance $ million FY191 FY20 Change $ million FY191 FY20 Change (Post AASB16) (Post AASB16) Gross Revenue 2,283 2,332 2.1% Solid Waste Services Net Revenue 1,362.3 1,372.8 0.8% Net Revenue 2,109 2,100 (0.4)
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