Australia’s leading total waste management company For personal use only Macquarie Australia Conference Presentation - 3 May 2018 ASX: CWY Vik Bansal – CEO and Managing Director
Dynamics of a successful player in the waste management industry For personal use only High marginal Network economics are ‘king’ contribution Mix of Large enterprise-level selling contrasted against mass market, consumer-like selling ‘2 worlds’ – Utility like front end SME Customers Low share of mind share Momentum business with multi-year contracts – price escalation related to cost Recurring revenue inflation Highly Valued Infrastructure back end – long term prized assets Infrastructure back end Strategic Moat Footprint & Revenue, costs and competitive dynamics vary market by market, multiple waste streams Multiple Waste Regulatory change which provides barrier to entry Streams 360 view of performance – sustainability for Customers, Shareholders, Employees Sustainability and Society/Environment 2
As Australia’s leading waste management company Cleanaway has built a complete asset base and services portfolio For personal use only 90+ 3,000+ 4,000+ Licensed infrastructure assets Vehicles Employees ~120,000 90+ Commercial & Industrial Customers Municipal Councils ~200 Sites Australia wide ~130 million litres ~550 million litres Waste Mineral Oil collected Waste Liquids collected for processing and processed ~10,000 tonnes 90m+ kWh ~230,000 tonnes ~13,000 tonnes Renewable energy generated Paper and cardboard recycled Plastic packaging recycled Steel recycled 3 Note: Excludes Toxfree acquisition
Currently, our reporting segments comprise For personal use only Solids Collections Solids Post Collections Liquids and Industrial Services Largest solid waste services fleet Landfill assets located in every Largest collector and processor and widest network across mainland state of Australia of waste liquids in Australia Australia Growing network of transfer Largest hydrocarbon recycler in stations across Australia Over 120,000 customers ranging Australia Gas generated from landfills Largest provider of a wide range from local small business to large used to produce over 90 million of environmentally focussed national corporates across all kWh of renewable energy industrial services in Australia industries Growing base of resource Servicing over 90 Councils and 2 recovery assets across Australia million residences per week 4
Three years ago we started our journey from a good to great company For personal use only 5
The good to great company journey so far ✓ Rebranded the Company to Cleanaway For personal use only ✓ Over 80% of our revenues are contracted ✓ Changed sales structures and “Go to Market” approach ✓ Implemented an Internal Sales and Save Desk structure that has reduced customer churn rates ✓ Greatly improved our pricing model ✓ Achieved organic revenue growth every year over the past three years plus significant major contract wins in FY17 ✓ $30 million in permanent cost reductions achieved by the end of FY17 ✓ Streamlined the organisation into a “fit for purpose” structure ✓ The Cleanaview propriety in-cab system is generating further efficiencies ✓ Rationalisation of depots and branches with sub-standard returns ✓ One ERP and significant improvement in business line of sight ✓ Disciplined, predictable capital spend ✓ Maintained cash capital expenditure at below the depreciation and amortisation rate ✓ Remediation and Rectification spend under control ✓ Major Infrastructure spend within capital expenditure targets ✓ Improved free cash flow generation from $18.9 million in FY15 to $62.6 million in FY17 6
With over 80% of revenues contracted, customer churn is a key driver of performance For personal use only Over 120,000 Commercial & Industrial customers Save desk limits churn, pricing and margin decline Pricing Pricing Pricing Margin sweet Margin sweet spot spot 1 5 6 7 1 5 6 7 1 5 6 7 2 3 4 2 3 4 2 3 4 8 9 Years Years Years 7
Financial performance improving Net Revenue 1 ($million) EBITDA 2 ($million) and EBITDA margin (%) EBIT 2 ($million) and EBIT margin (%) For personal use only $1,350.6 $1,320.7 $142.9 $301.3 $1,301.1 $281.3 $122.6 $231.3 22.3% 21.3% 10.6% $97.5 17.8% 9.3% 7.5% FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 Free Cash Flow 3 ($million) NPAT 2 ($million) and NPAT margin (%) Dividends (cents) $77.5 $62.6 2.1 $50.7 $63.3 1.7 $45.7 1.5 5.7% $18.9 4.8% 3.5% FY15 FY16 FY17 FY15 FY16 FY17 FY15 FY16 FY17 8 Notes 1: Gross revenues less landfill levies. 2. Underlying results. 3. Free cash flow defined as cash from operating activities excluding interest and tax less capital expenditure
Leading to improved shareholder returns For personal use only ASX Code: CWY Relative share price performance Share price: $1.59 Cleanaway v ASX100 Industrials (1 May 2018) 1 July 2015 to 1 May 2018 Market Capitalisation: $3.2 billion Index: S&P/ASX100 +113.0% 215% 195% 175% 155% 135% 115% +1.6% 95% 75% 01 Jul 15 01 Oct 15 01 Jan 16 01 Apr 16 01 Jul 16 01 Oct 16 01 Jan 17 01 Apr 17 01 Jul 17 01 Oct 17 01 Jan 18 01 Apr 18 Cleanaway S&P/ASX100 Industrials 9
Optimising the waste value chain - Cleanaway Footprint 2025 For personal use only We will extract maximum value through the value chain Landfill/alternative Collections Resource recovery waste disposal Operational efficiency Access to strategic resource Well located prized assets recovery facilities Strong market share position by Long term planning and reinvestment Scale of collections region leading to route density based on supply/demand Pricing Agile optimisation of materials Optimisation of flows between flow landfill/alternative waste disposal and Customer churn management resource recovery Ability to adapt to a changing regulatory outlook Investing in the right ‘package’ of assets for us to compete effectively and extract maximum returns across the value chain The Toxfree acquisition accelerates the implementation of the Footprint 2025 strategy 10
Prized infrastructure assets completed during the last 24 months or in construction stage For personal use only New paper recycling Engineering upgrade facility and transfer to oil recycling facility station acquired improving product quality New material recycling Brisbane facility constructed and Perth transfer station acquired Adelaide Sydney Melbourne New transfer station Ownership of 100% of and material recycling base oil recycling facility facility. in Rutherford and 3 transfer stations and Scheduled completion engineering upgrade at resource recovery facilities 2H18 Wetherill Park refinery to following acquisition of SA now produce Category 1 Waste in July 2017 base oil New transfer station Double electricity Planning permit in South East generating for MRL to 2046 Melbourne capacity at MRL 11
Recycling and the China Sword Program For personal use only 12
Cleanaway has limited exposure to the change in the recycling markets For personal use only Commercial & Industrial (C&I) and waste oil collections remain the major source of commodities Cleanaway contracts with Municipals are a mix of collection only (50%) 1 , collection and on sell the comingled waste to third party sorters or take the material through our own recycling facility Only 7% of commodity revenues relate to Municipal Pricing increases to a number of Municipals have commenced 13 Note 1: Municipals retain risk on commodity end markets
Acquisition of Toxfree The acquisition of Toxfree Solutions was approved by the ACCC on 26 April 2018. The transaction is still For personal use only subject to customary closing conditions including Toxfree shareholder approval and court approval. We are confidant that all approvals will be received with the scheme expected to become effective on 11 May 2018 and implemented on 25 May 2018. 14
Recommend
More recommend
