FY19 Half Year Results For the six months ended 31 December 2018 14 February 2019
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. Forward -looking statements can generally be identified by the use of words including but not limited to ‘project’, ‘foresee’, ‘plan’, ‘guidance’, ‘expect’, ‘aim’, ‘intend’, ‘anticipate’, ‘believe’, ‘estimate’, ‘may’, ‘should’, ‘will’ or similar expressions. All such forward -looking statements involve known and unknown risks, significant uncertainties, assumptions, contingencies and other factors, many of which are outside the control of CWY, which may cause the actual results or performance of CWY to be materially different from any future results or performance expressed or implied by such forward-looking statements. Such forward-looking statements apply only as of the date of this presentation. • Factors that could cause actual results or performance to differ materially include without limitation the following: risks and uncertainties associated with the Australian and global economic environment and capital market conditions, cyclical nature of various industries, the level of activity in Australian construction, manufacturing, mining, agricultural and automotive industries, commodity price fluctuations, fluctuation in foreign currency exchange and inter est rates, competition, CWY’s relationships with, and the financial condition of, its suppliers and customers, legislative changes, regulatory changes or othe r changes in the laws which affect CWY’s business, including environmental and taxation laws, and operational risks. The foregoing list of important factors and risks is not exhaustive. • To the fullest extent permitted by law, no representation or warranty (express or implied) is given or made by any person (including CWY) in relation to the accuracy or completeness of all or any part of this presentation, or any constituent or associated presentation, information or material (collectively, the Information) or the accuracy or completeness or likelihood of achievement or reasonableness of any forward looking statements or the assumptions on which any forward looking statements are based. CWY does not accept responsibility or liability arising in any way for errors in, omissions from, or information contained in this presentation. • The Information may include information derived from public or third party sources that has not been independently verified. • CWY disclaims any obligation or undertaking to release any updates or revisions to the Information to reflect any new information or change in expectations or assumptions, except as required by applicable law. • Investment decisions – Nothing contained in the Information constitutes investment, legal, tax or other advice. The Information does not take into account the investment objectives, financial situation or particular needs of any investor, potential investor or any other person. You should take independent professional advice before making any investment decision. • Results information – This presentation contains summary information that should be read in conjunction with CWY's Consolidated Financial Report for the six months ended 31 December 2018. • All amounts are in Australian dollars unless otherwise stated. A number of figures in the tables and charts in the presentation pages have been rounded to one decimal place. Percentages (%) have been calculated on actual whole figures. • Unless otherwise stated, all earnings measures in this presentation relate to underlying earnings. • Underlying earnings are categorised as non-IFRS financial information and therefore have been presented in compliance with ASIC Regulatory Guide 230 – Disclosing non- IFRS information, issued in December 2011. Refer to CWY’s Directors’ Report for the definition of “Underlying earnings”. The term EBITDA represents earnings before interest, income tax, and depreciation, amortisation and impairments and the term EBIT represents earnings before interest and income tax expense. • This presentation has not been subject to review or audit. 2
Agenda 1H19 Results Update Page • Safety and Environmental 4 • Group Performance Overview 5-8 • Segments Performance 9-12 • Statutory NPAT Reconciliation to Underlying NPAT 13 • Balance Sheet, Cash Flow and Debt 14-16 • Changes to Accounting Standards 17 Enterprise Updates: • Capital Expenditure 18 • Landfill Remediation 19 • Toxfree Integration 20-22 • Footprint 2025 23-26 Priorities and FY19 Outlook 27 Q&A Appendices 29-32 3
Safety and Environmental – Our objective is Goal Zero Total Recordable Injury Frequency Rate 1 26.6 16.7 12.6 10.8 10.6 7.6 6.2 6.2 FY12 FY13 FY14 FY15 FY16 FY17 FY18 1H19 Total recordable injury frequency Safety performance remains a key rate, with Toxfree included is in- performance measure for all No major environmental incidents line with last year. Safety initiatives executive STI’s starting from CEO were reported during the period being further deployed across the down to site management Company Notes 1: Comparative periods have been adjusted to exclude divested businesses and includes contractors from FY16. 4
Group Performance Overview Underlying Results Statutory Results $ million 1H18 1H19 Growth 1H18 1H19 Growth Gross Revenue 46.4% 785.5 1,149.7 785.5 1,149.7 46.4% Net Revenue 47.4% 722.2 1,064.6 722.2 1,064.6 47.4% EBITDA 44.0% 159.0 228.9 43.2% 154.2 220.8 EBITDA Margin (50)bps 22.0% 21.5% 21.4% 20.7% (70)bps EBIT 47.4% 79.5 117.2 74.7 109.1 46.1% EBIT Margin — 11.0% 11.0% (10)bps 10.3% 10.2% Total NPAT 43.9 67.0 52.6% 35.1% 45.0 60.8 EPS 1 (Basic cents per share) 2.6 3.3 26.9% 2.7 3.0 11.1% NPATA 2 45.2 72.5 60.4% 46.3 66.3 43.2% 1H18 1H19 Growth Interim dividend per share (cents) 1.1 1.65 50.0% Cash from operating activities ($m) 112.8 175.6 55.7% Free cash flow ($m) 49.5 112.1 126.5% Cash conversion ratio 104.5% 95.9% Net Debt to EBITDA 3 1.17x 1.51x Notes: 1: 1H18 adjusted for impact of equity raising. 2: Excludes tax effected amortisation of acquired customer and license intangibles. 3: The net debt to underlying EBITDA ratio of 1.51x assumes a full six month contribution from Toxfree for the second half of 5 FY18
Revenue and earnings improvements driven by Toxfree acquisition, organic growth and synergy realisation Net Revenue ($million) 91.0 1,064.6 255.3 (3.9) 973.6 ❖ Organic growth in 1H19 was: ❖ Revenue up 9.3% ❖ EBITDA up 14.7% 722.2 ❖ EBITDA margins increased to 21.5%, up 100bps CWY Tox Elimination CWY Proforma Organic CWY 1H18 1H18 1H18 Growth 1H19 ❖ The integration of Toxfree commenced in May 2018 EBITDA ($million) and EBITDA margin (%) ❖ We remain on track to achieving committed returns 29.4 228.9 40.5 199.5 from this acquisition 159.0 22.0% 21.5% 20.5% 15.9 % CWY Tox CWY Proforma Organic CWY 1H18 1H18 1H18 Growth & 1H19 Synergies 6
Sustained earnings growth continues Net Revenue ($million) EBITDA ($million) and EBITDA margin (%) EBIT ($million) and EBIT margin (%) 1,064.6 117.2 228.9 842.7 180.7 159.0 86.9 150.4 722.2 137.2 672.4 669.7 79.5 22.4% 22.0% 67.0 11.0% 11.0% 10.3% 21.5% 21.4% 58.5 10.0% 8.7% 20.5% 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 NPAT ($million) and NPAT margin (%) NPATA ($million) and NPATA margin (%) 72.5 67.0 70 70 56.1 53.9 45.2 43.9 36.8 34.9 6.8% 6.7% 6.4% 6.3% 6.1% 6.3% 30.5 29.0 5.5% 5.2% 4.6% 4.3% 20 2.00% 20 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 7 7
Increasing cash flows and shareholder returns Operating Cash Flow ($m) Cash Capex ($m) and % of D&A Free Cash Flow ($m) 175.6 112.1 93.0 85.7 74.3 67.5 70.0 112.8 108.4 117.0% 99.8 49.5 50.5 89.0% 89.1% 34.5 77.8 76.7% 18.0 53.8% 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 Basic Earnings Per Share (cents) Dividend (cents) & Payout Ratio (%) 1.65 3.3 1.40 2.7 2.6 1.10 1.00 2.1 0.80 1.8 52.9% 51.0% 50.3% 45.6% 43.8% 0.5 1H16 1H17 1H18 2H18 1H19 1H16 1H17 1H18 2H18 1H19 8 8
Segments Performance Summary 9
Solid Waste Services Performance ❖ Revenue and earnings growth enhanced by: o Addition of Toxfree Solids collections business in North West WA and Qld o Full ramp up of recent major contract wins o Increase in landfill volumes along the east coast ❖ Commodity pricing was stable in first half of FY19 compared to FY18. Some of the commodity price fluctuations have been mitigated by improved contract terms with customers Note 1: Net revenue excludes landfill levies collected 10
Industrial & Waste Services Performance ❖ Toxfree acquisition a major factor in growth ❖ Modest organic growth achieved after taking into account the completion of the Toxfree Wheatstone project in the previous corresponding period ❖ Increased scale allows segmentation and management across two dedicated strategic business units: Resources and Infrastructure with specialisation of technical ability, assets and improved customer focus ❖ Increased pipeline across both infrastructure and resources is encouraging, although too early to be confident on the timing of the projects 11 11
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