HY19 2019 Half-Year Results Presentation February 2019 Presenters: Ian Ball, CEO Peter Barker, CFO
Disclaimer This presentation contains certain statements and relation to the accuracy or completeness of the COVER IMAGES (L-R) forecasts provided by or on behalf of Cardno Limited. information, statements, opinions or matters (express Top Left: Cardno project scientist Any forward ‐ looking statements reflect various or implied) arising out of, contained in or derived from performing instream flow survey for the assumptions by or on behalf of Cardno. Accordingly, this presentation or any omission from this Southern California Edison Kaweah these statements are subject to significant business, presentation or of any other written or oral information Relicensing Project, United States. economic and competitive uncertainties and or opinions provided now or in the future to any contingencies associated with the business of Cardno interested party or its advisers. In furnishing this Top Right: Cardno planners which may be beyond the control of Cardno which presentation, Cardno undertakes no obligation to collaborated with the developer, could cause actual results or trends to differ materially, provide any additional or updated information whether Brisbane City Council, architects and including but not limited to competition, industry as a result of new information, future events or results other consultants in designing the downturns, inability to enforce contractual and other or otherwise. project, before administering a fast arrangements, legislative and regulatory changes, Except to the extent prohibited by law, the Relevant three-month development approval sovereign and political risks, ability to meet funding Parties disclaim all liability that may otherwise arise process. Image credit: Elenberg Fraser. requirements, dependence on key personnel and other due to any of this information being inaccurate or market and economic factors. Accordingly, there can Bottom Left: The Fiji Women’s Fund incomplete. By obtaining this document, the recipient be no assurance that any such statements and provides funding and capacity releases the Relevant Parties from liability to the forecasts will be realised. Cardno makes no development support to women’s recipient for any loss or damage which any of them representations as to the accuracy or completeness of groups, organisations and networks in may suffer or incur arising directly or indirectly out of or any such statement or forecasts or that any forecasts Fiji to expand and enhance their work in connection with any use of or reliance on any of this will be achieved and there can be no assurance that on women’s empowerment and gender information, whether such liability arises in contract, any forecasts are attainable or will be realised. equality. tort (including negligence) or otherwise. Additionally, Cardno makes no representation or Bottom Right: Cardno UES field crew This document does not constitute, and should not be warranty, express or implied, in relation to, and no safety meeting before performing construed as, either an offer to sell or a solicitation of responsibility or liability (whether for negligence, under Subsurface Utility Engineering (SUE) an offer to buy or sell securities. It does not include all statute or otherwise) is or will be accepted by Cardno on-call services for Port Authority of available information and should not be used in or by any of its directors, shareholders, partners, New York and New Jersey, United isolation as a basis to invest in Cardno. employees, or advisers (Relevant Parties) as to or in States. 1 2019 Half-Year Results
01 Performance overview 02 Detailed financial review 03 Commentary and outlook 2 2019 Half-Year Results
2019 Half-Year Performance Overview With the multi year business improvement plan into its third year, Cardno focus remains the same: cost control, organic growth, invest in people and strategic accretive acquisitions . > Fee revenue $414.0m up 9.7% on prior year comparative (PCP). > EBITDA $27.9m down 7.6% on prior year comparative. > Conversion of EBITDA into operating cash flow pre tax and interest expense of 34.9%, driven by the timing of large government client receipts. > Completed three key acquisitions expanding our Consulting Engineering footprint in Regional Victoria, the Florida Keys and our Construction Materials Testing footprint in the US. > Balance sheet remains strong, bank debt facility successfully renewed and increased (expires December 2021). > Americas Engineering division performance continues to improve with revenue up 11.7% on PCP. EBITDA margin increased from 3.6% to 4.5%. > Asia Pacific Engineering revenues down 1.5% on PCP and EBITDA margin down from 9.1% to 5.9% driven by the roll off of a number of major projects in 1Q18, significant investment to ramp up business development, specific ‘non-repeating’ costs. > Construction Sciences revenue up 37.8% on PCP as the division continues to benefit from infrastructure spend in Australia. EBITDA margin down from 12.3% to 10.0% - primarily due to client and project mix. > ID revenue up 8.2% on PCP. EBITDA margin down from 2.3% to 0.6% with the business investing heavily in business development on multi year tenders (particularly in the UK). > PPI continues to perform strongly and we expect this trend to continue. > Wind down of LATAM projects and operations is progressing broadly consistent with management expectations. > Backlog grew by 24.1%, due to the award of multi-year international development projects, the inclusion of backlog from acquisitions, and organic growth. 3 2019 Half-Year Results
2019 Half-Year Performance Overview: how are we going? The company is broadly performing as expected. While the ‘portfolio effect’ of Cardno’s geographic and business footprint buffers the company from under (and over) performance, we have work to do. POSITIVE IMPROVING WIP Americas continues to improve with new contract wins and PPI Oil & Gas business grew revenue Asia Pacific revenue and margin down on excellent project delivery, with particularly solid momentum and EBITDA over PCP and are PCP caused by run off of major projects and margin expansion in Science & Environment. Our operating profitably with more upside and delay in securing significant new work. Government Services business is also ahead of budget. A potential. APAC business has been restructured with performance improvement plan has been executed to Key account focus and proactive business improve performance in Structures and Utility Engineering to development has been stepped up and will Cash conversion and debtor drive an improved second half result. be a key and sustained priority moving management key focus of business forward. Cardno is well placed on several and “new normal”. Timing of cash major consortia tenders currently underway, Construction Sciences benefiting from both the continuing receipts from substantial government albeit hard to see much change in favorable business environment and good business client positively impacted 1H18, performance this financial year. discipline with a significant gain on last year. negatively impacted 1H19. Caminosca and wind down of Ecuador International Development business margins are as planned projects are legacy issues that are steadily but down on PCP (as previously anticipated) as the business being resolved. invests in bids for substantial multi-year projects. Balance Sheet in good position. Bank lending facility successfully renewed December 2018 (3 year facility). Financial results improving Financial results flat or declining 4 2019 Half-Year Results
New CEO focus for remainder of FY19 The over-arching goal in the next few Business Structure Client Excellence months is to set up the business for a strong performance in FY20 and beyond by implementing a > Consolidated APAC North and South > Introduction of key account program into a single Division and client centric approach, focusing number of specific actions to improve on sustained advisory relationships > Aligned Suresearch to Construction the business structure, client Sciences. > Roll-out of pipeline tool excellence, people excellence and > Introduction of independent delivery excellence client feedback. People Excellence Delivery Excellence Improved Productivity > Improved leadership engagement and > Consistent digitally enabled project > Appointment of CDO and CTO to communication management framework drive digital transformation and innovation > Introduction of clearer KPIs, performance > Pricing model for margin assessments and development plans management > Ramp up of offshore back office functions and new offshore centres > Career path development > New KPIs. of excellence. > New focus on diversity and inclusiveness. 5 2019 Half-Year Results
01 Performance overview 02 Detailed financial review 03 Commentary and outlook 6 2019 Half-Year Results
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