FY22 HALF-YEAR RESULTS
Strong Financial Performance and Blueprint for future growth
Cleanaway Waste Management Limited (“Cleanaway”) ASX:CWY today announced a Statutory Net Profit of $52.5m for the six months ended 31 December 2021 (“1H22”), down 33.9% on the prior corresponding period (“pcp” or “1H21”). Statutory Net Profit was $23.8m lower than Underlying Net Profit of $76.3m predominantly due to costs associated with the acquisition and integration of the Sydney Resource Network.
HIGHLIGHTS
Financial Performance
- Strong top line growth with opportunity to drive further earnings once temporary headwinds subside
- Increased dividend underpinned by resilient business performance, higher operating cash flow and strong balance sheet
“Sydney Resource Network” transaction completed
- Completed 18 December and immediately earnings accretive
- Former Suez assets fully integrated into Cleanaway network
Strategy Refresh – BluePrint 2030
- Established our foundations and embed leadership behaviours to deliver
- Completed a deep dive across the enterprise and formulated refreshed strategy
- Added carbon, sustainability and core process capabilities
- Continued to build-out growth platforms
Executive Appointments
- New EGM appointments will bring increased capability and experience aligned to refreshed strategy
Financial Performance Summary
| 1H22 | 1H21 | Variance | |||
| Net revenue ($m) | 1,229.9 | 1,070.2 | 14.9% | ||
| Underlying EBITDA ($m) | 273.7 | 263.8 | 3.8% | ||
| Underlying EBIT ($m) | 129.9 | 132.2 | (1.7%) | ||
| Underlying Net profit after tax ($m) | 76.3 | 79.0 | (3.4%) | ||
| Underlying Earnings per share (cents) | 3.7 | 3.8 | (2.6%) | ||
| Statutory Net profit after tax ($m) | 52.5 | 79.4 | (33.9%) | ||
| Statutory Earnings per share (cents) | 2.5 | 3.8 | (34.2%) | ||
| Cash flow from operating activities ($m) | 223.6 | 202.4 | 10.5% | ||
| Net Debt to EBITDA (times) | 2.24x | 1.57x | +0.67x | ||
| Interim dividend declared (cents per share) | 2.45 | 2.25 | 8.9% |
Net Revenue of $1,230m was 14.9% higher than the pcp with higher revenue across all segments primarily driven by a general recovery in economic conditions, new customer contracts, recent acquisitions, pandemic related clinical waste and higher commodity revenue.
Underlying EBITDA of $273.7m was 3.8% higher than the pcp reflecting higher revenue partially offset by lower volumes from higher margin activities, the first quarter impact of the lockdown in New South Wales, higher fuel and Adblue prices, significantly higher costs in the Health Services business and higher commodity shipping costs.
Underlying EBIT of $129.9m was 1.7% lower than the pcp due to higher depreciation and amortisation expenses related to new customer contracts, acquisitions and developments. Underlying earnings per share (“EPS”) attributable to ordinary equity holders of 3.7 cents per share (“cps”) was 2.6% lower than the pcp.
Net operating cash flow of $223.6 million was 10.5% higher than the pcp.
The Board declared an interim dividend of 2.45 cps partially franked at 25%, 8.9% higher than the pcp.
Management Commentary
Chief Executive Officer and Managing Director of Cleanaway, Mark Schubert, said, “Today it is my sincere privilege to report for the first time the financial and operational results for Cleanaway on behalf of the more than 6,600 hardworking, humble and willing employees that together make Cleanaway the great business that it is.”
“During the half we have redefined safety and the environment as our two foundations. We do this so if our teams need to choose then, our foundations will always come first. They are also central to our purpose of making a sustainable future possible together.”
“The underlying financial performance for the half-year was pleasing with around 15% top line growth compared to the prior corresponding period. This flowed through to around 4% higher EBITDA at $273.7 million and translated into 10.5% higher underlying net operating cash flow of $223.6 million. There were a few temporary headwinds impacting margins. However, we do see these as temporary, with margin recovery expected in all segments in the second half.”
“The strong underlying financial performance, together with our cash flow and strong balance sheet allowed directors to increase the interim dividend to shareholders.”
“We undertook a deep review of our strategy and refreshed it. It is evident that there is significant change happening. In a relative short period, the industry has moved from a collect and dispose one to a much more complex one with a far greater focus on resource recovery through the value chain.
With sustainability here to stay in the form of lower carbon and higher circularity driven by customers and communities, our landscape review showed a long and exciting runway of domestic opportunities in our core markets, which we are well positioned to capture.”
“Our Blueprint 2030 strategy is our customer led evolution of Footprint 2025. Blue represents Cleanaway, it represents sustainability and it represents the blue-sky ambition and mindset that we will bring to the strategy, while ”print” acknowledges this as an extension of our Footprint 2025 strategy, which underpins this strategy evolution.”
“In Blueprint 2030 we will create superior shareholder value by integrating and extending our leading network of infrastructure assets to provide high circularity low carbon solutions, seamless customer service and value for money for our customers.”
“Our goal is to be recognized by our customers as the most innovative and sustainable waste company. We will do this with foundations of zero harm to people and the environment. We have a unique execution and delivery capability, which has underpinned our multi-year track record in performance, and we have set up exactly this to execute our strategy effectively.”
“During the half we completed the significant acquisition of the Sydney Resource Network and the business has been contributing to earnings from day one. Following an efficient integration, operational control has been passed to the Solids NSW business unit. We also recently acquired ‘Vins Bins’, a C&D collections and resource recovery business operating in the Mornington Peninsula region of Victoria as we seek to grow our market share in that segment over time.”
“As Energy-from-Waste will be a core part of our business into the future we also determined during the half to pursue our proposed Melbourne and Queensland projects on a 100% equity ownership basis. In Melbourne we have purchased a site in Wollert, which is about 30km north-east of the city and surrounded by other industrial activities. In Queensland we have an agreement in place for the purchase of a site and are finalising detailed documentation.”
“We are further developing our cross-value chain partnership as we look for opportunities to recycle mixed plastics which are not suitable for our mechanical processing facilities. We are currently working with Qenos, Australia’s only manufacturer of polyethylene and supplier of a diverse range of specialty polymers, on a feasibility study to chemically recycle mixed plastics and turn them into raw materials that are used to make new plastic polymers for a circular solution.”
Dividend
The Board declared an interim dividend of 2.45 cents per share (prior corresponding period: 2.25 cents per share) representing an increase of 8.9% on the interim dividend paid in the prior corresponding period. The dividend will be partially franked at 25% and paid on 6 April 2022 to shareholders on the register on 1 March 2022.
The Dividend Reinvestment Plan (DRP) will be in operation for this dividend. Shareholders residing in Australia or New Zealand may elect to participate in the DRP. The DRP election date is 2 March 2022. Under the DRP, Cleanaway shares will be issued at the average of the daily Volume Weighted Average Price (VWAP) of all shares sold on ASX over the period from 3 to 9 March 2022. No discount will be applied to shares issued under the DRP.
FY22 Outlook
When comparing the second half of FY22 to the first half of FY22, the second half has six less working days to earn revenue. Excluding Sydney Resource Network contribution, we expect second half EBITDA to be similar to the first half. In addition, FY22 EBITDA will also include the Sydney Resource Network from 18 December, which is trading in line with expectations.
COVID impacts are difficult to forecast. The Omicron COVID impact in December and into the start of 2022 has resulted in higher labour and logistics costs, both of which we expect to be temporary. The impact has moderated in February, but it remains uncertain and therefore may impact the outlook.
Investor Briefing
The Company will be holding a webcast and tele-conference briefing on the results at 9.30am (AEDT) today.
Presenters: CEO and Managing Director – Mr Mark Schubert
CFO – Mr Paul Binfield
Webcast: https://services.choruscall.com/mediaframe/webcast.html?webcastid=U0Jnjct5
Tele-conference: To participate in the teleconference please go to the following link
https://s1.c-conf.com/diamondpass/10018549-rham14.html
Investor Enquiries
Richie Farrell – Head of Investor Relations
Telephone: +61 409 829 014
Email: richie.farrell@cleanaway.com.au
Media Enquiries
Mark Biddulph – Head of Corporate Affairs
Telephone: +61 499 332 601
Email: mark.biddulph@cleanaway.com.au