Credit Suisse Lunch Briefing. 11 December 2018

Transcription

1 Credit Suisse Lunch Briefing 11 December 2018

2 Overview Business Update On track to deliver stated FY19 guidance expect to report year-on-year pro forma 1 EBITDA growth of the underlying business in the range of 15 20% in FY19, prior to any impact of the acquisition of Dial A Dump Continued momentum in infrastructure contract wins and C&I growth multiple new contract wins in infrastructure, commercial construction and C&I in FY19 Infrastructure investment to offset slowdown in multi-dwelling residential market from record levels $75bn Federal Government 10 year national infrastructure plan; $87bn and $40bn in committed or commenced infrastructure projects in NSW and VIC respectively, over 4 years 2 Redevelopment program across NSW and VIC well underway St Mary s development consent granted on 7 November 2018 and key projects on track Strong foundation in VIC Expansion on track. Continued focus on internalisation, fleet optimisation and volume growth over the next 6-12 months Waste management industry characterised by strong long term growth fundamentals waste generation in Australia growing at six times population growth Introduction of QLD levy to be introduced in July 2019 ACCC process for DADI Process ongoing and a decision announced in February

3 FLEET PEOPLE CAPACITY (MT) Overview Operating footprint NSW VIC Total 1.6 Million tonnes = Million tonnes 2.2 Million tonnes 655 Employees = Employees 788 Employees 177 Trucks + 77 Trucks = 254 Trucks 17 RRC s 13 NSW and 4 VIC 3

4 POST-COLLECTIONS Contaminated soils COLLECTIONS END-MARKETS Overview Diversification into new markets Indicates Bingo s current operations Indicates DADI s current operations Potential future state of Bingo / DADI combined Households & councils Kerbside residential Retailers & shopping centres Hospitality Commercial Health / education Community Manufacturers Property services Small builders Diversified construction Commercial construction Civil & infrastructure Residential construction PUTRESCIBLE WASTE NON-PUTRESCIBLE WASTE Municipal solid waste (MSW) Commercial & Industrial (C&I) Building & Demolition (B&D) MSW C&I C&I B&D Alternate Waste Treatment (AWT) Recycling Compost Refuse Derived Fuel (RDF) Refuse Derived Fuel (RDF) Recovered Product Timber shredding Brick & concrete crushing Residual Waste Scrap steel recycling Green waste - organics NON-PUTRESCIBLE LANDFILL

5 % of B&D % Bingo Collections Bins Revenue Revenue Overview Diversified exposure across construction end markets Bingo has a diversified portfolio with exposure across a number of end-markets and is well placed to target growth within the construction cycle Bingo B&D Collections Revenue by diversified end market 30% 25% 20% 15% 10% 5% 0% IPO FY17 1H FY18 FY18 Current Civil and infrastructure Diversified construction company Residential Commercial construction Commercial business Smaller projects & private businesses Individuals Bingo estimates that ~25% of Group Revenue is related to residential construction Revenue composition of Bingo B&D collections has been shifting from smaller projects, individuals and residential construction to diversified and infrastructure construction since IPO Civil and Infrastructure has increased to 23% of Bingo B&D collections revenue versus 8% at the time of IPO Strong uplift in diversified construction since IPO and expected to continue to increase Residential construction as a proportion of Bingo B&D collections revenue has decreased by 33% since IPO to 16% The combination of strong economic drivers, population growth and infrastructure pipeline expected to support construction activity over the medium term Bingo B&D collections revenue represents 75% of Collections revenue, Bingo s 5 year strategy is to diversify collections revenue to 50:50 across C&I and B&D and is occurring with entry into VIC on track

6 Overview NSW and VIC forecast construction expenditure Total building and construction work in Australia is expected to hover between $242 billion and $245 billion over the next three years with minor dips and lifts of around 1% Forecast construction activity indicate a rebalancing with the cycles that are playing our in key subcategories effectively cancelling out big changes in the forecasts of total work to be done In NSW and VIC, Bingo s two operating markets, total construction expenditure is forecast to remain relatively flat over the next 5 years Total Forecast Construction Expenditure in NSW and VIC (A$bn) $128.5 $134.0 $130.8 $130.4 $127.8 $ Net +$5.5bn 43.1 Net -$3.2bn Net -$0.4bn 43.7 Net -$2.6bn Flat YoY Resi Non-Resi E&C 2019f Resi Non-Resi E&C 2020f Resi Non-Resi E&C 2021f Resi Non-Resi E&C 2022f Resi Non-Resi E&C 2023f Residential Non-Residential Engineering & Construction Source: ACIF November ABS and ACIF CFC.

7 Overview Bingo reaffirms FY19 guidance FY19 Guidance On track to deliver our stated FY19 guidance of pro forma 1 EBITDA growth of the underlying business in the range of 15 20% in FY19, prior to any positive impact of the acquisition of Dial A Dump As previously advised, FY19 will be a transitional year with a number of Bingo recycling facilities offline for redevelopment and a ramp up in the Victorian business impacting group margins before returning to the long term group margin of 30% in FY20 As advised, FY19 full year will be skewed to 2H FY19, due to: Annual price increase forecast in 2H FY19 Newly built West Melbourne and Mortdale recycling facilities online in 2H FY19; and Volume ramp up and timing of commencement of large infrastructure projects. Market outlook Normalisation of multi-dwelling residential activity in NSW and VIC, with forecast activity expected to moderate over the next 2 years The slow down in residential construction is expected to be offset by: robust growth in commercial construction, predominately office and hotel new builds in Sydney and Melbourne; and transport and social infrastructure projects over the medium term sustained construction activity in single dwelling residential builds Bingo has solid work in hand and work to tender of infrastructure projects across NSW and VIC continued strong momentum in infrastructure contract wins across NSW and VIC infrastructure waste mix is highly recyclable and therefore higher margin, however provides a lower revenue contribution than residential and nonresidential construction waste Management remain focused on diversification of revenue over the long term to 50:50 split between Building & Construction and Commercial & Industrial waste streams, which will provide a greater contracted revenue base for its Collections business 1. Pro forma excludes acquisition, capital raising, integration costs and prepayment amortisation.

8 Overview Positioned for growth FY20 and beyond Compelling growth outlook for Bingo underpinned by recent capital investment in strategic assets and operating footprint in core growth markets with favourable long term prospects Strong growth is expected from FY20 with a full year contribution from Patons Lane, DADI, QLD Levy, completion of redevelopment program and ramp up efficiencies from Victorian operations 1 A$millions $60 Additional upside Some pass through of DADI Synergies $93.7 $108-$112 $20 Redevelopment program largely complete Ramp up and operational efficiencies from VIC operations Full year contribution from impact of QLD levy 1 FY18 EBITDA FY19 EBITDA Patons Lane DADI FY20 1. Pending ACCC merger clearance determination.

9 Overview Our vision: Pushing for a waste-free Australia

10 Sustainability The future of resource recovery in Sydney Recycling ecology park Fully integrated waste infrastructure site for both putrescible and non-putrescible waste streams Alternative waste solutions to enhance recovery rates and increase diversion of waste from landfill 100% renewable energy development of a sustainable energy network comprised of solar PV rooftop systems, batteries and landfill gas fired power generation to meet the sites electricity requirements Product production including timber shredding, organics processing, brick & concrete crushing and scrap steel recycling 10 Note: Indicative only and subject to receiving appropriate approvals and amendments required. The site is currently not licensed to accept putrescible waste.

11 Sustainability What sustainability means to Bingo Sustainability is part of the fabric of our business; it is fundamental to our business strategy and underpins our future growth As a leading recycling and waste management company, we believe we have the opportunity to significantly contribute to the development of a circular economy in Australia Sustainability is a priority for the Board, management and all Bingo employees Our objective is to operate at the highest standards in the industry Business goals Growing innovation Through investing in new technology to increase recovery rates and drive a closed loop economy Enhance industry transparency for recycling and recovery Environmental preservation Recycling is core to our business model with over 50% of revenue derived from recycling Be an advocate for change in diverting waste from landfill Fostering safety Focus on injury prevention and mitigation Bingo Live management of safety i.e. driver fatigue Zero harm workplace Cultivating community Our culture is one team, one family. Support, development and inclusion underpins our strategy for our people and communities in which we operate Fostering a partnership between Bingo and our stakeholders to increase sustainable waste management practices 11

12 Sustainability Sustainability highlights FY18 For Bingo sustainability and profitability are inextricably linked. In excess of $700,000 raised for NSW Cancer Council and McGrath Foundation +223,000 Tonnes of brick and concrete recovered Bingo s waste education program reached 1,141 School students in FY Employees participated in certificate III level training Continued focus on safety 65% Improvement on LTIFR Achieved a best annual recovery rate of 85% at the Minto facility 4 Pink Bingo Trucks In support of the McGrath Foundation and the Cancer Council Independently verified average recovery rate of 77% Safety Stats Zero Harm Target LTIFR 4.3 LTIFR 1.5 LTIFR 85,478 tco2-e/pa Abated Emissions From recovery materials FY18 water consumption of 111 kl Contributing to a circular economy Bingo s five revenue producing recycled products contributed 4% of total revenue Bingo-owned commercial and skip fleet fully Euro V Compliant or equivalent

13 Sustainability Helping clients meet their recycling targets Independent audit of Bingo s resource recovery rates undertaken for the second consecutive year during FY2018 Independent Audit Brick and concrete Scrap metal ~ 223,000 ~ 38,000 77% Average recovery rate (Auburn, Minto and St Marys) Minto 85% Recovery rate Timber Paper and cardboard ~ 11,000 ~ % across entire business Committed to maintaining a minimum recovery rate of 75% 13

14 Closing the loop Sustainability

15 Sustainability Focus on building a sustainable business Resource recovery is more than waste management we are uniquely positioned to drive change and have a lasting positive impact on the environment For Bingo sustainability and profitability are inextricably linked Waste going to landfill is a loss of valuable resources Through resource recovery materials can be used as inputs to create products of value Bingo achieves market leading resource recovery rates driven by investment in advanced recycling technology This is reflected in our bottom line with recycling representing more than 50% of Group EBITDA Market demands are evolving which supports new models of sustainability Closing the loop 5 out of our 14 recovered products are revenue producing CUSTOMER REUSE COLLECTIONS TARGET RECOVERY RATE >75% RECOVERED MATERIALS RECYCLING & PROCESSING 15 Note: Target recovery rate linked to site upgrade program and mix of materials. Recovery rates may vary due to mix of waste month to month, this does not directly impact profitability

16 Sustainability Driving a circular economy Mixed waste is sorted and separated at Bingo recycling centres to create 14 different materials, five of which currently contribute to our revenue Bingo s in-house reprocessing capabilities Resource and Recovery Facilities: Enhanced waste processing and recycling capabilities through the addition of advanced waste processing technologies New processing capabilities provide the following benefits: Green Waste Brick and Concrete o Reduce Bingo s tipping costs o Generate additional revenue streams o Materials: Bingo re-processes and re-sells 5 of the 14 waste product streams it processes and diverts most others from landfill (shown to the right) Various End-Markets Paper and Cardboard 16 o Closing the Loop: The materials are used by a number of end-markets including civil works / infrastructure projects, landscaping, housing and residential use and is consistent with our sustainability targets (as well as supporting our clients goals). Revenue attributable to product sales represented 4% of FY18 total group revenue Scrap Metal Steel

17 Sustainability Our long-term sustainability commitments Climate Risk Leading practice environmental management Health & Safety Energy & GHG Emissions Diversity & Inclusion Responding to climate change. Bingo is committed to further exploring climate risks and opportunities and going forward, will align our approach to the Task Force on Climate-related Financial Disclosures (TCFD) framework. Driving towards a circular economy. Bingo is committed to enhancing diversion of waste from landfill through investment in recycling infrastructure and innovation. Creating a safe environment. Bingo is committed to being relentless in our pursuit of zero harm for our people. Becoming energy self sufficient. Bingo is committed to optimising the use of solar energy at its network of recycling facilities and assessing alternate fleet fuel solutions. A culture that values and leverages diversity. Bingo is committed to achieving a long term target of 30% female representation on our Bingo Board. 17

18 Percentage(%) Sustainability Driving change through innovation and technology Global solid waste disposal and recovery Recycling and composting Combustion with energy recovery Combustion without energy recovery Landfill How do we get there? Greater recovery of end products Focus on diversion from landfill 2 Automated processing Enhance systems to drive efficiency from customer engagement transformation through to reprocessing 1. World Bank (2015), Global Review of Solid Waste. 2. Through investment in advanced recycling equipment, Alternate Waste Treatment (AWT), RDF and other alternate technology. 18

19 Thank you