Full Year 2026 Cleanaway Waste Management Limited Earnings Call Transcript
Key Points
- Underlying EBIT grew 14.2% to $470.2 million, with net revenue up 13.1% to $3.7 billion.
- Free cash flow improved significantly, up 63.7% to $213.8 million, driven by better capital management and improved payment terms.
- Solid Waste Services delivered a strong performance with EBIT up 9.1% to $405 million and margin expansion of 40 basis points to 16.2%.
- Contract Resources outperformed its acquisition business case, delivering $320 million in revenue and $36.1 million EBIT, with synergies ahead of plan.
- The Board declared a final dividend of $0.035 per share, bringing the full-year dividend to $0.0685, up 14.2%, reflecting confidence in the outlook.
- ROCE improved 60 basis points to 9.7%, demonstrating better capital efficiency and disciplined capital allocation.
- The company secured a significant 7.5-year municipal collections contract with Cairns, expected to contribute over $100 million in revenue.
- The EQT Infrastructure proposal at $3.13 per share represents a 34% premium to recent trading, providing immediate value to shareholders.
- Organic growth was weaker than expected, with underperformance in Health Services, Industrial Services, and OTS project volumes.
- Health Services experienced a difficult year, with a major customer recontracting at lower rates and disruptions from Ex-Tropical Cyclone Alfred, leading to reduced revenue and earnings.
- Industrial Services saw lower contracted and project activity, fewer shutdowns, and weaker utilization, impacting profitability.
- The Middle East conflict caused market softness and higher fuel prices, requiring significant management attention and incurring costs that were not fully recovered in-year.
- Statutory NPAT was lower at $98.5 million due to significant items, including legacy matters, reorganization costs, and non-cash impairments.
- FY27 guidance of $500-$530 million underlying EBIT implies only modest growth, with EPS growth expected to be below the previously stated 10-15% CAGR.
- The company faces higher central investment costs for IT modernization and safety systems, which will weigh on FY27 earnings before benefits are realized.
- Landfill volumes are expected to be less predictable, and resource recovery volumes are being impacted by regulatory changes such as glass separation and CDS rollout.
Thank you for standing by, and welcome to the Cleanaway FY26 results. (Operator Instructions)
I'd now like to hand the comments over to Mr. Mark Schubert, Managing Director and CEO. Please go ahead.
Good morning, and welcome everyone listening in today. Thank you for joining Cleanawayâs financial results briefing for the FY26 financial year. I am Mark Schubert, and I am joined by Nigel Simonsz, Cleanawayâs CFO, who joined the business in July; and Richie Farrell, General Manager of Investor Relations and Sustainability. Following the presentation, we will open the call for questions as usual.
Moving to slide 3. Before we begin, please note the usual disclaimer. Unless specifically called out, I will be talking about underlying performance of the business and the associated financial metrics throughout this presentation. The agenda for today is set out on slide 4. The plan today is that I will take you through the highlights and
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