Emeco (EHL) H2 2024 earnings summary

Executive summary

• Delivered strong FY24 results with significant growth in operating earnings, margins, and cash flow, in line with expectations, despite a 6% revenue decline due to the sale of the underground contract mining portfolio.

• Refocused on core equipment rental and workshop services after divesting underground contracting, simplifying the business model and driving margin improvement.

• Major growth CapEx program completed, with all new equipment deployed to projects, supporting future earnings momentum.

• Business model simplification and operational improvements underpin positive momentum into FY25, with robust mining sector activity expected to sustain high demand.

• Improved safety performance, with TRIFR reduced from 3.2 to 2.8 year-over-year.

Financial highlights

• Operating EBITDA up 12% to $281 million; EBIT up 20% to $125 million; NPAT up 17% to $69 million year-over-year.

• Group revenue down 6% to $823 million due to divestment of underground contracting business.

• Operating free cash flow up 66% to $87 million, with 93% cash conversion and FCF yield of 24%.

• EBITDA margin increased from 29% to 34%; EBIT margin from 12% to 15%.

• Return on capital improved to 15% from 13% last year.

Outlook and guidance

• Positive demand outlook for FY25, with all growth CapEx equipment deployed and expected to drive earnings growth.

• Targeting 20% return on capital within two years, with further improvements expected from procurement, labor, and R&M savings.

• FY25 SIB CapEx expected at $160–165 million; depreciation at $165–170 million; ERP spend around $10 million; minimal growth CapEx planned.

• Focus on cost efficiencies, contract repricing, and right-sizing underground fleet to support earnings and free cash flow.

• Continued focus on free cash flow generation and disciplined capital management.