ASX 200 stock Cleanaway Waste Management Ltd (ASX: CWY) has drifted nearly 2% higher on Wednesday after the company posted its FY24 results.
Cleanaway shares are currently swapping hands at $2.96 apiece as investors react positively to the waste management company's annual numbers.
Let's see what the company posted.
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ASX 200 stock higher on solid full-year results
Key takeouts from the year include the following:
- Revenue came to $3.19 billion, up 7.7% from FY23
- Underlying earnings before interest and tax (EBIT) of $359.2 million, up 18.9% year on year
- EBIT margin expanded by 100 basis points to 11.2%
- Net profit of $170.6 million, a 14.8% growth compared to last year
- Earnings per share (EPS) up 15.2% to 7.6 cents
- Declared a final dividend of 2.55 cents per share, fully franked
What else happened in FY24?
The ASX 200 stock's performance in FY24 was marked by profit growth. Underlying EBIT grew 19% year over year, leading to a 15% growth in EPS.
Operating margins improved as workforce turnover stabilised during the year, with voluntary turnover settling at 17% vs. 21.5% last year.
Management says growth was underscored by improvements in its Queensland Solids operations and the transformation of its Health Services business.
Despite this, EBIT from its landfills segment was down 2.4% year over year due to "the impact of
lower volumes".
Segment-wise, industrial and waste services sales were up 7%, whereas its liquid waste and health business grew sales 13% for the year.
Moreover, the company announced the acquisition of Citywide's waste collection and recycling assets.
Due to revenue growth, operating cash flows were also more than $60 million higher over the 12 months.
The cash conversion ratio – earnings to cash flow – was therefore 97% for the year, sporting a 4% increase in the dividend to 2.55 cents per share. This could be positive for the ASX 200 stock.
What did management say?
Cleanaway's CEO, Mark Schubert, expressed confidence in the company's performance, noting:
FY24 was about execution, progress and delivering another year of double-digit EBIT growth and improving returns to shareholders. Equally important, it was about doing what we said we would do. Our FY24 financial result demonstrates the underlying strength and scale of our business, its increasing resilience, and the value creation being delivered through the year on year execution of our Blueprint 2030 strategy.
Through the disciplined and methodical approach to addressing the challenges of the recent years and executing our Blueprint 2030 strategic initiatives, we have delivered double digit EBIT growth as well as increased operational resilience.
Schubert also outlined the growth drivers for the year:
In FY24, our record underlying EBIT growth rate of 18.9% was driven by the completion of our QLD Solids restoration program, the transformation of our Health Services business and a solid underlying performance from across the Group. This underpinned a 60 bps increase in underlying ROIC to 5.5%.
What's next?
Looking ahead, Cleanaway expects to continue its growth trajectory.
Management projects FY25 EBIT in the range of $395 million – $425 million, whereas it assumes an interest expense of $130 million for the year.
It also consolidated some of its operations along the East Coast, but there's no word yet on what financial impact these may have.
In July 2024, I&WS undertook a restructure to align the business to the medium-term outlook. On the East Coast of Australia, I&WS's operations have been consolidated, as the business focuses on larger projects, that offer more stability and predictability.
On the West Coast, I&WS operations have been adjusted to support greater customer segmentation, in response to the business's growth over the past few years and its attractive growth outlook.
ASX 200 stock snapshot
Cleanaway is catching a bid today after the company posted its annual numbers. Over the past 12 months, the ASX 200 stock has climbed nearly 12% into the green.
