Emeco returns to profitability

EQUIPMENT provider Emeco has returned to profitability following an impressive turnaround.
Emeco returns to profitability Emeco returns to profitability Emeco returns to profitability Emeco returns to profitability Emeco returns to profitability

Staff reporter

Revenue for the 2018 financial year jumped by 64% to A$233 million.

Operating EBITDA was up by 83% to $83.5 million, while the EBITDA margin improved from 35.8% to 40.2%.

Operating EBIT jumped by 593% to $83.2 million, while the operating net profit after tax was $20.1 million, up from a $90.9 million loss for the previous year.

The company improved its financial performance while at the same time reducing its total recordable injury frequency rate by 45% to 1.2.

During FY18, Emeco successfully integrated the Force assets into its business and the integration of its latest acquisition, Matilda, is on track.

Emeco managing director Ian Testrow said the company continued to execute on its strategy to become the highest quality and lowest cost provider of equipment rental solutions.

"I am pleased to report that our focus on serving our customers and the hard work of our team has resulted in a return to positive operating NPAT for the first time since FY13," he said.

"We have further deleveraged our balance sheet to position Emeco to refinance our debt on more favourable terms."

Emeco's net debt/pro-forma run-rate operating EBITDA reduced to 2.0x, down from 3.9x in FY17.

"In line with our strategy, Emeco has recently made two significant acquisitions - Force in November 2017 and Matilda in July 2018," Testrow said.

"These acquisitions significantly increase Emeco's scale and provide internal equipment maintenance capabilities, allowing Emeco to widen its customer value proposition."

Testrow said the company continued to deliver on objectives of improving financial and operational performance.

"We have continued to improve our systems and processes to maintain operational excellence and cost discipline," he said.

"This has included a focus on enhanced centralised support to the regions, including centralising planning of our component change outs, standardising processes across regions and using technology to drive best practice asset management, particularly given the cost pressures in a tightening market."

Testrow said the company expected to see additional revenue growth in FY19, driven by further increases in utilisation and rates, additional retail maintenance services and a full-year contribution from Force and Matilda.

"We continue to see evidence of improving market conditions across Australia with an increase in the number of tenders being undertaken by miners, which is reflected in the increase in earnings in 4Q18 following several new project wins and existing project expansions," he said.

Emeco shares opened 0.5% higher at 38.2c, valuing the company at more than $1.2 billion.