Cleanaway Waste Management announced today that they are planning on performing a $350 million fully underwritten institutional placement. It will also undertake a $50 million non-underwritten share purchase plan for existing shareholders.
The purpose of the raise will be to fund Cleanaway’s growth strategy and to pay for the takeover of Global Renewables Holdings Pty Ltd (GRL). Cleanaway is buying the business for $168.5 million.
The acquisition price represents 7.9 times the enterprise value of the target’s actual FY22 pro forma EBITDA.
Further to this, the company also announced their full year results this morning, the highlights of which include:
Net revenue increased 18.4% to $2,603.8 million
Underlying Earnings before Interest and Tax fell 0.6% to $257.1 million
Cash flow from operating activities increased 9.9% to $466.3 million
Total dividend per share increased 6.5% to 4.9 cents
Statutory net profit fell 45.4% to $80.6 million
Global Renewables Holdings is a licensed composting facility that processes ~20% of Sydney’s ‘Red bin’ household waste at its Eastern Creek site. It delivers ~30% landfill diversion and better carbon outcomes compared to landfill.
The deal will be 3.7% EPS accretive on a pro forma FY22A basis. It also believes there is incremental earnings upside as additional capital is deployed into growth projects targeting a double-digit return.
Management handed in its earnings report card that showed an 18.4% increase in net revenue to $2.6 billion. But its underlying earnings fell due to costs linked to its acquisition and integration of the Sydney Resource Network (SRN).
Mark Schuber, Cleanaway’s managing director commented:
“In a year of significant challenges posed by a global pandemic, natural disasters, supply chain disruptions and emerging inflation, Cleanaway delivered a strong financial performance.
While Cleanaway is not immune to inflationary pressures, we do have mechanisms within many of our contracts that allow us to recoup rising costs over time, but there is a time lag on our ability to recover these amounts, which has resulted in a te mporary impact on margins.”