Macmahon Holdings Limited (MCHHF) CEO Michael Finnegan on Q4...

Macmahon Holdings Limited (MCHHF) CEO Michael Finnegan on Q4 2018 Results - Earnings Call Transcript

Aug. 24, 2018 6:40 PM ET
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About: MacMahon Holdings Ltd. (MCHHF)

Macmahon Holdings Limited (OTCPK:MCHHF) Q4 2018 Results Conference Call August 23, 2018 7:00 PM ET
Executives
Michael Finnegan - Chief Executive Officer
Giles Everist - Chief Financial Officer
Chris Chong - Investor Relations
Greg Gettingby - General Counsel and Company Secretary
Analysts
Melinda White - IFM Investors
Siraj Ahmed - Citigroup
Brendan Harrington - Harrington Partners
Operator
Ladies and gentlemen, thank you for standing by, and welcome to the Macmahon Holdings Limited 2018 Full Year Results Presentation. At this time, all participants are in a listen-only model. There will be a presentation followed by a question-and-answer session. [Operator instructions] I must advice you, that this conference is being recorded today, Friday 24 of August 2018.
I would now like to hand the conference over to your first speaker today, the CEO of Macmahon, Mick Finnegan. Thank you. Please go ahead.
Michael Finnegan
Thank you, Edwin. Good morning, everyone, thank you for joining us today for Macmahon’s 2018 full year results presentation. I am joined by Giles Everist, our CFO; and Chris Chong and Greg Gettingby.
This morning we will go through the presentation that was released earlier. I will start by providing a summary of the financial year '18 results. I will then move through an operational review of the key contracts. Giles will then go into more detail about the financials, before handing back to me to discuss the outlook and guidance for financial year '19, and the strategic priorities for the year ahead. At the conclusion of the briefing, there'll be an opportunity to ask questions.
Moving now to the next slide, titled 2018 Highlights. Financial year '18 has been transformative and we are very pleased to report a strong result that was in line with guidance and market consensus. We achieved revenue of $710 million and EBIT of $41.2 million. EBITDA and operating cash flow improved substantially and our balance sheet remains robust with net cash of $3.4 million.
The performance marks a significant turnaround on recent years and as a result of our focus on contract execution, market improvement at Telfer, and the ramp up five new projects, which occurred largely across the second half of the year. We've been very pleased with the progress made on our new projects in particular, Batu Hijau, Tujuh Bukit, Byerwen and Mount Morgans. We look forward to continuing to build on our good relationships and leveraging the strengths of our amazing people.
Over the past year, we secured $1.1 billion of new work and extensions in Australia in addition to the transformational Batu Hijau contract. As a result, we are well positioned this year with that order book at a record $5.4 billion. Despite the tightening equipment and labor market in the mining industry, we were successful in resourcing and ramping up five new projects during the year. We're excited about the opportunities ahead of us and remain strongly focused on delivering on our substantial order book, which puts us in a very fortunate and healthy position.
As a result, we now have confidence in providing financial year 2019 guidance of between $950 million and $1.05 billion of revenue and $70 million to $80 million of EBIT.
Turning now to the next slide, we will provide you some context of just how far we have gone.
These charts highlight the improvement in our financial performance over the past two years. The results speak for themselves, but you can see we delivered on a strong second half as new projects ramped up. Our revenue in the second half, in fact was more than financial year '17, and we only reached our full run rate in Q4 of the last financial year.
Pleasingly, we’re now operating at revenue run rate of around $1 billion per year, which is in line with our new financial year '19 guidance. You can also see a significant uplift in our second half EBIT margin of 7.1%, which is, obviously a great improvement on the underlying and volatile EBIT margins over recent periods. Our focus is to execute well so that we generate the consistent returns that we showed.​