Cleanaway Waste Management : Macquarie Australia Conference 2024 – Prepared Remarks

Speaker Notes

7 May 2024

2024 Macquarie Australian Equi�es Conference

Delivered Tuesday 7 May 2024, 4pm

___________________________________________________________________________

Good a�ernoon

My name is Mark Schubert and I am the CEO and Managing Director of Cleanaway.

Thank you for joining me this a�ernoon. It is a pleasure to be here to talk to you about the progress we are making execu�ng our customer-led, Blueprint 2030 strategy. Progress which underpins our confidence in delivering shareholders atrac�ve EPS growth into FY26 and beyond.

Today, I'll start by giving some context to those in the room who might be new to the Cleanaway story, then I'll provide updates on three topics that have been in focus since our February results - with them being, an update on our Opera�onal Excellence ini�a�ves, our capex spend, and our energy-from-waste progress.

Before I move on, I would like to acknowledge the tradi�onal owners on the land with which we meet today, the Gadigal people of the Eora na�on and pay my respects to Elders past, present and emerging.

SLIDE 4 - Australia's leading waste company

This is a new slide - and rather than show you a map of Australia and the size and scale of our footprint - I wanted to make the case as to why Cleanaway presents a unique investment opportunity.

Star�ng at the botom of the slide, where today we have Australia's largest network of waste infrastructure assets and a singular laser focus on Australia. We have 135 hard to replicate licenced assets within our 332 branches. Our 7,700 hardworking teammates bring our assets to life empowered by our branch-led performance culture.

We are an essen�al service provider (and that was proven during Covid) with diverse and noncyclical cash flows from 150,000 customers and 140 long term stable council rela�onships. Our revenue is highly contracted with strong infla�on protec�on mechanics built in.

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

And then there are the triple tail winds from customers, from regula�on and from scale. Our customers want access to our integrated infrastructure that matches the shape of their waste and increasingly want to follow their waste with great repor�ng on carbon and circularity. The regulatory environment is highly suppor�ve of both the domes�c circular economy and higher environmental standards - both of which we benefit from. And our scale provides an advantage in being able to provide flexibility to customers as they transi�on up the waste hierarchy and our scale provides us the ability to invest in built only once waste infrastructure.

Finally, our detailed strategy makes the big and the right moves to create an opera�onally excellent Cleanaway, comprising of the leading and growing network of Australian waste infrastructure assets that deliver high circularity low carbon solu�ons for customers with great customer service at a value for money price. Importantly our strategy translates into financial performance for shareholders as evidenced by our on-trackmid-term financial ambi�on of deliver double-digit EPS growth and improving returns.

SLIDE 5 - Building a safe and resilient pla�orm to underpin growth beyond FY26

Some of you may be familiar with our value crea�on staircase, which captures how our BP2030 strategic pillars combine to deliver shareholder value.

Star�ng with our footprint of prized infrastructure assets - which are naturally �ed to GDP+ growth. We then apply our opera�onal excellence ini�a�ves like our VMB's, data analy�cs, route op�misa�on tools, branch-led opera�ng model or digi�sing our fleet workshops.

In addi�on to improving how we operate, we are adding value-accre�ve infrastructure growth-e.g., addi�onal capacity at Eastern Creek Organics, the new Western Sydney MRF, or new IWS contracts.

We then integrate them together to present our customers, high circularity, low carbon solu�ons in the form of scale, end-to-end customer solu�ons across mul�ple waste-streams that we think done well will be hard to replicate, and support market share growth in an increasingly sustainability focussed economy.

Our execu�on to date underpins our confidence in our mid-term financial ambi�on of delivering shareholders more than $450 million in EBIT and improved ROIC in FY26.

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

I would like to emphasize that as one of the very few companies that has an ar�culated medium- term growth target, I am o�en asked what role M&A plays in achieving our mid-term ambi�on? Implied in this ques�on is whether we will buy our way to this EBIT target. The answer is, that we have specifically stated that earnings from any acquisi�on over $50m would be addi�onal to the target as well as saying ROIC must con�nuously improve. We see M&A as being appropriate where it is an accelerator of our Blueprint 2030 strategy (in the way that GRL accelerated our organics strategy in NSW) or alterna�vely we see M&A as an op�on where the asset is hard to replicate organically.

SLIDE 6 - Opera�onal excellence: Driving margin expansion

Turning now to look at those ini�a�ves we are undertaking to drive margin expansion, which we collec�vely refer to as our Opera�onal Excellence bucket.

Pleasingly our three Restora�on ini�a�ves across Health Services, QLD Solids and labour are on-track to realise their FY26 EBIT target of $50m.

Moving down the slide - you can see six Opera�onal Efficiency ini�a�ves which collec�vely we expect to deliver at least $50m in EBIT by FY26.

These ini�a�ves, all colour coded white on the slide, are anchored in their objec�ve of improving the profitability of our business by: enabling our branches and customer facing teams, improving decision making at all levels by making by using our data, improving our fleet performance and delivering new EBIT by mone�sing landfill gas as well as seeding our growth vectors of tomorrow that combine our current capabili�es in a new offering such Decomissioning Services.

Importantly, it is these efficiency ini�a�ves that we see as driving our EBIT north of $450m in FY26 and will take us towards our ambi�ous but achievable Mission 500 stretch target of $500m EBIT in FY26.

Having spent quite some �me focusing on the Restora�on ini�a�ves back at our first-half results in February, today I want to spend some �me sharing some insights on our Branch Op�misa�on work, CustomerConnect program and our Fleet Transforma�on strategy.

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

SLIDE 7 - Upli�ing the average EBIT margin of our branch network

Star�ng with Branch Op�misa�on.

Our EBIT results are the sum of the combined efforts of our 330 plus branches and our 7,700 strong team, spread right across Australia. We believe that we can op�mise the performance of all these branches to li� our overall EBIT in 4 ways:

• First, we iden�fy those branches that are delivering poor results - those that are below the average for similar business ac�vi�es
• Then, we apply focused and high-cadence support to improve performance - through one of three approaches:
  o a business-led structured Profit Improvement Plan; or
  o sending in our SWOT team who u�lise a proven structured approach to unpicking the P&L, iden�fying opportuni�es, and delivering improvements quickly; or
  o if the underlying performance issues can be best addressed through applying Lean principles (for example, turnaround �mes at our transfer sta�ons), we send in our Lean experts
• At the same �me, we work on li�ing underlying performance of the en�re business - we call this 'li�ing the �de', and we do this in two ways:
  o One is our Business Teams. In our SWS business, we are organised by State. This enables us to leverage our en�re network of strategic infrastructure assets to capture margins along the value chain and deliver a solu�on to customers. Our Business Teams are 'virtual teams' made up of handpicked leaders from within the same lines of business - to form for example a C&I Collec�ons Business team or a
  Landfill Business team. Their role is to iden�fy best prac�ce within the segment and implement it across the network for example the Landfill Business team has been working on improving compac�on density with good success.
  o The other is our Opera�ng Model. We are part way through installing a full opera�ng model shi� that ensures we have the right structures, leadership capability, culture, and cadence to drive superior performance. When we're done, every single person and team at Cleanaway will know the value driver they're responsible for delivering on; they'll know how they're tracking in real �me; and, they'll feel a real sense of

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

ownership. Leaders at all levels will see how those combined efforts are impac�ng results daily and weekly, and will be able to intervene with support where needed. When the team meet their gamified targets they celebrate this success as a team, which can o�en be something as simple as a pizza lunch for the team.

• Finally, we have several key strategic programmes of work, like CustomerConnect, Data and Analy�cs, and our new Fleet Strategy which are managed centrally and designed to deliver improved performance across the Group, and which we'll discuss next.

SLIDE 8 - Digi�sing our call to cash cycle with CustomerConnect

I am pleased to report our CustomerConnect project is on schedule and within budget. Forecast medium-term benefits are in-line with our business case shared with you back in November 2022, with expected annual EBIT contribu�on greater than $13m star�ng from FY27.

The total cost remains approximately $100m and is divided, 60:40 between upgrading our IT systems and addi�onal IT growth func�onality. Addi�onally, since so�ware costs must be expensed, in our results, these costs will be taken below the line as previously communicated.

Release 1 will be completed by the end of this financial year. It will modernise our core ERP and Customer Rela�onship systems se�ng the founda�ons for enhanced customer experience, efficiency and commercial benefits. Specifically, it will provide a unified view of the customer across the organisa�on, resul�ng in improved customer interac�ons. This will enable faster responses to complaints, service issues and disputes. Commercially we will see quicker sales response, enhanced cross selling and improved credit control.

Release 2 will be completed by March 26 and focuses on deploying an off-the-shelf fulfillment and service system, which is specifically designed for the waste industry. Widely used in Europe and the US it will deliver produc�vity and revenue gains. New func�onality will include digi�sed run sheets and real �me service status for our customers - which we don't have today. Given Cleanaway completes 1.7m services per month for our C&I customers, this will be transforma�ve. It also includes a new customer service portal, for self-service by our SME customers.

When all this comes together, from a customer experience perspec�ve, First Call Resolu�on will move from 30% today to 70%. Our customer service teams will be able to focus more on value adding ac�vi�es given the removal of significant, �me-consuming admin tasks.

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

SLIDE 9 - Transforming how we manage our fleet

I would now like to introduce you to our Fleet Transforma�on program.

With over 3,600 heavy vehicles we have one of the largest owned heavy vehicle fleets in Australia. We also own over;

• 1100 pieces of yellow gear
• 800 trailers and
• 780 light vehicles

We maintain this Fleet by opera�ng around 30 large workshops across Australia stretching from the Pilbara in Northwest WA to Dandenong in Victoria.

Through the progress of our Blueprint2030 strategy to date and the restora�on of the business, we've arrived at a point where we're able to now focus on the commercial opportuni�es within our Fleet.

In prac�cal terms, this means we are expanding our Fleet focus beyond our commitment to ensuring a safe and compliant fleet to now include op�mising it's running and capital costs. This focus will lead to lower costs and a more efficient use of capital, resul�ng in improved EBIT and increasing returns.

We are doing this through a wholis�c and comprehensive, mul�-year strategy that will transform the fleet, how we manage it on a day-to-day basis, as well as the life of each vehicle. One of the key programs of work we are looking at is a transforma�on of our exis�ng ownership model.

Historically, the Cleanaway mindset was that we needed to own our Fleet. But, as we look ahead, the R&M spend to maintain this fleet and the capital cost to replenish it increases significantly, impac�ng our EBIT and becoming a drag on our ROIC. In-line with our new capital alloca�on framework, we'll look to reduce the ownership costs where it makes sense, such as in linehaul or logis�cs type movements and employ capital-lite solu�ons such as third-party owners or customer-ownership models.

Each program of work within our Fleet strategy is being �ed to clear financial metrics which we are developing, but as our largest asset class, and at this stage of our Fleet Transforma�on journey - we can see the work we do here will be a meaningful lever to manage our capex spend, and drive EBIT.

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

SLIDE 10 - Capex alloca�on

Which leads me the next slide discussing a capex update and specifically, that we are targe�ng a $50m per annum reduc�on in our maintenance capital spend from FY25.

This reduc�on is the aggregated benefit arising from ac�ons taken in response to various catalysts realised through the execu�on of our Blueprint2030 strategy.

Specifically, the company-wide transi�on from EBITDA to EBIT, and our enhanced focus on capital discipline, is leading to our SBU management teams sharpening their focus on asset performance, which includes exploring capital-lite alterna�ves where appropriate. In addi�on, our returns focus led to the crea�on and implementa�on of our centralised capital alloca�on framework which is reducing project risks, and enhancing project management.

In addi�on, we are seeing the benefit of our Data & Analy�cs capabili�es driving beter analysis and delivering greater insights - as evidenced in the Fleet Transforma�on strategy. These D&A driven insights have been pivotal in unlocking the opportuni�es to asset pool, improve capex alloca�on and consider capital-lite ini�a�ves, par�cularly in rela�on to fleet ownership.

SLIDE 11 - Energy-from-Waste is part of Australia's waste future

Our commitment to op�mising our capital and shareholder returns is evident in our Energy-from- Waste (EfW) approach.

EfW will play a cri�cal role in enabling society to meet the Federal and State Government's landfill diversion targets of 80% by 2030.

We have customers, both councils and C&I who are demanding waste disposal solu�ons that are more environmentally friendly than landfill. If you then consider that the NSW and Victorian State Governments are on record as saying that there will be no new putrescible landfill sites in the Sydney Basin or Melbourne metro areas - this all leads to EfW being an important part of our future cri�cal waste infrastructure landscape for those waste streams with no recycling alterna�ves.

Given NSW's stance that there will be no more putrescible landfill sites in the Sydney basin, we think EfW is needed in NSW in the early 2030s. Posi�vely, and as we've said before, the landfill levy and resul�ng gate fees in NSW results in economics suppor�ng EfW toda

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

Turning to Victoria. Un�l lunch�me today, I was going to say the lower landfill levies means that the EfW economics are currently challenging at current gate rates. However, this changed at lunch�me today with the announcement of landfill levies increasing from $129 per tonne, currently to $170 per tonne from 1 July 2025. This brings it in line with NSW and will make customers indifferent between EfW and landfill. We already observe that some councils prefer the environmental outcomes from disposing at EfW regardless of the current price premium. The landfill levy increases will significantly grow the available feedstock to fill EfW plants in Victoria.

SLIDE - 12 As Australia's largest waste company, EfW is part of our future

With EfW coming and with economics evolving, as Cleanaway we need to be ready. And to be ready, we need to have progressed the long lead �me work required to complete the various elements that must come together before reaching an EfW plant's Final Investment Decision, or FID.

In terms of when that might be, even if everything went our way, without delay, FID in either Victoria or NSW is a minimum of two years away.

As we've been pursuing our capital-lite approach, we are uniquely posi�oned to bring an EfW project together and take the role of an originator of these projects.

Cri�cally, as Australia's largest waste company we can de-risk an EfW project unlike a financial sponsor or an industrial company trying their hand at EfW.

Central to this de-risking, is that we have the waste supply, so we can fill a facility to nameplate capacity. We have the landfills, enabling us to manage the schedule risk for customers who want to transi�on to EfW but would also like the op�on to dispose of their putrescible waste at a landfill if necessary. We already have the rela�onships with councils who are already seeking EfW as an op�on, and for the environmental regulators, we are a known and proven operator in the waste sector, where our environmental performance is cri�cal to our long-term licence to operate.

What we do know now is we do not need to be 100% owners of these assets, and just because we are the originator, it does not mean we are the ul�mate owner of the facility.

Importantly, being an originator allows us to be at the table to secure low-cost,long-term access to the facility for our customers. It also allows us to maintain the op�on to decide at a later date what the right level of ownership for CWY and our shareholders will be when the EfW landscape and

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia

Speaker Notes

7 May 2024

project risks are well understood. In turn enabling an informed decision with the right informa�on to reduce the risk and maximise the value related to the move into EfW for shareholders.

SLIDE 13 - Posi�oned to deliver growth

Turning now to my last slide.

We are well posi�oned to deliver atrac�ve returns to shareholders this year, next year, and in FY26 and beyond.

We are maintaining our FY24 EBIT guidance at approximately $350 million. Due to beter landfill management, par�cularly improved compac�on and mix benefits, forecast D&A expense is now $360 to $370 million, compared to previous guidance of $370 to $390 million.

Interest expense is expected to be $117 million, and our GHG emission reduc�on efforts remain on track, aligning with our customers' aspira�ons.

We are on track to deliver double-digit EPS compound annual growth in the next two financial years, as our strategic momentum drives us towards our Blueprint 2030 mid-term ambi�on of over $450 million in EBIT in FY26, while also steadily improving our return on invested capital (ROIC).

Over the next two years, we will remain focused on the con�nued execu�on of our opera�onal efficiency ini�a�ves, such as Fleet Transforma�on. We are commited to op�mising our capex spend, as evidenced by today's announced $50m per annum reduc�on in maintenance capex from FY25; and we are expanding our growth pla�orm by introducing new services, including FOGO in NSW, CDS in Victoria, and Decommissioning Services na�onwide.

And finally, as you've heard today, it's not just about 2026. CWY's Blueprint 2030 strategy is also about strategically posi�oning the company to achieve sustainable long-term growth beyond FY26. Our opera�onal excellence transforma�on will create best-in-class performance and repor�ng for customers. Add our capability to meet their increasing demands for end-to-end,mul�-stream, at- scale waste solu�ons with our pipeline of strategic infrastructure growth - and we have an atrac�ve, hard to replicate customer offering in an environment where the tailwinds of suppor�ve regula�on and increasing societal demands will further drive demand for our services.

With that, I will open for ques�ons.

Cleanaway Waste Management Limited	Registered Office:	P [phone]	cleanaway.com.au
ABN 74 101 155 220	Level 4, 441 St Kilda Road,	F [phone]
	Melbourne VIC 3004
	Australia