The Emeco Holdings Limited (ASX: EHL) share price will be on watch this morning as the company holds its 2019 Investor Day.
How has Emeco performed this year?
Back in August, the Emeco share price plummeted lower after the release of its FY19 results.
However, the Aussie mining equipment group's headline numbers paint a picture of a strong FY19 with operating earnings before interest, tax, depreciation and amortisation (EBITDA) climbing 40% higher to $214.0 million. Operating EBITDA margins rocketed 590 basis points (bps) to 46.1% while operating EBIT came in 51% higher at $125.4 million.
Operating net profit after tax (NPAT) more than doubled to $63.2 million while free cash flow (pre-growth capex) was 16% higher at $90.1 million.
The Emeco share price has edged higher in 2019 but failed to post any serious gains this year.
Strong cash flow and a focus on debt reduction reduced Emeco's net leverage to below 2.0x one year ahead of schedule.
The group invested $85.1 million in growth assets in FY19, which are expected to deliver $25 million in EBITDA in FY20.
What about Emeco's FY20 outlook?
The company has presented a strong growth outlook for FY20.
First half operating EBITDA guidance is up 15% to 17% on 1H 2019 numbers. Emeco is expecting operating EBITDA of between $118 million to $120 million with further growth expected in 2H 2020.
The Aussie equipment supplier reported strong demand in the Eastern Region, particularly in metallurgical coal.
Thermal coal is continuing to perform this year, while the company's Western Region operations are building up.
The strong capital management in FY19 is set to stay a focus for management this year.
Emeco is looking to generate further strong free cash flows and reduce net leverage to 1.5x by 30 June 2020 and 1.0x by 30 June 2021.
Foolish takeaway
The Emeco share price will be worth watching in early trade following the solid FY20 outlook presented by management.
The Emeco share price is up just 2.99% so far this year, which is significantly under the S&P/ASX 200 (INDEXASX: XJO).
The company's shares are trading at 18.5x earnings with a market cap of $669 million.
