Transurban FY24 Earnings Call Highlights

Transurban (ASX: TCL) reported a mixed FY24 result as cost cutting efforts helped deliver an earnings beat, offset by slightly softer-than-expected traffic trends.

FY24 Earnings Highlights

• Toll revenue up 6.7% to $3.53bn vs. $3.86bn consensus (8.5% miss)

• EBITDA up 7.5% to $2.63bn vs. $2.51bn consensus (5.2% beat)

• Free cash flow up 15% to $1.95bn , in-line with consensus $1.95bn

• FY24 average daily trips of 2.5 million vs. 2.4 million in FY24

• Full-year dividend up 7.0% to 62 cents per share

• FY25 dividend guidance of 65 cents per share

Earnings Call Highlights

Financial performance: "We've delivered strong free cash generation, driving distribution growth of 7%. Revenue is up almost 7%, and traffic has grown in each market. Importantly, we've been very disciplined on costs, outperforming our guidance and improving margins." – CEO Michelle Jablko

Dividend: "In FY25, distribution growth is forecast to be a further 5% ... we expect underlying free cash coverage within that range of 95% to 105%. And that will be subject to things like traffic performance and macroeconomic factors."

Australian traffic: "This year, traffic has increased across all markets with an average of 2.5 million trips made on our roads every day ... Despite what we're seeing play out in the broader economy, our Australian traffic is holding up relatively well, with impacts very much at the margins." – CEO Michelle Jablko

North American traffic: "We also saw North American traffic return strongly this year. This was driven by strong economic activity in the Greater Washington region, and the opening of our Fredericksburg Extension project." – CEO Michelle Jablko

Project pipeline: "Right now, we have the West Gate Tunnel project, the Northern Extension project and the M7-M12 project all set to open in the next year or two ... Today, we have over AUD 12 billion of projects well underway, while we're actively evaluating others." – CEO Michelle Jablko

Analyst Q&A Highlights

Macquarie analyst Ian Myles said the quarterly traffic numbers "don't look particularly exciting at this point in time" and asked what is impacting growth in traffic: "There is a bit of a watch point on commercial traffic, as Michelle said, because it has been weaker in some spots, and we're looking at data like those housing and construction numbers, they have been offset." – CFO Henry Byrne

UBS analyst Andre Fromyhr asked the company's FY25 dividend guidance of 65 cents per share and how it relates to the payout range of free cash flow: we aren't going to guide specifically within the range. It will clearly be within the 95% to 105%. And then exactly where we land will be dependent on some of the factors that we're working on exactly where the traffic numbers land for the year, where we get to on the cost outcome." – CFO Henry Byrne

Citi analyst Suraj Nabarhani asked if they expect any incremental negative traffic impacts in FY25: "Melbourne will abate, as I said earlier, just tied to the profile of the Westgate Tunnel project completion. Sydney's sort of major projects agenda still has a couple of years to run. So we probably will see, slightly greater impact from construction as we look out through FY25." – CFO Henry Byrne

This article was generated with the support of AI and reviewed by an editor.