Key Strengths
A market leader, with established brands, significant scale and geographic reach, which create high barriers
to entry
Waco is an established market leader in forming, shoring and scaffolding (FSS) and portable sanitation (PS) in South
Africa and in access scaffolding in Australasia, and it has the second largest relocatable modular building (R&MB) hire
fleet in South Africa.
It also has a niche position in R&MB in the United Kingdom and a small but growing share of South
Africa’s integrated hygiene services (HIS) market. Waco offers its products and services through well-established
brand names in each of the markets in which it operates, including Form-Scaff, SGB-Cape, Sanitech, Abacus Space
Solutions and SkyJacks in South Africa, Premier in the United Kingdom, Kwikform in Australia and APL Kwikform and
United Scaffolding in New Zealand, all of which enjoy significant brand recognition and market reputation in the
industries in which they operate.
Waco’s market presence and the scale and geographic reach of its operations give it a clear advantage relative to
smaller, local competitors. Waco’s geographic network spans over 100 branches located throughout South Africa,
other sub-Saharan Africa, Australasia and the United Kingdom from which it serves longstanding, established
customers in key sectors. The strategic positioning of the Group’s branches, in close proximity to its customers, allows
Waco to serve its customers more efficiently and at a lower cost, which is a significant competitive advantage. In
certain locations, Waco’s business units share branches allowing for significant cross-selling and cost-reduction
opportunities.
In addition to providing a platform for growth, the scale of Waco’s hire fleet combined with its extensive branch network
create a high barrier to entry for potential entrants into the markets in which the Group operates as such entrants
would need to make significant capital investment in both hire fleet and property before being able to compete with the
Group for major projects.
Diversified equipment hire and industrial services business model
Waco’s equipment hire and industrial services business is diversified across products, geographies and end markets,
supporting reduced earnings volatility through economic cycles. The Group provides FSS, R&MB and PS products to
over 14,000 customers in a broad range of sectors across its five principal geographies, with significant exposure to
“blue chip” multinational and national companies in South Africa and Australasia and government-related organisations
in the United Kingdom.
Its business model is scalable and flexible, affording Waco the ability within its FSS product offering to move its hire
fleet between geographies in response to demand in order to maximise returns. Diversification across geographies,
industries and clients enables the Group to be flexible and responsive to market opportunities across the geographies
in which it operates, to balance businesses that are cyclical and to benefit from a presence in geographies that are
exposed to different economic cycles. Waco’s hire and services business model also provides it with growing and
predictable cash flows underpinned by low risk, long-term contracts, as well as an asset base with a long lifespan,
which generates attractive returns on capital.
Successful track record of profitable growth
For the three financial years ended 30 June 2015, Waco achieved Adjusted EBITDA growth at a compound annual
growth rate of 39% and its Adjusted EBITDA margin increased from 13% in the 2013 financial year to 17% in the 2015
financial year, resulting in better operating cash flows over the same period.
Waco’s ability to adjust its capital expenditure to address market demand and new customer orders, its focus on
minimum profitability standards at its branches, and its ability to share its fixed cost base across the business, in
combination with other cost-managing initiatives, have been key drivers of the growth in income and profitability, and
have supported an increase in RONAM from 17% to 27% over the last three financial years.
Established and experienced management team committed to continued growth
Waco’s senior and operational management have extensive industry experience and a proven track record of
successfully leading numerous organic and acquisitive growth initiatives, both locally and internationally.
Waco’s Chief Executive Officer, Stephen Goodburn, has been at Waco for over 25 years, and its Chief Financial
Officer, Eben le Roux, for over 11 years, with many other senior management and operational management members
also having been at the business for over 10 years. During the 2015 financial year, Stephen and Eben worked closely
with the rest of senior and operational management in order to continue to execute Waco’s growth plan, successfully
expanding its operations in sub-Saharan Africa and building on the growth achieved in the 2014 financial year.
All members of senior and operational management benefit from well-established remuneration programmes that aim
to maximise performance across the business.
Significant operational advantages
The Group’s operations benefit from significant advantages over its competitors as a result of its business model.
These include the scale and strategic positioning of its branch network, successful track record of innovation, active
management of its hire fleet and standardisation and flexibility across its product range.
Extensive branch network
Waco maintains over 100 branches across the geographies in which it operates and has opened 18 new branches in
the past three financial years. Waco’s business units share the use of branches in certain locations, which facilitates
the expansion of businesses in geographies where Waco already has an existing branch network.
Successful track record of innovation and growth
Waco has a proven ability to innovate in order to capture new business opportunities and revenue streams. Innovation
at Waco is encouraged and supported by a culture of growth. Examples of recent innovative products include
EzeeSpace, a technologically advanced modular building product, Steam Clean Toilets for use in underground mining
operations and Tifa Flex, a circular formwork system for application on rounded surfaces. Waco also recently
developed portable waste water treatment plants, which are intended to respond to Africa’s increasing water shortage,
reduce transportation costs and create new revenue opportunities.
Active management of hire fleet
A key differentiator of Waco is the scale and diversity of its hire fleet, which is spread across a range of geographies.
This enables it to move skilled personnel and equipment efficiently between businesses, markets and locations in
order to respond to favourable market conditions, and thereby achieve optimal returns.
Standardisation and flexibility of product range
Waco focuses on maintaining a standardised, yet versatile, product range which can be modified to meet specific
customer requirements.
Well-positioned to capitalise on established and future growth markets
As a result of the strengths highlighted above, Senior Management believes that Waco is well-positioned to capture
significant growth opportunities across its geographies. Established markets, including South Africa, where growth is
planned in areas such as infrastructure and sanitation, and Australia, which is experiencing recovery in the commercial
and high-rise residential markets, represent significant opportunities for the Group. Similarly, the Group is well placed
to capitalise on the growth in sub-Saharan Africa, where infrastructure spend is forecasted to be approximately $360
million, and in New Zealand, which has experienced growth resulting from increased demand for housing and from
the rebuilding of the city of Christchurch.