Good day, and thank you for standing by, and welcome to the Immuco Holdings FY 'twenty one Full Year Results Briefing. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded. I will now hand the conference over to your first speaker today, Mr.
Ian Testrow, Managing Director and CEO for Emeco Holdings. Thank you. Please go ahead.
Thank you very much. Good morning, everyone, and thank you for dialing into our FY 'twenty one results briefing. With me today, I have Neil Southey, our CFO Tau Pham, Chief Strategy Officer Steve DeSteigen, the CEO of BitImport, Andrew Taylor, our Financial Controller and Sam Byford, our Manager of Investor Relations. We'll start off by turning to Slide number 1. I'd like to thank the Emeco team for another year of hard work, particularly in the challenging and uncertain circumstances.
I'm very proud of the efforts that the team has made in FY 'twenty one. It's been a busy year where we have successfully managed through the volatility and seen the benefits of our diversification strategy reflected in our results. FY 2021 was the year that we delivered solid financial results and excellent cash flow, restructured all of our legacy U. S. Debt, which we thank our supportive shareholders and welcome our new Aussie dollar noteholders and announced and delivered on our capital management policy.
And it was a year where we continue to develop and deliver on our strategic goals, which I'll talk about throughout this presentation. On Slide number, we're incredibly proud that with our workforce of over 1100 people, our recordable injury rate is reduced to 2.1 down from 2.9 last year. As we continue to target 0 harm across Aimico, it is great to see that we also remain lost time injury free throughout FY 2021. Operating EBITDA was $238,000,000 and that was at the upper end of the guidance we provided in April. This reflects the stabilized performance in the Eastern region, continued excellent growth in the West and good contribution from pit and portal, albeit somewhat impacted by some operational challenges that are now resolved.
Strong free cash flow of $87,000,000 is an excellent result funding growth and capital management. Our return on capital is dipped due to the impact of lower earnings and higher capital following the Pitt and Portal acquisition, but this will increase into FY 2022 and onwards as in April. The refinance of our legacy U. S. Notes in June was a real milestone for us.
Great support from investors and significantly improved rate and extended maturity. This both simplifies our capital structure and lowers our cost of capital and I think it validates the work we've been doing to build a resilient and diverse business. The cumulative benefit of our debt restructure in FY 2021 means that in FY 2022 interest expense will be down 64% on FY 2020, a saving of $28 per annum. We also continue to diversify our commodity exposure with gold and base metals revenue now at 62% of group revenue, up from 42% in FY 2020. Gold is now up as commodity exposure.
Services related revenue has also continued to grow, now at 72%, up from 62% in FY 2020, which as you know is
a key strategic objective as
we widen the value proposition to our customers. The Board has announced an inaugural capital management package of 35% of second half operating impact. This is made up of a $0.125 fully franked dividend and a modest on market buyback of around $4,000,000 And so I grew up. We expect growth in all of our operating segments in FY 2022, comfortable with current consensus of FY 2022 operating EBITDA, which is around $262,000,000 We see continued strong growth in the Western region and improving contribution from the East as the businesses stabilize and we pursue projects to put our current idle equipment to work. We're looking for longer term sustainable projects which continue to diversify our commodity base.
Pit and Port will also deliver strong growth as new project commence in the first half with earnings expected to be weighted to the second half as these new projects and existing projects move from development to to production phase. Our net sustaining CapEx is expected to be in the range of $140,000,000 to $150,000,000 This includes asset rebuilds of around $150,000,000 to $120,000,000 You note that we've allocated $25,000,000 to $30,000,000 for asset replacements, which is expected to be around 5% of our fleet value. This ongoing investment ensures that our CapEx profile will remain smooth and predictable with no significant or lumpy CapEx requirements. Obviously, our strong cash flow more than covers this spend. Pitt and Portal has won a couple of new projects, which will require an initial $10,000,000 to $15,000,000 in growth CapEx.
I think it goes without saying that we generate strong free cash flow, are committed to leverage below one times and will return capital to our shareholders in line with our recently implemented capital management policy. We're in a position to review opportunities to deploy our surplus capital into investments that meet our strict return hurdles and further our strategic goals. If no such opportunity to present, we'll consider holding cash and further strengthening our balance sheet. Moving on to Slide 4. As I mentioned, we've reduced our trip by 25% since December, down to 2.1% as in the end of June.
Importantly, we remain lost time injury free for 5 years running. This is a great team effort by workforce of over 1100 people as we continue to target the 0 harm work environment. Our COVID-nineteen systems in process continue to maintain a safe and healthy work environment for our people. This has ensured 0 COVID cases and the continuity of our operations. We continue to invest time and money into our safety programs and technology to proactively manage our safety performance.
Moving on to Slide number 5. Our skilled workforce is our key asset and differentiator. We've been investing a lot of time and resources in their retention and development. You understand the labor pressures in the mining industry at present and we continue to support and develop our people in a really positive way. We've invested significantly in Project Align, which we've rolled out nationally engaging with over 8 60 of 1100 employees and these 8 60 employees have defined and guided our organizational values.
Align is targeted engaging our workforce and long term success of Emica and providing opportunities for our people to develop within the organization, which we know is a key to employee retention. We appointed John Wursold as our Manager of People and Culture in February and he chairs our community engagement committee, which allows us to be more involved in our local communities. Our people have identified a number of causes and community groups to support and we've committed to ongoing involvement with Lifeline and supporting junior sporting organizations. We're also undertaking a detailed sustainability assessment, which will establish our ESG strategy, including long term goals and targets and a pathway to decarbonization. I look forward to presenting our sustainability targets later in FY 'twenty two.
I'd like to now hand over to Neil to cover the group's financial performance.
Thanks, Ian. Good morning, everyone. So Slide 7 shows our FY 'twenty two results. So operating revenue of $620,000,000 comprised the full year of Bettenportal, which contributed $144,000,000 and rental revenue, which was down 6% on last year to $401,000,000 There was good growth in services revenue and strong growth in the West. The decline in the East, which Ian will cover further in the segment slides.
You should note that our presentation today contains restated figures for to reflect the adoption of AASB 16 leases and hence are slightly different from the FY 2020 results pack and that's just to clarify for the prior year results. This allows an accurate financial comparison between years, and as usual, the footnotes have all the details. Operating EBITDA for FY 2021 of 238,000,000 is at the upper end of our guidance and reflects strong growth in the West, up 35 percent to $71,000,000 offset by the decline in earnings from the East by 24 percent to $158,000,000 Pitt and Portal contributed $30,000,000 in its 1st full year in the group. And Force's annual contribution was slightly ahead of last year at $8,100,000 Importantly, group revenue is up 7.4 percent half on half and operating EBITDA is up 2%. Earnings have now troughed.
Conditions are improving in the East and there is continued growth in the West. Tipton Portal's earnings were flat half and half, but as Ian mentioned earlier, momentum is building in all divisions. Our group EBITDA margin is 38%, down slightly on the 39% at the half. But importantly, rental margins actually improved half to half, up from 56.5% to 57.5%. This was however offset by a decline in the half on half margin at Pitten Portal as the new projects ramp up in Duvelmes and due to the temporary impact of some early stage commissioning issues, which Adrien mentioned earlier are now resolved.
A comparison to FY 2020 margins is not reflective of where we have taken the business with our deliberate diversification strategy, which brings broader opportunities, more secure and longer term customer relationships across commodities and with increased services revenue. Operating EBIT of $119,000,000 reflects the increase in depreciation charge of some $4,000,000 for the full year of Piton Portal and explains the proportional decline in EBIT versus EBITDA. Operating NPAT of $57,000,000 was broadly flat with the benefit of lower interest costs incurred as a result of debt reduction and with both FY 2020 and FY 2021 tax affected at 30%. Our return on capital at 17% is down on the half year of 18.7% due to the annualized effect of higher capital employed in Pit and Portal and the decline in EBIT, which we mentioned earlier. This, however, remains comfortably above our cost of capital and we expect this has blossomed and it will improve as earnings improve in FY 2022.
I'll now move on to Slide 8, cash flow. Another strong period of cash conversion of 102% with broadly flat working capital for the year. The chart shows the benefit of the lower interest expense following the half one debt payment. Our net sustaining CapEx of $116,000,000 was in line with our guidance of around $115,000,000 and resulted in free cash flow for growth CapEx of $87,000,000 We also invested $40,000,000 in growth assets, predominantly to support further growth in Pit and Portal. It included the purchase of a package of underground equipment to support its rental operations and ramp up of projects.
This transaction demonstrates a group ability to quickly source assets that support customer growth. And I'm pleased to report that the equipment is quickly input to use at strong returns. I will now hand back to William to touch on the FY 2022 CapEx outlook.
Thanks, Tim. As mentioned earlier, we've been mentioning a stage and smooth investment program into replacing assets over the coming year. On top of our ongoing asset review investment of around $115,000,000 to 120,000,000 we plan to invest approximately $25,000,000 to $30,000,000 in replacing some core fleet over FY 2022. Similar investment in subsequent years is expected as assets reach end of life. This will ensure a smooth and predictable CapEx profile over the coming years that will sustain our fleet and ensure we continue to generate strong returns.
As I noted, the annual spend is around 5% of our current fleet base. We believe that we're the best in the industry at sourcing and rebuilding assets to generate strong returns for our shareholders and this will underpin the replacement program over the coming periods. In terms of growth investment, Pitt and Portal has 2 newly awarded projects commencing in the next few months and this required an additional $10,000,000 to $15,000,000 in growth CapEx. On to Slide 9 and the balance sheet, and I'll hand back to Neil.
Thanks, Ian. Our balance sheet has strengthened significantly at the end of the year, and that's in no small part due to the support of our shareholders. The refinancing announced in June last year, sorry, June this year, which completed earlier this month, combined with repayment of U. S. Notes in August last year will result in annual interest costs reducing by $28,000,000 and as mentioned earlier, a reduction of 64% compared to FY 2020.
Our debt maturity profile has been extended out to 5 years. Our plant and equipment has increased as we invested in growth assets, largely to support Pit and Portal. We have maintained disciplined capital management. Our working capital position is solid. We have low leverage and excellent liquidity with the cash on hand and our undrawn revolving credit facility, which is now extended out to FY 2024.
And I'll now hand back to Ian to discuss the operating segments. Thank you, Neil.
Now on to Slide 9 with the rental dividends. In FY 2021, we took the opportunity to rebalance our fleet across Australia by relocating a substantial amount of fleet from the Eastern region to the Western region. This makes Emekaar healthier business going forward with a more balanced geographical customer and commodity spread. Dollars 229,000,000 of operating EBITDA is a solid result given the COVID related challenges, in particular with the Eastern region coal in the first half of FY 'twenty one. Opportunities in the West created an opportunity to relocate fleet to meet demand.
The business delivered revenue and earnings growth half on half as operating conditions stabilized in the East and the assets we moved
to the West were put to work.
As you can see, operating utilization could decline during the year, but the decision we made to relocate equipment has seen utilization return up to 60% in the 4th quarter. We expect growth in rental in FY 2022. We'll see the full benefit of assets deployed into the West and with continued strong demand in the West, we expect to see solid half on half growth and full year growth. Despite the transfer of assets to the western region in FY 2021, the eastern region will grow over FY22 as we put idle capacity to work with that growth weighted more to the second half. In all, we expect our rental margins to remain broadly consistent year on year as we pursue projects with higher service levels.
On to Slide number 12, The key message for our Eastern rental operations is that performance has stabilized in the second half. The full utilization in the first half has been made up somewhat in the Q4 off the back of new projects in coal and copper. We've effectively transferred $30,000,000 operating earning capacity to the West. We're encouraged by improving coal conditions in the region, where we've been measured in how we approach the deployment of our idle capacity. We want to make sure that we're smart in the way we put equipment to work.
In line with our strategy, we're targeting projects to put idle assets to work in longer tenure, high service projects. We also see opportunities in base metals and gold, which will further diversify our commodity mix. So we expect our growth to be weighted to the second half as we get our equipment to work in our targeted projects. Over to Slide 13. The Western region has had a very strong year, up 34% on FY 2020 supported by projects in gold and iron ore.
The relocated fleet is now fully deployed to meet demand from numerous project wins. Customer engagement is strong and we created 3 new EOS projects, which reflects our drive to deliver value beyond dry rental. Operating utilization increased from 55% to 65% half on half as we place more assets into double shift projects as it's been our plan. Continued strong half on half and full year growth is expected ahead. This is driven by the full year effect of transferred equipment, continued strong demand for our fleet and increasing services with fully maintained double shift work.
We expect margins to increase as utilization continues to improve and given good prospects, we may consider additional growth projects should they meet our strict return hurdles. All in all, the West remains a great story for us.
Now it's my pleasure to
hand over to Steve Versteegan, CEO of Pit and Portal to talk about their 1st full year with Emeco on Slide 14.
Thanks, Ian. Good morning, everyone. I'm pleased to talk about what has been a great year for the Pit and Portal business. At the outset, I want to say that the team and I have been very fortunate to have the support of Ian and the Emeco teams to support our growth, to collaborate and to benefit from the strength of the group. There's been great synergies and it's excellent working together.
Numbers reflect the commencement of the Minkor project to good activity levels in the underground sector as well as strong demand for our underground rental fleet. Pleasingly, we secured our 1st mining surface mining project supported by Emeco Rental and the EOS technology. We've also mobilized and started our 2nd surface project just this month, which will again utilize EOS and Emeco's equipment and maintenance capabilities. As we announced in April, we had some project commissioning issues. This temporarily impacted our profitability that's now on track.
The half on half revenue is up strongly, up nearly 50 percent to $85,000,000 versus the first half of $58,000,000 Operating EBITDA was flat at $15,000,000 which reflects the impact of the issues I just referred to. And also the fact that margins in the development of new projects are typically lower and build as the projects move into production. We invested in growth assets with the recently announced package of underground equipment, which is in strong demand and 4th quarter availability of equipment models, which currently have long lead time from the OEMs. There's also opened up several new customer opportunities. In addition to our existing projects, we also commenced newly awarded project wins in Queensland and WA in the first half of FY 'twenty two.
Looking into FY 'twenty two, we see strong growth as our existing and new projects ramp up. As these projects progress from development production, margins and earnings will increase. You will see evidence of this in the second half of FY 'twenty two with full benefits coming through in FY 'twenty three. Lastly, a word on the labor market, which is topical. This has been a challenge due to COVID and tight water restrictions.
However, we acquired an underground labor hire business last year called Boden Select, which has significantly assisted in recruitment of underground operators to facilitate our growth. Also the group's Project Align and John Wertfeld have both supported employee engagement and retention to mitigate some of the labor tightness we have experienced. The labor situation remains tough, but we believe that the increased recruitment capability, project line initiatives have placed us in a better position than many of our competitors as we practically manage through this. We've also gained some traction on the East Coast and we'll be targeting more projects in the region as we leverage Emeco's East Coast footprint infrastructure networks to continue to pursue both open cut and underground opportunities. Crucially, the labor tightness is not as much of a concern in the East.
Thanks, Dave.
On to Slide 15 and our course workshops. We saw continued growth in earnings in FY 'twenty one supported by good external customer revenue and expanded margins. Our internal rebuild activity was down with sorry, our internal rebuild activity was down with lower Eastern region utilization, but this will rebound in FY 2022 as utilization recovers. Forces increased proportion of Emeco's components. And rebuilds for Emeco by 15% over the last year.
Force continues to be a key differentiator and competitive advantage. Our ability to rebuild equipment provides a cost and quality advantage compared to our competitors. This business provides security supplied to our large fleet and ensures we get great value from every dollar of capital invested. Force has been a driver of achieving historically high return on capital sustainably over the past several years and an ongoing basis. Our workshops provide Emeco and Pit and Portal businesses high quality fleet with a cost advantage.
Force will play a key role in our fleet replacement program as we acquire midlife assets and rebuild them in the workshops. This ensures that smooth capital profile in the coming years. Force recently entered into an agreement to acquire a small WA-one boring business called Borax. This is a vertical expansion of capability and boost our specialized engineering, line boring and machining services as well as light to medium fabrication. This year we expect growth in external work particularly in the East as well as an increase in underground maintenance work for Pitonport.
I've included Slide 17 to reiterate our strategy which you should all be familiar with. I'll just skim over that and go to Slide 18. I'm really proud that as we've navigated through an eventful year in the business, we made great progress on executing on our strategic plan. We've covered our balance sheet in some detail and a healthy balance sheet and capital structure supports our ongoing growth. We continue to be disciplined in capital allocation and ensure we maintain our strong balance sheet.
The lowest cost and highest quality focus is in the core of the Amico business. It's in our DNA. This is our key strategic advantage and differentiates us from our competitors. We strive every day to deliver this to our customers. We continue to widen the value proposition with newly fully maintained rental wins, increasing the implementation of EOS with 3 new EOS projects and work with Pitman Portal to win new long tenure projects.
And we continue to diversify our business through asset redeployments, new project wins and greater geographic and commodity spread. Finally, to wrap up on Slide 19, we'll focus on our initiatives and areas of focus for the coming year. We still have idle equipment, which we'll put to work, targeting strategically in line projects and customers further diversifying our commodity mix and exposure in the East. We'll create more Eos, fully maintain double ship projects in the West and support the growth of Pit and Portal as they progress projects from development production phase and continue to win more work. We'll continue to leverage the capability of Force in providing our customers a retail maintenance solution and to provide us with quality and the cost advantage to our Emeco and pit and portal operations.
And we'll commence our fleet replacement program with modest and disciplined CapEx using the expertise of force. Our strategy to build long term sustainable shareholder value will be supported by the strong cash flows we generate going forward. We are guided by our capital management policy and committing to keeping leverage below 1x EBITDA. With our surplus capital, we will continue to review opportunities to deploy into investments either organically or through M and A. All investments will meet our strict return hurdles and target accelerating our strategic goals, widening our value proposition to embed ourselves onto our customer projects and to diversify our business and commodity mix.
Our growth strategy is to build long term sustainable value for our shareholders. If no such opportunities present, we will consider holding the cash to further strengthen our balance sheet. Thank you moderator. Can you please open up the call for Q and A?
Thank you. Your first question today comes from the line of Jacob Kakadis from Jarden. Please go ahead.
Good morning, Ian. Good morning, Neil. I just wanted to ask a question just on Eastern rental utilization just to start. So you mentioned that that was up to 60% in the Q4 of 2019. Do you think that that's the right rate of utilization to extrapolate into FY 'twenty two?
And then the second part of that question, can you just let us know where utilization got to at the peak of last cycle if it's comparable?
Yes. Chris, on the Eastern region, so 60% utilization, I would continue that through the first half. I think that would be a good assumption and then I would have that utilization building into the second half. Our peak utilization was around high 60s in the Eastern region. Towards 70.
Yes, in the Eastern region. And I think we'll build back towards that into FY 2023. So in summary, 60% in the first half, building towards mid-60s into the second half and into high 60s in FY 2023.
Thanks for that. And then just pivoting to the West Coast, it looks like a good result there, especially for the second half. Can you just talk to some of the competitive dynamics in that market and whether or not there is further upside to utilization as you guys ramp up double shift there
please? Yes, happy to. We're feeling really good about the Western region business. Our team has done a fantastic job in creating fully maintained projects. And I think that combination of our skilled workforce and our EOS technology really differentiates us in the market.
So I feel very, very good about building both the utilization in the Western region and our margins going forward. I also feel good about the Pit and Portal businesses ability to win further open pit operations. We commenced a second open pit project with Pit and Portal in August, another EOS project And I think the combination of the work that our Emeco team are doing plus Picking Portals capability will certainly assist us in our objective for building more fully maintained double ship projects in the West supported by EOS.
Awesome. One final one for me. Just to focus on free cash generation and the capital management mix that you've announced today. Am I right in thinking moving forward, it's going to be much more weighted to an ordinary dividend payment rather than including on market buybacks or is there any additional light you can shed on that please?
Yes. Look, there's obviously a Board decision and the Board will carefully consider capital allocation on a half by half basis. I'm really proud of Emeco. This is our first capital allocation since 2013. So it's a real milestone for us on top of our refinance.
As you know we announced capital allocation of 25% to 40% of operating impact. So for the Board to allocate 35% really is at the top end of that range and shows the confidence that they have in the business and our cash generation going forward.
Thanks guys. Appreciate you taking the questions.
And your next question today comes from the line of Trent Barnett from Uros. Please go ahead.
Hi. You probably sort of answered the question already. I'm just wondering, it sounds like every division has got a much stronger second half. Just wondering on a group basis sort of what sort of split we're expecting for the second half?
So this is you're talking FY 'twenty. Hi, Trent. How are you, man?
Hi. Hi. FY 'twenty two, so we sort of got the guidance in line with consensus, which is fine, just when we got every division going to be much stronger in the second half. Is that sort of like a 55, 45 split second half or maybe stronger in the second half?
Chad, I might just give you a high level overview on the answer. But from an operating perspective, I think you consider force consistent half on half. The Western region will be fairly consistent half on half with ongoing growth. The Eastern region, I think you should consider growth to be weighted to the second half and pit and portal business as we get through the development phase and get those projects into the production phase will be weighted to the second half. I'll see you, Sam.
Yes. Just Ann pretty much got what I was going to say, but I guess strong growth in the West this first half. We expect growth in Q1 first half and second half probably heavy weighted to the second half and then more second half weighted. But at a group level, if you go half on half on half, we'd expect pretty constant growth rates across the board to get up to that consensus guidance number we built to.
Okay. Okay. Thank you.
And your next question today comes from the line of Mitch Sonneker from Macquarie. Please go ahead.
Hey, good morning guys. Thanks for taking the question. Good result from Pit and Portal. I guess just thinking about that, am I able to give us any sensitivity about what the annualized revenue the current contract book is when fully ramped up and maybe what you'd expect is an acceptable margin range you'd hope to achieve in that steady state? Thank you.
Hi, Mitch. It's Sam here. I guess, we see if you see the revenue, we'd expect further pretty strong growth at the top line coming in FY 'twenty two. In terms of margins, I think the steady state margin when it's at development is probably still in that 20% range. But I guess the first half is maybe in line with the second half of twenty twenty one and then building up into calendar twenty twenty two as it hits production.
Yes, okay. Great.
The first half is still very much in development. So this is new projects and existing. And then as we enter the 2nd half year into production and you really see the benefits of that in the same in calendar 2022 into FY 2023.
Yes, great. And maybe just a broader comment on the tendering environment out there and I guess where you're seeing the opportunities and in what commodities and in terms of maybe just touching on state by state, is WA a bit harder to ramp up different things like pit and portal due to labor constraints, especially with different borders being locked down? Yes, any sort of broader thoughts there would be great.
I'll give a high level view and then I'll hand to Steve. So tendering opportunities, they're very strong for us in the West. Demand is strong both through Pitt and Porter and the Emeco business. We are encouraged by the uptick in coal in the Eastern region and that is creating opportunities for us to place our idle equipment. But we're also encouraged by some metals opportunities that we're exploring and tendering on in the Eastern region at the moment.
I think it's fair to say with the Pit and Portal business back ourselves seem to have I think a competitive advantage in regard to recruiting with the Bowden Select acquisition that you did, Steve. But I think we mentioned in the slide that if we could pick up further projects in the East we've been in Portland, that would also be preferable given the hard WA orders. Steve, did you want to add to that?
Yes, look, I'd agree. Obviously, the opportunity here in WA remains very strong, especially in the gold and nickel iron ore sectors. The labor is tighter though. I think the Pit and Paul as a business obviously coming into the Emeco Group being able to leverage their great infrastructure and relationships on the East Coast is probably an exciting opportunity for us. We're seeing a lot of good right movement in the base metals, particularly in North Queensland, Central New South Wales.
So I think that will and probably stop the labor markets over there. So I think we'll be probably waiting some of our focus on those areas to try and leverage the existing infrastructure and probably a softer labor market.
Excellent. Thanks, guys. That's all for me.
And your next question today comes from the line of Michael Appendal from Jefferies. Please go ahead.
Thanks, Jay, Ian, Neil and team, a few for me. So met coal and thermal coal increased very significantly recently. Has that changed conversations with customers yet and you've seen that translate into higher minimums or rates increasing?
Hi, Michael. Yes, look, it's definitely encouraging increase in thermal coal price particular and met coal price as well. And our guys on the girls on the East Coast are doing a good job. We are being focused on the East Coast putting our idle equipment to work. We do have idle capacity on the East Coast.
So we are targeting projects specific to that fleet and we're also looking at broadening our commodity diversification on the East guys. But yes, we're encouraged by coal prices. I think there's still a little bit of a sense of is this sustainable from our customer base in regard to those prices. But overall, we're hearing pretty good about things.
Okay. And it sounds a little bit like you might put some of that idle equipment into metals rather than coal. I mean, if you don't put that equipment into coal, will there be an unmet demand there and how do you see that being filled?
So we'd be that selective, Michael. I think putting our idle fleet to work in projects that are long term supported by our services is our absolute focus. But we're seeing opportunities both in gold and in metals at the moment in the East Coast and the team working hard to build us.
Okay. Maybe just a bit more of a broader one. How are you seeing kind of the supply and demand for equipment
on the
East Coast in 2022 and 2023? Is there a requirement for another provider to increase their supply as well?
It's been similar to us for quite some time now. We did see a wave of equipment coming into the country around that sort of 11, 12, 13 period. Then we can see a downturn which took up all that surplus capacity. Since then, we really have seen a very strong disciplined view from our customers in regard to CapEx and acquisition of fleet. So the equipment tightness in the market remains from our perspective.
So yes, we talk about our business and where we're positioned.
Okay, great. And then maybe just the last one for me and how you see the kind of the supply demand for equipment in the West Coast as well. Iron ore and gold prices are up very strongly now. Are you seeing the need for more equipment to come into the market in the West Coast?
Demand is good for us in the West. There's no doubt about that. And I think you'll see an increase in our margins as our utilization increases in the West and we further our progression from single shift to double shift projects.
Okay, great. Thanks. There's no more questions. Moderator, we can wrap up.
There are no further questions there. Please go ahead.
I'd like to thank everyone for their time and I especially like to thank the Emeco team for all their hard work in FY 'twenty one and great to have the Pete and Paul team on board for full year. Thanks.
Thank you.
Thank you. That does