The Bingo Industries Ltd (ASX: BIN) share price was dumped 6.3% lower after investors got a look at the FY19 result.
Bingo Industries is a waste management business, it provides residential and commercial waste services, recycling services and bin manufacturing. It started in 2005 when the Tartak family purchased a small skip bin business.
Bingo’s Share Price Dumped
Bingo reported that its net revenue grew by 32% to $402.2 million in the year to 30 June 2019.
Collections revenue rose by 20.7% to $213.5 million, which was helped by a full year contribution of the Victorian business and a part year contribution from Dial A Dump.
Post-collections revenue rose by 41.3% to $243.8 million and now represents 63% of total EBITDA, reflecting the repositioning of the business (click here to learn what EBITDA means). High barriers to entry insulated this business’ EBITDA margin, despite several sites being offline for development during the year.
The waste business managed to grow total EBITDA by 13.2% to $106.1 million, although the EBITDA margin actually declined by 4.4% to 26.4%.
Underlying net profit rose by 22.2% to $58.9 million but statutory profit declined by 41.4% to $22.3 million – this includes $18.9 million of transaction & integration costs, and $14.8 million of stamp duty related to the Dial A Dump acquisition.
The company said that its integration of Dial A Dump is well progressed and on track to deliver annualised cost synergies of $15 million over two years from FY20.
It also finished its development of the West Melbourne Recycling Centre and the Patons Lane Recycling Centre and Landfill during the year. Construction of the Mortdale Recycling Centre has progressed well and the Eastern Creek Materials Processing Centre is now underway.
Bingo Dividend and Balance Sheet
The Bingo Board decided to declare full year FY19 dividends amounting to 3.72 cents per share, the same as last year. That’s not surprising considering net debt more than doubled to $275.8 million due to the acquisition of Dial A Dump.
Is The Bingo Share Price A Buy?
The Bingo NSW price rise was implemented from 1 July 2019, the Dial A Dump synergies are on track and full year contributions from its developed recycling centres should be a boost to earnings in FY20. Management expect “solid growth”, although guidance will be provided at the annual general meeting in a few months.
However, a construction downturn could be a headwind to short term earnings. I think Bingo looks quite interesting at this share price, but I think there are even more attractive investment opportunities, like the ones in the free report below.
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