The Bingo Industries (ASX: BIN) share price is up 11.6% this morning after giving a FY20 market update.
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 FY20 Market Update
Bingo is holding its annual general meeting (AGM) today and gave a trading update as part of the proceedings.
The waste management business said that the Dial A Dump integration is going well with cost synergies of $15 million to be realised equally over two years. The integration is expected to be completed by June 2020 with the NSW network reconfiguration now largely complete with the sale of Banksmeadow.
Bingo now thinks it can achieve underlying EBITDA (click here to learn what EBITDA means) of between $159 million to $164 million in FY20.
Management think the company will achieve “solid year on year growth” this year underpinned by a full year contribution from Patons Lane Recycling Centre and Landfill, West Melbourne Recycling Centre and Dial A Dump.
Pleasingly for the company, the broader construction market remains strong according to Bingo with a “robust” pipeline of activity in the commercial and infrastructure sectors, although headwinds in residential construction are expected to continue during FY20.
The company’s EBITDA margin continues to increase and is ahead of schedule to return to its target of 30% within the two year window previously indicated at the FY19 result.
What’s helping the performance is the NSW pricing increase that was implemented in July 2019 after the introduction of the Queensland waste levy and is expected to deliver a net benefit to the business after allowing for volume effects.
Bingo Managing Director and CEO Daniel Tartak said: “Our investment in our post-collections network positions us favourably for further growth in FY21 and beyond.
The completion of MPC 2 at Eastern Creek, full year contributions from Mortdale and the Patons Lane advanced recycling equipment, licence amendments underway for West Melbourne and Eastern Creek, continued growth in C&I, the expansion of our Victorian business and our entry into the Queensland market, all provide further avenues for growth in the near to medium term.
“This is further supported by the ongoing structural shifts in the market that are supportive of our business model.”
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