Bingo Industries Limited (ASX: BIN), a waste management company from the commercial & professional Services industry group, has announced its half-yearly results for the period ended 31 December 2018.
During the period, there was a robust net revenue growth by 25.4% to $178.7 million. The underlying EBITDA increased by 4.1% to $45.6 million as compared to the prior corresponding period. However, the underlying EBITDA margin was 200 basis points below forecast. The underlying EBITDA got impacted as various sites were offline for redevelopment. It also got influenced by the initial impact of lower margins in the Victorian business, rise in the volumes of lower-margin material in its post-collections segment followed by an increase in the corporate cost.
There was an increase in NPATA by 3.8% to $23 million as compared to the previous corresponding period. The statutory NPAT declined by 24.9% which was impacted by the inclusion of transaction as well as the integration costs that was linked to the company’s recent and pending acquisitions. There was an increase in the operating cash flow by 33% to $47.2 million as compared to the prior corresponding period. The company maintained a strong focus on the cash collection which resulted in the cash conversion of 103%. By the end of the half-yearly period on 31 December 2018, the company had net cash of $140 million.
Daniel Tartak, who is the Managing Director and Chief Executive Officer of Bingo Industries Limited stated that, although there were some market headwinds, the underlying EBITDA was in line with the budget. The company was able to achieve year on year growth in the net revenue as well as EBITDA. The company was also able to maintain its momentum in Victoria and also acquired fifth post-collections site situated in Dandenong. The company is soon to open an upgraded recycling facility in West Melbourne which will serve the purpose of enhancing the margin in the Victoria to meet the group target of 30%.
The company also reconfigured its NSW network to achieve enhanced operational efficiencies through improved network utilization as well as freeing up space to attract and process greater volumes.
Also, the period witnessed a strong balance sheet. The company declared an interim dividend of 1.72 cents per share.
The collection segment reported an increase in the revenue by 27.9% to $100.4 million supported by increased volumes. There was an increase in the underlying EBITDA by 7.4% to $19.3 million.
The Post-collections segment reported an increase in the revenue by 27.7% to $104.4 million. The EBITDA under this segment also increased by 5.2% to $25.3 million. This segment remained the largest revenue and EBITDA contributing segment of the group. The growth in this segment was driven by BINGO’s Artarmon as well as it’s Campbellfield Recycling Centres. Also, there was sustained growth in the volumes.
Lower margins in Victoria drove the decrease in the post-collection margins. There was an increase in the operating cost without an additional BINGO price rise followed by the redevelopment of the network.
Other segments, apart from collection and post-collection, contributed an increase in the revenue by 20% from TORO to $16 million. Out of these, 53% of the income was through external customers. The improved EBITDA and EBITDA margin from TORO got balanced by an increase in the corporate costs, primarily employee as well as insurance costs.
The company expects a positive outlook in the remaining part of FY2019, where the construction market in NSW and Victoria is expected to deliver an overall volume of $130 billion per annum in the next few years. There is also a hope that there could be a significant increase in the market share of the company in the C&I sector.
In the last six months, the stock has generated a negative return of 59.49%. However, positive performance is seen in the previous five days where the stock has generated a positive return of 5.35%. By the closure of trading session on 26 February 2019, the closing price of the stock was A$1.355, up by 5.859% as compared to its previous trading day’s closing price. The company has a market capitalization of A$745.46 million with approximately 582.39 million outstanding shares and a PE ratio of 12.80x.
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