Hot on the heels of the Cleanaway Waste Management Ltd (ASX: CWY) half year results release on Wednesday, today has been the turn of BINGO Industries Ltd (ASX: BIN) to hand in its report card.
And as with Cleanaway, the reaction to this results release has been very positive.
In morning trade the BINGO share price surged over 8% higher to a 52-week high of $3.47.
How did BINGO perform in the first half?
During the first half of FY 2020, BINGO reported a 50.7% increase in revenue to $271.2 million and a 67.9% jump in underlying EBITDA to $78.8 million.
The strong underlying EBITDA result was driven by margin expansion during the half. This is the result of optimisations from the network reconfiguration program, Dial A Dump Industries (DADI) synergy realisations, and the New South Wales price increases.
On the bottom line, the waste management company posted a 31.9% increase in underlying net profit after tax to $28.4 million.
This strong profit growth led to the BINGO board declaring a 2.2 cents per share interim dividend. This was an increase of 27.9% over the prior corresponding period.
What were the drivers of its growth?
The company revealed strong revenue and earnings growth in both its Collections and Post-Collections segments.
Collections revenue increased 21.5% to $122 million, with underlying EBITDA growing 28% to $24.7 million. This was driven by a full six-month contribution of the DADI collections business and an increase in the size of its collections fleet in Victoria.
The Post-Collections business delivered a 55.7% increase in revenue to $162.7 million and a 120.2% increase in underlying EBITDA to $55.6 million. This strong result was underpinned by a full six-month contribution from DADI, West Melbourne, and a limited contribution from Patons Lane.
Other revenue increased 129.7% to $39.8 million following the gain on the sale of Banksmeadow. Excluding the gain from Banksmeadow, revenue was broadly flat year-on-year. Other EBITDA fell 28.7% to $1.7 million due to an increase in corporate costs and a weaker TORO EBITDA margin.
Outlook.
No firm guidance was given for the second half. However, BINGO expects to achieve "solid" year-on-year growth in FY 2020, underpinned by a full year contribution from the West Melbourne recycling facility and DADI operations. It also notes that the Patons Lane recycling facility is now fully operational and is expected to contribute.
Management also notes that its group EBITDA margin has improved well above its longer-term average of ~30%. However, some slight moderation in margin is expected in the second half.
Headwinds in multi-dwelling residential construction are expected to continue in FY 2020, with an improvement forecast for calendar year 2021.
