Bingo Industries Ltd (ASX: BIN) shares are down right now after reporting its FY21 half-year result.
Bingo is one of Australia’s largest waste management businesses.
HY21 result
Bingo said that its underlying revenue fell by 3.1% to $241.1 million. The company said that there has been a softening in Bingo’s addressable markets as a result of COVID-19.
There was lower pricing across B&D collections cube rates and post-collections in NSW, which was required to attract volume. However, there was strong year on year growth in NSW post collections volume to support its increased network capacity.
Underlying EBITDA (EBITDA explained) fell by 20.5% to $65.2 million. The underlying EBITDA margin declined 600 basis points (6.00%) to 27%. As well as lower pricing, Bingo paid around $0.7 million for COVID-19 related labour expenses and the VIC lockdown disruptions, together with impacts on revenue opportunities.
Bingo’s underlying net profit after tax (NPAT) dropped 41.2% to $16.7 million and operating free cash flow declined 41.2% to $64.2 million.
The net debt reduced by 1.2% to $317.4 million. This was achieved despite the company’s continuing capital expenditure program for growth.
Bingo dividend
The board of Bingo decided to declare an interim dividend of 1.5 cents per share.
Management comments
Bingo CEO and managing director Daniel Tartak said: “We expect to benefit from the strong infrastructure pipelines in NSW and VIC, before a recovery in the residential and non-residential markets over the medium term. C&I volumes are also set to increase with reduced restrictions and the wider workforce moving back to offices in the short term.”
“We have built a sustainable business with a low cost of operations, which has allowed us to continue to generate industry leading margins. We have continued to gain post-collections market share in a declining market and are well positioned to emerge from the COVID-19 environment as a bigger, better and stronger business.”
Outlook
Bingo said that market conditions have held up better than first anticipated and greater certainty around outlook together with the pipeline of opportunities supports a broader recovery going into FY22.
This is good news for Bingo and shareholders. The Bingo share price has recovered to its former heights, so I’m not sure that it’s a clear buy today. But it could be one to watch for the long term.
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