The share price of Bingo Industries Ltd (ASX: BIN) has slipped 1.5% this morning following the company’s outlook for FY21 at the annual general meeting (AGM) this morning. Let’s take a look.
Highlights from the AGM
- Revenue $486.7 million, up by 21% from prior year
- Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) was $152.1 million, up 40.8%
- Net Profit After Tax (NPAT) to $66 million, up by 196%
- Operating free cash flow of $160.1 million, up 37.4%
- Achieved all safety targets for financial year 2020, recording a lost-time injury frequency rate of 0.4, which is a 50% improvement
Management admitted that the company has been impacted hard by COVID-19, and it expected to be further impacted in the second half of FY21.
The company is also anticipating increased regulations, which will result in increased compliance costs. It says that the Australian Competition and Consumer Commission (ACCC) market investigation is ongoing and the outcome is yet to be determined.
Update and guidance for FY21
- Views on the outlook for FY21 remain unchanged, as the company anticipates COVID-19 headwinds may continue to impact the business in 2021.
- As a result, Bingo expects group EBITDA margin to decline in FY21 by approximately 2% to 3%, before rebounding to its longer-term target of 30%.
- Pre-collections volume continue to be affected by the ongoing impacts of COVID-19, down 10-15% below pre-COVID-19.
- Post-collections volume however, which accounts for approximately 72% of EBITDA, continued its strong momentum in volumes in the first four months of FY21.
What does Bingo do?
Bingo is a recycling and waste management company. It provides solutions across the entire waste management supply chain including collection, processing, separation, recycling and disposal. The company has the largest network of recovery and recycling centres across NSW and Victoria, operating out of 17 locations. In 2019, Bingo acquired competitor Dial-a-Dump in a $578 million deal that attracted scrutiny from the ACCC.
Brief take on Bingo’s business model
There are three major waste management market segments: construction and demolition (C&D), commercial and industrial (C&I), and municipal waste. The bulk majority of Bingo’s business is in the C&D segment, and it does not participate in the municipal segment.
C&D waste collection however is cyclical, being closely tied to construction activity. Due to COVID-19 and the already depressed construction activity across all states, Bingo’s earnings are also impacted. This contrasts with municipal and C&I waste management players, whose volumes and earnings are relatively stable through economic cycles.
How has Bingo’s share performed in 2020?
Bingo’s share price has dropped by around 7% this year. It is currently trading at $2.64, giving the company a market cap of $1.75 billion.
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