‘Better than expected’: Soaring revenues drive the DGL (ASX:DGL) share price up 17%

The DGL Group Ltd (ASX: DGL) share price is flying high today after the company announced strong earnings growth during the first half of FY22.

The hazardous waste management company told the ASX that its results were “better than expected”.

The DGL share price hit an intraday high of $3.18 shortly after the market opened. This was 17.3% above yesterday’s closing price. At the time of writing, DGL shares are up 10.7% to $3.00.

Let’s take a look at what DGL reported today.

DGL share price skyrockets on ‘better than expected’ results

For the 6 months ending December 2021, DGL reported:

• Sales revenue of $143 million (up 182% against the previous corresponding period [PCP])
• Earnings before interest, taxes, depreciation and amortisation (EBITDA) of $23 million (before deducting acquisition costs of $3 million) — up a whopping 139% from PCP
• Net profit after tax of $9 million, up 187% from PCP

DGL said the “better than expected” results were “fuelled by stronger than anticipated Q2 growth which is forecast to continue into the second half of FY22”.

Further, DGL predicts that its revenue for FY22 will hit $343 million, with an EBITDA of $54 million.

However, with these results currently being externally audited, full earnings are to be released to investors on 25 February. In it, accurate results and detailed earnings guidance for the financial year will be announced.

Since 31 December, the DGL share price has dropped by 4.1%.

Management praises ‘outstanding results’

DGL CEO Simon Henry said:

The outstanding results have been driven by favourable trading and climatic conditions across the group and the successful integration of the acquisitions completed over the reporting period.

Despite the challenging business environment, DGL with its wide range of assets and services is expected to perform strongly over the remainder of FY22 as reflected in the updated FY22 forecast revenue of $343mil and EBITDA of $54 mil.

In other company news today, DGL announced the issuing of 511,190 fully paid ordinary shares to Austech Chemicals Pty Ltd. This is “part settlement of the final working capital adjustment in accordance with the Share Purchase Agreement entered into between the parties”.

The acquisition of Austech — a company manufacturing automotive chemicals — was completed in December. It is one of several DGL takeovers announced last year.

Among these businesses were:

• Opal Australasia — a chemical manufacturer (completed September 2021)
• Aquapac — a water solutions company (completed October 2021)
• Profill Industries — a chemical manufacturer (completed November 2021)
• Ausblue — Adblue distributor (completed November 2021)
• Shackell Transport — a bulk liquid and other freight company (completed December 2021)

DGL said the acquisitions would “preserve significant portions” of the businesses while “increasing DGL’s breadth of products, services, customers and geographies”.

DGL share price snapshot

Over the past 12 months, the DGL share price has increased by a whopping 177%.

Last month, DGL was among the top 20 small cap ASX shares listed in fund manager Wilson Asset Management’s Microcap portfolio due to its potential for future growth.

The company has a market capitalisation of $764.75 million and a price-to-earnings ratio (P/E) of 16.35.

The post ‘Better than expected’: Soaring revenues drive the DGL (ASX:DGL) share price up 17% appeared first on The Motley Fool Australia.

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Motley Fool contributor Alice de Bruin has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns and has recommended DGL Group Limited. The Motley Fool Australia has recommended DGL Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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