The Cleanaway Waste Management Ltd (ASX: CWY) share price has been one of the best performers on the local market on Thursday.
In morning trade the waste management company's shares are up 8% to $2.10.
What happened in the first half?
In the first half of FY 2019 Cleanaway posted a 46.4% increase in gross revenue to $1,149.7 million and a 35.1% lift in statutory net profit after tax to $60.8 million.
On an underlying basis, which excludes costs related to acquisitions, net profit after tax increased 52.6% to $67 million. Underlying earnings per share was 3.3 cents.
Cleanaway generated $175.6 million in cash flow from operating activities during the half, up 55.7% on the prior corresponding period. This ultimately increased its free cash flow to $112.1 million, allowing the board to declare a 1.65 cents per share interim dividend. This was an increase of 50% on FY 2018's interim dividend.
What were the drivers of the strong result?
The company's Solid Waste Services segment grew net revenue by 30.2% to $682.4 million and EBITDA by 26.2% to $175.7 million. This was driven largely by the addition of the Toxfree Solids businesses in North West Western Australia and Queensland.
The Industrial & Waste Services segment delivered a 129% increase in net revenue to $177 million and a 193.7% lift in EBITDA to $23.2 million. While modest organic growth was achieved, the majority of this grow is attributable to the acquisition of Toxfree.
The Liquid Waste & Health Services segment posted a 77.1% increase in net revenue to $251 million and a 93.2% lift in EBITDA to $42.7 million.
Looking ahead, management believes the positive earnings momentum will continue for the remainder of the year thanks to a combination of organic growth and further realisation of synergies.
Should you invest?
I'm a big fan of Cleanaway and believe it could be a great long term investment, especially given its defensive qualities.
However, my favourite option in the industry at the moment is Bingo Industries Ltd (ASX: BIN) following its sharp share price decline. If the ACCC approves its acquisition of Dial A Dump Industries later this month I think it will put the company in a position to deliver above-average earnings growth over the long term.
