The Bingo Industries Ltd (ASX: BIN) share price has been trashed by investors as the company reported a 41.4% drop in full-year net profit.
At the time of writing, the Bingo Industries share price was trading more than 7% lower around the $2.22 mark as one of the worst performers in the S&P/ASX 200 (INDEXASX: XJO) index.
What did Bingo Industries announce this morning?
Despite recording full-year revenue up 32.4% to $402.2 million, Bingo's statutory net profit after tax (NPAT) plummeted 41.4% lower to $22.3 million.
The biggest drag on company profits for the year ended 30 June 2019 (FY19) was a total $33.7 million in transaction and integration costs from Bingo's recent Dial-a-Dump Industries (DADI) acquisition.
Bingo's net debt ballooned out during the year, doubling from $136.6 million in FY18 to $275.8 million, while return on capital employed (ROCE) plummeted 1,200 basis points (bps) to 9.2% for the year.
On an underlying basis, Bingo reported a 22.2% increase in underlying net profit before amortisation of acquired intangibles (NPATA) to $58.9 million as underlying earnings before interest, tax, depreciation and amortisation (EBITDA) also surged 13.2% higher.
Positively for shareholders, Bingo's operating free cash flow rocketed 31% higher to $116.5 million in FY19, while cash conversion climbed 1,490 bps to 109.8% for the year.
Another sign of management's confidence was Bingo's 3.7 cents per share (cps) dividend remaining constant despite the softer earnings, which could be a sign of better things to come for the group.
In terms of revenue breakdown, Bingo's Post-Collections business remains its biggest contributor at 63% of total revenue, which has increased from 50% in FY18, which is then followed by Collections (36%) and Other (1%).
Foolish takeaway
While the financials are far from the healthiest we've seen this August reporting season, Bingo completed a major acquisition during the latter part of the year and it will take some time to see that flow through to earnings.
Operationally, the Aussie waste management group remains well placed with several key projects awarded in FY19 and a healthy pipeline of opportunities for FY20 and beyond.
The Bingo share price has been hit hard in early trade but I don't think the long-term outlook for the company is fully reflected given the lack of time for the DADI acquisition synergies to be realised.
