The Cleanaway Waste Management Ltd (ASX: CWY) share price has been the best performer on the ASX 200 on Wednesday.
In morning trade the waste management company's shares are up 14% to $2.19.
Why is the Cleanaway share price rocketing higher?
Investors have been buying the company's shares following the release of its half year results this morning.
For the six months ended December 31, Cleanaway reported a 4.1% increase in net revenue to $1,197.2 million and a 13.7% lift in underlying net profit after tax to $76.2 million. Underlying earnings per share came in 15.2% higher at 3.8 cents per share. This was driven largely by its Liquid Waste & Health Services business, which delivered a 15% jump in EBITDA.
This underlying result excludes the impact of $28.9 million of after tax costs relating to acquisitions and the Perth Material Recycling Facility fire. On a statutory basis, net profit after tax was down 25.5% to $45.3 million.
And although it reported a 25.8% decline in free cash flow to $83.2 million, it didn't stop the Cleanaway board from lifting its dividend. Cleanaway will be paying shareholders a fully franked 2 cents per share dividend, up 21.2% from this time last year.
The company's chief executive officer, Vik Bansal, was pleased with the resilience of the business.
He said: "I am pleased to report results that once again reflect the resilience of Cleanaway. Our financial results highlight the portfolio nature of our total waste services offering. Our underlying profit increased despite the lower commodity prices for the half and the introduction of the Queensland waste levy which reduced volumes into our Queensland landfill. The actions we have taken to reduce rebates on commodities and to increase our Queensland resource recovery efforts have mitigated the adverse impacts on our bottom line."
Mr Bansal also revealed that the company is towards the final stages of the Toxfree integration process. It remains on track to deliver $35 million of synergies from the acquisition.
Outlook.
Management advised that it expects to deliver stronger earnings growth in the second half. Earnings are expected to be up on both the first half of FY 2020 and the second half of FY 2019.
As a result, it is targeting underlying EBITDA (post AASB16) of ~$515 million to $525 million. This includes a ~$43 million to $45 million positive impact from AASB16. In FY 2019 Cleanaway posted underlying EBITDA of $461.6 million (pre AASB16).
