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Bingo Industries share price surges on 196% boost in profit

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The Bingo Industries Limited (ASX: BIN) share price has leapt more than 12% after the waste management company revealed a 196% increase in profits.

Despite COVID-19 related disruptions, Bingo Industries delivered a better than expected result, sending the share price skyward. 

What does Bingo Industries do? 

Bingo industries is a fully integrated recycling and resource management company providing solutions across the waste management supply chain. Beginning as a small family-owned skip bin business in Western Sydney, the company has grown to provide collection, processing, recycling, and disposal services.

Bingo services more than 18,000 customers a year, leveraging its network of resource recovery and recycling centres, the largest across NSW and Victoria. 

How did it perform in FY20? 

Bingo Industries reported a 21% increase in revenue, which reached $486.7 million, up from $402.2 million in FY19.

The rise was driven by a 34.9% in post-collections revenue which reached $329 million. Post-collection infrastructure assets now account for about 70% of Bingo’s underlying EBITDA. Group underlying EBITDA increased 40.8% to $152.1 million and underlying EBITDA margin was 31.3%. This exceeded the company’s long term target of 30% a year earlier than forecast. Bingo declared a final dividend of 1.5 cents per share, bringing full year dividends to 3.7 cents per share, broadly in line with FY19. 

Statutory NPAT went up an impressive 196% to $66 million as Bingo benefitted from a business resilient to normal market cycles.

Nonetheless, the company did experience a drop in collections and post-collections volumes in April as COVID-19 restrictions were introduced. Commercial and industrial revenue was down approximately 20% as hospitality, entertainment, and office activity slowed. Post-collections volumes remained solid in 4Q FY20 with pricing stabilising post-May and remaining stable into FY21. 

Outlook for the Bingo Industries share price 

Bingo Industries is 3 years into a 5-year strategy to achieve strategic objectives set at its initial public offering (IPO). After achieving a number of developmental milestones in FY20, Bingo Industries has increased its network capacity to 4.6 million tonnes per annum with significant capacity supporting future growth.

Despite market volatility, Bingo has entered FY21 with solid momentum as volumes rebound from the fourth quarter downturn. Moving toward a post-COVID-19 environment, the Bingo Industries share price is well-placed to benefit from market tailwinds. That includes a boom in infrastructure investment. The recovery of residential and commercial building markets may trigger a surge in activity in FY22. 

CEO Daniel Tartak said:

We enter FY21 with a resilient business model and strong balance sheet. We are confident the business will continue to demonstrate its resilience and emerge from the current challenges bigger, better, and stronger.

We expect to resume our growth trajectory in FY22 as our key markets rebound. We continue to benefit from regulatory and market tailwinds and as we take advantage of the additional capacity within our existing network.” 

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Motley Fool contributor Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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