Bingo Industries FY18 full year results

Bingo Industries Limited has announced its full year results for the 12 months ending 30 June 2018, with pro forma earnings before interest, tax, depreciation and amortisation (EBITDA) up 46 per cent to $93.7 million.

As it announced its full-year results, the company also revealed plans to acquire Dial A Dump Industries Group. More news on that here.

In an ASX statement, the company noted its strong growth trajectory was maintained with net revenue up 44.5 per cent to $303.8 million, attributing it to ongoing business momentum, favourable economic and market conditions and acquisitions.

The results showed earnings per share growth of 53.1 per cent year on year. The Tartak family, who own about 30 per cent of the $1 billion group, floated on the ASX last year after raising $440 million.

Pro forma net profit after tax before amortisation of acquired intangibles (NPATA) was up 44.8 per cent at $48.2 million. It noted that pro forma excludes acquisition, capital raising, integration costs and prepayment amortisation, prior to any impact of the company’s acquisition of Dial A Dump Industries Group.

The statement said the acquisition was performing in line with guidance and on track to realise full identified synergy benefits of $6 million from the acquisition of National Recycling Group in financial year 2019. There is also an anticipated growth in the underlying business of about 15 to 20 per cent for financial year 2019 of pro forma EBITDA.

Related stories:

Bingo CEO Daniel Tartak said the 2018 financial year was a very successful year across many measures for Bingo.

“We delivered strong growth in revenue and earnings, and successfully executed on our growth plans set out at the time of the initial public offering, through strong organic growth, acquisitions and entry into the Victorian market,” Mr Tartak said.

“We are on track to realise the full annualised synergies identified with the acquisition of National Recycling Group in FY19. Meanwhile construction at Paton’s Lane is progressing well and remains on track to be operational in July 2019.”

“We have strong momentum across the business, supported by major infrastructure programs in NSW and Victoria. We have seen a significant ramp up in government work in our building and demolition business and are winning more commercial and industrial contracts with Tier 1 customers. The infrastructure sector now contributes 22 per cent (against eight per cent at the time of the initial public offering) to our bins business, while residential construction activity remained buoyant during the year.”

“We continue to generate strong cash flows, with operating free cash flow up 45.6 per cent to $88.9 million, and have strengthened our balance sheet by refinancing our debt on more attractive terms. This provides a funding platform that is more aligned with the scale of our operations and greater flexibility to execute on our growth plans.”

Revenue from its collections increased by 45.2 per cent to $176.9 million, driven by increased volumes in the market underpinned by sustained construction activity and buoyant economic conditions. Its post-collections revenue meanwhile increased by 47.7 per cent to $176.2 million, which the statement said was primarily driven by increased network capacity in NSW, with full year contributions from St Marys and Revesby.

OUTLOOK

The statement said Bingo remains well positioned to capitalise on favourable end markets in both NSW and Victoria. It said continued revenue growth is expected to be underpinned by supportive macroeconomic conditions, a ramp up in infrastructure and commercial construction activity and an ongoing structural shift towards increased recycling.

Bingo’s positive momentum has continued into FY19 with a strong base of contracted work, projects under tender and pipeline of building and demolition and commercial and industrial opportunities.

“As a result, Bingo expects to report year-on-year pro forma before EBITDA growth of the underlying business in the range of 15 to 20 per cent in FY19, prior to any impact of the acquisition of DADI,” the statement read.

“Bingo expects EBITDA margin, excluding the Dial A Dump acquisition, to return to its longer term target of approximately 30 per cent in FY20, supported by enhanced recovery rates and internalisation of volumes following completion of development program.”

Mr Tartak said Bingo has a clear growth strategy in place which will see it continue to expand its network capacity over the next five years to help meet the rapidly growing demand along the east coast of Australia.

“With a strong team in place and a culture of success, I am confident of another successful year ahead for our company,” he said.

Bingo Industries to acquire Dial A Dump Industries

Bingo Industries has announced it will acquire fully integrated NSW waste and recycling business Dial A Dump Industries for $577.5 million.

It comes as Bingo Industries released its full-year results (more to come on this). According to an ASX statement, consideration for the acquisition will comprise $377.5 million in cash and $200 million in Bingo shares to be issued to vendors of Dial A Dump Industries Group (DADI Group) after the acquisition is completed.

The acquisition will be funded by an underwritten 1 for 2.48 $425 million pro-rata accelerated non-renounceable entitlement offer and $200 million scrip consideration to DADI vendors, priced at $2.54 per new ordinary share.

DADI Group generated financial year 2018 revenue of $198.2 million and earnings before interest, tax, depreciation and amortisation of $51.6 million.

Ian Malouf, the largest vendor of DADI will join the Bingo board after the acquisition is completed with a shareholding of up to 12 per cent post completion of the entitlement offer and acquisition.

Related stories:

The acquisition includes its post-collection assets, including Genesis Waste Facility at Eastern Creek, a recycling and landfill asset with approved capacity of up to two million tonnes per annum and remaining useful landfill life of about 15 years.

The ASX statement said DADI has strong future growth opportunities through exposure to favourable NSW infrastructure markets and structural shifts towards recycling.

It said there would be compelling future growth opportunities, including the opportunity to develop a Recycling Ecology Park in Eastern Creek aligned with Bingo’s strategy of further diversifying into putrescible, commercial and industrial and municipal solid waste and waste post collections.

The statement said it also provides economic benefits through volume growth and internalisation of 100 per cent of Bingo’s non-putrescible building and demolition and commercial and industrial waste, with significant landfill capacity for external customers and broader coverage of revenue from the excavation and demolition phases of the construction process.

CEO Daniel Tartak has committed to invest a further $72 million to take up 100 per cent of his entitlements, while Tony Tartak, the founder of Bingo and Mark Tartak have separately committed to invest a further $9 million each.

CEO Daniel Tartak said the DADI site at Eastern Creek provides Bingo with the opportunity to transform waste recovery and recycling in greater Sydney through the development of a Recycling Ecology Park.

“The Recycling Ecology Park, once completed, will considerably broaden our range of processed end products as we work towards building a circular economy. By seeking alternative waste solutions, we can enhance recovery rates, consistent with Bingo’s strategic intent of diverting waste from landfill through recycling led solutions,” he said.

Dial A Dump founder Ian Malouf said the company has a lot of respect for Bingo and how they have built their business.

“Bringing together these two Australian companies makes complete sense. I fully support Daniel Tartak the CEO and Bingo’s growth strategy, particularly the vision of a master site at Eastern Creek that can process all waste types. With the infrastructure program in NSW and the new waste levy in Queensland, the market is only going to grow and I’m excited to be on board for the journey,” he said.

Bingo expects to deliver run-rate synergies of $15 million per annum to be realised over two years, from internalisation of waste volumes, operational efficiencies and rationalisation of overheads.

The acquisition remains subject to customary closing conditions including Australian Competition and Consumer Commission informal merger clearance.

NSW waste parliamentary inquiry committee recommendations

A parliamentary inquiry into waste regulations has handed down its recommendations, including investigating options to restructure the NSW EPA.

It recommended the NSW Government investigate options to restructure the NSW Environment Protection Authority (NSW EPA) to improve its performance and an independent review conducted into the EPA to assess the adequacy of funding for performance of compliance and enforcement, community engagement and a perceived conflict of interest between its compliance and policy and education roles.

The terms of reference sought to understand the impact of waste levies, the role of waste to energy and its impact on the recycling industry, regulatory standards, guidelines and policy statements on this and references to regulations overseas. In addition, it focused on illegal dumping and actions to prevent it, impacts of landfilling and the transport of waste out of the state.

NSW is the second highest per capita producer of waste in the world, with the final report acknowledging that successive NSW Governments have “failed to effectively leverage levy funds” to support the development of much-needed services and infrastructure, leaving the state dependent on landfill.

“The committee has made a number of recommendations to overcome this issue, including that the NSW Government hypothecate a greater percentage of waste levy funds to local councils and the waste industry to support the provision of additional waste services, initiatives and infrastructure,” said the Hon Paul Green MLC Committee Chair, in the Chair’s foreword.

Mr Green said there was a great deal of debate during the inquiry about whether the NSW EPA is regulating the waste industry effectively. He said stakeholders pointed to the increase in illegal dumping, including the insidious crime of dumping contaminated waste such as asbestos, the growing volume of NSW waste being transported to Queensland, and concerns about criminal elements targeting the waste industry, as examples of the NSW EPA failing to provide the strong, decisive, but fair regulatory approach this industry requires.

“The committee has made several recommendations to overcome these concerns, including that the NSW Government investigate options to restructure the NSW EPA, and undertake an independent review of the NSW EPA’s performance of its various functions.”

“Another key concern for stakeholders was the role of energy from waste technologies in New South Wales. Inquiry participants debated whether there was a place for energy from waste facilities in managing residual waste once higher order waste management techniques have already been exhausted, and whether the NSW Energy from Waste Policy Statement is sufficiently robust.”

He said the committee supports energy from waste in some circumstances, and has made a number of recommendations aimed at strengthening the regulatory framework for such facilities, including that an expert advisory body chaired by the Chief Scientist examine and report on these issues.

Among the report’s numerous recommendations are that the NSW Government ensure all funds allocated to Waste Less, Recycle More are spent in accordance with the program and that the NSW EPA undertake an audit of the program to ensure funds are fully expended to meet its objectives. It also recommends the NSW Government investigate opportunities to hypothecate a proportion of waste levy funds to support the development of innovative waste management technology, in addition to urgent consideration of attaching the waste levy to the generator.

Environment Minister Gabrielle Upton said in a statement to AAP: “The government will consider all the recommendations from the parliamentary inquiry.”

Another recommendation is an independent inquiry into the operation, regulation and approvals of the Mangrove Mountain Landfill site. Furthermore, it recommends the EPA develop and implement resource recovery criteria for landfills in NSW. The NSW Government has until 28 September to respond to the inquiry.

You can read the full report here.

NSW Premier unaware of Dial A Dump Industries project

New South Wales Premier Gladys Berejiklian says plans for the State Government to back Dial A Dump Industries’ bid for the world’s largest incinerator is “news to her”.

In March, Dial A Dump Industries’ chief executive Ian Malouf said the $700 million energy-from-waste plant at Eastern Creek would proceed because the State Government wanted the project.

Last week, Ms Berejiklian told News Corp she was not aware of that and suggested Mr Malouf email details for The Next Generation plant to her office. She said she had confidence in the Environmental Protection Authority’s guidelines.

“A lot of proposals like that have not been approved and the EPA guidelines are very strict,’’ she said.

Mr Malouf said in 2014 the State Government introduced an energy-from-waste policy with the EPA.

He said the policy recognised “the recovery of energy and resources from the thermal processing of waste has the potential … to deliver positive outcomes for the community and the environment”.

In April, the company told Waste Management World the Next Generation facility will be built to the latest European and Australian engineering and environmental standards. This would include technology that captures any particulate matter and adsorbs heavy metals and dioxins, while cleaning any gases before they reach the atmosphere.

The company said that this would mean that outputs would be below the limits set out by the New South Wales Environmental Protection Agency and the very strict European directives, and in many cases would not even be detectable. The facility’s pollution controls will be monitored by the EPA 24 hours a day, seven days a week.

“Emissions from the facility will have less impact than a person holding a burning sparkler at a birthday party, emitting less chloride, dust and nitrous oxides,” Mr Malouf said.

“By converting residual waste into power, the facility will prevent the release of 3 million tonnes of greenhouse gases into the atmosphere and divert over 1 million tonnes of waste from landfill each year”.