Bingo Industries boss Daniel Tartak has raised the possibility Dial-a-Dump founder Ian Malouf will remain a long-term shareholder of the consolidated waste group after Bingo bought Mr Malouf's business for $578 million this year including debt.
Shares of Bingo rallied more than 5 per cent on Wednesday to $1.78 after Mr Tartak kept revised earnings guidance intact and said Dial-a-Dump's performance was within expectations.
This includes "headwinds" in multi-dwelling residential construction that are expected to persist throughout 2019-20.
In February, Bingo issued a downgrade whereby underlying earnings for 2018-19 would only be broadly in line with 2018-19. It previously had counted on an increase of up to 20 per cent.
Mr Malouf has 12 per cent of Bingo's stock and that stake is subject to escrow for up to 24 months based on equal tranches eligible for release over nine, 12, 18 and 24 months beginning on March 25. He also has a board seat.
"Ian is very committed to this business; he's been very engaged with the handover of his role into mine. We definitely talk on a daily basis. He's very committed to the performance of the company," Mr Tartak said at Macquarie's Australia conference on Wednesday.
"He's not overly concerned about where the share price is, considering the way the deal was structured. I believe he's a very long-term holder. So am I. We're definitely aligned in where we want to see the company go."
The newly acquired Dial-a-Dump landfill is "pretty much running at its annual capacity per month", Mr Tartak said, because of volumes linked to infrastructure works.
"In terms of the impact on Bingo, probably the simplest way to look at it is we're comfortable where the consensus range is for FY19, which includes the Dial-a-Dump business," he said.
Volume growth
"In FY20, we still believe we will get volume growth through the business; it might not necessarily come from the collections arm.
"It might come from the post-collections assets, so collections might be slightly weaker but post-collections, we believe, could be higher. Overall we believe we can grow. That's the way we're looking at volumes in the market."
Referring to February's downgrade, the Bingo chief executive said: "We saw quite a bit of competition around B&D [building and demolition] collections, mainly a rate drop." Volumes were still strong.
"I did advise in February that rates had gotten to a point where they can't go any lower and they haven't gotten any lower. They've flat-lined over the last three or four months."
Four Bingo facilities have been mothballed as a result of the Dial-a-Dump acquisition: Smithfield, Silverwater, Minto and Ingleburn. Three of those were small transfer sites that Mr Tartak said were immaterial in the context of earnings, and had yielded savings upon closure. Bingo also has to sell a recycling centre in Banksmeadow to fulfil competition conditions imposed on the deal.
In Queensland, waste levies will be introduced from July 1, setting off a chain of price rises through the system.
"The Queensland levy price goes up, impacts Sydney landfill pricing, Sydney landfill pricing impacts recycling facility pricing, and that all impacts collections prices," Mr Tartak said.
BIN Price at posting:
$1.78 Sentiment: Buy Disclosure: Held
