Tox Free Solutions (ASX:TOX) reported strong revenue growth for the 2008/09 financial year, up 162% to $88 million. While it posted an impressive 65% rise in EBITDA to $23 million, earnings failed to keep pace with revenue growth as the cost of sales climbed and resources were poured into setting a platform for growth and recruiting senior management – a key member of which recently parted ways with the company.
In April TOX announced the appointment of Steve Hyams as executive general manager of business development. But the former Spotless and Transpacific Industries employee, who was reportedly responsible for some of the company’s most significant recent contract wins, recently left the company.
Managing director Steve Gostlow shrugs off the impact of losing one staff member – “this company is not Steve Hyams, it’s Tox Free” – and said there is more than enough employee talent to keep the company growing.
In its full year report TOX claims its opportunities moving forward, “are extremely positive as the company continues to develop its strategy of becoming Australia’s leading integrated waste management and industrial service provider”.
“Growth will continue through a combination of acquisition, greenfield development and the securing of further total waste management and industrial service contracts throughout Australia. The company has focussed its efforts over the last year in building a platform to sustain its growth strategy.”
That focus saw its cost of sales rise to $50.2 million, some 57% of revenue, compared to $16.4 million in the previous year, which was about 49% of revenue.
“At TOX’s stage of its life, we put a lot of investment into its management systems [and establishing a national footprint]… so there’s a lot of one off costs this year that will enable us to grow into future,” Gostlow told Inside Waste.
In terms of which areas of the business will see the strongest growth over the coming year, he tips that expansion of the total waste management offering will see fairly consistent growth across each division – liquid, hazardous and solid waste, and industrial services.
The key question will be if the company’s heavy investment in building its “growth platform” will pay off through the next year.
SLE
TOX Price at posting:
$2.39 Sentiment: LT Buy Disclosure: Held
