When looking at investment companies, we like to be certain that there’s a demand for the product being offered. It’s not much of a consolation to be the very very best at something if only ten people in the whole world would ever need what you do. While investigating Budget Waste Inc. however, it was easy to see from the very inception that demand was not going to be a problem. Why? They offer a “one stop shop” approach to one of the world’s biggest dilemmas: How to get rid of the constant stream of garbage, and wastes that are produced every day. That’s not even expanding the idea to such areas as construction clean up, demolition clean up, job site maintenance, environmental fencing, portable sanitation facilities, etc. As we can see, the demand side of the equation, is built in.
Budget Waste Inc. (trading under the symbol BDGW) is addressing this demand head on with a growth strategy that makes perfect sense in a modern world. Utilizing a two pronged approach, they are growing organically, from the inside out, but they are also aggressively acquiring other waste management companies that strategically fit their unique business concepts. This has worked quite well for them as they strive to achieve their overall business goals.
BWI’s strategy is to expand both existing services and add related services throughout North America to position BWI as the only National Complete Waste Solutions Company. While that’s a lofty goal, BWI has stayed true to their word, and has just completed an unheard of 13 acquisitions in just over 2 years. But it’s their “next one” that’s got some real interesting sides to it.
In filings, Budget has made it public that they intend to buy Broadband Communications Services Inc. On the surface, one might ask what does a waste company need with a broadband company, but that’s not really the issue. BBCS (as we call it) has been in business over 15 years and its customer base is comprised of large, corporate entities such as Sprint, Windstream, Verizon, AT&T and Lincoln Electric. Management of BBCS has disclosed to Budget that approximate gross revenues in 2007 were $7,300,000, with asset value of approximately $3,200,000 as of December 31, 2007.
BBCS has a number of current and long-term contracts that help to ensure continued revenue growth and profitability. Some of the contracts BBCS is working on include the placement of a large ethanol pipeline and a water distribution system in the USA. BBCS has represented that these contracts could provide up to an additional $15-20 million in annual revenues for the following 3 years or so. Additionally, BBCS has advised that it plans to complete negotiations for placing utility infrastructure for a large corporate client in South America.
So again, where’s the connection? Right here; BBCS is currently involved in underground construction operations with multiple clients and has operations in several States. These operations frequently involve hydro vac construction and vacuum truck services. BWI is also currently involved in hydro vac and vacuum truck operations throughout its service area. Expansion into BBCS’s current service area would give BWI an instant foothold into the US and possibly into South America.
While BBCS does not currently operate Waste and Recycling services, they are involved in the construction industry, an area in which BWI has vast experience, providing waste hauling, recycling, portable sanitation services and site security (temporary fencing). The potential for vertical integration involving these services can likely have a very positive effect on the organic growth of BWI. Additionally the potential addition of operations and clients from BBCS will benefit BWI not only by providing an increased customer base, but also diversifies its operations which will reduce the impact of economic fluctuations among different markets
BBCS is a great fit, it generates revenues, it gets BWI a foothold into the states, and leverages their client list to their advantage. Growth acquisitions like that is enough to get our attention every day, and we feel it’s a good idea that it gets your attention too. Budget Waste is creating waves in the waste management business, and doing it in a very spectacular way. Continue to watch this outfit for more tremendous news.
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