The phrase ‘where there’s muck there’s brass’ refers to the opportunity to make money from dirty jobs. Filta (FLTA:AIM) is embracing this concept with rapid earnings growth from cleaning and recycling work across North America and parts of Europe.

Rather than emptying bins or sweeping streets as per traditional waste management, Filta uses special machines to filter cooking oil from deep fat fryers, removing food particles and contaminants and returning the oil for re-use. This filtration can double the life of the oil, so reducing waste and cutting costs for the fryer owners.

Having established this business in the US and UK via a franchise model, Filta is now rolling it out across Europe and Canada. It signed up eight European franchise operators in 2018 versus a target of six and they are now servicing a variety of stadiums in Germany as well as recent moves into Austria and Spain.

In total Filta now has 12 franchise owners in mainland Europe, 43 in the UK and 144 in North America. Customers include restaurants, hotels, banks, sports arenas, supermarkets and hospitals.

Admittedly the US is becoming more mature for Filta and high employment levels mean fewer people want to become franchisees. However, chief executive Jason Sayers tells Shares the territory should still grow as existing franchisees add more machines and the overall frying market grows.

‘Some schools have got rid of fryers for health reasons but we’re seeing more university campuses expand the use as it is a cheap and simple way of cooking food,’ he comments.

GREEN CREDENTIALS

Interestingly several environmental funds have recently invested in Filta as they like its oil recycling and work to reduce fat clogging up drains.

Last December it bought of Watbio, a high margin repeat revenue business in the UK with the scope to be run more efficiently. It provides a variety of grease and drainage services to commercial kitchens and expands the existing FiltaGMG business which targets the same market.

The acquisition brings new customers such as Costa and expands the work it already does for McDonald’s, Greene King (GNK), Mitchells & Butlers (MAB) and others.

‘We now have the right platform to handle anything in the UK,’ says Sayers, adding that Filta is seeking two or three more acquisitions.

Broker Cenkos forecasts in 2019 pre-tax profit will grow by 34% to £3.9m and the dividend will double to 3.2p.

A 2019 price-to-earnings ratio of 21.1-times isn’t excessive for a fast growth company with so much repeat revenue and increasingly strong customer relationships.

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