The Tribune

By NEIL HARTNELL

Tribune Business Editor

DESPITE a 134.8 per cent year-over-year net income increase to $461,181, Bahamas Waste's managing director has revealed that results for 2011 were "still not as good as we had expected", with some business categories underperforming internal expectations.

Writing in the BISX-listed waste collections services provider's annual report, Francisco de Cardenas said net profits "doubled" in the second half of 2011 due to Bahamas Waste obtaining from the Government several contracts to help residential garbage collection contracts in several Nassau inner-city areas.

And, although Bahamas Waste's waste cooking oil (WVO) and cardboard recycling initiatives have yet to positively impact the company's bottom line, generating losses of $179,773 and $149,800, respectively, for the 12 months to end-December 2011, Mr de Cardenas indicated that progress was being made on both fronts.

The two initiatives are designed to position Bahamas Waste for the future, and leave it at the forefront of Bahamian-led renewable energy and environmentally-friendly 'green' initiatives, and Mr de Cardenas said that for 2011 the company exported more than 1,036 tonnes of recycled cardboard/paper and produced 26,000 biodiesel gallons.

"We are still experiencing growing pains in our cardboard recycling and biodiesel efforts, but feel that we are on the right track," Mr de Cardenas told Bahamas Waste's more than 1,500 shareholders in the annual report.

"Up until the end of 2011, we exported over 1,036 tonnes of cardboard (OCC) and shredded office paper (SOP), and produced over 26,000 gallons of Biodiesel (B100). We currently have over 30 vehicles running on various blends of biodiesel with no disruptions."

The cardboard recycling division's loss dropped narrowly year-over-year, falling from $153,523 in 2010 to $149,800 this time around, but the biodiesel-related losses rose from $45,678 in 2010 to $179,763.

Meanwhile, Mr de Cardenas added that despite of the long-awaited boosted from securing some residential garbage contracts from the Government, it was not enough to help Bahamas Waste meet its financial expectations for the 2011 full-year.

"After very disappointing 2010 results, we experienced a significant increase in our net profits for fiscal 2011," the managing director wrote.

"The last two quarters provided a strong boost, with net profits doubling the June 2011 mark. Although pleased with the results, they were still not as good as we had projected for the year, with some segments running well below budgeted expectations.

"Year to year, total revenues increased by 15.3 per cent, and total expenses increased by 12 per cent, with direct operating costs up 14 per cent and administrative overheads up 7 per cent. Together, these changes have resulted in a 135 per cent increase in net profits over our 2010 financial year."

Bahamas Waste is doubtless hoping that the June 2011 contracts it received to assist the Department of Environmental Health with residential garbage collection represent the start of a more concerted effort by the Government to outsource further aspects of waste management and collection to the private sector.

This is something Bahamas Waste was built for, and it has been part of various groups looking at constructing a waste-to-energy plant at the Tonique Williams-Darling Highway landfill, and/or taking over management and operations and the landfill.

The company was awarded a residential garbage collection contract for parts of Englerston, St Cecilia and Grant's Town in September 2011, and gained part of Centreville in November.

"We remain hopeful that these short-term contracts will eventually evolve into a long-term arrangement thereby allowing for better strategic planning," Mr de Cardenas wrote.

These sentiments were echoed by his chairman, Peter Andrews, who told shareholders in the same report: "We began the year planning for the long term collection of residential waste and managing the land fill and this process took several busy months.

"We expected a five to six-month period to prepare for this eventuality. Instead, mid-year, without much notice, we were asked to start collection in the inner city core right away. Of course we said 'yes', and our response as a team was superb.

"We shift-worked the vehicles and the employees as best we could without exhausting either until we were able to hire more staff and acquire a couple of rear loaders. It has all been worked out, and our contracts have been expanded outward from the core areas. All of this has been accomplished with good performance and profitability."

Mr de Cardenas said Bahamas Waste was currently focusing on "timely repairs" and the appearance of its equipment, adding that Bahamians should notice "a vast improvement in the appearance of our equipment" by mid-2012.

Noting that the Bahamian economy's tepid recovery meant business conditions remained challenging, he added of 2011: "It was a difficult year all around, and the protracted downturn in the economy forced some customers to discontinue services as a means of reducing their own operating expenses, or made it difficult for others to stay current on their monthly billings.

"Special consideration was given to working closely with our customers to help them through this difficult time."

Garbage collection still remained Bahamas Waste's core business, with revenues in this segment - aided by the government contracts - rising from $7.615 million in 2010 to $8.64 million, a 13.5 per cent increase. Profits in this segment increased by 21.4 per cent, going from $2.377 million to $2.884 million.

With net income improving from $196,566 to $461,481, an increase in earnings per share (EPS) terms from $0.05 to $0.11, Bahamas Waste was able to pay a $0.07 per share dividend, amounting to a total $294,000, to investors in November 2011.

And Bahamas Waste's balance sheet also remains healthy, with total current assets, at $2.841 million, more than 10 times' current liabilities of $260,844. Indeed, total assets of $10.071 million stand well above some $726,102 in total liabilities.