The Tribune

By NEIL HARTNELL

Tribune Business Editor

BAHAMAS Waste has submitted bids for the multi-million dollar Pinewood Gardens and Gladstone Road wastewater treatment plants in a move to expand its service lines, Tribune Business was told yesterday, with the BISX-listed company projecting a 34.4 per cent net income increase for 2012.

Francisco de Cardenas, Bahamas Waste's managing director, said the company had bid on the two Water & Sewerage Corporation tenders because it "owed it" to its more than 1,500 Bahamian shareholders to explore new opportunities to grow the business via avenues complementary to its existing waste collection services.

"We have put in a couple of tender bids for the Water & Sewerage projects at Pinewood and Gladstone Road," he revealed to Tribune Business, "only because we feel it's line with what we do. As a public company, we owe it to our shareholders to look into these things."

It is unclear how far the tenders for both projects have progressed, although the Pinewood one was released much earlier. That is for a $4-$6 million build/own/operate contract for a wastewater/sewerage treatment plant, while the Gladstone Road location - designed principally to serve the $2.6 billion Baha Mar project and residential communities in the area - is for a similar facility.

Meanwhile, Disa Harper, Bahamas Waste's chief financial officer, told Tribune Business that the company's 2011 net income of $461,181 - a 134.8 per cent improvement over the previous year - still came in some 25 per cent below projections.

She added, though, that the BISX-listed waste collection services provider was "optimistic" it would enjoy a better performance for 2012, having projected net profits of $620,000 for the full year - a 34.5 per cent increase over 2011.

Telling Tribune Business that Bahamas Waste had enjoyed "a pretty strong" 2012 first quarter, Ms Harper said: "We were about 25 per cent below budget for 2011, and most of that relates to the cardboard recycling."

Crucial to Bahamas Waste's 2012 financial performance will be the continuation, even the expansion, of the company's contracts to assist the Department of Environmental Health Services with residential garbage collection in several inner-city New Providence areas, along with a pick-up in construction at projects such as Baha Mar.

Ms Harper said Bahamas Waste was currently on "month-to-month" contracts with the Department for that residential garbage collection, and she added: "If that continues for the rest of the year, we should have a really good year.

"We budgeted $620,000 for the year, and we've gone through the first quarter and part of the second quarter. We have contracts up until May."

Describing the government residential garbage collection contracts as "very important" to the company, Mr de Cardenas added: "We feel strongly that as a publicly traded company with a strong ownership base that when Bahamas Waste is given the contract, you have a lot of people benefiting, not just the few."

Ms Harper said Bahamas Waste's accounts receivables at month's end were higher now because of the large government contracts, but added that these billings were "being paid fairly quickly".

"If you take that out, receivables are flat," she said. "But we are seeing a real slowdown in small contracts, and a slight rise in bad debts. But we've still been fortunate enough to continue with no real debt on the balance sheet. We are very well positioned, and have beefed up.

"We are hoping for the continuation of the government contracts, and are trying to get equipment in place for the Baha Mar site, so that when they call there is no delay and we can give them what they need. We are reviewing our toilet and open-top inventory to make sure we have what we need."

With Bahamas Waste's biodiesel facility "coming along", Ms Harper told Tribune Business: "The only thing now is to get the cardboard recycling to where it needs to be in terms of volumes and exports. We had a good 2011, and by all accounts a pretty strong 2012 first quarter."

For 2011, Bahamas Waste exported more than 1,036 tonnes of recycled cardboard/paper and produced 26,000 biodiesel gallons. They have yet to positively impact the company's bottom line, generating losses of $149,800 and $179,773, respectively, for the 12 months to end-December 2011.

Ms Harper said Bahamas Waste was producing enough biodiesel to power both its road vehicle fleet and yard fleet, enabling it to cut back on fuel purchases from external sources.

"We are actively doing some design changes and getting more equipment in for biodiesel, which will improve our productivity and make us more efficient," Mr de Cardenas added. "That's happening this quarter.

"There's more tankage, more piping, and we're doing some fine tuning on the processing side of things. Hopefully that should speed up and increase productivity, and that should be a good thing."

He told Tribune Business that rising global oil prices represented a major worry for Bahamas Waste, given that these costs percolated down through almost every aspect of the company's business, affecting inputs such as steel and tyres.

"The price of fuel is starting to concern me, and I'm not sure where it's going," the Bahamas Waste managing director said.

Mr de Cardenas told Tribune Business that Bahamas Waste was "still warm" on taking over management of the Tonique Williams-Darling Highway landfill from the Government, but expected nothing to happen on this front until after the general election.

For 2011, garbage collection 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.