The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Despite first-half profits that were 30 per cent below expectations, Bahamas Waste yesterday said it anticipates a “much better” final six months of 2013 after the Government expanded its residential garbage routes.

Disa Harper, the BISX-listed waste services provider’s chief financial officer, said that although it had yet to secure a long-term contract with the Government, the increased outsourcing had given it the confidence to invest $314,000 in importing five new garbage trucks.

The increased vehicle fleet, coupled with 25 recently-hired staff, will also help to eliminate the extra overtime and truck maintenance costs that Bahamas Waste has had to incur in operating the new routes.

Ms Harper told Tribune Business these factors drove Bahamas Waste’s expenses 5 per cent higher than forecast for the 2013 first half, particularly when the new garbage routes came online towards the end of the second quarter.

Still, Bahamas Waste’s profits for the six months to-end June were down 59 per cent year-over-year, falling to $175,282 from $427,948 the year before.

Confirming that the company was “off expectations” for the first half, Ms Harper told Tribune Business it was predicting a fairly rapid rebound via its expanded residential garbage routes.

“We are hoping for, optimistic for, a much better second half of the year because we do have the additional work,” she said.

The Government outsourced extra residential garbage collection areas to Bahamas Waste “right at the end the second quarter”, and this - coupled with its failure to-date to replenish the Department of Environmental Health Services (DEHS) fleet - has given the BISX-listed company confidence to expand.

“We still don’t have a long-term contract, but we don’t see any effort on their [the Government’s] part to replenish, rebuild their fleet, and so we are hoping that’s an indication the outsourcing will be a long-term thing,” Ms Harper said. “Things do seem to be looking up on the residential garbage side.”

Bahamas Waste had initially been servicing Bain and Grant’s Town, and parts of Centreville, but its new routes include areas such as Marathon, St Ann’s, Fort Charlotte, South Beach and Elizabeth.

Still, while describing the 2013 second quarter as slightly better than the first, Ms Harper said the first half results were “still not what we had hoped for”.

While Bahamas Waste had budgeted for a fall-off in revenues, which ended up down just 2 per cent on projections, the absence of a long-term contract with the Government caused it to pause on expansion.

As a result, expenses were some 5 per cent ahead of budget forecasts, due to the combination of staff overtime and increased fuel/maintenance cost.

Optimistic that Bahamas Waste would be able to “claw that back” in the second half, Ms Harper said:”Our core business is doing well. Medical waste has picked up some and we’re doing extra burns, plus special projects like the destruction of documents.

“As far as our regular commercial garbage routes and roll-off business, we’re holding our own despite the additional competition.

“We don’t think our pricing is where it should be. We’ve not had a price increase for five years now, but we have extra competition in the market and they don’t have the expenses we do.”

Ms Harper said that unlike its competitors, as a publicly traded company Bahamas Waste incurred an extra $100,000 a year in costs to comply with this extra level of obligations. And she argued that its staff benefits were much greater than those offered to rival firms.

“Their [competitors] margins are probably a lot higher than ours, so we have to bear that in mind when passing costs on to the consumer,” Ms Harper said.

The profits from Bahamas Waste’s core garbage collection business continue, though, to be undermined by its start-up cardboard recycling and biodiesel ventures, which respectively lost $88,732 and $89,752 for the half-year to end-June.

“Cardboard is still not what we had hoped,” Ms Harper conceded. “We are looking at other things that we might be able to do to compensate for cardboard; maybe plastics. But right now we’re still researching.”

On the biodiesel front, consultants will arrive at Bahamas Waste this weekend to install a new Flash Tower at this facility - a move intended to speed up production and enhance volume capacity.

Disclosing that Bahamas Waste was “looking forward” to the second half on biodiesel, Ms Harper told Tribune Business: “When we initially got into that, we didn’t anticipate the level of free fatty acids in the oil that we had to take away.

“We had to use pieces of the plant to do things they were not designed for. That cut back on the speed of production and volume capacity.”

She added that the new Flash Tower was designed to “take us back to where we need to be”.

Noting that the US, where Bahamas Waste’s biodiesel plant was manufactured, had much more stringent regulations on how often cooking oil could be reused, Ms Harper said that in the Bahamas it was used “until the chicken turns into conch”.

She added that the Flash Tower would require a further $50,000-$60,000 investment, coming on top of the $1.2 million already pumped into the biodiesel facility.

Elsewhere, Ms Harper said Bahamas Waste had acquired 30,000 of its own shares to-date as part of the ‘buyback’ programme announced in January, in a bid to stop small retail trades - with vendors desperate to sell - from depressing its stock price.

Looking forward, she added: “We’re in a good position. Obviously, our bottom line is not where we’d like it to be, but we have the ability to accept more work if offered the opportunity.

“We are still the pacesetter in our industry, and our balance sheet is so strong.”