The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Waste yesterday branded the New Providence landfill “our biggest source of pain” in 2016, with “disastrous” waiting times and equipment damage undermining revenue performance that was 8 per cent above expectations.

Francisco deCardenas, the BISX-listed waste provider’s managing director, told Tribune Business that operating conditions at the landfill had a “substantial” impact on his company’s costs, with its vehicles sometimes forced to wait more than two hours to tip loads.

While these challenges, which peaked in Hurricane Matthew’s immediate aftermath, have now eased, Mr deCardenas said operating hours at the landfill were cut by six hours per day when Renew Bahamas exited the site and its management contract.

Emphasising that he was not blaming the Department of Environmental Health Services (DEHS), or its staff, who were left to ‘pick up the pieces’ by Renew Bahamas, Mr deCardenas said: “The landfill was our biggest source of pain; equipment and waiting times.

“I can’t put a monetary value on that, but it’s substantial. Some waiting times were over two hours; a disaster. It increased our operating costs significantly - overtime, and the loss of customer loyalty. It’s like a domino effect.”

He added: “They’ve opened up another site on Carmichael Road, which is taking some of the C&D (construction and demolition) and green waste, there are still challenges with the hours [at the landfill].

“We have operations that are 24 hours a day. When Renew stopped, and the DEHS took over the landfill, the hours were reduced by six hours per day, and it was difficult to manage.

“We’re doing our best, and they’re [the DEHS] trying to work with us and being as accommodating as they possibly can. They’ve managed to do the best they can in the circumstances.”

The Government and DEHS were taken by surprise by Renew Bahamas’ decision to walk away from the landfill in Matthew’s immediate aftermath, which meant the latter took over operations ‘cold’.

Mr deCardenas, writing in Bahamas Waste’s 2016 annual report, told shareholders that the extra time and costs associated with the landfill’s woes ended up cancelling out the company’s year-over-year-top line revenue increase.

With operating expenses up compared to 2015, Bahamas Waste’s total comprehensive income dropped by around $20,000 or 2.1 per cent year-over-year, falling to $935,730.

“Our top line revenues increased over financial year 2015, which was mainly due to post-Hurricane Matthew activity, several Out Island clean-up jobs and the Spring and summer festivals,” Mr deCardenas wrote.

“While our total direct revenue increased by 1 per cent over 2015 totals, and 8 per cent over budgeted amounts, our direct expenses also increased across the Board.

“One of the main factors driving this increase was directly linked to the failures at the landfill. To make matters worse, immediately post-Hurricane Matthew, the landfill operations were taken over by the Department of Environmental Health (DEHS), which unfortunately was put in a very difficult situation, having to get teams and equipment in place to run the landfill.

“As a result of reduced and/or unknown operating hours, limited landfill equipment, no cover material and inexperienced personnel, we suffered major delays and damages on a consistent basis. I would like to thank all of my customers who endured these unacceptable delays, and their continued patience.”

Bahamas Waste’s total sales revenue rose from $10.907 million to $10.993 million year-over-year, but an increase in direct expenses saw gross profit drop by 1.4 per cent to $3.712 million. Total operating expenses increased by 6.1 per cent, growing from $2.712 million to $2.877 million.

“Considering everything that was going on, we’re pleased with the results,” Mr deCardenas told Tribune Business. “Considering everything that was going on, we did alright.”

His assessment was slightly more downbeat than in the annual report, where he told shareholders that the 2016 financial performance “came in far better than expected, and certainly better than forecasted”.

The annual report also revealed that Bahamas Waste wound-up its cardboard recycling venture on December 6, 2016, its Board having decided last April to gradually ‘wind down’ the initiative.

All staff involved with the cardboard recycling have been redeployed to other areas of Bahamas Waste’s business, with the buildings that housed the venture now accommodating its equipment maintenance.

Mr deCardenas told Tribune Business that Bahamas Waste chose to exit the cardboard recycling because of “continued losses”, which totalled $183,357 in 2015.

“Volatile market, continued losses. It was just unsustainable,” he explained, suggesting that Bahamas Waste was unable to obtain an adequate supply of waste cardboard to make the venture viable.

“We were only dealing with one commodity,” Mr deCardenas explained. “I didn’t have control over it, there is no legislation to mandate recycling, and it was only those wishing to participate.

“It was really tough. We sent the bailer back, and some of our miscellaneous equipment we got rid of locally.”

Bahamas Waste gained $42,729 from the sale of the cardboard recycling equipment, while some $8,840 of obsolete inventory has been provided for.

There were positive developments, though, with Bahamas Waste’s other recycling venture, namely the conversion of waste vegetable oil into biodiesel.

That was last year transferred to Bahamas Sustainable Fuels Ltd, an entity in which Bahamas Waste holds a 49 per cent equity interest, with the majority stake held by 700 Islands Energy Ltd.

Among the principals in 700 Islands Energy, which is based at the Airport Industrial Park, is well-known Bahamian soccer player and coach, Happy Hall. He has partnered with Michael Lokey, a Florida-based entrepreneur, who is the founding partner and chief executive of Sunshine Biofuels, a five-year old company based on Lake Worth.

Although Bahamas Sustainable Fuels made a near-$46,000 loss in 2016, Mr deCardenas said Bahamas Waste “couldn’t be more pleased with the quality of fuel” it was producing.

He added that the BISX-listed waste services provider was using biodiesel to power more of its vehicle fleet, and looking to run 70 per cent off the fuel.

“Compared to what we had before, where it was hit and miss one week to another, we haven’t had absolutely any issues in 2017,” Mr deCardenas told Tribune Business.

He added that Bahamas Waste, and its Bahamas Sustainable Fuels partner, were now looking to expand the biodiesel beyond just the former’s vehicle fleet.

Bahamas Waste, at 2016 year-end, granted Bahamas Sustainable Fuels an exclusive purchase agreement, whereby it will purchase a minimum of 15,000 gallons of biodiesel per month, based on production volumes.

The agreement, which is for 12 months and renewable annually, prices the biodiesel 5 per cent below prevailing global market rates.

Bahamas Waste purchased $308,952 worth of biodiesel from its affiliate in 2016. It also granted Bahamas Sustainable Fuels a seven-year lease, with an option to renew for two further five-year terms, over the buildings housing the biodiesel recycling equipment.

The lease payments are $500 per month for the first six months, after which they will increase to $1,197.