By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Bahamas Waste’s managing director yesterday said it endured a “terrible” 2013 first quarter with net income down 72.3 per cent, due to a combination of key cost increases and reduced residential rates.

Expressing hope that the BISX-listed waste services provider might have seen an improvement in the current period, Francisco De Cardenas told Tribune Business that the residential garbage collection rate it was receiving from the Government had been cut by 30 per cent for the first quarter.

And rising fuel and raw material prices had driven a 9.8 per cent year-over-year increase in Bahamas Waste’s direct cost of sales and expenses, which rose from $1.669 million to $1.834 million for the three months to end-March 2013.

With the top-line down 3.3 per cent year-over-year, standing at $2.429 million compared to $2.511 million, even a reduction in total operating expenses could not prevent Bahamas Waste’s first quarter 2013 net income from falling to $74,828,.

That represented a relatively steep drop on the prior year’s $269,784 bottom line performance, and Mr De Cardenas told Tribune Business: “It was a terrible first quarter. Obviously, we were not very pleased.

“The garbage collection rate from government came down 30 per cent. We also had fuel challenges, and cost of raw materials. Things are still tough out there, but it has been disappointing.

“I’m hoping we may have seen a little bit of an improvement moving forward into the second quarter, and should know pretty soon.”

On a positive note, Mr De Cardenas told Tribune Business that the company’s $30,000 investment in the purchase and installation of a new Flash Tower should “double” the speed at which it converts waste cooking/vegetable oil into biodiesel.

“We’ll be able to double the speed of the current process,” he said. “We’ll be able to process the oil more efficiently, so we’re pretty excited about that. It’ll be a nice improvement.”

Around 70 per cent of Bahamas Waste’s own vehicle fleet is running on biodiesel, and Mr De Cardenas said the company was producing between 5,000-7,000 gallons per month.

“I’m OK with the waste vegetable oil,” he added. “It’s a pretty technical thing, and once we get this new piece of equipment in we’ll evaluate how things are going.”

Bahamas Waste’s waste vegetable oil recycling business generated a $32,185 net loss during the three months to end-March 2013, compared to a small $6,527 profit during the same period last year. The biodiesel is used only in Bahamas Waste’s own business.

Both it, and the cardboard recycling segment, are continuing to act as a slight drag on the BISX-listed company’s overall performance. The cardboard business produced a $35,918 net loss for the 2013 first quarter, an improvement over the previous year’s $55,594 in red ink.

“We just need to get the card out,” Mr De Cardenas said. “It’s been a tough sell, and we could definitely use a bit more volume.”

Cardboard exports to China have been continuing, though, and Mr De Cardenas told Tribune Business: “We had five containers go out three-four weeks ago. That was our second shipment, but we need the volume.”

Explaining why Bahamas Waste had chosen to venture into ‘start-up’ areas that might take a while to produce a profit, Mr De Cardenas told Tribune Business: “We want to do what is right for the environment, and the landfill, the state it is in, could use all the help it can to alleviate what goes into it.

“We went into these things thinking we could make money. It’s not as easy as it was held out to be, and just have to keep plugging away.”

Following authorisation from its Board of Directors in January, Bahamas Waste has begun the share ‘buy back’ plan that allows it to re-purchase up to 10 per cent of its issued common shares over the 15 months to end-October 2013.

During the 2013 first quarter, the company acquired 17,330 shares for a total cost of $42,402, as it moves to protect loyal shareholders against sudden price drops caused by retail investors willing to sell out at any cost.

Besides offering such sellers an exist route, Bahamas Waste is also signalling to the market - in providing such liquidity - what it thinks the true value of its stock is.

Indicating that the company and its major shareholders thought it was “at least” a $3 per share stock, Mr De Cardenas said of the public stock exchange: “It’s still a very immature market.

“We had it at $2.70, it went back to $2.50, and we just bought a chunk, so it went back to $2.70.

“We’re just going to keep an eye on it, see how it goes and, depending on cash flow, continue to buy when we feel it’s right.”

Looking to the immediate future, Bahamas Waste has expanded the residential garbage collection work it is doing for the Government in inner-city New Providence.

“We’re hoping that’s going to go real well, and hopefully we can make it a permanent thing,” Mr De Cardenas told Tribune Business. “It’s all up to the Ministry of the Environment and the Department of Environmental Health. We can only keep on proving ourselves and they see us as the right way to go.”