HOUSTON – Waste Management Inc., the No. 1 U.S. garbage hauler, on Tuesday said fourth-quarter net income jumped, but profits were hurt by the weak economy and a $16 million charge from contracts with bankrupt energy giant Enron.
Net earnings were $158 million, or 25 cents a share, up from $39 million, or 6 cents a share, in the fourth quarter of 2000. Revenues slipped to $2.79 billion from $2.88 billion a year earlier.
In mid-February Waste Management put into effect immediate cost-cutting measures, focusing on overtime, contract labor, travel and professional fees, Chairman, President and Chief Executive A. Maurice Myers said in a statement.
"These steps are absolutely necessary in light of the slowdown in the economy and the resulting impact to our business levels." Myers said. "We estimate that diligence in controlling these costs can save up to $50 million during the course of 2002. Further opportunities for cost savings and efficiency improvements are currently being assessed."
Waste Management said that on a pro forma basis it earned $198 million, or 31 cents per share, up from $181 million, or 29 cents a share, in the year-ago period. The pro forma results include a $77 million pretax benefit from certain settlements and also include $14 million in revenue reductions and $2 million in pretax expense related to Enron bankruptcy filings.
The Houston-based company also said it expects revenue of $11.4 billion to $11.5 billion for 2002, before the $11.32 billion in revenue it reported for 2001.
Waste Management said that it expects 2002 earnings before interest, taxes, depreciation and amortization (EBITDA) to be 28 percent to 28.5 percent of revenue.
The company added that it expects 2002 capital expenditures of about $1.3 billion and said that it will allocate about $250 million in additional capital for acquisitions.
Shares of Waste Management closed at $25.23 on Monday. The shares have plunged about 20 percent so far this year.