Trash hauling giant Waste Management (WM) increased its net income to $138 million this quarter, despite a decrease in revenues to $2.61 billion. In the first quarter last year, WM earned $124 million on $2.72 billion in revenue.
Houston-based WM said its earnings would have been higher were it not for several costly charges, including a $37-million restructuring charge and $2 million in asset impairments also related to its recently announced restructuring. However, $6 million in pre-tax credits offset some of those charges, the company said.
"Given the tough economy, the seasonal slowdown and their combined negative impact on revenues, our bottom-line performance proved our ability to better manage variable costs," said president & CEO A. Maurice Myers.
Myers added that for the quarter, lower volumes reduced revenue by about 3%, with the March volumes off quite a bit more than volumes in January and February. However, he added that April landfill and roll-off volumes have rebounded, and those factors combined with favorable moves in recycling commodity prices lead it to be optimistic.
However, WM has a dark cloud on of sorts its horizon. The Securities and Exchange Commission (SEC) has filed a civil suit against six former executives of WM alleging that they illegally inflated the company's profits by $1.7 billion between 1992 and 1997.
SEC claims that those former executives and its auditor, Arthur Andersen, conspired to hide the accounting fraud, which cost shareholders $6 billion when the trash hauler was forced to restate its earnings in 1997.
Andersen paid $7 million to SEC last June of last year to settle its part of SEC's civil case. However, WM itself is not named in the suit, as the alleged fraud occurred prior to Myers's tenure at the company.