Waste Management CEO Jim Fish on CNBC Friday disputed the narrative that major companies are using most of the new corporate tax cut to buy back stock.
Fish cited the trash and recycling giant’s plans as case and point, saying the company he leads is giving special bonuses of $2,000 to about 34,000 employees. He also said the tax cut windall will be used to purchase new equipment.
“So about three-quarters to 80 percent of it is going to go back into the economy. And we think it will benefit shareholders on the back end of the cycle,” Fish told “Squawk Box.”
The new tax law, championed by President Donald Trump and Republicans on Capitol Hill, reduces the federal corporate tax rate from 35 percent to 21 percent.
“The benefit to us was about $275 million,” Fish said. “We gave about $70 million back to employees through a bonus. And we’re spending an extra $150 [million] by accelerating some spending on trucks and some IT spends.”
“We like what tax reform has done for us so far,” he said. “We’re a pretty good barometer of the economy. We see it on just about every sector of the economy, whether it’s the industrial or the services side. Right now, we’re seeing a very good economy.”
Fish said Waste Management’s better-than-expected top and bottom lines reflected the strengthening economy.
On Thursday, the company said it earned an adjusted 85 cents in its fiscal fourth quarter. That was 2 cents better than estimates and 10 cents higher than the year-ago period. Revenue for the most recent quarter increased about 5.5 percent to $3.65 billion, above estimates and last year’s $3.46 billion.
Waste Management also issued upbeat full-year guidance: $3.97 to $4.05 per share versus expectations of $3.67 per share.
Shares of Waste Management, as of Thursday’s close, were 2.6 percent lower in 2018. That compares to a 2.2 percent gain for the S&P 500.
During Fish’s tenure as CEO, which began in November 2016, the stock has gained about 30 percent, basically matching the S&P’s advance.
