Summary
Waste Management Inc. (WM) faced a challenging economic environment in 2008, marked by severe economic uncertainty, market volatility, and tightening credit conditions. Despite these headwinds, the company reported a slight increase in revenue to $13.388 billion, driven by internal revenue growth from pricing strategies (yield). However, income from operations saw a marginal decrease due to factors like volatile recycling commodity markets in Q4, higher fuel costs throughout most of the year, and non-recurring charges related to environmental remediation liabilities and labor matters. Looking ahead to 2009, WM announced a significant organizational streamlining initiative, consolidating its market areas and reducing employee positions, which is expected to yield substantial cost savings. The company remains focused on operational efficiency and generating strong free cash flow to manage its debt obligations and return value to shareholders. The company's performance was also impacted by a lawsuit against SAP AG regarding a revenue management system, with a potential impairment charge of $45-$55 million if the system is abandoned.
Financial Highlights
50 data points| Revenue | $13.39B |
| SG&A Expenses | $1.48B |
| Operating Expenses | $11.15B |
| Operating Income | $2.23B |
| Interest Expense | $472.00M |
| Net Income | $1.09B |
| EPS (Basic) | $2.21 |
| EPS (Diluted) | $2.19 |
| Shares Outstanding (Basic) | 492.10M |
| Shares Outstanding (Diluted) | 495.40M |
Key Highlights
- 1Revenue increased slightly to $13.388 billion in 2008, driven by a 2.8% "yield" in base business due to pricing initiatives.
- 2Net income decreased to $1.087 billion ($2.19 diluted EPS) in 2008 from $1.163 billion ($2.23 diluted EPS) in 2007.
- 3Operating cash flow increased by 5.6% to $2.575 billion.
- 4The company announced a restructuring plan in early 2009 to consolidate market areas, eliminate over 1,000 positions, and achieve annualized cost savings exceeding $100 million, with an expected charge of $40-$50 million.
- 5Recycling commodity prices experienced a significant downturn in Q4 2008, negatively impacting revenue and earnings.
- 6The company suspended share repurchases in July 2008 due to the proposed acquisition of Republic Services and the uncertain financial markets.
- 7A lawsuit was filed against SAP AG for fraud and breach of contract related to a software implementation, with a potential impairment charge if the system is abandoned.