10-KPeriod: FY2009

WASTE MANAGEMENT INC Annual Report, Year Ended Dec 31, 2009

Filed February 16, 2010For Securities:WM

Summary

Waste Management, Inc. (WM) reported revenues of $11.8 billion for the year ended December 31, 2009, a decrease from the prior year primarily attributed to challenging economic conditions, lower recyclable commodity prices, and reduced electricity market prices. Despite these headwinds, the company demonstrated resilience through effective cost management, internal revenue growth from pricing initiatives, and a strong focus on operational excellence. Management highlighted the generation of $1.2 billion in free cash flow, which supported dividend payments and share repurchases, underscoring the company's ability to generate consistent cash flows. Looking ahead, WM aims to continue its strategy of operational and pricing excellence, with a focus on profitable growth and returning value to shareholders through dividends and share repurchases. The company also announced an expected increase in its quarterly dividend for 2010, signaling confidence in its future performance and cash generation capabilities.

Financial Highlights

51 data points
Beta

Revenue

$11.79B

Net Income

$994.00M

8.4% Net Margin

EPS (Diluted)

$2.01

Total Assets

$21.15B

Cash & Equivalents

$1.14B

Free Cash Flow

$2.36B

Financial Statements
Beta
Revenue$11.79B
SG&A Expenses$1.36B
Operating Expenses$9.90B
Operating Income$1.89B
Interest Expense$443.00M
Net Income$994.00M
EPS (Basic)$2.02
EPS (Diluted)$2.01
Shares Outstanding (Basic)491.20M
Shares Outstanding (Diluted)493.60M

Key Highlights

  • 1Total revenue for 2009 was $11.8 billion, a decrease from $13.4 billion in 2008, primarily due to economic conditions and market factors affecting commodity and electricity prices.
  • 2The company generated $1.211 billion in free cash flow, down from $1.466 billion in 2008, but sufficient to fund dividends and share repurchases.
  • 3Income from operations was $1.9 billion, impacted by $83 million in non-cash impairment charges related to software and a landfill.
  • 4Waste Management streamlined operations by consolidating 45 Market Areas into 25, incurring $50 million in restructuring costs but achieving over $120 million in annualized cost savings.
  • 5The company repurchased $226 million of its common stock in 2009 after suspending repurchases earlier in the year due to market conditions.
  • 6The Board of Directors expects to increase the quarterly dividend to $0.315 per share in 2010, an 8.6% increase.
  • 7Landfill assets remained significant, with 273 owned or operated landfills and an estimated weighted average remaining landfill life of approximately 35 years, extending to 41 years with expansion airspace.

Frequently Asked Questions

The challenging economic environment in 2009 led to reduced waste volumes due to lower construction activity and decreased consumer and business spending. This directly impacted Waste Management's revenues, causing a decline compared to 2008. Additionally, the company experienced an unusually weak recyclable commodities market and lower market prices for electricity, further affecting revenues.

Waste Management focused on several key strategies to manage costs and maintain profitability. These included maintaining pricing discipline, controlling operating costs through reductions in discretionary spending and headcount, and improving operational efficiency. The company also implemented a significant restructuring initiative by consolidating its market areas, which resulted in cost savings and standardization of processes.

Waste Management's strategy for returning value to shareholders includes a commitment to paying consistent cash dividends and repurchasing its common stock. The company noted an expected increase in its quarterly dividend for 2010 and repurchased $226 million of its stock in 2009, demonstrating its ongoing focus on shareholder returns.

The recycling segment experienced a significant downturn in 2009 due to weak market prices for recyclable commodities. Revenue from recycling operations decreased substantially compared to 2008, though market prices began to recover towards the end of 2009. The company's revenue growth from 'average yield' in collection and disposal operations partially offset these declines.