01—Abstract
Summary
Summary of the 10-K filed February 14, 2013. Cited figures are marked; the original filing is the authoritative source.
Waste Management, Inc. (WM) demonstrated revenue growth in 2012, driven by strategic acquisitions, particularly Oakleaf Global Holdings, and internal yield improvements in its core collection and disposal services.
Despite lower commodity prices negatively impacting recycling revenues and increased operating expenses due to acquisitions and fuel costs, the company managed to increase its dividend and maintained its commitment to shareholder returns. The company is focused on its three transformational goals: deeper customer understanding, extracting more value from materials, and improving operational efficiency through initiatives like a significant operational reorganization in July 2012. WM continues to invest in greener technologies and expand its service offerings, positioning itself for long-term growth in a dynamic industry.
Financially, WM reported revenues of $13.6 billiona for 2012, a 2.0% increase from 2011. However, net income attributable to Waste Management, Inc. decreased to $817 million in 2012 from $961 million in 2011, partly due to impairment and restructuring charges totaling $109 million and $82 million respectively.
Free cash flow also saw a decrease, coming in at $829 million in 2012 compared to $1,198 millionb in 2011. The company's strategic direction emphasizes growth through customer focus, technology investment, and operational efficiency, aiming to deliver long-term value to stockholders.
02—Key points
Key Highlights
- Total operating revenues increased by 2.0% to $13.6 billion in 2012, primarily driven by acquisitions and internal yield improvements.
- The company announced an expected increase in its quarterly dividend from $0.355 to $0.365 per share for dividends declared in 2013.
- WM completed a significant operational reorganization in July 2012, streamlining management and reducing the cost structure by consolidating geographic Areas.
- Acquisitions, notably Oakleaf Global Holdings, contributed significantly to revenue growth, although integration costs impacted operating expenses.
- Net income attributable to Waste Management, Inc. decreased to $817 million in 2012 from $961 million in 2011, impacted by impairment and restructuring charges.
- Free cash flow decreased to $829 million in 2012 from $1,198 million in 2011, influenced by increased capital expenditures and lower cash earnings.
- Recycling revenues were negatively impacted by a 25% decline in commodity prices in 2012, affecting operating income.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2012, Waste Management Inc kept $0.06.
- Revenue$13.65B100.0%
- Cost of revenue−$8.88B65.1%
- Gross profit$4.77B34.9%
- Operating costs−$2.92B21.4%
- Operating income$1.85B13.6%
- Interest, other & tax−$1.03B7.6%
- Net income$817.0M6.0%
Where FY2012 revenue went
$13.65B- Cost of revenue: $8.88B, 65% of revenue
- Net income: $817.0M, 6.0% of revenue
- SG&A: $1.47B, 11% of revenue
- Other operating costs: $1.45B, 11% of revenue
- Interest, other & tax: $1.03B, 7.6% of revenue
Kept 6.0% as net incomeNet income $817.0M · 6.0%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2012filed February 14, 2013Financial Statements
FY2012 against FY2011
| Line item | FY2012FY2011 | Change |
|---|---|---|
| Revenue | $13.65B$13.38B | +2.0% |
| Cost of Revenue | $8.88B$1.29B | +589.9% |
| Gross Profit | $4.77B$12.09B | −60.5% |
| SG&A Expenses | $1.47B$1.55B | −5.1% |
| Operating Expenses | $11.80B$11.35B | +3.9% |
| Operating Income | $1.85B$2.03B | −8.7% |
| Interest Expense | $509.00M$503.00M | +1.2% |
| Net Income | $817.00M$961.00M | −15.0% |
| EPS (Basic) | $1.76$2.05 | −14.1% |
| EPS (Diluted) | $1.76$2.04 | −13.7% |
| Shares Outstanding (Basic) | 463.60M469.70M | −1.3% |
| Shares Outstanding (Diluted) | 464.40M471.40M | −1.5% |
05—Questions
Frequently Asked Questions
What were the main drivers of Waste Management's revenue growth in 2012?
Waste Management's revenue growth in 2012 was primarily driven by strategic acquisitions, most notably the acquisition of Oakleaf Global Holdings, which contributed significantly to revenue. Additionally, internal revenue growth from yield on its collection and disposal services, as well as higher volumes in certain businesses like recycling brokerage and material recovery facilities, contributed to the overall increase. Fuel surcharges and mandated fees also added to revenue.
What impact did commodity price fluctuations have on Waste Management's 2012 performance?
Commodity price fluctuations, particularly the 25% year-over-year decline in recycling commodity prices in 2012, had a significant negative impact on Waste Management's recycling revenues. This decrease in commodity prices resulted in lower revenues and an estimated negative impact on income from operations of approximately $130 million for 2012.
How did the company's operational reorganization in July 2012 affect its financial results?
The July 2012 reorganization aimed to streamline management and reduce costs. While it involved eliminating approximately 700 positions and incurred restructuring charges of $67 million (with $56 million related to employee severance and benefits), the company expected long-term benefits from improved operational efficiency and a reduced cost structure. For the twelve months ended December 31, 2012, the company realized $20 million in labor and benefits cost savings from these restructuring activities.
What is the outlook for Waste Management's dividends and share repurchases?
Waste Management's Board of Directors expects to increase the quarterly dividend from $0.355 to $0.365 per share for dividends declared in 2013, signaling confidence in the company's ability to generate strong cash flows. Additionally, the Board authorized up to $500 million in share repurchases for the 2013 financial plan, indicating a continued commitment to returning value to shareholders.
06—Continue