10-KPeriod: FY2012

WASTE MANAGEMENT INC Annual Report, Year Ended Dec 31, 2012

Filed February 14, 2013For Securities:WM

Summary

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 billion 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 million 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.

Financial Highlights

53 data points
Beta

Revenue

$13.65B

34.9% Gross Margin

Net Income

$817.00M

6.0% Net Margin

EPS (Diluted)

$1.76

Total Assets

$23.10B

Cash & Equivalents

$194.00M

Free Cash Flow

$2.29B

Financial Statements
Beta
Revenue$13.65B
Cost of Revenue$8.88B
Gross Profit$4.77B
SG&A Expenses$1.47B
Operating Expenses$11.80B
Operating Income$1.85B
Interest Expense$509.00M
Net Income$817.00M
EPS (Basic)$1.76
EPS (Diluted)$1.76
Shares Outstanding (Basic)463.60M
Shares Outstanding (Diluted)464.40M

Key Highlights

  • 1Total operating revenues increased by 2.0% to $13.6 billion in 2012, primarily driven by acquisitions and internal yield improvements.
  • 2The company announced an expected increase in its quarterly dividend from $0.355 to $0.365 per share for dividends declared in 2013.
  • 3WM completed a significant operational reorganization in July 2012, streamlining management and reducing the cost structure by consolidating geographic Areas.
  • 4Acquisitions, notably Oakleaf Global Holdings, contributed significantly to revenue growth, although integration costs impacted operating expenses.
  • 5Net income attributable to Waste Management, Inc. decreased to $817 million in 2012 from $961 million in 2011, impacted by impairment and restructuring charges.
  • 6Free cash flow decreased to $829 million in 2012 from $1,198 million in 2011, influenced by increased capital expenditures and lower cash earnings.
  • 7Recycling revenues were negatively impacted by a 25% decline in commodity prices in 2012, affecting operating income.

Frequently Asked Questions

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.

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.

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.

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.