10-KPeriod: FY2015

WASTE MANAGEMENT INC Annual Report, Year Ended Dec 31, 2015

Filed February 18, 2016For Securities:WM

Summary

Waste Management, Inc. (WM) reported revenues of $12.96 billion for the year ended December 31, 2015, a decrease from the previous year primarily driven by the divestiture of its Wheelabrator business, lower volumes, and decreased fuel surcharges and commodity prices. Despite the revenue decline, the company emphasized strong core pricing in its collection and disposal operations, contributing to a positive yield. The company returned $1.3 billion to shareholders through dividends and share repurchases in 2015 and announced an expected dividend increase for 2016, signaling confidence in its free cash flow generation capabilities. Key financial events for 2015 included a significant pre-tax loss of $555 million related to the early extinguishment of senior notes, aimed at reducing future interest expenses. The company also managed various asset impairments and restructuring charges impacting net income. Despite these one-time items, WM's operational focus remained on cost control, customer service, and strategic growth through acquisitions, highlighted by the purchase of Deffenbaugh Disposal, Inc. The company continued to manage its extensive landfill network, which underpins its operations and future capacity.

Financial Highlights

56 data points
Beta

Revenue

$12.96B

36.5% Gross Margin

Net Income

$752.00M

5.8% Net Margin

EPS (Diluted)

$1.65

Total Assets

$20.37B

Cash & Equivalents

$39.00M

Free Cash Flow

$1.27B

Financial Statements
Beta
Revenue$12.96B
Cost of Revenue$8.23B
Gross Profit$4.73B
SG&A Expenses$1.34B
Operating Expenses$10.92B
Operating Income$2.04B
Net Income$752.00M
EPS (Basic)$1.66
EPS (Diluted)$1.65
Shares Outstanding (Basic)452.70M
Shares Outstanding (Diluted)455.90M

Key Highlights

  • 1Total operating revenues for 2015 were $12.96 billion, a decrease of 7.4% from $13.99 billion in 2014, largely due to divestitures and lower volumes.
  • 2Income from operations decreased to $2.045 billion in 2015 from $2.299 billion in 2014, impacted by various charges and the sale of the Wheelabrator business.
  • 3Net income attributable to Waste Management, Inc. was $753 million ($1.65 per diluted share) in 2015, down from $1.30 billion ($2.79 per diluted share) in 2014, significantly impacted by a $555 million loss on early debt extinguishment.
  • 4Free cash flow was $1.41 billion in 2015, a substantial decrease from $3.43 billion in 2014, primarily due to the proceeds from the Wheelabrator divestiture in the prior year.
  • 5The company returned $1.3 billion to shareholders in 2015 through dividends ($695 million) and share repurchases ($600 million).
  • 6Acquisition activity included Deffenbaugh Disposal, Inc. for $416 million in March 2015, strengthening its Midwest presence.
  • 7The company's extensive landfill network remained a core asset, with approximately 46 years of remaining weighted average landfill life based on remaining permitted airspace.

Frequently Asked Questions

Waste Management's operating revenues decreased by 7.4% to $12.96 billion in 2015 compared to 2014. This was primarily due to divestitures, notably the sale of the Wheelabrator business, which reduced revenues by $762 million. Other contributing factors included lower volumes ($215 million decrease), reduced fuel surcharges and mandated fees ($171 million decrease) due to lower fuel prices, and a decline in recyclable commodity prices ($138 million decrease). These were partially offset by positive revenue growth from yield on collection and disposal operations ($203 million increase) and revenues from acquisitions ($174 million increase).

In 2015, Waste Management incurred a significant pre-tax loss of $555 million related to the early extinguishment of nearly $2 billion of high-coupon senior notes. This was achieved through a make-whole redemption and cash tender offer, aimed at reducing future interest expenses and extending debt maturity. This loss negatively impacted diluted earnings per share by $0.75.

Waste Management returned $1.3 billion to shareholders in 2015 through dividends and share repurchases. The company announced that its Board of Directors expects to increase the quarterly dividend from $0.385 to $0.41 per share for dividends declared in 2016, reflecting confidence in its ability to generate strong and consistent cash flows. Future dividend declarations remain at the discretion of the Board.

Waste Management operates North America's largest network of landfills, owning or operating 249 sites as of December 31, 2015. The company has a weighted average remaining landfill life of approximately 46 years based on permitted airspace, with potential for further expansion at many sites. They are actively pursuing expansion permits at 21 landfills, demonstrating a strategy to maintain long-term disposal capacity.