01—Abstract
Summary
Summary of the 10-K filed February 13, 2020. Cited figures are marked; the original filing is the authoritative source.
Waste Management, Inc. (WM) reported solid revenues and operational performance for the fiscal year ending December 31, 2019.
The company demonstrated consistent growth in its core collection and disposal businesses, benefiting from a generally favorable economic environment. WM also made significant strategic investments, allocating substantial capital to acquisitions and fleet enhancements to support ongoing growth and operational efficiency. The company's commitment to returning value to shareholders was evident through increased dividend payouts and share repurchases, underscoring its financial stability and confidence in future performance.
Despite challenges like declining recycling commodity prices, WM continued to focus on sustainable business models and adapting to evolving customer needs and regulatory landscapes. The company's strategic initiatives, including investments in technology and people, are designed to leverage its industry-leading asset network for enhanced customer experience and profitable growth.
The pending acquisition of Advanced Disposal Services, Inc. is a key strategic move expected to further strengthen WM's market position, though subject to regulatory approvals and integration risks. Overall, Waste Management's 2019 performance reflects a resilient business model, a clear strategic vision, and a continued focus on delivering long-term value to its stakeholders.
02—Key points
Key Highlights
- Waste Management's total revenue increased by 3.6% to $15.46 billion in 2019, driven by growth in collection and disposal volumes and strategic acquisitions.
- The company's commitment to shareholder returns was highlighted by a planned 6.3% increase in quarterly dividends for 2020, marking the 17th consecutive year of dividend increases.
- Despite lower recycling commodity prices, WM focused on improving the profitability of its recycling business through fee-based pricing models to cover increased processing and contamination costs.
- Significant capital allocation was directed towards acquisitions ($527 million) and capital expenditures ($1.82 billion), including fleet modernization and landfill development, to support business growth.
- The company's strong financial position is supported by healthy operating cash flow ($3.87 billion) and free cash flow ($2.11 billion) in 2019.
- WM announced plans to acquire Advanced Disposal Services, Inc. for $4.9 billion (including debt), a strategic move aimed at expanding its market presence and operational capabilities.
- The company continued its investment in a natural gas vehicle fleet, operating nearly 9,000 natural gas trucks and 145 fueling facilities to reduce environmental impact and operating costs.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2019, Waste Management Inc kept $0.11.
- Revenue$15.46B100.0%
- Cost of revenue−$9.50B61.4%
- Gross profit$5.96B38.6%
- Operating costs−$3.25B21.0%
- Operating income$2.71B17.5%
- Interest, other & tax−$1.04B6.7%
- Net income$1.67B10.8%
Where FY2019 revenue went
$15.46B- Cost of revenue: $9.50B, 61% of revenue
- Net income: $1.67B, 11% of revenue
- SG&A: $1.63B, 11% of revenue
- Other operating costs: $1.62B, 10% of revenue
- Interest, other & tax: $1.04B, 6.7% of revenue
Kept 11% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2019filed February 13, 2020Financial Statements
FY2019 against FY2018
| Line item | FY2019FY2018 | Change |
|---|---|---|
| Revenue | $15.46B$14.91B | +3.6% |
| Cost of Revenue | $9.50B$9.25B | +2.7% |
| Gross Profit | $5.96B$5.67B | +5.2% |
| SG&A Expenses | $1.63B$1.45B | +12.3% |
| Operating Expenses | $12.75B$12.13B | +5.1% |
| Operating Income | $2.71B$2.79B | −3.0% |
| Net Income | $1.67B$1.93B | −13.2% |
| EPS (Basic) | $3.93$4.49 | −12.5% |
| EPS (Diluted) | $3.91$4.45 | −12.1% |
| Shares Outstanding (Basic) | 424.60M429.10M | −1.0% |
| Shares Outstanding (Diluted) | 427.50M432.20M | −1.1% |
05—Questions
Frequently Asked Questions
What was Waste Management's revenue performance in 2019?
Waste Management's operating revenues increased by 3.6% to $15.46 billion in 2019, compared to $14.91 billion in 2018. This growth was primarily driven by higher volumes and pricing in its collection and disposal business, along with contributions from acquisitions.
How is Waste Management addressing the decline in recycling commodity prices?
Waste Management is focusing on developing a sustainable recycling business model by assessing fees to cover higher processing costs and contamination rates, and by implementing a fee-based pricing model. Despite market price declines impacting revenue, these efforts aim to improve the long-term profitability of the recycling segment.
What is the status of the Advanced Disposal acquisition?
Waste Management entered into an Agreement and Plan of Merger to acquire Advanced Disposal for $4.9 billion in April 2019. The transaction was subject to regulatory approvals, and the company anticipated obtaining antitrust approval by the end of March 2020, with a closing expected shortly thereafter.
How does Waste Management return value to shareholders?
Waste Management demonstrates its commitment to shareholder value through consistent dividend payments and share repurchases. In December 2019, the company announced its Board of Directors expected to increase the quarterly dividend by 6.3% for 2020, marking the 17th consecutive year of dividend increases. The company also has a significant authorization for future share repurchases.
06—Continue