01—Abstract
Summary
Summary of the 10-K filed February 22, 2021. Cited figures are marked; the original filing is the authoritative source.
Waste Management, Inc. (WM) operates as North America's leading provider of comprehensive waste management and environmental services.
For the fiscal year ending December 31, 2020, the company reported revenues of $15.2 billiona, a slight decrease of 1.5% from the prior year, largely due to the impact of the COVID-19 pandemic on waste volumes, particularly in its collection and disposal segments. Despite the revenue dip, WM demonstrated resilience through proactive cost management, resulting in operating expenses remaining flat as a percentage of revenue. The company completed a significant strategic move with the acquisition of Advanced Disposal Services, Inc. in October 2020, which is expected to enhance its service offerings and geographic reach, though it also contributed to increased acquisition-related costs and integration efforts.
Financially, WM generated $3.4 billionb in net cash from operating activities and $2.7 billion in free cash flow, showcasing its strong operational cash generation. The company continued its commitment to shareholder returns by paying $1.3 billion in dividends and share repurchases, and announced an expected 5.5% increase in its quarterly dividend for 2021, marking its 18th consecutive year of dividend increases. WM's robust asset network, including the largest landfill network in North America, positions it well for continued leadership and adaptability in the evolving waste management and environmental services industry.
02—Key points
Key Highlights
- Revenue of $15.2 billion for FY 2020, a 1.5% decrease from FY 2019, primarily impacted by COVID-19 related volume declines in collection and disposal services.
- Completed the acquisition of Advanced Disposal Services, Inc. in October 2020 for approximately $4.6 billion (including net debt), expanding its market presence and customer base.
- Generated $3.4 billion in net cash from operating activities and $2.7 billion in free cash flow in FY 2020, demonstrating strong liquidity and cash generation.
- Returned $1.3 billion to shareholders through dividends and share repurchases in FY 2020.
- Announced an expected 5.5% increase in quarterly dividends for 2021, signaling confidence in continued cash flow generation.
- Maintained operating expenses as a percentage of revenue flat at 61.4% despite revenue challenges, due to proactive cost management efforts.
- Invested $1.6 billion in capital expenditures and $4.1 billion in acquisitions in FY 2020, reflecting continued strategic investment in growth and operations.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2020, Waste Management Inc kept $0.10.
- Revenue$15.22B100.0%
- Cost of revenue−$9.34B61.4%
- Gross profit$5.88B38.6%
- Operating costs−$3.44B22.6%
- Operating income$2.43B16.0%
- Interest, other & tax−$938.0M6.2%
- Net income$1.50B9.8%
Where FY2020 revenue went
$15.22B- Cost of revenue: $9.34B, 61% of revenue
- Net income: $1.50B, 9.8% of revenue
- SG&A: $1.73B, 11% of revenue
- Other operating costs: $1.72B, 11% of revenue
- Interest, other & tax: $938.0M, 6.2% of revenue
Kept 9.8% as net incomeNet income $1.50B · 9.8%
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2020filed February 22, 2021Financial Statements
FY2020 against FY2019
| Line item | FY2020FY2019 | Change |
|---|---|---|
| Revenue | $15.22B$15.46B | −1.5% |
| Cost of Revenue | $9.34B$9.50B | −1.6% |
| Gross Profit | $5.88B$5.96B | −1.4% |
| SG&A Expenses | $1.73B$1.63B | +5.9% |
| Operating Expenses | $12.78B$12.75B | +0.3% |
| Operating Income | $2.43B$2.71B | −10.1% |
| Net Income | $1.50B$1.67B | −10.4% |
| EPS (Basic) | $3.54$3.93 | −9.9% |
| EPS (Diluted) | $3.52$3.91 | −10.0% |
| Shares Outstanding (Basic) | 423.00M424.60M | −0.4% |
| Shares Outstanding (Diluted) | 425.10M427.50M | −0.6% |
05—Questions
Frequently Asked Questions
What was Waste Management's financial performance in 2020, and what were the key drivers?
In 2020, Waste Management reported revenues of $15.2 billion, a slight decrease of 1.5% from 2019, largely due to reduced waste volumes from the COVID-19 pandemic impacting commercial and industrial customers. Despite this, the company maintained flat operating expenses as a percentage of revenue through cost controls. Key financial achievements included strong operating cash flow of $3.4 billion and free cash flow of $2.7 billion, alongside a significant acquisition of Advanced Disposal.
How did the acquisition of Advanced Disposal impact Waste Management?
The acquisition of Advanced Disposal, completed in October 2020, was a major strategic move that cost approximately $4.6 billion (including net debt). This acquisition expands Waste Management's operational footprint and customer base, particularly in the Eastern U.S. While it contributed to increased acquisition and integration costs in 2020, it is expected to enhance the company's service offerings and market position.
What is Waste Management's strategy for returning capital to shareholders?
Waste Management has a consistent strategy of returning capital to shareholders through dividends and share repurchases. In 2020, the company paid out $1.3 billion to shareholders via these methods. Notably, they announced an expected 5.5% increase in their quarterly dividend for 2021, marking their 18th consecutive year of dividend increases, which reflects their confidence in sustained cash flow generation.
What are the main risks facing Waste Management, as highlighted in the 10-K?
Key risks highlighted include the potential impact of economic conditions and the ongoing effects of the COVID-19 pandemic on waste volumes and customer behavior. Regulatory changes, competition within the industry, operational and safety risks inherent in waste management, cybersecurity threats, and fluctuations in commodity prices (especially for recyclables) are also significant concerns. The company also faces risks related to its extensive natural gas vehicle fleet and potential mandates for transitioning to electric vehicles.
06—Continue