10-QPeriod: Q2 FY2008

WASTE MANAGEMENT INC Quarterly Report for Q2 Ended Jun 30, 2008

Filed July 29, 2008For Securities:WM

Summary

Waste Management, Inc. (WM) reported solid operational performance for the six months ended June 30, 2008, with a 3.2% increase in internal revenue growth, reaching $6.8 billion. Despite headwinds from record-high fuel prices and a slowdown in the general economy impacting volumes, the company demonstrated resilience. Operating income for the period was $1.14 billion, with diluted earnings per share at $1.13. The company successfully managed operating expenses as a percentage of revenue, largely offsetting increased costs due to fuel and commodity prices. The balance sheet remained stable, with total assets at $20.05 billion and total liabilities at $14.03 billion. Financially, WM generated $1.13 billion in cash flow from operations, though free cash flow saw a decrease compared to the prior year due to lower divestiture proceeds and increased capital spending. The company continues to invest in its business, with capital expenditures of $486 million. Notably, WM has been actively managing its debt, issuing new senior notes and repaying existing ones. The company also highlighted its strategic proposal to acquire Republic Services, Inc., indicating a proactive approach to market consolidation.

Financial Highlights

22 data points
Beta

Revenue

$3.49B

Net Income

$318.00M

9.1% Net Margin

EPS (Diluted)

$0.64

Cash & Equivalents

$210.00M

Free Cash Flow

$1.13B

Financial Statements
Beta
Revenue$3.49B
SG&A Expenses$358.00M
Operating Expenses$2.86B
Operating Income$632.00M
Net Income$318.00M
EPS (Basic)$0.65
EPS (Diluted)$0.64

Key Highlights

  • 1Total revenues increased by 3.2% to $6.76 billion for the first six months of 2008.
  • 2Operating income for the six months was $1.14 billion, a slight increase from $1.11 billion in the prior year period.
  • 3Diluted earnings per share for the six months remained strong at $1.13, consistent with the prior year.
  • 4Net cash provided by operating activities increased to $1.13 billion for the six months ended June 30, 2008.
  • 5The company issued $600 million of new senior notes and repaid $244 million of existing senior notes.
  • 6Free cash flow decreased to $683 million for the six months, primarily due to lower proceeds from divestitures and higher capital expenditures.
  • 7Waste Management made a $6.2 billion all-cash proposal to acquire Republic Services, Inc., which was subsequently rejected by Republic's board.

Frequently Asked Questions

For the six months ended June 30, 2008, Waste Management reported total revenues of $6.76 billion, an increase from $6.55 billion in the prior year period. Operating income was $1.14 billion, up from $1.11 billion in the first half of 2007. Diluted earnings per share remained steady at $1.13 for both periods.

Operating expenses increased by 3.6% for the six months, largely driven by record-high fuel prices (a 48% increase year-over-year), higher commodity prices impacting the cost of goods sold, and the strengthening Canadian dollar. These increases were partially offset by operational efficiencies and cost management initiatives.

Net cash provided by operating activities increased to $1.13 billion for the first six months of 2008. However, free cash flow decreased to $683 million due to lower proceeds from divestitures and increased capital expenditures. The company has $1.4 billion in scheduled debt maturities within the next twelve months and manages its liquidity through its operating cash flow and existing credit facilities.

Waste Management made a $6.2 billion proposal to acquire Republic Services, Inc. This proposal indicates the company's strategic interest in industry consolidation and potential market expansion. While Republic's board rejected the initial proposal, Waste Management stated it is evaluating its options and has initiated an antitrust review process, signaling potential ongoing activity in this area.