10-QPeriod: Q3 FY2008

WASTE MANAGEMENT INC Quarterly Report for Q3 Ended Sep 30, 2008

Filed October 30, 2008For Securities:WM

Summary

Waste Management, Inc. (WM) reported a solid third quarter for 2008, demonstrating resilience despite significant economic headwinds. Revenues increased by 3.6% year-over-year to $3.5 billion, driven by yield improvements in base business operations and increased commodity prices for recycling. Diluted earnings per share saw a notable increase of 16.7% to $0.63. The company successfully managed its operating expenses, maintaining them as a percentage of revenue despite higher fuel costs and labor disruptions, showcasing strong cost control and operational excellence. Despite challenges such as record high fuel prices, volume declines due to economic slowdown and pricing competition, and a recent downturn in recyclable commodity markets, Waste Management maintained a positive outlook. The company's essential services business model and strong cash flow generation provide confidence in its ability to navigate the current economic climate and meet its financial obligations. Management highlighted a disciplined approach to cost management, strategic pricing initiatives, and operational efficiency as key drivers for continued performance.

Financial Highlights

22 data points
Beta

Revenue

$3.52B

Net Income

$310.00M

8.8% Net Margin

EPS (Diluted)

$0.63

Cash & Equivalents

$504.00M

Free Cash Flow

$771.00M

Financial Statements
Beta
Revenue$3.52B
SG&A Expenses$369.00M
Operating Expenses$2.89B
Operating Income$632.00M
Net Income$310.00M
EPS (Basic)$0.63
EPS (Diluted)$0.63

Key Highlights

  • 1Revenue increased by 3.6% to $3.5 billion for the third quarter of 2008 compared to the prior year period.
  • 2Diluted earnings per share (EPS) grew by 16.7% to $0.63 in the third quarter of 2008.
  • 3Income from operations rose by 11.9% to $632 million, with operating margins improving by 130 basis points to 17.9%.
  • 4Despite increased fuel costs and labor disruptions, operating costs as a percentage of revenue remained stable due to effective cost control.
  • 5The company reported strong free cash flow of $524 million for the third quarter of 2008.
  • 6Waste Management withdrew its proposal to acquire Republic Services, Inc. due to current financial market conditions.
  • 7The company notes recent dislocation and price declines in the recyclable commodities markets, which are expected to impact revenues and earnings.

Frequently Asked Questions

In the third quarter of 2008, Waste Management reported a 3.6% increase in revenue to $3.5 billion and a 16.7% increase in diluted earnings per share to $0.63, compared to the same period in 2007. Income from operations grew by 11.9% to $632 million, with operating margins expanding by 130 basis points.

The company faced significant challenges including record high fuel prices, volume declines in certain service areas due to economic slowdown and pricing competition, and a recent sharp downturn in the recyclable commodities markets. Additionally, there was a labor disruption in Milwaukee, Wisconsin, which increased operating expenses.

Waste Management effectively managed its expenses by maintaining operating costs as a percentage of revenue, despite headwinds. This was achieved through disciplined cost control, operational efficiencies, strategic pricing initiatives, and a focus on safety.

Waste Management expressed confidence in its ability to navigate the current economic climate due to the essential nature of its services and its strong cash flow generation. The company plans to rely on available cash, operational cash flow, and its existing credit facility to meet financial obligations. However, recent declines in commodity prices are expected to impact revenues and earnings in the near term.