01—Abstract
Summary
Summary of the 10-Q filed April 29, 2010. Cited figures are marked; the original filing is the authoritative source.
Waste Management Inc. (WM) reported improved financial results for the first quarter of 2010 compared to the same period in 2009.
Revenue increased by 4.4% to $2,935 milliona, driven by higher commodity prices, a strengthening Canadian dollar, and improved pricing (yield) in collection and disposal services. While overall volumes declined by 4.9%, this was an improvement from the prior year's decline. Income from operations rose by 10.8% to $412 million, and net income attributable to Waste Management, Inc. increased to $182 million, or $0.37 per diluted share, up from $155 million, or $0.31 per diluted share, in the prior year.
The company highlighted discipline in pricing and cost control as key factors for the improved performance, despite challenges such as ongoing weakness in industrial collection volumes, rising fuel costs, and severe winter weather impacting operations. A notable non-recurring charge of $28 millionb was incurred due to withdrawals from an underfunded multi-employer pension plan. The company also continues to invest in strategic growth initiatives, including a 40% equity investment in Shanghai Environment Group and an expected acquisition of a waste-to-energy facility in Virginia.
02—Key points
Key Highlights
- Revenue increased by 4.4% to $2,935 million, driven by higher commodity prices and improved pricing.
- Income from operations increased by 10.8% to $412 million, with operating margin improving to 14.0% from 13.2%.
- Net income attributable to Waste Management, Inc. rose to $182 million, or $0.37 per diluted share, an increase from $155 million, or $0.31 per diluted share, in Q1 2009.
- Volume declines improved year-over-year, with a 4.9% decrease in Q1 2010 compared to an 8.1% decrease in Q1 2009.
- The company made a significant strategic investment of $142 million for a 40% equity stake in Shanghai Environment Group.
- Free cash flow was $253 million for the quarter, up from $199 million in the prior year period.
- Operating expenses as a percentage of revenue increased to 64.1% from 61.4%, primarily due to higher recyclable commodity prices, fuel costs, and acquisitions.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2010filed April 29, 2010Financial Statements
Q1 FY2010 against Q1 FY2009
| Line item | Q1 FY2010Q1 FY2009 | Change |
|---|---|---|
| Revenue | $2.94B$2.81B | +4.4% |
| SG&A Expenses | $351.00M$337.00M | +4.2% |
| Operating Expenses | $2.52B$2.44B | +3.5% |
| Operating Income | $412.00M$372.00M | +10.8% |
| Net Income | $182.00M$155.00M | +17.4% |
| EPS (Basic) | $0.37$0.31 | +19.4% |
| EPS (Diluted) | $0.37$0.31 | +19.4% |
| Shares Outstanding (Basic) | 485.60M— | — |
| Shares Outstanding (Diluted) | 488.10M— | — |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the first quarter of 2010?
Revenue growth was driven by market factors such as higher recyclable commodity prices and a strengthening Canadian dollar, as well as improved pricing (yield) in collection and disposal services, and contributions from acquisitions. These were partially offset by a decline in waste volumes.
What impact did the multi-employer pension plan withdrawal have on the company's results?
The company incurred a $28 million charge to operating expenses related to bargaining unit employees withdrawing from an under-funded multi-employer pension plan. This charge reduced diluted earnings per share by $0.04 for the quarter.
How did the company's investment in Shanghai Environment Group impact its financial position?
Waste Management invested $142 million in the first quarter of 2010 for a 40% equity investment in Shanghai Environment Group, a move aimed at participating in the waste-to-energy and waste services market in China. This investment is reflected in the cash flows from investing activities.
What is the company's outlook regarding economic conditions and fuel prices?
The company expects to continue facing challenges related to the economy and rising fuel prices throughout 2010. They are implementing measures to grow the business and improve operational performance, while acknowledging trends towards waste reduction and diversion.
06—Continue