10-QPeriod: Q2 FY2010

WASTE MANAGEMENT INC Quarterly Report for Q2 Ended Jun 30, 2010

Filed August 2, 2010For Securities:WM

Summary

Waste Management, Inc. (WM) reported a notable increase in operating revenues for the second quarter of 2010, reaching $3.16 billion, a 7.0% rise year-over-year. This growth was driven by higher prices for recyclable commodities, increased revenue from their fuel surcharge program, and positive foreign currency translation, alongside a 2.3% internal revenue growth from yield in collection and disposal services. While volume declines persisted at -2.9%, this represented an improvement from the previous year's figures. Net income attributable to Waste Management, Inc. remained stable at $246 million, with diluted earnings per share at $0.51, comparable to the prior year's $0.50. The company also strengthened its financial position by issuing new senior notes and repurchasing common stock, demonstrating a commitment to shareholder returns. The company generated solid cash flow from operations, amounting to $976 million for the first six months of 2010. However, investing activities saw increased outflows due to significant investments in unconsolidated entities, including a substantial stake in Shanghai Environment Group and the acquisition of a waste-to-energy facility. The company continues to manage its debt effectively, with new credit facilities in place. Overall, WM demonstrated resilience in its core operations and strategic investments, navigating economic challenges while pursuing growth opportunities.

Financial Highlights

48 data points
Beta

Revenue

$3.16B

Net Income

$246.00M

7.8% Net Margin

EPS (Diluted)

$0.51

Total Assets

$21.76B

Cash & Equivalents

$1.17B

Free Cash Flow

$480.00M

Financial Statements
Beta
Revenue$3.16B
SG&A Expenses$345.00M
Operating Expenses$2.57B
Operating Income$586.00M
Net Income$246.00M
EPS (Basic)$0.51
EPS (Diluted)$0.51
Shares Outstanding (Basic)482.10M
Shares Outstanding (Diluted)485.80M

Key Highlights

  • 1Operating revenues increased by 7.0% to $3.16 billion in Q2 2010, driven by higher recyclable commodity prices and yield improvements.
  • 2Volume declines improved year-over-year, moving from -8.6% in Q2 2009 to -2.9% in Q2 2010.
  • 3Net income attributable to Waste Management, Inc. was $246 million, resulting in diluted EPS of $0.51, largely consistent with the prior year.
  • 4Cash flow from operations remained strong at $976 million for the first six months of 2010.
  • 5Investing activities showed increased outflows due to strategic investments, including a significant stake in Shanghai Environment Group and acquisition of a waste-to-energy facility.
  • 6The company repurchased $286 million of common stock in the first half of 2010, alongside paying $305 million in dividends.
  • 7The company issued $600 million in new senior notes, enhancing its liquidity and debt management.

Frequently Asked Questions

The revenue increase was primarily driven by favorable market conditions, including higher prices for recyclable commodities and increased revenue from the company's fuel surcharge program. Additionally, internal revenue growth from yield in collection and disposal services contributed to the increase, alongside positive foreign currency translation effects.

Volume declines improved year-over-year, moving from -8.6% in the second quarter of 2009 to -2.9% in the second quarter of 2010. While the company is optimistic about the lessening rate of decline, it anticipates continued challenges from the overall economic environment, particularly in the construction and demolition sector, along with trends in waste reduction and diversion, and ongoing pricing competition.

The company made significant investments in unconsolidated entities, including a $142 million equity investment in Shanghai Environment Group and a $150 million acquisition of a waste-to-energy facility in Portsmouth, Virginia. Capital expenditures also continued, though at a slightly reduced pace compared to the prior year.

Waste Management generated strong cash flow from operations and maintained a healthy cash balance. The company also issued $600 million in new senior notes and entered into a new $2.0 billion revolving credit facility, demonstrating proactive debt management and ensuring sufficient liquidity. Significant debt repayments were also made.