10-QPeriod: Q1 FY2011

WASTE MANAGEMENT INC Quarterly Report for Q1 Ended Mar 31, 2011

Filed April 28, 2011For Securities:WM

Summary

Waste Management Inc. (WM) reported its first-quarter 2011 financial results, showing a modest increase in revenue and net income compared to the prior year. Total operating revenues rose by 5.7% to $3.1 billion, driven by a 2.8% increase in average yield from collection and disposal services, higher commodity prices for recyclables, and contributions from acquisitions. This growth was partially offset by a 1.7% decline in overall volumes, reflecting ongoing economic weakness and waste reduction trends. Net income attributable to Waste Management, Inc. increased to $186 million ($0.39 per diluted share) from $182 million ($0.37 per diluted share) in the first quarter of 2010. The company highlighted improved operational efficiency and disciplined pricing strategies as key contributors. Despite a slight increase in operating expenses as a percentage of revenue, driven by higher fuel costs and acquisition-related expenses, the company managed to improve its income from operations. Free cash flow also saw an increase, providing financial flexibility for dividends, share repurchases, and strategic investments.

Financial Highlights

49 data points
Beta

Revenue

$3.10B

Net Income

$186.00M

6.0% Net Margin

EPS (Diluted)

$0.39

Total Assets

$21.65B

Cash & Equivalents

$676.00M

Free Cash Flow

$600.00M

Financial Statements
Beta
Revenue$3.10B
SG&A Expenses$382.00M
Operating Expenses$2.68B
Operating Income$427.00M
Net Income$186.00M
EPS (Basic)$0.39
EPS (Diluted)$0.39
Shares Outstanding (Basic)475.70M
Shares Outstanding (Diluted)477.60M

Key Highlights

  • 1Operating revenues increased by 5.7% to $3.1 billion in Q1 2011 compared to Q1 2010.
  • 2Net income attributable to Waste Management, Inc. rose to $186 million ($0.39 per diluted share) from $182 million ($0.37 per diluted share) year-over-year.
  • 3Average yield from collection and disposal operations increased by 2.8%, indicating successful pricing strategies.
  • 4Revenue growth was positively impacted by higher prices for recyclable commodities and contributions from acquisitions.
  • 5Overall waste volumes declined by 1.7%, reflecting economic conditions and waste reduction trends.
  • 6Free cash flow increased to $289 million in Q1 2011 from $253 million in Q1 2010.
  • 7The company initiated a $400 million issuance of 4.60% senior notes due March 2021.

Frequently Asked Questions

Waste Management's revenue increased primarily due to a 2.8% improvement in average yield from its collection and disposal services, higher prices for recyclable commodities, and revenue from recently acquired businesses. Foreign currency translation and increased fuel surcharges also contributed positively.

The company experienced a 1.7% decline in overall waste volumes in the first quarter of 2011, which is an improvement from the 5.1% decline in the prior year's first quarter. This trend is attributed to the ongoing weakness in the economy, pricing strategies, competition, and increasing waste reduction and diversion efforts by consumers. The company anticipates volumes to be relatively flat for the full year.

Operating expenses increased by 6.1% due to higher recyclable commodity prices leading to increased customer rebates, higher fuel costs, and expenses from acquisitions. However, the company also achieved cost savings from volume declines and managed its selling, general, and administrative expenses effectively, partly through efficiency initiatives. Despite a slight increase in operating expenses as a percentage of revenue, income from operations saw a modest increase.

Waste Management's free cash flow is used to fund capital expenditures, pay quarterly dividends, repurchase common stock, and pursue strategic acquisitions and investments.