01—Abstract
Summary
Summary of the 10-Q filed July 28, 2011. Cited figures are marked; the original filing is the authoritative source.
Waste Management Inc. (WM) reported its second-quarter 2011 financial results, showing a 6.0% increase in operating revenues to $3.35 billiona, driven by improved commodity prices, a fuel surcharge program, and acquisitions.
Despite revenue growth, net income attributable to Waste Management, Inc. decreased slightly to $237 millionb ($0.50 per diluted share) from $246 million ($0.51 per diluted share) in the prior year period. This decrease was influenced by a significant litigation settlement benefit in Q2 2010 and higher operating expenses, partly due to increased recycling rebates and fuel costs. The company's free cash flow for the quarter was $206 million, down from $275 million in the prior year, reflecting lower operating cash flow and higher capital expenditures.
For the first six months of 2011, net cash provided by operating activities increased to $1.08 billionc from $976 million in the prior year, primarily due to decreased income tax payments. The company also announced a significant subsequent event: the acquisition of Oakleaf Global Holdings for $425 million, aimed at expanding its national accounts and environmental solutions capabilities.
02—Key points
Key Highlights
- Operating revenues increased by 6.0% to $3.35 billion in Q2 2011, driven by higher commodity prices, fuel surcharges, and acquisitions.
- Net income attributable to Waste Management, Inc. decreased slightly to $237 million ($0.50/share) from $246 million ($0.51/share) in Q2 2010.
- Free cash flow for Q2 2011 was $206 million, down from $275 million in Q2 2010.
- Net cash provided by operating activities for the first six months of 2011 increased by $102 million to $1.08 billion, largely due to lower income tax payments.
- The company executed a significant acquisition of Oakleaf Global Holdings for $425 million subsequent to the quarter.
- Internal revenue growth from volume remained negative at -1.7% for Q2 2011, though this was an improvement from -2.9% in Q2 2010.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2011, Waste Management Inc kept $0.07.
- Revenue$3.35B100.0%
- Cost of revenue−$2.14B63.9%
- Gross profit$1.21B36.1%
- Operating costs−$701.0M20.9%
- Operating income$506.0M15.1%
- Interest, other & tax−$269.0M8.0%
- Net income$237.0M7.1%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2011filed July 28, 2011Financial Statements
Q2 FY2011 against Q2 FY2010
| Line item | Q2 FY2011Q2 FY2010 | Change |
|---|---|---|
| Revenue | $3.35B$3.16B | +6.0% |
| Cost of Revenue | $2.14B— | — |
| Gross Profit | $1.21B— | — |
| SG&A Expenses | $382.00M$345.00M | +10.7% |
| Operating Expenses | $2.84B$2.57B | +10.5% |
| Operating Income | $506.00M$586.00M | −13.7% |
| Net Income | $237.00M$246.00M | −3.7% |
| EPS (Basic) | $0.50$0.51 | −2.0% |
| EPS (Diluted) | $0.50$0.51 | −2.0% |
| Shares Outstanding (Basic) | 474.20M482.10M | −1.6% |
| Shares Outstanding (Diluted) | 476.00M485.80M | −2.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth in the second quarter of 2011?
Revenue growth was primarily driven by market factors including higher recyclable commodity prices, a more robust fuel surcharge program, and the impact of acquisitions. Internal revenue growth from yield also contributed positively.
Why did net income attributable to Waste Management, Inc. decrease despite revenue growth?
Despite revenue growth, net income decreased due to a combination of factors. In the prior year's second quarter, a significant litigation settlement provided a substantial benefit. Additionally, operating expenses increased due to higher customer recycling rebates (linked to higher commodity prices), increased fuel costs, and expenses related to acquisitions and growth initiatives. Selling, general, and administrative expenses also rose, supporting strategic growth plans.
What is the significance of the Oakleaf Global Holdings acquisition?
The acquisition of Oakleaf Global Holdings for $425 million is a strategic move to advance Waste Management's growth and transformation strategies. It is intended to expand the company's national accounts customer base and enhance its ability to provide comprehensive environmental solutions.
How did the company's free cash flow perform during the quarter?
Free cash flow for the second quarter of 2011 was $206 million, a decrease from $275 million in the prior year's second quarter. This was due to lower net cash provided by operating activities and higher capital expenditures. However, for the first six months of 2011, net cash provided by operating activities saw an increase of $102 million compared to the prior year, primarily due to reduced income tax payments.
06—Continue