10-QPeriod: Q2 FY2011

WASTE MANAGEMENT INC Quarterly Report for Q2 Ended Jun 30, 2011

Filed July 28, 2011For Securities:WM

Summary

Waste Management Inc. (WM) reported its second-quarter 2011 financial results, showing a 6.0% increase in operating revenues to $3.35 billion, 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 million ($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 billion 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.

Financial Highlights

52 data points
Beta

Revenue

$3.35B

36.1% Gross Margin

Net Income

$237.00M

7.1% Net Margin

EPS (Diluted)

$0.50

Total Assets

$21.58B

Cash & Equivalents

$371.00M

Free Cash Flow

$478.00M

Financial Statements
Beta
Revenue$3.35B
Cost of Revenue$2.14B
Gross Profit$1.21B
SG&A Expenses$382.00M
Operating Expenses$2.84B
Operating Income$506.00M
Net Income$237.00M
EPS (Basic)$0.50
EPS (Diluted)$0.50
Shares Outstanding (Basic)474.20M
Shares Outstanding (Diluted)476.00M

Key Highlights

  • 1Operating revenues increased by 6.0% to $3.35 billion in Q2 2011, driven by higher commodity prices, fuel surcharges, and acquisitions.
  • 2Net income attributable to Waste Management, Inc. decreased slightly to $237 million ($0.50/share) from $246 million ($0.51/share) in Q2 2010.
  • 3Free cash flow for Q2 2011 was $206 million, down from $275 million in Q2 2010.
  • 4Net 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.
  • 5The company executed a significant acquisition of Oakleaf Global Holdings for $425 million subsequent to the quarter.
  • 6Internal revenue growth from volume remained negative at -1.7% for Q2 2011, though this was an improvement from -2.9% in Q2 2010.

Frequently Asked Questions

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.

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.

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.

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.