01—Abstract
Summary
Summary of the 10-Q filed July 30, 2013. Cited figures are marked; the original filing is the authoritative source.
Waste Management Inc. (WM) reported solid financial results for the second quarter and first half of 2013, demonstrating revenue growth and improved operational efficiency.
Total revenues increased by 1.9% to $3.53 billiona for the quarter and 1.6% to $6.86 billion for the first half, driven by a combination of price increases (yield) in collection and disposal services and strategic acquisitions, most notably Greenstar. Despite some headwinds from lower commodity prices, the company effectively managed its cost structure, leading to a notable increase in operating income. Diluted earnings per share also saw a healthy increase, reflecting the company's ability to translate revenue growth into profitability.
Key financial highlights include a 2.1%b increase in collection and disposal yield, the highest since early 2011, and a significant reduction in selling, general, and administrative expenses due to ongoing restructuring and cost control initiatives. While capital expenditures were managed carefully, the company continued to invest in strategic growth through acquisitions. Overall, Waste Management demonstrated strong operational execution and a commitment to shareholder value during the period.
02—Key points
Key Highlights
- Total revenues increased by 1.9% to $3.53 billion for Q2 2013 and 1.6% to $6.86 billion for the first half of 2013.
- Collection and disposal yield increased by 2.1% in Q2 2013, the highest since early 2011, indicating successful pricing strategies.
- Selling, general, and administrative expenses decreased by 5.6% in Q2 2013, reflecting successful cost control and restructuring efforts.
- Income from operations increased by 9.4% to $510 million in Q2 2013.
- Diluted earnings per share rose to $0.52 in Q2 2013 from $0.45 in Q2 2012.
- The acquisition of Greenstar, LLC for $170 million in January 2013 contributed $40 million in revenue for Q2 2013 and demonstrates a focus on recycling and resource recovery.
- Free cash flow increased to $347 million in Q2 2013 from $332 million in Q2 2012, indicating strong liquidity.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q2 FY2013, Waste Management Inc kept $0.07.
- Revenue$3.53B100.0%
- Cost of revenue−$2.31B65.5%
- Gross profit$1.22B34.5%
- Operating costs−$705.0M20.0%
- Operating income$510.0M14.5%
- Interest, other & tax−$266.0M7.5%
- Net income$244.0M6.9%
04—Financials
Financial Highlights
Figures from 10-QQ2 FY2013filed July 30, 2013Financial Statements
Q2 FY2013 against Q2 FY2012
| Line item | Q2 FY2013Q2 FY2012 | Change |
|---|---|---|
| Revenue | $3.53B$3.46B | +1.9% |
| Cost of Revenue | $2.31B$2.26B | +2.3% |
| Gross Profit | $1.22B$1.20B | +1.3% |
| SG&A Expenses | $353.00M$374.00M | −5.6% |
| Operating Expenses | $3.02B$2.99B | +0.8% |
| Operating Income | $510.00M$466.00M | +9.4% |
| Net Income | $244.00M$208.00M | +17.3% |
| EPS (Basic) | $0.52$0.45 | +15.6% |
| EPS (Diluted) | $0.52$0.45 | +15.6% |
| Shares Outstanding (Basic) | 467.90M463.40M | +1.0% |
| Shares Outstanding (Diluted) | 469.40M464.00M | +1.2% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the second quarter of 2013?
Revenue growth was primarily driven by an increase in average yield (pricing) in collection and disposal operations, contributing $60 million, and revenue from acquisitions, notably the Greenstar acquisition, which added $40 million. Higher fuel surcharges and electricity prices also contributed positively.
How did Waste Management manage its operating expenses during this period?
Operating expenses increased slightly due to the Greenstar acquisition and higher processing costs in recycling. However, the company implemented cost control and restructuring initiatives that led to a decrease in selling, general, and administrative expenses by 5.6%. The overall operating expense as a percentage of revenue remained largely stable.
What is the company's outlook on future growth and profitability?
The company's strategic priorities include pursuing revenue growth through customer-focused segmentation, pricing discipline, and strategic acquisitions. They also emphasize cost control, investment in technology, and exploring emerging technologies. The positive revenue trends and cost management suggest a commitment to continued growth and profitability.
How are acquisitions impacting the company's financial performance?
Acquisitions, such as Greenstar, are contributing to revenue growth and expanding the company's presence in areas like recycling. While acquisitions increase operating expenses, the company aims to offset these with synergistic revenue generation and operational efficiencies. The acquisition of RCI Environnement Inc. subsequent to the quarter further indicates a strategy of growth through M&A.
06—Continue