10-QPeriod: Q2 FY2013

WASTE MANAGEMENT INC Quarterly Report for Q2 Ended Jun 30, 2013

Filed July 30, 2013For Securities:WM

Summary

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 billion 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% 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.

Financial Highlights

52 data points
Beta

Revenue

$3.53B

34.5% Gross Margin

Net Income

$244.00M

6.9% Net Margin

EPS (Diluted)

$0.52

Total Assets

$23.01B

Cash & Equivalents

$154.00M

Free Cash Flow

$545.00M

Financial Statements
Beta
Revenue$3.53B
Cost of Revenue$2.31B
Gross Profit$1.22B
SG&A Expenses$353.00M
Operating Expenses$3.02B
Operating Income$510.00M
Net Income$244.00M
EPS (Basic)$0.52
EPS (Diluted)$0.52
Shares Outstanding (Basic)467.90M
Shares Outstanding (Diluted)469.40M

Key Highlights

  • 1Total 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.
  • 2Collection and disposal yield increased by 2.1% in Q2 2013, the highest since early 2011, indicating successful pricing strategies.
  • 3Selling, general, and administrative expenses decreased by 5.6% in Q2 2013, reflecting successful cost control and restructuring efforts.
  • 4Income from operations increased by 9.4% to $510 million in Q2 2013.
  • 5Diluted earnings per share rose to $0.52 in Q2 2013 from $0.45 in Q2 2012.
  • 6The 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.
  • 7Free cash flow increased to $347 million in Q2 2013 from $332 million in Q2 2012, indicating strong liquidity.

Frequently Asked Questions

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.

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.

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.

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.