10-QPeriod: Q3 FY2014

WASTE MANAGEMENT INC Quarterly Report for Q3 Ended Sep 30, 2014

Filed October 29, 2014For Securities:WM

Summary

Waste Management, Inc. (WM) reported its third-quarter and year-to-date financial results for the period ending September 30, 2014. Total revenues saw a slight decrease of 0.5% year-over-year for the quarter, primarily due to lower volumes and divestitures, partially offset by increased yield on collection and disposal operations. Net income attributable to Waste Management, Inc. decreased to $270 million ($0.58 per diluted share) from $291 million ($0.62 per diluted share) in the prior year's quarter, impacted by restructuring charges and litigation reserves. The company is actively managing its portfolio, notably through the pending sale of its Wheelabrator business, which has been classified as held-for-sale. Free cash flow remained robust, demonstrating the company's ability to generate cash from operations.

Financial Highlights

53 data points
Beta

Revenue

$3.60B

36.2% Gross Margin

Net Income

$270.00M

7.5% Net Margin

EPS (Diluted)

$0.58

Total Assets

$22.21B

Cash & Equivalents

$183.00M

Free Cash Flow

$672.00M

Financial Statements
Beta
Revenue$3.60B
Cost of Revenue$2.30B
Gross Profit$1.30B
SG&A Expenses$377.00M
Operating Expenses$3.06B
Operating Income$546.00M
Net Income$270.00M
EPS (Basic)$0.59
EPS (Diluted)$0.58
Shares Outstanding (Basic)460.80M
Shares Outstanding (Diluted)463.60M

Key Highlights

  • 1Total revenues for the third quarter of 2014 were $3,602 million, a slight decrease of 0.5% compared to $3,621 million in the third quarter of 2013.
  • 2Net income attributable to Waste Management, Inc. decreased to $270 million for the quarter, down from $291 million in the prior year's quarter, with diluted earnings per share at $0.58 compared to $0.62.
  • 3The company recognized $67 million in pre-tax charges related to a corporate restructuring and an additional $20 million in charges for litigation reserves and investment write-downs, negatively impacting quarterly earnings per share.
  • 4The pending sale of the Wheelabrator business, announced in July 2014, is progressing, with the business classified as 'Businesses held-for-sale' on the balance sheet.
  • 5Free cash flow remained strong, totaling $1,349 million for the nine months ended September 30, 2014, compared to $1,147 million in the same period of 2013.
  • 6The company repurchased $600 million of its common stock through accelerated share repurchase agreements during the third quarter of 2014.
  • 7Cash and cash equivalents increased significantly to $183 million from $58 million at the beginning of the year, indicating improved liquidity.

Frequently Asked Questions

The decrease in revenue was primarily driven by lower collection volumes (-$49 million) and divestitures, particularly the sale of Puerto Rico operations and Eastern Canada landfill/collection assets (-$24 million). These were partially offset by positive revenue growth from yield on collection and disposal operations (+$68 million).

The company incurred $67 million in pre-tax charges primarily related to a corporate restructuring announced in August 2014, which negatively impacted diluted earnings per share by $0.09. Additional charges of $20 million for litigation reserves and investment write-downs further impacted EPS by $0.05.

Waste Management signed a definitive agreement in July 2014 to sell substantially all of its Wheelabrator business for $1.94 billion. The business has been classified as 'Businesses held-for-sale' on the balance sheet as of September 30, 2014, with the closing expected by the end of 2014.

During the third quarter of 2014, Waste Management initiated accelerated share repurchase agreements totaling $600 million, funded by borrowings under its revolving credit facility. This activity reflects a strategic use of capital to return value to shareholders, though it increased net cash used in financing activities.