01—Abstract
Summary
Summary of the 10-Q filed April 29, 2015. Cited figures are marked; the original filing is the authoritative source.
Waste Management Inc. (WM) reported a net loss attributable to the company of $129 milliona for the first quarter of 2015, a significant shift from a net income of $228 million in the same period of the prior year.
This was largely due to a substantial pre-tax loss of $550 millionb related to the early extinguishment of debt as part of a strategic refinancing initiative. Despite the net loss, the company's core operations showed resilience with income from operations at $440 million, down only slightly from $469 million in Q1 2014, and operating expenses as a percentage of revenue improving to 64.0% from 65.7%. The company completed a significant acquisition of Deffenbaugh Disposal, Inc. during the quarter, expanding its Midwest presence.
Key financial adjustments impacted the bottom line, including the debt extinguishment charge, which resulted in an earnings per share of $(0.28) for the quarter, compared to $0.49c in Q1 2014. Total revenues decreased by 10.5% to $3,040 million, primarily due to the divestiture of the Wheelabrator business in late 2014, lower volumes, and declining commodity prices for recyclables.
However, the company saw positive revenue growth from yield in its collection and disposal operations, indicating effective pricing strategies. Management remains focused on executing its strategy to drive long-term value through customer service, operational efficiency, growth, yield management, and cost control.
02—Key points
Key Highlights
- Reported a net loss of $129 million for Q1 2015, contrasting with a net income of $228 million in Q1 2014, primarily due to a $550 million loss on early debt extinguishment.
- Income from operations was $440 million, a slight decrease from $469 million in the prior year's quarter, with operating expenses as a percentage of revenue improving to 64.0% from 65.7%.
- Total revenues decreased by 10.5% to $3,040 million, significantly impacted by the divestiture of the Wheelabrator business and lower volumes.
- Completed the acquisition of Deffenbaugh Disposal, Inc. for $416 million, expanding its footprint in the Midwest.
- Successfully refinanced a significant portion of high-coupon senior notes, issuing $1.8 billion in new debt at lower interest rates, which will reduce future interest expense.
- Free cash flow was $285 million, down from $484 million in Q1 2014, reflecting lower cash earnings and increased acquisitions.
- Basic and diluted EPS were $(0.28) for Q1 2015, compared to $0.49 for Q1 2014, heavily influenced by the debt extinguishment charge.
03—One dollar
Follow one dollar
For each $1.00 of revenue in Q1 FY2015, Waste Management Inc lost $0.04.
- Revenue$3.04B100.0%
- Cost of revenue−$1.95B64.0%
- Gross profit$1.09B36.0%
- Operating costs−$654.0M21.5%
- Operating income$440.0M14.5%
- Interest, other & tax−$571.0M18.8%
- Net income−$131.0M4.3%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2015filed April 29, 2015Financial Statements
Q1 FY2015 against Q1 FY2014
| Line item | Q1 FY2015Q1 FY2014 | Change |
|---|---|---|
| Revenue | $3.04B$3.40B | −10.5% |
| Cost of Revenue | $1.95B$2.23B | −12.8% |
| Gross Profit | $1.09B$1.16B | −6.0% |
| SG&A Expenses | $348.00M$375.00M | −7.2% |
| Operating Expenses | $2.60B$2.93B | −11.2% |
| Operating Income | $440.00M$469.00M | −6.2% |
| Net Income | -$131.00M$228.00M | −157.5% |
| EPS (Basic) | $-0.28$0.49 | −157.1% |
| EPS (Diluted) | $-0.28$0.49 | −157.1% |
| Shares Outstanding (Basic) | 458.50M465.20M | −1.4% |
| Shares Outstanding (Diluted) | 458.50M466.90M | −1.8% |
05—Questions
Frequently Asked Questions
What was the primary driver of the net loss in the first quarter of 2015?
The primary driver of the net loss in the first quarter of 2015 was a significant pre-tax loss of $550 million incurred due to the early extinguishment of debt as part of a debt refinancing strategy. This charge significantly impacted the company's bottom line.
How did the divestiture of the Wheelabrator business affect the company's financials?
The divestiture of the Wheelabrator business, completed in December 2014, led to a significant decrease in revenue ($220 million in Q1 2015 compared to Q1 2014) and a reduction in operating expenses. While it reduced overall revenue and operating costs, the gain from the sale was recognized in the prior year, impacting year-over-year comparisons.
What is the company's outlook on its core waste management operations, excluding one-time items?
Excluding one-time charges, the core waste management operations remained relatively stable. Income from operations was $440 million, only slightly down from $469 million in the prior year, and operating expenses as a percentage of revenue improved, indicating operational efficiency. The company also saw positive revenue growth from yield in its collection and disposal operations, suggesting effective pricing strategies.
Did the company make any significant acquisitions during the quarter?
Yes, on March 26, 2015, Waste Management acquired Deffenbaugh Disposal, Inc. for $416 million. This acquisition expands the company's collection and disposal operations in the Midwest region.
06—Continue