01—Abstract
Summary
Summary of the 10-Q filed October 26, 2017. Cited figures are marked; the original filing is the authoritative source.
Waste Management Inc. (WM) reported solid financial results for the nine months ended September 30, 2017.
The company demonstrated robust revenue growth of 6.7%, reaching $10.83 billiona, driven by a combination of increased volumes, higher recycling commodity prices, and improved yield in its collection and disposal services. Net income attributable to Waste Management, Inc. also saw a significant increase, rising to $1.046 billion, or $2.36 per diluted share, compared to $701 million, or $1.89 per diluted share, in the same period last year. The company's operational efficiency improved, with operating expenses as a percentage of revenue remaining stable year-over-year.
Free cash flow generation was strong, increasing to $1.428 billionb for the nine-month period, supporting the company's capital allocation priorities, including share repurchases and dividend payments. WM actively managed its capital structure, with significant share repurchases totaling $750 million year-to-date, demonstrating a commitment to returning value to shareholders.
02—Key points
Key Highlights
- Revenue increased by 6.7% to $10.83 billion for the nine months ended September 30, 2017, compared to the prior year period.
- Net income attributable to Waste Management, Inc. rose to $1.046 billion for the nine months ended September 30, 2017, up from $701 million in the prior year period.
- Diluted earnings per share increased to $2.36 for the nine months ended September 30, 2017, from $1.89 in the same period last year.
- Free cash flow for the nine months ended September 30, 2017, was $1.428 billion, an increase from $1.322 billion in the prior year period.
- The company repurchased $750 million of its common stock year-to-date, indicating a strong focus on shareholder returns.
- Operating expenses as a percentage of revenue remained stable year-over-year, indicating effective cost management.
- Total assets grew slightly to $20.949 billion as of September 30, 2017, from $20.859 billion as of December 31, 2016.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2017, Waste Management Inc kept $0.10.
- Revenue$3.72B100.0%
- Cost of revenue−$2.30B61.9%
- Gross profit$1.41B38.1%
- Operating costs−$713.0M19.2%
- Operating income$701.0M18.9%
- Interest, other & tax−$315.0M8.5%
- Net income$386.0M10.4%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2017filed October 26, 2017Financial Statements
Q3 FY2017 against Q3 FY2016
| Line item | Q3 FY2017Q3 FY2016 | Change |
|---|---|---|
| Revenue | $3.72B$3.55B | +4.7% |
| Cost of Revenue | $2.30B$2.22B | +3.9% |
| Gross Profit | $1.41B$1.33B | +6.2% |
| SG&A Expenses | $356.00M$330.00M | +7.9% |
| Operating Expenses | $3.02B$2.99B | +0.9% |
| Operating Income | $701.00M$560.00M | +25.2% |
| Net Income | $386.00M$304.00M | +27.0% |
| EPS (Basic) | $0.88$0.68 | +29.4% |
| EPS (Diluted) | $0.87$0.68 | +27.9% |
| Shares Outstanding (Basic) | 437.80M442.90M | −1.2% |
| Shares Outstanding (Diluted) | 440.80M445.70M | −1.1% |
05—Questions
Frequently Asked Questions
What was the primary driver of revenue growth for Waste Management in the first nine months of 2017?
Revenue growth was primarily driven by a combination of higher market prices for recycling commodities, increased volumes in collection and disposal services, and improved yield from pricing strategies in its core collection and disposal business lines.
How did the company's profitability change compared to the previous year?
Profitability improved significantly. Net income attributable to Waste Management, Inc. increased to $1.046 billion for the nine months ended September 30, 2017, a substantial rise from $701 million in the same period last year. Diluted earnings per share also grew to $2.36 from $1.89.
What is the company's approach to capital allocation and shareholder returns?
Waste Management continues to prioritize shareholder returns through a disciplined capital allocation strategy. This includes significant share repurchases, with $750 million executed year-to-date, and consistent dividend payments. Strong free cash flow generation supports these initiatives.
Are there any significant environmental liabilities or contingent risks that investors should be aware of?
The company faces ongoing environmental matters and potential liabilities related to landfill and environmental remediation costs. While WM accrues for probable and estimable liabilities, the ultimate costs can be uncertain. Specific disclosures are made regarding Superfund National Priorities List sites and other environmental proceedings. Management believes that the ultimate outcome of these matters will not have a material adverse effect on the Company's financial condition, results of operations or cash flows.
06—Continue