What was the primary driver for the significant increase in net income?

The significant increase in net income for the quarter was primarily driven by a combination of factors: the reduction in the federal corporate income tax rate due to tax reform enacted in late 2017, improved operating results in the core Solid Waste business, net gains from the sale of certain ancillary operations, and the settlement of various tax audits which resulted in a reduction in income tax expense. Lower commodity prices for recycling did partially offset these gains.

How is the company managing its debt and credit facilities?

Waste Management, Inc. has a robust debt and credit facility structure. In June 2018, they amended and restated their revolving credit facility, increasing its capacity to $2.75 billion, extending its term to June 2023, and adding flexibility. As of June 30, 2018, the company had $1.2 billion in unused and available credit capacity under this facility. They also utilize a commercial paper program, which is fully supported by the revolving credit facility. The company's investment grade credit ratings, significant unencumbered assets, and modest leverage support their ability to access financing for operational and capital needs.

What is the impact of recycling commodity price fluctuations on the company's performance?

The company experienced a notable revenue decline in its recycling segment due to lower market prices for recycling commodities, particularly impacted by restrictions in global trade, such as those imposed by China. For the three and six months ended June 30, 2018, revenue from recycling commodities decreased by 23.4% and 21.6% respectively. Management expects these disruptions to continue through the remainder of 2018, which will put downward pressure on recycling commodity prices.

What is the company's strategy for growth and shareholder returns?

Waste Management's strategy focuses on a combination of organic growth through disciplined pricing and volume management, and inorganic growth through strategic acquisitions. They have invested $266 million in 12 solid waste businesses in the first half of 2018. Alongside growth initiatives, the company is committed to returning capital to shareholders through dividends and share repurchases. In Q2 2018 alone, $500 million was allocated to these programs.

WM 10-Q Quarterly Report Q2 FY2018 — Revenue, Net Income, EPS

Summary

Waste Management, Inc. (WM) reported solid financial results for the second quarter and first half of 2018, demonstrating revenue growth and improved profitability. Total revenues increased by 1.7% to $3,739 million for the quarter, driven by a 2.3% increase in collection and disposal yield and volume growth, partially offset by lower recycling commodity prices. Net income attributable to Waste Management, Inc. saw a significant increase of 36.6% to $499 million for the quarter, translating to $1.15 per diluted share, up from $0.81 in the prior year. This improvement was largely due to the benefits of tax reform, improved operating results in the core Solid Waste business, and tax audit settlements. The company also highlighted strong operational cash flow generation, with net cash provided by operating activities increasing by 18.6% to $1,784 million for the first six months of the year. WM continued its commitment to shareholder returns, allocating $500 million to share repurchases and dividends in the second quarter. Acquisitions remain a focus, with $266 million invested in 12 solid waste businesses during the first half of 2018, indicating a strategic approach to growth alongside disciplined capital allocation and operational efficiency.

Financial Highlights

52 data points

Beta

Revenue

$3.74B

0.4% Gross Margin

Net Income

$499.00M

0.1% Net Margin

EPS (Diluted)

$1.15

Total Assets

$22.01B

Cash & Equivalents

$47.00M

Free Cash Flow

$975.00M

Financial Statements

Beta

Revenue	$3.74B
Cost of Revenue	$2.31B
Gross Profit	$1.43B
SG&A Expenses	$365.00M
Operating Expenses	$3.02B
Operating Income	$715.00M
Net Income	$499.00M
EPS (Basic)	$1.16
EPS (Diluted)	$1.15
Shares Outstanding (Basic)	429.90M
Shares Outstanding (Diluted)	432.30M

Key Highlights

1Total revenues increased 1.7% to $3,739 million for Q2 2018 compared to $3,677 million in Q2 2017.
2Net income attributable to Waste Management, Inc. rose significantly by 36.6% to $499 million ($1.15 per diluted share) for Q2 2018, up from $362 million ($0.81 per diluted share) in Q2 2017.
3Operating cash flow for the first six months of 2018 increased by 18.6% to $1,784 million from $1,535 million in the prior year period.
4The company successfully executed acquisitions, spending $266 million on 12 solid waste businesses in the first half of 2018.
5Shareholder returns remained a priority, with $500 million allocated to common stock repurchases and dividends in Q2 2018.
6The effective income tax rate decreased significantly due to the enactment of tax reform and tax audit settlements.
7Collection and disposal average yield increased by 2.3% for both the three and six-month periods, demonstrating effective pricing strategies.

WASTE MANAGEMENT INC Quarterly Report for Q2 Ended Jun 30, 2018

Summary

Financial Highlights

Key Highlights

Frequently Asked Questions