10-QPeriod: Q1 FY2020

WASTE MANAGEMENT INC Quarterly Report for Q1 Ended Mar 31, 2020

Filed May 6, 2020For Securities:WM

Summary

Waste Management, Inc. (WM) reported financial results for the first quarter ended March 31, 2020. The company generated operating revenues of $3.729 billion, a slight increase of 0.9% from the prior year, primarily driven by higher yield and volumes in its collection and disposal business, partially offset by lower commodity prices for recycling. Net income attributable to Waste Management, Inc. was $361 million, or $0.85 per diluted share, an increase from $347 million, or $0.81 per diluted share, in the first quarter of 2019. The company highlighted the initial impacts of the COVID-19 pandemic, which began to affect revenues in March 2020. Despite these headwinds, WM demonstrated resilience with stable operational performance. The company's strong cash flow generation allowed for significant shareholder returns through dividends and share repurchases. However, in response to the pandemic and to preserve liquidity, WM temporarily suspended its share repurchase program. Looking ahead, WM anticipates continued near-term impacts from COVID-19 on its financial performance, particularly on volumes and customer service levels. The company's long-term strategy remains focused on organic growth, operational efficiency, and disciplined capital allocation, positioning it to navigate the evolving economic landscape.

Financial Highlights

51 data points
Beta

Revenue

$3.73B

37.5% Gross Margin

Net Income

$361.00M

9.7% Net Margin

EPS (Diluted)

$0.85

Total Assets

$27.18B

Cash & Equivalents

$3.13B

Free Cash Flow

$765.00M

Financial Statements
Beta
Revenue$3.73B
Cost of Revenue$2.33B
Gross Profit$1.40B
SG&A Expenses$425.00M
Operating Expenses$3.16B
Operating Income$573.00M
Net Income$361.00M
EPS (Basic)$0.85
EPS (Diluted)$0.85
Shares Outstanding (Basic)424.20M
Shares Outstanding (Diluted)426.40M

Key Highlights

  • 1Operating revenues increased by 0.9% to $3.729 billion, driven by higher yield and volume in collection and disposal services.
  • 2Net income attributable to Waste Management, Inc. rose to $361 million ($0.85 per diluted share) from $347 million ($0.81 per diluted share) in the prior year.
  • 3The company experienced initial impacts from the COVID-19 pandemic starting in March 2020, leading to revenue declines and increased costs for residential services.
  • 4Net cash provided by operating activities was $765 million, a decrease from $890 million in the prior year, partly due to working capital changes influenced by COVID-19.
  • 5Free cash flow was $318 million, down from $431 million in the prior year, reflecting lower operating cash flows and consistent capital expenditures.
  • 6The company temporarily suspended its common stock repurchase program to enhance liquidity in response to COVID-19, though $402 million was repurchased in Q1 2020.
  • 7The acquisition of Advanced Disposal Services, Inc. is still anticipated to close by the end of the second quarter of 2020, despite pandemic-related disruptions.

Frequently Asked Questions

The COVID-19 pandemic began to impact Waste Management's results in March 2020. This led to revenue declines in landfill and industrial/commercial collection services due to business closures and reduced service needs. Conversely, residential customer costs increased due to higher waste volumes from stay-at-home orders. The company incurred additional costs for employee safety and transitioned back-office staff to remote work. While these impacts were not material to the full quarter's financial statements, management expects them to negatively affect financial performance in the near term.

Waste Management continues to make progress on its planned acquisition of Advanced Disposal Services, Inc. Despite general business disruptions caused by COVID-19, the company anticipates receiving final antitrust regulatory approval and proceeding toward closing by the end of the second quarter of 2020.

Waste Management generated $765 million in cash from operating activities in Q1 2020. To preserve liquidity in light of the COVID-19 pandemic, the company temporarily suspended its common stock repurchase program. They also focused on cost management, including route optimization, reducing overtime, limiting hiring, and optimizing the workforce. The company believes its investment-grade credit ratings, unencumbered assets, and modest leverage provide adequate financing to meet its ongoing requirements.

Operating revenues increased slightly by 0.9% to $3.729 billion, driven by higher yield and volume in collection and disposal services, partially offset by lower recycling commodity prices. Net income attributable to Waste Management, Inc. increased to $361 million ($0.85 per diluted share) from $347 million ($0.81 per diluted share) in the prior year. This improvement was supported by higher revenues and a lower effective income tax rate in the current period, despite the emerging impacts of COVID-19 and higher interest expenses from recent debt issuances.