Summary
Waste Management, Inc. (WM) filed an 8-K on February 17, 2015, to report its fourth quarter and full-year financial results for 2014. The report highlights a significant improvement in operational profitability, particularly for the fourth quarter. Adjusted income from operations increased by over 10% and adjusted operating EBITDA grew by 4% year-over-year, with both metrics showing improved margins as a percentage of revenue. The company also reported a reduction in its selling, general, and administrative (SG&A) expenses as a percentage of revenue for the full year.
Key Highlights
- 1Reported Q4 2014 Adjusted Income from Operations increased by over 10% ($54 million) compared to Q4 2013.
- 2Q4 2014 Adjusted Income from Operations as a percentage of revenue improved by 190 basis points to 17.0%.
- 3Reported Q4 2014 Adjusted Operating EBITDA increased by 4% ($34 million) compared to Q4 2013.
- 4Q4 2014 Adjusted Operating EBITDA as a percentage of revenue improved by 140 basis points to 25.9%.
- 5Full year 2014 Further Adjusted SG&A expenses improved by $40 million and 30 basis points to 10.2% of revenue compared to the prior year.
- 6The report references a press release detailing financial results and management's discussion of these results, including non-GAAP financial measures.
Frequently Asked Questions
Waste Management reported improved operational profitability in Q4 2014. Adjusted Income from Operations grew over 10% year-over-year to $584 million, and as a percentage of revenue, it increased to 17.0%. Adjusted Operating EBITDA rose 4% to $891 million, representing 25.9% of revenue. These figures exclude certain items such as gains on sale of assets, asset impairments, and restructuring costs, which management believes are not representative of ongoing performance.
Yes, the company highlighted improved cost management for the full year 2014. 'Further adjusted' SG&A expenses, which exclude items like legal reserves and incentive compensation accruals, decreased by $40 million and improved by 30 basis points as a percentage of revenue, reaching 10.2%.
The report discusses several non-GAAP measures, including Adjusted Income from Operations, Adjusted Operating EBITDA, and adjusted SG&A expenses. Management uses these measures because they exclude certain costs and non-cash items that are believed not to be representative of the company's core operating performance. Reconciliations to the most comparable GAAP measures are provided in the accompanying press release (Exhibit 99.1).
For Q4 2014, the 'Income from operations, as reported' was impacted by significant adjustments. A gain on the sale of a waste-to-energy business reduced income by $519 million, while asset impairments increased expenses by $338 million. These items, along with restructuring costs, were excluded to arrive at the adjusted income from operations.