Waste Management, Inc. (NYSE:WM) today announced financial results for
its quarter ended March 31, 2015. Revenues for the first quarter of 2015
were $3.0 billion compared with $3.4 billion for the same 2014 period.
Net loss(a) for the quarter was $129 million, or $0.28 per
diluted share, compared with net income of $228 million, or $0.49 per
diluted share, for the first quarter of 2014. On an as-adjusted basis,
excluding certain items, net income would have been $227 million, or
$0.49 per diluted share, in the first quarter of 2015 compared with $212
million, or $0.45 per diluted share, in the first quarter of 2014.(b)
The Company’s as-adjusted first quarter 2015 results exclude a $0.74 per
diluted share loss on early extinguishment of debt as well as a $0.03
per diluted share impact from non-cash charges related to post-closing
adjustments that reduced the gain on the sale of certain operations in
2014 and an impairment of a short-lived landfill asset. In order to
provide a meaningful comparison to 2015 results, the Company’s first
quarter 2014 results have been adjusted to exclude the earnings from
businesses and assets divested in 2014, which provided $0.04 per diluted
share to the first quarter of 2014.(b)
David P. Steiner, President and Chief Executive Officer of Waste
Management, commented, “We are pleased with our first quarter results.
We continue to see the benefit from disciplined core price growth and
cost controls. Our adjusted net income, operating income and margin, and
earnings per diluted share improved when compared to the first quarter
of 2014, despite year over year headwinds of $0.03 per diluted share
from lower recycling commodity prices and the unfavorable impact of
foreign currency fluctuations.
“During the first quarter, we re-invested a portion of the proceeds from
the sale of our waste-to-energy business. We completed the acquisition
of Deffenbaugh Disposal. Once fully integrated, Deffenbaugh should add
about $52 million of annual operating EBITDA.(b) We also
refinanced high interest rate notes to generate interest savings in 2015
and beyond.”
KEY HIGHLIGHTS FOR THE FIRST QUARTER 2015
-
Internal revenue growth from yield for collection and disposal
operations was 2.0%.
-
Core price, which consists of price increases and fees, other than the
Company’s fuel surcharge, net of rollbacks, was 4.4%, up from 4.2% in
the first quarter of 2014.(c)
-
Internal revenue growth from volume in the Company’s traditional solid
waste business declined 1.2% in the first quarter of 2015 versus a
decline of 3.2% in the first quarter of 2014.
-
Overall revenue declined by 10.5%, or $356 million. Virtually all of
the $356 million revenue decline can be attributed to a $220 million
decline from divestitures, a $70 million decline from lower recycling
revenues, $36 million in lower fuel surcharge revenue and $25 million
in foreign currency fluctuations. Looking at the solid waste side of
the business, revenue was virtually flat, with increased revenue from
high margin collection and landfill lines of business offsetting
revenue declines in the lower margin residential and national account
lines.
-
Average recycling commodity prices were approximately 14.1% lower in
the first quarter of 2015 compared with the prior year period.
Recycling volumes declined 8.0% in the first quarter. In total,
recycling operations negatively affected earnings by $0.02 per diluted
share when compared to the prior year period.
-
Operating expenses improved by $286 million compared to the prior year
period. Excluding divestitures, operating expenses improved $131
million.(b) Lower fuel and subcontractor costs, lower
commodity rebates, and continued route optimization drove the
improvement. As a percent of revenue, operating expenses were 64.0% in
the first quarter of 2015, as compared to 65.7% in the first quarter
of 2014, an improvement of 170 basis points.
-
SG&A expenses improved by $27 million compared with the first quarter
of 2014. Excluding divestitures, SG&A expenses improved by $15 million
compared with the first quarter of 2014.(b)
-
Net cash provided by operating activities was $499 million, compared
to $584 million in the first quarter of 2014, with divestitures
driving $57 million of the decline. Capital expenditures were $233
million. The Company had $19 million of divestiture proceeds in the
quarter.
-
Free cash flow improved by $22 million, to $285 million, in the first
quarter of 2015, compared to free cash flow for the first quarter of
2014. The comparison excludes the impacts to first quarter 2014 free
cash flow of divested operations and assets.(b)
-
The Company returned $176 million to shareholders in the form of
dividends.
-
The effective tax rate was approximately 41.0%. Adjusting for items
excluded from the Company’s as-adjusted results, the tax rate was
34.2%, in line with the Company’s expected full-year tax rate of 35%.(b)
Steiner concluded, “First quarter results put us on track to achieve our
full year guidance. Volumes in our traditional solid waste business were
a negative 1.2% in the quarter, but we saw some very positive trends in
our commercial and industrial lines. The rate of decline in our
commercial volumes moderated and was 200 basis points better than the
rate of decline in the first quarter of 2014. Similarly, our industrial
volumes were 520 basis points better than the first quarter of 2014.
Both lines of business had the lowest rate of decline in seven quarters.
Consequently, although total revenue in the quarter was down more than
we expected, the revenue decline was primarily in low margin lines or
resulting from external factors like foreign currency. The revenue and
volume trends in our most profitable lines of business are encouraging,
and we expect them to improve as we see our normal seasonal upturn.
“At the beginning of the year, we gave guidance that our 2015 adjusted
earnings per diluted share would be between $2.48 and $2.55 for the full
year, including a negative $0.03 to $0.05 diluted earnings per share
headwind from recycling commodities. The annual impact from the
recycling business is now anticipated to be closer to $0.10 per diluted
share. We will continue to work to improve our recycling contracts and
to implement additional operational improvements. Despite the increased
recycling headwind, we still anticipate adjusted earnings per diluted
share to be within the guidance range. We also expect to achieve our
full year free cash flow guidance of between $1.4 and $1.5 billion.”(b)
--------------------------------------------------------------------------------------------------------------
(a) For purposes of this press release, all references
to “Net loss” and “Net income” refer to the financial statement line
items “Net income (loss) attributable to Waste Management, Inc.” and
“Net income attributable to Waste Management, Inc.,” respectively.
(b) This press release contains a discussion of non-GAAP
measures, as defined in Regulation G of the Securities Exchange Act of
1934, as amended. The Company reports its financial results in
compliance with GAAP, but believes that also discussing non-GAAP
measures provides investors with (i) additional, meaningful comparisons
of current results to prior periods’ results by excluding items that the
Company does not believe reflect its fundamental business performance
and are not representative or indicative of its results of operations
and (ii) financial measures the Company uses in the management of its
business. Accordingly, net income, earnings per diluted share, operating
expenses, SG&A expenses, and our effective tax rate have been presented
in certain instances excluding items identified in the reconciliations
provided.
The Company’s projected full year 2015 earnings per diluted share
is not based on GAAP net earnings per diluted share and are anticipated
to be adjusted to exclude the effects of events or circumstances in 2015
that are not representative or indicative of the Company’s results of
operations including the items excluded from our as-adjusted first
quarter results. Projected GAAP earnings per diluted share
for the full year would require inclusion of the projected impact of
future excluded items, including items that are not currently
determinable, but may be significant, such as asset impairments and
one-time items, charges, gains or losses from divestitures or
litigation, or other items. Due to the uncertainty of the likelihood,
amount and timing of any such items, the Company does not have
information available to provide a quantitative reconciliation of
adjusted projected full year earnings per diluted share or projected
earnings growth to a GAAP earnings per diluted share projection.
The Company also discusses free cash flow and provides projections
of free cash flow. Free cash flow is a non-GAAP measure. The
company discusses free cash flow because the Company believes that it is
indicative of its ability to pay its quarterly dividends, repurchase
common stock, fund acquisitions and other investments and, in the
absence of refinancings, to repay its debt obligations. Free cash flow
is not intended to replace “Net cash provided by operating activities,”
which is the most comparable U.S. GAAP measure. However, the Company
believes free cash flow gives investors useful insight into how the
Company views its liquidity. Nevertheless, the use of free cash flow as
a liquidity measure has material limitations because it excludes certain
expenditures that are required or that the Company has committed to,
such as declared dividend payments and debt service requirements. The
Company defines free cash flow as:
-
Net cash provided by operating activities
-
Less, capital expenditures
-
Plus, proceeds from divestitures of businesses (net of cash
divested) and other sales of assets.
The Company's definition of free cash flow may not be comparable to
similarly titled measures presented by other companies, and therefore is
not subject to comparison.
The quantitative reconciliations of non-GAAP measures used herein
to the most comparable GAAP measures are included in the accompanying
schedules, with the exception of projected earnings per diluted share.
Non-GAAP measures should not be considered a substitute for
financial measures presented in accordance with GAAP, and investors are
urged to take into account GAAP measures as well as non-GAAP measures in
evaluating the Company. Management refers to GAAP income from
operations before depreciation and amortization as “operating EBITDA.”
(c) Core price is a performance metric used by
management and is based on certain historical assumptions to allow for
comparability between reporting periods.
The Company will host a conference call at 10:00 AM (Eastern) today to
discuss the first quarter 2015 results. Information contained within
this press release will be referenced and should be considered in
conjunction with the call.
The conference call will be webcast live from the Investor Relations
section of Waste Management’s website www.wm.com.
To access the conference call by telephone, please dial (877) 710-6139
approximately 10 minutes prior to the scheduled start of the call. If
you are calling from outside of the United States or Canada, please dial
(706) 643-7398. Please utilize conference ID number 16632898 when
prompted by the conference call operator.
A replay of the conference call will be available on the Company’s
website www.wm.com
and by telephone from approximately 1:00 PM (Eastern) Wednesday, April
29, 2015 through 5:00 PM (Eastern) on Wednesday, May 13, 2015. To access
the replay telephonically, please dial (855) 859-2056, or from outside
of the United States or Canada dial (404) 537-3406, and use the replay
conference ID number 16632898.
The Company, from time to time, provides estimates of financial and
other data, comments on expectations relating to future periods and
makes statements of opinion, view or belief about current and future
events. This press release contains a number of such forward-looking
statements, including but not limited to statements regarding 2015
earnings per diluted share; 2015 free cash flow; future results from
yield management and cost controls; refinancing of retired debt and
related interest savings; volume trends and improvements; future
recycling commodity prices; results from recycling operations; and
operating EBITDA from the acquired Deffenbaugh Disposal operations. You
should view these statements with caution. They are based on the facts
and circumstances known to the Company as of the date the statements are
made. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to be materially different
from those set forth in such forward-looking statements, including but
not limited to, increased competition; pricing actions; failure to
implement our optimization, growth, and cost savings initiatives and
overall business strategy; failure to identify acquisition targets and
negotiate attractive terms; failure to consummate or integrate such
acquisitions; failure to obtain the results anticipated from
acquisitions; environmental and other regulations; commodity price
fluctuations; disposal alternatives and waste diversion; declining waste
volumes; failure to develop and protect new technology; significant
environmental or other incidents resulting in liabilities and brand
damage; weakness in economic conditions; failure to obtain and maintain
necessary permits; labor disruptions; impairment charges; and negative
outcomes of litigation or governmental proceedings. Please
also see the Company’s filings with the SEC, including Part I, Item 1A
of the Company’s most recently filed Annual Report on Form 10-K, for
additional information regarding these and other risks and uncertainties
applicable to our business. The Company assumes no obligation to
update any forward-looking statement, including financial estimates and
forecasts, whether as a result of future events, circumstances or
developments or otherwise.
ABOUT WASTE MANAGEMENT
Waste Management, based in Houston, Texas, is the leading provider of
comprehensive waste management services in North America. Through its
subsidiaries, the company provides collection, transfer, recycling and
resource recovery, and disposal services. It is also a leading
developer, operator and owner of landfill gas-to-energy facilities in
the United States. The company’s customers include residential,
commercial, industrial, and municipal customers throughout North
America. To learn more information about Waste Management, visit www.wm.com
or www.thinkgreen.com.
|
Waste Management, Inc. Condensed Consolidated
Statements of Operations (In Millions, Except Per Share
Amounts) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
Operating revenues
|
|
|
$
|
3,040
|
|
|
|
$
|
3,396
|
|
|
|
|
|
|
|
|
Costs and expenses:
|
|
|
|
|
|
|
Operating
|
|
|
|
1,946
|
|
|
|
|
2,232
|
|
Selling, general and administrative
|
|
|
|
348
|
|
|
|
|
375
|
|
Depreciation and amortization
|
|
|
|
292
|
|
|
|
|
317
|
|
Restructuring
|
|
|
|
1
|
|
|
|
|
1
|
|
(Income) expense from divestitures, asset impairments and unusual
items
|
|
|
|
13
|
|
|
|
|
2
|
|
|
|
|
|
2,600
|
|
|
|
|
2,927
|
|
Income from operations
|
|
|
|
440
|
|
|
|
|
469
|
|
|
|
|
|
|
|
|
Other income (expense):
|
|
|
|
|
|
|
Interest expense, net
|
|
|
|
(104
|
)
|
|
|
|
(121
|
)
|
Loss on early extinguishment of debt
|
|
|
|
(550
|
)
|
|
|
|
-
|
|
Equity in net losses of unconsolidated entities
|
|
|
|
(8
|
)
|
|
|
|
(9
|
)
|
Other, net
|
|
|
|
-
|
|
|
|
|
(3
|
)
|
|
|
|
|
(662
|
)
|
|
|
|
(133
|
)
|
|
|
|
|
|
|
|
Income (loss) before income taxes
|
|
|
|
(222
|
)
|
|
|
|
336
|
|
Provision for (benefit from) income taxes
|
|
|
|
(91
|
)
|
|
|
|
99
|
|
Consolidated net income (loss)
|
|
|
|
(131
|
)
|
|
|
|
237
|
|
Less: Net income (loss) attributable to noncontrolling interests
|
|
|
|
(2
|
)
|
|
|
|
9
|
|
Net income (loss) attributable to Waste Management, Inc.
|
|
|
$
|
(129
|
)
|
|
|
$
|
228
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per common share
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
Basic common shares outstanding
|
|
|
|
458.5
|
|
|
|
|
465.2
|
|
|
|
|
|
|
|
|
Diluted common shares outstanding
|
|
|
|
458.5
|
|
|
|
|
466.9
|
|
|
|
|
|
|
|
|
Cash dividends declared per common share
|
|
|
$
|
0.385
|
|
|
|
$
|
0.375
|
|
|
Waste Management, Inc. Earnings Per Share (In
Millions, Except Per Share Amounts) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
EPS Calculation:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) attributable to Waste Management, Inc.
|
|
|
$
|
(129
|
)
|
|
|
$
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Number of common shares outstanding at end of period
|
|
|
|
457.8
|
|
|
|
|
465.3
|
|
Effect of using weighted average common shares outstanding
|
|
|
|
0.7
|
|
|
|
|
(0.1
|
)
|
Weighted average basic common shares outstanding
|
|
|
|
458.5
|
|
|
|
|
465.2
|
|
Dilutive effect of equity-based compensation awards and
|
|
|
|
|
|
|
other contingently issuable shares
|
|
|
|
-
|
|
|
|
|
1.7
|
|
Weighted average diluted common shares outstanding
|
|
|
|
458.5
|
|
|
|
|
466.9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic earnings (loss) per common share
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per common share
|
|
|
$
|
(0.28
|
)
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
Waste Management, Inc. Condensed Consolidated Balance
Sheets (In Millions)
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
|
December 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
(Unaudited)
|
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
277
|
|
|
$
|
1,307
|
Receivables, net
|
|
|
|
2,008
|
|
|
|
1,937
|
Other
|
|
|
|
332
|
|
|
|
397
|
Total current assets
|
|
|
|
2,617
|
|
|
|
3,641
|
|
|
|
|
|
|
|
Property and equipment, net
|
|
|
|
10,679
|
|
|
|
10,657
|
Goodwill
|
|
|
|
5,855
|
|
|
|
5,740
|
Other intangible assets, net
|
|
|
|
564
|
|
|
|
440
|
Other assets
|
|
|
|
976
|
|
|
|
934
|
Total assets
|
|
|
$
|
20,691
|
|
|
$
|
21,412
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
Accounts payable, accrued liabilities, and
|
|
|
|
|
|
|
deferred revenues
|
|
|
$
|
2,105
|
|
|
$
|
2,395
|
Current portion of long-term debt
|
|
|
|
168
|
|
|
|
1,090
|
Total current liabilities
|
|
|
|
2,273
|
|
|
|
3,485
|
|
|
|
|
|
|
|
Long-term debt, less current portion
|
|
|
|
9,039
|
|
|
|
8,345
|
Other liabilities
|
|
|
|
3,804
|
|
|
|
3,693
|
Total liabilities
|
|
|
|
15,116
|
|
|
|
15,523
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
Waste Management, Inc. stockholders' equity
|
|
|
|
5,554
|
|
|
|
5,866
|
Noncontrolling interests
|
|
|
|
21
|
|
|
|
23
|
Total equity
|
|
|
|
5,575
|
|
|
|
5,889
|
Total liabilities and equity
|
|
|
$
|
20,691
|
|
|
$
|
21,412
|
|
Waste Management, Inc. Condensed Consolidated
Statements of Cash Flows (In Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended March 31,
|
|
|
|
2015
|
|
|
2014
|
|
|
|
|
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
Consolidated net income (loss)
|
|
|
$
|
(131
|
)
|
|
|
$
|
237
|
|
Adjustments to reconcile consolidated net income to net cash
|
|
|
|
|
|
|
provided by operating activities:
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
|
292
|
|
|
|
|
317
|
|
Loss on early extinguishment of debt
|
|
|
|
550
|
|
|
|
|
-
|
|
Other
|
|
|
|
99
|
|
|
|
|
41
|
|
Change in operating assets and liabilities, net of effects of
|
|
|
|
|
|
|
acquisitions and divestitures
|
|
|
|
(311
|
)
|
|
|
|
(11
|
)
|
Net cash provided by operating activities
|
|
|
|
499
|
|
|
|
|
584
|
|
|
|
|
|
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
Acquisitions of businesses, net of cash acquired
|
|
|
|
(445
|
)
|
|
|
|
(11
|
)
|
Capital expenditures
|
|
|
|
(233
|
)
|
|
|
|
(266
|
)
|
Proceeds from divestitures of businesses
|
|
|
|
|
|
|
and other assets (net of cash divested)
|
|
|
|
19
|
|
|
|
|
166
|
|
Investments in unconsolidated entities
|
|
|
|
(5
|
)
|
|
|
|
(4
|
)
|
Net receipts from restricted trust and escrow
|
|
|
|
|
|
|
accounts, and other
|
|
|
|
36
|
|
|
|
|
(7
|
)
|
Net cash provided by (used in) investing activities
|
|
|
|
(628
|
)
|
|
|
|
(122
|
)
|
|
|
|
|
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
New borrowings
|
|
|
|
1,817
|
|
|
|
|
913
|
|
Debt repayments
|
|
|
|
(2,029
|
)
|
|
|
|
(928
|
)
|
Premiums paid on early extinguishment of debt
|
|
|
|
(554
|
)
|
|
|
|
-
|
|
Cash dividends
|
|
|
|
(176
|
)
|
|
|
|
(174
|
)
|
Exercise of common stock options
|
|
|
|
39
|
|
|
|
|
14
|
|
Other, net
|
|
|
|
5
|
|
|
|
|
(4
|
)
|
Net cash used in financing activities
|
|
|
|
(898
|
)
|
|
|
|
(179
|
)
|
|
|
|
|
|
|
|
Effect of exchange rate changes on cash and cash equivalents
|
|
|
|
(3
|
)
|
|
|
|
(2
|
)
|
|
|
|
|
|
|
|
Increase (decrease) in cash and cash equivalents
|
|
|
|
(1,030
|
)
|
|
|
|
281
|
|
Cash and cash equivalents at beginning of period
|
|
|
|
1,307
|
|
|
|
|
58
|
|
Cash and cash equivalents at end of period
|
|
|
$
|
277
|
|
|
|
$
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Waste Management, Inc. Summary Data Sheet (Dollar
Amounts in Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
2014
|
|
|
Operating Revenues by Lines of Business
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collection
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Commercial
|
|
|
|
$
|
820
|
|
|
$
|
838
|
|
|
$
|
846
|
|
|
|
|
|
|
Residential
|
|
|
|
|
612
|
|
|
|
629
|
|
|
|
635
|
|
|
|
|
|
|
Industrial
|
|
|
|
|
509
|
|
|
|
555
|
|
|
|
516
|
|
|
|
|
|
|
Other
|
|
|
|
|
76
|
|
|
|
85
|
|
|
|
77
|
|
|
|
|
|
Total Collection
|
|
|
|
|
2,017
|
|
|
|
2,107
|
|
|
|
2,074
|
|
|
|
|
|
Landfill
|
|
|
|
|
635
|
|
|
|
727
|
|
|
|
632
|
|
|
|
|
|
Transfer
|
|
|
|
|
308
|
|
|
|
336
|
|
|
|
306
|
|
|
|
|
|
Wheelabrator
|
|
|
|
|
-
|
|
|
|
176
|
|
|
|
230
|
|
|
|
|
|
Recycling
|
|
|
|
|
282
|
|
|
|
321
|
|
|
|
347
|
|
|
|
|
|
Other
|
|
|
|
|
|
333
|
|
|
|
373
|
|
|
|
387
|
|
|
|
|
|
Intercompany (a)
|
|
|
|
|
(535
|
)
|
|
|
(603
|
)
|
|
|
(580
|
)
|
|
|
|
|
|
Operating revenues
|
|
|
|
$
|
3,040
|
|
|
$
|
3,437
|
|
|
$
|
3,396
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
|
|
|
|
|
|
|
|
|
|
|
March 31, 2015
|
|
March 31, 2014
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Analysis of Change in Year Over Year
Revenues
|
|
|
|
Amount
|
|
As a % of Total Company
|
|
Amount
|
|
As a % of Total Company
|
|
|
Average yield (i)
|
|
|
|
$
|
(24
|
)
|
|
|
-0.7
|
%
|
|
$
|
86
|
|
|
2.6
|
%
|
|
|
Volume
|
|
|
|
|
(95
|
)
|
|
|
-3.0
|
%
|
|
|
(59
|
)
|
|
-1.8
|
%
|
|
|
Internal revenue growth
|
|
|
|
|
(119
|
)
|
|
|
-3.7
|
%
|
|
|
27
|
|
|
0.8
|
%
|
|
|
Acquisition
|
|
|
|
|
8
|
|
|
|
0.2
|
%
|
|
|
54
|
|
|
1.6
|
%
|
|
|
Divestitures
|
|
|
|
|
(220
|
)
|
|
*
|
|
|
|
(4
|
)
|
|
-0.1
|
%
|
|
|
Foreign currency translation
|
|
|
|
|
(25
|
)
|
|
|
-0.8
|
%
|
|
|
(17
|
)
|
|
-0.5
|
%
|
|
|
|
|
|
|
|
|
|
|
$
|
(356
|
)
|
|
|
-10.5
|
%
|
|
$
|
60
|
|
|
1.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amount
|
|
As a % of Related Business
|
|
Amount
|
|
As a % of Related Business
|
|
(i)
|
Average yield
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Collection and disposal
|
|
|
|
$
|
54
|
|
|
|
2.0
|
%
|
|
$
|
71
|
|
|
2.6
|
%
|
|
|
|
Recycling commodities
|
|
|
|
|
(42
|
)
|
|
|
-12.2
|
%
|
|
|
(14
|
)
|
|
-4.0
|
%
|
|
|
|
Electricity
|
|
|
|
|
-
|
|
|
|
0.0
|
%
|
|
|
27
|
|
|
37.5
|
%
|
|
|
|
Fuel surcharges and mandated fees
|
|
|
|
|
(36
|
)
|
|
|
-21.3
|
%
|
|
|
2
|
|
|
1.2
|
%
|
|
|
Total
|
|
|
|
|
$
|
(24
|
)
|
|
|
-0.7
|
%
|
|
$
|
86
|
|
|
2.6
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended March 31,
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015
|
|
2014
|
|
|
|
|
Free Cash Flow Analysis (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net cash provided by operating activities
|
|
|
|
$
|
499
|
|
|
$
|
584
|
|
|
|
|
|
Capital expenditures
|
|
|
|
|
(233
|
)
|
|
|
(266
|
)
|
|
|
|
|
Proceeds from divestitures of businesses
|
|
|
|
|
|
|
|
|
|
|
|
|
and other assets (net of cash divested)
|
|
|
|
|
19
|
|
|
|
166
|
|
|
|
|
|
Free cash flow
|
|
|
|
$
|
285
|
|
|
$
|
484
|
|
|
|
|
|
|
|
|
*
|
|
Percentage change does not provide a meaningful comparison.
|
|
|
|
(a)
|
|
Intercompany revenues between lines of business are eliminated
within the Condensed Consolidated Financial Statements included
herein.
|
|
|
|
(b)
|
|
The summary of free cash flows has been prepared to highlight and
facilitate understanding of the principal cash flow elements. Free
cash flow is not a measure of financial performance under
generally accepted accounting principles and is not intended to
replace the consolidated statement of cash flows that was prepared
in accordance with generally accepted accounting principles.
|
|
Waste Management, Inc. Summary Data Sheet (Dollar
Amounts in Millions) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarters Ended
|
|
|
|
March 31,
|
|
|
|
December 31,
|
|
|
|
March 31,
|
|
|
|
2015
|
|
|
|
2014
|
|
|
|
2014
|
Balance Sheet Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
277
|
|
|
|
|
$
|
1,307
|
|
|
|
|
$
|
339
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt-to-total capital ratio:
|
|
|
|
|
|
|
|
|
|
|
|
Long-term indebtedness, including current portion
|
|
|
$
|
9,207
|
|
|
|
|
$
|
9,435
|
|
|
|
|
$
|
10,194
|
|
Total equity
|
|
|
|
5,575
|
|
|
|
|
|
5,889
|
|
|
|
|
|
6,039
|
|
Total capital
|
|
|
$
|
14,782
|
|
|
|
|
$
|
15,324
|
|
|
|
|
$
|
16,233
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Debt-to-total capital
|
|
|
|
62.3
|
%
|
|
|
|
|
61.6
|
%
|
|
|
|
|
62.8
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Capitalized interest
|
|
|
$
|
4
|
|
|
|
|
$
|
5
|
|
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Acquisition Summary (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross annualized revenue acquired
|
|
|
$
|
244
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
9
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total consideration
|
|
|
$
|
465
|
|
|
|
|
$
|
4
|
|
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for acquisitions
|
|
|
$
|
445
|
|
|
|
|
$
|
3
|
|
|
|
|
$
|
11
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other Operational Data
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internalization of waste, based on disposal costs
|
|
|
|
64.3
|
%
|
|
|
|
|
67.5
|
%
|
|
|
|
|
67.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Total landfill disposal volumes (tons in millions)
|
|
|
|
20.9
|
|
|
|
|
|
24.5
|
|
|
|
|
|
21.3
|
|
Total waste-to-energy disposal volumes (tons in millions)
|
|
|
|
-
|
|
|
|
|
|
1.6
|
|
|
|
|
|
1.7
|
|
Total disposal volumes (tons in millions)
|
|
|
|
20.9
|
|
|
|
|
|
26.1
|
|
|
|
|
|
23.0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Active landfills
|
|
|
|
254
|
|
|
|
|
|
252
|
|
|
|
|
|
267
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Landfills reporting volume
|
|
|
|
236
|
|
|
|
|
|
235
|
|
|
|
|
|
247
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Amortization, Accretion and Other
Expenses for
|
|
|
|
|
|
|
|
|
|
|
|
Landfills Included in Operating Groups:
|
|
|
|
|
|
|
|
|
|
|
|
Landfill amortization expense -
|
|
|
|
|
|
|
|
|
|
|
|
Cost basis of landfill assets
|
|
|
$
|
72.4
|
|
|
|
|
$
|
83.7
|
|
|
|
|
$
|
73.5
|
|
Asset retirement costs
|
|
|
|
16.0
|
|
|
|
|
|
4.7
|
|
|
|
|
|
9.9
|
|
Total landfill amortization expense (b)
|
|
|
|
88.4
|
|
|
|
|
|
88.4
|
|
|
|
|
|
83.4
|
|
Accretion and other related expense
|
|
|
|
18.4
|
|
|
|
|
|
19.4
|
|
|
|
|
|
18.3
|
|
Landfill amortization, accretion and other related expense
|
|
|
$
|
106.8
|
|
|
|
|
$
|
107.8
|
|
|
|
|
$
|
101.7
|
|
|
|
|
(a)
|
|
Represents amounts associated with business acquisitions
consummated during the indicated periods except for Cash paid for
acquisitions, which may include cash payments for business
acquisitions consummated in prior quarters.
|
|
|
|
(b)
|
|
The quarter ended March 31, 2015 as compared to the quarter ended
March 31, 2014 reflects an increase in amortization expense of
approximately $5.0 million primarily due to changes in landfill
estimates identified in both quarters.
|
|
|
|
|
|
Waste Management, Inc. Reconciliation of Certain
Non-GAAP Measures (Dollars In Millions, Except Per Share
Amounts) (Unaudited)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
March 31, 2015
|
|
|
|
Adjusted Net Income and Earnings Per Diluted Share
|
|
|
After-tax Amount
|
|
|
|
Per Share Amount
|
|
|
|
Net Income (Loss) and Diluted EPS, as reported
|
|
|
$
|
(129
|
)
|
|
|
|
$
|
(0.28
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Net Income (Loss) and Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
Loss on early debt extinguishment
|
|
|
|
344
|
|
|
|
|
|
0.74
|
|
|
|
|
Asset impairments and unusual items (a)
|
|
|
|
12
|
|
|
|
|
|
0.03
|
|
|
|
|
|
|
|
|
356
|
|
|
|
|
|
0.77
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income and Diluted EPS, as adjusted
|
|
|
$
|
227
|
|
|
|
|
$
|
0.49
|
|
(b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarter Ended
March 31, 2014
|
|
|
|
|
|
|
|
Adjusted Earnings Per Diluted Share
|
|
|
Per Share Amount
|
|
|
|
|
|
|
|
Diluted EPS, as reported
|
|
|
$
|
0.49
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustment to Diluted EPS:
|
|
|
|
|
|
|
|
|
|
|
Divested businesses and assets in 2014 (c)
|
|
|
|
(0.04
|
)
|
(c)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted EPS, as adjusted
|
|
|
$
|
0.45
|
|
(b)
|
|
|
|
|
|
|
|
(a)
|
|
Includes net charges reflected in: i) the "asset impairments and
unusual items" financial caption, primarily related to certain
adjustments associated with the sale of our waste-to-energy
business in December 2014 and an impairment of a landfill in
Western Canada and ii) the "restructuring" financial caption.
|
(b)
|
|
First quarter 2015 as-adjusted earnings per diluted share increased
$0.04, or almost 9%, as compared with the first quarter of 2014
results adjusted to exclude the earnings from businesses and assets
divested in 2014.
|
(c)
|
|
Primarily includes the divestiture of our waste-to-energy business
and other solid waste assets. Tax expense associated with this item
was $9 million.
|
|
Waste Management, Inc.
|
Reconciliation of Certain Non-GAAP Measures
|
(Dollars In Millions, Except Per Share Amounts)
|
(Unaudited)
|
|
|
|
|
|
|
Quarter Ended March 31, 2015
|
Adjusted Tax Expense Reconciliation and Effective Tax Rate
|
|
|
|
|
Pre-tax Income / (Loss)
|
|
|
Tax Expense / (Benefits)
|
|
|
Effective Tax Rate (a)
|
|
|
|
|
|
|
|
|
|
|
|
|
As reported amounts
|
|
|
|
|
$
|
(222
|
)
|
|
|
$
|
(91
|
)
|
|
|
41.0
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjustments to Tax Expense:
|
|
|
|
|
|
|
|
|
|
|
|
Loss on early debt extinguishment
|
|
|
|
|
|
550
|
|
|
|
|
206
|
|
|
|
|
Asset impairments and unusual items
|
|
|
|
|
|
14
|
|
|
|
|
2
|
|
|
|
|
As adjusted amounts
|
|
|
|
|
$
|
342
|
|
|
|
$
|
117
|
|
|
|
34.2
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2015 Projected Free Cash Flow Reconciliation (b)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Scenario 1
|
|
|
Scenario 2
|
|
|
|
Net cash provided by operating activities
|
|
|
|
|
$
|
2,600
|
|
|
|
$
|
2,800
|
|
|
|
|
Capital expenditures
|
|
|
|
|
|
(1,200
|
)
|
|
|
|
(1,300
|
)
|
|
|
|
Proceeds from divestitures of businesses
|
|
|
|
|
|
|
|
|
|
|
|
and other assets (net of cash divested)
|
|
|
|
|
|
50
|
|
|
|
|
100
|
|
|
|
|
Free cash flow
|
|
|
|
|
$
|
1,450
|
|
|
|
$
|
1,600
|
|
|
|
|
|
|
|
(a)
|
|
The Company calculates its effective tax rate based on actual
dollars. Rounding differences occurred when the effective tax rate
was calculated using Pre-tax Income and Tax Expense amounts
included in the table above, as these items have been rounded in
millions.
|
(b)
|
|
The reconciliation includes two scenarios that illustrate our
projected free cash flow range for 2015. The amounts used in the
reconciliation are subject to many variables, some of which are
not under our control and, therefore, are not necessarily
indicative of actual results.
|
|
Waste Management, Inc.
|
Supplemental Data - Q1 2014 Impact of Divestitures
|
(Dollars In Millions, Except Per Share Amounts)
|
(Unaudited)
|
|
The following table presents certain financial measures that have
been adjusted to exclude amounts attributed to divestitures during
2014, primarily our waste-to-energy business and other solid waste
assets. These pro-forma 2014 financial measures are non-GAAP
measures and should not be considered a substitute for the
as-reported amounts below. We have included this information because
the Company had significant divestitures in 2014; accordingly,
management believes that presenting certain financial measures as
adjusted to exclude amounts attributed to divested operations and
assets will provide investors with a more meaningful comparison to
2015 results.
|
|
|
|
Quarter ended March 31, 2014
|
|
Selected Financial Information
|
|
As-Reported Amount
|
|
LESS: Amounts Attributed to Divestitures
|
|
Pro-Forma 2014
|
|
Operating Revenues
|
|
$
|
3,396
|
|
$
|
218
|
|
$
|
3,178
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
$
|
2,232
|
|
$
|
155
|
|
$
|
2,077
|
(a)
|
|
|
|
|
|
|
|
|
SG&A Expenses
|
|
$
|
375
|
|
$
|
12
|
|
$
|
363
|
(b)
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
$
|
317
|
|
$
|
15
|
|
$
|
302
|
|
|
|
|
|
|
|
|
|
Income From Operations
|
|
$
|
469
|
|
$
|
36
|
|
$
|
433
|
|
|
|
|
|
|
|
|
|
Operating EBITDA
|
|
$
|
786
|
|
$
|
51
|
|
$
|
735
|
(c)
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
228
|
|
$
|
16
|
|
$
|
212
|
|
|
|
|
|
|
|
|
|
Earnings Per Diluted Share
|
|
$
|
0.49
|
|
$
|
0.04
|
|
$
|
0.45
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
$
|
584
|
|
$
|
57
|
|
$
|
527
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
$
|
266
|
|
$
|
2
|
|
$
|
264
|
|
|
|
|
|
|
|
|
|
Proceeds from Divestitures
|
|
$
|
166
|
|
$
|
166
|
|
$
|
-
|
|
|
|
|
|
|
|
|
|
Free Cash Flow
|
|
$
|
484
|
|
$
|
221
|
|
$
|
263
|
(d)
|
|
|
|
(a)
|
|
As-reported operating expenses for the first quarter of 2015 were
$1,946 million. As a result, after excluding divestitures from the
first quarter of 2014, operating expenses improved by $131 million
compared with the prior year period.
|
(b)
|
|
As-reported SG&A expenses for the first quarter of 2015 were $348
million. As a result, after excluding divestitures from the first
quarter of 2014, SG&A expenses improved by $15 million compared with
the prior year period.
|
(c)
|
|
Management refers to GAAP income from operations, before
depreciation and amortization, as operating EBITDA.
|
(d)
|
|
Free cash flow was $285 million in the first quarter of 2015.
Excluding estimated free cash flow from operations and assets
divested in 2014, free cash flow improved $22 million when
compared with the prior year period. Please see note (b) to the
earnings press release for a definition and additional information
regarding our use of this non-GAAP measure.
|
|
Waste Management, Inc.
|
Supplemental Data - 2014 Impact of Divestitures by Quarter
|
(Dollars In Millions, Except Per Share Amounts)
|
(Unaudited)
|
|
The following table presents certain financial results attributed to
divestitures during 2014, primarily our waste-to-energy business and
other solid waste assets. We have included this information because
the Company had significant divestitures in 2014; accordingly,
management believes that providing this additional detail regarding
prior financial results attributed to divested operations and assets
will help investors understand the Company’s 2015 financial
projections and provide investors with more meaningful comparisons
to 2015 results.
|
|
|
|
Q1 2014
|
|
Q2 2014
|
|
Q3 2014
|
|
Q4 2014
|
|
Year 2014
|
|
|
|
|
|
|
|
|
|
|
|
Gross Operating Revenues
|
|
$
|
253
|
|
|
$
|
218
|
|
|
$
|
204
|
|
|
$
|
177
|
|
|
$
|
852
|
|
Intercompany Operating Revenues
|
|
|
(35
|
)
|
|
|
(29
|
)
|
|
|
(28
|
)
|
|
|
(26
|
)
|
|
|
(118
|
)
|
Net Operating Revenues
|
|
$
|
218
|
|
|
$
|
189
|
|
|
$
|
176
|
|
|
$
|
151
|
|
|
$
|
734
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
$
|
155
|
|
|
$
|
134
|
|
|
$
|
113
|
|
|
$
|
93
|
|
|
$
|
495
|
|
|
|
|
|
|
|
|
|
|
|
|
SG&A Expenses
|
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
8
|
|
|
$
|
6
|
|
|
$
|
39
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and Amortization
|
|
$
|
15
|
|
|
$
|
16
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
36
|
|
|
|
|
|
|
|
|
|
|
|
|
Income from Operations
|
|
$
|
36
|
|
|
$
|
26
|
|
|
$
|
51
|
|
|
$
|
51
|
|
|
$
|
164
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating EBITDA (a)
|
|
$
|
51
|
|
|
$
|
42
|
|
|
$
|
55
|
|
|
$
|
52
|
|
|
$
|
200
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
|
|
$
|
16
|
|
|
$
|
9
|
|
|
$
|
25
|
|
|
$
|
30
|
|
|
$
|
80
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per Diluted Share
|
|
$
|
0.04
|
|
|
$
|
0.02
|
|
|
$
|
0.05
|
|
|
$
|
0.07
|
|
|
$
|
0.18
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Cash Provided by Operating Activities
|
|
$
|
57
|
|
|
$
|
16
|
|
|
$
|
45
|
|
|
$
|
22
|
|
|
$
|
140
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Expenditures
|
|
$
|
2
|
|
|
$
|
3
|
|
|
$
|
4
|
|
|
$
|
1
|
|
|
$
|
10
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from Divestitures
|
|
$
|
166
|
|
|
$
|
100
|
|
|
$
|
53
|
|
|
$
|
1,934
|
|
|
$
|
2,253
|
|
|
|
|
|
|
|
|
|
|
|
|
Free Cash Flow (b)
|
|
$
|
221
|
|
|
$
|
113
|
|
|
$
|
94
|
|
|
$
|
1,955
|
|
|
$
|
2,383
|
|
|
|
|
(a)
|
|
Management refers to GAAP income from operations, before
depreciation and amortization, as operating EBITDA.
|
(b)
|
|
Please see note (b) to the earnings press release for a definition
and additional information regarding our use of this non-GAAP
measure.
|
Copyright Business Wire 2015