Company Expects Significant Cash Generation in 2013
HOUSTON -- (Business Wire)
Waste Management, Inc. (NYSE: WM) today announced financial results for
the fourth quarter and for the year ended December 31, 2012. Revenues
for the fourth quarter of 2012 were $3.43 billion compared with $3.41
billion for the same 2011 period. Net income (a) for the
quarter was $224 million, or $0.48 per diluted share, compared with $266
million, or $0.58 per diluted share, for the fourth quarter of 2011.
Adjusting for certain items, net income would have been $267 million, or
$0.57 per diluted share, in the fourth quarter of 2012 compared with
$289 million, or $0.63 per diluted share, in the fourth quarter of 2011.(b)
For the full year 2012, the Company reported revenues of $13.65 billion
compared with $13.38 billion for 2011. Earnings per diluted share were
$1.76 for the full year 2012 compared with $2.04 for the full year 2011.
On an as-adjusted basis taking into account several items that impacted
the full year results, earnings per diluted share were $2.08 for the
full year 2012 and $2.14 for the full-year 2011.(b)
As-adjusted results in the fourth quarter of 2012 excluded a negative
$0.09 per diluted share impact resulting from the following:
-
A total of $27 million in after-tax impacts from charges for asset
impairments, legal reserves and discount rate adjustments; and
-
A total of $16 million in after-tax impacts from charges for
restructuring and Oakleaf integration costs.
David P. Steiner, President and Chief Executive Officer of Waste
Management, commented, “Our fourth quarter was in line with our
expectations. Our internal revenue growth from yield in the fourth
quarter was at its highest level for the year. This should provide a
nice tailwind for improved yield in 2013 -- something every manager will
be focused on in 2013. In addition, we continued to see the benefit of
our second quarter reorganization. These improvements were partially
offset by increased costs for operations labor and repair and
maintenance.
“During 2012, we continued to produce strong cash flows from operating
activities and return cash to our shareholders. We met our goal of $800
million to $850 million of free cash flow, generating $829 million of
free cash. We expect to grow free cash flow by 33% to 45% in 2013. We
returned $658 million to our shareholders in 2013 through our dividend,
which our Board has indicated will increase in 2013 to $1.46 per share
annually.”
KEY HIGHLIGHTS FOR THE FOURTH QUARTER 2012 AND THE FULL YEAR 2012
-
Revenue in the fourth quarter increased by 0.8%, or $28 million. For
the full year, revenue increased by 2.0%, or $271 million.
-
Internal revenue growth from yield for collection and disposal
operations was 0.9% for the fourth quarter and 0.8% for the full year.
Adjusting for contract changes related to the Company’s South Florida
waste-to-energy plants, internal revenue growth from yield for
collection and disposal operations was 1.1% in the fourth quarter and
1.0% for the full year.
-
Core price increases, which consist of price increases and fees
(excluding fuel surcharges), net of rollbacks, were 2.5% for the
fourth quarter and 2.8% for the full year.
-
Internal revenue growth from volume was 0.4% for the fourth quarter
and 0.5% for the full year.
-
Recycling and electricity commodities pricing had a negative impact of
$0.04 per diluted share in the fourth quarter when compared to the
fourth quarter of 2011. For the full year, commodities pricing had a
negative impact of $0.25 per diluted share when compared to the full
year of 2011.
-
Operating expenses increased by $79 million in the fourth quarter and
$338 million for the full year. Adjusting for the items excluded in
calculating the Company’s as-adjusted earnings, operating expenses
increased by $71 million in the fourth quarter and $326 million for
the full year.(b) In the fourth quarter, the majority of
the increases were for costs associated with operating recently
acquired businesses, labor, and repair and maintenance.
-
SG&A expenses in the fourth quarter improved to 10.4% of revenue from
11.9% in the prior year period, and for the full year improved to
10.8% of revenue from 11.6% in the prior year.
-
In the fourth quarter, net cash provided by operating activities was
$577 million; capital expenditures were $378 million; and free cash
flow was $215 million.(b) For the full year 2012, net cash
provided by operating activities was $2.3 billion; capital
expenditures were $1.51 billion; and free cash flow was $829 million.(b)
-
The Company returned $165 million to shareholders in the fourth
quarter in dividends. For the full year, the Company returned $658
million to shareholders in dividends.
-
The effective tax rate was approximately 32.4% in the fourth quarter
and approximately 34.0% for the full year.
2013 OUTLOOK
The Company announced the following with regard to its financial outlook
for 2013:
-
2013 adjusted earnings per diluted share are expected to be between
$2.15 and $2.20.(b)
-
Internal revenue growth from yield on the collection and disposal
business is expected to be between 1.0% and 1.5%. Internal revenue
growth from volume is expected to be between 0.5% and 1.0%.
-
Recycling commodity sales prices are expected to have a negative $0.02
impact on earnings per diluted share in 2013, compared with the prior
year.
-
Results from the Company’s waste-to-energy operations are expected to
have a negative $0.02 impact on earnings per diluted share, compared
with the prior year.
-
The tax rate is expected to be approximately 35.0%.
-
Capital expenditures are expected to be approximately $1.3 to $1.4
billion.
-
Free cash flow is projected to be approximately $1.1 to $1.2 billion
without the benefit of any divestitures.(b) Any
divestitures would increase free cash flow.
-
The Board of Directors has announced its intention to increase the
dividend to $1.46 per share on an annual basis, at an approximate
annual cost of $680 million. The Board must separately declare each
dividend. The Board has authorized up to $500 million in share
repurchases. The amount of share repurchases will depend on a number
of factors, including changes from expected levels of capital
expenditures, business acquisitions, investments and debt repayments.
Steiner concluded, “Based upon all of our assumptions, we forecast
full-year adjusted earnings to be in the range of $2.15 to $2.20 per
diluted share.(b) Capital expenditures are projected to be
about $1.3 to $1.4 billion; and our free cash flow for 2013 is estimated
to be approximately $1.1 to $1.2 billion.(b) We expect to
continue to use our free cash to pay our dividend, to reduce debt, and
to repurchase shares, as well as to make appropriate acquisitions and
investments in our business. These acquisitions and investments will be
predominantly in our core businesses of solid waste and recycling.
“In 2013 we expect to see increased internal revenue growth from yield
and volume, as well as the ongoing benefit from our cost savings
programs. We are forecasting modest earnings per share growth in 2013 of
between 3% and 6%, but strong free cash flow growth of between 33% and
45%. Our projected earnings growth is being impacted by about $120
million of compensation headwinds from accruals that we expect in 2013
assuming target payout of our annual and long-term incentive plans,
compared to significantly lower incentive compensation expense in 2012.
Without this accrual, our forecasted earnings would be $0.15 per share
higher. We do not expect this same headwind in 2014, so based on current
conditions and assumptions, we expect to see more normalized earnings
growth of 8% to 12% in 2014.”
--------------------------------------------------------------------------------------------------------------
(a)For purposes of this press release, all references
to “Net income” refer to the financial statement line item “Net income
attributable to Waste Management, Inc.”
(b)This earnings 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 our results of operations
and (ii) financial measures the Company uses in the management of its
business. Accordingly, net income, earnings per diluted share, and
operating expenses have been presented in certain instances excluding
special items noted in this press release.
The Company’s projected full year 2013 earnings per diluted share
are not GAAP net earnings per diluted share and are anticipated to be
adjusted to exclude the effects of events or circumstances in 2013 that
are not representative or indicative of the Company’s results of
operations.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 to a GAAP earnings per diluted share
projection.
The Company also discusses free cash flow and provides a projection
of free cash flow, which is a non-GAAP measure, because it believes that
it is indicative of our ability to pay our quarterly dividends,
repurchase common stock, fund acquisitions and other investments and, in
the absence of refinancings, to repay our 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. Nonetheless, 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,
other than projected earnings per diluted share, to the most comparable
GAAP measures are included in the accompanying schedules. 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.
The Company will host a conference call at 10:00 AM (Eastern) today to
discuss the fourth quarter and full year 2012 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 88156298 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) Thursday, February
14, 2013 through 5:00 PM (Eastern) on Thursday, March 1, 2013. 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 88156298.
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, all of the statements under
the heading “2013 Outlook” (which includes 2013 earnings per diluted
share; 2013 free cash flow; 2013 capital expenditures; future internal
revenue growth from yield and volume; future recycling commodity prices;
results from waste-to-energy operations; expected tax rate; and future
dividends and share repurchases), as well as statements regarding 2013
compensation and accruals, future debt reduction, future acquisitions
and investments, and earnings or cash generation in 2014. 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; 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 oflitigation 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, Inc., 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 waste-to-energy and 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 December 31, |
| | | | | 2012 | | | | | 2011 |
| | | | | | | | | |
|
Operating revenues
| | | | |
$
|
3,434
| | | | | |
$
|
3,406
| |
| | | | | | | | | |
|
Costs and expenses:
| | | | | | | | | | |
Operating
| | | | | |
2,224
| | | | | | |
2,145
| |
Selling, general and administrative
| | | | | |
356
| | | | | | |
407
| |
Depreciation and amortization
| | | | | |
326
| | | | | | |
294
| |
Restructuring
| | | | | |
16
| | | | | | |
4
| |
(Income) expense from divestitures, asset impairments and unusual
items
| | | | |
|
28
|
| | | | |
|
4
|
|
| | | | |
|
2,950
|
| | | | |
|
2,854
|
|
Income from operations
| | | | |
|
484
|
| | | | |
|
552
|
|
| | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | |
Interest expense
| | | | | |
(122
|
)
| | | | | |
(123
|
)
|
Interest income
| | | | | |
-
| | | | | | |
2
| |
Equity in net losses of unconsolidated entities
| | | | | |
(11
|
)
| | | | | |
(11
|
)
|
Other, net
| | | | |
|
(2
|
)
| | | | |
|
(8
|
)
|
| | | | |
|
(135
|
)
| | | | |
|
(140
|
)
|
| | | | | | | | | |
|
Income before income taxes
| | | | | |
349
| | | | | | |
412
| |
Provision for income taxes
| | | | |
|
114
|
| | | | |
|
134
|
|
Consolidated net income
| | | | | |
235
| | | | | | |
278
| |
Less: Net income attributable to noncontrolling interests
| | | | |
|
11
|
| | | | |
|
12
|
|
Net income attributable to Waste Management, Inc.
| | | | |
$
|
224
|
| | | | |
$
|
266
|
|
| | | | | | | | | |
|
Basic earnings per common share
| | | | |
$
|
0.48
|
| | | | |
$
|
0.58
|
|
| | | | | | | | | |
|
Diluted earnings per common share
| | | | |
$
|
0.48
|
| | | | |
$
|
0.58
|
|
| | | | | | | | | |
|
Basic common shares outstanding
| | | | |
|
464.3
|
| | | | |
|
460.8
|
|
| | | | | | | | | |
|
Diluted common shares outstanding
| | | | |
|
464.8
|
| | | | |
|
462.3
|
|
| | | | | | | | | |
|
Cash dividends declared per common share
| | | | |
$
|
0.355
|
| | | | |
$
|
0.34
|
|
| | | | | | | | | | | | | |
|
|
Waste Management, Inc. |
Earnings Per Share |
(In Millions, Except Per Share Amounts) |
(Unaudited) |
|
|
|
|
| |
|
|
|
| |
| | | | | | | | | |
|
| | | | | Quarters Ended December 31, |
| | | | | 2012 | | | | | 2011 |
| | | | | | | | | |
|
EPS Calculation: | | | | | | | | | | |
| | | | | | | | | |
|
Net income attributable to Waste Management, Inc.
| | | | |
$
|
224
| | | | |
$
|
266
|
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Number of common shares outstanding at end of period
| | | | | |
464.2
| | | | | |
460.5
|
Effect of using weighted average common shares outstanding
| | | | |
|
0.1
| | | | |
|
0.3
|
Weighted average basic common shares outstanding
| | | | | |
464.3
| | | | | |
460.8
|
Dilutive effect of equity-based compensation awards and
| | | | | | | | | | |
other contingently issuable shares
| | | | |
|
0.5
| | | | |
|
1.5
|
Weighted average diluted common shares outstanding
| | | | |
|
464.8
| | | | |
|
462.3
|
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Basic earnings per common share
| | | | |
$
|
0.48
| | | | |
$
|
0.58
|
| | | | | | | | | |
|
Diluted earnings per common share
| | | | |
$
|
0.48
| | | | |
$
|
0.58
|
| | | | | | | | | | | |
|
|
Waste Management, Inc. |
Condensed Consolidated Statements of Operations |
(In Millions, Except Per Share Amounts) |
(Unaudited) |
|
|
|
|
| |
|
|
|
| |
| | | | | | | | | |
|
| | | | | Years Ended December 31, |
| | | | | 2012 | | | | | 2011 |
| | | | | | | | | |
|
Operating revenues
| | | | |
$
|
13,649
| | | | | |
$
|
13,378
| |
| | | | | | | | | |
|
Costs and expenses:
| | | | | | | | | | |
Operating
| | | | | |
8,879
| | | | | | |
8,541
| |
Selling, general and administrative
| | | | | |
1,472
| | | | | | |
1,551
| |
Depreciation and amortization
| | | | | |
1,297
| | | | | | |
1,229
| |
Restructuring
| | | | | |
67
| | | | | | |
19
| |
(Income) expense from divestitures, asset impairments and unusual
items
| | | | |
|
83
|
| | | | |
|
10
|
|
| | | | |
|
11,798
|
| | | | |
|
11,350
|
|
Income from operations
| | | | |
|
1,851
|
| | | | |
|
2,028
|
|
| | | | | | | | | |
|
Other income (expense):
| | | | | | | | | | |
Interest expense
| | | | | |
(488
|
)
| | | | | |
(481
|
)
|
Interest income
| | | | | |
4
| | | | | | |
8
| |
Equity in net losses of unconsolidated entities
| | | | | |
(46
|
)
| | | | | |
(31
|
)
|
Other, net
| | | | |
|
(18
|
)
| | | | |
|
(4
|
)
|
| | | | |
|
(548
|
)
| | | | |
|
(508
|
)
|
| | | | | | | | | |
|
Income before income taxes
| | | | | |
1,303
| | | | | | |
1,520
| |
Provision for income taxes
| | | | |
|
443
|
| | | | |
|
511
|
|
Consolidated net income
| | | | | |
860
| | | | | | |
1,009
| |
Less: Net income attributable to noncontrolling interests
| | | | |
|
43
|
| | | | |
|
48
|
|
Net income attributable to Waste Management, Inc.
| | | | |
$
|
817
|
| | | | |
$
|
961
|
|
| | | | | | | | | |
|
Basic earnings per common share
| | | | |
$
|
1.76
|
| | | | |
$
|
2.05
|
|
| | | | | | | | | |
|
Diluted earnings per common share
| | | | |
$
|
1.76
|
| | | | |
$
|
2.04
|
|
| | | | | | | | | |
|
Basic common shares outstanding
| | | | |
|
463.6
|
| | | | |
|
469.7
|
|
| | | | | | | | | |
|
Diluted common shares outstanding
| | | | |
|
464.4
|
| | | | |
|
471.4
|
|
| | | | | | | | | |
|
Cash dividends declared per common share
| | | | |
$
|
1.42
|
| | | | |
$
|
1.36
|
|
| | | | | | | | | | | | | |
|
|
Waste Management, Inc. |
Earnings Per Share |
(In Millions, Except Per Share Amounts) |
(Unaudited) |
|
|
|
|
| |
|
|
|
| |
| | | | | | | | | |
|
| | | | | Years Ended December 31, |
| | | | | 2012 | | | | | 2011 |
| | | | | | | | | |
|
EPS Calculation: | | | | | | | | | | |
| | | | | | | | | |
|
Net income attributable to Waste Management, Inc.
| | | | |
$
|
817
|
| | | | |
$
|
961
|
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Number of common shares outstanding at end of period
| | | | | |
464.2
| | | | | | |
460.5
|
Effect of using weighted average common shares outstanding
| | | | |
|
(0.6
|
)
| | | | |
|
9.2
|
Weighted average basic common shares outstanding
| | | | | |
463.6
| | | | | | |
469.7
|
Dilutive effect of equity-based compensation awards and
| | | | | | | | | | |
other contingently issuable shares
| | | | |
|
0.8
|
| | | | |
|
1.7
|
Weighted average diluted common shares outstanding
| | | | |
|
464.4
|
| | | | |
|
471.4
|
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Basic earnings per common share
| | | | |
$
|
1.76
|
| | | | |
$
|
2.05
|
| | | | | | | | | |
|
Diluted earnings per common share
| | | | |
$
|
1.76
|
| | | | |
$
|
2.04
|
| | | | | | | | | | | | |
|
|
Waste Management, Inc. |
Condensed Consolidated Balance Sheets |
(In Millions) |
|
|
|
|
| |
|
|
|
| |
| | | | | | | | | |
|
| | | | | | | | | |
|
| | | | | December 31, | | | | | December 31, |
| | | | | 2012 | | | | | 2011 |
| | | | | (Unaudited) | | | | | |
Assets | | | | | | | | | | |
| | | | | | | | | |
|
Current assets:
| | | | | | | | | | |
Cash and cash equivalents
| | | | |
$
|
194
| | | | |
$
|
258
|
Receivables, net
| | | | | |
1,839
| | | | | |
1,775
|
Other
| | | | |
|
390
| | | | |
|
346
|
Total current assets
| | | | | |
2,423
| | | | | |
2,379
|
| | | | | | | | | |
|
Property and equipment, net
| | | | | |
12,651
| | | | | |
12,242
|
Goodwill
| | | | | |
6,291
| | | | | |
6,215
|
Other intangible assets, net
| | | | | |
397
| | | | | |
457
|
Other assets
| | | | |
|
1,335
| | | | |
|
1,276
|
Total assets
| | | | |
$
|
23,097
| | | | |
$
|
22,569
|
| | | | | | | | | |
|
| | | | | | | | | |
|
Liabilities and Equity | | | | | | | | | | |
| | | | | | | | | |
|
Current liabilities:
| | | | | | | | | | |
Accounts payable, accrued liabilities, and
| | | | | | | | | | |
deferred revenues
| | | | |
$
|
2,293
| | | | |
$
|
2,437
|
Current portion of long-term debt
| | | | |
|
743
| | | | |
|
631
|
Total current liabilities
| | | | | |
3,036
| | | | | |
3,068
|
| | | | | | | | | |
|
Long-term debt, less current portion
| | | | | |
9,173
| | | | | |
9,125
|
Other liabilities
| | | | |
|
4,213
| | | | |
|
3,986
|
Total liabilities
| | | | |
|
16,422
| | | | |
|
16,179
|
| | | | | | | | | |
|
Equity:
| | | | | | | | | | |
Waste Management, Inc. stockholders' equity
| | | | | |
6,354
| | | | | |
6,070
|
Noncontrolling interests
| | | | |
|
321
| | | | |
|
320
|
Total equity
| | | | |
|
6,675
| | | | |
|
6,390
|
Total liabilities and equity
| | | | |
$
|
23,097
| | | | |
$
|
22,569
|
| | | | | | | | | | | |
|
|
Waste Management, Inc. |
Condensed Consolidated Statements of Cash Flows |
(In Millions) |
(Unaudited) |
|
|
|
|
| |
|
|
|
| |
| | | | | | | | | |
|
| | | | | Years Ended December 31, |
| | | | | 2012 | | | | | 2011 |
| | | | | | | | | |
|
Cash flows from operating activities:
| | | | | | | | | | |
Consolidated net income
| | | | |
$
|
860
| | | | | |
$
|
1,009
| |
Adjustments to reconcile consolidated net income to net cash
| | | | | | | | | | |
provided by operating activities:
| | | | | | | | | | |
Depreciation and amortization
| | | | | |
1,297
| | | | | | |
1,229
| |
Other
| | | | | |
356
| | | | | | |
403
| |
Change in operating assets and liabilities, net of effects of
| | | | | | | | | | |
acquisitions and divestitures
| | | | |
|
(218
|
)
| | | | |
|
(172
|
)
|
Net cash provided by operating activities
| | | | |
|
2,295
|
| | | | |
|
2,469
|
|
| | | | | | | | | |
|
Cash flows from investing activities:
| | | | | | | | | | |
Acquisitions of businesses, net of cash acquired
| | | | | |
(250
|
)
| | | | | |
(867
|
)
|
Capital expenditures
| | | | | |
(1,510
|
)
| | | | | |
(1,324
|
)
|
Proceeds from divestitures of businesses (net of cash
| | | | | | | | | | |
divested) and other sales of assets
| | | | | |
44
| | | | | | |
36
| |
Investments in unconsolidated entities
| | | | | |
(77
|
)
| | | | | |
(155
|
)
|
Net receipts from restricted trust and escrow
| | | | | | | | | | |
accounts, and other
| | | | |
|
(37
|
)
| | | | |
|
125
|
|
Net cash used in investing activities
| | | | |
|
(1,830
|
)
| | | | |
|
(2,185
|
)
|
| | | | | | | | | |
|
Cash flows from financing activities:
| | | | | | | | | | |
New borrowings
| | | | | |
1,180
| | | | | | |
1,201
| |
Debt repayments
| | | | | |
(1,058
|
)
| | | | | |
(503
|
)
|
Common stock repurchases
| | | | | |
-
| | | | | | |
(575
|
)
|
Cash dividends
| | | | | |
(658
|
)
| | | | | |
(637
|
)
|
Exercise of common stock options
| | | | | |
43
| | | | | | |
45
| |
Other, net
| | | | |
|
(37
|
)
| | | | |
|
(97
|
)
|
Net cash used in financing activities
| | | | |
|
(530
|
)
| | | | |
|
(566
|
)
|
| | | | | | | | | |
|
Effect of exchange rate changes on cash and cash equivalents
| | | | |
|
1
|
| | | | |
|
1
|
|
| | | | | | | | | |
|
Increase (decrease) in cash and cash equivalents
| | | | | |
(64
|
)
| | | | | |
(281
|
)
|
Cash and cash equivalents at beginning of period
| | | | |
|
258
|
| | | | |
|
539
|
|
Cash and cash equivalents at end of period
| | | | |
$
|
194
|
| | | | |
$
|
258
|
|
| | | | | | | | | | | | | |
|
|
Waste Management, Inc. |
Summary Data Sheet |
(Dollar Amounts in Millions) |
(Unaudited) |
|
|
|
|
| |
|
|
|
| |
|
|
|
| |
|
|
|
| |
| | | | | | | | | | | | | | | | | | | |
|
| | | | | Quarters Ended | | | | | |
| | | | | December 31, | | | | | September 30, | | | | | December 31, | | | | | |
| | | | | 2012 | | | | | 2012 | | | | | 2011 | | | | | |
Operating Revenues by Lines of Business | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
Collection
| | | | | | | | | | | | | | | | | | | | |
Commercial (a) | | | | |
$
|
846
| | | | | |
$
|
851
| | | | | |
$
|
879
| | | | | | |
Residential
| | | | | |
652
| | | | | | |
644
| | | | | | |
656
| | | | | | |
Industrial
| | | | | |
538
| | | | | | |
553
| | | | | | |
517
| | | | | | |
Other
| | | | |
|
70
|
| | | | |
|
71
|
| | | | |
|
67
|
| | | | | |
Total Collection
| | | | | |
2,106
| | | | | | |
2,119
| | | | | | |
2,119
| | | | | | |
Landfill
| | | | | |
689
| | | | | | |
705
| | | | | | |
671
| | | | | | |
Transfer
| | | | | |
335
| | | | | | |
332
| | | | | | |
315
| | | | | | |
Wheelabrator
| | | | | |
215
| | | | | | |
218
| | | | | | |
213
| | | | | | |
Recycling
| | | | | |
330
| | | | | | |
316
| | | | | | |
353
| | | | | | |
Other
| | | | | |
385
| | | | | | |
393
| | | | | | |
251
| | | | | | |
Intercompany (b) | | | | |
|
(626
|
)
| | | | |
|
(622
|
)
| | | | |
|
(516
|
)
| | | | | |
Operating revenues
| | | | |
$
|
3,434
|
| | | | |
$
|
3,461
|
| | | | |
$
|
3,406
|
| | | | | |
| | | | | | | | | | | | | | | | | | | |
|
| | | | | Quarters Ended |
| | | | | December 31, 2012 | | | | | December 31, 2011 |
| | | | | | | | | | | | | | | | | | | |
|
Analysis of Change in Year Over Year
Revenues | | | | | | | | | |
As a % of
| | | | | | | | | |
As a % of
|
| | | | |
Amount
| | | | |
Total Company
| | | | |
Amount
| | | | |
Total Company
|
Average yield (i) | | | | |
$
|
(35
|
)
| | | | | |
-1.0
|
%
| | | | |
$
|
46
| | | | | | |
1.5
|
%
|
Volume
| | | | |
|
14
|
| | | | |
|
0.4
|
%
| | | | |
|
(20
|
)
| | | | |
|
-0.6
|
%
|
Internal revenue growth
| | | | | |
(21
|
)
| | | | | |
-0.6
|
%
| | | | | |
26
| | | | | | |
0.9
|
%
|
Acquisition
| | | | | |
45
| | | | | | |
1.3
|
%
| | | | | |
194
| | | | | | |
6.0
|
%
|
Divestitures
| | | | | |
(2
|
)
| | | | | |
-0.1
|
%
| | | | | |
-
| | | | | | |
-
| |
Foreign currency translation
| | | | |
|
6
|
| | | | |
|
0.2
|
%
| | | | |
|
(1
|
)
| | | | |
|
0.0
|
%
|
| | | | |
$
|
28
|
| | | | |
|
0.8
|
%
| | | | |
$
|
219
|
| | | | |
|
6.9
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
| | | | | | | | | |
As a % of
| | | | | | | | | |
As a % of
|
| | | | | | | | | |
Related
| | | | | | | | | |
Related
|
| | | | |
Amount
| | | | |
Business
| | | | |
Amount
| | | | |
Business
|
(i) Average yield
| | | | | | | | | | | | | | | | | | | | |
Collection, landfill and transfer
| | | | |
$
|
29
| | | | | | |
1.1
|
%
| | | | |
$
|
43
| | | | | | |
1.7
|
%
|
Waste-to-energy disposal
| | | | |
|
(3
|
)
| | | | | |
-2.8
|
%
| | | | |
|
(5
|
)
| | | | | |
-4.2
|
%
|
Collection and disposal
| | | | | |
26
| | | | | | |
0.9
|
%
| | | | | |
38
| | | | | | |
1.4
|
%
|
Recycling commodities
| | | | | |
(83
|
)
| | | | | |
-23.2
|
%
| | | | | |
(20
|
)
| | | | | |
-5.8
|
%
|
Electricity
| | | | | |
6
| | | | | | |
9.1
|
%
| | | | | |
(6
|
)
| | | | | |
-8.5
|
%
|
Fuel surcharges and mandated fees
| | | | |
|
16
|
| | | | | |
10.3
|
%
| | | | |
|
34
|
| | | | | |
27.9
|
%
|
Total
| | | | |
$
|
(35
|
)
| | | | | |
-1.0
|
%
| | | | |
$
|
46
|
| | | | | |
1.5
|
%
|
| | | | | | | | | | | | | | | | | | | |
|
| | | | | Quarters Ended December 31, | | | | | Years Ended December 31, |
| | | | | 2012 | | | | | 2011 | | | | | 2012 | | | | | 2011 |
Free Cash Flow Analysis (c) | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
|
Net cash provided by operating activities
| | | | |
$
|
577
| | | | | |
$
|
732
| | | | | |
$
|
2,295
| | | | | |
$
|
2,469
| |
Capital expenditures
| | | | | |
(378
|
)
| | | | | |
(415
|
)
| | | | | |
(1,510
|
)
| | | | | |
(1,324
|
)
|
Proceeds from divestitures of businesses (net of
| | | | | | | | | | | | | | | | | | | | |
cash divested) and other sales of assets (d) | | | | |
|
16
|
| | | | |
|
14
|
| | | | |
|
44
|
| | | | |
|
53
|
|
Free cash flow
| | | | |
$
|
215
|
| | | | |
$
|
331
|
| | | | |
$
|
829
|
| | | | |
$
|
1,198
|
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | |
|
|
|
|
| |
(a)
| | | |
During 2012, our revenues resulting from subcontracting work for our
National Accounts customers has been reclassified from our
Commercial Collection line of business to our Other line of
business. For the three months ended September 30, 2012 and December
31, 2011, $4.0 million and $25.0 million, respectively, of these
subcontract revenues were included in our Commercial Collection line
of business.
|
| | | |
| | | |
| | | |
|
(b)
| | | |
Intercompany revenues between lines of business are eliminated
within the Condensed Consolidated Financial Statements included
herein.
|
| | | |
| | | |
|
(c)
| | | |
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.
|
| | | |
| | | |
| | | |
| | | |
|
(d)
| | | |
Proceeds for the year ended December 31, 2011 includes the repayment
of a $17.0 million note receivable from a prior year divestiture.
This repayment is included as a component of "Net receipts from
restricted trust and escrow accounts, and other" in our Condensed
Consolidated Statement of Cash Flows.
|
| | | |
| | | |
| | | |
|
|
|
| |
|
| |
|
| |
Waste Management, Inc. Summary Data Sheet (Dollar
Amounts in Millions) (Unaudited) |
| | | | | | | | |
|
| | | Quarters Ended |
| | | December 31, | | | September 30, | | | December 31, |
| | | 2012 | | | 2012 | | | 2011 |
Balance Sheet Data | | | | | | | | | |
| | | | | | | | |
|
Cash and cash equivalents
| | |
$
|
194
|
| | |
$
|
398
|
| | |
$
|
258
|
|
| | | | | | | | |
|
Debt-to-total capital ratio:
| | | | | | | | | |
Long-term indebtedness, including current
| | | | | | | | | |
portion
| | |
$
|
9,916
| | | |
$
|
9,992
| | | |
$
|
9,756
| |
Total equity
| | |
|
6,675
|
| | |
|
6,612
|
| | |
|
6,390
|
|
Total capital
| | |
$
|
16,591
|
| | |
$
|
16,604
|
| | |
$
|
16,146
|
|
| | | | | | | | |
|
Debt-to-total capital
| | |
|
59.8
|
%
| | |
|
60.2
|
%
| | |
|
60.4
|
%
|
| | | | | | | | |
|
Capitalized interest
| | |
$
|
6
|
| | |
$
|
5
|
| | |
$
|
8
|
|
| | | | | | | | |
|
Acquisition Summary (a) | | | | | | | | | |
| | | | | | | | |
|
Gross annualized revenue acquired
| | |
$
|
55
|
| | |
$
|
20
|
| | |
$
|
169
|
|
| | | | | | | | |
|
Total consideration
| | |
$
|
76
|
| | |
$
|
26
|
| | |
$
|
237
|
|
| | | | | | | | |
|
Cash paid for acquisitions
| | |
$
|
72
|
| | |
$
|
24
|
| | |
$
|
222
|
|
| | | | | | | | |
|
Other Operational Data | | | | | | | | | |
| | | | | | | | |
|
Internalization of waste, based on disposal costs
| | |
|
67.0
|
%
| | |
|
66.9
|
%
| | |
|
68.3
|
%
|
| | | | | | | | |
|
Total landfill disposal volumes (tons in millions)
| | | |
23.6
| | | | |
23.9
| | | | |
22.7
| |
Total waste-to-energy disposal volumes (tons in millions)
| | |
|
2.0
|
| | |
|
2.0
|
| | |
|
2.0
|
|
Total disposal volumes (tons in millions)
| | |
|
25.6
|
| | |
|
25.9
|
| | |
|
24.7
|
|
| | | | | | | | |
|
Active landfills
| | |
|
269
|
| | |
|
270
|
| | |
|
271
|
|
| | | | | | | | |
|
Landfills reporting volume
| | |
|
254
|
| | |
|
259
|
| | |
|
254
|
|
| | | | | | | | |
|
| | | | | | | | |
|
Amortization, Accretion and Other
Expenses for | | | | | | | | | |
Landfills Included in Operating Groups: | | | | | | | | | |
Landfill amortization expense -
| | | | | | | | | |
Cost basis of landfill assets
| | |
$
|
86.2
| | | |
$
|
86.7
| | | |
$
|
84.5
| |
Asset retirement costs
| | |
|
5.0
|
| | |
|
19.1
|
| | |
|
(12.3
|
)
|
Total landfill amortization expense (b)(c)
| | | |
91.2
| | | | |
105.8
| | | | |
72.2
| |
Accretion and other related expense
| | |
|
17.9
|
| | |
|
17.1
|
| | |
|
17.7
|
|
Landfill amortization, accretion and other related expense
| | |
$
|
109.1
|
| | |
$
|
122.9
|
| | |
$
|
89.9
|
|
|
| |
(a)
| |
Represents amounts associated with business acquisitions
consummated during the indicated periods. Note that cash paid for
acquisitions may include cash payments for business acquisitions
consummated in prior quarters.
|
| |
|
(b)
| |
The quarter ended December 31, 2012 as compared to the quarter
ended September 30, 2012 reflects a decrease in amortization
expense of approximately $14.6 million, primarily due to changes
in landfill estimates identified in both quarters, as volumes
remained consistent quarter-over-quarter.
|
| |
|
(c)
| |
The quarter ended December 31, 2012 as compared to the quarter
ended December 31, 2011 reflects an increase in amortization
expense of approximately $19.0 million. Approximately $17 million
is 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 December 31, 2012 | | | | Quarter Ended December 31, 2011 |
Adjusted Net income and Diluted Earnings Per Share | | | | After-tax Amount | | (a) | | Per Share Amount | | | | After-tax Amount | | (a) | | Per Share Amount |
| | | | | | | | | | | | | | | |
|
Net income and Diluted EPS, as reported | | | | $ | 224 | | | | $ | 0.48 | | | | $ | 266 | | | | $ | 0.58 |
| | | | | | | | | | | | | | | |
|
Adjustments to Net income and Diluted EPS: | | | | | | | | | | | | | | | | |
Asset impairments, legal reserves and landfill operating costs (b) | | | | |
27
| | | | | | | | |
3
| | | | |
Restructuring charges and Oakleaf related integration activities
| | | | |
16
| | | | | | | | |
4
| | | | |
Litigation
| | | |
|
-
| | | | | | | |
|
16
| | | | |
| | | |
| 43 | | | |
| 0.09 | | | |
| 23 | | | |
| 0.05 |
Net income and Diluted EPS, as adjusted | | | | $ | 267 | | | | $ | 0.57 | | | | $ | 289 | | | | $ | 0.63 |
| | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | |
|
| | | | Year Ended December 31, 2012 | | | | Year Ended December 31, 2011 |
Adjusted Net income and Diluted Earnings Per Share | | | | After-tax Amount | | (a) | | Per Share Amount | | | | After-tax Amount | | (a) | | Per Share Amount |
| | | | | | | | | | | | | | | |
|
Net income and Diluted EPS, as reported | | | | $ | 817 | | | | $ | 1.76 | | | | $ | 961 | | | | $ | 2.04 |
| | | | | | | | | | | | | | | |
|
Adjustments to Net income and Diluted EPS: | | | | | | | | | | | | | | | | |
Asset impairments (c) | | | | |
84
| | | | | | | | |
7
| | | | |
Restructuring
| | | | |
41
| | | | | | | | |
11
| | | | |
Oakleaf related integration activities
| | | | |
9
| | | | | | | | |
7
| | | | |
Legal reserve and landfill operating costs (d) | | | | |
6
| | | | | | | | |
5
| | | | |
Partial withdrawal from multiemployer pension plan
| | | | |
6
| | | | | | | | |
-
| | | | |
Labor dispute
| | | | |
3
| | | | | | | | |
-
| | | | |
Litigation
| | | |
|
-
| | | | | | | |
|
16
| | | | |
| | | |
| 149 | | | |
| 0.32 | | | |
| 46 | | | |
| 0.10 |
Net income and Diluted EPS, as adjusted | | | | $ | 966 | | | | $ | 2.08 | | | | $ | 1,007 | | | | $ | 2.14 |
|
| |
(a) | |
Please see the "Adjusted tax expense reconciliation" for the tax
expense associated with each of the after-tax adjustments to net
income and diluted EPS in the fourth quarter and full year of 2012
and 2011.
|
(b) | |
Adjustments in the fourth quarter of 2012 include impairment
charges associated with certain of our investments in
unconsolidated entities that are included in the "Other, net"
financial caption, as well as impairment charges associated with
assets in the "Asset Impairments and Unusual Items" financial
caption. Adjustments in the fourth quarter of 2012 consist of $21
million of asset impairment charges and $6 million in legal
reserves and landfill operating costs. Adjustments in the fourth
quarter of 2011 consist of asset impairment charges of $3 million.
|
(c) | |
Adjustments in 2012 consist of impairment charges associated with
certain of our investments in unconsolidated entities that are
included in the "Equity in Earnings/Losses of Unconsolidated
Entities" and "Other, net" financial captions, as well as
impairment charges associated with assets in the "Asset
Impairments and Unusual Items" financial caption.
|
(d) | |
Adjustments in 2012 consist of an aggregate after-tax charge of $6
million related to legal reserves and changes in risk-free
interest rates. Adjustments in 2011 consist of a net after-tax
charge resulting from an $11 million charge due to changes in
risk-free interest rates partially offset by an after-tax benefit
of $6 million due to decreases in environmental remediation
reserves and closure and post-closure costs.
|
|
|
| |
|
| |
Waste Management, Inc. Reconciliation of Certain
Non-GAAP Measures (Dollars In Millions) (Unaudited) |
| | | | | |
|
| | | | | |
|
| | | Quarters Ended December 31, |
Adjusted Operating Expenses | | | 2012 | | | 2011(e) |
| | | | | |
|
Operating Expenses, as reported | | | $ | 2,224 | | | | $ | 2,145 | |
Adjustments to Operating Expenses | | | | | | |
Legal reserves and landfill operating costs
| | | |
(10
|
)
| | | |
-
| |
Oakleaf related integration activities
| | |
|
-
|
| | |
|
(2
|
)
|
Adjusted Operating Expenses (f) | | | $ | 2,214 |
| | | $ | 2,143 |
|
| | | | | |
|
| | | | | |
|
| | | Years Ended December 31, |
Adjusted Operating Expenses | | | 2012 | | | 2011(e) |
| | | | | |
|
Operating Expenses, as reported | | | $ | 8,879 | | | | $ | 8,541 | |
Adjustments to Operating Expenses | | | | | | |
Partial withdrawal from multiemployer pension plan
| | | |
(10
|
)
| | | |
-
| |
Legal reserves and landfill operating costs (g) | | | |
(10
|
)
| | | |
(8
|
)
|
Labor dispute
| | | |
(6
|
)
| | | |
-
| |
Oakleaf related integration activities
| | |
|
-
|
| | |
|
(6
|
)
|
Adjusted Operating Expenses (h) | | | $ | 8,853 |
| | | $ | 8,527 |
|
| | | | | |
|
| | | | | |
|
| | | | | |
|
Full Year 2013 Free Cash Flow Reconciliation (i) | | | Scenario 1 | | | Scenario 2 |
| | | | | |
|
Net cash provided by operating activities
| | |
$
|
2,500
| | | |
$
|
2,500
| |
Capital expenditures
| | | |
(1,400
|
)
| | | |
(1,300
|
)
|
Proceeds from divestitures of businesses (net of
| | | | | | |
cash divested) and other sales of assets
| | |
|
-
|
| | |
|
-
|
|
| | | | | |
|
| | | $ | 1,100 |
| | | $ | 1,200 |
|
|
| |
(e) | |
Our financial results for the fourth quarter and full year 2011 were
adjusted to exclude the impact of our then recently acquired Oakleaf
operations. However, for purposes of this year-over-year comparison,
we have included the impact of the Oakleaf operations in the results
of both 2012 and 2011, except for certain integration costs.
|
(f) | |
Adjusted operating expenses for fourth quarter 2012 increased $71
million as compared with fourth quarter 2011.
|
(g) | |
Adjustments in 2012 were primarily comprised of $7 million in
legal reserves and landfill operating costs of $3 million.
Adjustments in 2011 were primarily comprised of a $17 million
charge due to changes in risk-free interest rates partially offset
by a $9 million benefit from decreases in environmental
remediation reserves and closure and post-closure costs.
|
(h) | |
Adjusted operating expenses for full year 2012 increased $326
million as compared with full year 2011.
|
(i) | |
The reconciliation illustrates two scenarios that show our projected
free cash flow for 2013. 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. Reconciliation of Certain
Non-GAAP Measures (Dollars In Millions) (Unaudited) |
| | | | | | | | | |
|
| | | Quarter Ended December 31, 2012 | | | Quarter Ended December 31, 2011 |
Adjusted tax expense reconciliation | | | Pre-tax Income | | Tax Expense | | | Pre-tax Income | | Tax Expense |
| | | | | | | | | |
|
As reported amounts | | | $ | 349 | | $ | 114 | | | $ | 412 | | $ | 134 |
| | | | | | | | | |
|
Adjustments to Tax Expense: | | | | | | | | | | |
Asset impairments, legal reserves and landfill operating costs
| | | |
41
| | |
14
| | | |
4
| | |
1
|
Restructuring charges and Oakleaf related integration activities
| | | |
25
| | |
9
| | | |
7
| | |
3
|
Litigation
| | | |
-
| | |
-
| | | |
24
| | |
8
|
| | |
| |
| | |
| |
|
As adjusted amounts | | | $ | 415 | | $ | 137 | | | $ | 447 | | $ | 146 |
| | | | | | | | | |
|
| | | Year Ended December 31, 2012 | | | Year Ended December 31, 2011 |
Adjusted tax expense reconciliation | | | Pre-tax Income | | Tax Expense | | | Pre-tax Income | | Tax Expense |
| | | | | | | | | |
|
As reported amounts | | | $ | 1,303 | | $ | 443 | | | $ | 1,520 | | $ | 511 |
| | | | | | | | | |
|
Adjustments to Tax Expense: | | | | | | | | | | |
Asset impairments
| | | |
112
| | |
28
| | | |
10
| | |
3
|
Restructuring
| | | |
67
| | |
26
| | | |
17
| | |
6
|
Oakleaf related integration activities
| | | |
15
| | |
6
| | | |
11
| | |
4
|
Legal reserve and landfill operating costs
| | | |
10
| | |
4
| | | |
8
| | |
3
|
Partial withdrawal from multiemployer pension plan
| | | |
10
| | |
4
| | | |
-
| | |
-
|
Labor dispute
| | | |
6
| | |
3
| | | |
-
| | |
-
|
Litigation
| | | |
-
| | |
-
| | | |
24
| | |
8
|
| | |
| |
| | |
| |
|
As adjusted amounts | | | $ | 1,523 | | $ | 514 | | | $ | 1,590 | | $ | 535 |
Contacts:
Waste Management, Inc.
Analysts
Ed Egl,
713-265-1656
eegl@wm.com
or
Media
Lynn
Brown, 713-394-5093
lynnbrown@wm.com
Source: Waste Management, Inc.
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