Company Grows Full-Year Net Cash Provided by Operating Activities by 8.5%
Named to CDP’s ‘A List’ for Leading Effort Toward a Low-Carbon Future
HOUSTON--(BUSINESS WIRE)-- Waste Management, Inc. (NYSE: WM) today announced financial results for its quarter ended December 31, 2019. Revenues for the fourth quarter of 2019 were $3.85 billion, compared with $3.84 billion for the same 2018 period. Net income for the quarter was $447 million, or $1.05 per diluted share, compared with net income of $531 million, or $1.24 per diluted share, for the fourth quarter of 2018.(a) On an adjusted basis, earnings per diluted share were $1.19 for the fourth quarter of 2019, compared with $1.13 for the fourth quarter of 2018.(b)
This press release features multimedia. View the full release here: https://www.businesswire.com/news/home/20200213005408/en/
2019 Full Year Earnings Overview (Graphic: Business Wire)
The Company’s adjusted fourth quarter 2019 results exclude negative impacts of $0.07 per diluted share for non-cash charges to write off certain assets, $0.05 per diluted share from interest and advisory costs incurred in connection with the pending acquisition of Advanced Disposal Services, Inc., and $0.02 per diluted share from costs incurred to support our plan to implement a new enterprise resource planning system.
For the full year 2019, the Company reported revenues of $15.46 billion, compared with $14.91 billion for 2018. Earnings per diluted share were $3.91 for the full year 2019 compared with $4.45 for the full year 2018. On an adjusted basis, earnings per diluted share were $4.40 for the full year 2019 versus $4.20 for the full year 2018.(b)
“In 2019, we continued our focus on optimizing our traditional solid waste business, developing our people and investing in technology to better serve our customers,” said Jim Fish, President and Chief Executive Officer of Waste Management. “Our strong results demonstrate that we are investing in the right areas. Our collection and disposal business operating EBITDA grew by 8.5% in 2019 and operating EBITDA margin expanded by 70 basis points. This strong operating EBITDA growth translated into an 8.5% increase in net cash provided by operations in 2019.(c)
“We also are pleased to have been recognized for the fourth consecutive year on CDP’s ‘A-List’ for leading effort toward a low-carbon future. We have had a longstanding commitment to environmental transparency and are proud of the progress we have achieved on reducing emissions and mitigating climate risk,” Fish said.
KEY HIGHLIGHTS FOR THE FOURTH QUARTER AND THE FULL YEAR 2019
Profitability
Revenue Growth
Commodity-Based Businesses
Cost Management
Free Cash Flow & Capital Allocation
Income Taxes
2020 OUTLOOK(e)
Profitability
Revenue Growth
Free Cash Flow & Capital Allocation
Fish concluded, “Our hardworking team members made 2019 a successful year, and 2020 is set to be an outstanding year as we drive organic growth in the solid waste business and anticipate closing on the acquisition of Advanced Disposal. We will continue to focus on the long-term growth of our business through investments in our team members, technology, and asset network. We are confident that we are positioned for success in 2020 and beyond.”
(a) | For purposes of this press release, all references to “Net income” refer to the financial statement line items “Net income attributable to Waste Management, Inc.” | |
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(b) | Adjusted earnings per diluted share, adjusted net income, adjusted operating EBITDA, adjusted operating EBITDA margin, adjusted operating expenses, adjusted SG&A expenses, adjusted tax rate, and free cash flow are non-GAAP measures. Please see “Non-GAAP Financial Measures” below and the reconciliations in the accompanying schedules for more information. | |
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(c) | Management defines operating EBITDA as GAAP income from operations before depreciation and amortization; this measure may not be comparable to similarly-titled measures reported by other companies. | |
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(d) | Core price is a performance metric used by management to evaluate the effectiveness of our pricing strategies; it is not derived from our financial statements and may not be comparable to measures presented by other companies. Core price is based on certain historical assumptions, which may differ from actual results, to allow for comparability between reporting periods and to reveal trends in results over time. Beginning with the fourth quarter 2019, the Company has updated its core price calculation. With advancements in technology, the Company began collecting additional transactional customer level data, which provides improved clarity of the impact of the Company’s pricing activities. While this does not change the year-over-year core price performance result, the new measure reflects a more precise calculation in the evaluation of revenue changes. Please refer to the press release tables, where the Company has provided two years of quarterly core price data using the new methodology. | |
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(e) | The Company’s 2020 Outlook does not include the impact of our planned acquisition of Advanced Disposal Services, Inc. |
The Company will host a conference call at 10:00 AM (Eastern) Feb. 13, 2020 to discuss the fourth quarter and full year 2019 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 “Events & Presentations” section of investors.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 9977058 when prompted by the conference call operator.
A replay of the conference call will be available on the Company’s website investors.wm.com and by telephone from approximately 1:00 PM (Eastern) Feb. 13, 2020 through 5:00 PM (Eastern) on Feb. 27, 2020. 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 9977058.
ABOUT WASTE MANAGEMENT
Waste Management, based in Houston, Texas, is the leading provider of comprehensive waste management environmental services in North America. Through its subsidiaries, the Company provides collection, transfer, disposal services, and recycling and resource recovery. 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.
FORWARD-LOOKING STATEMENTS
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 statements under the heading “2020 OUTLOOK” and all statements about future business performance, growth, investments and timing and closing of the Advanced Disposal Services, Inc. acquisition. 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 the acquisition of Advanced Disposal Services, Inc. or other acquisitions; failure to obtain the results anticipated from the acquisition of Advanced Disposal Services, Inc. or other acquisitions; environmental and other regulations, including developments related to emerging contaminants and renewable fuel; commodity price fluctuations; international trade restrictions; weakness in economic conditions; failure to obtain and maintain necessary permits; disposal alternatives and waste diversion; declining waste volumes; failure to develop and protect new technology; failure of technology to perform as expected, including implementation of a new enterprise resource planning system; failure to prevent, detect and address cybersecurity incidents or comply with privacy regulations; significant environmental or other incidents resulting in liabilities and brand damage; significant storms and destructive events influenced by climate change; 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.
NON-GAAP FINANCIAL MEASURES
To supplement its financial information, the Company has presented, and/or may discuss on the conference call, adjusted earnings per diluted share, adjusted net income, adjusted operating EBITDA, adjusted operating EBITDA margin, adjusted operating expenses, adjusted SG&A expenses, adjusted tax rate and free cash flow, as well as projections of adjusted operating EBITDA and free cash flow; these are non-GAAP financial 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) financial measures the Company uses in the management of its business and (ii) additional, meaningful comparisons of current results to prior period 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.
The Company’s non-GAAP results and projections exclude the impact of costs incurred in connection with the pending acquisition of Advanced Disposal Services, Inc. In addition, the Company’s projected full year 2020 operating EBITDA is anticipated to exclude the effects of other events or circumstances in 2020 that are not representative or indicative of the Company’s results of operations. Such excluded items are not currently determinable, but may be significant, such as asset impairments and one-time items, charges, gains or losses from divestitures or litigation, and 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 such projection to the comparable 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 GAAP measure. The Company believes free cash flow gives investors useful insight into how the Company views its liquidity, but 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 and other assets (net of cash divested); this definition may not be comparable to similarly-titled measures reported by other companies.
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 operating EBITDA. Non-GAAP measures should not be considered a substitute for financial measures presented in accordance with GAAP.
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In Millions, Except per Share Amounts) (Unaudited) | ||||||||||||
|
| Three Months Ended |
| Years Ended | ||||||||
|
| December 31, |
| December 31, | ||||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||
Operating revenues |
| $ | 3,846 |
| $ | 3,842 |
| $ | 15,455 |
| $ | 14,914 |
Costs and expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Operating |
|
| 2,314 |
|
| 2,379 |
|
| 9,496 |
|
| 9,249 |
Selling, general and administrative |
|
| 445 |
|
| 370 |
|
| 1,631 |
|
| 1,453 |
Depreciation and amortization |
|
| 395 |
|
| 370 |
|
| 1,574 |
|
| 1,477 |
Restructuring |
|
| 3 |
|
| — |
|
| 6 |
|
| 4 |
(Gain) loss from divestitures, asset impairments and unusual items, net |
|
| 34 |
|
| (44) |
|
| 42 |
|
| (58) |
|
|
| 3,191 |
|
| 3,075 |
|
| 12,749 |
|
| 12,125 |
Income from operations |
|
| 655 |
|
| 767 |
|
| 2,706 |
|
| 2,789 |
Other income (expense): |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense, net |
|
| (110) |
|
| (97) |
|
| (411) |
|
| (374) |
Loss on early extinguishment of debt |
|
| — |
|
| — |
|
| (85) |
|
| — |
Equity in net losses of unconsolidated entities |
|
| (16) |
|
| (12) |
|
| (55) |
|
| (41) |
Other, net |
|
| 2 |
|
| 1 |
|
| (50) |
|
| 2 |
|
|
| (124) |
|
| (108) |
|
| (601) |
|
| (413) |
Income before income taxes |
|
| 531 |
|
| 659 |
|
| 2,105 |
|
| 2,376 |
Income tax expense |
|
| 84 |
|
| 128 |
|
| 434 |
|
| 453 |
Consolidated net income |
|
| 447 |
|
| 531 |
|
| 1,671 |
|
| 1,923 |
Less: Net income (loss) attributable to noncontrolling interests |
|
| — |
|
| — |
|
| 1 |
|
| (2) |
Net income attributable to Waste Management, Inc. |
| $ | 447 |
| $ | 531 |
| $ | 1,670 |
| $ | 1,925 |
Basic earnings per common share |
| $ | 1.05 |
| $ | 1.25 |
| $ | 3.93 |
| $ | 4.49 |
Diluted earnings per common share |
| $ | 1.05 |
| $ | 1.24 |
| $ | 3.91 |
| $ | 4.45 |
Weighted average basic common shares outstanding |
|
| 424.5 |
|
| 425.3 |
|
| 424.6 |
|
| 429.1 |
Weighted average diluted common shares outstanding |
|
| 427.4 |
|
| 428.5 |
|
| 427.5 |
|
| 432.2 |
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In Millions) (Unaudited) | ||||||
|
| December 31, | ||||
|
| 2019 |
| 2018 | ||
ASSETS |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
| $ | 3,561 |
| $ | 61 |
Receivables, net |
|
| 2,319 |
|
| 2,275 |
Other |
|
| 329 |
|
| 309 |
Total current assets |
|
| 6,209 |
|
| 2,645 |
Property and equipment, net |
|
| 12,893 |
|
| 11,942 |
Goodwill |
|
| 6,532 |
|
| 6,430 |
Other intangible assets, net |
|
| 521 |
|
| 572 |
Other |
|
| 1,588 |
|
| 1,061 |
Total assets |
| $ | 27,743 |
| $ | 22,650 |
LIABILITIES AND EQUITY |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable, accrued liabilities and deferred revenues |
| $ | 2,926 |
| $ | 2,676 |
Current portion of long-term debt |
|
| 218 |
|
| 432 |
Total current liabilities |
|
| 3,144 |
|
| 3,108 |
Long-term debt, less current portion |
|
| 13,280 |
|
| 9,594 |
Other |
|
| 4,249 |
|
| 3,672 |
Total liabilities |
|
| 20,673 |
|
| 16,374 |
Equity: |
|
|
|
|
|
|
Waste Management, Inc. stockholders’ equity |
|
| 7,068 |
|
| 6,275 |
Noncontrolling interests |
|
| 2 |
|
| 1 |
Total equity |
|
| 7,070 |
|
| 6,276 |
Total liabilities and equity |
| $ | 27,743 |
| $ | 22,650 |
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions) (Unaudited) | ||||||
|
| Years Ended | ||||
|
| December 31, | ||||
|
| 2019 |
| 2018 | ||
Cash flows from operating activities: |
|
|
|
|
|
|
Consolidated net income |
| $ | 1,671 |
| $ | 1,923 |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
| 1,574 |
|
| 1,477 |
Loss on early extinguishment of debt |
|
| 85 |
|
| — |
Other |
|
| 464 |
|
| 199 |
Change in operating assets and liabilities, net of effects of acquisitions and divestitures |
|
| 80 |
|
| (29) |
Net cash provided by operating activities |
|
| 3,874 |
|
| 3,570 |
Cash flows from investing activities: |
|
|
|
|
|
|
Acquisitions of businesses, net of cash acquired |
|
| (521) |
|
| (460) |
Capital expenditures |
|
| (1,818) |
|
| (1,694) |
Proceeds from divestitures of businesses and other assets (net of cash divested) |
|
| 49 |
|
| 208 |
Other, net |
|
| (86) |
|
| (223) |
Net cash used in investing activities |
|
| (2,376) |
|
| (2,169) |
Cash flows from financing activities: |
|
|
|
|
|
|
New borrowings |
|
| 4,683 |
|
| 359 |
Debt repayments |
|
| (533) |
|
| (499) |
Premiums paid on early extinguishment of debt |
|
| (84) |
|
| — |
Net commercial paper borrowings |
|
| (1,001) |
|
| 453 |
Common stock repurchase program |
|
| (248) |
|
| (1,004) |
Cash dividends |
|
| (876) |
|
| (802) |
Exercise of common stock options |
|
| 67 |
|
| 52 |
Tax payments associated with equity-based compensation transactions |
|
| (33) |
|
| (29) |
Other, net |
|
| (11) |
|
| (38) |
Net cash provided by (used in) financing activities |
|
| 1,964 |
|
| (1,508) |
Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents |
|
| 2 |
|
| (3) |
Increase (decrease) in cash, cash equivalents and restricted cash and cash equivalents |
|
| 3,464 |
|
| (110) |
Cash, cash equivalents and restricted cash and cash equivalents at beginning of period |
|
| 183 |
|
| 293 |
Cash, cash equivalents and restricted cash and cash equivalents at end of period |
| $ | 3,647 |
| $ | 183 |
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET (In Millions) (Unaudited) | ||||||||||||
Operating Revenues by Line of Business |
|
|
|
|
|
|
|
|
|
|
|
|
|
| Three Months Ended |
| Years Ended | ||||||||
|
| December 31, |
| December 31, | ||||||||
|
| 2019 |
| 2018 |
| 2019 |
| 2018 | ||||
Commercial |
| $ | 1,082 |
| $ | 1,024 |
| $ | 4,229 |
| $ | 3,972 |
Residential |
|
| 657 |
|
| 644 |
|
| 2,613 |
|
| 2,529 |
Industrial |
|
| 726 |
|
| 705 |
|
| 2,916 |
|
| 2,773 |
Other collection |
|
| 121 |
|
| 117 |
|
| 482 |
|
| 450 |
Total collection |
|
| 2,586 |
|
| 2,490 |
|
| 10,240 |
|
| 9,724 |
Landfill |
|
| 966 |
|
| 914 |
|
| 3,846 |
|
| 3,560 |
Transfer |
|
| 463 |
|
| 454 |
|
| 1,820 |
|
| 1,711 |
Recycling |
|
| 240 |
|
| 339 |
|
| 1,040 |
|
| 1,293 |
Other |
|
| 413 |
|
| 440 |
|
| 1,758 |
|
| 1,736 |
Intercompany (a) |
|
| (822) |
|
| (795) |
|
| (3,249) |
|
| (3,110) |
Total |
| $ | 3,846 |
| $ | 3,842 |
| $ | 15,455 |
| $ | 14,914 |
Internal Revenue Growth |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Period-to-Period Change for the Three Months Ended December 31, 2019 vs. 2018 |
|
|
| Period-to-Period Change for the Year Ended December 31, 2019 vs. 2018 |
| |||||||||||||||||
|
|
|
|
| As a % of |
|
|
|
|
| As a % of |
|
|
|
|
| As a % of |
|
|
|
|
| As a % of |
|
|
|
|
|
| Related |
|
|
|
|
| Total |
|
|
|
|
| Related |
|
|
|
|
| Total |
|
|
| Amount |
| Business(b) |
|
| Amount |
| Company(c) |
|
| Amount |
| Business(b) |
|
| Amount |
| Company(c) |
| ||||
Collection and disposal |
| $ | 108 |
| 3.2 | % |
|
|
|
|
|
|
| $ | 364 |
| 2.8 | % |
|
|
|
|
|
|
Recycling commodities (d) |
|
| (109) |
| (33.3) |
|
|
|
|
|
|
|
|
| (248) |
| (20.0) |
|
|
|
|
|
|
|
Fuel surcharges and mandated fees |
|
| (19) |
| (11.7) |
|
|
|
|
|
|
|
|
| (22) |
| (3.5) |
|
|
|
|
|
|
|
Total average yield (e) |
|
|
|
|
|
|
| $ | (20) |
| (0.5) | % |
|
|
|
|
|
|
| $ | 94 |
| 0.6 | % |
Volume |
|
|
|
|
|
|
|
| (15) |
| (0.4) |
|
|
|
|
|
|
|
|
| 346 |
| 2.3 |
|
Internal revenue growth |
|
|
|
|
|
|
|
| (35) |
| (0.9) |
|
|
|
|
|
|
|
|
| 440 |
| 2.9 |
|
Acquisitions |
|
|
|
|
|
|
|
| 49 |
| 1.3 |
|
|
|
|
|
|
|
|
| 222 |
| 1.5 |
|
Divestitures |
|
|
|
|
|
|
|
| (10) |
| (0.3) |
|
|
|
|
|
|
|
|
| (104) |
| (0.7) |
|
Foreign currency translation |
|
|
|
|
|
|
|
| — |
| 0.0 |
|
|
|
|
|
|
|
|
| (17) |
| (0.1) |
|
Total |
|
|
|
|
|
|
| $ | 4 |
| 0.1 | % |
|
|
|
|
|
|
| $ | 541 |
| 3.6 | % |
|
|
|
|
|
|
|
|
|
|
|
|
| Period-to-Period Change for the Three Months Ended December 31, 2019 vs. 2018 |
|
| Period-to-Period Change for the Year Ended December 31, 2019 vs. 2018 |
| ||||
|
| As a % of Related Business(b) |
|
| As a % of Related Business(b) |
| ||||
|
| Yield |
| Volume |
|
| Yield |
| Volume |
|
Commercial |
| 4.8 | % | 1.5 | % |
| 3.0 | % | 2.4 | % |
Industrial |
| 3.9 |
| (0.5) |
|
| 4.0 |
| 1.3 |
|
Residential |
| 3.1 |
| (2.1) |
|
| 3.3 |
| (0.9) |
|
Total collection |
| 3.9 |
| 0.3 |
|
| 3.3 |
| 1.5 |
|
MSW |
| 4.5 |
| 0.9 |
|
| 3.8 |
| 3.7 |
|
Transfer |
| 2.3 |
| (0.3) |
|
| 2.9 |
| 4.0 |
|
Total collection and disposal |
| 3.2 | % | (0.6) | % |
| 2.8 | % | 2.6 | % |
_____________________________ | |
(a) | Intercompany revenues between lines of business are eliminated in the Condensed Consolidated Financial Statements included herein. |
(b) | Calculated by dividing the increase or decrease for the current year period by the prior year period’s related business revenue adjusted to exclude the impacts of divestitures for the current year period. |
(c) | Calculated by dividing the increase or decrease for the current year period by the prior year period’s total Company revenue adjusted to exclude the impacts of divestitures for the current year period. |
(d) | Includes net impact of commodity price variability and changes in fees. |
(e) | The amounts reported herein represent the changes in our revenue attributable to average yield for the total Company. |
WASTE MANAGEMENT, INC. | ||||||||||||||||||
SUMMARY DATA SHEET | ||||||||||||||||||
(In Millions) | ||||||||||||||||||
(Unaudited) | ||||||||||||||||||
Free Cash Flow (a) | ||||||||||||||||||
Three Months Ended |
| Years Ended | ||||||||||||||||
December 31, |
| December 31, | ||||||||||||||||
2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||||||
Net cash provided by operating activities | $ | 1,022 |
| $ | 912 |
| $ | 3,874 |
| $ | 3,570 |
| ||||||
Capital expenditures |
| (286 | ) | (454 | ) |
| (1,818 | ) |
| (1,694 | ) | |||||||
Proceeds from divestitures of businesses | ||||||||||||||||||
and other assets (net of cash divested) |
| 20 |
| 102 |
|
| 49 |
|
| 208 |
| |||||||
Free cash flow | $ | 756 |
| $ | 560 |
| $ | 2,105 |
| $ | 2,084 |
| ||||||
Three Months Ended | Years Ended | |||||||||||||||||
December 31, | December 31, | |||||||||||||||||
2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||||||
Supplemental Data | ||||||||||||||||||
Internalization of waste, based on disposal costs |
| 67.1 | % |
| 66.2 | % |
| 66.6 | % |
| 66.0 | % | ||||||
Landfill amortizable tons (in millions) |
| 29.0 |
|
| 29.6 |
|
| 120.7 |
|
| 115.6 |
| ||||||
Acquisition Summary (b) | ||||||||||||||||||
Gross annualized revenue acquired |
| 1 |
|
| 73 |
|
| 171 |
|
| 288 |
| ||||||
Total consideration for current year acquisitions, | ||||||||||||||||||
net of cash acquired |
| 2 |
|
| 121 |
|
| 515 |
|
| 471 |
| ||||||
Cash paid for acquisitions consummated during the period, | ||||||||||||||||||
net of cash acquired |
| 2 |
|
| 111 |
|
| 512 |
|
| 455 |
| ||||||
Cash paid for acquisitions including contingent consideration | ||||||||||||||||||
and other items from prior periods, net of cash acquired |
| 9 |
|
| 118 |
|
| 527 |
|
| 466 |
| ||||||
Amortization, Accretion and Other Expenses for Landfills: | Three Months Ended |
| Years Ended | |||||||||||||||
December 31, |
| December 31, | ||||||||||||||||
2019 |
| 2018 |
| 2019 |
| 2018 | ||||||||||||
Landfill amortization expense: | ||||||||||||||||||
Cost basis of landfill assets | $ | 117 |
| $ | 113 |
| $ | 489 |
| $ | 440 |
| ||||||
Asset retirement costs |
| 18 |
|
| 16 |
|
| 86 |
|
| 98 |
| ||||||
Total landfill amortization expense |
| 135 |
|
| 129 |
|
| 575 |
|
| 538 |
| ||||||
Accretion and other related expense |
| 26 |
|
| 26 |
|
| 102 |
|
| 100 |
| ||||||
Landfill amortization, accretion and other related expense | $ | 161 |
| $ | 155 |
| $ | 677 |
| $ | 638 |
|
(a) | The summary of free cash flow 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. | |||||||||||
(b) | Represents amounts associated with business acquisitions consummated during the applicable period except where noted. |
WASTE MANAGEMENT, INC. | |||||||||
SUPPLEMENTAL DATA | |||||||||
(In Millions) | |||||||||
(Unaudited) | |||||||||
Core Price (a) | |||||||||
2019 | |||||||||
Q1 | Q2 | Q3 | Q4 | Full Year | |||||
Commercial | 5.3% | 5.3% | 5.1% | 6.1% | 5.4% | ||||
Residential | 4.4% | 4.3% | 4.1% | 4.1% | 4.2% | ||||
Industrial | 6.1% | 5.0% | 4.9% | 4.6% | 5.1% | ||||
Landfill | 4.3% | 4.0% | 3.9% | 3.8% | 4.0% | ||||
Solid Waste | 4.5% | 4.2% | 4.0% | 4.3% | 4.2% | ||||
2018 | |||||||||
Q1 | Q2 | Q3 | Q4 | Full Year | |||||
Commercial | 5.4% | 6.1% | 6.1% | 6.1% | 5.9% | ||||
Residential | 3.0% | 3.1% | 3.4% | 3.5% | 3.2% | ||||
Industrial | 4.8% | 6.3% | 6.1% | 6.3% | 5.9% | ||||
Landfill | 3.3% | 3.0% | 2.9% | 3.4% | 3.1% | ||||
Solid Waste | 3.8% | 4.2% | 4.3% | 4.4% | 4.2% |
(a) | Beginning with the fourth quarter 2019, the Company has updated its core price calculation. With advancements in technology, the Company began collecting additional transactional customer level data, which provides improved clarity of the impact of the Company's pricing activities. While this does not change the year-over-year core price performance result, the new measure reflects a more precise calculation in the evaluation of revenue changes. The 2019 and 2018 quarterly and full year data provided represent core price data using the new methodology. |
WASTE MANAGEMENT, INC. | ||||||||||||||||||||
RECONCILIATION OF CERTAIN NON-GAAP MEASURES | ||||||||||||||||||||
(In Millions, Except Per Share Amounts) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Three Months EndedDecember 31, 2019 | ||||||||||||||||||||
Income fromOperations | Pre-taxIncome | TaxExpense | NetIncome (a) | DilutedPer ShareAmount | ||||||||||||||||
As reported amounts | $ | 655 |
| $ | 531 |
| $ | 84 |
| $ | 447 |
| $ | 1.05 |
| |||||
Adjustments: | ||||||||||||||||||||
Loss from divestitures, asset impairments and unusual items, net |
| 34 |
|
| 34 |
|
| 6 |
|
| 28 |
| ||||||||
Advanced Disposal acquisition-related costs |
| 24 |
|
| 28 |
|
| 6 |
|
| 22 |
| ||||||||
Enterprise resource planning system related costs |
| 10 |
|
| 10 |
|
| 2 |
|
| 8 |
| ||||||||
Restructuring |
| 3 |
|
| 3 |
|
| 1 |
|
| 2 |
| ||||||||
| 71 |
|
| 75 |
|
| 15 |
|
| 60 |
|
| 0.14 |
| ||||||
As adjusted amounts | $ | 726 |
| $ | 606 |
| $ | 99 |
| (b) | $ | 507 |
| $ | 1.19 |
| ||||
Depreciation and amortization |
| 395 |
| |||||||||||||||||
As adjusted operating EBITDA | $ | 1,121 |
| |||||||||||||||||
Three Months EndedDecember 31, 2018 | ||||||||||||||||||||
Income fromOperations | Pre-taxIncome | TaxExpense | NetIncome (a) | DilutedPer ShareAmount | ||||||||||||||||
As reported amounts | $ | 767 |
| $ | 659 |
| $ | 128 |
| $ | 531 |
| $ | 1.24 |
| |||||
Adjustments: | ||||||||||||||||||||
Gain from divestitures, asset impairments and unusual items, net |
| (44 | ) |
| (44 | ) |
| (13 | ) |
| (31 | ) | ||||||||
Tax benefits related to adjustment to deferred taxes |
| - |
|
| - |
|
| 17 |
|
| (17 | ) | ||||||||
| (44 | ) |
| (44 | ) |
| 4 |
|
| (48 | ) |
| (0.11 | ) | ||||||
As adjusted amounts | $ | 723 |
| $ | 615 |
| $ | 132 |
| $ | 483 |
| $ | 1.13 |
| |||||
Depreciation and amortization |
| 370 |
| |||||||||||||||||
As adjusted operating EBITDA | $ | 1,093 |
|
(a) | For purposes of this press release table, all references to "Net income" refer to the financial statement line item "Net income attributable to Waste Management, Inc." | |||||||
(b) | The Company calculates its effective tax rate based on actual dollars. When the effective tax rate is calculated by dividing the Tax Expense amount in the table above by the Pre-tax Income amount, differences occur due to rounding, as these items have been rounded in millions. The fourth quarter 2019 adjusted effective tax rate was 16.3%. |
WASTE MANAGEMENT, INC. | ||||||||||||||||||||
RECONCILIATION OF CERTAIN NON-GAAP MEASURES | ||||||||||||||||||||
(In Millions, Except Per Share Amounts) | ||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||
Year EndedDecember 31, 2019 | ||||||||||||||||||||
Income fromOperations | Pre-taxIncome | Tax Expense | NetIncome (a) | DilutedPer ShareAmount | ||||||||||||||||
As reported amounts | $ | 2,706 |
| $ | 2,105 |
| $ | 434 |
| $ | 1,670 |
| $ | 3.91 |
| |||||
Adjustments: | ||||||||||||||||||||
Loss on early extinguishment of debt |
| - |
|
| 84 |
|
| 20 |
|
| 64 |
| ||||||||
Impairment of an investment and other |
| - |
|
| 55 |
|
| - |
|
| 55 |
| ||||||||
Advanced Disposal acquisition-related costs |
| 33 |
|
| 45 |
|
| 8 |
|
| 37 |
| ||||||||
Loss from divestitures, asset impairments and unusual items, net |
| 57 |
|
| 57 |
|
| 12 |
|
| 45 |
| ||||||||
Enterprise resource planning system related costs |
| 10 |
|
| 10 |
|
| 2 |
|
| 8 |
| ||||||||
Restructuring |
| 3 |
|
| 3 |
|
| 1 |
|
| 2 |
| ||||||||
| 103 |
|
| 254 |
|
| 43 |
|
| 211 |
|
| 0.49 |
| ||||||
As adjusted amounts | $ | 2,809 |
| $ | 2,359 |
| $ | 477 |
| (b) | $ | 1,881 |
| $ | 4.40 |
| ||||
Depreciation and amortization |
| 1,574 |
| |||||||||||||||||
As adjusted operating EBITDA | $ | 4,383 |
| |||||||||||||||||
Year EndedDecember 31, 2018 | ||||||||||||||||||||
Income fromOperations | Pre-taxIncome | Tax Expense | NetIncome (a) | DilutedPer ShareAmount | ||||||||||||||||
As reported amounts | $ | 2,789 |
| $ | 2,376 |
| $ | 453 |
| $ | 1,925 |
| $ | 4.45 |
| |||||
Adjustments: | ||||||||||||||||||||
Gain from divestitures, asset impairments and unusual items, net |
| (55 | ) |
| (55 | ) |
| (17 | ) |
| (38 | ) | ||||||||
Tax benefits related to income tax audit settlements |
| - |
|
| - |
|
| 33 |
|
| (33 | ) | ||||||||
Benefit primarily related to favorable adjustments from changes in state tax law and impact of Tax Cuts and Jobs Act |
| - |
|
| - |
|
| 27 |
|
| (27 | ) | ||||||||
Tax benefits related to adjustment to deferred taxes |
| - |
|
| - |
|
| 17 |
|
| (17 | ) | ||||||||
Charges related to multiemployer pension plans |
| 3 |
|
| 3 |
|
| 1 |
|
| 2 |
| ||||||||
Restructuring |
| 2 |
|
| 2 |
|
| 1 |
|
| 1 |
| ||||||||
| (50 | ) |
| (50 | ) |
| 62 |
|
| (112 | ) |
| (0.25 | ) | ||||||
As adjusted amounts | $ | 2,739 |
| $ | 2,326 |
| $ | 515 |
| $ | 1,813 |
| $ | 4.20 |
| |||||
Depreciation and amortization |
| 1,477 |
| |||||||||||||||||
As adjusted operating EBITDA | $ | 4,216 |
|
(a) | For purposes of this press release table, all references to "Net income" refer to the financial statement line item "Net income attributable to Waste Management, Inc." | |||||||
(b) | The Company calculates its effective tax rate based on actual dollars. When the effective tax rate is calculated by dividing the Tax Expense amount in the table above by the Pre-tax Income amount, differences occur due to rounding, as these items have been rounded in millions. The full year 2019 adjusted effective tax rate was 20.2% . |
WASTE MANAGEMENT, INC. | ||||||||||||||
RECONCILIATION OF CERTAIN NON-GAAP MEASURES | ||||||||||||||
(In Millions) | ||||||||||||||
(Unaudited) | ||||||||||||||
Three Months Ended | ||||||||||||||
December 31, 2019 |
| December 31, 2018 | ||||||||||||
Adjusted Operating EBITDA and Adjusted Operating EBITDA Margin | Amount |
| As a % of Revenues |
| Amount |
| As a % of Revenues | |||||||
Operating revenues, as reported | $ | 3,846 |
| $ | 3,842 |
| ||||||||
Income from operations, as reported |
| 655 |
|
| 767 |
| ||||||||
Depreciation and amortization, as reported |
| 395 |
|
| 370 |
| ||||||||
Operating EBITDA, as reported | $ | 1,050 |
| $ | 1,137 |
| ||||||||
Adjustments: | ||||||||||||||
(Gain) loss from divestitures, asset impairments and unusual items, net |
| 34 |
|
| (44 | ) | ||||||||
Advanced Disposal acquisition-related costs |
| 24 |
|
| - |
| ||||||||
Enterprise resource planning system related costs |
| 10 |
|
| - |
| ||||||||
Restructuring |
| 3 |
|
| - |
| ||||||||
Adjusted operating EBITDA (a) | $ | 1,121 |
|
| 29.1 | % | $ | 1,093 |
| 28.4 | % | |||
Years Ended | ||||||||||||||
December 31, 2019 |
| December 31, 2018 | ||||||||||||
Adjusted Operating EBITDA and Adjusted Operating EBITDA Margin | Amount |
| As a % of Revenues |
| Amount |
| As a % of Revenues | |||||||
Operating revenues, as reported | $ | 15,455 |
| $ | 14,914 |
| ||||||||
Income from operations, as reported |
| 2,706 |
|
| 2,789 |
| ||||||||
Depreciation and amortization, as reported |
| 1,574 |
|
| 1,477 |
| ||||||||
Operating EBITDA, as reported | $ | 4,280 |
| $ | 4,266 |
| ||||||||
Adjustments: | ||||||||||||||
(Gain) loss from divestitures, asset impairments and unusual items, net |
| 57 |
|
| (55 | ) | ||||||||
Advanced Disposal acquisition-related costs |
| 33 |
|
| - |
| ||||||||
Enterprise resource planning system related costs |
| 10 |
|
| - |
| ||||||||
Restructuring |
| 3 |
|
| 2 |
| ||||||||
Charges related to multiemployer pension plans |
| - |
|
| 3 |
| ||||||||
Adjusted operating EBITDA | $ | 4,383 |
|
| 28.4 | % | $ | 4,216 |
| 28.3 | % | |||
2020 Projected Free Cash Flow Reconciliation (a) | ||||||||||||||
Scenario 1 | Scenario 2 | |||||||||||||
Net cash provided by operating activities | $ | 3,800 |
| $ | 3,950 |
| ||||||||
Capital expenditures |
| (1,700 | ) |
| (1,800 | ) | ||||||||
Proceeds from divestitures of businesses and | ||||||||||||||
other assets (net of cash divested) |
| 50 |
|
| 100 |
| ||||||||
Free cash flow | $ | 2,150 |
| $ | 2,250 |
|
(a) | The reconciliation includes two scenarios that illustrate our projected free cash flow range for 2020. 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 | |||||||||||||
(In Millions) | |||||||||||||
(Unaudited) | |||||||||||||
Years Ended | |||||||||||||
December 31, 2019 |
| December 31, 2018 | |||||||||||
Adjusted Operating Expenses and Adjusted Operating Expenses Margin | Amount |
| As a % of Revenues |
| Amount |
| As a % of Revenues | ||||||
Operating revenues, as reported | $ | 15,455 |
| $ | 14,914 |
| |||||||
Operating expenses, as reported | $ | 9,496 |
| $ | 9,249 |
| |||||||
Adjustments: | |||||||||||||
Non-cash charges to write-off certain assets |
| (16 | ) |
| - |
| |||||||
Charges related to multiemployer pension plans |
| - |
|
| (3 | ) | |||||||
Adjusted operating expenses | $ | 9,480 |
| 61.3 | % | $ | 9,246 |
| 62.0 | % | |||
Three Months Ended | |||||||||||||
December 31, 2019 |
| December 31, 2018 | |||||||||||
Adjusted SG&A Expenses and Adjusted SG&A Expenses Margin | Amount |
| As a % of Revenues |
| Amount |
| As a % of Revenues | ||||||
Operating revenues, as reported | $ | 3,846 |
| $ | 3,842 |
| |||||||
SG&A expenses, as reported | $ | 445 |
| $ | 370 |
| |||||||
Adjustments: | |||||||||||||
Advanced Disposal acquisition-related costs |
| (24 | ) |
| - |
| |||||||
Enterprise resource planning system related costs |
| (10 | ) |
| - |
| |||||||
Adjusted SG&A expenses | $ | 411 |
| 10.7 | % | $ | 370 |
| 9.6 | % | |||
Years Ended | |||||||||||||
December 31, 2019 |
| December 31, 2018 | |||||||||||
Adjusted SG&A Expenses and Adjusted SG&A Expenses Margin | Amount |
| As a % of Revenues |
| Amount |
| As a % of Revenues | ||||||
Operating revenues, as reported | $ | 15,455 |
| $ | 14,914 |
| |||||||
SG&A expenses, as reported | $ | 1,631 |
| $ | 1,453 |
| |||||||
Adjustments: | |||||||||||||
Advanced Disposal acquisition-related costs |
| (33 | ) |
| - |
| |||||||
Enterprise resource planning system related costs |
| (10 | ) |
| - |
| |||||||
Adjusted SG&A expenses | $ | 1,588 |
| 10.3 | % | $ | 1,453 |
| 9.7 | % |
View source version on businesswire.com: https://www.businesswire.com/news/home/20200213005408/en/
Waste Management
Website www.wm.com
Analysts Ed Egl 713.265.1656 eegl@wm.com
Media Andy Izquierdo 832.710.5287 aizquierdo@wm.com
Source: Waste Management, Inc.