WM to close sale of Wheelabrator in late 2014, early 2015

Waste Management is nearing completion on the sale of waste-to-energy (WTE) business subsidiary Wheelabrator Technologies Inc., WM President and CEO David Steiner reported during an Oct. 29 quarterly earnings call.

Wheelabrator owns or operates 17 WTE facilities and four independent power-producing facilities in the U.S. that process more than 7.5 million tons of waste and have a combined electric generating capacity of 853 MW. It also has four ash monofill landfills, three transfer stations and an ongoing development and construction project in the U.K.

The transaction is progressing and should receive Federal Energy Regulatory Commission approval for closing at the end of the year or early 2015, Steiner said. “Regarding the use of proceeds, our philosophy has not changed—we would prefer to replace the $220 million of invested operating EBIDA at attractive multiples,” he said, adding that the company’s acquisition of Deffenbaugh Disposal Inc. will enable WM to replace a portion of that operating EBIDA.

In early October, WM entered into an agreement to acquire Deffenbaugh, which employs 1,000 and provides services in Omaha, Nebraska, the St. Joseph and Kansas City, Missouri, metropolitan areas and Topeka, Kansas, as well as in Northwest Arkansas. The company also operates one municipal solid waste landfill, one construction and demolition landfill, two material recovery facilities, and seven transfer stations.

Other key points included during the earnings call included:

-Revenue decreased by 0.5 percent, or $19 million, but would have increased by 0.5 percent, or $17 million, if not for a $24 million decline related to divestitures of operations and a $12 million decline related to foreign currency translation adjustments.

-Operating expenses as a percent of revenue were 63.8 percent in the third quarter of 2014, as compared to 64.2 percent in the third quarter of 2013, an improvement of 40 basis points. Overall operating expenses improved by $26 million compared to the prior year period, primarily driven by operating cost improvements in both the company’s solid waste and recycling operations.

-Net cash provided by operating activities was $672 million. Capital expenditures were $307 million.

-Free cash flow was $418 million, a decrease of $34 million compared to the third quarter of 2013.