WM reports increased net income in second quarter results

By Erin Voegele | July 23, 2015

Waste Management Inc. has released second quarter financial results, reporting quarterly revenue of $3.32 billion, down from $3.56 billion during the same period of the prior year. Net income for the quarter was $274 million, or 60 cents per diluted share, compared to $210 million, or 45 cents per diluted share, during the second quarter of 2014. On an as-adjusted basis, excluding certain items, net income was $306 million, or 67 per diluted share, compared to $270 million, or 58 cents per diluted share, in the second quarter of last year.

The company’s as-adjusted second quarter 2015 results exclude a 7 cents per diluted share charge to operating expenses associated with resolving the company’s withdrawal liability from certain underfunded multiemployer pension plans. The company’s second quarter 2014 results have been adjusted to exclude a negative impact of 15 cents per diluted share, primarily related to the divestiture of operations in Puerto Rico, and the earnings from businesses and assets divested in 2014, which contributed 2 cents per diluted share to earnings in the second quarter of 2014.

“Our strong second quarter results reflect our continued commitment to disciplined core price growth and cost controls, said David Steiner, president and CEO of WM. “After adjusting for the items noted above, each of our net income, operating income and margin, operating EBITDA and margin, and earnings per diluted share improved when compared to the second quarter of 2014, despite year-over-year headwinds of 3 cents per diluted share from lower recycling commodity prices and the unfavorable impact of foreign currency fluctuations.”

“In the second quarter, we also saw improvement in our volumes year-over-year and sequentially, Steiner said. “In addition, commercial and industrial new business revenue exceeded lost business revenue for the first time in three years. We are encouraged by the volume performance as we maintain our focus on more profitable volumes, and we expect them to strengthen through the rest of 2015 and into 2016.”

“Our net cash provided by operating activities and free cash flow were very strong at $816 million and $579 million, respectively,” he continued. “Combined with the proceeds from our 2014 divestitures, we are in a strong cash position to improve our business and return cash to our shareholders.”

Steiner added, “To update our plans to deploy our excess cash, we continue to seek accretive acquisitions in our solid waste business, and we expect to reach agreements in the second half of this year to acquire an additional $50 to $75 million of operating EBITDA. We expect to close those acquisitions in 2016. In the second quarter, we repurchased $300 million of our outstanding shares and we returned $175 million to our shareholders in the form of cash dividends. We currently anticipate that we will repurchase an additional $300 million of our outstanding shares in the third quarter of 2015. In the fourth quarter, and going forward, we will continue to balance our acquisitions, share repurchases, and our dividend to provide the maximum benefit for our shareholders while maintaining a strong balance sheet.”

According to information published by WM, the company uses landfill gas to generate renewable energy at approximately 130 of its disposal sites. Together, those projects generate more than 550 MW of electricity, which is enough to power more than 440,000 homes.

While MW currently produces energy from landfill gas, the company sold its Wheelabrator Technologies Inc. waste-from-energy business to Energy Capital Partners late last year. At the time of the sale, Wheelabrator featured 15 energy-from-waste facilities, four independent power-producing facilities, four ash monofills, and three waste transfer stations. According to information released by Wheelabrator in December 2014, MW continues to be a core Wheelabrator customer under long-term waste supply agreements.