Stronger than
Expected Financial Performance Demonstrates Business’ Resiliency
and Disciplined Focus on Cost and Capital Management
Waste Management, Inc. (NYSE: WM) today announced financial
results for the quarter ended June 30, 2020. Revenues for the
second quarter of 2020 were $3.56 billion compared with $3.95
billion for the same 2019 period. Net income for the quarter was
$307 million, or $0.72 per diluted share, compared with $381
million, or $0.89 per diluted share, for the second quarter of
2019.(a) On an adjusted basis, net income was $372 million, or
$0.88 per diluted share, in the second quarter of 2020, compared
with $470 million, or $1.11 per diluted share, in the second
quarter of 2019.(b)
The Company’s adjusted second quarter 2020 results exclude $0.12
per diluted share from non-cash impairments of landfill assets
primarily related to energy services activities, $0.03 per diluted
share from advisory costs incurred in connection with the pending
acquisition of Advanced Disposal Services, Inc., and $0.01 per
diluted share from costs incurred to support its implementation of
a new enterprise resource planning system.
“I am proud of how our employees have continued to provide
dependable, essential services to our customers and communities
during the pandemic,” said Jim Fish, Waste Management’s President
and Chief Executive Officer. “While keeping health and safety as
the top priority, the team adapted through difficult circumstances,
finding ways to improve efficiency across the collection and
disposal business and reduce discretionary spending.
“We saw robust improvements in volumes and earnings each month
as we progressed through the quarter with June standing out as the
strongest month. This early stage of economic recovery combined
with our successful cost flexing in the second quarter provide
greater clarity for our 2020 financial results under current
economic conditions.”
As previously announced, Waste Management and Advanced Disposal
have agreed to revised acquisition terms along with an agreement to
sell substantially all anticipated regulatory divestures to GFL
Environmental. Both transactions are expected to close by the end
of the third quarter of 2020. The Company continues to maintain a
strong balance sheet and liquidity position, with its current and
forecasted post-acquisition leverage ratio well within the
financial covenant in its revolving credit facilities. The Company
has recently entered into a supplemental $3 billion revolving
credit facility maturing July 27, 2021, to be used for general
corporate purposes, including funding a portion of the Advanced
Disposal acquisition and refinancing of indebtedness.
KEY HIGHLIGHTS FOR THE SECOND QUARTER OF 2020
Revenue
- In the second quarter of 2020, revenue declined $331 million in
the Company’s collection and disposal business, driven by $386
million in volume declines partially offset by $55 million of yield
growth.
- Core price for the second quarter of 2020 was 1.3% compared to
4.2% in the second quarter of 2019.(d)
- Collection and disposal yield was 1.6% in the second quarter of
2020 compared to 2.7% in the second quarter of 2019.
- The Company’s second quarter 2020 pricing results were muted
relative to historical results and our initial full year
expectations due to proactive customer-centric steps to temporarily
suspend price increases and certain fees for customers impacted by
the COVID-19 pandemic. The Company remains committed to its pricing
programs.
- Total Company volumes declined 10.3% in the second quarter of
2020. Volumes declined almost 11% in the commercial line of
business, 16% in industrial, and 18% in landfill, primarily related
to the COVID-19 pandemic. Adjusting for natural disaster volumes
that occurred in the second quarter of 2019, landfill volumes
declined 13% in the second quarter of 2020.
- We estimate that business interruptions related to the COVID-19
pandemic had a negative revenue impact of approximately $400
million.
Cost
Management
- The Company remains focused on taking steps to manage costs to
mitigate the impact of the COVID-19 pandemic. Steps include swift
labor and route optimization in response to reduced volumes,
reducing overtime hours, limiting hiring, eliminating non-essential
expenses and costs, and reducing incentive compensation
accruals.
- Operating expenses as a percentage of revenue improved 70 basis
points to 61.2% when compared to the second quarter of 2019. On an
adjusted basis, operating expenses as a percentage of revenue
improved 30 basis points when compared to the second quarter of
2019.(b)
- Operating expenses included $12 million of costs specifically
attributable to the Company’s People First responses to COVID-19,
primarily related to enhanced personal protective equipment and the
Company’s policies of excusing COVID-19 related absences and
guaranteeing 40 hours of weekly pay for full-time employees during
the pandemic.
- SG&A expenses were 10.6% of revenue in the second quarter
of 2020 compared to 9.9% in the second quarter of 2019. On an
adjusted basis, SG&A expenses were 9.9% of revenue in the
second quarter of 2020 compared to 9.8% in the second quarter of
2019. (b) Increased bad debt expense drove the majority of the
increase as efforts to reduce discretionary spending and lower
incentive compensation accruals reduced overall costs.
- SG&A expenses included $8 million of costs specifically
attributable to the Company’s People First responses to COVID-19,
primarily driven by employee pay guarantees and costs related to
employees working from home.
Profitability
- Total Company operating EBITDA was $941 million, or 26.4% as a
percentage of revenue for the second quarter of 2020.(c) On an
adjusted basis, total Company operating EBITDA was $1.03 billion,
or 28.8% as a percentage of revenue for the second quarter of 2020
versus adjusted operating EBITDA of $1.13 billion and 28.7% as a
percentage of revenue in 2019.(b)
- Operating EBITDA in the Company’s collection and disposal
business, adjusted on the same basis as total Company operating
EBITDA, was $1.14 billion for the second quarter of 2020, compared
to $1.31 billion for the second quarter of 2019.
- The Company grew operating EBITDA in its recycling business by
almost $8 million when compared to the second quarter of 2019 by
reducing costs and continuing to implement its fee-for-service
model.
Free Cash Flow &
Capital Allocation
- In the second quarter of 2020, net cash provided by operating
activities was $856 million compared to $1.01 billion in the second
quarter of 2019.
- In the second quarter of 2020, capital expenditures were $436
million compared to $578 million in the second quarter of
2019.
- In the second quarter of 2020, free cash flow was $423 million
compared to $440 million in the second quarter of 2019.(b)
- The Company paid $230 million of dividends to
shareholders.
- As a prudent step to preserve cash in this uncertain
environment, the Company has temporarily suspended share
repurchases through the end of the year.
UPDATE ON 2020 OUTLOOK(e)
- Total revenue for 2020 is expected to decline between 4% and 5%
when compared to full year 2019.
- Given the strong performance in the second quarter of 2020 and
improved volume outlook, the Company now expects adjusted operating
EBITDA margin to be in the range of 28.0% to 28.5%, or flat to down
50 basis points on a year-over-year basis.(b)
- Capital expenditures are projected to be between $1.55 and
$1.65 billion, and the Company expects to generate free cash flow
approaching $2 billion, exclusive of transaction and advisory costs
incurred for the acquisition of Advanced Disposal.(b)
Fish concluded, “Despite the challenging backdrop, we’re
confident in our ability to continue to meet our commitments to our
customers and deliver solid 2020 results. During these
unprecedented times, our business model has once again proven its
resilience, and we remain focused on using this opportunity and our
technology investments to create a differentiated customer
experience that puts our customers at the center of everything we
do and to increase work place flexibility for our people.”
(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)
Adjusted earnings per diluted share,
adjusted net income, adjusted operating expenses, adjusted SG&A
expenses, adjusted operating EBITDA 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.
(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.
(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. In the first
quarter of 2020, the Company reported core price of 5.5%, which was
calculated using the old methodology. Core price using the new
methodology was 4.2% in the first quarter of 2020.
(e)
The Company’s 2020 Outlook excludes (i)
transaction and advisory costs incurred in connection with the
planned acquisition of Advanced Disposal Services, Inc. and (ii)
post-closing financial contributions from the acquisition of
Advanced Disposal Services, Inc.
The Company will host a conference call at 10 a.m. (Eastern)
today to discuss the second quarter 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 Investors
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
9164328 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) today through 5:00 PM (Eastern) on Thursday,
August 13, 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 9164328.
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.
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 “Update on 2020 Outlook” and all
statements regarding future performance or financial results of our
business; responses and impacts of COVID-19; future liquidity,
leverage ratio and balance sheet strength; future share
repurchases; and the pending acquisition of Advanced Disposal
Services, Inc. and divestitures to GFL Environmental (together, the
“Pending Transactions”) including timing of such closings. 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 acquisitions; failure to obtain
the results anticipated from acquisitions; the effects that the
announcement of the Pending Transactions may have on the respective
businesses; inability to obtain required regulatory or governmental
approvals for the Pending Transactions or to obtain such approvals
on satisfactory conditions; inability to obtain approval from the
stockholders of Advanced Disposal Services, Inc. or satisfy other
closing conditions for the Pending Transactions; inability of a
party to obtain financing necessary for the Pending Transactions;
the occurrence of any event, change or other circumstance that
could give rise to the termination of a Pending Transaction and the
effects of any such termination; legal proceedings that may be
instituted related to a Pending Transaction; unexpected costs,
charges or expenses resulting from a Pending Transaction; failure
to successfully integrate the acquisition of Advanced Disposal
Services, Inc., realize anticipated synergies or obtain the results
anticipated from such acquisition; environmental and other
regulations, including developments related to emerging
contaminants and renewable fuel; commodity price fluctuations;
international trade restrictions; weakness in general economic
conditions and capital markets; public health risk and other
impacts of COVID-19 or similar pandemic conditions, including
increased costs, social and commercial disruption, service
reductions and other adverse effects on our business, financial
condition, results of operations and cash flows; 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 as
updated by our subsequent quarterly reports on Form 10-Q, for
additional information regarding these and other risks and
uncertainties applicable to its 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
expenses, adjusted SG&A expenses, adjusted operating EBITDA,
and free cash flow, as well as projections of operating EBITDA
margin and free cash flow for 2020. 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 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.
The Company’s non-GAAP results and projections exclude the
impact of our planned acquisition of Advanced Disposal Services,
Inc. In addition, the Company’s projected full year 2020 operating
EBITDA margin 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, and provide a projection
of 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 to the
most comparable GAAP measures are included in the accompanying
schedules, with the exception of projected operating EBITDA margin.
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
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Operating revenues
$
3,561
$
3,946
$
7,290
$
7,642
Costs and expenses:
Operating
2,180
2,443
4,509
4,741
Selling, general and administrative
377
391
802
800
Depreciation and amortization
414
409
816
775
Restructuring
2
—
2
2
(Gain) loss from divestitures, asset
impairments and unusual items, net
61
7
61
7
3,034
3,250
6,190
6,325
Income from operations
527
696
1,100
1,317
Other income (expense):
Interest expense, net
(119)
(100)
(231)
(196)
Loss on early extinguishment of debt
—
(84)
—
(84)
Equity in net losses of unconsolidated
entities
(14)
(16)
(40)
(25)
Other, net
1
1
1
(53)
(132)
(199)
(270)
(358)
Income before income taxes
395
497
830
959
Income tax expense
88
115
162
230
Consolidated net income
307
382
668
729
Less: Net income (loss) attributable to
noncontrolling interests
—
1
—
1
Net income attributable to Waste
Management, Inc.
$
307
$
381
$
668
$
728
Basic earnings per common share
$
0.73
$
0.90
$
1.58
$
1.71
Diluted earnings per common share
$
0.72
$
0.89
$
1.57
$
1.70
Weighted average basic common shares
outstanding
422.3
424.8
423.2
424.6
Weighted average diluted common shares
outstanding
423.9
427.5
425.1
427.2
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (In Millions)
(Unaudited)
June 30,
December 31,
2020
2019
ASSETS
Current assets:
Cash and cash equivalents
$
2,663
$
3,561
Receivables, net
2,107
2,319
Other
336
329
Total current assets
5,106
6,209
Property and equipment, net
12,917
12,893
Goodwill
6,512
6,532
Other intangible assets, net
472
521
Other
1,612
1,588
Total assets
$
26,619
$
27,743
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
2,582
$
2,926
Current portion of long-term debt
3,190
218
Total current liabilities
5,772
3,144
Long-term debt, less current portion
9,598
13,280
Other
4,356
4,249
Total liabilities
19,726
20,673
Equity:
Waste Management, Inc. stockholders’
equity
6,891
7,068
Noncontrolling interests
2
2
Total equity
6,893
7,070
Total liabilities and equity
$
26,619
$
27,743
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (In Millions)
(Unaudited)
Six Months Ended
June 30,
2020
2019
Cash flows from operating activities:
Consolidated net income
$
668
$
729
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation and amortization
816
775
Loss on early extinguishment of debt
—
84
Other
167
195
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
(30)
117
Net cash provided by operating
activities
1,621
1,900
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(1)
(440)
Capital expenditures
(895)
(1,049)
Proceeds from divestitures of businesses
and other assets (net of cash divested)
15
20
Other, net
(37)
(96)
Net cash used in investing activities
(918)
(1,565)
Cash flows from financing activities:
New borrowings
—
3,971
Debt repayments
(705)
(385)
Premiums paid on early extinguishment of
debt
—
(84)
Net commercial paper borrowings
(repayments)
—
(1,001)
Common stock repurchase program
(402)
(248)
Cash dividends
(466)
(440)
Exercise of common stock options
42
45
Tax payments associated with equity-based
compensation transactions
(34)
(30)
Other, net
(10)
(6)
Net cash (used in) provided by financing
activities
(1,575)
1,822
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
(3)
2
Increase (decrease) in cash, cash
equivalents and restricted cash and cash equivalents
(875)
2,159
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
3,647
183
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
2,772
$
2,342
WASTE MANAGEMENT, INC. SUMMARY
DATA SHEET (In Millions) (Unaudited)
Operating Revenues by Line of
Business
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Commercial
$
928
$
1,052
$
1,991
$
2,078
Residential
657
655
1,307
1,295
Industrial
625
744
1,318
1,424
Other collection
115
122
227
231
Total collection
2,325
2,573
4,843
5,028
Landfill
874
1,023
1,761
1,887
Transfer
439
474
880
886
Recycling
275
264
529
555
Other
409
445
839
876
Intercompany (a)
(761)
(833)
(1,562)
(1,590)
Total
$
3,561
$
3,946
$
7,290
$
7,642
Internal Revenue Growth
Period-to-Period Change for
the Three Months Ended June 30, 2020 vs. 2019
Period-to-Period Change for
the Six Months Ended June 30, 2020 vs. 2019
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
$
55
1.6
%
$
127
1.9
%
Recycling commodities (d)
24
9.6
(35)
(6.5)
Fuel surcharges and mandated fees
(60)
(36.6)
(76)
(24.3)
Total average yield (e)
$
19
0.5
%
$
16
0.2
%
Volume
(406)
(10.3)
(396)
(5.2)
Internal revenue growth
(387)
(9.8)
(380)
(5.0)
Acquisitions
10
0.3
39
0.5
Divestitures
(1)
—
(2)
—
Foreign currency translation
(7)
(0.3)
(9)
(0.1)
Total
$
(385)
(9.8)
%
$
(352)
(4.6)
%
Period-to-Period Change for
the Three Months Ended June 30, 2020 vs. 2019
Period-to-Period Change for
the Six Months Ended June 30, 2020 vs. 2019
As a % of Related
Business(b)
As a % of Related
Business(b)
Yield
Volume
Yield
Volume(f)
Commercial
1.8
%
(11.0)
%
2.1
%
(4.6)
%
Industrial
1.0
(15.7)
2.3
(9.3)
Residential
2.5
(2.6)
2.2
(1.9)
Total collection
1.7
(9.6)
2.1
(4.8)
MSW
2.1
(9.4)
2.5
(4.8)
Transfer
2.6
(8.1)
2.7
(2.3)
Total collection and disposal
1.6
%
(10.9)
%
1.9
%
(6.0)
%
______________________________
(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 combined 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.
(f)
Workday adjusted volume impact.
WASTE MANAGEMENT, INC. SUMMARY DATA SHEET
(In Millions) (Unaudited) Free Cash
Flow (a)
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Net cash provided by operating activities
$
856
$
1,010
$
1,621
$
1,900
Capital expenditures
(436)
(578)
(895)
(1,049)
Proceeds from divestitures of businesses and other assets (net of
cash divested)
3
8
15
20
Free cash flow
$
423
$
440
$
741
$
871
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Supplemental Data Internalization of waste, based on
disposal costs
68.4%
66.6%
68.3%
66.4%
Landfill amortizable tons (in millions)
27.0
32.5
54.2
60.4
Acquisition Summary (b) Gross annualized
revenue acquired
-
14
2
119
Total consideration, net of cash acquired
-
41
1
435
Cash paid for acquisitions consummated during the period,
net of cash acquired
-
40
1
431
Cash paid for acquisitions including contingent
consideration and other items from prior periods, net of cash
acquired
1
48
3
442
Amortization, Accretion and Other Expenses for
Landfills:
Three Months Ended
Six Months Ended
June 30,
June 30,
2020
2019
2020
2019
Landfill amortization expense: Cost basis of landfill assets
$
111
$
133
$
225
$
243
Asset retirement costs
37
28
61
45
Total landfill amortization expense
148
161
286
288
Accretion and other related expense
25
25
50
50
Landfill amortization, accretion and other related expense
$
173
$
186
$
336
$
338
(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.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES (In
Millions, Except Per Share Amounts) (Unaudited)
Three Months EndedJune 30, 2020 Income
fromOperations Pre-taxIncome TaxExpense
NetIncome (a) DilutedPer ShareAmount As reported
amounts
$
527
$
395
$
88
$
307
$
0.72
Adjustments: Non-cash impairments of disposal assets
61
61
14
47
0.12
Advanced Disposal acquisition-related costs
17
17
4
13
0.03
Enterprise resource planning system related costs
7
7
2
5
0.01
85
85
20
65
0.16
As adjusted amounts
$
612
$
480
$
108
(b)
$
372
$
0.88
Depreciation and amortization
414
As adjusted operating EBITDA
$
1,026
Three Months EndedJune 30, 2019 Income
fromOperations Pre-taxIncome (c) TaxExpense
NetIncome (a) DilutedPer ShareAmount As reported
amounts
$
696
$
496
$
115
$
381
$
0.89
Adjustments: Loss on early extinguishment of debt
-
84
20
64
0.15
Non-cash charges to write-off certain assets
23
23
6
17
0.04
Advanced Disposal acquisition-related costs
6
9
1
8
0.03
As adjusted amounts
$
725
$
612
$
142
(b)
$
470
$
1.11
Depreciation and amortization
409
As adjusted operating EBITDA
$
1,134
(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) While the
Company calculates its effective tax rate based on actual dollars,
an approximate effective tax rate can be calculated by dividing the
Tax Expense amount in the table above by the Pre-tax Income amount.
The adjusted effective tax rate was 22.5% and 23.3% for the quarter
ended June 30, 2020 and 2019, respectively.
(c) Pre-tax
income for the second quarter of 2019 excludes $1 million related
to net income attributable to noncontrolling interests.
WASTE
MANAGEMENT, INC. RECONCILIATION OF CERTAIN NON-GAAP
MEASURES (In Millions) (Unaudited)
Three Months Ended June 30, 2020 June 30, 2019
Adjusted Operating Expenses and Adjusted Operating Expenses
Margin Amount As a % ofRevenues Amount
As a % ofRevenues Operating revenues, as
reported
$
3,561
$
3,946
Operating expenses, as reported
$
2,180
61.2%
$
2,443
61.9
%
Adjustment: Non-cash charges to write-off certain assets
16
Adjusted operating expenses
$
2,427
61.5
%
Three Months Ended June 30, 2020
June 30, 2019 Adjusted SG&A Expenses and Adjusted
SG&A Expenses Margin Amount As a % ofRevenues
Amount As a % ofRevenues Operating
revenues, as reported
$
3,561
$
3,946
SG&A expenses, as reported
$
377
10.6%
$
391
9.9
%
Adjustments: Advanced Disposal acquisition-related costs
(17)
(6)
Enterprise resource planning system related costs
(7)
-
Adjusted SG&A expenses
$
353
9.9%
$
385
9.8
%
2020 Projected Free Cash Flow Reconciliation
(a) Scenario 1 Scenario 2 Net cash
provided by operating activities
$
3,340
$
3,525
Capital expenditures
(1,550)
(1,650)
Proceeds from divestitures of businesses and other assets (net of
cash divested)
35
50
Free cash flow
$
1,825
$
1,925
Advanced Disposal acquisition-related costs
100
100
Free cash flow (excl. ADS transaction and advisory costs)
$
1,925
$
2,025
(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. The Company's 2020 Outlook excludes
(i) transaction and advisory costs incurred in connection with the
planned acquisition of Advanced Disposal Services, Inc. and (ii)
post-closing financial contributions from the acquisition of
Advanced Disposal Services, Inc.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200730005474/en/
Waste Management
Web site www.wm.com
Analysts Ed Egl 713.265.1656 eegl@wm.com
Media Janette Micelli 602.579.6152 jmicelli@wm.com
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