Waste Management Announces First Quarter 2008 Earnings
Company Posts Higher Earnings and Cash from Operations and Expresses Confidence in Achieving Full Year 2008 Earnings Guidance
HOUSTON--(BUSINESS WIRE)--April 29, 2008--Waste Management, Inc. (NYSE:WMI) today announced financial results for its first quarter ended March 31, 2008. Net income for the quarter was $241 million, or $0.48 per diluted share, compared with $238 million, or $0.45 per diluted share in the prior year period.
Revenue for the first quarter of 2008 was $3.27 billion as compared with $3.19 billion in the year ago period, an increase of 2.4%. Income from operations as a percent of revenue improved by 50 basis points from the prior year period to 15.6% in the first quarter of 2008.
The Company noted several items that impacted the results in the 2007 and 2008 first quarters. Results in the first quarter of 2008 included a net $0.01 per diluted share benefit due to a $6 million benefit in net income from income tax audit settlements. Results in the first quarter of 2007 included a net $0.02 per diluted share benefit consisting of a $16 million benefit in net income from income tax audit settlements and a $6 million reduction in net income due to restructuring charges.
Excluding those items, earnings would have been $0.47 per diluted share in the first quarter of 2008 compared with $0.43 per diluted share in the first quarter of 2007. This is a 9.3% increase in adjusted earnings per diluted share.(a)
"We started the year on a solid note as we again accomplished our primary financial goals of earnings growth, margin expansion and strong free cash flow," said David P. Steiner, Chief Executive Officer of Waste Management. "The 9.3% growth in adjusted earnings per share is an impressive accomplishment in the current business environment. It is even more impressive when you consider that we had a $0.02 per diluted share benefit in Section 45K tax credits in the first quarter of 2007. The Section 45K program expired at the end of 2007. Excluding that benefit, year-over-year earnings would have grown 14.6% in the first quarter of 2008.(a)
"We grew revenue by 2.4% during the first quarter of 2008, due mainly to our disciplined approach to pricing, which led to internal revenue growth from yield on base business of 3.2%. We also benefited from higher recycling commodity prices, which contributed an additional 2.3% to revenue growth. Partially offsetting these increases were declines in internal revenue growth from volumes of 3.9%, mostly in the collection lines of business, as well as the carry-over impact of divestitures of certain under-performing operations, which occurred principally during the 2007 fiscal year.
"We overcame several challenges during the first quarter of 2008, including the impact of sharply rising diesel fuel prices, a slow economy and harsh winter weather in the Midwest. Higher diesel fuel prices caused an approximate $0.01 per share reduction in earnings during the quarter because the increase in our fuel surcharge revenue lagged the sharp rise in diesel fuel prices; and this also caused an approximate 50 basis point decline in income from operations as a percent of revenue. Excluding this negative 50 basis point impact, our income from operations as a percent of revenue increased by 100 basis points in the first quarter of this year compared with the prior year period, in line with our expectations.(a) We estimate that the winter weather conditions caused a $0.01 per share decline in net income during the first quarter of this year."
Steiner continued, "We overcame a number of challenges by continuing our focus on pricing and operational excellence and executing our strategy of reviewing low margin accounts and increasing prices or culling that business. And we again produced strong free cash flow that we returned to shareholders in the form of our dividend and share repurchases. We generated $561 million in net cash from operating activities and $362 million of free cash flow during the quarter."(a)
Key Highlights for the First Quarter of 2008
-- Income from operations was $511 million, or 15.6% of revenue,
an increase of 50 basis points compared with the prior year
first quarter. Excluding the impacts of higher diesel fuel
prices on fuel surcharge revenue and operating expenses,
income from operations as a percent of revenue was 16.1% in
the first quarter of 2008, an increase of 100 basis points
compared with the prior year first quarter.(a)
-- Internal revenue growth from yield on base business was 3.2%.
Including the positive impact of higher recycling commodity
prices and higher fuel surcharge revenue, internal revenue
growth from yield was 6.8%.
-- Internal revenue growth from volume was a negative 3.9%.
-- Divestitures caused a 2.0% decline in revenue in the quarter,
while acquisitions contributed 0.8% to higher revenue. Foreign
currency translation contributed an additional 0.8% to revenue
growth.
-- Operating expenses were 64.1% of revenue, up from 63.8% of
revenue in the same period in 2007. Excluding the impacts of
higher diesel fuel prices and higher recycling commodity
prices on both operating expenses and revenue, operating
expenses were 63.0% of revenue in the first quarter of 2008,
or an 80 basis point improvement compared with the prior year
period.(a)
-- Depreciation and amortization expenses were 9.1% of revenue,
down from 9.7% of revenue in the first quarter of 2007, due
mainly to lower volumes.
-- Net cash provided by operating activities was $561 million
compared with $538 million in the prior year quarter. Capital
expenditures were $213 million, compared with $272 million in
the prior year quarter.
-- Free cash flow was $362 million, compared with $335 million in
the prior year quarter.(a)
-- We returned $414 million to shareholders in the form of $281
million in common stock repurchases, or approximately 9
million shares, and $133 million in dividend payments.
Steiner concluded, "Despite the slow economy, we are off to a good start for the year. We continued to execute our disciplined pricing and cost control strategies and we overcame the challenges during the quarter. Our success during the first quarter gives us confidence that we can achieve our previously projected full-year earnings of $2.19 to $2.23 per diluted share and free cash flow of $1.4 billion."(a)
(a) 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 (ii) financial measures the Company uses in the management of its business. GAAP measures that have been adjusted to exclude the impact of certain unusual, non-recurring or otherwise non-operational items include:
-- Earnings per diluted share;
-- Income from operations as a percent of revenue;
-- Operating expenses as a percent of revenue; and
-- Projected earnings per diluted share.
The Company also discusses free cash flow and projected free cash flow, which are non-GAAP measures, because it believes that investors are interested in the cash produced by the Company from non-financing activities that is available for uses such as the Company's acquisitions, its share repurchase program, its scheduled debt reduction and the payment of dividends. 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 not subject to comparison.
The quantitative reconciliations of the non-GAAP measures, other than the full year projected earnings per diluted share, to the most comparable GAAP measures are included in the accompanying schedules. Investors are urged to take into account GAAP measures as well as non-GAAP measures in evaluating the Company.
The full year adjusted earnings of $2.19 to $2.23 per diluted share projected by the Company excludes the first quarter impact of a $6 million income tax audit settlement. GAAP net earnings per diluted share for the remaining three quarters of 2008 may include other items that are not currently determinable, but may be significant, such as asset impairment and unusual items, charges, gains or losses from divestitures, or additional resolution of income tax items. The full year 2008 adjusted projected earnings reaffirmed today excludes the impact of any such items that may occur. GAAP net earnings per diluted share projected for the full year would require inclusion of the projected impact of these items. Due to the uncertainty of the likelihood, amount and timing of any such items, we do not believe we have the information available to provide projected full year GAAP net earnings per diluted share and the quantitative reconciliation to our current adjusted earning per diluted share projection.
The Company has scheduled an investor and analyst conference call for later this morning to discuss the results of today's earnings announcement. The information in this press release should be read in conjunction with the information on the conference call. The call will begin at 10:00 a.m. Eastern time and is open to the public. To listen to the conference call, which will be broadcast live over the Internet, go to the Waste Management Website at http://www.wm.com, and select "Earnings Webcast." You may also listen to the analyst conference call by telephone by contacting the conference call operator 5 to 10 minutes prior to the scheduled start time and asking for the "Waste Management Conference Call - Call ID 39562966." US/Canada Dial-In Number: (877) 710-6139. Int'l/Local Dial-In Number: (706) 643-7398. For those unable to listen to the live call, a replay will be available 24 hours a day beginning at approximately 1:00 p.m. Eastern time on April 29th through 5:00 p.m. Eastern time on May 13th. To hear a replay of the call over the Internet, access the Waste Management Website at http://www.wm.com. To hear a telephonic replay of the call, dial (800) 642-1687 or (706) 645-9291 and enter reservation code 39562966.
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.
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. Statements relating to future events and performance are "forward-looking statements." The forward-looking statements that the Company makes are the Company's expectations, opinion, view or belief at the point in time of issuance but may change at some future point in time. By issuing estimates or making statements based on current expectations, opinions, views or beliefs, the Company has no obligation, and is not undertaking any obligation, to update such estimates or statements or to provide any other information relating to such estimates or statements. Outlined below are some of the risks that the Company faces and that could affect our financial statements for 2008 and beyond and that could cause actual results to be materially different from those that may be set forth in forward-looking statements made by the Company. However, they are not the only risks that the Company faces. There may be additional risks that we do not presently know or that we currently believe are immaterial which could also impair our business. We caution you not to place undue reliance on any forward-looking statements, which speak only as of their dates. The following are some of the risks that we face:
-- competition may negatively affect our profitability or cash
flows, our price increases may have negative effects on
volumes and price roll-backs and lower than average pricing to
retain and attract customers may negatively affect our yield
on base business;
-- we may be unable to maintain or expand margins if we are
unable to control costs or raise prices;
-- we may not be able to successfully execute or continue our
operational or other margin improvement plans and programs,
including pricing increases; passing on increased costs to our
customers; reducing costs due to our operational improvement
programs; and divesting under-performing assets and purchasing
accretive businesses, any of which could negatively affect our
revenue and margins;
-- weather conditions cause our quarter-to-quarter results to
fluctuate, and harsh weather or natural disasters may cause us
to temporarily shut down operations;
-- inflation, higher interest rates and other general and local
economic conditions may negatively affect the volumes of waste
generated, our financing costs and other expenses;
-- possible changes in our estimates of costs for site
remediation requirements, final capping, closure and
post-closure obligations, compliance and regulatory
requirements may increase our expenses;
-- regulations, including regulations to limit greenhouse gas
emissions, may negatively impact our business by, among other
things, restricting our operations, increasing costs of
operations or requiring additional capital expenditures;
-- if we are unable to obtain and maintain permits needed to
open, operate, and/or expand our facilities, our results of
operations will be negatively impacted;
-- limitations or bans on disposal or transportation of
out-of-state, cross-border, or certain categories of waste, as
well as mandates on the disposal of waste, can increase our
expenses and reduce our revenue;
-- fuel price increases or fuel supply shortages may increase our
expenses or restrict our ability to operate;
-- increased costs to obtain financial assurance or the
inadequacy of our insurance coverages could negatively impact
our liquidity and increase our liabilities;
-- possible charges as a result of shut-down operations,
uncompleted development or expansion projects or other events
may negatively affect earnings;
-- fluctuating commodity prices may have negative effects on our
operating revenue and expenses;
-- trends toward recycling, waste reduction at the source and
prohibiting the disposal of certain types of wastes could have
negative effects on volumes of waste going to landfills and
waste-to-energy facilities;
-- efforts by labor unions to organize our employees may increase
operating expenses and we may be unable to negotiate
acceptable collective bargaining agreements with those who
have been chosen to be represented by unions, which could lead
to labor disruptions, including strikes and lock-outs, which
could adversely affect our results of operations and cash
flows;
-- negative outcomes of litigation or threatened litigation or
governmental proceedings may increase our costs, limit our
ability to conduct or expand our operations, or limit our
ability to execute our business plans and strategies;
-- problems with the operation of our current information
technology or the development and deployment of new
information systems could decrease our efficiencies, increase
our costs, or lead to an impairment charge;
-- the adoption of new accounting standards or interpretations
may cause fluctuations in reported quarterly results of
operations or adversely impact our reported results of
operations; and
-- we may reduce or eliminate our dividend or share repurchase
program or we may need to raise additional capital if cash
flows are less than we expect or capital expenditures or
acquisition spending are more than we expect, and we may not
be able to obtain any needed capital on acceptable terms.
Additional information regarding these and/or other factors that could materially affect results and the accuracy of the forward-looking statements contained herein may be found in Part I, Item 1 of the Company's Annual Report on Form 10-K for the year ended December 31, 2007.
Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarters Ended March 31,
-------------------------
2008 2007
------------ ------------
Operating revenues $ 3,266 $ 3,188
------------ ------------
Costs and expenses:
Operating 2,092 2,034
Selling, general and administrative 368 353
Depreciation and amortization 297 310
Restructuring - 9
(Income) expense from divestitures, asset
impairments and unusual items (2) 1
------------ ------------
2,755 2,707
------------ ------------
Income from operations 511 481
------------ ------------
Other income (expense):
Interest expense (122) (135)
Interest income 5 18
Equity in net losses of unconsolidated
entities (2) (24)
Minority interest (7) (10)
Other, net - 1
------------ ------------
(126) (150)
------------ ------------
Income before income taxes 385 331
Provision for income taxes 144 93
------------ ------------
Net income $ 241 $ 238
============ ============
Basic earnings per common share $ 0.49 $ 0.45
============ ============
Diluted earnings per common share $ 0.48 $ 0.45
============ ============
Basic common shares outstanding 496.0 529.4
============ ============
Diluted common shares outstanding 498.3 534.1
============ ============
Cash dividends declared per common share $ 0.27 $ 0.24
============ ============
Note: The quarter ended March 31, 2007 includes certain adjustments
required as a result of the Financial Accounting Standards Board
("FASB") finalizing and releasing FASB Staff Position ("FSP") No. FIN
48-1, Definition of Settlement in FASB Interpretation No. 48. This
FSP was released subsequent to the Company's Q1 2007 Press Release
and Form 10-Q filing, but was required to be retrospectively applied
to the date of the initial adoption of FIN 48.
Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
Quarters Ended March 31,
-------------------------
2008 2007
------------ ------------
EPS Calculation:
Net income $ 241 $ 238
============ ============
Number of common shares outstanding at end
of period 492.4 520.9
Effect of using weighted average common
shares outstanding 3.6 8.5
------------ ------------
Weighted average basic common shares
outstanding 496.0 529.4
Dilutive effect of equity-based
compensation awards, warrants, and other
contingently issuable shares 2.3 4.7
------------ ------------
Weighted average diluted common shares
outstanding 498.3 534.1
============ ============
Basic earnings per common share $ 0.49 $ 0.45
============ ============
Diluted earnings per common share $ 0.48 $ 0.45
============ ============
Waste Management, Inc.
Condensed Consolidated Balance Sheets
(In Millions)
March 31, December 31,
2008 2007
------------ ------------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $ 466 $ 348
Receivables, net 1,816 1,892
Other 283 240
------------ ------------
Total current assets 2,565 2,480
Property and equipment, net 11,297 11,351
Goodwill 5,411 5,406
Other intangible assets, net 125 124
Other assets 786 814
------------ ------------
Total assets $ 20,184 $ 20,175
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Accounts payable, accrued liabilities,
and deferred revenues $ 2,104 $ 2,269
Current portion of long-term debt 490 329
------------ ------------
Total current liabilities 2,594 2,598
Long-term debt, less current portion 8,229 8,008
Other liabilities 3,443 3,467
------------ ------------
Total liabilities 14,266 14,073
Minority interest in subsidiaries and
variable interest entities 307 310
Stockholders' equity 5,611 5,792
------------ ------------
Total liabilities and stockholders'
equity $ 20,184 $ 20,175
============ ============
Waste Management, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)
Quarters Ended March 31,
-------------------------
2008 2007
------------ ------------
Cash flows from operating activities:
Net income $ 241 $ 238
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 297 310
Other 29 13
Change in operating assets and
liabilities, net of effects of
acquisitions and divestitures (6) (23)
------------ ------------
Net cash provided by operating activities 561 538
------------ ------------
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired (69) (2)
Capital expenditures (213) (272)
Proceeds from divestitures of businesses
(net of cash divested) and other sales of
assets 14 69
Purchases of short-term investments - (525)
Proceeds from sales of short-term
investments - 663
Net receipts from restricted trust and
escrow accounts, and other 68 31
------------ ------------
Net cash used in investing activities (200) (36)
------------ ------------
Cash flows from financing activities:
New borrowings 803 134
Debt repayments (544) (242)
Common stock repurchases (281) (487)
Cash dividends (133) (126)
Exercise of common stock options and
warrants 10 34
Other, net (98) 42
------------ ------------
Net cash used in financing activities (243) (645)
------------ ------------
Effect of exchange rate changes on cash and
cash equivalents - -
------------ ------------
Increase (decrease) in cash and cash
equivalents 118 (143)
Cash and cash equivalents at beginning of
period 348 614
------------ ------------
Cash and cash equivalents at end of period $ 466 $ 471
============ ============
Note: The quarter ended March 31, 2007 includes certain adjustments
required as a result of the Financial Accounting Standards Board
("FASB") finalizing and releasing FASB Staff Position ("FSP") No. FIN
48-1, Definition of Settlement in FASB Interpretation No. 48. This
FSP was released subsequent to the Company's Q1 2007 Press Release
and Form 10-Q filing, but was required to be retrospectively applied
to the date of the initial adoption of FIN 48.
Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
Quarters Ended
----------------------------------
March 31, December 31, March 31,
2008 2007 2007
----------- ------------ ---------
Operating Revenues by Lines of
Business
------------------------------------
Collection $2,138 $2,190 $2,121
Landfill 685 747 720
Transfer 380 406 389
Wheelabrator 213 219 208
Recycling 320 307 258
Other 45 43 34
Intercompany (a) (515) (551) (542)
----------- ------------ ---------
Operating revenues $3,266 $3,361 $3,188
=========== ============ =========
Internal Growth of Operating
Revenues from Comparable Prior
Periods
------------------------------------
Internal growth 2.8% 3.3% 0.7%
Less: Yield changes due to
recycling commodities,
electricity (IPP), fuel surcharge
and mandated fees 3.5% 3.8% 2.2%
----------- ------------ ---------
Adjusted internal growth -0.7% -0.5% -1.5%
=========== ============ =========
Acquisition Summary (b)
------------------------------------
Gross annualized revenue acquired $ 71 $ 3 $ 2
=========== ============ =========
Total consideration $ 104 $ 2 $ 1
=========== ============ =========
Cash paid for acquisitions $ 70 $ 2 $ 1
=========== ============ =========
WMRA Segment Supplemental Data (c)
------------------------------------
Operating revenues $ 269 $ 254 $ 210
=========== ============ =========
Operating expenses $ 230 $ 216 $ 177
=========== ============ =========
Quarters Ended March 31,
------------------------
2008 2007
----------- ------------
Free Cash Flow Analysis (d)
------------------------------------
Net cash provided by operating
activities $ 561 $ 538
Capital expenditures (213) (272)
Proceeds from divestitures of
businesses (net of cash divested)
and other sales of assets 14 69
----------- ------------
Free cash flow $ 362 $ 335
=========== ============
(a) Intercompany revenues between lines of business are eliminated
within the Condensed Consolidated Financial Statements included
herein.
(b) Represents amounts associated with business acquisitions
consummated during the indicated periods.
(c) Information provided is after the elimination of intercompany
revenues and related expenses.
(d) 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.
Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
Quarters Ended
--------------------------------
March 31, December 31, March 31,
2008 2007 2007
--------- ------------ ---------
Balance Sheet Data
--------------------------------------
Cash, cash equivalents and short-term
investments available for use (a) $ 466 $ 348 $ 517
========= ============ =========
Debt-to-total capital ratio:
Long-term indebtedness, including
current portion $ 8,719 $ 8,337 $ 8,223
Total equity 5,611 5,792 5,885
--------- ------------ ---------
Total capital $14,330 $14,129 $14,108
========= ============ =========
Debt-to-total capital 60.8% 59.0% 58.3%
========= ============ =========
Capitalized interest $ 4 $ 6 $ 4
========= ============ =========
Other Operational Data
--------------------------------------
Internalization of waste, based on
disposal costs 67.7% 66.6% 66.2%
========= ============ =========
Total landfill disposal volumes (tons
in millions) 25.1 27.3 27.6
Total waste-to-energy disposal volumes
(tons in millions) 1.7 1.8 1.8
--------- ------------ ---------
Total disposal volumes (tons in
millions) 26.8 29.1 29.4
========= ============ =========
Active landfills 280 277 281
========= ============ =========
Landfills reporting volume 260 258 263
========= ============ =========
Amortization and SFAS No. 143 Expenses
for Landfills Included in Operating
Groups (b)
--------------------------------------
Non - SFAS No. 143 amortization
expense $ 86.1 $ 94.1 $ 90.7
Amortization expense related to SFAS
No. 143 obligations 7.7 1.1 13.8
--------- ------------ ---------
Total amortization expense (c)(d) 93.8 95.2 104.5
Accretion and other related expense 15.7 16.6 14.7
--------- ------------ ---------
Landfill amortization, accretion and
other related expense $ 109.5 $ 111.8 $ 119.2
========= ============ =========
(a) The quarters ended March 31, 2008, December 31, 2007, and March
31, 2007 include short-term investments available for use of $0
million, $0 million, and $46 million, respectively.
(b) Prior period amounts have been revised to exclude amounts from
closed landfills not included in our Operating groups.
(c) The quarter ended March 31, 2008, as compared with the quarter
ended December 31, 2007 reflects a $1.4 million reduction in
amortization expense, of which $10.2 million was due to the
seasonal reduction in landfill volumes. Additionally, there was
a sequential increase of $9.7 million due to rate changes
principally as a result of the SFAS No. 143 landfill capping
construction and closure/post closure obligations identified in
our annual landfill review process during the quarter ended
December 31, 2007.
(d) The quarter ended March 31, 2008, as compared with the quarter
ended March 31, 2007 reflects a decline in amortization expense
due primarily to a reduction in landfill volumes, as well as a
$4.6 million decline resulting principally from changes in our
estimates of capping costs. The decline in landfill volumes can
be attributed to the Company's collection pricing initiative, a
decline in residential construction activities and other
economic impacts.
Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions, Except Per Share Amounts)
(Unaudited)
Quarter Ended Quarter Ended
March 31, 2008 March 31, 2007
----------------- -----------------
After- Per After- Per
Adjusted Net income and Diluted tax Share tax Share
Earnings Per Share Amount Amount Amount Amount
-------- -------- -------- --------
Net income and Diluted EPS, as
reported $ 241 $ 0.48 $238 $ 0.45
Adjustments to Net income and
Diluted EPS:
Income tax audit settlements (6) (0.01) (16) (0.03)
Restructuring - - 6 0.01
-------- ------- ------- -------
Net income and Diluted EPS, as
adjusted (a) $ 235 $ 0.47 $228 $ 0.43
Additional adjustment:
Section 45K tax credit impact (1) - (12) (0.02)
-------- ------- ------- -------
Net income and Diluted EPS, as
further adjusted (b) $ 234 $ 0.47 $216 $ 0.41
======== ======= ======= =======
Full Year 2008 Free Cash Flow
Reconciliation
Net cash provided by
operating activities $ 2,750
Capital expenditures (1,500)
Proceeds from divestitures of
businesses (net of cash
divested) and other sales of
assets 150
--------
Free cash flow $ 1,400
========
(a) Increase in Diluted EPS, as adjusted, of 9.3%.
(b) Increase in Diluted EPS, as adjusted, of 14.6%.
Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions)
(Unaudited)
Impact of Rising Diesel Fuel Prices on Income from Quarter Ended
Operations as a percent of Revenues March 31, 2008
----------------------------------------------------- ---------------
Adjusted Income from Operations as a percent of
Revenues
As reported:
Operating revenues $3,266
Income from operations $ 511
Income from Operations as a percent of Revenues 15.6%
Adjustments for Fuel Impact:
Operating revenues (a) ($48)
Income from operations $ 8
As adjusted:
Operating revenues $3,218
Income from operations $ 519
Adjusted Income from Operations as a percent of
Revenues 16.1%
Impacts of Rising Diesel Fuel Prices and Higher
Recycling Commodity Prices on Operating Expenses as Quarter Ended
a percent of Revenues March 31, 2008
----------------------------------------------------- ---------------
Adjusted Operating Expenses as a percent of Revenues
As reported:
Operating revenues $3,266
Operating expenses $2,092
Operating Expenses as a percent of Revenues 64.1%
Adjustments to Operating Revenues:
Fuel surcharges (a) ($48)
Recycling commodity prices (b) ($71)
Adjustments to Operating Expenses:
Fuel (c) ($47)
Subcontractor costs - fuel pass-through (d) ($9)
Cost of goods sold due to recycling commodity
prices (e) ($53)
As adjusted:
Operating revenues $3,147
Operating expenses $1,983
Adjusted Operating Expenses as a percent of
Revenues 63.0%
(a) Increase in fuel surcharge revenue due to higher diesel fuel
prices. Excludes changes in fuel surcharge revenue caused by
volume fluctuations.
(b) Increase in revenues due to increase in recycling commodity
prices. Excludes changes in recycling commodity revenues caused
by volume fluctuations.
(c) Increase in fuel costs due to higher diesel fuel prices. Excludes
changes in fuel costs caused by volume fluctuations.
(d) Estimated impact of higher diesel fuel prices on fuel costs
passed-through by subcontractors. Excludes changes in
subcontractor costs caused by volume fluctuations.
(e) Increase in cost of goods sold due to increase in recycling
commodity prices. Excludes changes in cost of goods sold caused
by recycling commodity volume fluctuations.
CONTACT: Waste Management, Inc., Houston
Analysts: Greg Nikkel, 713-265-1358
or
Media: Lynn Brown, 713-394-5093
http://www.wm.com
SOURCE: Waste Management, Inc.