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Waste Management Inc. Reports Operating Results (10-Q)

July 26, 2012 | About:
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10qk

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Waste Management Inc. (WM) filed Quarterly Report for the period ended 2012-06-30.

Waste Management, Inc. has a market cap of $15.25 billion; its shares were traded at around $33.12 with a P/E ratio of 15.3 and P/S ratio of 1.1. The dividend yield of Waste Management, Inc. stocks is 4.3%. Waste Management, Inc. had an annual average earning growth of 4.7% over the past 10 years. GuruFocus rated Waste Management, Inc. the business predictability rank of 2.5-star.

Highlight of Business Operations:

Our revenues increased $112 million, or 3.3%, for the three months ended June 30, 2012 as compared with the prior year period and $304 million, or 4.7%, for the six months ended June 30, 2012 as compared with the prior year period. During the three- and six-month periods, our current period revenue growth has been driven by (i) acquisitions, particularly the acquisition of Oakleaf, which increased consolidated revenues $139 million and $270 million for the three and six months ended June 30, 2012, respectively, (ii) increased volume and (iii) increased revenue growth from our collection and disposal average yield. Offsetting these revenue increases were market factors, including lower recyclable commodity prices; lower electricity prices, which correlate with natural gas prices and cause fluctuations in the rates we receive for electricity under our power purchase contracts and merchant transactions; and foreign currency translation, which affects revenues from our Canadian operations.

Revenues from our environmental fee, which are included in average revenue growth from yield on collection and disposal, increased $16 million and $32 million for the three and six months ended June 30, 2012, respectively. These revenues were $86 million and $167 million for the three and six months ended June 30, 2012 as compared with $70 million and $135 million for the three and six months ended June 30, 2011, respectively.

Our operating expenses increased by $120 million, or 5.6%, and $291 million, or 7.0% for the three and six months ended June 30, 2012 as compared with the three and six months ended June 30, 2011. Our operating expenses as a percentage of revenues increased from 63.9% in the second quarter of 2011 to 65.3% in the current quarter, and increased from 64.1% for the six months ended June 30, 2011 to 65.5% for the six months ended June 30, 2012. The increase in our operating expenses during the three and six months ended June 30, 2012 can largely be attributed to the following:

Our selling, general and administrative expenses decreased by $8 million, or 2.1%, and increased $17 million, or 2.2%, when comparing the three and six months ended June 30, 2012 with the comparable prior year periods. As a percentage of revenue, our selling, general and administrative expenses decreased from 11.4% for the second quarter of 2011 to 10.8% for the second quarter of 2012, and decreased from 11.8% for the six months ended June 30, 2011 to 11.6% for the six months ended June 30, 2012.

The most significant items affecting the year-over-year comparison of selling, general and administrative costs for the three and six months ended June 30, 2012 include (i) our acquisition of Oakleaf, which increased costs by $16 million and $31 million, respectively; (ii) increased costs incurred to support our sales and marketing initiatives, which include expenses associated with our customer-focused growth initiative through segmentation, of $2 million and $10 million, respectively; (iii) a decrease in bonus expense and non-cash compensation expenses attributable to our long-term incentive plan, or LTIP; and (iv) additional costs, principally labor-related, associated with our efforts to implement our cost savings programs focusing on procurement, operational and back-office efficiency of $5 million and $9 million, respectively. However, the additional costs incurred in 2012 related to our cost savings programs were more than offset by a decrease in consulting costs of $11 million and $21 million for the three- and six-month periods ended June 30, 2012, respectively. We incurred higher consulting costs in 2011 during the start-up phase of these programs. We have received associated benefits of these cost savings programs throughout the first half of 2012 and expect the benefits to continue throughout the remainder of the year.

Read the The complete Report

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