Waste Management, Inc. · NYSE:WM
Waste Management — Raymond James European Investors North American Equities Conference 2009
42 slides from Waste Management's conference presentation, Sep 9, 2009
Slide 1: Raymond James European Investors North American Equities Conference
Waste Management, Inc. Raymond James European Investors North American Equities Conference September 9, 2009
Slide 2: Cautionary Statement
Certain statements provided in this presentation are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. When we use words like "may," "should," "could," "will," "likely," "believe," "expect," "anticipat
Slide 3: Non-GAAP Financial Measures
This presentation contains non-GAAP financial measures under Regulation G of the Securities Exchange Act of 1934, as amended. The Company believes that providing investors with these non-GAAP financial measures gives investors additional information to enable them to assess, in the way management as
Slide 4: Industry Overview
Industry Overview Waste Business Journal estimates that the North American waste industry generates $56 billion in annual revenue WMI accounts for about 24% of the market on that basis; two largest companies account for 41% and all publicly traded companies approximately 60% Industry characteristics
Slide 5: Waste Management's Footprint
Waste Management's Footprint 2008 annual revenues of $13.4 billion Waste Management ranked 201 on the April 2009 Fortune 500 list $20.2 billion in total assets and $5.9 billion in stockholders' equity We serve nearly 20 million customers and employ approximately 45,000 people Waste Management has th
Slide 6: Mix of Business
Residential Commercial Roll-Off East 31 40 29 Mix of Business Collection Landfill Transfer Waste-to-energy Recycling & Other East 55 19 10 5 11 Collection 56% Landfill 19% Transfer 10% Waste-to- Energy 6% Recycling & Other 9% Residential 32% Roll-off 28% Commercial 40% Approximate Collection Mix Bas
Slide 7: 2009 Operating Strategies
2009 Operating Strategies Profitable Revenue Growth Driven primarily by disciplined approach to pricing Sales programs organizing around a few key customer segments Cost Cutting through Operational Excellence Continued focus on productivity, safety and maintenance Use of Free Cash Flow $570 million
Slide 8: Management Incentive Programs
Management Incentive Programs Annual Incentive Plan 2009 Annual Incentive Plan rewards all employees on the same Company-wide measures 35% Income from operations (EBIT) margin 35% Income from operations before depreciation and amortization (EBITDA) dollars 30% Individual Performance (goals set at in
Slide 9: Environmental Leadership
Environmental Leadership WM Recycle America Largest U.S. recycler, over 7 million tons per year marketed Leader in landfill gas beneficial use Supply about 500 megawatts of electricity, or enough to power approximately 400,000 homes One of the largest fleets of LNG/CNG powered trucks in North Americ
Slide 10: Pricing Discipline
Pricing Discipline WASTE MANAGEMENT
Slide 11: Profitable Revenue Growth
Profitable Revenue Growth We focus on a disciplined price management process The Pricing Excellence programs drive significant return through disciplined price increase activities and service fee execution Maintaining price leadership is paramount Service fee capture; environmental fee increased to
Slide 12: Success of Collection Pricing Excellence
Success of Collection Pricing Excellence 1Q 08 2Q 08 3Q 08 4Q 08 1Q 09 2Q 09 Collection Internal Revenue Growth from Yield 0.048 0.042 0.037 0.034 0.038 0.041 Note: Collection yield excludes impact of fuel surcharge
Slide 13: Recycling Update
Recycling Update WASTE MANAGEMENT
Slide 14: Recycling Update
Recycling Update Market Update June commodity prices were up 41% on average compared to January 2009 Export to China and lower generation of material supported prices Our Response to Market Changes New contracts will have minimum processing fees for inbound material No floor pricing to the supplier
Slide 15: Historical Pricing ONP and OCC
5 Year Historical Pricing ONP and OCC Note: Average published index pricing from the Official Board Market (excludes export pricing) ONP is Old News Paper and OCC is Old Corrugated Cardboard
Slide 16: Growth Opportunities
Growth Opportunities
Slide 17: Growth Potential of Renewable Energy from Waste
Growth Potential of Renewable Energy from Waste Through our Wheelabrator subsidiary, Waste Management is the second largest player in the U.S. Waste-to-Energy market The waste-to-energy business is generally recession-resistant, has high growth and good returns. There is renewed interest in waste-to
Slide 18: Growth Potential of Renewable Energy from Waste: Landfill Gas
Growth Potential of Renewable Energy from Waste Waste Management is the leading developer and operator of landfill gas to energy projects Landfill gas is a natural byproduct of decomposing waste, providing us with a renewable energy resource related to our core business. The business is generally re
Slide 19: Operating Cost Leverage
Operating Cost Leverage
Slide 20: Operational Excellence
Operational Excellence Continue Productivity, Maintenance and Safety Improvements Improve operating costs per hour by increasing productivity and flexing down costs as volumes decline Maximize routing efficiencies and asset utilization through use of standard tools, applications and processes Improv
Slide 21: 2Q 2009 Operating Costs
2Q 2009 Operating Costs (Compared to Prior Year) Operating costs declined over 18% compared to the prior year period
Slide 22: Safety: Total Recordable Injury Rate
Safety: Total Recordable Injury Rate (TRIR) 2000 - Q2 2009 Improvement of 87% Q2 2009 TRIR 2.8
Slide 23: Driver Hour Trend
Driver Hour Trend Driver Hours per Workday
Slide 24: Restructuring
Restructuring In February 2009, we announced a restructuring as part of our continuing efforts to improve efficiencies Streamlined our field operations through consolidation by reducing from 45 Market Areas to 25 Areas Additionally, we realigned our corporate staff to more efficiently support the ne
Slide 25: Financial Review
Financial Review
Slide 26: 2009 Guidance
2009 Guidance Free Cash Flow (a) ~$1.3 billion Capital expenditures ~$1.0 to $1.1 billion Capital allocation program Up to $1.3 billion Share repurchase program Up to $400 million in 2nd half 2009 $1.16 per share dividend annually ~$570 million (BOD authorized 2009 capital allocation program of up t
Slide 27: 2009 Guidance Continued
2009 Guidance Continued On July 30, we stated that we expected to see a year-over-year earnings decrease of approximately $0.04 in the second half of 2009 due to continued weakness in energy prices at certain of our Wheelabrator plants. Natural gas prices have since decreased over 25%, further negat
Slide 28: 2Q 2009 Financial Overview
2Q 2009 Financial Overview Net income per diluted share, as adjusted, was $0.52, compared with $0.63 per diluted share in the second quarter of 2008 (a) Negative impacts in the second quarter of 2009 $0.07 from our recycling operations (primarily commodity prices) $0.03 from lower energy sales price
Slide 29: Analysis of the Change in Revenue 2Q 2008 to 2Q 2009
Analysis of the Change in Revenue 2Q 2008 to 2Q 2009 Note 1: Includes volume related decline of $20 million
Slide 30: EBIT Margin Trends
Q1 Q2 Q3 Q4 2004 0.119 0.141 0.142 0.14 2005 0.117 0.142 0.153 0.151 2006 0.141 0.158 0.168 0.154 2007 0.154 0.179 0.174 0.169 2008 0.156 0.181 0.18 0.165 2009 0.163 0.186 Note: See slides 38 through 41 for the reconciliation of this non-GAAP financial measure to its corresponding GAAP financial mea
Slide 31: Return on Invested Capital
Return on Invested Capital* Year *See slides 34 and 35 for the calculation of ROIC, which is a measure used by the Company for executive compensation purposes.
Slide 32: Cash Dividends Paid Per Share Annually
Year 2004 0.75 2005 0.8 2006 0.88 2007 0.96 2008 1.08 Cash Dividends Paid Per Share Annually
Slide 33: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures
Slide 34: ROIC as Adjusted
Reconciliation of Certain Non-GAAP Measures ROIC as Adjusted* *We define ROIC as Net Operating Profit after Taxes divided by Invested Capital. See slide 35 for additional explanation
Slide 35: ROIC as Adjusted Continued
Reconciliation of Certain Non-GAAP Measures ROIC as Adjusted Continued Management discloses the Company's Return on Invested Capital because it believes that ROIC is a measure of how effectively we allocate capital in our operations. ROIC also is used as one of the measures for our executives' long-
Slide 36: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures ($ in Millions Un-audited) (a) 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 prin
Slide 37: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures ($ in Millions Un-audited, except per share amounts)
Slide 38: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures ($ in Millions Un-audited)
Slide 39: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures ($ in Millions Un-audited)
Slide 40: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures ($ in Millions Un-audited)
Slide 41: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures ($ in Millions Un-audited)
Slide 42: Raymond James European Investors North American Equities Conference
Waste Management, Inc. Raymond James European Investors North American Equities Conference September 9, 2009
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