Waste Management, Inc. · NYSE:WM
Waste Management — Non-Deal Roadshow (September 2006)
25 slides from Waste Management's roadshow presentation, September 2006
Slide 1: Waste Management, Inc. Investor Meetings
Waste Management, Inc. Investor Meetings September 2006 1
Slide 2: Forward-Looking Statement
Forward-Looking 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,” “beli
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures This presentation contains (a) Income from Operations (EBIT) and Income from Operations as a Percentage of Revenue (EBIT Margin), as adjusted to exclude the impact of asset impairments and unusual items and restructuring charges, (b) free cash flow, and (c) Selling, Gener
Slide 4: North American Solid Waste Industry Overview - $46 Billion Market
North American Solid Waste Industry Overview - $46 Billion Market and Dynamics • Recession resistant business with economic growth opportunities – 3-4% average historical growth rate • Industry has emerged from its consolidation phase to an operational Privately excellence model Held Cos WMI 23% 27%
Slide 5: How the Waste is Handled
How the Waste is Handled Source: Chartwell Millions of Percent Percent Percent Tons (1) Recycled Incinerated Landfilled 1992 305 13% 10% 77% 1994 316 18% 10% 72% 1996 358 23% 9% 68% 1998 405 26% 8% 66% 2000 446 27% 8% 65% 2002 467 29% 7% 64% 2004 495 29% 7% 64% (1) Total U.S. tons including commerci
Slide 6: Landfill Capacity 1991 - 2003
Landfill Capacity 1991 - 2003 10,000 9,600 32 9,300 9,275 Years of Remaining Capacity 8,450 LF Capacity (millions Capacity MM Tons of tons) 7,725 8,000 28 7,425 6,500 Remaining Capacity (years) 25.8 25.6 6,000 24.6 24 23.6 22.6 21.3 20.3 4,000 20 1991 1993 1995 1997 1999 2001 2003 Source: Chartwell
Slide 7: Operating Strategies
Operating Strategies • Profitable Revenue Growth – Driven by disciplined approach to pricing – Significantly improved IRG from yield in 2005 and through 2Q 2006 • Cost Cutting through Operational Excellence – Continued focus on productivity, safety and maintenance • Improve our Operations through Di
Slide 8: EBIT Margin Trends
EBIT Margin Trends 15.8% 16.0% 14.7% 14.8% 14.1% 14.2% 14.2% 14.0% 14.0% 13.5% 12.0% 11.9% 12.0% 10.0% Q1 Q2 Q3 Q4 2004 2005 2006 Margin Expansion Gained Momentum last 4 quarters Note: Q3 2005 and Q2 2005 and Q2 2006 EBIT Margins are adjusted for Income/Expense and Restructuring and Asset Impairment
Slide 9: Income from Ops Growth
Income from Ops Growth $2,000 $1,806 Income from Ops* $1,685 $1,800 $1,576 $ Millions $1,600 $1,400 $1,200 2003 2004 2005 Income from operations thru 6/30/2006 is $1.0 billion Note: Income from Operations for the full years 2003-2005 are adjusted for Restructuring and Asset Impairments and Unusual I
Slide 10: Cash Flow Generation
Cash Flow Generation $2,391 Net Cash Provided by Operating Activities $2,400 $2,218 $ Millions $2,200 $1,926 $2,000 $1,800 Year 2003 2004 2005 WM has generated $1.12 billion in net cash from operations thru 6/30/2006 10
Slide 11: Revenue Growth
Revenue Growth Q2 2006 Accomplishments and Full-Year Objectives: • Third consecutive quarter of 3.9% yield in Q2 2006 – Including fuel surcharge, yield was 5.3% – Rolling out increased Environmental Cost Recovery Fee at 2% in Q1 & Q2 – 5% seasonal price increase on temporary roll-off line of busines
Slide 12: Internal Revenue Growth
Internal Revenue Growth 5.8% 6.0% 5.0% 3.9% 3.9% 3.9% 4.0% 3.3% 3.6% 2.7% 2.8% 3.0% 2.1% 2.0% 1.6% 1.6% 1.4% 1.4% 1.0% 1.1% 1.0% 0.0% 1.2% 1.9% -1.0% -0.3% -2.0% -1.1% -1.6% -3.0% 2Q 2005 3Q 2005 4Q 2005 1Q 2006 2Q 2006 Average Yield Volume Total Fuel Surcharge Note: Average Yield and Total exclude
Slide 13: Impact of Pricing Excellence on Collection IRG from Yield
Impact of Pricing Excellence on Collection IRG from Yield Pricing Excellence 2nd Yr of Began Roll-out of Price Opportunities Roll-off Roll-off Levers (Environmental impacting the IRG 5.0% Cost Recovery Fee, New Seasonal Seasonal Pricing Pricing Business Pricing, Price Begins Begins Increase Retentio
Slide 14: Operational Excellence
Operational Excellence Q2 2006 Accomplishments and Full-Year Objectives: • Year-over-year productivity improvement in all 3 collection lines of business during Q2 2006 • Another strong quarter for improved safety – Total Recordable Injury Rate (an OSHA measure) improved by 25% – We have produced 22
Slide 15: 2Q 2006 Operating Costs
2Q 2006 Operating Costs QTR 2 2006 vs. QTR 2 2005 2006 2005 Change Labor 18.4% 18.8% 0.4 Disposal 9.6% 10.2% 0.6 Maintenance & Repairs 8.4% 8.6% 0.2 Subcontractor 7.3% 7.0% (0.3) COGS 4.2% 5.1% 0.9 Fuel 4.6% 3.9% (0.7) Fees & Taxes 4.8% 5.1% 0.3 LF Operating Costs 1.8% 1.7% (0.1) Risk Management 2.2
Slide 16: 2Q 2006 Financial Highlights
2Q 2006 Financial Highlights 2Q 2005 2Q 2006 Revenues $3.29 billion $3.41 billion Increase over 2005 NA 3.7% Internal Revenue Growth Yield (base business) 2.1% 3.9% Volume 1.2% (1.1%) Fuel Surcharge 1.0% 1.4% Income From Operations $463 million $565 million Net cash provided by ops $595 million $557
Slide 17: Cash Returned to Shareholders
Cash Returned to Shareholders Quarterly dividend payment began in 2004 $ in Millions $1,200 $1,155 $1,000 $928 $449 $800 $432 $600 $556 $6 (dividends) $400 $706 $550 $496 $200 $0 2003 2004 2005 Share Repurchase Dividends YTD 2006: $867 million returned to shareholders BOD has authorized up to $1.55
Slide 18: SG&A Costs as a % of Revenue
SG&A Costs as a % of Revenue 12.5% 11.8% 11.5% 10.9% 10.8% 10.8% 10.5% 10.3% 10.1% 9.9% 9.9% 9.9% 9.7% 9.6% 9.5%9.6% 9.5% 9.2% 8.5% 1st Qtr 2nd Qtr 3rd Qtr 4th Qtr 2003 2004 2005 2006 Note: Q1 2006 SG&A costs as a percent of revenue is adjusted for the unclaimed property charge. See slide 24 for the
Slide 19: Questions and Answers
Think Green. Think Waste Management.
Slide 20: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures Quarter Ended Adjusted Income from Operations as a 9/30/2005 percent of Revenue (EBIT Margin) As reported: Operating revenues $3,375 Income from operations $382 Income from Operations as a percent of Revenue 11.3% Adjustments to Income from Operations: Ass
Slide 21: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures Quarters Ended Adjusted Income from Operations as a June 30, percent of Revenue (EBIT Margin) 2006 2005 As reported: Operating revenues $ 3,410 $ 3,289 Income from operations $ 565 $ 463 Income from Operations as a percent of Revenue 16.6% 14.1% Adjustment
Slide 22: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures Year Ended Year Ended Year Ended Adjusted Income from Operations December 31, December 31, December 31, 2003 2004 2005 As reported: Income from operations $1,540 $1,699 $1,710 Adjustments to Income from Operations: Restructuring $44 ($1) $28 Asset impairme
Slide 23: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures Waste Management, Inc. Summary Data Sheet (Dollar Amounts in Millions) (Unaudited) Quarters Ended June 30, 2006 2005 Free Cash Flow Analysis Net cash provided by operating activities $557 $595 Capital expenditures (296) (308) Proceeds from divestitures of
Slide 24: Reconciliation of Certain Non-GAAP Measures
Reconciliation of Certain Non-GAAP Measures Waste Management, Inc. Summary Data Sheet (Dollar Amounts in Millions) (Unaudited) Quarter Ended March 31, 2006 SG&A Costs as a percent of revenue SG&A costs as reported $368 Operating Revenues $3,229 SG&A costs as reported as a percent of revenue 11.4% SG
Slide 25: Waste Management, Inc. Investor Meetings
Waste Management, Inc. Investor Meetings September 2006 25
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