Waste Management, Inc. · NYSE:WM
Waste Management — Investor Day (March 2010)
18 slides from Waste Management's investor day presentation, Mar 4, 2010
Slide 1: Financial Performance and Outlook
Financial Performance and Outlook Bob Simpson Senior Vice President and Chief Financial Officer
Slide 2: Cost Structure by Line of Business
Cost Structure by Line of Business Fixed And Variable Costs On Incremental Volume Changes Definition of terms used: • Fixed Costs – Those costs that remain constant, regardless of a change in volume • Variable Costs – Directly Variable Costs– Those costs that change automatically with volume changes
Slide 3: Cost Structure by Line of Business
Cost Structure by Line of Business Variable cost categories: Collection Variable Costs as a % of Total Business Line Operating Costs • Wages Indirectly • Fuel 67% Total Variable 63% Total • Parts Landfill 28% 7% Directly • OT Wages 32% Total Variable • Fuel 39% 56% 12% 20% Collection Landfill Includ
Slide 4: Margin Leverage with Volume Changes
Margin Leverage with Volume Changes Collection and Landfill Weighted Average Incremental Income from Operations Margin by Line of Business Total collection and landfill assumes an equivalent volume change in both the collection and landfill lines of business % of Collection Business Line % Increment
Slide 5: WM Renewable Energy Supplemental Data – Income Statement
WM Renewable Energy Supplemental Data – Income Statement Year to Date December 31, 2009 ($ in 000's) Landfill Gas to Growth Wheelabrator Energy Opportunities Total % Rev Total External Operating Revenue 718,462 89,427 ‐ 807,889 86.8% Total Intercompany Operating Revenue 122,932 ‐ ‐ 122,932 13.2% Tot
Slide 6: How We Measure Ourselves
How We Measure Ourselves • Improving margins in each of our businesses – Improving margins is a requirement in our Annual Incentive Plan targets • Focus on returns – In 2005 we made returns our key long-term focus, changing our Long Term Incentive plan accordingly – Return on Invested Capital is the
Slide 7: Return Comparisons
Return Comparisons* * Return on equity and return on assets. See slides 6 and 7 in the accompanying file named 10 – WM Investor Day – Non-GAAP Reconciliation for the calculation of this non-GAAP financial measure
Slide 8: Return Comparisons
Return Comparisons* * Return on invested capital. See slide 5 in the accompanying file named 10 – WM Investor Day – Non-GAAP Reconciliation for the calculation of this non-GAAP financial measure
Slide 9: New Project Return Criteria
New Project Return Criteria Minimum Internal Rate of Return by Business Type • Collection and Landfill 12% • Recycling 15% • Waste-to-Energy 11% • Organic Growth 17% Note: Return requirements are adjusted based on the risk profile of the investment
Slide 10: Financial Strategies
Financial Strategies • Maintain our investment grade ratings – EBIT to Interest ratio was 4.3 to 1 at December 31, 2009 – Debt to EBITDA ratio was 2.86 to 1 at December 31, 2009 • Maintain debt/total capitalization ratio of approximately 60% – Ratio at December 31, 2009 was 57.4% • Maintain strong l
Slide 11: 2010 Guidance
2010 Guidance • Earnings per diluted share of between $2.09 and $2.13 • A benefit from recycling commodity prices of between $0.04 and $0.08 per diluted share • No net impact from electricity sales prices • We expect revenue and expense headwinds for 1Q 2010 from the severe winter weather, but the a
Slide 12: 2010 Guidance
2010 Guidance Expenses • Resumption of merit increases for exempt employees will add approximately $40 million of costs • Increased information technology expenses of $35 million to upgrade outdated information technology equipment and applications • Additional interest expense of $65 million becaus
Slide 13: 2010 Guidance
2010 Guidance • Internal revenue growth from yield of between 2.5% to 3.0% and from volume of between -1% and -3%; 1Q 2010 expected to be below this range • Capital expenditures of approximately $1.2 billion • Free cash flow in the range of $1.2 billion to $1.3 billion
Slide 14: 2010 Growth Capital
2010 Growth Capital • $135 million in core solid waste • $86 million in renewable energy methane gas plants • $76 million in recycling single stream • $23 million in organic growth initiatives • $20 million in healthcare solutions
Slide 15: 2010 Investments and Acquisitions
2010 Investments and Acquisitions • $150 million to purchase a waste-to-energy plant in Virginia from the Southeastern Public Service Authority • $150 million to purchase a 40% interest in Shanghai Environment Group, a company dedicated to developing waste-to-energy facilities in China • $250 millio
Slide 16: 2010 Capital Allocation
2010 Capital Allocation Common Stock Repurchases Dividends Up to $685 million $615 million* * Expected annual payment of $1.26 per share in cash dividends over the course of the year. Each dividend must be separately declared by the Board of Directors
Slide 17: 5 Year Growth Targets
5 Year Growth Targets • We assume that over the next 5 years the economy will steadily but slowly improve • Compounded annual revenue growth rate of between 3% and 5% driven by price and volume. Additional revenue growth from acquisitions, spending on average between $200 million and $300 million ea
Slide 18: WM Investor Day Non-GAAP Reconciliations
WM Investor Day Non-GAPP Reconciliations.pdf