Waste Management (WM), Houston, has announced financial results for its quarter ended June 30, 2017. Revenues for the second quarter of 2017 were $3.68 billion compared with $3.43 billion for the same 2016 period. Net income for the quarter was $362 million, or $0.81 per diluted share, compared with net income of $287 million, or $0.64 per diluted share, for the second quarter of 2016. On an as-adjusted basis, excluding certain items, net income was $329 million, or $0.74 per diluted share, in the second quarter of 2016.
“We are hitting on all cylinders right now with the cash generating strength of our business shining brightly in 2017. We achieved the highest quarterly operating EBITDA (earnings before interest, taxes, depreciation and amortization) in our history, with operating EBITDA growing about 8 percent in the second quarter when compared to the second quarter of 2016,” Jim Fish, president and COE of Waste Management, says. “Our strong operational performance led to record free cash flow generation in the first half of 2017. Together, our strong core price results, robust volume growth and continued cost improvement focus led to earnings per diluted share growth of almost 10 percent.”
“Based upon our strong start to 2017, we are on track to meet the upper end of our full-year 2017 guidance of adjusted earnings per diluted share of between $3.14 and $3.18 and free cash flow of between $1.5 and $1.6 billion,” Fish continues. “In the third quarter, we expect to enter agreements to repurchase $500 million of the company’s common stock. We’re proud of the performance our employees have delivered and confident that will continue. Accordingly, we expect our earnings will continue to grow throughout the remainder of 2017, which in turn will continue to drive robust cash flow to be deployed for the benefit of our business and shareholders.”
The company’s projected full-year 2017 earnings per diluted share is not based on generally accepted accounting principles (GAAP) net earnings per diluted share and are anticipated to be adjusted to exclude the effects of events or circumstances in 2017 that are not representative or indicative of the company’s results of operations, including the items excluded from its as-adjusted first quarter results. Projected GAAP earnings per diluted share for the full year would require inclusion of the projected impact of future excluded items, including items that are not currently determinable, but may be significant, such as asset impairments and one-time items, charges, gains or losses from divestitures or litigation or other items. Due to the uncertainty of the likelihood, amount and timing of any such items, the company does not have information available to provide a quantitative reconciliation of adjusted projected full year earnings per diluted share to a GAAP earnings per diluted share projection.
The company also discusses free cash flow and provides a projection of free cash flow. Free cash flow is a non-GAAP measure. WM believes that free cash flow is indicative of its ability to pay its quarterly dividends, repurchase common stock, fund acquisitions and other investments and, in the absence of refinancings, repay its debt obligations. Free cash flow is not intended to replace net cash provided by operating activities, which is the most comparable U.S. GAAP measure. However, the company believes free cash flow gives investors useful insight into how the company views its liquidity. The use of free cash flow as a liquidity measure has material limitations because it excludes certain expenditures that are required or that the company has committed to, such as declared dividend payments and debt service requirements. The company defines free cash flow as net cash provided by operating activities, less capital expenditures, plus proceeds from divestitures of businesses and other assets (net of cash divested); this definition may not be comparable to similarly titled measures reported by other companies.
Management defines operating EBITDA as GAAP income from operations before depreciation and amortization; this measure may not be comparable to similarly titled measures reported by other companies.
Core price is a performance metric used by management to evaluate the effectiveness of the company’s pricing strategies; it is not derived from the company’s financial statements and may not be comparable to measures presented by other companies. Core price is based on certain historical assumptions, which differs from actual results, to allow for comparability between reporting periods and to reveal trends in results over time.