Waste Management Inc. (WM), Houston, has announced financial results for Q4 2017. Revenues for Q4 2017 were $3.65 billion, compared with $3.46 billion for the same 2016 period. Net income for the quarter was $903 million, or $2.06 per diluted share, compared with net income of $335 million, or 75 cents per diluted share, for Q4 2016. On an as-adjusted basis, earnings per diluted share were 85 cents for Q4 2017, compared with 75 cents in Q4 2016.
The results have been adjusted to exclude a net benefit of $1.21 per diluted share related to the impact of the Tax Cuts and Jobs Act.
For the full year 2017, the company reported revenues of $14.5 billion, compared with $13.6 billion for 2016. Earnings per diluted share were $4.41 for the full year 2017 compared with $2.65 for 2016. On an as-adjusted basis, earnings per diluted share were $3.22 for the full year 2017 versus $2.91 for 2016.
“The strong results that we saw through the first nine months of 2017 continued into the fourth quarter as we saw organic revenue growth continue to translate into operating EBITDA (earnings before interest, taxes, depreciation and amortization) growth,” Jim Fish, President and CEO of WM, says. “In the fourth quarter, we achieved double-digit growth in income from operations, operating EBITDA, and adjusted earnings per diluted share, and nearly 10 percent growth in both adjusted income from operations and operating EBITDA.
“Looking at the full year, 2017 was exceptional for Waste Management as our continued focus on improving core price, adding profitable volume in a disciplined manner and controlling costs led to arguably the best year in the company’s history. Our employees did a great job of executing our strategy, and we exceeded our expectations for all financial and operational metrics leading to record cash provided by operations and adjusted earnings per diluted share.”
Overall revenue increased by 5.5 percent, or $192 million, from the same period in the prior year. The revenue growth was driven by yield and volume growth in the company’s collection and disposal business, which contributed $172 million of the increase. For the full year 2017, overall revenue increased by 6.4 percent, or $876 million. Yield and volume growth in the company’s collection and disposal business increased revenue by $536 million. Though revenue from the company’s recycling yield and volume declined by $25 million on a year-over-year basis in Q4 2017, full-year recycling yield and volume contributed $231 million of revenue growth.
Core price, which consists of price increases net of rollbacks and fees, excluding the company’s fuel surcharge, was 4.8 percent, compared to 5.1 percent in Q4 2016 and 4.7 percent in Q3 2017. For the full year, core price was 4.8 percent, compared to 5 percent in 2016.
Internal revenue growth from yield for collection and disposal operations was 2.2 percent for Q4 and 2 percent for the full year.
Traditional solid waste internal revenue growth from volume was 4.2 percent in Q4 2017. Total company internal revenue growth from volume, which recycling and other ancillary businesses, was 2.6 percent in Q4. For the full year 2017, traditional solid waste internal revenue growth from volume was 2.7 percent. Total company volume was 2.1 percent for the full year 2017
Average recycling commodity prices at the company’s recycling facilities were approximately 8.1 percent lower in Q4 2017 compared with the prior year period. Recycling volumes declined 4.8 percent in Q4. Results in the company’s recycling line of business declined by 3 cents per diluted share when compared to Q4 2016. For the full year, average recycling commodity prices at the company’s recycling facilities were approximately 27 percent higher and volumes decreased 0.5 percent. The revenue increase, combined with reduced operating costs at the company’s recycling facilities, drove an almost 9 cent increase in the company’s earnings per diluted share for the full year.
Operating expenses as a percentage of revenue in the company’s traditional solid waste business improved about 120 basis points during Q4 and 85 basis points for the full year. As a percent of revenue, total company operating expenses were 62 percent in Q4 2017 as compared to 62.1 percent in Q4 2016. For the full year, as a percent of revenue, operating expenses were 62.3 percent in 2017, as compared to 62.4 percent for the full year 2016.
As a percent of revenue, selling, general and administrative (SG&A) expenses were 10.1 percent in Q4 2017 compared to 10.9 percent in Q4 2016. For the full year, as a percent of revenue, SG&A expenses were 10.1 percent compared to 10.4 percent in 2016.
Operating EBITDA for the fourth quarter of 2017 was $1.05 billion, or $1.02 billion on an as-adjusted basis, an increase of $90 million, or 9.7 percent, from Q4 2016. Full-year operating EBITDA was $4.01 billion, or $4 billion on an as-adjusted basis, an increase of 8.1 percent.
Net cash provided by operating activities was $790 million in Q4 and $3.18 billion for the full year. Operating cash flow increased by $36 million, or 4.8 percent, for Q4 and $174 million, or 5.8 percent, for the full year as a result of strong operating income growth and working capital improvements offset in part by a $120 million increase in cash taxes paid.
Capital expenditures were $528 million in Q4, a $151 million increase from the Q4 2016, and $1.51 billion for the full year, a $170 million increase from 2016. Free cash flow was $342 million in Q4 2017 compared to $388 million in Q4 2016. Free cash flow for the full year was $1.77 billion compared to $1.71 billion in 2016.
The company paid dividends of $184 million to shareholders in Q4. For the full year, the company returned $1.5 billion to shareholders through $750 million in dividends and $750 million in share repurchases. The Company spent $200 million on tuck-in acquisitions of traditional solid waste businesses during 2017, $120 million of which was spent in Q4.