APRIL 2009

Waste Management reorganizes to save millions

Waste Management, Inc. announced financial results for its fourth quarter and for the year ended December 31, 2008. Revenues for the fourth quarter of 2008 were $3.11 billion compared with $3.36 billion for the same 2007 period. Net income for the quarter was $218 million, or $0.44 per diluted share, compared with $309 million, or $0.61 per diluted share, for the fourth quarter of 2007.

For the full year 2008, the Company reported revenues of $13.39 billion compared with $13.31 billion for 2007. Earnings per diluted share were $2.19 for the full year 2008 compared with $2.23 for the full year 2007.

“The fourth quarter was a challenge on a number of fronts, and I am pleased with the way we have reacted to the tough economic circumstances. Despite the challenges, our adjusted earnings per share for the quarter beat consensus, we met our full year expectations for earnings per share, we increased our adjusted margins, and we generated strong free cash flow,” stated David P. Steiner, chief executive officer of Waste Management.

Waste Management returned $132 million to shareholders through dividend payments in the quarter. For the full year, they returned $941 million to shareholders, consisting of $410 million of common stock repurchases and dividends of $531 million.

Steiner added, “The majority of our business, which relates to commercial and residential customers, is recession resistant, and the fourth quarter reflected that. Internal revenue growth from volume in those lines was consistent across all quarters of 2008. But the sharp decline in economic activity in the fourth quarter did cause further volume declines in our more economically sensitive industrial collection, transfer and recycling businesses.

“Recycling commodity revenues were affected by both steep price declines and greatly reduced volumes as a result of the lack of demand for these commodities. We expect volumes in these economically sensitive lines of business to remain soft in 2009. So, we will redouble our focus on pricing discipline and driving continued efficiency throughout our organization.

These targets must be met in order for eligible employees to receive the financial performance portion of their 2009 annual bonuses. This will help to ensure that we maintain our focus on our pricing programs in 2009.”

The Company announced a reorganization that will cost approximately $50 million to implement, but will result in annualized savings in excess of $100 million. Some of their plans to save follows:

  • The restructuring of field operations through consolidation, reducing market areas from 45 to 25 and eliminating duplicative functions;
  • The realignment of corporate staff to more efficiently support field operations;
  • The elimination of calendar year 2009 merit-based salary increases for salaried exempt personnel, unless we see a turnaround in the economy and our business; and
  • Delaying until June 30, 2009 our merit-based pay process for hourly personnel.