Dive Brief:
- Houston, TX-based Waste Management has reported its 2015 fourth quarter and annual earnings. Full-year revenues were $13 billion, down from $14 billion in 2014. In the fourth quarter, revenues were $3.25 billion versus $3.44 billion for the same period in 2014, while net income was $273 million versus $590 million for the same period in 2014.
- While overall revenue declined — attributed to reductions in divestitures, fuel surcharge revenues and recycling revenues, and fluctuations in foreign currency — the company had a positive outcome in two areas: internal revenue growth in traditional solid waste business and acquisitions, as well as improved operating expenses both in fourth quarter of 2015 (by $143 million) and for the full year (by $771 million).
- Waste Management President and CEO David Steiner was confident that some strategies executed in 2015 will put the company on solid ground for the future, commenting, "In 2015 [we] saw the execution of pricing, productivity, and growth strategies in a way that will lead to continued growth in 2016 and beyond."
Dive Insight:
A billion dollar revenue hit — largely due to recycling and how energy prices have affected the industry — is not a small loss for Waste Management. However Steiner has expressed that other areas of the business will continue to do well through this year, hopefully making up for substantial losses.
"...Growth is fairly muted from the economy. But you can pretty much say, the business is firing on all cylinders save two areas, and that's recycling and energy services," said Steiner in the earnings call. "I think we all know what the macroenvironments are for that. I mean, it's low commodity prices, not just oil but cardboard and plastics ... It's steady-as-she-goes. We continue to see the other lines of business doing very well and we don't expect that to end in 2016."
Steiner also commented on potential opportunities that may rise from the pending Waste Connections and Progressive Waste merger, stating Waste Management would consider taking advantage of tuck-ins in markets where Waste Connections may be forced to let go of assets due to its expansion.
"They are a tough competitor but they are a fair competitor, and so we certainly welcome them into the markets," he said in the earnings call.
