Waste Management's (WM) core operating and cost-cut initiatives, along with shareholder-friendly measures are aiding growth. However, its high debt levels are worrisome.

Q1 2020 Waste Management Inc Earnings Call

(Bloomberg Opinion) -- If you want to know someone’s secrets, look at their trash. That’s true for their whereabouts, too. For most people during the coronavirus pandemic, that’s been at home. And the recent batch of results from the biggest U.S. garbage haulers shows how more people sheltering in place has taken a toll on their businesses.Republic Services Inc. and Waste Management Inc. both noted steep volume declines in late March and April on the commercial side of their business when they reported first-quarter results this week. With many restaurants, gas stations and strip malls seeing virtually no business and office buildings depleted of their garbage-producing employees, customers are seeking to pause their trash service or reduce the frequency of pickups. Waste Management also cited a downturn in industrial volumes.These are the most profitable customers for trash haulers so the loss of business is having an outsize effect on margins. At Republic, overall decremental margins — a measure of earnings power that looks at how much profit is lost for each dollar of sales (a lower number is better) — trended at around 40% in April. That’s steep for a company that’s considered relatively resilient in downturns. The pandemic shaved about 40 basis points off of Waste Management's Ebitda margin in the first quarter.The trash is piling up at household curbsides, however. But if you’re wondering whether all those extra bags of trash and recycling you are producing at home under lockdown are providing much of an offset to the commercial slump, they aren’t. While commercial contracts tend to have some flexibility when it comes to volumes — and the trash haulers are incentivized to make allowances on this once-in-a-lifetime event to protect long-term relationships — the majority of residential trash pickup is based on a fixed contract, says Jefferies analyst Hamzah Mazari. Your city usually negotiates with companies for a certain level of service, say two times a week, and then the cost stays the same even if you lugged 10 bags of trash to the curb last week rather than your usual two. As a result, the pandemic has had a limited effect on sales in the residential part of Republic and Waste Management’s business, although the cost of processing and disposing of all the trash we're now creating at home is increasing. The good news is that some in the corporate world think their rubbish containers may soon be a little less empty. At Republic, some of the customers that cut back on their service are already re-engaging and planning for a restart of their business. Last week, service increases fully offset requests for reductions. “The worst is behind us,” CEO Donald Slager said on a call late Tuesday to discuss Republic’s results, sounding a tone of optimism that has been largely absent from other industrial companies this earnings season. While the company officially pulled its guidance, Slager said the lower end of its prior free-cash-flow outlook of $1.175 billion to $1.225 billion may still be possible depending on how the recovery shakes out. Republic is taking a “wait-and-see" approach to capital allocation, but indicated its plans to spend $600 million to $650 million on M&A this year remain intact, with the remainder of free cash flow going to shareholders. Only those manufacturers with pristine balance sheets have been willing to make similar commitments.It remains to be seen if this optimism is justified. Just hours before Slager’s upbeat tone, Bloomberg News reported Capital One Financial Corp. is preparing office-based employees in the U.S., Canada and U.K. to work from home at least through the Labor Day holiday on Sept. 7. Waste Management was notably more cautious in its earnings press release on Wednesday, warning of a “significant decrease” in 2020 revenue and announcing plans to temporarily suspend share repurchases. But Republic president Jon Vander Ark said few of the company’s customers have closed for good at this point, even as he acknowledged many are still sorting through the chaos, and few are seeking to renegotiate the pricing of their contracts. “They’re eager to get back to business,” Vander Ark said. “Their first point of interest is not the price point of their waste and recycling service. It’s getting their employees back safely and working and getting customers in their door.”Speaking of getting employees back safely and customers in the door, I would be remiss if I didn’t call attention to Republic and Waste Management's efforts to take care of their own workers. Waste Management is guaranteeing 40 hours of weekly pay to all full-time employees during the pandemic. Republic is launching a $20 million initiative that among other things provides front-line employees with weekly onsite meals and dinners for their families purchased at local establishments, as well as $400 worth of gift cards for small businesses. “They perform an essential service and it’s a noble purpose. Unfortunately, society doesn’t do a great job of recognizing them all the time, and this is their moment,” Vander Ark of Republic said. “Customers obviously are looking for some cost relief, but what they really need is revenue, and we’re allowing our people and empowering our people to go support local small businesses that are our customers.” As we think about a recovery, this mentality toward corporations’ role in the community may play a key role. I can think of a lot of companies that would do well to follow the lead of their trash collectors. This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.Brooke Sutherland is a Bloomberg Opinion columnist covering deals and industrial companies. She previously wrote an M&A column for Bloomberg News.For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

Waste Management (WM) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

(Bloomberg Opinion) -- No class of Americans was spared during the 1918 flu pandemic, including the garbage men. In San Francisco, illness rapidly thinned their ranks, and trash piled up in streets and backyards, leaving the city little choice but to cover it with dirt. In Kansas City, Missouri, medical waste was tossed atop the household waste already piling up in public spaces, creating new hazards for the diminishing numbers of people employed to collect it, and those who lived, worked and played in the city. And in Baltimore, at least a quarter of the city’s sanitation workers didn’t report for duty at the peak of the pandemic, with predictably dirty and dangerous results.A century later, trash collection is as reliable as a utility bill in most American towns and cities, and thoughts of pandemic trash piles are relics of a dirtier past. But the coronavirus outbreak has the potential to challenge those perceptions, and create unsanitary and potentially hazardous problems. Already, a few towns — including New York — are suspending or reducing some trash and recycling services to promote social distancing and prepare for lower staff levels that will stress collection and processing. These reductions won’t lead to a 1918-style trash crisis. But they are a reminder that the critical job of managing American waste is extremely vulnerable in a pandemic. Fortifying and protecting the companies, towns and workers who do this work must be a top priority for citizens and government alike.Covid-19 poses several unique challenges for the U.S. waste collection and disposal industry and the 467,000 workers employed by it. Above all, it is likely to generate a surge in solid medical waste such as used surgical masks and empty IV bags. At the height of the epidemic in Wuhan, China, the city was producing 240 tons of medical waste a day, and the government had to deploy mobile treatment facilities to manage it. The good news is that, unlike China, the U.S. has sufficient capacity at specialized medical waste treatment centers to manage whatever is generated in hospitals and other medical facilities. In fact, it’s been managing medical wastes safely — including wastes far more hazardous than items carrying coronavirus — without much public notice, for years.But there’s a related problem that isn’t so easily solved. Large-scale home quarantining, combined with large numbers of asymptomatic individuals, means that at least some of the medical waste generated in the U.S. (including all those masks) will be in home and office garbage and recycling bins. Nobody knows how much of a risk Covid-19 waste poses to sanitation workers. But it could be substantial: The National Institute of Allergy and Infectious Diseases reported last week that Covid-19 can remain infectious in aerosols for hours and on surfaces for days.So far, there aren’t any American refuse and recycling workers publicly known to have the virus (a New York Department of Sanitation office worker was recently diagnosed). And, at the federal level at least, concern is low. Recently updated U.S. Occupational Safety and Health Administration guidelines suggest that waste workers handle office and home solid waste “with potential or known COVID-19 contamination like any other non-contaminated municipal waste.”But across the industry, concern is rising about the impact on employees and the ability to collect and process waste. Some recycling centers are closing to maintain safe distances between customers and employees. Waste Management Inc., North America’s largest waste hauler, is reducing staffing levels and implementing social distancing at its plants, so as to reduce infection risk. The Teamsters, which represents thousands of waste management workers, sent letters to the three largest U.S. waste management companies, demanding action to protect the health of its members. In Platteville, Wisconsin, waste workers have been instructed not to pick up garbage that falls from a torn or ripped bag, for fear of infection. And the National Waste & Recycling Association, an association of almost 700 members, expressed concern last week to U.S. state agencies that — among other problems — personal protective equipment for waste workers is unavailable because of panic buying by the general public.These precautionary steps and concerns will go a long way to ensuring that large numbers of waste workers will work safely through the pandemic. But more can be done. At the federal government level, OSHA should begin an immediate reassessment of its Covid-19 waste management guidelines in light of recent data on the persistence of the virus in aerosols and on surfaces.Equally important, waste industry employers must strive to provide and enforce the use of personal protective gear, and workers must double-down in their commitment to using it. Too often, industry accidents happen because employees simply don’t like wearing gear or set it aside because it’s uncomfortable. Finally, Americans should take extra care with their waste and recycling, especially if it was generated in a quarantined home. The Centers for Disease Control and Prevention recommends using gloves when handling trash generated by an ill person. From a sick home or not, recyclable and non-recyclable waste should be double-bagged or placed in durable bags unlikely to rip, tear or burst. Doing so will not only protect the health of the people employed to collect your trash, but also help to maintain clean cities where disease outbreaks are rare and quick.This column does not necessarily reflect the opinion of Bloomberg LP and its owners.Adam Minter is a Bloomberg Opinion columnist. He is the author of “Junkyard Planet: Travels in the Billion-Dollar Trash Trade” and the forthcoming "Secondhand: Travels in the New Global Garage Sale."For more articles like this, please visit us at bloomberg.com/opinionSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.

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Waste Management, Inc. (NYSE: WM) today announced that, due to increasing public health concerns posed by the COVID-19 pandemic, NOTICE IS HEREBY GIVEN that the location and time of its 2020 Annual Meeting of Stockholders ("Annual Meeting") has been changed to an audio virtual meeting to be held on Tuesday, May 12, 2020 at 2:00 pm CT. Stockholders will not be able to attend the Annual Meeting in person this year. The only items of business are the same as set forth in the Annual Meeting notice and proxy materials previously distributed. No presentations are planned.

Waste Management, Inc. (NYSE: WM) announced that it will release first quarter 2020 financial results before the opening of the market on Wednesday, May 6, 2020. Following the release, Waste Management will host its investor conference call at 10 a.m. ET.

Waste Management (WM) closed the most recent trading day at $94.60, moving -0.73% from the previous trading session.

From guaranteeing hours to full pay replacement, companies are stepping up to help workers impacted by the coronavirus shutdown.

Waste Management, Inc. (NYSE: WM) today announced the declaration of a quarterly cash dividend of $0.545 per share payable June 19, 2020 to stockholders of record on June 5, 2020.

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Waste Management, Inc. (NYSE: WM) today announced financial results for the quarter ended March 31, 2020. Revenues for the first quarter of 2020 were $3.73 billion compared with $3.70 billion for the same 2019 period. Net income for the quarter was $361 million, or $0.85 per diluted share, compared with $347 million, or $0.81 per diluted share, for the first quarter of 2019.(a) On an adjusted basis, net income was $395 million, or $0.93 per diluted share, in the first quarter of 2020, compared with $402 million, or $0.94 per diluted share, in the first quarter of 2019.(b)

Waste Management (WM) has an impressive earnings surprise history and currently possesses the right combination of the two key ingredients for a likely beat in its next quarterly report.