Waste Management, Inc. (WM)

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Waster Management, Inc. (WM)

Q4 2009 Earnings Call

February 16, 2010 10:00 am ET


Jim Alderson – Director Investor Relations

David Steiner – Chief Executive Officer

Lawrence O’Donnell – President, Chief Operating Officer

Robert Simpson – Senior Vice President, Chief Financial Officer


[Al Katchoff – Wedbush Securities]

Jonathan Ellis – Bank of America

Hamzah Mazari – Credit Suisse

Michael Hoffman – Wunderlich Securities

Scott Levine – J.P. Morgan

Alex for Richard Skidmore – Goldman Sachs

Cory Greendale – First Analysis

Vance Edelson – Morgan Stanley



I would like to welcome everyone to the fourth quarter and full year 2009 earnings release conference call. (Operator Instructions) I would now like to introduce Mr. Jim Alderson, Director Investor Relations.

Jim Alderson

Good morning everyone and thank you for joining us for our fourth quarter 2009 earnings conference call. With me this morning are David Steiner, Chief Executive Officer, Larry O’Donnell, President and Chief Operating Officer and Bob Simpson, Senior Vice President and Chief Financial Officer.

David will start things off with a summary of the financial results for the quarter and a review of the details of our revenue growth including price and volume trends. Larry will discuss operating costs and Bob will cover the financial statement. We will conclude with questions and answers. During their statements any comparisons made by David, Bob or Larry unless otherwise stated will be with the fourth quarter of 2008.

Before we get started, let me remind you that in addition to our press release that was issued this morning, we have filed a Form 8-K that includes the press release as an attachment and is available on our website at www.wm.com. The Form 8-K, the press release and the schedules to the release include important information that you should refer to. That is because David, Larry and Bob will discuss our results on an as adjusted basis.

Unless otherwise noted, all of the financial measures referenced on the call including net income, earnings per share, income from operations, operating expenses and operating margins are adjusted for items we deem unusual or non operational in nature. We will also discuss free cash flow. All of these are non-GAAP financial measures.

We have given detailed information on all of the non-GAAP measures that will be discussed on this morning’s call and have reconciled them to the most comparable GAAP measures, and you can find that information in the schedules to the earnings press release and the Form 8-K filed today which can be found on the company’s web site at www.wm.com.

Additionally, during the call you will hear certain forward-looking statements concerning our plans and expectations for first quarter and full year 2010. Actual results could differ materially from our plans and expectations. Certain factors related to future expectations are detailed in our press release this morning and in our filings with the Securities and Exchange Commission including the Form 10-K filed for 2009.

This call is being recorded and will be available 24 hours a day beginning approximately 1:00 pm Eastern time today until 5:00 pm Eastern time on March 2. To hear a replay of the call over the internet, access the Waste Management website at www.wm.com. To hear a telephonic replay of the call, dial 800-642-1687 and enter reservation code 49511473.

Time sensitive information given during the course of today’s call which is occurring on February 16, 2010 may no longer be accurate at the time of the replay. Any redistribution, retransmission or rebroadcast of this call in any form without the express written consent of Waste Management is prohibited.

Now I will turn the call over to Waste Management’s CEO, David Steiner.

David Steiner

Thanks Jim and good morning from Houston. Our fourth quarter was a positive note in a challenging year and we believe the signs we saw in the fourth quarter point toward a better 2010. We earned $0.52 per share in 2009’s fourth quarter, an increase of over 6% compared to the $0.49 we earned in the prior year quarter.

Revenue declined by $102 million or 3.3% from the prior year quarter which is a significant improvement from the 14.2% decline experienced in the third quarter of 2009. Benefits from our reorganization announced in February exceeded our original target of $120 million in annualized savings.

We continue to see positive signs on the macro economic front with recycling commodity pricings continuing to trend upward. Commodity prices have now increased every month since January of 2009.

Natural gas markets, which affect the electricity sales prices at some of our Waste Energy and Landfill Gas Energy plants, continued to move upward during the fourth quarter, and by December 2009, matched prior year prices.

Pricing continued to be strong and consistent and internal growth from yield in the fourth quarter was 2.7%. Internal revenue growth from yield was strongest in the three collection lines of business. Combined, the revenue growth from yield in the industrial, commercial and residential lines of our collection business was 3.4% in the fourth quarter.

Commercial and industrial produced the strongest results where internal revenue growth from yield from both business lines was 3.5% in the quarter. The yield component of internal revenue growth in our residential line of business was 3%.

New business pricing for the fourth quarter in both the commercial and industrial line of business was the best we’ve seen in some time. Commercial new business pricing was the strongest we’ve seen since 2007, increasing by over 6% while industrial new business pricing increased almost 12% which was our strongest industrial new business pricing since 2006.

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