Waste Management, Inc. · NYSE:WM
Waste Management — Non-Deal Roadshow (August 2010)
28 slides from Waste Management's roadshow presentation, August 2010
Slide 1: Waste Management, Inc. Investor Meetings August 2010
Waste Management, Inc. Investor Meetings August 2010
Slide 2: Cautionary Statement
Cautionary Statement Certain statements provided in this presentation are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements are often identified by the words, “will,” “may,”
Slide 3: Today's $55 Billion Solid Waste Market
Today’s $55 Billion Solid Waste Market Waste #Privately Held Cos Management 24% 18%# #Other Public Cos 18% Municipal 23% #Republic Services 17% Source: Waste Business Journal’s Waste Market Overview & Outlook 2009
Slide 4: Key Industry Strengths
Key Industry Strengths • A significant portion of revenue has annuity-like characteristics • Cash flow is strong and predictable • Capital expenditures are controllable and predictable • Improving return on invested capital is a primary focus • Disciplined pricing
Slide 5: WM 2009 Revenue Mix by Line of Business
WM 2009 Revenue Mix by Line of Business Landfill 19% Approximate Transfer Collection Mix 10% Roll-off 25% Waste-to-Energy Commercial 6% 43% Other 2% Collection Recycling Residential 58% 5% 32% Based on 2009 Gross Revenues
Slide 6: Our Strategy
Our Strategy • Continue focus on pricing • Know more about our customers and how to service them better than anyone else in the industry, through the use of customer segmentation and technology • Manage the waste stream to extract more value from the material than anyone else in the industry
Slide 7: MSW Volume Trends
MSW Volume Trends Total Historical Waste Generation and Recovery 550 500 millions of tons 450 400 350 300 250 1992 1994 1996 1998 2000 2002 2004 2006 2008 Total MSW Generation Post Recovery MSW available for landfill or WTE Source: 2009 WBJ Waste Market Overview and Outlook
Slide 8: Generated Waste is Dominated by Paper, Yard and Food Scraps
Generated Waste is Dominated by Paper, Yard and Food Scraps Waste composition has remained fairly consistent, but has shifted to lighter materials % of Total Generation 1960 2008 Paper and paper board 34.0 31.0 Glass Ferrous materials 7.6 4.9 Aluminum 11.7 6.3 Other nonferrous 0.4 1.4 materials 0.2
Slide 9: How We Extract Value from Material
How We Extract Value from Material • Waste-to-energy (energy from • eCycling waste) – Electronics recycling • Curbside and commercial • Harvest Power recycling – Aerobic and anaerobic digestion • Landfill-gas-to-energy or fuel • New technology in organics • C&D recycling – Terrabon L.L.C. • Roof shi
Slide 10: Continued Growth of Landfill Volumes
Continued Growth of Landfill Volumes • Economic and population growth expected to increase disposal volumes in the future • Increasingly complex society and regulations – Individual servings and packaging – Waste streams, like coal ash, that could be directed into landfills by regulations
Slide 11: Strategic Growth Plan
Strategic Growth Plan GROW OUR GROW OUR GROW INTO MARKETS CUSTOMER NEW LOYALTY MARKETS • Segments • Improved customer • WTI – new plants • Commercial Property engagement • OGG • Manufacturing & Industrial • Self-service capabilities • Processing & Conversion • Retail & Food • Lower cost of service T
Slide 12: Why Segmentation is Right for WM
Why Segmentation is Right for WM • Segmentation presents an opportunity to drive significant incremental value by: – Improving sales effectiveness with focused and specialized reps that understand customer needs, i.e. one point of contact – Increasing penetration within most profitable segments by e
Slide 13: Long-Term Vision and Financial Impact of Customer Segmentation
Long-Term Vision and Financial Impact of Customer Segmentation By providing “Growth through Innovative Environmental Customer Solutions,” segmentation is expected to add over $1.6 billion in revenue over the next 5 years Projected Segmentation Incremental Revenue $MM $700 $700 $500 $600 $500 $300 $4
Slide 14: Waste To Energy
Waste To Energy • For the past three decades, Wheelabrator (WTI) has been a leading operator of waste-to-energy (WTE) and other power generation facilities reliant on renewable waste fuels with a revenue of $840 million in 2009 and 1,100 employees. • As of January 1, 2010, in more than three decades
Slide 15: WTE's Growth Opportunities U.S.
WTE’s Growth Opportunities U.S. • The U.S. is the second-largest market Incinerated Volume as % of Total MSW* (in tons) for municipal waste • Potential for WTE growth in the U.S. is 249.6m 264.8m greater than any period over the past 31.6m 41.5m 15.7% 12.6% 15 years • WTE offers several advantages l
Slide 16: WTE's Growth Opportunities U.S.
WTE’s Growth Opportunities U.S. • Engaged in 6 new WTE projects across the U.S. with capacities of 9,200 TPD and 190 MW 1,2 • Closed on purchase of the SPSA 6 3 2,000 TPD RDF facility with 175 4 employees located in Portsmouth, VA. WTI was 5 selected against two finalists, Covanta and ReEnergy Proje
Slide 17: WTE's Growth Opportunities in China
WTE’s Growth Opportunities in China • China has surpassed the U.S. as the Incinerated Volume as % of Total MSW largest waste generator in the world (in tons) • Continued rapid economic development, rising incomes and lifestyle changes will WTE +17% p.a. increase MSW volumes (expected to 432.3m incre
Slide 18: WTE's Growth Opportunities in UK/Europe
WTE’s Growth Opportunities in UK/Europe European drivers: Incinerated Volume as % of Total MSW (in tons) • Revised EU Directive on Waste – Favors energy recovery over disposal 38.1m 38.7m • EU Directive on Landfill of Waste: By 2016 WTE 4.6m 12.1% 32.4% biodegradable municipal waste (BMW) land- 12.5
Slide 19: Financial Performance and Outlook
Financial Performance and Outlook
Slide 20: How We Measure Ourselves
How We Measure Ourselves • Returns are our primary focus – Margins are important, but returns are a better indicator of value to shareholders – In 2005 we made returns our key long-term focus, changing our Long-Term Incentive plan accordingly – Return on Invested Capital is the principle measure – O
Slide 21: Margin Leverage with Volume Changes
Margin Leverage with Volume Changes Collection and Landfill Weighted Average Incremental Income from Operations Margin by Line of Business Total collection and landfill assumes an equivalent volume change in both the collection and landfill lines of business % of Collection Business Line % Increment
Slide 22: New Project Return Criteria
New Project Return Criteria Minimum Internal Rate of Return by Business Type • Collection and Landfill 12% • Recycling 15% • Waste-to-Energy 11% • Organic Growth 17% Note: Return requirements are adjusted based on the risk profile of the investment
Slide 23: Financial Priorities
Financial Priorities • Maintain our investment grade ratings. Our Revolving Credit Agreement requires compliance with the following financial covenants defined therein: – Interest coverage ratio: > 2.75 to 1 and Total Debt to EBITDA: < 3.5 to 1 – As of June 30, 2010, we were comfortably in complianc
Slide 24: 2010 Investments and Acquisitions
2010 Investments and Acquisitions • Purchased in April 2010 a waste-to-energy plant in Virginia from the Southeastern Public Service Authority for $150 million • Purchased for $142 million in March 2010 a 40% interest in Shanghai Environment Group, a company dedicated to developing waste-to-energy f
Slide 25: 2010 Capital Allocation
2010 Capital Allocation Common Stock Repurchases Dividends Up to $685 million $615 million* * Expected annual payment of $1.26 per share in cash dividends over the course of the year. Each dividend must be separately declared by the Board of Directors
Slide 26: Cash Dividends Paid Per Share
Cash Dividends Paid Per Share Annually $1.26* $1.25 $1.16 Cash Dividends Paid Per $1.08 $0.96 $1.00 $0.88 Share $0.80 $0.75 $0.75 $0.50 2004 2005 2006 2007 2008 2009 2010 Note *: The Board of Directors approved an 8.6% increase in the quarterly dividend rate to $0.315 on December 17, 2009. The Compa
Slide 27: 5 Year Growth Targets
5 Year Growth Targets • We assume that over the next 5 years the economy will steadily but slowly improve • Compounded annual revenue growth rate of between 3% and 5% driven by price and volume. Additional revenue growth from acquisitions, spending on average between $200 million and $300 million ea
Slide 28: Waste Management, Inc.
Waste Management, Inc. Investor Meetings August 2010