UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the Quarterly Period Ended | |
or | |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 | |
For the transition period from to | |
Commission file number |
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of | (I.R.S. Employer |
incorporation or organization) | Identification No.) |
(Address of principal executive offices)
(
(Registrant’s telephone number, including area code)
Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class |
| Trading Symbol |
| Name of Each Exchange on Which Registered |
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Accelerated filer ☐ | ||
Non-accelerated filer ☐ | Smaller reporting company | |
Emerging growth company |
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes
The number of shares of Common Stock, $0.01 par value, of the registrant outstanding at July 22, 2024 was
PART I.
Item 1. Financial Statements.
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(In Millions, Except Share and Par Value Amounts)
June 30, | December 31, | |||||
| 2024 |
| 2023 | |||
(Unaudited) | ||||||
ASSETS | ||||||
Current assets: |
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Cash and cash equivalents | $ | | $ | | ||
Accounts receivable, net of allowance for doubtful accounts of $ |
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Other receivables, net of allowance for doubtful accounts of $ |
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Parts and supplies |
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Other current assets |
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Total current assets |
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Property and equipment, net of accumulated depreciation and depletion of $ |
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Goodwill |
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Other intangible assets, net |
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Restricted funds |
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Investments in unconsolidated entities |
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Other long-term assets |
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Total assets | $ | | $ | | ||
LIABILITIES AND EQUITY | ||||||
Current liabilities: |
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Accounts payable | $ | | $ | | ||
Accrued liabilities |
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Deferred revenues |
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Current portion of long-term debt |
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Total current liabilities |
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Long-term debt, less current portion |
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Deferred income taxes |
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Landfill and environmental remediation liabilities |
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Other long-term liabilities |
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Total liabilities |
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Commitments and contingencies (Note 6) |
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Equity: |
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Waste Management, Inc. stockholders’ equity: |
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Common stock, $ |
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Additional paid-in capital |
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Retained earnings |
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Accumulated other comprehensive (loss) income |
| ( |
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Treasury stock at cost, |
| ( |
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Total Waste Management, Inc. stockholders’ equity |
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Noncontrolling interests |
| ( |
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Total equity |
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Total liabilities and equity | $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
2
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In Millions, Except per Share Amounts)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Operating revenues | $ | | $ | | $ | | $ | | ||||
Costs and expenses: |
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Operating |
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Selling, general and administrative |
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Depreciation, depletion and amortization |
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Restructuring |
| — |
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(Gain) loss from divestitures, asset impairments and unusual items, net |
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| — |
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| ( | ||||
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Income from operations |
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Other income (expense): |
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Interest expense, net |
| ( |
| ( |
| ( |
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Equity in net income (losses) of unconsolidated entities |
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| ( |
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Other, net |
| ( |
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| ( |
| ( |
| ( |
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Income before income taxes |
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Income tax expense |
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Consolidated net income |
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Less: Net income (loss) attributable to noncontrolling interests |
| — |
| ( |
| ( |
| ( | ||||
Net income attributable to Waste Management, Inc. | $ | | $ | | $ | | $ | | ||||
Basic earnings per common share | $ | | $ | | $ | | $ | | ||||
Diluted earnings per common share | $ | | $ | | $ | | $ | |
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In Millions)
(Unaudited)
Three Months Ended | Six Months Ended | |||||||||||
June 30, | June 30, | |||||||||||
| 2024 |
| 2023 |
| 2024 |
| 2023 | |||||
Consolidated net income | $ | | $ | | $ | | $ | | ||||
Other comprehensive income (loss), net of tax: |
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Derivative instruments, net |
| ( |
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| ( |
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Available-for-sale securities, net |
| ( |
| — |
| — |
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Foreign currency translation adjustments |
| ( |
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| ( |
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Post-retirement benefit obligations, net |
| ( | ( |
| ( |
| ( | |||||
Other comprehensive income (loss), net of tax |
| ( | |
| ( |
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Comprehensive income |
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Less: Comprehensive income (loss) attributable to noncontrolling interests |
| — | ( |
| ( |
| ( | |||||
Comprehensive income attributable to Waste Management, Inc. | $ | | $ | | $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
3
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Six Months Ended | ||||||
June 30, | ||||||
| 2024 |
| 2023 | |||
Cash flows from operating activities: |
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Consolidated net income |
| $ | | $ | | |
Adjustments to reconcile consolidated net income to net cash provided by operating activities: |
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Depreciation, depletion and amortization |
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Deferred income tax expense (benefit) |
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Interest accretion on landfill and environmental remediation liabilities |
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Provision for bad debts |
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Equity-based compensation expense |
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Net gain on disposal of assets |
| ( |
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(Gain) loss from divestitures, asset impairments and other, net |
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Equity in net (income) losses of unconsolidated entities, net of dividends |
| ( |
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Change in operating assets and liabilities, net of effects of acquisitions and divestitures: |
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Receivables |
| ( |
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Other current assets |
| ( |
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Other assets |
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Accounts payable and accrued liabilities |
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Deferred revenues and other liabilities |
| ( |
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Net cash provided by operating activities |
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Cash flows from investing activities: |
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Acquisitions of businesses, net of cash acquired |
| ( |
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Capital expenditures |
| ( |
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Proceeds from divestitures of businesses and other assets, net of cash divested |
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Other, net |
| ( |
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Net cash used in investing activities |
| ( |
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Cash flows from financing activities: |
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New borrowings |
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Debt repayments |
| ( |
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Common stock repurchase program |
| ( |
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Cash dividends |
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Exercise of common stock options |
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Tax payments associated with equity-based compensation transactions |
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Other, net |
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Net cash used in financing activities |
| ( |
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Effect of exchange rate changes on cash, cash equivalents and restricted cash and cash equivalents |
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(Decrease) increase in cash, cash equivalents and restricted cash and cash equivalents |
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Cash, cash equivalents and restricted cash and cash equivalents at beginning of period |
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Cash, cash equivalents and restricted cash and cash equivalents at end of period |
| $ | | $ | | |
Reconciliation of cash, cash equivalents and restricted cash and cash equivalents at end of period: | ||||||
Cash and cash equivalents | $ | | $ | | ||
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Cash, cash equivalents and restricted cash and cash equivalents at end of period |
| $ | | $ | |
See Notes to Condensed Consolidated Financial Statements.
4
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY
(In Millions, Except Shares in Thousands)
(Unaudited)
Waste Management, Inc. Stockholders’ Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||||
Common Stock | Paid-In | Retained | Comprehensive | Treasury Stock | Noncontrolling | ||||||||||||||||||||
| Total |
| Shares |
| Amounts |
| Capital |
| Earnings |
| (Loss) Income |
| Shares |
| Amounts |
| Interests | ||||||||
Three Months Ended June 30: | |||||||||||||||||||||||||
2024 | |||||||||||||||||||||||||
Balance, March 31, 2024 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | ( | ||||||||
Consolidated net income |
| | — | — | — | | — | — | — | — | |||||||||||||||
Other comprehensive income (loss), net of tax |
| ( | — | — | — | — | ( | — | — | — | |||||||||||||||
Cash dividends declared of $ |
| ( | — | — | — | ( | — | — | — | — | |||||||||||||||
Equity-based compensation transactions, net |
| | — | — | | ( | — | | | — | |||||||||||||||
Common stock repurchase program |
| ( | — | — | | — | — | ( | ( | — | |||||||||||||||
Adoption of new accounting standard | ( | — | — | — | ( | — | — | — | — | ||||||||||||||||
Other, net |
| — | — | — | | — | — | | — | ( | |||||||||||||||
Balance, June 30, 2024 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | ( | ||||||||
2023 | |||||||||||||||||||||||||
Balance, March 31, 2023 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | | ||||||||
Consolidated net income |
| | — |
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| ( | ||||||||
Other comprehensive income (loss), net of tax |
| | — |
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Cash dividends declared of $ |
| ( | — |
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| ( |
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| — | ||||||||
Equity-based compensation transactions, net |
| | — |
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| ( |
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Common stock repurchase program |
| ( | — |
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Other, net |
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Balance, June 30, 2023 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | |
See Notes to Condensed Consolidated Financial Statements.
5
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY ─ (Continued)
(In Millions, Except Shares in Thousands)
(Unaudited)
Waste Management, Inc. Stockholders’ Equity | |||||||||||||||||||||||||
Accumulated | |||||||||||||||||||||||||
Additional | Other | ||||||||||||||||||||||||
Common Stock | Paid-In | Retained | Comprehensive | Treasury Stock | Noncontrolling | ||||||||||||||||||||
Total |
| Shares |
| Amounts |
| Capital |
| Earnings |
| (Loss) Income |
| Shares |
| Amounts |
| Interests | |||||||||
Six Months Ended June 30: | |||||||||||||||||||||||||
2024 | |||||||||||||||||||||||||
Balance, December 31, 2023 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | ( | ||||||||
Consolidated net income |
| | — |
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| — |
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| ( | ||||||||
Other comprehensive income (loss), net of tax |
| ( | — |
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| ( |
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Cash dividends declared of $ |
| ( | — |
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| ( |
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Equity-based compensation transactions, net |
| | — |
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Common stock repurchase program |
| ( | — |
| — |
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| — |
| ( |
| ( |
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Adoption of new accounting standard | ( | ( | |||||||||||||||||||||||
Other, net |
| | — |
| — |
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| — |
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Balance, June 30, 2024 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | ( | ||||||||
2023 | |||||||||||||||||||||||||
Balance, December 31, 2022 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | | ||||||||
Consolidated net income |
| | — |
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| — |
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| ( | ||||||||
Other comprehensive income (loss), net of tax |
| | — |
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| — |
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Cash dividends declared of $ |
| ( | — |
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| ( |
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Equity-based compensation transactions, net |
| | — |
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Common stock repurchase program |
| ( | — |
| — |
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| ( |
| ( |
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Other, net |
| | — |
| — |
| — |
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Balance, June 30, 2023 | $ | | | $ | | $ | | $ | | $ | ( |
| ( | $ | ( | $ | |
See Notes to Condensed Consolidated Financial Statements.
6
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Basis of Presentation
The financial statements presented in this report represent the consolidation of Waste Management, Inc., a Delaware corporation; its wholly-owned and majority-owned subsidiaries; and certain variable interest entities for which Waste Management, Inc. or its subsidiaries are the primary beneficiaries as described in Note 13. Waste Management, Inc. is a holding company and all operations are conducted by its subsidiaries. When the terms “the Company,” “we,” “us” or “our” are used in this document, those terms refer to Waste Management, Inc., together with its consolidated subsidiaries and consolidated variable interest entities. When we use the term “WMI,” we are referring only to Waste Management, Inc., the parent holding company.
We are North America’s leading provider of comprehensive environmental solutions, providing services throughout the United States (“U.S.”) and Canada. We partner with our customers and the communities we serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. Our business is operated and managed locally by our subsidiaries that focus on distinct geographic areas and provide collection, transfer, disposal, and recycling and resource recovery services. Through our subsidiaries, including our Waste Management Renewable Energy (“WM Renewable Energy”) business, we are also a leading developer, operator and owner of landfill gas-to-energy facilities in the U.S. and Canada that produce renewable electricity and renewable natural gas (“RNG”), which is a significant source of fuel that we allocate to our natural gas fleet.
Our senior management evaluates, oversees and manages the financial performance of our business through
The Condensed Consolidated Financial Statements as of June 30, 2024 and for the three and six months ended June 30, 2024 and 2023 are unaudited. In the opinion of management, these financial statements include all adjustments, which, unless otherwise disclosed, are of a normal recurring nature, necessary for a fair presentation of the financial position, results of operations, comprehensive income, cash flows, and changes in equity for the periods presented. The results for interim periods are not necessarily indicative of results for the entire year. The financial statements presented herein should be read in conjunction with the financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2023.
In preparing our financial statements, we make numerous estimates and assumptions that affect the accounting for and recognition and disclosure of assets, liabilities, equity, revenues and expenses. We must make these estimates and assumptions because certain information that we use is dependent on future events, cannot be calculated with precision from available data or simply cannot be calculated. In some cases, these estimates are difficult to determine, and we must exercise significant judgment. In preparing our financial statements, the most difficult, subjective and complex estimates and the assumptions that present the greatest amount of uncertainty relate to our accounting for landfills, environmental remediation liabilities, long-lived asset impairments, intangible asset impairments and the fair value of assets and liabilities acquired in business combinations. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements.
Revenue Recognition
We generally recognize revenue as services are performed or products are delivered. For example, revenue typically is recognized as waste is collected, tons are received at our landfills or transfer stations, or recycling and other commodities,
7
WASTE MANAGEMENT, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
such as RNG, electricity and capacity, Renewable Identification Numbers (“RINs”) and Renewable Energy Credits (“RECs”), are sold.
We also bill for certain services prior to performance. Such services include, among others, certain commercial and residential contracts, and equipment rentals. These advanced billings are included in deferred revenues and recognized as revenue in the period service is provided. Substantially all our deferred revenues during the reported periods are realized as revenues within
Contract Acquisition Costs
Our incremental direct costs of obtaining a contract, which consist primarily of sales incentives, are generally deferred and amortized to selling, general and administrative expense over the estimated life of the relevant customer relationship, ranging from
Leases
Amounts for our operating lease right-of-use assets are recorded in long-term other assets and the current and long-term portion of our operating lease liabilities are reflected in accrued liabilities and other long-term liabilities, respectively, in our Condensed Consolidated Balance Sheets. Amounts for our financing leases are recorded in property and equipment, net of accumulated depreciation and depletion, and current or long-term debt in our Condensed Consolidated Balance Sheets, as appropriate.
Concentrations of Credit Risk
Financial instruments that potentially subject us to concentrations of credit risk consist primarily of cash and cash equivalents, investments held within restricted funds, and accounts receivable. We make efforts to control our exposure to credit risk associated with these instruments by (i) placing our assets and other financial interests with a diverse group of credit-worthy financial institutions; (ii) holding high-quality financial instruments while limiting investments in any one instrument and (iii) maintaining strict policies over credit extension that include credit evaluations, credit limits and monitoring procedures, although generally we do not have collateral requirements for credit extensions. We also control our exposure associated with trade receivables by discontinuing service, to the extent allowable, to non-paying customers. However, our overall credit risk associated with trade receivables is limited due to the large number and diversity of customers we serve.