Profile: Waste Management Inc (WM.N)

WM.N on New York Stock Exchange

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Waste Management, Inc. (WM), incorporated on April 28, 1995, is a holding company whose operations are conducted by its subsidiaries. The Company is a provider of comprehensive waste management environmental services in North America. The Company partners with its residential, commercial, industrial and municipal customers and the communities it serve to manage and reduce waste at each stage from collection to disposal, while recovering valuable resources and creating clean, renewable energy. The Company’s Solid Waste business is operated and managed locally by its subsidiaries that focus on distinct geographic areas and provides collection, transfer, recycling and resource recovery, and disposal services. Through its subsidiaries, it is a developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States.

The Company owns and operates 267 landfill sites, which is a network of landfills in its industry. In order to make disposal more practical for larger urban markets, where the distance to landfills or waste-to-energy facilities is typically farther, it manages 300 transfer stations that consolidate, compact and transport waste efficiently and economically. The Company is helping industries, communities and individuals reduce, reuse and remove waste better through sound sustainability strategies. It has a precise day-to-day focus on collecting and handling its customers’ waste efficiently and responsibly.

Collection

The Company’s commitment to customers begins with a vast waste collection network. Collection involves picking up and transporting waste and recyclable materials from where it was generated to a transfer station, material recovery facility (MRF) or disposal site. It provides collection services under one of two types of arrangements: Commercial and industrial collection services and residential collection services.

For commercial and industrial collection services, the Company has a three-year service agreement. The fees under the agreements are influenced by factors such as collection frequency, type of collection equipment it furnish, type and volume or weight of the waste collected, distance to the disposal facility, labor costs, cost of disposal and general market factors. As part of the service, it provides steel containers to most customers to store their solid waste between pick-up dates. Containers vary in size and type according to the needs of its customers and the restrictions of their communities. Many are designed to be lifted mechanically and either emptied into a truck’s compaction hopper or directly into a disposal site. By using these containers, it can service most of its commercial and industrial customers with trucks operated by only one employee.

For most residential collection services, it has a contract with, or a franchise granted by, a municipality, homeowners’ association or some other regional authority that gives it the exclusive right to service all or a portion of the homes in an area. These contracts or franchises are typically for periods of three to six years. It also provides services under individual monthly subscriptions directly to households. The fees for residential collection are either paid by the municipality or authority from their tax revenues or service charges, or are paid directly by the residents receiving the service.

Landfill

Landfills are the main depositories for solid waste in North America. As of December 31, 2013, the Company owned and operated 262 solid waste landfills and five secure hazardous waste landfills, which represents a network of landfills in North America. Solid waste landfills are constructed and operated on land with engineering safeguards that limit the possibility of water and air pollution, and are operated under procedures prescribed by regulation. A landfill must meet federal, state or provincial, and local regulations during its design, construction, operation and closure. The operation and closure activities of a solid waste landfill include excavation, construction of liners, continuous spreading and compacting of waste, covering of waste with earth or other acceptable material and constructing final capping of the landfill. These operations are carefully planned to maintain environmentally safe conditions and to maximize the use of the airspace.

All solid waste management companies must have access to a disposal facility, such as a solid waste landfill. The significant capital requirements of developing and operating a landfill serve as a barrier to landfill ownership and, as a result, third-party haulers often dispose of waste at its landfills. It is usually preferable for its collection operations to use disposal facilities that it owns or operates, a practice it refer to as internalization, rather than using third-party disposal facilities. Internalization allows it to realize higher consolidated margins and stronger operating cash flows. The fees charged at disposal facilities, which are referred to as tipping fees, are based on several factors, including competition and the type and weight or volume of solid waste deposited.

Under environmental laws, the federal government (or states with delegated authority) must issue permits for all hazardous waste landfills. All of the Company’s hazardous waste landfills have obtained the required permits, although some can accept only certain types of hazardous waste. These landfills must also comply with specialized operating standards. Only hazardous waste in a stable, solid form, which meets regulatory requirements, can be deposited in its secure disposal cells. In some cases, hazardous waste can be treated before disposal. Generally, these treatments involve the separation or removal of solid materials from liquids and chemical treatments that transform waste into inert materials that are no longer hazardous. Its hazardous waste landfills are sited, constructed and operated in a manner designed to provide long-term containment of waste. It also operates a hazardous waste facility at which it isolates treated hazardous waste in liquid form by injection into deep wells that have been drilled in certain acceptable geologic formations far below the base of fresh water to a point that is safely separated by other substantial geological confining layers.

Transfer

The Company as of December 31, 2013, owned and operated 300 transfer stations in North America. It deposits waste at these stations, as do other waste haulers. The solid waste is then consolidated and compacted to reduce the volume and increase the density of the waste and transported by transfer trucks or by rail to disposal sites. As of December 31, 2013, its medical waste services business also had 15 smaller transfer operations that are permitted to consolidate regulated medical waste collections for disposal. Access to transfer stations is critical to haulers who collect waste in areas not in close proximity to disposal facilities. Fees charged to third parties at transfer stations are usually based on the type and volume or weight of the waste deposited at the transfer station, the distance to the disposal site and general market factors.

The utilization of the Company’s transfer stations by its own collection operations improves internalization by allowing it to retain fees that it would otherwise pay to third parties for the disposal of the waste it collects. It enables the Company to manage costs associated with waste disposal because transfer trucks, railcars or rail containers have larger capacities than collection trucks, allowing it to deliver more waste to the disposal facility in each trip; waste is accumulated and compacted at transfer stations that are strategically located to increase the efficiency of its network of operations and it can retain the volume by managing the transfer of the waste to one of its own disposal sites.

The transfer stations that the Company operates but do not own are operated through lease agreements under which it lease property from third parties. There are some instances where transfer stations are operated under contract, for municipalities. In most cases it owns the permits and will be responsible for any regulatory requirements relating to the operation and closure of the transfer station.

Recycling

The Company’s recycling operations provide communities and businesses with an alternative to traditional landfill disposal and support its strategic goals to extract more value from the materials it manages. Residential single-stream programs have increased the recycling rates. Single-stream recycling is possible through the use of various mechanized screens and optical sorting technologies. It has also been advancing the single-stream recycling programs for commercial applications. Recycling involves the separation of reusable materials from the waste stream for processing and resale or other disposition. Its recycling operations include Materials processing, Plastics materials recycling and Commodities recycling.

The Company, through materials processing collection operations, collects recyclable materials from residential, commercial and industrial customers and directs these materials to one of its MRFs for processing. It operates 120 MRFs where paper, cardboard, metals, plastics, glass, construction and demolition materials and other recyclable commodities are recovered for resale. It also operates five secondary processing facilities where recyclable materials can be further processed into raw products used in the manufacturing of consumer goods. Materials processing services include data destruction and automated color sorting. The Company’s plastics materials recycling state-of-the-art sorting and processing technology, it processes, inventory and sell plastic commodities making the recycling of such items more cost effective and convenient. Through commodities recycling it markets and resells recyclable commodities to customers world-wide. It manages the marketing of recyclable commodities that are processed in its facilities by maintaining comprehensive service centers that continuously analyze market prices, logistics, market demands and product quality.

Fees for recycling services are influenced by the type of recyclable commodities being processed, the volume or weight of the recyclable material, degree of processing required, the market value of the recovered material and other market factors. Some of the recyclable materials processed in its MRFs are purchased from various sources, including third parties and its own operations. The cost per ton of material purchased is based on market prices and the cost to transport the processed goods to its customers to whom it sells such materials. The price it pays for recyclable materials is often referred to as a rebate. Rebates are based upon the price it receives for sales of processed goods and on market conditions, but in some cases are based on fixed contractual rates or on defined minimum per-ton rates. As a result, changes in commodity prices for recycled fiber can affect its revenues, the rebates it pay to its suppliers and its operating income from operations margins.

Other

The Company’s other services provided include recycling brokerage services, which involve managing the marketing of recyclable materials for third parties. The experience of its recycling operations in managing recyclable commodities for its own operations gives it the expertise needed to effectively manage volumes for third parties. Utilizing the resources and knowledge of its recycling operations’ service centers, it can assist customers in marketing and selling their recyclable commodities with minimal capital requirements. It also provides electronics recycling. It recycles discarded computers, communications equipment, and other electronic equipment. Services include the collection, sorting and disassembling of electronics in an effort to reuse or recycle all collected materials. In recent years, it has teamed with major electronics manufacturers to offer comprehensive take-back programs of their products to assist the general public in disposing of their old electronics in a convenient and environmentally safe manner.

The Company’s WM Sustainability Services organization offers its customers in all Areas a variety of services in collaboration with its Area and strategic accounts programs, including in-plant services, where its employees work full-time inside its customers’ facilities to provide full-service waste management solutions and consulting services; specialized disposal services for oil and gas exploration and production operations and services associated with the disposal of fly ash, residue generated from the combustion of coal and other fuel stocks. Its vertically integrated waste management operations enable it to provide customers with full management of their waste. The breadth of its service offerings and the familiarity it has with waste management practices gives it the unique ability to assist customers in minimizing the amount of waste they generate, identifying recycling opportunities and determining the most efficient means available for waste collection and disposal.

The Company develops, operates and promotes projects for the beneficial use of landfill gas through its WM Renewable Energy Program. Landfill gas is produced naturally as waste decomposes in a landfill. The methane component of the landfill gas is a readily available, renewable energy source that can be gathered and used as an alternative to fossil fuel. The EPA endorses landfill gas as a renewable energy resource, in the same category as wind, solar and geothermal resources. As of December 31, 2013, it had 137 landfill gas beneficial use projects producing commercial quantities of methane gas at 124 of its solid waste landfills and four third-party landfills. At 109 of these landfills, the processed gas is used to fuel electricity generators. The electricity is then sold to public utilities, municipal utilities or power cooperatives. At 17 landfills, the gas is used at the landfill or delivered by pipeline to industrial customers as a direct substitute for fossil fuels in industrial processes. At 10 landfills, the landfill gas is processed to pipeline-quality natural gas and then sold to natural gas suppliers. At one landfill, the gas is processed into liquefied natural gas and used as vehicle fuel.

Although many waste management services, such as collection and disposal are local services, the Company’s strategic accounts program works with customers whose locations span the United States. The Company’s strategic accounts program provides centralized customer service, billing and management of accounts to streamline the administration of customers’ multiple and nationwide locations’ waste management needs.

The Company continues to invest in businesses and technologies that are designed to offer services and solutions ancillary or supplementary to its current operations. These investments include joint ventures, acquisitions and partial ownership interests. The solutions and services include the collection of project waste, including construction debris and household or yard waste, through its Bagster program; the development, operation and marketing of plasma gasification facilities; operation of a landfill gas-to-liquid natural gas plant; solar powered trash compactors; and organic waste-to-fuel conversion technology. Part of its expansion of services includes offering portable self-storage services; fluorescent bulb and universal waste mail-back through its LampTracker program; and a sharps mail return program through which individuals can safely dispose of their used syringes and lancets using its MedWaste Tracker system. In addition, it has made investments that involve the acquisition and development of interests in oil and gas producing properties. The Company also rents portable restroom facilities to municipalities and commercial customers under the name Port-o-Let, it services such facilities and it provides street and parking lot sweeping services.

Company Address

Waste Management Inc

1001 Fannin St Ste 4000
HOUSTON   TX   77002-6711
P: +1713.5126200
F: +1302.6555049

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