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    Waste Management Inc (WM)

    New Share Buyback Program

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    WM, North America's leading provider of comprehensive environmental solutions, operates primarily in the United States and Canada. The company manages waste from collection to disposal, while also recovering valuable resources and creating renewable energy . WM owns or operates the largest network of landfills in North America and manages transfer stations to efficiently transport waste. Their business is divided into four reportable segments: Collection and Disposal - East Tier, Collection and Disposal - West Tier, Recycling Processing and Sales, and WM Renewable Energy .

    1. Collection and Disposal - Provides comprehensive waste management services, including Commercial, Industrial, Residential, and Other Collection services, as well as Landfill and Transfer operations, across the East and West Tiers .
    2. Recycling Processing and Sales - Manages the processing and sale of recyclable materials, contributing to resource recovery and sustainability efforts .
    3. WM Renewable Energy - Focuses on creating renewable energy from waste, supporting environmental sustainability and energy recovery .
    NamePositionStart DateShort Bio
    Charles C. BoettcherExecutive Vice President, Corporate Development and Chief Legal OfficerFebruary 2020Charles C. Boettcher has been serving in his current role since February 2020. Previously, he was the Senior Vice President, Corporate Development and Chief Legal Officer from May 2019 to February 2020 .
    Rafael E. CarrascoSenior Vice President — Enterprise StrategySeptember 2023Rafael E. Carrasco has been the Senior Vice President — Enterprise Strategy since September 2023. He was previously the Senior Vice President — Operations from July 2021 to September 2023 .
    John A. CarrollVice President and Chief Accounting OfficerMarch 2023John A. Carroll has been serving as the Vice President and Chief Accounting Officer since March 2023. Before this, he was the Vice President of Internal Audit and Controls from 2018 to March 2023 .
    Christopher P. DeSantisSenior Vice President — OperationsOctober 2023Christopher P. DeSantis has been the Senior Vice President — Operations since October 2023. Prior to this, he served as the Area Vice President for the New England area from 2009 until October 2023 .
    Tara J. HemmerSenior Vice President and Chief Sustainability OfficerJuly 2021Tara J. Hemmer has been serving as the Senior Vice President and Chief Sustainability Officer since July 2021. She was previously the Senior Vice President of Operations from January 2019 to June 2021 .
    John J. Morris, Jr.Executive Vice President and Chief Operating OfficerJanuary 2019John J. Morris, Jr. has been serving as the Executive Vice President and Chief Operating Officer since January 2019. He was previously the Senior Vice President of Operations from 2012 to December 2018 .
    Devina A. RankinExecutive Vice President and Chief Financial OfficerFebruary 2020Devina A. Rankin has been the Executive Vice President and Chief Financial Officer since February 2020. She was previously the Senior Vice President and Chief Financial Officer from 2017 to February 2020 .
    Kelly C. RooneySenior Vice President and Chief Human Resources and Diversity & Inclusion OfficerFebruary 2023Kelly C. Rooney has been in her current role since February 2023. She was previously the Senior Vice President and Chief People Officer from August 2022 to February 2023 .
    Donald J. SmithSenior Vice President — OperationsJanuary 2023Donald J. Smith has been the Senior Vice President — Operations since January 2023. He was previously the Area Vice President for the Texas & Oklahoma Area from 2012 to December 2022 .
    Johnson VarkeySenior Vice President and Chief Information OfficerJanuary 2024Johnson Varkey is expected to start as the Senior Vice President and Chief Information Officer in January 2024. He was previously the Vice President and Chief Information Officer from March 2023 to December 2023 .
    Michael J. WatsonSenior Vice President and Chief Customer Officer2018Michael J. Watson has been the Senior Vice President and Chief Customer Officer since 2018. He was previously the Area Vice President for the Illinois & Missouri Valley Area from 2013 to September 2018 .
    James C. Fish, Jr.President and Chief Executive Officer2016James C. Fish, Jr. has been the President, Chief Executive Officer, and Director since 2016. He has over 20 years of experience with the company and has held several key positions .
    1. Given that your leverage is expected to rise to 3.6x after the Stericycle acquisition and recent tuck-in acquisitions, how do you plan to manage debt reduction while continuing to invest in growth opportunities and return value to shareholders, especially considering the temporary suspension of your share repurchase program?

    2. With certain segments of your collection volumes trending behind full-year expectations, particularly in industrial and roll-off services, what specific strategies are you implementing to mitigate these volume declines, and how confident are you in the sustainability of your cost optimization efforts?

    3. Considering softness in industrial volumes and potential economic uncertainties, how confident are you in maintaining your pricing power to sustain margin expansion into 2025, and what factors could impact your ability to do so?

    4. How might the upcoming election outcomes impact your renewable natural gas (RNG) business, particularly regarding RIN pricing and the regulatory environment, and how does this influence your investment plans for RNG projects?

    5. With the planned acquisition of Stericycle introducing medical waste as a new vertical, what integration risks do you foresee, and how do you plan to address potential cultural and operational challenges to ensure the projected financial and strategic benefits are realized?

    Program DetailsProgram 1Program 2
    Approval DateN/AN/A
    End Date/DurationFebruary 2024 April 2024
    Total Additional AmountN/A$250 million
    Remaining Authorization$1,238 million $1,238 million
    DetailsCompleted in February 2024 Completed in April 2024
    YearAmount Due (Millions)Debt TypeInterest Rate (%)% of Total Debt
    2025422Senior Notes3.1252.5% = (422 / 16,653) * 100
    2025500Senior Notes0.753.0% = (500 / 16,653) * 100
    2026250Senior Notes7.3751.5% = (250 / 16,653) * 100
    2027750Senior Notes3.154.5% = (750 / 16,653) * 100
    2027750Senior Notes4.9504.5% = (750 / 16,653) * 100
    2028600Senior Notes7.003.6% = (600 / 16,653) * 100
    2028500Senior Notes1.153.0% = (500 / 16,653) * 100
    2029250Senior Notes7.3751.5% = (250 / 16,653) * 100
    2029475Senior Notes2.002.9% = (475 / 16,653) * 100
    2029750Senior Notes4.8754.5% = (750 / 16,653) * 100
    2030750Senior Notes4.6254.5% = (750 / 16,653) * 100
    20311,000Senior Notes1.506.0% = (1,000 / 16,653) * 100
    2031750Senior Notes4.9504.5% = (750 / 16,653) * 100
    2032500Senior Notes7.753.0% = (500 / 16,653) * 100
    20321,000Senior Notes4.156.0% = (1,000 / 16,653) * 100
    2033500Senior Notes4.6253.0% = (500 / 16,653) * 100
    20341,250Senior Notes4.8757.5% = (1,250 / 16,653) * 100
    2035450Senior Notes3.902.7% = (450 / 16,653) * 100
    2039600Senior Notes6.1253.6% = (600 / 16,653) * 100
    2041475Senior Notes2.952.9% = (475 / 16,653) * 100
    2045750Senior Notes4.104.5% = (750 / 16,653) * 100
    20491,000Senior Notes4.156.0% = (1,000 / 16,653) * 100
    2050500Senior Notes2.503.0% = (500 / 16,653) * 100

    Competitors mentioned in the company's latest 10K filing.

    • Large national waste management companies - Compete with WM in waste collection and disposal operations.
    • Counties and municipalities - Maintain their own waste collection and disposal or recycling operations and may have financial competitive advantages due to tax revenues and tax-exempt financing.
    • Regional and local companies - Varying sizes and financial resources, compete in all aspects of operations.
    • Companies specializing in discrete areas of waste management - Focus on specific segments within the waste management industry.
    • Operators of alternative disposal facilities - Provide alternative solutions for waste disposal.
    • Companies using waste stream as feedstock for renewable energy and other by-products - Compete by utilizing waste for renewable energy production.
    • Waste brokers - Rely on haulers in local markets to address customer needs.
    NameStart DateEnd DateReason for Change
    Ernst & Young LLP2002 PresentCurrent auditor

    Recent developments and announcements about WM.

    Legal & Compliance

      Legal Proceedings

      ·
      Nov 8, 2024, 12:00 AM

      Summary of Legal Matter Involving Waste Management, Inc. (WM)

      Key Parties Involved:

      • Waste Management, Inc. (WM): The primary company involved in the legal matter.
      • Waste Management Holdings, Inc.: A wholly-owned subsidiary of WM, acting as the guarantor in the proceedings.
      • Barclays Capital Inc., Deutsche Bank Securities Inc., and Goldman Sachs & Co. LLC: Dealer managers involved in the exchange offer and registration rights agreement.
      • Stericycle, Inc.: The company acquired by WM, whose notes are being exchanged.
      • The Bank of New York Mellon Trust Company, N.A.: Trustee for the notes issued by WM.

      Nature of the Proceedings:

      • Exchange Offer and Consent Solicitation: WM completed a private offer to exchange any and all outstanding Stericycle Notes for new notes issued by WM and cash. This exchange offer was not registered under the Securities Act of 1933. In conjunction with the exchange offer, WM solicited consents to amend the Stericycle Notes and the Stericycle Base Indenture to eliminate most restrictive covenants and events of default, except for payment-related, guarantee-related, and bankruptcy-related events of default .
      • Issuance of Notes: WM issued $485,084,000 aggregate principal amount of 3.875% Senior Notes due 2029, which are fully and unconditionally guaranteed by Waste Management Holdings, Inc. .
      • Registration Rights Agreement: WM entered into a registration rights agreement with the dealer managers, agreeing to use commercially reasonable efforts to file a registration statement for a registered offer to exchange the WM Notes for new notes issued by WM and guaranteed by WM Holdings. If the registered exchange offer is not completed by November 9, 2025, or a shelf registration statement is not declared effective by the specified deadlines, WM will pay additional interest on the WM Notes .

      Potential Financial or Operational Consequences for WM:

      • Financial Impact: If WM fails to meet the registration deadlines, it will incur additional interest costs of 0.25% per annum on the WM Notes .
      • Operational Impact: The amendments to the Stericycle Notes and the Stericycle Base Indenture, which eliminate most restrictive covenants and events of default, could provide WM with greater operational flexibility .
      • Legal and Compliance Costs: WM will bear the costs associated with the registration process, including SEC, stock exchange, and FINRA fees, as well as legal and accounting expenses .

      Conclusion: The legal matter primarily involves the exchange of Stericycle Notes for new WM Notes, the issuance of new notes, and the associated registration requirements. The successful completion of these proceedings is crucial for WM to avoid additional financial costs and to maintain compliance with regulatory requirements.

    Financial Actions

      Debt Issuance

      ·
      Nov 8, 2024, 12:00 AM

      Waste Management, Inc. (WM) has recently created a direct financial obligation by issuing $485,084,000 in aggregate principal amount of 3.875% Senior Notes due 2029. This issuance is part of a private offer to exchange outstanding notes from Stericycle, Inc., which WM acquired. The notes are fully and unconditionally guaranteed by WM's wholly-owned subsidiary, Waste Management Holdings, Inc. .

      Potential Effects on Financial Health:

      • Balance Sheet Impact: The issuance of these notes increases WM's liabilities, specifically long-term debt, which could affect leverage ratios and interest coverage metrics.
      • Interest Obligations: The notes carry an interest rate of 3.875% per annum, which will require regular interest payments, impacting cash flow .
      • Credit Rating Considerations: The issuance and the associated guarantee might influence WM's credit ratings, depending on how rating agencies view the increased debt and the strategic rationale behind the acquisition and note exchange .

      This financial move is part of WM's broader strategy following its acquisition of Stericycle, aiming to streamline its financial obligations and potentially improve its financial flexibility by consolidating debt under more favorable terms .

      Strategic Assets

      ·
      Nov 4, 2024, 12:00 AM

      WM Completes Acquisition of Stericycle

      On November 4, 2024, WM announced the completion of its acquisition of Stericycle, Inc. for a total enterprise value of approximately $7.2 billion. This acquisition is a strategic move to expand WM's environmental solutions into the healthcare market, enhancing its sustainability commitments and growth strategy. The transaction was funded through a combination of borrowings and cash on hand .

      Transaction Details

      • Purchase Price: $62.00 per share in cash.
      • Total Enterprise Value: Approximately $7.2 billion.
      • Funding: Borrowings under WM's credit agreement and commercial paper program, and cash on hand .

      Potential Effects on Financials and Operations

      • Growth Strategy: The acquisition aligns with WM's long-term financial goals and sustainability initiatives, providing a platform in the medical waste sector with attractive growth dynamics.
      • Financial Outlook: The acquisition is expected to enhance WM's operating EBITDA and cash flows, with projected cost synergies exceeding $125 million.
      • Operational Synergies: The integration will leverage WM's logistics expertise, technology-enabled cost optimization, and waste disposal network .

      Strategic Importance

      • Market Expansion: This acquisition positions WM to capitalize on the growing medical waste industry and secure information destruction services, furthering its leadership in comprehensive waste and environmental solutions.
      • Leadership and Integration: Rafa Carrasco will lead the new WM Healthcare Solutions division, focusing on regulated medical waste and secure information destruction businesses .

      This acquisition marks a significant step for WM in expanding its service offerings and enhancing its market position in the healthcare sector, while also supporting its sustainability and financial objectives .

      New Share Buyback Program

      ·
      Oct 31, 2024, 12:00 AM

      Waste Management, Inc. (WM) has announced a new buyback program. Key details include the following: WM will repurchase up to $1 billion of its outstanding shares. The buyback program is set to commence immediately and will be executed through open market purchases, privately negotiated transactions, or other means as permitted by securities laws and regulations. The program does not have a fixed expiration date, allowing the company flexibility in its repurchase strategy .

      Dividend Policy

      ·
      Jun 5, 2024, 12:00 AM

      WM Announces Temporary Suspension of Share Repurchases

      WM has announced a temporary suspension of share repurchases. This decision is part of the company's strategy to maintain a strong balance sheet and solid investment grade credit profile. The suspension is expected to help WM achieve a leverage ratio within its targeted net debt-to-EBITDA range of 2.75x to 3.0x approximately 18 months after closing the transaction .