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Waste Management Inc. (WMI)

Waste Management Inc. (WMI). What Exactly Does Waste Management do?. Waste Collection

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Waste Management Inc. (WMI)

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  1. Waste Management Inc.(WMI)

  2. What Exactly Does Waste Management do? • Waste Collection • The leading provider of comprehensive waste and environmental services in North America” According to their 2007 annual report, Waste Management collects approximately 74 million tons of solid waste a year from nearly 20 million residential, municipal, commercial, and industrial customers in the United States, Canada, and Puerto Rico. We see them every day here at Colby and around coast to coast. • Recycling • Waste Management is the largest provider of comprehensive recycling services in North America, managing nearly 8 million tons of recyclable material annually, including paper, cardboard,glass, plastics, metals, and electronics • Producing Energy • More than 20 years ago, Waste Management realized that garbage was a potential resource for producing clean, renewable energy, and began to develop the methodology to harness it. One of the sources is methane, a natural byproduct of decomposing waste in landfills. This gas is collected and used to generate electricity or piped offsite to industrial customers for use as an alternative fuel source. Over the last two decades, Waste Management has participated in more than100 beneficial-use landfill gas projects for businesses and public utilities.

  3. Methane burns as a natural gas • Hands on research: • I was recently able to visit the newly opened Norridgewock waste to methane collection operation at the landfill. Dave Jarvis, explained to me about this new program that had just recently received authorization: to begin collecting methane.

  4. But, How does a landfill work? • Methane Collection System • Bacteria in the landfill breaks down the trash in the absence of oxygen (anaerobic) because the landfill is airtight. A byproduct of this anaerobic breakdown is landfill gas, which contains approximately 50 percent methane and 50 percent carbon dioxide with small amounts of nitrogen and oxygen. This presents a hazard because the methane can explode and/or burn. So, the landfill gas must be removed. To do this, a series of pipes are embedded within the landfill to collect the gas. In some landfills, this gas is vented or burned.

  5. Collection vents and Methane flares surrounded the landfill • This landfill will produce energy for enough to power twice of all of Colby’s energy needs for 20 years.

  6. Green • With Over 100 of these Waste to Energy installations and increased energy prices, Waste Management is poised to profit not only from trucking and managing waste but also from the byproducts the waste produces. • The collection facility costs only about $3-4 million dollars to install.

  7. Outside the Box • Management has devoted a small amount of capital to niche opportunities outside of the solid waste market, although these businesses appear to have characteristics that mirror the solid waste model and therefore carry some synergies. WMI already provides portable restroom facilities to municipalities and commercial customers as well as street and parking lot sweeping services. During 2007, the company began offering portable self storage services, which may allow WMI to more efficiently utilize excess capacity across its transfer station network. Customer storage containers could be housed within transfer stations and the delivery of those containers would be similar to the logistics around the roll off business.

  8. Room for Growth

  9. Some positives, some negatives • But wait, WMI had negative revenue growth last year. • Yes, but then we must look at how profit, margins and EBIDA has improved and COGS have decreased over time.

  10. Competition • Republic Services (RSG) • Allied Waste Ind. (AW) • Waste Connection (WCN) • Waste Industries (WWIN) • Waste Services (WSII) • Casella Waste (CWST) • WCA Waste Corp (WCAA)

  11. WMI Clearly the Largest Player • Republic Services (RSG) • Allied Waste Ind. (AW) • Waste Connection (WCN) • Waste Industries (WWIN) • Waste Services (WSII) • Casella Waste (CWST) • WCA Waste Corp (WCAA)

  12. AW Fundamentals:as largest competitor • .

  13. AW may have higher margins, but generated less than half the revenue of WMI. • Notables: Waste Management Inc. WMI 34.82, -0.04, -0.1%) recentlyreported fourth-quarter net income rose 26% on 2.4% higher revenue. Earnings were 61 cents a share against 46 cents a year earlier. Revenue rose to $3.36 billion from $3.28 billion. Beating estimates surveyed by Thomson Financial expecting 51 cents on revenue of $3.31 billion

  14. Solid Metrics • This company has reacted well even in a softening economy, and even though it has had a recent run up because, it beat earnings estimates, the valuations for WMI remain. • It is important to note that this stock is not very volatile, and so to yield good returns for this stock we should purchase it around the $28-29 mark.

  15. Risks to call • Overall Economic Conditions • Less consumption means less waste to manage • Much of this speculation has been priced into stock, plus who is really consuming less these days? • Labor disputes • There has been no word of any disagreements, and WMI is quoted as having a happy workforce, but labor disruptions would be detrimental to company

  16. WMI

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