Trash-handling giant moves far up the heap
Money from sale of unit will go toward core business
Abig sale last year means Waste Management is primed this year with money to funnel back into its core mission.
The Houston trash management and environmental services company sold Wheelabrator Technologies, a waste-to-energy operation, in December for about $1.9 billion in cash. Jim Fish, chief financial officer and executive vice president at Waste Management, noted the price was a good one for the company.
“We had an opportunity to sell a business that was not providing growth and carried a heavy maintenance expense,” Fish said.
Waste Management, which still invests in heavily in landfills that can produce energy, has also reinvested some of those sale proceeds to buy Kansas City-based solid waste disposal company Deffenbaugh Disposal. And the company will continue to look for acquisition opportunities but also may repurchase shares with some of that money.
“We will look for ways to use it to return value to shareholders,” Fish said.
With 2014 revenue of $14 billion, up slightly before rounding from 2013, Waste Management posted a total return to shareholders of 18 percent and logged earnings-per-share growth of 1,229 percent last year. Those numbers helped land it at No. 10 on the Chronicle’s list of top public companies, up from No. 94 previously. The company has about 41,000 employees, including about 1,700 locally.
Waste Management’s recycling business has been a “tough go” for the last three years, Fish said, but added that the company is still one of the biggest recyclers in North America and remains committed to that business.
Commodity prices are lower, and China, a major market for recycled materials, has tightened its standards for what it takes and is paying less for what it buys.
“There are pressures on both sides, so it’s been difficult,” Fish said. “We are going to customers to make them understand that they will have to share in the costs on a sliding scale until commodity prices come back up.”
Most of Waste Management’s recycling contracts run three to five years, and many are up for renewal soon, he said, adding that the company looks to renegotiate more favorable terms.