Waste Management Announces Third Quarter Earnings

The conference call will be webcast live from the Investor Relations section of Waste Management’s website www.wm.com. To access the conference call by telephone, please dial [phone] approximately 10 minutes prior to the scheduled start of the call. If you are calling from outside of the United States or Canada, please dial [phone]. Please utilize conference ID number 30012751 when prompted by the conference call operator.

A replay of the conference call will be available on the Company’s website www.wm.com and by telephone from approximately 1:00 PM (Eastern) Wednesday, October 31, 2012 through 5:00 PM (Eastern) on Wednesday, November 14, 2012. To access the replay telephonically, please dial [phone], or from outside of the United States or Canada dial [phone], and use the replay conference ID number 30012751.

The Company, from time to time, provides estimates of financial and other data, comments on expectations relating to future periods and makes statements of opinion, view or belief about current and future events. This press release contains a number of such forward-looking statements, including but not limited to 2012 earnings per diluted share; 2012 free cash flow and its individual components; 2013 earnings and free cash flow; 2013 restructuring cost savings, and statements regarding the results from recycling and waste-to-energy operations and related commodity prices; results for core solid waste operations; sales of non-core assets; results from pricing initiatives; overall results of operations and business prospects; and general market and industry conditions. You should view these statements with caution. They are based on the facts and circumstances known to the Company as of the date the statements are made. These forward-looking statements are subject to risks and uncertainties that could cause actual results to be materially different from those set forth in such forward-looking statements, including but not limited to, commodity price fluctuations; increased competition; pricing actions; failure to implement our optimization and growth initiatives and overall business strategy; failure to successfully implement our restructuring actions and/or failure of those actions to achieve the goals and cost savings intended; business disruption and employee distraction resulting from our restructuring; changes in our organizational structure and workforce and resulting restructuring or impairment charges; environmental and other regulations; disposal alternatives and waste diversion; declining waste volumes; failure to develop and protect new technology; significant environmental or other incidents resulting in liabilities and brand damage; weakness in economic conditions; failure to obtain and maintain necessary permits; labor disruptions; impairment charges; and negative outcomes of litigation or governmental proceedings. Please also see the Company’s filings with the SEC, including Part I, Item 1A of the Company’s most recently filed Annual Report on Form 10-K, for additional information regarding these and other risks and uncertainties applicable to our business. The Company assumes no obligation to update any forward-looking statement, including financial estimates and forecasts, whether as a result of future events, circumstances or developments or otherwise.

ABOUT WASTE MANAGEMENT

Waste Management, Inc., based in Houston, Texas, is the leading provider of comprehensive waste management services in North America. Through its subsidiaries, the company provides collection, transfer, recycling and resource recovery, and disposal services. It is also a leading developer, operator and owner of waste-to-energy and landfill gas-to-energy facilities in the United States. The company’s customers include residential, commercial, industrial, and municipal customers throughout North America. To learn more information about Waste Management visit www.wm.com or www.thinkgreen.com.

Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
						Quarters Ended September 30,
						2012								2011
Operating revenues						$	3,461							$	3,522
Costs and expenses:
Operating							2,229								2,261
Selling, general and administrative							335								380
Depreciation and amortization							331								317
Restructuring							44								15
(Income) expense from divestitures, asset impairments and unusual items							22								6
							2,961								2,979
Income from operations							500								543
Other income (expense):
Interest expense							(123	)							(118	)
Interest income							2								1
Equity in net losses of unconsolidated entities							(17	)							(7	)
Other, net							(14	)							2
							(152	)							(122	)
Income before income taxes							348								421
Provision for income taxes							125								136
Consolidated net income							223								285
Less: Net income attributable to noncontrolling interests							9								13
Net income attributable to Waste Management, Inc.						$	214							$	272
Basic earnings per common share						$	0.46							$	0.58
Diluted earnings per common share						$	0.46							$	0.58
Basic common shares outstanding							464.2								468.3
Diluted common shares outstanding							464.9								469.7
Cash dividends declared per common share						$	0.355							$	0.34

Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
						Quarters Ended September 30,
						2012							2011
EPS Calculation:
Net income attributable to Waste Management, Inc.						$	214						$	272
Number of common shares outstanding at end of period							463.9							461.2
Effect of using weighted average common shares outstanding							0.3							7.1
Weighted average basic common shares outstanding							464.2							468.3
Dilutive effect of equity-based compensation awards and
other contingently issuable shares							0.7							1.4
Weighted average diluted common shares outstanding							464.9							469.7
Basic earnings per common share						$	0.46						$	0.58
Diluted earnings per common share						$	0.46						$	0.58

Waste Management, Inc.
Condensed Consolidated Statements of Operations
(In Millions, Except Per Share Amounts)
(Unaudited)
						Nine Months Ended September 30,
						2012							2011
Operating revenues						$	10,215						$	9,972
Costs and expenses:
Operating							6,655							6,396
Selling, general and administrative							1,116							1,144
Depreciation and amortization							971							935
Restructuring							51							15
(Income) expense from divestitures, asset impairments and unusual items							55							6
							8,848							8,496
Income from operations							1,367							1,476
Other income (expense):
Interest expense							(366	)						(358	)
Interest income							4							6
Equity in net losses of unconsolidated entities							(35	)						(20	)
Other, net							(16	)						4
							(413	)						(368	)
Income before income taxes							954							1,108
Provision for income taxes							329							377
Consolidated net income							625							731
Less: Net income attributable to noncontrolling interests							32							36
Net income attributable to Waste Management, Inc.						$	593						$	695
Basic earnings per common share						$	1.28						$	1.47
Diluted earnings per common share						$	1.28						$	1.46
Basic common shares outstanding							463.4							472.7
Diluted common shares outstanding							464.2							474.5
Cash dividends declared per common share						$	1.065						$	1.02

Waste Management, Inc.
Earnings Per Share
(In Millions, Except Per Share Amounts)
(Unaudited)
						Nine Months Ended September 30,
						2012								2011
EPS Calculation:
Net income attributable to Waste Management, Inc.						$	593							$	695
Number of common shares outstanding at end of period							463.9								461.2
Effect of using weighted average common shares outstanding							(0.5	)							11.5
Weighted average basic common shares outstanding							463.4								472.7
Dilutive effect of equity-based compensation awards and
other contingently issuable shares							0.8								1.8
Weighted average diluted common shares outstanding							464.2								474.5
Basic earnings per common share						$	1.28							$	1.47
Diluted earnings per common share						$	1.28							$	1.46

Waste Management, Inc.
Condensed Consolidated Balance Sheets
(In Millions)
						September 30,						December 31,
						2012						2011
						(Unaudited)
Assets
Current assets:
Cash and cash equivalents						$	398					$	258
Receivables, net							1,868						1,775
Other							393						346
Total current assets							2,659						2,379
Property and equipment, net							12,518						12,242
Goodwill							6,259						6,215
Other intangible assets, net							405						457
Other assets							1,232						1,276
Total assets						$	23,073					$	22,569
Liabilities and Equity
Current liabilities:
Accounts payable, accrued liabilities, and
deferred revenues						$	2,361					$	2,437
Current portion of long-term debt							826						631
Total current liabilities							3,187						3,068
Long-term debt, less current portion							9,166						9,125
Other liabilities							4,108						3,986
Total liabilities							16,461						16,179
Equity:
Waste Management, Inc. stockholders' equity							6,288						6,070
Noncontrolling interests							324						320
Total equity							6,612						6,390
Total liabilities and equity						$	23,073					$	22,569

Waste Management, Inc.
Condensed Consolidated Statements of Cash Flows
(In Millions)
(Unaudited)
						Nine Months Ended September 30,
						2012							2011
Cash flows from operating activities:
Consolidated net income						$	625						$	731
Adjustments to reconcile consolidated net income to net cash
provided by operating activities:
Depreciation and amortization							971							935
Other							219							204
Change in operating assets and liabilities, net of effects of
acquisitions and divestitures							(97	)						(133	)
Net cash provided by operating activities							1,718							1,737
Cash flows from investing activities:
Acquisitions of businesses, net of cash acquired							(178	)						(645	)
Capital expenditures							(1,132	)						(909	)
Proceeds from divestitures of businesses (net of cash
divested) and other sales of assets							28							22
Investments in unconsolidated entities							(61	)						(92	)
Net receipts from restricted trust and escrow
accounts, and other							(18	)						89
Net cash used in investing activities							(1,361	)						(1,535	)
Cash flows from financing activities:
New borrowings							685							1,001
Debt repayments							(473	)						(425	)
Common stock repurchases							-							(528	)
Cash dividends							(493	)						(481	)
Exercise of common stock options							39							40
Other, net							23							(66	)
Net cash used in financing activities							(219	)						(459	)
Effect of exchange rate changes on cash and cash equivalents							2							-
Increase (decrease) in cash and cash equivalents							140							(257	)
Cash and cash equivalents at beginning of period							258							539
Cash and cash equivalents at end of period						$	398						$	282

Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
						Quarters Ended
						September 30,							June 30,							September 30,
						2012							2012							2011
Operating Revenues by Lines of Business
Collection
Commercial						$	851						$	855						$	885
Residential							644							650							657
Industrial							553							536							540
Other							71							66							68
Total Collection							2,119							2,107							2,150
Landfill							705							676							690
Transfer							332							331							337
Wheelabrator							218							206							228
Recycling							316							369							438
Other							393							363							210
Intercompany (a)							(622	)						(593	)						(531	)
Operating revenues						$	3,461						$	3,459						$	3,522
						Quarters Ended
						September 30, 2012														September 30, 2011
Analysis of Change in Year Over Year Revenues													As a % of														As a % of
						Amount							Total Company							Amount							Total Company
Average yield (i)						$	(148	)						-4.2	%					$	191							5.9	%
Volume							(5	)						-0.1	%						(64	)						-2.0	%
Internal revenue growth							(153	)						-4.3	%						127							3.9	%
Acquisition							95							2.7	%						150							4.6	%
Divestitures							(1	)						-							(1	)						-
Foreign currency translation							(2	)						-0.1	%						11							0.4	%
						$	(61	)						-1.7	%					$	287							8.9	%
													As a % of														As a % of
													Related														Related
						Amount							Business							Amount							Business
(i) Average yield
Collection, landfill and transfer						$	27							1.0	%					$	45							1.7	%
Waste-to-energy disposal							(5	)						-4.1	%						(2	)						-1.6	%
Collection and disposal							22							0.8	%						43							1.6	%
Recycling commodities							(176	)						-38.6	%						104							34.9	%
Electricity							(2	)						-2.8	%						(3	)						-4.1	%
Fuel surcharges and mandated fees							8							5.0	%						47							41.2	%
Total						$	(148	)						-4.2	%					$	191							5.9	%
						Quarters Ended September 30,														Nine Months Ended September 30,
						2012							2011							2012							2011
Free Cash Flow Analysis (b)
Net cash provided by operating activities						$	574						$	659						$	1,718						$	1,737
Capital expenditures							(402	)						(313	)						(1,132	)						(909	)
Proceeds from divestitures of businesses (net of
cash divested) and other sales of assets (c)							8							26							28							39
Free cash flow						$	180						$	372						$	614						$	867

(a)					Intercompany revenues between lines of business are eliminated within the Condensed Consolidated Financial Statements
					included herein.
(b)					The summary of free cash flows has been prepared to highlight and facilitate understanding of the principal cash
					flow elements. Free cash flow is not a measure of financial performance under generally accepted accounting principles
					and is not intended to replace the consolidated statement of cash flows that was prepared in accordance with generally
					accepted accounting principles.
(c)					Proceeds for the three and nine months ended September 30, 2011 includes the repayment of a $17.0 million note receivable
					from a prior year divestiture. This repayment is included as a component of "Net receipts from restricted trust and escrow
					accounts, and other" in our Condensed Consolidated Statement of Cash Flows.

Waste Management, Inc.
Summary Data Sheet
(Dollar Amounts in Millions)
(Unaudited)
						Quarters Ended
						September 30,							June 30,							September 30,
						2012							2012							2011
Balance Sheet Data
Cash and cash equivalents						$	398						$	237						$	282
Debt-to-total capital ratio:
Long-term indebtedness, including current
portion						$	9,992						$	9,826						$	9,613
Total equity							6,612							6,487							6,285
Total capital						$	16,604						$	16,313						$	15,898
Debt-to-total capital							60.2	%						60.2	%						60.5	%
Capitalized interest						$	5						$	5						$	5
Acquisition Summary (a)
Gross annualized revenue acquired						$	20						$	13						$	651
Total consideration						$	26						$	18						$	495
Cash paid for acquisitions						$	24						$	25						$	488
Other Operational Data
Internalization of waste, based on disposal costs							66.9	%						67.3	%						67.8	%
Total landfill disposal volumes (tons in millions)							23.9							23.2							24.0
Total waste-to-energy disposal volumes (tons in millions)							2.0							2.0							2.1
Total disposal volumes (tons in millions)							25.9							25.2							26.1
Active landfills							270							270							271
Landfills reporting volume							259							258							254
Amortization, Accretion and Other Expenses for
Landfills Included in Operating Groups:
Landfill amortization expense -
Cost basis of landfill assets						$	86.7						$	83.1						$	87.0
Asset retirement costs							19.1							14.0							15.2
Total landfill amortization expense (b)(c)							105.8							97.1							102.2
Accretion and other related expense							17.1							16.8							17.6
Landfill amortization, accretion and other related expense						$	122.9						$	113.9						$	119.8

(a)					Represents amounts associated with business acquisitions consummated during the indicated periods. Note that cash paid for acquisitions
					may include cash payments for business acquisitions consummated in prior quarters.
(b)					The quarter ended September 30, 2012 as compared to the quarter ended June 30, 2012 reflects an increase in amortization expense of
					approximately $8.7 million. $5.1 million of this change is driven by an increase in landfill volumes due to seasonality, coupled with a
					$3.6 million increase primarily due to changes in landfill estimates identified in both quarters.
(c)					The quarter ended September 30, 2012 as compared to the quarter ended September 30, 2011, reflects an increase in amortization expense
					of approximately $3.6 million, primarily due to changes in landfill estimates identified in both quarters, as volumes remained
					consistent year-over-year.

Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions, Except Per Share Amounts)
(Unaudited)
						Quarter Ended
						September 30, 2012
												Tax
						After-tax						(Expense)/				Per Share
Adjusted Net Income and Earnings Per Diluted Share						Amount						Benefit				Amount
Net income and Diluted EPS, as reported						$	214									$	0.46
Adjustments to Net income and Diluted EPS:
Asset impairments (a)							39					6		(b)			0.08
Restructuring charges and Oakleaf related integration activities							29					18					0.06
Labor dispute							3					3					0.01
Net income and Diluted EPS, as adjusted						$	285									$	0.61
						Quarter Ended
						September 30, 2011
												Tax
						After-tax						(Expense)/				Per Share
Adjusted Net Income and Earnings Per Diluted Share						Amount						Benefit				Amount
Net income and Diluted EPS, as reported						$	272									$	0.58
Adjustments to Net income and Diluted EPS:
Restructuring charges and asset impairments							14					6					0.03
Closed site adjustments and changes in risk-free interest rate							5					3					0.01
Oakleaf acquisition and related integration activities							4					3					0.01
Net income and Diluted EPS, as adjusted						$	295									$	0.63

(a)					Includes impairment charges associated with certain of our investments in unconsolidated entities
					that are included in the "Equity in Earnings/Losses of Unconsolidated Entities" and "Other, net"
					financial captions, as well as impairment charges associated with assets in the "Asset
					Impairments and Unusual Items" financial caption.
(b)					Represents tax benefit resulting from the $22 million of pre-tax impairment charges included in
					the "Asset Impairments and Unusual Items" financial caption. There is no tax impact
					corresponding to the $23 million of pre-tax impairment charges associated with our investments
					in unconsolidated entities.

Waste Management, Inc.
Reconciliation of Certain Non-GAAP Measures
(Dollars In Millions, Except Per Share Amounts)
(Unaudited)
						Quarter Ended
						September 30, 2012
												As a % of
Adjusted Income from Operations as a percent of Revenues						Amount						Revenues
Operating revenues, as reported						$	3,461
Income from operations, as reported						$	500					14.4	%
Adjustments to Income from operations:
Asset impairments							22
Restructuring charges and Oakleaf related integration activities							47
Labor dispute							6
							75
Income from operations, as adjusted						$	575					16.6	%		(c)
						Quarter Ended
						September 30, 2011
												As a % of
Adjusted Income from Operations as a percent of Revenues						Amount						Revenues
Operating revenues, as reported						$	3,522
Income from operations, as reported						$	543					15.4	%
Adjustments to Income from operations:
Restructuring charges and asset impairments							20
Closed site adjustments and changes in risk-free interest rate							8
Oakleaf related integration activities							4
							32
Income from operations, as adjusted (d)						$	575					16.3	%		(c)

(c)					Increase of 30 basis points in income from operations as a percent of revenues, as adjusted.
(d)					Our financial results released at the conclusion of the third quarter of 2011 were adjusted to exclude
					the impact of our then recently acquired Oakleaf operations. However, for purposes of this year-over-year
					comparison, we have included the impact of the Oakleaf operations in the results of both quarters.

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