Waste Management 4Q profit falls 29 percent

Waste Management Inc. said Thursday its fourth-quarter profit slid 29 percent on declines in its recycling business and one-time charges. The nation's No. 1 waste hauler also announced a restructuring and consolidation plan intended to save $100 million per year amid a deteriorating economy.

With building activity down sharply, less construction site trash is being carted off. Restaurants and small businesses also are producing less garbage, requiring fewer trash pickups. Additionally, prices for commodities such as paper, newsprint, metals and other recycled materials are falling as demand drops, weighing on Waste Management even further.

Waste Management said net income for the quarter fell to $218 million, or 44 cents per share, down 29 percent from $309 million, or 61 cents per share, in the year-earlier period.

Revenue was $3.11 billion, down 7 percent from $3.36 billion in the fourth quarter of 2007.

The latest quarter's results were hurt by falling commodity prices that affected its recycling business and special charges related to a withdrawal from a pension plan and accounting and tax impacts. Without the charges, net income would have been $241 million, or 49 cents per share.

Analysts surveyed by Thomson Reuters expected earnings of 48 cents per share on revenue of $3.18 billion for the fourth quarter. Analysts typically exclude one-time items from their estimates.

Waste Management said its recycling business was hurt in the fourth quarter by 8 cents per share as commodity prices were pressured by weakening demand.

For Subscribers

FOR SUBSCRIBERSCBP leaders cut out of Trump ad buy decision

FOR SUBSCRIBERSAmerican passenger drafted goodbye texts to her family as Flydubai plane plummeted

FOR SUBSCRIBERSCornell rape allegation pushes embattled New York prosecutor into national spotlight

FOR SUBSCRIBERSAbdul El-Sayed tries to woo MAHA voters as Democrats seek inroads with RFK’s supporters

FOR SUBSCRIBERSKratom-like substances are popping up in a typically benign supplement

FOR SUBSCRIBERSGOP super PAC increases its spending for Sen. Jon Husted in tough Ohio race

FOR SUBSCRIBERSRecords reveal tumultuous marriage between slain New York Times executive and wife

FOR SUBSCRIBERSFrom clean energy warrior to ‘wall of shame,’ James Talarico reverses on a fossil fuel money pledge

FOR SUBSCRIBERSCongressional staff planned official trip with luxury stops in Italy and France weeks before election

FOR SUBSCRIBERSA harrowing ordeal aboard an Israel-bound plane

FOR SUBSCRIBERSOpenAI CEO Sam Altman to skip congressional hearing on rogue AI agents

FOR SUBSCRIBERSKey DOJ lawyers departed Trump ‘grand conspiracy’ probe amid pressure to produce, source says

FOR SUBSCRIBERSTrump’s new AI chatbot often links to a site launched under Clinton 26 years ago

FOR SUBSCRIBERSAt MAHA summit, industry CEOs the movement once vilified take the stage

FOR SUBSCRIBERSThis Paralympian has two goals: Win medals and give away $500,000 to her teammates

Chief Executive David Steiner said volumes in industrial collection, transfer and recycling are expected to remain soft this year.

Steiner told investor analysts on a conference call that Waste Management is tying annual bonuses to employees who achieve price targets in the collection and landfill businesses. Employees who fail to meet the targets will not receive a portion of an annual bonus connected to financial results. Senior leaders could lose their entire annual bonus and for others, the loss could be up to 70 percent, he said.

"Given the weak economy and the effect on our volumes, it's more important than ever for us to maintain our disciplined approach to pricing and cost control," he said.

Analyst Michael E. Hoffman of Wunderlich Securities said he was looking to Waste Management to remain a "price leader" in the industry. Raising prices in a weak economy is the right strategy because the company receives 90 cents on every dollar when prices are raised, he said.

For Subscribers

FOR SUBSCRIBERSCBP leaders cut out of Trump ad buy decision

FOR SUBSCRIBERSAmerican passenger drafted goodbye texts to her family as Flydubai plane plummeted

FOR SUBSCRIBERSCornell rape allegation pushes embattled New York prosecutor into national spotlight

FOR SUBSCRIBERSAbdul El-Sayed tries to woo MAHA voters as Democrats seek inroads with RFK’s supporters

FOR SUBSCRIBERSKratom-like substances are popping up in a typically benign supplement

FOR SUBSCRIBERSGOP super PAC increases its spending for Sen. Jon Husted in tough Ohio race

FOR SUBSCRIBERSRecords reveal tumultuous marriage between slain New York Times executive and wife

FOR SUBSCRIBERSFrom clean energy warrior to ‘wall of shame,’ James Talarico reverses on a fossil fuel money pledge

FOR SUBSCRIBERSCongressional staff planned official trip with luxury stops in Italy and France weeks before election

FOR SUBSCRIBERSA harrowing ordeal aboard an Israel-bound plane

FOR SUBSCRIBERSOpenAI CEO Sam Altman to skip congressional hearing on rogue AI agents

FOR SUBSCRIBERSKey DOJ lawyers departed Trump ‘grand conspiracy’ probe amid pressure to produce, source says

FOR SUBSCRIBERSTrump’s new AI chatbot often links to a site launched under Clinton 26 years ago

FOR SUBSCRIBERSAt MAHA summit, industry CEOs the movement once vilified take the stage

FOR SUBSCRIBERSThis Paralympian has two goals: Win medals and give away $500,000 to her teammates

"Giving up price in the garbage business is a cardinal sin," Hoffman said. "The market loves pay for performance."

Analyst Stewart Scharf of Standard & Poor's said that by raising prices, Waste Management gains by avoiding a "deflationary environment" even if it loses some market share.

For 2008, net income was $1.09 billion, or $2.19 per share, down 6.5 percent from $1.16 billion, or $2.23 per share. Adjusting for several items, earnings were $2.22 per share in 2008. Revenue climbed to $13.39 billion from $13.31 billion.

Analysts expected full-year earnings of $2.21 per share on revenue of $13.47 billion.

"Certainly we expect the first quarter to be weak and we expect improvement in the economy by the end of the year, but the recent volatility makes it difficult to estimate the timing of the improvement," Chief Financial Officer Robert G. Simpson told analysts.

Waste Management said it expects to generate between $1.3 billion and $1.4 billion in cash that could be used for acquisitions.

Scharf said generating cash will help Waste Management pursue acquisitions.

Shares climbed 81 cents, or 2.9 percent, to close at $29.26.