Waste Management Inc. (NYSE:WM)

Net Operating Profit After Taxes (NOPAT)

The NOPAT showed an initial increase from 1952 million US dollars in 2017 to a peak of 2286 million US dollars in 2018. Following this peak, there was a decline in the subsequent years, falling to 2119 million in 2019, decreasing further to 2018 million in 2020 before slightly recovering to 2064 million in 2021. Overall, the NOPAT demonstrates some volatility with a noticeable downturn after 2018.

Cost of Capital

The cost of capital remained relatively stable over the period under review. It started at 10.75% in 2017, increased slightly to 11.1% in 2018, then fluctuated modestly, dropping to 10.34% in 2020 before increasing again to 10.89% in 2021. These minor variations indicate a generally consistent cost environment for capital investment.

Invested Capital

Invested capital exhibited a steady upward trend from 17,686 million US dollars in 2017 to a peak of 23,729 million in 2020, followed by a minor decrease to 22,932 million in 2021. This growth over the years suggests continued investment and expansion, although the slight reduction in the last reported year may indicate some capital divestment or asset optimization.

Economic Profit

Economic profit showed significant fluctuation during the period. There was an improvement from 51 million US dollars in 2017 to 240 million in 2018, signaling better profitability relative to invested capital and cost of capital. However, from 2019 onward, economic profit turned negative, declining to -334 million in 2019 and further deteriorating to -435 million and -433 million in 2020 and 2021, respectively. This trend suggests that despite increases in invested capital and stable cost of capital, the returns generated were insufficient to cover the cost of capital after 2018.

Summary of Trends

Overall, the data reflects a period of growth in invested capital and initial improvement in operating profits and economic profit until 2018. Post-2018, profitability measures show a downturn, with economic profit turning negative, indicating challenges in generating returns that exceed the cost of capital. The cost of capital remained relatively constant, signifying that the negative shift in economic profit is more attributable to declining NOPAT or inefficiencies in capital use. The slight recovery in NOPAT in 2021 did not translate into improved economic profit, highlighting ongoing profitability concerns related to the invested capital base.

The financial data indicates fluctuations and trends in the profitability measures of the entity over the five-year period ending December 31, 2021.

Net Income Attributable to the Company

The net income shows a declining trend from 2017 through 2020, starting at 1,949 million US dollars in 2017, slightly decreasing to 1,925 million in 2018, followed by a more pronounced decrease to 1,670 million in 2019 and further down to 1,496 million in 2020. However, there is a rebound in 2021, with net income rising to 1,816 million, indicating a recovery after the decline in prior years.

Net Operating Profit After Taxes (NOPAT)

The NOPAT figures reveal a different pattern. Starting at 1,952 million US dollars in 2017, NOPAT increased substantially in 2018 to 2,286 million, peaking in that year. Afterward, it declined over the next two years to 2,119 million in 2019 and 2,018 million in 2020. By 2021, NOPAT experienced a slight increase to 2,064 million, indicating some stabilization or modest recovery in operating profitability after taxes.

In summary, while both net income and NOPAT exhibit declines starting around 2018 or 2019, net income shows a more significant decrease and a notable rebound by 2021, whereas NOPAT peaked earlier in 2018, followed by declines with a slight recovery by 2021. These patterns may reflect variations in non-operating income, expenses, taxes, or other adjustments impacting net income differently compared to operating profit.

The financial data over the five-year period ending December 31, 2021, shows distinct trends in both income tax expense and cash operating taxes.

Income Tax Expense

Income tax expense experienced a general increase from 2017 to 2021, with fluctuations during the intermediate years. The value rose significantly from $242 million in 2017 to $453 million in 2018. It then slightly decreased to $434 million in 2019 and further declined to $397 million in 2020. However, in 2021, there was a notable increase to $532 million, marking the highest expense in the period analyzed.

Cash Operating Taxes

Cash operating taxes demonstrated a downward trend from 2017 through 2020, followed by a sharp rise in 2021. Specifically, cash operating taxes decreased from $626 million in 2017 to $511 million in 2018 and further to $424 million in 2019. This downward trajectory continued with a reduction to $324 million in 2020. In 2021, this trend reversed dramatically as cash operating taxes surged to $689 million, surpassing all previous years in the data set.

Overall, while the income tax expense shows variability with an eventual upward movement to reach its peak in 2021, cash operating taxes reveal a more pronounced downward trend until 2020, followed by a significant increase in the last year. The contrasting movements in these two tax-related financial items in 2021 may indicate changes in tax policy application, operational performance, or other tax-related accounting factors impacting the company’s tax obligations.

The financial data reveals distinct trends in key balance sheet components over the five-year period ending December 31, 2021.

Total Reported Debt & Leases

The total reported debt and leases exhibit an overall upward trend from 2017 through 2020, increasing from approximately $9,976 million in 2017 to a peak near $14,326 million in 2020. This represents a significant increase of roughly 43% over three years. In 2021, a slight decline to $13,928 million is noted, indicating a minor reduction in indebtedness or lease obligations after reaching the high point the prior year.

Total Stockholders’ Equity

Stockholders' equity also shows a general increase over the reviewed period, rising from about $6,019 million in 2017 to a maximum of $7,452 million in 2020. This growth suggests accumulated retained earnings and possible capital contributions enhancing the company’s net asset base. However, equity decreases slightly in 2021 to $7,124 million, indicating some erosion following the peak, which could be due to net losses, dividends, or other equity-reducing activities.

Invested Capital

Invested capital follows a similar pattern to total debt and equity, with steady growth from $17,686 million in 2017 to $23,729 million in 2020. This growth, amounting to approximately 34%, reflects increased deployment of financial resources into the company's operations, likely contributing to expansion or asset acquisition. The figure slightly contracts to $22,932 million in 2021, aligning with the modest declines in both debt and equity components.

Overall, the data depicts growth in the company’s financial size and capital structure through 2020, with a slight retrenchment in debt, equity, and invested capital during 2021. This trend suggests a period of expansion followed by cautious tightening or normalization of the balance sheet in the most recent year.

The financial data reveals several noteworthy trends over the five-year period analyzed.

Economic Profit

The economic profit exhibited significant fluctuations, initially showing a positive value of 51 million USD at the end of 2017, followed by a substantial increase to 240 million USD in 2018. However, from 2019 onwards, economic profit declined sharply, becoming negative and reaching -334 million USD in 2019, with further deterioration to -435 million USD in 2020, and a marginal improvement to -433 million USD in 2021. This transition from profitability to sustained losses indicates challenges in generating returns above the cost of capital during the latter years.

Invested Capital

The invested capital demonstrated a generally upward trend from 2017 to 2020, rising from approximately 17.7 billion USD to 23.7 billion USD, suggesting ongoing investment or asset growth. In 2021, this figure slightly declined to 22.9 billion USD, indicating a modest reduction or reallocation of capital. This trend reflects the company's efforts to expand or maintain its asset base, despite the concurrent negative economic profit observed in recent years.

Economic Spread Ratio

The economic spread ratio, reflecting the difference between return on invested capital and the cost of capital, followed a similar trajectory to economic profit. It started at a low positive rate of 0.29% in 2017, improving significantly to 1.3% in 2018. Subsequently, it turned negative from 2019 onward, declining to -1.48%, then further to -1.83% and -1.89% by 2021. This negative spread indicates the company has consistently earned returns below its cost of capital in recent years, which aligns with the negative economic profit observed.

Overall, the data suggests a period of profitability and capital growth until 2018, followed by a challenging period characterized by investment in capital but declining returns and economic losses. The persistent negative economic spread ratio and economic profit imply that the company has faced difficulties in creating shareholder value during the latest years analyzed.

Adjusted Operating Revenues

There is a generally positive trend in adjusted operating revenues over the observed periods. From 2017 to 2019, revenues increased steadily from 14,495 million to 15,467 million US dollars. Despite a slight decline in 2020 to 15,223 million, revenues rose significantly in 2021 to 17,963 million US dollars, representing the highest level in the five-year span.

Economic Profit

The economic profit shows a marked negative trend after 2018. In 2017, economic profit stood at 51 million US dollars and experienced a substantial increase in 2018 to 240 million US dollars. However, from 2019 onwards, there was a sharp reversal, with economic profit turning negative and declining further to -334 million in 2019, -435 million in 2020, and slightly improving to -433 million US dollars in 2021. This indicates growing economic losses during the latter part of the period.

Economic Profit Margin (%)

The economic profit margin followed a pattern similar to economic profit. Starting at a low positive level of 0.35% in 2017, it rose to 1.61% in 2018, reflecting improved profitability relative to revenues. However, it turned negative in 2019 at -2.16%, further decreased to -2.86% in 2020, and slightly improved to -2.41% in 2021. This suggests that profitability relative to revenue deteriorated significantly after 2018 but showed minor improvement in 2021.

Overall Analysis

Despite the increase in adjusted operating revenues, economic profitability declined sharply after 2018, transitioning from positive to sustained negative values in both absolute economic profit and margin terms. The data indicates that the company was generating higher revenues while experiencing increasing economic losses, pointing towards rising costs, decreased operational efficiency, or other financial pressures impacting profitability. The minor improvement in economic profit and margin in 2021, while revenues surged, may suggest initial efforts towards recovering economic profitability, though results remain below earlier positive levels.