Waste Management 2013 Annual Report Download - page 124

Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
This section includes a discussion of our results of operations for the three years ended December 31, 2013.
This discussion may contain forward-looking statements that anticipate results based on management’s plans that
are subject to uncertainty. We discuss in more detail various factors that could cause actual results to differ from
expectations in Item 1A, Risk Factors. The following discussion should be read in light of that disclosure and
together with the Consolidated Financial Statements and the notes to the Consolidated Financial Statements.
Overview
Every day, we are helping industries, communities and individuals reduce, reuse and remove waste better
through sound sustainability strategies. We have a precise day-to-day focus on collecting and handling our
customers’ waste efficiently and responsibly. Meanwhile, we are also developing and implementing new ways to
handle and extract value from waste. Our employees are committed to delivering environmental performance —
our mission is to maximize resource value, while minimizing environmental impact, so that both our economy
and our environment can thrive. Drawing on our resources and experience, we actively pursue projects and
initiatives that benefit the waste industry, the customers and communities we serve and the environment.
We are also committed to providing long-term value to our stockholders by successfully executing on our
strategic goals of optimizing our business, knowing and servicing the customer better than anyone else, and
extracting more value from the materials we handle. In pursuit of these long-term goals, we have sharpened our
focus on the following key priorities:
‰Pursue revenue growth through customer-focused segmentation, pricing discipline and strategic
acquisitions;
‰Continually emphasize cost control and investment in technology and systems that enhance the efficiency
of our operations; and
‰Invest in emerging technologies that offer alternatives to traditional disposal and generate additional
value from the waste, recycling and other streams we manage.
We believe that execution of our strategy through these key priorities will drive continued growth and
leadership in a dynamic industry, as customers increasingly seek non-traditional solutions.
Notable items of our 2013 financial results include:
‰Revenues of $14.0 billion in 2013 compared with $13.6 billion in 2012, an increase of $334 million, or
2.4%. This increase in revenues is primarily attributable to (i) positive revenue growth from yield on our
collection and disposal operations of $235 million, or 2.1%, and (ii) revenue from acquisitions, driven in
large part by our acquisitions of Greenstar and RCI, which increased revenues by $138 million and $80
million, respectively. These increases were partially offset by lower volumes, which decreased our
revenues by $133 million;
‰Operating expenses of $9.1 billion in 2013, or 65.2% of revenues, compared with $8.9 billion, or 65.1%
of revenues, in 2012. This increase of $233 million is largely due to (i) our acquisition of Greenstar,
which increased operating expenses by $131 million, and was primarily related to cost of goods sold and,
to a lesser extent, labor and related benefits and other categories; (ii) higher labor and related benefits due
to merit increases and higher incentive compensation costs attributed to higher anticipated payouts and
(iii) higher costs from the acquired RCI operations, primarily subcontractor costs and, to a lesser extent,
cost of goods sold. The increases attributable to Greenstar and RCI were incurred in connection with the
acquisition revenues discussed above;
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