Waste Management 2014 Annual Report Download - page 124

• Yield growth from our landfill and transfer station operations also improved slightly for both 2014 and
2013.
Recycling commodities — Decreases in the prices of the recycling commodities we sell resulted in revenue
declines of $53 million and $79 million for the years ended December 31, 2014 and 2013, respectively,
compared with the same prior year period.
Fuel surcharges and mandated fees — These revenues, which are predominantly generated by our fuel
surcharge program, decreased $2 million and increased $32 million for the years ended December 31, 2014 and
2013, respectively. These revenues fluctuate in response to changes in the national average prices for diesel fuel
on which our surcharge is based. We experienced a fuel price decline of approximately 2.4% in 2014, which
caused a slight decrease in our fuel surcharge revenues. These revenues increased in 2013 resulting from a
revision of the surcharge calculation implemented to better capture price increases intended to be recovered by
the surcharge. The mandated fees included in this line item are primarily related to pass-through fees and taxes
assessed by various state, county and municipal government agencies at our landfills and transfer stations.
Volume — Declines in our volume caused our revenue to decrease $188 million, or 1.4%, and $133 million,
or 1.0%, for the years ended December 31, 2014 and 2013, respectively, as compared with prior year periods,
driven primarily by declines in our collection business. Our volume fluctuations are generally attributable to
economic conditions, pricing changes, competition and diversion of waste by customers. Our revenue growth due
to volume has been negatively affected by our pricing strategy. We are experiencing volume declines due to the
loss of low margin customers that we are not willing to keep at current rates. Additionally, we are experiencing
losses of certain municipal contracts that are up for bid. As a result of both the very competitive environment and
our focus on reasonable returns, we continue to face challenges to keep existing contracts and to win new
contracts. Finally, we experienced revenue declines associated with the loss of certain large accounts in our
WMSBS organization.
Other drivers affecting the comparability of volumes for the periods presented include:
• We experienced revenue declines due to lower volumes in our material recovery facilities in 2014
primarily driven by the rationalization of our underperforming assets. Revenue increased due to higher
volumes in 2013 driven by additional recycling capacity that we added in 2012.
• We experienced revenue declines of approximately $23 million associated with the severe winter
weather conditions in the first quarter of 2014.
• We experienced higher landfill volumes in both comparable periods primarily driven by our municipal
solid waste business. In addition, higher special waste volumes in the Southern U.S. also contributed to
our higher landfill volumes in 2014.
• We experienced revenue increases due to higher volumes in our ancillary services, primarily driven by
increases in our Energy and Environmental Services, our WM Renewable Energy Program and our
portable self-storage services in 2014.
Acquisitions and Divestitures — Revenues increased $124 million and $292 million for the years ended
December 31, 2014 and 2013, respectively, due to acquisitions. The revenue increase due to acquisitions in both
2014 and 2013 was principally associated with the RCI operations acquired in July 2013. To a lesser extent, 2013
revenues increased due to the acquisition of Greenstar in January of that year, which is reported in our
“Recycling” line of business.
These revenues were offset partially by revenue decreases of $90 million and $6 million due to divestitures
for the years ended 2014 and 2013, respectively. The revenue decrease in 2014 is primarily due to (i) our
divestiture of our Puerto Rico operations and certain other collection and landfill assets in the second quarter of
2014; (ii) the divestiture of certain landfill and collection operations in our Eastern Canada Area in the third
quarter of 2014; and (iii) the divestiture of our Wheelabrator business in December 2014.
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