Waste Management 2014 Annual Report Download - page 126

The decrease in labor and related benefits in 2014 as compared with 2013 was due to:
• Lower headcount and contract labor due to lower volumes in our collection line of business and
operating efficiencies in our recycling line of business;
• Lower costs resulting from recent divestitures, particularly the divestiture of our Puerto Rico
operations, offset in part by;
• Higher wages due to merit increases effective in the second quarter of 2013 and 2014; and
• Increased health and welfare costs.
The increase in labor and related benefits in 2013 as compared with 2012 was due to:
• Higher wages due to merit increases effective in the second quarter of 2013;
• Higher incentive compensation expense in 2013;
• Higher contract labor principally attributed to the recycling line of business;
• Recent acquisitions, principally the Greenstar acquisition, offset in part by; and
• Lower headcount resulting principally from the flexing of our costs in response to lower collection
volumes.
Maintenance and repairs — The increase in 2013 compared to 2012 was driven by (i) the Greenstar
acquisition and (ii) higher internal shop labor costs due in part to higher incentive compensation and merit
increases.
Subcontractor costs — The increase in 2014 was driven by (i) remediation services within our Energy and
Environmental Services business and (ii) the RCI operations acquired in July 2013; offset in part by the volume
decline related to the loss of certain large accounts in our WMSBS organization. The decrease in 2013 was
driven primarily by the volume decline associated with the loss of certain large accounts in our WMSBS
organization. These decreases were offset, in part, by higher costs associated with the acquired RCI operations.
Cost of goods sold — The decrease in cost of goods sold in 2014 is due to (i) increased efforts to reduce
controllable recycling rebates paid to customers; (ii) better alignment of rebate structures to commodity prices for
new recycling contracts; (iii) ongoing recycling business improvement efforts around inbound quality control and
(iv) lower commodity prices. These cost decreases were offset in part by our business in portable self-storage
services and remediation services. The increase in cost of goods sold in 2013 is due in large part to higher
customer rebates resulting from higher volumes in our recycling commodity business driven primarily by the
acquired Greenstar operations.
Fuel — The decrease in fuel expense in both 2014 and 2013 when compared to the prior year periods was
driven by (i) lower fuel purchases due to reduced collection volumes; (ii) lower costs resulting from the
conversion of our fleet to CNG vehicles; (iii) lower fuel prices and (iv) retroactive CNG fuel excise credits.
Disposal and franchise fees and taxes— The increase in costs in both 2014 and 2013 can be attributable to
(i) higher disposal fees and taxes due to higher landfill volumes and (ii) higher municipal franchise fees relating
to the collection line of business. A disposal surcharge at one of our waste-to-energy facilities in 2013 affected
the comparability in both periods.
Landfill operating costs — Significant items affecting the comparability of expenses for the periods
presented include (i) unfavorable adjustments in 2014 and 2012 as well as favorable adjustments in 2013 related
to changes in U.S. Treasury rates used to discount the present value of our environmental remediation obligations
and recovery rates and (ii) higher leachate costs for all comparable periods.
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