Waste Management Inc. (NYSE:WM)

Goodwill

Goodwill showed a steady increase from 6,247 million US dollars in 2017 to 6,532 million in 2019, followed by a significant jump to 8,994 million in 2020. This level was maintained with a slight increase to 9,028 million in 2021, indicating substantial acquisitions or revaluations during 2020 and stabilization thereafter.

Customer and Supplier Relationships

The value of customer and supplier relationships increased moderately from 880 million in 2017 to 949 million in 2018, then declined slightly to 906 million in 2019. A sharp rise occurred in 2020 to 1,436 million, with a slight decrease to 1,355 million in 2021. This pattern suggests enhanced valuation or acquisition of relationships notably during 2020, with minor revaluation or attrition in the following year.

Covenants Not-to-Compete

These decreased gradually overall, starting at 48 million in 2017 and increasing to 72 million in 2019 before declining to 43 million in 2021. This slight downward trend after 2019 could reflect less reliance on such covenants or expiration of agreements.

Licenses, Permits, and Other

The value of licenses, permits, and other intangible assets remained relatively stable, fluctuating between 109 and 142 million over the years. A noticeable increase happened in 2020 to 142 million, which was sustained into 2021, indicating an expansion or reevaluation in this category during the latter period.

Intangible Assets, Gross

This category showed a steady range from 1,052 million in 2017 to 1,118 million in 2018, followed by a slight dip in 2019, then a substantial increase to 1,646 million in 2020 and a minor decline to 1,540 million in 2021. The significant spike in 2020 aligns with notable growth in related intangible assets, particularly customer relationships.

Accumulated Amortization

Accumulated amortization consistently increased in absolute terms, from -505 million in 2017 to -642 million in 2021, reflecting ongoing amortization of intangible assets over time, which is a typical accounting process reducing the net value of intangibles.

Intangible Assets, Net

The net value of intangible assets started at 547 million in 2017, rose slightly to 572 million in 2018, then dropped to 521 million in 2019. A marked increase to 1,024 million in 2020 was observed, followed by a reduction to 898 million in 2021. This trend mirrors the gross intangible assets movement and accumulated amortization, indicating a significant recognition of assets in 2020 with some subsequent write-down or amortization effects.

Goodwill and Other Intangible Assets

The combined figure for goodwill and other intangible assets rose steadily from 6,794 million in 2017 to 7,053 million in 2019, then experienced a sharp increase to 10,018 million in 2020. A slight decrease to 9,926 million in 2021 suggests a plateauing or minor adjustment after substantial asset growth. The rise especially in 2020 underlines a pivotal year for asset acquisitions or valuation changes in intangible holdings.

Asset Trends

Reported total assets increased steadily from 21,829 million US dollars in 2017 to a peak of 29,345 million in 2020, with a slight decrease to 29,097 million in 2021. Adjusted total assets, which exclude goodwill, also showed an increasing trend from 15,582 million in 2017 to a high of 21,211 million in 2019, but then declined to 20,351 million in 2020 and further to 20,069 million in 2021. This divergence indicates that goodwill adjustments have a significant impact on the overall asset base, especially notable after 2019.

Equity Trends

Reported stockholders’ equity grew from 6,019 million in 2017 to a high of 7,452 million in 2020, before falling to 7,124 million in 2021. Conversely, adjusted stockholders’ equity, factoring out goodwill, displayed negative values from 2017 through 2018, briefly turned positive at 536 million in 2019, and then sharply declined again to negative figures in 2020 (-1,542 million) and 2021 (-1,904 million). This suggests that intangible assets, specifically goodwill, play a large role in reported equity and that underlying tangible equity may be under pressure or eroding in recent years.

Net Income

Reported net income attributable to the company showed a declining trend from 1,949 million in 2017 to a low of 1,496 million in 2020, followed by a recovery to 1,816 million in 2021. Adjusted net income closely mirrored the reported figures, with minor differences observed in 2017 and 2019 but identical values in 2018, 2020, and 2021. The consistency between reported and adjusted net income implies that goodwill adjustments do not materially affect profitability measures within the reported periods.

Summary Insights

The data highlight a continual growth in reported total asset and equity values until 2020, after which both slightly decline, possibly reflecting changing asset valuations or disposals. The adjusted measures, excluding goodwill, reveal more volatility and generally weaker equity positions, including negative adjusted equity values in most years, which raises considerations about asset quality or impairments related to intangible assets. The net income figures show resilience with a dip during 2020, possibly linked to external factors affecting earnings, followed by recovery in 2021. The close alignment between adjusted and reported net income suggests that goodwill does not significantly distort earnings, although it has a pronounced effect on asset and equity composition.

Net Profit Margin

The reported net profit margin shows a declining trend from 13.46% in 2017 to 9.83% in 2020, followed by a slight recovery to 10.13% in 2021. The adjusted net profit margin closely mirrors this pattern, although the adjustment causes minor variations in 2019 where it is slightly higher than the reported figure.

Total Asset Turnover

The reported total asset turnover decreased from 0.66 in 2017 and 2018 to a low of 0.52 in 2020 before recovering to 0.62 in 2021. The adjusted total asset turnover, which generally removes goodwill effects, consistently remains higher than the reported values, starting at 0.93 in 2017 and dropping to 0.73 in 2019, then improving to 0.89 in 2021. This indicates that goodwill significantly affects reported asset efficiency measures.

Financial Leverage

The reported financial leverage ratio remained relatively stable between 3.61 and 4.08 over the five years with a slight upward trend. Adjusted financial leverage data is largely unavailable except for an anomalously high value of 39.57 in 2019, suggesting either data inconsistency or a non-standard calculation approach for that year.

Return on Equity (ROE)

The reported ROE declined from 32.38% in 2017 to 20.08% in 2020, but rose again to 25.49% in 2021. Adjusted ROE data is only available for 2019 and is extremely elevated at 316.6%, an outlier likely caused by adjustments removing goodwill, or potential data irregularities. The absence of other years' adjusted ROE prevents trend analysis.

Return on Assets (ROA)

Reported ROA shows a downward trend from 8.93% in 2017 to 5.10% in 2020, followed by a recovery to 6.24% in 2021. The adjusted ROA consistently exceeds the reported figures each year, starting at 12.73% in 2017 and falling to 7.35% in 2020 before increasing again to 9.05% in 2021. The adjustment tends to reveal better asset profitability when goodwill is excluded.

Overall Insights

Across the observed period, the company's profitability and asset efficiency generally declined until 2020, with modest improvements in 2021. Adjustments for goodwill typically improve the appearance of asset turnover and returns, emphasizing the impact of intangible assets on reported financial ratios. Financial leverage remains stable in reported terms but appears questionable in adjusted metrics due to limited and inconsistent data. The unusual magnitude of the adjusted ROE in 2019 warrants further investigation to clarify underlying factors.

The financial data reveals a downward trend in both reported and adjusted net income attributable to Waste Management, Inc. from 2017 through 2020, followed by a partial recovery in 2021. The reported net income decreased from 1,949 million US dollars in 2017 to a low of 1,496 million US dollars in 2020 before increasing to 1,816 million US dollars in 2021. A similar trend is observed in adjusted net income, though the values are slightly higher in some periods, indicating minor adjustments primarily in earlier years.

Net profit margins, both reported and adjusted, exhibit a consistent decline over the same period, indicating diminishing profitability relative to revenue. The reported net profit margin fell from 13.46% in 2017 to 9.83% in 2020. Despite a slight improvement to 10.13% in 2021, the margins have not returned to the levels observed in 2017. Adjusted net profit margins follow a close pattern, beginning at 13.69% in 2017 and declining to 9.83% in 2020, also rising marginally to 10.13% in 2021.

Net Income Trends

Initially stable in 2017 and 2018, with a small difference between reported and adjusted figures. A decline in income occurred through 2019 and 2020, reflecting possibly unfavorable business conditions or increased expenses. The uptick in 2021 suggests some recovery efforts or improved operational performance.

Net Profit Margin Behavior

Margins declined steadily from 2017 to 2020, indicating either increased costs, reduced pricing power, or both. The small rebound in 2021 points to a partial regain of profitability efficiency but remains below previous peak levels.

Adjustment Effects

The differences between reported and adjusted net income and margins are minor, implying limited significant goodwill or other accounting adjustments impacting profitability during the period.

Total Assets

Reported total assets exhibited a steady increase from 21,829 million US dollars at the end of 2017 to a peak of 29,345 million in 2020, followed by a slight decrease to 29,097 million in 2021. Adjusted total assets, which exclude goodwill, showed a similar upward trend reaching a peak of 21,211 million in 2019 before declining notably to 20,069 million by 2021. This suggests a reduction in asset base after adjustments, particularly from 2019 onwards.

Total Asset Turnover

Reported total asset turnover remained stable at 0.66 in 2017 and 2018 but declined significantly to 0.56 in 2019 and further to 0.52 in 2020, before recovering somewhat to 0.62 in 2021. The adjusted total asset turnover started at a higher efficiency level of 0.93 in 2017, slightly decreasing to 0.73 in 2019, then improving moderately to 0.89 by 2021. The adjusted turnover consistently outperformed the reported turnover throughout the period, indicating better asset utilization when excluding goodwill.

Overall Insights

The data reveals that the company’s asset base grew over time but faced a decline in the latest year assessed, particularly after adjusting for goodwill. The efficiency of asset utilization, as measured by turnover ratios, experienced a downturn mid-period but showed signs of recovery by 2021. The consistent gap between reported and adjusted turnover ratios implies that goodwill plays a significant role in the asset base without corresponding to revenue-generating capacity, highlighting the importance of considering adjusted figures for operational efficiency analysis.

The financial data shows a general increase in reported total assets from 2017 to 2020, rising from $21,829 million to $29,345 million, followed by a slight decrease to $29,097 million in 2021. Adjusted total assets also demonstrate growth from 2017 through 2019, increasing from $15,582 million to $21,211 million, but then decline in the subsequent years, reaching $20,069 million by 2021.

Reported stockholders’ equity experienced a steady increase between 2017 and 2020, growing from $6,019 million to $7,452 million, but it slightly decreased to $7,124 million in 2021. In contrast, the adjusted stockholders' equity values are consistently negative or near zero for most years, with a slight positive peak in 2019 at $536 million, indicating that once goodwill adjustments are considered, equity position appears significantly weaker or more volatile.

The reported financial leverage ratio remains relatively stable with a gradual increase from 3.63 in 2017 to 4.08 in 2021, pointing towards a rising reliance on debt relative to equity. The adjusted financial leverage ratio shows an exceptionally high value of 39.57 in 2019; the absence of data in other years makes it difficult to establish a trend, but this peak suggests significant impacts from adjustments, likely due to changes in goodwill or related intangible assets affecting the equity base.

Asset Trends

Reported assets grew consistently until 2020, then saw a minor decline in 2021; adjusted assets increased through 2019 but declined thereafter.

Equity Analysis

Reported equity showed a steady upward trend until 2020 with a slight fall in 2021; adjusted equity reveals volatility and negative values over most years, highlighting the influence of goodwill adjustments.

Financial Leverage Patterns

Reported leverage displays a gentle upward trajectory, indicating increasing debt use, whereas adjusted leverage shows a singular very high value, suggesting significant leverage after adjustment for goodwill at least in 2019.

The financial data reveals several notable trends regarding profitability and equity over the five-year period. The reported net income attributable to the company shows a declining trend from 2017 through 2020, decreasing from $1949 million to $1496 million. There is a reversal of this trend in 2021 with net income rising to $1816 million. The adjusted net income closely follows the reported figures with a slight variation in 2017 and 2019, indicating adjustments have a minimal structural impact on net income presentation.

Stockholders’ equity presents a contrasting pattern when comparing reported and adjusted amounts. The reported stockholders' equity demonstrates a generally upward trend from 2017 to 2020, growing from $6019 million to $7452 million, followed by a slight decline to $7124 million in 2021. The adjusted stockholders' equity shows significant volatility and largely negative figures, fluctuating from negative values in 2017 (-$228 million) and 2018 (-$155 million) to a positive peak in 2019 ($536 million), then falling sharply to negative values in 2020 (-$1542 million) and further in 2021 (-$1904 million). This suggests substantial adjustments related to goodwill or other items that significantly affect the equity base.

Return on equity (ROE) based on reported data declines steadily from 32.38% in 2017 to 20.08% in 2020, then recovers somewhat to 25.49% in 2021, paralleling the net income trajectory. This decline and partial recovery imply a moderation in profitability relative to equity until 2021. The adjusted ROE exhibits an extraordinary spike in 2020 to 316.6%, which is likely driven by a disproportionately low or negative adjusted equity figure for that period, causing inflated ROE values that do not align with typical financial performance indicators.

Overall, the reported figures indicate a company experiencing a downturn in earnings and profitability metrics between 2017 and 2020, with an improvement in 2021. The adjusted figures, likely excluding goodwill and similar intangible adjustments, reveal significant distortions in equity and profitability measures, highlighting potential risks or accounting complexities that should be considered in evaluating the company’s financial health.

Net Income Trends

Reported and adjusted net income decreased gradually from 2017 to 2020 and improved in 2021.

Stockholders’ Equity Trends

Reported equity grew until 2020 then slightly declined; adjusted equity showed high volatility with notable negative values.

Return on Equity (ROE)

Reported ROE declined from 2017 to 2020 with moderate recovery in 2021; adjusted ROE spiked extraordinarily in 2020, indicating distorted ratios.

Adjustment Impact

Adjustments cause significant changes in equity and profitability indicators, particularly volatile adjusted equity and ROE.

The financial data reflects several notable trends over the five-year period ending in 2021. Reported net income attributable to the company shows a general decline from 2017 through 2020, falling from $1,949 million to $1,496 million. However, in 2021 there is a rebound with net income increasing to $1,816 million, although it remains below the 2017 peak. The adjusted net income follows a similar pattern, starting slightly higher than the reported figures in 2017 at $1,983 million, dropping to $1,496 million in 2020, and then rising again to $1,816 million in 2021.

Reported total assets display a consistent upward trajectory from 2017 to 2020, increasing from $21,829 million to $29,345 million, followed by a slight decrease to $29,097 million in 2021. In contrast, adjusted total assets also rise sharply from 2017 to 2019, going from $15,582 million to $21,211 million, but thereafter decline over the next two years to $20,069 million in 2021. This suggests that adjustments, possibly related to goodwill or asset revaluations, materially affect the total asset base and its trend.

Return on assets (ROA) based on reported data declines steadily from 8.93% in 2017 to 5.10% in 2020, then improves modestly to 6.24% in 2021. The adjusted ROA follows a comparable trajectory but with higher values throughout, starting at 12.73% in 2017, decreasing to 7.35% in 2020, and then recovering to 9.05% in 2021. The adjusted figures indicate a stronger underlying asset profitability when excluding or adjusting for certain accounting elements such as goodwill.

Net Income

Both reported and adjusted net income declined from 2017 to 2020, with a notable partial recovery in 2021.

Total Assets

Reported total assets increased significantly until 2020 and plateaued in 2021, while adjusted total assets peaked earlier in 2019 and decreased thereafter, indicating adjustments impact asset valuation trends.

Return on Assets (ROA)

ROA figures demonstrate declining profitability from 2017 to 2020 with a subsequent improvement in 2021; adjusted ROA consistently exceeds reported ROA, suggesting better asset efficiency when adjustments are applied.

Overall, the data reveals a period of declining profitability and asset efficiency until 2020, followed by signs of recovery in 2021. Adjustments, likely involving goodwill, significantly influence asset valuations and profitability metrics, highlighting the importance of analyzing both reported and adjusted figures to understand the company’s financial performance fully.