Waste Management Inc. (NYSE:WM)

The financial data for the reviewed periods reveals several notable trends in the company's operating performance and capital efficiency.

Net Operating Profit After Taxes (NOPAT)

The NOPAT shows an overall upward trend from 2017 to 2018, increasing from 1,952 million US dollars to 2,286 million US dollars. However, from 2018 onwards, there is a decrease in 2019 to 2,119 million, followed by a further decline in 2020 to 2,018 million. In 2021, there is a slight recovery to 2,064 million. This pattern indicates some fluctuation in profitability with a peak in 2018 and a modest rebound in the most recent year.

Invested Capital

Invested capital consistently grows from 17,686 million US dollars in 2017 to a peak of 23,729 million in 2020, before experiencing a minor contraction to 22,932 million in 2021. The steady increase over the period suggests ongoing investments and asset accumulation, with a slight retrenchment in the final year under review.

Return on Invested Capital (ROIC)

The ROIC increases notably between 2017 and 2018, rising from 11.04% to 12.4%, reflecting improved efficiency in generating returns from the capital invested. Subsequently, ROIC declines sharply to 9.36% in 2019 and further to 8.5% in 2020, indicating reduced capital productivity in these years. In 2021, there is a modest improvement to 9%, although it remains below earlier levels. This downward trend correlates with the fluctuating NOPAT and growing capital base, implying that the returns have not kept pace proportionately with capital increases.

In summary, while invested capital has expanded over the period, operating profits have been variable, peaking in 2018 and declining thereafter with a slight recovery in 2021. The efficiency measure, ROIC, mirrored this trajectory by improving initially but then diminishing, highlighting challenges in maintaining returns proportional to capital investment growth. These patterns suggest potential operational or market pressures affecting profitability despite continued capital deployment.

Operating Profit Margin (OPM)

The operating profit margin demonstrated a fluctuation over the five-year period. It started at 17.78% in 2017, experienced a slight increase to 18.73% in 2018, then showed a declining trend over the next three years, reaching 15.32% by 2021. This indicates a reduction in operational efficiency or increased costs impacting profitability from 2018 onward.

Turnover of Capital (TO)

Turnover of capital remained relatively stable in 2017 and 2018 at 0.82 and 0.81 respectively; however, it declined notably in 2019 and 2020 to 0.68 and 0.64. By 2021, it recovered somewhat to 0.78. This pattern reflects a period of reduced asset efficiency in generating revenue around 2019-2020, followed by a partial rebound in the last year.

1 – Effective Cash Tax Rate (CTR)

The indicator showed an increasing trend from 75.72% in 2017 to a peak of 86.16% in 2020, before falling back to 74.98% in 2021. A higher value here implies a lower effective cash tax rate. The rise until 2020 suggests improved tax management or benefits, while the decrease in 2021 may indicate less favorable tax conditions or changes in tax strategy.

Return on Invested Capital (ROIC)

ROIC rose from 11.04% in 2017 to a peak of 12.4% in 2018 but then exhibited a downward trend to 8.5% in 2020, with a slight recovery to 9% in 2021. This trajectory signals diminishing returns from investments in capital during the middle years, with some improvement observed in the most recent period.

Summary of Trends

Overall, the financial data suggest that the company experienced peak performance around 2018 across multiple metrics, including operational profitability and return on invested capital. Post-2018, there was a general decline in efficiency and profitability indicators, with some signs of recovery in 2021. The turnover of capital and ROIC both declined notably from 2019 through 2020, indicating challenges in asset utilization and investment returns during this period. Tax efficiency improved until 2020 but reversed slightly in 2021. The consistent decrease in operating profit margin after 2018 points to possible cost pressures or operational challenges affecting profitability.

Net Operating Profit Before Taxes (NOPBT)

The net operating profit before taxes demonstrated a fluctuating trend from 2017 to 2021. Starting at 2,578 million USD in 2017, it increased to 2,797 million USD in 2018, followed by a decline to 2,543 million USD in 2019 and further to 2,342 million USD in 2020. In 2021, the NOPBT rebounded to 2,753 million USD, approaching the peak levels observed earlier in the period.

Adjusted Operating Revenues

Adjusted operating revenues showed a generally upward trajectory over the analyzed period. Beginning at 14,495 million USD in 2017, revenues increased steadily to 14,933 million USD in 2018 and 15,467 million USD in 2019. There was a slight decline in 2020 to 15,223 million USD, but a significant increase occurred in 2021, reaching 17,963 million USD, the highest value within the period.

Operating Profit Margin (OPM)

The operating profit margin exhibited a downward trend throughout the five-year span. The margin was highest in 2018 at 18.73%, following 17.78% in 2017. From 2019 onward, the margin consistently decreased, recording 16.44% in 2019, 15.38% in 2020, and 15.32% in 2021. This decline indicates that despite growth in operating revenues, profitability relative to revenues diminished.

Summary of trends and insights

The financial data indicate a complex dynamic between revenue growth and profitability. Adjusted operating revenues showed resilience and overall growth, particularly strong in the most recent year. However, the operating profit margin declined steadily, suggesting increased costs or reduced efficiency in generating profit from revenues. The net operating profit before taxes followed a fluctuating path, mirroring the movements in margin and revenues but ending near the initial peak level. These trends may highlight challenges in sustaining profit margins amid expanding revenue and possibly changing operational conditions.

Adjusted Operating Revenues

The adjusted operating revenues exhibited a generally upward trend over the analyzed period. Starting from US$ 14,495 million at the end of 2017, revenues increased steadily each year until 2019, reaching US$ 15,467 million. A slight decline was observed in 2020 to US$ 15,223 million, potentially reflecting adverse conditions during that year. However, the revenues rebounded significantly in 2021 to US$ 17,963 million, marking the highest value within the period and indicating a strong recovery or growth phase.

Invested Capital

The invested capital showed a consistent and notable increase from 2017 to 2020. It rose from US$ 17,686 million at the end of 2017 to US$ 23,729 million by the end of 2020, representing a substantial growth over these four years. In 2021, invested capital experienced a moderate decline to US$ 22,932 million, which may suggest some divestments or capital optimization efforts after sustained growth.

Turnover of Capital (TO)

The turnover of capital ratio experienced a downward trend from 2017 through 2020, beginning at 0.82 and declining steadily to 0.64 by the end of 2020. This trend indicates diminishing efficiency in generating revenues from the invested capital during this period. In 2021, the ratio improved to 0.78, suggesting a recovery in capital efficiency in conjunction with the increase in revenues. Despite this improvement, the turnover of capital in 2021 remains below the levels observed in 2017 and 2018, highlighting room for further efficiency enhancements.

The financial data reveals several notable trends over the five-year period ending December 31, 2021.

Cash Operating Taxes

The amount of cash paid as operating taxes showed a decreasing trend from 2017 to 2020, declining from $626 million in 2017 to $324 million in 2020. However, in 2021, there was a significant reversal, with tax payments rising sharply to $689 million, exceeding the initial 2017 level. This fluctuation indicates variability in tax liabilities or tax payments over the period.

Net Operating Profit Before Taxes (NOPBT)

NOPBT fluctuated during the period but remained relatively stable around the $2.3 billion to $2.8 billion range. The profit peaked in 2018 at $2,797 million, followed by a decline over the next two years, reaching a low of $2,342 million in 2020. In 2021, there was a recovery to $2,753 million, close to prior peak levels. The trend suggests resilience in operating profitability despite fluctuations.

Effective Cash Tax Rate (CTR)

The effective cash tax rate displayed a downward trend from 2017 through 2020, falling from 24.28% in 2017 to a low of 13.84% in 2020. This trend may reflect tax planning strategies, changes in tax laws, or shifts in profitability mix. In 2021, however, the tax rate increased sharply to 25.02%, the highest in the five-year span, aligning with the increased cash tax payments observed in that year.

Overall, the data points to a period of declining tax liabilities and tax rates through 2020, followed by a pronounced increase in 2021. Operating profits experienced a mild decline before rebounding in the final year. These patterns suggest that tax-related factors had a considerable impact on the company's financials, notably with the reversal in both cash taxes and effective tax rate in 2021, which could warrant further investigation into underlying causes such as changes in tax policy, income composition, or one-time items.