Analysis of Geographic Areas
Waste Management Inc. operates in 2 regions: U.S. and Canada.
Area Asset Turnover
Waste Management Inc., asset turnover by geographic area
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. | 1.28 | 1.10 | 1.23 | 1.28 | 1.30 |
| Canada | 0.80 | 0.73 | 0.79 | 0.83 | 0.74 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The asset turnover ratios for the U.S. and Canadian geographic areas indicate divergent levels of asset efficiency, although both segments followed a similar trajectory between 2017 and 2021.
- U.S. Geographic Area
- A gradual decline in asset turnover was observed from 2017 through 2020, with the ratio decreasing from 1.30 to a period low of 1.10. This downward trend was reversed in 2021, as the ratio increased to 1.28, nearly returning to the efficiency levels seen in 2018.
- Canadian Geographic Area
- The Canadian segment consistently exhibited lower asset turnover ratios than the U.S. operations. Performance in this region fluctuated, reaching a peak of 0.83 in 2018 and a low of 0.73 in 2020, before recovering to 0.80 by the end of 2021.
- Comparative Regional Analysis
- A significant gap in asset utilization exists between the two regions, with the U.S. consistently maintaining a higher ratio. Despite this difference in scale, both geographic areas experienced a synchronized dip in 2020 followed by a recovery in 2021, suggesting that external systemic factors impacted asset efficiency across both markets simultaneously.
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Area Asset Turnover: U.S.
Waste Management Inc.; U.S.; area asset turnover calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net operating revenues | 17,136) | 14,505) | 14,701) | 14,167) | 13,768) |
| Property and equipment, net of accumulated depreciation and amortization | 13,428) | 13,168) | 11,941) | 11,044) | 10,591) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 1.28 | 1.10 | 1.23 | 1.28 | 1.30 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Area asset turnover = Net operating revenues ÷ Property and equipment, net of accumulated depreciation and amortization
= 17,136 ÷ 13,428 = 1.28
Between 2017 and 2021, the relationship between revenue generation and capital investment exhibited a period of declining efficiency followed by a significant recovery. While net operating revenues and property and equipment both trended upward over the five-year period, the rate of growth differed, impacting the overall asset turnover.
- Net Operating Revenues
- Revenues demonstrated a general upward trajectory, growing from 13,768 million USD in 2017 to 17,136 million USD in 2021. A slight contraction occurred in 2020, where revenues decreased to 14,505 million USD from 14,701 million USD in the prior year. However, this was followed by a substantial increase of approximately 18% in 2021, marking the highest revenue level in the analyzed period.
- Property and Equipment, Net
- Net investments in property and equipment increased consistently every year throughout the period. Assets grew from 10,591 million USD in 2017 to 13,428 million USD by the end of 2021. This steady expansion indicates a continuous commitment to capital expenditure and infrastructure growth regardless of short-term revenue fluctuations.
- Area Asset Turnover
- The area asset turnover ratio experienced a steady decline from 1.30 in 2017 to a low of 1.10 in 2020. This downward trend suggests that during this timeframe, the growth in the asset base outpaced the growth in operating revenues, resulting in diminished asset productivity. A sharp reversal occurred in 2021, with the ratio rebounding to 1.28. This recovery was driven by the significant surge in net operating revenues, which effectively synchronized revenue generation with the expanded asset base.
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Area Asset Turnover: Canada
Waste Management Inc.; Canada; area asset turnover calculation
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| Selected Financial Data (US$ in millions) | |||||
| Net operating revenues | 795) | 713) | 754) | 747) | 717) |
| Property and equipment, net of accumulated depreciation and amortization | 991) | 980) | 952) | 898) | 968) |
| Area Activity Ratio | |||||
| Area asset turnover1 | 0.80 | 0.73 | 0.79 | 0.83 | 0.74 |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
1 2021 Calculation
Area asset turnover = Net operating revenues ÷ Property and equipment, net of accumulated depreciation and amortization
= 795 ÷ 991 = 0.80
The financial performance for the Canadian operations between 2017 and 2021 is characterized by fluctuating revenue streams and a relatively stable capital asset base, resulting in variable asset utilization efficiency.
- Net Operating Revenues
- Revenues exhibited a general upward trajectory, increasing from US$ 717 million in 2017 to US$ 795 million in 2021. A temporary contraction occurred in 2020, where revenues decreased to US$ 713 million, before achieving a significant recovery in 2021.
- Net Property and Equipment
- The asset base remained relatively consistent over the five-year period, ending at US$ 991 million. A notable reduction was observed in 2018, with assets dropping to US$ 898 million, followed by a steady increase through 2021.
- Area Asset Turnover
- The asset turnover ratio fluctuated between a minimum of 0.73 in 2020 and a maximum of 0.83 in 2018. The peak efficiency observed in 2018 was driven by the combination of rising revenues and a lower asset base. The decline to 0.73 in 2020 corresponds with the period of lowest revenue and an expanding asset base. As of December 31, 2021, the ratio improved to 0.80, reflecting a strong recovery in revenue generation relative to the invested capital.
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Net operating revenues
Waste Management Inc., net operating revenues by geographic area
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. | 17,136) | 14,505) | 14,701) | 14,167) | 13,768) |
| Canada | 795) | 713) | 754) | 747) | 717) |
| Total | 17,931) | 15,218) | 15,455) | 14,914) | 14,485) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
Net operating revenues exhibited a general upward trajectory between 2017 and 2021, characterized by steady growth in the first three years, a slight contraction in 2020, and a substantial surge in 2021. Total revenues increased from 14,485 million US dollars in 2017 to 17,931 million US dollars by the end of 2021.
- United States Revenue Trends
- The U.S. market serves as the primary revenue driver, accounting for the vast majority of total net operating revenues. Revenues climbed steadily from 13,768 million US dollars in 2017 to 14,701 million US dollars in 2019. A marginal decrease to 14,505 million US dollars was observed in 2020, followed by a significant expansion in 2021, where revenues reached 17,136 million US dollars.
- Canadian Revenue Trends
- Revenue from Canadian operations remained relatively stable but operated at a significantly smaller scale, ranging between 713 million and 795 million US dollars. Similar to the U.S. trend, a decline occurred in 2020, falling to 713 million US dollars from 754 million US dollars in 2019, before recovering to a period high of 795 million US dollars in 2021.
- Geographic Revenue Distribution
- A high level of geographic concentration is evident, with the U.S. market consistently contributing approximately 95% of total net operating revenues throughout the analyzed period. The Canadian market maintained a consistent but minor share of approximately 5% of the total revenue stream.
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Property and equipment, net of accumulated depreciation and amortization
Waste Management Inc., property and equipment, net of accumulated depreciation and amortization by geographic area
US$ in millions
| Dec 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | Dec 31, 2018 | Dec 31, 2017 | |
|---|---|---|---|---|---|
| U.S. | 13,428) | 13,168) | 11,941) | 11,044) | 10,591) |
| Canada | 991) | 980) | 952) | 898) | 968) |
| Total | 14,419) | 14,148) | 12,893) | 11,942) | 11,559) |
Based on: 10-K (reporting date: 2021-12-31), 10-K (reporting date: 2020-12-31), 10-K (reporting date: 2019-12-31), 10-K (reporting date: 2018-12-31), 10-K (reporting date: 2017-12-31).
The net property and equipment assets exhibit a consistent upward trajectory over the five-year period from 2017 to 2021, increasing from 11.56 billion US$ to 14.42 billion US$. This represents a total growth of approximately 24.7%, primarily driven by significant capital expansion within the United States market.
- U.S. Geographic Performance
- A steady and significant increase in net assets is observed in the U.S. region. Assets grew from 10.59 billion US$ in 2017 to 13.43 billion US$ by 2021. The most pronounced growth occurred between 2019 and 2020, where net property and equipment increased by approximately 10.3%, suggesting a period of intensified capital investment or acquisition activity during that timeframe.
- Canadian Geographic Performance
- The Canadian market displays relative stability with minimal fluctuation. After a slight decrease from 968 million US$ in 2017 to 898 million US$ in 2018, assets recovered and grew marginally to 991 million US$ by 2021. This indicates a maintenance-focused approach or a period of limited expansion in the Canadian territory compared to the domestic U.S. operations.
- Asset Distribution and Concentration
- The asset base is heavily concentrated in the United States. In 2017, U.S. property and equipment accounted for approximately 91.6% of the total; by 2021, this concentration increased to approximately 93.1%. The divergence in growth rates between the two regions indicates that the overarching increase in net property and equipment is almost exclusively attributable to U.S. expansions.
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