Bloomsburg Investment Group Equity Analysis Waste Management (WM) Analyst: Daniel Kurp: Class of 2021 Jon Molloy: Class of 2020 Zach Pyers, Dean Laubach: Class of 2022

Bloomsburg Investment Group Opinion: As a group, the industrials sector believes that Waste Management (WM) will be a strong addition to the Bloomsburg Investment Group Portfolio. Waste Management will provide an industry that the portfolio does not include. This addition will further diversify the industrials holdings to be a better representation of the industrials sector. We expect strong returns in WM from many opportunities that the company is pursuing especially he further investment and development in the recycling industry. With the company acquiring new companies and furthering investment, the group believes that the returns the stock has produced will continue in the future. We believe in the company and especially in the corporate governance. With many individuals having decades of experience at the company, we believe that their guidance will provide a very bright future for the company. Being the leader in the industry in market share and sustainability, we believe that Waste Management is set up to compete at a very high level as well as innovate the waste management industry.

Corporate Summary: Corporate Details: Name Waste Management Inc Waste Management (WM) is a waste management environmental Ticker WM corporation with services to residential, commercial, industrial, and municipal customers throughout . The company currently has Domicile United States operations in The United States as well as Canada. As the largest environmental waste company, Waste Management currently holds a 37% Sector Industrials market share in the waste market. Waste Management operates in 8 main Industry Waste Management sectors including: collection, landfill, transfer, recycling, recycling commodities, recycling brokerage services, and other. “Other” including Exchange NEW YORK STOCK EXCHANGE, INC. construction and remediation services, services associated with the disposal Last Close 111.35 of fly ash, in-plant services, specialized disposal services for oil and gas exploration and production operations. Waste Management breaks these 17 Price 52 Wk High 121.77 areas of operations into 3 geographical tiers. Tiers comprised of 1: Price 52 Wk Low 83.22 operations across southern US. Tier 2 includes southern California, Eastern Canada, , and . Tier 3 encompasses the Pacific Latest Dividend 0.51 Northwest, Northern California, Mid-Atlantic US, peninsula, Illinois, and Missori. The company currently owns/operates 247 solid waste landfills, Dividend Yield % TTM 1.80 5 secure hazardous waste landfills 314 transfer stations. Based in Houston, Beta 5 Yr (Mo­End) 0.61 Texas, Waste Management was founded in 1968 by Wayne Hiuzenga and Dean Buntrock. With 43,700 employees Waste Management is led by Avg Daily Volume (3 Mo) 1,837,728.55 President/CEO/Director James C. Fish. Shares Outstanding (mil) 424.24 Number of Analysts 5 10/27/2019 Waste Management Inc US Dollar Page 1 of 10

Source: Morningstar Direct Waste Management Inc WM

Corporate Governance: Board of Directors

Frank M. Clark Jr. Frank Clark served as chairman and chief executive officer of ComEd Corporation from 2005 to 2012. Mr. Clark is currently also a director of Aetna, Inc. and the president of the Board of Education Andres R. Gluski Andrés Gluski has served as president, chief executive officer and a director of The AES Corporation (AES). Patrick W. Gross Pat Gross has been chairman of The Lovell Group since October 2001. Mr. Gross is currently a director of Career Education Corporation, Liquidity Services, Inc., and Rosetta Stone, Inc. Victoria M Holt Victoria Holt joined Proto Labs, Inc.as president, chief executive officer and a director in 2014.. Kathleen M Mazzarella Kathleen Mazzarella is president, chief executive officer and chairman of the board of directors of Graybar Electric Company, Inc. Ms. Mazzarella also currently serves as chairman of the board of the Federal Reserve Bank of St. Louis. William B Plummer William Plummer served as executive vice president and chief financial officer for United Rentals, Inc. from 2008 to 2019. Mr. Plummer is also a director of Global Payments Inc. and chairman of NESCO. John C. Pope John Pope has served as chairman of the board of PFI Group since July 1994. Mr. Pope is also currently chairman of the board of R.R. Donnelley & Sons Company and a director of The Kraft Heinz Company and Talgo S.A. Thomas H. Weidemeyer Thomas Weidemeyer served as senior vice president of United Parcel Service, Inc. Mr. Weidemeyer is also a director of NRG Energy, Inc., The Goodyear Tire & Rubber Company, and Amsted Industries Inc. James C Fish James C Fish Jr is 57 years old and was put into the position in July of 2016. He has been with the company since 2001, holding a variety of positions including CFO and vice president of a variety of regions. Before working at Waste Management, James had worked at Westec, Trans World Airlines, and KPMG Peat Marwick.

Corporate Governance: Top Management

James C Fish Jr: President and CEO James C Fish Jr is 57 years old and was put into the position in July of 2016. He has been with the company since 2001, holding a variety of positions including CFO and vice president of a variety of regions. Before working at Waste Management, James had worked at Westec, Trans World Airlines, and KPMG Peat Marwick. John J Morris: Executive Vice President and COO John Morris is at the age of 50 and was named executive VP in December of 2018. John has been with the company for 20 plus years including market area general manager of NYC, chief strategy officer and area vice president of greater mid atlantic area. Devina A Ranklin: Senior Vice President, CFO At the age of 43, Devina was promoted in February of 2017. Being with the company since 002 she has held several corporate positions including treasurer. Prior to joining Waste Management, Devina was with Ernst and Young and Arthur Anderson. Charles C Boettcher: Senior Vice President, Chief Legal Officer Charles is 45 years old and has been in his position since January of 2017 beginning with the company in 2017. Prior to being with Waste Management, Charles had held executive roles at Oilfield Water Logistics in Dallas. Nikolaj H Sjoqvist: Senior Vice President, Chief Digital Officer Beginning his position in October of 2017, Nikolaj is 46 years old and has been with the company since 2012. Prior to Waste Management, Nikolaj was a consultant for McKinsey and Company, as well as Hewlett-Packard Company. Tamla D Oates-Forney: Senior Vice President, Chief HR Officer Tamla is 47 years old and promoted in May of 2019. She has had a successful career prior to Waste Management working for General Electric for 20 years. Michael J Watson: Senior Vice President, Chief Customs Officer Michael at the age of 49 has been in his position since October of 2018. Watson has had an extensive career at Waste Management being with the company since 1992 and holding a variety of corporate and field based roles. Steven R Batchelor: Senior Vice President of Field Operations Beginning his position in January of 2019, 61 year old Steven Batchelor and started at WM in 1997. Prior to Waste Management, Steve had held leadership roles at Browning Ferris Industries Tara J Hemmer: Senior Vice President of Field Operations Tara J Hemmer is 46 years old and has been in her position since January of 2019, beginning at the company in 1999. She has an active role in the Environmental Education and Research Foundation.

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Source: Morningstar Direct Waste Management Inc WM

Corporate Governance: Top Shareholders & Insider Transactions Top Institutional Holdings 1)The Vanguard Group: Shares: 35,963,494 (8.48%) 2)BlackRock Inc.: Shares: 32,164,494 (7.58%) 3)State Street Corp.: Shares: 20,188,463 (4.76%) 4)Bill and Melinda Gates Foundations Asset Trust: Shares: 18,633,672 (4.39%) 5)Cascade Investment LLC: Shares: 14,483,672 (3.41%)

Top Individual Holdings 1)Trevathan James Jr: 398,038 (.094%) 2)James Fish Jr: 249,858 (.059%) 3)John Morris: 80,151 (.019%) 4)John Charles Pope: 53,110 (.013%) 5)Jeff Harris: 51490 (.012%)

Insider Trading 1)CEO James Fish sold 84,3414 at $116.51 7/08/19 2)Officer Michael Watson sold 8019 at $119.40 9/3/2019 3)Officer Tara Hemmer sold 4739 shares at $118.04 9/09/2019 4)Officer John Morris sold 42,795 at $106.38 4/29/19 5)Officer Jeff Harris sold 24,500 at $90.00 11/08/18

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Source: Morningstar Direct Waste Management Inc WM

Financial Summary, Year End 2016 (in millions) Financial Highlights Market Capitaliza�on 47,239.26 -Q3 earning per share beat at $1.19, expected $1.16 Total Revenue 14,914.00 Gross Profit 5,665.00 -Q3 Revenue at $3.97 billion, a 3.8% increase year over year Opera�ng Income 2,735.00 -Revenue growth of 3% in 2018 year over year Net Income Cont Ops 1,923.00 Net Income 1,925.00 -Q3 Collection services 6% increase year over year Current Assets 2,645.00 Cash 61.00 -Q3 Other services saw a 9% increase year over year Total Assets 22,650.00 -2018 Deferred Revenue 3.8% increase year over year Current Liabili�es 3,108.00 Long­term Liabili�es 13,266.00 -Tier 1 saw an increase of 6.8% in revenue year over year Total Liabili�es Total Equity 6,275.00 -At the beginning of 2019, dividend was increased by 10% to $2.05 on a yearly basis Opera�ng Cash Flow 3,570.00 Inves�ng Cash Flow ­2,169.00 -December, 2018, Board of Directors authorized a share Financing Cash Flow ­1,508.00 repurchase program of up to $1.5 billion dollars Change In Cash ­107.00 EBITDA 4,227.00 -EBITA growth 7.8% growth year over year in collection and Enterprise Value 57,682.26 disposable business sectors Capital Expenditure ­1,694.00 P/E Ra�o Forward 23.98 -5.3 percent organic revenue growth in Q3 year over year in collection and disposable PEG Ra�o 2.98 Dividend Yield % TTM 1.80

Investment Growth

Time Period: 10/1/2016 to 9/30/2019

100.0% 90.0%

80.0% 70.0%

60.0% 50.0%

40.0% 30.0% 20.0%

10.0% 0.0%

-10.0% 12/2016 3/2017 6/2017 9/2017 12/2017 3/2018 6/2018 9/2018 12/2018 3/2019 6/2019 9/2019

Waste Management Inc 92.1% S&P 500 TR USD 45.8% 10/27/2019 Waste Management Inc US Dollar Page 4 of 10

Source: Morningstar Direct Waste Management Inc WM

WM Acquires Petro Waste Environmental Increasing Urbanization to Boost Demand March 2019, Waste Management Energy Services, a subsidiary of A study done by Technavio, a leading global technology Waste Management, announced the acquisition of Petro Waste research and advisory company, showed that from Environmental, a leading provider of advanced oilfield 2019-2023, solid global municipal waste is expected to environmental services and solid waste disposal. Petro Waste grow by $34.04 billion USD. This market is driven by Environmental serves with a strong presence in the Permian Basin increasing urbanization. Although the growth is expected and Eagle Ford Shale Play. This acquisition is expected to create momentum for significant and sustainable business growth. Petro to be greatest in fast growing countries like China, India, or Waste Environmental currently is permitted to 5 landfills, acquired Nigeria, this still creates a large demand for waste 2 landfill permits, and owns 5 state-of-the-art facilities . management companies to create technology and processes to properly manage this demand.

WM to Acquire Advanced Disposal Services WM Acquires Compost Facilities in Tulare April 2019, Waste Management announced that the company has August 1, 2019, Waste Management announced the reached a definitive agreement to acquire Advanced Disposal acquisition of two Harvest Power California LLC Services. With the acquisition set to be completed by 2020 at a $4.9 billion price point at $33.15 per share. Advanced Disposal with 6,000 compost facility located in Tulare and Lathrop employees, serves more than 3 million residential, commercial, and California. Each site is permitted to take up to 156,000 industrial customers as well as over 800 municipalities in 16 states in tons of organics per year. Waste such as landscape, the eastern half of the United States will grow the company’s network. The acquisition also includes 91 collective operations, 73 food waste, and manure are accepted at the sites and transfer stations, 41 landfills, and 22 owned or operated recycling serve hundreds of communities in an effort to reduce facilities. the amount of waste sent to landfills.

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Source: Morningstar Direct Waste Management Inc WM

Industry Environment: As an Industrials listed company, Waste Management operates as an environmental waste management services such as collection services, landfills, recycling and industrial services. The waste industry is watched closely by the Environmental Protection Agency (EPA), a government agency who researches the integrity of landfills, the waste inside of landfills, and the environmental impacts/potential hazards of these operations. The waste industry is guided by the EPA through regulations and acts mandating practices and rules to waste management companies. Activities passed by the EPA must be complied by at the expense of the companies owning waste facilities.

Competitor Comparison

Market Gross Net Net Revenue Revenue % Gross Net Cap Current Receivable Profit Income Income % (mil) Chg Margin % Margin % (mil) Ratio Turnover (mil) (mil) Chg (Daily)

Waste Management Inc 14,914.00 2.96 5,665.00 37.98 1,925.00 -1.23 12.91 47,239.26 0.85 7.98 Republic Services Inc Class A 10,040.90 -0.01 3,890.90 38.75 1,036.90 -18.89 10.33 27,594.23 0.58 9.09 Waste Connections Inc 4,922.94 6.32 2,057.24 41.79 546.87 -5.19 11.11 24,082.76 1.27 8.46 S&P 500 TR USD Competitor Comparison (Cont.) Free Total P/E P/B Dividend Cash Asset Debt ROA % ROE % Beta 5 Yr Ratio PEG Ratio Ratio Yield % Flow / Turnover to Total Forward Current TTM Sales % Equity TTM Waste Management Inc 0.67 8.66 1.60 31.32 0.61 23.98 2.98 6.96 1.80 11.51 Republic Services Inc Class A 0.47 4.85 1.05 13.05 0.49 23.98 1.55 3.47 1.78 10.51 Waste Connections Inc 0.40 4.44 0.65 8.60 0.59 23.26 3.59 0.70 17.47 S&P 500 TR USD Investment Growth

Time Period: 10/1/2014 to 9/30/2019

225.0%

200.0%

175.0%

150.0%

125.0%

100.0%

75.0%

50.0%

25.0%

0.0%

-25.0% 3/2015 9/2015 3/2016 9/2016 3/2017 9/2017 3/2018 9/2018 3/2019 9/2019

Waste Management Inc 173.0% Republic Services Inc Class A 148.5% Waste Connections Inc 197.0% S&P 500 TR USD 67.3% 10/27/2019 Waste Management Inc US Dollar Page 6 of 10

Source: Morningstar Direct Waste Management Inc WM

Republic Services (RSG) Waste Connections (WCN) Republic Services Inc. is a non hazardous Waste Connection (WCN) is a waste solid waste company that operates in management company headquartered in waste collection, transfer, recycling, Woodlands, Texas and makes up for 7.2% disposal, and energy services sectors. of the industry. Waste Connections offers Republic Services currently has a market services in waste, collection, transfer, share of 17.2%. Operating in the United disposal, and recycling services. The States and Puerto Rico, Republic services company operates in The United States operates 190 active landfills, 91 as well as Canada. Waste Connection also processing centers, and 7 treatment, operates in the oil exploration and recovery and disposal facilities. Republic production segment waste treatment. services also operates 129 closed landfills The exploration and production segment as well as 75 landfill gas-energy projects. makes 5 percent of their revenues. Waste Republic Services has also operated Connections operates 113 transfer similarly to Waste management by stations, 56 solid waste landfills, 11 acquiring various large companies in the exploration and production landfills, 64 last 5 years. With 36,000 workers and recycling operations, and 4 intermodal operations in 41 states and Puerto Rico, operations. Waste Connections offers Republic Services is the largest exploration and production waste competitor to Waste Management. services as well as spill cleanup, drilling fluids, drill cuttings, and flowback water.

Source: Morningstar Direct Waste Management Inc WM

Strengths: Weaknesses: Large Market Share Current Regulations causing loss of profit Having the largest market share in the industry at 21.5%, WM has a strong With the EPA as a heavy overwatch of the industry, certain mandates force presence across the US as well as Canada all waste compnaies to expend money to provide an environmentally Fulfill large and Constant Need friendly practice. In an industry like waste management, there is and always will be a large Forced compliance with future EPA regulations demand for a service as such With the EPA constantly researching, WM has to take extra steps to be sure Well known and highly regarded reputation not to be an “example” by the EPA Waste Management is known to consumers and industry corporations for Currency Exchange rates with the Canadian Dollar high quality service and fair prices. As an international company, the company is forced to have hedging Social Responsibility Regarding Environmental techniques to solve this problem. Concerns Limited success outside core functions WM takes pride to be the leader in social responsibility earning the As a very high to enter industry, the price for expanding into other areas is industry leader in sustainability for the second year in a row. a slow process High return on Capital expenditure Product ranges vary, leaving room for competition Waste Management is very articulate to investing as it shows in their With WM focused on certain services, it allows competition to develop industry leading 14.76% return on capital expenditure High turnover rate of drivers at 50% who leave after Security in earnings their first year With the constant demand for waste services, there is always revenue to be As a very non desirable industry, frontline employees are constantly made in whatever stage in the business cycle. changing Strong dividend Waste Management is dedicated to serving the stockholders at a dividend yield of 1.81%

Opportunities: Threats: Renewable energy New EPA Regulations Waste management is leading in the collection methane landfill gas New regulations have the potential to cause large scale mandations and “Green” Practices and further technology research on extreme measures causing millions of dollars in environmental policy recycling Fluctuating Commodities Markets With the technology advancing, recycling is a strong prospective practice Mainly in the recycling area, fluctuating commodity prices have shown to to give a solid revenue stream have stong efects on revenue. Practices in the oil and gas waste management to scale Breakthrough Technology Regarding Revolutionary With the oil industry playing a larger role under the current administration, change in waste management the waste management of oil waste is a potential for a new industry If there was a technological innovation, it could cause WM to have millions New regulation and environmental policies of dollars in assets that are no longer relevant. With WM a leader in sustainable practices, the implementation of new Competition regulations could give WM a competitive advantage over the competition The threat of competition beating WM out is always a threat by gaining credits or subsidies. Reduction of waste overall Further development of the brand name and customer With the goal of society to overall reduce waste, it could pose a threat to service WM revenues As a large consumer company, building on the image of the company will Lawsuits against the company based on a variety of show greater market share and trust. claims Potential to continue decreasing transportation and As a dirty industry, the potential for lawsuits for spills or injuries is always a shipping cost possibility With WM already decreasing transportation costs, the costs continuing to Economic Conditions affecting waste volumes go down will provide higher profits. An economic downturn could affect waste volumes slightly, mainly in the corporate industry

10/27/2019 Waste Management Inc US Dollar Page 8 of 10

Source: Morningstar Direct Waste Management Inc WM

Valuation: Discount Cash Flow Model (DCF) Using the DCF model, the intrinsic value of the equity came to $129.43. We believe that this valuation gives a better valuation for the company at this time. We are very confident with the company and the growth potential is very prospective for Waste Management. With the future cash flows expected to continue to increase, this model accurately represents the company.

Valuation: Discount Dividend Model (DDM) With the use of the DDM model, the intrinsic value of the stock came to $119.43. We believe that this is a slight undervalue of the company per share. As Waste Management gives a fair dividend, but the model does not account for the investing and high capital needs of the waste industry. With this reasoning, it is our belief that Waste Management has a higher value per share.

Valuation: Multiple Valuation Waste Management Currently has a price to book ratio of 6.96. Whereas Waste Connections (WCN) is at 3.59 and Republic Services is at 3.47. We believe that this measure does not show a cause of concern. As with Waste Management’s future aspirations, its believed that this ratio shows the growth potential in the company.

The other multiple that is pertinent to Waste Management is the Debt/EBITDA. Waste Management currently operates at a ratio of 2.35. Republic Services has a ratio of 2.93, and Waste Connections at 2.91. We believe that this shows that Waste Management is much more well suited to take on their debt to the competition.

10/27/2019 Waste Management Inc US Dollar Page 9 of 10

Source: Morningstar Direct Waste Management Inc WM

Bloomsburg Investment Group Disclaimer This report was developed by student members of the Bloomsburg Investment Group (BIG). The purpose of the report is to provide research analysis of securi�es to poten�al and exis�ng donors of The BIG Fund. The report is designed to exemplify the abili�es of our members through investment research and analysis. Analysts of the Bloomsburg Investment Group and The BIG Fund are not registered brokers, investment advisors, or licensed financial professionals. The generated opinion of our analysts is not an offer or solicita�on to buy or sell any security, and due diligence is recommended before making any financial transac�on. Informa�on included in this report was compiled from different public sources. Not all relevant data was included into the report, and accuracy is not guaranteed. Students, faculty, and staff of Bloomsburg University may have a financial interest in any company listed in this report.

Sources Cited Bloomberg Capital IQ MorningStar Yahoo Finance Google Images Waste Management corporate wedbiste IBISWORLD Wall Street Journal

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Source: Morningstar Direct