May&29th,&2012
Waste&Management&(NYSE:&WM)
Waste&Management&is&the&leading&provider&of&comprehensive&waste&
management&services&in&North&America.&&The&company&provides&
BUY
Price: $32.96
Target Price: $41.00
Potential Upside: 27.7%
collection,&transfer,&recycling,&and&disposal&services&to&a&broad&network&of&
residential,&municipal,&commercial,&and&industrial&clients.&&&The&company&is&
at&the&forefront&of&new&technologies&in&renewable&energy&generation,&
including&waste?to?energy&and&land@ill&gas?to?energy.&&&
Industrials
Daniel Krikorian
(1-615) 512-7541
krikorian_4@fisher.osu.edu
Investment&Thesis
Risks
•&&Opportunity&to&increase&market&share&through&vertical&integration&
•&&General&economic&slowdown&&
•&&Extensive&existing&infrastructure&in&industry&with&high&barriers&to&entry&
•&&High&fuel&prices&
•&&Positioned&to&capitalize&on&long?term&movement&towards&sustainability&
•&&Uncertain&regulatory&environment&
•&&Experts&at&extracting&value&from&the&waste&stream&
•&&Increasingly&competitive&pricing&
•&&Comprehensive&service&offerings&unmatched&by&competitors&
•&&Depressed&electricity&prices&
•&&Margin&expansion&through&cost?cutting&&&natural&gas&@leet&transition&
•&&Low&recycled&commodity&prices&
•&&Bene@its&from&Oakleaf&acquisition&coming&online&in&2H&2012&
!
•&&Complications&integrating&Oakleaf&
•&&Environmental&litigation&
Company Data
Price ($)
$32.96
Date of Price
25 May 12
52-wk Range
$27.75 - $38.90
Market Cap
$15.26B
Shares O/S (mil)
462
Beta
0.65
Dividend Yield
4.3%
P/E (ttm)
16.3
EPS (ttm)
2.02
!
!
!!!!May!29th,!2012!
Table!of!Contents!
Company!Overview/Description!.....................................................................................................!3!
Business!Segments!..........................................................................................................................................!3!
!!!!!Collection,!Landfill,!Transfer!...........................................................................................................................!3!
!!!!!Recycling!..................................................................................................................................................................!4!
!!!!!Single!Stream!Recycling!....................................................................................................................................!4!
!!!!!Waste;to;energy!...................................................................................................................................................!5!
Market!Features!.................................................................................................................................................................!5!
!!!!!Main!Competitors!.................................................................................................................................................!6!
!!!!!Recent!Developments!.....................................................................................................................................................!7!
!
!!!!!Cost!Savings!Initiative!........................................................................................................................................!7!
!
!!!!!Oakleaf!Acquisition!..............................................................................................................................................!7!
!
!!!!!Transition!to!Natural!Gas!Fleet!......................................................................................................................!7!
!
!
!
Investment!Thesis!................................................................................................................................!8!
Fundamental!Drivers!.....................................................................................................................................!8!
!!!!!!!!!!Volume!and!Yield!..................................................................................................................................................!8!!!!!!!!!!
!!!!!!!!!!Recycling!..................................................................................................................................................................!9!
!!!!!!!!!!Waste;to;energy!................................................................................................................................................!10!
Economic!Drivers!............................................................................................................................................................!10!
!
!!!!!Population!Growth!............................................................................................................................................!11!
!!
!!!!!New!Business!Formation!...............................................................................................................................!11!
!!!!!!!!!!!!!!!!!!!!Construction!........................................................................................................................................................!11!
!
!!!!!Recycled!Commodity!Prices!..........................................................................................................................!12!
Financials!!...........................................................................................................................................................................!12!
!!!!!!!!!!!!!!!!!!Revenue!..................................................................................................................................................................!12!
!!!!!!!!!!!!!!!!!!!!Expenses!................................................................................................................................................................!13!
!
!!!!!Income!Statement!.............................................................................................................................................!14!
!!!!!Creating!Shareholder!Value!......................................................................................................................................!14!
!
!!!!!New!Project!IRR!Hurdles!................................................................................................................................!14!
!
!!!!!Dividends!..............................................................................................................................................................!15!
!
!!!!!Share!Repurchases!............................................................................................................................................!15!
Valuation!!............................................................................................................................................................................!15!
!
!!!!Discounted!Cash!Flows!....................................................................................................................................!15!
!
!!!!Sensitivity!Analysis!............................................................................................................................................!16!
!
!!!!Multiples!Analysis!..............................................................................................................................................!17!
!!!!!Price!Target!........................................................................................................................................................................!17!
!
Conclusion!..............................................................................................................................................................!18!
!
!!!!Investment!Thesis!..............................................................................................................................................!18!
!
!!!!Risks!.........................................................................................................................................................................!18!
Appendix!.................................................................................................................................................................!19!
!
!
!
!
!
!
2!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Company!Overview/Description!
!
Waste!Management!is!the!leading!provider!of!comprehensive,!including!hazardous!and!non;
hazardous,!waste!management!services!in!North!America.!!The!company!operates!multiple!lines!of!
business!that!include!waste!collection,!transfer,!recycling,!and!disposal!services,!as!well!as!waste;
to;energy!and!landfill!energy;to;gas!facilities.!!With!a!29.9%!market!share!in!the!waste!collection!
industry,!Waste!Management!is!the!market!leader!and!has!a!strong!position!for!sustained!
dominance.1!!The!company!states!on!its!website!that!it!is!“on!a!mission!to!maximize!resource!value,!
while!minimizing!–!and!even!eliminating!–!environmental!impact!so!that!both!our!economy!and!our!
environment!can!thrive.”2!
!
Business!Segments!
!
Waste!Management!operates!the!following!lines!of!business:!
Revenue!Mix!by!Line!of!Business!
WasteWtoW
energy,!6%!
Other,!2%!
Transfer,!9%!
Recycling,!
8%!
Collection,!
57%!
LandUill,!18%!
!!!!!!!!!!!!!!!!!!!!!
!
!
Collection,!Landfill,!and!Transfer!
It!is!important!to!note!that!these!three!lines!of!business!are!very!closely!related,!and!in!turn!
represent!over!80%!of!total!revenues.!!Obviously!when!waste!is!collected!it!must!then!be!
transported!to!a!location!designated!for!the!storage!of!waste,!like!a!landfill.!!At!its!most!basic!level,!
Waste!Management!is!contracted!by!clients!to!remove!certain!waste!and!transport!it!to!a!landfill.!!
However,!in!addition!to!basic!waste!removal,!the!company!provides!numerous!specialized!service!
offerings!depending!on!the!client,!nature!of!waste,!and!disposal!requirements.!!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
1!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
2!Company!Website:!“Company!Profile”!
3!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Revenue!growth!is!achieved!through!expanding!the!company’s!footprint!into!new!markets,!as!well!
as!increasing!the!service!offerings!to!clients!seeking!comprehensive!waste!management!solutions.!!
Focusing!on!the!needs!of!the!customer!is!the!key!to!securing!lucrative!contracts.!!For!example,!in!
the!municipal!waste!segment,!Waste!Management!can!offer!services!such!as!“single;stream!
recycling,!recycling!rewards!and!household!hazardous!waste!removal,”!which!are!often!required!by!
municipalities!in!their!sustainability!efforts.3!!By!focusing!on!specific!industries,!and!their!individual!
waste!requirements,!the!company’s!sales!teams!can!tailor!specialized!services!that!competitors!may!
have!trouble!matching.!!!
!
Recycling!
!
The!recycling!segment!is!relatively!young!in!
its!life!cycle!and!therefore!has!an!
opportunity!for!significant!growth.!!As!
governments,!businesses,!and!individuals!
become!increasingly!conscious!about!their!
waste!footprint,!the!volume!of!waste!
eligible!for!recycling!will!grow.!!Waste!
Management!has!been!a!dominant!provider!
of!recycling!for!the!past!few!decades,!and!
!
continues!to!invest!heavily!in!new!
technologies.!!!
!
Recycling!is!an!attractive!service!for!Waste!Management!because!it!provides!a!dual!revenue!stream.!!
Customers!pay!for!the!removal!of!their!recyclable!waste,!and!WM!profits!from!the!value!of!the!
recycled!raw!materials!it!sells!back!to!the!market.!
!
Single!Stream!Recycling!
Single!stream!recycling!is!a!technology!that!WM!has!utilized!to!drastically!increase!recycling!
participation!among!residential!and!commercial!customers.!!Customers!are!no!longer!required!to!
pre;sort!their!recyclables!into!separate!containers,!making!recycling!dramatically!more!convenient.!!
The!technology!employs!magnets,!screens,!and!optical!scanners!to!automatically!sort!recyclables!in!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
3!Waste!Management!1Q2012!10;Q!
4!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
one!machine.!!Not!only!does!it!improve!volumes,!but!it!also!
increases!transport!route!productivity!by!10%;30%.4!!!!!
!
WasteWtoWenergy!
As!an!expert!in!extracting!value!from!its!waste!streams,!WM!
has!been!investing!in!technologies!that!convert!waste!into!
usable!energy.!!This!process!generally!involves!capturing!the!
methane!gas!that!is!produced!by!the!natural!decomposition!
of!organic!waste,!and!using!it!to!power!turbines!that!provide!
energy!to!surrounding!areas.!!By!the!end!of!2012,!WM!plans!
to!operate!over!175!Landfill!Gas!To!Energy!(LFGTE)!facilities!
nationwide.5!A!second!method!used!to!produce!energy!is!through!the!use!of!
Single&Stream&Facility&
Wheelabrator!facilities.!!The!Wheelabrator!Technologies!Group,!a!wholly!owned!subsidiary!of!WM,!
specializes!in!extracting!energy!from!
solid!municipal!waste.!!Every!day,!WM!
produces!enough!renewable!energy!to!
power!700,000!homes.6!!!WM!is!also!at!
the!forefront!of!new!science!that!seeks!
to!extract!energy!from!biomass!and!
other!compostable!materials.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!
Market!Features!
It!is!estimated!that!the!Waste&Collection!industry!will!yield!approximately!$4.4!billion!in!profits!
from!over!$46!billion!in!revenue!in!2012.!!The!industry!is!comprised!of!a!few!major!companies!and!
thousands!of!regional!niche!operators.!!The!industry!appears!poised!for!steady!growth!in!the!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
4!Investor!Presentation:!Goldman!Sachs!Global!Industrials!Conference!
5!Waste!Management!FY!2011!10;k!
6!Company!Website:!“Waste;to;energy”!
5!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
coming!years!as!the!economy!recovers!from!its!post;recessionary!
slump.!!The!average!annual!revenue!growth!rate!is!expected!to!be!
approximately!2.9%!through!2017.7!
!!!
Main!Competitors!
There!are!only!a!few!large!competitors!in!the!Waste!Collection!
industry,!and!many!of!them!are!focused!on!niche!segments!of!the!!!!!!!!!!
industry.!
!
!!
(NYSE:!RSG)!!Waste!Management’s!largest!competitor,!and!the!one!that!poses!the!biggest!threat,!is!
Republic!Services.!!With!an!18%!market!share,!RSG!operates!nationwide!and!competes!directly!
with!WM!for!customers.!!In!2008,!Republic,!the!third!largest!company!by!market!share,!merged!
with!Allied!Waste!Services,!the!second!largest.!!The!merged!entity!expects!to!achieve!considerable!
synergies,!however,!so!far!the!combination!of!the!two!entities!has!been!difficult.!!!
!
!!
!
(NYSE:!VE)!!Veolia!is!the!only!foreign;based!company!with!any!significant!operations!in!the!United!
States.!!After!a!difficult!period!of!revenue!contraction!in!2008;2009,!Veolia!has!enjoyed!steady!
growth!in!recent!years,!and!has!an!estimated!4.4%!market!share.!
!
!!
!
(NASDAQ:!SRCL)!!Stericycle!is!the!largest!medical!waste!collection!and!management!company!in!the!
United!States.!!The!company!has!grown!through!acquisition!and!currently!commands!an!estimated!
market!share!of!2.9%,!almost!predominantly!comprised!of!hazardous!medical!waste.!!Waste!
Management!can!compete!in!the!medical!waste!segment!because!it!can!offer!comprehensive!waste!
management!services!on!top!of!the!medical!waste!services,!a!feature!that!Stericycle!lacks.!!!
!
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
7!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
6!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Recent!Developments!
!
Cost!Savings!Initiative!
WM!has!instituted!an!operational!efficiency!program!that!utilizes!consultants!to!identify!cost!
reduction!or!efficiency!opportunities!throughout!the!company.!!The!main!areas!of!focus!are!on!
procurement,!routing!and!logistics,!and!centralization!of!back!office!functions.8!!Routing!and!
logistics!encompasses!a!huge!opportunity!for!cost!savings!through!the!use!of!onboard!computer!
systems!in!each!truck.!!Additionally,!the!management!compensation!structure!was!altered!to!
include!margin!improvement!as!a!primary!performance!metric.!
!
Oakleaf!Acquisition!
In!July!2011,!WM!acquired!Oakleaf,!a!provider!of!outsourced!waste!removal!and!recycling!services!
through!a!network!of!third!party!operators,!for!$432!million.!!In!the!1Q!2012,!the!Oakleaf!
operations!generated!$148!million!in!revenue!and!a!net!loss!of!$1!million.!!WM!plans!to!integrate!
Oakleaf’s!network!of!vendors!more!closely!in!order!to!combine!the!new!revenue!footprint!with!
WM’s!operational!expertise!and!selection!of!services.!
!
Transition!to!Natural!Gas!Fleet!
WM!has!transformed!its!image!over!the!past!decade!from!a!dirty!polluting!company!to!one!focused!
on!sustainability.!!This!was!not!done!purely!for!ethical!reasons,!but!rather!it!is!the!direction!that!
individuals!and!businesses!are!transitioning.!!
As!a!symbol!of!its!new!corporate!image,!WM!
committed!to!reducing!the!carbon!emissions!
of!its!fleet!15%!by!2020.!!By!transitioning!
from!diesel;powered!trucks!to!natural!gas,!
WM!will!be!in!a!position!to!achieve!this!goal,!
while!at!the!same!time!increasing!their!fuel!
efficiency.!!Finally,!at!the!current!market!price!
of!natural!gas!and!diesel!fuel,!this!initiative!
stands!to!significantly!lower!its!fuel!expense.!!
With!operations!requiring!the!transport!of!
waste!across!wide!areas,!and!a!large!truck!
fleet,!this!will!have!a!meaningful!effect!on!
!
Wall&Street&Journal&Market&Data&Center&
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
8!Investor!Presentation:!Goldman!Sachs!Global!Industrials!Conference!
7!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
margins.!!The!company!celebrated!the!addition!of!its!1000th!natural!gas!powered!truck!in!July!
2011.9!
!
Investment!Thesis!
!
Fundamental!Drivers!
Drivers!that!make!WM!an!attractive!investment!include!the!recent!positive!trends!in!volume!and!
yield,!continued!attention!to!customer;focused!sales,!and!the!opportunity!for!sustained!growth!in!
recycling!and!energy!conversion.!!!
!
Volume!and!Yield!!
Volume!and!yield!are!metrics!used!by!management!to!measure!the!make;up!of!revenue!changes!in!
the!collection!and!disposal!operations.!!It!is!important!for!investors!to!have!a!good!grasp!on!
specifically!what!is!contributing!to!revenue!growth!so!that!they!are!prepared!if!a!trend!change!
occurs.!!Volume!simply!measures!the!percentage!of!revenue!growth!that!can!be!attributed!to!an!
increase!in!the!amount!of!waste!handled!year!over!year.!!Alternatively,!yield!measures!the!
percentage!of!revenue!growth!that!can!be!attributed!to!changes!in!pricing,!including!certain!
variables!like!commodity!or!electricity!pricing.!!As!the!graph!depicts,!yield!is!consistently!around!
50;100!bps!above!CPI,!while!volume!has!been!significantly!negative!over!the!past!four!years,!
although!volume!has!been!trending!higher!since!2010.!!!!!!
!
Investor&Presentation&
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
9!Company!Press!Release:!“Waste!Management!adds!1000th!truck!to!natural!gas!fleet”!July!12th,!2011!
8!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Volume!is!affected!by!large;scale!economic!changes!like!industrial,!business,!and!construction!
activity.!!The!reversion!to!the!mean!after!a!decade!of!over;construction!in!the!residential!housing!
market!had!a!profound!effect!on!volumes.!!A!potential!driver!for!the!stock!over!the!next!few!years!is!
the!predicted!rebound!in!volumes!created!by!a!recovering!economy.!!Evidence!that!a!shift!has!
already!begun!is!that!revenue!growth!from!volume!was!positive!in!1Q!2012,!the!first!positive!
quarter!since!2006.10!!Management!expects!volume!to!continue!to!contribute!positively!to!revenues!
through!the!foreseeable!future.!
!
Recycling!
The!recycling!business!will!continually!
grow!as!a!percentage!of!total!revenues!as!
consumer!and!business!sentiment!shifts!
more!and!more!towards!sustainability.!!
WM!is!in!a!strong!position!to!capitalize!on!
this!huge!opportunity!because!it!has!been!
a!leader!in!recycling!advancements!for!
decades!and!possesses!valuable!
proprietary!technologies!and!
infrastructure.!!Growth!in!the!recycling!
EPA&Website&
movement!is!expected!to!continue!well!
!
!
into!the!future,!with!many!state!and!local!governments!setting!minimum!recycling!rates!for!
Municipal!Solid!Waste!(MSW).11!!!As!the!chart!above!portrays,!the!percentage!of!MSW!that!is!
recycled!nationally!has!been!trending!
higher!since!around!1985.12!!WM!stands!to!
benefit!both!by!the!increase!in!overall!MSW!
volume,!and!by!the!increase!in!the!
percentage!that!is!recycled.!!However,!the!
profitability!of!the!recycling!segment!is!
vulnerable!to!fluctuations!in!the!market!for!
certain!heavily!recycled!materials!like!fiber,!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
10!Company!News!Release:!“Results!for!1Q!2012”!
11!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
12!EPA!Website:!Municipal!Solid!Waste!
9!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
metal,!and!glass.!!In!the!1Q!2012,!average!recycling!commodity!prices!were!20%!lower!than!the!1Q!
2011,!negatively!impacting!EPS!by!$0.03.13!!!Recyclers!often!face!uncertainty!in!estimating!the!
volume!of!recyclable!waste!that!will!be!available!quarter!by!quarter.14!!In!the!future,!clearer!and!
more!predictable!recycling!streams!should!become!the!norm,!as!the!majority!of!new!municipal!
service!contracts!will!include!provisions!for!recycling.!!!!!!
!
WasteWtoWenergy!
Opportunities!for!growth!in!the!waste;to;energy!segment!are!fundamentally!similar!to!the!recycling!
segment.!!Incentives!to!extract!energy!from!organic!waste!will!grow!as!more!attention!is!paid!to!the!
role!that!green!energy!will!play!in!our!future.!!A!major!headwind!currently!facing!the!profitability!of!
this!segment!is!the!low!price!of!electricity!generation.!!The!estimated!supply!of!our!nation’s!natural!
gas!reserves!have!increased!dramatically!with!the!new!drilling!technique!known!as!fracking.!!A!
large!increase!in!the!supply!of!natural!gas!has!pushed!down!its!price!to!levels!not!seen!in!over!a!
decade.!!According!to!the!graph!of!futures!contracts,!the!price!of!natural!gas!should!slowly!rise!as!
demand!increases!from!utilities!transitioning!to!natural!gas!from!dirty!coal.!!When!this!happens,!
WM!will!benefit!from!higher!prices!for!the!energy!it!sells!to!utilities.!!The!potential!return!for!this!
segment!is!very!high,!but!also!very!long;term.!!!
!
!
US&Energy&Information&Administration&
!
US&Energy&Information&Administration&
!
Economic!Drivers!
!
The!majority!of!waste!collection!in!the!US!is!categorized!as!Municipal!Solid!Waste!(MSW),!which!
encompasses!residential!and!commercial!waste,!and!is!typically!the!responsibility!of!municipal!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
13!Company!News!Release:!“Results!for!1Q!2012”!
14!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
10!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
governments!to!collect.!!However,!the!majority!of!MSW!collection!has!been!privatized!to!companies!
like!WM.!!Future!growth!in!the!industry!will!depend!on!rising!volumes!and!additional!service!
offerings.15!!!
!
Population!Growth:!!The!growth!in!total!volume!of!waste!is!directly!correlated!to!the!rate!of!
population!growth.!!Since!1990,!the!average!amount!of!waste!generated!has!been!steady!at!about!
4.5!pounds!per!person!per!day.16!!!!!
!
New!Business!Formation:!!New!business!formations!are!the!second!major!contributing!factor!to!
the!volume!of!waste!generated.!!Volume!from!commercial!sources!is!more!strongly!correlated!to!
general!economic!conditions!than!that!from!residential!sources.!!Therefore,!it!makes!sense!that!
during!the!recent!recession,!commercial!volumes!declined!steeply.!!Volumes!have!since!recovered!
to!a!historical!level,!and!future!growth!will!be!dependent!on!the!economic!environment!for!new!
business!formation.!
!
Construction:!!Volumes!can!be!
impacted!by!changes!in!
Construction!&!Demolition!activity,!
mainly!residential!housing!
construction.!!The!industry’s!largest!
decline!in!revenues!in!the!past!ten!
years!can!be!attributed!to!the!
construction!halt!during!the!
housing!crisis.17!!Although!there!
remains!an!oversupply!of!homes,!residential!construction,!as!measured!by!Housing&Starts,!is!
expected!to!be!strong!over!the!next!five!years.!!Traditionally,!after!a!recession,!housing!starts!
increase!in!order!to!alleviate!the!pent;up!demand!that!accumulates!during!a!downturn.!!However,!
some!economists!have!argued!that!because!this!recession!was!so!deep!and!protracted,!the!recovery!
may!not!play!out!as!expected.!!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
15!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
16!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
17!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
11!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
On!top!of!residential!construction,!it!is!
important!to!follow!the!change!in!
overall!construction!spending.!!This!
includes!private!residential!and!
commercial,!as!well!as!public!
construction!spending.18!!!!
!
!
!!
Recycled!Commodity!Prices:!!As!
previously!discussed,!the!market!
price!of!certain!recyclable!materials!
!
will!impact!the!profitability!of!
recycling!operations.!!As!the!long!term!trend!towards!recycled!material!continues,!demand!from!
manufacturers!should!drive!prices!higher.!!!
!
Financials!
Revenue!
Sales!growth!for!the!industry!as!a!whole!for!the!five!years!to!2017!is!expected!to!average!2.9%.19!!As!
the!industry!leader,!WM!is!in!a!position!to!gain!market!share!through!competitive!pricing!and!its!
breadth!of!service!offerings.!!For!this!reason,!I!forecast!that!WM!will!grow!sales!at!an!average!rate!
outpacing!the!industry!through!2014.!!!!!!!!!
!
!
!!!
!!!!!!!!!!!!!!!!!!
Sales'Growth'200812014E'
10.00%'
Growth'Rate'
5.00%'
0.00%'
2008'
2009'
2010'
2011'
2012E' 2013E' 2014E'
!5.00%'
!10.00%'
!!!!!!!!!!!!!!!!!!!!!!!!
!15.00%'
Sales'Growth'
Consensus'
Forecast'
!
!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
18!US!Census!Bureau:!March!2012!Construction!Spending!
19!IBIS!World!Industry!Report:!Waste!Collection!Services!in!the!US!
12!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
The!main!drivers!of!growth!will!likely!be!benefits!from!increased!volume!in!the!collection!and!
landfill!segments!as!new!business!and!construction!spending!picks!up.!!Near!term!commodity!price!
pressures!will!continue!to!temper!growth!in!recycling!and!transport.!!Revenue!in!the!waste;to;
energy!segment!should!continue!its!trend!upward!as!utilities!transition!away!from!fossil!fuels,!
although!current!electricity!prices!may!weigh!on!profitability.!!!
!
Expenses!
Savings!from!investments!in!cost;cutting!initiatives!will!start!to!be!realized!in!the!second!half!of!
2012,!and!will!continue!into!the!future.!!Further!savings!from!the!transition!towards!natural!gas!
powered!trucks!will!lower!fuel!expenses!as!long!as!the!price!of!natural!gas!remains!depressed.!!A!
company;wide!focus!on!operational!efficiency,!coupled!with!the!altered!management!compensation!
structure,!should!yield!margin!expansion!in!the!near!to!medium!term.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!
Margins(2008,2014E(
20%#
15%#
10%#
5%#
0%#
2008#
2009#
2010#
2011#
2012E# 2013E# 2014E#
Opera1ng#Margin#
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
Net#Profit#Margin#
!
!
!
According!to!the!condensed!income!statement,!seen!below,!EPS!estimates!for!FY!2012;2013!are!in!
line!with!both!consensus!and!management!guidance.!!EPS!guidance!for!FY!2012!is!$2.22;$2.30.20!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
20!Seeking!Alpha:!WM!1Q!2012!Earnings!Call!Transcript!
13!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
WASTE MANAGEMENT (WM)
Income Statement
FY
2014E
FY
2013E
FY
2012E
Revenues
Collection
Landfill
Transfer
Wheelabrator
Recycling
Other
Intercompany
Net Sales
Consensus
8,575
2,744
1,210
842
2,281
1,126
(2,093)
14,685
8,490
2,716
1,198
825
2,173
1,023
(2,072)
14,354
14,310
8,406
2,663
1,235
851
1,975
819
(2,051)
13,898
13,820
8,406
8,247
2,611
2,540
1,280
1,318
877
889
1,580
1,169
655
314
(2,031) (1,962)
13,378 12,515
Operating costs and expenses
12,106
11,941
11,700
11,350
Operating profit
2,579
2,413
2,197
Income before taxes
Provision for income tax
2,048
727
1,897
673
Earnings from continuing operations
Non controlling interest
1,321
(59)
Net income
(millions)
Per share items
Cont ops
Diluted EPS
Consensus
Guidance
Shares outstanding - diluted
FY
2011
FY
2010
FY
2009
FY
2008
FY
2007
7,980
2,547
1,383
841
741
245
(1,946)
11,791
8,679
2,955
1,589
912
1,180
207
(2,134)
13,388
8,714
3,047
1,654
868
1,135
163
(2,271)
13,310
10,399
9,904
11,154
11,056
2,028
2,116
1,887
2,234
2,254
1,694
601
1,520
511
1,631
629
1,473
413
1,797
669
1,749
540
1,223
(57)
1,093
(56)
1,009
(48)
1,002
(49)
1,060
(66)
1,128
(41)
1,209
(46)
1,262
1,166
1,037
961
953
994
1,087
1,163
2.77
2.77
2.53
2.53
2.52
2.25
2.25
2.24
2.26
2.04
2.04
1.98
1.98
2.01
2.01
2.19
2.19
2.23
2.23
455.0
460.0
460.0
465.0
477.0
490.0
495.0
515.0
!
!
!
Creating!Shareholder!Value!
!
New!Project!IRR!Hurdles:!!Management!ensures!that!
any!new!investment!will!create!value!for!shareholders!
by!constantly!evaluating!the!risk!and!updating!the!IRR!
hurdle!rates!to!reflect!them.!!My!estimation!of!WM’s!
cost!of!capital!is!approximately!8.0%.!
!
!
!
!
14!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Dividends:!!As!a!company!in!a!mature!industry,!Waste!Management!experiences!relatively!stable!
earnings,!and!is!therefore!able!to!pay!an!attractive!dividend.!!In!fact,!the!company!has!increased!its!
dividend!every!year!throughout!the!past!decade,!including!during!the!recession.!!At!the!current!
stock!price,!the!quarterly!dividend!of!$0.355/share!yields!4.3%.!
!
Share!Repurchases:!!WM!is!an!active!buyer!of!its!own!stock!when!management!believes!it!is!
undervalued.!!WM!traditionally!generates!around!$300!million!in!quarterly!free!cash!flows,!of!
which!$164!million!are!paid!in!the!form!of!
dividends.!!The!remainder!is!available!for!share!
repurchases!or!capital!expenditures.!!The!
largest!buyback!in!recent!history!took!place!
during!the!3Q!2011!when!the!company!spent!
$360!million!on!its!own!shares.21!!!!!!!
!
!
Valuation!
!
Discounted!Cash!Flow!Model!
DCF$Assumptions
*7Percent7of7sales
Revenue7Growth
Operating7Margin
Depreciation/Amortization*
Capex*
Tax7rate
Terminal7Discount7Rate
Terminal7FCF7Growth
2012E
2013E
2014E
Terminal
3.88%
15.80%
9.20%
10.00%
35.50%
3.30%
2.30%
3.25%
16.80%
17.60%
18.20%
9.20%
9.40%
35.50%
9.20%
8.90%
35.50%
9.00%
9.00%
35.50%
10.00%
3.25%
!
I!estimated!that!Depreciation/Amortization!would!remain!near!historical!levels!because!the!
company’s!capital!expenditure!requirements!are!usually!constant!from!year!to!year.!!On!the!1Q!
2012!earnings!call!management!provided!some!color!on!their!expectations!for!capex!spending!
through!2013.!!They!estimated!$1.4!billion!and!$1.3;$1.4!billion!for!FY!2012;2013.22!!This!translates!
to!approximately!10.0%!and!9.4%!of!sales,!slightly!higher!than!the!average!of!9.0%.!!I!expect!shares!
outstanding!to!remain!steady!at!between!455;460!million!as!management!temporarily!ramps!up!
capex!spending.!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
21!Company!Press!Release:!3Q!2011!Earnings!
22!Seeking!Alpha:!WM!1Q!2012!Earnings!Call!Transcript!
15!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
The!terminal!discount!rate!is!estimated!at!10.0%!and!the!terminal!free!cash!flow!growth!rate!at!
3.25%.!!These!rates!imply!a!historical!P/E!ratio!of!15.3,!which!is!very!close!to!the!long;term!average!
of!the!S&P!500!of!14.5.!&See&the&Appendix&for&a&chart&of&market&implied&P/E&ratios&by&sector.!
!
Sensitivity!Analysis:!!Using!sensitivity!analysis!on!the!two!main!drivers!of!valuation,!discount!rate!
and!FCF!growth,!we!find!a!likely!range!of!$39.69!W!$44.66.!!
FCF Growth Rate
42.00
3.00%
3.25%
3.50%
3.75%
4.00%
9.50%
$44.36
$45.41
$46.54
$47.77
$49.12
Discount Rate
9.75%
10.00%
$42.69
$41.14
$43.64
$42.00
$44.66
$42.93
$45.78
$43.94
$46.98
$45.02
10.25%
$39.69
$40.48
$41.33
$42.24
$43.22
10.50%
$38.34
$39.07
$39.84
$40.67
$41.56
!
!
Forecasting!cash!flows!in!a!ten!year!discounted!cash!flow!(DCF)!model,!we!arrive!at!an!estimated!
intrinsic!value!of!$42.00!per!share.!
16!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!
!!!!May!29th,!2012!
Multiples!
Current!and!historical!multiples!were!sourced!from!Thomson!Reuters!Baseline!and!have!a!10;year!
timeframe.!!Because!WM!operates!in!a!mature!industry!where!growth!is!relatively!constant,!I!felt!
that!the!median!multiples!best!represents!the!company’s!growth!potential.!!Target!values!for!
forward!earnings!and!sales!were!taken!from!the!FY!2012!estimates,!which!can!be!found!in!the!
projected!income!statement.!!!
Per)Share)
Target)
Target)Price
Values
Absolute)Valuation
High
Low
Median
Current
Target)
Multiple
Forward)PE
21.5
12.5
16.1
16.1
16.1
$2.25
$36.23
P/S
P/B
1.6
3.4
0.9
2.1
1.4
2.8
1.2
2.7
1.4
2.8
$30.21
$13.18
$42.29
$36.90
P/EBITDA
P/CF
7.13
9.4
3.68
5.4
5.53
7.7
5.03
7.3
5.5
7.7
$7.10
$4.70
$39.05
$36.19
Low:
High:
Average:
Thomson'Reuters'Baseline
!!
$36.19
$42.29
$38.13
!
!
According!to!the!multiples!analysis,!the!expected!share!range!is!$36.19!;!$42.29,!and!the!average!is!
$38.13.!!!This!value!range!validates!the!intrinsic!value!of!$42.00!calculated!by!the!DCF!analysis,!
although!it!is!towards!the!upper!end!of!the!range.!
Portrayed!in!Exhibit!2!of!the!Appendix,!is!a!comparison!of!the!valuation!multiples!of!WM!with!its!
largest!competitor,!Republic!Services.!!The!analysis!shows!that!WM!is!indeed!valued!below!its!ten;
year!median,!but!it!is!more!expensive!than!RSG!according!to!every!multiple!analyzed.!!This!calls!for!
further!analysis!of!RSG!as!a!possible!alternative!investment!to!WM,!but!it!does!not!alter!my!
investment!thesis!at!this!time.!
!
Price!Target!
Assigning!a!75%!weight!to!the!DCF!and!25%!to!the!relative!valuation,!the!final!oneWyear!price!
target!for!Waste!Management!is!approximately!$41.00!per!share.!!I!felt!comfortable!assigning!a!
higher!weight!than!normal!to!the!DCF!because!of!the!consistency!of!WM’s!cash!flows,!and!
consequently,!my!ability!to!forecast!them!with!greater!accuracy.!!!!
!
!
!
!
!
17!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Conclusion!
I!believe!that!Waste!Management!shares!are!in!a!position!to!appreciate!by!around!25%!in!the!next!
year.!!Adding!in!dividends!for!the!remaining!three!quarters,!the!total!potential!upside!is!27.7%.!!
According!to!the!value!implied!by!the!DCF,!the!shares!have!a!potential!27.4%!upside.!!The!upside!
potential!implied!by!multiples!analysis!is!15.7%.!!Based!on!my!analysis!of!company!and!industry!
fundamentals,!as!well!my!estimated!oneWyear!price!target,!I!recommend!Waste!Management!
as!a!BUY.!
!
Investment!Thesis!
!
Market!share!leader!with!ability!to!compete!on!price!if!necessary!
!
Opportunity!to!increase!market!share!through!vertical!integration!
!
Extensive!existing!infrastructure!in!industry!with!high!barriers!to!entry!
!
Positioned!to!capitalize!on!long;term!movement!towards!sustainability!
!
Proprietary!technologies!that!increase!operating!efficiency!and!value!extracted!from!the!
!
!
waste!stream!
!
Ability!to!offer!comprehensive!waste!management!services!unmatched!by!competitors!
!
Annuity;like!revenue!stream!enables!consistent!and!increasing!dividends!
!
Opportunity!for!margin!expansion!through!cost;cutting!programs!and!other!initiatives!like!
the!transition!to!a!natural!gas!fleet!
!
Benefits!from!Oakleaf!acquisition!coming!online!in!2H!2012!
!
Risks!
!
General!economic!slowdown!!
!
Nature!of!operations!is!still!quite!fuel!intensive,!any!increase!in!fuel!prices!will!have!a!
material!impact!on!margins!
!
Uncertain!regulatory!environment!
!
Environmental!litigation/remediation!costs!
!
Ability!to!pass!on!certain!costs!to!customers!in!the!form!of!price!increases!may!affect!
revenues!
!
Sustained!periods!of!depressed!electricity!or!recycled!commodity!prices!
!
Complications!integrating!Oakleaf!operations!or!realizing!the!forecasted!benefits!
!
!
18!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!
!
!
!!!!May!29th,!2012!
Appendix!
!!!
!!!!!!!Exhibit!1!
Terminal#Growth#Rate
Discount#Rate
!!!!!
0.00%
0.25%
0.50%
0.75%
1.00%
1.25%
1.50%
1.75%
2.00%
2.25%
2.50%
2.75%
3.00%
3.25%
3.50%
3.75%
4.00%
4.25%
4.50%
4.75%
5.00%
5.25%
5.50%
5.75%
6.00%
9.00%
#########11.1
#########11.5
#########11.8
#########12.2
#########12.6
#########13.1
#########13.5
#########14.0
#########14.6
#########15.1
#########15.8
#########16.4
#########17.2
#########18.0
#########18.8
#########19.8
#########20.8
#########21.9
#########23.2
#########24.6
#########26.3
#########28.1
#########30.1
#########32.5
#########35.3
9.25%
#########10.8
#########11.1
#########11.5
#########11.9
#########12.2
#########12.7
#########13.1
#########13.6
#########14.1
#########14.6
#########15.2
#########15.8
#########16.5
#########17.2
#########18.0
#########18.9
#########19.8
#########20.9
#########22.0
#########23.3
#########24.7
#########26.3
#########28.1
#########30.2
#########32.6
9.50%
#########10.5
#########10.8
#########11.2
#########11.5
#########11.9
#########12.3
#########12.7
#########13.1
#########13.6
#########14.1
#########14.6
#########15.2
#########15.8
#########16.5
#########17.3
#########18.0
#########18.9
#########19.9
#########20.9
#########22.1
#########23.3
#########24.8
#########26.4
#########28.2
#########30.3
9.75%
#########10.3
#########10.6
#########10.9
#########11.2
#########11.5
#########11.9
#########12.3
#########12.7
#########13.2
#########13.6
#########14.1
#########14.7
#########15.3
#########15.9
#########16.6
#########17.3
#########18.1
#########19.0
#########19.9
#########21.0
#########22.1
#########23.4
#########24.8
#########26.4
#########28.3
10.00%
#########10.0
#########10.3
#########10.6
#########10.9
#########11.2
#########11.6
#########11.9
#########12.3
#########12.8
#########13.2
#########13.7
#########14.2
#########14.7
#########15.3
#########15.9
#########16.6
#########17.3
#########18.1
#########19.0
#########20.0
#########21.0
#########22.2
#########23.4
#########24.9
#########26.5
10.25%
###########9.8
#########10.0
#########10.3
#########10.6
#########10.9
#########11.3
#########11.6
#########12.0
#########12.4
#########12.8
#########13.2
#########13.7
#########14.2
#########14.8
#########15.3
#########16.0
#########16.6
#########17.4
#########18.2
#########19.0
#########20.0
#########21.1
#########22.2
#########23.5
#########24.9
10.50%
###########9.5
###########9.8
#########10.1
#########10.3
#########10.6
#########10.9
#########11.3
#########11.6
#########12.0
#########12.4
#########12.8
#########13.3
#########13.7
#########14.2
#########14.8
#########15.4
#########16.0
#########16.7
#########17.4
#########18.2
#########19.1
#########20.0
#########21.1
#########22.3
#########23.6
10.75%
###########9.3
###########9.5
###########9.8
#########10.1
#########10.4
#########10.7
#########11.0
#########11.3
#########11.7
#########12.0
#########12.4
#########12.8
#########13.3
#########13.8
#########14.3
#########14.8
#########15.4
#########16.0
#########16.7
#########17.5
#########18.3
#########19.1
#########20.1
#########21.2
#########22.3
11.00%
###########9.1
###########9.3
###########9.6
###########9.8
#########10.1
#########10.4
#########10.7
#########11.0
#########11.3
#########11.7
#########12.1
#########12.5
#########12.9
#########13.3
#########13.8
#########14.3
#########14.9
#########15.4
#########16.1
#########16.8
#########17.5
#########18.3
#########19.2
#########20.1
#########21.2
11.25%
###########8.9
###########9.1
###########9.3
###########9.6
###########9.9
#########10.1
#########10.4
#########10.7
#########11.0
#########11.4
#########11.7
#########12.1
#########12.5
#########12.9
#########13.4
#########13.8
#########14.3
#########14.9
#########15.5
#########16.1
#########16.8
#########17.5
#########18.3
#########19.2
#########20.2
11.50%
###########8.7
###########8.9
###########9.1
###########9.4
###########9.6
###########9.9
#########10.2
#########10.4
#########10.7
#########11.1
#########11.4
#########11.7
#########12.1
#########12.5
#########12.9
#########13.4
#########13.9
#########14.4
#########14.9
#########15.5
#########16.2
#########16.8
#########17.6
#########18.4
#########19.3
11.75%
###########8.5
###########8.7
###########8.9
###########9.2
###########9.4
###########9.6
###########9.9
#########10.2
#########10.5
#########10.8
#########11.1
#########11.4
#########11.8
#########12.1
#########12.5
#########13.0
#########13.4
#########13.9
#########14.4
#########15.0
#########15.6
#########16.2
#########16.9
#########17.6
#########18.4
12.00%
###########8.3
###########8.5
###########8.7
###########9.0
###########9.2
###########9.4
###########9.7
###########9.9
#########10.2
#########10.5
#########10.8
#########11.1
#########11.4
#########11.8
#########12.2
#########12.6
#########13.0
#########13.5
#########13.9
#########14.4
#########15.0
#########15.6
#########16.2
#########16.9
#########17.7
!
!
!!!!!!!!!!!!!!!!!!!Exhibit!2!
Multiples)
Comparison
Forward)P/E
P/S
P/B
P/EBITDA
P/CF
WM
RGS
Median
Current
Median)
Current
16.1
1.4
2.8
5.5
7.7
16.1
1.2
2.7
5.0
7.3
16.9
1.7
2.1
6.7
9.0
14.0
1.2
1.3
4.2
6.3
!!!!!!!!!!!!!!!!!!! Thomson'Reuters'Baseline
!
!
Analyst!Background!
Daniel!Krikorian!received!a!BSBA!in!Finance!from!the!University!of!Tennessee!in!2010,!graduating!
cum&laude.&!!During!his!University!career,!Daniel!spent!a!year!as!an!analyst!in!the!Knoxville,!TN!
office!of!Merrill!Lynch!Private!Wealth!Management!with!approximately!$500!million!AUM.!!He!will!
be!receiving!a!Masters!in!Finance!from!the!Fisher!College!of!Business!at!The!Ohio!State!University!
in!June!2012.!!After!graduation,!Daniel!will!be!joining!the!OSU!Office!of!Investments!as!an!
Investment!Associate!on!the!Illiquid!Markets!team.!
19!
!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
!