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NEW YORK--(BUSINESS WIRE)--Fitch Ratings has affirmed the ratings on Waste Management, Inc.'s (WM)

Issuer Default Rating (IDR), senior credit facility and senior unsecured

notes at 'BBB'. The Rating Outlook is Stable. A full rating list is

included at the end of the release. The ratings apply to approximately

$9 billion in debt.

KEY RATING DRIVERS

WM's ratings are supported by its strong free cash flow (FCF), leading

market position within the environmental services industry, stable

credit metrics and consistent capital deployment strategies. Fitch

expects WM to manage its capital structure and deployment plans within

its current financial strategy of maintaining solid liquidity alongside

leverage (total debt/Fitch adjusted EBITDA) in the mid-to-high 2x range

(2.6x as of June 30, 2015). Given the stability of the environmental

services industry, Fitch expects any deviation from this financial

strategy to remain among the key rating drivers going forward.

Following the divestiture of its Wheelabrator waste-to-energy business

in late 2014, WM has honed its focus on its core environmental service

operations. The initial example of this shift in strategy was the

acquisition of Deffenbaugh Disposal Inc. in March of 2015 for $416

million ($413 million in cash). Prior to the acquisition, Deffenbaugh

was one of the largest privately owned, solid waste collection and

disposal firms in the Midwest and following certain divestitures

required by the U.S. Department of Justice, Deffenbaugh is expected to

contribute approximately $176 million of third party revenue and $52

million of operating EBITDA annually. Fitch views WM's re-focus on solid

waste positively as it reduces the firm's exposure to volatile energy

prices and improves the margin profile.

Fitch expects WM's capital deployment plans going forward to be focused

on organic growth in its more profitable segments (industrial,

commercial and landfills), inorganic growth primarily focused on

solid-waste targets, followed by shareholder friendly activities. Fitch

expects WM leverage to increase moderately, likely peaking in the

vicinity of 3.0x over the intermediate term as the company deploys

capital in acquisitions to replace the roughly $200 million in EBITDA

from Wheelabrator and other recent divestitures. Fitch expects (Fitch

defined) FCF to be adequate in 2015, despite the top-line and commodity

pricing pressures, likely not declining materially from the nearly $500

million in FCF generated in 2014.

Pricing trends have been positive in the more profitable industrial and

commercial business segments with each line of business posting about

270 basis points of volume improvement in the second quarter (2Q) over

the prior year. WM has also recently been successful in winning new

business in the industrial and commercial segments with new awards

outpacing lost business.

Rating concerns include a potential shift in operational and financial

strategy or a continued commodity price compression. WM's shift back to

a core environmental services company is a credit positive; however, the

company has made non-core acquisitions in the past, and this continues

to be a potential ratings concern. Given the industry's capital

intensity and WM's capital deployment plans going forward, credit

metrics could be strained depending on the timing of acquisitions and

appetite for debt-funded buybacks.

Financial flexibility remains strong. As of the end of the 2Q, WM had

approximately $1.7 billion of total liquidity, consisting of $273

million in cash and $1.4 billion in availability under its primary

revolving line of credit ($2.25 billion less $830 million in letters of

credit). Long-term cash is expected to range between $100 million-$150

million.

After prepaying $947 million worth of senior notes and tender offers for

another $1 billion in senior notes in the first six months of 2015, WM

has a manageable debt maturity profile over the next several years. The

company has a $500 million maturity in September of 2016, the maturity

of its Canadian credit facility in November 2017 ($162 million drawn as

of June 30, 2015) and a $600 million note maturity in March of 2018.

Fitch expects WM to have the ability to address its debt maturities with

either FCF or through consistent access to the capital markets.

KEY ASSUMPTIONS

--Falling revenue over the intermediate term;

--Flat EBITDA margins as restructuring benefits and improved pricing are

offset by weak commodity pricing;

--EBITDA leverage increases from the current level to fund acquisitions

in the intermediate-term;

--Annual capital expenditures in the 9% to 10% of revenue range;

--The company continues to invest moderately in acquisitions each year;

--Dividends grow modestly on an annual basis;

--The company retains about $100 million in cash on its balance sheet,

with excess cash targeted toward share repurchases.

RATING SENSITIVITIES

Positive: Future developments that may, individually or collectively,

lead to a positive rating action include:

--Maintaining leverage (total debt/Fitch adjusted EBITDA) below 2.5x for

a prolonged period;

--FCF margin consistently greater than 4%;

--A change to a more conservative financial strategy.

Negative: Future developments that may, individually or collectively,

lead to a negative rating action include:

--Leverage above 3.25x for a prolonged period;

--FCF lower than 1.5% (or 2% excluding cash outflow from minority

distributions) for a prolonged period;

--Debt funded share repurchases, dividends or a large debt funded

acquisition;

--A change to a less conservative financial strategy.

FULL LIST OF RATING ACTIONS

Fitch has affirmed the following ratings with, a Stable outlook:

Waste Management, Inc.

--IDR at 'BBB';

--Senior unsecured revolving credit facility rating at 'BBB';

--Senior unsecured notes rating at 'BBB'.

Additional information is available on www.fitchratings.com.

Applicable Criteria

Corporate Rating Methodology - Including Short-Term Ratings and Parent

and Subsidiary Linkage - Effective from 28 May 2014 - 14 August 2015

(pub. 28 May 2014)

https://www.fitchratings.com/creditdesk/reports/report_frame.cfm?rpt_id=749393

Additional Disclosures

Dodd-Frank Rating Information Disclosure Form

https://www.fitchratings.com/creditdesk/press_releases/content/ridf_frame.cfm?pr_id=989502

Solicitation Status

https://www.fitchratings.com/gws/en/disclosure/solicitation?pr_id=989502

Endorsement Policy

https://www.fitchratings.com/jsp/creditdesk/PolicyRegulation.faces?context=2&detail=31

ALL FITCH CREDIT RATINGS ARE SUBJECT TO CERTAIN LIMITATIONS AND

DISCLAIMERS. PLEASE READ THESE LIMITATIONS AND DISCLAIMERS BY FOLLOWING

THIS LINK: HTTP://FITCHRATINGS.COM/UNDERSTANDINGCREDITRATINGS.

IN ADDITION, RATING DEFINITIONS AND THE TERMS OF USE OF SUCH RATINGS ARE

AVAILABLE ON THE AGENCY'S PUBLIC WEBSITE 'WWW.FITCHRATINGS.COM'.

PUBLISHED RATINGS, CRITERIA AND METHODOLOGIES ARE AVAILABLE FROM THIS

SITE AT ALL TIMES. FITCH'S CODE OF CONDUCT, CONFIDENTIALITY, CONFLICTS

OF INTEREST, AFFILIATE FIREWALL, COMPLIANCE AND OTHER RELEVANT POLICIES

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RATINGS FOR WHICH THE LEAD ANALYST IS BASED IN AN EU-REGISTERED ENTITY

CAN BE FOUND ON THE ENTITY SUMMARY PAGE FOR THIS ISSUER ON THE FITCH

WEBSITE.

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