Strong Organic Revenue Growth and Cost
Optimization Drive Record Results
The Company Now Expects to Deliver Adjusted
Operating EBITDA Near the Upper End of 2024 Guidance
Accretive Acquisitions, Sustainability
Investments, and Continued Growth from Core Solid Waste Position WM
for Another Strong Year in 2025
WM (NYSE: WM) today announced financial results for the quarter
ended September 30, 2024.
Three Months Ended
Three Months Ended
September 30, 2024 (in millions, except per share
amounts)
September 30, 2023 (in millions, except per share
amounts)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
Revenue
$5,609
$5,609
$5,198
$5,198
Income from Operations
$1,119
$1,153
$1,021
$1,022
Operating EBITDA(b)
$1,677
$1,711
$1,540
$1,541
Operating EBITDA Margin
29.9%
30.5%
29.6%
29.6%
Net Income(c)
$760
$790
$663
$664
Diluted EPS
$1.88
$1.96
$1.63
$1.63
“The Company’s third quarter results again demonstrated the
dedication of our people, the consistency of our business model,
and the strength of our operations,” said Jim Fish, WM’s President
and Chief Executive Officer. “Our investments in technology, our
fleet, and our asset network, combined with our disciplined pricing
programs, are expanding the spread between price growth and our
cost to serve. This led to adjusted operating EBITDA growth of 11%
and record margin of 30.5% for the quarter.”(a)
Fish continued, “Our strong results have been led by our
Collection and Disposal business where our focused efforts on
frontline retention, optimization of our cost structure, and
providing differentiated service to our customers have fueled
earnings growth. Additionally, we continue to make headway on our
sustainability growth investments and planning for the successful
integration of the Stericycle business. We have a lot of momentum
for a strong finish to the year, which will position us to deliver
another year of outsized growth in 2025.”(a)
KEY HIGHLIGHTS FOR THE THIRD QUARTER OF 2024
- Total Company revenue grew 7.9% driven by core price of
6.5%.(d) In addition to strong execution on pricing, revenue grew
above expectations due to higher market prices for the recyclable
commodities we sell and a notable increase in landfill volumes. The
Company expects full year revenue growth to be about 6%, which is
above the high end of prior guidance of 5.75%.(g)
- Adjusted operating EBITDA grew $170 million in the quarter
driven by the Company’s Collection and Disposal business. Adjusted
operating EBITDA margin grew 90 basis points to a record high of
30.5%. This strong result puts the Company on track to deliver
about $6.5 billion in adjusted operating EBITDA in 2024, which is
near the upper end of its guidance range.(a)(e)(g)
- The Company continues to prioritize technology and automation
to optimize its cost structure and enhance operational efficiency.
This is evident in operating expenses as a percentage of revenue
improving 70 basis points to 60.6% in the third quarter. This is
the fourth consecutive quarter this measure has been below
61%.
- SG&A expenses were 9.4% of revenue, or 8.9% on an adjusted
basis, reflecting continued discipline in cost control.(a)
- The Company completed eight recycling projects in the quarter
and has now completed 24 out of its 39 planned automation and new
market projects. Completed projects have added 1.5 million tons of
annual recycling capacity across North America.(f)
- The Company has brought three of its 20 planned renewable
natural gas projects into service, including one brought online
earlier this year, and currently expects four additional projects
to be commissioned by year-end. The Company anticipates that these
seven projects will contribute approximately six million MMBtu of
annual production next year.(f)
- Through the first nine months of the year, the Company
generated $3.88 billion of net cash provided by operating
activities, an increase of 16.2% from the prior year.
- The Company expects total capital expenditures to be $3.15 to
$3.25 billion, with about $950 million targeted at sustainability
growth investments.
- Strong operating cash flow growth combined with disciplined
capital spending led to a 20.0% increase in free cash flow on a
year-to-date basis. These results put the Company on track to
achieve the high end of its guidance of $2.15 billion in free cash
flow in 2024.(a)(g)
- The Company has invested $790 million on acquisitions in 2024,
largely for solid waste businesses. The acquired businesses have
contributed $108 million of revenue growth in 2024. Additionally,
the Company continues to work through regulatory approval processes
to support its planned acquisition of Stericycle. The acquisition
is expected to close in the fourth quarter of 2024. Integration
planning processes are moving forward as expected.
- WM released its 2024 Sustainability Report during the third
quarter, focused on three core ambitions - material is repurposed,
energy is renewable, and communities are thriving. The report
details the Company’s sustainability ambitions and progress toward
its goals.
Fish concluded, “We came into this year expecting strong
execution across several fronts, and through the first nine months
we have delivered results that exceeded our own high expectations.
As we look ahead to 2025, we anticipate continued growth in our
solid waste business, increased contributions from our
sustainability growth investments, and the successful integration
of the Stericycle business to come together to create a significant
step change in revenue, earnings, and free cash flow.”
(a)
The information labeled as adjusted in
this press release, as well as free cash flow, are non-GAAP
measures. Please see “Non-GAAP Financial Measures” below and the
reconciliations in the accompanying schedules for more
information.
(b)
Management defines operating EBITDA as
GAAP income from operations before depreciation and amortization;
this measure may not be comparable to similarly titled measures
reported by other companies.
(c)
For purposes of this press release, all
references to “Net income” refer to the financial statement line
item “Net income attributable to Waste Management, Inc.”
(d)
Core price is a performance metric used by
management to evaluate the effectiveness of our pricing strategies;
it is not derived from our financial statements and may not be
comparable to measures presented by other companies. Core price is
based on certain historical assumptions, which may differ from
actual results, to allow for comparability between reporting
periods and to reveal trends in results over time.
(e)
In the fourth quarter of 2023, the Company
updated its reportable segments to enhance transparency regarding
its financial performance and underscore its commitment to
sustainability through substantial planned and ongoing investments
in its Recycling Processing and Sales and WM Renewable Energy
businesses. The Company reports through four segments, referred to
as (i) Collection and Disposal – East Tier; (ii) Collection and
Disposal – West Tier; (iii) Recycling Processing and Sales and (iv)
WM Renewable Energy. The Company’s East and West Tiers along with
certain ancillary services not managed through its Tier segments
form its “Collection and Disposal” business.
(f)
The Company’s blended average price
received for single stream recycled commodity price sold during the
quarter was about $101 per ton compared to about $58 per ton in the
prior year period, and the full-year expectation for received
pricing remains approximately $90 per ton. In the third quarter,
the average price received for Renewable Fuel Standard credits sold
during the quarter was $3.08 compared to $2.65 in the prior year
period, and the average price received for natural gas sold during
the quarter was $1.80 per MMBtu compared to $2.11 per MMBtu in the
prior year period. The average price received for electricity was
about $60 per megawatt hour in the third quarter compared to about
$65 per megawatt hour in the prior year period.
(g)
The Company’s 2024 financial guidance and
outlook excludes (i) transaction and advisory costs incurred in
connection with the acquisition of Stericycle and (ii) post-closing
financial contributions related to the acquisition of
Stericycle.
The Company will host a conference call at 10 a.m. ET on October
29, 2024 to discuss the third quarter 2024 results. Information
contained within this press release will be referenced and should
be considered in conjunction with the call.
Listeners can access a live audio webcast of the conference call
by visiting investors.wm.com and selecting “Events &
Presentations” from the website menu. A replay of the audio webcast
will be available at the same location following the conclusion of
the call.
Conference call participants should register to obtain their
dial in and passcode details. This streamlined process improves
security and eliminates wait times when joining the call.
ABOUT WM
WM (WM.com) is North America's leading provider of comprehensive
environmental solutions. Previously known as Waste Management and
based in Houston, Texas, WM is driven by commitments to put people
first and achieve success with integrity. The company, through its
subsidiaries, provides collection, recycling and disposal services
to millions of residential, commercial, industrial and municipal
customers throughout the U.S. and Canada. With innovative
infrastructure and capabilities in recycling, organics and
renewable energy, WM provides environmental solutions to and
collaborates with its customers in helping them achieve their
sustainability goals. WM has the largest disposal network and
collection fleet in North America, is the largest recycler of
post-consumer materials and is a leader in beneficial use of
landfill gas, with a growing network of renewable natural gas
plants and the most landfill gas-to-electricity plants in North
America. WM's fleet includes more than 12,000 natural gas trucks –
the largest heavy-duty natural gas truck fleet of its kind in North
America. To learn more about WM and the company's sustainability
progress and solutions, visit Sustainability.WM.com.
FORWARD-LOOKING STATEMENTS
The Company, from time to time, provides estimates or
projections of financial and other data, comments on expectations
relating to future periods and makes statements of opinion, view or
belief about current and future events, circumstances or
performance. This press release contains a number of such
forward-looking statements, including all statements regarding
future performance or financial results of our business;
achievement of financial guidance or outlook; growth and strength
of our business; drivers of performance, including pricing
programs, cost optimization and other initiatives; consummation and
integration of the Stericycle acquisition related results and
benefits; and timing of sustainability investments, upgrades and
project completions and related results and benefits. You should
view these statements with caution. They are based on the facts and
circumstances known to the Company as of the date the statements
are made. These forward-looking statements are subject to risks and
uncertainties that could cause actual results to be materially
different from those set forth in such forward-looking statements,
including but not limited to failure to implement our optimization,
automation, growth, and cost savings initiatives and overall
business strategy; failure to obtain the results anticipated from
strategic initiatives, investments, acquisitions, including the
planned Stericycle acquisition, or new lines of business; failure
to identify acquisition targets, consummate and integrate
acquisitions, including our planned integration of Stericycle; our
ability to consummate and finance the Stericycle acquisition and
achieve the anticipated benefits therefrom, including cost
synergies; legal, regulatory and other matters that may affect the
costs and timing of our ability to complete, integrate and deliver
all of the expected benefits of the planned Stericycle acquisition;
existing or new environmental and other regulations, including
developments related to emerging contaminants, gas emissions,
renewable energy, extended producer responsibility and our natural
gas fleet; significant environmental, safety or other incidents
resulting in liabilities or brand damage; failure to obtain and
maintain necessary permits due to land scarcity, public opposition
or otherwise; diminishing landfill capacity, resulting in increased
costs and the need for disposal alternatives; failure to attract,
hire and retain key team members and a high quality workforce;
increases in labor costs due to union organizing activities or
changes in wage- and labor-related regulations; disruption and
costs resulting from severe weather and destructive climate events;
failure to achieve our sustainability goals or execute on our
sustainability-related strategy and initiatives, including within
planned timelines or anticipated budgets due to disruptions,
delays, cost increases or changes in environmental or tax
regulations and incentives; focus on, and regulation of,
environmental and sustainability-related disclosures, which could
lead to increased costs, risk of non-compliance, brand damage and
litigation risk related to our sustainability efforts;
macroeconomic conditions, geopolitical conflict and large-scale
market disruption resulting in labor, supply chain and
transportation constraints, inflationary cost pressures and
fluctuations in commodity prices, fuel and other energy costs;
increased competition; pricing actions; impacts from international
trade restrictions; competitive disposal alternatives, diversion of
waste from landfills and declining waste volumes; weakness in
general economic conditions and capital markets, including
potential for an economic recession; instability of financial
institutions; adoption of new tax legislation; fuel shortages;
failure to develop and protect new technology; failure of
technology to perform as expected; failure to prevent, detect and
manage cybersecurity incidents or comply with privacy regulations;
inability to adapt and manage the benefits and risks of artificial
intelligence; negative outcomes of litigation or governmental
proceedings including those acquired through transactions,
including the Stericycle acquisition; and operations or management
decisions or developments that result in impairment charges. Please
also see the Company’s filings with the SEC, including Part I, Item
1A of the Company’s most recently filed Annual Report on Form 10-K,
as updated by subsequent Quarterly Reports on Form 10-Q, for
additional information regarding these and other risks and
uncertainties applicable to its business. The Company assumes no
obligation to update any forward-looking statement, including
financial estimates and forecasts, whether as a result of future
events, circumstances or developments or otherwise.
NON-GAAP FINANCIAL MEASURES
To supplement its financial information, the Company has
presented, and/or may discuss on the conference call, adjusted
earnings per diluted share, adjusted net income, adjusted income
from operations, adjusted operating EBITDA and margin, adjusted
SG&A expenses and free cash flow. All of these items are
non-GAAP financial measures, as defined in Regulation G of the
Securities Exchange Act of 1934, as amended. The Company reports
its financial results in compliance with GAAP but believes that
also discussing non-GAAP measures provides investors with (i)
financial measures the Company uses in the management of its
business and (ii) additional, meaningful comparisons of current
results to prior periods’ results by excluding items that the
Company does not believe reflect its fundamental business
performance and are not representative or indicative of its results
of operations.
In addition, the Company’s projected adjusted operating EBITDA
and margin is anticipated to be adjusted to exclude the effects of
other events or circumstances that are not representative or
indicative of the Company’s results of operations. Such excluded
items are not currently determinable, but may be significant, such
as asset impairments and one-time items, charges, gains or losses
from divestitures or litigation, and other items. Due to the
uncertainty of the likelihood, amount and timing of any such items,
the Company does not have information available to provide a
quantitative reconciliation of such projection to the comparable
GAAP measure.
The Company discusses free cash flow and provides a projection
of free cash flow because the Company believes that it is
indicative of its ability to pay its quarterly dividends,
repurchase common stock, fund acquisitions and other investments
and, in the absence of refinancings, to repay its debt obligations.
The Company believes free cash flow gives investors useful insight
into how the Company views its liquidity, but the use of free cash
flow as a liquidity measure has material limitations because it
excludes certain expenditures that are required or that the Company
has committed to, such as declared dividend payments and debt
service requirements. The Company defines free cash flow as net
cash provided by operating activities, less capital expenditures,
plus proceeds from divestitures of businesses and other assets (net
of cash divested); this definition may not be comparable to
similarly-titled measures reported by other companies.
The quantitative reconciliations of non-GAAP measures to the
most comparable GAAP measures are included in the accompanying
schedules, with the exception of projected adjusted operating
EBITDA and margin. Non-GAAP measures should not be considered a
substitute for financial measures presented in accordance with
GAAP.
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In Millions, Except per Share
Amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Operating revenues
$
5,609
$
5,198
$
16,170
$
15,209
Costs and expenses:
Operating
3,399
3,188
9,830
9,460
Selling, general and administrative
525
470
1,517
1,413
Depreciation, depletion and
amortization
558
519
1,615
1,545
Restructuring
2
—
2
4
(Gain) loss from divestitures, asset
impairments and unusual items, net
6
—
62
(3
)
4,490
4,177
13,026
12,419
Income from operations
1,119
1,021
3,144
2,790
Other income (expense):
Interest expense, net
(131
)
(127
)
(397
)
(372
)
Equity in net income (losses) of
unconsolidated entities
1
(18
)
4
(41
)
Other, net
6
(4
)
7
—
(124
)
(149
)
(386
)
(413
)
Income before income taxes
995
872
2,758
2,377
Income tax expense
235
210
611
570
Consolidated net income
760
662
2,147
1,807
Less: Net income (loss) attributable to
noncontrolling interests
—
(1
)
(1
)
(4
)
Net income attributable to Waste
Management, Inc.
$
760
$
663
$
2,148
$
1,811
Basic earnings per common share
$
1.89
$
1.64
$
5.35
$
4.46
Diluted earnings per common share
$
1.88
$
1.63
$
5.33
$
4.44
Weighted average basic common shares
outstanding
401.5
404.0
401.5
405.8
Weighted average diluted common shares
outstanding
403.2
405.9
403.2
407.6
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Millions)
(Unaudited)
September 30,
December 31,
2024
2023
ASSETS
Current assets:
Cash and cash equivalents
$
614
$
458
Receivables, net
3,125
2,870
Other
520
476
Total current assets
4,259
3,804
Property and equipment, net
17,931
16,968
Goodwill
9,822
9,254
Other intangible assets, net
742
759
Other
1,976
2,038
Total assets
$
34,730
$
32,823
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
4,103
$
3,892
Current portion of long-term debt
676
334
Total current liabilities
4,779
4,226
Long-term debt, less current portion
15,977
15,895
Other
6,002
5,806
Total liabilities
26,758
25,927
Equity:
Waste Management, Inc. stockholders’
equity
7,979
6,903
Noncontrolling interests
(7
)
(7
)
Total equity
7,972
6,896
Total liabilities and equity
$
34,730
$
32,823
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Nine Months Ended
September 30,
2024
2023
Cash flows from operating activities:
Consolidated net income
$
2,147
$
1,807
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation, depletion and
amortization
1,615
1,545
Other
271
278
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
(154
)
(293
)
Net cash provided by operating
activities
3,879
3,337
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(782
)
(139
)
Capital expenditures
(2,116
)
(1,853
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
99
68
Other, net
(40
)
(83
)
Net cash used in investing activities
(2,839
)
(2,007
)
Cash flows from financing activities:
New borrowings
10,914
17,319
Debt repayments
(10,619
)
(16,991
)
Common stock repurchase program
(262
)
(990
)
Cash dividends
(909
)
(855
)
Exercise of common stock options
42
29
Tax payments associated with equity-based
compensation transactions
(49
)
(28
)
Other, net
(20
)
(9
)
Net cash used in financing activities
(903
)
(1,525
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
(2
)
—
(Decrease) increase in cash, cash
equivalents and restricted cash and cash equivalents
135
(195
)
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
552
445
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
687
$
250
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Operating Revenues by Line of
Business
Three Months Ended
September 30,
2024
2023
Gross
Intercompany
Net
Gross
Intercompany
Net
Operating
Operating
Operating
Operating
Operating
Operating
Revenues
Revenues
Revenues
Revenues
Revenues
Revenues
Commercial
$
1,564
$
(205
)
$
1,359
$
1,464
$
(179
)
$
1,285
Industrial
1,003
(206
)
797
982
(194
)
788
Residential
897
(22
)
875
875
(23
)
852
Other collection
822
(57
)
765
773
(55
)
718
Total collection
4,286
(490
)
3,796
4,094
(451
)
3,643
Landfill
1,345
(422
)
923
1,259
(412
)
847
Transfer
641
(276
)
365
594
(263
)
331
Total Collection and Disposal
6,272
(1,188
)
5,084
5,947
(1,126
)
4,821
Recycling Processing and Sales
503
(71
)
432
386
(81
)
305
WM Renewable Energy
88
(1
)
87
68
(1
)
67
Corporate and Other
12
(6
)
6
12
(7
)
5
Total
$
6,875
$
(1,266
)
$
5,609
$
6,413
$
(1,215
)
$
5,198
Nine Months Ended
September 30,
2024
2023
Gross
Intercompany
Net
Gross
Intercompany
Net
Operating
Operating
Operating
Operating
Operating
Operating
Revenues
Revenues
Revenues
Revenues
Revenues
Revenues
Commercial
$
4,591
$
(586
)
$
4,005
$
4,300
$
(508
)
$
3,792
Industrial
2,915
(592
)
2,323
2,889
(563
)
2,326
Residential
2,659
(67
)
2,592
2,595
(73
)
2,522
Other collection
2,354
(162
)
2,192
2,207
(161
)
2,046
Total collection
12,519
(1,407
)
11,112
11,991
(1,305
)
10,686
Landfill
3,813
(1,225
)
2,588
3,672
(1,220
)
2,452
Transfer
1,819
(797
)
1,022
1,719
(779
)
940
Total Collection and Disposal
18,151
(3,429
)
14,722
17,382
(3,304
)
14,078
Recycling Processing and Sales
1,414
(209
)
1,205
1,154
(239
)
915
WM Renewable Energy
228
(3
)
225
201
(3
)
198
Corporate and Other
36
(18
)
18
38
(20
)
18
Total
$
19,829
$
(3,659
)
$
16,170
$
18,775
$
(3,566
)
$
15,209
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Internal Revenue Growth
Period-to-Period Change for
the
Period-to-Period Change for
the
Three Months Ended
Nine Months Ended
September 30, 2024 vs.
2023
September 30, 2024 vs.
2023
As a % of
As a % of
As a % of
As a % of
Related
Total
Related
Total
Amount
Business(a)
Amount
Company(b)
Amount
Business(a)
Amount
Company(b)
Collection and Disposal
$
188
4.1
%
$
609
4.6
%
Recycling Processing and Sales and WM
Renewable Energy(c)
108
28.1
236
20.5
Energy surcharge and mandated fees
(19
)
(7.9
)
(55
)
(7.6
)
Total average yield(d)
$
277
5.3
%
$
790
5.2
%
Volume(e)
70
1.4
75
0.5
Internal revenue growth
347
6.7
865
5.7
Acquisitions
71
1.4
108
0.7
Divestitures
(4
)
(0.1
)
(5
)
—
Foreign currency translation
(3
)
(0.1
)
(7
)
(0.1
)
Total
$
411
7.9
%
$
961
6.3
%
Period-to-Period Change for
the
Period-to-Period Change for
the
Three Months Ended
Nine Months Ended
September 30, 2024 vs.
2023
September 30, 2024 vs.
2023
As a % of Related
Business(a)
As a % of Related
Business(a)
Yield
Volume(f)
Yield
Volume
Commercial
5.8
%
0.9
%
6.3
%
1.0
%
Industrial
4.8
(4.1
)
5.1
(4.1
)
Residential
5.1
(2.9
)
6.0
(3.0
)
Total collection
5.1
(1.6
)
5.6
(1.6
)
MSW
3.1
5.7
3.2
3.9
Transfer
3.6
(1.3
)
4.6
1.7
Total Collection and Disposal
4.1
%
0.3
%
4.6
%
0.1
%
__________________
(a)
Calculated by dividing the increase or
decrease for the current year period by the prior year period’s
related business revenue adjusted to exclude the impacts of
divestitures for the current year period.
(b)
Calculated by dividing the increase or
decrease for the current year period by the prior year period’s
total Company revenue adjusted to exclude the impacts of
divestitures for the current year period.
(c)
Includes combined impact of commodity
price variability in both our Recycling Processing and Sales and WM
Renewable Energy segments, as well as changes in certain recycling
fees charged by our collection and disposal operations.
(d)
The amounts reported herein represent the
changes in our revenue attributable to average yield for the total
Company.
(e)
Includes activities from our Corporate and
Other businesses.
(f)
Workday adjusted volume impact.
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Free Cash Flow(a)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Net cash provided by operating
activities
$
1,358
$
1,263
$
3,879
$
3,337
Capital expenditures to support the
business
(598
)
(493
)
(1,545
)
(1,456
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
41
22
99
68
Free cash flow without sustainability
growth investments
801
792
2,433
1,949
Capital expenditures - sustainability
growth investments
(183
)
(180
)
(571
)
(397
)
Free cash flow
$
618
$
612
$
1,862
$
1,552
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Supplemental Data
Internalization of waste, based on
disposal costs
69.6
%
69.0
%
69.1
%
68.8
%
Landfill depletable tons (in millions)
32.9
31.6
93.9
92.7
Acquisition Summary(b)
Gross annualized revenue acquired
$
217
$
10
$
295
$
121
Total consideration, net of cash
acquired
540
20
780
138
Cash paid for acquisitions consummated
during the period, net of cash acquired
540
23
773
134
Cash paid for acquisitions including
contingent consideration and other items from prior periods, net of
cash acquired
540
21
790
139
Landfill Depletion and Accretion
Expenses:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2024
2023
2024
2023
Landfill depletion expense:
Cost basis of landfill assets
$
166
$
155
$
474
$
453
Asset retirement costs
37
33
106
101
Total landfill depletion expense(c)
203
188
580
554
Accretion expense
33
32
99
97
Landfill depletion and accretion
expense
$
236
$
220
$
679
$
651
__________________
(a)
The summary of free cash flow has been
prepared to highlight and facilitate understanding of the principal
cash flow elements. Free cash flow is not a measure of financial
performance under generally accepted accounting principles and is
not intended to replace the consolidated statement of cash flows
that was prepared in accordance with generally accepted accounting
principles.
(b)
Represents amounts associated with
business acquisitions consummated during the applicable period
except where noted.
(c)
For both the third quarter of 2024 and the
nine months ended September 30, 2024, the increase in landfill
depletion expense was driven by changes in amortization rates from
revisions in landfill and volume increases, partially offset by the
closure of a landfill in our East Tier.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions, Except Per Share
Amounts)
(Unaudited)
Three Months Ended September
30, 2024
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
1,119
$
995
$
235
$
760
$
1.88
Adjustments:
Stericycle transaction costs
40
40
5
35
0.09
Gain from divestment, asset impairments
and unusual items, net
(6
)
(6
)
(1
)
(5
)
(0.01
)
As adjusted amounts
$
1,153
$
1,029
$
239
(b)
$
790
$
1.96
Depreciation, depletion and
amortization
558
Adjusted operating EBITDA
$
1,711
Adjusted operating EBITDA
margin
30.5
%
Three Months Ended September
30, 2023
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
1,021
$
872
$
210
$
663
$
1.63
Adjustment:
Collective bargaining agreement costs
1
1
—
1
—
As adjusted amounts
$
1,022
$
873
$
210
(b)
$
664
$
1.63
Depreciation, depletion and
amortization
519
Adjusted operating EBITDA
$
1,541
Adjusted operating EBITDA
margin
29.6
%
__________________
(a)
For purposes of this press release table,
all references to “Net income” refer to the financial statement
line item “Net income attributable to Waste Management, Inc.”
(b)
The Company calculates its effective tax
rate based on actual dollars. When the effective tax rate is
calculated by dividing the Tax Expense amount in the table above by
the Pre-tax Income amount, differences occur due to rounding, as
these items have been rounded in millions. The third quarter 2024
and 2023 adjusted effective tax rates were 23.3% and 24.1%,
respectively.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended September
30, 2024
Recycling
WM
Collection
Processing
Renewable
Corporate
and Disposal(a)(b)
and Sales(a)
Energy(b)
and Other
Total
Operating revenues, as reported
$
5,084
$
432
$
87
$
6
$
5,609
Income from operations, as
reported
$
1,426
$
21
$
28
$
(356
)
$
1,119
Depreciation, depletion and
amortization
491
34
9
24
558
Operating EBITDA, as reported
$
1,917
$
55
$
37
$
(332
)
$
1,677
Adjustments:
Stericycle transaction costs
—
—
—
40
40
Gain from divestment, asset impairments
and unusual items, net
(18
)
—
7
5
(6
)
(18
)
—
7
45
34
Adjusted operating EBITDA
$
1,899
$
55
$
44
$
(287
)
$
1,711
Operating EBITDA margin, as
reported
37.7
%
12.7
%
42.5
%
N/A
29.9
%
Adjusted operating EBITDA
margin
37.4
%
12.7
%
50.6
%
N/A
30.5
%
Three Months Ended September
30, 2023
Recycling
WM
Collection
Processing
Renewable
Corporate
and Disposal(a)(b)
and Sales(a)
Energy(b)
and Other
Total
Operating revenues, as reported
$
4,821
$
305
$
67
$
5
$
5,198
Income from operations, as
reported
$
1,259
$
18
$
17
$
(273
)
$
1,021
Depreciation, depletion and
amortization
458
28
8
25
519
Operating EBITDA, as reported
$
1,717
$
46
$
25
$
(248
)
$
1,540
Adjustment:
Collective bargaining agreement costs
1
—
—
—
1
Adjusted operating EBITDA
$
1,718
$
46
$
25
$
(248
)
$
1,541
Operating EBITDA margin, as
reported
35.6
%
15.1
%
37.3
%
N/A
29.6
%
Adjusted operating EBITDA
margin
35.6
%
15.1
%
37.3
%
N/A
29.6
%
__________________
(a)
Certain fees related to the processing of
recycled material we collect are included within our Collection and
Disposal businesses. The amounts in income from operations for the
three months ended September 30, 2024 and 2023 are $29 million and
$16 million, respectively.
(b)
WM Renewable Energy pays a 15%
intercompany royalty to our Collection and Disposal businesses for
landfill gas. The total amount of royalties in income from
operations for the three months ended September 30, 2024 and 2023,
are $13 million and $10 million, respectively.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended
September 30, 2024
September 30, 2023
As a % of
As a % of
Amount
Revenues
Amount
Revenues
Adjusted SG&A Expenses and Adjusted
SG&A Expenses Margin
Operating revenues, as reported
$
5,609
$
5,198
SG&A expenses, as reported
$
525
9.4
%
$
470
9.0
%
Adjustments:
Stericycle transaction costs
(26
)
—
Collective bargaining agreement costs
—
(1
)
SG&A expenses, as adjusted
$
499
8.9
%
$
469
9.0
%
2024 Projected Free Cash Flow
Reconciliation(a)
Scenario 1
Scenario 2
Net cash provided by operating
activities
$
5,125
$
5,300
Capital expenditures to support the
business
(2,225
)
(2,275
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
125
150
Free cash flow without sustainability
growth investments
$
3,025
$
3,175
Capital expenditures - sustainability
growth investments
(925
)
(975
)
Free cash flow
$
2,100
$
2,200
__________________
(a)
The reconciliation includes two scenarios
that illustrate our projected free cash flow range for 2024. The
amounts used in the reconciliation are subject to many variables,
some of which are not under our control and, therefore, are not
necessarily indicative of actual results.
WASTE MANAGEMENT, INC.
SUPPLEMENTAL INFORMATION
PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY
(In Millions)
(Unaudited)
Diversity in the structure of recycling
contracts results in different accounting treatment for commodity
rebates. In accordance with revenue recognition guidance, our
Company records gross recycling revenue and records rebates paid to
customers as cost of goods sold. Other contract structures allow
for netting of rebates against revenue.
Additionally, there are differences in
whether companies adjust for accretion expense in their calculation
of EBITDA. Our Company does not adjust for landfill accretion
expenses when calculating operating EBITDA, while other companies
do adjust it for the calculation of their EBITDA measure.
The table below illustrates the impact
that differing contract structures and treatment of accretion
expense has on the Company’s adjusted operating EBITDA margin
results. This information has been provided to enhance
comparability and is not intended to replace or adjust GAAP
reported results.
Three Months Ended
September 30, 2024
September 30, 2023
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
240
1.4
%
$
143
0.9
%
Accretion expense
$
33
0.6
%
$
32
0.6
%
Nine Months Ended
September 30, 2024
September 30, 2023
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
643
1.3
%
$
433
0.9
%
Accretion expense
$
99
0.6
%
$
97
0.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20241028909138/en/
Waste Management
Web site www.wm.com
Analysts Ed Egl 713.265.1656 eegl@wm.com
Media Toni Werner media@wm.com
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