The Company Delivers Another Quarter of Strong
Expansion in Operating EBITDA Margin
WM (NYSE: WM) today announced financial results for the quarter
ended September 30, 2023.
Three Months Ended
Three Months Ended
September
30, 2023 (in millions, except per share amounts)
September
30, 2022
(in
millions, except per share amounts)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
Revenue
$5,198
$5,198
$5,075
$5,075
Income from Operations
$1,021
$1,022
$942
$950
Operating EBITDA(b)
$1,540
$1,541
$1,445
$1,453
Operating EBITDA Margin
29.6%
29.6%
28.5%
28.6%
Net Income(c)
$663
$664
$639
$645
Diluted EPS
$1.63
$1.63
$1.54
$1.56
“Over the course of the year, our team has consistently
delivered strong results driven by our focus on pricing discipline
and optimization of our cost structure,” said Jim Fish, WM’s
President and Chief Executive Officer. “In the third quarter,
organic growth in our collection and disposal business, operating
cost improvements, and our commitment to SG&A cost management
translated into more than 6% growth in adjusted operating EBITDA
and 100 basis points of adjusted operating EBITDA margin
expansion.”(a)
KEY HIGHLIGHTS FOR THE THIRD QUARTER OF 2023
Revenue
- Core price for the third quarter of 2023 was 6.6% compared to
8.2% in the third quarter of 2022.(d) Core price exceeded
inflationary cost increases in the quarter by an estimated 100
basis points, contributing to margin and earnings growth.
- Collection and disposal yield was 5.0% in the third quarter of
2023 compared to 7.1% in the third quarter of 2022.(e)
- On a workday adjusted basis, total Company volumes increased
1.0% and collection and disposal volumes increased 0.7% in the
third quarter of 2023. On a reported basis, total Company volumes
increased 0.5% and collection and disposal volumes increased 0.3%
in the third quarter of 2023 compared to 1.0% and 1.4%,
respectively, in the third quarter of 2022.
Cost Management
- Operating expenses as a percentage of revenue were 61.3% in the
third quarter of 2023 compared to 62.2% in the third quarter of
2022.
- SG&A expenses were 9.0% of revenue in the third quarter of
2023 compared to 9.3% in the third quarter of 2022. SG&A
expenses as a percentage of revenue improved 20 basis points in the
third quarter of 2023 from 9.2%, on an adjusted basis, in the third
quarter of 2022.(a)
Profitability
- Operating EBITDA in the Company’s collection and disposal
business, adjusted on the same basis as total Company operating
EBITDA, increased by approximately $105 million to $1.70 billion
for the third quarter of 2023. Operating EBITDA as a percentage of
revenue in the Company’s collection and disposal business was 32.6%
for the third quarter of 2023 compared to 31.9% for the third
quarter of 2022.(f)
- Operating EBITDA in the Company’s recycling line of business
declined by $10 million compared to the third quarter of 2022,
which was in line with the Company’s expectations. The decline was
driven by the approximately 40% decrease in market prices for
single-stream recycled commodities.(g) WM’s automated facilities
continue to see strong improvements in product quality, throughput,
and labor costs, which is mitigating the commodity price pressure
on earnings.
- Operating EBITDA in the Company’s renewable energy business
declined by $13 million compared to the third quarter of 2022,
which was in line with expectations and primarily driven by
decreases in the value of energy prices and renewable fuel standard
credits.(g)
Free Cash Flow & Capital
Allocation
Three Months Ended
September 30,
(in millions)
2023
2022
Net cash provided by operating
activities
$
1,263
$
1,182
Capital expenditures to support the
business
(493
)
(547
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
22
7
Free cash flow without sustainability
growth investments
792
642
Capital expenditures - sustainability
growth investments
(180
)
(210
)
Free cash flow
$
612
$
432
- Cash flow from operations increased 6.9% in the third quarter
of 2023, driven by strong operating EBITDA growth.
- During the third quarter of 2023, $653 million was returned to
shareholders, including $283 million of cash dividends and $370
million of share repurchases.
Sustainability Update
- The Company continues to advance its sustainability growth
investments in both the renewable energy and recycling businesses,
and management continues to expect that the previously announced
investments will deliver approximately $740 million in incremental
annual adjusted operating EBITDA contributions beginning in 2026,
with approximately $500 million coming from renewable energy
investments and approximately $240 million coming from recycling
investments.(a)(h)
- In the third quarter, technology and automation upgrades were
completed at two of WM’s recycling facilities, and another two
automation projects and a new market facility are expected to be in
service by the end of the year. Additionally, the Company expects
to have its seventh renewable natural gas facility, the third in
its growth program, in service in January.
- The Company now expects sustainability growth capital spending
of about $750 million in 2023. The decrease from prior expectations
is based on a shift in the timing of spending across the next few
quarters. As a result of lower anticipated capital spending, 2023
free cash flow is expected to be in the range of $1.825 and $1.925
billion.(a)
- WM released its 2023 Sustainability Report during the third
quarter, providing details about the Company’s sustainability
ambitions, strategy, and progress toward its goals.
“We are pleased with our results in the initial three quarters
of the year across all key financial metrics giving us confidence
in our ability to deliver on the guidance we communicated in July.
Our team remains focused on continuing to drive operating leverage
in the business to deliver a strong finish to this year and lay the
groundwork for further growth in 2024,” Fish concluded.
-----------------------------------------------------------------------------------------------------------------
(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
measuring cumulative price changes net of churn plus price changes
from ancillary fees excluding fuel surcharges. It is 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)
Collection and disposal yield reflects the
effect on revenue from the pricing activities of collection,
transfer and landfill operations, exclusive of volume changes. It
is 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.
(f)
In the first quarter of 2023, the Company
updated its collection and disposal operating EBITDA calculation
with a more accurate allocation of costs to this line of business.
The Company has restated the prior periods to be consistent with
the current year presentation.
(g)
In the third quarter of 2023, the
Company’s average recycled commodity price was $58 per ton compared
to $94 per ton in the third quarter of 2022. The blended average
value of renewable fuel standard credits was $2.65 in the third
quarter compared to $2.86 in the prior year period. The average
natural gas price was $2.11 per MMBtu in the third quarter compared
to $7.21 per MMBtu in the prior year period, and the average
electricity price was $65 per megawatt hour in the third quarter
compared to about $81 per megawatt hour in the prior year
period.
(h)
Projections are based on commodity price
assumptions of $26 per MMBtu for renewable natural gas and $125 per
ton for the blended average value of single-stream recycled
commodities. In the recycling business, projected incremental
annual operating EBITDA by 2026 ranges from $200 to $260 million
assuming commodity prices range from $75 to $150 per ton.
The Company will host a conference call at 10 a.m. ET on October
25, 2023 to discuss the third quarter 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 must 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 the 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 nearly 11,000 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 but not limited to statements
under the heading “Sustainability Update” and all statements
regarding future performance or financial results of our business;
achievement of our full-year financial guidance; 2023 free cash
flow; future capital expenditures; pricing results; commodity price
assumptions; costs management and cost reduction; future execution
of and investment in strategic priorities, including technology,
automation, and sustainability projects; and timing, outcomes and
benefits from investment in such strategic priorities. 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 or new lines of
business; failure to identify acquisition targets, consummate and
integrate acquisitions; environmental and other regulations,
including developments related to emerging contaminants, gas
emissions, renewable energy and environmental, social, and
governance performance and disclosure; increasing attention to
sustainability matters and heightened scrutiny of sustainability
measurements, objectives and disclosures, which could lead to
increased litigation risk related to our sustainability efforts;
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 extreme weather and destructive climate events;
failure to achieve our sustainability goals or execute on our
sustainability-related strategy and initiatives; public health
risk, increased costs and disruption due to a future resurgence of
pandemic conditions and restrictions; macroeconomic conditions,
geopolitical conflict and 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 address cybersecurity incidents or comply with privacy
regulations; negative outcomes of litigation or governmental
proceedings; and 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, adjusted operating
EBITDA margin, adjusted SG&A expenses, and free cash flow, as
well as projections of adjusted operating EBITDA 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 future operating EBITDA is
anticipated 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.
Free cash flow is not intended to replace “Net cash provided by
operating activities,” which is the most comparable GAAP measure.
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. 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,
2023
2022
2023
2022
Operating revenues
$
5,198
$
5,075
$
15,209
$
14,763
Costs and expenses:
Operating
3,188
3,156
9,460
9,201
Selling, general and administrative
470
473
1,413
1,451
Depreciation, depletion and
amortization
519
503
1,545
1,493
Restructuring
—
1
4
1
(Gain) loss from divestitures, asset
impairments and unusual items, net
—
—
(3
)
17
4,177
4,133
12,419
12,163
Income from operations
1,021
942
2,790
2,600
Other income (expense):
Interest expense, net
(127
)
(91
)
(372
)
(269
)
Equity in net losses of unconsolidated
entities
(18
)
(17
)
(41
)
(49
)
Other, net
(4
)
(6
)
—
(7
)
(149
)
(114
)
(413
)
(325
)
Income before income taxes
872
828
2,377
2,275
Income tax expense
210
189
570
535
Consolidated net income
662
639
1,807
1,740
Less: Net income (loss) attributable to
noncontrolling interests
(1
)
—
(4
)
1
Net income attributable to Waste
Management, Inc.
$
663
$
639
$
1,811
$
1,739
Basic earnings per common share
$
1.64
$
1.55
$
4.46
$
4.20
Diluted earnings per common share
$
1.63
$
1.54
$
4.44
$
4.18
Weighted average basic common shares
outstanding
404.0
412.0
405.8
414.0
Weighted average diluted common shares
outstanding
405.9
414.3
407.6
416.2
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Millions)
(Unaudited)
September 30,
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
150
$
351
Receivables, net
2,917
2,752
Other
495
448
Total current assets
3,562
3,551
Property and equipment, net
16,229
15,719
Goodwill
9,398
9,323
Other intangible assets, net
779
827
Other
1,967
1,947
Total assets
$
31,935
$
31,367
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
3,921
$
3,980
Current portion of long-term debt
297
414
Total current liabilities
4,218
4,394
Long-term debt, less current portion
15,133
14,570
Other
5,618
5,539
Total liabilities
24,969
24,503
Equity:
Waste Management, Inc. stockholders’
equity
6,950
6,849
Noncontrolling interests
16
15
Total equity
6,966
6,864
Total liabilities and equity
$
31,935
$
31,367
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Nine Months Ended
September 30,
2023
2022
Cash flows from operating activities:
Consolidated net income
$
1,807
$
1,740
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation, depletion and
amortization
1,545
1,493
Other
278
199
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
(293
)
55
Net cash provided by operating
activities
3,337
3,487
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(139
)
(207
)
Capital expenditures
(1,853
)
(1,725
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
68
18
Other, net
(83
)
(122
)
Net cash used in investing activities
(2,007
)
(2,036
)
Cash flows from financing activities:
New borrowings
17,319
5,916
Debt repayments
(16,991
)
(5,429
)
Common stock repurchase program
(990
)
(1,061
)
Cash dividends
(855
)
(811
)
Exercise of common stock options
29
39
Tax payments associated with equity-based
compensation transactions
(28
)
(39
)
Other, net
(9
)
(6
)
Net cash used in financing activities
(1,525
)
(1,391
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
—
(6
)
(Decrease) increase in cash, cash
equivalents and restricted cash and cash equivalents
(195
)
54
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
445
194
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
250
$
248
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Operating Revenues by Line of
Business
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Commercial
$
1,464
$
1,392
$
4,300
$
4,034
Industrial
982
966
2,889
2,744
Residential
875
846
2,595
2,483
Other collection
193
187
556
521
Total collection
3,514
3,391
10,340
9,782
Landfill
1,261
1,197
3,678
3,442
Transfer
594
562
1,719
1,602
Recycling
366
420
1,094
1,341
Other
678
614
1,944
1,785
Intercompany (a)
(1,215
)
(1,109
)
(3,566
)
(3,189
)
Total
$
5,198
$
5,075
$
15,209
$
14,763
Internal Revenue Growth
Period-to-Period Change for
the Three Months
Period-to-Period Change for
the Nine Months
Ended September 30, 2023 vs.
2022
Ended September 30, 2023 vs.
2022
As a % of
As a % of
As a % of
As a % of
Related
Total
Related
Total
Amount
Business(b)
Amount
Company(c)
Amount
Business(b)
Amount
Company(c)
Collection and disposal
$
215
5.0
%
$
699
5.6
%
Recycling and WM Renewable Energy(d)
(e)
(108
)
(23.3
)
(399
)
(26.8
)
Energy surcharge and mandated fees(e)
(f)
(54
)
(18.4
)
(70
)
(8.8
)
Total average yield(g)
$
53
1.1
%
$
230
1.6
%
Volume
27
0.5
94
0.6
Internal revenue growth
80
1.6
324
2.2
Acquisitions
50
0.9
156
1.0
Divestitures
(1
)
—
(5
)
—
Foreign currency translation
(6
)
(0.1
)
(29
)
(0.2
)
Total
$
123
2.4
%
$
446
3.0
%
Period-to-Period Change for
the Three Months Ended September 30, 2023 vs. 2022
Period-to-Period Change for
the Nine Months Ended September 30, 2023 vs. 2022
As a % of Related
Business(b)
As a % of Related
Business(b)
Yield
Volume(h)
Yield
Volume(h)
Commercial
5.9
%
0.1
%
6.6
%
(0.6
)%
Industrial
6.1
(2.5
)
7.7
(2.3
)
Residential
6.3
(3.0
)
6.3
(3.4
)
Total collection
5.8
(1.2
)
6.5
(1.4
)
MSW
4.1
1.7
5.0
2.7
Transfer
7.1
1.4
7.8
0.4
Total collection and disposal
5.0
%
0.7
%
5.6
%
0.6
%
_____________________
(a)
Intercompany revenues between lines of
business are eliminated in the Condensed Consolidated Financial
Statements included herein.
(b)
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.
(c)
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.
(d)
Includes combined impact of commodity
price variability in both our recycling and WM Renewable Energy
businesses, as well as changes in fees in our recycling
business.
(e)
Beginning in 2023, Recycling and WM
Renewable Energy includes changes in our revenue attributable to
our WM Renewable Energy business. Previously these changes in
revenues were included in fuel surcharges and mandated fees. We
have revised our prior year results to conform with the current
year presentation.
(f)
Our energy surcharge was revised in the
second quarter of 2023 to incorporate market prices for both diesel
and compressed natural gas.
(g)
The amounts reported herein represent the
changes in our revenue attributable to average yield for the total
Company.
(h)
Workday adjusted volume impact.
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Supplemental Data
Internalization of waste, based on
disposal costs
69.0
%
68.6
%
68.8
%
68.6
%
Landfill depletable tons (in millions)
31.6
32.1
92.7
93.9
Acquisition Summary(a)
Gross annualized revenue acquired
$
10
$
132
$
121
$
135
Total consideration, net of cash
acquired
20
210
138
216
Cash paid for acquisitions consummated
during the period, net of cash acquired
23
197
134
202
Cash paid for acquisitions including
contingent consideration and other items from prior periods, net of
cash acquired
21
197
139
207
Landfill Depletion and Accretion
Expenses:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2023
2022
2023
2022
Landfill depletion expense:
Cost basis of landfill assets
$
155
$
150
$
453
$
436
Asset retirement costs
33
34
101
103
Total landfill depletion expense(b)
188
184
554
539
Accretion expense
32
29
97
84
Landfill depletion and accretion
expense
$
220
$
213
$
651
$
623
_____________________
(a)
Represents amounts associated with
business acquisitions consummated during the applicable period
except where noted.
(b)
The increase in landfill depletion for the
nine months ended September 30, 2023, as compared with the prior
year period, was primarily driven by the reopening of previously
closed 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, 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:
Business readiness costs for collective
bargaining agreement negotiations
1
1
—
1
—
As adjusted amounts
$
1,022
$
873
$
210
(b)
$
664
$
1.63
Depreciation and amortization
519
Adjusted operating EBITDA
$
1,541
Three Months Ended September
30, 2022
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
942
$
828
$
189
$
639
$
1.54
Adjustment:
Enterprise resource planning system
implementation-related costs
8
8
2
6
0.02
As adjusted amounts
$
950
$
836
$
191
(b)
$
645
$
1.56
Depreciation and amortization
503
Adjusted operating EBITDA
$
1,453
_____________________
(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 2023
and 2022 adjusted effective tax rates were 24.1% and 22.8%,
respectively.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended
September 30, 2023
September 30, 2022
As a % of
As a % of
Amount
Revenues
Amount
Revenues
Adjusted SG&A Expenses and Adjusted
SG&A Expenses Margin
Operating revenues, as reported
$
5,198
$
5,075
SG&A expenses, as reported
$
470
9.0
%
$
473
9.3
%
Adjustments:
Business readiness costs for collective
bargaining agreement negotiations
(1
)
—
Enterprise resource planning system
implementation-related costs
—
(8
)
Adjusted SG&A expenses
$
469
9.0
%
$
465
9.2
%
2023 Projected Free Cash Flow
Reconciliation(a)
Scenario 1
Scenario 2
Net cash provided by operating
activities
$
4,500
$
4,650
Capital expenditures to support the
business
(1,975
)
(2,075
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
50
100
Free cash flow without sustainability
growth investments
$
2,575
$
2,675
Capital expenditures - sustainability
growth investments
(750
)
(750
)
Free cash flow
$
1,825
$
1,925
_____________________
(a)
The reconciliation includes two scenarios
that illustrate our projected free cash flow range for 2023. 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, 2023
September 30, 2022
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
143
0.9%
$
209
1.3%
Accretion expense
$
32
0.6%
$
29
0.6%
Nine Months Ended
September 30, 2023
September 30, 2022
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
433
0.9%
$
661
1.3%
Accretion expense
$
97
0.6%
$
84
0.6%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231024984950/en/
Waste Management Website www.wm.com
Analysts Ed Egl 713.265.1656 eegl@wm.com
Media Toni Werner media@wm.com
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