Accelerated Earnings Growth in the Fourth
Quarter Driven by Strong Execution of Price Programs and
Optimization of Cost of Operations
Robust Full-Year Cash from Operations Driven by
Growth in Operating EBITDA
WM (NYSE: WM) today announced financial results for the quarter
and year ended December 31, 2023.
Three Months Ended
Year Ended
December
31, 2023
December
31, 2022
December
31, 2023
December
31, 2022
(in
millions, except per share amounts)
(in
millions, except per share amounts)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
Revenue
$5,217
$5,217
$4,935
$4,935
$20,426
$20,426
$19,698
$19,698
Income from Operations
$785
$1,032
$765
$814
$3,575
$3,828
$3,365
$3,474
Operating EBITDA(b)
$1,311
$1,558
$1,310
$1,359
$5,646
$5,899
$5,403
$5,512
Operating EBITDA Margin
25.1%
29.9%
26.5%
27.5%
27.6%
28.9%
27.4%
28.0%
Net Income(c)
$493
$703
$499
$537
$2,304
$2,519
$2,238
$2,321
Diluted EPS
$1.22
$1.74
$1.21
$1.30
$5.66
$6.19
$5.39
$5.59
“Our operating and financial results in the second half of 2023
surpassed expectations driven by strong execution on our pricing
and operating excellence programs. Our team continues to make
progress in optimizing our cost structure, and our investments in
people, technology, and assets accelerated margin expansion ahead
of plan in the fourth quarter,” said Jim Fish, WM’s President and
Chief Executive Officer. “During the fourth quarter, our collection
and disposal business performance powered our total Company
adjusted operating EBITDA growth of 15% and record adjusted margin
of 29.9%.(a) Our performance in 2023, particularly the momentum
built during the second half of the year, positions us well to
sustain growth throughout 2024.”
Fish continued, “In 2024, we anticipate our financial
performance to be driven by disciplined pricing, enhanced
operational efficiencies, prudent cost management, and
contributions from our investments in our recycling and renewable
energy businesses. We anticipate total Company adjusted operating
EBITDA growth of almost 8% at the midpoint of our guidance.(a) Our
expectations for operating EBITDA growth position us to achieve all
of our capital allocation priorities, including continuing to
invest in sustainability growth, completing accretive acquisitions,
and returning cash to our shareholders through dividends and share
repurchases.”
KEY HIGHLIGHTS FOR THE FOURTH QUARTER OF 2023
- Total Company revenue grew 5.7%, driven primarily by core price
of 7.3%.(e)
- Collection and disposal yield was 4.9%, and collection and
disposal volumes increased 1.1%, or 1.9% on a workday adjusted
basis.
- Operating expenses as a percentage of revenue improved 240
basis points to 60.3% driven by efficiencies in the collection and
disposal business.
- SG&A expenses were 9.8% of revenue compared to 9.9%, or
9.8% on an adjusted basis, in the fourth quarter of 2022.(a)
- Total Company adjusted operating EBITDA grew 14.7% to $1.56
billion, and margin expanded 240 basis points to 29.9% on an
adjusted basis.(a)
- Operating EBITDA in the Collection and Disposal business grew
$250 million, or $205 million on an adjusted basis, to $1.77
billion. Operating EBITDA margin expanded 360 basis points, or 260
basis points on an adjusted basis, to 37.0%. (a)(d)
- The Company returned $593 million to shareholders, including
$312 million of share repurchases and $281 million of cash
dividends.
KEY HIGHLIGHTS FOR FULL YEAR 2023
- Total Company revenue grew 3.7%, driven primarily by core price
of 7.0%.(e) Revenue growth from core price and volume finished the
year ahead of expectations. This strong result was partially offset
by the impact of lower commodity prices, which negatively impacted
revenue from energy surcharges, recycling sales, and our renewable
energy business.
- Collection and disposal yield was 5.4%, and collection and
disposal volumes increased 0.7%, or 0.9% on a workday adjusted
basis.
- Operating expenses as a percentage of revenue improved 70 basis
points to 61.7% driven by efficiencies in the collection and
disposal business.
- SG&A expenses were 9.4% of revenue compared to 9.8%, or
9.6% on an adjusted basis, in 2022.(a)
- Total Company adjusted operating EBITDA grew 7.0% to $5.90
billion, and margin expanded 90 basis points to 28.9% on an
adjusted basis.(a)
- Operating EBITDA in the Collection and Disposal business grew
$457 million to $6.63 billion. Adjusted operating EBITDA in the
Collection and Disposal business grew $422 million to $6.64
billion. Operating EBITDA margin expanded 50 basis points, or 30
basis points on an adjusted basis, to 35.2%.(a)(d)
- Net cash provided by operating activities increased 4.0% to
$4.72 billion, and free cash flow before investments in high-return
sustainability projects grew 5.1% to $2.67 billion. Total Company
free cash flow, including investments in sustainability projects,
declined 3.7% to $1.90 billion.
- The Company returned $2.44 billion to shareholders, including
$1.30 billion of share repurchases and $1.14 billion of cash
dividends.
2024 OUTLOOK
Revenue Growth &
Profitability
- Total Company revenue is expected to grow between 6% and 7%.
The Company’s disciplined pricing programs are expected to result
in core price of between 6% and 6.5% and collection and disposal
yield approaching 5%. Collection and disposal volume growth is
expected to approach 1%.
- Total Company adjusted operating EBITDA is expected to be in
the range of $6.275 to $6.425 billion, an increase of about $450
million at the midpoint of the range, which includes about $115
million of adjusted operating EBITDA growth from sustainability
growth investments.(a)(f)
- Adjusted operating EBITDA margin is expected to be in the range
of 29.0% and 29.4%, expanding 30 basis points at the midpoint of
the range.(a)
Free Cash Flow & Capital
Allocation
- WM expects to spend in the range of $2.2 to $2.3 billion on
capital expenditures to support its normal business
activities.
- WM intends to invest between $850 and $900 million for capital
expenditures on high-return growth projects in its recycling and
renewable energy businesses.
- Free cash flow before these targeted sustainability and
automation focused capital investments is projected to be between
$2.75 and $2.95 billion. Free cash flow is projected to be between
$1.90 and $2.05 billion including the sustainability growth
investments.(a)
- WM’s cash flow outlook and strong balance sheet position the
Company to continue its commitment to sound capital allocation.
- The Company plans to invest $100 to $200 million in solid waste
acquisitions.
- The Board of Directors has indicated its intention to increase
the annual dividend by $0.20 per share to $3.00, increasing
estimated annual dividends paid to shareholders to $1.2 billion.
This will be the 21st consecutive year of increases in the
Company’s per share dividend. Each individual future quarterly
dividend will be declared at the discretion of the Board of
Directors prior to payment.
- In December 2023, the Board of Directors refreshed the
Company’s share repurchase authorization, providing for the
repurchase of up to $1.5 billion of the Company’s common stock. WM
expects to repurchase $1 billion of its common stock in 2024.
SUSTAINABILITY GROWTH OUTLOOK
- WM has progressed its sustainability growth portfolio and
remains committed to investing in an industry-leading network of
renewable natural gas projects and recycling assets. The renewable
natural gas projects have a projected payback period of about three
years and the recycling assets have a projected payback period of
about six years. These anticipated returns reflect the Company’s
views that these investments create strong economic value, in
addition to underlying environmental value.
- The Company has updated the outlook for its sustainability
growth program to reflect the addition of new high-return recycling
growth opportunities, refined project schedules, and impacts from
inflation.
- The Company expects to invest $2.8 to $2.9 billion in growth
investments across the recycling and renewable energy platforms
from 2022 to 2026, which includes the $1.325 billion already
invested in 2022 and 2023. About $350 million of the increase from
the Company’s prior plan is for new recycling growth projects that
are expected to deliver similar returns.
- The projects are expected to contribute incremental run-rate
adjusted operating EBITDA of about $800 million by the end of 2026,
with about $510 million coming from renewable natural gas projects
assuming a blended average renewable natural gas price of $26 per
MMBtu and about $290 million coming from recycling projects
assuming a blended average recycled commodity price of $125 per
ton.(a)(g)
Following the request of stockholders, the Company previously
announced that it engaged a team led by former U.S. Attorney
General Loretta Lynch at Paul, Weiss, Rifkind, Wharton &
Garrison to perform an independent assessment of the impact of the
Company’s policies and practices on the civil rights of Company
stakeholders, and to provide recommendations for further
improvement. The assessment was recently completed, and the report
is available at https://sustainability.wm.com/ under
“Sustainability Disclosures.”
“We are pleased with the positive findings of the civil rights
assessment, which reported that WM’s work to date reflects a
substantial and enduring commitment to creating a welcoming and
supportive environment that presents opportunities for all
employees and suppliers to succeed and proactively addresses the
environmental impacts in the communities where WM operates,” Fish
said. “WM remains committed to continuous improvement in these
areas and seeking innovative ways to support and serve our key
stakeholders with the highest integrity, fairness, and
respect.”
Fish continued, “Our strong fourth quarter finish to the year
reflects our commitments to putting our people first, delivering
best-in-class customer service, optimizing our cost to serve, and
protecting and preserving the environment. This strong finish
positions us to continue to deliver out-paced growth in 2024.”
(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)
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 our Tier segments
form its “Collection and Disposal” businesses.
(e)
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.
(f)
In 2024, the Company’s outlook assumes a
blended average single stream recycled commodity price of
approximately $70 per ton; a blended average renewable natural gas
value of about $29.50 per MMBtu including an average price for
renewable fuel standard credits of $3.00 and an average natural gas
price of $2.50 per MMBtu; and an average electricity price of
approximately $64 per megawatt hour. The Company’s blended average
single stream recycled commodity price was about $75 per ton in the
fourth quarter, compared to about $47 per ton in the prior year
period, and about $62 per ton for the full year, compared to about
$100 per ton in the prior year. The blended average renewable
natural gas value was about $28.10 per MMBtu for the full-year
2023. The average value of renewable fuel standard credits was
$2.77 in the fourth quarter, compared to $2.82 in the prior year
period, and $2.45 for the full year, compared to $3.10 in the prior
year. The average natural gas price was $1.87 per MMBtu in the
fourth quarter, compared to $4.99 per MMBtu in the prior year
period, and $2.07 per MMBtu for the full year, compared to $5.84
per MMBtu in the prior year. The average electricity price was $62
per megawatt hour in the fourth quarter, compared to about $74 per
megawatt hour in the prior year period, and about $64 per megawatt
hour for the full year, compared to about $73 per megawatt hour in
the prior year.
(g)
Projected run-rate annual adjusted
operating EBITDA by the end of 2026 from recycling investments
ranges from $250 to $310 million, assuming commodity prices range
from $75 to $150 per ton. Projected run-rate annual adjusted
operating EBITDA by the end of 2026 from renewable natural gas
investments changes by about $25 million for each $1 per MMBtu
change in the value of renewable natural gas.
The Company will host a conference call at 10 a.m. ET on
February 13, 2024 to discuss the fourth quarter and full-year 2023
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 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 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 but not limited to all
statements under the heading “2024 Outlook” and “Sustainability
Growth Outlook” and all statements regarding future performance or
financial results of our business; achievement of financial
guidance and growth in 2024; drivers of 2024 financial performance;
future capital allocation priorities, investments, expenditures,
results, returns and payback periods; contributions from
sustainability growth investments in recycling and renewable
energy; future pricing results, cost management and operational
efficiencies; commodity price assumptions; future acquisition
activity and results of acquisitions; future shares repurchase
activity and dividend payments; and future activities in response
to the civil rights assessment. 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, 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; 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 address 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; 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
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Operating revenues
$
5,217
$
4,935
$
20,426
$
19,698
Costs and expenses:
Operating
3,146
3,093
12,606
12,294
Selling, general and administrative
513
487
1,926
1,938
Depreciation, depletion and
amortization
526
545
2,071
2,038
Restructuring
1
—
5
1
(Gain) loss from divestitures, asset
impairments and unusual items, net
246
45
243
62
4,432
4,170
16,851
16,333
Income from operations
785
765
3,575
3,365
Other income (expense):
Interest expense, net
(128
)
(109
)
(500
)
(378
)
Equity in net losses of unconsolidated
entities
(19
)
(18
)
(60
)
(67
)
Other, net
6
5
6
(2
)
(141
)
(122
)
(554
)
(447
)
Income before income taxes
644
643
3,021
2,918
Income tax expense
175
143
745
678
Consolidated net income
469
500
2,276
2,240
Less: Net income (loss) attributable to
noncontrolling interests
(24
)
1
(28
)
2
Net income attributable to Waste
Management, Inc.
$
493
$
499
$
2,304
$
2,238
Basic earnings per common share
$
1.23
$
1.22
$
5.69
$
5.42
Diluted earnings per common share
$
1.22
$
1.21
$
5.66
$
5.39
Weighted average basic common shares
outstanding
402.0
409.2
404.9
412.8
Weighted average diluted common shares
outstanding
404.2
411.5
406.9
415.0
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Millions)
(Unaudited)
December 31,
2023
2022
ASSETS
Current assets:
Cash and cash equivalents
$
458
$
351
Receivables, net
2,870
2,752
Other
476
448
Total current assets
3,804
3,551
Property and equipment, net
16,968
15,719
Goodwill
9,254
9,323
Other intangible assets, net
759
827
Other
2,038
1,947
Total assets
$
32,823
$
31,367
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
3,892
$
3,980
Current portion of long-term debt
334
414
Total current liabilities
4,226
4,394
Long-term debt, less current portion
15,895
14,570
Other
5,806
5,539
Total liabilities
25,927
24,503
Equity:
Waste Management, Inc. stockholders’
equity
6,903
6,849
Noncontrolling interests
(7
)
15
Total equity
6,896
6,864
Total liabilities and equity
$
32,823
$
31,367
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Year Ended
December 31,
2023
2022
Cash flows from operating activities:
Consolidated net income
$
2,276
$
2,240
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation, depletion and
amortization
2,071
2,038
Goodwill impairment
168
—
Other
455
403
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
(251
)
(145
)
Net cash provided by operating
activities
4,719
4,536
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(170
)
(377
)
Capital expenditures
(2,895
)
(2,587
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
78
27
Other, net
(104
)
(126
)
Net cash used in investing activities
(3,091
)
(3,063
)
Cash flows from financing activities:
New borrowings
21,306
8,688
Debt repayments
(20,394
)
(7,328
)
Common stock repurchase program
(1,302
)
(1,500
)
Cash dividends
(1,136
)
(1,077
)
Exercise of common stock options
44
44
Tax payments associated with equity-based
compensation transactions
(31
)
(39
)
Other, net
(11
)
(4
)
Net cash used in financing activities
(1,524
)
(1,216
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
3
(6
)
Increase in cash, cash equivalents and
restricted cash and cash equivalents
107
251
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
$
552
$
445
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Operating Revenues by Line of
Business
Three Months Ended
December 31,
2023
2022
Gross
Intercompany
Net
Gross
Intercompany
Net
Operating
Operating
Operating
Operating
Operating
Operating
Revenues
Revenues
Revenues
Revenues
Revenues
Revenues
Commercial
$
1,501
$
(185
)
$
1,316
$
1,416
$
(170
)
$
1,246
Industrial
947
(190
)
757
937
(174
)
763
Residential
879
(23
)
856
856
(25
)
831
Other collection
797
(59
)
738
691
(53
)
638
Total collection
4,124
(457
)
3,667
3,900
(422
)
3,478
Landfill
1,193
(391
)
802
1,158
(377
)
781
Transfer
574
(256
)
318
541
(246
)
295
Total Collection and Disposal
$
5,891
$
(1,104
)
$
4,787
$
5,599
$
(1,045
)
$
4,554
Recycling Processing and Sales
421
(72
)
349
376
(80
)
296
WM Renewable Energy
76
(1
)
75
80
(1
)
79
Corporate and Other
13
(7
)
6
11
(5
)
6
Total
$
6,401
$
(1,184
)
$
5,217
$
6,066
$
(1,131
)
$
4,935
Year Ended
December 31,
2023
2022
Gross
Intercompany
Net
Gross
Intercompany
Net
Operating
Operating
Operating
Operating
Operating
Operating
Revenues
Revenues
Revenues
Revenues
Revenues
Revenues
Commercial
$
5,801
$
(692
)
$
5,109
$
5,450
$
(590
)
$
4,860
Industrial
3,836
(753
)
3,083
3,681
(656
)
3,025
Residential
3,474
(96
)
3,378
3,339
(75
)
3,264
Other collection
3,006
(220
)
2,786
2,683
(217
)
2,466
Total collection
16,117
(1,761
)
14,356
15,153
(1,538
)
13,615
Landfill
4,863
(1,611
)
3,252
4,597
(1,535
)
3,062
Transfer
2,293
(1,036
)
1,257
2,143
(977
)
1,166
Total Collection and Disposal
$
23,273
$
(4,408
)
$
18,865
$
21,893
$
(4,050
)
$
17,843
Recycling Processing and Sales
1,576
(312
)
1,264
1,760
(244
)
1,516
WM Renewable Energy
276
(3
)
273
315
(3
)
312
Corporate and Other
51
(27
)
24
50
(23
)
27
Total
$
25,176
$
(4,750
)
$
20,426
$
24,018
$
(4,320
)
$
19,698
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Internal Revenue Growth
Period-to-Period Change for
the Three Months Ended December 31, 2023 vs. 2022
Period-to-Period Change for
the Year Ended December 31, 2023 vs. 2022
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
$
209
4.9
%
$
911
5.4
%
Recycling Processing and Sales and
18
4.7
(381)
(20.2)
WM Renewable Energy (c) (d)
Energy surcharges and mandated
(34)
(12.2)
(104)
(9.7)
fees (d) (e)
Total average yield (f)
$
193
3.9
%
$
426
2.1
%
Volume (g)
59
1.2
150
0.8
Internal revenue growth
252
5.1
576
2.9
Acquisitions
30
0.6
186
0.9
Divestitures
—
—
(5)
—
Foreign currency translation
—
—
(29)
(0.1)
Total
$
282
5.7
%
$
728
3.7
%
Period-to-Period Change for
the Three Months Ended December 31, 2023 vs. 2022
Period-to-Period Change for
the Year Ended December 31, 2023 vs. 2022
As a % of Related
Business(a)
As a % of Related
Business(a)
Yield
Volume(g)
Yield
Volume(g)
Commercial
6.3
%
0.8
%
6.5
%
(0.3)
%
Industrial
5.6
(1.0)
7.2
(2.0)
Residential
5.7
(2.1)
6.1
(3.1)
Total collection
5.7
(0.3)
6.3
(1.1)
MSW
4.5
3.9
4.9
3.0
Transfer
6.5
3.1
7.5
1.0
Total collection and disposal
4.9
%
1.9
%
5.4
%
0.9
%
________________________
(a)
Calculated by dividing the increase or
decrease for the current year by the prior year’s related business
revenue adjusted to exclude the impacts of divestitures for the
current year.
(b)
Calculated by dividing the increase or
decrease for the current year by the prior year’s total Company
revenue adjusted to exclude the impacts of divestitures for the
current year.
(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)
Beginning in 2023, the results include
changes in our revenue attributable to our WM Renewable Energy
segment. Previously these changes in revenue were included in
energy surcharges and mandated fees. We have revised our prior year
results to conform with the current year presentation.
(e)
Our energy surcharge was revised beginning
in the second quarter of 2023 to incorporate market prices for both
diesel and compressed natural gas.
(f)
The amounts reported herein represent the
changes in our revenue attributable to average yield for the total
Company.
(g)
Workday adjusted volume impact.
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Free Cash Flow(a)
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Net cash provided by operating
activities
$
1,382
$
1,049
$
4,719
$
4,536
Capital expenditures to support the
business
(675
)
(623
)
(2,131
)
(2,026
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
10
9
78
27
Free cash flow before sustainability
growth investments
717
435
2,666
2,537
Capital expenditures - sustainability
growth investments
(367
)
(239
)
(764
)
(561
)
Free cash flow
$
350
$
196
$
1,902
$
1,976
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Supplemental Data
Internalization of waste, based on
disposal costs
68.9
%
68.2
%
68.8
%
68.5
%
Landfill depletable tons (in millions)
30.1
30.8
122.8
124.7
Acquisition Summary(b)
Gross annualized revenue acquired
$
20
$
123
$
141
$
258
Total consideration, net of cash
acquired
44
291
182
507
Cash paid for acquisitions consummated
during the period, net of cash acquired
31
170
165
372
Cash paid for acquisitions including
contingent consideration and other items from prior periods, net of
cash acquired
34
170
173
377
Landfill Depletion and Accretion
Expenses:
Three Months Ended
Year Ended
December 31,
December 31,
2023
2022
2023
2022
Landfill depletion expense:
Cost basis of landfill assets
$
145
$
141
$
598
$
576
Asset retirement costs
46
75
147
178
Total landfill depletion expense(c)
191
216
745
754
Accretion expense
33
28
130
112
Landfill depletion and accretion
expense
$
224
$
244
$
875
$
866
________________________
(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)
The decrease in landfill depletion expense
for the twelve months ended December 31, 2023, as compared with the
prior year period, was primarily driven by reductions in volume
partially offset by the reopening of a previously closed landfill
in our East Tier. The decrease in landfill depletion for the three
months ended December 31, 2023, as compared to the quarter ended
December 31, 2022, was primarily driven by reductions in volume and
prior year nonrecurring cost increases at certain closed landfills
in both the East and West Tiers.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions, Except Per Share
Amounts)
(Unaudited)
Three Months Ended December
31, 2023
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
785
$
644
$
175
$
493
$
1.22
Adjustments:
(Gain) loss from asset impairments and
other, net(c)
247
247
5
210
0.52
As adjusted amounts
$
1,032
$
891
$
180
(b)
$
703
$
1.74
Depreciation, depletion and
amortization
526
As adjusted operating EBITDA
$
1,558
Three Months Ended December
31, 2022
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
765
$
643
$
143
$
499
$
1.21
Adjustments:
(Gain) loss from divestitures and asset
impairments(d)
45
45
10
35
Enterprise resource planning system
implementation-related costs
4
4
1
3
49
49
11
38
0.09
As adjusted amounts
$
814
$
692
$
154
(b)
$
537
$
1.30
Depreciation, depletion and
amortization
545
As adjusted operating EBITDA
$
1,359
________________________
(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 fourth quarter 2023
and 2022 adjusted effective tax rates were 20.1% and 22.3%,
respectively.
(c)
Includes net charges primarily consisting
of (i) a $168 million goodwill impairment charge related to a
business engaged in accelerating film and plastic wrap recycling
capabilities, which was partially offset by the recognition of $46
million of income related to the reversal of contingent
consideration associated with our investment in such business; (ii)
$107 million of impairment charges for certain investments in waste
diversion technology businesses and (iii) a $17 million charge to
adjust an indirect wholly-owned subsidiary's estimated potential
share of the liability for a proposed environmental remediation
plan at a closed site.
(d)
Includes asset impairment charges in our
Collection and Disposal segment primarily related to management’s
decision to close two landfills in our East Tier offset by a gain
from the divestiture of a solid waste business in our West
Tier.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended December
31, 2023
Recycling
WM
Collection
Processing
Renewable
Corporate
and Disposal
and Sales
Energy
and Other
Total
Operating revenues, as reported
$
4,787
$
349
$
75
$
6
$
5,217
Income from operations, as reported
$
1,325
$
(99
)
$
28
$
(469
)
$
785
Adjustment:
(Gain) loss from asset impairments and
other, net
—
122
—
125
247
Adjusted income from operations
$
1,325
$
23
$
28
$
(344
)
$
1,032
Depreciation, depletion and
amortization
448
30
8
40
526
Adjusted operating EBITDA
$
1,773
$
53
$
36
$
(304
)
$
1,558
Adjusted operating EBITDA margin
37.0
%
15.2
%
48.0
%
—
29.9
%
Three Months Ended December
31, 2022
Recycling
WM
Collection
Processing
Renewable
Corporate
and Disposal
and Sales
Energy
and Other
Total
Operating revenues, as reported
$
4,553
$
296
$
79
$
7
$
4,935
Income from operations, as reported
$
1,048
$
7
$
32
$
(322
)
$
765
Adjustments:
(Gain) loss from divestitures and asset
impairments
45
—
—
—
45
Enterprise resource planning system
implementation-related costs
—
—
—
4
4
45
—
—
4
49
Adjusted income from operations
$
1,093
$
7
$
32
$
(318
)
$
814
Depreciation, depletion and
amortization
475
24
7
39
545
Adjusted operating EBITDA
$
1,568
$
31
$
39
$
(279
)
$
1,359
Adjusted operating EBITDA margin
34.4
%
10.5
%
49.4
%
—
27.5
%
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions, Except Per Share
Amounts)
(Unaudited)
Year Ended December 31,
2023
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
3,575
$
3,021
$
745
$
2,304
$
5.66
Adjustments:
Collective bargaining agreement costs
8
8
2
6
(Gain) loss from asset impairments and
other, net(c)
245
245
4
209
253
253
6
215
0.53
As adjusted amounts
$
3,828
$
3,274
$
751
(b)
$
2,519
$
6.19
Depreciation, depletion and
amortization
2,071
As adjusted operating EBITDA
$
5,899
Year Ended December 31,
2022
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
3,365
$
2,918
$
678
$
2,238
$
5.39
Adjustments:
(Gain) loss from divestitures, asset
impairments and other, net(d)
61
61
13
48
Enterprise resource planning system
implementation-related costs
40
40
11
29
Advanced Disposal integration-related
costs
8
8
2
6
109
109
26
83
0.20
As adjusted amounts
$
3,474
$
3,027
$
704
(b)
$
2,321
$
5.59
Depreciation, depletion and
amortization
2,038
As adjusted operating EBITDA
$
5,512
________________________
(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 full year 2023 and
2022 adjusted effective tax rates were 22.9% and 23.2%,
respectively.
(c)
Includes net charges primarily consisting
of (i) a $168 million goodwill impairment charge related to a
business engaged in accelerating film and plastic wrap recycling
capabilities, which was partially offset by the recognition of $46
million of income related to the reversal of contingent
consideration associated with our investment in such business; (ii)
$107 million of impairment charges for certain investments in waste
diversion technology businesses and (iii) a $17 million charge to
adjust an indirect wholly-owned subsidiary's estimated potential
share of the liability for a proposed environmental remediation
plan at a closed site.
(d)
Includes primarily asset impairment
charges related to management’s decision to close two landfills in
our East Tier and a charge to increase the recorded liability for a
subsidiary’s estimated potential share of a proposed environmental
remediation plan at a closed site partially offset by a gain from
the divestiture of a solid waste business in our West Tier.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Year Ended December 31,
2023
Recycling
WM
Collection
Processing
Renewable
Corporate
and Disposal
and Sales
Energy
and Other
Total
Operating revenues, as reported
$
18,865
$
1,264
$
273
$
24
$
20,426
Income from operations, as reported
$
4,821
$
(44
)
$
79
$
(1,281
)
$
3,575
Adjustments:
Collective bargaining agreement costs
8
—
—
—
8
(Gain) loss from asset impairments and
other, net
—
122
—
123
245
8
122
—
123
253
Adjusted income from operations
$
4,829
$
78
$
79
$
(1,158
)
$
3,828
Depreciation, depletion and
amortization
1,812
110
33
116
2,071
Adjusted operating EBITDA
$
6,641
$
188
$
112
$
(1,042
)
$
5,899
Adjusted operating EBITDA margin
35.2
%
14.9
%
41.0
%
—
28.9
%
Year Ended December 31,
2022
Recycling
WM
Collection
Processing
Renewable
Corporate
and Disposal
and Sales
Energy
and Other
Total
Operating revenues, as reported
$
17,843
$
1,516
$
312
$
27
$
19,698
Income from operations, as reported
$
4,360
$
128
$
132
$
(1,255
)
$
3,365
Adjustments:
(Gain) loss from divestitures, asset
impairments and other, net
43
—
—
18
61
Enterprise resource planning system
implementation-related costs
—
—
—
40
40
Advanced Disposal integration-related
costs
—
—
—
8
8
43
—
—
66
109
Adjusted income from operations
$
4,403
$
128
$
132
$
(1,189
)
$
3,474
Depreciation, depletion and
amortization
1,816
92
33
97
2,038
Adjusted operating EBITDA
$
6,219
$
220
$
165
$
(1,092
)
$
5,512
Adjusted operating EBITDA margin
34.9
%
14.5
%
52.9
%
—
28.0
%
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended
December 31, 2023
December 31, 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
$
5,217
$
4,935
SG&A expenses, as reported
$
513
9.8
%
$
487
9.9
%
Adjustment:
Enterprise resource planning system
implementation-related costs
(4
)
As adjusted SG&A expenses
$
483
9.8
%
Year Ended
December 31, 2023
December 31, 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
$
20,426
$
19,698
SG&A expenses, as reported
$
1,926
9.4
%
$
1,938
9.8
%
Adjustments:
Collective bargaining agreement costs
(1
)
—
Enterprise resource planning system
implementation-related costs
—
(40
)
Advanced Disposal acquisition and
integration-related costs
—
(4
)
As adjusted SG&A expenses
$
1,925
9.4
%
$
1,894
9.6
%
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Year Ended
December 31, 2023
December 31, 2022
As a % of
As a % of
Amount
Revenues
Amount
Revenues
Adjusted Operating Expenses and
Adjusted Operating Expenses Margin
Operating revenues, as reported
$
20,426
$
19,698
Operating expenses, as reported
$
12,606
61.7
%
$
12,294
62.4
%
Adjustments:
Collective bargaining agreement costs
(7
)
—
Advanced Disposal integration-related
costs
—
(4
)
Legacy loss contingency reserve adjustment
and other, net
3
1
As adjusted operating expenses
$
12,602
61.7
%
$
12,291
62.4
%
2024 Projected Free Cash Flow
Reconciliation(a)
Scenario 1
Scenario 2
Net cash provided by operating
activities
$
4,900
$
5,150
Capital expenditures to support the
business
(2,200
)
(2,300
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
50
100
Free cash flow before sustainability
growth investments
$
2,750
$
2,950
Capital expenditures - sustainability
growth investments
(850
)
(900
)
Free cash flow
$
1,900
$
2,050
________________________
(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
December 31, 2023
December 31, 2022
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
171
1.0
%
$
154
0.9
%
Accretion expense
$
33
0.6
%
$
28
0.6
%
Year Ended
December 31, 2023
December 31, 2022
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
604
0.9
%
$
815
1.2
%
Accretion expense
$
130
0.6
%
$
112
0.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240212819733/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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