WM sees revenue grow in Q3

Waste Management (WM), Houston, has announced its financial results for the third quarter of the year, which ended Sept. 30. Revenue grew for the quarter compared with the same time frame last year. The company achieved $4,665 million in revenue in the recently completed third quarter compared with $3,861 million in revenue in the third quarter of 2020.

The company says the results put it on track to meet its full-year financial targets despite accelerating cost inflation.

According to WM, revenue for its collection and disposal services increased $260 million, driven by $137 million in volume increases and $123 million of growth from yield. Acquisitions, net of divestitures, added $295 million of revenue primarily from the acquisition of Advanced Disposal in Ponte Vedra Beach, Florida. The company acquired Advanced Disposal in October 2020.

WM’s operating earnings before interest, taxes, depreciation and amortization (EBITDA), adjusted on the same basis as total company operating EBITDA, was $1.4 billion, or 31.1 percent of revenue, for the third quarter of the year compared with $1.27 billion, or 33.1 percent of revenue, for the third quarter of 2020.

WM says operating EBITDA in its recycling line of business improved by $53 million compared with the third quarter of 2020. The improvement, the company says, was driven by an increase in market prices for recycled commodities and investments WM is making in improved technology and equipment at its material recovery facilities that are delivering a less labor-intensive operating cost model.

Its EBITDA in the renewable energy line of business improved by $22 million compared with the third quarter of 2020, primarily driven by increases in price.

“Strong organic growth and continued progress on the integration of the Advanced Disposal business powered our robust revenue growth in the third quarter and led to a more than 14 percent increase in adjusted operating EBITDA and a more than 15 percent increase in net cash provided by operating activities,” says Jim Fish, WM president and CEO. “Our solid results put us on track to meet our full-year financial targets despite accelerating cost inflation.”

Operating expenses were 62.3 percent of revenue in the third quarter of this year compared with 60.4 percent in the third quarter of 2020. On an adjusted basis, operating expenses were 62.2 percent of revenue in the third quarter of the year compared with 60.4 percent in the third quarter of 2020. WM says the increase in operating expense margin in the current quarter is due to an acceleration of labor and other inflationary cost pressures, as well as the impact of higher commodity prices for recyclables.

In the third quarter of this year, net cash provided by operating activities was $1.18 billion compared with $1.03 billion in the third quarter of 2020. The improvement in net cash provided by operating activities was primarily driven by the increase in operating EBITDA.

According to WM, total company revenue growth this year is expected to be between 17 percent and 17.5 percent. Combined internal revenue growth from yield and volume in the collection and disposal business is expected to be about 6.5 percent, driven by the company’s disciplined pricing programs and strong outlook for continued volume recovery. Adjusted operating EBITDA is expected to be between $5 billion and $5.1 billion this year. Free cash flow is projected to be between $2.5 billion and $2.6 billion this year.

“Our people are doing an outstanding job providing essential services to our customers and communities,” Fish says. “We’re proud to highlight many of the efforts that have helped us move the needle on our sustainability goals in our 2021 Sustainability Report released earlier this month.”