WM portrays sustainability as its growth driver

In its 2023 Sustainability Investor Day presentation, the CEO of Houston-based WM Inc. says the company’s sustainability-related activities as “strengthening value proposition[s] and solutions to drive positive benefits for all stakeholders.”

The message from CEO Jim Fish and several other WM executives who contributed to the April 5 presentation is that the company’s investments in recycling and waste diversion are not about keeping up appearances but producing bottom-line results.

In his portion of the presentation, Fish referred to overarching WM sustainability activities as contributing to a company balance sheet that is  “on track to grow adjusted operating earnings before interest, taxes, depreciation and amortization (EBITDA) and free cash flow nearly 2 times from 2019 to 2027.”

The messages transmitted at the early April event build on those from the 2022 Sustainability Day event, when Fish and WM announced the name change away from Waste Management.

In a snapshot of its operations, WM continues to operate 254 active landfills and 337 waste transfer stations. Also in its facilities mix, however, are 97 material recovery facilities (MRFs) and 135 landfill gas-to-energy installations.

Its investments in MRFs and recyclables collection have WM predicting it will boost its recyclables managed by 67 percent by 2030—from 15 million tons in 2021 to 25 million in 2030. It has a similar target for landfill gas recovery, predicting that figure will rise from 45 percent of gas recovered in 2021 to 65 percent in 2026.

WM Chief Sustainability Officer Tara Hemmer said the company is in the planning or installation process of building or upgrading 43 MRFs. The projects combined will allow WM to handle 2.8 million additional tons of recyclables annually, the company estimates.

The projects, Hemmer said, are part of a $2.2 billion four-year WM capital expenditure program. She said the spending means WM is “anticipating significant advantages through [its] commitment to sustainability.”

By the numbers, WM Vice President of Operations Brent Bell said the company handled nearly 7.8 million tons of recyclable paper in 2021, along with about 515,000 tons of plastic and nearly 420,000 tons of metal.

In the construction and demolition recycling market, WM said its facilities handled more than 1.2 million tons of scrap wood that year. In the growing organics sector, WM took in more than 3.9 million tons of what it calls “mixed organics” in 2021.

Bell said sustainability targets adopted by consumer packaged goods (CPG) companies means WM should enjoy more recyclable material entering its MRFs and healthy demand for the paper, cardboard, plastic and metal it markets.

According to the WM presentation, “Automated equipment has the ability to process material at faster rates than ever before, processing 30 percent to 40 percent more tons than nonautomated MRFs utilizing a similar footprint.”

The company pointed to its recently upgraded Chicago-area MRF, calling it one of the largest in North America. WM said the plant can now process 66 tons per hour, “more than double the average throughput of nonautomated MRFs.”

Bells said, beyond volume, WM is investing in optical sorters, volumetric scanners and “intelligent sorting” to boost quality. On the paper front, he said WM is concentrating on separating higher-value paper products; in plastics, it is focusing on “further separating resin types by grade and color;” and with its glass it is striving to produce what it calls a higher quality three-mix product for end markets.

WM Vice President of Renewable Energy Shahid Malik said WM landfill gas that is converted to renewable natural gas (RNG) will find an RNG marketplace poised for “strong growth” within the wider natural gas sector. Robust RNG demand, WM predicted is “expected to outpace supply” in the United States.

On the financial front, WM Chief Financial Officer Devina Rankin said in 2023 sustainability tactics will help lead to predicted growth in revenue from 4 percent to 5.5 percent. EBITDA, meanwhile, could grow this year from 6 percent to 8 percent, Rankin said.

Displaying figures for WM’s anticipated growth in RNG and recyclables revenue and a scaling back of its massive capital expenditures plan by 2025, WM said it expects about an 8.9 percent compound annual growth rate (CAGR) in EBITDA between 2022 and 2027.

Saying WM’s “new investments present financial upside with manageable earnings and cash flow sensitivity,” Rankin added WM has developed a “proven model with sustainable competitive advantages to consistently deliver 0utperformance” in the waste and recycling sector.