01—Abstract
Summary
Summary of the 10-Q filed October 26, 2022. Cited figures are marked; the original filing is the authoritative source.
Waste Management Inc. (WM) reported strong third-quarter results for 2022, with operating revenues increasing by 8.8% year-over-year to $5.1 billiona, driven by yield and volume improvements in its collection and disposal businesses, as well as fuel surcharges.
Despite inflationary pressures on labor, fuel, and maintenance, the company managed operating expenses effectively, resulting in a significant increase in operating income by 16.9% to $942 millionb. Net income attributable to Waste Management, Inc. rose to $639 million ($1.54 per diluted share) from $538 million ($1.28 per diluted share) in the prior year.
While free cash flow saw a decline to $432 millionc from $773 million, primarily due to increased capital expenditures on sustainability initiatives, the company continued to return value to shareholders through dividends and share repurchases, and maintained a strong liquidity position with $2.5 billion in unused credit capacity. The company also highlighted its ongoing strategic focus on sustainability, technology investments, and operational efficiency to navigate economic headwinds.
02—Key points
Key Highlights
- Revenue increased by 8.8% to $5.1 billion, driven by yield, volume, and fuel surcharges.
- Operating income grew by 16.9% to $942 million, reflecting effective cost management despite inflationary pressures.
- Net income attributable to WM increased by 18.8% to $639 million, with diluted EPS rising to $1.54 from $1.28.
- Free cash flow decreased to $432 million due to higher capital expenditures, particularly in sustainability projects.
- The company returned $808 million to shareholders via dividends and share repurchases during the quarter.
- Waste Management maintained a strong liquidity position, with $2.5 billion in unused credit capacity.
- Investments in sustainability initiatives and technology continue to be a strategic focus.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q3 FY2022, Waste Management Inc kept $0.13.
- Revenue$5.08B100.0%
- Cost of revenue−$3.16B62.2%
- Gross profit$1.92B37.8%
- Operating costs−$977.0M19.3%
- Operating income$942.0M18.6%
- Interest, other & tax−$303.0M6.0%
- Net income$639.0M12.6%
04—Financials
Financial Highlights
Figures from 10-QQ3 FY2022filed October 26, 2022Financial Statements
Q3 FY2022 against Q3 FY2021
| Line item | Q3 FY2022Q3 FY2021 | Change |
|---|---|---|
| Revenue | $5.08B$4.67B | +8.8% |
| Cost of Revenue | $3.16B$2.91B | +8.6% |
| Gross Profit | $1.92B$1.76B | +9.1% |
| SG&A Expenses | $473.00M$469.00M | +0.9% |
| Operating Expenses | $4.13B$3.86B | +7.1% |
| Operating Income | $942.00M$806.00M | +16.9% |
| Net Income | $639.00M$538.00M | +18.8% |
| EPS (Basic) | $1.55$1.28 | +21.1% |
| EPS (Diluted) | $1.54$1.28 | +20.3% |
| Shares Outstanding (Basic) | 412.00M419.50M | −1.8% |
| Shares Outstanding (Diluted) | 414.30M422.00M | −1.8% |
05—Questions
Frequently Asked Questions
What were the main drivers of revenue growth in the third quarter?
Revenue growth was primarily driven by higher yield in collection and disposal lines of business, increases from the fuel surcharge program, and volume growth. These positive factors were partially offset by lower average market prices for recycling commodities.
How did the company manage inflationary cost pressures?
Waste Management addressed inflationary pressures on labor, fuel, and maintenance through strategic pricing efforts to recover costs, operational efficiencies, labor productivity improvements, and investments in technology for automation. Operating expenses as a percentage of revenue saw a slight improvement.
What is the company's outlook regarding free cash flow?
Free cash flow for the quarter was $432 million, down from $773 million in the prior year, primarily due to an increase in capital expenditures, particularly for sustainability growth projects and timing differences in fixed asset purchases. The company continues to prioritize investments for long-term growth and asset replacement.
How is Waste Management addressing sustainability and future investments?
Sustainability remains a core focus, with significant investments in sustainability growth projects aimed at increasing recycling volumes and renewable natural gas generation. The company is also investing in technology to enhance operational efficiency and customer experience, including automation in service delivery.
06—Continue