10-QPeriod: Q3 FY2022

WASTE MANAGEMENT INC Quarterly Report for Q3 Ended Sep 30, 2022

Filed October 26, 2022For Securities:WM

Summary

Waste Management Inc. (WM) reported strong third-quarter results for 2022, with operating revenues increasing by 8.8% year-over-year to $5.1 billion, 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 million. 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 million 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.

Financial Highlights

51 data points
Beta

Revenue

$5.08B

37.8% Gross Margin

Net Income

$639.00M

12.6% Net Margin

EPS (Diluted)

$1.54

Total Assets

$29.84B

Cash & Equivalents

$137.00M

Free Cash Flow

$1.18B

Financial Statements
Beta
Revenue$5.08B
Cost of Revenue$3.16B
Gross Profit$1.92B
SG&A Expenses$473.00M
Operating Expenses$4.13B
Operating Income$942.00M
Net Income$639.00M
EPS (Basic)$1.55
EPS (Diluted)$1.54
Shares Outstanding (Basic)412.00M
Shares Outstanding (Diluted)414.30M

Key Highlights

  • 1Revenue increased by 8.8% to $5.1 billion, driven by yield, volume, and fuel surcharges.
  • 2Operating income grew by 16.9% to $942 million, reflecting effective cost management despite inflationary pressures.
  • 3Net income attributable to WM increased by 18.8% to $639 million, with diluted EPS rising to $1.54 from $1.28.
  • 4Free cash flow decreased to $432 million due to higher capital expenditures, particularly in sustainability projects.
  • 5The company returned $808 million to shareholders via dividends and share repurchases during the quarter.
  • 6Waste Management maintained a strong liquidity position, with $2.5 billion in unused credit capacity.
  • 7Investments in sustainability initiatives and technology continue to be a strategic focus.

Frequently Asked Questions

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.

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.

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.

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.