01—Abstract
Summary
Summary of the 10-Q filed April 27, 2023. Cited figures are marked; the original filing is the authoritative source.
Waste Management, Inc. (WM) reported its first quarter 2023 financial results, demonstrating revenue growth driven by improved pricing and volume increases across its core collection and disposal services.
Despite facing inflationary pressures on operating expenses, particularly in labor, maintenance, and subcontractor costs, the company managed to increase its operating income and net income compared to the prior year. This was achieved through a combination of strategic revenue management, including price increases (yield) and disciplined cost control, as well as a reduction in selling, general, and administrative expenses due to lower professional fees. Key financial highlights include a 5.0% increase in total revenue to $4.9 billiona and a 7.4% increase in income from operations to $825 million.
Diluted earnings per share rose to $1.30b from $1.23 in the prior year. While operating cash flow saw a decrease compared to the prior year due to working capital changes and higher interest payments, the company continues to invest strategically in growth initiatives, particularly in its sustainability-focused businesses like recycling and renewable energy.
Capital expenditures remain significant, reflecting these investments. The company also continued its commitment to shareholder returns through dividends and share repurchases.
02—Key points
Key Highlights
- Revenue increased by 5.0% to $4.9 billion, driven by yield improvements in collection and disposal services and modest volume growth.
- Income from operations grew by 7.4% to $825 million, reflecting effective pricing strategies and cost management despite inflationary pressures.
- Diluted earnings per share (EPS) improved to $1.30 from $1.23 in the prior year's first quarter.
- Operating cash flow decreased to $1,044 million from $1,258 million, primarily due to unfavorable working capital movements and higher interest payments.
- Capital expenditures increased significantly to $660 million from $418 million, largely due to investments in sustainability growth projects.
- The company maintained a strong balance sheet with $15.4 billion in total debt and $6.8 billion in total equity.
- Waste Management continued returning capital to shareholders through $289 million in cash dividends and $350 million in share repurchases during the quarter.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2023, Waste Management Inc kept $0.11.
- Revenue$4.89B100.0%
- Cost of revenue−$3.09B63.1%
- Gross profit$1.81B36.9%
- Operating costs−$981.0M20.1%
- Operating income$825.0M16.9%
- Interest, other & tax−$292.0M6.0%
- Net income$533.0M10.9%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2023filed April 27, 2023Financial Statements
Q1 FY2023 against Q1 FY2022
| Line item | Q1 FY2023Q1 FY2022 | Change |
|---|---|---|
| Revenue | $4.89B$4.66B | +5.0% |
| Cost of Revenue | $3.09B$2.90B | +6.3% |
| Gross Profit | $1.81B$1.76B | +2.7% |
| SG&A Expenses | $476.00M$491.00M | −3.1% |
| Operating Expenses | $4.07B$3.89B | +4.5% |
| Operating Income | $825.00M$768.00M | +7.4% |
| Net Income | $533.00M$513.00M | +3.9% |
| EPS (Basic) | $1.31$1.24 | +5.6% |
| EPS (Diluted) | $1.30$1.23 | +5.7% |
| Shares Outstanding (Basic) | 407.40M415.70M | −2.0% |
| Shares Outstanding (Diluted) | 409.00M417.80M | −2.1% |
05—Questions
Frequently Asked Questions
What drove the revenue increase in the first quarter of 2023?
Revenue increased by 5.0% to $4.9 billion primarily due to higher yield (pricing) in the collection and disposal business, alongside modest volume growth, increases from the fuel surcharge program, and contributions from acquisitions. These were partially offset by declines in commodity prices for recycling and renewable energy operations.
How did the company manage inflationary pressures on its operating expenses?
While operating expenses increased primarily due to inflationary pressures on maintenance, repairs, and subcontractor costs, as well as higher labor costs, Waste Management managed to improve its operating income. This was achieved through a combination of strategic revenue management, including price increases and focused cost controls, and a reduction in selling, general, and administrative (SG&A) expenses, particularly professional fees.
What is the outlook for capital expenditures, and why did they increase?
Capital expenditures increased significantly to $660 million in the first quarter of 2023, up from $418 million in the prior year. This increase is primarily driven by intentional investments in sustainability growth projects, including recycling and renewable energy initiatives, as well as regular capital expenditures to support ongoing operations and replace aging assets.
How is the company returning capital to shareholders?
Waste Management continues to prioritize returning capital to shareholders. In the first quarter of 2023, the company paid $289 million in cash dividends and repurchased $350 million of its common stock under an accelerated share repurchase program. The company also has an ongoing authorization for approximately $1.15 billion in future share repurchases.
06—Continue