10-QPeriod: Q2 FY2023

WASTE MANAGEMENT INC Quarterly Report for Q2 Ended Jun 30, 2023

Filed July 26, 2023For Securities:WM

Summary

Waste Management, Inc. (WM) reported solid financial results for the second quarter and the first half of 2023, demonstrating resilience amidst inflationary pressures and market volatility. Revenue increased by 1.8% for the quarter and 3.3% year-to-date, driven by strong performance in the core collection and disposal business, supported by effective pricing strategies and acquisitions. While the company faced headwinds from declining commodity prices in its recycling and renewable energy segments, it successfully offset these challenges through disciplined cost management and operational efficiencies. Net income attributable to Waste Management, Inc. saw a healthy increase, with diluted earnings per share reflecting this growth. The company continues to invest strategically in its sustainability initiatives and technology to enhance operational efficiency and drive long-term value. Despite increased interest expenses due to higher debt balances and borrowing rates, Waste Management's strong operating cash flow generation and prudent financial management ensure robust liquidity and the ability to fund dividends, share repurchases, and strategic growth investments.

Financial Highlights

51 data points
Beta

Revenue

$5.12B

37.8% Gross Margin

Net Income

$615.00M

12.0% Net Margin

EPS (Diluted)

$1.51

Total Assets

$31.61B

Cash & Equivalents

$144.00M

Free Cash Flow

$1.03B

Financial Statements
Beta
Revenue$5.12B
Cost of Revenue$3.19B
Gross Profit$1.93B
SG&A Expenses$467.00M
Operating Expenses$4.17B
Operating Income$944.00M
Net Income$615.00M
EPS (Basic)$1.52
EPS (Diluted)$1.51
Shares Outstanding (Basic)405.90M
Shares Outstanding (Diluted)407.70M

Key Highlights

  • 1Revenue increased 1.8% to $5.119 billion in Q2 2023 and 3.3% to $10.011 billion in the first six months of 2023, driven by yield and acquisitions.
  • 2Income from operations rose to $944 million in Q2 2023 and $1.769 billion in the first six months of 2023, indicating improved profitability.
  • 3Net income attributable to Waste Management, Inc. increased to $615 million in Q2 2023 ($1.51 per diluted share) and $1.148 billion in the first six months of 2023 ($2.81 per diluted share).
  • 4Operating expenses increased but as a percentage of revenue remained stable at 62.2% for Q2 and 62.7% for the first six months, managed through cost controls despite inflationary pressures.
  • 5Net cash provided by operating activities was $2.074 billion for the first six months of 2023, down slightly from $2.305 billion in the prior year, impacted by working capital changes and higher tax/interest payments.
  • 6Free cash flow was $545 million in Q2 2023 and $940 million in the first six months of 2023, showing continued strong cash generation to fund shareholder returns and investments.
  • 7The company repurchased $620 million of common stock and paid $572 million in dividends during the first six months of 2023, demonstrating commitment to returning capital to shareholders.

Frequently Asked Questions

In the second quarter of 2023, Waste Management's revenue increased by 1.8% to $5.119 billion, compared to $5.027 billion in the prior year period. This growth was primarily driven by higher yield in its collection and disposal business and contributions from acquisitions, partially offset by declines in commodity prices for recycling and renewable energy.

Waste Management acknowledges inflationary cost pressures, particularly for maintenance, repairs, and subcontractor costs, as well as labor. The company is actively managing these pressures through pricing strategies to offset cost inflation, operational efficiencies, and investments in technology and automation. While operating expenses increased, they were managed effectively as a percentage of revenue.

The company is strategically investing in its sustainability growth strategy, particularly in its WM Renewable Energy and recycling businesses. Capital expenditures for sustainability growth investments amounted to $217 million in the first six months of 2023, aimed at increasing recycling volumes, growing renewable natural gas generation, and delivering circular solutions.

Waste Management maintains a strong liquidity position, generating $2.074 billion in net cash from operating activities for the first six months of 2023. Free cash flow for the same period was $940 million. This robust cash flow generation enables the company to fund capital expenditures, dividends, share repurchases, and strategic investments.