Strong Revenue Growth Leads to Double Digit
Growth in Income from Operations, Net Cash Provided by Operating
Activities, and Diluted EPS
Waste Management, Inc. (NYSE: WM) today announced financial
results for the quarter ended September 30, 2021.
Three Months Ended
Three Months Ended
September
30, 2021 (in millions, except per share amounts)
September
30, 2020 (in millions, except per share amounts)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
Revenue
$4,665
$4,665
$3,861
$3,861
Income from Operations
$806
$792
$680
$721
Operating EBITDA(b)
$1,323
$1,309
$1,099
$1,140
Operating EBITDA Margin
28.4%
28.1%
28.5%
29.5%
Net Income(c)
$538
$530
$390
$465
Diluted EPS
$1.28
$1.26
$0.92
$1.09
“Strong organic growth and continued progress on the integration
of the Advanced Disposal business powered our robust revenue growth
in the third quarter and led to a more than 14% increase in
adjusted operating EBITDA and a more than 15% increase in net cash
provided by operating activities,” said Jim Fish, WM’s President
and Chief Executive Officer. (a) “Our solid results put us on track
to meet our full-year financial targets despite accelerating cost
inflation.”
Fish continued, “Like many other companies, we are seeing
constraints on labor availability. At WM, we continue to
demonstrate our commitment to putting our people first and being an
employer of choice. During the quarter, we continued to invest in
our people through frontline market wage adjustments and training
for new team members. We remain focused on improving operational
efficiency and executing on our disciplined pricing programs to
drive margin growth in the face of these additional labor costs and
other inflationary cost pressures.”
KEY HIGHLIGHTS FOR THE THIRD QUARTER OF 2021
Revenue
- In the third quarter of 2021, revenue increased $260 million in
the Company’s collection and disposal business, excluding the
impact of acquisitions and divestitures, compared to the third
quarter of 2020. The increase was driven by $137 million in volume
increases and $123 million of growth from yield.
- In the third quarter of 2021, acquisitions, net of
divestitures, added $295 million of revenue primarily from the
acquisition of Advanced Disposal.
- Core price for the third quarter of 2021 was 4.6% compared to
3.2% in the third quarter of 2020.(d)
- Collection and disposal yield was 3.5% in the third quarter of
2021 compared to 2.6% in the third quarter of 2020.
- Total Company volumes improved 3.8% in the third quarter of
2021, or 3.6% on a workday adjusted basis, compared to a decline of
5.0% in the third quarter of 2020, or 5.1% on a workday adjusted
basis.
Cost Management
- Operating expenses as a percentage of revenue were 62.3% in the
third quarter of 2021 compared to 60.4% in the third quarter of
2020. On an adjusted basis, operating expenses were 62.2% of
revenue in the third quarter of 2021 compared to 60.4% in the third
quarter of 2020.(a) The increase in operating expense margin in the
current quarter is primarily due to an acceleration of labor and
other inflationary cost pressures, as well as the impact of higher
commodity prices for recyclables.
- SG&A expenses were 10.1% of revenue in the third quarter of
2021 compared to 10.8% in the third quarter of 2020. On an adjusted
basis, SG&A expenses were 9.7% of revenue in the third quarter
of 2021 compared to 10.1% in the third quarter of 2020,
demonstrating the Company’s success at managing controllable
costs.(a)
Profitability
- Operating EBITDA in the Company’s collection and disposal
business, adjusted on the same basis as total Company operating
EBITDA, was $1.40 billion, or 31.1% of revenue, for the third
quarter of 2021, compared to $1.27 billion, or 33.1% of revenue,
for the third quarter of 2020.(e)
- Operating EBITDA in the Company’s recycling line of business
improved by $53 million compared to the third quarter of 2020. The
improvement was driven by an increase in market prices for recycled
commodities and investments the Company is making in improved
technology and equipment at its materials recovery facilities that
are delivering a less labor-intensive operating cost model.
- Operating EBITDA in the Company’s renewable energy line of
business improved by $22 million compared to the third quarter of
2020, primarily driven by increases in price.
- In the third quarter of 2021, the Company realized almost $26
million of operating and SG&A cost synergies from the
acquisition of Advanced Disposal.
Free Cash Flow & Capital
Allocation
- In the third quarter of 2021, net cash provided by operating
activities was $1.18 billion compared to $1.03 billion in the third
quarter of 2020. The improvement in net cash provided by operating
activities was primarily driven by the increase in operating
EBITDA.
- In the third quarter of 2021, capital expenditures were $464
million compared to $343 million in the third quarter of 2020.
- In the third quarter of 2021, free cash flow was $773 million
compared to $691 million in the third quarter of 2020.(a)
- During the third quarter of 2021, $741 million was returned to
shareholders, including $500 million of share repurchases and $241
million of cash dividends.
2021 OUTLOOK
- Total Company revenue growth in 2021 is expected to be between
17% and 17.5%. Combined internal revenue growth from yield and
volume in the collection and disposal business is expected to be
about 6.5%, driven by the Company’s disciplined pricing programs
and strong outlook for continued volume recovery.
- Adjusted operating EBITDA is expected to be between $5.0
billion and $5.1 billion in 2021.(a)
- Free cash flow is projected to be between $2.5 billion and $2.6
billion in 2021.(a)
- The Company is on target to capture between $80 million and $85
million in cost synergies in 2021 from the acquisition of Advanced
Disposal, which is on track to achieve $150 million in total annual
run-rate synergies from cost and capital savings.
- The Company expects to repurchase an additional $350 million of
its common stock in 2021, exhausting the full $1.35 billion of
share repurchases previously authorized.
“Our people are doing an outstanding job providing essential
services to our customers and communities. We’re proud to highlight
many of the efforts that have helped us move the needle on our
sustainability goals in our 2021 Sustainability Report released
earlier this month. This year’s report focuses on the people behind
the progress we have made in the past year, and how they are doing
their part to take care of our customers, neighbors and the
environment in communities across North America,” Fish
concluded.
(a)
The information labeled as adjusted in
this press release, as well as free cash flow, are non-GAAP
measures. Please see "Non-GAAP Financial Measures" below and the
reconciliations in the accompanying schedules for more
information.
(b)
Management defines operating EBITDA as
GAAP income from operations before depreciation and amortization;
this measure may not be comparable to similarly-titled measures
reported by other companies.
(c)
For purposes of this press release, all
references to "Net income" refer to the financial statement line
item "Net income attributable to Waste Management, Inc."
(d)
Core price is a performance metric used by
management to evaluate the effectiveness of our pricing strategies;
it is not derived from our financial statements and may not be
comparable to measures presented by other companies. Core price is
based on certain historical assumptions, which may differ from
actual results, to allow for comparability between reporting
periods and to reveal trends in results over time.
(e)
In the first quarter of 2021, the Company
updated its collection and disposal operating EBITDA calculation
with a more accurate allocation of costs to this line of business
that were previously consolidated at the corporate level. This
revised calculation methodology increased collection and disposal
operating EBITDA for the third quarter of 2020 from 31.2% of
revenue, as previously reported, to 33.1% of revenue, as reported
above.
The Company will host a conference call at 10 a.m. ET today to
discuss the third quarter results. Information contained within
this press release will be referenced and should be considered in
conjunction with the call.
The conference call will be webcast live from the Investors
section of Waste Management’s website www.wm.com. To access the
conference call by telephone, please dial (877) 710-6139
approximately 10 minutes prior to the scheduled start of the call.
If you are calling from outside of the United States or Canada,
please dial (706) 643-7398. Please utilize conference ID number
6835518 when prompted by the conference call operator.
A replay of the conference call will be available on the
Company’s website www.wm.com and by telephone from approximately 1
p.m. ET today through 5 p.m. ET on Tuesday, November 9, 2021. To
access the replay telephonically, please dial (855) 859-2056, or
from outside of the United States or Canada dial (404) 537-3406 and
use the replay conference ID number 6835518.
ABOUT WM Waste Management, based in Houston, Texas, is
the leading provider of comprehensive waste management
environmental services in North America, providing services
throughout the United States and Canada. Through its subsidiaries,
the Company provides collection, transfer, disposal services, and
recycling and resource recovery. It is also a leading developer,
operator and owner of landfill gas-to-energy facilities in the
United States. The Company’s customers include residential,
commercial, industrial, and municipal customers throughout North
America. To learn more information about Waste Management, visit
www.wm.com.
FORWARD-LOOKING STATEMENTS The Company, from time to
time, provides estimates of financial and other data, comments on
expectations relating to future periods and makes statements of
opinion, view or belief about current and future events. This press
release contains a number of such forward-looking statements,
including but not limited to, all statements under the heading
“2021 Outlook” and all statements regarding 2021 financial
guidance, future targets or financial results of our business;
future revenue and revenue growth; integration of, and synergies
from, the acquisition of Advanced Disposal Services, Inc.
(“Advanced Disposal”); future share repurchases; and future
operations, efficiencies, cost structure, cost management, pricing,
volumes and margin growth. You should view these statements with
caution. They are based on the facts and circumstances known to the
Company as of the date the statements are made. These
forward-looking statements are subject to risks and uncertainties
that could cause actual results to be materially different from
those set forth in such forward-looking statements, including but
not limited to, failure to implement our optimization, growth, and
cost savings initiatives and overall business strategy; failure to
identify acquisition targets and negotiate attractive terms;
failure to consummate or integrate acquisitions; failure to obtain
the results anticipated from acquisitions; failure to successfully
integrate the acquisition of Advanced Disposal, realize anticipated
synergies or obtain the results anticipated from such acquisition;
environmental and other regulations, including developments related
to emerging contaminants, gas emissions and renewable fuel;
significant environmental, safety or other incidents resulting in
liabilities or brand damage; failure to obtain and maintain
necessary permits; failure to attract, hire and retain key team
members and a high quality workforce; labor disruptions and
workforce-related regulations; significant storms and destructive
climate events; public health risk and other impacts of COVID-19 or
similar pandemic conditions, including increased costs, social and
commercial disruption and service reductions; macroeconomic
pressures and market disruption resulting in labor, supply chain
and transportation constraints and inflationary cost pressure;
increased competition; pricing actions; commodity price
fluctuations; international trade restrictions; disposal
alternatives and waste diversion; declining waste volumes; weakness
in general economic conditions and capital markets; adoption of new
tax legislation; fuel shortages; failure to develop and protect new
technology; failure of technology to perform as expected, including
implementation of a new enterprise resource planning system;
failure to prevent, detect and address cybersecurity incidents or
comply with privacy regulations; negative outcomes of litigation or
governmental proceedings; and decisions or developments that result
in impairment charges. Please also see the Company’s filings with
the SEC, including Part I, Item 1A of the Company’s most recently
filed Annual Report on Form 10-K, as updated by subsequent Form
10-Qs, for additional information regarding these and other risks
and uncertainties applicable to its business. The Company continues
to be optimistic about volume recovery and overall economic
recovery from the impacts of the COVID-19 pandemic, and the
Company’s 2021 financial targets incorporate these views. However,
uncertainty remains with respect to various factors that influence
the pace of economic recovery, including workforce regulation and
the potential for future resurgence in transmission of COVID-19 and
related business closures due to virus variants or otherwise. Such
conditions could have an unanticipated adverse impact on our
business. The Company assumes no obligation to update any
forward-looking statement, including financial estimates,
forecasts, and guidance, whether as a result of future events,
circumstances or developments or otherwise.
NON-GAAP FINANCIAL MEASURES To supplement its financial
information, the Company has presented, and/or may discuss on the
conference call, adjusted earnings per diluted share, adjusted net
income, adjusted income from operations, adjusted operating
expenses, adjusted SG&A expenses, adjusted operating EBITDA,
adjusted operating EBITDA margin, and free cash flow, as well as
projections of adjusted operating EBITDA and free cash flow for
2021. All of these items are non-GAAP financial measures, as
defined in Regulation G of the Securities Exchange Act of 1934, as
amended. The Company reports its financial results in compliance
with GAAP but believes that also discussing non-GAAP measures
provides investors with (i) financial measures the Company uses in
the management of its business and (ii) additional, meaningful
comparisons of current results to prior periods’ results by
excluding items that the Company does not believe reflect its
fundamental business performance and are not representative or
indicative of its results of operations.
In addition, the Company’s projected full year 2021 adjusted
operating EBITDA is anticipated to exclude the effects of other
events or circumstances in 2021 that are not representative or
indicative of the Company’s results of operations. Such excluded
items are not currently determinable, but may be significant, such
as asset impairments and one-time items, charges, gains or losses
from divestitures or litigation, and other items. Due to the
uncertainty of the likelihood, amount and timing of any such items,
the Company does not have information available to provide a
quantitative reconciliation of such projection to the comparable
GAAP measure.
The Company discusses free cash flow and provides a projection
of free cash flow because the Company believes that it is
indicative of its ability to pay its quarterly dividends,
repurchase common stock, fund acquisitions and other investments
and, in the absence of refinancings, to repay its debt obligations.
Free cash flow is not intended to replace “Net cash provided by
operating activities,” which is the most comparable GAAP measure.
The Company believes free cash flow gives investors useful insight
into how the Company views its liquidity, but the use of free cash
flow as a liquidity measure has material limitations because it
excludes certain expenditures that are required or that the Company
has committed to, such as declared dividend payments and debt
service requirements. The Company defines free cash flow as net
cash provided by operating activities, less capital expenditures,
plus proceeds from divestitures of businesses and other assets (net
of cash divested); this definition may not be comparable to
similarly-titled measures reported by other companies.
The quantitative reconciliations of non-GAAP measures to the
most comparable GAAP measures are included in the accompanying
schedules, with the exception of projected adjusted operating
EBITDA. Non-GAAP measures should not be considered a substitute for
financial measures presented in accordance with GAAP.
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF OPERATIONS
(In Millions, Except per Share
Amounts)
(Unaudited)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Operating revenues
$
4,665
$
3,861
$
13,253
$
11,151
Costs and expenses:
Operating
2,906
2,332
8,156
6,841
Selling, general and administrative
469
416
1,372
1,218
Depreciation and amortization
517
419
1,489
1,235
Restructuring
1
7
6
9
(Gain) loss from divestitures, asset
impairments and unusual items, net
(34)
7
(17)
68
3,859
3,181
11,006
9,371
Income from operations
806
680
2,247
1,780
Other income (expense):
Interest expense, net
(87)
(97)
(282)
(328)
Loss on early extinguishment of debt
—
(52)
(220)
(52)
Equity in net losses of unconsolidated
entities
(14)
(16)
(34)
(56)
Other, net
1
1
(4)
2
(100)
(164)
(540)
(434)
Income before income taxes
706
516
1,707
1,346
Income tax expense
167
126
396
288
Consolidated net income
539
390
1,311
1,058
Less: Net income (loss) attributable to
noncontrolling interests
1
—
1
—
Net income attributable to Waste
Management, Inc.
$
538
$
390
$
1,310
$
1,058
Basic earnings per common share
$
1.28
$
0.92
$
3.11
$
2.50
Diluted earnings per common share
$
1.28
$
0.92
$
3.09
$
2.49
Weighted average basic common shares
outstanding
419.5
422.7
421.3
423.1
Weighted average diluted common shares
outstanding
422.0
424.6
423.6
425.0
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Millions)
(Unaudited)
September 30,
December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
116
$
553
Receivables, net
2,669
2,624
Other
399
363
Total current assets
3,184
3,540
Property and equipment, net
14,083
14,148
Goodwill
9,006
8,994
Other intangible assets, net
919
1,024
Other
1,649
1,639
Total assets
$
28,841
$
29,345
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
3,501
$
3,002
Current portion of long-term debt
601
551
Total current liabilities
4,102
3,553
Long-term debt, less current portion
12,446
13,259
Other
5,119
5,079
Total liabilities
21,667
21,891
Equity:
Waste Management, Inc. stockholders’
equity
7,172
7,452
Noncontrolling interests
2
2
Total equity
7,174
7,454
Total liabilities and equity
$
28,841
$
29,345
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Nine Months Ended
September 30,
2021
2020
Cash flows from operating activities:
Consolidated net income
$
1,311
$
1,058
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation and amortization
1,489
1,235
Loss on early extinguishment of debt
220
52
Other
103
364
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
224
(59)
Net cash provided by operating
activities
3,347
2,650
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(11)
(3)
Capital expenditures
(1,130)
(1,238)
Proceeds from divestitures of businesses
and other assets, net of cash divested
70
20
Other, net
(35)
(20)
Net cash used in investing activities
(1,106)
(1,241)
Cash flows from financing activities:
New borrowings
6,428
2,650
Debt repayments
(7,237)
(5,764)
Premiums and other paid on early
extinguishment of debt
(211)
(30)
Common stock repurchase program
(1,000)
(402)
Cash dividends
(730)
(696)
Exercise of common stock options
60
49
Tax payments associated with equity-based
compensation transactions
(28)
(34)
Other, net
32
(17)
Net cash used in financing activities
(2,686)
(4,244)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
2
1
Decrease in cash, cash equivalents and
restricted cash and cash equivalents
(443)
(2,834)
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
648
3,647
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
205
$
813
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Operating Revenues by Line of
Business
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Commercial
$
1,214
$
1,025
$
3,523
$
3,016
Residential
795
662
2,371
1,969
Industrial
829
709
2,383
2,027
Other collection
140
120
391
347
Total collection
2,978
2,516
8,668
7,359
Landfill
1,100
946
3,090
2,707
Transfer
550
482
1,547
1,362
Recycling
464
290
1,203
819
Other
551
458
1,541
1,297
Intercompany (a)
(978)
(831)
(2,796)
(2,393)
Total
$
4,665
$
3,861
$
13,253
$
11,151
Internal Revenue Growth
Period-to-Period Change for
the Three Months
Period-to-Period Change for
the Nine Months
Ended September 30, 2021 vs.
2020
Ended September 30, 2021 vs.
2020
As a % of
As a % of
As a % of
As a % of
Related
Total
Related
Total
Amount
Business(b)
Amount
Company(c)
Amount
Business(b)
Amount
Company(c)
Collection and disposal
$
123
3.5
%
$
334
3.3
%
Recycling (d)
180
66.3
361
47.8
Fuel surcharges and mandated fees
51
45.5
88
25.1
Total average yield (e)
$
354
9.1
%
$
783
7.0
%
Volume
144
3.8
384
3.5
Internal revenue growth
498
12.9
1,167
10.5
Acquisitions
311
8.0
929
8.3
Divestitures
(16)
(0.4)
(37)
(0.3)
Foreign currency translation
11
0.3
43
0.4
Total
$
804
20.8
%
$
2,102
18.9
%
Period-to-Period Change for
the Three Months Ended September 30, 2021 vs. 2020
Period-to-Period Change for
the Nine Months Ended September 30, 2021 vs. 2020
As a % of Related
Business(b)
As a % of Related
Business(b)
Yield
Volume(f)
Yield
Volume(f)
Commercial
4.0
%
4.6
%
3.8
%
3.7
%
Industrial
4.8
0.3
4.6
1.9
Residential
5.0
(3.3)
4.7
(2.1)
Total collection
4.4
1.7
4.1
2.0
MSW
3.5
3.1
3.0
4.7
Transfer
2.5
0.1
2.7
(0.2)
Total collection and disposal
3.5
%
3.8
%
3.3
%
3.6
%
______________________________
(a)
Intercompany revenues between
lines of business are eliminated in the Condensed Consolidated
Financial Statements included herein.
(b)
Calculated by dividing the
increase or decrease for the current year period by the prior year
period’s related business revenue adjusted to exclude the impacts
of divestitures for the current year period.
(c)
Calculated by dividing the
increase or decrease for the current year period by the prior year
period’s total Company revenue adjusted to exclude the impacts of
divestitures for the current year period.
(d)
Includes combined impact of
commodity price variability and changes in fees.
(e)
The amounts reported herein
represent the changes in our revenue attributable to average yield
for the total Company.
(f)
Workday adjusted volume
impact.
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Free Cash Flow(a)
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Net cash provided by operating
activities
$
1,184
$
1,029
$
3,347
$
2,650
Capital expenditures
(464)
(343)
(1,130)
(1,238)
Proceeds from divestitures of businesses
and other assets, net of cash divested
53
5
70
20
Free cash flow
$
773
$
691
$
2,287
$
1,432
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Supplemental Data
Internalization of waste, based on
disposal costs
68.6
%
68.4
%
68.5
%
68.4
%
Landfill amortizable tons (in
millions)
32.6
28.7
92.3
82.9
Acquisition Summary(b)
Gross annualized revenue acquired
—
1
8
3
Total consideration, net of cash
acquired
—
1
11
2
Cash paid for acquisitions consummated
during the period, net of cash acquired
—
1
9
2
Cash paid for acquisitions including
contingent consideration and other items from prior periods, net of
cash acquired
1
1
11
4
Landfill Amortization and Accretion
Expenses:
Three Months Ended
Nine Months Ended
September 30,
September 30,
2021
2020
2021
2020
Landfill amortization expense:
Cost basis of landfill assets
$
146
$
120
$
413
$
345
Asset retirement costs
54
28
128
89
Total landfill amortization expense(c)
200
148
541
434
Accretion expense
28
26
82
76
Landfill amortization and accretion
expense
$
228
$
174
$
623
$
510
______________________________
(a)
The summary of free cash flow has been
prepared to highlight and facilitate understanding of the principal
cash flow elements. Free cash flow is not a measure of financial
performance under generally accepted accounting principles and is
not intended to replace the consolidated statement of cash flows
that was prepared in accordance with generally accepted accounting
principles.
(b)
Represents amounts associated with
business acquisitions consummated during the applicable period
except where noted.
(c)
The increase in landfill amortization was
driven by landfill volume increases from the continued economic
recovery from the pandemic and our acquisition of Advanced Disposal
and changes in landfill estimates. Additionally, includes a $15
million amortization charge due to management’s decision to close a
landfill sooner than expected.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions, Except Per Share
Amounts)
(Unaudited)
Three Months Ended September
30, 2021
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
806
$
706
$
167
$
538
$
1.28
Adjustments:
Advanced Disposal integration-related
costs
10
10
2
8
Enterprise resource planning system
related costs
9
9
2
7
Gain from divestitures and other,
net(b)
(33)
(33)
(10)
(23)
(14)
(14)
(6)
(8)
(0.02)
As adjusted amounts
$
792
$
692
$
161
(c)
$
530
$
1.26
Depreciation and amortization
517
Adjusted operating EBITDA
$
1,309
Three Months Ended September
30, 2020
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
680
$
516
$
126
$
390
$
0.92
Adjustments:
Loss on extinguishment of debt
—
52
13
39
Advanced Disposal transaction and advisory
costs
21
21
1
20
Non-cash impairments of assets and
other
14
14
3
11
Enterprise resource planning system
related costs
6
6
1
5
41
93
18
75
0.17
As adjusted amounts
$
721
$
609
$
144
(c)
$
465
$
1.09
Depreciation and amortization
419
Adjusted operating EBITDA
$
1,140
______________________________
(a)
For purposes of this press release table,
all references to "Net income" refer to the financial statement
line item "Net income attributable to Waste Management, Inc."
(b)
Primarily driven by (i) a pre-tax gain
from the recognition of cumulative translation adjustments on the
divestiture of certain non-strategic Canadian operations in 2021
which was not taxable and (ii) a change from our initial
expectations of the tax effects of the Advanced Disposal
acquisition and related divestitures.
(c)
The Company calculates its effective tax
rate based on actual dollars. When the effective tax rate is
calculated by dividing the Tax Expense amount in the table above by
the Pre-tax Income amount, differences occur due to rounding, as
these items have been rounded in millions. The third quarter of
2021 and 2020 adjusted effective tax rates were 23.3% and 23.7%,
respectively.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended
September 30, 2021
September 30, 2020
As a % of
As a % of
Amount
Revenues
Amount
Revenues
Adjusted SG&A Expenses and Adjusted
SG&A Expenses Margin
Operating revenues, as reported
$
4,665
$
3,861
SG&A expenses, as reported
$
469
10.1
%
$
416
10.8
%
Adjustments:
Advanced Disposal integration and
acquisition-related costs
(7)
(21)
Enterprise resource planning system
related costs
(9)
(6)
Adjusted SG&A expenses
$
453
9.7
%
$
389
10.1
%
Three Months Ended
September 30, 2021
September 30, 2020
As a % of
As a % of
Amount
Revenues
Amount
Revenues
Adjusted Operating Expenses and
Adjusted Operating Expenses Margin
Operating revenues, as reported
$
4,665
$
3,861
Operating expenses, as reported
$
2,906
62.3
%
$
2,332
60.4
%
Adjustments:
Advanced Disposal integration-related
costs
(2)
Multiemployer pension plan withdrawal
(1)
Adjusted operating expenses
$
2,903
62.2
%
Scenario 1
Scenario 2
2021 Projected Free Cash Flow
Reconciliation(a)
Net cash provided by operating
activities
$
4,130
$
4,300
Capital expenditures
(1,700)
(1,800)
Proceeds from divestitures of businesses
and other assets, net of cash divested
70
100
Free cash flow
$
2,500
$
2,600
______________________________
(a)
The reconciliation includes two scenarios
that illustrate our projected free cash flow range for 2021. The
amounts used in the reconciliation are subject to many variables,
some of which are not under our control and, therefore, are not
necessarily indicative of actual results.
Supplemental Information Provided For Illustrative Purposes
Only (In Millions) Diversity in the structure of
recycling contracts results in different accounting treatment for
commodity rebates. In accordance with revenue recognition guidance,
our Company records gross recycling revenue and records rebates
paid to customers as cost of goods sold. Other contract structures
allow for netting of rebates against revenue. Additionally,
there are differences in whether companies adjust for accretion
expense in their calculation of EBITDA. Our Company does not adjust
for landfill accretion expenses when calculating operating EBITDA,
while other companies do adjust it for the calculation of their
EBITDA measure. The table below illustrates the impact that
differing contract structures and treatment of accretion expense
has on the Company’s adjusted operating EBITDA margin results. This
information has been provided to enhance comparability and is not
intended to replace or adjust GAAP reported results.
Three Months Ended September 30, 2021 September
30, 2020 Amount Change inEBITDA Margin
Amount Change inEBITDA Margin Recycling
commodity rebates
$
234
1.4%
$
115
0.9%
Accretion expense
$
28
0.7%
$
26
0.7%
Nine Months Ended September 30, 2021
September 30, 2020 Amount Change inEBITDA
Margin Amount Change inEBITDA Margin
Recycling commodity rebates
$
565
1.3%
$
314
0.8%
Accretion expense
$
82
0.7%
$
76
0.7%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211026005682/en/
Waste Management
Website www.wm.com
Analysts Ed Egl 713.265.1656 eegl@wm.com
Media Toni Werner corp_comm@wm.com
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