Robust Organic Revenue Growth Drives Strong
Income from Operations Performance
The Company Raises 2022 Financial Guidance
WM (NYSE: WM) today announced financial results for the quarter
ended June 30, 2022.
Three Months Ended
Three Months Ended
June 30,
2022 (in millions, except per share amounts)
June 30,
2021 (in millions, except per share
amounts)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
Revenue
$5,027
$5,027
$4,476
$4,476
Income from Operations
$890
$907
$791
$813
Operating EBITDA(b)
$1,398
$1,415
$1,291
$1,313
Operating EBITDA Margin
27.8%
28.1%
28.8%
29.3%
Net Income(c)
$587
$599
$351
$538
Diluted EPS
$1.41
$1.44
$0.83
$1.27
“In the second quarter, we exceeded expectations as our team
delivered outstanding results, building on our first quarter
momentum and positioning us to increase our full-year financial
outlook,” said Jim Fish, WM’s President and Chief Executive
Officer. “Exceptionally strong organic revenue growth, combined
with diligent management of our costs, translated into an almost 8%
increase in adjusted operating EBITDA in the second quarter.(a) I
am proud of how our team continues to diligently manage costs in
this inflationary environment while remaining focused on advancing
our long-term strategic priorities of providing the best workplace
for our employees, investing in technology and automation that
differentiates WM and permanently reduces our cost structure, and
leveraging our sustainability platform for growth.”
Fish continued, “During the quarter, we achieved two exciting
milestones in our sustainability growth journey. We brought our
fifth WM-owned and operated renewable natural gas plant into
service in Oklahoma, which is expected to generate about 570,000
MMBtu of RNG and progresses us towards the 21 million MMBtu planned
increase in RNG generation by 2026. We also completed technology
and automation upgrades at our materials recovery facility in
Houston, which keeps us on track to deliver on our planned
recycling investments.”
KEY HIGHLIGHTS FOR THE SECOND QUARTER OF 2022
Revenue
- Core price for the second quarter of 2022 was 7.5% compared to
6.2% in the second quarter of 2021.(d)
- Collection and disposal yield was 6.2% in the second quarter of
2022 compared to 3.7% in the second quarter of 2021.
- Total Company volumes increased 1.6% in the second quarter of
2022 and collection and disposal volumes increased 2.3%. Total
Company and collection and disposal volumes increased 9.2% in the
second quarter of 2021 driven largely by strong recovery from the
pandemic.(f)
Cost Management
- Operating expenses as a percentage of revenue increased 140
basis points to 62.5% when compared to the second quarter of 2021.
On an adjusted basis, operating expenses as a percentage of revenue
increased 130 basis points to 62.4% in the second quarter of
2022.(a) Operating expense margin in the second quarter, when
compared to the prior year, was 100 basis points higher due to the
impacts of higher commodity prices for fuel and recyclables and 30
basis points higher related to alternative fuel tax credits
received in the prior year that have not yet been renewed for
2022.
- SG&A expenses were 9.7% of revenue in the second quarter of
2022 compared to 9.9% in the second quarter of 2021. On an adjusted
basis, SG&A expenses were 9.4% of revenue in the second quarter
of 2022 compared to 9.6% in the second quarter of 2021.(a)
Profitability
- Operating EBITDA in the Company’s collection and disposal
business, adjusted on the same basis as total Company operating
EBITDA, increased by approximately $107 million to $1.53 billion
for the second quarter of 2022. Operating EBITDA as a percentage of
revenue in the Company’s collection and disposal business was 31.2%
for the second quarter of 2022 compared to 32.0% for the second
quarter of 2021.(e)
- Operating EBITDA in the Company’s recycling line of business
increased by $5 million compared to the second quarter of
2021.
- Operating EBITDA in the Company’s renewable energy business
increased by $14 million compared to the second quarter of 2021,
primarily driven by increases in the value for electricity,
renewable natural gas and environmental credits.
Free Cash Flow & Capital
Allocation
- In the second quarter of 2022, net cash provided by operating
activities was $1.05 billion compared to $1.04 billion in the
second quarter of 2021.
- In the second quarter of 2022, capital expenditures to support
the business were $485 million compared to $387 million in the
second quarter of 2021. In addition, capital expenditures for
sustainability growth investments were $65 million compared to $9
million in the second quarter of 2021.
- In the second quarter of 2022, free cash flow was $503 million
compared to $649 million in the second quarter of 2021.(a) Free
cash flow without sustainability growth investments was $568
million compared to $658 million in the second quarter of 2021.(a)
The year-over-year decline in free cash flow was primarily driven
by the timing of capital spending.
- During the second quarter of 2022, $539 million was returned to
shareholders, including $269 million of cash dividends and $270
million allocated to share repurchases.
REVISED 2022 OUTLOOK
- Total Company revenue growth in 2022 is expected to be
approximately 10%, an increase of 400 basis points from the
midpoint of prior guidance. Combined internal revenue growth from
yield and volume in the collection and disposal business is now
expected to approach 8.5%.
- Adjusted operating EBITDA is now expected to be between $5.5
and $5.6 billion in 2022, an increase of $175 million from prior
guidance.(a)
- The Company’s projected adjusted operating EBITDA margin at the
midpoint of its guidance range is 28.1%, which includes an
estimated 60-basis-point headwind related to increased fuel
costs.(a)
- Free cash flow is projected to exceed the upper end of the
Company’s previous guidance range of $2.6 to $2.7 billion excluding
the targeted sustainability growth investments, or $2.05 to $2.15
billion including sustainability growth investments.(a)
- The Company expects to complete between $300 and $400 million
of acquisitions in 2022. The Company’s revenue and operating EBITDA
guidance provided above exclude incremental contributions from
acquisitions.
- The Company expects to repurchase an additional $980 million of
its common stock in 2022, exhausting the full $1.5 billion of share
repurchase authorization previously announced.
Fish concluded, “WM is well positioned in any economic
environment given the essential nature of the services we provide,
the annuity-like characteristics of our revenue, and our reliable
business model. Our solid results in the first half of 2022, driven
by our focus on disciplined pricing and cost management, give us
confidence in our ability to deliver on our new, higher
outlook.”
(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 fourth 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.
The Company has restated the prior periods to be consistent with
the current year presentation.
(f)
Beginning in the fourth quarter of 2021,
changes in the Company’s renewable energy revenue are reflected as
components of the changes in revenue attributable to yield
(included in “Fuel & Other”) and volume. The Company has
restated the prior periods to be consistent with the current year
presentation.
The Company will host a conference call at 10 a.m. ET today to
discuss the second quarter results. Information contained within
this press release will be referenced and should be considered in
conjunction with the call.
Listeners can access a live audio webcast of the conference call
by visiting investors.wm.com and selecting “Events &
Presentations” from the website menu. A replay of the audio webcast
will be available at the same location following the conclusion of
the call.
Beginning this quarter, conference call participants must
register to obtain their dial in and passcode details. The new,
streamlined process improves security and eliminates wait times
when joining the call.
ABOUT WASTE MANAGEMENT
WM (WM.com) is North America's largest comprehensive waste
management environmental solutions provider. Previously known as
Waste Management and based in Houston, Texas, WM is driven by
commitments to put people first and achieve success with integrity.
The company, through its subsidiaries, provides collection,
recycling and disposal services to millions of residential,
commercial, industrial and municipal customers throughout the U.S.
and Canada. With innovative infrastructure and capabilities in
recycling, organics and renewable energy, WM provides environmental
solutions to and collaborates with its customers in helping them
achieve their sustainability goals. WM has the largest disposal
network and collection fleet in North America, is the largest
recycler of post-consumer materials and is the leader in beneficial
reuse of landfill gas, with a growing network of renewable natural
gas plants and the most gas-to-electricity plants in North America.
WM's fleet includes nearly 11,000 natural gas trucks – the largest
heavy-duty natural gas truck fleet of its kind in North America –
where more than half are fueled by renewable natural gas. To learn
more about WM and the company's sustainability progress and
solutions, visit Sustainability.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 “Revised 2022 Outlook” and all
statements regarding future performance or financial results of our
business; achievement of financial guidance; future share
repurchases; future demand for services, volumes and economic
activity; and future execution of strategic priorities, including
pricing, cost management, investments and sustainability projects,
results and 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, consummate and integrate acquisitions; failure
to obtain the results anticipated from acquisitions; 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; changes in wage and labor related regulations;
significant storms and destructive climate events; public health
risk and other impacts of COVID-19 or similar pandemic conditions,
including related regulations, resulting in increased costs and
social, labor and commercial disruption; macroeconomic pressures
and market disruption resulting in labor, supply chain and
transportation constraints and inflationary cost pressure;
increased competition; pricing actions; commodity price
fluctuations; impacts from Russia’s invasion of Ukraine and the
resulting geopolitical conflict and international response,
including increased risk of cyber incidents and exacerbation of
market disruption, inflationary cost pressure and changes in
commodity prices, fuel and other energy costs; 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 and human capital management 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, for additional information
regarding these and other risks and uncertainties applicable to its
business. The Company assumes no obligation to update any
forward-looking statement, including financial estimates and
forecasts, 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 EBITDA, adjusted operating
EBITDA margin, adjusted operating expenses, adjusted SG&A
expenses and free cash flow, as well as projections of adjusted
operating EBITDA and free cash flow for 2022. 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 future adjusted operating
EBITDA is anticipated to exclude the effects of events or
circumstances 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
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Operating revenues
$
5,027
$
4,476
$
9,688
$
8,588
Costs and expenses:
Operating
3,142
2,736
6,045
5,250
Selling, general and administrative
487
445
978
903
Depreciation and amortization
508
500
990
972
Restructuring
—
4
—
5
Loss from divestitures, asset impairments
and unusual items, net
—
—
17
17
4,137
3,685
8,030
7,147
Income from operations
890
791
1,658
1,441
Other income (expense):
Interest expense, net
(93)
(98)
(178)
(195)
Loss on early extinguishment of debt
—
(220)
—
(220)
Equity in net losses of unconsolidated
entities
(17)
(11)
(32)
(20)
Other, net
(4)
(6)
(1)
(5)
(114)
(335)
(211)
(440)
Income before income taxes
776
456
1,447
1,001
Income tax expense
189
105
346
229
Consolidated net income
587
351
1,101
772
Less: Net income attributable to
noncontrolling interests
—
—
1
—
Net income attributable to Waste
Management, Inc.
$
587
$
351
$
1,100
$
772
Basic earnings per common share
$
1.42
$
0.83
$
2.65
$
1.83
Diluted earnings per common share
$
1.41
$
0.83
$
2.64
$
1.82
Weighted average basic common shares
outstanding
414.4
421.6
415.0
422.3
Weighted average diluted common shares
outstanding
416.4
423.6
417.0
424.0
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Millions)
(Unaudited)
June 30,
December 31,
2022
2021
ASSETS
Current assets:
Cash and cash equivalents
$
894
$
118
Receivables, net
2,665
2,546
Other
428
405
Total current assets
3,987
3,069
Property and equipment, net
14,382
14,419
Goodwill
9,022
9,028
Other intangible assets, net
834
898
Other
1,903
1,683
Total assets
$
30,128
$
29,097
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
3,491
$
3,374
Current portion of long-term debt
231
708
Total current liabilities
3,722
4,082
Long-term debt, less current portion
14,046
12,697
Other
5,168
5,192
Total liabilities
22,936
21,971
Equity:
Waste Management, Inc. stockholders’
equity
7,190
7,124
Noncontrolling interests
2
2
Total equity
7,192
7,126
Total liabilities and equity
$
30,128
$
29,097
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Six Months Ended
June 30,
2022
2021
Cash flows from operating activities:
Consolidated net income
$
1,101
$
772
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation and amortization
990
972
Loss on early extinguishment of debt
—
220
Other
105
75
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
109
124
Net cash provided by operating
activities
2,305
2,163
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(10)
(10)
Capital expenditures
(968)
(666)
Proceeds from divestitures of businesses
and other assets, net of cash divested
11
17
Other, net
(133)
(49)
Net cash used in investing activities
(1,100)
(708)
Cash flows from financing activities:
New borrowings
5,360
1,707
Debt repayments
(4,683)
(2,326)
Premiums and other paid on early
extinguishment of debt
—
(211)
Common stock repurchase program
(520)
(500)
Cash dividends
(544)
(489)
Exercise of common stock options
21
41
Tax payments associated with equity-based
compensation transactions
(35)
(28)
Other, net
(6)
(4)
Net cash used in financing activities
(407)
(1,810)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
1
4
Increase (decrease) in cash, cash
equivalents and restricted cash and cash equivalents
799
(351)
Cash, cash equivalents and restricted cash
and cash equivalents at beginning of period
194
648
Cash, cash equivalents and restricted cash
and cash equivalents at end of period
$
993
$
297
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Operating Revenues by Line of
Business
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Commercial
$
1,355
$
1,178
$
2,642
$
2,309
Industrial
942
811
1,778
1,554
Residential
832
794
1,637
1,576
Other collection
181
135
334
251
Total collection
3,310
2,918
6,391
5,690
Landfill
1,194
1,075
2,245
1,990
Transfer
554
532
1,040
997
Recycling
468
397
921
739
Other
596
513
1,171
990
Intercompany (a)
(1,095)
(959)
(2,080)
(1,818)
Total
$
5,027
$
4,476
$
9,688
$
8,588
Internal Revenue Growth
Period-to-Period Change for
the Three Months
Period-to-Period Change for
the Six Months
Ended June 30, 2022 vs.
2021
Ended June 30, 2022 vs.
2021
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
$
241
6.2
%
$
442
5.9
%
Recycling (d)
96
25.5
212
30.2
Fuel surcharges and other (e)
153
70.0
243
58.9
Total average yield (f)
$
490
10.9
%
$
897
10.4
%
Volume (e)
73
1.6
217
2.5
Internal revenue growth
563
12.5
1,114
12.9
Acquisitions
2
0.1
5
0.1
Divestitures
(6)
(0.1)
(11)
(0.1)
Foreign currency translation
(8)
(0.2)
(8)
(0.1)
Total
$
551
12.3
%
$
1,100
12.8
%
Period-to-Period Change for
the Three Months
Ended June 30, 2022 vs.
2021
Period-to-Period Change for
the Six Months
Ended June 30, 2022 vs.
2021
As a % of Related
Business(b)
As a % of Related
Business(b)
Yield
Volume
Yield
Volume(g)
Commercial
8.3
%
1.6
%
8.1
%
2.4
%
Industrial
10.6
0.7
9.2
0.8
Residential
5.3
(3.2)
5.1
(3.3)
Total collection
7.8
0.7
7.3
0.9
MSW
5.8
0.4
5.9
2.5
Transfer
3.7
0.2
3.5
0.3
Total collection and disposal
6.2
%
2.3
%
5.9
%
3.0
%
(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)
Beginning in the fourth quarter of 2021,
includes changes in our revenue attributable to our WM Renewable
Energy business. We have revised our prior year results to conform
with the current year presentation.
(f)
The amounts reported herein represent the
changes in our revenue attributable to average yield for the total
Company.
(g)
Workday adjusted volume impact.
WASTE MANAGEMENT, INC.
SUMMARY DATA SHEET
(In Millions)
(Unaudited)
Free Cash Flow(a)
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Net cash provided by operating
activities
$
1,047
$
1,043
$
2,305
$
2,163
Capital expenditures
(485)
(387)
(856)
(646)
Proceeds from divestitures of businesses
and other assets, net of cash divested
6
2
11
17
Free cash flow without sustainability
growth investments
568
658
1,460
1,534
Capital expenditures - sustainability
growth investments
(65)
(9)
(112)
(20)
Free cash flow
$
503
$
649
$
1,348
$
1,514
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Supplemental Data
Internalization of waste, based on
disposal costs
68.7
%
68.7
%
68.6
%
68.4
%
Landfill amortizable tons (in
millions)
32.7
32.1
61.8
59.7
Acquisition Summary(b)
Gross annualized revenue acquired
$
—
$
2
$
3
$
8
Total consideration, net of cash
acquired
—
2
6
11
Cash paid for acquisitions consummated
during the period, net of cash acquired
—
2
5
9
Cash paid for acquisitions including
contingent consideration and other items from prior periods, net of
cash acquired
6
2
10
10
Landfill Amortization and Accretion
Expenses:
Three Months Ended
Six Months Ended
June 30,
June 30,
2022
2021
2022
2021
Landfill amortization expense:
Cost basis of landfill assets
$
152
$
144
$
286
$
267
Asset retirement costs
36
40
69
74
Total landfill amortization expense(c)
188
184
355
341
Accretion expense
27
28
55
54
Landfill amortization and accretion
expense
$
215
$
212
$
410
$
395
(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 and changes in landfill
estimates.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions, Except Per Share
Amounts)
(Unaudited)
Three Months Ended June 30,
2022
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
890
$
776
$
189
$
587
$
1.41
Adjustments:
Enterprise resource planning system
implementation-related costs
13
13
4
9
Advanced Disposal integration-related
costs
4
4
1
3
17
17
5
12
0.03
As adjusted amounts
$
907
$
793
$
194
(b)
$
599
$
1.44
Depreciation and amortization
508
Adjusted operating EBITDA
$
1,415
Three Months Ended June 30,
2021
Income from
Pre-tax
Tax
Net
Diluted Per
Operations
Income
Expense
Income(a)
Share Amount
As reported amounts
$
791
$
456
$
105
$
351
$
0.83
Adjustments:
Loss and other costs associated with
extinguishment of debt (c)
—
226
56
170
Advanced Disposal integration-related
costs
13
13
3
10
Enterprise resource planning system
implementation-related costs
9
9
2
7
22
248
61
187
0.44
As adjusted amounts
$
813
$
704
$
166
(b)
$
538
$
1.27
Depreciation and amortization
500
Adjusted operating EBITDA
$
1,313
(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)
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 second quarter 2022
and 2021 adjusted effective tax rates were 24.3% and 23.5%,
respectively.
(c)
Includes charges of $220 million reflected
in the “Loss on early extinguishment of debt” financial caption and
$6 million reflected in the “Interest expense, net” financial
caption related to the retirement of $1.3 billion of certain
high-coupon senior notes through a cash tender offer in May
2021.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN
NON-GAAP MEASURES
(In Millions)
(Unaudited)
Three Months Ended
June 30, 2022
As a % of
Amount
Revenues
Adjusted Operating Expenses and
Adjusted Operating Expenses Margin
Operating revenues, as reported
$
5,027
Operating expenses, as reported
$
3,142
62.5
%
Adjustment:
Advanced Disposal integration-related
costs
(3)
Adjusted operating expenses
$
3,139
62.4
%
Three Months Ended
June 30, 2022
June 30, 2021
As a % of
As a % of
Amount
Revenues
Amount
Revenues
Adjusted SG&A Expenses and Adjusted
SG&A Expenses Margin
Operating revenues, as reported
$
5,027
$
4,476
SG&A expenses, as reported
$
487
9.7
%
$
445
9.9
%
Adjustments:
Enterprise resource planning system
implementation-related costs
(13)
(9)
Advanced Disposal integration-related
costs
(1)
(6)
Adjusted SG&A expenses
$
473
9.4
%
$
430
9.6
%
2022 Projected Free Cash Flow
Reconciliation(a)
Scenario 1
Scenario 2
Net cash provided by operating
activities
$
4,675
$
4,725
Capital expenditures
(2,000)
(2,050)
Proceeds from divestitures of businesses
and other assets, net of cash divested
25
75
Free cash flow without sustainability
growth investments
$
2,700
$
2,750
Capital expenditures - sustainability
growth investments
(550)
(550)
Free cash flow
$
2,150
$
2,200
(a)
The reconciliation includes two scenarios
that illustrate our projected free cash flow range for 2022. 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.
WASTE MANAGEMENT, INC.
SUPPLEMENTAL INFORMATION
PROVIDED FOR ILLUSTRATIVE PURPOSES ONLY
(In Millions)
(Unaudited)
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
June 30, 2022
June 30, 2021
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
229
1.4%
$
179
1.3%
Accretion expense
$
27
0.6%
$
28
0.6%
Six Months Ended
June 30, 2022
June 30, 2021
Amount
Change in Adjusted Operating
EBITDA Margin
Amount
Change in Adjusted Operating
EBITDA Margin
Recycling commodity rebates
$
452
1.3%
$
331
1.2%
Accretion expense
$
55
0.6%
$
54
0.6%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220726005986/en/
Waste Management
Website www.wm.com
Analysts Ed Egl 713.265.1656 eegl@wm.com
Media Toni Werner media@wm.com
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