By the numbers
Q2 revenue: $5.4B
Up 5.5% year over year, due partly to core price of 6.8% and increased recycled commodity values
Net income: $680M
Up 10.6% year over year
Operating EBITDA: $1.55B
- Economic outlook: WM achieved a 30% quarterly operating EBITDA margin for the first time, the company reported during its Thursday earnings call. It’s a milestone CEO Jim Fish touted as a result of ongoing technology investments, pricing, turnover reductions and other cost savings measures. Adjusted operating earnings before interest, taxes, depreciation and amortization increased by 10.3% year over year.
- M&A progress: WM spent about $750 million on solid waste acquisitions through July. Fish highlighted the recent Winters Bros. Waste Systems acquisition as an important move into the Long Island, New York, region, while WM also carried out smaller tuck-in deals in its existing footprint in Florida, North Carolina, and Arizona, he said.
- Stericycle updates: Executives affirmed that WM’s $7.2 billion acquisition of Stericycle could be complete as early as Q4, subject to regulatory reviews. WM expects to realize about $125 million in annual cost synergies from the deal within about three years, though more details on that timeline will come once WM completes the acquisition, said Chief Operating Officer John Morris. WM estimates it could capture better commodity prices from Stericycle’s shredding business due to WM’s size and equipment access.
- Commodity values: WM benefited from increased commodity prices over the quarter despite a slight headwind from recycling brokerage services, said CFO Devina Rankin. WM’s blended average single-stream recycled commodity price for the quarter was about $96 per ton compared with about $61 per ton in the prior year period. Rankin expects “elevated” commodity prices to continue through the rest of the year. The full-year price estimate is about $90 per ton, up from a previous estimate of $80 per ton.
- Recycling investments: Ongoing recycling automation investments helped reduce labor cost per ton by 30-35% in the quarter and raised the blended value on commodity sales between 15-20%, Fish said. WM recently completed projects at its Pittsburgh and Atlanta facilities. It aims to complete another seven automation projects and add new facilities in New York, Florida and Oregon by the end of the year.
- RNG updates: WM says it’s still on track to bring five RNG projects online in 2024, bringing the total up to seven. Chief Sustainability Officer Tara Hemmer said 2025 will be a “big year” for renewable natural gas projects. WM expects its planned RNG projects to contribute about $510 million in incremental adjusted operating EBITDA by 2026, and Hemmer estimates about 30% of that will happen in 2025.
- Reiterated outlook: WM reaffirmed its 2024 full-year outlook, which calls for adjusted operating EBITDA of between $6.375 billion and $6.525 billion and for free cash flow, including sustainability growth investments, of between $2 billion and $2.15 billion. WM had raised its outlook for adjusted operating EBITDA and free cash flow after last quarter by about $100 million.
