Stronger than expected financial performance for Waste Management shows resiliency amid pandemic
Waste Management has released financial results for the quarter ended June 30, 2020. Revenues for the second quarter of 2020 were $3.56 billion compared with $3.95 billion for the same 2019 period. Net income for the quarter was $307 million, or $0.72 per diluted share, compared with $381 million, or $0.89 per diluted share, for the second quarter of 2019.
The company's adjusted second quarter 2020 results exclude $0.12 per diluted share from non-cash impairments of landfill assets primarily related to energy services activities, $0.03 per diluted share from advisory costs incurred in connection with the pending acquisition of Advanced Disposal Services, and $0.01 per diluted share from costs incurred to support its implementation of a new enterprise resource planning system.
As previously announced, Waste Management and Advanced Disposal have agreed to revised acquisition terms along with an agreement to sell substantially all anticipated regulatory divestures to GFL Environmental. Both transactions are expected to close by the end of the third quarter of 2020. The company continues to maintain a strong balance sheet and liquidity position, with its current and forecasted post-acquisition leverage ratio well within the financial covenant in its revolving credit facilities.
Key highlights for the second quarter of 2020
- In the second quarter of 2020, revenue declined $331 million in the company's collection and disposal business, driven by $386 million in volume declines partially offset by $55 million of yield growth.
- Core price for the second quarter of 2020 was 1.3% compared to 4.2% in the second quarter of 2019.
- Collection and disposal yield was 1.6% in the second quarter of 2020 compared to 2.7% in the second quarter of 2019.
- The company's second quarter 2020 pricing results were muted relative to historical results and initial full year expectations due to customer-centric steps to temporarily suspend price increases and certain fees for customers impacted by the COVID-19 pandemic.
- Total company volumes declined 10.3% in the second quarter of 2020. Volumes declined almost 11% in the commercial line of business, 16% in industrial, and 18% in landfill, primarily related to the COVID-19 pandemic. Adjusting for natural disaster volumes that occurred in the second quarter of 2019, landfill volumes declined 13% in the second quarter of 2020.
- Given the strong performance in the second quarter of 2020 and improved volume outlook, the company now expects adjusted operating EBITDA margin to be in the range of 28.0% to 28.5%, or flat to down 50 basis points on a year-over-year basis.