Waste Management third quarter results reflect double-digit growth
Recycling business improvement driven by an increase in market prices for recycled commodities and a less labour-intensive operating cost model
Strong organic growth and continued progress on the integration of the Advanced Disposal business powered robust revenue growth in the third quarter for Waste Management, according to their third quarter financial report. The latest results include a more than 14% increase in adjusted operating EBITDA and an increase of over 15% in net cash provided by operating activities.
"Our solid results put us on track to meet our full-year financial targets despite accelerating cost inflation," said Jim Fish, WM's President and Chief Executive Officer. "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."
Recycling and waste-to-energy growth
Operating EBITDA in WM'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.
WM 3rd quarter revenue and profitability highlights
- In the third quarter of 2021, Waste Management Inc.'s revenue increased $260 million in the 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.
- 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.
- 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% 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.
- Operating EBITDA in collection and disposal, of $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.
Over 17 percent growth expected in 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.
Waste Management also says it 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.
"Our people are doing an outstanding job providing essential services to our customers and communities," commented Jim Fish. "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."