Revenue
Growth Exceeds Expectations Driven by Accelerated Volume
Recovery
Strong
Financial Results Position Company to Further Increase 2021
Financial Guidance
Waste Management, Inc. (NYSE: WM) today announced financial
results for the quarter ended June 30, 2021.
Three Months Ended
Three Months Ended
June 30,
2021 (in millions, except per share
amounts)
June 30,
2020 (in millions, except per share amounts)
As Reported
As Adjusted(a)
As Reported
As Adjusted(a)
Revenue
$4,476
$4,476
$3,561
$3,561
Income from Operations
$791
$813
$527
$612
Operating EBITDA(b)
$1,291
$1,313
$941
$1,026
Operating EBITDA Margin
28.8%
29.3%
26.4%
28.8%
Net Income(c)
$351
$538
$307
$372
Diluted EPS
$0.83
$1.27
$0.72
$0.88
“Our business produced tremendous growth in the second quarter
as the economy continued to recover from the pandemic, and we made
further progress on our integration of the Advanced Disposal
operations,” said Jim Fish, WM’s President and Chief Executive
Officer. “The acquisition of Advanced Disposal, the return of
volumes from early pandemic levels, and our continued focus on cost
control all contributed to financial outcomes that exceeded
expectations. In the second quarter, as adjusted operating EBITDA
grew 28%, adjusted operating EBITDA margin expanded 50 basis
points, and we generated more than $1 billion of cash from
operations.(a) We continue to execute on our pricing programs and
efficiently manage our costs as volumes return.”
Fish continued, “As a result of our strong performance through
the first half of 2021 and our confidence in the continued strength
of our business model, we are increasing our full-year revenue,
adjusted operating EBITDA, and free cash flow guidance.(a) In
addition, due to our robust cash generation, we are increasing our
expectations for 2021 share repurchases up to our full
authorization of $1.35 billion.”
KEY HIGHLIGHTS FOR THE SECOND QUARTER OF 2021
Revenue
- In the second quarter of 2021, revenue increased $425 million
in the Company’s collection and disposal business, when excluding
the impact of acquisitions and divestitures, compared to the second
quarter of 2020, driven by $307 million in volume increases and
$118 million of growth from yield.
- In the second quarter of 2021, acquisitions, net of
divestitures, added $305 million of revenue primarily from the
acquisition of Advanced Disposal.
- Core price for the second quarter of 2021 was 6.2% compared to
1.3% in the second quarter of 2020.(d)
- Collection and disposal yield was 3.7% in the second quarter of
2021 compared to 1.6% in the second quarter of 2020.
- Total Company volumes improved 9.6% in the second quarter of
2021 compared to a decline of 10.3% in the second quarter of
2020.
Cost Management
- Operating expenses as a percentage of revenue were 61.1% in the
second quarter of 2021 compared to 61.2% in the second quarter of
2020, demonstrating discipline on maintaining a lower cost
structure. The Company saw strong volume recovery in its highest
margin lines of business and more than offset volume-driven cost
increases and inflationary cost pressures.
- SG&A expenses were 9.9% of revenue in the second quarter of
2021 compared to 10.6% in the second quarter of 2020. On an
adjusted basis, SG&A expenses were 9.6% of revenue in the
second quarter of 2021 compared to 9.9% in the second quarter of
2020.(a)
Profitability
- Operating EBITDA in the Company’s collection and disposal
business, adjusted on the same basis as total Company operating
EBITDA, was $1.41 billion, or 32.0% of revenue, for the second
quarter of 2021, compared to $1.14 billion, or 32.1% of revenue,
for the second quarter of 2020.
- Operating EBITDA in the Company’s recycling line of business
improved by $56 million compared to the second quarter of 2020. The
improvement was driven by an increase in market prices for recycled
commodities, investments the Company is making in improved
technology and equipment at its materials recovery facilities that
are delivering a lower operating cost model and the re-opening of
facilities where operations were temporarily suspended during the
pandemic.
- Operating EBITDA in the Company’s renewable energy line of
business improved by almost $14 million compared to the second
quarter of 2020, primarily driven by increases in price.
- In the second quarter of 2021, the Company realized almost $20
million of operating and SG&A cost synergies from the
acquisition of Advanced Disposal.
Free Cash Flow & Capital
Allocation
- In the second quarter of 2021, net cash provided by operating
activities was $1,043 million compared to $856 million in the
second quarter of 2020. The improvement in net cash provided by
operating activities was primarily driven by the increase in
operating EBITDA.
- In the second quarter of 2021, capital expenditures were $396
million compared to $436 million in the second quarter of
2020.
- In the second quarter of 2021, free cash flow was $649 million
compared to $423 million in the second quarter of 2020.(a)
- During the second quarter of 2021, $492 million was returned to
shareholders, including $242 million of cash dividends and $250
million of share repurchases.
REVISED 2021 OUTLOOK
- Total Company revenue growth in 2021 is expected to be 15.5% to
16.0%. Combined internal revenue growth from yield and volume in
the collection and disposal business is expected to be 5.5% or
greater, 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.
- Free cash flow is projected to be between $2.5 billion and $2.6
billion in 2021.
- 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 $850 million of
its common stock in 2021, exhausting the full $1.35 billion of
share repurchases previously authorized.
“Strong performance across all of our businesses — collection
and disposal, recycling, and renewable energy — generated
outstanding results so far this year,” Fish concluded. “Our focus
on disciplined pricing and cost management helped to offset the
inflationary cost pressures we have seen, and we expect to continue
this focus into the second half of the year to help us deliver on
our new, higher outlook. I want to thank each of our team members
for their contributions to our success.”
(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.
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.
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
6965743 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, August 11, 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 6965743.
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 “Revised 2021 Outlook” and all
statements regarding 2021 financial guidance; future performance or
financial results of our business; future share repurchases;
recovery from the COVID-19 pandemic; integration of, and synergies
from, the acquisition of Advanced Disposal Services, Inc.
(“Advanced Disposal”); future strength of our business model and
our future cost structure, cost management, pricing and volumes.
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 wage-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; 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
for additional information regarding these and other risks and
uncertainties applicable to its business. The Company is optimistic
about volume recovery and overall economic recovery as states and
local jurisdictions continue lifting previous restrictions related
to the COVID-19 pandemic, and the Company’s Revised 2021 Outlook
incorporates these views. However, uncertainty remains with respect
to the pace of economic recovery, as well as the potential for
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 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
Six Months Ended
June 30,
June 30,
2021
2020
2021
2020
Operating revenues
$
4,476
$
3,561
$
8,588
$
7,290
Costs and expenses:
Operating
2,736
2,180
5,250
4,509
Selling, general and administrative
445
377
903
802
Depreciation and amortization
500
414
972
816
Restructuring
4
2
5
2
(Gain) loss from divestitures, asset
impairments and unusual items, net
—
61
17
61
3,685
3,034
7,147
6,190
Income from operations
791
527
1,441
1,100
Other income (expense):
Interest expense, net
(98
)
(119
)
(195
)
(231
)
Loss on early extinguishment of debt
(220
)
—
(220
)
—
Equity in net losses of unconsolidated
entities
(11
)
(14
)
(20
)
(40
)
Other, net
(6
)
1
(5
)
1
(335
)
(132
)
(440
)
(270
)
Income before income taxes
456
395
1,001
830
Income tax expense
105
88
229
162
Consolidated net income
351
307
772
668
Less: Net income (loss) attributable to
noncontrolling interests
—
—
—
—
Net income attributable to Waste
Management, Inc.
$
351
$
307
$
772
$
668
Basic earnings per common share
$
0.83
$
0.73
$
1.83
$
1.58
Diluted earnings per common share
$
0.83
$
0.72
$
1.82
$
1.57
Weighted average basic common shares
outstanding
421.6
422.3
422.3
423.2
Weighted average diluted common shares
outstanding
423.6
423.9
424.0
425.1
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED BALANCE
SHEETS
(In Millions)
(Unaudited)
June 30,
December 31,
2021
2020
ASSETS
Current assets:
Cash and cash equivalents
$
148
$
553
Receivables, net
2,645
2,624
Other
433
363
Total current assets
3,226
3,540
Property and equipment, net
14,110
14,148
Goodwill
8,992
8,994
Other intangible assets, net
956
1,024
Other
1,753
1,639
Total assets
$
29,037
$
29,345
LIABILITIES AND EQUITY
Current liabilities:
Accounts payable, accrued liabilities and
deferred revenues
$
3,322
$
3,002
Current portion of long-term debt
361
551
Total current liabilities
3,683
3,553
Long-term debt, less current portion
12,883
13,259
Other
5,117
5,079
Total liabilities
21,683
21,891
Equity:
Waste Management, Inc. stockholders’
equity
7,352
7,452
Noncontrolling interests
2
2
Total equity
7,354
7,454
Total liabilities and equity
$
29,037
$
29,345
WASTE MANAGEMENT, INC.
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
(In Millions)
(Unaudited)
Six Months Ended
June 30,
2021
2020
Cash flows from operating activities:
Consolidated net income
$
772
$
668
Adjustments to reconcile consolidated net
income to net cash provided by operating activities:
Depreciation and amortization
972
816
Loss on early extinguishment of debt
220
—
Other
75
167
Change in operating assets and
liabilities, net of effects of acquisitions and divestitures
124
(30
)
Net cash provided by operating
activities
2,163
1,621
Cash flows from investing activities:
Acquisitions of businesses, net of cash
acquired
(10
)
(1
)
Capital expenditures
(666
)
(895
)
Proceeds from divestitures of businesses
and other assets, net of cash divested
17
15
Other, net
(49
)
(37
)
Net cash used in investing activities
(708
)
(918
)
Cash flows from financing activities:
New borrowings
1,707
—
Debt repayments
(2,326
)
(705
)
Premiums and other paid on early
extinguishment of debt
(211
)
—
Common stock repurchase program
(500
)
(402
)
Cash dividends
(489
)
(466
)
Exercise of common stock options
41
42
Tax payments associated with equity-based
compensation transactions
(28
)
(34
)
Other, net
(4
)
(10
)
Net cash used in financing activities
(1,810
)
(1,575
)
Effect of exchange rate changes on cash,
cash equivalents and restricted cash and cash equivalents
4
(3
)
Decrease in cash, cash equivalents and
restricted cash and cash equivalents
(351
)
(875
)
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
$
297
$
2,772
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,
2021
2020
2021
2020
Commercial
$
1,178
$
928
$
2,309
$
1,991
Residential
794
657
1,576
1,307
Industrial
811
625
1,554
1,318
Other collection
135
115
251
227
Total collection
2,918
2,325
5,690
4,843
Landfill
1,075
874
1,990
1,761
Transfer
532
439
997
880
Recycling
397
275
739
529
Other
513
409
990
839
Intercompany (a)
(959
)
(761
)
(1,818
)
(1,562
)
Total
$
4,476
$
3,561
$
8,588
$
7,290
Internal Revenue Growth
Period-to-Period Change for
the Three Months Ended June 30, 2021 vs. 2020
Period-to-Period Change for
the Six Months Ended June 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
$
118
3.7
%
$
211
3.2
%
Recycling (d)
84
32.9
181
37.4
Fuel surcharges and mandated fees
46
44.3
37
15.4
Total average yield (e)
$
248
7.0
%
$
429
5.9
%
Volume
341
9.6
240
3.3
Internal revenue growth
589
16.6
669
9.2
Acquisitions
316
8.9
618
8.5
Divestitures
(11
)
(0.3
)
(21
)
(0.3
)
Foreign currency translation
21
0.5
32
0.4
Total
$
915
25.7
%
$
1,298
17.8
%
Period-to-Period Change for
the Three Months Ended June 30, 2021 vs. 2020
Period-to-Period Change for
the Six Months Ended June 30, 2021 vs. 2020
As a % of Related
Business(b)
As a % of Related
Business(b)
Yield
Volume
Yield
Volume(f)
Commercial
4.2
%
11.3
%
3.6
%
3.3
%
Industrial
5.8
10.9
4.5
2.7
Residential
4.7
(1.5
)
4.5
(1.6
)
Total collection
4.6
7.8
4.0
2.2
MSW
2.8
12.2
2.7
5.6
Transfer
2.9
5.8
2.8
(0.4
)
Total collection and disposal
3.7
%
9.6
%
3.2
%
3.5
%
(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 Six Months Ended June 30, June
30,
2021
2020
2021
2020
Net cash provided by operating activities
$
1,043
$
856
$
2,163
$
1,621
Capital expenditures
(396
)
(436
)
(666
)
(895
)
Proceeds from divestitures of businesses and other assets, net of
cash divested
2
3
17
15
Free cash flow
$
649
$
423
$
1,514
$
741
Three Months Ended Six Months Ended
June 30, June 30,
2021
2020
2021
2020
Supplemental Data Internalization of waste, based on
disposal costs
68.7
%
68.4
%
68.4
%
68.3
%
Landfill amortizable tons (in millions)
32.1
27.0
59.7
54.2
Acquisition Summary (b) Gross annualized
revenue acquired
2
—
8
2
Total consideration, net of cash acquired
2
—
11
1
Cash paid for acquisitions consummated during the period,
net of cash acquired
2
—
9
1
Cash paid for acquisitions including contingent
consideration and other items from prior periods, net of cash
acquired
2
1
10
3
Amortization, Accretion and Other Expenses for
Landfills: Three Months Ended Six Months Ended
June 30, June 30,
2021
2020
2021
2020
Landfill amortization expense: Cost basis of landfill assets
$
144
$
111
$
267
$
225
Asset retirement costs
40
37
74
61
Total landfill amortization expense (c)
184
148
341
286
Accretion and other related expense
28
25
54
50
Landfill amortization, accretion and other related expense
$
212
$
173
$
395
$
336
(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.
WASTE MANAGEMENT, INC. RECONCILIATION
OF CERTAIN NON-GAAP MEASURES (In Millions, Except Per Share
Amounts) (Unaudited) Three Months EndedJune
30, 2021 Income fromOperations Pre-taxIncome
TaxExpense NetIncome(a) Diluted PerShare
Amount As reported amounts
$
791
$
456
$
105
$
351
$
0.83
Adjustments: Loss and other costs associated with
extinguishment of debt(b)
—
226
56
170
Advanced Disposal integration-related costs
13
13
3
10
Enterprise resource planning system related costs
9
9
2
7
22
248
61
187
0.44
As adjusted amounts
$
813
$
704
$
166
(c)
$
538
$
1.27
Depreciation and amortization
500
Adjusted operating EBITDA
$
1,313
Three Months EndedJune 30, 2020 Income
fromOperations Pre-taxIncome TaxExpense
NetIncome(a) Diluted PerShare Amount As reported
amounts
$
527
$
395
$
88
$
307
$
0.72
Adjustments: Non-cash impairments of disposal assets
61
61
14
47
Advanced Disposal acquisition-related costs
17
17
4
13
Enterprise resource planning system related costs
7
7
2
5
85
85
20
65
0.16
As adjusted amounts
$
612
$
480
$
108
(c)
$
372
$
0.88
Depreciation and amortization
414
Adjusted operating EBITDA
$
1,026
(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) 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. (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 second quarter 2021
and 2020 adjusted effective tax rates were 23.5% and 22.5%,
respectively.
WASTE MANAGEMENT, INC.
RECONCILIATION OF CERTAIN NON-GAAP MEASURES (In
Millions) (Unaudited) Three Months Ended
June 30, 2021 June 30, 2020 Adjusted SG&A
Expenses and Adjusted SG&A Expenses Margin Amount
As a % ofRevenues Amount As a % ofRevenues
Operating revenues, as reported
$
4,476
$
3,561
SG&A expenses, as reported
$
445
9.9
%
$
377
10.6
%
Adjustments: Advanced Disposal integration-related costs
(6
)
(17
)
Enterprise resource planning system related costs
(9
)
(7
)
Adjusted SG&A expenses
$
430
9.6
%
$
353
9.9
%
2021 Projected Free Cash Flow
Reconciliation(a) Scenario 1 Scenario 2
Net cash provided by operating activities
$
4,230
$
4,380
Capital expenditures
(1,780
)
(1,880
)
Proceeds from divestitures of businesses and other assets, net of
cash divested
50
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
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, 2021 June 30, 2020 Amount
As a % ofRevenues Amount As a % ofRevenues
Recycling commodity rebates
179
1.3
%
115
1.0
%
Accretion expense
27
0.6
%
25
0.7
%
Six Months Ended June 30, 2021 June
30, 2020 Amount As a % ofRevenues Amount
As a % ofRevenues Recycling commodity rebates
331
1.2
%
199
0.8
%
Accretion expense
53
0.6
%
49
0.6
%
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210727005611/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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