WM announces solid Q2 growth

Citing robust growth in its collection and disposal business, Houston-based waste and recycling firm WM has reported strong operating earnings before interest, taxes, depreciation and amortization (EBITDA) and quarterly margin growth in the second quarter of 2024.

Total company adjusted operating EBITDA increased 10.3 percent to $1.62 billion, which WM President and CEO Jim Fish reports is the company’s strongest since the 1990s, while operating EBITDA margin grew by 30 percent, a number that Fish touts as the largest in the company’s history.

“We’re flat on volume, and yet, in an economy that’s kind of stumbling along, honestly, we’re growing EBITDA by 10 percent. Almost all of that … is coming from organic growth,” Fish said during a July 25 earnings call. “I could not be more bullish when I think about 2025.”

He cited the company’s investments in technology, sustainability and operating processes to improve efficiencies, including data analytics, as being key to WM’s strategic growth over the past few years.

WM closed more than $750 million in solid waste acquisitions through July, including the acquisition of Long Island, New York-based Winter Bros. Waste Systems. Its acquisition of Bannockburn, Illinois-based Stericycle Inc., set to close in the fourth quarter of 2024, will add medical waste as a new vertical for WM alongside residential, commercial and industrial waste.

“With Stericycle comes significant opportunities for synergy and comes with a higher growth trajectory in medical waste than in the solid waste space,” Fish said.

Total company revenue grew by 5.5 percent in the second quarter, driven primarily by pricing and increases in the value of the recycled commodities the company sells. Operating EBITDA in the collection and disposal business grew $200 million to $1.83 billion, a 12 percent increase, and margin expanded to 37.3 percent. Adjusted EBITDA in collection and disposal grew $203 million to $1.84 billion and margin expanded to 37.3 percent.

WM cited price and cost optimization efforts as well as benefits from the sale of nonstrategic assets for these strong margin results, partially offset by higher risk management costs and the net impact of recycled commodity prices.

In the recycling processing and sales and renewable energy businesses, operating EBITDA grew 20.8 percent, driven by higher market prices for recycled and renewable energy commodities and partially offset by temporary shutdown costs associated with recycling facility upgrades.

WM expects to bring five new renewable natural gas projects online this year, adding to the two new facilities completed in 2022 and 2023, with an additional nine projects currently under construction. The company completed automation projects at its material recovery facilities in Pittsburgh and Atlanta during the second quarter and says it is on track to complete another seven automation projects and add new facilities in New York, Florida and Portland by year-end.

In the first half of the year, net cash provided by operating activities increased 22 percent to $2.52 billion compared with the same period in 2023 driven by the company’s strong EBITDA growth combined with working capital benefits. Free cash flow before investments in high-return sustainability projects grew 41.1 percent to $1.63 billion.

John Morris, executive vice president and chief operating officer for WM, explained he was particularly pleased with the ongoing optimization of operating costs, even while the company has seen decreased volume in the roll-off area in response to moderation in the homebuilding business.

Based on a strong Q1 performance and elevated M&A activity, WM raised its full-year outlook after the first quarter for adjusted operating EBITDA and free cash flow by $100 million, reported Devina Rankin, WM executive vice president and chief financial officer.

Second-quarter results are tracking to that higher trajectory and reflect continued momentum in the collection and disposal business, Fish says in the news release that accompanied the company's earnings.

“The momentum is strong, and we remain focused on execution,” Fish says.