Waste Management Inc (WM) Q3 2024 Earnings Call Highlights: Record EBITDA Margin and Strategic ...

GuruFocus News
4 min read

In This Article:

  • Operating EBITDA Growth: Double-digit growth, positioning for about $6.5 billion for the full year.

  • Operating EBITDA Margin: Record margin of 30.5%, a year-over-year expansion of 90 basis points.

  • Operating Expenses: 60.6% of revenue, improved by 70 basis points.

  • Collection and Disposal Business Margin: Expanded to 37.4%.

  • Cash from Operations: $3.88 billion for the first nine months, a 16% increase year-over-year.

  • Free Cash Flow Growth: Increased by 20% for the first nine months.

  • Capital Expenditures: Expected to be $3.15 billion to $3.25 billion for the year.

  • Revenue Growth: Driven by commercial collection, MSW, and special waste.

  • MSW Volume Growth: Increased by 5.7% in the quarter.

  • Churn Rate: 9.2% in the quarter, similar to last year.

  • Free Cash Flow Guidance: On pace to achieve the high end of $2.15 billion for the year.

  • Acquisitions: Nearly $800 million of solid waste acquisitions completed through the first nine months.

Release Date: October 29, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Waste Management Inc (NYSE:WM) reported double-digit operating EBITDA growth, positioning the company to deliver approximately $6.5 billion for the full year, near the upper end of their guidance.

  • The company achieved a record operating EBITDA margin of 30.5% in the third quarter, marking a year-over-year expansion of 90 basis points.

  • WM has successfully closed nearly $800 million of solid waste acquisitions in the first nine months of the year, with a strong pipeline of additional deals.

  • The integration of automated recycling facilities has led to lower labor costs per ton and higher blended value on commodity sales, improving operating EBITDA margins.

  • WM's renewable energy business is on track to commission four new renewable natural gas projects in the fourth quarter, contributing to significant future growth in this segment.

Negative Points

  • Higher-than-expected recycling commodity prices impacted the operating EBITDA margin, which was at the low end of the company's projection.

  • The roll-off business remained soft, with declines in volume, although there was sequential improvement.

  • The expiration of the alternative fuel tax credit in 2025 is expected to create a $60 million EBITDA headwind and a 30 basis points margin impact.

  • Industrial haul volumes have been lighter than expected, reflecting some reservation on industrial investment in the current economic environment.

  • The acquisition of Stericycle is expected to temporarily impact consolidated margins due to its current SG&A cost structure.

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