Key Points
- Adjusted earnings of $1.88 per share exceeded estimates by $0.05 per share.
- Revenue was $5.49 billion, beating expectations by $63.8 million (about 1.2%).
- The company saw significant growth in its renewable energy and recycling segments.
Waste Management (WM) (WM -0.49%), North America's leading provider of comprehensive waste management services, announced its second-quarter results on July 24. The company reported adjusted earnings per share (EPS) of $1.88, surpassing the consensus analyst estimate of $1.83. Total revenue came in at $5.49 billion, exceeding the consensus estimate by $64 million. The quarter featured notable improvements in strategic areas such as renewable energy and recycling.
| Metric | Q2 2024 Result | Q2 2024 Analyst Estimate | Q2 2023 Result | % Change (YoY) |
|---|---|---|---|---|
| Adjusted EPS | $1.88 | $1.83 | $1.75 | 7.4% |
| Total revenue | $5.49 billion | $5.42 billion | $5.16 billion | 6.5% |
| EBITDA margin | 30.2% | --- | 29.0% | 4.1% |
| Source: Analyst estimates for the quarter provided by FactSet. |
Business Overview and Focus Areas
Waste Management operates the largest network of landfills, transfer stations, and recycling facilities in North America. It also provides a comprehensive waste management service that includes collection, transfer, recycling, and disposal of waste materials.
Recently, it has focused on expanding its renewable energy and recycling operations. Investments in technology and automation have also been a priority to enhance efficiency and reduce costs.
Quarterly Highlights
For the quarter, Waste Management reported several key achievements and changes in its financial and operational performance.
Revenue increased significantly from $5.16 billion in the same period last year to $5.49 billion. That 6.5% growth was driven mainly by price increases and higher volumes in the recycling and renewable energy segments. Specifically, renewable energy revenue increased by 18% year over year, while the recycling segment saw 14% growth.
On the expense side, the company cut its operating expenses as a percentage of revenue from 63.1% in the prior-year period to 60.9%, thanks to automation and improved operational efficiency. These efforts led to a reduction in labor costs by 4% and better margins across the board.
The company's adjusted EBITDA margin also improved, from 29.0% in the prior-year period to 30.2%. Cash flow from operations reached $1.46 billion. Capital expenditures for the quarter were $460 million as Waste Management continued its ongoing investments in technology and infrastructure.
Waste Management also repurchased 3.2 million shares of common stock during the quarter. It paid out $297 million in dividends, and boosted its payout by 7.1% to $0.71 per share per quarter.
Looking Ahead
Management's outlook for the year is positive. The company expects full-year EBITDA margins between 30.0% and 30.5%, and revenue for Q3 in the range of $5.37 billion to $5.45 billion. Investors should keep an eye out for developments in the company's renewable energy and recycling projects.
