WM has released its financial results for the quarter ended March 31, 2022.
"We had an excellent start to the year, as our first quarter results put us on a path to comfortably achieve our full-year guidance," said Jim Fish, WM's President and Chief Executive Officer. "I am proud of how we continue to respond to inflationary pressures in our business. Our teams executed remarkably well, delivering double-digit growth in revenue, operating EBITDA and net cash provided by operating activities in the quarter. We also advanced our long-term strategic priorities of providing the best workplace for our employees, progressing technology and automation that differentiates WM and reduces costs, and leveraging our sustainability platform for growth."
Fish continued, "In addition, the key leading performance indicators within our business, such as special waste volumes, construction and demolition volumes, and new business formation, point to continued strong economic activity and business performance for the balance of the year."
Key highlights for the first quarter of 2022
Revenue
- Core price for the first quarter of 2022 was 7.3 percent compared to 3.4 percent in the first quarter of 2021.
- Collection and disposal yield was 5.5 percent in the first quarter of 2022 compared to 2.8 percent in the first quarter of 2021.
- Total company volumes increased 3.6 percent in the first quarter of 2022, or 3.2 percent on a workday adjusted basis, compared to a decline of 3.3 percent in the first quarter of 2021, or a decline of 2.7 percent on a workday adjusted basis.
Cost management
- Operating expenses as a percentage of revenue increased 120 basis points to 62.3 percent when compared to the first quarter of 2021 but improved 70 basis points when compared to the fourth quarter of 2021. The increase in operating expense margin in the first quarter, when compared to the prior year, was primarily due to the impacts of increased wages for front-line employees, higher commodity prices for recyclables, and alternative fuel tax credits received in the prior year that have not yet been renewed for 2022.
- SG&A expenses were 10.5 percent of revenue in the first quarter of 2022 compared to 11.1 percent in the first quarter of 2021. On an adjusted basis, SG&A expenses were 10.1 percent of revenue in the first quarter of 2022 compared to 10.7 percent in the first quarter of 2021.
Profitability
- Operating EBITDA in the company's collection and disposal business, adjusted on the same basis as total company operating EBITDA, was $1.4 billion, or 31.2 percent of revenue, for the first quarter of 2022, compared to $1.3 billion, or 31.8 percent of revenue, for the first quarter of 2021.
- Operating EBITDA in the company's recycling line of business, adjusted on the same basis as total company operating EBITDA, improved by $23 million compared to the first quarter of 2021. The improvement was primarily driven by increases in market prices for recycled commodities.
- Operating EBITDA in the company's renewable energy business, adjusted on the same basis as total company operating EBITDA, improved by $13 million compared to the first quarter of 2021, primarily driven by increases in the value of renewable fuel standard credits, or RINs.
Free cash flow and capital allocation
- In the first quarter of 2022, net cash provided by operating activities was $1.26 billion compared to $1.12 billion in the first quarter of 2021. The improvement in net cash provided by operating activities was primarily driven by the increase in operating EBITDA.
- In the first quarter of 2022, capital expenditures to support the business were $371 million compared to $259 million in the first quarter of 2021. In addition, in the first quarter of 2022, capital expenditures for sustainability growth investments were $47 million compared to $11 million in the first quarter of 2021.
- In the first quarter of 2022, free cash flow was $845 million compared to $865 million in the first quarter of 2021. In the first quarter of 2022, free cash flow without sustainability growth investments was $892 million compared to $876 million in the first quarter of 2021.
- During the first quarter of 2022, $525 million was returned to shareholders, including $275 million of cash dividends and $250 million allocated to share repurchases.
Fish concluded, "In addition to our strong financial performance, we also take pride in being recognized among the World's Most Ethical Companies by Ethisphere in March. This was the 13th time WM has received this distinction, and it reflects our commitment to being a responsible operator that achieves success with integrity."
