WM closes out 2023 with profits

WM is crediting strong execution of price programs and optimization of cost of operations for a 2023 net income figure that is nearly 3 percent higher than the 2022 amount.

For all of 2023, Houston-based WM reports net income of $2.3 billion, a more than 2.9 percent increase from the $2.24 billion earned the previous year.

In the fourth quarter of 2023, the company’s net income declined slightly from $499 million in late 2022 to $493 million.

In comments accompanying the results, WM President and CEO Jim Fish points to the benefits of its recycling and landfill gas harvesting efforts while also noting that collection and disposal continue to play a large role in the firm’s profitability.

“During the fourth quarter, our collection and disposal business performance powered our total company adjusted operating earnings before interest, taxes, depreciation and amortization (EBITDA) growth of 15 percent and record adjusted margin of 29.9 percent,” Fish says.

“Our performance in 2023, particularly the momentum built during the second half of the year, positions us well to sustain growth throughout 2024,” he adds,

Regarding the year now in progress, Fish says, “In 2024, we anticipate our financial performance to be driven by disciplined pricing, enhanced operational efficiencies, prudent cost management and contributions from our investments in our recycling and renewable energy businesses.

“We anticipate total company adjusted operating EBITDA growth of almost 8 percent at the midpoint of our guidance. Our expectations for operating EBITDA growth position us to achieve all of our capital allocation priorities, including continuing to invest in sustainability growth, completing accretive acquisitions and returning cash to our shareholders through dividends and share repurchases."

WM continues to add to its sustainability growth portfolio and says it remains committed to investing in an industry-leading network of renewable natural gas projects and recycling assets.

The renewable natural gas projects have a projected payback period of about three years and the recycling assets have a projected payback period of about six years, according to WM.

“These anticipated returns reflect the company’s views that these investments create strong economic value, in addition to underlying environmental value,” the company says.

WM expects to invest up to $2.9 billion in the recycling and renewable energy platforms between 2022 and 2026, which includes more than $1.3 billion already invested in 2022 and 2023. “About $350 million of the increase from the company’s prior plan is for new recycling growth projects that are expected to deliver similar returns,” the company says.

WM also points to the impact of lower commodity prices, which negatively impacted revenue from energy surcharges, recycling sales and its renewable energy business, as a factor holding back further profits last year.

The company’s collection and disposal yield was 5.4 percent in 2023, while collection and disposal volumes increased 0.7 percent, or 0.9 percent on a workday adjusted basis, in 2023 compared with 2022.

WM operating expenses as a percentage of revenue improved 70 basis points to 61.7 percent, which it says was driven by efficiencies in the collection and disposal business.