WM Earning Date, Transcript Summary & Report

EBITDA Growth Analysis: Total company operating EBITDA grew by more than 12% in Q1 2025 compared to Q1 2024, driven by solid operational performance and contributions from WM Healthcare Solutions.

EBITDA Growth in Recycling: Combined operating EBITDA from recycling and renewable energy grew by over 20% year-over-year, keeping the company on track to meet full year targets.

Operational Efficiency Comparison: Automated recycling facilities delivered nearly double the operating EBITDA margin compared to non-automated facilities, indicating strong operational efficiency.

Expansion of Recycling Facilities: The company added two new automated recycling facilities in California and Texas, with seven more scheduled for 2025, enhancing capacity and operational performance.

Healthcare Integration Progress: WM Healthcare Solutions integration is progressing well, with expectations of achieving $250 million of annual run rate synergies by 2027.

EBITDA Growth and Margin Expansion: First quarter operating EBITDA for the collection and disposal business was up almost 5%, with margin expansion of 10 basis points, demonstrating strong core business performance.

Revenue Growth Drivers: Revenue grew across all lines of business, driven by collection and disposal yield of 4% and core price of 6.5%, indicating effective pricing strategies.

Cost Management Improvement: Operating expenses as a percentage of revenue were at 60.5%, marking a 40 basis point improvement from Q1 2024, showcasing cost management effectiveness.

Consistent Margin Achievement: WM's legacy business achieved a 30% margin for the fourth consecutive quarter, reflecting consistent operational efficiency and profitability.

Strong Cash Generation: Operating cash flow was $1.21 billion in Q1, and free cash flow of $475 million is on plan, indicating strong cash generation capabilities.

Shareholder Value Commitment: The company returned $336 million to shareholders through dividends, demonstrating commitment to shareholder value.

Solid Waste Acquisition Growth: WM expects to close on more than $500 million of solid waste acquisitions in 2025, a significant increase from typical acquisition levels, reflecting confidence in growth opportunities.

EBITDA Growth Challenges: Operating EBITDA growth of 12% was driven by solid performance, but the company faced challenges from tough winter weather in the Southeast and Gulf Coast regions.

Flat Collection and Disposal Results: First quarter collection and disposal results were flat on a workday-adjusted basis, with positive landfill and commercial collection volumes offset by the strategic exit from low-margin residential business.

Tax Credit Impact on Margins: The expiration of alternative fuel tax credits negatively impacted margins, contributing to a 30 basis point headwind in the quarter.

Operating Cash Flow Decline: Operating cash flow decreased to $1.21 billion compared to the previous year, attributed to planned increases in cash interest payments and headwinds from working capital.

Share Buyback Pause: Share buybacks are currently paused as the company focuses on reducing leverage, indicating potential concerns about debt levels.