(Information is taken from Waste Dive)

Waste Management recorded solid results for Q1 – despite a $40 million revenue hit due to initial COVID-19 effects in March – though executives are no longer offering any guidance on how the rest of 2020 may play out.

Like the industry’s other major players, Waste Management is not seen as facing any existential risks itself as a result of the pandemic shutdown. During the company’s earnings call, CFO Devina Rankin said liquidity is “the strongest it has been in the company’s history.” That doesn’t mean effects won’t be significant for Q2 and beyond, as previewed by stark trends from recent weeks.

“We just don’t have as good of an idea about what happens with commercial business, what happens with retail, restaurants, all the sporting-related businesses, office space. That is really virtually impossible to predict,” said CEO Jim Fish.

The big unknown

Like its other large competitors, Waste Management reports it has worked to adapt quickly to this major economic disruption and remains resilient. Guidance suspensions are expected across the board, though one analyst noted competitor Republic Services (which is still aiming for $1 billion in free cash flow this year) struck a slightly more optimistic tone in its own earnings call yesterday.

While declining to comment on Republic’s business directly, Fish and others repeatedly came back to a similar refrain about heightened unpredictability in the months ahead. Even in areas that have theoretically begun to reopen, such as the company’s home city of Houston, it remains unclear how and when customers may return to any version of normal. This was described as a primary factor in the decision to suspend guidance.

“If you look at office, retail, the restaurants and the education bucket that was about 65-70% of where we’ve seen the degradation in revenue and volume,” said Morris.

Overall, under 10% of Waste Management’s 1.3 million commercial customers have reduced or suspended service as a result of COVID-19 disruptions. The company’s decision to temporarily pause price increases, and offer one month of free service to certain smaller customers, is viewed as a way to maintain loyalty if they ramp back up. So far, only around 1% of all commercial customers have canceled service due to the pandemic.

At the same time, the company is anticipating potentially higher levels of “bad debt” among customers that might not be able to pay, increasing reserves for uncollectible accounts by $5 million as a precaution, and recognizes some small businesses that attempt to reopen may not make it.

“That’s the big unknown,” said Fish. “The piece that I think all waste companies are going to really have to get our heads around is what happens to small business.”

Fish went on to cite a recent report that said if current conditions continue for six months there could be many more small business closures ahead.

“That’s going to affect us, that’s going to affect Republic, that’s going to affect everybody in every industry,” he said.

Additional updates

Looking ahead

Dumpster Rental in Waste Management and COVID-19 Effects was last modified: January 18th, 2021 by Dumpster Rental