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Waste Connections (WCN) Q1 Earnings & Revenues Top Estimates

Zacks Equity Research

Waste Connections, Inc. WCN reported impressive first-quarter 2019 results, with earnings and revenues beating the Zacks Consensus Estimate.

Adjusted EPS of 62 cents surpassed the consensus mark by 2 cents and improved 10.7% year over year. Quarterly revenues came in at $1.24 billion, which outpaced the consensus mark by $2 million and increased 9.2% on a year-over-year basis.

Consistent strength in solid waste pricing growth, E&P waste activity and contributions from acquisitions aided the company’s results, offsetting recycling and weather-related headwinds.

Shares of Waste Connections have gained 24.9% year to date, outperforming the industry’s 20.9% growth.

Let’s check out the numbers.

Revenues in Details

Reported revenues in the Solid Waste Collection segment increased 10.1% year over year to $889.2 million. The segment contributed 71% to total revenues.

Reported revenues in the Solid Waste Disposal and Transfer segment rose 8.8% year over year to $240.7 million. It contributed 19% to total revenues.

Reported revenues in the E&P Waste Treatment, Recovery and Disposal segment improved 20.1% year over year to $63.97 million. It contributed 5% to total revenues.

Reported revenues in the Solid Waste Recycling segment grew 13.5% year over year to $63.1 million. The unit contributed 5% to total revenues.

Reported revenues in the Intermodal and Other segment fell 3.4% year over year to $32.3 million. It contributed 3% to total revenues.

Operating Results

Adjusted EBITDA in the first quarter was $385.7 million compared with $356.9 million in the year-ago quarter. Adjusted EBITDA margin was 31% of total revenues compared with 31.3% in the prior-year quarter.

Operating income totaled $184.9 million compared with $188.7 million a year ago. Operating income, as a percentage of revenues, was 14.9% compared with 16.6% in the year-ago quarter.

Waste Connections, Inc. Price, Consensus and EPS Surprise

Waste Connections, Inc. Price, Consensus and EPS Surprise | Waste Connections, Inc. Quote

Balance Sheet and Cash Flow

Waste Connections exited first-quarter 2019 with cash and cash equivalent balance of $499.5 million compared with $319.3 million in the fourth quarter. Long-term debt at the end of the quarter was $4.2 billion, flat with the prior-quarter figure.

The company generated $363.7 million of cash from operating activities in the reported quarter and spent $114.2 million on capex. Adjusted free cash flow was $246.3 million compared with $220.2 million in the last reported quarter.

Waste Connections paid dividend of $42.1 billion in the quarter.

Q2 View

Waste Connections expects revenues to be around $1.36 billion, below the current Zacks Consensus Estimate of $1.37 billion for the period. Adjusted EBITDA is estimated to be around $434 million (roughly 31.9% of revenues). Depreciation and amortization expenses are expected to be around 13.7% of revenues.

Zacks Rank & Upcoming Releases

Currently, Waste Connections carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting first-quarter 2019 earnings reports of key players like Aptiv APTV, S&P Global SPGI and CRA International CRAI. All of these are slated to report results on May 2, before market open.

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