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Waste Management (WM) Beats Q1 Earnings, Revenue Estimates

Zacks Equity Research

Waste Management Inc. WM first-quarter 2019 earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of 94 cents beat the consensus mark and were higher than the year-ago quarter by 3 cents. Total revenues of $3.69 billion surpassed the consensus mark by $26 million and increased 5.3% year over year.

The top line benefited from strong yield and volume growth in the company’s collection and disposal business, which contributed $190 million of incremental revenues. This was, however, partially offset by $16 million decline in recycling business revenues.

Internal revenue growth from yield for collection and disposal operations was 2.7% compared with 2.3% in the year-ago quarter.

Collection and disposal business internal revenue growth from volume was 3.6% or 4.1% on a workday adjusted basis in first-quarter 2019. Total company internal revenue growth from volume, which includes recycling business, was 3.4% or 4% on a workday adjusted basis.

So far this year, shares of Waste Management have gained 19.3% compared with 19% rise of the industry it belongs to and 16.3% rise of the Zacks S&P 500 Composite.


Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.45 billion, up 6.4% from the prior-year quarter’s figure. Landfill segment’s top line increased 7.3% year over year to $864 million. Total revenues in the Transfer segment were up 9.9% to $412 million. Recycling segment revenues decreased 6.7% to $291 million. Other businesses’ revenues totaled $431 million, up 0.9% year over year. 

Operating EBITDA of $987 million increased 3.4% from the year-ago quarter’s level.

Waste Management, Inc. Price, Consensus and EPS Surprise


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

Waste Management exited first-quarter 2019 with cash and cash equivalents of $57 million compared with $61 million at the end of the prior quarter. Long-term debt was $9.32 billion compared with $9.59 billion at the end of the prior quarter.

The company generated $890 million of cash from operating activities and spent $471 million in capital expenditures. Free cash flow was $431 million compared with $423 million in the prior-year quarter.

The company paid dividends worth $223 million and repurchased shares worth $68 million in first-quarter 2019. It spent $394 million on acquisitions during the reported quarter.

2019 Guidance

Waste Management reaffirmed its full-year 2019 guidance. The company continues to expect adjusted EPS in the range of $4.28-$4.38. The current Zacks Consensus Estimate of $4.35 lies above the midpoint of the guided range.

Adjusted operating EBITDA is expected in the range of $4.40-$4.45 billion. Free cash flow is expected between $2.025 and $2.075 billion. Adjusted effective tax rate is anticipated to be around 24%.

Zacks Rank & Upcoming Releases

Currently, Waste Management 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 Avis Budget CAR, Clean Harbors CLH and IQVIA Holdings IQV. All of them are slated to report on May 1.

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