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Waste Management (WM) Beats Q2 Earnings, Revenue Estimates

Zacks Equity Research

Waste Management Inc. WM reported solid second-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.11 beat the consensus mark by 4 cents and were higher than the year-ago quarter by 10 cents. Total revenues of $3.95 billion surpassed the consensus estimate by $5.3 million and increased 5.5% year over year.

The top line benefited from strong yield and volume growth in the company’s collection and disposal business, which contributed $230 million of incremental revenues. This was, however, partially offset by $38 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 4.4% in second-quarter 2019. Total company internal revenue growth from volume, which includes recycling business, was 4%.

So far this year, shares of Waste Management have gained 30.1% compared with 25.5% rise of the industry it belongs to and 18.8% rise of the Zacks S&P 500 composite.


Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.57 billion, up 5.4% from the prior-year quarter’s figure. Landfill segment’s top line increased 11.8% year over year to $1.02 billion. Total revenues in the Transfer segment were up 8.5% to $474 million. Recycling segment revenues decreased 13.4% to $264 million. Other businesses’ revenues totaled $445 million, up 1.4% year over year. 

Adjusted operating EBITDA of $1.13 billion increased 6.9% from the year-ago quarter’s level. Adjusted operating EBITDA margin increased to 28.7% from 28.4% in the year-ago quarter.

Operating income came in at $696 million compared with $715 million in the year-ago quarter. Operating income margin decreased to 17.6% from 19.1% in the year-ago quarter.

Waste Management, Inc. Price, Consensus and EPS Surprise


Waste Management, Inc. Price, Consensus and EPS Surprise

Waste Management, Inc. price-consensus-eps-surprise-chart | Waste Management, Inc. Quote

Waste Management exited second-quarter 2019 with cash and cash equivalents of $2.25 billion compared with $57 million at the end of the prior quarter. Long-term debt was $12.62 billion compared with $9.32 billion at the end of the prior quarter.

The company generated $1.01 billion of cash from operating activities and spent $578 million in capital expenditures. Free cash flow was $440 million compared with $621 million in the prior-year quarter.

The company paid dividends worth $217 million and repurchased shares worth $180 million in second-quarter 2019. It spent $48 million on acquisitionsof traditional solid waste businesses 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 $4.30 lies within 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.

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 second-quarter 2019 earnings of key players like Insperity NSP, Waste Connections WCN and Verisk Analytics VRSK. While Insperity and Waste Connections are slated to report on Jul 29, Verisk Analytics is scheduled to release results on Jul 30.

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