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Waste Management (WM) Beats Q3 Earnings & Revenue Estimates

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Zacks Equity Research
·3 min read
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Waste Management Inc. WM reported better-than-expected third-quarter 2020 results.

Adjusted earnings (excluding 17 cents from non-recurring items) per share of $1.09 beat the Zacks Consensus Estimate by 5.8% but fell 8.4% year over year. Total revenues of $3.86 billion beat the consensus estimate by 3.5% but declined 2.7% year over year.

In the reported quarter, revenues declined $99 million in the company’s collection and disposal business due to $192 million worth of volume declines, which were partially offset by $93 million of yield growth.

So far this year, shares of Waste Management have lost 0.6% compared with 18.9% decline of the industry it belongs to.

Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.5 billion, down 4.2% from the prior-year quarter’s figure. Landfill segment’s top line declined 4.7% year over year to $946 million. Total revenues in the Transfer segment were up 2.3% to $482 million. Recycling segment revenues improved 18.4% to $290 million. Other businesses’ revenues totaled $458 million, down 2.3% year over year.

Adjusted operating EBITDA of $1.14 billion declined marginally from the year-ago quarter’s level. Adjusted operating EBITDA margin rose to 29.5% from 28.8% in the prior-year quarter.

Operating income came in at $680 million compared with $734 million in the year-ago quarter. Operating income margin declined to 17.6% from 18.5% in the year-ago quarter.

Waste Management exited third-quarter 2020 with cash and cash equivalents of $703 million compared with $2.6 billion at the end of the prior quarter. Long-term debt (minus current portion) was $10.25 billion compared with $9.59 billion at the end of the prior quarter.

The company generated $1.03 billion of cash from operating activities and capital expenditures were $343 million. Free cash flow was $691 million. The company paid out dividends worth $230 million.  

2020 Guidance

Waste Management expects adjusted operating EBITDA margin is anticipated in the range of 28-28.5% (unchanged from previous guidance). Free cash flow is estimated in excess of $2 billion.

Waste Management, Inc. Price, Consensus and EPS Surprise

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

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.

Performance of Other Business Services Companies

Equifax EFX reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the guidance of $1.30-$1.40.

The Interpublic Group of Companies IPG reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.

IQVIA Holdings IQV reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the guidance of $1.47-$1.55.

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