Waste Management, Inc (WM) – a provider of comprehensive waste management services reported a net income of $168 million or 36 cents per share in the first quarter of 2013, compared with $171 million, or 37 cents per share in the year-ago quarter. Adjusted earnings per share (EPS) stood at 40 cents in the quarter versus 38 cents in the year-ago quarter. Adjusted earnings in the quarter missed the Zacks Consensus Estimate of 41 cents.
Quarter in Detail
Revenues in the first quarter 2013 were up 1.2 % year over year to $3,336 million. The quarterly sales were below the Zacks Consensus Estimate of $3,363 million.
Internal revenue growth from volumes was negative 0.4% for the quarter. Internal revenue growth from yield for collection and disposal operations was 1.4% for the reported quarter.
Average recycling commodity prices were down 12% year over year in the reported quarter.
Revenues from the company’s Collection business dipped 0.9% to $2.1 billion in the reported quarter. Landfill revenues escalated 2.1% to $628 million, Transfer revenues increased 0.7% to $300 million, Wheelabrator revenues inched down 0.9% to $205 million and Recycling revenues increased 3.8% to $358 million.
Operating expenses increased by $43 million to $2,209 million in the reported quarter, driven by higher operating costs within operations, primarily labor, transfer and disposal costs.
SG&A expenses stood at $ 390 million, down 4.2% year over year in the reported quarter.
Cash and cash equivalents increased to $307 million as of Mar 31, 2013 versus $189 million in the year ago period. Long-term debt less current portion stood at $9045 million as of Mar 31, 2013 versus $9173 million as of Dec 31, 2012.
In the reported quarter, net cash provided by operating activities was $577 million, free cash flow was $348 million and capital expenditures were $266 million. For the reported quarter, Waste Management returned $170 million in dividends to its shareholders.
Waste Management expects 2013 adjusted EPS to be in the range of $2.15 -$2.20. Free cash flow is projected between $1.1 billion and $1.2 billion.
Moving ahead, Waste Management expects positive momentum in both yields and cost in 2013. The company is taking adequate measures to improve its yield in the coming year and at the same time remains focused on controlling its costs. On the collection front, Waste Management has implemented a new regulatory cost recovery fee and made some modifications in its fuel surcharge. Additionally, in the recycling operations, the company is implementing new rebate structures to reflect lower commodity prices.
However, Waste Management currently has a Zacks Rank #4 (Sell). Other stocks that look promising and are worth considering now are Alliance Data Systems Corporation (ADS), Fiserv, Inc (FISV) and Green Dot Corporation (GDOT), each carrying a Zacks Rank #2 (Buy).
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