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Waste Management (WM) Q1 Earnings Beat, Revenues Up Y/Y

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Waste Management, Inc. (WM - Free Report) reported mixed first-quarter 2018 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

The company’s earnings per share of 91 cents topped the Zacks Consensus Estimate by 11% and improved 35.8% year over year. Total revenues came in at $3.5 billion missing the consensus mark by 1.2%. However, the top line increased 2.1% on a year-over-year basis.

Strong yield and volume growth in the company’s collection as well as disposal business led to top-line growth year over year. The business contributed $160 million of incremental revenues. This was partially offset by a decrease in revenues from the recycling line of business, which declined by $77 million on a year-over-year basis.

We observe that shares of Waste Management have rallied 13.4% over the past year, underperforming the industry’s gain of 17.6%.

Let’s check out the numbers in detail

Revenues by Segment

The Collection segment recorded revenues of $2.3 billion, up 3.2% from the prior-year quarter. Landfill segment’s top-line increased to 8.9% to $805 million. While total revenues from the Transfer segment were up 2.5% to $375 million, the same from the Recycling segment was down 16.1% to $312 million. Other businesses’ revenues totaled $427 million, up 6.8% year over year.

Waste Management, Inc. Revenue (TTM)

Operating Performance

Operating EBITDA was $955 million up 7.8% from the year-earlier quarter. As a percentage of revenues, operating expenses were 62.2% compared with 63.0% in the year-ago quarter. SG&A expenses, as a percentage of revenues, were 10.6% compared with 11.3% in the prior-year quarter.

Balance Sheet and Cash Flow

Cash and cash equivalents balance at the end of the first quarter was $52 million compared with $22 million at the end of the fourth quarter of 2017. Long-term debt was $8.9 billion compared with $8.8 billion in the prior quarter.

In the reported quarter, net cash provided by operating activities was $809 million than $790 million in the fourth quarter. Free cash flow was $423 million compared with $342 million in the previous quarter. The company paid dividends worth $206 million and repurchased shares of $250 million in the quarter.

Zacks Rank and Key Picks

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

Some better-ranked stocks in the broader Business Services sector include WageWorks , FTI Consulting (FCN - Free Report) and NV5 Global (NVEE - Free Report) , each sporting a Zacks Rank #1.  

In the trailing four quarters, WageWorks, FTI Consulting and NV5 Global have delivered a positive earnings surprise of 8.8%, 6.1% and 5.8%, respectively.

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