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Waste Management (WM) Beats Q4 Earnings, Revenue Estimates

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Waste Management, Inc. (WM - Free Report) delivered better-than-expected fourth-quarter 2018 results.

Adjusted earnings per share (EPS) came in at $1.13, which beat the consensus mark by 6 cents and rallied 32.9% year over year. Total revenues of $3.84 billion surpassed the consensus mark by $55 million and improved 5.2% year over year.

The year-over-year improvement was mainly driven by strong yield and volume growth in the collection and disposal business, which contributed $203 million of incremental revenues. Revenues from recycling business increased $18 million in the quarter.

Internal revenue growth from yield for collection and disposal operations was 2.3% compared with 2.2% in the year-ago quarter.

Traditional solid waste internal revenue growth from volume came in at 3.1% or 2.4% on a workday adjusted basis. Total company internal revenue growth from volume, which includes recycling and other ancillary businesses, was 4.7% or 4% on a workday adjusted basis.

In a year’s time, shares of Waste Management have gained 19.4% compared with the industry’s 13.1% rise.

 

Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.49 billion, up 5.9% from the prior-year quarter’s tally. Landfill segment’s top line increased 3.5% year over year to $914 million. Total revenues in the Transfer segment were up 13.8% to $454 million. The same in the Recycling segment increased 9.4% to $339 million. Other businesses’ revenues totaled $440 million, up 1.6% year over year.

Waste Management, Inc. Revenue (TTM)

 

Adjusted operating EBITDA was $1.09 billion, up 7.2% from the year-ago quarter’s level. Adjusted operating EBITDA margin improved 50 basis points (bps) to 28.4%.

Waste Management exited the fourth quarter with cash and cash equivalents of $61 million compared with $83 million at the end of the third quarter. Long-term debt at the end of the quarter was $9.6 billion, flat year over year.

The company generated $912 million of cash from operating activities and spent $454 million in capital expenditures. Free cash flow was $560 million compared with $344 million in the prior-year quarter.

The company paid dividends worth $197 million and repurchased shares worth $254 million in the fourth quarter. It spent $118 million on acquisitions of solid waste businesses during the reported quarter.

2019 Guidance

Waste Management expects adjusted EPS in the range of $4.28-$4.38. The Zacks Consensus Estimate stands at $4.46, which is well above the current guidance.

Internal revenue growth from yield on the collection and disposal business is anticipated to be more than 2.0%. Internal revenue growth from volume is expected to be approximately 2.0%.

Adjusted operating EBITDA guidance range is $4.40-$4.45 billion. Free cash flow is expected between $2.025 and $2.075 billion.

Zacks Rank & Upcoming Releases

Waste Management currently 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 keenly awaiting fourth-quarter 2018 earnings reports of key players like Avis Budget (CAR - Free Report) , Green Dot (GDOT - Free Report) and Delphi Technologies . While Avis Budget and Green Dot are scheduled to report on Feb 20, Delphi Technologies is slated to release the same on Feb 21.

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