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Waste Management's (WM) Q4 Earnings Beat Estimate, Decline Y/Y

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Waste Management Inc. (WM - Free Report) reported better-than-expected fourth-quarter 2020 results.

Adjusted earnings (excluding 10 cents from non-recurring items) per share of $1.13 beat the Zacks Consensus Estimate by 5.6% but fell 5% year over year. Total revenues of $4.06 billion beat the consensus estimate by 2.2% and increased 5.8% year over year.

In the reported quarter, revenues increased $185 million in the company’s collection and disposal business primarily driven by $202 million in acquisition revenues and $79 million of growth from yield.

In the past year, shares of Waste Management have lost 10.4% compared with 21.4% decline of the industry it belongs to.

Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.69 billion, up 4.3% from the prior-year quarter’s figure. Landfill segment’s top line declined marginally year over year to $960 million. Total revenues in the Transfer segment were up 6.5% to $493 million. Recycling segment revenues increased 28.3% to $308 million. Other businesses’ revenues totaled $479 million, up 16% year over year.

Adjusted operating EBITDA of $1.14 billion increased 4.1% from the year-ago quarter’s level. Adjusted operating EBITDA margin fell to 28.1% from 29.1% in the prior-year quarter.

Operating income came in at $654 million compared with $655 million in the year-ago quarter. Operating income margin declined to 16.2% from 17% 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 the quarter 2020 with cash and cash equivalents of $553 million compared with $703 million at the end of the prior quarter. Long-term debt was $13.25 billion compared with $10.25 billion at the end of the prior quarter.

The company generated $753 million of cash from operating activities and capital expenditures were $394 million. Free cash flow was $1.22 billion. The company paid out dividends worth $231 million.

During the quarter, the company closed the sale of the assets required to be divested by the U.S. Department of Justice in connection with the Advanced Disposal acquisition to GFL Environmental. Proceeds from divestures were $865 million, with $856 million of this related to the divestitures to GFL Environmental.

2021 Outlook

Waste Management total revenue growth is expected between 10.75% and 11.25%. Combined internal revenue growth from yield and volume in the collection and disposal business is expected to between 4% and 4.5%, primarily driven by the company’s disciplined pricing programs. These are expected to result in core price of 4.0% or greater and yield of approximately 2.5%.

The company expects adjusted operating EBITDA in the range of $4.75 -$4.9 billion. Synergies from the complete acquisition of Advanced Disposal are included in this measure and are expected to between $50 million and $60 million in 2021.

Free cash flow is estimated in the range of $2.25-$2.35 billion.

Capital expenditures are anticipated in the range of $1.78-$1.88 billion.

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

Rollins’ (ROL - Free Report) fourth-quarter 2020 adjusted earnings of 13 cents per share came ahead of the Zacks Consensus Estimate and increased 18.2% year over year. Revenues of $536.3 million beat the consensus mark by 1.7% and rose 6% year over year.

IHS Markit’s fourth-quarter 2020 adjusted earnings per share of 72 cents beat the Zacks Consensus Estimate by 7.5% and increased 11% on a year-over-year basis. Total revenues came in at $1.11 billion, marginally missing the consensus mark and declining 1% from the year-ago quarter’s level.

Automatic Data Processing’s (ADP - Free Report) second-quarter fiscal 2021 adjusted earnings per share of $1.52 beat the consensus mark by 17.8% and were flat year over year. Total revenues of $3.69 billion beat the consensus mark by 3.2% and inched up 0.7% year over year.

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