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Waste Management (WM) Beats Q2 Earnings, Revenue Estimates

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Waste Management Inc. (WM - Free Report) reported solid second-quarter 2019 results, wherein the company’s earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of $1.11 beat the consensus mark by 4 cents and were higher than the year-ago quarter by 10 cents. Total revenues of $3.95 billion surpassed the consensus estimate by $5.3 million and increased 5.5% year over year.

The top line benefited from strong yield and volume growth in the company’s collection and disposal business, which contributed $230 million of incremental revenues. This was, however, partially offset by $38 million decline in recycling business revenues.

Internal revenue growth from yield for collection and disposal operations was 2.7% compared with 2.3% in the year-ago quarter. Collection and disposal business internal revenue growth from volume was 4.4% in second-quarter 2019. Total company internal revenue growth from volume, which includes recycling business, was 4%.

So far this year, shares of Waste Management have gained 30.1% compared with 25.5% rise of the industry it belongs to and 18.8% rise of the Zacks S&P 500 composite.

 

Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.57 billion, up 5.4% from the prior-year quarter’s figure. Landfill segment’s top line increased 11.8% year over year to $1.02 billion. Total revenues in the Transfer segment were up 8.5% to $474 million. Recycling segment revenues decreased 13.4% to $264 million. Other businesses’ revenues totaled $445 million, up 1.4% year over year. 

Adjusted operating EBITDA of $1.13 billion increased 6.9% from the year-ago quarter’s level. Adjusted operating EBITDA margin increased to 28.7% from 28.4% in the year-ago quarter.

Operating income came in at $696 million compared with $715 million in the year-ago quarter. Operating income margin decreased to 17.6% from 19.1% 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 second-quarter 2019 with cash and cash equivalents of $2.25 billion compared with $57 million at the end of the prior quarter. Long-term debt was $12.62 billion compared with $9.32 billion at the end of the prior quarter.

The company generated $1.01 billion of cash from operating activities and spent $578 million in capital expenditures. Free cash flow was $440 million compared with $621 million in the prior-year quarter.

The company paid dividends worth $217 million and repurchased shares worth $180 million in second-quarter 2019. It spent $48 million on acquisitionsof traditional solid waste businesses during the reported quarter.

2019 Guidance

Waste Management reaffirmed its full-year 2019 guidance. The company continues to expect adjusted EPS in the range of $4.28-$4.38. The current Zacks Consensus Estimate of $4.30 lies within the guided range.

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

Zacks Rank & Upcoming Releases

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.

Investors interested in the broader Zacks Business Services sector are awaiting second-quarter 2019 earnings of key players like Insperity (NSP - Free Report) , Waste Connections (WCN - Free Report) and Verisk Analytics (VRSK - Free Report) . While Insperity and Waste Connections are slated to report on Jul 29, Verisk Analytics is scheduled to release results on Jul 30.

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