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Waste Management (WM) Beats on Q4 Earnings, Misses Revenues

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Waste Management Inc. WM reported mixed fourth-quarter 2019 results, wherein earnings surpassed the Zacks Consensus Estimate but revenues lagged the same.

Adjusted earnings per share of $1.19 beat the consensus mark by 1.7% and were up 5.3% year over year. Total revenues of $3.85 billion missed the consensus estimate by 2.6% but increased slightly year over year.

The top line benefited from growth in the company’s collection and disposal business, which contributed $88 million of incremental revenues.

Internal revenue growth from yield for collection and disposal operations was 3.2% compared with 2.3% in the year-ago quarter. Collection and disposal business internal revenue growth from volume was a negative 0.6%. Total company internal revenue growth from volume, which includes recycling and other ancillary businesses, was a negative 0.4%.

Shares of Waste Management have gained 29.4% over the past year compared with 23.9% growth of the industry it belongs to.


Quarterly Numbers in Detail

The Collection segment recorded revenues of $2.59 billion, up 3.9% from the prior-year quarter’s figure. Landfill segment’s top line increased 5.7% year over year to $966 million. Total revenues in the Transfer segment were up 2% to $463 million. Recycling segment revenues declined 29.2% to $240 million. Other businesses’ revenues totaled $413 million, down 6.1% year over year. 

Waste Management, Inc. Revenue (TTM)


Adjusted operating EBITDA of $1.12 billion increased 2.6% from the year-ago quarter’s level. Adjusted operating EBITDA margin improved 70 basis points (bps) year over year.

Operating income came in at $655 million compared with $767 million in the year-ago quarter. Operating income margin decreased to 17% from 20% in the year-ago quarter.

Waste Management exited fourth-quarter 2019 with cash and cash equivalents of $3.56 billion compared with $2.92 billion at the end of the prior quarter. Long-term debt was $13.28 billion compared with $13.15 billion at the end of the prior quarter.

The company generated $1.02 billion of cash from operating activities and capital expenditure was $286 million. Free cash flow was $756 million compared with $478 million in the prior-year quarter.

The company paid out dividends worth $218 million in fourth-quarter 2019. It spent $9 million on acquisitions of solid waste businesses during the reported quarter.

2020 Guidance

Waste Management expects adjusted operating EBITDA of $4.56-$4.66 billion. Internal revenue growth from volume is expected to be around 1.5%. Free cash flow is anticipated between $2.15 billion and $2.25 billion.

Zacks Rank & Other Stocks to Consider

Currently, Waste Management carries a Zacks Rank #2 (Buy). 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 fourth-quarter 2019 earnings of key players like Verisk VRSK, TransUnion TRU and Green Dot (GDOT - Free Report) . While Verisk and TransUnion are slated to report their results on Feb 18, Green Dot is scheduled to release on Feb 19.

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