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


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. 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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