Waste Connections Earnings: Profit Rises

Waste Connections Inc. (NYSE:WCN) reported net income above Wall Street’s expectations for the third quarter. Waste Connections is an integrated solid waste services company that provides solid waste collection, transfer, disposal and recycling services in mostly secondary markets in the western and southern United States.

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Waste Connections Inc. Earnings Cheat Sheet

Results: Net income for Waste Connections Inc. rose to $49.4 million (40 cents per share) vs. $46.3 million (41 cents per share) in the same quarter a year earlier. This marks a rise of 6.6% from the year-earlier quarter.

Revenue: Rose 5.4% to $425.7 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: Waste Connections Inc. beat the mean analyst estimate of 36 cents per share. It beat the average revenue estimate of $409.9 million.

Quoting Management: “We once again are extremely pleased with our performance for the quarter as revenue, margins and free cash flow exceeded the upper end of our expectations – notable achievements in light of declining recycled commodity values realized during the period. Throughout the year, we have cautioned investors about the tepid macro environment, the headwinds of lower recycled commodity prices and tough disposal comps. We believe the strength of our operating performance continues to demonstrate the resiliency of our differentiated strategy,” said Ronald J. Mittelstaedt, Chairman and Chief Executive Officer. “Although the direction of the economy remains uncertain, we are encouraged both by recent improvements in construction data and increases since early October in recycled commodity prices.”

Key Stats:
Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 0.6 percentage point to 42.9% from the year-earlier quarter. Over that time, margins have contracted on average 0.9 percentage point per quarter on a year-over-year basis.

Revenue has risen the past four quarters. Revenue increased 5.3% to $410.7 million in the second quarter. The figure rose 13.6% in the first quarter from the year earlier and climbed 13% in the fourth quarter of the last fiscal year from the year-ago quarter.
Last quarter’s profit increase breaks a two-quarter streak of year-over-year profit decreases. Net income fell 4.5% in the second quarter and in the first quarter.

The company has beaten estimates for two quarters in a row. In the second quarter, it topped expectations with net income of 32 cents versus a mean estimate of net income of 31 cents per share.

Looking Forward: Analysts appear increasingly negative about the company’s results for the next quarter. The average estimate for the fourth quarter has moved down from 43 cents a share to 40 cents over the last ninety days. The average estimate for the fiscal year is $1.46 per share, down from $1.50 ninety days ago.

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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