Waste Management Inc. Earnings Cheat Sheet: Yet Another Quarter of Profitability

S&P 500 (NYSE:SPY) component Waste Management Inc. (NYSE:WM) reported its results for the third quarter. Waste Management is a provider of integrated waste services in North America. It provides collection, transfer, recycling, disposal and waste-to-energy services.

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Waste Management Earnings Cheat Sheet for the Third Quarter

Results: Net income for the waste management company rose to $272 million (58 cents per share) vs. $244 million (51 cents per share) in the same quarter a year earlier. This marks a rise of 11.5% from the year earlier quarter.

Revenue: Rose 8.9% to $3.52 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: WM reported adjusted net income of 63 cents per share. By that measure, the company beat the mean estimate of 61 cents per share. It beat the average revenue estimate of $3.41 billion.

Quoting Management: David P. Steiner, Chief Executive Officer of Waste Management, commented, “We are happy with our progress in the quarter, which resulted in expansion of both our revenue and net income year-over-year. Our revenue grew for the seventh consecutive quarter and our net income grew more than 11% year-over-year, primarily driven by our pricing programs, higher commodity prices and recycling volumes, acquisitions and fuel surcharges. In addition, we saw a $28million benefit from our cost reduction initiatives.”

Key Stats:

Gross margin shrank 2.2 percentage points to 35.8%. The contraction appeared to be driven by increased costs, which rose 12.7% from the year earlier quarter while revenue rose 8.9%.

Revenue has risen the past four quarters. Revenue increased 6% to $3.35 billion in the second quarter. The figure rose 5.7% in the first quarter from the year earlier and climbed 6% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company beat estimates last quarter after falling short in the previous two quarters. In the second quarter, it missed the mark by 4 cents, and in the first quarter, it fell short by 2 cents.

The increase in profit last quarter comes after net income fell in the previous quarter. In the second quarter, net income declined 3.7% to $237 million.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the fourth quarter is 64 cents per share, down from 66 cents ninety days ago. At $2.14 per share, the average estimate for the fiscal year has fallen from $2.25 ninety days ago.

Competitors to Watch: Republic Services, Inc. (NYSE:RSG), Waste Connections, Inc. (NYSE:WCN), Stericycle, Inc. (NASDAQ:SRCL), WCA Waste Corporation (NASDAQ:WCAA), Casella Waste Systems Inc. (NASDAQ:CWST), Perma-Fix Environmental Services, Inc. (NASDAQ:PESI), Clean Harbors, Inc. (NYSE:CLH), Veolia Environnement (NYSE:VE), US Ecology Inc. (NASDAQ:ECOL), and Avalon Holdings Corp. (AMEX:AWX).

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(Source: Xignite Financials)

 

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