Waste Management Inc. Earnings: Fifth Straight Quarter of Shrinking Margins as Net Income Falls

S&P 500 (NYSE:SPY) component Waste Management Inc. (NYSE:WM) reported its results for the first 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 First Quarter

Results: Net income for Waste Management Inc. fell to $171 million (37 cents per share) vs. $186 million (39 cents per share) a year earlier. This is a decline of 8.1% from the year-earlier quarter.

Revenue: Rose 6.2% to $3.29 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Waste Management Inc. reported adjusted net income of 38 cents per share. By that measure, the company fell short of mean estimate of 40 cents per share. It beat the average revenue estimate of $3.21 billion.

Quoting Management: David P. Steiner, President and Chief Executive Officer of Waste Management, commented, “Our revenue grew for the ninth consecutive quarter. We achieved positive internal revenue growth from volume for the first time since 2006, and we also saw continued benefits from our cost reduction initiatives. We achieved solid performance in the first quarter of 2012 despite the expected impact of the headwinds we discussed in our fourth quarter 2011 earnings release.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins, as gross margin fell 1.4 percentage points to 34.3% from the year-earlier quarter. Over that time, margins have contracted on average 1.3 percentage points per quarter on a year-over-year basis.

Revenue has increased for four quarters in a row. Revenue increased 6.9% to $3.41 billion in the fourth quarter of the last fiscal year. The figure rose 8.9% in the third quarter of the last fiscal year from the year earlier and climbed 6% in the second quarter of the last fiscal year from the year-ago quarter.

The company’s net income has fallen for two quarters in a row. In the fourth quarter of the last fiscal year, net income fell 5.3% from the year-earlier quarter.

The company fell short of forecasts after beating estimates in the previous two quarters. In the fourth quarter of the last fiscal year, it topped the mark by 3 cents, and in the third quarter of the last fiscal year, it was ahead by 2 cents.

Looking Forward: The outlook for the company’s results in the upcoming quarter is unfavorable. The average estimate for the second quarter is 54 cents per share, down from 57 cents ninety days ago. For the fiscal year, the average estimate has moved down from $2.27 a share to $2.24 over the last sixty days.

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

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