Waste Management Beats Estimates - Analyst Blog
February 16 2012 - 8:42AM
Zacks
Waste Management Inc. (WM) recorded a 5%
increase in EPS to 63 cents (excluding special items) in the fourth
quarter from 60 cents in the year-ago quarter. The company
outperformed the Zacks Consensus Estimate of 60 cents.
Including after-tax charge for a
litigation loss, asset impairments, restructuring, results of the
acquired Oakleaf operations and related integration costs, EPS in
the quarter stood at 58 cents. Including special items such as
after-tax charge for litigation; benefit from the accounting effect
of higher ten-year Treasury rates, and a benefit in net income
primarily from income tax audit settlements, EPS in the prior year
quarter was 59 cents.
Revenues increased 7% to $3.406 billion from $3.187 billion in
the year-ago quarter, marginally higher than the Zacks Consensus
Estimate of $3.4 billion. Internal revenue growth from volume fell
0.6% during the quarter. Internal revenue growth from yield for
collection and disposal operations was 1.4%.
Revenues from the company’s Collection business decreased
marginally by 1% to $2.1 billion, Landfill business dipped 3% to
$671 million, Transfer business dipped 7% to $315 million,
Wheelabrator business declined 7% to $213 million, Recycling
business revenues plunged 19% to $353 million.
Adjusted operating expenses increased 4% to $2.02 billion due to
increased cost of goods sold from recycling commodity rebates and
increase in fuel costs. Selling, general and administrative
expenses remained flat at $367 million compared to the prior-year
quarter. The company’s operating profit increased 22% to $724
million with operating margin of 21.3% versus 18.6% in the
prior-year quarter.
Adjusted EPS in fiscal 2011 was $2.14 compared with $2.09 in the
previous year, surpassing the Zacks Consensus Estimate of $2.11 and
at the lower end of the company’s guided range of $2.14-$2.18.
Including special items, EPS was $2.04 versus $1.98 in fiscal
2010. Revenues increased 7% to $13.4 billion, ahead of the Zacks
Consensus Estimate of $13.3 billion.
Cash and cash equivalents deteriorated to $258 million as of
December 31, 2011 from $539 million as of December 31, 2011.
Long-term debt amounted to $9.1 billion as of December 31, 2011
with debt-to-total capital ratio of 60.4% compared with $8.6
billion and 57.5% as of December 31, 2010, respectively.
During the year, cash flow from operations increased to $2.47
billion from $2.27 billion in the comparable year-ago period. Free
cash flow decreased to $1.198 billion in the year from $1.215
billion in the prior year. The company returned $1.21 billion to
shareholders, consisting of $637 million in dividends and $575
million in common stock repurchases.
Waste Management expects 2012 adjusted EPS to lie between $2.22
and $2.30 in fiscal 2012. Internal revenue growth from yield on the
collection and disposal business is expected to be in the range of
1.0% to 1.5%. Yield in the second half is expected to improve in
the second half from the first half. Internal revenue growth from
volume is expected to be flat to slightly positive.
Capital expenditures are expected to be approximately $1.4
billion. Free cash flow is projected to be between $1.1 billion and
$1.2 billion.The company’s Board of Directors has announced its
intention to increase the dividend to $1.42 per share. This will
result in an annual payout of $665 million approximately. In
addition, the Board has authorized up to $500 million in share
repurchases.
Waste Management’s ability to cut costs will help in maintaining
profits despite weak volumes. However, lower trending recycling
prices, lower volumes, commodity headwinds and continued margin
deterioration remain causes of concern. Backed by its strong cash
flow, the company has increased its dividend for the eight
consecutive years.
The recent acquisition of Oakleaf Global Holdings will provide
North American customers with unprecedented access to waste and
recycling solutions by pairing the largest network of directly
owned hauling, recycling, diversion and disposal assets with the
largest managed third-party network.
Waste Management is the largest provider of comprehensive waste
management services in North America. The company provides
collection, transfer, recycling and resource recovery, as well as
disposal services to nearly 20 million residential, commercial,
industrial and municipal customers. It competes with
Republic Services, Inc. (RSG) and Casella
Waste Systems Inc. (CWST). Waste Management currently
maintains a Zacks #3 Rank (Hold) on its stock for the short
term.
CASELLA WASTE (CWST): Free Stock Analysis Report
REPUBLIC SVCS (RSG): Free Stock Analysis Report
WASTE MGMT-NEW (WM): Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jun 2024 to Jul 2024
Casella Waste Systems (NASDAQ:CWST)
Historical Stock Chart
From Jul 2023 to Jul 2024