Waste Management Q3 Adj Profit Tops View, But Revenues Miss, Boosts 2014 Outlook

(RTTNews) - Integrated waste services provider Waste Management, Inc. (WM) reported Wednesday a profit for the third quarter that decreased from last year, hurt by higher restructuring charges and a revenue decline. Adjusted earnings per share topped analysts' expectations, while quarterly revenues missed their estimates. The company also raised earnings forecast for the full-year 2014.

"Once again, our strong yield and cost controls delivered growth in our traditional solid waste business as income from operations grew $13 million and income from operations margin rose by 60 basis points compared to the third quarter of 2013 results," President and CEO David Steiner said in a statement.

The Houston, Texas-based company reported net income of $270 million or $0.58 per share for the third quarter, lower than $291 million or $0.62 per share in the year-ago quarter.

Results for the latest quarter include about $0.14 per share of net charges primarily related to the restructuring of several corporate functions and legal reserves, while the year-ago quarter included net charges of $0.03 per share.

Excluding items, Waste Management's adjusted net income for the quarter was $336 million or $0.72 per share, compared to $306 million or $0.65 per share in the prior-year quarter.

On average, ten analysts polled by Thomson Reuters expected the company to report earnings $0.68 per share for the quarter. Analysts' estimate typically excludes one-time items.

Operating revenues for the quarter edged down 0.5 percent to $3.60 billion from $3.62 billion in the same quarter last year, and missed ten Wall Street analysts' consensus estimate of $3.66 billion.

Internal revenue growth from yield for collection and disposal operations was 2.3 percent.

Collection revenues declined to $2.17 billion from $2.19 billion, while landfill revenues increased to $758 million from $741 million and transfer revenues improved to $354 million from $352 million last year.

Recycling revenues declined to $351 million from $367 million, and wheelabrato revenues decreased to $205 million from $214 million a year ago.

Operating expenses as a percent of revenue declined 40 basis points to 63.8 percent from last year.

The company noted that it took another important step to expand operating margins in the third quarter by reducing corporate overhead costs. That action continued the alignment of the company's corporate leadership and staff with the needs of its field operations. The company anticipates saving in excess of $100 million annually from these actions when fully implemented in 2015.

The company said it has seen three successive strong quarters in 2014, and it expects that strength to continue into the fourth quarter.

Looking ahead to the fourth quarter, the company expects earnings of about $0.60 per share, while analysts also anticipate earnings of $0.60 per share.

For fiscal 2014, the company now projects adjusted earnings of $2.41 per share, up $0.06 per share from the high end of its previous forecast range of $2.30 and $2.35 per share. Street is currently looking for full-year 2014 earnings of $2.36 per share.

"The strength of our business in the first three quarters and the reorganization of our corporate functions sets us up to continue to grow our core business in 2015," Steiner added.

In Wednesday's regular trading session, WM is currently trading at $48.23, down $0.19 or 0.39% on a volume of 0.26 million shares, after hitting a 52-week high of $48.50 in early dealings.