Waste Management releases Q1 financial results

By Katie Fletcher | April 29, 2015

On April 29, Waste Management Inc. announced financial results for the quarter ended March 31, reporting revenues for the first quarter were $3 billion, down from $3.4 billion for the same period in 2014. The net loss for the quarter was $129 million, or 28 cents per diluted share, compared with net income of $228 million, or 49 cents per diluted share, for the first quarter of 2014.

Although overall revenue declined, David Steiner, president and CEO of WM, said that the company was pleased to have earned 49 cents per share—an increase of almost 9 percent from the 2014 first quarter results—when adjusted to exclude the earnings from divested businesses and assets.  The company’s as-adjusted results exclude a 74 cents per diluted share loss on early extinguishment of debt, as well as a 3 cents per diluted share impact from non-cash charges related to post-closing adjustments that reduced the gain on the sale of certain operations in 2014 and an impairment of a short-lived landfill asset.

Steiner said on the call that the company continues to see the benefit from discipline core price growth and cost controls. The company experienced growth in its income from operations, operating earnings before interest, taxes, depreciation and amortization (EBIDTA), margins, free cash flow and earnings per share (EPS). “Our EPS increased despite 3 cents of year-over-year headwinds from lower recycling commodity prices, and the unfavorable impact of foreign currency fluctuation,” Steiner said.

He commented that these improvements mark a strong start to 2015. “These results were in line with our internal expectations, and we expect to see continued improvement as we progress throughout the year,” Steiner said.

Steiner also mentioned that during the first quarter WM reinvested a portion of the proceeds from the sale of its waste-to-energy (WTE) business, and completed the acquisition of Deffenbaugh Disposal. “Once fully integrated the acquisition should add about $52 million of annual operating EBIDTA,” Steiner said.

A few other highlights WM mentioned from the quarter include internal revenue growth from yield for collection and disposal operations of 2 percent. Core price was 4.4 percent, up from 4.2 percent in the comparable period of 2014. Internal revenue growth from volume in WM’s traditional waste business declined 1.2 percent in comparison to a decline of 3.2 percent in the first quarter of 2014.

Average recycling commodity prices decreased 14.1 percent for the quarter compared to the first quarter of the prior year, and recycling volumes declined 8 percent in the first quarter of 2015. This decrease resulted in a negative impact of 2 cents per diluted share when compared to the prior year. Free cash flow improved to $285 million in the first quarter, an increase of $22 million from the comparable period in 2014. The company also returned $176 million to shareholders in the form of dividends.

Overall, WM experienced negative volume growth in its solid waste business of 1.2 percent during the first quarter, but saw some positive trends in its commercial and industrial lines. According to Steiner, both lines of business had the lowest rate of decline in seven quarters. “Consequently, although total volumes are down more than expected, its due primarily to volumes in lower margin lines of business,” he said. “The revenue and volume trends in our most profitable lines of business are encouraging, and we expect the positive momentum to improve as we see our normal seasonal upturn.”

These financial results follow fourth quarter 2014 and year-end earnings released in February. At the beginning of the year, WM gave guidance that its 2015 adjusted EPS would be between $2.48 and $2.55 for the full year, including a negative 3 cents to 5 cents diluted EPS headwind from recycling commodities. Steiner said the company anticipates the annual impact from the recycling business to be around 10 cents per diluted share. “Despite the increased recycling headwind, we still anticipate adjusted earnings per diluted share to be within the guidance range,” he said. “We also expect to achieve our full year free cash flow guidance of between $1.4 and $1.5 billion.”