WM releases third-quarter earnings for 2018

Waste Management, Houston, has released financial results for its third quarter ended Sept. 30. Revenues for the quarter were $3.82 billion compared with $3.72 billion for the same 2017 period. Net income for the quarter was $499 million, or $1.16 per diluted share, compared with $386 million, or 87 cents per diluted share, for the third quarter of 2017. 

In addition, on an as-adjusted basis, net income was $496 million, or $1.15 per diluted share, in the third quarter of 2018 compared with $398 million, or 90 cents per diluted share, in the third quarter of 2017.

Third-quarter revenue growth was driven by strong yield and volume growth in Waste Management’s collection and disposal business, which contributed $200 million of incremental revenue, according to a company news release. This was partially offset by a decline in revenue from the company’s recycling line of business, which fell by $52 million year over year in the third quarter of 2018. 

According to Waste Management’s news release, average recycling commodity prices at the company’s facilities were approximately 47 percent lower in the third quarter of 2018 compared with the prior year period. Results for the company’s recycling line of business declined by about 4 cents per diluted share when compared with the third quarter of 2017. The company says it continues to expect the full-year impact from recycling to be a negative 17 cents to 20 cents per diluted share, according to Waste Management.

Traditional solid waste internal revenue growth from volume was 3.2 percent, or 3.4 percent on a workday adjusted basis, in the third quarter of 2018, the company reports. Total company revenue growth from volume, which includes the recycling and ancillary businesses, was 4.2 percent, or 4.4 percent on a workday adjusted basis, in the third quarter.

As a percentage of revenue, total company operating expenses were 62.1 percent in the third quarter of 2018 compared with 61.9 percent in the third quarter of 2017. According to the company, the increase in operating expense is primarily driven by core solid waste volume growth, acquisitions, inflationary cost pressures and investments made by company employees.

“The recurring theme for the first two quarters of 2018 was one of historically strong solid waste performance more than overcoming a weak recycling market,” says Jim Fish, president and CEO of Waste Management. “In the third quarter, we generated strong operating EBITDA growth, and we expect that growth to accelerate in the fourth quarter and into 2019. Our collection and disposal business generated strong organic revenue growth of 6.4 percent as a result of our strengthening core price and volume. Additionally, we demonstrated disciplined cost control, particularly on the SG&A [selling, general & administrative] line. We executed very well on our plans to refine our recycling pricing model, and we saw tangible benefits from the investments we are making in our employees.

“I’m enthusiastic about the direction of the company,” Fish adds. “We continue to deliver strong financial and operational performance, and we have promoted strong leaders to continue our high standard of operational excellence. With the hard work our employees have demonstrated so far, I am confident that we can achieve our goals for the remainder of this year and set the stage for an even better 2019.”