Waste Connections, Inc. WCN reported strong third-quarter 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Adjusted earnings per share (EPS) of 69 cents surpassed the consensus estimate by a penny and improved 15% year over year. The bottom line was positively impacted by price-driven earnings growth in solid waste segment and improved operational efficiency.
Quarterly revenues came in at $1.28 billion, which outpaced the consensus mark by $11 million. The reported figure increased 6.2% on a year-over-year basis. Strength across majority of the segments and a favorable impact of $48.2 million from solid waste acquisitions, net of divestitures drove the top line.
Continued strength in solid waste pricing growth, E&P waste activity and contributions from acquisitions aided the company's results, offsetting recycling and cost related headwinds.
In a year's time, shares of Waste Connections have gained 7.4%, outperforming the industry 's 0.8% growth.
Revenues in Details
Solid Waste Collection segment revenues increased 6.9% year over year to $869.28 million. The segment accounted for 67.9% of total revenues.
Solid Waste Disposal and Transfer segment's revenues rose 12.3% year over year to $291.29 million. It contributed 22.7% to total revenues.
E&P Waste Treatment, Recovery and Disposal segment revenues improved 18.4% year over year to $64.79 million. It contributed 5.1% to total revenues.
Intermodal and Other segment revenues decreased 11.8% year over year to $33.37 million. It accounted for 2.6% of total revenues.
Solid Waste Recycling segment revenues decreased 46.2% year over year to $22.4 million. It accounted for 1.7% of total revenues.
Waste Connections, Inc. Revenue (TTM)
Adjusted EBITDA for the third quarter was $416.8 million compared with $393.4 million in the year-ago quarter. Adjusted EBITDA margin was 32.5% of total revenues compared with 32.6% in the prior-year quarter.
Operating income totaled $232.87 million compared with $218.77 million. Operating margin was 18.2% compared with 18.1% in the year-ago quarter.
Balance Sheet and Cash Flow
Waste Connections exited the third quarter with cash and cash equivalents balance of $244.39 million compared with $145.80 million in the previous quarter. Long-term debt at the end of the quarter was $3.90 billion compared with $3.79 billion at the end of the prior quarter.
Concurrent with the earnings release, the company's board of directors announced a 14.3% increase in regular quarterly cash dividend.
Zacks Rank & Upcoming Releases
Waste Connections currently has a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Investors interested in the broader Business Services sector are keenly awaiting third-quarter earnings reports of key players like Clean Harbors CLH , Fiserv FISV and WEX WEX , all of which are scheduled to report on Oct 31.
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