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Waste Connections (WCN) Tops Q3 Earnings & Revenue Estimates

Waste Connections Inc. WCN reported better-than-expected third-quarter 2020 results.

Adjusted earnings of 72 cents per share beat the Zacks Consensus Estimate by 9.1% but decreased 1.4% year over year. Revenues of $1.39 billion beat the consensus mark by 0.7% but declined 1.6% year over year.

Acquisitions contributed $44.2 million to revenues in the reported quarter.

So far this year, shares of Waste Connection have gained 8.8% compared with 19.3% decline of the industry it belongs to.

Let’s check out the numbers in detail.

Revenues by Segment

Solid Waste Collection segment revenues increased 1.9% year over year to $1.01 billion. The segment accounted for 72.4% of total revenues.

Solid Waste Disposal and Transfer segment revenues decreased 1.9% from the year-ago quarter to $311.6 million. The segment contributed 22.4% of total revenues.

E&P Waste Treatment, Recovery and Disposal segment revenues decreased 64.4% from the year-ago quarter to $23.6 million. The segment contributed 1.7% to total revenues.

Intermodal and Other segment revenues increased 2.6% to $27.1 million. The segment accounted for 2% of total revenues.

Solid Waste Recycling segment revenues improved 51% year over year to $20.7 million. The segment accounted for 1.5% of total revenues.

Operating Results

Adjusted EBITDA in the reported quarter was $432.6 million compared with $443.6 million in the year-ago quarter. Adjusted EBITDA margin came in at 31.1% compared with 31.4% in the year-ago quarter. 

Operating income totaled $230.7 million compared with$236.6 millionin the year-ago quarter. Operating income margin came in at 16.6% compared with 16.7% in the year-ago quarter.

Waste Connections, Inc. Price, Consensus and EPS Surprise

Waste Connections, Inc. price-consensus-eps-surprise-chart | Waste Connections, Inc. Quote

Balance Sheet and Cash Flow

Waste Connections exited third-quarter 2020 with cash and cash equivalents of $859.09 million compared with $790.55 million at the end of the prior quarter. Long-term debt was $4.68 billion compared with $4.69 billion at the end of the prior quarter.

The company generated $432.4 million of cash from operating activities in the reported quarter. Adjusted free cash flow was $283.8 million. Capital expenditure totaled $151.9 million.

Waste Connections’ board of directors approved a dividend hike of 10.8%, reflecting its 10th consecutive double-digit percentage increase since the initiation of dividend payment in 2010. The company paid out dividend of $49 million in the reported quarter.

Currently, Waste Connections carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax EFX reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and improving 26.4% on a year-over-year basis. The reported figure exceeded the guided range of $1.30-$1.40.

The Interpublic Group of Companies IPG reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and improved 8.2% on a year-over-year basis.

IQVIA Holdings IQV reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and improved 1.9% on a year-over-year basis. The reported figure was above the guided range of $1.47-$1.55.

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