Waste Management (NYSE: WM) reported Q1 EPS of $0.94, $0.01 better than the analyst estimate of $0.93. Revenue for the quarter came in at $3.696 billion versus the consensus estimate of $3.67 billion.

“The strong results we generated in the first quarter demonstrate that delivering an outstanding customer experience and focusing on continuous improvement produce solid growth in our business,” said Jim Fish, President and Chief Executive Officer of Waste Management. “In the first quarter, we saw organic revenue growth of more than 6% in our collection and disposal business, which translated into about a 7% increase in operating EBITDA in that business.(c) More importantly, this strong operational performance resulted in net cash provided by operating activities increasing by 10% when compared to 2018.

“The focus and discipline of our employees continue to drive exceptional results. That discipline is also evident in our recycling line of business, where the steps we took to improve the business increased operating EBITDA by $11 million when compared to the first quarter of 2018, despite a 28% decline in recycling commodity prices. The great start to 2019 puts us well on our way to meeting our targets for the full year.”

KEY HIGHLIGHTS FOR THE FIRST QUARTER OF 2019

Profitability

• Total Company operating EBITDA was $987 million for the first quarter of 2019, an increase of $32 million, or 3.4%, from the first quarter of 2018. The Company achieved this increase without the benefit of the expired federal natural gas fuel credits that added $28 million to operating EBITDA in the first quarter of 2018.
• Operating EBITDA in the Company’s collection and disposal business increased $76 million, or about 7.0%, in the first quarter of 2019 when compared to the first quarter of 2018.

Revenue Growth

• In the first quarter of 2019, revenue growth was driven by strong yield and volume growth in the Company’s collection and disposal business, which contributed $190 million of incremental revenue. This was partially offset by a $16 million decline in revenuefrom the Company’s recycling line of business on a year-over-year basis in the first quarter of 2019.
• Core price for the first quarter of 2019 was 5.8%, compared to 4.9% in the first quarter of 2018.(d)
• Internal revenue growth from yield for the collection and disposal business was 2.7% for the first quarter of 2019 versus 2.3% in the first quarter of 2018.
• Collection and disposal business internal revenue growth from volume was 3.6%, or 4.1% on a workday adjusted basis, in the first quarter of 2019. Total Company internal revenue growth from volume, which includes our recycling business, was 3.4%, or 4.0% on a workday adjusted basis, in the first quarter of 2019.

Recycling

• Average recycling commodity prices at the Company’s facilities were approximately 28% lower in the first quarter of 2019 compared to the prior year period. Recycling brokerage volumes increased 7.1% in the first quarter of 2019 on a workday adjusted basis.
• Operating EBITDA in the Company’s recycling line of business improved by $11 million from breakeven in the first quarter of 2018. The improvement was driven by the Company’s efforts to develop a sustainable business model that meets customers’ environmental needs.

Cost Management

• As a percent of revenue, total Company operating expenses were 62.2% in both the first quarter of 2019 and 2018. The Company’s focus on improving efficiency in its collection business, controlling costs and maintaining discipline in its pricing programs delivered margin expansion sufficient to offset an 80-basis point headwind from federal natural gas fuel credits received in 2018.
• As a percentage of revenue, SG&A expenses were 11.1% in the first quarter of 2019 compared to 10.6% in the first quarter of 2018. The increase was primarily related to planned investments in technology as well as litigation reserves.

Free Cash Flow & Capital Allocation

• Net cash provided by operating activities was $890 million in the first quarter of 2019, an increase of $81 million, or 10.0%, when compared to the first quarter of 2018.
• Capital expenditures were $471 million in the first quarter of 2019, a $71 million increase from the first quarter of 2018.
• Free cash flow was $431 million in the first quarter of 2019 compared to $423 million in the first quarter of 2018.(b)
• The Company paid $223 million of dividends to shareholders. Cash allocated to share repurchases of $68 million in the first quarter of 2019 was less than both prior year and the Company’s plan due to completed and contemplated acquisition spending.
• The Company spent $394 million on acquisitions during the first quarter of 2019.

Taxes

• The Company’s effective tax rate for the first quarter of 2019 was approximately 24.8%. On an adjusted basis, the Company’s tax rate was 22.2%. The Company expects its 2019 full-year adjusted tax rate to be approximately 24%.(b)

For earnings history and earnings-related data on Waste Management (WM) click here.