HOUSTON - Waste Management Inc., the nation's largest garbage hauler, said Friday its first-quarter profit rose 19 percent, helped by revenue growth at its commercial collection and landfill businesses and improved cost controls. Its share price rose sharply.
Profit rose to $222 million, or 42 cents per share, from $186 million, or 34 cents per share, a year ago, even as revenue fell slightly to $3.19 billion from $3.23 billion a year earlier.
The company said it incurred an after-tax charge of $6 million, or 1 cent per share, in the most recent quarter related to restructuring.
Results topped Wall Street projections for earnings of 36 cents per share on $3.16 billion of revenue, according to analysts polled by Thomson Financial.
"Our first quarter 2007 financial performance exceeded our expectations and demonstrated that our pricing and operational excellence programs continue to positively impact our results," said David P. Steiner, Waste Management's chief executive.
Steiner said the company continues to execute a strategy of reviewing low-margin accounts and either raising prices or dumping them altogether. As such, volume at Waste Management's collection business fell about 5.2 percent in the first quarter, while income from operations grew 16 percent, the company said.
Steiner said Waste Management also lowered its operating costs by $66 million in the January-March period, a 3.1 percent improvement from a year ago.
Shares of Waste Management rose $2.65, or 7.5 percent, to $38 in afternoon trading on the New York Stock Exchange, near their 52-week high. The stock has traded in a range of $32.56 to $38.70 in the past year.
In a research note, Citigroup analyst Leone Young called Waste Management results a "clean sizable upside surprise," easily topping Citigroup's forecast of 36 cents a share.
"The company executed much better than we anticipated," Young said, noting Citigroup's target price for Waste Management shares is $45.
Due in part to its positive first quarter, Waste Management raised its adjusted full-year earnings guidance to $2.03 to $2.07 a share, up from a forecast of $1.96 to $2 a share released in February.
The current Wall Street estimate is for full-year earnings of $1.97 a share.
"We are off to a very good start to the year," Steiner said.
Waste Management hauls, disposes and recycles garbage for residential, commercial, industrial and municipal customers throughout North America. It also owns and operates landfills.