Quarterly Results

First Quarter 2024
Waste Connections Reports First Quarter 2024 Results

  • Strong start to 2024 on price-led organic growth in solid waste, improving operating trends and continued acquisition activity
  • Revenue of $2.073 billion, above outlook and up 9.1% year over year
  • Net income(a) of $230.1 million and adjusted EBITDA(b) of $650.7 million, above outlook and up 14.8% year over year
  • Adjusted EBITDA margin of 31.4%, above outlook and up 160 basis points year over year
  • Net income and adjusted net income(b) of $0.89 and $1.04 per share, respectively
  • Net cash provided by operating activities of $490.3 million and adjusted free cash flow(b) of $324.8 million
  • Year-to-date acquired annualized revenue of over $375 million

TORONTO, April 24, 2024 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE: WCN) ("Waste Connections" or the "Company") today announced its results for the first quarter of 2024.    

"We are extremely pleased by the strong start to the year driving better than expected operating and financial results, which, along with recently completed acquisitions, positions us well for the remainder of 2024.  Adjusted EBITDA(b) margin expansion of 160 basis points to 31.4% in the seasonally weakest quarter of the year puts us on track to exceed our industry-leading full year outlook of 32.7%, as continuing improvements in employee retention and safety trends, along with rising commodity values, provide momentum for continued outperformance," said Ronald J. Mittelstaedt, President and Chief Executive Officer.

"We're encouraged to see improvements in employee retention driving some of our best safety performance in years, with monthly incidents down to three-year lows in spite of outsized growth from acquisitions during that period," continued Mr. Mittelstaedt.  "These results reflect the value of our decentralized operating model and our commitment to a culture of accountability."

Mr. Mittelstaedt added, "Acquisition activity continues at outsized levels following the Secure Energy transaction completed in February, with solid waste acquisitions totaling approximately $150 million in annualized revenue closed to date, including a new market entry serving customers in Indiana and Michigan.  The strength of our financial position and free cash flow generation provide flexibility for continued acquisition outlays in 2024 for what could be one of our busiest years ever, along with increasing return of capital to shareholders."

Q1 2024 Results

Revenue in the first quarter totaled $2.073 billion, up from $1.901 billion in the year ago period.  Operating income was $366.8 million, which included $11.5 million primarily in transaction-related expenses and fair value accounting changes associated with certain equity awards.  This compares to operating income of $314.7 million in the first quarter of 2023, which included $4.3 million primarily related to transaction-related expenses and impairments and other operating items.  Net income in the first quarter was $230.1 million, or $0.89 per share on a diluted basis of 258.5 million shares.  In the year ago period, the Company reported net income of $197.8 million, or $0.77 per share on a diluted basis of 258.0 million shares.  

Adjusted net income(b) in the first quarter was $268.7 million, or $1.04 per diluted share, up from $230.4 million, or $0.89 per diluted share, in the prior year period.  Adjusted EBITDA(b) in the first quarter was $650.7 million, as compared to $566.9 million in the prior year period.  Adjusted net income, adjusted net income per diluted share and adjusted EBITDA, all non-GAAP measures, primarily exclude impairments and transaction-related items, as reflected in the detailed reconciliations in the attached tables.

Q1 2024 Earnings Conference Call

Waste Connections will be hosting a conference call related to first quarter earnings on April 25th at 8:30 A.M. Eastern Time.  A live audio webcast of the conference call can be accessed by visiting investors.wasteconnections.com and selecting "News & Events" from the website menu. Alternatively, conference call participants can preregister by clicking here.  Registered participants will receive dial-in instructions and a personalized code for entry to the conference call.  A replay of the conference call will be available until May 2, 2024, by calling 877-344-7529 (within North America) or 412-317-0088 (international) and entering Passcode #4074999.   

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on April 25th, providing the Company's second quarter 2024 outlook for revenue, price plus volume growth for solid waste, and adjusted EBITDA(b).

About Waste Connections

Waste Connections (wasteconnections.com) is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, including by rail, along with resource recovery primarily through recycling and renewable fuels generation. The Company serves approximately nine million residential, commercial and industrial customers in mostly exclusive and secondary markets across 46 states in the U.S. and six provinces in Canada. Waste Connections also provides non-hazardous oilfield waste treatment, recovery and disposal services in several basins across the U.S. and Canada, as well as intermodal services for the movement of cargo and solid waste containers in the Pacific Northwest. Waste Connections views its Environmental, Social and Governance ("ESG") efforts as integral to its business, with initiatives consistent with its objective of long-term value creation and focused on reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety and enhancing employee engagement. Visit wasteconnections.com/sustainability for more information and updates on our progress towards targeted achievement.

Safe Harbor and Forward-Looking Information

This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 ("PSLRA"), including "forward-looking information" within the meaning of applicable Canadian securities laws. These forward-looking statements are neither historical facts nor assurances of future performance and reflect Waste Connections' current beliefs and expectations regarding future events and operating performance. These forward-looking statements are often identified by the words "may," "might," "believes," "thinks," "expects," "estimate," "continue," "intends" or other words of similar meaning. All of the forward-looking statements included in this press release are made pursuant to the safe harbor provisions of the PSLRA and applicable securities laws in Canada. Forward-looking statements involve risks and uncertainties. Forward-looking statements in this press release include, but are not limited to, statements about expected 2024 financial results, outlook and related assumptions, and potential acquisition activity. Important factors that could cause actual results to differ, possibly materially, from those indicated by the forward-looking statements include, but are not limited to, risk factors detailed from time to time in the Company's filings with the SEC and the securities commissions or similar regulatory authorities in Canada.  You should not place undue reliance on forward-looking statements, which speak only as of the date of this press release.  Waste Connections undertakes no obligation to update the forward-looking statements set forth in this press release, whether as a result of new information, future events, or otherwise, unless required by applicable securities laws.

– financial tables attached –

CONTACT:

 

Mary Anne Whitney / (832) 442-2253                                                         

Joe Box / (832) 442-2153

maryannew@wasteconnections.com                                                           

joe.box@wasteconnections.com                          

               

----------------------------------------------------------------------------------------------------------------------------------------------------

 (a) All references to "Net income" refer to the financial statement line item "Net income attributable to Waste Connections".
 (b) A non-GAAP measure; see accompanying Non-GAAP Reconciliation Schedule.

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME

THREE MONTHS ENDED MARCH 31, 2023 AND 2024

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)

             
   

Three months ended
March 31,

   

2023

 

2024

         

Revenues

 

$

1,900,503

 

$

2,072,653

Operating expenses:

           

Cost of operations

   

1,146,941

   

1,221,783

Selling, general and administrative

   

193,667

   

220,735

Depreciation

   

204,059

   

222,691

Amortization of intangibles

   

39,282

   

40,290

Impairments and other operating items

   

1,865

   

354

Operating income

   

314,689

   

366,800

             

Interest expense

   

(68,353)

   

(78,488)

Interest income

   

2,715

   

2,051

Other income (expense), net

   

3,174

   

(1,823)

Income before income tax provision

   

252,225

   

288,540

             

Income tax provision

   

(54,389)

   

(59,413)

Net income

   

197,836

   

229,127

Plus (Less): Net loss (income) attributable to noncontrolling interests

   

(23)

   

927

Net income attributable to Waste Connections

 

$

197,813

 

$

230,054

             

Earnings per common share attributable to Waste Connections' common shareholders:

           

Basic

 

$

0.77

 

$

0.89

             

Diluted

 

$

0.77

 

$

0.89

             

Shares used in the per share calculations:

           

Basic

   

257,372,942

   

257,801,116

Diluted

   

257,988,971

   

258,482,473

             
             

Cash dividends per common share

 

$

0.255

 

$

0.285

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands of U.S. dollars, except share and per share amounts)

               
   

December 31,
2023

 

March 31,
2024

 

ASSETS

             

Current assets:

             

Cash and equivalents

 

$

78,399

 

$

111,985

 

Accounts receivable, net of allowance for credit losses of $23,553 and $22,858 at
December 31, 2023 and March 31, 2024, respectively

   

856,953

   

896,682

 

Prepaid expenses and other current assets

   

206,433

   

208,387

 

Total current assets

   

1,141,785

   

1,217,054

 
               

Restricted cash

   

105,639

   

105,683

 

Restricted investments

   

70,350

   

74,655

 

Property and equipment, net

   

7,228,331

   

7,827,304

 

Operating lease right-of-use assets

   

261,782

   

273,371

 

Goodwill

   

7,404,400

   

7,597,175

 

Intangible assets, net

   

1,603,541

   

1,877,226

 

Other assets, net

   

100,048

   

110,192

 

Total assets

 

$

17,915,876

 

$

19,082,660

 

 

LIABILITIES AND EQUITY

             

Current liabilities:

             

Accounts payable

 

$

642,455

 

$

589,861

 

Book overdraft

   

14,855

   

14,584

 

Deferred revenue

   

355,203

   

370,380

 

Accrued liabilities

   

521,428

   

507,259

 

Current portion of operating lease liabilities

   

32,533

   

36,430

 

Current portion of contingent consideration

   

94,996

   

96,931

 

Current portion of long-term debt and notes payable

   

26,462

   

16,096

 

Total current liabilities

   

1,687,932

   

1,631,541

 
               

Long-term portion of debt and notes payable

   

6,724,771

   

7,795,191

 

Long-term portion of operating lease liabilities

   

238,440

   

249,419

 

Long-term portion of contingent consideration

   

20,034

   

20,802

 

Deferred income taxes

   

1,022,480

   

1,052,508

 

Other long-term liabilities

   

524,438

   

542,239

 

Total liabilities

   

10,218,095

   

11,291,700

 

Commitments and contingencies

             

Equity:

             

Common shares: 257,659,921 shares issued and 257,600,479 shares outstanding at
December 31, 2023; 258,019,417 shares issued and 257,961,725 shares outstanding at
March 31, 2024

   

3,276,661

   

3,279,130

 

Additional paid-in capital

   

284,284

   

272,450

 

Accumulated other comprehensive loss

   

(9,826)

   

(62,836)

 

Treasury shares: 59,442 and 57,692 shares at December 31, 2023 and March 31, 2024, respectively

   

-

   

-

 

Retained earnings

   

4,141,690

   

4,298,171

 

Total Waste Connections' equity

   

7,692,809

   

7,786,915

 

Noncontrolling interest in subsidiaries

   

4,972

   

4,045

 

Total equity

   

7,697,781

   

7,790,960

 

 Total liabilities and equity

 

$

17,915,876

 

$

19,082,660

 

 

WASTE CONNECTIONS, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

THREE MONTHS ENDED MARCH 31, 2023 AND 2024

(Unaudited)

(in thousands of U.S. dollars)

 
               
   

Three months ended March 31,

 
   

2023

 

2024

 

Cash flows from operating activities:

             

Net income

 

$

197,836

 

$

229,127

 

Adjustments to reconcile net income to net cash provided by operating activities:

             

Loss on disposal of assets and impairments

   

1,910

   

1,649

 

Depreciation

   

204,059

   

222,691

 

Amortization of intangibles

   

39,282

   

40,290

 

Deferred income taxes, net of acquisitions

   

28,229

   

30,395

 

Current period provision for expected credit losses

   

2,247

   

3,730

 

Amortization of debt issuance costs

   

1,621

   

4,055

 

Share-based compensation

   

18,469

   

21,952

 

Interest accretion

   

4,884

   

11,279

 

Adjustments to contingent consideration

   

(637)

   

-

 

Other

   

(2,937)

   

902

 

Net change in operating assets and liabilities, net of acquisitions

   

(52,605)

   

(75,761)

 

Net cash provided by operating activities

   

442,358

   

490,309

 
               

Cash flows from investing activities:

             

   Payments for acquisitions, net of cash acquired

   

(144,611)

   

(1,156,422)

 

Capital expenditures for property and equipment

   

(175,786)

   

(169,951)

 

Proceeds from disposal of assets

   

1,260

   

1,085

 

Other

   

1,378

   

(9,291)

 

Net cash used in investing activities

   

(317,759)

   

(1,334,579)

 
               

Cash flows from financing activities:

             

Proceeds from long-term debt

   

336,649

   

2,353,022

 

Principal payments on notes payable and long-term debt

   

(320,027)

   

(1,350,932)

 

Payment of contingent consideration recorded at acquisition date

   

(1,319)

   

(11,295)

 

Change in book overdraft

   

5,421

   

(271)

 

Payments for cash dividends

   

(65,788)

   

(73,573)

 

Tax withholdings related to net share settlements of equity-based compensation

   

(22,966)

   

(30,850)

 

Debt issuance costs

   

-

   

(10,093)

 

Proceeds from issuance of shares under employee share purchase plan

   

1,841

   

2,183

 

Proceeds from sale of common shares held in trust

   

765

   

286

 

Net cash provided by (used in) financing activities

   

(65,424)

   

878,477

 
               

Effect of exchange rate changes on cash, cash equivalents and restricted cash

   

(54)

   

(577)

 
               

Net increase in cash, cash equivalents and restricted cash

   

59,121

   

33,630

 

Cash, cash equivalents and restricted cash at beginning of period

   

181,364

   

184,038

 

Cash, cash equivalents and restricted cash at end of period

 

$

240,485

 

$

217,668

 
               
               

 

ADDITIONAL STATISTICS
(in thousands of U.S. dollars, except where noted)

Solid Waste Internal Growth:  The following table reflects a breakdown of the components of our solid waste internal growth for the three months ended March 31, 2024:

   

Three months ended

March 31, 2024

Core Price

   

7.8 %

Surcharges

   

(0.7 %)

Volume

   

(3.8 %)

Recycling

   

0.8 %

Foreign Exchange Impact

   

0.0 %

Total

   

4.1 %

 

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended March 31, 2023 and 2024:

                         
   

 Three months ended March 31, 2023

 
   

Revenue

 

Inter-company
Elimination

 

Reported
Revenue

 

%

Solid Waste Collection

 

$

1,434,647

 

$

(5,514)

 

$

1,429,133

 

75.2

%

Solid Waste Disposal and Transfer

   

616,954

   

(262,445)

   

354,509

 

18.7

%

Solid Waste Recycling

   

31,301

   

(623)

   

30,678

 

1.6

%

E&P Waste Treatment, Recovery and Disposal

   

51,759

   

(3,624)

   

48,135

 

2.5

%

Intermodal and Other

   

38,212

   

(164)

   

38,048

 

2.0

%

Total

 

$

2,172,873

 

$

(272,370)

 

$

1,900,503

 

100.0

%

 

   

 Three months ended March 31, 2024

 
   

Revenue

 

Inter-company
Elimination

 

Reported
Revenue

 

%

Solid Waste Collection

 

$

1,515,060

 

$

(4,003)

 

$

1,511,057

 

72.9

%

Solid Waste Disposal and Transfer

   

655,360

   

(282,978)

   

372,382

 

17.9

%

Solid Waste Recycling

   

49,025

   

(1,839)

   

47,186

 

2.3

%

E&P Waste Treatment, Recovery and Disposal

   

97,408

   

(4,543)

   

92,865

 

4.5

%

Intermodal and Other

   

49,541

   

(378)

   

49,163

 

2.4

%

Total

 

$

2,366,394

 

$

(293,741)

 

$

2,072,653

 

100.0

%

 

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three month periods ended March 31, 2023 and 2024:

             
   

Three months ended
March 31,

   

2023

 

2024

Acquisitions, net

 

$

132,109

 

$

77,988

 

ADDITIONAL STATISTICS (continued)
(in thousands of U.S. dollars, except where noted)

Other Cash Flow Items: The following table reflects cash interest and cash taxes for the three month periods ended March 31, 2023 and 2024:

             
   

Three months ended
March 31,

   

2023

 

2024

Cash Interest Paid

 

$

55,131

 

$

66,384

Cash Taxes Paid

   

11,326

   

28,406

 

Debt to Book Capitalization at March 31, 2024:  50%

Internalization for the three months ended March 31, 2024:  58%

Days Sales Outstanding for the three months ended March 31, 2024:  39 (23 net of deferred revenue)

Share Information for the three months ended March 31, 2024:

     

Basic shares outstanding

 

257,801,116

Dilutive effect of equity-based awards 

 

681,357

Diluted shares outstanding

 

258,482,473

 

NON-GAAP RECONCILIATION SCHEDULE
(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted EBITDA:

Adjusted EBITDA, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a performance and valuation measure in the solid waste industry.  Management uses adjusted EBITDA as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections defines adjusted EBITDA as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus income tax provision, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion expense, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income.  Waste Connections further adjusts this calculation to exclude the effects of other items management believes impact the ability to assess the operating performance of its business.  This measure is not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate adjusted EBITDA differently. 

   

Three months ended
March 31,

   

2023

 

2024

Net income attributable to Waste Connections

 

$

197,813

 

$

230,054

Plus/(Less): Net income (loss) attributable to noncontrolling interests

   

23

   

(927)

Plus: Income tax provision

   

54,389

   

59,413

Plus: Interest expense

   

68,353

   

78,488

Less: Interest income

   

(2,715)

   

(2,051)

Plus: Depreciation and amortization

   

243,341

   

262,981

Plus: Closure and post-closure accretion

   

4,520

   

9,405

Plus: Impairments and other operating items

   

1,865

   

354

Plus/(Less): Other expense (income), net

   

(3,174)

   

1,823

Adjustments:

           

Plus: Transaction-related expenses(a)

   

2,081

   

9,847

Plus: Fair value changes to equity awards(b)

   

373

   

1,286

Adjusted EBITDA

 

$

566,869

 

$

650,673

             

As % of revenues

   

29.8 %

   

31.4 %

____________________________

(a) 

Reflects the addback of acquisition-related transaction costs.

(b) 

Reflects fair value accounting changes associated with certain equity awards.

 

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except where noted)

Reconciliation of Adjusted Free Cash Flow:

Adjusted free cash flow, a non-GAAP financial measure, is provided supplementally because it is widely used by investors as a liquidity measure in the solid waste industry.  Waste Connections calculates adjusted free cash flow as net cash provided by operating activities, plus or minus change in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment and periodic distributions to noncontrolling interests.  Waste Connections further adjusts this calculation to exclude the effects of items management believes impact the ability to evaluate the liquidity of its business operations.  This measure is not a substitute for, and should be used in conjunction with, GAAP liquidity or financial measures.  Other companies may calculate adjusted free cash flow differently.

   

Three months ended
March 31,

   

2023

 

2024

Net cash provided by operating activities

 

$

442,358

 

$

490,309

Plus/(Less): Change in book overdraft

   

5,421

   

(271)

Plus: Proceeds from disposal of assets

   

1,260

   

1,085

Less: Capital expenditures for property and equipment

   

(175,786)

   

(169,951)

Adjustments:

           

Transaction-related expenses(a)

   

1,249

   

4,976

Pre-existing Progressive Waste share-based grants(b)

   

(2)

   

14

Tax effect(c)

   

(519)

   

(1,369)

Adjusted free cash flow

 

$

273,981

 

$

324,793

             

As % of revenues

   

14.4 %

   

15.7 %

___________________________

(a)   

Reflects the addback of acquisition-related transaction costs.

(b)

Reflects the cash settlement of pre-existing Progressive Waste share-based awards during the period.

(c)   

The aggregate tax effect of footnotes (a) through (b) is calculated based on the applied tax rates for the respective periods.

 

NON-GAAP RECONCILIATION SCHEDULE (continued)
(in thousands of U.S. dollars, except per share amounts)

Reconciliation of Adjusted Net Income attributable to Waste Connections and Adjusted Net Income per Diluted Share attributable to Waste Connections:

Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections, both non-GAAP financial measures, are provided supplementally because they are widely used by investors as valuation measures in the solid waste industry.  Management uses adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections as one of the principal measures to evaluate and monitor the ongoing financial performance of Waste Connections' operations.  Waste Connections provides adjusted net income attributable to Waste Connections to exclude the effects of items management believes impact the comparability of operating results between periods.  Adjusted net income attributable to Waste Connections has limitations due to the fact that it excludes items that have an impact on the Company's financial condition and results of operations.  Adjusted net income attributable to Waste Connections and adjusted net income per diluted share attributable to Waste Connections are not a substitute for, and should be used in conjunction with, GAAP financial measures.  Other companies may calculate these non-GAAP financial measures differently. 

             
   

Three months ended
March 31,

   

2023

 

2024

Reported net income attributable to Waste Connections

 

$

197,813

 

$

230,054

Adjustments:

           

Amortization of intangibles(a)

   

39,282

   

40,290

Impairments and other operating items(b)

   

1,865

   

354

Transaction-related expenses(c) 

   

2,081

   

9,847

Fair value changes to equity awards(d)

   

373

   

1,286

Tax effect(e)

   

(11,024)

   

(13,162)

Adjusted net income attributable to Waste Connections

 

$

230,390

 

$

268,669

Diluted earnings per common share attributable to Waste Connections' common shareholders:

           

Reported net income

 

$

0.77

 

$

0.89

Adjusted net income

 

$

0.89

 

$

1.04

____________________________

(a)   

Reflects the elimination of the non-cash amortization of acquisition-related intangible assets.

(b) 

Reflects adjustments for impairments and other operating items.

(c)   

Reflects the addback of acquisition-related transaction costs.

(d)   

Reflects fair value accounting changes associated with certain equity awards.

(e)   

The aggregate tax effect of the adjustments in footnotes (a) through (d) is calculated based on the applied tax rates for the respective periods.

 

SOURCE Waste Connections, Inc.