Waste Connections CEO talks earnings, commodity headwinds and more

Plus, former CEO Ron Mittelstaedt addresses his new position during a Q2 earnings conference call.


Waste Connections, headquartered in Toronto, announced its second-quarter financial earnings July 29, reporting revenue of $1.370 billion, which is up from $1.240 billion in the same period a year ago.

More second-quarter financial highlights include:

  • A revenue increase of up 10.5 percent from last year. 
  • Reporting a 6 percent solid waste price and volume growth, exceeding the high end of the outlook. 
  • Net income attributable to Waste Connections of $148.8 million, or $0.56 per share. 
  • Adjusted net income attributable to Waste Connections of $181.3 million, or $0.69 per share.
  • Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $425.3 million, or 31.1 percent of revenue. 
  • Year-to-date net cash provided by operating activities of $753.0 million. 
  • Year-to-date adjusted free cash flow of $503.9 million, or 19.3 percent of revenue.  Year-to-date acquired annualized revenue of approximately $160 million.

Following Worthing Jackman’s recent appointment as CEO of Waste Connections, he and former CEO Ron Mittelstaedt, who has returned from his temporary leave of absence and assumed the role of executive chairman of the board of directors, held a conference call July 30 to discuss the results.

Here are some highlights from the call:

Mittelstaedt on returning to the company

“I'd like to thank our employees, everyone on today's call and many others for the thousands of cards and expressions of support that my family and I have received over the past several months. I'm excited to be back and pleased I've been able to assume the role of executive chairman. I remain committed to the company and, as a continuing employee, look forward to assisting in several areas, including culture, strategy and acquisition. Exiting the day-to-day responsibilities [will] provide sufficient time for me to continue to address health matters affecting my family. No matter who you are, regardless of your profession or title, families should always come first.

“I look forward to continued success for the company under Worthing, who has been an integral part of the leadership team driving the success of Waste Connections for over 20 years. When I kept early stepped aside earlier this year, Worthing assumed the role as our principal executive officer, consistent with a management professional plan approved by our board. He and our long-tenured team did not miss a beat, continuing to execute our growth strategy and drive further improvements in safety, employee development and retention while moving the company forward in many areas. Our board has great confidence in him as our new CEO, and we believe that he is the right person to lead the company.”

Jackman on overcoming commodity headwinds

“Solid waste pricing growth of over 5 percent, along with a sequential 200 basis points increase in solid waste volumes, drove underlying solid waste collection, transfer and disposal margin expansion of approximately 70 basis points in the quarter. This helped offset a portion of the impact from lower than expected contributions from higher margin, commodity-related activities, primarily recycling and renewable fuels, and the dilutive margin impact of acquisitions completed since the prior-year period.

“Our team delivered on the commitments within their control, but the ongoing erosion in recycled commodity values and a precipitous drop in renewable fuel credits impacted overall results. In spite of these commodity-related headwinds, we have already generated adjusted free cash flow of more than $500 million, putting us on track to meet our original expectation for underlying adjusted free cash flow for the full year.”

Jackman on waste volumes

“As noted on prior calls, we expect to fully anniversary the impact of shedding by the end of this year. Taking these impacts into consideration, we estimate the underlying volumes were up almost 1.5 percent in the period, and we saw trends improved during the quarter as activity picked up with improving weather in many markets. On the subject of increased volumes, we've also seen an above-average success rate on municipal contract bids year-to-date, which will supplement underline volume growth in 2020 and, in some cases, should position us for additional growth opportunities in certain markets where we would not otherwise have a presence. …

“Solid waste landfill tonnage increased about 6 percent, the strongest year-over-year increase we have reported since 2017, led by strength in both MSW [municipal solid waste] and special waste. MSW was up 6 percent on increases in all regions in the U.S. and also in Canada, led by both East Coast, most notably New York, and the West Coast in California.

“Special waste was up 9 percent with increases in all regions except our central region, which includes Minnesota, Oklahoma and Colorado, where weather continues to be a factor driving a slower seasonal ramp in Q2. C&D [construction and demolition] tons were down about 1 percent, mostly on decline in Canada.”

Jackman on acquisition activity

“Looking at acquisition activity, we've already closed of what we will consider an above-average amount of acquisitions for the year and continue to see an elevated amount of seller interest. Year-to-date, our acquisitions totaled approximately 160 million in annualized revenue, including most recently a new integrated market in Texas, plus a significant expansion of our footprint we established last year, in addition [to] recently completed tuck-ins in California, Kentucky, New York, Texas and Quebec. …

“We’ve already … completed a typical year of acquisition activity, and we are well-positioned for additional acquisition and organic growth opportunities while maintaining flexibility to increase the return of capital to shareholders. We anticipate announcing another double-digit percentage increase in our … quarterly cash dividend in October, and we are completing the annual renewal of our normal course issuer bid, which authorizes the repurchase of up to 5 percent of our outstanding share.”

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