Waste Connections reports ‘better than expected’ Q1 results

Waste Connections Inc., The Woodlands, Texas, has reported “better than expected” operating and financial results for the first quarter of 2024. The report shows revenue totaled $2.073 billion, up 9.1 percent from last year.

Waste Connections CEO Ron Mittelstaedt says the company’s price retention was in line with its expectations, with solid waste core pricing at 7.8 percent.

Reported volume growth of negative 3.8 percent was also in line with the company’s expectations. Mittelstaedt attributes the decline to extreme weather events in January, which the company believes impacted reported volumes by approximately 100 basis points.

“Acquisition activity has already contributed to our strong start to the year, with approximately $375 million in annualized revenue completed to date,” Mittelstaedt says. “In addition to the secure energy divestitures we acquired in February, we've completed acquisitions of over $150 million in annualized solid waste revenue, including a new market entry providing services to customers in Indiana and Southern Michigan.”

RELATED: Waste Connections acquires 30 waste treatment, disposal facilities in Canada

Beyond mergers and acquisitions, Mittelstaedt highlights the company’s renewable natural gas (RNG) facilities, three of which are scheduled to be operational this year. He anticipates an incremental $200 million of annual earnings before interest, taxes, depreciation and amortization (EBITDA) beginning in 2026 from projects currently in development.

The company also saw continued improvements in employee retention and safety. Voluntary turnover decreased sequentially in Q1, making this the company’s sixth consecutive quarter of improvement to levels which are 30 percent below the peaks seen in late 2022. Incident rates declined for the seventh consecutive month. Mittelstaedt says the company saw its best safety performance in years, with monthly incidents down to 3-year lows despite outsized growth from acquisitions.

“We’re excited about the steps we've taken to support employee growth and development with expanded training, including through our in-house driver academies, the second of which will open this summer, and our diesel technician school partnership offering,” Mittelstaedt says. “We expect that these internal efforts will augment the improving dynamics we've seen in employee recruiting, resulting from additional resources and targeted efforts.”

First quarter results

Waste Connections Chief Financial Officer (CFO) Mary Anne Whitney says the company’s first quarter revenue of $2.073 billion was approximately $23 million above the outlook due to incremental acquisition contributions and higher recovered commodity values.

Whitney says beyond solid waste, revenues were better than expected in the first quarter, with recycled commodities, landfill gas and renewable energy credits (RINs) collectively up approximately 50 percent year-over-year and recycled commodity values up approximately 15 percent from earlier this year. Prices for old corrugated containers (OCC) averaged about $130 per ton and RINs averaged approximately $3.10.

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 attributed 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, compared with $197.8 million, or $0.77 per share on a diluted basis of 258 million shares, in Q1 of 2023.

Adjusted net income 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 in the first quarter was $650.7 million, as compared to $566.9 million in 2023. 

Whitney reports revenue in Q2 is estimated to be between $2.2 billion and $2.225 billion. This includes solid waste price plus volume growth of approximately 4 percent. Adjusted EBITDA margin in Q2 is estimated at approximately 32.5 percent, up 140 basis points year-over-year.

“With solid waste pricing largely in place, improving operating trends, higher commodity values and the benefit of what could be a record year of M&A, we are well positioned,” Mittelstaedt says.

Waste Connections’ full first quarter 2024 earnings report can be found here.