WASTE CONNECTIONS REPORTS THIRD QUARTER 2024 RESULTS AND RAISES FULL YEAR OUTLOOK
Better than expected third quarter results drive further increases to full year 2024 outlook
Revenue of $2.338 billion, up 13.3% year over year
Net income(a) of $308.0 million, and adjusted EBITDA(b) of $787.4 million, up 17.3% year over year
Adjusted EBITDA(b) margin of 33.7%, up 120 basis points year over year
Net income of $1.19 per share, and adjusted net income(b) of $1.35 per share
Year to date net cash provided by operating activities of $1.660 billion and adjusted free cash flow(b) of $1.044 billion
Increased regular quarterly dividend by 10.5%
On pace for acquisitions totaling over $700 million in annualized revenue, with an estimated rollover revenue contribution in 2025 of approximately 2%
Increased full year 2024 outlook to $8.9 billion of revenue, up $150 million from original outlook, with net income of $1.082 billion and adjusted EBITDA(b) of $2.91 billion, up $50 million from original outlook
TORONTO, Oct. 23, 2024 /PRNewswire/ -- Waste Connections, Inc. (TSX/NYSE:WCN) ("Waste Connections" or the "Company") today announced its results for the third quarter of 2024.
"We are extremely pleased by the strength of our operating and financial results in the period, positioning for another increase to our full year 2024 outlook, with momentum as we look ahead to 2025. Solid waste growth led by 6.8% core pricing was supplemented by incremental acquisition contributions and 90 basis points sequential improvement in solid waste volumes during the period to drive results above expectations. Solid operational execution enabled us to deliver adjusted EBITDA(b) margin of 33.7% in the third quarter, as expected, up 120 basis points year over year, overcoming margin dilution from acquisitions closed during the quarter and storm-related impacts at quarter-end," said Ronald J. Mittelstaedt, President and Chief Executive Officer.
"Our results also reflect continued progress in employee retention, with voluntary turnover improving for the eighth consecutive quarter, bringing multi-year reductions to over 40%, as we continue to invest in our most important asset, our people," continued Mr. Mittelstaedt. "Further, we anticipate that our innovative approaches to drive continued improvement in employee engagement and retention should position us in 2025 for another year of above average underlying margin expansion in solid waste collection, transfer and disposal. On that basis, we should be positioned for high single-digit adjusted EBITDA(b) growth in 2025 on expected mid to high single-digit revenue growth, including approximately 2% revenue carryover from a record amount of private company acquisition activity expected to be completed in 2024, with upside potential from additional acquisition activity."
Mr. Mittelstaedt concluded, "As anticipated, the strength of our operating performance, free cash flow generation and balance sheet positioned us for another double-digit increase to our quarterly cash dividend, demonstrating once again the compatibility of funding our differentiated growth strategy and acquisition activity, along with an increasing return of capital to shareholders."
Q3 2024 Results
Revenue in the third quarter totaled $2.338 billion, up from $2.065 billion in the year ago period. Operating income was $475.3 million, which included $8.1 million in transaction-related expenses and $3.0 million primarily from impairments and other operating items. This compares to operating income of $353.0 million in the third quarter of 2023 that included $59.2 million primarily in impairments and other operating items and transaction-related expenses. Net income in the third quarter was $308.0 million, or $1.19 per share on a diluted basis of 258.8 million shares. In the year ago period, the Company reported net income of $229.0 million, or $0.89 per share on a diluted basis of 258.2 million shares.
Adjusted net income(b) in the third quarter was $350.0 million, or $1.35 per diluted share, versus $303.1 million, or $1.17 per diluted share, in the prior year period. Adjusted EBITDA(b) in the third quarter was $787.4 million, as compared to $671.2 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 acquisition-related items, as reflected in the detailed reconciliations in the attached tables.
Nine Months Year to Date Results
For the nine months ended September 30, 2024, revenue was $6.659 billion, up from $5.986 billion in the year ago period. Operating income was $1.267 billion, which included $38.2 million primarily attributable to transaction-related expenses, impairments and other operating items and fair value changes to equity awards. This compares to operating income in the prior year period of $1.012 billion, which included $91.3 million primarily attributable to impairments and other operating items, executive separation costs and transaction-related expenses.
Net income for the nine months ended September 30, 2024 was $813.6 million, or $3.15 per share on a diluted basis of 258.6 million shares. In the year ago period, the Company reported net income of $636.0 million, or $2.46 per share on a diluted basis of 258.1 million shares.
Adjusted net income(b) for the nine months ended September 30, 2024 was $938.7 million, or $3.63 per diluted share, compared to $795.8 million, or $3.08 per diluted share, in the year ago period. Adjusted EBITDA(b) for the nine months ended September 30, 2024 was $2.170 billion, as compared to $1.867 billion in the prior year period.
Updated 2024 Outlook
Waste Connections also updated its outlook for 2024, which assumes no change in the current economic environment or underlying economic trends. The Company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items. The outlook provided below is forward looking, and actual results may differ materially depending on risks and uncertainties detailed at the end of this release and in our periodic filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2024 are subject to quarterly fluctuations. See reconciliations in the attached tables.
Revenue is estimated to be approximately $8.9 billion, up $150 million from our original outlook.
Net income is estimated to be approximately $1.082 billion, and adjusted EBITDA(b) is estimated to be approximately $2.910 billion, up $50 million from our original outlook.
Capital expenditures are estimated to be approximately $1.150 billion, in line with our original outlook.
Net cash provided by operating activities is estimated to be approximately $2.342 billion, and adjusted free cash flow(b) is estimated to be approximately $1.200 billion, in line with our original outlook.
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(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
Q3 2024 Earnings Conference Call
Waste Connections will be hosting a conference call related to third quarter earnings on October 24th 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 October 31, 2024, by calling 877-344-7529 (within North America) or 412-317-0088 (international) and entering Passcode #1135108.
Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on October 24th, providing the Company's fourth 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 and 2025 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
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED STATEMENTS OF NET INCOME
THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2024
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)
Three months endedSeptember 30,
Nine months endedSeptember 30,
2023
2024
2023
2024
Revenues
$
2,064,744
$
2,338,488
$
5,986,342
$
6,659,308
Operating expenses:
Cost of operations
1,204,603
1,344,079
3,548,893
3,866,932
Selling, general and administrative
196,316
222,526
606,367
672,110
Depreciation
214,966
248,473
632,347
712,392
Amortization of intangibles
39,405
45,170
117,740
129,584
Impairments and other operating items
56,477
2,897
69,201
11,441
Operating income
352,977
475,343
1,011,794
1,266,849
Interest expense
(69,016)
(83,520)
(204,914)
(244,385)
Interest income
2,833
3,331
6,886
9,391
Other income, net
5,372
4,904
8,346
12,727
Income before income tax provision
292,166
400,058
822,112
1,044,582
Income tax provision
(62,975)
(92,012)
(185,915)
(232,008)
Net income
229,191
308,046
636,197
812,574
Plus/(Less): Net loss (income) attributable to noncontrolling interests
(165)
-
(150)
1,003
Net income attributable to Waste Connections
$
229,026
$
308,046
$
636,047
$
813,577
Earnings per common share attributable to Waste Connections' common shareholders:
Basic
$
0.89
$
1.19
$
2.47
$
3.15
Diluted
$
0.89
$
1.19
$
2.46
$
3.15
Shares used in the per share calculations:
Basic
257,633,703
258,023,661
257,535,408
257,939,935
Diluted
258,229,404
258,756,528
258,110,484
258,601,815
Cash dividends per common share
$
0.255
$
0.285
$
0.765
$
0.855
WASTE CONNECTIONS, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
(in thousands of U.S. dollars, except share and per share amounts)
December 31,2023
September 30,2024
ASSETS
Current assets:
Cash and equivalents
$
78,399
$
115,265
Accounts receivable, net of allowance for credit losses of $23,553 and $23,660 at
December 31, 2023 and September 30, 2024, respectively
856,953
990,896
Prepaid expenses and other current assets
206,433
248,971
Total current assets
1,141,785
1,355,132
