WASTE CONNECTIONS REPORTS FOURTH QUARTER 2023 RESULTS AND PROVIDES 2024 OUTLOOK

Fourth Quarter Highlights

• Revenue of $2.036 billion, up 8.9% year over year
• Net income^(a) of $126.8 million, and adjusted EBITDA^(b) of $656.0 million, up 16.4% year over year
• Adjusted EBITDA^(b) margin of 32.2% of revenue, up 200 basis points year over year
• Momentum from accelerating margin expansion and acquisition activity sets up 2024 for outsized growth

Full Year 2023 Highlights

• Revenue of $8.022 billion, up 11.2% year over year
• Net income of $762.8 million, and adjusted net income^(b) of $1.081 billion
• Adjusted EBITDA^(b) of $2.523 billion, up 13.6%, and 31.5% of revenue, up 70 basis points year over year
• Net cash provided by operating activities of $2.127 billion and adjusted free cash flow^(b) of $1.224 billion
• Completes acquisitions with approximately $215 million of total annualized revenue in 2023

Expectations for 2024

• Adjusted EBITDA growth of over 13%
• Outsized adjusted EBITDA^(b) margin expansion of 120 basis points, or 32.7%
• Revenue contribution of approximately 4% from acquisitions already completed
• Additional acquisitions, further increases in values for recovered commodities or reduction of inflationary pressures to provide upside to 2024 outlook

 

TORONTO, Feb. 13, 2024 /PRNewswire/ -- Waste Connections, Inc. (NYSE:WCN) ("Waste Connections" or the "Company") today announced its results for the fourth quarter of 2023 and outlook for 2024.   

"Adjusted EBITDA^(b) margin expansion of 200 basis points in Q4 capped off a remarkable year for Waste Connections, driven by solid execution and continued improvement in operating trends.  Solid waste organic growth led by 8.7% core pricing was bolstered by improvements in commodity-driven revenues during the quarter, providing momentum for 2024.  Acquisition activity also accelerated into year-end, as we announced the acquisition of the $225 million (US$) revenue E&P waste disposal-oriented assets of Secure Energy in Western Canada, which closed February 1^st, bringing expected 2024 acquisition revenue contribution to approximately $325 million, with dialogue ongoing," said Ronald J. Mittelstaedt, President and Chief Executive Officer.

"Looking at our differentiated results during the full year 2023, we delivered 70 basis points adjusted EBITDA^(b)  margin expansion after overcoming 60 basis points in headwinds from recovered commodity values to report industry-leading margin of 31.5%.  Double-digit growth in both revenue and adjusted EBITDA^(b) from price-led organic solid waste growth and outsized acquisition contribution, along with disciplined execution and focus on quality of revenue, drove adjusted free cash flow^(b) of $1.224 billion, or 15.3% of revenue," added Mr. Mittelstaedt.  "Moreover, both employee turnover and safety incident rates exited 2023 at multi-year lows, setting up 2024 for continued improvement in trends, along with the opportunity for outsized margin expansion." 

Mr. Mittelstatedt concluded, "We are extremely pleased by our 2023 results and our positioning for outsized growth in 2024.  We applaud the resilience of our 23,000 dedicated employees who enabled us to deliver on our commitments and once again drive industry-leading results.  Their efforts have already positioned us for 120 basis points adjusted EBITDA^(b) margin expansion  in 2024 on approaching double-digit revenue growth, with upside from continued improvement in recovered commodity values or inflationary pressures, as well as any additional acquisition activity."

Q4 2023 Results

Revenue in the fourth quarter totaled $2.036 billion, up from $1.869 billion in the year ago period.  Operating income was $224.5 million, which included $169.6 million in impairments primarily associated with adjustments to landfill closure and post-closure costs and $2.9 million primarily associated with transaction-related expenses.  This compares to operating income of $312.0 million in the fourth quarter of 2022, which included $4.7 million primarily in transaction-related expenses.  Net income in the fourth quarter was $126.8 million, or $0.49 per share on a diluted basis of 258.3 million shares.  In the year ago period, the Company reported net income of $194.4 million, or $0.75 per share on a diluted basis of 258.0 million shares.   

Adjusted net income^(b) in the fourth quarter was $285.5 million, or $1.11 per diluted share, up from $229.8 million, or $0.89 per diluted share, in the prior year period.  Adjusted EBITDA^(b) in the fourth quarter was $656.0 million, as compared to $563.6 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.

Full Year 2023 Results

For the year ended December 31, 2023, revenue was $8.022 billion, up from $7.212 billion in the year ago period.  Operating income was $1.236 billion, which included $238.8 million primarily related to adjustments associated with landfill closure and post-closure costs and other impairments, $10.7 million associated with transaction-related expenses and $14.4 million primarily related to executive separation costs and fair value changes to equity awards.  In the year ago period, operating income was $1.242 billion, which included $43.2 million primarily attributable to transaction-related expenses and impairments and other operating items.

Net income for the year ended December 31, 2023 was $762.8 million, or $2.95 per share on a diluted basis of 258.1 million shares.  In the year ago period, the Company reported net income of $835.7 million, or $3.24 per share on a diluted basis of 258.0 million shares.  

Adjusted net income^(b) for the year ended December 31, 2023 was $1.081 billion, or $4.19 per diluted share, as compared to $985.3 million, or $3.82 per diluted share, in the year ago period. Adjusted EBITDA^(b) for the year ended December 31, 2023 was $2.523 billion, up from $2.221 billion in the prior year period.

2024 Outlook

Waste Connections also announced its outlook for 2024, which assumes no change in the current economic environment.  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 at approximately $8.750 billion;
• Net income is estimated at approximately $1.096 billion;
• Adjusted EBITDA^(b) is estimated at approximately $2.860 billion and 32.7% of revenue, up 120 basis points year over year;
• Net cash provided by operating activities is estimated at approximately $2.350 billion;
• Capital expenditures are estimated at $1.150 billion, including $150 million for Renewable Natural Gas (RNG) facilities; and
• Adjusted free cash flow^(b) is estimated at $1.200 billion, including $150 million in RNG-related capex and $75 million in closure-related outlays at the Chiquita Canyon Landfill; adjusted free cash flow^(b) normalized for RNG and Chiquita outlays is estimated at $1.425 billion.

Q4 2023 Earnings Conference Call

Waste Connections will be hosting a conference call related to fourth quarter earnings on February 14^th 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 February 21, 2024, by calling 877-344-7529 (within North America) or 412-317-0088 (international) and entering Passcode #4262752.

Waste Connections will be filing a Form 8-K on EDGAR and on SEDAR (as an "Other" document) prior to markets opening on February 14^th, providing the Company's first 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 44 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 –

                                                            

 

 

 

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 and twelve month periods ended December 31, 2023:

Revenue Breakdown: The following table reflects a breakdown of our revenue for the three month periods ended December 31, 2022 and 2023:

Contribution from Acquisitions: The following table reflects revenues from acquisitions, net of divestitures, for the three and twelve month periods ended December 31, 2022 and 2023:

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 and twelve month periods ended December 31, 2022 and 2023:

Debt to Book Capitalization as of December 31, 2023:  47%

Internalization for the three months ended December 31, 2023:  55%

Days Sales Outstanding for the three months ended December 31, 2023:  39 (23 net of deferred revenue)

Share Information for the three months ended December 31, 2023:

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, plus loss on early extinguishment of debt.  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. 

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.

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 a valuation measure 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. 

2024 OUTLOOK

NON-GAAP RECONCILIATION SCHEDULE

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

 

 

View original content to download multimedia:https://www.prnewswire.com/news-releases/waste-connections-reports-fourth-quarter-2023-results-and-provides-2024-outlook-302061005.html

SOURCE Waste Connections, Inc.