Waste Connections' second quarter sees continued momentum, increased revenue

Waste Connections has released its results for the second quarter of 2024 and increased its outlook for the full year.

"Solid operational execution supplemented by incremental acquisitions and increased commodity values drove an across-the-board beat in the second quarter, positioning us for an increase to our full year outlook," said Ronald J. Mittelstaedt, president and chief executive officer at Waste Connections. "Revenue and adjusted EBITDA increased in the quarter by 11.2 percent and 16.4 percent, respectively, as price-led organic solid waste growth and 100 basis points sequential improvement in volumes was augmented by accretive acquisitions. We are extremely pleased by the continued strength of operational execution during the quarter, including sequential improvement in employee retention, as we maintain the strategy that has served to differentiate our results and which positions us for continued outsized growth.

"Given the strength of our performance in the first half of 2024, the momentum from continuing trends and contributions from recent acquisitions, we are raising our full year 2024 outlook to approximately $8.850 billion in revenue and approximately $2.900 billion in adjusted EBITDA, or 32.8 percent adjusted EBITDA margin, exceeding our initial outlook and up 130 basis points as compared to the prior year.

"We are also positioned for a record year of private company acquisition activity in 2024. In addition to year-to-date completed acquisitions with over $500 million in annualized revenue, we have an additional $150 million under definitive agreement, expected to close later this year. Continued balance sheet strength provides the flexibility to fund outsized acquisition activity along with an increasing return of capital to shareholders."

Second quarter 2024 results

Revenue in the second quarter totalled $2.248 billion, up from $2.021 billion in the year-ago period. Operating income was $424.7 million, which included $15.7 million primarily in impairments and other operating items and transaction-related expenses. This compares to operating income of $344.1 million in the second quarter of 2023, which included $27.8 million primarily in executive separation costs, impairments and other operating items, and transaction-related expenses. Net income in the second quarter was $275.5 million, or $1.07 per share on a diluted basis of 258.6 million shares. In the year-ago period, the company reported a net income of $209.2 million, or $0.81 per share on a diluted basis of 258.1 million shares. 

Adjusted net income in the second quarter was $320.0 million, or $1.24 per diluted share, versus $262.3 million, or $1.02 per diluted share, in the prior year period. Adjusted EBITDA in the second quarter was $731.8 million, as compared to $628.9 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 acquisition-related items, as reflected in the detailed reconciliations in the attached tables.

Six months year to date results

For the six months that ended June 30, 2024, revenue was $4.321 billion, up from $3.922 billion in the year-ago period. Operating income, which included $27.2 million primarily attributable to transaction-related expenses and impairments and other operating items was $791.5 million, as compared to operating income of $658.8 million in the prior year period, which included $32.1 million primarily attributable to executive separation costs, impairments and other operating items, and transaction-related expenses.

Net income for the six months ended June 30, 2024, was $505.5 million, or $1.96 per share on a diluted basis of 258.5 million shares. In the year-ago period, the company reported a net income of $407.0 million, or $1.58 per share on a diluted basis of 258.1 million shares. 

Adjusted net income(b) for the six months ended June 30, 2024, was $588.7 million, or $2.28 per diluted share, compared to $492.7 million, or $1.91 per diluted share, in the year-ago period. Adjusted EBITDA for the six months ended June 30, 2024, was $1.382 billion, as compared to $1.196 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 the expensing of transaction-related items. Certain components of the outlook for 2024 are subject to quarterly fluctuations.

• Revenue is estimated to be approximately $8.850 billion, up $100 million from the original outlook.
• Net income is estimated to be approximately $1.087 billion, and adjusted EBITDA is estimated to be approximately $2.900 billion, or about 32.8 percent of revenue, as compared to the original outlook for adjusted EBITDA of $2.860 billion or 32.7 percent of revenue.
• Capital expenditures are estimated to be approximately $1.150 billion, in line with the original outlook.
• Net cash provided by operating activities is estimated to be approximately $2.337 billion, and adjusted free cash flow is estimated to be approximately $1.200 billion, in line with the original outlook.