Waste Connections Outperforms Expectations in Q2

Waste Connections (WCN) announced its Q2 2022 earnings today and all results point to outperformed expectations.

The management team credits accelerated pricing, E&P activity and closed acquisitions for the solid earnings. These positive results helped Waste Connections to overcome increased inflationary pressures and the current challenging environment.

Worthing F. Jackman, president and CEO noted, "Accelerating solid waste pricing and E&P waste activity drove a top-to-bottom beat in the period. Solid waste pricing growth of 8.8% enabled us to overcome increased inflationary pressures during the period and deliver adjusted EBITDA margin in line with our outlook for Q2 and flat on a year over year (YOY) basis excluding the margin dilutive impact from acquisitions completed since the year ago period,". 

The company’s pace of M&A continues to be robust, and management noted on the earnings call that they see it as coast-to-coast and it considers opportunities from the United States and Canada. Jackman said the pipeline is strong and added, "As anticipated, acquisition activity is pacing well above average.  We have closed approximately $245 million in annualized revenues, with another approximately $225 million in total annualized revenue under definitive agreements expected to close during the third quarter, subject to customary closing conditions, and our pipeline remains quite robust. As such, we believe we are well-positioned for double digit revenue growth in 2023 along with margin expansion from continuing solid waste pricing strength and rollover contribution from acquisitions already signed or closed year to date; additional acquisitions expected to close later this year and early next year would provide further growth." 

Here are some financial highlights:

Waste Connections looks to be set up for double-digit sales growth with significant operating leverage in 2023.