GFL Delivers 10.3 Percent Q3 Revenue Growth, Boosted By Core Pricing

GFL (NYSE: GFL) (TSX: GFL) delivered 10.3 percent total revenue growth in Q3 2023.

Solid waste core pricing, which reached 8.8 percent, boosted the company's earnings. Patrick Dovigi, GFL CEO and founder, commented that the quarterly results "exceeded expectations."

"We also saw significant margin improvement during this quarter across both our lines of business, with Solid Waste Adjusted EBITDA margin up 250 bps year over year, inclusive of headwinds from M&A, commodity pricing and fuel, and Environmental Services Adjusted EBITDA margin up 440 bps" he said. "These results are a testament to the strength of our business and our ability to execute on the many self-help levers in our portfolio."  

Revenue grew to $1.89 billion in Q3, which resulted from double-digit percentage growth, excluding the impact of divestitures. While the company experienced nearly $325 million in annualized revenue due to merger and acquisition activity, its main focus continues to be on base pricing strategies.

Dovigi stated that GFL's organic initiatives are now outpacing M&A activity.

"Since we went public in March of 2020, We have more than doubled the size of the business, while at the same time shaping a platform and asset base that will now drive the execution of our differentiated growth strategy in the coming years," he said....."Our base pricing strategies are working, and will continue to mature, ancillary services are significantly underutilizing our portfolio today, and we will see significant runway as we implement the well-defined industry playbook in this area."

GFL divested its solid waste operations in Colorado and New Mexico markets to Phoenix-based Republic Services, in June 2023. The company has finalized 11 acquisitions in Q3, with another four expected to close after the end of the quarter.

"We have done a large platform-type acquisition that we needed to establish the base," Dovigi said. "We do not need any further platforms to execute our strategy. We have no plans to shift our focus away from our core solid waste and environmental services businesses by seeking large acquisitions outside of the core."

As the company balances both short- and long-term objectives, Dovigi said it is focused on value-creating opportunities rather than boosting results by 10 or 15 basis points with an acquisition, which does not align with GFL's overall goals.

GFL also has leveraged Canada's extended producer responsibility (EPR) legislation to drive organic growth in renewable natural gas and recycling.

"Our ongoing focus on optimizing price and managing costs to drive higher underlying profitability continues to yield exceptional operating results in positions for continued success in the future," Dovigi said to investors.

Q3 2023 Highlights:

Revenue: $1.89 billion, up 10.3 percent YOY
Adjusted EBITDA: $530.3 million, up 12 percent YOY
Net Income from continuing operations: $18.3 million
Adjusted Free Cash Flow: $276 million
Solid Waste Revenue: $1.502.5 billion, including organic growth of 4.2 percent driven predominantly by core pricing increases.
Environmental Services Revenue: $387.5 million, including organic growth of 6.9% due to higher industrial collection and processing activity.