Waste Connections Q3 Revenue Up 9.8 Percent Year Over Year

Toronto-based Waste Connections, Inc. (TSX/NYSE: WCN) released its third-quarter results for 2023 today, showing revenue growth despite unforeseen challenges in landfill operations.

The company achieved revenue of $2.065 billion in Q3 2023, up from $1.880 billion. The company's operating income stood at $353.0 million, inclusive of $59.2 million in impairments and other operating items. This was partially due to adjustments related to contingent liabilities from prior acquisitions and a non-cash impairment on certain assets. In the same period of 2022, operating income was $326.8 million, with similar adjustments.

"We overcame over $15 million of unforeseen headwinds during the quarter primarily in two areas," Ronald J. Mittelstaedt told investors. "First, an increase of approximately 9 million to already inflated risk related expenses. This development was associated with prior period activity and reflects the higher safety incident rates that accompanied the increase employee turnover in recent years. A reminder that risk is a lagging indicator as claims develop, while turnover is a leading indicator. As we drive down turnover risk expense will improve along with claim frequency and severity. Next, we absorbed over $6 million in additional operating expenses at our Chiquita Canyon landfill in Southern California, where we are managing and working to resolve what is characterized as an elevated temperature landfill or ETL event."

Net income for Q3 2023 was reported at $229.0 million compared year over year to $236.9 million, or $0.92 per diluted share.

Adjusted net income for the same period was $303.1 million, or $1.17 per diluted share, exceeding the previous year's $284.9 million, or $1.10 per diluted share. Adjusted EBITDA for Q3 2023 reached $671.2 million, up from $588.1 million in the same quarter in 2022.

For the first nine months of 2023, Waste Connections reported revenue of $5.986 billion, compared to $5.343 billion in the prior year period. Operating income for this period was $1.012 billion, inclusive of $91.3 million primarily related to impairments, executive separation costs and transaction-related expenses. This compares to operating income of $930.2 million in the first nine months of 2022, with similar adjustments.

The company remains encouraged  in employee retention and expects solid waste collection, transfer, and disposal to "experience above-average margin expansion in 2024." This expansion is predicted to result in high single-digit adjusted EBITDA growth in 2024, supported by mid to high single-digit revenue growth. Waste Connections also anticipates additional growth from acquisitions and commodity-related activities.

Furthermore, the company's strong financial performance has enabled it to increase its quarterly cash dividend.

Overall, Waste Connections, Inc. maintains a positive outlook and aims to navigate challenges while pursuing its growth strategy in the waste management industry.