GFL Q3 Reports 15% Revenue Growth In Q3 Despite Ongoing COVID-19 Pandemic

Today GFL Environmental (GFL) reported on its third-quarter earnings call that it continues to grow its business despite the ongoing COVID-19 pandemic. The company once again announced its highest ever reported revenue, adjusted EBITDA and adjusted EBITDA margin.

Here’s a quick look at the 3Q 2020 financials:

GFL Founder and CEO Patrick Dovigi said on the earnings call that “we are pleased with the growth today which demonstrates the continued resilience of our business” in light of the COVID-19 pandemic which has not stopped the company from posting the highest EBITDA margins in its corporate history.

With respect to margin growth Dovigi noted, “This increase in margins was largely due to the organic growth in our solid waste business and our disciplined management of our variable costs, resulting in better than expected free cash flow generation for the period.”

Dovigi further noted with respect to growth in their solid waste business, “we continued to see sequential improvements in the commercial activity and volumes in the markets that we serve, driving 2.5% of organic growth in the quarter and resulting in margin expansion of 240 basis points.”

This was driven by solid waste core price and surcharges for the third quarter of 2020 of 3.5%. Meanwhile, solid waste volumes declined 1.7% for the third quarter of 2020, primarily from lower volumes in commercial and industrial collection businesses and post-collection business, due to a decrease in service levels attributable to COVID-19.

He also noted stronger margin growth in their U.S. businesses versus than in their Canadian businesses over the quarter due to differences in pricing.

The company also noted that changing commodity prices and lower diesel costs provided a further net margin benefit. He also noted foreign exchange gains in the company’s Canadian dollar-denominated results because of its U.S. dollar-denominated debt benefiting from depreciation of the U.S. dollar relative to the Canadian dollar during the pandemic economic recovery.

Outside of its primary solid waste business, Dovigi did note however with respect to its liquid waste business that the company “experienced lower sales volume of used motor oil and reduced industrial collection processing activity in its liquid waste business resulting from the temporary suspension of certain customers' operations and deferral of capital expenditures in an effort to mitigate the impact of COVID-19”.

With respect to M&A growth, Dovigi also noted its two acquisitions in recent months including WCA Waste Corporation (which was purchased for $1.2 billion) noting a “well-defined integration plan which is well underway” allowing them to pursue both their “organic and acquisition growth strategy”.

Since the GFL IPO earlier this year, Dovigi also said that they have deleveraged the balance sheet, attracted new equity and leveraged their unique credit profile to reduce borrowing costs and their average cost of capital.

The company also noted incremental risk management steps taken by the company to prioritize safety amid the pandemic which the company has implemented successfully while being able to maintain absenteeism at some of its lowest levels ever.