Waste Connections Reports Strong Q2, Updates 2023 Outlook

Waste Connections, Inc. (TSX/NYSE: WCN) announced its second-quarter results for 2023 today and provided an outlook for the rest of the year.
Ronald J. Mittelstaedt, Waste Connections president and CEO, was pleased with the results from the second quarter, citing solid operational execution leading to an adjusted EBITDA 30 basis points above the company’s outlook. 

The first half of 2023 led Waste Connections to increase full-year estimated adjusted EBITDA to roughly $2.525 billion, expanding that margin to 31.5%.

"The strength of our results reflects our focus on quality of revenue through the shedding of low margin volumes and furthered by strategic acquisitions, including Arrowhead, a $100 million revenue integrated transportation and disposal network with rail access providing enhanced internalization opportunities to our operations across the Northeast,” said Mittelstaedt.

“Already having completed acquisitions with over $160 million in annualized solid waste revenue year to date, we see plenty of runway and opportunity for continued activity throughout the balance of the year. Most importantly, we are encouraged by improving trends in safety and employee retention as we double down on human capital in our decentralized operating model, including through the realignment of our organizational structure with the addition of a sixth region and refinements to our corporate operational structure, and we look forward to driving outsized margin expansion in the second half of 2023 and into 2024.”

Revenue for Waste Connections in the second quarter of 2023 totaled $2.021 billion, which is up $1.816 billion from the same quarter of 2022. Operating income for the company was $344.1 million, including $27.8 million primarily in executive separation costs, impairments and other operating items, and transaction-related expenses. Last year, operating income was $329.6 million for the second quarter, meaning 2023 saw an increase of $14.5 million.

Net income for Q2 2023 came in at $209.2 million ($0.81 per share on a diluted basis of 258.1 million shares). This number is down compared to 2022’s Q2 report, as last year, Waste Connections reported a net income of $244.1 million, or $0.87 a share on a diluted basis of 257.7 million shares. Although adjusted net income was up in 2023 compared to 2022, being reported as $262.3 million for the second quarter, up $5.2 million.
So far in 2023, the first six months have been rather successful for Waste Connections as it is reporting its revenue to be at $3.922 billion so far this year, up $459 million from last year’s first half. Net income is also up for the first half of 2023, coming in at $407 million, up $2.6 million from 2022’s first half.

Looking towards the rest of 2023, Waste Connections has updated its outlook for the remaining six months of the year. The company now anticipates its revenue will be approximately $8.025 billion, down $25 million from the original outlook estimate due to a reduction in fuel and material surcharges of $35 million because of lower fuel costs. Net income is now estimated to be approximately $931 million, with an adjusted EBITDA estimation of $2.525 billion. The original adjusted EBITDA outlook for Waste Connections was a bit lower at $2.5 billion, putting the company on an optimistic pace to end the year.

Q2 2023 Highlights:

Revenue: $2.021 billion

Net Income: $209.2 million

Adjusted Net Income: $262.3 million

Adjusted EBITDA: $628.9 million