Waste Connections Sees Uptick in Solid Waste Pricing, Excels in Q1 2022

As the company enters its 25th anniversary year, Waste Connections (WC) reported a 'better than expected' Q1 2022 on accelerated acquisition activity and volume growth.

CEO and President Worthing F. Jackman said that $175 million in annualized revenues have closed to date, which the company expects to be "another outsized year of such activity, for which we remain well-positioned."

Although inflationary pressures continue to challenge the waste and recycling industry, solid waste pricing growth has been the catalyst for underlying margin expansion. Still, the Texas-based waste services provider saw a 50 basis point year-over-year decline in adjusted EBITDA in Q1, with a 90 basis points combined margin impact due to $10 million of frontline pandemic-related support distributed in January and a completed acquisition.

"Looking ahead to Q2, we expect another sequential increase in both for pricing surcharges, with all in price growth exceeding 8 percent," Jackman stated, citing E&P waste activity and efficient operational execution.

Waste Connections reported an adjusted free cash flow generation of more than $320 million, or 19.5 percent of revenue in the first quarter of 2022. The company expects to meet or exceed the $1.150 billion full-year outlook for full-year adjusted cash flow.

"We're fairly pleased with our start to the year particularly given the challenges of record levels of inflation magnified by geopolitical events, ongoing supply chain disruptions and labor constraints. as well as the overhangs and COVID-related variant," Jackman concluded. "As has been our focus throughout the pandemic, we have continued to provide outsized-level support for the health and welfare of our employees and their families. To that end, we're also getting back on a regular cadence of in-person training and other opportunities to sget together for shared celebrations, recognition and collaboration."

First-quarter revenues reached $1.646 billion, up nearly 18 percent from $1.396 billion year over year (YOY). WC stated operating income as $273.9 million, up from $238.4 million in the previous year, or 14.9 percent. 

The company reported net income in Q1 2022 of $180.3 million, an increase YOY of 12.5 percent from $160.3 million the previous year. 

Referencing its sustainability efforts, WC noted the reach and impact has begun to take place for its long-term Environmental, Social and Governance goals. The company has pledged more than $500 million in investments to meet its targets, which include "reducing emissions, increasing resource recovery of both recyclable commodities and clean energy fuels, reducing reliance on off-site disposal for landfill leachate, further improving safety through reduced incidents and enhancing employee engagement through improved voluntary turnover and Servant Leadership scores." 

"We're fairly pleased with our start to the year particularly given the challenges of record levels of inflation magnified by geopolitical events, ongoing supply chain disruptions and labor constraints. as well as the overhangs and COVID-related variant," Jackman concluded. "As has been our focus throughout the pandemic, we have continued to provide outsized-level support for the health and welfare of our employees and their families. To that end, we're also getting back on a regular cadence of in-person training and other opportunities to get together for shared celebrations, recognition and collaboration."

Q1 2022 Highlights

Revenue: $1.646 billion 
Net Income: $180.3 million
Adjusted Net Income: $213 million (Q1 2021 $185.5 million)
Adjusted EBITDA: $502 million (Q1 2021: $433 million)