Rising solid waste prices and acquisitions drove Toronto-based Waste Connections Inc. to “exceed expectations” in the third quarter.
Revenue in the third quarter totaled $1.88 billion, up from approximately $1.6 billion in the same quarter in 2021. Waste Connections reports that his third quarter operating profit was $326.8 million. Operating income for the third quarter of 2021 was $285.1 million, including $9.7 million primarily related to transaction costs, impairments and other operating items.
Additionally, Waste Connections reported third quarter net income of $236.9 million, or 92 cents per share on a diluted basis of 257.9 million shares. of the impact of changes in foreign exchange rates on certain liabilities during the period. In the third quarter of 2021, Waste Connections reported net income of $114.4 million, or 44 cents per share on a diluted basis of 261.1 million shares. Or 32 cents per share.
Waste Connections reported third-quarter adjusted net income of $284.9 million, or $1.10 per diluted share, versus $233.1 million, or $89 per diluted share, in the third quarter of 2021. was a cent. Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) were $588.1 million, compared with $505.6 million in the third quarter of 2021.
For the first nine months of the fiscal year ended September 30, Waste Connections revenues were $5.343 billion, up from $4.527 billion in the prior year. Operating income was $930.2 million, including $38.5 million primarily attributable to impairments and other operating items and transaction-related charges. In comparison, operating income for the same period in 2021 was $790.3 million, which included impairment charges, fair value movements and $23.7 million. Stock-based compensation and transaction costs.
financial factor
“Strong execution once again outperformed expectations as solid waste pricing continued to accelerate to over 10.1% in the third quarter. [Exploration and Production] Worthing F. Jackman, President and Chief Executive Officer of Waste Connections, said: “As expected, acquisition activity continues to be well above historical levels, with annual revenue of $535 million to be completed in 2022, and an eventual closing expected to be completed by the end of 2023 or early 2023. An additional $35 million will be added under the terms of the agreement.”
He said this quarter’s acquisitions include multimarket solid waste franchises in California and Oregon. Market expansion in Arizona and Texas. New market entry in Pennsylvania, British Columbia and Quebec. Market expansion within the company’s established footprint in Massachusetts.
Jackman added that the company overcame an increasing headwind of 50 basis points, largely due to lower recyclate prices in September. At the company’s Nov. 2 third-quarter earnings call, Jackman said revenue from recycled goods was down about 35% year-over-year. It was expected.
Mary Anne Whitney, executive vice president and chief financial officer of Waste Connections, said the company’s continued pricing push contributed to the decline in recycled commodity prices in the fourth quarter. She added that the company is looking to future challenges related to commodity pricing.
“Starting with the expected impact next year with current pricing, we see a range of 70 basis points or 80 basis points margin to 100 basis points depending on the eventual flow from these declines. “And that’s how we’re thinking about what we need to overcome…when we think about the overall margin that was reported. Remember what we’ve been doing.Make sure you’re compensated for it by the hauler.Secondly, the projects we’re developing now have more recycled products inside. This means that we will handle the processing ourselves so that we are not exposed to paying processing fees to third parties. Part of building is the latest technology that delivers better quality from the back end, which is working to maximize value by de-risking, marketing materials and leveraging bulk. One way, another thing we do.”
Jackman reports about a 15% year-over-year increase in commercial collection revenue, largely due to price. Roll-off revenue increased by about 11%, he said. In addition, the landfill rate per tonne has risen by more than 9%, he said, and revenues have risen by about 3%. He added that special waste tonnage for the period fell by 16%, but related revenues nominally increased year-on-year. He said that compared to the same period in 2021, tons of municipal solid waste fell by 4% in the third quarter, while construction and demolition tons increased by 3%.
Full-year outlook
Waste Connections reported net income of $641.3 million for the first nine months of the year, or $2.49 per share on a diluted basis of 258.1 million shares, primarily as a result of Includes a tax benefit of $18.9 million, or 7 cents per share. The impact of foreign exchange rate fluctuations on certain debt. For the first three quarters of 2021, the company reported his net income of $451.7 million, or $1.72 per share on a diluted basis of 261.9 million shares. , or 32 cents per share.
Adjusted net income for the first nine months of the year was $755.5 million, diluted, compared with $629.5 million, $2.39 per diluted share, for the first three quarters of 2021. $2.93 per share. Adjusted EBITDA for the first nine months of the year was $1.657 billion, compared with $1.424 billion for the first nine months of 2021.
Considering the results for fiscal 2022, Waste Connections says it estimates revenue of approximately $7.19 billion, compared with the company’s previously revised revenue guidance of approximately $7.125 billion. . The company estimates net income at about $836.7 million, and his adjusted EBITDA is estimated at about $2.21 billion, or about 30.7% of revenue.
Additionally, Waste Connections estimates annual capital expenditures at $850 million, in line with initial annual projections. Net cash from operations is expected to be approximately $1,963 million and adjusted free cash flow is expected to be approximately $1,160 million, or approximately 16.1% of earnings. of earnings.
“Our results through the third quarter and the completion of our acquisitions year-to-date enhance the potential for double-digit earnings growth expected in 2023. This is driven by pricing that is expected to remain elevated. In addition, it is driven by rollover contributions from acquisitions already signed or completed year-to-date,” Jackman said. “Additionally, we expect underlying margins to expand to overcome headwinds from the recent decline in recycled commodity prices.”
