Waste nections(WCN)2024-07-25 10:03Revenue Growth - Total revenues increased by $227.1 million, or 11.2%, to $2.248 billion for the three months ended June 30, 2024, compared to $2.021 billion for the same period in 2023[169]. - Acquisitions closed during the three and six months ended June 30, 2023, contributed an increase of $123.4 million and $204.0 million to revenues, respectively[170]. - The net increase in prices charged to customers at existing operations was $131.2 million for the three months ended June 30, 2024, consisting of $135.7 million in core price increases[171]. - Revenues from sales of recyclable commodities increased by $15.2 million and $30.6 million for the three and six months ended June 30, 2024, respectively, attributed to higher average commodity pricing[175]. - Other revenues increased by $9.7 million during the three months ended June 30, 2024, primarily due to higher landfill gas revenues[177]. - Revenue for the three months ended June 30, 2024, increased by $35.0 million to $453.9 million compared to $418.9 million for the same period in 2023, driven by price increases and acquisitions[234]. - Overall revenue for the six months ended June 30, 2024, reached $4,320.8 million, with an EBITDA of $1,348.4 million, resulting in a margin of 31.2%[236]. Operating Performance - Operating income for the three months ended June 30, 2024, was $424.7 million, representing an 18.8% margin compared to 17.0% in the same period of 2023[169]. - Operating income for the three months ended June 30, 2024, increased by $80.6 million, or 23.4%, to $424.7 million compared to $344.1 million for the same period in 2023[205]. - For the six months ended June 30, 2024, operating income rose by $132.7 million, or 20.1%, to $791.5 million from $658.8 million in the prior year[207]. - Operating income as a percentage of revenues increased by 1.8 percentage points to 18.8% for the three months ended June 30, 2024, compared to 17.0% for the same period in 2023[209]. - EBITDA for the three months ended June 30, 2024, rose by $14.8 million to $134.4 million, resulting in a margin of 29.6%, up from 28.5% in the prior year[235]. - EBITDA for the Southern segment increased by $8.8 million to $138.5 million, with a margin of 31.5%, compared to 31.3% in the previous year[241]. - EBITDA for the Eastern segment increased by $16.6 million to $103.1 million, achieving a margin of 26.7%, up from 25.2% in the prior year[244]. - EBITDA for the Central segment rose by $7.8 million to $138.8 million, with a margin of 36.0%, compared to 35.5% in the previous year[247]. Cost and Expenses - Total cost of operations increased by $103.7 million, or 8.7%, to $1.301 billion for the three months ended June 30, 2024, compared to $1.197 billion for the same period in 2023[178]. - Operating costs at existing operations increased by $48.4 million, primarily due to higher labor and recurring incentive compensation expenses of $17.5 million and an increase in risk management expenses of $5.1 million[179]. - SG&A expenses increased by $12.5 million, or 5.8%, to $228.9 million for the three months ended June 30, 2024, from $216.4 million for the same period in 2023[185]. - Depreciation expense increased by $27.9 million, or 13.1%, to $241.2 million for the three months ended June 30, 2024, from $213.3 million for the same period in 2023[192]. - Amortization of intangibles expense increased by $5.0 million, or 13.0%, to $44.1 million for the three months ended June 30, 2024, from $39.1 million for the same period in 2023[195]. - Cost of operations as a percentage of revenues decreased by 1.3 percentage points to 57.9% for the three months ended June 30, 2024, from 59.2% for the same period in 2023[183]. Net Income and Taxes - Net income attributable to Waste Connections was $275.5 million for the three months ended June 30, 2024, or 12.2% of revenues, compared to $209.2 million, or 10.3%, in the prior year[169]. - Income taxes for the three months ended June 30, 2024, increased by $12.0 million to $80.6 million, with an effective tax rate of 22.6% compared to 24.7% in the prior year[222]. - Reported net income attributable to Waste Connections for the six months ended June 30, 2024, was $505,531 thousand, compared to $407,021 thousand in 2023, reflecting a 24.2% increase[294]. - Adjusted net income attributable to Waste Connections for the six months ended June 30, 2024, was $588,714 thousand, a 19.5% increase from $492,723 thousand in 2023[294]. Cash Flow and Investments - Net cash provided by operating activities increased by $85.0 million to $1.102 billion for the six months ended June 30, 2024, from $1.017 billion for the same period in 2023[261]. - Net cash used in investing activities increased by $1.189 billion to $1.794 billion for the six months ended June 30, 2024, compared to $604.6 million for the same period in 2023[264]. - Net cash provided by financing activities increased by $1.091 billion to $701.9 million for the six months ended June 30, 2024, from a net cash used of $389.3 million for the same period in 2023[264]. - Cash dividends paid during the six months ended June 30, 2024, amounted to $147.3 million, compared to $131.1 million for the same period in 2023[266]. - Cash paid for acquisitions increased by $1.223 billion during the period[267]. - Capital expenditures for property and equipment totaled $387.2 million for the six months ended June 30, 2024, with an expected total of approximately $1.150 billion for 2024[270]. Debt and Financing - Long-term borrowings increased by $1.135 billion, with a net increase of $907.2 million during the six months ended June 30, 2024[267]. - The company has $7.779 billion in long-term debt obligations, with significant payments due in the coming years[279]. - As of June 30, 2024, $1.774 billion was outstanding under the revolving credit facility, with $38.9 million in standby letters of credit[277]. - The company completed a public offering of $750.0 million aggregate principal amount of 5.00% Senior Notes due 2034[271]. Market and Economic Factors - Inflationary pressures have been observed, particularly in fuel, materials, and labor costs, but the company believes it can pass through certain cost increases to customers[296]. - A $0.10 per gallon increase in diesel fuel prices would decrease pre-tax income by approximately $2.5 million during the second half of 2024[307]. - A 10% decrease in average recycled commodity prices would impact revenues by $10.8 million for the six months ended June 30, 2024, compared to $6.8 million for the same period in 2023[308]. - A $0.01 change in the Canadian dollar to U.S. dollar exchange rate would affect annual revenue by approximately $18.0 million and EBITDA by $8.0 million[309]. Operational Insights - The company managed operations through six geographic solid waste operating segments for the six months ended June 30, 2024[226]. - For the six months ended June 30, 2024, the total disposal tonnage at owned operational landfills was 25,587 thousand tons, an increase of 4.2% from 24,554 thousand tons in 2023[287]. - Adjusted EBITDA for the six months ended June 30, 2024, was $1,382,485 thousand, up 15.6% from $1,195,756 thousand in 2023[291]. Internal Controls and Compliance - The company has evaluated its disclosure controls and procedures, concluding they were effective as of June 30, 2024[312]. - There were no changes in internal control over financial reporting that materially affected the company during the quarter ended June 30, 2024[313].