Waste nections(WCN) - 2024 Q3 - Quarterly Results

Q3 2024 Earnings Release Overview Third Quarter 2024 Highlights Waste Connections reported strong third-quarter 2024 results, exceeding expectations and leading to an increased full-year outlook. Revenue grew 13.3% year-over-year to $2.338 billion, driven by solid waste core pricing and acquisition contributions. Adjusted EBITDA margin expanded by 120 basis points to 33.7%, and the company raised its quarterly dividend by 10.5% Q3 2024 Key Financial Metrics | Metric | Q3 2024 Value | Year-over-Year Change | | :--- | :--- | :--- | | Revenue | $2.338 billion | +13.3% | | Net Income | $308.0 million | - | | Adjusted EBITDA | $787.4 million | +17.3% | | Adjusted EBITDA Margin | 33.7% | +120 bps | | Net Income per Share | $1.19 | - | | Adjusted Net Income per Share | $1.35 | - | - The company increased its regular quarterly dividend by 10.5%, reflecting strong operating performance and free cash flow generation[1][3] - Acquisitions are on pace to total over $700 million in annualized revenue for 2024, with an estimated 2% rollover revenue contribution expected in 2025[1][3] Management Commentary The CEO highlighted strong operational execution, with 6.8% core pricing in solid waste and improved volumes driving results above expectations. The company noted continued progress in employee retention, with voluntary turnover improving for the eighth consecutive quarter. Management anticipates high single-digit adjusted EBITDA growth in 2025, supported by revenue carryover from a record year of acquisition activity - Solid waste growth was led by 6.8% core pricing, supplemented by incremental acquisition contributions and a 90 basis point sequential improvement in solid waste volumes[2] - Employee retention has improved significantly, with voluntary turnover declining for the eighth consecutive quarter, resulting in multi-year reductions of over 40%[3] - The company expects high single-digit adjusted EBITDA growth in 2025, driven by mid to high single-digit revenue growth, including about 2% carryover from 2024's acquisition activity[3] Financial Performance Q3 2024 Results In Q3 2024, revenue increased to $2.338 billion from $2.065 billion in Q3 2023. Net income rose to $308.0 million ($1.19 per share) from $229.0 million ($0.89 per share) in the prior-year period. Adjusted EBITDA saw significant growth to $787.4 million, up from $671.2 million year-over-year Q3 Financial Performance Comparison (2024 vs. 2023) | Metric | Q3 2024 | Q3 2023 | | :--- | :--- | :--- | | Revenue | $2,338.0 million | $2,065.0 million | | Operating Income | $475.3 million | $353.0 million | | Net Income | $308.0 million | $229.0 million | | Diluted EPS | $1.19 | $0.89 | | Adjusted Net Income | $350.0 million | $303.1 million | | Adjusted Diluted EPS | $1.35 | $1.17 | | Adjusted EBITDA | $787.4 million | $671.2 million | Nine Months Year-to-Date (YTD) Results For the first nine months of 2024, revenue grew to $6.659 billion from $5.986 billion in the same period of 2023. Net income increased to $813.6 million ($3.15 per share) from $636.0 million ($2.46 per share). Adjusted EBITDA for the period was $2.170 billion, compared to $1.867 billion in the prior year YTD Financial Performance Comparison (2024 vs. 2023) | Metric | Nine Months 2024 | Nine Months 2023 | | :--- | :--- | :--- | | Revenue | $6,659.0 million | $5,986.0 million | | Operating Income | $1,267.0 million | $1,012.0 million | | Net Income | $813.6 million | $636.0 million | | Diluted EPS | $3.15 | $2.46 | | Adjusted Net Income | $938.7 million | $795.8 million | | Adjusted Diluted EPS | $3.63 | $3.08 | | Adjusted EBITDA | $2.170 billion | $1.867 billion | Updated 2024 Full Year Outlook Full Year 2024 Guidance Waste Connections has raised its full-year 2024 outlook, now estimating revenue of approximately $8.9 billion and adjusted EBITDA of $2.910 billion. This represents a $150 million increase in the revenue forecast and a $50 million increase in the adjusted EBITDA forecast from the original outlook. Capital expenditures and adjusted free cash flow estimates remain in line with original guidance Updated Full Year 2024 Outlook | Metric | Updated 2024 Outlook | Change from Original Outlook | | :--- | :--- | :--- | | Revenue | ~$8.9 billion | +$150 million | | Net Income | ~$1.082 billion | - | | Adjusted EBITDA | ~$2.910 billion | +$50 million | | Capital Expenditures | ~$1.150 billion | In line | | Net Cash from Operations | ~$2.342 billion | In line | | Adjusted Free Cash Flow | ~$1.200 billion | In line | - The updated outlook assumes no change in the current economic environment and excludes the impact of any additional acquisitions that may close during the year[8] Financial Statements Condensed Consolidated Statements of Net Income The income statement for the nine months ended September 30, 2024, shows a 11.2% increase in revenues to $6.66 billion. Operating income grew by 25.2% to $1.27 billion, and net income attributable to Waste Connections increased by 27.9% to $813.6 million compared to the same period in 2023 Nine Months Ended Sept 30 - Income Statement Highlights (in thousands) | Line Item | 2024 | 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenues | $6,659,308 | $5,986,342 | +11.2% | | Operating income | $1,266,849 | $1,011,794 | +25.2% | | Net income attributable to Waste Connections | $813,577 | $636,047 | +27.9% | | Diluted EPS | $3.15 | $2.46 | +28.0% | Condensed Consolidated Balance Sheets As of September 30, 2024, total assets increased to $20.10 billion from $17.92 billion at year-end 2023, primarily driven by growth in property & equipment, goodwill, and intangible assets. Total liabilities rose to $11.83 billion from $10.22 billion, largely due to an increase in long-term debt. Total equity increased to $8.26 billion Balance Sheet Highlights (in thousands) | Line Item | Sept 30, 2024 | Dec 31, 2023 | | :--- | :--- | :--- | | Total current assets | $1,355,132 | $1,141,785 | | Property and equipment, net | $8,234,162 | $7,228,331 | | Goodwill | $7,922,757 | $7,404,400 | | Total assets | $20,095,364 | $17,915,876 | | Total current liabilities | $1,754,033 | $1,687,932 | | Long-term debt | $8,160,538 | $6,724,771 | | Total liabilities | $11,833,909 | $10,218,095 | | Total equity | $8,261,455 | $7,697,781 | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2024, net cash provided by operating activities was $1.66 billion, a slight increase from $1.57 billion in the prior year. Net cash used in investing activities increased significantly to $2.65 billion, driven by $2.01 billion in payments for acquisitions. Net cash provided by financing activities was $1.04 billion, reflecting proceeds from long-term debt Nine Months Ended Sept 30 - Cash Flow Highlights (in thousands) | Line Item | 2024 | 2023 | | :--- | :--- | :--- | | Net cash provided by operating activities | $1,659,998 | $1,570,876 | | Net cash used in investing activities | ($2,645,810) | ($1,185,613) | | Payments for acquisitions, net | ($2,010,274) | ($573,185) | | Capital expenditures | ($659,302) | ($615,554) | | Net cash provided by (used in) financing activities | $1,040,357 | ($366,536) | Additional Statistics and Non-GAAP Reconciliations Key Operating Metrics In Q3 2024, solid waste internal growth was 5.4%, driven by a strong 6.8% in core pricing, which offset a 1.9% volume decline. Solid Waste Collection remains the largest revenue segment at 69.2%. Revenue from acquisitions contributed $161.0 million in the quarter, a significant increase from $102.9 million in Q3 2023 Solid Waste Internal Growth (Q3 2024) | Component | Growth Rate | | :--- | :--- | | Core Price | 6.8% | | Surcharges | (0.3%) | | Volume | (1.9%) | | Recycling | 1.0% | | Foreign Exchange Impact | (0.2%) | | Total | 5.4% | Revenue Breakdown (Q3 2024) | Segment | Revenue (million) | % of Total | | :--- | :--- | :--- | | Solid Waste Collection | $1,617.4 | 69.2% | | Solid Waste Disposal and Transfer | $459.8 | 19.6% | | Solid Waste Recycling | $67.1 | 2.9% | | E&P Waste Treatment, Recovery and Disposal | $147.3 | 6.3% | | Intermodal and Other | $46.9 | 2.0% | - Revenue from acquisitions, net of divestitures, increased to $161.0 million in Q3 2024 from $102.9 million in Q3 2023[20] Non-GAAP Reconciliations The report provides detailed reconciliations for non-GAAP measures including Adjusted EBITDA, Adjusted Free Cash Flow, and Adjusted Net Income. These adjustments primarily exclude items like amortization of intangibles, impairments, transaction-related expenses, and fair value changes to equity awards to provide a clearer view of ongoing operational performance and liquidity - Adjusted EBITDA is reconciled from net income by adding back taxes, interest, D&A, and other specific items like transaction-related expenses and impairments to better assess operating performance[24][25] - Adjusted Free Cash Flow is calculated starting from net cash from operating activities, adjusting for capital expenditures, asset sale proceeds, and other items like transaction costs to measure liquidity[26][27] - Adjusted Net Income excludes non-cash amortization of intangibles, impairments, transaction costs, and other items to improve comparability of operating results between periods[29][30]