Waste nections(WCN) - 2025 Q2 - Quarterly Results

Company Announcement & CEO Commentary Second Quarter 2025 Results and Full Year Outlook Update Waste Connections reported Q2 2025 results and updated its full-year outlook, exceeding expectations driven by improved employee retention, record-low safety incidents, and 6.6% core solid waste pricing growth - Improved employee retention and record-low safety incidents, along with 6.6% core solid waste pricing growth, drove a solid waste margin expansion of approximately 70 basis points this period[3] - The company achieved better-than-expected results despite lower-than-anticipated contributions from commodity-related activities and headwinds from sustained economic sluggishness and tariff uncertainty[3] - Completed outsized acquisition activity of approximately $200 million in annualized revenue and maintains a strong acquisition pipeline[3] - The full-year 2025 outlook remains within the February range, projecting approximately 6% revenue growth and a 50 basis point expansion in adjusted EBITDA margin to 33.0%[3] CEO Commentary CEO Ronald J. Mittelstaedt highlighted achievements in operational efficiency and strategic growth, noting strong financial health and free cash flow generation despite macroeconomic headwinds - The company continues to improve in employee retention and safety performance, with 6.6% core solid waste pricing growth driving an approximate 70 basis point expansion in underlying solid waste margins[3] - Completed outsized acquisition activity of approximately $200 million in annualized revenue with a strong ongoing pipeline, supported by a solid financial position and free cash flow generation, providing flexibility for additional acquisitions and increased shareholder capital returns, including share repurchases[3] - Despite increasing headwinds, the full-year 2025 outlook remains within the February range, with expected revenue growth of about 6% and an adjusted EBITDA margin expansion of 50 basis points to 33.0%[3] Financial Performance Overview Second Quarter 2025 Financial Highlights Waste Connections delivered a stronger-than-expected financial performance in Q2 2025, with revenue up 7.1% year-over-year to $2.407 billion, adjusted EBITDA up 7.5% to $786.4 million, and adjusted diluted EPS of $1.29 GAAP Results Summary | Metric | Q2 2025 (in millions USD) | Q2 2024 (in millions USD) | Y/Y Change | | :--- | :--- | :--- | :--- | | Revenue | $2,407.055 | $2,248.166 | +7.1% | | Operating Income | $459.5 | $424.7 | +8.2% | | Net Income | $290.3 | $275.5 | +5.4% | | Diluted EPS | $1.12 | $1.07 | +4.7% | Non-GAAP Adjusted Results Summary | Metric | Q2 2025 (in millions USD) | Q2 2024 (in millions USD) | Y/Y Change | | :--- | :--- | :--- | :--- | | Adjusted Net Income | $333.1 | $320.0 | +4.1% | | Adjusted Diluted EPS | $1.29 | $1.24 | +4.0% | | Adjusted EBITDA | $786.4 | $731.8 | +7.5% | | Adjusted EBITDA Margin | 32.7% | 32.6% | +0.1 pp | Six Months Year to Date Financial Highlights For the six months ended June 30, 2025, Waste Connections' revenue reached $4.635 billion, a 7.3% year-over-year increase, with corresponding growth in operating and net income, and an adjusted diluted EPS of $2.42 GAAP Results Summary | Metric | Six Months 2025 (in millions USD) | Six Months 2024 (in millions USD) | Y/Y Change | | :--- | :--- | :--- | :--- | | Revenue | $4,635.231 | $4,320.819 | +7.3% | | Operating Income | $849.8 | $791.5 | +7.4% | | Net Income | $531.8 | $505.5 | +5.2% | | Diluted EPS | $2.05 | $1.96 | +4.6% | Non-GAAP Adjusted Results Summary | Metric | Six Months 2025 (in millions USD) | Six Months 2024 (in millions USD) | Y/Y Change | | :--- | :--- | :--- | :--- | | Adjusted Net Income | $626.2 | $588.7 | +6.4% | | Adjusted Diluted EPS | $2.42 | $2.28 | +6.1% | | Adjusted EBITDA | $1,499.0 | $1,382.0 | +8.5% | Detailed Financial Statements Condensed Consolidated Statements of Net Income This section provides detailed net income statements for the three and six months ended June 30, 2024 and 2025, showing revenue, operating expenses, interest expense, income tax expense, and net income | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | Six Months 2025 (in thousands USD) | Six Months 2024 (in thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Revenue | 2,407,055 | 2,248,166 | 4,635,231 | 4,320,819 | | Operating Income | 459,545 | 424,705 | 849,755 | 791,505 | | Income before income taxes | 389,158 | 355,984 | 702,135 | 644,524 | | Net income attributable to Waste Connections | 290,276 | 275,477 | 531,787 | 505,531 | | Diluted EPS | 1.12 | 1.07 | 2.05 | 1.96 | | Cash dividends per common share | 0.315 | 0.285 | 0.630 | 0.570 | Condensed Consolidated Balance Sheets This section presents condensed consolidated balance sheets as of December 31, 2024, and June 30, 2025, showing the detailed composition of the company's assets, liabilities, and equity | Metric | June 30, 2025 (in thousands USD) | December 31, 2024 (in thousands USD) | | :--- | :--- | :--- | | Total current assets | 1,349,739 | 1,226,912 | | Property and equipment, net | 8,380,628 | 8,035,929 | | Goodwill | 8,220,824 | 7,950,406 | | Total assets | 20,678,610 | 19,817,809 | | Total current liabilities | 2,001,199 | 1,878,834 | | Long-term debt and notes payable | 8,337,178 | 8,072,928 | | Total liabilities | 12,324,953 | 11,957,455 | | Total equity attributable to Waste Connections | 8,353,657 | 7,860,354 | Condensed Consolidated Statements of Cash Flows This section details the condensed consolidated statements of cash flows for the six months ended June 30, 2024 and 2025, specifying cash flows from operating, investing, and financing activities | Metric | Six Months 2025 (in thousands USD) | Six Months 2024 (in thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | 1,179,741 | 1,101,687 | | Net cash used in investing activities | (1,019,972) | (1,794,104) | | Net cash provided by (used in) financing activities | (92,478) | 701,881 | | Net increase in cash, cash equivalents, and restricted cash | 69,298 | 8,368 | | Cash, cash equivalents, and restricted cash at end of period | 267,471 | 192,406 | Operational and Additional Statistics Solid Waste Internal Growth Solid waste internal growth was 2.4% in Q2 2025, driven primarily by 6.6% core price growth, partially offset by volume declines and other factors | Component | Three Months Ended June 30, 2025 | Six Months Ended June 30, 2025 | | :--- | :--- | :--- | | Core price | 6.6% | 6.7% | | Surcharges | (0.2%) | (0.2%) | | Volume | (2.6%) | (2.7%) | | Recycling | (0.3%) | (0.2%) | | Foreign exchange impact | (0.2%) | (0.5%) | | Closed operations | (0.9%) | (0.9%) | | Total | 2.4% | 2.2% | Revenue Breakdown by Segment Solid waste collection remained the largest revenue source in Q2 2025, accounting for 70.0% of total reported revenue, while E&P waste treatment, recycling, and disposal showed significant growth | Segment | Q2 2025 Reported Revenue (in thousands USD) | Q2 2025 % of Total | Q2 2024 Reported Revenue (in thousands USD) | Q2 2024 % of Total | | :--- | :--- | :--- | :--- | :--- | | Solid Waste Collection | 1,685,454 | 70.0% | 1,578,499 | 70.2% | | Solid Waste Disposal and Transfer | 441,619 | 18.3% | 442,035 | 19.7% | | Solid Waste Recycling | 66,805 | 2.8% | 61,165 | 2.7% | | E&P Waste Treatment, Recovery and Disposal | 169,835 | 7.1% | 117,787 | 5.2% | | Intermodal and Other | 43,342 | 1.8% | 48,680 | 2.2% | | Total | 2,407,055 | 100.0% | 2,248,166 | 100.0% | Contribution from Acquisitions Acquisition revenue, net of divestitures, contributed $112.87 million in Q2 2025 and $242.17 million for the six months ended June 30, 2025 | Period | Acquisition Revenue, Net of Divestitures (in thousands USD) | | :--- | :--- | | Three months ended June 30, 2025 | $112,870 | | Three months ended June 30, 2024 | $120,705 | | Six months ended June 30, 2025 | $242,168 | | Six months ended June 30, 2024 | $198,693 | Other Financial Statistics As of June 30, 2025, the company's debt-to-book capitalization ratio was 50%, internalization was 60%, and Days Sales Outstanding was 39 days (23 days net of deferred revenue) | Metric | Q2 2025 Value | | :--- | :--- | | Debt to Book Capitalization Ratio | 50% | | Internalization Rate | 60% | | Days Sales Outstanding (DSO) | 39 (23 net of deferred revenue) | | Diluted Shares Outstanding | 258,982,647 | | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | Six Months 2025 (in thousands USD) | Six Months 2024 (in thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Cash Interest Paid | $71,092 | $71,642 | $155,246 | $138,026 | | Cash Taxes Paid | $68,965 | $54,974 | $91,140 | $83,381 | Updated 2025 Outlook Full Year 2025 Outlook Summary Waste Connections maintains its full-year 2025 outlook, projecting revenue of approximately $9.45 billion, adjusted EBITDA of $3.12 billion (33.0% of revenue), and adjusted free cash flow of $1.30 billion - The outlook assumes no change in the current economic environment or underlying economic trends and excludes any impact from additional acquisitions[10] | Metric | Full Year 2025 Outlook (in millions USD) | | :--- | :--- | | Revenue | ~$9,450 | | Net Income | ~$1,140 | | Adjusted EBITDA | ~$3,120 (approx. 33.0% of revenue) | | Capital Expenditures | $1,200 - $1,250 | | Net Cash Provided by Operating Activities | $2,483 - $2,533 | | Adjusted Free Cash Flow | ~$1,300 | Non-GAAP Reconciliation of Adjusted EBITDA Outlook This section provides a reconciliation for the full-year 2025 adjusted EBITDA outlook, starting from net income attributable to Waste Connections and detailing adjustments to arrive at a projected $3.12 billion | Metric | 2025 Outlook Update (in thousands USD) | | :--- | :--- | | Net income attributable to Waste Connections | 1,140,000 | | Plus: Provision for income taxes | 367,472 (approx. 24.4% effective tax rate) | | Plus: Net interest expense | 322,000 | | Plus: Depreciation and depletion | 1,031,000 (approx. 10.9% of revenue) | | Plus: Amortization | 196,000 | | Plus: Closure and post-closure accretion | 48,000 | | Plus: Impairments and other operating items | 10,471 | | Less: Other income, net | (11,922) | | Plus: Transaction-related expenses | 15,943 | | Plus: Fair value changes in equity awards | 1,036 | | Adjusted EBITDA | 3,120,000 (approx. 33.0% of revenue) | Non-GAAP Reconciliation of Adjusted Free Cash Flow Outlook This section provides a reconciliation for the 2025 adjusted free cash flow outlook, projected at $1.30 billion, calculated from net cash provided by operating activities and various adjustments | Metric | 2025 Outlook Update (in thousands USD) | | :--- | :--- | | Net cash provided by operating activities | $2,482,888 - $2,532,888 | | Plus: Change in book overdraft | 397 | | Plus: Proceeds from disposal of assets | 5,417 | | Less: Capital expenditures for property and equipment | (1,200,000) - (1,250,000) | | Plus: Transaction-related expenses | 11,161 | | Plus: Executive severance | 2,119 | | Plus: Contingent consideration payments expensed | 400 | | Plus: Legacy Progressive Waste equity awards | 16 | | Less: Tax impact | (2,398) | | Adjusted Free Cash Flow | $1,300,000 | Non-GAAP Reconciliations (Historical) Reconciliation of Adjusted EBITDA This section details the reconciliation of net income attributable to Waste Connections to adjusted EBITDA, a non-GAAP financial metric widely used to evaluate performance and valuation in the solid waste industry - Adjusted EBITDA is defined as net income attributable to Waste Connections, plus or minus net income (loss) attributable to noncontrolling interests, plus provision for income taxes, plus interest expense, less interest income, plus depreciation and amortization expense, plus closure and post-closure accretion, plus or minus any loss or gain on impairments and other operating items, plus other expense, less other income, and is further adjusted for other items that management believes are not indicative of its ongoing operating performance[23] | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | Six Months 2025 (in thousands USD) | Six Months 2024 (in thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Net income attributable to Waste Connections | 290,276 | 275,477 | 531,787 | 505,531 | | Plus: Provision for income taxes | 98,882 | 80,584 | 170,348 | 139,996 | | Plus: Interest expense | 82,751 | 82,377 | 163,626 | 160,864 | | Plus: Depreciation and amortization | 307,657 | 285,353 | 597,606 | 548,334 | | Plus: Transaction-related expenses | 3,973 | 7,256 | 15,943 | 17,103 | | Adjusted EBITDA | 786,413 | 731,813 | 1,498,627 | 1,382,485 | | % of Revenue | 32.7% | 32.6% | 32.3% | 16.8% | Reconciliation of Adjusted Free Cash Flow This section details the reconciliation of net cash provided by operating activities to adjusted free cash flow, a non-GAAP liquidity measure widely used to assess liquidity in the solid waste industry - Adjusted free cash flow is calculated as net cash provided by operating activities, plus or minus changes in book overdraft, plus proceeds from disposal of assets, less capital expenditures for property and equipment, and is further adjusted for other items that management believes are not indicative of its ongoing liquidity performance[27] | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | Six Months 2025 (in thousands USD) | Six Months 2024 (in thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Net cash provided by operating activities | 638,202 | 611,378 | 1,179,741 | 1,101,687 | | Less: Capital expenditures for property and equipment | (285,310) | (217,219) | (497,765) | (387,170) | | Plus: Transaction-related expenses | 8,769 | 3,704 | 11,161 | 8,680 | | Adjusted Free Cash Flow | 367,013 | 402,639 | 699,088 | 727,432 | | % of Revenue | 15.2% | 17.9% | 15.1% | 16.8% | Reconciliation of Adjusted Net Income and EPS This section reconciles GAAP net income attributable to Waste Connections and diluted EPS to their adjusted non-GAAP counterparts, aiming to exclude items management deems not indicative of operational comparability - Adjusted net income attributable to Waste Connections and adjusted diluted EPS are intended to exclude items that management believes are not indicative of the comparability of the company's operating performance between periods[30] | Metric | Q2 2025 (in thousands USD) | Q2 2024 (in thousands USD) | Six Months 2025 (in thousands USD) | Six Months 2024 (in thousands USD) | | :--- | :--- | :--- | :--- | :--- | | Reported net income attributable to Waste Connections | 290,276 | 275,477 | 531,787 | 505,531 | | Plus: Amortization of intangibles | 50,236 | 44,124 | 97,878 | 84,414 | | Plus: Impairments and other operating items | 4,030 | 8,190 | 10,471 | 8,544 | | Plus: Transaction-related expenses | 3,973 | 7,256 | 15,943 | 17,103 | | Less: Tax impact | (14,687) | (15,222) | (30,898) | (28,385) | | Adjusted net income attributable to Waste Connections | 333,094 | 320,047 | 626,217 | 588,714 | | Reported diluted EPS | 1.12 | 1.07 | 2.05 | 1.96 | | Adjusted diluted EPS | 1.29 | 1.24 | 2.42 | 2.28 | Corporate Information & Disclosures Q2 2025 Earnings Conference Call Waste Connections will host a conference call on July 24th at 8:30 A.M. Eastern Time to discuss Q2 earnings, with a live webcast and replay available to investors - A conference call to discuss second-quarter earnings will be held on July 24, 2025, at 8:30 A.M. Eastern Time[12] - A live audio webcast can be accessed through the "News & Events" section of the company's website at investors.wasteconnections.com[12] - A replay of the conference call will be available until July 31, 2025, by calling 877-344-7529 (within North America) or 412-317-0088 (international) and using passcode 4455366[12] About Waste Connections Waste Connections is an integrated solid waste services company providing non-hazardous waste collection, transfer, and disposal services, along with resource recovery through recycling and renewable fuels production - Waste Connections is an integrated solid waste services company that provides non-hazardous waste collection, transfer and disposal services, including by rail, along with resource recovery primarily through recycling and renewable fuels generation[13] - The company serves approximately nine million residential, commercial, and industrial customers in 46 states in the U.S. and six provinces in Canada, primarily in exclusive and secondary markets[13] - The company also views its environmental, social and governance (ESG) efforts as integral to its business, aiming to reduce emissions, increase resource recovery of recyclable commodities and clean energy fuels, reduce reliance on off-site disposal of landfill leachate, further improve safety and enhance employee engagement[13] Safe Harbor and Forward-Looking Information This section contains standard safe harbor statements regarding forward-looking information, advising investors that actual results may differ materially due to risks and uncertainties detailed in regulatory filings - This press release contains forward-looking statements within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 (PSLRA) and "forward-looking information" within the meaning of applicable Canadian securities laws[14] - Forward-looking statements involve risks and uncertainties, and actual results may differ materially from those shown in such statements[14] - Waste Connections undertakes no obligation to update the forward-looking statements in this press release unless required by applicable securities laws[14] Contact Information Provides contact information for investor relations personnel - Contact: Mary Anne Whitney / (832) 442-2253 / maryannew@wasteconnections.com[15] - Contact: Joe Box / (832) 442-2153 / joe.box@wasteconnections.com[15]