Waste nections(WCN) - 2025 Q3 - Quarterly Results

Executive Summary & Highlights This section provides an overview of Waste Connections' strong Q3 2025 financial performance, operational achievements, and strategic capital allocation Q3 2025 Performance Overview Waste Connections reported better-than-expected financial results for Q3 2025, driven by superior execution and improved operating trends, including reduced employee turnover and record low safety incident rates. The company achieved solid waste margin expansion and is on track to meet its full-year 2025 outlook. Strategic capital allocation included an 11.1% increase in the quarterly cash dividend, significant acquisition activity, and share repurchases - Superior execution led to better than expected financial results, supported by improved operating trends, a reduction in employee turnover, and new record low safety incident rates[3] - Underlying solid waste margin expanded by approximately 80 basis points in Q3 2025, despite incremental commodity headwinds[3] - The company increased its regular quarterly cash dividend by 11.1% and completed share repurchases of approximately 1% of shares outstanding, demonstrating strong operating performance and free cash flow generation[3][5] Q3 2025 Key Financial Highlights Waste Connections exceeded expectations in Q3 2025 with revenue of $2.458 billion and strong adjusted profitability metrics. Adjusted net income attributable to Waste Connections reached $372.0 million, or $1.44 per diluted share, and Adjusted EBITDA was $830.3 million, representing a 33.8% margin. The company also reported approximately $300 million in annualized revenue from year-to-date acquisitions Q3 2025 Key Financial Highlights | Metric | Q3 2025 (Millions USD) | Q3 2024 (Millions USD) | Change (%) | | :-------------------------------- | :--------------------- | :--------------------- | :--------- | | Revenue | $2,458.378 | $2,338.488 | 5.1% | | Operating Income | $439.591 | $475.343 | -7.5% | | Net Income | $286.271 | $308.046 | -7.0% | | Diluted EPS | $1.11 | $1.19 | -6.7% | | Adjusted Net Income | $372.0 | $350.0 | 6.3% | | Adjusted Diluted EPS | $1.44 | $1.35 | 6.7% | | Adjusted EBITDA | $830.3 | $787.4 | 5.5% | | Adjusted EBITDA Margin | 33.8% | 33.7% | 0.1 pp | | Cash Dividends per Common Share | $0.315 | $0.285 | 10.5% | - Acquisitions year-to-date contributed approximately $300 million in annualized revenue, either closed or under definitive agreement[5] - The full year 2025 outlook remains unchanged from the guidance provided in July[5] Detailed Financial Results This section presents Waste Connections' GAAP and non-GAAP financial performance for Q3 and the nine months ended September 30, 2025, including income statements, balance sheets, and cash flow Third Quarter 2025 Results (GAAP) For the third quarter of 2025, Waste Connections reported GAAP revenue of $2.458 billion, an increase from the prior year. Operating income decreased to $439.6 million, primarily due to $60.1 million in impairments and other operating items. Net income was $286.3 million, or $1.11 per diluted share, compared to $308.0 million, or $1.19 per diluted share, in Q3 2024 Third Quarter 2025 Results (GAAP) | Metric | Q3 2025 (Millions USD) | Q3 2024 (Millions USD) | YoY Change | | :----------------- | :--------------------- | :--------------------- | :--------- | | Revenue | $2,458.378 | $2,338.488 | +5.1% | | Operating Income | $439.591 | $475.343 | -7.5% | | Net Income | $286.271 | $308.046 | -7.0% | | Diluted EPS | $1.11 | $1.19 | -6.7% | - Operating income in Q3 2025 included $60.1 million in impairments and other operating items, primarily related to contract write-downs, a non-operating E&P waste facility permit, and an environmental liability[4] Nine Months Year to Date Results (GAAP) For the nine months ended September 30, 2025, Waste Connections' revenue increased to $7.094 billion. Operating income saw a slight increase to $1.289 billion, despite higher impairments and transaction-related expenses. Net income for the period was $818.1 million, or $3.16 per diluted share, showing a modest improvement over the prior year Nine Months Year to Date Results (GAAP) | Metric | 9M 2025 (Millions USD) | 9M 2024 (Millions USD) | YoY Change | | :----------------- | :--------------------- | :--------------------- | :--------- | | Revenue | $7,093.609 | $6,659.308 | +6.5% | | Operating Income | $1,289.346 | $1,266.849 | +1.8% | | Net Income | $818.057 | $813.577 | +0.5% | | Diluted EPS | $3.16 | $3.15 | +0.3% | - Operating income for the nine months ended September 30, 2025, included $70.6 million from impairments and other operating items, and $20.3 million primarily from transaction-related expenses and fair value changes to equity awards[7] Condensed Consolidated Statements of Net Income The condensed consolidated statements of net income detail the company's financial performance for the three and nine months ended September 30, 2024 and 2025. Key changes include an increase in revenues and operating expenses, particularly impairments and other operating items, which impacted operating income and net income Three Months Ended September 30: | Item | 2024 (in thousands) | 2025 (in thousands) | YoY Change | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Revenues | $2,338,488 | $2,458,378 | +5.1% | | Cost of operations | $1,344,079 | $1,406,854 | +4.7% | | Selling, general and administrative | $222,526 | $236,476 | +6.3% | | Impairments and other operating items | $2,897 | $60,127 | +1975.5% | | Operating income | $475,343 | $439,591 | -7.5% | | Net income attributable to Waste Connections | $308,046 | $286,271 | -7.0% | | Diluted EPS | $1.19 | $1.11 | -6.7% | Nine Months Ended September 30: | Item | 2024 (in thousands) | 2025 (in thousands) | YoY Change | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Revenues | $6,659,308 | $7,093,609 | +6.5% | | Cost of operations | $3,866,932 | $4,091,153 | +5.8% | | Selling, general and administrative | $672,110 | $729,576 | +8.5% | | Impairments and other operating items | $11,441 | $70,598 | +517.0% | | Operating income | $1,266,849 | $1,289,346 | +1.8% | | Net income attributable to Waste Connections | $813,577 | $818,057 | +0.5% | | Diluted EPS | $3.15 | $3.16 | +0.3% | Condensed Consolidated Balance Sheets As of September 30, 2025, Waste Connections reported an increase in total assets to $20.782 billion from $19.818 billion at December 31, 2024. This was primarily driven by increases in accounts receivable, property and equipment, and goodwill. Total liabilities also increased to $12.689 billion, with a notable rise in long-term debt, while total equity grew to $8.093 billion Condensed Consolidated Balance Sheets | Item | December 31, 2024 (in thousands) | September 30, 2025 (in thousands) | Change | | :----------------------------------- | :------------------------------- | :-------------------------------- | :------- | | ASSETS | | | | | Total current assets | $1,226,912 | $1,403,640 | +14.4% | | Property and equipment, net | $8,035,929 | $8,422,847 | +4.8% | | Goodwill | $7,950,406 | $8,275,386 | +4.1% | | Total assets | $19,817,809 | $20,782,495 | +4.9% | | LIABILITIES AND EQUITY | | | | | Total current liabilities | $1,878,834 | $2,087,623 | +11.1% | | Long-term portion of debt and notes payable | $8,072,928 | $8,621,371 | +6.8% | | Total liabilities | $11,957,455 | $12,689,127 | +6.1% | | Total Waste Connections' equity | $7,860,354 | $8,093,368 | +3.0% | | Total liabilities and equity | $19,817,809 | $20,782,495 | +4.9% | Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2025, net cash provided by operating activities increased to $1.857 billion. However, net cash used in investing activities significantly decreased due to lower payments for acquisitions. Net cash from financing activities shifted from a net inflow in 2024 to a net outflow in 2025, primarily due to increased principal payments on debt and payments for share repurchases Nine Months Ended September 30: | Cash Flow Activity | 2024 (in thousands) | 2025 (in thousands) | Change | | :----------------------------------- | :------------------ | :------------------ | :------- | | Net cash provided by operating activities | $1,659,998 | $1,857,190 | +11.9% | | Net cash used in investing activities | $(2,645,810) | $(1,433,913) | +45.8% | | Net cash provided by (used in) financing activities | $1,040,357 | $(331,492) | -131.9% | | Net increase in cash, cash equivalents and restricted cash | $54,470 | $92,412 | +69.7% | | Cash, cash equivalents and restricted cash at end of period | $238,508 | $290,585 | +21.8% | - Payments for acquisitions, net of cash acquired, decreased significantly from $2.010 billion in 2024 to $627.310 million in 2025[17] - The company made payments for repurchase of common shares totaling $442.176 million in 2025, compared to none in 2024[17] Operational and Statistical Data This section details Waste Connections' solid waste internal growth drivers, revenue breakdown by service type, acquisition contributions, and other key operational metrics Solid Waste Internal Growth Waste Connections' solid waste internal growth for Q3 2025 was 1.8%, primarily driven by a strong core price increase of 6.3%. This growth was partially offset by negative impacts from volume, recycling, foreign exchange, and closed operations Solid Waste Internal Growth Components (Q3 2025): | Component | Three months ended Sep 30, 2025 | | :------------------ | :------------------------------ | | Core Price | 6.3% | | Surcharges | (0.1%) | | Volume | (2.7%) | | Recycling | (0.8%) | | Foreign Exchange Impact | (0.1%) | | Closed Operation | (0.8%) | | Total | 1.8% | Solid Waste Internal Growth Components (Nine Months Ended Sep 30, 2025): | Component | Nine months ended Sep 30, 2025 | | :------------------ | :----------------------------- | | Core Price | 6.6% | | Surcharges | (0.2%) | | Volume | (2.7%) | | Recycling | (0.4%) | | Foreign Exchange Impact | (0.4%) | | Closed Operation | (0.9%) | | Total | 2.0% | Revenue Breakdown by Service Type In Q3 2025, Solid Waste Collection remained the largest revenue contributor at 70.1%, increasing from 69.2% in Q3 2024. E&P Waste Treatment, Recovery and Disposal also saw an increase in its revenue share, while Solid Waste Disposal and Transfer, Solid Waste Recycling, and Intermodal and Other services experienced slight decreases in their percentage contributions Revenue Breakdown (Three Months Ended September 30): | Service Type | Q3 2024 Revenue (Millions USD) | Q3 2024 % | Q3 2025 Revenue (Millions USD) | Q3 2025 % | | :------------------------------------ | :----------------------------- | :-------- | :----------------------------- | :-------- | | Solid Waste Collection | $1,617.410 | 69.2% | $1,724.606 | 70.1% | | Solid Waste Disposal and Transfer | $459.786 | 19.6% | $456.402 | 18.6% | | Solid Waste Recycling | $67.137 | 2.9% | $56.241 | 2.3% | | E&P Waste Treatment, Recovery and Disposal | $147.279 | 6.3% | $179.137 | 7.3% | | Intermodal and Other | $46.876 | 2.0% | $41.992 | 1.7% | | Total | $2,338.488 | 100.0% | $2,458.378 | 100.0% | Contribution from Acquisitions Revenue from acquisitions, net of divestitures, decreased in Q3 2025 compared to the prior year, but increased for the nine-month period. This indicates a continued, albeit fluctuating, impact of M&A activity on the company's top line Revenue from Acquisitions, Net of Divestitures: | Period | 2024 (Millions USD) | 2025 (Millions USD) | | :-------------------- | :------------------ | :------------------ | | Three months ended Sep 30 | $161,024 | $76,621 | | Nine months ended Sep 30 | $318,789 | $359,716 | Other Financial Statistics Waste Connections' debt to book capitalization stood at 52% as of September 30, 2025. The company maintained an internalization rate of 60% and Days Sales Outstanding (DSO) of 40 days (25 net of deferred revenue) for Q3 2025. Cash interest paid increased for the nine-month period, while cash taxes paid decreased Other Cash Flow Items (Nine Months Ended September 30): | Item | 2024 (Millions USD) | 2025 (Millions USD) | | :---------------- | :------------------ | :------------------ | | Cash Interest Paid | $223,196 | $239,038 | | Cash Taxes Paid | $164,615 | $141,535 | - Debt to Book Capitalization as of September 30, 2025: 52%[20] - Internalization for the three months ended September 30, 2025: 60%[20] - Days Sales Outstanding for the three months ended September 30, 2025: 40 (25 net of deferred revenue)[20] Non-GAAP Financial Measures Reconciliation This section reconciles key non-GAAP financial measures, including Adjusted EBITDA, Adjusted Free Cash Flow, and Adjusted Net Income, to their most directly comparable GAAP measures Reconciliation of Adjusted EBITDA Adjusted EBITDA, a key non-GAAP performance measure, increased to $830.3 million in Q3 2025, up from $787.4 million in Q3 2024, resulting in a margin of 33.8%. For the nine-month period, Adjusted EBITDA grew to $2.329 billion, with a margin of 32.8%. These adjustments primarily exclude impairments and acquisition-related items to provide a clearer view of operating performance Adjusted EBITDA Reconciliation: | Metric | Q3 2024 (Millions USD) | Q3 2025 (Millions USD) | 9M 2024 (Millions USD) | 9M 2025 (Millions USD) | | :-------------------- | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net income attributable to Waste Connections | $308,046 | $286,271 | $813,577 | $818,057 | | Plus: Income tax provision | $92,012 | $88,503 | $232,008 | $258,852 | | Plus: Interest expense | $83,520 | $84,449 | $244,385 | $248,074 | | Plus: Depreciation and amortization | $293,643 | $315,330 | $841,976 | $912,936 | | Plus: Impairments and other operating items | $2,897 | $60,127 | $11,441 | $70,598 | | Adjusted EBITDA | $787,436 | $830,337 | $2,169,916 | $2,328,964 | | As % of revenues | 33.7% | 33.8% | 32.6% | 32.8% | Reconciliation of Adjusted Free Cash Flow Adjusted free cash flow, a non-GAAP liquidity measure, increased to $384.6 million in Q3 2025, up from $316.3 million in Q3 2024, representing 15.6% of revenues. For the nine-month period, it reached $1.084 billion, or 15.3% of revenues. This measure adjusts net cash provided by operating activities for capital expenditures and other specific items to reflect cash available for discretionary uses Adjusted Free Cash Flow Reconciliation: | Metric | Q3 2024 (Millions USD) | Q3 2025 (Millions USD) | 9M 2024 (Millions USD) | 9M 2025 (Millions USD) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Net cash provided by operating activities | $558,310 | $677,449 | $1,659,998 | $1,857,190 | | Less: Capital expenditures for property and equipment | $(272,132) | $(297,172) | $(659,302) | $(794,937) | | Adjusted free cash flow | $316,276 | $384,580 | $1,043,709 | $1,083,668 | | As % of revenues | 13.5% | 15.6% | 15.7% | 15.3% | Reconciliation of Adjusted Net Income and EPS Adjusted net income attributable to Waste Connections increased to $372.0 million, or $1.44 per diluted share, in Q3 2025, compared to $350.0 million, or $1.35 per diluted share, in Q3 2024. For the nine-month period, adjusted net income rose to $998.3 million, or $3.86 per diluted share. These adjustments primarily remove the impact of non-cash amortization of intangibles, impairments, and transaction-related expenses Adjusted Net Income and EPS Reconciliation: | Metric | Q3 2024 (Millions USD) | Q3 2025 (Millions USD) | 9M 2024 (Millions USD) | 9M 2025 (Millions USD) | | :------------------------------------ | :--------------------- | :--------------------- | :--------------------- | :--------------------- | | Reported net income attributable to Waste Connections | $308,046 | $286,271 | $813,577 | $818,057 | | Plus: Amortization of intangibles | $45,170 | $51,331 | $129,584 | $149,209 | | Plus: Impairments and other operating items | $2,897 | $60,127 | $11,441 | $70,598 | | Plus: Transaction-related expenses | $8,067 | $3,835 | $25,169 | $19,778 | | Adjusted net income attributable to Waste Connections | $350,004 | $372,050 | $938,718 | $998,266 | | Adjusted diluted EPS | $1.35 | $1.44 | $3.63 | $3.86 | Corporate Information This section provides details on the Q3 2025 earnings conference call, a company profile, and important safe harbor statements regarding forward-looking information Q3 2025 Earnings Conference Call Details Waste Connections hosted a conference call on October 22nd at 8:30 A.M. Eastern Time to discuss its third-quarter earnings. A live audio webcast was available, and a replay was accessible until October 29, 2025 - A live audio webcast of the conference call was accessible via investors.wasteconnections.com[11] - A replay of the conference call was available until October 29, 2025, via a dedicated dial-in number and passcode[11] About Waste Connections (Company Profile) Waste Connections is an integrated solid waste services company providing non-hazardous waste collection, transfer, and disposal, including resource recovery through recycling and renewable fuels. The company serves approximately nine million residential, commercial, and industrial customers across 46 U.S. states and six Canadian provinces, focusing on exclusive and secondary markets. It also offers non-hazardous oilfield waste services and intermodal services, with a strong commitment to ESG initiatives for long-term value creation - Waste Connections provides non-hazardous waste collection, transfer, and disposal services, including by rail, along with resource recovery primarily through recycling and renewable fuels generation[12] - The company serves approximately nine million residential, commercial, and industrial customers in mostly exclusive and secondary markets across 46 states in the U.S. and six provinces in Canada[12] - Waste Connections views its Environmental, Social and Governance ("ESG") efforts as integral to its business, focusing on reducing emissions, increasing resource recovery, improving safety, and enhancing employee engagement[12] Safe Harbor and Forward-Looking Information This press release contains forward-looking statements, subject to risks and uncertainties, made pursuant to the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws. These statements reflect current beliefs and expectations regarding future events and operating performance, including expected 2025 financial results and acquisition activity. Readers are cautioned not to place undue reliance on these statements, and Waste Connections undertakes no obligation to update them unless required by law - The press release contains forward-looking statements regarding expected 2025 financial results, outlook, related assumptions, and potential acquisition activity[13] - Forward-looking statements are subject to risks and uncertainties, and actual results could differ materially from those indicated[13] - Waste Connections undertakes no obligation to update these statements unless required by applicable securities laws[13]