By the numbers
Annualized revenue acquired in 2024: $500M
Deals worth another $150M under agreement
Q2 net income: $275.4M
Up 31.6% year over year
- Financial picture: During a Thursday earnings call, Waste Connections CEO Ron Mittelstaedt discussed contributions from acquisitions and margin expansion through pricing initiatives in the face of cutting volumes in some areas, in what the company described as a positive second quarter.
- Results: Core price was 7%, ranging from 5% in exclusive markets to 8% in more competitive markets. Solid waste volumes were down 2.8% year over year, in line with company expectations, and overall landfill volumes were down 2%. Special waste volumes were down 13%, which Mittelstaedt attributed in part to more conservative project spending by some local governments.
- Arrowhead anniversary: It’s been almost a year since the company purchased Arrowhead Environmental Partners, which included a large rail-served landfill in Alabama permitted for up to 15,000 tons per day. Mittelstaeadt said it has already doubled volumes to more than 6,000 tons per day, driven largely by the company internalizing its own volumes. Recent issues with certain rail operators affected activity in the quarter, but conditions have since improved. Waste Connections is investing in more capacity for tracks and cars at the landfill as well as its rail-served transfer stations in the Northeast.
- Acquisitions: Mittelstaedt said the company is on track for an “all-time annual record for us in private company acquired revenue.” Q2 deals included a variety of tuck-ins and the purchase of Washington-based Pioneer Recycling Services in May. Notable deals in franchise-related markets are also expected to close on the East Coast and West Coast later this year.
- Recycling: Revenue was $61.2 million in the quarter, driven in part by a 20% bump in commodity values year over year. Mittelstaedt said the company previously sent volumes to Pioneer’s MRFs, and upcoming extended producer responsibility laws in the region made the need for volume internalization “very critical for us there with our very large footprint.” He also touted a recent MRF retrofit in Illinois that used new technology to reduce headcount and improve material quality “quite dramatically.”
- E&P: Waste Connections purchased a business outside Alberta, Canada, to add to its existing exploration and production waste business that grew with the purchase of Secure Energy Services. Mittelstaedt said the team had an “exceptional” quarter and is working to eventually reopen one or more shuttered sites that came with the Secure transaction. CFO Mary Anne Whitney noted that U.S. E&P business also improved despite lower rig counts. Overall E&P revenues were $123.6 million in Q2.
- RNG: The company reported ongoing delays with three renewable natural gas facilities set to open at landfills soon, and it lowered expected contributions for the year as a result. Whitney said the delays were related to “the last mile” and “the interconnect with electric utilities.”
- Workforce: Voluntary turnover was at 14.6%, down from a peak of 25% in recent years. Open positions stood at 4%, down from a recent peak of 7.2%. Mittelstaedt still sees room to improve on both metrics and has spoken extensively about this being a goal since he returned to the CEO role last year. Involuntary turnover was around 11.5-12%.
- Looking ahead: Waste Connections expects Q3 revenue could reach upward of $2.3 billion, with net income up to $302 million. Projected 2024 revenue was raised to $8.85 billion, up $100 million from the prior estimate. Estimated net income was raised to $1.087 billion and adjusted earnings before interest, depreciation and amortization up to $2.9 billion. This doesn’t include future acquisitions, and Mittelstaedt said, “our results in 2024 should set up another year of outsized growth in 2025."
