By the numbers
2023 full year revenue: $8.022B
Up 11.2% year over year
Q4 net income: $126.8M
Down 34.8% year over year
- Financial picture: During an earnings call on Wednesday, Waste Connections CEO Ron Mittelstaedt touted 2023 as a “year of renewal” marked by more investment in employee retention and safety, along with accelerated acquisition activity. He also applauded the company’s “disciplined execution” and said “we’re well on our way” toward exceeding near-term goals such as reaching a 34% margin for earnings before interest, taxes, depreciation, and amortization.
- Secure Energy Services acquisition: Waste Connections closed on its deal to acquire energy waste treatment and disposal assets from Secure Energy Services in Canada on Feb. 1. The deal, which represents $225 million in revenue, also adds about 300 employees to the company, Mittelstaedt said.
- Acquisition pipeline: In 2023, Waste Connections closed over $215 million in annualized revenue from 13 acquisitions, with activity coming from integrated markets, new markets and tuck-ins, he said. He expects the Secure Energy deal, along with the rollover contribution from deals completed during 2023, to provide a 2024 acquisition contribution of over $325 million. He expects an “outsize” year for M&A, with possible deals in the core solid waste business, he said.
- Chiquita Canyon updates: Mittelstaedt said the company is “encouraged by our ongoing progress” to address a “landfill event” at the Chiquita Canyon landfill near Los Angeles, where higher than normal levels of dimethyl sulfide and leachate have prompted numerous odor complaints from nearby residents. In 2023, the company incurred about $21 million in related costs, and expects to spend about $75 million in 2024.
- Employee retention: Waste Connections continues its ongoing employee retention and training plans meant to improve safety. The turnover rate in Q2 of 2023 was about 30%, but dropped to 27%
by the end of the year, Mittelstaedt said. “We've made significant changes in how we recruit, we've made significant changes in how we onboard,” he said. Voluntary turnover is about 17%, but Waste Connections aims for that rate to be between 10% and 12%, “which means we are being proactive on people who might not be the best fit, particularly with regard to safety.” The company’s safety incidence rate dropped 7% in 2023, he said. - Q4 volume: Solid waste volumes were down 2.3%, which reflects the “shedding of poor quality revenues” and the non-renewal of municipal contracts, “as well as the purposeful trade off between price and volume in some markets,” said CFO Mary Anne Whitney. Landfill volumes were down about 1%, while special waste volumes were down 9%. Factors affecting Q4 volume were comparisons with higher-than-average volumes from hurricane activity the previous year, plus temporary “operating limitations” at the Seabreeze landfill while workers fixed a slope failure issue.
- Pricing: Solid waste core pricing in Q4 was 8.7%, which executives said in an earnings release was “bolstered by improvements in commodity-driven revenues” and is providing momentum for 2024. Core price ranged from about 7% in the Western region, which the company considers an exclusive market, to between 8.5% and over 10% in more competitive markets, Whitney said.
- First quarter outlook: Revenue in Q1 is estimated to be about $2.05 billion. That’s on “an expected solid waste price plus volume growth of 3.5%, driven by pricing of about 7%,” Whitney said. Waste Connections predicts about 1% incremental temporary volume losses due to winter weather impacts, especially on the West Coast, she said.
- Outlook for 2024: Revenue in 2024 is estimated to increase by over 9% to $8.75 billion, she said. In the solid waste sector, price plus volume could reach 4.5% to 5.5%, with core pricing of about 7%. Adjusted EBITDA is estimated at $2.86 billion, a margin of about 32.7%, she said.
