By the numbers
Net income: $224.1M
Up 26.6% from the same period in 2021
Acquisitions year to date: 12
The company has closed deals worth $245 million in annualized revenue, with transactions worth another $225 million in annualized revenue set to close in Q3.
- Economic outlook: Waste Connections CEO Worthing Jackman said during a Wednesday earnings call the company outperformed its expectations for the quarter, primarily due to accelerated solid waste pricing, higher activity in its E&P waste sector and rollover from recent acquisitions. He forecasted the company is “well positioned for double-digit revenue growth in 2023, along with margin expansion” due in part to further pricing effects and more anticipated acquisitions. Increased oil and gas drilling contributed to the 24% increase in E&P revenues for the quarter, bringing in $50.4 million during Q2.
- Price: Solid waste pricing grew 8.8% in the quarter, which Jackman said was a major factor in helping to overcome Q2 inflation pressures. Total pricing ranged from about 5% in the “mostly exclusive” Western region, to between 9.5% and 10.5% in “competitive regions.” In response to questions on how high pricing could go, Jackman said he believes inflationary pressures have peaked and pricing could be lower by 2023, possibly in the 7% range. Chief Financial Officer Mary Anne Whitney said most pricing increases are reflected in core price, not surcharges.
- M&A: Waste Connections completed 12 solid waste acquisitions year to date, mainly located on the West Coast in addition to several tuck-ins across the U.S. and Canada, he said. Acquisitions completed since this time last year contributed about $144 million, or $141 million net of divestitures, Whitney said. There’s still an “above average interest” from additional private companies to sell, both in the U.S. and in Canada, and Jackman said he expects to keep acquisition pace high and close additional deals late in 2022 and early into 2023.
- RNG: Whitney highlighted Waste Connections’ 10 renewable natural gas projects that are all expected to open in the next two to five years. Two are expected to come online in 2023, with two more currently under construction or that have equipment orders, as well as six others in development. The company will pursue other RNG projects in areas where the opportunity makes sense, she said.
- Updated outlook: Waste Connections is raising its guidance for the year, a move Jackman said is a considerable success “given the challenging macro environment and inflationary impacts.” Estimated 2022 revenue is now expected to be around $7.125 billion, up from a previous estimate of $6.875 billion. The company is also raising its outlook for net income and other metrics.
