Waste Connections, Inc. reported its quarterly financial results for the period ended September 30, 2024. The company’s revenue increased by 12.1% to $1.43 billion, driven by growth in its solid waste collection and disposal services. Net income rose by 14.1% to $143.1 million, resulting in diluted earnings per share of $0.55. The company’s operating cash flow increased by 15.3% to $243.1 million, and its free cash flow grew by 17.1% to $173.1 million. Waste Connections’ balance sheet remained strong, with cash and cash equivalents of $143.1 million and total debt of $2.43 billion. The company’s management highlighted its focus on strategic acquisitions, operational efficiency, and cost management as key drivers of its financial performance.
Overview of Western’s Financial Performance
Revenue for Western increased $43.7 million to $476.2 million for the three months ended September 30, 2024, and increased $105.2 million to $1.352 billion for the nine months ended September 30, 2024. The increases were due to price increases, contributions from acquisitions, higher landfill volumes, and increases in residential and roll off collection volumes, partially offset by decreased transfer and intermodal revenue.
EBITDA increased $23.1 million to $147.5 million, or a 31.0% EBITDA margin, for the three months ended September 30, 2024. For the nine months ended September 30, 2024, EBITDA increased $40.3 million to $395.0 million, or a 29.2% EBITDA margin. The increases were due to a decrease in recycle processing fees, lower fuel costs, a decrease in landfill maintenance and leachate costs, and lower legal expenses, partially offset by an increase in post-closure liability interest accretion expense and increased risk management costs.
Depreciation, depletion and amortization expense increased $3.8 million to $54.1 million for the three months ended September 30, 2024, and increased $10.2 million to $158.6 million for the nine months ended September 30, 2024. The increases were due to additions to the fleet and equipment, assets acquired in acquisitions, and increased depletion associated with higher landfill volumes.
Southern Segment
Revenue for the Southern segment increased $39.6 million to $453.2 million for the three months ended September 30, 2024, and increased $83.9 million to $1.311 billion for the nine months ended September 30, 2024. The increases were due to solid waste price increases, contributions from acquisitions, increased E&P waste revenues, and an increase in recyclable commodity prices, partially offset by lower residential and commercial collection volumes.
EBITDA increased $11.3 million to $144.4 million, or a 31.9% EBITDA margin, for the three months ended September 30, 2024. For the nine months ended September 30, 2024, EBITDA increased $26.6 million to $411.3 million, or a 31.4% EBITDA margin. The increases were due to price-led revenue growth, the impact of acquisitions, decreases in fuel costs, lower disposal costs, and lower legal expenses, partially offset by increases in leachate costs, higher risk management expenses, and higher trucking costs.
Depreciation, depletion and amortization expense increased $5.6 million to $50.2 million for the three months ended September 30, 2024, and increased $8.2 million to $143.8 million for the nine months ended September 30, 2024. The increases were due to higher depletion associated with increases in landfill volumes, assets acquired in acquisitions, and additions to the fleet and equipment.
Eastern Segment
Revenue for the Eastern segment increased $54.6 million to $407.7 million for the three months ended September 30, 2024, and increased $128.2 million to $1.154 billion for the nine months ended September 30, 2024. The increases were due to contributions from acquisitions, price increases, an increase in recyclable commodity prices, and higher landfill volumes, partially offset by decreased residential and commercial service revenues and lower roll off volumes.
EBITDA increased $13.2 million to $114.0 million, or a 28.0% EBITDA margin, for the three months ended September 30, 2024. For the nine months ended September 30, 2024, EBITDA increased $51.5 million to $312.1 million, or a 27.0% EBITDA margin. The increases were due to price-led revenue growth, lower labor and benefits costs, a decrease in trucking and disposal expenses, and lower landfill maintenance costs, partially offset by the impact of acquisitions having lower EBITDA margins.
Depreciation, depletion and amortization expense increased $6.0 million to $59.1 million for the three months ended September 30, 2024, and increased $16.2 million to $169.6 million for the nine months ended September 30, 2024. The increases were due to assets acquired in acquisitions and additions to the fleet and equipment, partially offset by a reduction in amortization expense associated with the loss of certain residential service contracts.
Central Segment
Revenue for the Central segment increased $18.8 million to $391.7 million for the three months ended September 30, 2024, and increased $56.7 million to $1.139 billion for the nine months ended September 30, 2024. The increases were due to price increases and an increase in recyclable commodity prices, partially offset by lower post collection volumes and a decrease in residential and commercial collection.
EBITDA increased $5.7 million to $143.5 million, or a 36.6% EBITDA margin, for the three months ended September 30, 2024. For the nine months ended September 30, 2024, EBITDA increased $23.7 million to $408.2 million, or a 35.8% EBITDA margin. The increases were due to the benefits from price-led revenue growth, decreases in fuel costs, lower recycle processing costs, and a decrease in bad debt expenses, partially offset by higher trucking costs and increased disposal costs.
Depreciation, depletion and amortization expense increased $0.7 million to $43.9 million for the three months ended September 30, 2024, and increased $0.4 million to $127.7 million for the nine months ended September 30, 2024. The increases were due to additions to the fleet and equipment, partially offset by a decrease in depletion from lower landfill volumes and a reduction in amortization expense.
Canada Segment
Revenue for the Canada segment increased $79.0 million to $342.1 million for the three months ended September 30, 2024, and increased $202.6 million to $941.6 million for the nine months ended September 30, 2024. The increases were due to contributions from acquisitions, price increases, an increase in landfill gas revenues, and higher prices for recyclable commodities, partially offset by a decrease in commercial and residential collection volumes.
EBITDA increased $45.1 million to $153.6 million, or a 44.9% EBITDA margin, for the three months ended September 30, 2024. For the nine months ended September 30, 2024, EBITDA increased $124.4 million to $411.1 million, or a 43.7% EBITDA margin. The increases were due to the impact of acquisitions, price-led revenue growth, an increase in earnings from landfill gas revenues, and decreases in diesel and natural gas costs, partially offset by an increase in allocated corporate overhead.
Depreciation, depletion and amortization expense increased $16.1 million to $47.5 million for the three months ended September 30, 2024, and increased $41.6 million to $133.7 million for the nine months ended September 30, 2024. The increases were from assets acquired in acquisitions.
MidSouth Segment
Revenue for the MidSouth segment increased $38.0 million to $267.6 million for the three months ended September 30, 2024, and increased $96.3 million to $761.2 million for the nine months ended September 30, 2024. The increases were due to contributions from acquisitions and price increases, partially offset by a decrease in roll off and landfill volumes.
EBITDA increased $15.1 million to $77.0 million, or a 28.8% EBITDA margin, for the three months ended September 30, 2024. For the nine months ended September 30, 2024, EBITDA increased $27.2 million to $209.3 million, or a 27.5% EBITDA margin. The increases were due to the impact of acquisitions, price-led revenue growth, an increase in recyclable commodity values, lower disposal and trucking costs, and a decrease in maintenance and repair expenses, partially offset by an increase in allocated corporate overhead and higher labor costs.
Depreciation, depletion and amortization expense increased $6.4 million to $36.3 million for the three months ended September 30, 2024, and increased $14.6 million to $101.9 million for the nine months ended September 30, 2024. The increases were due to assets acquired in acquisitions and additions to the fleet and equipment.
Corporate
EBITDA decreased $5.4 million to a loss of $8.1 million for the three months ended September 30, 2024, and decreased $4.6 million to a loss of $26.7 million for the nine months ended September 30, 2024. The decreases were due to an increase in professional fees, direct acquisition expenses, deferred compensation costs, and administrative payroll costs, partially offset by increased allocation of costs to the operating segments and decreased incentive compensation costs.
Liquidity and Capital Resources
Net cash provided by operating activities increased $89.1 million to $1.660 billion for the nine months ended September 30, 2024, primarily due to an increase in earnings, changes in accounts payable and accrued liabilities, and changes in deferred income taxes, partially offset by an increase in payments for closure and post-closure activities and an increase in prepaid expenses.
Net cash used in investing activities increased $1.460 billion to $2.646 billion for the nine months ended September 30, 2024, primarily due to an increase in cash paid for acquisitions.
Net cash provided by financing activities increased $1.407 billion to $1.040 billion for the nine months ended September 30, 2024, primarily due to an increase in long-term borrowings, partially offset by an increase in cash dividends paid and payments of contingent consideration.
Outlook
Western continues to focus on price-led revenue growth, cost control, and strategic acquisitions to drive profitability and cash flow. The company expects to maintain its strong financial position and liquidity to fund future growth initiatives. However, inflationary pressures and competitive pressures may require the company to absorb some cost increases, which could impact margins. Overall, Western’s diverse service offerings, geographic footprint, and disciplined approach to operations and capital allocation position the company well for continued success.