01—Abstract
Summary
Summary of the 10-K filed February 17, 2022. Cited figures are marked; the original filing is the authoritative source.
Waste Connections, Inc. is the third largest solid waste services company in North America, providing non-hazardous waste collection, transfer and disposal, resource recovery primarily through recycling and renewable fuels generation, and E&P waste treatment and disposal, across 43 states in the U.S. and six Canadian provinces.
For 2021, revenues increased 13.0% to $6.151 billiona from $5.446 billion, and net income attributable to Waste Connections rose to $618.0 million from $204.7 million. Adjusted EBITDA increased 15.5% to $1.919 billion, with the margin rising to 31.2% from 30.5%. The 2020 comparison included a $417.4 million impairment on four E&P landfills, which largely explains the swing in operating income, which rose to $1.040 billion from $412.4 million.
The company completed 30 acquisitions in 2021 for consideration with a net fair value of $1.069 billionb, and spent $744.3 million on capital expenditures. Net cash from operating activities rose 20.6% to $1.698 billion, and adjusted free cash flow increased to $1.010 billion from $841.9 million. Shareholder returns totaled $559.2 million, including $220.2 million in dividends and $339.0 million in share repurchases.
The Leverage Ratio fell to 2.50x from 2.68x. Total indebtedness was approximately $5.102 billionc at year-end, with $933.8 million of remaining capacity under the Credit Agreement, which matures in July 2026. The company expects 2022 capital expenditures of approximately $850 million.
Risks highlighted in the filing include E&P waste demand tied to oil prices, recycled commodity and RIN price volatility, evolving PFAS and climate regulation, pending litigation on the Chiquita Canyon landfill conditions, and the Lower Duwamish Waterway Superfund allocation process. Cash balances declined to $147.4 milliond at year-end from $617.3 million, and the company reported a working capital deficit of $200.0 million.
02—Key points
Key Highlights
- Revenue grew 13.0% to $6.151 billion in 2021; excluding acquisitions, revenue increased 9.0%, with solid waste internal growth of 8.4% driven by 5.0% pricing and 1.6% volume growth.
- Net income attributable to Waste Connections increased 202.0% to $618.0 million, while adjusted net income rose 21.7% to $846.6 million, or $3.23 per diluted share on an adjusted basis.
- Adjusted EBITDA rose 15.5% to $1.919 billion, with the margin expanding from 30.5% to 31.2%, driven by price-led organic growth and higher commodity-driven revenue.
- Adjusted free cash flow increased to $1.010 billion from $841.9 million, and was 16.4% of revenues in 2021 compared with 15.5% in 2020.
- Shareholders received $559.2 million through $220.2 million in dividends and $339.0 million in share repurchases; the quarterly dividend was raised 12.2% to $0.23 per share.
- The Leverage Ratio improved to 2.50x from 2.68x, within the 2.5x–3.0x target range, though cash fell to $147.4 million and the company had a $200.0 million working capital deficit.
- Operating income of $1.040 billion compares with $412.4 million in 2020, which included a $417.4 million impairment of four E&P landfills.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in FY2021, Waste Connections kept $0.10.
- Revenue$6.15B100.0%
- Cost of revenue−$3.65B59.4%
- Gross profit$2.50B40.6%
- Operating costs−$1.46B23.7%
- Operating income$1.04B16.9%
- Interest, other & tax−$421.1M6.8%
- Net income$618.5M10.1%
Where FY2021 revenue went
$6.15B- Cost of revenue: $3.65B, 59% of revenue
- Other operating costs: $845.3M, 14% of revenue
- Net income: $618.5M, 10% of revenue
- SG&A: $612.3M, 10.0% of revenue
- Interest, other & tax: $421.1M, 6.8% of revenue
Kept 10% as net income
Full revenue history →04—Financials
Financial Highlights
Figures from 10-KFY2021filed February 17, 2022Financial Statements
FY2021 against FY2020
| Line item | FY2021FY2020 | Change |
|---|---|---|
| Revenue | $6.15B$5.45B | +13.0% |
| Cost of Revenue | $3.65B$3.28B | +11.5% |
| Gross Profit | $2.50B$2.17B | +15.1% |
| SG&A Expenses | $612.34M$537.63M | +13.9% |
| Operating Income | $1.04B$412.43M | +152.1% |
| Interest Expense | $162.80M$162.38M | +0.3% |
| Net Income | $618.49M$203.99M | +203.2% |
| EPS (Basic) | $2.37$0.78 | +203.8% |
| EPS (Diluted) | $2.36$0.78 | +202.6% |
| Shares Outstanding (Basic) | 261.17M263.19M | −0.8% |
| Shares Outstanding (Diluted) | 261.73M263.69M | −0.7% |
05—Questions
Frequently Asked Questions
How did Waste Connections perform financially in 2021?
Revenues increased 13.0% to $6.151 billion, net income attributable to Waste Connections rose to $618.0 million from $204.7 million, and adjusted EBITDA increased 15.5% to $1.919 billion. The 2020 results were depressed by a $417.4 million E&P landfill impairment.
How much did the company spend on acquisitions and capital expenditures?
The company completed 30 acquisitions for consideration with a net fair value of $1.069 billion in 2021. Capital expenditures for property and equipment were $744.3 million, and the company expects approximately $850 million in 2022.
What is the company's debt and liquidity position?
Total indebtedness was approximately $5.102 billion at December 31, 2021, and the Leverage Ratio was 2.50x. The company had $933.8 million of remaining borrowing capacity under its Credit Agreement, which matures in July 2026, and cash of $147.4 million.
What are the main risks to the business highlighted in the filing?
Key risks include competitive bidding and contract loss, E&P waste demand tied to crude oil prices, volatility in recycled commodity and RIN prices, increasing PFAS and climate regulation, landfill permitting difficulties, and litigation including the Chiquita Canyon landfill case and the Lower Duwamish Waterway Superfund allocation.
How is the company returning capital to shareholders?
In 2021 the company paid $220.2 million in cash dividends and repurchased 3.004 million shares for $339.0 million. The quarterly dividend was increased to $0.23 per share, and the Board intends to review it annually with a long-term objective of increasing it.
06—Continue