01—Abstract
Summary
Summary of the 10-Q filed April 25, 2024. Cited figures are marked; the original filing is the authoritative source.
Waste Connections, Inc. reported first-quarter 2024 revenues of $2.073 billiona, up from $1.901 billion in the prior-year quarter, with net income attributable to Waste Connections of $230.1 million, or $0.89 per diluted share, compared with $197.8 million, or $0.77, a year earlier.
Operating income rose to $366.8 millionb from $314.7 million, and the filing attributes the increase primarily to price increases in solid waste services, contributions from acquisitions, higher E&P waste earnings and higher renewable energy credit and recyclable commodity pricing, partially offset by higher risk management costs and incentive compensation. Adjusted EBITDA was $650.7 million versus $566.9 million, and adjusted free cash flow was $324.8 million versus $274.0 million. The balance sheet expanded materially during the quarter.
Total assets rose to $19.08 billionc from $17.92 billion at December 31, 2023, and long-term debt increased to $7.80 billion from $6.72 billion. In February 2024 the company issued $750.0 million of 5.00% Senior Notes due 2034 and entered a new Revolving Credit Agreement of up to $3.0 billion, using proceeds to repay its 2021 Revolving and Term Credit Agreement and 2022 Term Loan Agreement. Cash paid for acquisitions was $1.16 billion in the quarter, and the company reported a working capital deficit of $414.5 million.
Net cash from operating activities was $490.3 million, and the quarterly dividend was raised to $0.285d per share. The filing also details significant legal and regulatory exposures.
The Jefferson Parish, Louisiana landfill odor litigation has a class certification briefing deadline of June 26, 2024 and a merits trial scheduled for August 12, 2024, and the company cannot currently determine the likelihood of outcome. At the Chiquita Canyon Landfill, an elevated temperature landfill event has produced approximately 163 SCAQMD Rule 402 notices of violation and two Department of Toxic Substances Control summaries of violation, with potential penalties that the company describes as potentially substantial and not yet determinable.
02—Key points
Key Highlights
- Revenues rose to $2.07 billion from $1.90 billion, with net price increases of $128.5 million and acquisitions adding $80.6 million, partially offset by volume losses of $69.6 million.
- Net income attributable to Waste Connections was $230.1 million ($0.89 per diluted share) versus $197.8 million ($0.77) in the prior-year quarter.
- Adjusted EBITDA increased to $650.7 million from $566.9 million; adjusted free cash flow increased to $324.8 million from $274.0 million.
- Total debt and notes payable rose to $7.80 billion long-term, following a new $3.0 billion Revolving Credit Agreement and a $750.0 million 5.00% Senior Notes offering due 2034.
- Acquisition spending was $1.16 billion in cash during the quarter, with nine individually immaterial solid waste businesses and one E&P waste business acquired.
- Chiquita Canyon Landfill faces approximately 163 SCAQMD notices of violation and two DTSC summaries of violation from an elevated temperature landfill event, with penalties not yet determinable.
- The quarterly cash dividend was raised to $0.285 per share from $0.255, and the company declared the next $0.285 dividend payable May 23, 2024.
03—One dollar
Follow one dollar
Of each $1.00 of revenue in Q1 FY2024, Waste Connections kept $0.11.
- Revenue$2.07B100.0%
- Cost of revenue−$1.22B58.9%
- Gross profit$850.9M41.1%
- Operating costs−$484.1M23.4%
- Operating income$366.8M17.7%
- Interest, other & tax−$137.7M6.6%
- Net income$229.1M11.1%
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2024filed April 25, 2024Financial Statements
Q1 FY2024 against Q1 FY2023
| Line item | Q1 FY2024Q1 FY2023 | Change |
|---|---|---|
| Revenue | $2.07B$1.90B | +9.1% |
| Cost of Revenue | $1.22B$1.15B | +6.5% |
| Gross Profit | $850.87M$753.56M | +12.9% |
| SG&A Expenses | $220.74M$193.67M | +14.0% |
| Operating Income | $366.80M$314.69M | +16.6% |
| Interest Expense | $78.49M$68.35M | +14.8% |
| Net Income | $229.13M$197.84M | +15.8% |
| EPS (Basic) | $0.89$0.77 | +15.6% |
| EPS (Diluted) | $0.89$0.77 | +15.6% |
| Shares Outstanding (Basic) | 257.80M257.37M | +0.2% |
| Shares Outstanding (Diluted) | 258.48M257.99M | +0.2% |
05—Questions
Frequently Asked Questions
What drove the increase in revenue and operating income?
Revenues increased $172.2 million, or 9.1%, to $2.073 billion. The filing attributes the increase to a net $128.5 million rise in prices at existing operations and $80.6 million from acquisitions, partly offset by $69.6 million of volume losses. Operating income rose $52.1 million, or 16.6%, to $366.8 million, with operating margin of 17.7% versus 16.6%.
How did the company's debt and liquidity change?
Long-term debt increased to $7.80 billion from $6.72 billion. In February 2024 the company issued $750.0 million of 5.00% Senior Notes due 2034 and entered a new Revolving Credit Agreement maturing February 27, 2029, with $2.24 billion drawn at March 31, 2024 and $723.4 million available. The company reported a working capital deficit of $414.5 million, including cash and equivalents of $112.0 million.
What are the main legal and regulatory risks disclosed?
The Jefferson Parish, Louisiana landfill odor lawsuits, including class and mass actions, face class certification briefing due June 26, 2024 and a merits trial for 13 plaintiffs starting August 12, 2024; the company says it cannot determine the likelihood of outcome. At Chiquita Canyon Landfill, the company received about 163 SCAQMD notices of violation and two DTSC summaries of violation tied to an elevated temperature landfill event, and states that resulting penalties could be substantial.
How did cash flows and shareholder returns look in the quarter?
Net cash provided by operating activities was $490.3 million, versus $442.4 million a year earlier. Investing outflows were $1.33 billion, mainly acquisitions, and financing provided $878.5 million net. Cash dividends paid were $73.6 million, and the company did not repurchase any shares under its normal course issuer bid during the quarter.
What is the outlook for capital spending?
The company expects total 2024 capital expenditures for property and equipment of approximately $1.150 billion, including about $150 million for renewable natural gas facilities. It expects to fund the balance of planned 2024 capital expenditures mainly through cash on hand, internally generated funds and borrowings under its Revolving Credit Agreement.
06—Continue