GFL Environmental Inc., Ontario, Canada, announced its results for the second quarter on Aug. 5.
Company revenue increased by 19.5 percent to CA$993.3 million ($746.9 million) in the second quarter compared to the second quarter of 2019. Solid waste core price for the second quarter was 3.7 percent compared to 4.4 percent in the comparable quarter of the prior year, resulting from the company’s decision to temporarily suspend pricing initiatives in response to COVID-19 disruptions. Solid waste volumes declined 8.3 percent for the second quarter, with 80 percent of the decline attributable to its commercial and industrial collection operations. Revenue for the six months ended June 30 was CA$1.92 billion ($1.44 billion), an increase of 24 percent compared to the same period in 2019. The increase in both periods was driven by significant revenue growth across all reportable segments both organically and through acquisitions.
Adjusted EBITDA increased by 23.4 percent to CA$261.5 million ($196.6 million) in the second quarter compared to the second quarter of 2019, primarily attributable to strong revenue growth in the quarter. Adjusted EBITDA includes CA$2.5 million ($1.9 million) of COVID-19-related costs specifically attributable to incremental personal protective equipment as well as CA$3.5 million ($2.6 million) of incremental bad debt expenses. Adjusted EBITDA margin was 26.3 percent for the second quarter as compared to 25.5 percent in the prior year period. Net loss increased from CA$68.1 million ($51.2 million) for the second quarter of 2019 to CA$115.5 million ($86.9 million) for the second quarter driven primarily by the changes in adjusted EBITDA partially offset by a mark-to-market loss on the company’s tangible equity unit derivative purchase contracts.
Adjusted EBITDA increased by 23.9 percent to CA$484.3 million ($364.2 million) for the six months ended June 30 compared to the same period in the prior year, primarily attributable to strong revenue growth in the period. Net loss increased from CA$161.4 million ($121.4 million) for the six months ended June 30, 2019 to CA$393.5 million ($295.9 million) for the six months ended June 30 driven by costs associated with the company’s initial public offering and the early redemption of several series of its outstanding unsecured bonds and the extinguishment of its 11 percent payment-in-kind notes as part of the pre-closing capital changes implemented immediately prior to its initial public offering.
Cash flow from operating activities increased by 137.3 percent to CA$132.2 million ($99.4 million) in the second quarter compared to the second quarter of 2019. For the six months ended June 30, cash flow from operating activities was CA$82 million ($61.7 million), an increase of 125.9 percent compared to the same period in the prior year.
"We are very pleased with our strong results for the quarter. Despite the impacts of COVID-19 on parts of the North American economy, we were able to grow revenue in the quarter by 19.5 percent and adjusted EBITDA by 23.4 percent compared to the second quarter of 2019, resulting in our highest ever reported revenue, adjusted EBITDA and adjusted EBITDA margin. Our results for the quarter reinforce the resiliency of our business model and our success in executing our margin-enhancing strategic initiatives. Our skilled team of managers and operators exceeded our expectations in responding to the slowdown resulting from the pandemic," GFL founder and CEO Patrick Dovigi says. "Over the course of the quarter, as markets and economies began to reopen, we saw, and continue to see, sequential increases in commercial activity and volumes in the markets that we serve.
"In response to the spread of COVID-19 and resulting governmental measures, we have implemented business continuity initiatives focused on prioritizing the health and safety of our workforce. I want to thank our over 13,000 employees for their continued hard work and commitment during these challenging times. Without them, we would not be able to provide our essential services to the customers and communities that depend on us."
"We remain focused on pursuing our growth strategies, including through organic revenue growth and acquisitions,” Dovigi continues. “In June, we announced the acquisition from Waste Management Inc. and Advanced Disposal Services Inc. of a portfolio of vertically integrated solid waste collection, transfer, recycling and disposal assets across 10 states. The acquisition, which is targeted to close in the third quarter of 2020, is expected to be financed through a combination of capacity under our revolving credit facility and cash on hand. Following the acquisition, we expect to maintain our current credit rating profile and leverage within previously stated ranges. With our strong balance sheet, available liquidity and proven access to the capital markets, we believe we are well positioned to continue to pursue strategic and accretive opportunities as they present themselves."