GFL’s momentum continues in Q2

GFL’s momentum continues in Q2

Quality pricing, volume improvements, M&A successes yield strong Q2 earnings.


GFL Environmental Inc., Ontario, announced its results for the second quarter July 28.

Highlights of GFL’s Q2 earnings* include:

  • revenue of $1.06 billion, an increase of 32.3 percent year over year (YOY);
  • adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) of $283.72 million, an increase of 35 percent YOY; net income of $20.25 million; adjusted net income of $28.45 million;
  • adjusted EBITDA margin of 26.9 percent, an increase of 60 basis points;
  • adjusted cash flows from operating activities of $197.88 million; cash flows from operating activities of $142.67 million; adjusted free cash flow of $128.44 million; and
  • adjusted earnings per share of 8 cents; earnings per share of 2 cents.

"Our exceptional start to the year continued into the second quarter, allowing us to once again exceed expectations," Patrick Dovigi, founder and CEO of GFL, says. "This quarter we grew revenue by nearly 40 percent on a constant currency basis. The revenue growth was driven by the quality of our pricing, with solid waste pricing ahead of plan at 4.1 percent, meaningful volume improvements and outperformance from the M&A we completed in 2020. We achieved this in the face of continued COVID-19 restrictions in many of our markets in Canada where we generate almost 40 percent of our revenue. We also expanded adjusted EBITDA margin by 60 basis points during the quarter and more than doubled our adjusted free cash flow.

"We remain focused on our strategy to create long-term value for all of our stakeholders by growing our business organically, completing strategic and accretive acquisitions, reducing our cost of capital and using proceeds from noncore asset sales to reinvest in our business, with the goal of increasing our free cash flow,” Dovigi continues. “This is the same growth strategy that we executed on when we were private and for each of the six quarters since becoming a public company. During this quarter alone, we closed nine accretive tuck-in acquisitions and significantly advanced our planning for the closing of the acquisition of Terrapure Environmental Ltd. We also successfully refinanced our highest coupon debt, resulting in significant cash interest savings. Finally, we received approximately [$48 million] from the sale of noncore assets, the proceeds of which we intend to redeploy into organic initiatives in our key growth markets.

"Our strong results for the first half of the year, coupled with our expectations for the balance of the year and our demonstrated ability to execute on our growth strategy, are leading us to increase our 2021 full-year guidance,” Dovigi continues. “On a constant currency basis, we are increasing our guidance for revenue and adjusted EBITDA by 4 to 5 percent and adjusted free cash flow by nearly 10 percent. We have achieved several of the goals we set for ourselves at the beginning of the year, and we still see a lot of upside opportunities ahead of us, including continued outsized M&A activity in the back half of the year. We believe that realizing on these opportunities could allow us to exit 2021 with over [$482.25 million] adjusted free cash flow on a run-rate basis.

"We also see significant opportunity with our sustainability initiatives, especially with the formation of GFL Renewables, our vehicle to unlock what we believe is significant value through landfill gas to [energy] projects at our MSW landfills and acceleration of the conversion of our fleet to CNG."

Updated full-year 2021 guidance

GFL also provided its updated guidance for 2021:

  • Revenue is estimated to be between $4.2 billion and $4.24 billion.
  • Adjusted EBITDA is estimated to be between $1.13 billion and $1.14 billion.
  • Adjusted free cash flow is estimated to be between $409.91 million and $417.95 million.

The company’s guidance assumes the closing of the acquisition of Terrapure Environmental Ltd. on Oct.1. The 2021 updated guidance excludes any additional acquisitions, refinancing opportunities and any potential redeployment of capital. 

2021 upside opportunities 

GFL says several upside opportunities are in play for the company over the second half of the year.

  • The company expects to reduce its cost of capital even further by refinancing certain outstanding debt, potentially resulting in additional annualized interest cost savings.
  • The company has completed 15 tuck-in acquisitions year to date and continues to manage a “robust pipeline of potential acquisition targets in both Canada and the United States,” GFL says. The company also sees additional opportunities to redeploy capital into organic initiatives in its key growth markets from the continued potential sale of noncore assets. The net impact from the potential incremental M&A and redeployment of capital could result in additional revenue of approximately $120.56 million.
  • Based on the above upside opportunities, the company believes it can exit 2021, on a run-rate basis, with revenue of $4.62 billion, adjusted EBITDA of $1.24 billion and adjusted free cash flow of $490.29 million.

*All figures have been converted from Canadian to U.S. dollars.