In light of a strong second quarter, Waste Connections,Woodbridge, Ontario, has raised its expectations for the remainder of 2022, according to its second-quarter financial report.
Net income for the second quarter was $257.1 million, an increase of nearly 22 percent over last year’s net income of $210.9 million for the same period.
“Solid waste pricing growth of 8.8 percent enabled us to overcome increased inflationary pressures during the period and deliver adjusted EBITDA [earnings before interest, taxes, depreciation and amortization] margin in line with our outlook for quarter two and flat on a year-over-year basis, excluding the margin dilutive impact from acquisitions completed since the year-ago period," Waste Connections President and CEO Worthing F. Jackman says.
According to the company’s filing with the federal Securities and Exchange Commission, its net income was up about 26.5 percent during the second quarter of 2022 (about $224 million) compared with 2021 (about $177 million).
Revenue for the quarter was about $1.81 billion, up 18.4 percent from the $1.53 billion Waste Connections brought in during the second quarter of 2021.
For the second quarter of ’22, Waste Connections’ adjusted EBIDTA was about $566.8 million compared with about $485 million for the second quarter of 2021, an increase of about 16.9 percent, according to the company’s SEC filing.
The updated outlook for the remainder of 2022 includes a revised annual revenue projection of $7.125 billion, up $215 million from an earlier estimate, Waste Connections Chief Finance Officer and Executive Vice President Mary Anne Whitney says.
“Adjusted EBITDA for the full year is now estimated at approximately $2.19 billion, or about 30.7 percent of revenue, down about 50 basis points from our initial outlook as follows: 40 basis points reflect the impact of incremental price increases to overcome higher inflationary pressures, including over 100 basis points from higher fuel and third-party logistics as compared to our original outlook, and 10 basis points is from the margin dilutive impact of acquisitions completed since February,” Whitney says.
Strong pricing coupled with fuel surcharges helped protect the company from inflationary pressures, Jackman says.
“We are extremely pleased with our performance in the first half of the year, led by strong execution and continued pricing implementations to address macro challenges,” he says. “In the second quarter, as cost pressures persisted, we once again delivered pricing above our outlook, and we positioned ourselves for another sequential increase in quarter three to drive higher pricing the second half of the year.”
The first half of 2022 also was marked by heavy acquisition activity, which Jackman says should help increase revenue.
“We’ve already closed 12 acquisitions year to date, with annualized revenue of approximately $245 million, about two times the level of what we would consider average for a full year,” he says. “These transactions are all in solid waste and include West Coast franchises, as well as new market entries and tuck-ins spread across competitive markets in the U.S. and Canada.”
According to the SEC filing, Waste Connections is carrying about $5.6 billion in long-term debt, issued in notes that come to maturity between 2028 and 2052. Interest rates on those notes range from 2.2 percent to 4.25 percent.