GFL Environmental Inc., Ontario, announced its results for the first quarter on May 5.
Revenue increased by 27.4 percent to $972.1 million* in the first quarter, compared to the first quarter of 2020. For the first quarter of 2021, solid waste core price and surcharges were 4 percent and solid waste volumes were positive 0.4 percent. Excluding processing volumes in the company’s material recovery facilities (MRFs), solid waste volumes were negative 3.2 percent, representing a 50 basis point sequential improvement compared to the fourth quarter of 2020, and over 110 basis point sequential improvement when normalizing for the impact of the leap year in 2020. In March, for the first time since the beginning of the COVID-19 pandemic, non-MRF solid waste volumes were positive as compared to the same month of the prior year.
Adjusted EBITDA increased by $68.65 million to $251.18 million in the first quarter compared to the first quarter of 2020. Adjusted EBITDA margin was 25.8 percent for the first quarter of 2021 as compared to 23.9 percent in the prior year period. Net loss decreased from $227.75 million for the first quarter of 2020 to $185.31 million for the first quarter of 2021 driven primarily by the changes in adjusted EBITDA partially offset by a mark-to-market loss on the company’s tangible equity unit (TEUs) derivative purchase contracts.
Cash flows from operating activities increased by 523.7 percent to $174.25 million in the first quarter of 2021 compared to the first quarter of 2020. This increase was predominantly attributable to the increase in adjusted EBITDA, lower interest expense, and improved working capital during the period.
"We have had an exceptionally strong start to the year, with solid waste pricing, volume recovery and contribution from acquisitions all exceeding our expectations and driving a 37.6 percent increase in adjusted EBITDA and a near doubling of adjusted cash flows from operating activities as compared to the first quarter of 2020," Patrick Dovigi, founder and CEO of GFL, says. "The quality of our revenue growth, combined with our continued rigorous focus on cost management, productivity and asset utilization, drove over 210 basis points of organic margin expansion in our solid waste business. As a result, we saw this segment report a 31 percent adjusted EBITDA margin, the highest in our history, and achieved during the first quarter, historically our lowest margins period on account of seasonality. The strength of this performance more than offset continued COVID-related volume headwinds, particularly in our infrastructure, soil and liquid businesses, driving 190 basis points of adjusted EBITDA margin expansion for the consolidated business."
Dovigi added, "We have substantially completed the integration of the acquisitions from the fourth quarter of last year. In March, we announced the acquisition of Terrapure Environmental, a transaction that we believe represents a unique opportunity to acquire a highly complementary, free cash flow accretive set of assets at a compelling valuation. The acquisition is still targeted to close in the third or fourth quarter of this year. We also completed six small tuck-in acquisitions during the quarter and four more acquisitions subsequent to quarter end."
Dovigi concluded, "We are very encouraged by the solid waste volume recovery that we saw throughout the quarter, even in the face of new and more restrictive COVID-19 measures being implemented in Canada, where we generate almost 40 percent of our revenue. As a result, we anticipate being in a position to increase our guidance when we provide our updated outlook at the time that we report our second quarter results."
Editor's note: All dollar figures have been converted from Canadian to U.S. dollars.