Waste Connections announces Q1 results

Waste Connections Inc., Ontario, Canada, has announced its results for the first quarter of 2021 on April 28.

According to the company, revenue in the first quarter totaled $1.396 billion, up from $1.352 billion in the year ago period. Operating income was $238.4 million, which included $0.9 million in acquisition-related costs and $0.6 million in impairments and other operating items. This compares to operating income of $217.0 million in the first quarter of 2020, which included $3.7 million in acquisition-related costs and $1.5 million of impairments and other operating items.

Net income in the first quarter was $160.3 million, or $0.61 per share on a diluted basis of 263.2 million shares. In the year ago period, the company reported net income of $143.0 million, or $0.54 per share on a diluted basis of 264.4 million shares.

Adjusted net income in the first quarter was $185.5 million, or $0.70 per diluted share, versus $170.6 million, or $0.65 per diluted share, in the prior year period. Adjusted EBITDA in the first quarter was $433.2 million, as compared to $408.5 million in the prior year period. 

“We are extremely pleased by the increasing momentum throughout the first quarter, with high flow through from returning solid waste volumes and increased resource recovery values setting up for outsized performance in 2021,” said Worthing F. Jackman, president and CEO of Waste Connections.

“These tailwinds, bolstered by strong solid waste pricing retention, drove adjusted EBITDA margin 70 basis points higher than expected in the period. Adjusted EBITDA margin in Q1 was 31.0 percent, up 80 basis points year over year, driven primarily by an estimated 110 basis points margin expansion in underlying solid waste collection, transfer and disposal, with another 100 basis points from higher recovered commodity values.”

Financial impact from COVID-19

Waste Connections reports that the related economic disruptions largely associated with closures or restrictions put into effect following the onset of the COVID-19 pandemic resulted in declines in solid waste commercial collection, transfer station and landfill volumes, and roll off activity.

Throughout the remaining fiscal year 2020, solid waste revenue and reported volumes largely reflected the pace and shape of the closures and subsequent reopening activity, with the timing and magnitude of recovery varying by market. Reported solid waste volumes in 2020 turned slightly negative in Q1, were most negative in Q2, and showed sequential improvement during the second half of the year, finishing the year at negative 3.1 percent in Q4.

In Q1 2021, the final period to include comparisons to pre-COVID-19 activity levels on a year over year basis, solid waste volumes were down 3.2 percent, reflecting the strong start to 2020 prior to the onset of the pandemic, compounded by the impact of an extra day in the quarter in 2020 due to leap year, as well as extreme winter weather in many markets during February 2021. Solid waste volumes increased 2.6 percent in March 2021 compared to March 2020. 

"We knew that our differentiated response to the COVID-19 pandemic would leave us well-positioned as local economies reopened, and we are encouraged by improving macro trends and our strong operating and financial performance as we anniversary the onset of the pandemic,” said Jackman. “COVID-19-related impacts to our business continue to abate, but most importantly, our commitment to and support of our employees and their families are unwavering.”

Looking ahead, the impact of the COVID-19 pandemic on Waste Connections’ business, results of operations, financial condition and cash flows in future periods will depend largely on future developments, including the duration and spread of the outbreak in the U.S. and Canada, the rate of vaccinations, the severity of COVID-19 variants, the actions to contain such coronavirus variants, and how quickly and to what extent normal economic and operating conditions can resume.