Waste Connections ((TSE:WCN)) has held its Q4 earnings call. Read on for the main highlights of the call.
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The latest earnings call for Waste Connections revealed a balanced sentiment despite notable challenges. The company demonstrated strong financial performance with record-breaking acquisitions and significant revenue growth. However, obstacles such as the closure of the Chiquita Canyon landfill and declines in volume and commodities tempered these achievements, resulting in an overall neutral sentiment.
Record-Breaking Acquisition Activity
In 2024, Waste Connections marked a record year for acquisition activity, closing approximately $750 million in annualized revenue from 24 acquisitions. This ambitious expansion underscores the company’s strategic growth efforts and positions it well for future opportunities.
Revenue and Adjusted EBITDA Growth
Waste Connections reported an impressive 11% year-over-year increase in Q4 2024 revenue, reaching $2.26 billion. The adjusted EBITDA also saw a significant rise of 11.6% year-over-year, totaling $732 million. These figures highlight the company’s robust financial growth and operational efficiency.
Employee Engagement and Retention
The company achieved notable success in employee engagement and retention, with multiyear lows in employee turnover. This improvement, down over 1,000 basis points from 2022, reflects enhanced operational execution and a positive workplace environment.
Strong Organic Growth and Pricing Strategy
Waste Connections demonstrated strong organic growth and a strategic pricing approach, with a solid waste core pricing of 7.1%. This was backed by effective operational execution and acquisition integration, contributing to industry-leading margins.
Chiquita Canyon Landfill Closure
Due to economic feasibility issues, Waste Connections closed the active waste disposal operations at the Chiquita Canyon landfill. This decision led to a significant adjustment of $596.9 million related to site costs and closure liabilities, impacting the financial outcomes.
Commodity and FX Headwinds
The fourth quarter faced challenges from significant declines in commodities, RINs, and FX, which impacted the margins by over 60 basis points relative to guidance. These headwinds posed notable financial hurdles for the company.
Volume Decline
In Q4 2024, Waste Connections experienced a 2.7% decline in solid waste volumes. The company continued to focus on quality of revenue, balancing the trade-offs between price and volume to maintain its strategic objectives.
Forward-Looking Guidance
Looking ahead, Waste Connections provided a positive outlook for 2025, expecting price-led organic solid waste growth supported by ongoing acquisitions. The company anticipates full-year revenues between $9.45 billion and $9.6 billion, with adjusted EBITDA ranging from $3.12 billion to $3.2 billion, reflecting margin expansion. Adjusted free cash flow is projected to exceed $1.55 billion, with significant investment in renewable natural gas projects.
In summary, Waste Connections’ earnings call presented a balanced view of strong financial performance alongside challenges. The company’s record acquisition activity and revenue growth were tempered by landfill closures and volume declines. The forward-looking guidance remains optimistic, with expectations for continued growth and strategic investments.
