GFL Environmental (GFL) Q3 2024 earnings summary

Executive summary

• Achieved record adjusted EBITDA margin of 31.1% in Q3 2024, up 300 bps year-over-year, driven by disciplined pricing, cost control, and operational efficiency, with lowest net leverage in company history at 4.05x.

• Revenue grew 9.3% year-over-year excluding divestitures, with Q3 revenue at $2.015 billion, and strong operational performance despite two hurricanes in the U.S. Southeast.

• On track with capital allocation strategy, deploying $900 million in M&A and growth investments, including recycling and RNG infrastructure.

• Launched process to sell Environmental Services (ES) segment, expecting at least $6 billion in after-tax proceeds, with $3.5 billion earmarked for debt repayment and the remainder for share buybacks and general purposes.

• Announced leadership succession: Greg Yorston to transition COO role to Billy Schaeffer (also referenced as Billy Soffera) effective January 1, 2025.

Financial highlights

• Q3 2024 Adjusted EBITDA rose 18.0% to $625.9 million; Adjusted Net Income was $126.1 million; Net income was $110.6 million.

• Consolidated Q3 revenue was $2.015 billion, in line with guidance, with 11.3% solid waste revenue growth (excluding divestitures).

• Adjusted Free Cash Flow for Q3 was $225.4 million, down from $276.0 million due to timing of cash taxes and growth investments.

• Adjusted EBITDA margin reached 31.1%, up 300 bps year-over-year and 600 bps over five years.

• Year-to-date completed acquisitions generated ~$115 million in annualized revenue.

Outlook and guidance

• Fiscal 2024 revenue expected at $7.82–$7.85 billion, with adjusted EBITDA margin guidance raised to 28.6% (200 bps expansion year-over-year).

• Q4 revenue expected at $1.94–$1.97 billion, with adjusted EBITDA margin just over 29%.

• Q4 Adjusted Free Cash Flow and Adjusted Net Income expected at $350 million and $75–$80 million, respectively.

• Fiscal 2025 guidance to be provided post-ES sale; early outlook suggests mid-single-digit organic revenue growth, double-digit adjusted EBITDA growth, and >100 bps margin expansion.

• Confident in delivering 2024 key guidance metrics and positioned for further margin expansion and growth in 2025.