Waste Connections (WCN) Q3 2024 earnings summary

Executive summary

• Q3 2024 revenue grew 13.3% year-over-year to $2.34 billion, with net income up 34.5% to $308.0 million and adjusted EBITDA up 17.3% to $787.4 million, exceeding expectations and supporting a raised full-year outlook.

• Growth was driven by 6.8% core pricing, improved volumes, significant acquisition contributions, and higher landfill gas and recyclable commodity revenues.

• Employee retention improved for the eighth consecutive quarter, with voluntary turnover down over 40% from 2022 peaks, supporting operational efficiency and safety.

• Record private company acquisition activity in 2024, with over $700 million in annualized revenue signed or closed, positioning for continued growth and 2% revenue carryover into 2025.

• The Board increased the quarterly dividend by 10.5% to $0.315 per share, effective November 2024.

Financial highlights

• Q3 2024 revenue: $2.34 billion (+13.3% year-over-year); net income: $308.0 million (+34.5%); adjusted EBITDA: $787.4 million (margin 33.7%, up 120 bps); adjusted net income per share: $1.35.

• For the nine months ended September 30, 2024, revenue was $6.66 billion (+11.2%), net income $813.6 million (+27.9%), and adjusted EBITDA $2.17 billion.

• Adjusted free cash flow for the nine months was $1.04 billion (15.7% of revenue), on track for the full-year outlook of $1.2 billion.

• Net interest expense was $80.2 million, with leverage at 2.71x debt to EBITDA and a Q3 tax rate of 23%.

• Cash dividends per share for Q3 2024 were $0.285, up from $0.255 in Q3 2023.

Outlook and guidance

• Full-year 2024 revenue outlook raised to $8.9 billion (up $150 million), with adjusted EBITDA at $2.91 billion (up $50 million), and margin at 32.7%.

• Q4 2024 revenue expected at $2.24 billion, adjusted EBITDA at $740 million (33% margin).

• 2025 framework anticipates high single-digit adjusted EBITDA growth and mid- to high single-digit revenue growth, including ~2% from acquisition carryover.

• Adjusted free cash flow conversion expected to remain at 45%-50% of adjusted EBITDA, normalized for RNG CapEx and closure outlays.

• 2024 capital expenditures expected at ~$1.15 billion, funded by cash, operations, and credit facility.