Company Reports

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

Wide-moat-rated Waste Connections reported robust first-quarter results as revenue and adjusted EBITDA increased 9% and 15%, respectively. Both revenue and adjusted EBITDA came in above prior guidance; however, adjusted EBITDA missed the FactSet consensus estimate by 2%. Nonetheless, our underlying thesis for the company is unchanged. As such, we don't expect to materially change our fair value estimate, save for a time value of money adjustment.

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

Wide-moat-rated Waste Connections reported strong fourth-quarter results with revenue and adjusted EBITDA increasing 9% and 16% year over year, respectively. The market reacted positively, sending shares up 5% on Feb. 14, as management guided toward a 120-basis-point improvement in adjusted EBITDA margin (to 32.7%) on top of greater than 9% sales growth for fiscal 2024. We expect to raise our fair value estimate for both New York Stock Exchange- and Toronto Stock Exchange-listed shares by approximately 6%, primarily due to our more optimistic view on near-term profit margins.

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

On Dec. 11, Waste Connections announced that it has agreed to acquire disposal assets in western Canada from Secure Energy Services for CAD 1.075 billion. These assets consist of 18 treatment, recovery, and disposal facilities, six landfills, four saltwater disposal injection wells, and two disposal caverns. Collectively, these assets generate annual revenue of approximately CAD 300 million. Management disclosed that these assets will increase Waste Connections’ pro forma EBITDA margin by 50 basis points. Based on our math, management targets about a 50% EBITDA margin for these assets, which is what we’d expect from high-quality disposal assets along with potential synergies. Management expects the deal to close during the first quarter of 2024. After updating our valuation model to include this acquisition, we’ve raised our fair value estimate for the New York Stock Exchange-listed shares by about 2.5% to $124. Our fair value estimate for the Toronto Stock Exchange-listed shares has increased to CAD 169 from CAD 163 due to the inclusion of the acquisition and the change in the U.S. dollar/Canadian dollar exchange ratio since our last update.

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

Wide-moat-rated Waste Connections' solid third-quarter results were overshadowed by nonrecurring costs incurred during the quarter. Despite meaningful adjusted EBITDA margin improvement, shares declined nearly 7% on Oct. 26 as the market digested the news that issues with two of the company's landfills could affect revenue, operating expenses, and free cash flow by up to $20 million during the fourth quarter. Nevertheless, we maintained our $121 per share fair value estimate for New York Stock Exchange-listed shares. We raised our fair value estimate for Toronto Stock Exchange-listed shares CAD 1 to CAD 167 due to the change in the USD/CAD ratio since our last update.

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

As a fully integrated waste hauler, Waste Connections leverages its large network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

After reviewing Waste Connections’ second-quarter financial results and 2023 outlook, we’ve raised our fair value estimate for New York Stock Exchange-listed shares about 9% to $118 per share. Waste Connections’ profit margin has outpaced our expectations this year, despite margin headwinds from lower recycled commodity prices. We’re now modeling adjusted EBITDA margin to average 31.5%-32.0% over the next five years, about 40 basis points higher than our previous outlook. Our more optimistic profit margin outlook, along with the time value of money, were key factors behind our increased fair value estimate. We raised our fair value estimate for Toronto Stock Exchange-listed shares to CAD 157.

As a fully integrated waste hauler, Waste Connections leverages its immense network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

As a fully integrated waste hauler, Waste Connections leverages its immense network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

Waste Connections delivered robust first-quarter results as momentum in core pricing and acquisition activity continued. The company's top line grew over 15% year over year, with contribution split evenly between internal solid waste growth and growth from acquisitions. Adjusted EPS of $0.89 was in line with FactSet consensus, and management reaffirmed its full-year financial guidance. We expect to raise our $107 per share (CAD 144) fair value estimate by a low-single-digit percentage due to the time value of money, but our long-term outlook remains intact.

On April 24, 2023, Waste Connections announced that its board of directors terminated CEO Worthing Jackman's employment effective April 23, 2023. Jackman had been Waste Connections' CEO since July 2019. We were not expecting a leadership change, and this abrupt announcement came as a surprise to us, especially considering Waste Connections' recent strong financial performance. Fortunately, Waste Connections has an experienced executive who can immediately take the helm. Ronald Mittelstaedt is the firm's founding CEO and served in that position until the 2019 CEO transition to Jackman. In 1997, Mittelstaedt raised capital to purchase the bedrock assets of Waste Connections from Browning-Ferris, and he took Waste Connections public roughly a year later. After the 2019 CEO transition, Mittelstaedt became the executive chairman of the board of directors. However, now that he is the CEO, the chairman role was passed on to independent director Michael Harlan. Considering Mittelstaedt’s long history with the firm and the fact that he’s been directly involved as the executive chairman in recent years, we don’t expect material changes to Waste Connections’ operations or business strategy. We've maintained our fair value estimate and wide-moat rating for Waste Connections. We look forward to hearing from Mittelstaedt during the firm's first-quarter earnings on April 27. That said, we don't expect to hear any more details on Jackman's departure.

As a fully integrated waste hauler, Waste Connections leverages its immense network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

Wide-moat-rated Waste Connections delivered fourth-quarter results that were mostly in line with our expectations as tailwinds in core pricing and strong acquisition activity outweighed headwinds from lower collection volumes and recycled commodity prices. For full-year 2022, Waste Connections posted over 17% top-line growth (7% organic solid waste) and adjusted EPS of $3.82 per share. Management issued a favorable outlook for 2023 propelled by continued gains in core pricing. We raised our fair value estimate by 9% to $107 (CAD 144) per share to reflect more favorable pricing dynamics in the core solid waste business.

As a fully integrated waste hauler, Waste Connections leverages its immense network of collection routes that bestows significant control over the waste stream, funneling trash from commercial, industrial, and residential end markets into its valuable landfill assets. Waste Connections' secondary and rural market strategy faces less competition and delivers higher profit margins relative to larger, urban-focused competitors Waste Management and Republic Services.

Waste Connections posted solid third-quarter results, driven by strong pricing tailwinds. Revenue growth of 18% and adjusted EPS of $1.10 (up 24% year over year) modestly exceeded our estimates for the quarter. Management remained optimistic heading into the fourth quarter and modestly raised its full-year 2022 revenue guidance by 1% while maintaining its adjusted free cash flow target of $1.16 billion. We maintain our $98 fair value estimate for New York Stock Exchange-listed shares. We lowered our fair value estimate for Toronto Stock Exchange-listed shares by 2% to CAD 132 due to foreign exchange.