In the face of the severe economic downturn brought on by the COVID-19 pandemic, Toronto-based Waste Connections Inc. (WCN) fared relatively well financially in the first quarter and is poised to recover quickly over the remainder of the year, company officials report.
“An extremely strong start to the year, which had put us firmly on track to exceed our outlook, was interrupted in March by measures taken across the U.S. and Canada to limit or control the spread of COVID-19,” said Worthing Jackman, WCN’s president and CEO, in a May 7 call with investors to discuss the company’s Q1 2020 earnings. “In spite of the resulting significant slowdown in economic activity and impact to revenue, we exceeded our first quarter outlook for adjusted EBITDA and delivered adjusted free cash flow of $235.7 million, or 17.4% of revenue and 57.7% of adjusted EBITDA, while also shifting our focus to one of preparedness.”
Jackman said the pandemic-related financial impacts that WCN has experienced vary geographically and have been affected by the size of the customer base in its markets and the timing and extent of shutdowns in those markets.
“Our smaller, more suburban or rural markets have been less impacted than the larger, more densely populated markets where we operate,” Jackman said. “Canada and the northeastern U.S. have been our hardest-hit areas.”
Due to the uncertainties and market volatility brought on by the pandemic, WCN has suspended the original outlook it provided for 2020, and the company intends to update its full-year outlook when it reports its second-quarter results, Jackman said.
However, WCN has seen many positive signs pointing toward recovery during April, he said.
“Assuming that April reflects the depths of any impact, we are encouraged that revenue on a reported basis for the month declined 6.0% year-over-year, or 1.4% excluding Canada and the Northeast U.S., which were hardest hit, and solid waste trends have improved sequentially late in the month and into early May,” Jackman said. “Any economic recovery should reduce the revenue impact going forward, and our daily trackers suggest that the worst may in fact be behind us. Our data indicates that the pace of decline in solid waste in our most affected markets peaked in late March and slowed considerably during April.”
Additional WCN Financial Highlights for Q1 2020:
- Revenue $1.352 billion, up 8.7% over $1.245 billion reported for Q1 2019
- Net income $142.9 million ($0.54 per diluted share), up 13.8% over $125.6 million ($0.48 per diluted share) reported for Q1 2019
- Solid waste internal price plus volume growth 4.7%
- Net cash provided by operating activities $369.6 million