Advanced Disposal Services announced revenue for the three months ended March 31, 2016 of $333.8 million versus $330.4 million in the same period of the prior year. Adjusted EBITDA for the first quarter was $86.8 million compared to $90.5 million in the first quarter of 2015 and net loss increased $3.5 million to $14.3 million.
The earnings report continued the theme for the quarter among the sector’s biggest haulers of price and volume growth driving results.
“We were able to execute on a number of [core initiatives],” Advanced Disposal CEO Richard Burke said in a conference call with analysts. “Starting with organic growth, we achieved gains in core operations led by a gain of 8 percent of disposal tons.”
That included a commercial container volume increase of 4 percent.
“I don’t think we’ve seen that bump yet where containers full over the top and the customer goes from two to three pickups per week or to [bigger containers],” Burke said. “So I don’t think we’ve seen the full effect of increasing weights in the containers yet.”
The company reported that its core business operations remain strong. Organic revenue gains were driven by a 1.9 percent improvement in average yield as the company continued its disciplined pricing strategy along with an 8 percent increase in disposal tons. These items were partially offset by lower fuel fee revenue and declines in residential volume primarily due to a business rationalization initiative that began in 2015. Revenue growth of 2.3 percent from acquisitions completed during 2015 was offset by lower margin divestitures during that same time period as the company remained focused on strengthening its competitive position in vertically integrated markets and divesting certain non-core businesses.
However, adjusted EBITDA declined $3.7 million and adjusted EBITDA margins fell 140 basis points to 26.0 percent. The company said it faced non-core revenue headwinds related to the sale of landfill gas as well as continued declines in shale activity and single-stream recyclable commodity pricing.
The company also reported operating income of $13 million for the quarter, adjusted EBITDA of $86.8 million, a net loss of $14.3 million and adjusted free cash flow of $27.1 million.