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GFL Boasts a 43.4% Revenue Increase in Q3; Raises FY21 Guidance

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GFL Environmental (GFL) announced its Q3 results today. The company’s results were better than expected (revenue +43.4% YOY) crediting its organic growth, strong proactive pricing and overperformance by recent acquisitions.

Here are some financial highlights:

  • Revenue increased by 43.3% to $1,485.1 million in the third quarter of 2021 compared to the third quarter of 2020.
  • Solid waste revenue increased by 8.2%, including 5.8% from core pricing, surcharge and commodity price increases and 2.4% from positive volume.
  • Adjusted EBITDA increased by $134.6 million to $415.8 million YOY. Adjusted EBITDA margin was 28% in the third quarter of 2021 compared to 27.1% in the third quarter of 2020.
  • Updated FY 2021 Guidance: Revenue is estimated to be between C$5,390 million and C$5,410 million (as compared to between C$5,225 million and C$5,275 million) and adj. EBITDA is estimated to be between C$1,440 million and C$1,450 million (as compared to between C$1,400 million and C$1,415 million).

"Our employees continued to deliver exceptional results in the third quarter, allowing us to once again exceed our expectations," said Patrick Dovigi, founder and chief executive officer of GFL. "This quarter we grew revenue by 43.3%, driven by strong organic growth ahead of expectations and continued outperformance from recent acquisitions. We also expanded Adjusted EBITDA margin by 90 basis points during the quarter, demonstrating the ability to successfully counteract increased inflationary cost pressures through proactive price increases and ongoing efficiency initiatives. We achieved these results in the face of continued COVID-19 restrictions in many of our Canadian markets, where we generate almost 40% of our revenue."

Dovigi added, "We remain focused on executing on our strategy to create long-term value for all of our stakeholders with the goal of growing our free cash flow. Year-to-date, we completed 37 acquisitions, including the acquisitions of Terrapure Environmental Ltd. and Peoria Disposal Company, further reinforcing our reputation as an acquirer of choice. We also completed several financing initiatives to further reduce our cost of capital, including an amendment to our revolving credit facility, resulting in additional annualized cash interest savings, and an equity commitment of up to US$300 million from affiliates of HPS Investment Partners, LLC. Finally, we received an additional US$74.2 million, US$126.4 million year-to-date, from the sale of non-core solid waste assets, the proceeds of which we are actively redeploying into organic and inorganic initiatives in our key growth markets."

Dovigi continued, "We continue to see upside opportunities ahead of us this year, as a result of our organic initiatives, and the robust M&A pipeline that we manage. Based on our performance to date and our proven ability to deliver on our growth strategies, we are once again increasing our 2021 full year guidance for revenue, Adjusted EBITDA and Adjusted Free Cash Flow. Furthermore, excluding acquisitions we expect to complete prior to year-end, we are positioned to have nearly 8.5% of roll over revenue contribution from M&A heading into 2022."

Labor shortages are a real challenge across the waste and recycling industry, but the GFL management team noted that their brand is one that attracts a strong pool of talent to GFL.

GFL also remains focused on its sustainability goals, investing in related technologies and Dovigi said, "We remain committed to our sustainability initiatives and continue to evaluate opportunities to unlock what we believe is significant value through landfill gas to energy projects at our MSW landfills and acceleration of the conversion of our fleet to CNG."

GFL’s 2022 guidance will be shared in February, but the management team feels optimistic and expects to have a strong jumping off point of 15% top-line growth.

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