Growing in a Covid environment is no easy task. Today GFL Environmental (GFL) reported that it has done just that. The company announced its highest ever reported revenue, adjusted EBITDA and adjusted EBITDA margin.
Here’s a quick look at the financials:
- With revenue of $993.3 million – it is an increase of 19.5%.
- With adjusted EBITDA of $261.5 million, it is an increase of 23.4%.
- With adjusted EBITDA margin of 26.3%, it is an increase of 80 basis points and a solid waste adjusted EBITDA margin of 30.6%, it is an increase of 180 basis points.
Patrick Dovigi, founder and chief executive officer, credited the company’s success to three things:
- The revenue profile of its business.
- GFL generates 2/3 of its solid waste revenues in secondary markets.
- The dedication of its employees and their ability to adapt to the current challenging environment.
"We are very pleased with our strong results for the quarter. Despite the impacts of COVID-19 on parts of the North American economy, we were able to grow revenue in the quarter by 19.5% and Adjusted EBITDA by 23.4%, compared to the second quarter of 2019, resulting in our highest ever reported revenue, Adjusted EBITDA and Adjusted EBITDA margin. Our results for the quarter re-inforce the resiliency of our business model and our success in executing our margin enhancing strategic initiatives. Our skilled team of managers and operators exceeded our expectations in responding to the slowdown resulting from the pandemic" said Patrick Dovigi, Founder and Chief Executive Officer. "Over the course of the quarter as markets and economies began to re-open we saw, and continue to see, sequential increases in commercial activity and volumes in the markets that we serve."
"In response to the spread of COVID-19 and resulting governmental measures, we have implemented business continuity initiatives focused on prioritizing the health and safety of our workforce. I want to thank our over 13,000 employees for their continued hard work and commitment during these challenging times. Without them, we would not be able to provide our essential services to the customers and communities that depend on us."
Pricing was discussed quite a bit on the earnings call. Like many other public waste companies, GFL suspended pricing initiatives to support their small customers in light of Covid. When asked about normalized pricing going forward, the management team said that 3.5% – 4% is a sustainable level for the midterm.
Growth is on the company’s mind as well. Dovigi added "We remain focused on pursuing our growth strategies, including through organic revenue growth and acquisitions. In June we announced the acquisition from Waste Management, Inc. and Advanced Disposal Services, Inc. of a portfolio of vertically integrated solid waste collection, transfer, recycling and disposal assets across 10 states. The acquisition, which is targeted to close in the third quarter of 2020, is expected to be financed through a combination of capacity under our revolving credit facility and cash on hand. Following the acquisition, we expect to maintain our current credit rating profile and leverage within previously stated ranges. With our strong balance sheet, available liquidity and proven access to the capital markets, we believe we are well positioned to continue to pursue strategic and accretive opportunities as they present themselves.”
GFL’s solid growth for Q2 has the Street asking again if waste is truly recession-proof? Or maybe a better question is whether or not it is Covid-proof at this point?