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WCN, WM Release 2019 Sustainability Reports

WCN, WM Release 2019 Sustainability Reports

Waste Connections, Inc. (WCN) just announced the release of its 2019 Sustainability Report, which covers calendar years 2017 and 2018 and highlights the company's continued focus on safety, culture, training and development, community involvement, environmental stewardship, governance and ethics. 

In addition, WCN introduced and incorporated Sustainability Accounting Standards Board disclosure into its 2019 Sustainability Report in order to provide comparable statistics and additional transparency on solid waste industry-related metrics.

"We are pleased to update and expand disclosure around our sustainability efforts, which we believe demonstrate our commitment to multiple stakeholders, including our employees, the communities we serve and our shareholders, as well as the environment,” said Worthing F. Jackman, president and chief executive officer, in a statement.

In his opening letter in the report, Jackman explained WCN is continuing its efforts to minimize impacts on the environment by:

  • Encouraging materials recycling and reuse.
  • Using waste to generate clean, renewable energy.
  • Reducing its carbon footprint and use of fossil fuels.
  • Exploring alternatives to landfill disposal.

The Waste Connections 2019 Sustainability Report is available here. Environmental data related to 2017 and 2018 greenhouse gas emissions was independently verified, according to the company.

Waste Management (WM) also released its 2019 Sustainablity Report, providing updated data to supplement the company’s full 2018 report titled “Change for the Better.” The report highlights progress on the company’s 2038 sustainability goals, key performance indicators, recycling and recent awards.

“Waste Management prepared its first ‘Environmental Report’ in 1992, well before we used the term ‘sustainability,’ and before we regularly reported on environmental, social and governance (ESG) principles,” said Jim Fish, president and CEO of Waste Management, in a statement. “Little did we know where this journey would take us. As champions for sustainability, we remain focused on our commitment to our planet and people, driven by our dedicated employees.”

The Waste Management 2019 Sustainability Report is available here

ADS Grows Revenue, Focuses on Customer Service in Q3 2019

Advanced Disposal Facebook ADS Grows Revenue, Focuses on Customer Service in Q3 2019

Ponte Vedra, Fla.-based Advanced Disposal Services (ADS), which is being acquired by Waste Management, released its third quarter 2019 earnings results, showing an increase in revenue and a continued focus on providing "excellent service" to customers.

The company reported revenue of $419.5 million for the three months ended September 30, 2019, versus $400.6 million in the same period of the prior year. Advanced Disposal’s net income during Q3 2019 was $3.6 million, or $0.04 per diluted share, and adjusted net income, which excludes certain gains and expenses, was $16.9 million, or $0.19 per diluted share.

"Our operating philosophy remains focused on safely providing an excellent service experience for our customers, coupled with disciplined pricing to generate strong cash flow for our shareholders," said Richard Burke, CEO of Advanced Disposal Services, in a statement. "During the third quarter, we were able to achieve 4.7 percent revenue growth led by a 3 percent increase in average yield. Year-to-date, we have also overcome headwinds related to recycling, leachate and interest costs to achieve $229.2 million in cash flow from operations and $111 million in adjusted free cash flow."

Q3 2019 financial highlights include:

  • Revenue of $419.5 million, representing a 4.7 percent increase.
  • Achieved total organic growth of 4.1 percent, which included average yield of 3 percent and volume growth of 1.1 percent.
  • Year-over-year growth from acquisitions was 1.5 percent.
  • Net income was $3.6 million, or $0.04 per diluted share.
  • Achieved adjusted EBITDA of $116.5 million, which included a $4.8 million year-over-year headwind related to declining recycling prices and higher recycling processing costs.
  • Cash provided by operating activities was $229.2 million year-to-date.
  • Adjusted free cash flow was $111 million year-to-date.
  • Solid waste collection accounted for 66.8 percent of reported revenue ($280.1 million vs. $262.7 million in 2018). Solid waste disposal accounted for 36.3 percent ($152.4 million vs. $146.8 million in 2018). Sale of recyclables accounted for 0.5 percent, fuel charges and environmental charges accounted for 7.1 percent, other accounted for 8.3 percent and intercompany eliminations decreased 19.0 percent.

More information about the pending acquisition was discussed during Waste Management’s Q3 2019 earnings call on October 23. Jim Fish, CEO and president of Waste Management, stated: “We continue to make progress toward closing this transaction, and we remain on track to complete the acquisition during the first quarter of 2020.”

RTS’ New President, CTO to Focus on Growth, Technical Efficiency

RTS’ New President, CTO to Focus on Growth, Technical Efficiency

From on-demand recycling removal to integrated waste management solutions, Recycle Track Systems (RTS) is a waste and recycling company that provides technology to companies and municipalities to track their waste diversion efforts. Recently, the New York-based company appointed Allyn L. Shaw as its new president and chief technology officer (CTO) to focus on growth, scale, operations and technological efficiency.

In this newly created role, Shaw will oversee the expansion of RTS’ technology platform and focus on enabling end-to-end technology and operations, including software, data management, mobility and communication technologies. Waste360 recently sat down with Shaw to discuss his new role at RTS and the future of technology in the waste and recycling industry.

Waste360: What is your career background in and out of the waste and recycling industry?

Allyn L. Shaw: Most recently, I was the chief operating officer of global information security at Bank of America (BOA). At BOA, I led all aspects of a $1 billion business operation—workforce, finance, strategy, risk and performance management across 14 countries. Over my 24-year career, I’ve led engineering, operation and architecture teams and have worked in the banking, technology and telecommunications industries. I am eager to utilize my experience to aid RTS in its mission and vision to manage waste more responsibly and protect our environment.

Waste360: Describe your role as president and CTO of RTS.

Allyn L. Shaw: As president and CTO of RTS, I will primarily focus on three areas:

  1. The expansion of RTS’ cutting-edge technology platform as we continue to grow to ensure we can scale while managing our costs.
  2. Continuing to mature our end-to-end business processes, improving our operational efficiency.
  3. Attracting the best talent in the industry, allowing RTS to continue as a leader of innovation in this space.

Waste360: How will you expand RTS’ innovative technology platform?

Allyn L. Shaw: I will expand RTS’ innovative technology platform through the lens of our customers and hauling partners. At RTS, we differentiate ourselves on exceptional service and innovative technology, allowing our customers and partners to engage in a frictionless way. From automated diversion reporting, so you know exactly how much waste you diverted from a landfill, to real-time pickup notification using geo-fencing technology, we tie it all together via a technology platform built to scale.

Waste360: How will you contribute to enabling end-to-end technology and operations at RTS?

Allyn L. Shaw: With a great deal of humility, empathy, creativity and innovation. I believe the best ideas come from your customers, employees and the market. My job is to facilitate spaces for people to be inspired and attract passionate talent with a commitment to this space. The key is always having good people around you and a relentless optimism to progress the world forward.

Waste360: What is the future of technology in the waste and recycling industry?

Allyn L. Shaw: Technology is a pretty broad term with many uses. For example, RTS sees technology playing a role in awareness and education. Regardless of the downstream technology or infrastructure, if we teach one another how to be sustainable and recycle responsibly in our places of work and at home, we can solve a significant part of the challenge we all currently face globally.

Waste360: What is your leadership style?

Allyn L. Shaw: That is probably a better question for my teammates. In all seriousness, I believe in inspirational leadership. If you hire top talent, they can execute the “what” and the “how.” The game changer is focusing on the “why.” Passion and commitment come from inspiration and purpose. Then, as a leader, you have to check the small things, have a vision and be demanding.

Waste360: How are you active in supporting professional growth?

Allyn L. Shaw: When you see good performance, you must reward it. Feedback is a gift, and we should give it in real time but also be open to receiving it. Lastly, I believe that coaching and sponsorship is key.

Waste360: What is your greatest accomplishment to date in your career?

Allyn L. Shaw: I would consider working with peers in the industry to champion for diversity, inclusion and workplace advocacy my greatest accomplishment. Talent is literally everywhere. If we can open the aperture far and wide, imagine what we can accomplish.

Need to Know

Letter Urges EPA to Uphold Coal Ash Safeguards

Letter Urges EPA to Uphold Coal Ash Safeguards

Rep. Nydia M. Velázquez (D-N.Y.) has led more than two dozen members of Congress in writing to the administrator and a regional administrator of the U.S. Environmental Protection Agency (EPA), calling on the agency to withdraw a proposal to roll back federal safeguards for coal ash waste piles and construction fillers.

Coal ash is the byproduct of burned coal and contains deadly toxins and carcinogens linked to cancer, developmental delays in children and other detrimental health effects. As a result of the risk coal ash waste piles and construction fillers pose to public health, the Obama administration’s EPA implemented a 2015 rule requiring waste piles and construction projects to comply with safeguards applicable to landfills. The current EPA now seeks to weaken those protections, according to Velázquez.

“Trump’s EPA Administrator is a former coal lobbyist who is apparently more than willing to put coal companies’ profits ahead of Americans’ health and safety,” said Velázquez in a statement. “We will not stand by and allow coal companies to poison families and children with this dangerous byproduct. Today, we are calling on the EPA to restore commonsense coal ash standards to protect the public health of our neighbors in Puerto Rico and on the mainland.”

In the letter, Velázquez and her colleagues ask the EPA to commit to protecting public health and the environment by upholding and strengthening the 2015 ruling. The letter notes that coal ash disproportionately impacts low-income communities, citing Guayama, Puerto Rico, as an example of an impoverished municipality suffering from coal ash’s environmental effects.

“The disposal of coal ash is an issue of social and environmental justice,” added Velázquez. “The EPA’s proposed rule will mean that some of our most vulnerable will be further harmed by irresponsible placement and maintenance of coal ash piles.”

The full text of the letter is below: 

October 21, 2019

The Honorable Andrew Wheeler

Administrator

U.S. EPA

1200 Pennsylvania Avenue, NW

Washington, D.C. 20460

 

Mr. Pete Lopez

Regional EPA Administrator

City View Plaza II Suite 7000

#48 Rd. 165 km1.2

Guaynabo, PR 00968-806

 

Dear Administrator Wheeler:

We write to urge you to withdraw the Environmental Protection Agency’s (EPA) July 30 , 2019 “Phase 2” proposal to weaken critical 2015 Coal Ash Rule safeguards for coal ash waste piles and sites where coal ash is placed on or beneath the ground.

Coal ash contains deadly toxic substances, including carcinogens like arsenic, cadmium and chromium, and neurotoxins such as lead, lithium and mercury, which have polluted air and water at hundreds of coal ash dump sites across the nation.  Decades of dumping have created hazardous leaking dumps at almost all U.S. coal powered electrical generation plants. In fact, monitoring data found that 91 percent of U.S. coal powered plants are currently contaminating groundwater with toxic substances above federal health standards.

As you know, coal ash is either placed below ground in a landfill or dumped in piles. Coal ash waste piles, which can reach 12 stories high and can contain half a million tons of toxic waste, are above ground accumulations that are not covered with grass or soil. These piles are also more dangerous than landfills because greater amounts of toxic waste are exposed to wind and water, causing ash to become airborne and leach into groundwater. They are particularly vulnerable during storm events because of their instability.

Recognizing the danger of toxic waste piles, the EPA’s 2015 Coal Ash Rule requires coal ash waste piles to comply with all the safeguards applicable to landfills. New waste piles must be lined, have leachate collection systems, and comply with siting restrictions. They must also minimize toxic dust, control polluted run-off, conduct frequent inspections, monitor groundwater, clean up contaminated groundwater, and provide the public with extensive information concerning compliance with these safeguards.

Alarmingly, under the EPA’s “Phase 2” proposal, toxic coal ash waste piles can escape these critical protective safeguards. Coal ash waste piles would no longer be subject to landfill requirements if a power plant owner claims that the ash pile is “temporary” and will be removed at some future date -- even hundreds of years from the creation of the waste pile. Consequently, the owner does not have to inspect the pile, monitor groundwater, execute a dust control plan, or clean up contaminated groundwater, among other safeguards.

In addition, the proposed rule change encourages the use of toxic coal ash as a cheap alternative to soil as a filler in construction and landscaping by removing all volume restrictions for such waste projects.  The proposal allows projects where coal ash is placed on land for any purpose, usually without barriers, to contain unlimited volumes of coal ash even when placed near drinking water wells, homes and waterbodies.  The proposed rule also subjects users to completing safety demonstrations only when coal ash is placed in inherently dangerous areas, such as within five feet of groundwater, in floodplains, and over sinkholes. There is no required notification to the public that such projects are occurring and no requirement to share demonstrations with the public unless directly asked. EPA data show there are many known re-use or fill projects using coal ash that have contaminated water, including drinking water in excess of federal safety standards.

The 2015 Coal Ash Rule is currently the reason why hundreds of American communities are protected.  Coal plant owners have already established publicly accessible websites and fugitive dust control plans, completed hundreds of inspections, and published critical groundwater quality data. The commonsense standards of the 2015 rule—which received more than a half-million supporting comments from the public—are helping to protect clean water and safeguard public health.

Coal ash hits our most vulnerable communities, like the municipality of Guayama, Puerto Rico, the hardest. Seventy percent of ash dams are in areas where the household income is less than the national median. EPA’s “Phase 2” proposal fails to address the direct impacts this pollution has on these communities.

As such, we urge the EPA to withdraw this dangerous proposal to block federal safeguards for coal ash waste piles and construction projects that use toxic coal ash as fill, and instead commit to adequately protecting the public’s health and our environment from toxic coal ash pollution by strengthening the underlying 2015 rule, as required by the U.S. Court of Appeals for the D.C. Circuit in its August 2018 ruling.

Thank you for your consideration of these comments.

Sincerely,

Nydia M. Velázquez                                                  

Diana DeGette

Steve Cohen                                                               

Darren Soto

Alexandria Ocasio-Cortez                                         

Sean Casten

José E. Serrano                       

Alan Lowenthal

Gerald Connolly                                                       

Jan Schakowsky

Hank Johnson                                                            

Jared Huffman

Rashida Tlaib                                                              

Barbara Lee

Mike Thompson                                                         

Yvette Clarke

Ro Khanna                                                                 

Bill Foster

Abigail Spanberger                                                     

Mike Quigley

David E. Price                                                            

Alma S. Adams

Raúl M. Grijalva                                                        

Matthew A. Cartwright

Lucille Roybal-Allard                                                

Robert C. “Bobby” Scott

Need to Know

Residents to Sue Australian Government Over PFAS Contamination

Residents to Sue Australian Government Over PFAS Contamination

Up to 40,000 Australian residents who live and work on land contaminated by per- and polyfluoroalkyl substances (PFAS) plan to sue the Australian government in the country’s largest class action lawsuit.

According to a news.com.au report, attorneys said documents, which will be filed in federal court before December 25, will focus on the impact of PFAS contamination on property prices. Attorneys claim that residents living in PFAS-contaminated areas have seen their property prices fall—in some cases by as much as 50 percent, the report notes. Impacted residents and their lawyers believe Australia’s federal government should provide residents with enough compensation to leave contaminated communities.

News.com.au has more:

The largest class action ever launched in Australia will be filed against the Federal Government by Christmas.

Up to 40,000 people living and working on land contaminated by the chemical compound PFAS will be covered by the action, which will be lodged against the Australian Government in the Federal Court.

Shine Lawyers told news.com.au the documents would be filed before Christmas and will focus on the impact of the contamination on people’s property prices.

Read the full article here.

Need to Know

Fairbanks, Alaska, Incinerator Tests PFAS Cleanup Project

Fairbanks, Alaska, Incinerator Tests PFAS Cleanup Project

The U.S. Environmental Protection Agency (EPA) is keeping its eye on an NRC Alaska incinerator that is permitted for destroying per- and polyfluoralkyl substances (PFAS).

According to a KTUU report, the NRC incineration pilot project is showing promise for cleaning toxic, PFAS-contaminated soil. The project began in March and was approved with a permit from the Alaska Department of Conservation.

The kiln processes contaminated soil by first heat cleaning the soil, then using additional high-temperature processes and filters to control post-combustion emissions. The report notes tests have shown that if the incinerator processes PFAS-contaminated soils every hour of every day for a year, less than one-one-hundredth of a pound of PFAS would accumulate in the smokestack.

EPA is expected to perform tests at the NRC facility and assess how well the system cleans soil and keeps PFAS out of the air.

KTUU has more:

A pilot project in interior Alaska is being closely watched by the Environmental Protection Agency for its effectiveness is cleaning toxic soil. In a first-of-its kind effort, NRC Alaska is home to the nation's only incinerator permitted for destroying per- and polyfluoralkyl substances, commonly known as PFAS.

The human-made, toxic compounds have been widely used since the 1940s, and are now known to be persistent in the environment and the human body.

Alaska is increasingly detecting contaminated groundwater linked to PFAS contamination from fire-fighting foams containing AFFF, used at airports and military installations. Other known sources of PFAS include some food packaging, stain- and water-repellent fabrics, and teflon-coated cooking pans.

Read the full article here.

EREF Study Shows Average MSW Landfill Tip Fee Continues to Rise for 2019

EREF Study Shows Average MSW Landfill Tip Fee Continues to Rise for 2019

From its database of 1,540 active Subtitle D municipal solid waste landfills (MSWLFs) in the U.S., the Environmental Research & Education Foundation (EREF) created a sample of facilities that was used for surveying landfill owners regarding tip fee information for MSW disposal.

Results for 2019 reveal a national average tip fee of $55.36 per ton, compared to $52.62 in 2018, with regional averages ranging from $40.92 (South Central) to $73.03 (Pacific). While tip fees in the Northeast and Pacific regions remain the highest in the U.S., the Pacific saw an increase of $4.57 per ton, or 6.7 percent, for 2019, and rates in the Northeast experienced a $0.86 per ton decrease on average. This year’s largest increases were seen in the Mountains/Plains region (plus $7.14 per ton, plus 16.4 percent) and South Central region (plus $6.12, plus 17.6 percent). The table below indicates average tip fee by region.

EREF Study Shows Average MSW Landfill Tip Fee Continues to Rise for 2019

MSW landfills often accept a variety of non-MSW special wastes. A recent EREF study found that construction and demolition (C&D) waste is the most commonly accepted special waste at MSW landfills. C&D is accepted at MSW landfills in 41 states and comprises roughly 12 percent of waste buried at these facilities. Given its prevalence, this year’s analysis includes data on C&D pricing at MSW landfills. Nationally, the average tip fee for C&D disposal at MSW landfills was $54.04 per ton. Results show that while the majority of MSW landfills charged the same rate for MSW and C&D, this pricing strategy is not uniform. The cost to dispose of C&D was lower than MSW at 27 percent of sites. At the remaining 16 percent of sites, C&D tip fees were higher than those for MSW.

EREF’s free report, “Analysis of MSW Landfill Tipping Fees: April 2019,” shares additional 2019 tipping fee data.

EPA Finalizes Cleanup Plan for Mansfield Trail Dump Superfund Site

EPA Finalizes Cleanup Plan for Mansfield Trail Dump Superfund Site

The U.S. Environmental Protection Agency (EPA) has finalized a cleanup plan calling for several cleanup technologies to address contamination at the Mansfield Trail Dump Superfund site in Byram Township, N.J. Under the Record of Decision, EPA will cap former dump areas, treat contaminated groundwater and dig up and remove contaminated soil, among other steps to protect public health.

"EPA is making progress to address the contamination that has plagued this community since the area was used as a dumping ground,” said EPA Regional Administrator Pete Lopez in a statement. “After listening to our neighbors, we are announcing our final plan, which will employ a combination of different cleanup methods to protect public health and the environment.”

EPA’s Record of Decision details the final plan to cap former dump areas to prevent rainwater from reaching the waste and further spreading the contamination. The final plan also calls for a soil vapor extraction system to reduce the volatile organic compounds contaminating the groundwater. This method removes harmful chemicals in the form of vapor from the soil by applying a vacuum. EPA will also apply non-hazardous additives to treat the groundwater and break down the contaminants as well as allow the contaminants to naturally decline while monitoring them. The Record of Decision also calls for digging up and properly disposing of contaminated soil at an impacted residential area.

Throughout the cleanup, monitoring, testing and further studies will be conducted to ensure the effectiveness of the remedy. The final plan includes evaluations of nearby homes or buildings to test for chemical vapors that have the potential to migrate from groundwater beneath the structure to indoor air. The Record of Decision requires restrictions on future activities that could disturb the site and will limit future onsite construction in capped areas. EPA will conduct a review of the cleanup every five years to ensure its effectiveness. Under the final plan, the estimated cost of the cleanup is $11.5 million.

EPA held a public meeting in July to explain its cleanup proposal, discuss the other cleanup options that were considered and solicit public comments. Read EPA’s selected cleanup plan, outlined in the Record of Decision, and view EPA’s responses to public comments in the Responsiveness Summary here.

WCN’s E&P Waste Activity Enables Better-than-expected Results in Q3 2019

Getty Images WCN’s E&P Waste Activity Enables Better-than-expected Results in Q3

Worthing F. Jackman, president and CEO of Toronto-based Waste Connections, Inc. (WCN), kicked off a call with investors on October 29 stating that strong organic growth in solid waste and a sequential increase in exploration and production (E&P) waste activity has enabled WCN to deliver better-than-expected results during Q3 2019.

In addition, Jackman noted that continued price-led solid waste growth and a slight pull forward of special waste activity drove underlying margin expansion in solid waste collection, transfer and disposal of an estimated 60 basis points in the quarter. More importantly, he said, adjusted free cash flow was $763 million year-to-date, or 18.9 percent of revenue, and almost 13 percent year-over-year, which puts WCN “firmly on track to meet or exceed the adjusted free cash flow outlook for the full year.”

WCN announced that revenue for the third quarter totaled $1.412 billion, up 10.3 percent from $1.281 billion in the year ago period. The company also reported a 6.1 percent price and volume growth for the quarter, which exceeded its outlook, and adjusted EBITDA of $443.6 million, or 31.4 percent of revenue.

“Our strong operating performance, free cash flow growth and balance sheet strength positioned us for another double-digit percentage increase in our quarterly cash dividend, while maintaining tremendous financial flexibility,” said Jackman in a statement. “We remain well-positioned to fund expected above average acquisition activity in the near term and increased return of capital to shareholders over the long term. Relatively consistent solid waste organic growth plus the contribution from acquisitions closed year-to-date already sets us up for overall revenue growth in the mid to high single digits and underlying margin expansion in solid waste collection, transfer and disposal in the upcoming year, with additional acquisitions and any potential improvement in commodity-related activities providing further growth.”

Here are some additional highlights for Q3 2019:

  • During the call with investors, Jackman reported that volume growth was 6.1 percent. “We reported our strongest quarterly volume results in almost two years in Q3 with volume growth better than expected at positive 90 basis points due primarily to an outsized quarter of special waste activity,” he said.
  • Municipal solid waste tons were up in most regions led by markets in WCN’s western and southern regions. Special waste volumes were up across all the company’s solid waste regions in the U.S. with notable activity in several states, including California, Florida, Illinois, Missouri and Minnesota, noted Jackman. Construction and demolition tons, in contrast, were down in every region except in the southern region due to tough year-over-year comparisons.
  • Recycling revenue, excluding acquisitions, was almost $13 million in the third quarter, down $9.5 million year-over-year, and down about 15 percent sequentially from Q2. “We believe that the flow through from changes in recycling revenue in the third quarter was slightly worse than in Q2 with decremental margins of 150 percent due to the combination of lower fiber price values and third-party processing costs that increased sequentially in the third quarter,” said Jackman. He added that old corrugated containers and mixed paper prices appeared to have stabilized for the moment, which WCN expected given increased demand from certain domestic mills. “Given capacity additions year-to-date and looking ahead into 2020, there are a number of mills and conversions scheduled to come online, which could increase demand for recovered recycled fiber by over 1 million tons,” added Jackman.
  • WCN reported $66.4 million of E&P waste revenue, the highest such quarterly revenue in more than two years, noted Jackman. However, he said: “Given the typical seasonal decline in E&P activity in Q4 and moderation in the pace of activity we have seen in the last two months, we are cautious in our outlook and continue to be selective on new project developments.”
  • Operating income was $236.6 million, which included $12.9 million in impairments and other operating items primarily related to the company’s termination of an E&P landfill development project in the Bakken Formation and $1 million in acquisition-related costs. This compares to operating income of $232.9 million in Q3 2018, which included $6.9 million in fair value accounting changes associated with certain equity awards and $0.7 million in integration and acquisition-related costs, partially offset by a $2 million gain in impairments and other items primarily related to the divestiture of certain assets acquired in the Progressive Waste acquisition.
  • Net income in Q3 2019 was $159.1 million, or $0.60 per share on a diluted basis of 264.6 million shares. In Q3 2018, the company reported net income of $150.8 million, or $0.57 per share on a diluted basis of 264.4 million shares.
  • Adjusted net income in Q3 2019 was $192.9 million, or $0.73 per diluted share, versus $181.9 million, or $0.69 per diluted share, in the prior year period. Adjusted EBITDA in the third quarter was $443.6 million, as compared to adjusted EBITDA of $416.8 million in the prior year period.
  • During the call with investors, Chief Financial Officer Mary Anne Whitney explained adjusted EBITDA was down 110 basis points year-over-year primarily due to two factors: an estimated 115 basis-point impact resulting from the year-over-year decrease in commodity-related recycling and landfill gas revenues and an estimated 55 basis-point impact from lower margin acquisitions completed since the year ago period. Whitney added that the underlying adjusted EBITDA margin for solid waste collection, transfer and disposal revenue was up an estimated 60 basis points year-over-year.
  • Revenue for the quarter was $4.027 billion, compared to revenue of $3.661 billion in Q3 2018.
  • “Revenue for Q4 is estimated to range from $1.335 billion to $1.345 billion, with the range due primarily to our cautiousness around special waste and E&P waste activity,” explained Whitney during the call. “We expect price growth for solid waste to remain around 5 percent in Q4 with volume down between 1 percent and 1.5 percent. And we expect revenue from E&P waste activity in the range of $55 million to $60 million. We expect the decline in volumes primarily to reflect a reduction in landfill volumes due to lower visibility on special waste jobs limited to our run rate as of our July call. This outlook reflects an approximate $5 million decrease in potential waste volumes and approximately $5 million to $10 million reduction in potential E&P waste activity.”

“We are extremely pleased with our year-to-date performance, particularly given the ongoing high-margin headwinds for the commodity-related activities,” concluded Jackman. “We remain well-positioned for potential acquisition outlays at the end of this quarter or early next year. Although we won’t provide a formal outlook for 2020 until next February, we’re able to provide some early thoughts assuming no change in the current economic environment. We believe that we could enter 2020 in the similar position that started 2019 when we provided our outlook this past February, at which time we had approximately $200 million in place from acquisitions plus the potential for additional contributions from our active pipeline.”

“We believe that we remain in a price-led solid waste organic growth range of between 4 and 6 percent, which should continue to drive underlying margin expansion in solid waste collection, transfer and disposal in the upcoming year,” he added. “Price is expected to remain around 5 percent, and our volumes should reflect underlying trends in the macro economy. We are mindful of the protracted nature of the economic recovery, which has driven increasingly challenging year-over-year volume activity. Therefore, we believe there is room to remain guarded in our outlook for volume growth. All in, this could result in potential topline growth for 2020 of between 8 percent and 10 percent from solid waste organic growth and acquisition contribution that could already be in place early in the new year. At current recycled price commodity and landfill gas values, the 2020 headwinds could be less than half of what we expected in 2019. We expect to have better visibility on the economy and expect acquisition attribution, E&P waste activity and commodity-driven revenue in February when we provide a formal outlook for the coming year.”

WCN’s E&P Waste Activity Enables Better-than-expected Results in Q3 2019

Getty Images WCN’s E&P Waste Activity Enables Better-than-expected Results in Q3

Worthing F. Jackman, president and CEO of Toronto-based Waste Connections, Inc. (WCN), kicked off a call with investors on October 29 stating that strong organic growth in solid waste and a sequential increase in exploration and production (E&P) waste activity has enabled WCN to deliver better-than-expected results during Q3 2019.

In addition, Jackman noted that continued price-led solid waste growth and a slight pull forward of special waste activity drove underlying margin expansion in solid waste collection, transfer and disposal of an estimated 60 basis points in the quarter. More importantly, he said, adjusted free cash flow was $763 million year-to-date, or 18.9 percent of revenue, and almost 13 percent year-over-year, which puts WCN “firmly on track to meet or exceed the adjusted free cash flow outlook for the full year.”

WCN announced that revenue for the third quarter totaled $1.412 billion, up 10.3 percent from $1.281 billion in the year ago period. The company also reported a 6.1 percent price and volume growth for the quarter, which exceeded its outlook, and adjusted EBITDA of $443.6 million, or 31.4 percent of revenue.

“Our strong operating performance, free cash flow growth and balance sheet strength positioned us for another double-digit percentage increase in our quarterly cash dividend, while maintaining tremendous financial flexibility,” said Jackman in a statement. “We remain well-positioned to fund expected above average acquisition activity in the near term and increased return of capital to shareholders over the long term. Relatively consistent solid waste organic growth plus the contribution from acquisitions closed year-to-date already sets us up for overall revenue growth in the mid to high single digits and underlying margin expansion in solid waste collection, transfer and disposal in the upcoming year, with additional acquisitions and any potential improvement in commodity-related activities providing further growth.”

Here are some additional highlights for Q3 2019:

  • During the call with investors, Jackman reported that volume growth was 6.1 percent. “We reported our strongest quarterly volume results in almost two years in Q3 with volume growth better than expected at positive 90 basis points due primarily to an outsized quarter of special waste activity,” he said.
  • MSW tons were up in most regions led by markets in WCN’s western and southern regions. Special waste volumes were up across all the company’s solid waste regions in the U.S. with notable activity in several states, including California, Florida, Illinois, Missouri and Minnesota, noted Jackman. Construction and demolition (C&D) tons, in contrast, were down in every region except in the southern region due in some markets to tough year-over-year comparisons.
  • Recycling revenue, excluding acquisitions, was almost $13 million the third quarter, down $9.5 million year over year, and down about 15 percent sequentially from Q2. “We believe that the flow through from changes in recycling revenue in the third quarter was slightly worse than in Q2 with decremental margins of 150 percent due to the combination of lower fiber price values and third-party processing costs increased sequentially in the third quarter,” said Jackman. He added that old corrugated containers and mixed paper prices appeared to have stabilized for the moment, which WCN expected given increased demand from certain domestic mills. “Given capacity additions year to date and looking ahead into 2020, there are a number of mills and conversions scheduled to come online, which could increase demand for recovered recycled fiber by over 1 million tons,” added Jackman.
  • WCN reported $66.4 million of E&P waste revenue, the highest such quarterly revenue in more than two years, noted Jackman. However, he said: “Given the typical seasonal decline in E&P activity in Q4 and moderation in the pace of activity we have seen in the last two months, we are cautious in our outlook and continue to be selective on new project developments.”
  • Operating income was $236.6 million, which included $12.9 million in impairments and other operating items primarily related to the company’s termination of an E&P landfill development project in the Bakken Formation, and $1 million in acquisition-related costs. This compares to operating income of $232.9 million in Q3 2018, which included $6.9 million in fair value accounting changes associated with certain equity awards and $0.7 million in integration and acquisition-related costs, partially offset by a $2 million gain in impairments and other items primarily related to the divestiture of certain assets acquired in the Progressive Waste acquisition.
  • Net income in Q3 2019 was $159.1 million, or $0.60 per share on a diluted basis of 264.6 million shares. In Q3 2018, the company reported net income of $150.8 million, or $0.57 per share on a diluted basis of 264.4 million shares.
  • Adjusted net income in Q3 2019 was $192.9 million, or $0.73 per diluted share, versus $181.9 million, or $0.69 per diluted share, in the prior year period. Adjusted EBITDA in the third quarter was $443.6 million, as compared to adjusted EBITDA of $416.8 million in the prior year period.
  • During the call with investors, Chief Financial Officer Mary Anne Whitney explained adjusted EBITDA was down 110 basis points year over year primarily due to two factors: an estimated 115-basis-point impact resulting from the year-over-year decrease in commodity-related recycling and landfill gas revenues and an estimated 55-basis-point impact from lower margin acquisitions completed since the year-ago period. Whitney added that the underlying adjusted EBITDA margin for solid waste collection, transfer and disposal revenue was up an estimated 60 basis points year over year.
  • Revenue for the quarter was $4.027 billion, compared to revenue of $3.661 billion in Q3 2018.
  • “Revenue for Q4 is estimated to range from $1.335 billion to $1.345 billion, with the range due primarily to our cautiousness around special waste and E&P waste activity,” explained Whitney during the call. “We expect price growth for solid waste to remain around 5 percent in Q4 with volume down between 1 percent and 1.5 percent. And we expect revenue from E&P waste activity in the range of $55 million to $60 million. We expect the decline in volumes primarily to reflect a reduction in landfill volumes due to lower visibility on special waste jobs limited to our run rate as of our July call. This outlook reflects an approximate $5 million decrease in potential waste volumes and approximately $5 to $10 million reduction in potential E&P waste activity.”

“We are extremely pleased with our year-to-date performance, particularly given the ongoing high-margin headwinds for the commodity-related activities,” concluded Jackman. “We remain well-positioned for potential acquisition outlays at the end of this quarter or early next year. Although we won’t provide a formal outlook for 2020 until next February, we’re able to provide some early thoughts assuming no change in the current economic environment. We believe that we could enter 2020 in the similar position that started 2019 when we provided our outlook this past February, at which time we had approximately $200 million in place from acquisitions plus the potential for additional contributions from our active pipeline.”

“We believe that we remain in a price-led solid waste organic growth range of between 4 and 6 percent, which should continue to drive underlying margin expansion in solid waste collection, transfer and disposal in the upcoming year,” he added. “Price is expected to remain around 5 percent and our volumes should reflect underlying trends in the macro economy. We are mindful of the protracted nature of the economic recovery, which has driven increasingly challenging year-over-year volume activity. Therefore, we believe there is room to remain guarded in our outlook for volume growth. All in, this could result in potential topline growth for 2020 of between 8 percent and 10 percent from solid waste organic growth and acquisition contribution that could already be in place early in the new year. At current recycled price commodity and landfill gas values, the 2020 headwinds could be less than half of what we expected in 2019. We expect to have better visibility on the economy and expect acquisition attribution, E&P waste activity and commodity-driven revenue in February when we provide a formal outlook for the coming year.”