Waste Connections Inc. (WCN, Financial) has reported a promising start to 2025, with its first-quarter revenue reaching $2.23 billion, narrowly surpassing analysts' expectations of $2.22 billion. The company attributes its success to robust organic growth in solid waste driven by strategic pricing and accelerated acquisitions.
The CEO highlighted the company's effective operations, which resulted in core solid waste pricing increasing by 6.9%. This operational proficiency not only helped the company achieve better-than-expected results but also compensated for challenges such as reduced volumes due to prolonged adverse weather conditions across various regions.
Waste Connections also maintained a strong focus on expansion, with significant acquisitions contributing to over $125 million in annualized revenue so far. This includes a cutting-edge recycling facility in New Jersey, enhancing the company's footprint in the Northeast.
Looking ahead, Waste Connections aims to leverage its solid financial foundation and healthy free cash flow to continue aggressive acquisition activities throughout 2025. Additionally, the company plans to enhance shareholder value through increased capital returns.
The company ended the quarter with an impressive adjusted EBITDA margin of 32.0%, reinforcing its strong market position and preparedness for sustained growth this year.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 18 analysts, the average target price for Waste Connections Inc (WCN, Financial) is $209.56 with a high estimate of $219.00 and a low estimate of $197.00. The average target implies an upside of 7.09% from the current price of $195.68. More detailed estimate data can be found on the Waste Connections Inc (WCN) Forecast page.
Based on the consensus recommendation from 23 brokerage firms, Waste Connections Inc's (WCN, Financial) average brokerage recommendation is currently 2.2, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Waste Connections Inc (WCN, Financial) in one year is $195.30, suggesting a downside of 0.19% from the current price of $195.68. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Waste Connections Inc (WCN) Summary page.
Key Business Developments
Release Date: February 13, 2025
- Q4 2024 Revenue: $2.26 billion, up 11% year-over-year.
- Full Year 2024 Revenue: $8.92 billion, up 11.2% year-over-year.
- Q4 2024 Adjusted EBITDA: $732 million, 32.4% of revenue.
- Full Year 2024 Adjusted EBITDA: $2.902 billion, up 15% year-over-year, with a margin of 32.5%.
- Adjusted Free Cash Flow 2024: $1.218 billion, exceeding expectations.
- Acquisition Revenue Contribution 2024: $529 million for the full year.
- Core Pricing Q4 2024: 6.7%.
- Solid Waste Core Pricing 2024: 7.1%.
- Chiquita Canyon Landfill Closure Costs: $116.1 million write-down and $480.8 million in closure and post-closure liabilities.
- 2025 Revenue Outlook: $9.45 billion to $9.6 billion.
- 2025 Adjusted EBITDA Outlook: $3.12 billion to $3.2 billion, with a margin of 33% to 33.3%.
- 2025 Adjusted Free Cash Flow Outlook: $1.3 billion to $1.35 billion.
- Q1 2025 Revenue Outlook: $2.2 billion to $2.225 billion.
- Q1 2025 Adjusted EBITDA Outlook: $700 million to $710 million, 31.8% to 31.9% of revenue.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Waste Connections Inc (WCN, Financial) achieved double-digit growth in both revenue and adjusted EBITDA for Q4 2024.
- The company successfully integrated acquisitions totaling approximately $750 million in annualized revenue in 2024.
- Employee turnover reached multiyear lows, improving operational execution and contributing to margin expansion.
- Price-led organic solid waste growth and improving commodities are expected to position the company at the high end of its financial outlook for 2025.
- The company has a robust acquisition pipeline, with over $75 million in annualized revenue already closed or signed for 2025.
Negative Points
- The closure of the Chiquita Canyon landfill resulted in significant financial impacts, including a $116.1 million write-down and $480.8 million in closure liabilities.
- Solid waste volumes in Q4 2024 were down 2.7%, reflecting a focus on quality of revenue and shedding unprofitable contracts.
- The company faces headwinds from declining commodity values, RINs, and FX rates, impacting margins.
- Incremental costs associated with the Chiquita Canyon ETLF event exceeded expectations, with significant outlays projected for 2025.
- Despite strong acquisition activity, the company anticipates continued volume declines due to strategic shedding and economic conditions.
