Waste Connections CEO Jackman encouraged by signs of continuing recovery in solid waste
Solid waste revenue for second quarter down about 5.3% compared to 2019
According to Waste Connections, which is set to report financial results for the second quarter of 2020 in early August, improving solid waste trends noted in May continued throughout the quarter, driving better than expected results in solid waste collection, transfer and disposal.
Such solid waste revenue, on a same store basis, in the second quarter is now expected to be down approximately 5.3% year over year, or down just 1.3% excluding Canada and the Northeast U.S.
"We are extremely encouraged by the signs of continuing recovery in solid waste activity, as revenue and adjusted EBITDA in the second quarter are expected to exceed the preliminary thoughts we provided in early May based on April results," commented Waste Connections' president and CEO, Worthing F. Jackman.
"Reported revenue, which was originally expected to be down approximately 6.0%, is now expected to be down approximately 4.7% year over year and adjusted EBITDA margin, originally expected to be down approximately 200 basis points, is now expected to be down between 90 basis points and 100 basis points year over year."
Waste Connections stated that they have also noted the potential for the recognition of impairment charges on its property and equipment and non-goodwill intangible assets associated with its exploration and production segment. At such time and to the extent that the company were to make a determination that the outlook for future oil prices and demand for the company's E&P waste services did not show sufficient improvement, this could result in the recognition of impairment charges.
As of March 31, 2020, the company's E&P segment had $832.7 million in property and equipment and $59.6 million of non-goodwill intangible assets, including $376.1 million of property and equipment and $2.4 million of non-goodwill intangible assets in the Williston Basin and $62.9 million of property and equipment in the Eagle Ford Basin. The Williston and Eagle Ford Basins have experienced a higher proportion of decline in demand for E&P waste services due to the higher cost of exploration and production in those areas relative to other basins.