Waste Connections, Inc. has released its results for the second quarter of 2022 and updated its outlook for 2022.
"Accelerating solid waste pricing and E&P waste activity drove a top-to-bottom beat in the period. Solid waste pricing growth of 8.8 percent enabled us to overcome increased inflationary pressures during the period and deliver adjusted EBITDA margin in line with our outlook for Q2 and flat on a year over year basis excluding the margin dilutive impact from acquisitions completed since the year ago period," said Worthing F. Jackman, president and chief executive officer.
"Our outperformance in the first half of 2022, expected further sequential increases in solid waste pricing growth, continuing strength in E&P waste activity, and acquisitions closed year to date, position us to update our outlook for the full year to revenue of approximately $7.125 billion, adjusted EBITDA of approximately $2.190 billion and adjusted free cash flow of approximately $1.160 billion, exceeding our initial outlook as provided in February and another reflection of our culture of accountability in a challenging operating environment."
Jackman added, "As anticipated, acquisition activity is pacing well above average. We have closed approximately $245 million in annualized revenues, with another approximately $225 million in total annualized revenue under definitive agreements expected to close during the third quarter, subject to customary closing conditions, and our pipeline remains quite robust. As such, we believe we are well-positioned for double digit revenue growth in 2023 along with margin expansion from continuing solid waste pricing strength and rollover contribution from acquisitions already signed or closed year to date; additional acquisitions expected to close later this year and early next year would provide further growth."
Q2 2022 results
Revenue in the second quarter totaled $1.816 billion, up from $1.534 billion in the year ago period. Operating income was $329.6 million, which included $6.8 million primarily in impairments and other operating items. This compares to operating income of $266.8 million in the second quarter of 2021, which included $12.5 million primarily related to fair value accounting changes to equity awards. Net income in the second quarter was $224.1 million, or $0.87 per share on a diluted basis of 257.7 million shares. In the year ago period, the Company reported net income of $177.0 million, or $0.68 per share on a diluted basis of 261.4 million shares.
Adjusted net income in the second quarter was $257.1 million, or $1.00 per diluted share, versus $210.9 million, or $0.81 per diluted share, in the prior year period. Adjusted EBITDA in the second quarter was $566.8 million, as compared to $484.9 million in the prior year period.
Six months year-to-date results
For the six months ended June 30, 2022, revenue was $3.463 billion, up from $2.930 billion in the year ago period. Operating income, which included $13.4 million primarily attributable to transaction-related expenses, was $603.4 million, as compared to operating income of $505.2 million in 2021, which included $14.0 million primarily related to fair value changes in equity awards.
Net income for the six months ended June 30, 2022 was $404.4 million, or $1.57 per share on a diluted basis of 258.1 million shares. In the year ago period, the Company reported net income of $337.4 million, or $1.29 per share on a diluted basis of 262.3 million shares.
Adjusted net income for the six months ended June 30, 2022 was $470.6 million, or $1.82 per diluted share, compared to $396.3 million, or $1.51 per diluted share, in the year ago period. Adjusted EBITDA for the six months ended June 30, 2022 was $1.069 billion, as compared to $918.1 million in the prior year period.
Updated 2022 outlook
Waste Connections also updated its outlook for 2022, which assumes no change in the current economic environment or underlying economic trends. The Company's outlook excludes any impact from additional acquisitions that may close during the year, and expensing of transaction-related items. The outlook provided below is forward looking, and actual results may differ materially depending on risks and uncertainties detailed at the end of this release and in the periodic filings with the U.S. Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. Certain components of the outlook for 2022 are subject to quarterly fluctuations. See reconciliations in the attached tables.
- Revenue is estimated to be approximately $7.125 billion, as compared to the original revenue outlook of approximately $6.875 billion.
- Net income is estimated to be approximately $837.5 million, and adjusted EBITDA is estimated to be approximately $2.190 billion, or about 30.7 percent of revenue, as compared to the original adjusted EBITDA outlook of $2.145 billion or 31.2 percent of revenue.
- Capital expenditures are estimated to be approximately $850 million, in line with the original outlook.
- Net cash provided by operating activities is estimated to be approximately $1.974 billion, and adjusted free cash flow of approximately $1.160 billion, or about 16.3 percent of revenue, as compared to the original adjusted free cash flow outlook of $1.150 billion or 16.7 percent of revenue.