GFL Environmental Inc. has released its results for the third quarter of 2022.
"Once again in the third quarter, our employees delivered results that significantly exceeded our expectations," says Patrick Dovigi, founder and chief executive officer of GFL. "Revenue increased 32.6 percent over the prior year period driven by price, continued strong volume gains in our Environmental Services segment and contributions from M&A. We made material progress in our fuel cost recovery initiatives and continue to see tremendous opportunity in this area. Excluding the impact of fuel and commodity prices, our record Solid Waste pricing drove margin expansion on our base business."
"Our results this year show the continuing maturity of our business model, allowing us to perform exceptionally well in the face of unprecedented cost headwinds," adds Patrick Dovigi. "The challenging environment also demonstrated the business's capability to manage leverage, allowing us to maintain, on a constant currency basis, net leverage within our targets despite a 300 to 400 basis point rise in rates and the deployment of over $1.1 billion into M&A. We remain committed to continuing to deliver meaningful reductions to our leverage ratio over the near term.
"With the strength of our third quarter results and our current outlook on foreign exchange rates and commodity prices, we are increasing our full-year guidance for revenue to between $6,600 million and $6,650 million and are affirming our previously provided ranges for adjusted EBITDA and adjusted free cash flow. Looking forward to 2023, we believe we are already well-positioned to achieve high single-digit organic revenue growth. When combined with three percent M&A rollover revenue already in hand and the impact from current commodity prices and foreign exchange rates, we expect to indicate at least 12 percent revenue growth when we provide our 2023 guidance next quarter. In terms of profitability, we believe the widening spread between price and cost inflation will allow for a year of outsized adjusted EBITDA margin expansion, likely in excess of 100 basis points, which should translate into adjusted EBITDA growth in the high teens. Additionally, we continue to see incremental upside opportunities ahead of us resulting from our robust M&A pipeline and organic growth initiatives."
Third quarter results
- Revenue increased by 32.6 percent to $1,831.2 million in the third quarter of 2022, compared to the third quarter of 2021.
- Environmental services revenue of $364.4 million, including organic growth of 37.0 percent driven by the strength of industrial collection and processing activity at our facilities and an increased emergency response activity, as well as the impact of higher used motor oil selling prices.
- Adjusted EBITDA increased by 18.4 percent to $473.3 million in the third quarter of 2022, compared to the third quarter of 2021. The adjusted EBITDA margin was 25.8 percent in the third quarter of 2022, compared to 28 percent in the third quarter of 2021 (28.9 percent as adjusted for the divestiture of GFL Infrastructure). The solid waste adjusted EBITDA margin was 28.9 percent in the third quarter of 2022, compared to 31.7 percent in the third quarter of 2021.
- Net loss from continuing operations decreased to $183.7 million in the third quarter of 2022, compared to $316.1 million in the third quarter of 2021.
- Adjusted free cash flow was $97.0 million in the third quarter of 2022, compared to $263.1 million in the third quarter of 2021.
- Capital expenditures were $209.4 million in the third quarter of 2022, inclusive of $11.2 million for the development and construction of RNG projects and aggregate proceeds from asset divestitures and disposals of $12.4 million, compared to $26.1 million in the third quarter of 2021, inclusive of aggregate proceeds from asset divestitures and disposals of $101.2 million.
Year to Date Results
- Revenue increased by 33.6 percent to $4,940.1 million for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021.
- Environmental Services revenue of $920.4 million, including organic growth of 28.2 percent driven by the strength of industrial collection and processing activity at our facilities and an increased emergency response activity, as well as the impact of higher used motor oil selling prices.
- Adjusted EBITDA increased by 23.8 percent to $1,281.0 million for the nine months ended September 30, 2022, compared to the nine months ended September 30, 2021. The adjusted EBITDA margin was 25.9 percent for the nine months ended September 30, 2022, compared to 27.0 percent for the nine months ended September 30, 2021 (28.0 percent as adjusted for the divestiture of GFL Infrastructure). Solid Waste Adjusted EBITDA margin was 29.3 percent for the nine months ended September 30, 2022, compared to 31.2 percent for the nine months ended September 30, 2021.
- Net income from continuing operations increased to $35.9 million for the nine months ended September 30, 2022, compared to a net loss of $545.3 million for the nine months ended September 30, 2021.
- Adjusted free cash flow was $317.8 million for the nine months ended September 30, 2022, compared to $537.1 million for the nine months ended September 30, 2021.
