Weekly News Bulletin: May 18-24, 2020


First Quarter Earnings Roundup

The big publicly traded waste companies announced first quarter earnings amid the global COVID-19 pandemic, which was collectively described as "unprecedented." For most companies though, the quarter would have been stellar except that by April waste volumes declined with the contraction of the overall economy, and at an increasing rate, at least until mid-month, after which some improvement was noted. For industry leader Waste Management, landfill tonnages were down 20 percent, commercial collection fell by 16 percent. Meanwhile, quarantine measures drove up residential waste volumes anywhere from 15-25 percent which tended to hurt profits as most of this business is service based, not weight based resulting in higher disposal costs that cannot be passed on to the customer.

Companies cut costs by cutting 40-60 percent of overtime, reducing discretionary expenses, idled trucks, optimized, or eliminated routes, while capital spending budgets were typically cut 10-20 percent. Selling, General and Administrative expense (SG&A) savings typically included reduced travel and entertainment expense (T&E) and lower incentive accruals...Read More »



WM 1st Quarter Revenue and Earnings Up

Waste Management, Inc. (WM)
  Three Months Ended Mar. 30
(millions of $) 2020 2019
Revenue 3,729 3,696
EBITDA 1,013 987
EBITDA Margin 27.2% 26.7%
Net Income 361 347

Amid all the disruption from COVID-19, Waste Management (Houston, TX) was able to post gains in first quarter 2020 earnings and revenues. Earnings for the quarter increased to $361 million ($0.85 per share) from $347 million ($0.81 per share) last year. Revenues increased slightly to $3.73 billion from $3.7 billion last year. Whereas, performance would have been much stronger were it not for the significant disruption to its business from the pandemic. The company said its EBITDA margins took a 40-basis point hit from lower collected volumes from its higher-margin commercial business while enduring greater costs collecting higher volumes of residential waste. Much of the residential business is service based, meaning they cannot charge more but rather must pay more to dispose of that volume.

Like its peers in the industry, the company was able to save money by reducing worker overtime, save on worker travel, decreased capital expenditures, route optimization, and eliminated routes, and other measures. On the other hand, technology costs to implement work-from-home capabilities added to SG&A. Also similar to its industry peers, the company is suspending making any estimates of its financial performance (guidance) until such time as an economic recovery is in sight, "when we have greater clarity," said Jim Fish, President and CEO. The company did note that it is on track to complete its pending acquisition of Advanced Disposal Services, which was originally announced in April of last year...Read More »



Republic Posts Strong First Quarter

Republic Services, Inc. (RSG)
  Three Months Ended Mar. 30
(millions of $) 2020 2019
Revenue 2,553.9 2,470.6
EBITDA 709.3 683.2
EBITDA Margin 27.8% 27.7%
Net Income 246.3 234.2

Republic Services (Phoenix, AZ) also managed positive revenue and earnings gains for its first quarter despite setbacks from service disruptions from the pandemic. Net income rose by 5 percent to $246.3 million ($0.77 per share) from $234.2 million ($0.72 per share) last year. Revenue grew by about 3.4 percent to $2.55 billion from 2.47 billion last year. With core price increases of 5.2 percent over last year, the company was on track for a banner quarter before the economic impacts of the pandemic took a toll.

In April volumes and revenues declined, and at an increasing rate, at least until mid-month when "the rate of decline [had] begun to moderate." Commercial container collection was down about 20 percent. Meanwhile, with everyone working from home, residential collection increased nearly 15% versus the prior year. In addition, third-party tons decreased by approximately 20% and included a decrease in special waste of 34%, a decrease in C&D of 11% and a decrease in MSW of only 7%.

Importantly, the rate of decline has begun to moderate and in the last week total landfill tons were only down 15% versus the prior year. With all the uncertainty, it is no surprise the company is suspending its full-year 2020 detailed financial guidance until such time as there can be any sort of clarity. Rebalancing routes and reducing overtime by 50 percent has helped shore up costs. The company reports that 33 percent of its CPI-based contracts have now been converted to more favorable pricing mechanisms (either a waste-related index or a fixed-rate increase of 3 percent or greater) for the annual price adjustment.

Cash flow invested in acquisitions was $63 million. The annual revenue acquired was approximately $30 million. And its pending acquisition of Santek Waste Services is "on track," according to CEO Don Slager...Read More »



Waste Connections 1st Quarter Revenue up 9%

Waste Connections, Inc. (WCN)
  Three Months Ended Mar. 30
(millions of $) 2020 2019
Revenue 1,352.4 1,244.6
EBITDA 408.5 385.7
EBITDA Margin 30.2% 31.0%
Net Income 143.0 125.6

Waste Connections (The Woodlands, TX) reported that its first quarter net income grew 14 percent to $143 million ($0.54 per share), up from $125.6 million ($0.48 per share) a year ago. Revenues for the quarter grew by 8.7 percent to $1.352 billion, up from $1.245 billion in the year ago period. Commercial collection revenue increased approximately 5.4 percent, mostly due to price increases. Acquisitions over the last year added $64 million of revenue in the quarter.

The results would have been stronger had it not been for the economic impacts of the pandemic. Revenue in April was off 6 percent year over year reflecting an overall 12 percent decline in volume. Especially hard hit was Canada and the Northeastern US, and ongoing declines in exploration and production (E&P) waste volumes. The company estimates these effects took a 20 percent toll on its adjusted EBITDA margin. According to President & CEO Worthing Jackman, "the impacts we have seen vary by geography, the size of customer mix in each market and the timing and extent of shutdown requirements across markets," he says. "In general, our smaller, more suburban or rural markets have been less impacted than the larger, more densely populated markets where we operate."

Capital expenditures for the company were $137.8 million, up by $23.6 million or 20.7 percent year over year. The company resumed its share repurchase program buying back about 1.27 million shares in the first quarter...Read More »



GFL Environmental 1st Quarter Revenue up on Acquisitions and Growth

GFL Environmental Inc. (GFL)
  Three Months Ended Mar. 30
(millions of $) 2020 2019
Revenue 931.3 720.9
EBITDA 222.9 179.1
EBITDA Margin 23.9% 24.8%
Net Income (278.0) (93.4)

GFL Environmental (Vaughan, Canada), which went public on March 5th of this year, reported its first quarter financial results. Revenue for the quarter increased by 29.2% to $931.3 million compared with a year ago driven by significant revenue growth across all reportable segments both organically and through acquisitions. Pricing growth in the first quarter was 4.9 percent versus 4 percent a year ago. That helped drive up revenue from the solid waste segment of the business by 32 percent from last year. Adjusted EBITDA increased 24.4 percent.

Net loss increased from $93.4 million in the first quarter of 2019 to $277.9 million in the first quarter of 2020 driven by costs associated with our initial public offering, the early redemption of outstanding unsecured bonds, etc.

The company noted that the COVID-19 pandemic has reduced commercial and industrial collection volumes. Rolloff was off 18 percent at the peak, while commercial collection revenue declined 7 percent. As a result, April solid waste revenue was down 8.7 percent on a same-store basis, with Toronto and Montreal seeing the most significant declines. Total organic growth in April declined 9.9 percent, as the liquid waste business fell more than 26 percent.

As with its peers, management noted that the impacts appeared to have peaked in mid-April, and the last several weeks have shown sequential increases in commercial and industrial collection activity.

Undeterred and armed with C$1.3 billion ($920 million) to spend on potential opportunities, the company plans to continue making bold acquisitions throughout the coming year. "We will never let a good crisis go to waste," said Patrick Dovigi, founder and CEO...Read More »



Advanced Disposal Reports 1st Quarter Results

Advanced Disposal Services (Ponte Vedra, FL) reported first quarter revenue that rose modestly by 0.7 percent to $386.7 million from $384.0 million a year ago. Year-over-year growth from acquisitions was 0.5 percent. Net loss during the first quarter 2020 was ($6.3) million or ($0.07) per diluted share and adjusted net income, which excludes certain gains and expenses, was $4.1 million, or $0.04 per diluted share. The net loss was less than what analysts had expected. As with its industry peers, the company noted that the COVID-19 pandemic resulted in volume declines in all lines of its business, except residential due to deteriorating macroeconomic conditions and stay-at-home orders. With its pending acquisition by Waste Management announced in April of last year, the company declined to host an earnings call with investors...Read More »



Casella Waste's 1st Quarter Revenue up 12% on Strong Pricing

Casella Waste Systems (CWST)
  Three Months Ended Mar. 30
(millions of $) 2020 2019
Revenue 182.9 163.7
EBITDA 33.5 26.6
EBITDA Margin 18.3% 16.3%
Net Income 1.0 (1.7)

Casella Waste Systems (Rutland, VT) announced that its first quarter revenues had risen 12 percent to $182.9 million over its first quarter last year. Overall pricing for its services were up by 5.8 percent, 5.2 percent on its collection business and 10.1 percent at its landfills which helped offset the negative economic effects of the COVID-19 pandemic. Adjusted net income was $2.5 million for the quarter, up $3 million from the same period in 2019. Adjusted EBITDA was $33.5 million for the quarter, up $6.9 million, or up 25.9 percent over last year. The company noted more recent revenue declines in its commercial collection, roll-off collection and disposal arising from temporary closures and reduced services because of the pandemic. Amid the economic uncertainty, the company withdrew financial guidance for the year...Read More »



Covanta Posts Solid 1st Quarter Results

Covanta Holding Corporation (CVA)
  Three Months Ended Mar. 30
(millions of $) 2020 2019
Revenue 468 453
EBITDA 97 84
EBITDA Margin 20.7% 18.5%
Net Income (32) 5

Covanta Holding Corporation (Morristown, NJ) announced that first quarter revenue had grown by 3 percent to $468 million, noting its highly contracted and stable business is somewhat insulated from the effects of the COVID-19 pandemic. Overall pricing (tipping fees) were up 5 percent on a same-store basis and profiled waste revenue was up 18 percent versus a year ago. The company reported feeling pressure on commercial MSW and profile waste volumes, which is largely generated from industrial and the manufacturing sources, given the stay-at-home and similar mandates in core regions. They have been able to backfill shortfall volumes thanks to the location of their assets, logistics and transfer station capabilities and the talent of their waste procurement team...Read More »



Clean Harbors' 1st Quarter Revenue up 10%

Clean Harbors, Inc. (Norwell, MA) said first quarter revenues grew by 10 percent to $858.6 million from the same period last year. Adjusted EBITDA grew 21 percent over last year. Net income grew to $11.6 million ($0.21 per share) from $1 million ($0.02 per share) last year. "Profitability in our Environmental Services segment increased 22 percent for the quarter on top-line growth of 11 percent, driven by our disposal facilities," said President and CEO Alan McKim. He also noted that the company's Safety-Kleen segment grew profitably, with a 12 percent increase in adjusted EBITDA on 8 percent higher revenue. As with its industry peers, the economic impacts of the COVID-19 pandemic progressively worsened toward quarter end as shelter-in-place orders took hold in the United States and Canada. The company responded by cutting workforce expense, shuttering half of its re-refinery production, and cutting capital expenditures. Amid the uncertainty, the company has withdrawn financial guidance for the year.

Despite concerns over COVID-19, McKim says that the company is well-positioned for the latter half of 2020. "We exited Q1 with a healthy backlog of waste streams in our disposal network and have not seen a meaningful decline from most of our large quantity generators. In addition, we are continuing to perform COVID-19 decontamination work and handling growing volumes of infectious waste for a variety of customers."...Read More »



Stericycle 1st Quarter Reflects New Focus Following Divestments

Medical waste processor Stericycle, Inc. (Bannockburn, IL) said first quarter revenues had decreased by 5.4 percent to $785 million from $830.1 million a year ago. However, the company has divested 6 business segments over 15 months. Without these, or foreign exchange or changes in sorted office paper ("SOP") pricing, revenues increased 2.4 percent over last year. Net loss was $20.1 million, or $0.22 diluted loss per share, compared with net loss of $37.8 million, or $0.42 diluted loss per share, in the first quarter of last year. With the economic uncertainty caused by the COVID-19 pandemic, the company is withdrawing financial guidance for the year...Read More »


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