Waste Connections (WCN) Q4 2022 Earnings Call Transcript

For the period ending December 31, 2022

February 16, 2023 8:30 a.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the Waste Connections Fourth Quarter Earnings Call. All participants will be in listen-only mode. [Operator Instructions] After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded.

Now I'd like to turn the call over to Mr. Worthing Jackman. Please go ahead.

Worthing Jackman

Thank you, operator, and good morning, everyone. I'd like to welcome everyone to this conference call to discuss fourth quarter results and our outlook for both the first quarter and full year 2023. I'm joined this morning by Mary Anne Whitney, our CFO and several other members of senior management.

As noted in our earning release, Q4 topped off an extraordinary year for Waste Connections, highlighted by continuing outperformance during the period and providing a higher entry point and enhanced visibility for 2023. Strong operational execution and over 10% solid waste pricing along with acquisitions closed during the period, once again, provided for better than expected results. We more than offset inflationary pressures and commodity-related headwinds to expand adjusted EBITDA margin by 30 basis points, excluding the margin dilutive impact of acquisitions completed since the year ago period.

Looking at the full year, double-digit percentage growth in both revenue and adjusted EBITDA along with adjusted EBITDA margin expansion, excluding the impact of acquisitions, continued to differentiate our results. We overcame elevated wage, fuel and inflationary pressures and a 70% drop in recycled commodity values in the second half of the year, with an acceleration in pricing during the year, providing momentum for higher core pricing in 2023.

Acquisition activity during the year also outpaced expectations for a total of approximately $640 million in acquired annualized revenues, which along with activity year-to-date, already provides acquisition contribution of 5% in 2023 with additional dialogue ongoing.

In short, tremendous operational execution in 2022 has provided outside visibility for double-digit top line growth along with adjusted EBITDA margin expansion in 2023, with upside from any improvement in recovery commodity values or inflationary pressures, as well as incremental acquisition activity during the year.

Before we get into much more detail, let me turn the call over to Mary Anne for our forward-booking disclaimer and other housekeeping items.

Mary Anne Whitney

Thank you, Worthing and good morning. The discussion during today's call includes forward-looking statements made pursuant to the safe harbor provisions of the US Private Securities Litigation Reform Act of 1995, including forward-looking information within the meaning of applicable Canadian Securities Laws. Actual results could differ materially from those made in such forward-looking statements, due to various risks and uncertainties. Factors that could cause actual results to differ are discussed both in the cautionary statement included in our February 15th earnings release and in greater detail in Waste Connections' filing with the US Securities and Exchange Commission and the securities commissions or similar regulatory authorities in Canada. You should not place undue reliance on forward-looking statements as there may be additional risks of which we are not presently aware or that we currently believe are immaterial, which could have an adverse impact on our business. We make no commitment to revise or update any forward-looking statements in order to reflect events or circumstances that may change after today's date.