Waste Connections, Inc. (NYSE:WCN) Q3 2023 Earnings Conference Call October 26, 2023 8:30 AM ET
Company Participants
Ron Mittelstaedt – President and Chief Executive Officer
Mary Anne Whitney – Chief Financial Officer
Conference Call Participants
Toni Kaplan – Morgan Stanley
Kevin Chiang – CIBC
Jasper Bibb – Truist Securities
Michael Hoffman – Stifel
Bryan Burgmeier – Citi
Tyler Brown – Raymond James
Noah Kaye – Oppenheimer
Jerry Revich – Goldman Sachs
Stephanie Moore – Jefferies
Stephanie Yee – JPMorgan
Operator
Good day, and welcome to the Waste Connections, Inc. Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, today’s event is being recorded.
I’d now like to turn the conference over to Ron Mittelstaedt, President and CEO. Please go ahead.
Ron Mittelstaedt
Okay. Thank you, operator, and good morning. I would like to welcome everyone to this conference call to discuss our third quarter results and to provide a detailed outlook for the fourth quarter as well as some early thoughts about 2024. I’m joined this morning by Mary Anne Whitney, our CFO, as well as other members of our leadership team.
As noted in our earnings release, we are extremely pleased by the durability of our financial and operating results in the quarter, with momentum for continued outsized margin expansion, solid operational execution drove adjusted EBITDA margin of 32.5% in the third quarter as expected, up about 140 basis points sequentially and up 120 basis points year-over-year, in spite of over $15 million in unforeseen headwinds.
Moreover, normalizing for recycled commodity values from just over a year ago underlying adjusted EBITDA margin eclipsed 33% in the quarter. And this is total company EBITDA margin, not just solid waste. During the quarter, we overcame elevated levels of risk related expenses and other lagging effects of higher employee turnover in prior periods, as well as site-specific incremental operating expenses at one of our landfills in California.
The expected Q4 and ongoing impact of this evolving landfill situation are currently being evaluated, along with a recent shorter-term development at a landfill in Texas, and as such, weren’t anticipated in the full year outlook we provided in August. We expect to get more clarity going forward, but currently estimate the range of outcomes in Q4 to include impacts of up to $20 million to revenue, adjusted EBITDA, and adjusted free cash flow.