Waste Connections, Inc. Q1 FY2026 earnings call

2026 started well with results exceeding expectations. Despite macro volatility, full-year outlook remains supported. Solid waste pricing retention was better than expected. Landfill tons were stronger with special waste up for sixth consecutive quarter. E&P waste business saw revenue increases. Fuel costs had impact but hedges and surcharges help. Recycled commodities and landfill gas sales improved. 14th consecutive quarter of employee retention improvement with voluntary turnover below 10%. AI investment showing promising results. Anticipate outsized M&A activity with deals expected to close. Progress on Chiquita Canyon ETLF event with EPA involvement.

Revenue in Q1 was $2.371 billion, up $143 million or 6.4% year over year. Adjusted EBITDA was $769.5 million, up 8% year-over-year, at 32.5% of revenue. Organic growth in solid waste collection transfer and disposal was 3.1% led by 6% core price. Landfill tons were slightly stronger than expected with MSW up 4%, special waste up 8%. Recycled commodity revenues improved in Q1, landfill gas sales increased sequentially.

2026 adjusted free cash flow expected 1.4 to 1.45 billion. Full-year outlook from February remains largely unchanged. Anticipate incremental benefits from external factors and ongoing investments. M&A activity expected with deals with aggregate annualized revenue ~100 million to close by end of Q2 or early Q3.

Macro-economic and geopolitical volatility risk. Fuel cost volatility risk with impact on margins. Commodity price volatility risk. Chiquita Canyon ETLF event related risks including uncertainty in resolution timeline.

Q: Tyler Brown asked about fuel impact and Q2 guidance.

A: Marianne addressed fuel surcharge recovery lag, Q2 being toughest, and incremental benefits from E&P waste.

Q: Konark Gupta asked about underlying margins and M&A.

A: Marianne said underlying margins had upside potential and M&A targets core solid waste areas.

Q: Tony Kaplan asked about volume and E&P.

A: Marianne discussed volume expectations and E&P pipeline.

Q: Faiza Aoui asked about yield and retention.

A: Marianne talked about yield and retention impact on volume.

Q: Adam Bubas asked about E&P and AI.

A: Marianne discussed E&P margin impact and AI initiative returns.

Q: Trevor Romeo asked about NY market and E&P facilities.

A: Ron discussed NY market rollout delay and E&P facility reopening.

Q: Jerry Riewicz asked about Arrowhead and rail.

A: Ron talked about Arrowhead volume growth and rail internalization.

Q: Seth Weber asked about SG&A and West region.

A: Marianne discussed SG&A and West region volume strength.

Q: Shlomo Rosenbaum asked about special waste and rail.

A: Ron talked about special waste as lead indicator and rail internalization.

Q: Noah Kay asked about yield and risk management.

A: Marianne discussed yield spread and risk management benefit.

Q: Kevin Chiang asked about special waste lead and AI.

A: Ron talked about special waste lead time and AI impact on yield.

Q: Toby Samir asked about rail volume shift.

A: Ron discussed rail volume shift drivers and future opportunities