Analyst Note| Brian Bernard, CFA, CPA |
Waste Connections enjoyed double-digit top-line growth and solid margin expansion as the wide-moat-rated waste management firm benefited from normalizing end markets. Revenue increased 17.5% year over year to over $1.5 billion, primarily driven by an 11.4% increase in solid waste volume and price, strong recycling performance, and acquisitions. Volume increased 6.5% year over year on an easy prior-year comparison (year-ago volume was down nearly 10%) and the core price was strong at 4.7% (up 20 basis points sequentially and year over year). Volume gains differed across regions depending, in part, on the severity of coronavirus-related restrictions. For example, Canadian volumes increased nearly 10.5%, the Western United States saw volumes rebound about 8.5%, while the Central U.S. saw a milder 4% gain in volumes. Management said landfill volume and roll-off pulls have returned to prepandemic levels.