Waste Connections Q3 Earnings Call Highlights

Key Points

• Strong Q3 performance: Revenue rose 7.3% year over year to $2.638 billion, while adjusted EBITDA increased 7.9% to $895.8 million. Growth was driven by pricing, improving landfill volumes, acquisitions and commodity-related revenue.
• 2026 outlook raised: Waste Connections now expects approximately $10.09 billion in revenue and $3.345 billion in adjusted EBITDA, with at least $1.4 billion in free cash flow for the year.
• Capital returns and future growth: The company repurchased more than $1 billion of stock year to date, raised its dividend 10%, and reported an active acquisition pipeline. Management’s initial 2027 framework calls for mid- to high-single-digit revenue growth and double-digit adjusted free-cash-flow-per-share growth.

Waste Connections NYSE: WCN reported third-quarter results that exceeded its expectations and raised its full-year 2026 outlook, citing pricing gains, improving landfill activity, acquisition contributions and commodity-related revenue growth.

Third-quarter revenue rose 7.3% from a year earlier to $2.638 billion, including $53 million of contribution from acquisitions net of divestitures. Adjusted EBITDA increased 7.9% to $895.8 million, while adjusted EBITDA margin reached 34.0%, up 20 basis points year over year.

President and CEO Ron Mittelstaedt said the company delivered 50 basis points of underlying margin expansion despite higher diesel costs late in the quarter. Excluding an approximately 30-basis-point margin drag from fuel, CFO Mary Anne Whitney said adjusted EBITDA margin would have been 34.3%.

Pricing, landfill volumes and commodity trends

Solid-waste organic growth was led by 5.5% core pricing, while fuel and material surcharges added 1.3%. Average yield was 4.3%, offset by a 1.2% decline in unit volumes. The volume decline improved by 70 basis points sequentially from the second quarter, driven primarily by more cyclical landfill volumes.

Landfill tons increased 3% year over year, compared with effectively flat volumes in the prior quarter. Whitney said the third quarter was the first in two years in which municipal solid waste, construction-and-demolition debris and special waste all improved year over year. Special-waste volumes rose 7%, and construction-and-demolition volumes increased 5%.

Special-waste activity was broad-based across the company’s markets, with projects ranging from infrastructure and remediation to data center, chip plant and commercial construction activity. However, management noted that residential construction remains under pressure. Mittelstaedt said new housing starts had declined to 1.2 million and could move lower if current interest-rate conditions persist.

Other business lines also contributed to growth. E&P waste revenue increased 6% sequentially, with U.S. organic growth of about 5% year over year, led by activity in the Permian Basin. Recycling revenue rose roughly 12% from a year earlier, helped by higher old corrugated container values, although plastics remained weak. Landfill gas sales climbed 35%, reflecting new renewable natural gas facilities and higher values for renewable identification numbers.

Higher 2026 outlook

Waste Connections raised its full-year outlook to approximately $10.09 billion in revenue and adjusted EBITDA of about $3.345 billion, representing an adjusted EBITDA margin of 33.2%. The forecast calls for fourth-quarter revenue of approximately $2.52 billion and adjusted EBITDA margin of 33.3%.

The company said its outlook assumes no change in underlying economic trends. Additional acquisitions, further commodity improvement and fuel-cost recovery could provide upside, while movements in diesel prices and the timing of surcharge recovery could affect results.

Year-to-date adjusted free cash flow totaled $1.09 billion, and the company maintained its expectation for at least $1.4 billion for the full year. Whitney said free-cash-flow conversion was currently around 42%, with a longer-term objective of returning to a 48% to 50% range. She said renewable natural gas capital spending is substantially complete, with about $75 million of spending expected in 2026 that largely will not repeat next year.

Management also expects spending related to the Chiquita landfill remediation to decline again in 2027, following a reduction in 2026. Mittelstaedt said remediation costs have declined as the reaction has cooled, reducing leachate volumes and related disposal costs.

Capital allocation and acquisitions

Year-to-date acquisitions represent $130 million in annualized revenue, including two West Coast solid-waste collection franchises acquired in the third quarter. Mittelstaedt said the acquisition pipeline remains active, with additional transactions expected to close later in 2026 or early in 2027.

The company had more than $1 billion of liquidity and leverage of approximately 2.75 times debt to adjusted EBITDA. It also repurchased more than $1 billion of stock year to date, equal to 2.5% of shares outstanding, and increased its regular quarterly cash dividend by 10%. The dividend increase marked the company’s 16th consecutive double-digit annual increase since it initiated the dividend in 2010.

Mittelstaedt said the company remains disciplined on acquisitions and does not view the recent pace of share repurchases as a substitute for M&A. He said a normalized acquisition contribution to growth could be in the range of 1% to 2%, while emphasizing that transaction timing is driven by sellers and market opportunities.

Initial framework for 2027

While Waste Connections will not issue formal 2027 guidance until February, management said it expects to be positioned for mid- to high-single-digit revenue growth, assuming current economic conditions do not materially change. The framework includes approximately 1% of combined rollover growth from acquisitions completed and RNG facilities placed into service during 2026, as well as pricing-led organic growth, surcharges, commodity-related revenue and future acquisitions.

The company expects adjusted EBITDA margin expansion in a normalized range from its solid-waste operations, with higher fuel costs expected to be largely offset by commodity-related tailwinds if current levels persist. Management also expects double-digit adjusted free-cash-flow-per-share growth, aided by declining Chiquita spending and the substantial completion of RNG capital expenditures.

On technology, Mittelstaedt said no incremental margin benefit from newer AI-driven operational initiatives is included in the preliminary 2027 framework. He said the company expects initial margin impacts to emerge in 2028, with fuller benefits potentially realized in 2029.

About Waste Connections (NYSE:WCN)

Waste Connections, Inc is a North American provider of solid waste collection, transfer, disposal and recycling services. The company serves residential, commercial, industrial and construction customers, offering scheduled and on-demand collection as well as waste management solutions tailored to municipalities and businesses.

Its operations include local collection fleets, transfer stations, recycling and resource-recovery facilities, and landfills. Waste Connections also provides non-hazardous oilfield waste services, including the collection, transportation, treatment and disposal of waste generated by energy-production activities.

Founded in 1997, Waste Connections has grown through a combination of internal development and acquisitions.

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