Waste Connections NYSE: WCN opened fiscal 2026 with first-quarter results that management said exceeded internal expectations, driven by stronger-than-anticipated pricing retention, improving special waste activity, and continued operating leverage from labor and technology initiatives.
President and CEO Ronald Mittelstaedt told investors the company delivered revenue and adjusted EBITDA ahead of expectations and posted an adjusted EBITDA margin of 32.5%, up year-over-year even after “outsized weather impacts” and ahead of recovering higher fuel costs through surcharges. CFO Mary Anne Whitney said adjusted EBITDA totaled $769.5 million, up 8% from the prior year, while adjusted free cash flow was $246 million, consistent with the company’s full-year outlook issued in February.
Pricing strength offsets weather-related volume pressure
Whitney reported first-quarter revenue of $2.371 billion, up 6.4% year-over-year, including $55 million of net acquisition contributions. Organic growth in solid waste collection, transfer, and disposal was 3.1%, led by 6% core price. Total price of 5.9% included a roughly 10-basis-point reduction from fuel and materials surcharges, which lag underlying cost changes.
Management emphasized visibility into the rest of the year’s pricing. Whitney said more than 75% of price increases are already in place or contractually set, supporting an expectation for full-year 2026 core pricing “at the high end of the range,” or about 5.5%. Mittelstaedt noted the company’s AI-driven pricing tool has improved retention and supported stronger pricing outcomes.
On volumes, Whitney said yield of 4.7% implied solid waste volumes down roughly 1.5%, including up to about 0.5 percentage point from severe weather impacts across most regions. The Western Region was an exception, with volumes up about 1.5%. In Q&A, Whitney said improved special waste helped underlying volumes in the quarter, but construction-driven activity has not yet accelerated, and that the company is seeing “reduction in the shedding or lost contracts,” which is “directionally getting us in the right direction.”
Landfill and commodity trends improve, led by special waste
Landfill tons were “slightly stronger than expected,” Mittelstaedt said, helped by special waste. Whitney added that total landfill tons increased 4% year-over-year, with MSW tons up 5% and special waste tons up 8%, partially offset by continued weakness in C&D, down 5%. Mittelstaedt called special waste a traditional leading indicator tied to site clearing for development, and told one analyst it typically leads broader volume inflection by “the next six to 12 months.”
Commodity-linked revenue also improved sequentially. Whitney said recycled commodity revenues rose in the quarter, led by old corrugated cardboard (OCC), which averaged $89 per ton in Q1 and exited the quarter near the 2025 full-year average of $94 per ton. Landfill gas sales rose sequentially as well, aided by contributions from a new RNG facility in startup and higher natural gas prices. Whitney said renewable energy credit (RIN) values remained stable at about $2.40 following EPA updates.
Fuel costs spike; company expects recovery over time with lag
Fuel was a key topic in Q&A after a sharp increase in diesel prices. Mittelstaedt said U.S. spot diesel was up 12% year-over-year, including an increase of more than 35% in March, which pushed internal fuel costs about $5 million above expectations in the quarter. He said the company has hedged more than 45% of expected diesel needs for 2026 and expects to recover a portion of higher costs over time through surcharges, which “will step up in Q2” due to the lagged mechanics.
Whitney told analysts that Q2 would likely be “the toughest” quarter for fuel recovery because of timing effects from surcharge formulas and advanced billing. She said the recovery can extend into next year given when the spike began, and offered an illustration that higher fuel could drive $60 million to $70 million of incremental fuel surcharges through the income statement, which would support EBITDA dollars but dilute margins due to the revenue mix.
In prepared remarks, Mittelstaedt said the company expects to be “largely insulated on an EBITDA basis over time” from fuel impacts through a combination of E&P activity, hedges, and surcharges, “albeit with some lag in timing.”
AI, labor retention, M&A, and capital allocation
Operationally, management highlighted continued improvements in workforce stability. Mittelstaedt said Q1 marked the company’s 14th consecutive quarter of improvement in employee retention and that voluntary turnover dropped below 10%. Whitney added that underlying margin expansion benefited from improved staffing, safety, and other cost items, though fuel was a headwind.
On technology, Mittelstaedt said the company’s AI-driven pricing tool has produced approximately a 20% improvement in customer retention and pricing effectiveness. He said Waste Connections is pursuing seven AI initiatives across 2025 to 2027, with three implemented in 2025 and two planned in each of 2026 and 2027, with annual spending of roughly $25 million to $30 million. Looking longer term, he said it is “reasonable” to expect “somewhere approaching about 100 basis points of margin appreciation as we head into 2028” as the initiatives are fully implemented.
On acquisitions, Mittelstaedt said the company anticipates another “outsized year” of activity, citing a “robust and building” pipeline and “a handful of deals” totaling approximately $100 million of aggregate annualized revenue expected to close by the end of Q2 or early Q3. He described the pipeline as consistent with the company’s traditional “singles and doubles” approach, including both franchise and competitive solid waste transactions, some integrated assets, and smaller E&P tuck-ins.
The company also continued returning capital to shareholders. Mittelstaedt said year-to-date outlays of approximately $365 million included share repurchases of about 1% of shares outstanding. Whitney said the company issued $600 million of notes in March, ending the quarter with about $9.1 billion of debt, an average interest rate of about 4%, about 80% fixed, and net leverage of about 2.75x, alongside approximately $1 billion of liquidity.
Chiquita Canyon update and other operational notes
Management reiterated its outlook related to the elevated temperature landfill (ETLF) event at the closed Chiquita Canyon landfill in Southern California. Mittelstaedt said objective data indicates the reaction is “stable, controlled, and decelerating,” and noted expanded involvement by the U.S. EPA, which he said has provided direction on two “critical issues.” He said there is “no change” in the 2026 outlook, which reflects free cash flow impacts of $100 million to $150 million, though the company adjusted its accrual in Q1 to reflect higher spending seen in 2025.
Elsewhere, Mittelstaedt discussed New York City’s transition to a zone-based commercial waste franchise system, stating Waste Connections holds the maximum 15 zones and has an integrated footprint including transfer stations and disposal options. He said implementation timing has slowed, with the full rollout now expected between mid-to-late 2028 versus an earlier end-of-2027 target, reflecting a “six- to 12-month delay.”
Mittelstaedt also addressed rail-driven internalization tied to the Arrowhead landfill, saying the operation is running about 7,500 to 8,000+ tons per day at peak and has a plan to reach 8,500 to 9,000 tons per day as it moves into 2027. He noted the permitted cap is 15,000 tons per day and said he believes the company can reach “north of 10,000 tons a day” in the next two to three years, which he said could lift internalization into the low-to-mid 60% range.
While acknowledging macro volatility, Mittelstaedt said management has not seen anything that would change the company’s full-year outlook issued in February and said the company believes it is positioned for “incremental benefits” from commodities, operational investments, and M&A as 2026 progresses.
About Waste Connections NYSE: WCN
Waste Connections NYSE: WCN is a North American integrated waste services company that provides a range of solid waste and environmental services to municipal, commercial, industrial and residential customers. The company offers collection, transportation, transfer, disposal and recycling services, and operates an extensive network of transfer stations and disposal facilities. Waste Connections positions itself as a provider of infrastructure-driven waste solutions across many regions of the United States and Canada.
The company's operating activities include routine curbside and commercial collection, roll-off and container services, operation of landfills and transfer stations, and recycling and resource recovery programs.
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