Waste Connections NYSE: WCN raised its full-year 2026 outlook after second-quarter revenue and adjusted EBITDA grew more than 6%, with management citing stronger-than-expected pricing, margin execution, acquisition activity and improving commodity trends.
President and CEO Ron Mittelstaedt said the company was “extremely pleased” with its first-half performance, which he said positioned Waste Connections for an increased outlook despite macroeconomic pressures tied to geopolitical uncertainty, elevated fuel costs and softer construction-related activity in some markets.
Second-quarter revenue rose 6.4% year over year to $2.562 billion, exceeding management’s expectations, according to EVP and CFO Mary Anne Whitney. Adjusted EBITDA was $840.1 million, up 6.8% from the prior-year period. Adjusted EBITDA margin was 32.8%, up 10 basis points year over year, as underlying margin expansion offset headwinds from fuel and lower commodity values.
Pricing Offsets Softer Volumes
Solid waste organic growth was driven by total price of 6.7% in the quarter, including core pricing of 5.6% and fuel and material surcharges of 1.1%. Whitney said the company remains on track for full-year core price “at or above 5.5%,” with most 2026 pricing already completed or otherwise known.
Volumes, however, remained pressured. Waste Connections reported solid waste volumes down 1.9%, reflecting ongoing macroeconomic uncertainty and a slowdown in construction-related activity. Mittelstaedt said recent elevated fuel costs appeared to have affected the timing and magnitude of some projects, with certain activity paused during the quarter. He also said customer sensitivity to higher pricing, including fuel-related surcharges, likely contributed to churn in some markets.
Still, management pointed to early signs of improvement. Mittelstaedt said special waste activity in July had been encouraging and may indicate that the second-quarter slowdown was temporary. Construction and demolition tons were up year over year in the second quarter for the first time in 10 quarters, with some projects continuing into the third quarter.
Updated 2026 Outlook Reflects First-Half Strength
Waste Connections increased its full-year 2026 outlook based on first-half results, recent values for recycled commodities, RINs and fuel, and acquisitions completed to date. The company now expects:
- Revenue of $10.02 billion to $10.05 billion, up $100 million to $120 million from its February outlook.
- Adjusted EBITDA of $3.33 billion to $3.34 billion, up from the prior range of $3.30 billion to $3.325 billion.
- Full-year adjusted EBITDA margin of 33.2% to 33.3%.
- Adjusted free cash flow of $1.4 billion to $1.45 billion, unchanged from the prior outlook.
Whitney said second-half adjusted EBITDA margin is expected to average about 33.7%, and could exceed 34% in the third quarter depending on fuel and commodity trends. She cautioned that fourth-quarter comparisons will be tougher because of a more typical seasonal margin step-down than the company experienced in 2025.
The free cash flow outlook includes expected 2026 impacts related to closure at Chiquita Canyon Landfill in the range of $100 million to $150 million, along with capital expenditures of $1.25 billion. Mittelstaedt said the company remains in line with its expectations for managing the elevated temperature landfill event at Chiquita Canyon, describing the reaction as “stable, controlled, and decelerating.”
Commodities, RNG Projects and M&A Provide Potential Upside
Management said recycled commodity revenue improved sequentially for the second consecutive quarter, with the overall basket up 10% to 15% from year-end. Landfill gas sales rose 15% sequentially from the first quarter, helped by higher gas generation and higher renewable energy credit values.
Waste Connections also reported progress on renewable natural gas projects. Mittelstaedt said the company has started up and ramped production at several projects, including one owned facility brought online in July. RNG capital outlays are expected to be “essentially complete” by year-end, with all plants expected to be operational by early next year.
On acquisitions, Waste Connections has completed deals representing approximately $100 million in annualized revenue year to date. Mittelstaedt said another $30 million of exclusive market franchise transactions are expected to close soon during the third quarter, and he described the company as on pace for “another above-average M&A year.”
The company has also been active in share repurchases. Mittelstaedt said Waste Connections has deployed about $692 million year to date to buy back more than 1.5% of shares outstanding under its normal course issuer bid. Leverage remained nearly unchanged at 2.76 times debt to EBITDA, which management said preserves flexibility for acquisitions, further buybacks and a potential dividend increase during the company’s annual review in October.
AI Initiatives Expected to Support Future Margin Gains
During the question-and-answer portion of the call, management discussed several artificial intelligence initiatives. Mittelstaedt said an AI-linked commercial pricing tool, fully deployed by the fourth quarter of 2025, has generated about $20 million of run-rate EBITDA improvement through 2026.
The company is also piloting a dynamic, real-time AI-driven routing algorithm, which is not expected to be fully deployed until the end of 2027 and is not expected to meaningfully affect profit and loss until 2028. Mittelstaedt said Waste Connections expects roughly $40 million to $50 million of route-related savings from that initiative through 2028 and 2029.
Additional AI work focused on customer service and a mobile application is expected to begin deployment in 2027. Overall, Mittelstaedt said the company is investing about $100 million across seven AI-related programs and expects about $100 million, or roughly 100 basis points, of EBITDA improvement as those efforts mature into 2028 and 2029.
Management said Waste Connections is set up for double-digit adjusted free cash flow per share growth in 2026 and is already looking ahead to similar growth in 2027, supported by declining RNG capital spending, expected contributions from RNG operations and lower cash closure outflows at Chiquita Canyon.
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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