GFL sees revenue growth increase by more than 40% in the second quarter of 2022

“Our exceptional start to the year continued into the second quarter, thanks to the hard work and commitment of our more than 19,000 employees,” said Patrick Dovigi, Founder and CEO of GFL. “The solid waste price of 7.3% was significantly higher than our original plan and speaks to our ability to respond to changing market conditions in real time. The strength of this price, along with the continued positive trends in volume and the contribution from mergers and acquisitions, generated nearly 30% revenue growth in our solid waste segment, exceeding our expectations The outperformance we saw in our environmental services segment at the start of the year continued to accelerate in the second quarter, driving organic revenue growth of more than 20% and validating our logic of consolidating the components of this segment at the end of last year Adjusted EBITDA increased by 115.5 million dollars or 34.2% in the second quarter. We achieved these extraordinary results despite the current inflationary environment which has been more severe and has persisted longer than expected, as well as e the continuing impact of tight labor markets and supply chain constraints. Last year’s margins will be impacted by labor shortages and the rapid rate of cost escalation, we believe our disciplined pricing initiatives, as well as the lagged impact of recent price adjustments from the IPC, will establish a very favorable starting point for 2023 and provide scope for margin expansion as inflationary pressures, labor markets and supply chain constraints begin to ease.”

Mr. Dovigi added, “We remain focused on executing our strategy to create long-term value for all stakeholders. We have completed 28 acquisitions since the start of the year, the majority of which were smaller add-on acquisitions, which have significantly increased our solid waste footprint in the markets we serve. Our outsized M&A activity in the first part of this year is expected to generate annualized revenue of approximately $360.0 million and puts us on track to outpace the upside M&A opportunity. acquisitions we identified early in We also continued to progress on RNG projects at the five landfills, where we have agreements in place, with seven additional sites under active negotiation and nine more projects at the application stage of proposals.

Mr. Dovigi concluded: “Our solid performance for the first half of the year, combined with our expectations for the rest of the year, the resilience of our business model and the effectiveness of our growth strategies, lead us to increase our full 2022 for the second time this year We are increasing our revenue guidance by $375 million, as well as Adjusted EBITDA and Adjusted Free Cash Flow, despite the current inflationary environment and rising rates We continue to see upside opportunities ahead of us following our strong M&A pipeline and the contribution of any additional M&As completed in the second half of the year would add to our guidance updates. “

Second quarter results

  • Revenue increased 40.4% to $1,707.5 million in the second quarter of 2022, compared to the second quarter of 2021. Solid waste organic growth of 12.4%, including 7.3% of the base pricing, 1.9% surcharges and 2.4% positive volume. In the second quarter of 2021, solid waste base pricing and surcharges were 4.1% and volume was positive 6.3%.
  • Environmental Services revenue of $324.3 million, including organic growth of 21.6% driven by strong industrial collection and treatment revenues, as well as the impact of higher prices sale of used motor oils.
  • Adjusted EBITDA increased 34.2% to $453.3 million in the second quarter of 2022, compared to the second quarter of 2021. Adjusted EBITDA margin was 26.5% in the second quarter of 2022, compared to 26 .9% in the second quarter of 2021 (27.8% after adjustment for the sale of GFL Infrastructure). Solid Waste Adjusted EBITDA margin was 29.4% in the second quarter of 2022, compared to 30.9% in the second quarter of 2021.
    • Fuel costs caused a 125 basis point headwind to the Solid Waste Adjusted EBITDA margin, compared to the second quarter of 2021.
  • Net income from continuing operations increased to $82.6 million in the second quarter of 2022 from $54.5 million in the second quarter of 2021.
  • Adjusted free cash flow was $102.2 million in the second quarter of 2022, compared to $162.2 million in the second quarter of 2021.
    • Investment in non-cash working capital was $90.8 million in the second quarter of 2022, compared to $5.9 million (adjusted) in the second quarter of 2021. The additional investment of 84, $9 million is attributable to revenue growth and the changing mix of activities carried out throughout the district.
    • Capital expenditures were approximately $150.0 million in the second quarter of 2022, including $19.6 million for the development and construction of RNG projects and proceeds from the disposal of assets of 0.3 million, excluding $224.0 million from our sale of GFL Infrastructure to Green Infrastructure Partners Inc., compared to $75.1 million in the second quarter of 2021, including sale proceeds assets of $65.4 million.

Results since the beginning of the year

  • Revenue increased 34.3% to $3,108.9 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. Solid waste organic growth of 11.3%, including:
    • 7.0% of base price, compared to 4.0% for the six months ended June 30, 2021.
    • 1.3 percent surcharges.
    • 2.1% of positive volume (2.6% excluding non-recurring MRF volumes), compared to 3.5% for the six months ended June 30, 2021 (1.1% excluding non-recurring MRF volumes).
  • Environmental Services revenue of $556.0 million, including organic growth of 20.6% driven by strong industrial collection and treatment revenues, as well as the impact of higher prices sale of used motor oils.
  • Adjusted EBITDA increased 27.1% to $807.7 million for the six months ended June 30, 2022, compared to the six months ended June 30, 2021. Adjusted EBITDA margin was 26.0% for the six months ended June 30, 2022, compared to 27.4%. for the six months ended June 30, 2021. Solid Waste Adjusted EBITDA margin was 29.6% for the six months ended June 30, 2022, compared to 30.9% for the six months ended June 30, 2021.
  • Net income from continuing operations increased to $219.6 million for the six months ended June 30, 2022 from a net loss of $229.2 million for the six months ended June 30, 2021.
  • Adjusted free cash flow was $220.8 million for the six months ended June 30, 2022, compared to $279.1 million for the six months ended June 30, 2021.

Full Year 2022 Forecast Update

GFL has also provided its updated forecast for 2022 assuming a CAD/US exchange rate of 1.28 for the rest of the year (compared to 1.26 provided in our initial forecast of February 9, 2022):

  • Revenues are estimated at $6,425–6,475 million (previously $6,000–6,100 million).
    • Base price of 7.0% for solid waste for the whole year, surcharges of 1.9% and volume of 1.75% and organic growth of environmental services of 9.0%. Changes in exchange rates led to revenue growth of 1.3% and a contribution from M&A revenue of 14.6%.
  • Adjusted EBITDA3 is estimated between $1,710 million and $1,730 million (previously between $1,680 million and $1,720 million).
    • Adjusted EBITDA margin for the full year is expected to be around 26.7%, including an estimated headwind of 110 basis points due to higher fuel costs.
  • Adjusted free cash flow3 is estimated between $650 and $680 million (previously between $645 and $675 million).
    • Cash interest for the full year is expected to be approximately $400 million, including approximately $40 million of additional cash interest over the initial guidance based on higher interest rates.

The updated guidance for 2022 includes the expected contribution from acquisitions already completed in 2022, net of divestitures completed to date, but excludes any impact from additional acquisitions not yet completed, refinancing opportunities and any potential redeployment of capital. Certain current assumptions are implicit in the forward-looking information regarding our expectations for 2022, including, among other things, the absence of change in the current economic environment and the fact that none of the jurisdictions in which GFL operates are instituting protective measures. additional COVID-19 emergency, including shelter-in-place orders or similar. Updated guidance for 2022 assumes GFL will continue to execute on its strategy to grow our business organically, leverage our scalable network to attract and retain customers across multiple service lines, achieve efficiencies operational and to extract supply and cost synergies. See “Forward-Looking Information”.

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