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    WCN
    Earnings call· Jun 2026(Q2 FY26)

    Waste Connections, Inc. WCN

    Jul 23, 2026 Source

    Executive summary

    Waste Connections, Inc. Q2 FY26 — Strong First Half Performance Drives Increased Full-Year Outlook

    Waste Connections delivered a strong Q2 FY26, exceeding revenue and EBITDA expectations, driven by robust pricing and underlying margin expansion despite macroeconomic headwinds and elevated fuel costs. The company increased its full-year outlook, anticipating continued momentum from improving commodity trends and ongoing acquisition activity. Strategic investments in AI and RNG projects are expected to drive future free cash flow growth, positioning the company for sustained performance.

    Highlights

    5

    • Q2 revenue of $2.562 billion exceeded expectations, up 6.4% year-over-year.

    • Adjusted EBITDA of $840.1 million, up 6.8% year-over-year, with margin expanding to 32.8% (up 10 bps YoY).

    • Underlying EBITDA margin expanded by 70 basis points, driven by favorable price/cost spread, employee retention, and safety savings.

    • Solid waste organic growth from total price was 6.7%, including 5.6% core pricing, outpacing expectations.

    • Year-to-date acquisitions totaled approximately $100 million in annualized revenue, with another $30 million anticipated to close soon.

    Concerns

    5

    • Q2 solid waste volumes were down 1.9% year-over-year due to macroeconomic uncertainty, with roll-off pulls down 2%.

    • Rapidly spiking fuel and related costs created a 40 bps drag on adjusted EBITDA margin in Q2.

    • Lower commodity values resulted in a 20 bps drag on adjusted EBITDA margin in Q2.

    • Customer sensitivity to higher overall pricing, exacerbated by fuel-related surcharges, likely increased churn by 10-15 basis points in certain markets.

    • Special waste tons were down year-over-year in Q2, though July activity showed improvement.

    Guidance & targets

    18
    CategoryTargetConfidence
    Full-year 2026 Revenue
    $10.02 billion to $10.05 billion
    high materiality
    High
    Full-year 2026 Adjusted EBITDA
    $3.33 billion to $3.34 billion
    high materiality
    High
    Full-year 2026 Adjusted Free Cash Flow
    $1.4 billion to $1.45 billion
    high materiality
    High
    Full-year 2026 Capital Expenditures
    $1.25 billion
    medium materiality
    High
    H2 2026 Adjusted EBITDA Margin
    average about 33.7%
    medium materiality
    Medium
    RNG Plants Operational
    all plants will be operational
    medium materiality
    High
    RNG Capital Outlays Completion
    essentially complete by year-end
    medium materiality
    High
    Full-year 2026 Core Price
    at or above 5.5%
    high materiality
    High
    Adjusted Free Cash Flow Per Share Growth
    double-digit growth
    high materiality
    High
    Anticipated M&A Annualized Revenue
    $30 million
    medium materiality
    High
    Share Buyback Program Renewal
    will be renewed
    medium materiality
    High
    Dividend Review
    will consider
    low materiality
    Medium
    Chiquita Canyon Landfill Free Cash Flow Impact
    sequential decline in impact
    medium materiality
    High
    AI-driven Routing Algorithm Deployment
    fully deployed
    medium materiality
    Medium
    AI-driven Routing Algorithm EBITDA Impact
    $40 million, maybe up to $50 million
    medium materiality
    Medium
    AI Customer Service/Mobile App Deployment
    fully deployed
    medium materiality
    Medium
    AI Customer Service/Mobile App EBITDA Impact
    $20 million to $35 million
    medium materiality
    Medium
    Total AI-related Technologies EBITDA Impact
    $100 million or 100 basis points
    high materiality
    Medium

    Segment performance

    4
    SegmentRevenueYoYQoQMargin
    Solid Waste Collection, Transfer and Disposal
    Core pricing ranged from about 4% in the Western region to 7% in competitive regions. Roll-off pulls were down 2% year-over-year, with rates per pull up 5%. Landfill tons were essentially flat, reflecting flat MSW, nominally down special waste, and C&D tons up 1% (first time in 10 quarters).
    Organic growth from total price: 6.7%Core pricing: 5.6%Fuel and material surcharges: 1.1%Yield: 4.6%Volumes: down 1.9%
    		————
    E&P Waste
    Organic E&P waste growth was led by the U.S. following a nominal pickup in rig count. Canada activity was nominally down but flat year-over-year when normalized for an outsized remediation project in the prior year.
    Organic growth (U.S.): up 7%Activity (Canada): down nominally, about flat YoY (normalized)
    		—up 18%up 12%—
    Recycled Commodities
    Overall basket of recycled commodity revenues stepped up sequentially for the second consecutive quarter.
    		——up 10% to 15% from year-end—
    Landfill Gas Sales
    Improved sequentially due to both higher gas generation and higher values for renewable energy credits (RINs).
    		——up 15% from Q1—

    Operational metrics

    22
    Adjusted EBITDA margin
    32.8%up 10 bps YoY
    Q2 FY26

    Exceeded expectations, driven by underlying margin expansion offset by fuel and commodity drags.

    Risk management costs savings
    about half
    Q2 FY26

    Accounted for about half of the underlying margin expansion, driven by improved employee retention and safety.

    Total price
    6.7%
    Q2 FY26

    Outpaced expectations for solid waste organic growth.

    Roll-off pulls
    down 2%YoY
    Q2 FY26

    Similar to recent quarters, primarily due to sluggish construction activity and some price-volume trade-off.

    C&D tons growth
    up 1%YoY
    Q2 FY26

    First time in 10 quarters, halting downward trends.

    Annualized revenue from acquisitions
    $100 million
    YTD FY26

    Completed year-to-date, with another $30 million anticipated to close soon.

    Share buyback deployment
    $692 million
    YTD FY26

    Busiest year ever for buybacks, repurchased over 1.5% of shares outstanding.

    Shares outstanding repurchased
    over 1.5%
    YTD FY26

    Pursuant to normal course issuer bid.

    Debt-to-EBITDA leverage
    2.76xvirtually unchanged
    Q2 FY26

    Remained virtually unchanged, retaining flexibility for acquisitions and shareholder returns.

    Capital expenditures
    $600 millionup more than $100 million YoY
    YTD FY26

    In line with expectations, reflecting a more normalized cadence after last year's delays.

    AI commercial pricing tool EBITDA improvement
    $20 million
    run rate

    Yielded on a run rate basis through 2026.

    AI routing algorithm EBITDA impact
    $40 million to $50 million
    FY28-FY29

    Expected route-related savings from dynamic, real-time AI-driven algorithm.

    AI customer service/mobile app EBITDA impact
    $20 million to $35 million
    initial cut

    Initial impact from AI technology in customer service approach and mobile application.

    Total AI-related technologies EBITDA impact
    $100 million
    FY28-FY29

    Expected improvement from investing $100 million in AI technologies across 7 programs.

    Free cash flow conversion
    41% to 42%
    current period

    Expected to normalize to 48-50% in 2027 with reduced RNG CapEx and Chiquita outlays.

    Cost inflation
    3.5% to 4%
    FY26

    Primary driver is wages, with other pressures creeping up.

    Volume churn
    10 to 15 bpsadditional
    Q2 FY26

    Related to rapid fuel spike and increased surcharge activity.

    M&A rollover contribution
    $30 million
    FY27

    Contribution to next year's revenue from acquisitions closed in 2026.

    RNG contribution to EBITDA
    $15 million to $20 millionmore than factored into original guidance
    FY26

    Increased contribution from RNG projects exceeding initial expectations.

    Undeveloped land purchase
    $51 million
    Q2 FY26

    Strategic and opportunistic purchase for future facility development in Florida.

    Arrowhead landfill rail network growth
    300%
    last 2 years

    Network expansion moving volumes off the upper northeastern seaboard.

    Western region volume growth
    1%
    Q1 FY26

    Benchmark for volume growth in an exclusive market, given current economic environment.

    Industry KPIs

    8
    MetricValueDetails
    Yield4.6%%
    Volumedown 1.9%%
    Core price5.6%%
    EBITDA margin32.8%%
    Churn retention10 to 15 bpsbps
    Safety turnoverabout half%
    Price to cost spreadfavorable
    Recycling commodity impactup 10% to 15%%

    Product announcements

    1
    ProductTypeDetails
    PFAS Treatment Facilitylaunch

    Deals & partnerships

    2
    Various (unnamed)Completed acquisitions contributing to annualized revenue.$100 million in annualized revenue

    Year-to-date, the company completed acquisitions totaling approximately $100 million in annualized revenue.

    Various (unnamed)Exclusive model franchise transactions anticipated to close.$30 million of exclusive model franchise transactions

    Another $30 million of exclusive model franchise transactions are anticipated to close very soon during Q3.

    Capital programs

    3
    RNG Development Projectsunderway
    Period spend: $75 million
    Spent to date: about 1/3 of our RNG portfolio already operational

    Benefit: higher gas generation and higher values for renewable energy credits (RINs); double-digit adjusted free cash flow per share growth

    Capital outlays are on track to be essentially complete by year-end 2026, with all plants expected to be operational by early 2027. Several projects, including one owned facility, brought online in July.

    AI-related Technologiesunderway$100 million

    Benefit: $100 million or 100 basis points of EBITDA improvement

    Investment across 7 programs, including a fully deployed commercial pricing tool, a dynamic routing algorithm (beta testing in Q2 2026, fully deployed end of 2027), and AI for customer service/mobile app (deployment Q2 2027, fully deployed mid-2028).

    PFAS Treatment Plantsunderway

    Benefit: significantly drop treatment cost relative to third party

    Deployment of multiple mobile technologies at several sites, with more to come, to separate PFAS and clean leachate. Considered a normal course of CapEx.

    Risks & headwinds

    5
    Macroeconomic UncertaintyQ2 FY26, ongoing

    Solid waste volumes down 1.9% in Q2 FY26.

    Mitigation: Disciplined operational execution, AI price optimization tool, observed pickup in July activity.

    Elevated Fuel and Related CostsQ2 FY26, ongoing

    40 bps drag on adjusted EBITDA margin in Q2 FY26.

    Mitigation: Fuel and material surcharges (1.1% contribution to total price), expected to fully recover higher costs over time.

    Lower Commodity ValuesQ2 FY26

    20 bps drag on adjusted EBITDA margin in Q2 FY26.

    Mitigation: Improving trends in commodities (recycled commodities up 10-15% from year-end, landfill gas sales up 15% from Q1).

    Customer Sensitivity and ChurnQ2 FY26

    Likely exacerbated churn in certain markets, accounting for an additional 10-15 bps of volume churn in Q2 FY26.

    Mitigation: Company comfortable with price-volume trade-off, AI price optimization tool.

    Chiquita Canyon Landfill Closure OutflowsFY26, with sequential decline in '27 and '28

    $100 million to $150 million free cash flow impact in 2026.

    Mitigation: ETLF reaction is stable, controlled, and decelerating; no change to projections.

    What to watch in Q3 FY26

    5

    Solid Waste Volume Trends

    Q3 FY26
    CurrentDown 1.9% in Q2 FY26
    TargetImprovement or stabilization, especially in special waste and C&D

    Why it matters

    Indicates underlying economic health and potential for organic growth recovery.

    Acknowledging these dynamics, while special waste tons were down year-over-year in Q2, we have been impressed by activity in July, which may be an indication that the slowdown was temporary.

    Q&A highlights

    6

    Is increased fuel cost causing churn due to smaller haulers using it as a competitive advantage? What is the M&A rollover impact for '26 and '27?

    Ron stated that while the rapid fuel spike might have caused a nominal increase in competitive activity and churn (10-15 bps), it's not materially different from historical trends. Mary Anne clarified that the M&A rollover contribution to next year ('27) would be about $30 million.

    “I would say it's just that this was such a fast spike is what probably makes it look a little different. Longer this wears on, the less difference between those public and private companies will happen. So it's not anything material, but it probably accounted for an additional 10 to 15 basis points of volume churn in the quarter related to that.”

    asked by Patrick Brown · answered by Ronald Mittelstaedt

    2 min read6 chapters

    Detailed Narrative

    01

    Q2 Performance and Macroeconomic Trends

    Waste Connections reported Q2 revenue of $2.562 billion, up 6.4% year-over-year, and adjusted EBITDA of $840.1 million, up 6.8% year-over-year, exceeding expectations. This performance occurred despite macroeconomic uncertainties, rapidly spiking fuel costs, and lower commodity values. The company noted a 1.9% decline in solid waste volumes, but observed an encouraging pickup in special waste and C&D tons in July, suggesting a potential temporary slowdown.

    02

    Margin Expansion and Cost Dynamics

    Adjusted EBITDA margin expanded by 10 basis points year-over-year to 32.8%, with an underlying margin expansion of 70 basis points. This was driven by favorable price/cost dynamics, employee retention, and record safety performance, which notably reduced risk management costs. These gains offset a 40 bps drag from fuel and 20 bps from lower commodity values, demonstrating disciplined operational execution.

    03

    Strategic Investments in RNG and AI

    The company is making significant progress on its renewable natural gas (RNG) projects, with several plants now operational and all expected to be online by early 2027. RNG capital outlays are on track to be essentially complete by year-end 2026, shifting from a CapEx headwind to a free cash flow tailwind in 2027. Additionally, Waste Connections is investing in AI technologies, including a fully deployed commercial pricing tool yielding $20 million in run-rate EBITDA, and upcoming AI-driven routing and customer service solutions expected to contribute $100 million in EBITDA by 2028-2029.

    04

    M&A and Capital Allocation

    Waste Connections completed acquisitions totaling approximately $100 million in annualized revenue year-to-date, with another $30 million expected to close soon, positioning 2026 as an 'above-average M&A year.' The company also deployed $692 million year-to-date for share repurchases, reducing shares outstanding by over 1.5%. Despite this activity, leverage remained stable at 2.76x debt-to-EBITDA, maintaining flexibility for future acquisitions and shareholder returns, including a potential dividend increase.

    05

    Chiquita Canyon Landfill Management

    The company continues to manage the elevated temperature landfill (ETLF) event at Chiquita Canyon, reporting that the reaction is stable, controlled, and decelerating. There is no change to the projected free cash flow impact of $100 million to $150 million for 2026, with expectations for sequential declines in 2027 and 2028, indicating effective mitigation efforts. The $58 million impairment in Q2 was a GAAP accrual adjustment, not indicative of Q2 spend.

    06

    Rail Network Expansion and PFAS Treatment

    Waste Connections is expanding its rail network, particularly in the Southeast (Florida) due to unique disposal issues, and has grown its Arrowhead landfill rail network by 300% over two years. The company is also proactively deploying on-site PFAS treatment plants at its landfills, such as a new facility in the Carolinas, to manage rising leachate costs and ensure acceptable discharge, viewing this as a normal course of CapEx that significantly reduces third-party treatment expenses.

    AI-generated summary of the company’s earnings call. Not investment advice.