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    WCN
    Earnings call· Sep 2025(Q3 FY25)

    Waste Connections, Inc. WCN

    Oct 22, 2025 Source

    Executive summary

    Waste Connections Q3 FY25 — Strong Pricing and Margin Expansion Despite Commodity Headwinds

    Waste Connections delivered better-than-expected Q3 FY25 results, driven by strong pricing execution and significant improvements in employee retention and safety metrics. The company continues to leverage technology for operational efficiencies and pricing retention, while actively pursuing M&A opportunities. Management provided a preliminary positive outlook for FY26, anticipating continued solid waste margin expansion despite commodity and acquisition-related headwinds.

    Highlights

    5

    • Adjusted EBITDA margins of 33.8%, reflecting underlying solid waste margin expansion of approximately 80 basis points.

    • Q3 revenue growth led by 6.3% core solid waste price, with total revenue up 5.1% year-over-year to $2.458 billion.

    • Voluntary employee turnover down for the 12th consecutive quarter, a total reduction of over 55% from peak levels.

    • Safety incident rates down over 25% to new historic lows for the company.

    • Acquisition activity continued at an above-average pace, with approximately $300 million in annualized revenues closed or under definitive agreement year-to-date.

    Concerns

    3

    • Recycled commodities and RINs continued to slide during Q3, down 30% to 35% year-over-year, resulting in a 70 basis point margin drag.

    • Volumes were down 2.7% year-over-year, reflecting purposeful shedding of low-margin contracts and sluggish cyclically exposed activities.

    • Risk management costs continue to be a headwind of 20 to 30 basis points in the quarter, despite safety improvements.

    Guidance & targets

    8
    CategoryTargetConfidence
    Full Year 2025 Outlook
    No change to our full year guidance
    high materiality
    High
    Q4 FY25 Revenue
    approximately $2.36 billion
    medium materiality
    High
    Q4 FY25 Adjusted EBITDA Margin
    about 33.3%
    medium materiality
    High
    Full Year 2025 Adjusted Free Cash Flow
    $1.3 billion
    high materiality
    High
    FY26 Revenue Growth
    mid-single-digit
    high materiality
    Medium
    FY26 Underlying Solid Waste Margin Expansion
    above-average
    high materiality
    Medium
    FY26 Adjusted EBITDA Margin Expansion
    normalized range
    high materiality
    Medium
    FY26 Adjusted Free Cash Flow Conversion
    should improve relative to 2025
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Solid Waste (Underlying)
    Underlying solid waste margin expansion, excluding the impact of commodities and Chiquita Canyon landfill closure.
    Margin expansion: 80 bps YoY
    		———80 basis points
    E&P Waste
    Growth driven by production-oriented R360 Canada business, partially due to a $10 million remediation job in Q3.
    R360 Canada business growth: driven by production-oriented activitiesLegacy U.S. business: down nominally YoY
    		—7%——

    Operational metrics

    54
    Revenue
    $2.458 billionup $120 million or 5.1% YoY
    Q3 FY25

    Above outlook.

    Acquisition Revenue Contribution
    $77 million
    Q3 FY25

    Net of divestitures, from acquisitions completed since the year-ago period.

    Core Solid Waste Price
    6.3%
    Q3 FY25

    Led Q3 revenue growth.

    Volumes
    down 2.7%similar to Q2
    Q3 FY25

    Reflected purposeful shedding of low-margin contracts, price-volume trade-off, and sluggish cyclically exposed activities.

    Adjusted EBITDA
    $830.3 millionup 5.4% YoY
    Q3 FY25

    Slightly above expectations.

    Adjusted EBITDA Margin
    33.8%up 10 bps YoY
    Q3 FY25

    Better than expected, despite 20 bps drag from commodity decline.

    Recycled Commodities and Landfill Gas Revenues
    down 27%YoY
    Q3 FY25

    Due to lower pricing, partially offset by new facilities. Resulted in 70 bps margin drag.

    Recycled Commodities and RINs Price
    down 30% to 35%YoY
    Q3 FY25

    Continued to slide during Q3.

    Net Interest Expense
    $79.4 million
    Q3 FY25
    Effective Tax Rate
    23.6%
    Q3 FY25
    Debt-to-EBITDA Leverage
    2.75x
    Q3 FY25

    Comfortably within expected range.

    Capital Expenditures
    up over $135 millionYoY
    YTD Q3 FY25

    Contributed to adjusted free cash flow.

    Regular Quarterly Cash Dividend Increase
    11.1%15th consecutive annual double-digit increase
    Q3 FY25

    Authorized by Board of Directors.

    Shares Repurchased
    approximately 2.4 millionalmost 1% of shares outstanding
    YTD Q3 FY25

    Pursuant to normal course issuer bid renewed in August for up to 5% of shares outstanding.

    Emissions Reductions
    19%
    Multiyear

    Achieved as part of sustainability targets, demonstrating compatibility of growth with ESG goals.

    Voluntary Turnover Reduction
    over 55%from peak in late '22 and early '23
    Multiyear

    Ongoing reductions during 2025, showing improved employee engagement.

    Safety Incident Rate Reduction
    over 25%to new historic lows
    Multiyear

    Continuous multiyear improvement.

    Labor Cost
    mid-3s, maybe 3.5%was 4.1% in Q3 FY25
    FY26

    Expected to run closer to this range next year, down from Q3 FY25.

    RNG Capital Expenditures
    $75 million to $125 millionoriginally $100 million to $150 million
    FY25

    Revised estimate for green CapEx.

    RNG Capital Expenditures Rollover
    $25 million to $50 million
    FY26

    Potential green CapEx rollover from FY25 into FY26.

    Commodity Headwind Impact on Margin
    20 to 25 basis pointsyear-to-year basis
    FY26

    Dilutive impact if commodities stay at current levels.

    M&A Dilutive Impact on Margin
    10 to 15 basis points
    FY26

    Expected dilutive impact from acquisitions.

    E&P Remediation Job Revenue
    $10 million
    Q3 FY25

    Incremental revenue from a remediation job in the Canadian R360 business.

    Price-Cost Spread
    150 to 200 basis points
    Ongoing

    Confidence level of achieving this spread has improved with AI tool utilization.

    Volume Improvement from Churn Reduction
    50 to 100 basis points
    Ongoing

    Expected improvement in reported volume number by reducing churn and offsetting price-volume trade-off.

    Chiquita Leachate Handling Volume
    220,000 to 240,000 gallons per daypeaked at over 400,000 gallons per day
    Q3 FY25

    Current handling rate, reducing leachate level within the landfill.

    Chiquita Reaction Area Capped
    42 acres
    Q3 FY25

    Completely capped with synthetic liner.

    Chiquita Additional Capped Area (Voluntary)
    50 acres
    Next 3 years

    Voluntarily agreed to cap preventatively at agency request.

    Chiquita Registered Odor Complaints Reduction
    over 95%
    Q3 FY25

    Monitored through local agencies and California Air Board.

    Q3 Volume Sequential Ramp
    about 1.5%less than half of typical
    Q3 FY25

    Muted seasonal ramp.

    Roll-off Pulls
    down 1%YoY
    Q3 FY25

    On a same-store basis.

    Roll-off Rates per Pull
    up 2%YoY
    Q3 FY25

    Modest improvement from Q2.

    Landfill Tons
    up almost 3%YoY
    Q3 FY25

    Led by higher MSW and special waste tons.

    MSW Tons
    up 2%YoY
    Q3 FY25

    Contributing to landfill tons increase.

    Special Waste Tons
    up 10%YoY
    Q3 FY25

    With some increase due to timing of jobs expected in Q4.

    C&D Tons
    down 4%YoY
    Q3 FY25

    Better on a comparative basis than recent quarters, rate of decline may be moderating.

    Risk Management Cost Headwind
    20 to 30 basis points
    Q3 FY25

    Continues to be a headwind despite safety improvements.

    RNG EBITDA per Investment Ratio
    closer to 2:1previously 1:1
    Long-term

    Shifted due to cost creep, delays, and lower RIN values ($2.25 vs. $2.50-$3.00).

    Private Company Revenue Opportunity
    $4.5 billion to $5 billion
    Future

    Identified pipeline for M&A.

    AI Tool Churn Reduction
    30% to 40%
    Early deployment

    Observed in 1/7 of P&Ls with similar price increases.

    Landfill Tip Fees
    $80 to $120
    Current

    Higher tip fees in these regions contribute to suppressed EBITDA margins.

    Landfill Tip Fees
    $20 to $40
    Current

    Lower tip fees in these regions.

    AI Deployment Progress
    1/7 of P&Ls
    Current

    Deployed to this portion of P&Ls, with plans to reach 50-75% throughout FY26.

    Government Shutdown Tariff Impact
    $3,000 up to about $7,500
    FY26 onwards

    Per truck impact from manufacturers, affecting different components of chassis and body.

    Volume Headwind from Intentional Shedding
    about 70 basis points
    Q3 FY25

    Portion of the 2.7% negative volumes due to shedding low-margin contracts.

    Volume Headwind from Intentional Shedding (Q4)
    about 20 basis points
    Q4 FY25

    Expected to ease in Q4 due to anniversary of one chunky contract.

    E&P New Facility Annual Revenue
    $3 million
    Annual

    Annual contribution from a newly opened idled asset in Canada.

    E&P New Facility Annual EBITDA
    $1.5 million to $2 million
    Annual

    Annual contribution from a newly opened idled asset in Canada.

    RIN Values
    $2.25previously $2.50 to $3.00
    Current

    Lower RIN values impacting RNG project economics.

    Underlying Margin Expansion from Turnover Reduction
    100 basis points
    2-3 year period

    Original target for margin expansion from turnover reduction goals, with 2/3 achieved.

    Underlying Margin Expansion (Adjusted)
    closer to about 160 to 170 basis points
    2-3 year period

    What would have been achieved if not for commodity and risk management headwinds.

    AI Deployment Percentage
    half to 75%
    FY26

    Target for P&L deployment throughout FY26.

    Customer Price Increase Example
    1.9%
    Current

    Example of a differentiated price increase based on algorithmic stack.

    Customer Price Increase Example
    10.4%
    Current

    Example of a differentiated price increase based on algorithmic stack.

    Industry KPIs

    7
    MetricValueDetails
    Volumedown 2.7%%
    Core price6.3%%
    EBITDA margin33.8%%
    Churn retentionover 55%%
    Safety turnoverover 25%%
    Price to cost spread150 to 200 basis pointsbps
    Recycling commodity impactdown 30% to 35%%

    Orderbook & backlog

    1
    Arrowhead Landfill Tons7,500 tonnes per dayQ3 FY25

    up from 2,500 to 2,700 tonnes per day in August '23

    Substantial progress since acquisition.

    Deals & partnerships

    1
    Various private companiesAcquisition of solid waste businessesapproximately $300 million in annualized revenues

    Continued at an above-average pace, including 2 of the largest private companies in Florida (one closed in Q3, one signed for Q4).

    Capital programs

    3
    RNG Investment Programunderway
    Period spend: $75 million to $125 million

    Benefit: material revenue and EBITDA benefits not until FY27

    Revised FY25 CapEx estimate. The 1:1 EBITDA-to-investment ratio has shifted closer to 2:1 due to cost creep, delays, and lower RIN values.

    New York City Transfer Station Acquisitionpending regulatory approval, now approved
    Start: April/May (definitive agreement)

    Benefit: one more leg in the jigsaw puzzle of how the franchise business comes together in New York City

    Largest remaining transfer station in Queens market, expected to close in Q4 FY25.

    Arrowhead/Newark Rail Track Expansionunderway
    Funding: our capital (with Norfolk Southern)

    Benefit: dedicated unit train multiple days a week; reduce transit times by 25-30%; less railcar capital needed

    Built out incremental track at Arrowhead landfill and Newark loading facility to enable unit train service.

    Risks & headwinds

    5
    Continued headwinds related to commodities (recycled commodities and RINs)Q3 FY25, continuing into FY26

    down 30% to 35% YoY in Q3; 70 bps margin drag in Q3; 20-25 bps dilutive impact on FY26 margin

    Mitigation: Underlying solid waste margin expansion, strategic pricing.

    Margin dilutive impacts from acquisitionsFY26

    10-15 bps dilutive impact on FY26 margin

    Mitigation: Strategic M&A selection, integration efficiencies.

    Lagging reductions in risk management costsQ3 FY25, potentially easing in FY26

    20 to 30 basis points headwind in Q3

    Mitigation: Ongoing safety improvements, expected unlocking of savings in future periods.

    Sluggishness in more cyclically exposed activities (e.g., roll-off, C&D tons)Q3 FY25, ongoing

    Volumes down 2.7% YoY in Q3; C&D tons down 4% YoY in Q3

    Mitigation: Purposeful shedding of low-margin contracts, asset position and market selection strategy to enjoy upside from volume pickup.

    Uncertainty from potential government shutdown or tariff-related implicationsFY26

    Tariff impact of $3,000-$7,500 per truck for FY26 onwards

    Mitigation: Monitoring economic environment, minimal impact expected from tariffs.

    What to watch in Q4 FY25

    5

    Q4 FY25 Revenue

    Q4 FY25
    Current$2.458 billion (Q3 FY25)
    Targetapproximately $2.36 billion

    Why it matters

    Verifies the company's ability to meet its implied Q4 revenue target, which is part of the reiterated full-year guidance.

    Assuming continuing trends and without further headwinds, there is no change to our full year guidance, which implies Q4 revenue of approximately $2.36 billion and adjusted EBITDA margin up about 90 basis points year-over-year to about 33.3%.

    Q&A highlights

    7

    Clarification on Q3 E&P strength and future run-rate, specifically asking about the Canadian R360 business.

    Q3 E&P strength was due to a sequential increase in the Canadian business, primarily from a $10 million remediation job. This $10 million should be backed out for run-rating purposes.

    “What was different about Q3, what was incremental was that there was a sequential increase in that Canadian business, primarily associated with the remediation job. And so if I were run rating it, I would back out that $10 million, which is what it accounted for.”

    asked by Tyler Brown · answered by Mary Whitney

    2 min read7 chapters

    Detailed Narrative

    01

    Operational Excellence and Employee Engagement

    The company highlighted a 55% reduction in voluntary employee turnover over 12 consecutive quarters and a 25% reduction in safety incident rates to new historic lows. These improvements are directly contributing to financial results, with 80 basis points of underlying solid waste margin expansion in Q3 FY25. Management noted that 65-70 basis points of the targeted 100 basis points of margin expansion from turnover reduction have been achieved, with the remainder expected by FY26.

    02

    Technology Investments for Productivity

    Waste Connections is making long-term investments in technology and infrastructure to digitize and automate operations, enhance forecasting through data analytics, and improve service delivery. Early positive outcomes include improved pricing retention, with a 30-40% reduction in churn on similar price increases in deployed areas. The company aims for total digitization by end of FY27, focusing on pricing/budgeting in FY25 and route optimization/mobile apps/maintenance software in FY26.

    03

    Strategic M&A Activity

    The company continued its above-average acquisition pace, closing or signing deals totaling approximately $300 million in annualized revenues year-to-date, including two large private companies in Florida. This activity is expected to continue into Q4 FY25 and early FY26, with a robust pipeline of $4.5 billion to $5 billion in private company revenue opportunities. The M&A environment is characterized as very strong and robust.

    04

    Chiquita Canyon Landfill Update

    Mitigation and treatment of the landfill reaction are progressing as expected or better, with leachate removal rates now outrunning generation (220,000-240,000 gallons/day vs. peak of 400,000 gallons/day). The reaction area is capped (42 acres), and registered odor complaints are down over 95%. Outlays are currently ahead of expectations due to accelerated steps, but the total estimated cost for post-closure remains unchanged.

    05

    RNG Investments and Outlook

    RNG projects are primarily timed to come online in late Q4 FY25 or early FY26, with material revenue and EBITDA benefits not expected until FY27. The initial CapEx estimate for RNG in FY25 of $100M-$150M has been revised to $75M-$125M, with $25M-$50M potentially rolling over into FY26. The 1:1 EBITDA-to-investment ratio previously discussed has shifted closer to 2:1 due to cost creep, delays, and lower RIN values ($2.25 vs. $2.50-$3.00).

    06

    New York City Franchise Progress

    Waste Connections is making good progress in the new commercial zones in New York City, with two additional zones opened on October 1 where the company holds permits. The acquisition of a large transfer station in Queens is expected to close in Q4 FY25, further solidifying its position in the market. This acquisition is seen as a crucial step in the complex regulatory process for the franchise business.

    07

    Arrowhead Landfill and Rail Operations

    Arrowhead landfill is now processing about 7,500 tonnes per day in Q3 FY25, up significantly from 2,500-2,700 tonnes/day in August FY23. The company has built incremental rail track at Arrowhead and its Newark facility, enabling Norfolk Southern to begin running dedicated unit trains in mid-to-late Q4 FY25. This is expected to reduce transit times by 25-30% and improve cost structure.

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