Waste Connections is a leading integrated solid waste services company in North America. They provide non-hazardous waste collection, transfer, disposal and recycling services. Waste Connections generates revenue primarily from collection operations, transfer stations, landfills and recycling facilities.
What are Waste Connections’ main revenue sources?
Waste Connections has three main revenue sources:
- Collection: Revenue from collecting solid waste from commercial, industrial, municipal and residential customers. This accounted for about 70% of total revenue in 2021.
- Transfer: Revenue from operating transfer stations that consolidate, compact and transport waste. This accounted for 11% of revenue.
- Disposal: Revenue from operating landfills for waste disposal. Landfill accounted for 14% of revenue.
In addition, Waste Connections generates revenue from other services like recycling, intermodal services and landfill gas-to-energy operations.
How much revenue does Waste Connections generate?
In 2021, Waste Connections generated total revenue of $6.15 billion, up 15% from $5.44 billion in 2020. This demonstrates strong growth in the company’s key business operations.
Here is a breakdown of Waste Connections’ revenue over the last 5 years:
Year | Revenue (USD billions) |
---|---|
2017 | $4.63 |
2018 | $4.92 |
2019 | $5.39 |
2020 | $5.44 |
2021 | $6.15 |
As shown, Waste Connections has grown revenue each year, even during the pandemic in 2020. The company has consistently expanded services through acquisitions and organic growth.
Waste Connections Revenue By Segment
Waste Connections breaks down revenue into three key operating segments – solid waste collection, transfer and disposal. Here is a closer look at revenue performance in each segment:
Solid Waste Collection Revenue
Waste Connections’ collection operations account for the majority of revenue. This includes commercial, industrial, municipal and residential collection services.
In 2021, solid waste collection revenue was $4.28 billion, up 14% year-over-year. Collection revenue accounted for 70% of total company revenue.
Key drivers of growth in collection revenue include acquisitions, price increases and volume increases from existing customers.
Transfer Station Revenue
Transfer stations consolidate, compact and transport waste for more efficient disposal. This segment accounted for 11% of Waste Connections’ revenue in 2021.
Transfer station revenue in 2021 was $654 million, up 21% from 2020. Growth is driven by acquisitions and increasing volumes from existing operations.
Landfill Disposal Revenue
As one of the largest solid waste landfill operators in North America, landfills are a strategically important segment for Waste Connections.
In 2021, landfill disposal revenue was $860 million, up 10% over 2020. It accounted for 14% of total revenue.
Key factors for landfill disposal revenue growth include price increases and volume increases from existing facilities. Acquisitions of landfills also contribute to growth.
Intermodal and Recycling Revenue
In addition to collection, transfer and disposal, Waste Connections generates revenue from intermodal services and recycling operations.
Intermodal involves transporting cargo containers between rail yards. Recycling includes collecting and processing recycled commodities.
In 2021:
- Intermodal revenue was $123 million, up 28% YoY.
- Recycling revenue was $283 million, up 57% YoY.
These services combined accounted for about 5% of total revenue in 2021.
Waste Connections Revenue Growth Trends
Waste Connections has achieved impressive revenue growth in recent years through the following trends:
Acquisitions Driving Growth
Acquisitions have been a key strategy for Waste Connections to expand into new markets and add new customers.
For example, in 2021 the company acquired over $460 million in annualized revenues from acquisitions. Major deals included the $1.2 billion acquisition of Advanced Disposal Services.
Acquisitions will continue to be an important component of growth going forward.
Price Increases Boosting Revenue
Waste Connections has consistently raised prices across its collection, disposal and recycling services, driving up revenue.
In 2021, average price increases were about 5.5% across disposal, transfer and collection services. Additional pricing growth is expected in 2022.
Growing Volumes from Existing Assets
The company is also generating more revenue from its existing assets and operations, including landfills, transfer stations and collection routes.
Higher volumes from existing customers and assets contributed around 3% growth in revenue in 2021. Ongoing economic growth will drive additional volume increases.
Expansion into Recycling Services
Waste Connections is expanding recycling capabilities to divert more waste from landfills.
Recycling revenue grew 57% in 2021 through acquisitions and new recycling processing plants. More growth is expected as recycling services are added.
Profitability and Cash Flow
In addition to strong revenue growth, Waste Connections has maintained excellent profit margins and cash flow:
- Gross Margin: Gross margin was about 38% over the last 3 years.
- Operating Margin: Operating margin has averaged around 16%.
- Net Income: Net income hit $662 million in 2021, up 20% over 2020.
- Cash Flow: Net cash provided by operations was $1.92 billion in 2021.
The company’s steady profitability and low capital requirements have allowed it to generate significant cash flow to fund growth efforts.
Waste Connections has a solid balance sheet with investment grade credit ratings to support acquisitions and other investments. The company has over $600 million in liquidity from cash and credit facilities.
Outlook and Projections
Waste Connections looks well-positioned for continued strong revenue growth in coming years.
The company has guided for about $6.9 billion in 2022 revenue, which would represent approximately 13% growth over 2021.
Ongoing acquisitions, price increases, volume growth from existing assets and expansion of recycling capabilities are expected to drive double-digit revenue growth.
Waste Connections sees substantial additional opportunities to expand through consolidation of the extremely fragmented US waste industry. Smaller family-owned competitors represent acquisition targets.
The company also aims to increase market share in existing regions by offering differentiated services and outcompeting municipalities.
Given these growth strategies and positive industry trends, Waste Connections seems likely to grow revenue at a high-single digit to low-double digit pace for the foreseeable future. Profitability is also expected remain strong, supported by the company’s disciplined operating model.
Conclusion
In summary, Waste Connections generated $6.15 billion in revenue in 2021 through its integrated solid waste services platform. The company has consistently grown revenue each year through acquisitions, price increases, volume growth and expansion into recycling.
With acquisition-driven growth, differentiated services, and an excellent track record of execution, Waste Connections appears well-positioned to continue its rapid growth trajectory. The company’s large scale and strong competitive position provide significant advantages to increase market share in the fragmented US waste industry. Waste Connections’ revenue seems likely to steadily rise in high-single digit to low-double digit range for years to come.